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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
iGAMBIT, INC.
(Exact name of registrant as specified in its charter)
     
Delaware   11-3363609
     
(State or other jurisdiction of incorporation or   (I.R.S. Employer Identification No.)
organization)    
     
1600 Calebs Path Extension, Suite 114,    
Hauppauge, New York   11788
     
(Address of principal executive offices)   (Zip Code)
With copy to:
Joel D. Mayersohn, Esq.
Clint J. Gage, Esq.
Roetzel & Andress
350 East Las Olas Boulevard, Suite 1150
Fort Lauderdale, Florida 33301
Telephone: (954) 462-4150
Facsimile: (954) 462-4260
Registrant’s telephone number, including area code: (631) 780-7055
Securities to be registered pursuant to Section 12(b) of the Act: None
     
Securities to be registered pursuant to Section 12(g) of the Act:   Common Stock
    (Title of Class)
      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer o     Accelerated filer o     Non-accelerated filer   o
(Do not check if a smaller reporting company)
  Smaller reporting company þ  
 
 

 


 

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  EX-3.1.I
  EX-3.1.II
  EX-3.1.II
  EX-3.1.IV
  EX-3.1.V
  EX-3.1.VI
  EX-3.2
  EX-10.1
  EX-10.2
  EX-10.3
  EX-21
  EX-23.1

 


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ITEM 1. BUSINESS
CAUTION REGARDING FORWARD LOOKING STATEMENTS
     This registration statement contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential” and similar expressions. All of the forward-looking statements contained in this registration statement are based on estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market and other factors. Although we believe such estimates and assumptions are reasonable, they are inherently uncertain and involve risks and uncertainties. In addition, management’s assumptions about future events may prove to be inaccurate. We caution you that the forward-looking statements contained in this registration statement are not guarantees of future performance and we cannot assure you that such statements will be realized. In all likelihood, actual results will differ from those contemplated by such forward-looking statements as a result of a variety of factors, including those factors discussed in “Item 1A. Risk Factors.” We will update these forward-looking statements only as required by law. We do not undertake any other responsibility to update any forward-looking statements.
HISTORY
     We were incorporated in the State of Delaware under the name BigVault.com Inc. on April 13, 2000. On April 18, 2000, we merged with BigVault.com, Inc., a New York corporation with which we were affiliated. We survived the merger, and on December 21, 2000 changed our name to bigVAULT Storage Technologies, Inc. At that time we were in the business of providing remote, internet-based storage vaulting services and related ancillary services to end users and resellers (the “Vault Business”).
     On February 28, 2006 we sold all of our assets to Digi-Data Corporation (“DDC”) pursuant to the terms of an Asset Purchase Agreement dated December 21, 2005 (the “APA”), a copy of which is filed herewith as an exhibit. As consideration for our transfer of assets under the APA, DDC paid certain of our liabilities and agreed to make certain quarterly and annual revenue sharing payments to us. Specifically, DDC agreed to make quarterly payments to us, for a period of 5 years, in the amount equal to 10% of the Vault Net Revenues received by DDC through its operation of the Vault Business (the “Quarterly Revenue Share Payments”). “Vault Net Revenues” is defined in the APA as the gross revenue of DDC actually received by DDC that is solely and directly attributable to the Vault Business, to the extent that such revenue is derived from the provision of vault services and/or vault appliances which use the Big Vault core technology, less the sum of (i) any discount given by DDC in compensation for early payment, (ii) returns, allowances, quantity discounts and credits, (iii) any accounting reserve amount, as determined in accordance with GAAP, and (iv) shipping and mailing costs, duties, taxes and insurance. In addition, DDC agreed to make an annual payment to us after the 2 nd , 3 rd , 4 th , and 5 th anniversaries of the closing of the transaction, in an amount equal to 5% of any increase in the annual Vault Net Revenue over the immediately prior year’s Vault Net Revenue (the “Annual Increase Payments”, and together with the Quarterly Revenue Share Payments the “Revenue Share Payments”). Mr. Salerno and Ms. Luqman accepted employment with DDC in senior management positions post closing, and continued to work for DDC until February 2009. As of March 1, 2009 Mr. Salerno and Ms. Luqman returned to their full time management roles with the Company.
     On April 5, 2006, we changed our name to iGambit, Inc.
     On October 1, 2009, we acquired the assets of Jekyll Island Ventures, Inc., a New York corporation doing business as Gotham Photo Company (“Jekyll”) through our wholly owned subsidiary Gotham Innovation Lab, Inc., a New York corporation (“Gotham”). Pursuant to the terms of the Asset Purchase Agreement and Plan of Reorganization (“APAPR”), we (i) issued 500,000 shares of our common stock to Jekyll at closing; (ii) assumed certain Jekyll accounts payable at closing; and (iii) issued Jekyll warrants to purchase 1,500,000 shares of our common stock, at $0.01 per share, subject to a 3 year vesting schedule and the attainment by Gotham of certain revenue targets during said 3 year period.

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     On December 2, 2009, we amended our Certificate of Incorporation increasing our authorized shares of common stock to 75 million shares.
     References to “iGambit”, the “Company”, “we”, “us”, “our” and similar words refer to iGambit, Inc.
OUR COMPANY
Introduction
     We are a company focused on the technology markets. Presently we have one operating subsidiary in the business of providing media technology services to the real estate industry.
     Our primary focus is the acquisition of technology companies. We believe that the background of our management and of our Board of Directors in the technology markets is a valuable resource that makes us a desirable business partner to the companies that we are seeking to acquire. When we acquire a company, we work to assume an active role in the development and growth of the company, providing both strategic guidance and operational support. We provide strategic guidance to our partner companies relating to, among other things, market positioning, business model and product development, strategic capital expenditures, mergers and acquisitions and exit opportunities. Additionally, we provide operational support to help our partner companies manage day-to-day business and operational issues and implement best practices in the areas of finance, sales and marketing, business development, human resources and legal services. Once a company joins our partner company network, our collective expertise is leveraged to help position that company to produce high-margin, recurring and predictable earnings and generate long-term value for our stockholders.
Sources of target businesses
     We anticipate that target business candidates will be brought to our attention from various sources, including our management team, investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds, consulting firms and other members of the financial community who will become aware that we are seeking a business combination partner via public relations and marketing efforts, direct contact by management or other similar efforts, who may present solicited or unsolicited proposals. Any finder or broker would only be paid a fee upon the completion of a business combination. While we do not presently anticipate engaging the services of professional firms that specialize in acquisitions on any formal basis, we may decide to engage such firms in the future or we may be approached on an unsolicited basis. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts. While our officers and directors make no commitment as to the amount of time they will spend trying to identify or investigate potential target businesses, they believe that the various relationships they have developed over their careers together with their direct inquiry, will generate a number of potential target businesses that will warrant further investigation. In no event will we pay any of our existing officers, directors, special advisors or stockholders or any entity with which they are affiliated any finder’s fee or other compensation for services rendered to us prior to or in connection with the completion of a business combination. In addition, none of our officers, directors, special advisors or existing stockholders will receive any finder’s fee, consulting fees or any similar fees from any person or entity in connection with any business combination involving us other than any compensation or fees that may be received for any services provided following such business combination.
Selection of a target business and structuring of a business combination
     Our management has virtually unrestricted flexibility in identifying and selecting a prospective target business. We expect that our management will diligently review all of the proposals we receive with respect to a prospective target business. In evaluating a prospective target business, our management will conduct the necessary business, legal and accounting due diligence on such target business and will consider, among other factors, the following:
    financial condition and results of operations;
 
    earnings and growth potential;

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    experience and skill of management and availability of additional personnel;
 
    capital requirements;
 
    competitive position;
 
    barriers to entry into the industry;
 
    breadth of services offered;
 
    degree of current or potential market acceptance of the technology;
 
    regulatory environment; and
 
    costs associated with effecting the business combination.
     These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management, where applicable, and inspection of facilities, as well as review of financial and other information which will be made available to us.
Evaluation of the target business’s management
     We would condition any acquisition on the commitment of management of the target business to remain in place post closing, Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management. Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment of the target business’s management will prove to be correct.
Competition
     In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors, which may limit our ability to compete in acquiring certain target businesses. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business.
Our Partner Company – Gotham Photo Company
      Products and Services
     Gotham’s business is directed at providing media technology services to the real estate community. The range of media services includes the exclusive Gotham Expo Full Screen Experience. Gotham also provides website development services, sales office technology, and data interchange services for many of the real estate firms in New York City.
     When it comes to selling real estate every broker or seller listing has to have pictures. Utilizing the latest technology Gotham’s Expo product provides a full screen listing experience. It allows brokers and sellers to present their listing in the largest format possible while giving the viewer control of the show. Expo integrates images, photos, floor plans, agent and key listing details in an engaging format that immerses the viewer. Currently, Gotham is capable of integrating up to 16 images into a full screen for any listing.
     Expo is available for all NYC realtors and will be made available nationwide within the coming months. All systems are built on accessible web platforms that integrate quickly and seamlessly into the agent’s workflow.
      Competitive Comparison

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     Gotham competes with others in the industry by focusing on user interaction, technology and delivery. Gotham maintains strict standards of photography that alone set us aside from our competition. In addition to superior media, Gotham’s technology tools further set us apart. Gotham constantly leverages Team5 technology to come up with the best solutions for the real estate industry. Team5, Gotham’s development arm, works across numerous different industries, allowing the Gotham / Team5 team to constantly see best in show technologies and adapt them to the real estate industry.
      Future Products and Services
     Future offerings will include enhanced products that focus on social media interaction, mobile applications and tools for realtors, as well as multi touch augmented reality technologies for presentations, etc. Gotham will continue to expand its media offerings, integrating with and adopting technologies as they become available.
      Market Segmentation
     According to the National Association of Realtors, in 2008 there were approximately 2.3 million real estate licenses, 1.2 million realtors and that in 2007 5.4 million homes were sold. Also, according to Borrell Associates, Inc the total marketing spent to market those homes was $11.5 billion. Another survey by VHT, Inc. indicated that the average marketing specific costs were $850 per home which would suggest a potential market size for the marketing component is approximately $5 billion per year at the low end. The marketing spend has migrated in recent years from traditional newspaper advertising to direct mail, and now variable data direct mail along with integrated online marketing, with a huge increase in email blast and other online tools. It is these other online tools that Gotham brings to the realtor.
     Current market trends and real estate industry leaders substantiate Gotham’s business model. The residential real estate industry in the United States is moving toward expanding the use of technology in the home and condo buying process. It’s the topic du jour of the real estate conferences. Plus, it is prominently and frequently discussed in all of the industry’s trade publications. Commercial real estate is also looking for better and efficient ways to reach out to and serve their customers.
     This real estate market is highly fragmented. According to REAL Trends, the 10 largest brokerage firms accounted for less than 9% of all brokered residential real estate transaction volume in 2007, and the single largest firm accounted for less than 5% of total transaction volume. Many brokerage firms are affiliated with national franchise brands, such as Century 21, Coldwell Banker, Prudential and RE/MAX. The franchise brands typically do not directly own and operate brokerage firms, but rather license their brand names and trademarks and provide other marketing support to franchisee brokerage firms. These brokerage firms typically engage agents to work for them as independent contractors and as a result franchisors and franchisees have limited direct influence over the client relationship or the quality of client service.
     At the same time consumers are increasingly using the Internet as a key source of information in buying and selling a home. Industry reports state that their use of the Internet to search for homes has increased from 71% in 2003 to 87% in 2008. The Internet provides a highly effective means for consumers to research information about homes in an industry that is data intensive yet historically has suffered from a lack of broad access to comprehensive and timely property listings information for consumers. The interactivity of the Internet also allows consumers greater ability to conduct targeted searches and research relevant data about desired homes or areas. The ability to provide multiple images and rich media makes the Internet a highly effective means for brokerage firms to market and consumers to research homes.
      Strategy and Implementation Summary
     Gotham’s objective is to be a market leader in offering EXPO, Virtual Tours, and e-Brochures, type services to the real estate industry. Gotham is currently providing services to a number realtors and brokers in the New York Metropolitan area including, but not limited to, Prudential Douglas Elliman, Cocoran and others. We plan to increase our marketing and client base in the NY area and expand to other major cities and markets such as

