Exhibit 10.1
 
ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is entered into this 17th day
of June, 2010 (the “Effective Date”), between SafeData, LLC, a Delaware limited
liability company (the “Seller”), and Data Storage Corporation, a Delaware
corporation (the “Purchaser”).

WITNESSETH:

WHEREAS, Purchaser desires to acquire the Assets (as hereinafter defined) and
shall assume the Assumed Liabilities (as hereinafter defined) of Seller related
to Seller’s business of data protection, recovery and secure storage (the
“Business”) and Seller desires to sell such Assets and transfer such Assumed
Liabilities to Purchaser.

NOW, THEREFORE, in consideration of the promises, the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
mutual receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:

ARTICLE I
SALE OF ASSETS TO PURCHASER

Section 1.1.                      Description of Assets and Assumed
Liabilities.  (a) At the Closing (as hereinafter defined), Seller shall sell,
transfer, assign and deliver to Purchaser, and Purchaser shall purchase and
acquire from Seller, all right, title and interest of Seller in and to the
end-user customer base of the Business and all related current and fixed assets
and contracts related thereto used in connection therewith, including but not
limited to all of Seller’s cash, accounts receivable and Intellectual Property
(as hereinafter defined) related to and/or arising out of the Business
(including but not limited to all rights to the name “SafeData” and all
derivations thereof to the extent of Seller’s rights and interest therein), all
licenses, permits and authorizations necessary to conduct the Business (to the
extent transferable), customer contracts and any and all security deposits made
in connection with the Business, all as specifically listed on Schedule
1.1(a)(i) attached hereto and made a part hereof (collectively, the
“Assets”).  Additionally, Seller shall transfer and Purchaser shall assume those
(and only those) current liabilities of Seller (as classified by GAAP (as
hereinafter defined)) to the extent arising out of or relating to the Business
or the Assets (including the Equipment Leases (as hereinafter defined)) and a
lease on Seller’s offices, but expressly excluding any Excluded Liabilities (as
hereinafter defined) (for clarity purposes, Purchaser shall not assume any
current portions of liabilities included in the Excluded Liabilities) all as
listed on Schedule 1.1(a)(ii) attached hereto and made a part hereof
(collectively, the “Assumed Liabilities”).

(b)           Excluded Liabilities.   Notwithstanding anything to the contrary,
Purchaser does not and, by this Agreement, any agreement related hereto or the
transactions contemplated by either, will not, assume or agree to pay, perform,
defend or discharge any liabilities or obligations of Seller other than the
Assumed Liabilities.  Purchaser shall assume no responsibility for, relating to
and/or arising from, any third party interest-bearing debt undertaken in
connection with the Business or the Assets, including but not limited to any
line of credit, subordinated debt or loan payable to Peter Briggs (“Briggs”) or
Larry Putterman (“Putterman”) (whether or not any such loans to either
individual are interest-bearing or not), or any taxes, penalties, fines,
assessments, late charges, interest or similar charges or any other payments due
related to the Business or the Assets  (collectively with any and all
liabilities other than the Assumed Liabilities, the “Excluded Liabilities”);
provided, however, that Excluded Liabilities shall expressly exclude the
Equipment Leases.
 
 
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ARTICLE II
PURCHASE PRICE

Section 2.1.                      Purchase Price; Payment of Purchase Price.

(a)           In addition to Purchaser’s assumption of the Assumed Liabilities,
the aggregate purchase price to be paid by Purchaser for the Assets is equal to
Three Million Dollars ($3,000,000), subject to adjustment as set forth in this
Agreement:  the sum of Two Million Dollars ($2,000,000) to be paid in cash and
One Million Dollars ($1,000,000) in shares of the common stock (par value $0.001
per share) (the “Shares”) of the Purchaser’s parent, Data Storage Corporation, a
Nevada corporation (the “Parent”), valued at an amount per Share (the “Per Share
Purchase Amount”) equal to thirty five cents ($0.35) per share (or Two Million
Eight Hundred Fifty Seven Thousand One Hundred Forty Two (2,857,142) Shares)
(the “Purchase Price”), subject to adjustment pursuant to Section 2.2.

(b)           At Closing, Purchaser shall deliver to the Seller, (i) One Million
Three Hundred Thousand Dollars ($1,300,000) (the “Closing Cash Amount”) in cash
by wire transfer of immediately available funds to an account designated by
Seller prior to the Closing, (ii) Eight Hundred Fifty Thousand Dollars
($850,000) in Shares valued at the Per Share Purchase Amount and (iii) minus the
amount, if any, described in Section 2.1(d) below.

                (c)           At Closing, delivery of the following portions of
the Purchase Price shall be deferred for the purchase price adjustment, such
amounts to be paid to the Seller, as applicable, in accordance with Section 2.2:
(i) the sum of Seven Hundred Thousand Dollars ($700,000) to be paid in cash (the
“Renewal Holdback Amount”) and (ii) One Hundred Fifty Thousand Dollars
($150,000) in Shares valued at the Per Share Purchase Amount (the “Assignment
Contingency Holdback Amount”, and, together with the Renewal Holdback Amount,
collectively, the “Holdbacks”).

(d)           At Closing, the outstanding balance (the “Line of Credit Balance”)
of Seller's line of credit financing facility, after taking into account all
checks written on such line of credit (which checks shall have been delivered or
mailed to their respective payees prior to Closing in satisfaction of Seller’s
outstanding liabilities) and reducing the Line of Credit Balance by any negative
cash balance in Seller’s accounts, shall be equal to no less than Three Hundred
Fifty Thousand Dollars ($350,000).  To the extent that the Line of Credit
Balance at the Closing is less than Three Hundred Fifty Thousand Dollars
($350,000), then an adjustment shall be made to reduce the Closing Cash Amount
by the amount of such difference. 

Section 2.2.                      Purchase Price Adjustment.

(a) Classifying Customer Contracts.  The parties acknowledge and agree that
payment of the Holdbacks is contingent on certain performance thresholds being
satisfied, as described herein, by the customer counterparties to such
contracts.  The Assets comprised of the customer contracts are categorized
initially on Schedule 2.2(a)(i) and Schedule 2.2(a)(ii) as either or both: (i)
“Assignment Contingency Contracts” which are all customer contracts (x) having
customer termination rights within some prescribed timeframe of a notice of
assignment of the customer contract being furnished to the customer or (y)
requiring the customer’s affirmative consent to the assignment of the customer
contract from Seller to Purchaser (as listed with a reasonable estimate of the
annual revenue beside each Assignment Contingency Contract on Schedule 2.2(a)(i)
attached hereto and made a part hereof) or (ii) “Renewal Contracts” which are
all of Seller’s customer contracts and may initially include the Assignment
Contingency Contracts (as listed with a reasonable estimate of the annual
revenue beside each Renewal Contract on Schedule 2.2(a)(ii) attached hereto and
made a part hereof), subject to potential removal of certain Assignment
Contingency Contracts from such schedule pursuant to the terms of Section
2.2(b).
 
