Exhibit 10.1


 


ASSET PURCHASE AGREEMENT


 


ASSET PURCHASE AGREEMENT
dated as of the 25th day of October, 2016, by and among Data Storage Corporation Inc., a Delaware corporation with offices located
at 68 South Service Road, Suite 100, Melville, New York 11747 (“Purchaser”) and Data Storage Corporation, a
Nevada corporation a (“DTST”), on one hand, and Harold Schwartz and Thomas Kempster (each, a “Stockholder,”
and collectively, the “Stockholders”), and ABC Services Inc., a New York corporation with offices located at
48 South Service Road, Suite LL90, Melville, New York 11747 (“Seller”), on the other hand.


 


WITNESSETH:


 


WHEREAS, Seller is
engaged in the business of providing clients with technical managed services, IBM Power I and Intel cloud based infrastructure,
equipment sales and services (the “Business”); and


 


WHEREAS, Stockholders
own all of the issued and outstanding capital stock of Seller; and


 


WHEREAS, Purchaser
is the wholly owned subsidiary of DTST;


 


WHEREAS, Purchaser
desires to purchase from Seller, and Seller desire to sell to Purchaser, all of the assets of Seller in consideration of shares
of common stock of DTST pursuant to Section 4(2) under the Securities Act of 1933, as amended;


 


WHEREAS, Seller and
Stockholders agree, in connection with the sale of the assets by Seller as contemplated by this Agreement, to enter into a covenant
not to compete and a non-disclosure and non-solicitation covenant; and


 


WHEREAS, capitalized
terms shall have the respective meanings set forth in Paragraph 9 of this Agreement;


 


NOW, THEREFORE, in
consideration of the mutual promises and covenants hereinafter contained, the parties to this Agreement hereby agree as follows:


 


A.          Terms
of the Asset Purchase.


 


1.  
        Sale of Assets. Seller shall sell, transfer, assign and convey to
Purchaser, the Assets, and enter into the Covenants, for which Purchaser shall pay the Purchase Price.


 




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2.     
     Assets. Subject to the terms and conditions of this Agreement and upon the
representations, warranties, covenants and agreements made in this Agreement by the parties, Seller shall validly sell,
transfer, assign, convey and deliver to Purchaser at the Closing and Purchaser shall purchase from Seller, free from all
Claims, all of the property and assets of Seller of every kind and wherever situated which are owned as of the date of this
Agreement or are acquired between the date of this Agreement and the Closing Date by Seller or in which it has any right or
interest (collectively, the “Assets”). The Assets include, but are not limited to:


 


a)          All
tangible assets of every kind and wherever situated (including, without limitation, all furniture, fixtures, computers and computer
equipment, office equipment, leasehold improvements and supplies on hand), which are owned as of the date of this Agreement or
are acquired between the date of this Agreement and the Closing Date by Seller or in which Seller has any right or interest, including,
but not limited to the assets listed on Exhibit A to this Agreement, which such Exhibit A shall include all tangible assets
located at the Premises (as defined below). Exhibit A shall be finalized within 90 days of the Closing Date;


 


b)          All
rights to the names “ABC Services”and all other names, trade names, trademarks, service marks and trade marks, whether
or not any of the foregoing are registered with the United States Patent and Trademark Office, and all other intellectual property
including, but not limited to, franchises, licenses, databases, "URL's" and Internet domain names and applications therefor
(and all interest therein), computer programs and other computer software, user interfaces, know-how, trade secrets, customer lists,
proprietary technology, processes and formulae, source code, object code, algorithms, architecture, structure, display screens,
layouts, development tools, instructions, templates, marketing materials, inventions, trade dress, logos and designs and all documentation
and media constituting, describing or relating to the foregoing (collectively, “Intellectual Property Rights”)
which are owned by Seller as of the date of this Agreement or are acquired between the date of this Agreement and the Closing Date
by Seller or in which Seller has any right or interest or are used by Seller in the conduct of the Seller’s business, including,
without limitation, the Intellectual Property Rights listed on Exhibit B to this Agreement;


 


c)          All
contracts and agreements (the “Service Agreements”) with Seller’s clients, which are listed on Exhibit
C to this Agreement. Exhibit C shall be finalized by the parties within ninety (90) days of the closing date;


 




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d)          The
lease of the premises (the “Premises”) located at 48 South Service Road, Suite LL90, Melville, New York 11747,
which are presently used by Seller as office space for Seller (the “Office Lease”);


 


e)          All
client and prospective client data bases and all ancillary documentation related to any of the foregoing, which are owned as of
the date of this Agreement or are acquired between the date of this Agreement and the Closing Date by Seller or in which Seller
has any right or interest;


 


f)      
   All rights under any Contracts (whether written or oral), other than Service Agreements, licenses any and
all intangible and intellectual property of all kinds, rights under warranties relating to the Assets and any other assets of
any kind and description located at the Premises, which are listed on Exhibit D to this Agreement;


 


g)         All
Permits and rights under all Permits (to the extent that they are assignable under applicable law), which are owned as of the date
of this Agreement or are acquired between the date of this Agreement and the Closing Date (as defined herein) by Sellers or in
which Sellers or either Seller has any right or interest, which are listed on Exhibit E to this Agreement;


 


h)          All
cash on hand and cash equivalents;


 


i)         
All securities held by the Seller including, but not limited to, its 50% joint membership interest in Secure Infrastructure
& Services LLC; and


 


j)         
All account receivables.


 




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3.     
     Consideration.


 


a)          The
purchase price (the “Purchase Price”) for the Assets and the Covenants shall, subject to the terms, conditions
and adjustments set forth in this Agreement, be 32,334,968 shares of common stock (the "DTST Shares"), $0.001
par value per share of DTST; provided, however, as of the Closing Date, in no event shall the Seller, the Stockholders,
ABC Services II, Inc. or any affiliate of these parties together own in excess of, or less than, 50% of the outstanding shares
of common stock of DTST as a result of the shares of common stock received pursuant to this Agreement, that certain Asset Purchase
Agreement entered with ABC Services II, Inc. or in connection with any other agreement. Further, that in the event that Seller's
audit for the fiscal year ended December 31, 2015 provide that Seller has generated less than $2,000,000 in revenue then the DTST
Shares shall be reduced by the proportionate amount of such shortfall. For example, if the Purchase Price is represented by 32,334,968
DTST Shares and Seller's 2015 revenue as set forth in the audited financial statements is $1,500,000 representing a 25% shortfall,
then the DTST Shares will be reduced to 24,251,226 representing a 25% reduction. There will be no adjustment if the revenue shortfall
is less than $300,000 for the year ended December 31, 2015.


 


b)          In
the event that the holder of Series A Preferred Stock of DTST receives a dividend in accordance with the rights and privileges
associated with such Series A Preferred Stock, Stockholders shall receive a cash amount equal to such dividend distribution paid
to such Series A Preferred Stock holder, which shall be evenly distributed among Thomas Kempster and Harold Schwartz.


 


4.     
     Obligations of Seller Concerning Obligations Not Assumed.


 


a)          Purchaser
shall assume the liabilities and obligations of the Seller which shall generally include payments due under the Office Lease, general
business and office expenses, Service Agreements, equipment leases, vendor invoices not entered into Seller's accounting system
as of October 14, 2016, vendor accounts payable not entered into Seller's accounting system as of October 14, 2016, unpaid Stockholders
expenses incurred in the ordinary course of business, employee expenses of October 14, 2016, $55,000.00 representing the outstanding
principal balance of that certain bank credit line provided by The Bank of New York to Seller and all other expenses inherent in
running the Seller’s business (collectively, the "Assumed Liabilities"). Purchaser will not assume or in any way
be liable or responsible for, and Seller shall retain all of the liabilities of Seller other than the Assumed Liabilities (the
“Excluded Liabilities”), which such Excluded Liabilities shall include, but not limited to any expenses for
litigation resulting from or in connection with (a) the gross negligence of Stockholders in the operation of the Business of Seller
or (b) the Stockholders willful engagement in illegal conduct, gross misconduct or fraud in the operation of the Business of Seller.


 




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b)          


 


5.      
    Purchase Price Allocation. The Purchase Price of the Assets and the Covenants shall be
allocated among the Assets and the Covenants in a manner determined in good faith by Purchaser, and such determination shall
be binding on Seller and Purchaser; provided, however that the amount allocated to the Covenants shall be the equivalent of
five thousand dollars ($5,000) for the Covenant of each of Seller and each Stockholder. The determination shall be made as
soon as practical after the Closing, and Purchaser shall advise Seller in writing of the allocation.