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Boston, Philadelphia, Washington DC, Chicago, etc. Within 3 years we expect to be offering our services to over 250 US metropolitan statistical areas.
Employees
     We presently have 9 total employees, all of which are full-time.
OUR CORPORATE INFORMATION
     Our principal offices are located at 1600 Calebs Path Extension, Suite 114, Hauppauge, New York, 11788. Our telephone number is (631) 780-7055 and our fax number is (631) 656-1055. We currently operate two corporate websites that can be found at www.igambit.com and www.gothamphotocompany.com (the information on the foregoing websites does not form a part of this prospectus).
ITEM 1A. RISK FACTORS
     If any of the following risks actually occur, our results of operations, cash flows and the value of our shares could be negatively impacted. Although we believe that we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known that may adversely affect our performance or financial condition.
RISKS RELATED TO OUR BUSINESS AND OPERATIONS
We have a limited operating history on which you can evaluate our ability to achieve our business objective.
     Prior to our acquisition of Gotham we had limited operations since 2006.
We are dependent upon our Management for the operating of the Company .
     We are dependent upon the services of the Officers and Directors to determine and implement our overall focus and strategy. There can be no assurance that management’s experience will be sufficient to successfully achieve our business objectives. All decisions regarding the management of our affairs will be made exclusively by our Officers and Directors. In the event these persons are ineffective, our business and results of operation would likely be adversely affected.
We may not be able to compete successfully against current and future competitors .
     A large number of companies currently compete with us in the marketplace. Many competitors have far greater capital, marketing and other resources than we do. Furthermore, we cannot assure you that these or other companies will not develop new or enhanced products that are more effective than those of Gotham or partner companies that we acquire in the future.
Numerous external forces, including the recent financial crisis, could negatively affect our businesses, results of operations and financial condition.
     Numerous external forces, including the state of global financial markets and general economic conditions, lack of consumer confidence, lack of availability of credit, interest rate and currency rate fluctuations and national and international political circumstances (including wars and terrorist acts) could negatively affect our business, results of operations and financial condition. The recent global financial crisis affecting the banking system, financial markets and financial institutions has resulted in a tightening in the credit markets, a low level of liquidity in many financial markets and extreme volatility in credit and equity markets. The length of time or severity with which these conditions may persist is unknown. As a consequence, our operating results for a particular period are difficult to predict and, therefore, prior results are not necessarily indicative of expected results in future periods. In response to the financial crisis, many customers and potential customers may forgo, delay or reduce technology and other purchases. In connection with such crisis, we may experience reductions in sales of our products and services,

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extended sales cycles, difficulties in collecting or the inability to collect accounts receivable, slower adoption of new technologies, increased price competition and difficulties in obtaining or the inability to obtain financing.
If we are not able to deploy capital effectively and on acceptable terms, we may not be able to execute our business strategy.
     Our strategy includes effectively deploying capital by acquiring new companies. We may not be able to identify attractive acquisition candidates that fit our strategy. Even if we are able to identify such candidates, we may not be able to acquire such companies due to an inability to reach mutually acceptable financial or other terms with such companies or due to competition from other potential acquirers that may have greater resources, brand name recognition, industry contacts or flexibility of structure than us. The recent turmoil in the global economy has caused significant declines and fluctuations in the valuations of publicly-traded companies and privately-held companies. Uncertainty regarding the extent to which valuations of companies that fit our acquisition criteria will continue to fluctuate may affect our ability to accurately value potential acquisition candidates. Additionally, the recent economic crisis may make it more difficult for us to obtain capital needed to deploy to new and existing partner companies. If we are unable to effectively deploy capital to our companies on acceptable terms, we may not be able to execute on our strategy, and our business may be adversely impacted.
Our operations and growth and that of our partner companies could be impaired by limitations on our and/or their ability to raise capital or borrow money on favorable terms.
     We may need to raise additional capital or borrow money in order to sustain operations or to grow. If we are unable to raise capital or obtain credit on favorable terms, our ability to operate and grow may be impaired. This may require us to take other actions, such as borrowing money on terms that may be unfavorable, or divesting of assets prematurely to raise capital. If we need capital and are unable to raise it, then we may need to limit or cease operations.
The loss of our or our partner companies’ executive officers or other key personnel or our partner companies’ inability to attract additional key personnel could disrupt our business and operations.
     If one or more of our executive officers or key personnel, including highly trained information technology personnel, or our partner companies’ executive officers or key personnel, including highly trained information technology personnel, were unable or unwilling to continue in their present positions, or if we or our partner companies were unable to hire qualified personnel, our business and operations could be disrupted and our operating results and financial condition could be seriously harmed.
We may be subject to litigation proceedings or government regulation that could harm our business.
     We may be subject to legal claims involving stockholder, consumer, competition and other matters. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or, in cases for which injunctive relief is sought, an injunction prohibiting us from performing one or more critical activities. If we were to receive an unfavorable ruling in a litigation matter, our business, financial condition and results of operations could be materially harmed. Even if legal claims brought against us are without merit, defending lawsuits may take significant time, be expensive and divert the attention of our management from other business concerns.
Our officers and directors will have significant voting power and may take actions that may not be in the best interests of other shareholders.
     Our officers and directors, principal stockholders and their affiliates currently control in excess of a majority of our voting securities. If these stockholders act together, they will be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of the common stock. This concentration of ownership may not be in the best interests of all of our stockholders.

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We do not anticipate paying dividends in the foreseeable future, and the lack of dividends may have a negative effect on the stock price.
     We currently intend to retain future earnings to support operations and to finance expansion and, therefore, do not anticipate paying any cash dividends on our capital stock in the foreseeable future.
We did not obtain an opinion from an unaffiliated third party as to the fair market value of Gotham or the fairness of the transaction to our stockholders and, as such, our stockholders are relying solely on the judgment of our board of directors.
     We did not obtain an opinion from an unaffiliated third party that the price we paid to acquire Gotham was fair to our stockholders. Accordingly, our stockholders relied solely on the judgment of our board of directors. None of our directors is a business valuation expert, an independent public accountant or an investment banker.
There is not now, and there may not ever be an active market for shares of our common stock .
     There is no public market for shares of our common stock. This makes it difficult for our stockholders to sell their shares as and when they choose. Should a trading market develop, it is likely to result in only small trading volumes for quite some time. Small trading volumes are generally understood to depress market prices. As a result, you may not always be able to resell shares of our common stock publicly at the time and prices that you feel are fair or appropriate.
We intend to have our common stock quoted on the OTC Bulletin Board, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on a National Exchange.
     Our securities will be traded in the over-the-counter market. It is anticipated that they will be quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities. Quotation of our securities on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were quoted or listed on a national exchange.
Our common stock is subject to the “penny stock” rules of the SEC, which may make it more difficult for stockholders to sell the common stock.
     The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
    that a broker or dealer approve a person’s account for transactions in penny stocks; and
 
    the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
     In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
    obtain financial information and investment experience objectives of the person; and
 
    make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
     The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

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    sets forth the basis on which the broker or dealer made the suitability determination; and
    that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
     Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
     The regulations applicable to penny stocks may severely affect the market liquidity for the common stock and could limit an investor’s ability to sell the common stock in the secondary market.
As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward looking statements does not apply to us.
     Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we do not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
The market price of our common stock is likely to be highly volatile and subject to wide fluctuations.
     Dramatic fluctuations in the price of our common stock may make it difficult to sell our common stock. The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors, some of which are beyond our control. Such factors include:
    dilution caused by our issuance of additional shares of common stock and other forms of equity securities, in connection with future capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies;
    variations in our quarterly operating results;
    announcements that our revenue or income are below or that costs or losses are greater than analysts’ expectations;
    the general economic slowdown;
    sales of large blocks of our common stock by stockholders;
    announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and
    fluctuations in stock market prices and volumes;
     These and other factors, and the impact of these risks, singly or in the aggregate, may result in material adverse changes to the market price of our common stock and/or our results of operations and financial condition.

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We are subject to Sarbanes-Oxley and the reporting requirements of federal securities laws, which can be expensive .
     As a public reporting company, we are subject to Sarbanes-Oxley and, accordingly, are subject to the information and reporting requirements of the Securities Exchange Act of 1934 and other federal securities laws. The costs of compliance with Sarbanes-Oxley, of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC, furnishing audited reports to our Stockholders, and other legal, audit and internal resource costs attendant with being a public reporting company will cause our expenses to be higher than if we were privately held.
Our internal control over financial reporting may have weaknesses or inadequacies that may be material.
     Section 404 of the Sarbanes-Oxley Act of 2002 requires us to perform an evaluation of our internal control over financial reporting and our auditor to attest to such evaluation on an annual basis. Ongoing compliance with these requirements is expected to be expensive and time-consuming and may negatively impact our results of operations. We cannot make any assurances that material weaknesses in our internal control over financial reporting will not be identified in the future. If any material weaknesses are identified in the future, we may be required to make material changes in our internal control over financial reporting, which could negatively impact our results of operations. In addition, upon such occurrence, our management may not be able to conclude that our internal control over financial reporting is effective or our independent registered public accounting firm may not be able to attest that our internal control over financial reporting was effective. If we cannot conclude that our internal control over financial reporting is effective or if our independent registered public accounting firm is not able to attest that our internal control over financial reporting is effective, we may be subject to regulatory scrutiny, and a loss of public confidence in our internal control over financial reporting, which may cause the value of our common stock to decrease.
Impact of corporate governance laws .
     Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty for public companies. We are required to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
ITEM 2. FINANCIAL INFORMATION
CRITICAL ACCOUNTING ESTIMATES
     Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements may require us to make estimates and assumptions that may affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements. We do not currently have any estimates or assumptions where the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change or the impact of the estimates and assumptions on financial condition or operating performance is material, except as described below.
Cash and Cash Equivalents
     For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.
Revenue Recognition