 
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(b)           Assignment Contingency Contract Review.  On the three (3) month
anniversary of the Closing Date (the “Assignment Contingency Contract Review
Date”), the Purchaser shall evaluate the Assignment Contingency Contracts and if
on the Assignment Contingency Contract Review Date, (i) an Assignment
Contingency Contract is still in force and performing (and, if applicable, any
required written consent received) with no then existing customer breach (and it
will not be considered a breach if such customer brings its entire account
current within ten (10) days of the Renewal Contract Review Date if such
customer’s payment history generally reflects a pattern of such late payments),
notice of customer dispute or notice of termination received or pending and (ii)
the gross revenues associated with such contract as set forth on Schedule
2.2(a)(i) are being received on a timely basis, then each such Assignment
Contingency Contract satisfying such criteria shall remain on Schedule
2.2(a)(ii) as a Renewal Contract to be further evaluated on the Renewal Contract
Review Date (as hereinafter defined).  In the event that, as of the Assignment
Contingency Contract Review Date, an Assignment Contingency Contract has been
terminated, or a customer breach has occurred under an Assignment Contingency
Contract, or a notice of customer dispute or notice of termination has been
received or is pending with respect to an Assignment Contingency Contract, or
the gross revenues associated with an Assignment Contingency Contract as set
forth on Schedule 2.2(a)(i) are not being received on a timely basis (unless the
sole reason for the delay in payment is due to a Purchaser Action (as
hereinafter defined)) (in each case, a “Problematic Assignment Contingency
Contract”), then the Assignment Contingency Holdback Amount and the Purchase
Price shall be reduced by the portion of the Assignment Contingency Holdback
Amount set forth on Schedule 2.2(a)(i) with respect to each such Problematic
Assignment Contingency Contract (and the Shares corresponding to the reduction
of the Assignment Contingency Holdback Amount retained by Purchaser).  Any
Assignment Contingency Holdback Amount remaining after reducing the Purchase
Price in accordance with the immediately preceding sentence shall be delivered
by Purchaser to Seller within ten (10) business days of the Assignment
Contingency Contract Review Date.  In the event that the amount of annual
revenue associated with the Problematic Assignment Contingency Contracts exceeds
the Assignment Contingency Holdback Amount, then the amount of such excess shall
be offset against the amount of Recurring New Sales Revenue to which Seller is
entitled under Section 2.2(d) and retained by the Purchaser.  If by the Renewal
Contract Review Date, all of the annual revenue associated with the Problematic
Assignment Contingency Contracts has not either reduced the Purchase Price
through a reduction of the Assignment Contingency Holdback Amount or been offset
against the amount of Recurring New Sales Revenue to which Seller is entitled
under Section 2.2(d), then any remaining amount (except for amounts relating to
any delinquent customer contracts resulting solely from a Purchaser Action for
which no reduction shall be made) shall be offset against the Renewal Holdback
Amount otherwise due and payable pursuant to Section 2.2(c).  Effective on the
Assignment Contingency Contract Review Date, Schedule 2.2(a)(ii) shall be deemed
revised, without further act by any party, to delete any Problematic Assignment
Contingency Contract.  Purchaser shall provide Seller with regular periodic
reports showing assignment and renewal activity as well as details concerning
problems encountered.   On reasonable prior written notice, during normal
business hours, and at the sole cost and expense of the Seller, Seller shall
have the right to examine and audit the books and records of the Purchaser at
the Purchaser’s principal office relating to the Assignment Contingency Holdback
Amount.   Such right to audit may be exercised only once and may only be
exercised within five (5) months following the Closing Date.  If such audit
discloses that any payments associated with release (or extinguishment) of a
portion of the Assignment Contingency Holdback Amount were not correct, then the
Purchaser shall pay to the Seller the amount of any undisputed underpayment
disclosed by the audit within ten (10) business days of such audit, and the
Seller shall pay to the Purchaser the amount of any undisputed overpayment
disclosed by the audit within ten (10) business days of such audit and the
parties will further amend Schedule 2.2(a)(ii), if necessary, to correct any
error.
 
 
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(c)           Renewal Contract Review.  On the one (1) year anniversary of the
Closing Date (the “Renewal Contract Review Date”), the Purchaser shall evaluate
the Renewal Contracts and if at least ninety percent (90%) of the Renewal
Contracts (as measured by annual dollar value as set forth on Schedule
2.2(a)(ii)) are still in force and performing on the Renewal Contract Review
Date on economic terms and conditions no less favorable than the terms and
conditions of such contract in effect on the Effective Date, with no then
existing customer breach (and it will not be considered a breach if such
customer brings its entire account current within ten (10) days of the Renewal
Contract Review Date if such customer’s payment history generally reflects a
pattern of such late payments), notice of customer dispute or notice of
termination pending and the gross revenues associated with such contract are
being received on a timely basis (collectively, the “Renewal Contract
Requirements”), then Purchaser shall pay to Seller one hundred percent (100%) of
the Renewal Holdback Amount within thirty (30) days of such date (the “Renewal
Payment Date”).   If any Renewal Contracts fail to meet the Renewal Contract
Requirements on the Renewal Contract Review Date solely as a result of any
Purchaser Action (and the rationale for such renewal failure is sufficiently
documented by the Seller to the reasonable satisfaction of the Purchaser), such
Renewal Contract shall be removed from Schedule 2.2(a)(ii) but included in the
calculations set forth below so as to avoid unfairly reducing payments made to
Seller.  If on the Renewal Contract Review Date, less than ninety percent (90%),
but greater than fifty percent (50%), of the Renewal Contracts (as measured by
annual dollar value as set forth on Schedule 2.2(a)(ii)) are still in force and
meet the Renewal Contract Requirements, then Purchaser shall pay to Seller on
the Renewal Payment Date a portion of the Renewal Holdback Amount equal to a
fraction calculated as follows:

The numerator shall equal the difference between (x) the percentage of the
Renewal Contracts (as measured by annual dollar value as set forth on Schedule
2.2(a)(ii)) that meet the Renewal Contract Requirements (plus the portion
removed due to Purchaser Action) and (y) fifty percent (50%), and the
denominator shall equal forty (40).  For example, if the percentage of Renewal
Contracts meeting the Renewal Contract Requirements (plus the portion removed
due to Purchaser Action) is sixty two percent (62%), Purchaser shall pay to
Seller (62 – 50 or 12)/40, or 30% of the Renewal Holdback Amount.  Similarly, if
the percentage of Renewal Contracts meeting the Renewal Contract Requirements
(plus the portion removed due to Purchaser Action) is fifty four percent (54%),
Purchaser shall pay to Seller (54 – 50 or 4)/40, or 10% of the Renewal Holdback
Amount.

Purchaser shall provide Seller with regular, periodic reports showing renewal
activity as well as details concerning problems encountered.  On reasonable
prior written notice, during normal business hours, and at the sole cost and
expense of the Seller, Seller shall have the right to examine and audit the
books and records of the Purchaser at the Purchaser’s principal office relating
to the calculation of the amount of the Renewal Holdback Amount being released
pursuant to this Section 2.2(c). Such right to audit may be exercised only once
and may only be exercised within fourteen (14) months following the Closing
Date.  If such audit discloses that any payments associated with release of a
portion of the Renewal Holdback Amount were not correct, then the Purchaser
shall pay to the Seller the amount of any undisputed underpayment disclosed by
the audit within ten (10) business days of such audit, and the Seller shall pay
to the Purchaser the amount of any undisputed overpayment disclosed by the audit
within ten (10) business days of such audit.  In the event that an audit
discloses that the Renewal Holdback Amount was actually understated by more than
five percent (5%), Purchaser shall reimburse Seller for an additional amount
equal to the reasonable cost of such audit; notwithstanding the foregoing,
Purchaser shall not be obligated to reimburse Seller for any costs or expenses
arising out of an audit if the person or entity performing such audit is being
compensated on a contingent fee basis.

Any Renewal Holdback Amount to which Seller is not entitled to be paid by the
Renewal Payment Date shall be deemed a reduction of the Purchase Price and
deemed paid under the Promissory Note (as hereinafter defined) along with the
Renewal Holdback Amount actually paid to Seller and the Promissory Note shall be
cancelled and returned to Purchaser marked “PAID IN FULL/CANCELLED” within
fourteen (14) months following the Closing Date unless the Seller is disputing
the amount of the Renewal Holdback Amount paid.
 