 


6.      
    Pre-Closing; Closing. At the close of business on the day before the Closing Date,
representatives of Sellers and Purchaser shall inspect the Assets and confirm their presence and good condition at the
Premises. Following such determination, the Premises shall be secured in a manner reasonably acceptable to Seller and
Purchaser. The purchase and sale contemplated by this Agreement shall take place at a closing (the
“Closing”) to be held at the offices of the Purchaser or such other place as shall be determined by Seller
and Purchaser on such date (the “Closing Date”) not later than October 25, 2016, as the parties
may determine. The parties will use their best efforts to schedule the Closing Date for the business day following the last
day of a payroll period for Seller.


 


B.          Representations
and Warranties of Seller and Stockholders. Seller and Stockholders, jointly and severally, hereby represents and warrants
to Purchaser, as follows, except as stated with respect to a specific representation or warranty in a disclosure letter dated the
date of this Agreement, delivered by Seller to Purchaser simultaneously with the execution and delivery of this Agreement, which
specifically identifies the Paragraph of this Agreement with respect to which the information is provided (hereinafter called the
“Disclosure Letter”):


 




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1.     
     General.


 


a)          
Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New York, is qualified
to conduct business in each state in which the nature of its business or the properties owned or leased by Seller require qualification.
Seller has full corporate power and authority to carry on its business and to own or lease all of its properties and assets as
and in the places such business is now conducted. The Disclosure Letter identifies each state in which Seller conducts business
or owns or leases real property.


 


b)          Stockholders
and Seller have full power and authority to carry out the transactions provided for in this Agreement. All necessary action required
to be taken by Seller, including, without limitation, all necessary stockholder approval, relating to the execution and delivery
of this Agreement and the consummation of the transactions contemplated by this Agreement has been duly and validly taken, and
this Agreement constitutes the legal, valid and binding obligation of Stockholders and Seller, enforceable in accordance with its
terms. Except for the consent of the Landlord, no consent, approval or agreement of any person, party, court, governmental authority,
or entity is required to be obtained by Stockholders or Seller in connection with the execution and performance by them of their
respective obligations under this Agreement.


 


c)          Stockholders
own all of the issued and outstanding capital stock of Seller, and no other person has any direct or indirect record or beneficial
equity interest in Seller or any option, warrant or right to acquire, pursuant to any agreement or convertible debt or other security,
any shares of any class or series of capital stock of Seller or any interest in any such stock, regardless of whether such right
was granted by Seller or either Stockholder.


 


d)          Neither
Seller nor either Stockholder is insolvent, and no Stockholder is subject to any disability or impairment. Neither the execution
of this Agreement nor the performance of its terms will render Seller or either Stockholder insolvent.


 


e)          No
Stockholder is engaged directly or indirectly in the Business, whether conducted by Seller or otherwise, except as a stockholder
and/or executive officer of Seller.


 




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2.      
    Financial.


 


a)          Seller
has provided Purchaser and Purchaser’s representatives full and complete access to Seller’s financials, books and records.
In addition, Seller has provided Purchaser with a Financial Review dated September 14, 2016 (collectively, the “Financial
Statements”) which has have been delivered to Purchaser as part of the Disclosure Letter. The Financial Statements are
in accordance with all books, records and accounts of Seller, are true, correct and complete and have been prepared in accordance
with generally accepted accounting principles, consistently applied. The Financial Statements are unaudited. The Financial Statements
present fairly the financial position of Seller as of the date thereof, reflect all liabilities, contingent or otherwise, of Seller
of the type required to be reflected on corporate balance sheets prepared in accordance with generally accepted accounting principles
as at such dates, and fairly present the results of Seller’s operations, changes in stockholders’ equity and cash flows
for the periods covered.


 


b)          At
the close of business on September 30, 2016, Seller did not have any liabilities, absolute or contingent, of the type required
to be reflected on balance sheets prepared in accordance with generally accepted accounting principles which are not fully reflected,
reserved against or disclosed in the Financial Statements. Seller has not guaranteed or assumed or incurred any obligation with
respect to any debt or obligations of any person, corporation, partnership, limited liability company or other entity, except endorsements
made in the ordinary course of business in connection with the deposit of items for collection. Seller has no debts, contracts,
guaranty, standby, indemnity or hold harmless commitments, liabilities or obligations of any kind, character or description, whether
accrued, absolute, contingent or otherwise, or due or to become due except:


 


(1)         to
the extent set forth or noted in the Financial Statements, and not heretofore paid or discharged;


 


(2)         to
the extent specifically disclosed in the Disclosure Letter; and


 


(3)         those
incurred in or as a result of the ordinary course of Seller’s normal and regular business since the date of the balance sheet,
all of which have been or will be consistent with past practices.


 




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c)          The
Disclosure Letter sets forth a true, correct and complete schedule of accounts receivables on an aging basis as of the date of
this Agreement. All of the accounts receivable on the date of this Agreement are, and all accounts receivable outstanding on the
Closing Date will be, bona fide accounts receivable which arose from the performance of services in the normal course of business
and are at standard rates and terms.


 


d)          Seller
has filed all Federal, state, county and local income, excise, profits, franchise, property, sales, use, occupancy, value-added
and other tax returns, reports and forms required by law to be filed by it and such returns, reports and forms are true and correct.


 


e)          Since
September 30, 2016, there has not been:


 


(1)         any
material adverse change in the condition (financial or otherwise), assets, liabilities, earnings, business or prospects of Seller;


 


(2)         any
damage or destruction, whether covered by insurance or not, affecting the business, property or assets of Seller; or


 


(3)         any
increase in the compensation payable or to become payable by Seller to key salaried employees or agents, or any bonus paid or declared
or any increase in any insurance, pension or other benefit plan, payment or arrangement made to, for or with any of such officers,
key salaried employees or agents.


 


3.        
  Property.


 


a)          Seller
does not own and did not at any time since its organization own, any real property. Seller does not lease any real property except
for the Office Lease. Seller has legal and valid occupancy permits, and all other required Permits necessary and for the operation
of its business in the manner operated by Seller. All rental and other payments due under the Lease have been duly made (or, if
not made, will on the Closing Date be made), all acts required to be performed by Seller have been duly performed, and Seller enjoys
the unrestricted quiet possession of the Premises. No improvement, fixture or equipment in the Premises or properties, leased,
used or occupied by Seller nor the leasehold or occupation with respect thereto, is in violation of any Environmental, Health and
Safety Requirements or any zoning, building or other similar Laws, and all such premises and properties are zoned for the operation
of the Business.


 




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b)          Neither
Seller nor, to Seller’s or either Stockholder’s Best Knowledge, the landlord of the Premises is in default of its obligations
pursuant to the Office Lease, and there has occurred no event which, with the passage of time or the giving of notice, would result
in a default by Seller under the Office Lease.


 


c)          Seller
owns outright and has good and marketable title to all the Assets free and clear of all Claims, and Seller’s leasehold interest
under the Office Lease is not subject to any Claims. Seller has good and marketable title to all machinery, equipment, items of
personal property and other tangible and intangible assets used by it and to be transferred to Purchaser pursuant to this Agreement,
free and clear of any Claims of any nature whatsoever. All of the Assets are owned by Seller, except to the extent any such Assets
are leased assets. All such leased Assets are leased by Seller pursuant to valid lease agreements which are listed in the Disclosure
Letter, and neither Seller nor, to the Best Knowledge of Seller or either Stockholder, the lessor of such leases is in default
under any of such leases. No event has occurred which, with the passage of time or the giving of notice by a third party would
result in a default by Seller under any such lease. The Disclosure Letter shall set forth the term of each such lease, the rental
payments, additional rentals and impositions due, renewal or purchase options and other pertinent data.


 


d)          The
Office Lease and all other leases, Contracts and licenses to be assumed by Purchaser under this Agreement were made at arms’
length with non-affiliated persons, except as set forth in the Disclosure Letter.


 


e)          Except
for the Landlord’s consent pursuant to the Office Lease, all of Seller’s rights under leases of all of its real and
personal property and its Contracts may be transferred to Purchaser without the consent of any third party.


 


f)      
   Deleted.


 


g)     
   Seller and each of its predecessors and Affiliates has complied and is in compliance with all
Environmental, Health and Safety Requirements. Neither Seller nor any of its predecessors and Affiliates has treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled, or released, or dealt in any manner with any
Hazardous Materials, and never owned or leased any real property on which any of such activities were conducted. Neither the
Company nor any of its predecessors or Affiliates has, either expressly or by operation of Law, assumed or undertaken any
Liability, including, without limitation, any obligation with respect to corrective or remedial action, on its own behalf or
on behalf of any other Person, relating to Environmental, Health and Safety Requirements. No facts, events or conditions
relating to the past or present facilities, properties or operations of Seller or any of its predecessors and Affiliates will
prevent, hinder or limit continued compliance with Environmental, Health and Safety Requirements, give rise to any
investigatory, remedial or corrective obligations pursuant to Environmental, Health and Safety Requirements or give rise to
other Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), pursuant to Environmental, Health and
Safety Requirements.