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     Contingency payments are recognized quarterly as an adjustment of the sales price of the business sold from a percentage of Digi-Data’s vaulting service revenue and is included in discontinued operations.
Property and Equipment and Depreciation
     Property and equipment are stated at cost. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets. During the year ended December 31, 2008, the Company purchased computer equipment totaling $1,864. Computer equipment is depreciated over 5 years. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation expense of $373 was charged to operations for the year ended December 31, 2008.
Stock-Based Compensation
     As of December 31, 2008, the Company has a stock-based employee compensation plan which it accounts for applying FASB Codification Topic 718, “Share-Based Payment.” Under these accounting rules, the Company is required to select a valuation technique or option-pricing model that meets the criteria as stated in the standard, which includes a binomial model and the Black-Scholes model. At the present time, the Company applies the Black-Scholes model. The rules also requires the Company to estimate forfeitures in calculating the expense relating to stock-based compensation as opposed to only recognizing these forfeitures and the corresponding reduction in expense as they occur.
Income Tax
     Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended September 30, 2009 as Compared to Nine Months Ended September 30, 2008
      Assets. At September 30, 2009, we had $1,525,700 in total assets, compared to $1,450,176 at December 31, 2008. This was primarily due to the increase of contingency payments to $1,236,232 from Digi-Data Corp. at September 30, 2009.
      Liabilities. At September 30, 2009, our Total Liabilities consisted of $2,121 compared to $496,292 at December 31, 2008. Liabilities consist only of Accounts Payable. Long Term Liabilities decreased to $0 at September 30, 2009 from $491,538 at December 31, 2008 primarily due to payment of deferred compensation and prepaid expenses to Digi-Data Corp.
      Stockholders’ Equity (Deficit). Our Stockholders’ Equity (Deficit) increased to $1,523,579 at September 30, 2009 from $953,884 at December 31, 2008. This increase was primarily due to the receipt of contingency payments from Digi-Data Corp. and an increase in Accumulated Deficit to $(231,888) at September 30, 2009, from $(794,083) at December 31, 2008.
      Revenues and Net Income . Our Revenues including other income increased to $1,239,576 for the nine months ended September 30, 2009 from $526,566 for the nine months ended September 30, 2008; our Income from Discontinued Operations increased to $1,237,673 for the nine months ended September 30, 2009, compared to $614,253 for the nine months ended September 30, 2008; and our net income increased to $562,195 for the nine months ended September 30, 2009, compared to $311,228 for the nine months ended September 30, 2008. These

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increases were due to the success of the agreement with Digi-Data Corporation. We continue to receive 10% of Digi-Data’s gross Vault sales and 5% of the year to year increase. This agreement ends on February 28, 2011.
      General and Administrative Expenses . General and Administrative Expenses increased to $297,292 for the nine months ended September 30, 2009 from $84,349 for the nine months ended September 30, 2008. General and Administrative Expenses consist of officers salaries of $51,825, corporate administrative expenses of $67,872, legal and accounting fees of $123,595, and Consulting Fees of $54,000.
Year Ended December 31, 2008 as Compared to Year Ended December 31, 2007
      Assets. At December 31, 2008, we had $1,450,176 in total assets, compared to $1,110,412 at December 31, 2007.
      Liabilities. At December 31, 2008, our total liabilities consisted of $496,292 compared to $708,802 at December 31, 2007. Liabilities consist primarily of liabilities from discontinued operations.
      Stockholders’ Equity (Deficit). Our Stockholders’ Equity (Deficit) increased to $953,884 at December 31, 2008 from $401,610 at December 31, 2007. This increase was primarily due to the receipt of contingency payments from Digi-Data Corp. and a decrease in Accumulated Deficit from $(1,270,376) at December 31, 2007, to $(794,083) at December 31, 2008.
      Revenue and Net Incomes . We did not have any revenue during the years ended 2008 and 2007, though we had income from discontinued operations of $553,363 for the year ended December 31, 2008, compared to $240,145 for the year ended December 31, 2007, and net income of $476,293 for the year ended December 31, 2008, compared to $164,020 for the year ended December 31, 2007. These increases were due to the success of the agreement with Digi-Data Corporation. We continue to receive 10% of Digi-Data’s gross Vault sales and 5% of the year to year increase. This agreement ends on February 28, 2011.
      General and Administrative Expenses . General and Administrative Expenses increased to $123,689 for the year ended December 31, 2008 from $120,271 for the year ended December 31, 2007.
LIQUIDITY AND CAPITAL RESOURCES
     As reflected in the accompanying consolidated financial statements, at September 30, 2009, we had $772,507 cash on hand and stockholders’ equity of $1,523,579. While we believe in the viability of our strategy to improve sales volume and acquire companies, and in our ability to raise additional funds, there can be no assurances that we will be able to fully effectuate our business plan.
     At September 30, 2009, we had $1,525,700 in total assets, compared to $1,450,176 at December 31, 2008. This increase is primarily due to contingency payments from Digi Data Corp.
     Our efforts are directed at growing our business by acquiring profitable and cash neutral technology companies with high growth potential. The current worldwide recession has not materially adversely affected our operations or business plan, and we believe we will continue to increase our cash position and liquidity for the foreseeable future. We believe we have enough capital to fund our present operations during the next 12 months.
OFF BALANCE SHEET ARRANGEMENTS
     We have no off balance-sheet arrangements.
ITEM 3. PROPERTIES
     Our principal executive office is located in Hauppauge, New York, in an executive center, where we lease approximately 300 square feet of office space. Monthly lease payments are approximately $2,600 and the lease term expires June 30, 2010.

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     Our Gotham operations are located in New York, New York, where we lease approximately 3,000 square feet of office space. Monthly lease payments are approximately $5,000 and the lease term expires October 31, 2010.
     Our leased properties are suitable for their respective uses and are, in general, adequate for our present needs. Our properties are subject to various federal, state, and local statutes and ordinances regulating their operations. Management does not believe that compliance with such statutes and ordinances will materially affect our business, financial condition, or results of operations.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
     The following table sets forth information known to us, as of November 30, 2009, relating to the beneficial ownership of shares of common stock by: (i) each person who is known by us to be the beneficial owner of more than 5% of the Company’s outstanding common stock; (ii) each director; (iii) each executive officer; and (iv) all executive officers and directors as a group. Under securities laws, a person is considered to be the beneficial owner of securities owned by him (or certain persons whose ownership is attributed to him) or securities that can be acquired by him within 60 days, including upon the exercise of options, warrants or convertible securities. The Company determines a beneficial owner’s percentage ownership by assuming that options, warrants and convertible securities that are held by the beneficial owner and which are exercisable within 60 days, have been exercised or converted. The Company believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock shown as being owned by them. Unless otherwise indicated, the address of each beneficial owner in the table set forth below is care of iGambit, Inc., 1600 Calebs Path Extension, Suite 114, Hauppauge, New York, 11788. The percentages in the following table are based upon 23,954,056 shares outstanding as of November 30, 2009.
                 
    Amount and Nature    
    of Beneficial    
Name of Beneficial Owner   Ownership   Percent of Class
John Salerno, Chief Executive Officer, President, Chairman of the Board, and Director
    5,616,900 (1)     23.3 %
 
Elisa Luqman, Chief Financial Officer, Executive Vice President, General Counsel and Director
    5,715,000 (2)     23.9 %
 
James J. Charles, Director
    441,000       1.8 %
 
George G. Dempster, Director
    392,000       1.6 %
 
John Waters, Director
    -0-       *  
 
Mehul Mehta
    2,450,000       10.2 %
 
Executive Officers and Directors as a Group (5):
    12,164,900       50.5 %
 
*   Less than 1.0%
 
1.   Includes: options to purchase 46,900 shares of common stock at $0.01 per share held by John L. Salerno, Mr. Salerno’s son; and options to purchase 100,000 shares of common stock at $0.01 per share held by Dean T. Salerno, Mr. Salerno’s son.
 
2.   Includes 245,000 shares of common stock held by Muhammad Luqman, Ms. Luqman’s husband.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.

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DIRECTORS AND EXECUTIVE OFFICERS
     Our board of directors manages our business and affairs. Under our Articles of Incorporation and Bylaws, the Board will consist of not less than one nor more than seven directors. Currently, our Board consists of five directors.
     The names, ages, positions and dates appointed of our current directors and executive officers are set forth below.
                 
Name   Age   Position   Appointed
John Salerno
    71     Chief Executive Officer, President, Chairman of the Board, and Director   March 2009
(appointed Chairman and Director in April 2000)
Elisa Luqman
    45     Chief Financial Officer, Executive Vice President, General Counsel, and Director   March 2009
(appointed Director in August 2009)
James J. Charles
    67     Director   March 2006
George G. Dempster
    70     Director   January 2001
John Waters
    64     Director   August 2009
      John Salerno 71, Chief Executive Officer, President, Chairman of the Board, and Director. Mr. Salerno is a seasoned hands-on executive with over 40 years of experience with public and private computer software and service companies. Mr. Salerno built a multi-million dollar business from a start up, servicing the real estate industry. The business was sold in 1984 and Mr. Salerno provided consulting services to a wide range of clients through 1995. In 1996, along with his daughter and a small group of private accredited investors, he co-founded the Company. After signing contracts with Verizon and Cablevision, the Company sold its assets in 2006 to Digi-Data Corporation. From 2006 thru February 2009 Mr. Salerno served as President of the Vault Services Division of Digi-Data Corporation. Upon the expiration of his 3 year contract the Vault Services Division was at a revenue run rate of $12 million annually. In March 2009, Mr. Salerno returned to his full time management roll at the Company. Mr. Salerno is an ex — US Marine Corps, Crypto/ Communications Officer and has a BS in Mathematics from Fordham University. Mr. Salerno is Ms. Luqman’s father.
      Elisa Luqman 45, Chief Financial Officer, Executive Vice President, General Counsel, and Director. Ms. Luqman is a computer literate attorney with over 18 years experience with intellectual property and computer software. Prior to co-founding the Company, Ms. Luqman was president of University Software Corp., a software development company focused on a wide range of student educational and intellectual applications. From 2006 through February 2009 Ms. Luqman was employed as in-house general counsel by Digi-Data Corporation, the company that acquired the Company’s assets in 2006. In that capacity she was responsible for acquisitions, mergers, patents, and employee contracts, and worked very closely with the Digi-Data’s outside counsel, DLA-Piper. In March 2009 Ms. Luqman rejoined the Company in her current capacities. Ms Luqman received a BA degree in Marketing, a JD in Law, and a MBA Degree in Finance from Hofstra University. Ms. Luqman is a member of the bar in New York and New Jersey. Ms. Luqman is Mr. Salerno’s daughter.
      James J. Charles 67, Director. Mr. Charles is a certified public accountant, and a high profile financial executive with a broad base of experience covering a career as a CFO and a Senior Managing Partner with Ernst & Young . Mr. Charles’ financial experience is with firms ranging in size from $24MM to $100MM in annual revenue. He worked closely with management and Boards of Directors on matters ranging from mergers and acquisitions to stock restructurings and spin-offs. Mr. Charles’ education includes studies and management programs at Harvard University, Williams College. Mr. Charles received his BBA in Accounting at Manhattan College.
      George G. Dempster 70, Director. Mr. Dempster is a former Commissioner of Commerce for the State of New York. He served as the Chairman of the Finance Committee for Hofstra University for 20 years, and is currently Chairman Emeritus of the Board of Trustees of the University. Mr. Dempster has served as the CEO of