 
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For purposes of this Section 2.2(c), “Purchaser Action” shall mean (1)
Purchaser’s material increase in pricing beyond the existing contract rate with
allowances for reasonable market-standard increases and/or standard cost of
living increases of a service offering that constitutes a material element of
service offerings provided to a customer, (2) Purchaser’s abandonment of a
service offering that constitutes a material element of service offerings
provided to a customer or (3) material adverse changes affirmatively caused by
Purchaser in key service or technology functions, protocols or software that
constitute a material element of a customer’s service offerings.  For purposes
of clarity, the parties understand and agree that the Seller shall have the
burden of proof in evidencing that payment delays and/or renewal failure of any
applicable customer contract is the sole result of a Purchaser Action.

(d)           New Sales; Additional Purchase Price.  For any new customer
contracts for the Business with no less than a one (1) year contract term
entered into by Seller after the Term Sheet Date for sales of services that
Seller provided prior to the Closing Date that (i) are memorialized in writing
and fully executed by the Seller and the counterparty to such contract(s) prior
to the Closing Date and (ii) result in recurring revenue (i.e., based on regular
monthly or quarterly fees) to Purchaser (net of sales, use, excise,
telecommunications and other similar taxes, but not income taxes) for such
contract(s) that is actually collected on or before April 30, 2011 (the
“Recurring New Sales Revenue”), Seller shall receive twenty five percent (25%)
of the Recurring New Sales Revenue.  The Purchaser shall be entitled to the
remaining seventy five percent (75%) of the Recurring New Sales Revenue for all
revenue collected on and after the Closing Date.  Any such contract satisfying
such requirements shall be referred to as a “Recurring New Sales
Contract”.  Seller shall be entitled to all revenue collected on Recurring New
Sales Contracts that is collected prior to the Closing Date so long as
recognition of such collections as revenue is consistent with generally accepted
accounting principles (“GAAP”); if recognition of such revenue on or before
April 30, 2011 under GAAP is appropriate, such revenue shall be shared twenty
five percent (25%) and seventy five percent (75%) by Seller and Purchaser,
respectively; and if recognition of such revenue after April 30, 2011 under GAAP
is appropriate, Purchaser shall be entitled to all such revenue.  Any monies
payable by the Purchaser to the Seller on account of Recurring New Sales Revenue
shall be paid on the first day of the eighth (8th) full calendar month and the
fourteenth (14th) full calendar month following the Closing Date.  The eighth
(8th) month payment shall be based on Recurring New Sales Revenue actually
collected by Purchaser before the six (6) month anniversary of the Closing Date;
provided, however, that, if on the six (6) month anniversary of the Closing Date
it is determined that any Recurring New Sales Contract has a delinquency of one
(1) month’s revenue or more (or the monthly revenue for such contract has been
reduced from its original terms), the customer of such Recurring New Sales
Contract has routinely failed to pay its monthly fee on a timely basis or such
Recurring New Sales Contract has been terminated (collectively, the “Recurring
New Sales Disqualification Events”), no New Sales Revenue shall be paid to
Seller for such contract.  The fourteenth (14th) month payment shall be based on
Recurring New Sales Revenue actually collected by Purchaser between the six (6)
month anniversary of the Closing Date and April 30, 2011; provided, however,
that, if on April 30, 2011 it is determined that any Recurring New Sales
Contract has a Recurring New Sales Disqualification Event, (A) no New Sales
Revenue shall be paid to Seller for such contract with the fourteenth (14th)
month payment, if any, and (B) any monies paid to Seller based on Recurring New
Sales Revenue generated by such contract before the six (6) month anniversary of
the Closing Date shall be offset against any monies otherwise due to Seller on
the fourteen (14) month anniversary of the Closing Date based on all New Sales
Revenue.  On reasonable prior written notice, during normal business hours, and
at the sole cost and expense of the Seller, Seller shall have the right to
examine and audit the books and records of the Purchaser at the Purchaser’s
principal office relating to the calculation of the Recurring New Sales Revenue
and payment of the amounts due under this Section 2.2(d) with respect thereto.
Such right to audit may be exercised only once and may only be exercised within
two (2) months of the fourteenth (14th) month payment.  If such audit discloses
that any payments associated with the Recurring New Sales Revenue were not
correct, then the Purchaser shall pay to the Seller, the amount of any
undisputed underpayment disclosed by the audit within ten (10) business days of
such audit, and the Seller shall pay to the Purchaser the amount of any
undisputed overpayment disclosed by the audit within ten (10) business days of
such audit.  The Seller covenants that the terms and conditions of any Recurring
New Sales Contract shall be (1) in conformance with the customary and historical
terms of Seller’s prior customer contracts (with reasonable adjustments for
current market conditions) and (2) developed within the ordinary course of the
Business.
 
 
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Section 2.3.   Promissory Note.  The Renewal Holdback Amount shall be evidenced
by the Purchaser’s delivery to Seller on the Closing Date of an interest free
Promissory Note, the form of which is attached hereto as Exhibit A (the
“Promissory Note”).

Section 2.4.   Transfer Tax.  Any sales, use, excise, ad valorem or any other
similar taxes resulting from the sale of the Assets pursuant to this Agreement
shall be the responsibility of Seller and Seller shall indemnify Purchaser
against any such taxes wherever assessed.   The indemnity obligations of this
Section 2.4 shall survive indefinitely the Closing hereunder.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

Section 3.1.    Seller represents and warrants to Purchaser that:

(a)           Company Status.  Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority to own its properties and assets and
carry on its businesses as and where now owned or conducted.

(b)           Authorization of Agreement; No Conflict.  Seller has all requisite
power and authority to enter into, execute and deliver this Agreement, fulfill
its obligations hereunder and consummate the transactions contemplated hereby;
such execution and delivery, performance of obligations and consummation of the
transactions have been duly authorized and approved by all requisite limited
liability company action by or in respect of Seller; and this Agreement
constitutes the legal, valid and binding obligation of Seller enforceable in
accordance with its terms.

(c)           Ownership of Assets/Absence of Claims.  Seller is the sole owner
of the Assets and such Assets are, except for liens and encumbrances that
lenders will release at the time of Closing, free and clear of any and all
liens, pledges, security interests, options, encumbrances, charges, agreements
or claims of any kind whatsoever except certain capital leases that Seller has
entered into as set forth on Schedule 3.1(c) attached hereto and made a part
hereof, which capital leases currently encumber Seller’s servers, and all the
documentation, correspondence, notices, files and other materials related
thereto have been furnished to Purchaser (the “Equipment Leases”).  The Seller
does not own, nor has it agreed or has an option to purchase or sell, or is it
obligated to purchase or sell, any real property, but does lease its office
facility, the lease for which shall be assigned to Purchaser and included in the
Assumed Liabilities.

(d)           Defaults.  Seller is not in default or breach under or in
violation of any contracts, leases or agreements to which Seller is a party with
respect to the Assets and/or the Assumed Liabilities.  All such contracts,
leases and agreements are now in full force and effect and Seller is not aware
of any violation or notice of termination or intent to terminate, with respect
to any such contracts, leases or agreements.

(e)           Litigation.  Seller is not subject to any unsatisfied judgment,
order, decree, stipulation, injunction or charge with respect to the Assets
and/or the Assumed Liabilities and is not a party nor to its knowledge is
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing or investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator with respect to the Assets and/or the Assumed Liabilities.
 