 




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4.       
   Litigation. There are no claims, actions, suits, proceedings, inquiries, labor disputes or
investigations (whether or not purportedly on behalf of Seller) pending or, to the Seller’s or either
Stockholder’s Best Knowledge, threatened against Seller or any of the Assets, at law or in equity or by or before any
Governmental Entity or in arbitration or mediation, nor is there any basis for any such action or proceeding. Neither Seller
nor Seller’s assets are subject to, and Seller is not in default with respect to, any Orders that could materially and
adversely affect it or would interfere with the transactions contemplated by this Agreement. Except as set forth in the
Disclosure Letter, Seller and Seller’s assets are not subject to, nor is Seller or either Stockholder in default with
respect to, any Order, Claim or governmental restriction that could materially and adversely affect its financial condition,
business, assets or prospects or that would interfere with the transactions contemplated by this Agreement.


 


5.       
   Compliance with Laws. Seller is in full compliance with all Laws applicable to its business
(including, without limitation, with respect to zoning, building, wages, hours, hiring, firing, promotion, equal opportunity,
pension and other benefit, immigration, nondiscrimination, Environmental, Health and Safety Requirements, warranties,
advertising or sale of products, trade regulations, anti-trust or control and foreign exchange), and Seller possesses all
required Permits for its services and facilities which are required to be issued in connection with the Business. Seller has
filed with the proper authorities all statements, reports, information and forms required by all applicable Laws, and has
maintained in full force and effect all Permits necessary or proper in the conduct of its business. Seller has not received
written notice or informal advice concerning any revocation or limitation of any such Permit and no such proceeding is
pending, or, to Seller’s or either Stockholder’s Best Knowledge, threatened. In the event that, on the Closing
Date, Seller shall not be in compliance with such Laws, Purchaser may, at its election, either terminate the
Agreement without any obligation whatsoever to Seller or take possession of the Assets subject to such violation and cure the
violation at the expense of Seller, in which event a reserve acceptable to Purchaser based on the anticipated cost of
compliance shall be reflected in the Closing Balance Sheet.


 




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6.      
    Contracts and Commitments.


 


a)          Except
for the Service Agreements set forth on Exhibit A to this Agreement, the Office Lease and the Contracts set forth on Exhibit
C to this Agreement, each Contract is listed on the Disclosure Letter and there are no other Contracts, whether written or
oral and whether formal or informal to which Seller is a party. Seller has provided to Purchaser a complete copy of each Service
Agreement, the Office Lease and each other Contract to which Seller is a party and a complete description of any oral Contract,
including any amendment or modification to an existing Contract. Such exhibits to be completed by the parties within ninety (90)
days.


 


b)          The
Disclosure Letter sets forth a list of each client who, together with its Affiliates, accounted for at least five percent (5%)
of Seller’s revenues for either of the years ended December 31, 2015 or 2014 or the nine months ended September 30, 2016.


 


c)          Except
as set forth in the Disclosure Letter, Seller has no outstanding contracts or commitments with its officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or dealers that are not cancelable by Seller on notice of
not longer than thirty (30) days and without liability, penalty or premium.


 


d)          Seller
has no collective bargaining or employment agreements, or agreements with any labor union or organization, nor any agreements that
contain any severance, retirement, or termination pay liabilities or obligations, and Seller has not been formally or informally
advised of any proposed attempts to organize any of Seller’s employees. Seller’s relations with its employees are good.


 


e)          The
Disclosure Letter sets forth each raise and bonus provided to its officers and other key employees (other than those who are performing
services at clients’ premises pursuant to Service Agreements) whose annual compensation exceeds fifty thousand dollars ($50,000),
which has been granted or paid since December 31, 2014.


 




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f)      
   The Disclosure Letter identifies each employee benefit plan (a “Plan”), as that term is defined
in Section 3(3) of ERISA, bonus, deferred compensation, profit sharing, stock purchase, stock option, or retirement
arrangement, whether legally binding or not, in which Seller participates or to which or pursuant to which Seller has or may
have financial obligations. Seller and each of Seller’s ERISA Affiliates are in compliance in all material respects
with the terms of each Plan and each Plan complies in all material respects with the applicable provisions of the Internal
Revenue Code and ERISA and the regulations and published interpretations thereunder. Within the times and in the manner
prescribed by law, Seller has filed all returns (including, without limitation, Forms 5500) required by law for all Plans
maintained by Seller. No Reportable Event, as defined in Section 4043(b) of ERISA or the regulations thereunder for which the
thirty (30) days’ notice requirement has not been waived by the Pension Benefit Guaranty Corporation, has occurred with
respect to any Plan administered by Seller or any administrator designated by Seller or any ERISA Affiliate. As of September
30, 2016 there is, and on the Closing Date there will be, no unfunded liability under any Plan. Neither Seller nor any ERISA
Affiliate has engaged in any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code, excluding any transactions which are exempt under Section 408 of ERISA or Section 4975 of the Internal
Revenue Code) with respect to any Plan which either Seller or any ERISA Affiliate maintains, or to which Seller or any ERISA
Affiliate contributes, which could subject it or any such other person to any material liability. There are no
material actions, suits or claims pending or, to the best of Seller’s or either Stockholder’s Best Knowledge, any
material actions, suits or claims which could reasonably be expected to be asserted, against any Plan maintained by Seller or
any ERISA Affiliate, the assets thereof, or against it in connection with any Plan. Seller is not a participant in or
contribute to any multiemployer benefit plan, and Seller has no formal or informal agreement requiring contribution to, any
multiemployer benefit plan.


 


g)     
    Seller has made no payments or commissions or provided any benefits to others in connection with any
sales or proposed sales by Seller, except to employees of Seller or sales representatives regularly engaged by Seller to
promote the sale of its products and services. None of such employees or sales representatives is employed or engaged as a
consultant, advisor, purchasing representative, employee, officer, director or otherwise, whether paid or unpaid, by any
client or proposed client or by any government or governmental agency or body of any kind and description or by any other
person, firm or corporation or hold political office or position (whether or not paid) with any government or governmental
agency or body or receive remuneration for services rendered from any person, firm or corporation other than Seller.


 




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h)         Seller
has not given any power of attorney to any Person for any purpose whatsoever nor has Seller designated any Person as an agent of
Seller for any purpose whatsoever.


 


i)       
  Seller is not restricted by any agreement or otherwise from carrying on its business anywhere in the world.


 


j)     
    The Disclosure Letter sets forth a list of all insurance policies and bonds in force with respect to
Seller and Seller’s business, property, and assets, copies of which have previously been delivered to Purchaser; and to
the Best Knowledge of Seller and Stockholders, such policies and bonds are maintained in such amounts and against such risks
as prudent business management would deem advisable to protect its assets and properties.


 


k)   
      The Disclosure Letter sets forth all political and charitable contributions made by
Seller or either Stockholder on behalf of Seller since December 31, 2014.


 


l)       
  Except as set forth in the Disclosure Letter, since December 31, 2014, no material client of Seller has canceled
or otherwise terminated or reduced the scope of services or, to the Best Knowledge of Seller and either Stockholder,
threatened to cancel, terminate or otherwise reduce the scope of services provided by Seller. The transactions contemplated
by this Agreement will not, to the Best Knowledge of Seller and each Stockholder, affect the relationship between Seller and
its clients.


 


7.       
   Intellectual Property Rights.


 


a)          Other
than that set forth in the Disclosure Letter, Seller does not own or use any patents or patent rights and neither Seller nor either
Stockholder owns or has any rights or interests in or any option or right to acquire or any license of any patents (including re-issues,
divisions, continuations and extensions thereof), patent applications, patent rights, patent disclosures docketed, inventions,
discoveries, confidential know-how, copyrights, trademarks, trademark applications and trade names and similar proprietary rights
or confidential know-how. Confidential know-how includes, but is not limited to, proprietary know-how, software, product formulae,
manufacturing, engineering and other drawings, process flow data, toxicological and ecological data, trade secrets, technology,
technical information, engineering data, design and engineering specifications and similar materials recording or evidencing proprietary
expertise relating to Seller’s business, whether or not currently or heretofore used by Seller and used by or useful to Seller
in the conduct by Seller of its business in the normal course.


 




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b)          Seller
owns outright all the Intellectual Proprietary Rights free and clear of all Claims and pays no royalty to anyone with respect to
any such rights or any other intellectual property rights of any kind and description. Seller has not granted any person any license,
right or interest, including any security interest or option with respect to the Intellectual Property Rights. Except for the Intellectual
Property Rights, Seller has no right, title or interest in or option to obtain or acquire an interest, in any intellectual property
rights of any kind or description which may be used in, or useful to, the Business. None of Seller’s rights in and to any
intellectual proprietary rights are or will be affected by the consummation of the transaction contemplated by this Agreement.
Seller has not granted any license or made any assignment regarding any of Seller’s Intellectual Proprietary Rights; there
has been no claim asserted or litigation challenging or threatening to challenge the right, title or interest of Seller with respect
to any such Intellectual Proprietary Rights; the operations of Seller do not infringe or violate any enforceable rights of others
in any intellectual property rights.