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Trans-leisure Corp, a diversified holding company with interests ranging from helicopter services to manufacturing, and as the CEO of Cybernetics, a major computer software developer. Mr. Dempster has also served as a marketing manager for IBM. Mr. Dempster has a BA in business administration from Hofstra University.
      John Waters 64, Director. Mr. Waters is a former Senior Partner at Arthur Andersen (1967-2001) with exceptional leadership skills and expertise in mergers and acquisitions (particularly reverse mergers) and 33’ Act filings with the Securities and Exchange Commission. Mr. Waters was involved in raising over $60 million for a special purpose acquisition company (SPAC). Mr. Waters serves on the audit committee and on the board of Authenticate Holding Corp. (ADAT ) a publicly traded company. He also serves on the board of two privately held companies. Mr. Waters is a certified public accountant and has a BA degree from Iona College.
ITEM 6. COMPENSATION
Summary Compensation Table
Effective September 1, 2009 Mr. Salerno and Ms. Luqman became full time employees of the Company with annual salaries of $225,000 and $200,000 respectively. Prior to September 1, 2009 Mr. Salerno and Ms. Luqman were employees of Digi-Data Corp.
During 2006 and 2007, Mr. Salerno exercised options to acquire 1,800,000 common shares of the Company and during 2007 Ms. Luqman exercised options to acquire 1,500,000 common shares of the Company.
Prior to December 31, 2006, the Company was indebted to officers, John Salerno and Elisa Luqman for unpaid compensation accrued totaling $350,000. John Salerno received advances against the deferred compensation in the amounts of $74,281.25 and $44,000 as of December 31 2007 and December 31, 2008 respectively. Elisa Luqman received advances against the deferred compensation in the amounts of $5,000 and $75,000 as of December 31, 2007 and December 31, 2008 respectively. The advances against deferred compensation totaling $79,281 and $198,281 as of December 31, 2007 and December 31, 2008 respectively were in the form of a note payable to the Company and were collateralized with the officers common shares issued and outstanding of 5,470,000 shares each.
During the nine months ended September 30, 2009, the Company paid the total balance to the officers, who subsequently repaid the advances received.
                                                                         
Current                                           Non-Equity            
Officers                                           Incentive   Nonqualified        
Name &                                   Option   Plan   Deferred   All Other    
Principal           Salary   Bonus   Stock   Awards   Compensation   Compensation   Compensation   Total
Position   Year   ($)   ($)   ($) (1)   ($)   ($)   Earnings ($)   ($)   ($)
John Salerno
    2008       0       0       0       0       0       0       0       0  
CEO, President,
    2007                                                                  
Chairman & Director
                                                                       
 
    2006                                                                  
Elisa Luqman
    2008       0       0       0       0       0       0       0       0  
CFO, Executive VP,
    2007                                                                  
General Counsel, & Director
                                                                       
 
    2006                                                                  
Employment Arrangements with Named Executive Officers
     The Company does not currently have any employment agreements with it executive officers.

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Compensation of the Board of Directors
     Members of our Board currently receive $1,000 per quarter for their service to the Company.
     Director George Dempster was engaged as an Independent Consultant to Digi-Data Corporation from the period June 1, 2006 through April 30, 2009. The Company agreed to share equally in the fees paid to Mr. George Dempster. From the period of February 2006 through February 2009 George Dempster was paid $179,448 directly from Digi-Data. The $89,724 representing the Company’s 50% share of that expense was deducted by Digi-Data from amounts Digi-Data owed to the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
RELATED PARTY TRANSACTIONS
     Pursuant to the terms of the agreements governing the sale of our assets to DDC in 2006, we will continue to receive Revenue Share Payments from DDC until 2011. In connection with said asset sale, Mr. Salerno and Ms. Luqman entered into employment agreements with DDC and worked for DDC until those agreements terminated in February 2009. Notwithstanding the termination of said employment agreements, Mr. Salerno is entitled, pursuant to the terms thereof, to receive a share of the net proceeds of any sale or other disposition of all or substantially all of the stock or assets of DDC that occurs on or before February 2011.
     Director George Dempster was engaged as an Independent Consultant to Digi-Data Corporation from the period June 1, 2006 through April 30, 2009. The Company agreed to share equally in the fees paid to Mr. George Dempster. From the period of February 2006 through February 2009 George Dempster was paid $179,448 directly from Digi-Data. The $89,724 representing the Company’s 50% share of that expense was deducted by Digi-Data from amounts Digi-Data owed to the Company.
BOARD INDEPENDENCE AND COMMITTEES
Independence Standard
     The Company has elected to use the independence standards of the NYSE AMEX Equities Exchange in its determination of whether the members of its Board are independent. Based on the foregoing, the Company has concluded that Mr. Charles, Mr. Waters, and Mr. Dempster are independent. The Board has established an Audit Committee and a Compensation Committee. The Board does not currently have a Nominating Committee. The work typically conducted by a Nominating Committee is conducted by the full Board.
Audit Committee
     The Audit Committee presently consists of Messrs. Charles, Waters, and Dempster, with Mr. Charles serving as chairman. Our Board has determined that Mr. Charles qualifies as an “audit committee financial expert” as defined under the federal securities laws. The Audit Committee is responsible for monitoring and reviewing our financial statements and internal controls over financial reporting. In addition, they recommend the selection of the independent auditors and consult with management and our independent auditors prior to the presentation of financial statements to stockholders and the filing of our forms 10-Q and 10-K. The Company has not adopted a charter. When a charter is adopted, it will be posted on our web site. The Audit Committee was established in August 2009, and thus had no meeting in 2008.

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Compensation Committee
          The Compensation Committee presently consists of Messrs. Charles, Waters, and Dempster, with Mr. Waters serving as chairman. The Compensation Committee is responsible for reviewing and recommending to the Board the compensation and over-all benefits of our executive officers, including administering the Company’s 2006 Long Term Incentive Plan. The Compensation Committee may, but is not required to, consult with outside compensation consultants. The Compensation Committee has not adopted a charter. When a charter is adopted, it will be posted on our web site. The Compensation Committee was established in August 2009, and thus had no meetings in 2008.
Board Attendance at Annual Meetings
          The Company encourages all members of the board to attend the annual meeting of shareholders in person or by telephone. All of the directors attended the last annual meeting of shareholders.
Selection of Board Nominees
     The Company’s full Board determines the individuals that will be nominated for election as directors. While no single factor is determinative, in order to have a Board with skills and attributes needed to function effectively, the following factors are considered:
    if not a Company employee, the ability to be an independent director;
 
    educational background, work experience and business knowledge generally;
 
    willingness and ability to dedicate the time and resources necessary for the diligent performance of the duties of a director of the Company;
 
    professional experience that is relevant to the Company’s business;
 
    character and ethics;
 
    reputation in the business community;
 
    previous service on boards, including public companies;
 
    actual or potential conflicts of interest;
 
    whether the person has any history of criminal convictions or violations of governmental rules and regulations; and
 
    other criteria that are relevant to determining whether the person will function effectively as a director.
          In determining whether to elect a director or to nominate any person for election by the stockholders, the Board assesses the appropriate size of the Board, consistent with its Bylaws, and whether any vacancies on the Board are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, the Board will consider various potential candidates to fill each vacancy. Candidates may come to the attention of the Board through a variety of sources, including from current members of the Board, stockholders, or other persons.
          The Board has not yet had the occasion to, but will, consider properly submitted proposed nominations by stockholders who are not directors, officers, or employees of the Company on the same basis as candidates proposed by any other person. A stockholder may nominate a person for election as a director at an annual meeting of the stockholders only if written notice of such stockholder’s intent to make such nomination has been given the Company’s General Counsel as described in the applicable proxy statement for the previous year’s annual meeting of stockholders. Each written notice must set forth: (a) as to each person whom the stockholder proposes to

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nominate for election as a director, (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or that is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended, and (ii) such person’s written consent to being named in the proxy statement as a nominee and to serve as a director if elected; and (b) as to the stockholder making such nomination, (i) the name and address of such stockholder, as they appear on the Company’s books, (ii) the class and number of shares of stock of the Company which are owned by such stockholder, (iii) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination, and (iv) a representation whether the stockholder intends or is a part of a group which intends (y) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and/or (z) otherwise to solicit proxies from stockholders in support of such nomination. The Board will evaluate the suitability of potential candidates nominated by stockholders in the same manner as other candidates identified to the Board.
Stockholder Communications with the Board
     Stockholders wishing to communicate with the Company’s Board as a whole or with certain directors, including committee chairpersons or the Chairman of the Board, individually, may do so by writing the General Counsel at the Company’s headquarters at 1600 Calebs Path Extension, Suite 114, Hauppauge, New York, 11788. Each stockholder communication should include an indication of the submitting stockholder’s status as a stockholder of the Company and eligibility to submit such communication. Each such communication will be received for handling by the General Counsel, who will maintain originals of each communication received and provide copies to (i) the Chairman and (ii) any other appropriate committee(s) or director(s) based on the expressed desire of the communicating stockholder and content of the subject communication. The General Counsel will also coordinate with the Chairman to facilitate a response, if it is believed that a response is appropriate or necessary, to each communication received. The Board, or a designated committee of the Board, will review all stockholder communications received on a periodic basis. The Board reserves the right to revise this policy in the event that this process is abused, becomes unworkable or otherwise does not efficiently serve the purpose of the policy.
ITEM 8.   LEGAL PROCEEDINGS.
     None.
ITEM 9.   MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
     To date there has not been an established public trading market in the Company’s common stock. The Company’s securities are not listed on any exchange or over the counter market. The Company does not have a ticker symbol.
HOLDERS
     As of November 30, 2009, there are 23,954,056 shares of our common stock outstanding, held of record by 149 persons. We have 3,085,000 common stock warrants outstanding, and 1,796,900 common stock options outstanding. No shares are being publicly offered by us pursuant to this Registration Statement on Form 10.
     As of November 30, 2009, 21,737,018 shares of our common stock are eligible to be sold under Rule 144.