 
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(f)           Taxes.  Seller has filed all federal, state and local tax returns
required to be filed by it as of the date of this Agreement with respect to the
Business, the Assets and/or the Assumed Liabilities and has paid, or made
provision for payment, of all (i) taxes due for the periods covered by such
returns, (ii) all payments of estimated taxes and (iii) all deficiencies
assessed as a result of any examination of such returns.  Seller has not been
granted any extension of the limitation period applicable to any claim for taxes
or assessments with respect to the Business, the Assets and/or the Assumed
Liabilities.

(g)           Compliance with Laws.  Seller and the Business have complied with
all applicable laws and regulations and all orders of any governmental authority
having jurisdiction over Seller, the Assets and/or the Business.  Seller has all
licenses, permits and authorizations necessary to conduct the  Business and/or
own the Assets.

(h)           Material Adverse Effect.  Except as fully disclosed to the
Purchaser, the Seller has incurred no material liabilities that would have a
material adverse effect on the Business and/or the Assets, and no contingency
exists which could reasonably be expected to result in or cause a material
adverse effect on the Business and/or the Assets.

(i)           Condition of Assets.  All equipment (whether or not covered by  an
Equipment Lease), hardware, software and other tangible assets included as
Assets (collectively, the “Tangible Assets”) are free of material defects and
are in good working order (ordinary wear and tear excepted), and have been
maintained in a manner consistent with the standards generally followed in the
industry to which such items relate and all applicable laws, permits and
contracts to which they are or may be subject.   In amplification and not
limitation of the foregoing, all equipment, hardware and software constituting
the operating Tangible Assets (e.g., servers, computers and copiers vs. desks
and filing cabinets) are (i)  currently in service by Seller and (ii) regularly
maintained pursuant to a service contract having a term of one (1) year or more
and meeting industry standards for such type of equipment and, in all cases, in
accordance with any manufacturer and/or warranty requirements.

(j)           Consents.  Except as set forth on Schedule 2.2(a)(i), neither the
execution nor the performance of this Agreement, any agreement related hereto or
the transactions contemplated hereunder requires the consent, approval,
authorization of or other action by, or filing with, any third party (including
any governmental authority) (collectively, the “Required Consents”) or if
required, the Required Consents have been obtained, filing has been accomplished
or the requisite action has been taken.

(k)           Intellectual Property.

i.           The Seller owns, or is licensed or otherwise possesses legally
enforceable rights to use, all intellectual property (including the goodwill
associated therewith) that is used, and/or is necessary, to conduct the Business
as currently conducted or planned to be conducted.  Schedule 3.1(k) lists (by
separate categories): (1) trademarks, trade names, and service marks that have
been used in connection with the Business either in the United States or
elsewhere, including but not limited to the name “SafeData”, and whether those
trademarks, trade names, or service marks are registered or unregistered; (2)
copyrighted or copyrightable materials (including but not limited to computer
programs or applications, databases, manuscripts, audiovisual works, artwork and
translations thereof) prepared by the Seller or others for the Seller, that were
created, obtained or modified in furtherance of the Business, whether or not
those materials were prepared in the United States or elsewhere, and whether or
not such copyrights have been registered; (3) all Letters Patents, patent
applications, divisions, continuations, continuations-in-part, substitutions,
reissues, reexaminations, and extensions to be obtained therefor, that relate to
the Business, whether in the United States or elsewhere; (4) all material
written licenses, sublicenses and other agreements relating to the Business to
which the Seller, its employees, Briggs or Putterman is a party and pursuant to
which any other party is authorized to use any Intellectual Property (as
hereinafter defined) rights; and (5) all written licenses, sublicenses and other
agreements relating to the Business to which the Seller, its employees, Briggs
or Putterman is a party and pursuant to which any of the Seller, its employees,
Briggs or Putterman is authorized to make, use or sell an article or process
patented by another or to exercise any of the exclusive rights reserved under a
copyright or trademark owned by another, including software (such Section
3.1(k)(i)(5) rights being the “Third Party Intellectual Property Rights”); and,
not listed separately on Schedule 3.1(k) but included in the Intellectual
Property (and in the Assets), (6) trade secrets, schematics, technology,
know-how, methods, processes, non-copyrightable computer software programs or
applications, and other proprietary materials that were created, obtained or
modified in furtherance of the Business, and whether or not those materials were
prepared in the United States or elsewhere that are used in the Businesses or
that form a part of any Seller’s product or as used in Seller’s services
(collectively, the “Intellectual Property”). None of the Seller, its employees,
Briggs nor Putterman is a party to any oral license, sublicense or agreement
relating to the Business which, if reduced to written form, would be required to
be listed in Schedule 3.1(k) under the terms of this Section 3.1(k)(i) and/or
constitutes Intellectual Property.
 
 
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ii.           None of the Seller, its employees, Briggs or Putterman is, nor
will any of the foregoing be as a result of the execution and delivery of this
Agreement or the performance of Seller’s obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to the
Intellectual Property or Third Party Intellectual Property Rights.

iii.           None of the Seller, its employees, Briggs or Putterman has been
named in any suit, action or proceeding that involves a claim of infringement of
any intellectual property rights of any third party.  None of the Seller, its
employees, Briggs or Putterman infringe on any intellectual property right of
any third party; and the Intellectual Property is not, to the knowledge of
Seller, Briggs or Putterman, being infringed by activities, products or services
of any third party.

iv.           The Seller has taken all reasonably necessary measures to
safeguard and maintain its rights in, and the proprietary and confidential
nature of, the Intellectual Property, including, but not limited to, including
in or showing on any applicable products of Intellectual Property all necessary
and/or appropriate copyright, patent, trademark or attribution notices.  All
officers, managers, employees, consultants and contractors of the Seller
(including but not limited to Briggs and/or Putterman) who have access to or
were involved in the development of Intellectual Property have executed and
delivered to the Seller, as applicable, an agreement regarding the protection of
such Intellectual Property, and the assignment to or ownership by the Seller, of
any and all rights, title and interest in the Intellectual Property arising from
the services performed for the Seller, by such individuals or entities and such
assignment documentation, if appropriate given the nature of the Intellectual
Property in question, has been fully effected and recorded at the United States
Patent and Trademark Office, Copyright Office and/or any other agencies
necessary for the Seller and the Purchaser to fully protect their rights, title
and interest in such Intellectual Property as of the Closing Date.   No current
or prior officer, manager, employee or consultant of the Seller claims, and the
Seller is not aware of any grounds to assert a claim to, or any ownership
interest in, any such Intellectual Property as a result of having been involved
in the development, creation or design of such property while employed or
engaged by or consulting to the Seller unless all such ownership interests, if
any, have been fully and properly assigned to the Seller as required pursuant to
this Section 3.1(k)(i).

(l)           Absence of Liabilities.  The Seller has no debts, liabilities or
obligations of any nature (whether accrued or unaccrued, absolute or contingent,
direct or indirect, known or unknown, choate or inchoate, perfected or
unperfected, liquidated or unliquidated, or otherwise, and whether due or to
become due), other than those liabilities: (i) included in the unaudited balance
sheet dated as of June 15, 2010 (the “Latest Balance Sheet”) or (ii) incurred in
the ordinary course of business since the date of the Latest Balance Sheet
consistent with past practices with unrelated third parties.   The Seller has no
indebtedness for borrowed money, other than the Excluded Liabilities.
 
 
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(m)           Customer Contracts.

(i)           Schedule 1.1(a)(i) contains a true, correct and complete list of
all Customer Contracts.