 


c)          Neither
Stockholder has any right, title or interest in or Claim with respect to any Intellectual Property Rights.


 


8.      
    No Defaults.


 


a)          Seller
has performed, in accordance with the terms thereof, all material obligations required to be performed by it, and Seller is not
in default, in any material respect, under any Service Agreement or other Contract to which it is a party, except as set forth
in the Disclosure Letter; each such Service Agreement and other Contract is a legal, valid and binding obligation of Seller and,
to the Best Knowledge of Seller and Stockholders, the other parties thereto, enforceable in accordance with its terms. There are
no material breaches or material defaults of or liabilities arising from any breach or default of any provision of any Service
Agreement or other Contract by any party thereto, which would, to the Best Knowledge of Seller or either Stockholder, materially
and adversely affect the Seller’s business; and no event has occurred which, with or without the lapse of time or giving
of notice, or both, would constitute such a breach or default thereof by any party thereto or would cause acceleration of any material
obligation of any party thereto or would otherwise materially and adversely affect Seller.


 




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b)          Seller
is not in violation of any term of its certificate of incorporation or by-laws or any judgment, decree or order, applicable to
it. The execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated by this Agreement
will not result in any such violation or a violation of Seller’s certificate of incorporation or by-laws or any applicable
Law or be in conflict with, constitute a default under, or result in a violation of, or give rise to any right of termination,
cancellation or acceleration under, any Service Agreement or other Contract to which Seller is a party or any Order or governmental
regulation applicable to Seller or the business or operations of Seller. Seller is not a party to or bound by any Service Agreement
or other Contract which would materially adversely affect Seller’s business, operations, financial condition or prospects.


 


9.       
   Related Party Transactions. Other then Seller’s contract with Systems Trading, Inc., which
such contract has been disclosed in the Disclosure Letter, no current or former Affiliate of Seller is now, or has been since
December 31, 2014, (i) a party to a transaction or Contract with Seller or (ii) the direct or indirect owner of an interest
in any Person which is a present or potential competitor, supplier or customer of Seller (other than immaterial holdings in
publicly-traded Persons), nor does any such Affiliate receive income from any source other than Seller which relates to the
business of, and should properly accrue to, Seller.


 


10.         No
Broker. Neither Seller nor either Stockholder nor any of their respective agents or employees has employed or engaged any broker
or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the transactions
contemplated by this Agreement.


 


11.         Copies
of Documents. The copies of all insurance policies, Service Agreements, other Contracts, the Office Lease, purchase orders
and other instruments listed in the Disclosure Letter and a summary of any of the foregoing which are oral have been delivered
to, or made available for inspection by, Purchaser.


 




    -15- 


     


    

 


12.         Securities
Laws Matters.


 


a)          Each
Stockholder and the Seller hereby acknowledges that the Purchase Price which consists solely of shares of common stock of DTST
Shares being issued to such Seller hereunder have not been registered under the Securities Act of 1933, as amended (the “1933
Act”), or registered or qualified for sale under any state securities laws, and cannot be resold without registration
thereunder or exemption therefrom. The Seller and the Stockholders represents that such party is an “accredited investor,”
as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D of the 1933 Act, and will acquire the DTST Shares for
his, her or its own account and not with a view to a sale or distribution thereof. The Seller and the Stockholders represent that
they have sufficient knowledge and experience in financial and business matters to enable him, her or it to evaluate the risks
of investment in the DTST Shares, is acquiring the DTST Shares with a full understanding of all of the terms, conditions and risks
thereof, and on the Closing Date will bear and have the ability to bear the economic risk of this investment for an indefinite
period of time. The Seller and the Stockholder represents that each party understands and agrees to the terms and conditions under
which the shares of DTST Shares are being offered.


 


b)          Each
Seller acknowledges that, to the extent applicable, each certificate evidencing the DTST Shares being issued hereunder shall be
endorsed with a legend substantially in the form set forth below, as well as any additional legend imposed or required by applicable
securities laws:


 


“THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS
OF ANY U.S. STATE, NOR IS ANY SUCH REGISTRATION CONTEMPLATED. THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.”


 


c)          Each
Seller acknowledges that the DTST Shares being offered hereunder are “restricted securities” (as such term is defined
in Rule 144 under the 1933 Act) and must be held indefinitely unless subsequently registered under the 1933 Act or an exemption
from such registration is available.


 


d)          Each
Stockholder and the Seller acknowledge that he, she or it has been afforded an opportunity to request and to review all information
considered by each party to be necessary to make an investment decision with respect to the DTST Shares being issued hereunder.
Each party also acknowledges that he has received and reviewed information about Buyer and has had an opportunity to discuss Buyer’s
business, management and financial affairs with its management.


 




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13.         Reliance
by Purchaser. No representation or warranty set forth in this Section B or in the Disclosure Letter contains or shall contain
any untrue statement of a material fact or, when taken with all such representations, warranties, certificates and other materials
so listed in the Disclosure Letter, omitted, omits or will omit to state a material fact necessary to make the statements contained
herein and therein, when taken together, not misleading, and there is no fact which materially and adversely affects the business,
operations or financial condition of Seller which has not been set forth in this Agreement or in the Disclosure Letter. Purchaser
may rely on the representations set forth in this Section B notwithstanding any investigation it may have made.


 


C.          Representations
and Warranties of Purchaser. Purchaser represents and warrants to Seller that:


 


1.     
     Organization; Capitalization. Purchaser is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and has full power and authority to carry on its
business as and where such business is operated. Purchaser has full power to carry out the transactions provided for in this
Agreement. All necessary corporate action required to be taken by Purchaser relating to the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this Agreement has been duly and validly taken, and this
Agreement constitutes the legal, valid and binding and enforceable obligation of Purchaser. No consent, approval or agreement
or any person, party, court, governmental authority, or entity is required to be obtained by Purchaser in connection with the
execution and performance by Purchaser of this Agreement. The capitalization of the Purchaser is set forth on Exhibit
F.


 


2.      
    No Broker. Neither Purchaser nor any of its officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the
transactions contemplated by this Agreement. Purchaser shall be solely liable for the payment of any such brokerage fees,
commissions or finders’ fees, arising from brokers engaged by Purchaser.


 


3.     
     No Defaults. Purchaser is not in violation of any term of its certificate of
incorporation or by-laws, and Purchaser is not in violation of any judgment, decree or order, applicable to it. The execution
and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated by this Agreement will not
result in any such violation or a violation of Purchaser’s certificate of incorporation or by-laws or any applicable
Law or be in conflict with, constitute a default under or result in a violation of (or give rise to any right of termination,
cancellation or acceleration under) any Contract, to which Purchaser is a party, or any judgment, decree, order, statute,
rule or governmental regulation applicable to Purchaser.


 




    -17- 


     


    

 


4.     
     SEC Filings; Financial Statements.


 


a)          Since
January 1, 2015, DTST has timely filed (including any extension permitted under the rules of the Securities and Exchange Commission
(the “SEC”)) or otherwise furnished (as applicable) all registration statements, prospectuses, forms, reports,
definitive proxy statements, schedules, statements and documents required to be filed or furnished by it under the 1933 Act or
the Securities Exchange Act of 1934 (the “Exchange Act”), as the case may be, together with all certifications
required pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”) such documents and any other
documents filed by Buyer with the SEC, as have been supplemented, modified or amended since the time of filing, collectively, the
“SEC Documents”). As of their respective filing dates, the SEC Documents (i) did not (or with respect to SEC
Documents filed after the date hereof, will not) contain any untrue statement of any material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under
which they were made, not misleading and (ii) complied (or will comply) in all material respects with the applicable requirements
of the Exchange Act or the 1933 Act, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the
SEC under each of those statutes, rules, and regulations.


 


b)          All
of the audited financial statements and unaudited interim financial statements of DTST included in the SEC Documents (i) have been
or will be, as the case may be, prepared from, are in accordance with, and accurately reflect the books and records of Buyer in
all material respects, (ii) have been or will be, as the case may be, prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements,
for normal and recurring year-end adjustments that are not material in amount or nature and as may be permitted by the SEC on Form
10-Q, Form 8-K or any successor or like form under the Exchange Act) and (iii) fairly and accurately present in all material respects
the consolidated financial position and the consolidated results of operations, cash flows and changes in stockholders’ equity
of the Buyer as of the dates and for the periods referred to therein. Without limiting the generality of the foregoing, (i) no
independent public accountant of DTST has resigned or been dismissed as independent public accountant of DTST as a result of or
in connection with any disagreement with DTST on a matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, (ii) no executive officer of Buyer has failed in any respect
to make, without qualification, the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with
respect to any form, report or schedule filed by Buyer with the SEC since the enactment of the Sarbanes-Oxley Act and (iii) no
enforcement action has been initiated or, to the knowledge of Buyer, threatened against Buyer by the SEC relating to disclosures
contained in any Buyer SEC Document.