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DIVIDENDS
     We have never declared or paid any dividends on our common stock. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will be dependent upon our results of operations, financial condition, capital requirements, contractual restrictions and other factors deemed relevant by the Board of Directors. The Board of Directors is not expected to declare dividends or make any other distributions in the foreseeable future, but instead intends to retain earnings, if any, for use in business operations.
EQUITY COMPENSATION PLAN INFORMATION
     We currently have one equity compensation plan outstanding which is our 2006 Long Term Incentive Plan. The Plan was adopted by our directors and approved by our stockholders on March 26, 2006. The Plan permits the award of incentive stock options, non-qualified stock options, stock appreciation rights, and stock grants. We have reserved 10 million shares for issuance under the Plan, plus an annual increase equal to 10% of the number of outstanding shares of our common stock on the first day of each year, but in no event more than 15 million shares of common stock in the aggregate. As of November 30, 2009, there were 4,798,708 shares available for issuance under the Plan.
     The following table describes our equity compensation plans as of November 30, 2009:
                         
                    Number of Securities
                    Remaining Available
                    for Future Issuance
    Number of Securities           under Equity
    to be Issued Upon   Weighted Average   Compensation Plans
    Exercise of   Exercise Price of   (excluding securities
    Outstanding Options,   Outstanding Options,   referenced in
    Warrants and Rights   Warrants and Rights   column (a))
Plan Category   (a)   (b)   (c)
Equity compensation plans approved by our stockholders (1)
    1,796,900     $ 0.01       4,798,708  
Equity compensation plans not approved by our stockholders
    2,310,000     $ 0.75       0  
 
(1)   Equity compensation plans approved by our stockholders consist of our 2006 Long Term Incentive Plan.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
     In the past three years, we have sold the following securities in transactions not registered under the Securities Act of 1933, as amended (the “Securities Act”):
     On May 26, 2009, we issued warrants to purchase 2,000,000 shares of our common stock to Newbridge Securities pursuant to the terms of a consulting agreement between the Company and Newbridge. 500,000 warrants, at an exercise price of $0.50 per share, vested upon issuance; 500,000 warrants, at an exercise price of $0.65 per share, vest on the 1 year anniversary of issuance; 500,000 warrants, at an exercise price of $0.80 per share, vest on the 2 year anniversary of issuance; and 500,000 warrants, at an exercise price of $1.15 per share, vest on the 3 year anniversary of issuance. The securities were issued in reliance on Section 4(2) of the Securities Act. The issued securities are restricted, and the agreements representing the securities contain a standard restrictive legend.
     On June 1, 2009, we issued warrants to purchase 250,000 shares of our common stock to Roetzel & Andress pursuant to the terms of an engagement letter between the Company and Roetzel. 100,000 warrants, at an exercise price of $0.50 per share, vested upon issuance; 50,000 warrants, at an exercise price of $0.65 per share, vest on the 1 year anniversary of issuance; 50,000 warrants, at an exercise price of $0.85 per share, vest on the 2 year anniversary of issuance; and 50,000 warrants, at an exercise price of $1.15 per share, vest on the 3 year anniversary

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of issuance. The securities were issued in reliance on Section 4(2) of the Securities Act. The issued securities are restricted, and the agreements representing the securities contain a standard restrictive legend.
     On October 1, 2009, we issued 500,000 shares of our common stock and options to purchase 1,500,000 shares of our common stock, at $0.01 per share, to Jekyll in connection with our acquisition of the assets of Jekyll. The securities were issued in reliance on Section 4(2) of the Securities Act. The issued securities are restricted, and the certificates representing the shares contain a standard restrictive legend.
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED
AUTHORIZED CAPITAL STOCK
Common Stock
     Our Articles of Incorporation authorize us to issue up to 75,000,000 shares of common stock, $0.001 par value per share. As of November 30, 2009, 23,954,056 shares of our common stock were issued and outstanding. Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Cumulative voting of shares in elections of directors is not permitted. Holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available therefore. In the event of a liquidation, dissolution or winding up of the Company, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred stock, if any. The common stock has no preemptive or other subscription rights. No redemption or sinking fund provisions apply to the common stock. All outstanding shares of common stock are duly authorized, validly issued, fully paid, and nonassessable. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future.
TRANSFER AGENT AND REGISTRAR
     We have not engaged a transfer agent.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
     Our Bylaws provide that we shall indemnify our officers, directors, employees and agents to the extent permitted by the Delaware General Corporation Law. Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement, that are incurred in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation, a derivative action. In order to be eligible for indemnification under Section 145, the director, officer, employee or other individual must have acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.
     Our Articles of Incorporation provide that our directors shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director except for liability: (i) for any breach of the director’s duty of loyalty to us or our stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv) for any transaction from which the director derived any improper personal benefit.

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     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
     See “Item 15. Financial Statements and Exhibits” of this Registration Statement on Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
     None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a)   Financial Statements
     
Report of Independent Registered Public Accounting Firm
        F-1
Balance Sheet as of December 31, 2008 and 2007
        F-2
Statement of Income for the years ended December 31, 2008 and 2007
        F-3
Statement of Changes in Stockholder’s Equity for the years ended December 31, 2008 and 2007
        F-4
Statement of Cash Flows for the years ended December 31, 2008 and 2007
        F-5
Notes to Financial Statements
        F-6
 
Consolidated Balance Sheet as of September 30, 2009 and December 31, 2008
      F-15
Consolidated Statement of Income for the nine months ended September 30, 2009 and 2008
      F-16
Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 and 2008
      F-18
Notes to Financial Statements
      F-19

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(b)   Exhibits
     
Exhibit No.   Description
 
   
3.1(i)
  Certificate of Incorporation, filed with the Delaware Secretary of State on April 13, 2000
 
   
3.1(ii)
  Certificate of Merger, filed with the Delaware Secretary of State on April 18, 2000
 
   
3.1(iii)
  Certificate of Amendment Changing Name, filed with the Delaware Secretary of State on December 19, 2000
 
   
3.1(iv)
  Certificate of Merger filed with the Delaware Secretary of State on February 17, 2006
 
   
3.1(v)
  Certificate of Amendment Changing Name filed with the Delaware Secretary of State on April 5, 2006
 
   
3.1(vi)
  Certificate of Amendment Increasing Authorized Common Stock to 75 Million Shares, filed with the Delaware Secretary of State on December 2, 2009
 
   
3.2
  Bylaws
 
   
5.1
  Legal opinion of Roetzel & Andress (1)
 
   
10.1
  iGambit, Inc. 2006 Long Term Incentive Plan, Amended 12/31/2006
 
   
10.2
  Asset Purchase Agreement between the Company and Digi-Data Corporation, dated December 21, 2005.
 
   
10.3
  Asset Purchase Agreement and Plan of Reorganization between Jekyll Island Ventures Inc. and Gotham Innovation Lab Inc., dated September 30, 2009
 
   
10.4
  Newbridge Consulting Agreement (1)
 
   
21
  Subsidiaries
 
   
23.1
  Consent of Michael F. Albanese, CPA
 
   
23.2
  Consent of Roetzel & Andress (included in Exhibit 5.1)
 
(1) To be filed by amendment.

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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.
         
Dated: December 31, 2009  iGAMBIT, INC.
 
 
  By:   /s/ John Salerno   
    John Salerno   
    Chief Executive Officer   
 
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following person in the capacities and date stated.
     
/s/ John Salerno 
  December 31, 2009 
 
John Salerno
   
Chairman of the Board, Chief Executive Officer,
   
President, and Director
   
(Principal Executive Officer)
   
 
/s/ Elisa Luqman 
  December 31, 2009 
 
Elisa Luqman
   
Chief Financial Officer, Executive Vice President,
   
General Counsel, and Director
   
(Principal Financial Officer and Principal Accounting Officer)
   

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INDEPENDENT AUDITOR’S REPORT
To the Board of Directors and Shareholders of: iGambit Inc.
I have audited the accompanying balance sheets of iGambit Inc. as of December 31,2008 and December 31,2007 and the related statements of income, changes in stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofiGambit Inc. as of December 31, 2008 and December 31,2007, and the results ofits operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Michael F. Albanese, CPA Parsippany, NJ
August 28, 2009

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IGAMBIT INC. BALANCE SHEETS DECEMBER 31,
                 
    2008   2007
ASSETS
               
Current assets
               
Cash
  $ 322,439     $ 40,907  
Notes receivable — stockholders
    17,000        
Assets from discontinued operations
    646,488       545,542  
Total current assets
    985,927       586,449  
Property and equipment, net
    1,491        
Other assets
               
Notes receivable — stockholders
    198,281       89,281  
Assets from discontinued operations
    264,477       434,682  
Total other assets
    462,758       523,963  
 
  $ 1,450,176     $ 1,110,412  
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities
               
Accounts payable
  $ 4,754     $ 2,659  
Long-term liabilities
               
Liabilities from discontinued operations
    491,538       706,143  
Total liabilities
    496,292       708,802  
Stockholders’ equity
               
Common stock, $.001 par value; authorized 30,000,000 shares; issued and outstanding — 22,719,056 shares in 2008 and 21,737,018 in 2007
    22,719       21,737  
Additional paid-in capital
    1,725,248       1,650,249  
Accumulated deficit
    (794,083 )     (1,270,376 )
Total stockholders’ equity
    953,884       401,610  
 
  $ 1,450,176     $ 1,110,412  
The accompanying notes are an integral part of the financial statements.

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IGAMBIT INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
                 
    2008     2007  
 
               
Revenue
  $     $  
 
               
Operating expenses
               
General and administrative expenses
    123,689       120,271  
 
           
 
               
Loss from operations
    (123,689 )     (120,271 )
 
               
Other income
               
Interest income
    2,554       817  
 
           
 
               
Loss from continuing operations before income tax benefit
    (121,135 )     (119,454 )
 
               
Income tax benefit
    (44,065 )     (43,329 )
 
           
 
               
Loss from continuing operations
    (77,070 )     (76,125 )
 
               
Income from discontinued operations (net of taxes of $361,286 and $156,790)
    553,363       240,145  
 
           
 
               
Net income
  $ 476,293     $ 164,020  
 
           
 
               
Basic and fully diluted earnings per common share:
               
Continuing operations
  $ (.01 )   $ (.01 )
Discontinued operations, net of tax
  $ .03     $ .02  
 
           
Net earnings per common share
  $ .02     $ .01  
 
           
 
               
Weighted average common shares outstanding
    22,402,104       20,528,799  
 
           
Diluted weighted average shares and equivalent shares outstanding
    22,407,245       20,538,354  
 
           
The accompanying notes are an integral part of the financial statements.