(ii)           The Seller has provided the Purchaser with true and correct
copies of all Customer Contracts, including all amendments, waivers and other
written modifications thereof and there are no oral agreements relating to the
Customer Contracts.  All of the Customer Contracts are in full force and effect
and are valid and enforceable in all respects in accordance with their terms and
no event has occurred or circumstance exists that would give any individual or
entity the right (with or without notice or lapse of time) to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, any such Customer Contract and Seller has
performed all its current obligations to be performed under the Customer
Contracts.
 
 
(iii)           Except as listed on Schedule 1.1(a)(i) by separate notation,
there are no pending renegotiations of any of the Customer Contracts.

(iv)           The Seller enjoys peaceful and undisturbed possession of all
leased personal or movable property under all such leases set forth, or required
to be set forth, on Schedule 1.1(a)(i) or Schedule 1.1(a)(ii), including but not
limited to the Equipment Leases, and all of such leases are valid and in full
force and effect and are enforceable against the Seller and against all other
parties thereto.  Neither the Seller nor any other party thereto is in default
under any of such leases and no event has occurred which with the giving of
notice or the passage of time or both could constitute a default under any of
such leases.

(v)           Assuming receipt of the Required Consents and except for certain
counterparties’ rights to terminate a Customer Contract on notice of assignment
as listed on Schedule 2.2(a)(i), no Customer Contract is subject to termination,
modification or acceleration as a result of the transactions contemplated by
this Agreement.

(vi)           No written notice of default has been given or received by Seller
or, to the knowledge of Seller, given by the applicable customer to a Customer
Contract but not yet received by Seller with respect to its Customer Contract.

(vii)           No customer to any Customer Contract is in monetary default or,
to the knowledge of Seller, in material non-monetary default under its
applicable Customer Contract.

(viii)           Except as set forth on Schedule 3.1(m)(viii), no customer to
any Customer Contract has deposited or paid for services for one (1) month or
more in advance.

(n)           The financial statements, including but not limited to the Latest
Balance Sheet, submitted by the Seller to the Purchaser (collectively, the
“Financial Statements”) have been prepared in accordance with the Seller’s books
and records and with GAAP, consistently applied throughout the periods
indicated, and fairly and accurately present the financial position of the
Seller, including but not limited to disclosure of all material liabilities,
direct or contingent, of the Seller required to be disclosed by GAAP, as of the
date of the Latest Balance Sheet, and the results of its operations for the
respective periods then ended, subject, in the case of the unaudited Financial
Statements, to normal year-end adjustments and the absence of footnotes required
by GAAP.
 
 
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(o)           Books and Records; Accuracy of Information Provided.  The Seller’s
books and records accurately and completely reflect its assets and
liabilities.  The Seller maintains internal accounting controls that are
sufficient to provide reasonable assurance that: (i) transactions are executed
only in accordance with management’s authorization; (ii) transactions are
recorded as necessary to permit preparation of the financial statements of the
Seller in accordance with GAAP and to maintain accountability for the assets and
liabilities of the Seller; (iii) receipts and expenditures of the Seller are
executed only in accordance with management’s authorization; (iv) unauthorized
acquisition, disposition or use of assets is prevented or timely detected; and
(v) accounts, notes and other receivables are recorded accurately, and proper
and adequate procedures are implemented to effect the collection thereof on a
current and timely basis.  There are no weaknesses in the design or operation of
such internal accounting controls that will adversely affect the ability of the
Seller to initiate, record, process and report financial data. The Seller has
provided complete, accurate and correct copies of all documentation requested by
Purchaser in connection with the transactions contemplated hereunder, including
but not limited to the Financial Statements, books of account and other records
of the Seller.

(p)           Disclosure.  All material facts relating to the Business have been
disclosed to the Purchaser in or in connection with this Agreement.  No
representation, warranty or statement concerning the Seller, Assets, Business or
Assumed Liabilities set forth in this Agreement or in any written statement or
certificate furnished to the Purchaser pursuant to the transactions contemplated
hereby, contains any untrue statement of a material fact or, when taken
together, omits to state a material fact necessary to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading.

(q)           Affiliate Transactions.  Except as listed on Schedule 3.1(q), no
officer, manager, member, director, employee or affiliate of the Seller or any
entity in which any such entity or individual is an officer, director, manager
or the owner of five percent (5%) or more of the beneficial ownership interests,
is a party to any contract (written or oral) with the Seller or has any
interests in any property used in the Business or has any claim or right against
the Seller, other than, with respect to officers, directors and managers,
relating to their employment by the Seller, and with respect to members,
relating to their respective membership interests in the Seller.  Each affiliate
transaction, if any, was effected on terms equivalent to those which would have
been established in an arm’s-length negotiation.  None of the Seller or any of
its affiliates has any direct or indirect interest in any competitor of the
Seller, except for passive ownership of less than five percent (5%) of the
outstanding capital stock of any competing business that is publicly traded on
any recognized exchange or in the over-the-counter market.

(r)           Securities Act Acknowledgements, Representations, Warranties and
Covenants.

(i)           Acknowledgments.  The Seller agrees and acknowledges that: (1) no
federal or state agency has made any finding or determination as to the fairness
of the distribution of the Shares for investment, or any recommendation or
endorsement of the Shares; (2) the Shares have not been registered under the
Securities Act of 1933, as amended (the “Act”), or the securities acts of any
state and, as a result, the Seller must bear the economic risk of the investment
indefinitely because the Shares may not be sold unless subsequently registered
under the Act and the securities laws of any appropriate states or an exemption
from such registration is available, and that such registration under the Act
and the securities laws of any such states is unlikely at any time in the
future; (3) the Parent does not have any present intention and is under no
obligation to register the Shares, whether upon initial issuance or upon any
transfer thereof under the Act and applicable state securities laws, and Rule
144 and/or Rule 145 may not be available as a basis for exemption from
registration; and (4) unless and until registered under the Act, all
certificates evidencing the Shares, whether upon initial issuance or upon any
transfer thereof, will bear a legend, prominently stamped or printed thereon,
reading substantially as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS.”
 
 
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(ii)           Representations, Warranties and Covenants.  (1) The Shares are
being acquired for the Seller’s own account for investment and not for
distribution or resale to others and the Seller will not sell or otherwise
transfer the Shares, whether by dividend or other distribution or upon
liquidation or dissolution or otherwise, unless they are registered under the
Act and the securities acts of any appropriate state or unless an exemption from
such registration is available and the Parent is satisfied that such exemption
is available; (2) the acquisition of the Shares by the Seller hereunder is
consistent with its general investment objectives and the Seller understands
that the acquisition of the Shares is a speculative investment involving a high
degree of risk, including the risk of total loss of such investment, and there
is now no established market for the Parent’s capital stock and there is no
assurance that any public market for such stock will develop; (3) the Seller has
adequate means of providing for its current needs and possible personal
contingencies and it has no need for liquidity in this investment and can bear
the risk of losing its entire investment in the Shares; (4) the Parent  has made
available to the Seller at a reasonable time prior to its investment the
opportunity to ask questions and receive answers concerning the Shares and to
obtain any additional information which the Parent possesses or can acquire
without unreasonable effort or expense that is necessary in connection with the
investment but the Seller agrees and acknowledges, however, that it has relied
solely upon this Agreement and its own independent investigation in making the
decision to invest in the Shares; (5) the Seller understands that the
distribution of the Shares is limited solely to “accredited investors,” as that
term is defined under Regulation D of the Securities Act and the Seller is an
“accredited investor” (as so defined); (6) the Seller is a sophisticated
investor and has such knowledge and experience in financial and business matters
that it is capable of understanding the merits and risks inherent in the
proposed acquisition of the Shares; (7) the Seller is acquiring the Shares
without having been furnished any specific offering literature or prospectus but
has relied generally upon information filed by Parent with the Securities and
Exchange Commission and acknowledges that no representations or warranties have
been made to the Seller or its representatives by the Parent or the Purchaser,
or any officer, employee, agent or affiliate of the Parent or the Purchaser
other than as contained in this Agreement and the Seller must independently seek
advice from its own tax and other advisor(s) and is not relying on any tax or
other advice received from the Parent or the Purchaser in connection with the
transactions contemplated by this Agreement; and (8) the Seller has neither
relied upon nor seen any form of advertising or general solicitation in
connection with the distribution of the Shares.