 




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5.    
      Reliance by Seller and Stockholders. No representation or warranty set forth in
this Section C contains or shall contain any untrue statement of a material fact or, omits or will omit to state a material
fact necessary to make the statements contained herein and therein, when taken together, not misleading. Seller and
Stockholders may rely on the representations set forth in this Paragraph 3 notwithstanding any investigation it may have
made.


 


6.      
    No Debt. Purchaser represents and warrants that Purchaser and DTST do not have debt other than
that that is disclosed in the SEC Documents. Certain debt held by third parties as previously disclosed to the Seller will be
converted into shares of common stock of DTST. Any and all such conversions into common stock of DTST will be made prior to
closing and the shares issued therewith will be accounted for in the consideration paid to the Stockholders hereunder.


 


7.      
    Litigation. Other than what is disclosed in the SEC Documents, there are no claims, actions,
suits, proceedings, inquiries, labor disputes or investigations (whether or not purportedly on behalf of Purchaser) pending
or, to the Purchaser’s Best Knowledge, threatened against Purchaser, at law or in equity or by or before any
Governmental Entity or in arbitration or mediation, nor is there any basis for any such action or proceeding. Neither
Purchaser nor Purchaser’s assets are subject to, and Purchaser is not in default with respect to, any Orders that could
materially and adversely affect it or would interfere with the transactions contemplated by this Agreement. Purchaser and
Purchaser’s assets are not subject to, nor is Purchaser in default with respect to, any Order, Claim or governmental
restriction that could materially and adversely affect its financial condition, business, assets or prospects or that would
interfere with the transactions contemplated by this Agreement.


 




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8.     
     No Defaults.


 


a)          Purchaser
has performed, in accordance with the terms thereof, all material obligations required to be performed by it, and Purchaser is
not in default, in any material respect, under any service agreement or other contract to which it is a party. There are no material
breaches or material defaults of or liabilities arising from any breach or default of any provision of any contract by any party
thereto, which would, to the Best Knowledge of Purchaser, materially and adversely affect the Purchaser’s business; and no
event has occurred which, with or without the lapse of time or giving of notice, or both, would constitute such a breach or default
thereof by any party thereto or would cause acceleration of any material obligation of any party thereto or would otherwise materially
and adversely affect Purchaser.


 


b)          Purchaser
is not in violation of any term of its certificate of incorporation or by-laws or any judgment, decree or order, applicable to
it. The execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated by this Agreement
will not result in any such violation or a violation of Purchaser’s certificate of incorporation or by-laws or any applicable
Law or be in conflict with, constitute a default under, or result in a violation of, or give rise to any right of termination,
cancellation or acceleration under, contract or agreement to which Purchaser is a party or any Order or governmental regulation
applicable to Purchaser or the business or operations of Purchaser. Purchaser is not a party to or bound by any contract or agreement
which would materially adversely affect Purchaser’s business, operations, financial condition or prospects.


 


9.     
     Related Party Transactions. Other than what is disclosed in the SEC Documents and the
conversions set forth on Section C(6), no current or former Affiliate of Purchaser is now, or has been since December 31,
2014, (i) a party to a transaction or Contract with Purchaser or (ii) the direct or indirect owner of an interest in any
Person which is a present or potential competitor, supplier or customer of Purchaser (other than immaterial holdings in
publicly-traded Persons), nor does any such Affiliate receive income from any source other than Purchaser which relates to
the business of, and should properly accrue to, Purchaser.


 




    -20- 


     


    

 


D.          Covenants
of the Parties.


 


1.       
   Access to Records; Properties. During the period between the date of this Agreement and the Closing
Date, Seller agrees to give Purchaser and its representatives, including its independent accountants, full and prompt access
to all of Seller’s premises and all of Seller’s books and records, including, without limitation, all filings
with the Department of Labor, the Internal Revenue Service and any other taxing authority, customs and immigration
authorities, applicable building and zoning authorities; provided that such investigation shall not unreasonably interfere
with Seller’s business.


 


2.    
      Operation of Seller’s Business Prior to Closing. Seller agrees that from the
date of this Agreement to the Closing Date, without Purchaser’s prior written consent, Seller will operate its business
substantially as it is presently operated and only in the ordinary course of business. Seller will duly comply with all
applicable Laws as may be required on its part to effect the transactions contemplated by this Agreement and in the conduct
by Seller of its business and the operation and use of its properties and assets. Seller shall promptly correct any
violations of any zoning ordinances, building, fire or other codes or Environmental, Health and Safety Requirement and shall
take any action requested by Seller’s insurance carrier as necessary to enable Seller to obtain the insurance required
by the Office Lease at standard or, if available, preferential rates. Seller shall also correct any conditions which would or
could, if known to the Landlord, give the Landlord the right to either increase the rent for the Premises or terminate the
Office Lease. Seller shall take such action as may be necessary to insure that the representations and warranties set forth
in Section B of this Agreement are true on the Closing Date with the same force and effect as if made on and as of such date.
Without limiting the generality of the foregoing, neither Seller nor either Stockholder will, without the prior approval of
Purchaser, enter into any agreements, purchase or sell any capital assets or enter into agreements or commitments
with respect to the purchase or sale of capital equipment; incur any Encumbrances (whether consensual or involuntary) with
respect to the Assets; subject any of its property or assets relating to the Business to any Claims; fail to obtain the
consent of the Landlord and all Governmental Entities the consent of which is required for the consummation of the
transactions contemplated by this Agreement; fail to take such action as may be necessary to insure compliance with the
provisions of applicable bulk sales laws; make any charitable or political contribution; waive any right of material value;
enter into or assume any Contract or Liability, except in the ordinary course of business consistent with past practices;
cancel or permit to lapse any insurance policy or surety bond presently carried by Seller; do any act or omit to do any act,
or permit any act or omission to act, which will or could cause a material breach of any material Contract, commitment or
obligation of Seller.


 




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3.      
    Noncompetition. Seller and each Stockholder hereby covenants and agrees that, from the date of
this Agreement until three (3) years from the Closing Date, neither Seller nor either Stockholder will directly or indirectly
(i) engage in the Business or any related business (whether for profit or not for profit), whether as an officer, director,
consultant, stockholder, guarantor, principal, agent, member, operator, proprietor, employee, advisor or in any other manner
in the United States, or (ii) solicit any present or proposed client of Seller, Purchaser or any Affiliate of Purchaser or
(iii) employ or engage any employee of Seller or Purchaser or (iv) aid or assist others with respect to any of the foregoing.
The parties hereto acknowledge and agree that Purchaser’s and its parent corporation’s business is national in
scope and that the foregoing non-competition covenant is an integral part of this Agreement for which they are receiving
adequate compensation, that Purchaser would not enter in this Agreement without the inclusion of the Covenants and that if
any court of competent jurisdiction shall hold that the scope or duration of the covenant not to compete set forth in
this paragraph is not reasonable or otherwise enforceable, then the parties agree that such court shall enforce the covenant
to the greatest extent permitted under applicable law.


 


4.      
    Non-Disclosure and Non-Disturbance. Seller and each Stockholder agrees that it and he will not
at any time use or disclose to any Person any Confidential Information relating to Seller, Purchaser or any Affiliate of
Purchaser which provided Confidential Information to Seller or either Stockholder; provided, however, that nothing in this
paragraph shall be construed to prohibit Seller or either stockholder from (i) using or disclosing such information if it
shall become public knowledge other than by or as a result of disclosure by a person not having a right to make such
disclosure and (ii) complying with legal process, provided, that Purchaser shall be given prompt notice in time to enable it
to object to such disclosure. Seller and each Stockholder further agrees that it and he will take no action to induce or
cause any of Seller’s clients to cease engaging Purchaser for its personnel requirements or to reduce the scope of
services performed by Purchaser.


 




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5.      
    Negotiation with Others; Disposition of Securities. During the Transition Period, Seller and
Stockholders shall deal exclusively with Purchaser regarding the sale of the Assets or any acquisition of Seller, whether by
way of merger, purchase of capital stock, purchase of assets or otherwise (a “Potential Transaction”) and,
without the prior consent of Purchaser, neither Seller nor either Stockholder shall, directly or indirectly, (i) solicit,
initiate discussions with or engage in negotiations with any Person, regardless of which party initiated any of the
foregoing, (ii) provide information or documentation relating to Seller or its business, (iii) enter into any agreement with
any Person other than Purchaser which relates directly or indirectly to a Potential Transaction. If Seller or either
Stockholder shall receive any unsolicited inquiry relating to any of the foregoing, Seller or such Stockholder shall
immediately notify Purchaser.