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IGAMBIT INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2008 AND 2007
                                         
                    Additional              
    Common stock     Paid-in     Accumulated        
    Shares     Amount     Capital     Deficit     Totals  
 
                                       
Balances, December 31, 2006
    18,062,018     $ 18,062     $ 1,617,174     $ (1,434,396 )   $ 200,840  
 
                                       
Common stock issued in consideration of cashless exercise of options, valued at $.01 per share
    3,675,000       3,675       33,075              
 
                                       
Net income
                            164,020       164,020  
 
                             
 
                                       
Balances, December 31, 2007
    21,737,018       21,737       1,650,249       (1,270,376 )     401,610  
 
                                       
Common stock issued in consideration of cashless exercise of options, valued at $.01 per share
    788,100       788       7,093             7,881  
 
                                       
Common stock issued in exercise of warrants, valued at $.01 per share
    60,000       60       540             600  
 
                                       
Common stock issued in exercise of warrants, valued at $.50 per share
    135,000       135       67,365             67,500  
 
                                       
Common stock retired
    (1,062 )     (1 )     1              
 
                                       
Net income
                            476,293       476,293  
 
                             
 
                                       
Balances, December 31, 2008
    22,719,056     $ 22,719     $ 1,725,248     $ (794,083 )   $ 953,884  
 
                             
The accompanying notes are an integral part of the financial statements.

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IGAMBIT INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
                 
    2008     2007  
 
               
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Loss from continuing operations
  $ (77,070 )   $ (76,125 )
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities
               
Depreciation
    373        
Stock-based compensation
    7,881       36,750  
Increase (Decrease) in cash flows as a result of changes in asset and liability account balances:
               
Accounts payable
    2,095       (21,118 )
 
           
 
               
Net cash used by continuing operating activities
    (66,721 )     (60,493 )
Net cash provided by discontinued operating activities
    741,174       130,636  
 
           
 
               
NET CASH PROVIDED BY OPERATING ACTIVITIES
    674,453       70,143  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment
    (1,864 )      
Loans to stockholders
    (126,000 )     (89,281 )
 
           
 
               
Net cash used by continuing investing activities
    (127,864 )     (89,281 )
Net cash (used) provided by discontinued investing activities
    (118,552 )     54,546  
 
           
 
               
NET CASH USED BY INVESTING ACTIVITIES
    (246,416 )     (34,735 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from exercise of warrants
    68,100        
 
           
 
               
Net cash provided by continuing financing activities
    68,100        
Net cash (used) provided by discontinued financing activities
    (214,605 )     3,173  
 
           
 
               
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES
    (146,505 )     3,173  
 
           
 
               
NET INCREASE IN CASH
    281,532       38,581  
 
               
CASH — BEGINNING OF YEAR
    40,907       2,326  
 
           
 
               
CASH — END OF YEAR
  $ 322,439     $ 40,907  
 
           
 
               
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
               
Cash paid during the year for:
               
Income taxes
  $ 67     $ 611  
 
           
 
               
Non-cash investing and financing activities:
               
Cashless exercise of common stock options
  $ 7,881     $ 36,750  
The accompanying notes are an integral part of the financial statements.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Note 1 — Organization and Basis of Presentation
The financial statements presented are those of iGambit Inc., (the “Company”). The Company was incorporated under the laws of the State of Delaware on April 13, 2000. The Company was originally incorporated as Compusations Inc. under the laws of the State of New York on October 2, 1996. The Company changed its name to BigVault.com Inc. upon changing its state of domicile on April 13, 2000. The Company changed its name again to bigVault Storage Technologies Inc. on December 22, 2000 before changing to iGambit Inc. on July 18, 2006.
Merger Transaction
On December 19, 2005, the Company executed a certificate of merger whereby BigVault Inc. (a Nevada corporation) merged into the Company leaving the Company as the surviving corporation. Pursuant to the certificate of merger, each share of Big Vault Inc.’s common stock issued and outstanding was converted to one share of the Company’s common stock.
Note 2 Discontinued Operations
Sale of Business
On February 28, 2006, the Company entered into an asset purchase agreement with Digi-Data Corporation (“Digi-Data”), whereby Digi-Data acquired the Company’s assets and its online digital vaulting business operations in exchange for $1,500,000, which was deposited into an escrow account for payment of the Company’s outstanding liabilities. In addition, as part of the sales agreement, the Company receives payments from Digi-Data based on 10% of the net vaulting revenue payable quarterly over five years. The Company is also entitled to an additional 5% of the increase in net vaulting revenue over the prior year’s revenue. These adjustments to the sales price are included in the discontinued operations line of the statements of income.
The assets and liabilities of the discontinued operations are presented in the balance sheets under the captions “Assets of discontinued operations” and “Liabilities of discontinued operations.” The underlying assets and liabilities of the discontinued operations for the years ended December 31 are as follows:
                 
    2008     2007  
ASSETS
               
Current:
               
Accounts receivable
  $ 367,430     $ 240,183  
Deferred income taxes
    279,058       305,359  
Noncurrent:
               
Restricted cash
    165,727       47,175  
Deferred income taxes
    98,750       387,507  
 
           
Assets of discontinued operations
  $ 910,965     $ 980,224  
 
           
LIABILITIES
               
Noncurrent:
               
Prepaid contingency
  $ 141,538     $ 356,143  
Deferred compensation
    350,000       350,000  
 
           
Liabilities of discontinued operations
  $ 491,538     $ 706,143  
 
           

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Accounts Receivable
Accounts receivable includes 50% of contingency payments earned for the previous quarter.
Restricted Cash
An escrow account was established in connection with the sale of business to Digi-Data to hold funds for contingent liabilities. Under the terms of the sale, 25% of the quarterly contingency payments are deposited into the escrow account for a period of three years. Also under the terms of the sale, 50% of the balance of the escrow funds held will be released after three years, and the remaining balance released after two more years. The escrow account balance was $165,727 and $47,175 at December 31, 2008 and 2007, respectively.
Prepaid Contingency
Prepaid contingency includes cash and expenses advanced by Digi-Data prior to the sale. The balance is being repaid with 25% of quarterly contingency payments earned that is retained by Digi-Data. The prepaid contingency balance was $141,538 and $356,143 as of December 31, 2008 and 2007, respectively.
Deferred Compensation
The Company is indebted to two former officers for unpaid compensation totaling $350,000. The officers received advances against the deferred compensation totaling $198,281 and $79,281 as of December 31, 2008 and 2007, respectively.
Note 3 — Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Revenue Recognition
Contingency payments are recognized quarterly as an adjustment of the sales price of the business sold from a percentage of Digi-Data’s vaulting service revenue and is included in discontinued operations.
Property and equipment and depreciation
Property and equipment are stated at cost. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets. During the year ended December 31, 2008, the Company purchased computer equipment totaling $1,864. Computer equipment is depreciated over 5 years. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income.
Depreciation expense of $373 was charged to operations for the year ended December 31, 2008.
Stock-Based Compensation
As of December 31, 2008, the Company has a stock-based employee compensation plan which it accounts for applying SFAS No. 123(R) (“SFAS 123(R)”), “Share-Based Payment.” Under SFAS 123(R), the Company is required to select a valuation technique or option-pricing model that meets the criteria as stated in the standard, which includes a binomial model and the Black-Scholes model. At the present time, the Company applies the Black-Scholes model. SFAS 123(R) also requires the Company to estimate forfeitures in calculating the expense relating to stock-based compensation as opposed to only recognizing these forfeitures and the corresponding reduction in expense as they occur.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Note 4 — Earnings Per Common Share
Earnings per common share is computed based on the weighted average common shares outstanding during the year. Diluted net income per share is computed using the treasury stock method to calculate the weighted average number of common shares and, if dilutive, potential common shares outstanding during the year. Potential dilutive common shares include unvested restricted shares and the incremental common shares issuable upon the exercise of stock options and warrants. The following table presents the calculation of the basic earnings per share and the fully diluted earnings per share:
                 
    Year Ended  
    December 31,  
    2008     2007  
 
               
Net income
  $ 476,293     $ 164,020  
 
           
Determination of shares:
               
Average common shares outstanding
    22,402,104       20,528,799  
Assumed conversion of:
               
Stock options
    2,860       5,027  
Warrants
    2,281       4,528  
 
           
Diluted average common shares outstanding
    22,407,245       20,538,354  
 
           
 
               
Basic income per share
  $ .02     $ .01  
 
           
Fully diluted income per share
  $ .02     $ .01  
 
           
Note 5 — Warrants and Stock Option Plan
Warrants
Warrant activity during the years ended December 31, 2008 and 2007 follows:
                 
            Average  
    Warrants     Exercise Price  
Warrants outstanding at January 1, 2007
    1,652,518     $ 0.67  
No warrant activity during 2007
    0       0.00  
 
           
Warrants outstanding at December 31, 2007
    1,652,518       0.67  
Issued during 2008
    60,000       0.01  
Exercised during 2008
    (195,000 )     0.35  
Expired during 2008
    (682,518 )     0.32  
 
           
Warrants outstanding at December 31, 2008
    835,000     $ 0.99  
 
           
During 2008, the Company issued 60,000 warrants to a consultant, which were valued at $600 and expensed and included in general and administrative expenses.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Stock Option Plan
Stock Option Plan activity during the years ended December 31, 2008 and 2007 follows:
                 
            Average  
    Shares     Exercise Price  
Options outstanding and exercisable at January 1, 2007
    2,510,000     $ 0.01  
Granted during 2007
    3,000,000       0.01  
Exercised during 2007
    (3,675,000 )     0.01  
 
           
Options outstanding and exercisable at December 31, 2007
    1,835,000     $ 0.01  
Exercised during 2008
    (788,100 )     0.01  
 
           
Options outstanding and exercisable at December 31, 2008
    1,046,900     $ 0.01  
 
           
Weighted average remaining contractual life at December 31, 2008, for all options is 7.33 years.
In 2006, the Company adopted the 2006 Long-Term Incentive Plan (the “2006 Plan”). The 2006 Plan provides for the granting of options to purchase up to 5,510,000 shares of common stock. 4,463,100 options have been exercised to date. There are 1,046,900 options outstanding under the 2006 Plan.
On May 1, 2007, the Company granted 3,000,000 stock options to a director and a consultant at exercise prices approximating fair market value of the stock on the date of the grant. Such issuances to directors and employees were valued at $36,750, utilizing similar factors as described below, which were expensed and are included in general and administrative expenses.
The fair value of each warrant and option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding.
The fair value of warrants and options granted is estimated on the date of grant based on the weighted-average assumptions in the table below. The assumption for the expected life is based on evaluations of historical and expected exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. The historical stock volatility of the Company’s common stock is used as the basis for the volatility assumption.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Stock Option Plan (Cont’d)
                 
    Years ended December 31,
    2008   2007
Weighted average risk-free rate
    4.64 %     5.36 %
Average expected life in years
    5.8       7.7  
Expected dividends
  None   None
Volatility
    20 %     20 %
Forfeiture rate
    0 %     0 %
Note 6 — Common Stock Issued
During the year ended December 31, 2008, warrants were exercised for 135,000 shares of common stock, valued at $.50 per share, and for 60,000 shares of common stock, valued at $.01 per share. As of December 31, 2008, there were 1,031,900 warrants outstanding exercisable at various prices.
Note 6 — Common Stock Issued (Cont’d)
Dividends may be paid on outstanding shares as declared by the Board of Directors from time to time. Each share of common stock is entitled to one vote.
Note 7 — Income Taxes
The tax provision at December 31 consists of the following:
                 