(s)           Accounts Receivable.  The accounts receivable of the Seller that
comprise part of the Assets being acquired hereunder (i) represent valid and
bona fide claims of the Seller against the account debtors associated with such
receivables, (ii) have arisen in the ordinary course of the Business, and (iii)
have not been and are not subject to set-off, counterclaim or any future
performance obligation on the part of the Seller.
 
(t)           Accounts Payable.  The accounts payable of the Seller (both those
accounts that comprise part of the Assumed Liabilities being assumed hereunder
and the accounts payable that are being paid by Seller post-Closing pursuant to
Section 5.9) represent vendors of the Seller that will continue to extend credit
to the Purchaser until at least the one (1) year anniversary of the Closing Date
so long as the Purchaser pays such vendors on a schedule of payments no more
frequently than Seller paid such vendors within the ninety (90) days period
prior to the Closing Date.
 
Section 3.2.   Survival.  Notwithstanding any investigation made by Purchaser or
any representative thereof with respect to the subject matter of any
representation or warranty of Seller, all of the representations and warranties
set forth in Section 3.1, as updated by the certificate of Seller to be
delivered to Purchaser at Closing in accordance with Section 6.2(a)(ii), hereof
shall survive the consummation of any and all transactions contemplated hereby
for a period of fifteen (15) months from and after the Closing Date.
 
 
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Section 4.1.    Purchaser hereby represents and warrants to Seller that:

(a)           Corporate Status.  Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.  Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada.

(b)           Authorization of Agreement.  Purchaser has all requisite power and
authority to enter into, execute and deliver this Agreement, fulfill its
obligations hereunder and consummate the transactions contemplated hereby; such
execution and delivery, performance of obligations and consummation of the
transactions have been duly authorized and approved by all requisite corporate
action by or in respect of Purchaser; and this Agreement constitutes the legal,
valid and binding obligation of Purchaser enforceable in accordance with its
terms.   Parent has all requisite power and authority to fulfill its obligations
in distributing the Shares hereunder; such performance of obligations have been
duly authorized and approved by all requisite corporate action by or in respect
of Parent.

Section 4.2.   Survival.  Notwithstanding any investigation made by Seller or
any representative thereof with respect to the subject matter of any
representation or warranty of Purchaser, all of the representations and
warranties set forth in Section 4.1, as updated by the certificate of Purchaser
to be delivered to Seller at Closing in accordance with Section 6.2(b)(i)
hereof, shall survive the consummation of any and all transactions contemplated
hereby for a period of fifteen (15) months from and after the Closing Date.

ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES

Section 5.1.   Ordinary Course.  Prior to the Closing, Seller covenants that it
has not in the past one (1) year nor shall it enter into any transaction or take
any other action with respect to the Assets other than in the ordinary course of
business consistent with past custom and practice of the Business and of other
businesses similar to the Business.

Section 5.2.   Regulatory and Other Authorizations. Purchaser shall obtain or
make, and/or shall cooperate fully in obtaining or making, all governmental,
regulatory and third-party approvals, orders, qualifications, waivers, consents,
filings, authorizations, certifications or other actions necessary in order to
consummate the transactions contemplated hereby.  The parties shall not take any
action that will have the effect of delaying, impairing or impeding the receipt
of any of the foregoing and will use all reasonable efforts to secure the same
as promptly as possible.  Seller shall obtain all Required Consents and prepare
all notices of assignment necessary to inform the counterparties of the Customer
Contracts (and other Assets where such notice may be required, including but not
limited to the Equipment Leases).  The forms used to obtain consent and provide
notice of assignment shall be subject to Purchaser’s prior approval (not to be
unreasonably withheld, conditioned or delayed).  Seller shall also provide
Purchaser, in response to Purchaser’s request from time to time, with regular
updates as to the status of the Required Consents and delivery of required
notices.  Seller agrees to use its commercially reasonable efforts to obtain any
Required Consent, including but not limited to individual additional contact
with such counterparty via telephone, email and/or additional mailings.  These
efforts to obtain Required Consents and provide required notices shall not be
part of the Transition Services (as hereinafter defined) and shall be provided
as part of the Seller’s obligations hereunder without any additional cost or
expense except for the payment of the Purchase Price.
 
 
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Section 5.3.   Indemnification. Purchaser hereby indemnifies and holds harmless
Seller, its officers, directors, shareholders, agents and representatives from
and against any damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs or expenses, whether accrued, absolute, contingent or otherwise
including but not limited to court costs and reasonable attorneys’ fees
(“Losses”), which any of the foregoing may incur or to which any of the
foregoing may be subjected, arising out of or otherwise based on (i) any
misrepresentation or breach of warranty or representation by Purchaser or any
breach or default by Purchaser under any of the covenants or other provisions of
this Agreement or (ii) circumstances occurring with respect to the Assets on and
after the Closing Date. Seller hereby indemnifies and holds harmless Purchaser,
its officers, directors, shareholders, agents and representatives from and
against any Losses, which any of the foregoing may incur or to which any of the
foregoing may be subjected, arising out of or otherwise based on (x) any
misrepresentation or breach of warranty or representation by Seller or any
breach or default by Seller under any of the covenants or other provisions of
this Agreement or (y) circumstances occurring with respect to the Assets prior
to the Closing Date.  Regardless of the theory of recovery upon which a claim is
made, Seller shall not be responsible to provide indemnification in an amount
that exceeds the amount of the Purchase Price actually received by Seller under
this Agreement.  In the event of any claim for indemnification hereunder, the
indemnified party shall give the indemnifying party notice of the alleged Loss
and sixty (60) days to cure the circumstances giving rise to such alleged Loss
before initiating any action, litigation or other proceeding.  The obligations
of this Section 5.3 shall survive for a period of one (1) year from and after
the Closing Date.

Section 5.4.   Employment Agreement.  Briggs shall enter into an employment
agreement with the Purchaser for a term of three (3) years, in the form attached
hereto as Exhibit E, such agreement to become effective as of the Closing (the
“Employment Agreement”).

Section 5.5.   Purchaser’s Board of Directors.   Purchaser shall arrange for the
election of Putterman to Parent’s Board of Directors for a period of one (1)
year from the Closing Date, continuing thereafter until such time as the
Purchase Price is paid in full and, in such position, Putterman shall be
entitled to all of the benefits and compensation, if any, granted to all other
Board members based on their Board membership.