 


6.       
   Audits. Seller shall assist DTST with the audits to be performed on Seller for the years ended
December 2015 and 2014 and for the nine months ended September 30, 2016 (collectively, the "Audits"). The Audits
shall be performed on Seller with a view to complying with applicable Securities and Exchange Commission requirements for
public companies and otherwise in scope satisfactory to Buyer, at Buyer’s sole expense. Such audit is to be conducted
by an independent accounting firm that is qualified under the Public Company Accounting Oversight Board mutually acceptable
to the parties.


 


7.    
      Injunctive Relief. Seller and each Stockholder agrees that his or her violation or
threatened violation of any of the provisions of Paragraphs D (2), (3), (4) and/or (5) of this Agreement shall cause
immediate and irreparable harm to Purchaser. In the event of any breach or threatened breach of said provisions, Seller and
each Stockholder consents to the entry of preliminary and permanent injunctions by a court of competent jurisdiction
prohibiting such party from any violation or threatened violation of these provisions and compelling Seller to comply with
these provisions. This paragraph shall not affect or limit, and the injunctive relief provided in this paragraph shall be in
addition to, any other remedies available to Purchaser at law or in equity.


 


8.    
      Transfer Taxes. Purchaser shall pay all sales, use and other transfer taxes, if
any, imposed on Seller or Purchaser with respect to the transactions contemplated by this Agreement. To the extent that such
taxes are not paid at the Closing, they shall be treated as liabilities on the Closing Balance Sheet.


 




    -23- 


     


    

 


9.      
    Obtain Consents. Seller shall obtain all necessary consents to the assumption by Purchaser of
all Service Agreements and other Contracts being assumed by Purchaser and any other consent required to consummate the
transactions contemplated by this Agreement.


 


10.         Obligations
Concerning Employees. Except for the obligations set forth under Section E(4), Purchaser intends to engage Seller’s employees
subject to the parties agreeing to terms of such employment. Seller shall be responsible for any severance or other obligations
to its employees.


 


11.         Compliance
with Bulk Sales Law. Seller shall take any and all action to comply with applicable bulk sales law in connection with the sale
of the Assets.


 


12.         Change
of Name. If requested by Purchaser, Seller shall, prior to the Closing Date, change its corporate name to a name reasonably
acceptable to Purchaser which name does not include any of the words “ABC” or “Service” other words that
are phonetically similar or have similar meaning or names that are similar to that of Purchaser or any of Purchaser’s Affiliates.


 


E.          Conditions
to the Obligation of Purchaser to Close. The obligations of Purchaser under this Agreement are subject to the satisfaction
of the following conditions unless waived by Purchaser:


 


1.         
 Representations and Warranties. On the Closing Date, the representations and warranties of Stockholders and
Seller shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if
made on such date, and Stockholders and Seller shall have performed all of their respective obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and Purchaser shall have received certificates of
each Stockholder and Seller.


 


2.       
   Authorization of Sale. All action necessary to authorize the execution, delivery and performance of
this Agreement by Seller shall have been taken, and Seller shall have delivered to Purchaser a certificate to such effect
executed by each Seller.


 


3.        
  Instruments of Transfer. Seller shall have delivered to Purchaser:


 


a)          Such
instrument or instruments of transfer and conveyance as shall, in the opinion of Purchaser’s counsel be reasonably necessary
to vest in Purchaser good and marketable title to the business, property and assets to be transferred, assigned, conveyed and delivered
to Purchaser;


 




    -24- 


     


    

 


b)          An
instrument in form for recording with respect to any registered trade marks, trade names or service marks used by Seller; and


 


c)          All
books, records and all other data relating to the Assets.


 


4.     
     Employment Agreement with Key Employees. Within 90 days of the Closing Date, Purchaser
and Messrs. Thomas Kempster and Harold Schwartz will negotiate and enter into employment agreement on terms mutually
satisfactory to all parties. The agreements shall include non-competition and non-solicitation provisions.


 


5.      
    Consents. Seller shall have obtained consents to the assignment to Purchaser of all Service
Agreements, and all other Contracts being assumed by Purchaser which require the consent of any third party by reason of the
transactions provided for in this Agreement and shall have obtained the consent of every person, corporation, bank,
governmental agency, authority or other third party, the consent of which is required for the consummation of the
transactions contemplated by this Agreement.


 


6.     
     No Material Adverse Change. No Material Adverse Change in the business or financial
condition of the Seller shall have occurred or be threatened since the date of this Agreement, and no Proceedings shall be
threatened or pending before any Governmental Entity or authority which, in the reasonable opinion of counsel for Purchaser,
are likely to result in a restraint, prohibition or the obtaining of damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated by this Agreement. The Premises shall not have been fully or
partially destroyed by fire or other casualty (whether or not covered by insurance) or subject to any whole or partial taking
by any government or quasi-government agency or body. In the event of any such destruction or taking, Purchaser may elect to
close subject to receipt by Purchaser of all insurance proceeds or any condemnation award.


 


7.      
    Opinion of counsel. Purchaser shall have received the opinion of Thomas D. Atkinson, counsel
for Seller and Stockholders addressed to Purchaser and dated the Closing Date to the effect that:


 


a)          Seller
is a corporation duly organized, validly existing and in good standing under the laws of the State of New York, and has the corporate
power to own its property and conduct their business as now being conducted and is qualified to conduct business as a foreign corporation
in each jurisdiction in which it owns or leases real property.


 




    -25- 


     


    

 


b)          This
Agreement has been duly executed and delivered by Stockholders and Seller, all corporate or other action necessary for Seller to
approve this Agreement and the performance of the terms of this Agreement have been taken, and this Agreement constitutes a legal,
valid and binding obligation of each of Stockholders and Seller, enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, or similar laws from time to time in effect which affect creditors'
rights generally, and by legal and equitable limitations on the enforceability of specific remedies).


 


c)          The
execution and delivery by each Stockholder and the Company of this Agreement and the consummation of its terms will not, to the
best of such counsel’s knowledge, violate the certificate of incorporation or by-laws of Seller.


 


d)          Such
counsel has no knowledge of any actions, suits or proceedings pending or threatened against or affecting Seller in any court or
before any arbitrator of any kind or before or by any governmental body except as disclosed and provided for in the Disclosure
Letter. In rendering such opinion, such counsel may rely as to factual matters on certificates of officers, directors or shareholders
of the Company and on certificates of governmental officers.


 


e)          Such
counsel, to the best of its knowledge, knows of no liens not set forth on the lien search performed by the Purchaser on the Seller.


 


8.   
       Tax and ERISA Payments. All Federal and state withholding taxes due with
respect to all payroll periods ending prior to the Closing Date shall have been paid; all amounts withheld from employees for
contribution to any Plan shall have been paid to the trustees of such Plan, and evidence of such payments shall have been
provided to Purchaser.


 


9.     
     Deleted.


 


10.         Due
Diligence. Purchaser shall be satisfied in all respects with the results of its business, legal, environmental, tax and accounting
due diligence investigation and review of Seller which shall be performed by Seller and its representatives.


 




    -26- 


     


    

 


F.          Conditions
to Seller’s Obligations to Close. The obligations of Seller under this Agreement are subject to the satisfaction
of the following conditions unless waived by Seller:


 


1.   
       Authorization.  All action necessary to authorize the execution,
delivery and performance of this Agreement by Purchaser shall have been taken and Purchaser shall have delivered to Seller
resolutions of its board of directors certified by the secretary of Purchaser.


 


2.       
   Payment of the Purchase Price. Purchaser shall have issued to Seller the Purchase Price.


 


3.      
    Representations and Warranties. On the Closing Date, the representations and warranties of
Purchaser shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as
if made on such date.


 


G.          Indemnification.


 


1.    
      Indemnification by Seller and Stockholders. Seller and Stockholders shall jointly
and severally indemnify and hold Purchaser harmless from and against any Losses that Purchaser may suffer, sustain, incur or
become subject to, arising out of, based upon, or by reason of (i) any breach of the warranties, representations, covenants
and agreements of Seller or either Stockholder contained in this Agreement; (ii) the failure of Seller to pay any obligations
not expressly assumed by Purchaser; and (iii) all reasonable cost incurred by Purchaser in connection with the investigation
and enforcement of any of the foregoing indemnification obligations. The obligations of Seller and Stockholders pursuant to
this paragraph is in addition to, and not in lieu of, any of the other obligations of Seller pursuant to this Agreement.


 


2.      
    Indemnification by Purchaser. Purchaser shall indemnify and hold Seller and Stockholders
harmless from and against any Losses that they or either of them may suffer, sustain, incur or become subject to, arising out
of, based upon, or by reason of (i) any breach of the warranties, representations, covenants and agreements of Purchaser
contained in this Agreement; (ii) the failure of Purchaser to pay any obligations assumed by Purchaser; and (iii) the
enforcement by Seller of any of the foregoing indemnification obligations. The obligations of Purchaser pursuant to this
paragraph is in addition to, and not in lieu of, any of the other obligations of Purchaser pursuant to this Agreement.