    2008     2007  
Current tax expense (benefit):
               
Federal
  $ (46,228 )   $ (44,692 )
State and local
    2,163       1,363  
Deferred tax expense:
               
Federal
    285,370       123,844  
State and local
    75,916       32,946  
 
           
 
               
 
  $ 317,221     $ 113,461  
 
           
 
               
Tax expense (benefit) attributable to:
               
Continuing operations
  $ (44,065 )   $ (43,329 )
Discontinued operations
    361,286       156,790  
 
           
 
  $ 317,221     $ 113,461  
 
           
The Company recognizes deferred tax assets and liabilities based on the future tax consequences of events that have been included in the financial statements or tax returns. The differences relate primarily to net operating loss carryovers and to deferred compensation. Deferred tax assets and liabilities are calculated based on the difference between the financial reporting and tax bases of assets and liabilities using the currently enacted tax rates in effect during the years in which the differences are expected to reverse. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Note 7 — Income Taxes (Cont’d)
The Company’s provision for income taxes differs from applying the statutory U.S. federal income tax rate to income before income taxes. The primary differences result from providing for state income taxes and from deducting certain expenses for financial statement purposes but not for federal income tax purposes.
In accordance with Statement of Financial Accounting Standards (“FAS”) No. 109, Accounting for Income Taxes (“FAS 109”), a valuation allowance is established based on the future recoverability of deferred tax assets. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations and expected future profitability. Management has determined that no valuation allowance related to deferred tax assets is necessary at December 31, 2008 and 2007.
The deferred tax assets included in assets from discontinued operations in the accompanying balance sheets includes the following at December 31:
                 
    2008     2007  
Current:
               
Net operating loss carryforwards
  $ 279,058     $ 305,359  
Non-current:
               
Net operating loss carryforwards
          288,757  
Deferred compensation
    98,750       98,750  
 
           
 
  $ 377,808     $ 692.866  
 
           
In June 2006, the FASB issued Interpretation No. 48 (“FIN 48”) Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“SFAS 109”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109, Accounting for Income Taxes. FIN 48 details how companies should recognize, measure, present, and disclose uncertain tax positions that have been or are expected to be taken. As such, financial statements will reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. FIN 48 will not have a material impact on the financial statements of the Company.
Note 8 Risks and Uncertainties
Contingency Payments — Discontinued Operations
The discontinued operations of contingency payments, as an adjustment to the sales price of the business sold, received from Digi-Data is the Company’s sole source of revenue. Should Digi-Data not achieve sufficient vaulting revenue or continue to exist, substantial doubt would be raised as to the Company’s ability to continue to exist, as the Company has no other source of revenue.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Uninsured Cash Balances
Substantially all amounts of cash accounts held at financial institutions are insured by the FDIC.
Note 9 Related Party Transactions
Notes Receivable — Stockholders
The Company provided loans to a stockholder totaling $17,000 and $10,000 at December 31, 2008 and 2007, respectively. The loans bear interest at a rate of 6% and are due on December 31, 2009.
Accrued interest on the note was $698 and $123 for the years ended December 31, 2008 and 2007, respectively.
The Company provided advances to two stockholders and former officers totaling $198,281 and $79,281 as of December 31, 2008 and 2007, respectively, against their respective deferred compensation balances. The advances to the stockholders are collateralized with their common shares issued and outstanding of 5,470,000 shares each.
Lease Commitment
The Company does not lease or rent any property. Office services are provided without charge by Digi-Data. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein.
Note 10 — Commitments and Contingencies
The Company provides accruals for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated.
Note 11 — Recent Accounting Pronouncements
In June 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”. This Statement establishes the FASB Accounting Standards Codification, (“Codification”) as the single source of authoritative GAAP to be applied by nongovernmental entities, except for the rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Company is required to adopt this standard in the first quarter of fiscal year 2010.

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IGAMBIT INC.
Notes to Financial Statements
December 31, 2008 and 2007
Note 11 — Recent Accounting Pronouncements (Cont’d)
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS 165), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company is required to adopt SFAS 165 prospectively to both interim and annual financial periods ending after June 15, 2009. The adoption of the standard is not expected to result in a change in current practice.
In April 2009, three FASB Staff Positions (FSPs) were issued addressing fair value of financial instruments: FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”; FSP FAS 115-2, “Recognition and Presentation of Other Than Temporary Impairments”; and FSP FAS 107-1,“Interim Disclosure about Fair Value of Financial Instruments.” The Company will adopt these FSPs in its fourth quarter of fiscal year 2009. The adoption of these FSPs is not expected to have a material impact on the Company’s financial condition and results of operations.

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IGAMBIT INC.
BALANCE SHEETS
                 
    SEPTEMBER 30,     DECEMBER 31,  
    2009     2008  
 
               
ASSETS
 
               
Current assets
               
Cash
  $ 772,507     $ 322,439  
Prepaid expenses
    1,703        
Notes receivable — stockholders
    17,000       17,000  
Assets from discontinued operations
    580,237       646,488  
 
           
 
               
Total current assets
    1,371,447       985,927  
 
           
 
               
Property and equipment, net
    1,044       1,491  
 
           
 
               
Other assets
               
Notes receivable — stockholders
          198,281  
Deposits
    2,600        
Assets from discontinued operations
    150,609       264,477  
 
           
 
               
Total other assets
    153,209       462,758  
 
           
 
               
 
  $ 1,525,700     $ 1,450,176  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
               
Current liabilities
               
Accounts payable
  $ 2,121     $ 4,754  
 
               
Long-term liabilities
               
Liabilities from discontinued operations
          491,538  
 
           
 
               
Total liabilities
    2,121       496,292  
 
           
 
               
Stockholders’ equity
               
Common stock, $.001 par value; authorized — 30,000,000 shares; issued and outstanding — 23,454,056 shares in 2009 and 22,719,056 in 2008
    23,454       22,719  
Additional paid-in capital
    1,732,013       1,725,248  
Accumulated deficit
    (231,888 )     (794,083 )
 
           
 
               
Total stockholders’ equity
    1,523,579       953,884  
 
           
 
               
 
  $ 1,525,700     $ 1,450,176  
 
           

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IGAMBIT INC.
STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30,
                 
    2009     2008  
 
               
Revenue
  $     $  
 
               
Operating expenses
               
General and administrative expenses
    297,272       84,349  
 
           
 
               
Loss from operations
    (297,272 )     (84,349 )
 
               
Other income
               
Miscellaneous income
    4,160        
Interest income
    3,275       1,842  
 
           
 
               
Total other income
    7,435       1,842  
 
           
 
               
Loss from continuing operations before income tax benefit
    (289,837 )     (82,507 )
 
               
Income tax benefit
    (107,059 )     (29,307 )
 
           
 
               
Loss from continuing operations
    (182,778 )     (53,200 )
 
               
Income from discontinued operations (net of taxes of $486,388 and $237,932)
    744,973       364,428  
 
           
 
               
Net income
  $ 562,195     $ 311,228  
 
           
 
               
Basic and fully diluted earnings per common share:
               
Continuing operations
  $ (.01 )   $ (.01 )
Discontinued operations, net of tax
  $ .03     $ .02  
 
           
Net earnings per common share
  $ .02     $ .01  
 
           
 
               
Weighted average common shares outstanding
    22,859,056       22,301,379  
 
           
Diluted weighted average shares and equivalent shares outstanding
    22,871,444       22,309,354  
 
           

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IGAMBIT INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
                                         
                    Additional              
    Common stock     Paid-in     Accumulated        
    Shares     Amount     Capital     Deficit     Totals  
 
                                       
Balances, December 31, 2007
    21,737,018     $ 21,737     $ 1,650,249     $ (1,270,376 )   $ 401,610  
 
                                       
Common stock issued in consideration of cashless exercise of options, valued at $.01 per share
    788,100       788       7,093             7,881  
 
                                       
Common stock issued in exercise of warrants, valued at $.01 per share
    60,000       60       540             600  
 
                                       
Common stock issued in exercise of warrants, valued at $.50 per share
    135,000       135       67,365             67,500  
 
                                       
Common stock retired
    (1,062 )     (1 )     1              
 
                                       
Net income
                            476,293       476,293  
 
                             
 
                                       
Balances, December 31, 2008
    22,719,056       22,719       1,725,248       (794,083 )     953,884  
 
                                       
Common stock issued in consideration of cashless exercise of options, valued at $.01 per share
    735,000       735       6,765             7,500  
 
                                       
Net income
                            562,195       562,195  
 
                             
 
                                       
Balances, September 30, 2009
    23,454,056     $ 23,454     $ 1,732,013     $ (231,888 )   $ 1,523,579  
 
                             

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IGAMBIT INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,
                 
    2009     2008  
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Loss from continuing operations
  $ (182,778 )   $ (53,200 )
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities
               
Depreciation
    447       280  
Stock-based compensation
    7,500       7,350  
Increase (Decrease) in cash flows as a result of changes in asset and liability account balances:
               
Prepaid expenses
    (1,703 )      
Accounts payable
    (2,633 )     2,095  
 
           
 
               
Net cash used by continuing operating activities
    (179,167 )     (43,475 )
Net cash provided by discontinued operating activities
    909,974       568,044  
 
           
 
               
NET CASH PROVIDED BY OPERATING ACTIVITIES
    730,807       524,569  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment
          (1,864 )
Increase in deposits
    (2,600 )      
Payments received from loans to stockholders
    198,281        
Loans to stockholders
          (106,500 )
 
           
 
               
Net cash provided (used) by continuing investing activities
    195,681       (108,364 )
Net cash provided (used) by discontinued investing activities
    15,118       (75,876 )
 
           
 
               
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES
    210,799       (184,240 )
 
           
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from exercise of warrants
          68,100  
 
           
 
               
Net cash provided by continuing financing activities
          68,100  
Net cash used by discontinued financing activities
    (491,538 )     (163,604 )
 
           
 
               
NET CASH USED BY FINANCING ACTIVITIES
    (491,538 )     (95,504 )
 
           
 
               
NET INCREASE IN CASH
    450,068       244,825  
 
               
CASH — BEGINNING OF PERIOD
    322,439       40,907  
 
           
 
               
CASH — END OF PERIOD
  $ 772,507     $ 285,732  
 
           
 
               
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
               
Cash paid during the period for:
               
Interest
  $ 1,189     $ 6  
Income taxes
    4,698       67  
 
               
Non-cash investing and financing activities:
               