Section 5.6.   Transition Services.  Commencing on the Closing Date and for up
to ninety (90) days after Closing, Seller shall cause Putterman to be available
to provide Purchaser with management and transition services, including but not
limited to customer care, billing, collection and trouble reporting regarding
the Assets and facilitating the smooth transition of the Business to Purchaser
(collectively, the “Transition Services”).   Engaging Putterman for such
Transition Services, if at all, is subject to the sole discretion of
Purchaser.  In the event Purchaser requests such services, Putterman shall be
paid a fee of One Hundred Seventy Five Dollars ($175.00) per hour as an
independent contractor and not as an employee or agent of the Purchaser and such
reasonable out-of-pocket expenses that shall be approved in advance by Purchaser
and sufficiently documented by Putterman (which expenses shall be reimbursed in
accordance with Purchaser’s applicable policies and procedures).  As an
independent contractor, Putterman shall be solely responsible for the
withholding and payment of all federal, state and local income, social security,
payroll, unemployment or other taxes and charges required to be made by him in
accordance with applicable law in connection with the rendering of any
Transition Services.  The Transition Services are to be provided based upon the
needs and desires of the Purchaser but are expected to be provided for no more
than three (3) days per week for a period of twenty-six (26) weeks following the
Closing Date.

Section 5.7.   Notification Letters; Press Release.  Within ten (10) days after
the Closing Date, Purchaser and Seller shall send each of the customers of the
Seller and counterparties to each of the contracts included in the Assets a
joint notification letter in a mutually agreeable form.  No later than the
execution and delivery of this Agreement, the Purchaser and Seller shall
mutually agree on a joint initial press release concerning this Agreement and
the transactions contemplated hereby, which shall be disseminated as promptly as
reasonably practicable after the Closing Date.
 
 
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Section 5.8.   Name Change.    Within one (1) business day after the Closing
Date, the Seller will file with the Delaware Secretary of State an amendment to
the Seller’s Certificate of Formation  (and with any other jurisdictions where
Seller is registered to do business under the name “SafeData”), changing the
Seller’s name from SafeData, LLC to another name that is not confusingly similar
to the name “SafeData” and promptly shall change all company documentation such
as its operating agreement to reflect the new name.

Section 5.9.   Payment of Certain Aged Accounts Payable.    The accounts payable
of the Seller that comprise part of the Excluded Liabilities shall be paid in
full within seven (7) days of the Closing Date, and Seller shall promptly
provide Purchaser with evidence of such payments as Purchaser may reasonably
require from time to time.

Section 5.10.   Tangible Assets.    All equipment, hardware and software
constituting Tangible Assets (including but not limited to such Tangible Assets
on-site at Seller’s premises or maintained off-site and those in Seller’s data
centers and currently used for Seller’s service offerings as well as for its
operations) shall remain within normal primary vendor product life cycles for no
less than one (1) year from the Closing Date and Seller promptly shall replace
any such Tangible Assets that fail to meet this requirement.  Seller shall have
provided Purchaser with “End of Support/End of Life (EOS/EOL)” notifications
(stating when such Tangible Assets shall no longer have “general availability”)
and the “normal” life cycle process relating to all equipment, hardware and
software constituting Tangible Assets from the vendors from which such Tangible
Assets were purchased or leased.  For example, vendors may state that the normal
life cycle of a particular piece of hardware purchased in year 1 is no longer
offered for sale (i.e., no longer generally available) in year 3 with such
hardware’s EOL occurring in year 5 and thereafter such vendor would only provide
a maximum of six (6) months of solely service support, as opposed to replacement
(i.e., its EOS is at the expiration of such six (6) month period).  Seller also
shall have provided adequate information regarding recommendations, costs and
alternatives to transition the Tangible Assets once they are subject to the
EOS/EOL point in their usage.

Section 5.11.   Non-Compete Agreements.    The Assets include all of Seller’s
right, title and interest in all of its agreements with its employees that
include non-competition covenants, whether styled “Invention Assignment and
Non-Competition Agreement” or otherwise.  Seller acknowledges that following
Closing it shall have no further rights under any such agreements, including but
not limited to any rights to enforce any non-competition covenants thereunder.

ARTICLE VI
CLOSING OF TRANSACTIONS

Section 6.1.                      The Closing.  The closing of the transactions
contemplated by this Agreement (the “Closing”) and all deliveries to be made at
such time shall take place on the date determined in accordance with this
Section (the “Closing Date”) at the offices of Kelley Drye & Warren LLP, 3050 K
Street, N.W., Suite 400, Washington, DC 20007 at 10:00 a.m., local time, or at
such other place, date or time as may be agreed in writing by Seller and
Purchaser.  Unless otherwise agreed, the Closing Date shall be June 17, 2010, to
be effective at 11:59 p.m. on June 15, 2010.

Section 6.2.                      Deliveries at Closing.

(a)           Deliveries by Seller.  At the Closing, Seller shall execute and
deliver to Purchaser:

(i)           Such documents conveying, transferring and assigning to Purchaser
all of the Assets, together with such information concerning the Assets so as to
give effect to the transactions contemplated by this Agreement;
 
 
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(ii)           An officer’s certificate certifying that all of Seller’s
representations and warranties contained herein are true, correct and complete
in all material respects as of the Closing Date, and that Seller has performed
all of its obligations hereunder;

(iii)           A bill of sale in the form attached hereto as Exhibit C and an
assignment and assumption agreement in the form attached hereto as Exhibit D;

(iv)           The Employment Agreement, executed by Briggs, in the form
attached hereto as Exhibit E;

(v)           Substantiation acceptable to Purchaser in its reasonable
discretion showing the Line of Credit Balance and cash balances in Seller’s
various checking and savings accounts as of the time of Closing; and

(vi)           Where appropriate, any other separate instruments of sale,
assignment or transfer, in form suitable for filing or recording with any
appropriate office or agency, where the same are necessary or desirable in order
to vest or evidence title thereto in Purchaser, including but not limited to any
further instruments or documents required to record any Intellectual Property
and evidence that any rights of Briggs, Putterman and/or any current or former
employee or consultant of the Seller or its predecessors in any Intellectual
Property have been assigned to the Seller.

At or after the Closing, at any time and from time to time, Seller shall also
execute and deliver, at Purchaser’s expense, such further instruments of
conveyance, sale, assignment or transfer, and shall take or cause to be taken
such other or further actions, as Purchaser may reasonably request, in order to
vest, confirm or evidence in Purchaser title to all or any part of the Assets,
including but not limited to the Intellectual Property.  Such efforts may
include but are not limited to any cooperation by Seller as may be reasonably
necessary to protect Purchaser’s rights in and to the Intellectual Property.  In
the event that Purchaser elects to seek patent protection for any portion of the
Assets that is capable of being patented, the Seller (and Seller shall cause
Briggs and/or Putterman, if necessary, to comply) agree to execute any
reasonably necessary documentation as inventors of such Intellectual Property,
including but not limited to any declarations or assignment of rights related
thereto.  The obligations of this Section 6.2(a) shall survive indefinitely the
Closing hereunder.

(b)           Deliveries by Purchaser.  At the Closing, Purchaser shall execute
and deliver to Seller:

(i)           An officer’s certificate certifying that all of Purchaser’s
representations and warranties contained herein are true, correct and complete
in all material respects as of the Closing Date, and that Purchaser has
performed all of its obligations hereunder;

(ii)           An assignment and assumption agreement in the form attached
hereto as Exhibit D;

(iii)           The Employment Agreement in the form attached hereto as Exhibit
E; and

(iv)           Where appropriate, any other separate instruments of sale,
assignment or transfer, in form suitable for filing or recording with any
appropriate office or agency, where the same are necessary or desirable in order
to vest or evidence title thereto in Purchaser and are required to be executed
by Purchaser.

Additionally, at the Closing, Purchaser shall deliver to Seller the portion of
the Purchase Price as required by Section 2.1 above and the Promissory Note as
required by Section 2.3 above.
 