 




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3.    
      Procedure for Claims by Third Parties. Promptly upon receipt by an indemnified
party under Paragraph G(1) or (2) of this Agreement, of notice of the commencement of any action for which indemnification is
to be sought pursuant to said Paragraph G(1) or (2), such indemnified party shall notify the indemnifying party in writing of
the commencement thereof; provided, that the failure to notify the indemnifying party shall relieve the indemnifying party
from liability under said Paragraph G(1) or (2) only to the extent that the indemnifying party was prejudiced as a result
thereof or unless such indemnifying party has otherwise received actual notice of the action at least thirty (30) days before
any answer or response is required by the indemnifying party in its defense of such action, but will not relieve it from any
liability that it may have to any indemnified party otherwise than under this Paragraph G. If any such action is brought
against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof; provided, that if
the defendants in any such action include both the indemnified party and the indemnifying party and either (i) the
indemnifying party or parties agree, or (ii) representation of both the indemnifying party or parties and the
indemnified party or parties by the same counsel is, in the opinion of counsel to the indemnified parties, inappropriate
under applicable standards of professional conduct because of actual or potential conflicting interests between them, then
the indemnified party or parties shall have the right to select separate counsel to assume such legal defense and to
otherwise participate in the defense of such action. The indemnifying party will not be liable to such indemnified party
under this Paragraph G for any legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed counsel in connection with the assumption of legal
defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one separate counsel approved by the indemnifying party
for all indemnified parties in each jurisdiction), (ii) the indemnifying party shall not have employed counsel to represent
the indemnified party within a reasonable time after notice of commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. In no event
shall an indemnifying party be liable under this Paragraph G for any settlement, effected without its written consent, which
consent shall not be unreasonably withheld, of any claim or action against an indemnified party.


 




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4.     
     Procedure for Other Claims. Claims for indemnity pursuant to this Paragraph G,
other than those covered by Paragraph G(3) of this Agreement, shall be submitted in writing. Such notice shall specify in
reasonable detail the basis for such claim. In the event that the other party disputes the validity of the indemnity claim,
such party shall give notice to such effect within fifteen (15) business days after the date of the indemnity claim, and if
such notice is not given prior to the expiration of such fifteen (15) business day period, the indemnity claim shall be
deemed to be accepted and the indemnifying party shall promptly make such payment. If the parties are not able to resolve the
dispute within thirty (30) days after the date of the notice disputing the validity of the indemnity claim, or such longer
period as they may agree upon, the matter shall be submitted to binding arbitration in New York City under the rules then
obtaining of the American Arbitration Association. The decision of the arbitrator(s) shall be final, binding and conclusive
on all parties and may be entered in any court having jurisdiction. The arbitrator(s) shall have no power or authority to
modify or amend any provisions of this Agreement. The arbitrator(s) may, in his or their discretion, award costs and
fees.


 


5.      
    Survival.


 


a)          The
representations and warranties of the parties shall survive the Closing and the consummation of the transaction contemplated by
this Agreement.


 


b)          The
covenants and other agreements contained in this Agreement shall survive the Closing until they are otherwise terminated, whether
by their terms or as a matter of law.


 


H.          Termination.


 


1.      
    This Agreement may be terminated prior to the Closing Date:


 


a)          By
either party if the Closing Date shall not have occurred within sixty (60) days from the date of this Agreement, provided, however,
that no party may terminate this Agreement if such party is in breach of the representation and warranties of such party or such
party is otherwise in breach or violation of its obligations under this Agreement.


 


b)          By
the written agreement of Purchaser, Seller and Stockholders.


 




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c)          By
Seller or Purchaser in the event that the other party shall have breached their respective representations, warranties, covenants
and agreements in any material respect or failed to comply in any material respect with their respective obligations pursuant to
this Agreement in any material respect, and such failure shall have continued for more than twenty (20) days after notice thereof,
in reasonable detail, shall have been given by the party seeking to terminate this Agreement.


 


2.      
    In the event of a termination of this Agreement pursuant to this Section H, no party shall have any
obligation to any other party.


 


I.           Definitions.
As used in this Agreement, the following terms shall have the following respective meanings:


 


1.        
  “Affiliate” shall mean, with respect to any Person, (i) a director, officer or stockholder of such
Person, (ii) a spouse, parent, sibling or descendant of such Person (or spouse, parent, sibling or descendant of any director
or executive officer of such Person), and (iii) any other Person that, directly or indirectly through one or more
intermediaries, Controls, or is Controlled by, or is under common Control with, such Person; provided, that with respect to
any Person which is a publicly traded Entity, an Affiliate shall not include a stockholder of such Person unless such
stockholder is an affiliate as a result of the application of clause (iii) of this Paragraph 9(a).


 


2.     
     “Assets” shall have the meaning set forth in Section A of this Agreement.


 


3.     
     “Best Knowledge” of any Person shall mean and include (i) actual knowledge and (ii)
that knowledge which a prudent businessperson could reasonably have obtained in the management of such Person’s
business affairs after making due inquiry and exercising the due diligence which a prudent businessperson should have made or
exercised, as applicable, with respect thereto. In connection therewith, the knowledge (both actual and constructive) of
either Stockholder, the chief executive officer, chief operating offer, chief financial officer, president or any vice
president of Seller shall be imputed to be the knowledge of Seller.


 


4.      
    “Business” shall have the meaning set forth in the first introductory paragraph of this
Agreement.


 




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5.    
      “Claim” shall mean any security interests, liens, pledges, claims, charges,
escrows, Encumbrances, options, rights of first refusal, mortgages, indentures, security agreements or other agreements,
arrangements, contracts, commitments, understandings or obligations, whether written or oral and whether or not relating in
any way to credit or the borrowing of money and any claim or right arising out of any marital relationship.


 


6.    
      “Closing” shall have the meaning set forth in Section A of this
Agreement.


 


7.      
    “Closing Date” shall have the meaning set forth in Section A of this Agreement.


 


8.      
    “Code” shall mean the Internal Revenue Code of 1986, as amended.


 


9.   
       “Confidential Information” shall mean all information of a proprietary
or confidential nature relating to any Person, including, but not limited to, such Person’s trade secrets or
proprietary information, technical know-how and products, processes, inventions and discoveries, whether or not patentable,
and information concerning such Person’s services, business, customer lists, proposed services, marketing strategy,
pricing policies and the requirements of its clients.


 


10.         “Contract”
shall mean any loan or credit agreement, note, bond, mortgage, indenture, lease, sublease, purchase order or other agreement, instrument,
franchise or licenses.


 


11.         “Control”
shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.


 


12.         “Covenants”
shall mean the obligations of Seller and Stockholders pursuant to Section D of this Agreement.


 


13.         “Encumbrances”
shall mean and includes security interests, mortgages, liens, pledges, charges, easements, reservations, restrictions, clouds,
equities, rights of way, options, rights of first refusal and all other encumbrances, whether or not relating to the extension
of credit or the borrowing of money.


 




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14.         “Environmental,
Health and Safety Requirements” shall mean all Federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations
and all common law obligations concerning public health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup
of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, medical waste, noise or radiation, each as amended
and as now or thereafter in effect.


 


15.         “ERISA”
shall mean the Employment Retirement Income Security Act of 1974, as amended.


 


16.         “ERISA
Affiliate” shall mean, with respect to any Person, any entity that is member of a “controlled group of corporations”
with, or is under “common control” with, or is a member of the same “affiliated service group” with such
Person as defined in Section 414(b), 414(c) or 414(m) of the Code.


 


17.         “Financial
Statements” shall have the meaning set forth in Section B of this Agreement.


 


18.         “Governmental
Entity” shall mean any court, administrative agency or commission or other governmental authority or instrumentality, domestic
or foreign, Federal, state or local.


 


19.         “Hazardous
Materials” shall mean any hazardous or toxic chemicals, materials or substances; any pollutants or contaminants; or crude
oil or any fraction thereof (as such terms are defined under any Environmental, Health and Safety Requirements).


 


20.         “Intellectual
Property Rights” shall have the meaning set forth in Section A of this Agreement.


 


21.         “Landlord”
shall mean Seller’s lessor with respect to the Premises.


 


22.         “Law”
shall mean any law, statute, treaty, rule, regulation or Order of any Governmental Entity.


 




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23.         “Liability”
shall mean any liability or obligation, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless or when asserted and regardless of whether such obligation
is required to be reflected as a liability on a corporate balance sheet prepared in accordance with generally accepted accounting
principles.