 
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ARTICLE VII
GENERAL PROVISIONS

Section 7.1.   Notices.  Any notices, consents or other communications required
to be sent or given hereunder by the parties shall in every case be in writing
and shall be deemed properly served if and when (a) delivered by hand, (b)
transmitted by electronic mail or facsimile with confirmation of transmission,
(c) delivered by Federal Express or other express overnight delivery service, or
registered or certified mail, return receipt requested, or (d) an attempted
delivery by one of the means described in the foregoing clauses, to the parties
at the addresses as set forth below:

SELLER:
SafeData, LLC
250 Centerville Road, Building A
Warwick, RI  02886
Attention: Peter Briggs, President
Fax:  (401) 737-2099

with copies to:
Larry Putterman
27 South Fifth Street
P.O. Box 211
Lewisburg, PA  17837

and

McNees Wallace & Nurick LLC
100 Pine Street
Harrisburg, PA 17108-1166
Attention: Michael L. Hund, Esq.
Fax:  (717) 237-5300

PURCHASER:
Data Storage Corporation
401 Franklin Ave. Suite 103
Garden City, NY 11530
Attention: Charles M. Piluso, President
Fax:  (212) 202-7966

with a copy to:
Kelley Drye & Warren LLP
3050 K Street, N.W., Suite 400
Washington, DC 20007
Attention:  Joseph B. Hoffman, Esq.
Fax:  (202) 342-8451
 
 
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or addressed to such other single address in the United States of a party as
such party may specify to the others by notice in writing given as provided in
this Section 7.1.  Date of service of such notice shall be (i) the date such
notice is delivered (or refused) by hand, (ii) on confirmed delivery by
electronic mail or facsimile (with a hard copy provided promptly thereafter by
hand delivery, express overnight service or certified or registered mail), (iii)
the next business day following the deposit of notice with an express overnight
delivery service, or (iv) three (3) days after the date of mailing if sent by
certified or registered mail.

Section 7.2.   Entire Agreement; Amendment; Waiver.  This Agreement, the
schedules and exhibits hereto, the agreements expressly referred to herein and
any agreement making specific reference to this Agreement embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter herein contained, and supersede all prior agreements and understandings
relative to the subject matter hereof. This Agreement may not be changed,
modified, terminated or discharged, in whole or in part (other than in
accordance with the respective terms hereof), except by a writing executed by
the parties hereto.  No waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented to such waiver.

Section 7.3.   Binding Effect.  This Agreement and the various rights and
obligations arising hereunder shall be binding on and inure to the benefit of
Seller and Purchaser and their respective transferees, successors and permitted
assigns; for purposes hereof, Purchaser shall be entitled to assign this
Agreement to a wholly-owned subsidiary prior to Closing hereunder without
Seller’s consent (but with written notice to Seller), provided that Purchaser
shall remain primarily liable hereunder.  Except as provided otherwise in the
immediately preceding sentence, nothing herein, express or implied, is intended
or shall be construed to confer on or to give to any person, corporation, firm
or legal entity other than the parties hereto, any rights, remedies or other
benefit, and neither this Agreement nor any right, title and interest herein of
either party shall be assignable (by operation of law or otherwise) except with
the prior written consent of the other party.

Section 7.4.   Governing Law.  This Agreement and any dispute arising hereunder
shall in all respects be construed in accordance with and governed by the laws
of the State of New York, without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York to be applied.  The parties agree that any action arising out
of this Agreement shall be venued in the federal, state or local courts located
in, or otherwise having jurisdiction over New York County, New York, and the
parties hereby consent to personal jurisdiction in such courts and waive any
objection based on Forum Non Conveniens and any objection to jurisdiction or
venue of any action instituted hereunder.

Section 7.5.   Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

Section 7.6.   Captions.  The captions in this Agreement are included for
purposes of convenience only and shall not be considered a part of this
Agreement in construing or interpreting any provision hereof.

Section 7.7.   Invalidity.  The invalidity or unenforceability of any term or
provision of this Agreement, or the application of such term or provision to any
person or circumstance, shall not impair or affect the remainder of this
Agreement and its application to other persons and circumstances, and the
remaining terms and provisions hereof shall not be invalidated but shall remain
in full force and effect.
 
 
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Section 7.8.   Gender and Number.  Whenever the context requires, words used in
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be deemed to mean or include any other gender
or genders.

Section 7.9.   Expenses.  Each of the parties shall bear its own respective
expenses, fees and commissions incurred in connection with the preparation,
negotiation and execution of this Agreement and consummation of the transactions
contemplated hereby.  Except for Seller’s broker, RLS Associates (“Seller’s
Broker”), each of the parties represents and warrants to the other that no
broker, agent or other person acting on their behalf is or will be entitled to a
fee, commission or other payment as a result of or arising out of this Agreement
or the transaction contemplated hereby, and each party shall indemnify and hold
harmless the other from any claim for commission and any other claims, fees and
expenses arising from or out of any breach of the foregoing representation and
warranty.  Seller agrees to be responsible for the payment of any commission
owed to the Seller’s Broker in accordance with the terms of a separate
commission agreement(s) entered into between Seller and the Seller’s
Broker.  The indemnity obligations of this Section 7.9 shall survive the Closing
hereunder.

Section 7.10.   Disclosure.  Except as permitted by Section 5.7 above, neither
party shall make any press release or other public announcement or communication
concerning the terms and conditions of this Agreement unless specifically
approved in advance by the Seller. The parties will keep confidential, not
disclose and not use for their own benefit (and will cause their affiliates to
keep confidential, not disclose, and not use for their own benefit) any
confidential and proprietary information obtained with respect to the other
party or its business except for the purpose of performing under this
Agreement.  The confidentiality obligation set forth in this Agreement shall not
apply to (a) information which is in the public domain on the date hereof,
enters the public domain after the date hereof (other than by reason of the
breach of such obligation), was known by a receiving party or its affiliates
prior to its receipt, is independently developed by the receiving party or its
affiliates after the date hereof, or provided by a third party not in violation
of the proprietary or other rights of the disclosing party or (b) the disclosure
of the information (including the existence of this Agreement and the terms and
conditions hereof) is required by law, rule, regulation, regulatory inquiry or
other judicial or administrative process.  The provisions of this Section 7.10
are in addition to, and in no way limit or waive, any of the provisions of that
certain Mutual Non-Disclosure Agreement between the parties (the “NDA”).   In
the event of a conflict between this Agreement and the NDA, this Agreement shall
control.

[SIGNATURE PAGE TO FOLLOW]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
the day and year first above written.

SELLER:                                                                           PURCHASER:

SAFEDATA,
LLC                                                                           DATA
STORAGE CORPORATION
 

 

 By:       By:         Name:    Peter Briggs        Name:    Charles M. Piluso  
 Its:         President       Its:          President

 

 

[Signature Page for Asset Purchase  Agreement]
 
 
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SCHEDULE 1.1(a)(i)

Assets

See also Schedule 2.2(a)(ii).
 
 
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SCHEDULE 1.1(a)(ii)

Assumed Liabilities
 
 
 
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SCHEDULE 2.2(a)(i)

Assignment Contingency Contracts
 
 
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SCHEDULE 2.2(a)(ii)

Renewal Contracts
 
 
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SCHEDULE 3.1(k)

Intellectual Property
 
 
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SCHEDULE 3.1(m)(viii)

Customer Contracts with Deposits or Pre-payments of One (1) Month or More
 
 
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SCHEDULE 3.1(q)

Affiliate Transactions
 
 
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EXHIBIT A

Promissory Note
 
 
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EXHIBIT B

INTENTIONALLY DELETED
 
 
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EXHIBIT C

Bill of Sale
 
 
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EXHIBIT D

Assignment and Assumption Agreement
 
 
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EXHIBIT E

Employment Agreement

31