 


24.         “Losses”
shall mean any and all losses, claims, shortages, damages, liabilities, expenses, actions, causes of action, charges, including
reasonable attorneys’ and accountants’ and other professionals’ fees, assessments, Tax deficiencies and Taxes
incurred in connection with the receipt of indemnification payments (including interest or penalties thereon) arising from or in
connection with any matter that is the subject of indemnification pursuant to Section G of this Agreement.


 


25.         “Material
Adverse Change” shall mean, with respect to any Person, any material adverse change in the business, operations, assets (including
levels of working capital and components thereof), condition (financial or otherwise), operating results, Liabilities, employee
relations or prospects of such Person or any material casualty loss or damage to the assets of such Person, whether or not covered
by insurance (it being understood, however, that if such loss is covered by insurance and as a result there is no adverse effect,
then no Material Adverse Change has occurred). With respect to Seller, in addition to the foregoing, a Material Adverse Change
shall any event or condition such that the Closing Balance Sheet or Seller’s income or cash flow from operations for the
year ended October 31, 2016 will be materially different from the projected financial statement delivered to Purchaser.


 


26.         “Material
Adverse Effect” on any Person shall mean a material adverse effect on the business, operations, assets (including levels
of working capital and components thereof), condition (financial or otherwise), operating results, Liabilities, employee relations
or prospects of such Person.


 


27.         “Orders”
shall mean judgments, writs, decrees, compliance agreements, injunctions or orders of any Governmental Entity or arbitrator.


 


28.         “Permits”
shall mean all permits, licenses, authorizations, registrations, franchises, approvals, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities.


 




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29.         “Person”
shall be construed broadly and shall include an individual, a partnership, a corporation, a limited liability company, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency
or political subdivision thereof).


 


30.         “Potential
Transaction” shall have the meaning set forth in Section D of this Agreement.


 


31.         “Proceedings”
means actions, suits, claims, investigations or legal or administrative or arbitration proceedings.


 


32.         “Premises”
shall have the meaning set forth in Section A of this Agreement.


 


33.         “Purchase
Price” shall have the meaning set forth in Section A of this Agreement.


 


34.         “Purchaser”
shall mean Data Storage Corporation, a Delaware corporation.


 


35.         “Seller”
shall mean ABC Services Inc., a New York corporation.


 


36.         “Stockholder”
shall mean either of Harold Schwartz and Thomas Kempster, and “Stockholders” shall mean both of such individuals.


 


37.         “Tax”
shall mean any of the Taxes.


 


38.         “Tax
Returns” shall mean Federal, state, local and foreign tax returns, reports, statements, declarations of estimated tax and
forms.


 


39.         “Taxes”
shall mean, with respect to any entity, (i) all income taxes (including any tax on or based upon net income, gross income, income
as specially defined, earnings, profits or selected items of income, earnings or profits) and all gross receipts, sales, use, ad
valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property
or windfall profits taxes, alternative or add-on minimum taxes, customs duties and other taxes, fees, assessments or charges of
any kind whatsoever, together with all interest and penalties, additions to tax and other additional amounts imposed by any taxing
authority (domestic or foreign) on such entity (if any) and (ii) any liability for the payment of any amount of the type described
in the immediately preceding clause (i) as a result of (A) being a “transferee” (within the meaning of Section 6901
of the Code or any other applicable law) of another entity, (B) being a member of an affiliated or combined group or (C) any contractual
obligation.


 




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40.         “Transition
Period” shall mean the period commencing on the date of this Agreement and ending on the first day on which this Agreement
may be terminated by Seller pursuant to Paragraph 8(a) of this Agreement.


 


J.          Miscellaneous.


 


1.    
      Entire Agreement. This Agreement, including any Exhibits and the Disclosure
Letter, which constitute integral parts of this Agreement, constitutes the entire agreement of the parties, superseding and
terminating any and all prior or contemporaneous oral and prior written agreements, understandings or letters of intent
between or among the parties with respect to the subject matter of this Agreement. No part of this Agreement may be modified
or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that
it is a modification or amendment of this Agreement and is signed by the parties to this Agreement, or, in the case of
waiver, by the party granting the waiver. No course of conduct or dealing or trade usage or custom and no course of
performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this
Agreement, it being acknowledged by the parties to this Agreement that this Agreement is intended to be, and is, the complete
and exclusive statement of the agreement with respect to its subject matter. Any waiver shall be limited to the express terms
thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any
other circumstances.


 


2.      
    Severability. If any section, term or provision of this Agreement shall to any extent be held
or determined to be invalid or unenforceable, the remaining sections, terms and provisions shall nevertheless continue in
full force and effect.


 


3.     
     Notices. All notices provided for in this Agreement shall be in writing signed by the
party giving such notice, and delivered personally or sent by overnight courier, mail or messenger against receipt thereof or
sent by registered or certified mail, return receipt requested, or by facsimile transmission or similar means of
communication if receipt is confirmed or if transmission of such notice is confirmed by mail as provided in this Paragraph
10(c). Notices shall be deemed to have been received on the date of personal delivery or telecopy or, if sent by certified or
registered mail, return receipt requested, shall be deemed to be delivered on the fifth (5th) business day after the date of
mailing. Notices shall be sent to the parties at their respective addresses set forth at the beginning of this Agreement to
the attention of the person executing this Agreement on behalf of such party or by telecopier, to Purchaser at (516)
___-____, or to Seller or either Stockholder at (516) ___-____. A copy of any notice shall be sent in like manner, with
respect to Purchaser, to Fleming PLLC, 49 Front Street, Suite 206, Rockville Centre, New York 11570, telecopier (516)
977-1209, Attention: Stephen M. Fleming, Esq., and, with respect to Seller, to Ledwith and Atkinson, telecopier (516) 593
-1816, Attention: Thomas D. Atkinson. Any party may, by like notice, change the address, person or telecopier number to which
notice shall be sent.


 




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a)          Governing
Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties
hereby irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this
Agreement shall be brought in the Federal or state courts located in the County of New York or Suffolk in the State of New York,
by execution and delivery of this Agreement, irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any
defense that such court is not a convenient forum, and (iv) consent to any service of process by made in the manner set forth in
Paragraph 10(d) of this Agreement (other than by telecopier), in addition to any other method of service permitted by law.


 


4.    
      Parties to Pay Own Expenses. Each of the parties to this Agreement shall be
responsible and liable for its own expenses incurred in connection with the preparation of this Agreement, the consummation
of the transactions contemplated by this Agreement and related expenses.


 


5.      
    Tax Consequences. Each party to this Agreement is relying on his or its own tax advisors as to
the tax consequences of this Agreement and the transactions contemplated by this Agreement, and no party is making any
representations or warranties of any kind as to such tax consequences to any other party.


 


6.     
     Successors. This Agreement shall be binding upon the parties and their respective heirs,
executors, administrators, legal representatives, successors and assigns; provided, however, that neither Seller nor either
Stockholder may assign this Agreement or any of its rights under this Agreement without the consent of Purchaser.


 




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7.    
      Further Assurances. Each party to this Agreement agrees, without cost or expense
to any other party, to deliver or cause to be delivered such other documents and instruments as may be reasonably requested
by any other party to this Agreement in order to carry out more fully the provisions of, and to consummate the transaction
contemplated by, this Agreement.


 


8.   
       Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same
instrument.


 


9.     
     Headings. The headings in the Paragraphs of this Agreement are inserted for convenience
only and shall not constitute a part of this Agreement.


 


10.         Exhibit;
Disclosure Letter. One complete set of the Exhibit and the Disclosure Letter has been marked for identification and delivered
by each of the parties to the other on or before the execution and delivery of this Agreement.


 




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IN WITNESS WHEREOF,
the parties have executed this Agreement on the date first written above.


 


	 	DATA STORAGE CORPORATION, a Delaware corporation
	 	 	 
	 	By:	/s/Charles M. Piluso
	 	Name: Charles M. Piluso
	 	Title: CEO
	 	 	 
	 	DATA STORAGE CORPORATION, a Nevada corporation
	 	 	 
	 	By:	/s/Charles M. Piluso
	 	Name: Charles M. Piluso
	 	Title: CEO
	 	 	 
	 	ABC SERVICES INC.
	 	 	 
	 	By: 	/s/Thomas Kempster
	 	Name: Thomas Kempster
	 	Title: President
	 	 	 
	 	/s/Harold Schwartz
	 	Harold Schwartz
	 	 	 
	 	/s/Thomas Kempster
	 	Thomas Kempster


 




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List of Exhibits


 


	Exhibit	 	Description	 	Paragraph Reference
	A	 	Tangible Assets	 	A(2)(a)
	B	 	Intellectual Property Rights	 	A(2)(b)
	C	 	Service Agreement	 	A(2)(c)
	D	 	Contracts	 	A(2)(f)
	E	 	Permits	 	A(2)(g)
	F	 	Capitalization	 	C(1)


 




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