Cashless exercise of common stock options
  $ 7,500     $ 7,350  

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IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
Note 1 — Organization and Basis of Presentation
The financial statements presented are those of iGambit Inc., (the “Company”). The Company was incorporated under the laws of the State of Delaware on April 13, 2000. The Company was originally incorporated as Compusations Inc. under the laws of the State of New York on October 2, 1996. The Company changed its name to BigVault.com Inc. upon changing its state of domicile on April 13, 2000. The Company changed its name again to bigVault Storage Technologies Inc. on December 22, 2000 before changing to iGambit Inc. on July 18, 2006.
Merger Transaction
On December 19, 2005, the Company executed a certificate of merger whereby BigVault Inc. (a Nevada corporation) merged into the Company leaving the Company as the surviving corporation. Pursuant to the certificate of merger, each share of Big Vault Inc.’s common stock issued and outstanding was converted to one share of the Company’s common stock.
Note 2 — Discontinued Operations
Sale of Business
On February 28, 2006, the Company entered into an asset purchase agreement with Digi-Data Corporation (“Digi-Data”), whereby Digi-Data acquired the Company’s assets and its online digital vaulting business operations in exchange for $1,500,000, which was deposited into an escrow account for payment of the Company’s outstanding liabilities. In addition, as part of the sales agreement, the Company receives payments from Digi-Data based on 10% of the net vaulting revenue payable quarterly over five years. The Company is also entitled to an additional 5% of the increase in net vaulting revenue over the prior year’s revenue. These adjustments to the sales price are included in the discontinued operations line of the statements of income.
The assets and liabilities of the discontinued operations are presented in the balance sheets under the captions “Assets of discontinued operations” and “Liabilities of discontinued operations.” The underlying assets and liabilities of the discontinued operations as of September 30, 2009 and December 31, 2008 are as follows:

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IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
                 
    2009     2008  
 
               
ASSETS
               
Current:
               
Accounts receivable
  $ 580,237     $ 367,430  
Deferred income taxes
          279,058  
Noncurrent:
               
Restricted cash
    150,609       165,727  
Deferred income taxes
          98,750  
 
           
Assets of discontinued operations
  $ 730,846     $ 910,965  
 
           
 
               
LIABILITIES
               
Noncurrent:
               
Prepaid contingency
  $     $ 141,538  
Deferred compensation
          350,000  
 
           
Liabilities of discontinued operations
  $     $ 491,538  
 
           
Accounts Receivable
Accounts receivable includes 50% of contingency payments earned for the previous quarter.
Restricted Cash
An escrow account was established in connection with the sale of business to Digi-Data to hold funds for contingent liabilities. Under the terms of the sale, 25% of the quarterly contingency payments are deposited into the escrow account for a period of three years. Also under the terms of the sale, 50% of the balance of the escrow funds held will be released after three years, and the remaining balance released after two more years. The escrow account balance was $150,609 and $165,727 at September 30, 2009 and December 31, 2008, respectively.
Prepaid Contingency
Prepaid contingency includes cash and expenses advanced by Digi-Data prior to the sale. The balance is being repaid with 25% of quarterly contingency payments earned that is retained by Digi-Data. The prepaid contingency balance was $0 and $141,538 as of September 30, 2009 and December 31, 2008, respectively.

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IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
Deferred Compensation
The Company was indebted to two former officers for unpaid compensation totaling $350,000 at December 31, 2008. The officers received advances against the deferred compensation totaling $198,281 as of December 31, 2008. The Company paid the total balance to the officers, who subsequently repaid the advances received, during the nine months ended September 30, 2009.
Note 3 — Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.
Revenue Recognition
Contingency payment income is recognized quarterly from a percentage of Digi-Data’s vaulting service revenue, and is included in discontinued operations.
Property and equipment and depreciation
Property and equipment are stated at cost. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets. During the year ended December 31, 2008, the Company purchased computer equipment totaling $1,864. Computer equipment is depreciated over 5 years. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income.
Depreciation expense of $447 and $280 was charged to operations for the nine ended September 30, 2009 and 2008.

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IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
Stock-Based Compensation
As of December 31, 2008, the Company has a stock-based employee compensation plan which it accounts for applying SFAS No. 123(R) (“SFAS 123(R)”), “Share-Based Payment.” Under SFAS 123(R), the Company is required to select a valuation technique or option-pricing model that meets the criteria as stated in the standard, which includes a binomial model and the Black-Scholes model. At the present time, the Company applies the Black-Scholes model. SFAS 123(R) also requires the Company to estimate forfeitures in calculating the expense relating to stock-based compensation as opposed to only recognizing these forfeitures and the corresponding reduction in expense as they occur.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.
Note 4 — Earnings Per Common Share
Earnings per common share is computed based on the weighted average common shares outstanding during the period. Diluted net income per share is computed using the treasury stock method to calculate the weighted average number of common shares and, if dilutive, potential common shares outstanding during the year. Potential dilutive common shares include unvested restricted shares and the incremental common shares issuable upon the exercise of stock options and warrants. The following table presents the calculation of the basic earnings per share and the fully diluted earnings per share:

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IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
                 
    Nine Months Ended  
    September 30,  
    2009     2008  
 
               
Net income
  $ 562,195     $ 311,228  
 
           
Determination of shares:
               
Average common shares outstanding
    22,859,056       22,301,379  
Assumed conversion of:
               
Stock options
    1,088       4,015  
Warrants
    11,300       3,960  
 
           
Diluted average common shares outstanding
    22,871,444       22,309,354  
 
           
 
               
Basic income per share
  $ .02     $ .01  
 
           
Fully diluted income per share
  $ .02     $ .01  
 
           
Note 5 — Warrants and Stock Option Plan
Warrants
Warrant activity during the nine months ended September 30, 2009 follows:
                 
            Average  
    Warrants     Exercise Price  
Warrants outstanding at January 1, 2009
    835,000     $ 0.99  
Granted during 2009
    2,250,000       0.77  
Warrants outstanding at September 30, 2009
    3,085,000     $ 0.83  
 
           
During the nine months ended September 30, 2009, the Company granted a warrant to purchase up to 2,000,000 shares of common stock to its securities firm pursuant to a business advisory agreement, and granted a warrant to purchase up to 250,000 shares of common stock to a law firm pursuant to an engagement agreement.

F-23


Table of Contents

IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
Stock Option Plan
Stock Option Plan activity during the nine months ended September 30, 2009 follows:
                 
            Average  
    Shares     Exercise Price  
Options outstanding and exercisable at January 1, 2009
    1,046,900     $ 0.01  
Exercised during 2009
    750,000       0.01  
 
           
Options outstanding and exercisable at September 30, 2009
    296,900     $ 0.01  
 
           
Weighted average remaining contractual life at September 30, 2009, for all options is 6.59 years.
In 2006, the Company adopted the 2006 Long-Term Incentive Plan (the “2006 Plan”). The 2006 Plan provides for the granting of options to purchase up to 5,510,000 shares of common stock. 5,213,100 options have been exercised to date. There are 296,900 options outstanding under the 2006 Plan.
The fair value of each warrant and option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding.
The fair value of warrants and options granted is estimated on the date of grant based on the weighted-average assumptions in the table below. The assumption for the expected life is based on evaluations of historical and expected exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. The historical stock volatility of the Company’s common stock is used as the basis for the volatility assumption.

F-24


Table of Contents

IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
                 
    Nine months ended September 30,
    2009   2008
Weighted average risk-free rate
    4.23 %     4.64 %
Average expected life in years
    5.1       5.8  
Expected dividends
  None   None
Volatility
    20 %     20 %
Forfeiture rate
    0 %     0 %
Note 6 — Common Stock Issued
During the nine months ended September 30, 2009, options were exercised for 735,000 shares of common stock, valued at $.01 per share. As of September 30, 2009, there were 296,900 options outstanding exercisable at various prices.
During the year ended December 31, 2008, warrants were exercised for 135,000 shares of common stock, valued at $.50 per share, and for 60,000 shares of common stock, valued at $.01 per share. As of December 31, 2008, there were 835,000 warrants outstanding exercisable at various prices.
Dividends may be paid on outstanding shares as declared by the Board of Directors from time to time. Each share of common stock is entitled to one vote.
Note 7 — Income Taxes
The tax provision at September 30 consists of the following:
                 
    2009     2008  
 
               
Current tax expense (benefit):
               
Federal
  $ (108,580 )   $ (31,470 )
State and local
    1,521       2,163  
Deferred tax expense:
               
Federal
    384,185       187,936  
State and local
    102,203       49,996  
 
           
 
               
 
  $ 379,329     $ 208,625  
 
           
 
               
Tax expense (benefit) attributable to:
               
Continuing operations
  $ (107,059 )   $ (29,307 )
Discontinued operations
    486,388       237,932  
 
           
 
  $ 379,329     $ 208,625  
 
           

F-25


Table of Contents

IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
The Company recognizes deferred tax assets and liabilities based on the future tax consequences of events that have been included in the financial statements or tax returns. The differences relate primarily to net operating loss carryovers and to deferred compensation. Deferred tax assets and liabilities are calculated based on the difference between the financial reporting and tax bases of assets and liabilities using the currently enacted tax rates in effect during the years in which the differences are expected to reverse. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate.
The Company’s provision for income taxes differs from applying the statutory U.S. federal income tax rate to income before income taxes. The primary differences result from providing for state income taxes and from deducting certain expenses for financial statement purposes but not for federal income tax purposes.
In accordance with Statement of Financial Accounting Standards (“FAS”) No. 109, Accounting for Income Taxes (“FAS 109”), a valuation allowance is established based on the future recoverability of deferred tax assets. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations and expected future profitability. Management has determined that no valuation allowance related to deferred tax assets is necessary at September 30, 2009 and December 31, 2008.
The deferred tax assets included in assets from discontinued operations in the accompanying balance sheets includes the following at September 30, 2009 and December 31, 2008:
                 
    2009     2008  
 
               
Current:
               
Net operating loss carryforwards
  $     $ 279,058  
Non-current:
               
Net operating loss carryforwards
           
Deferred compensation
          98,750  
 
           
 
               
 
  $ 377,808     $ 377,808  
 
           
In June 2006, the FASB issued Interpretation No. 48 (“FIN 48”) Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“SFAS 109”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109, Accounting for Income Taxes. FIN 48 details how companies should recognize, measure, present, and disclose uncertain tax positions that have been or are expected to

F-26


Table of Contents

IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
be taken. As such, financial statements will reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. FIN 48 will not have a material impact on the financial statements of the Company.
Note 8 — Risks and Uncertainties
Contingency Payment Income — Discontinued Operations
The discontinued operations of contingency payments received from Digi-Data is the Company’s sole source of income. Should Digi-Data not achieve sufficient vaulting revenue or continue to exist, substantial doubt would be raised as to the Company’s ability to continue to exist, as the Company has no other source of revenue.
Uninsured Cash Balances
Substantially all amounts of cash accounts held at financial institutions are insured by the FDIC.
Note 9 — Related Party Transactions
Notes Receivable — Stockholders
The Company provided loans to a stockholder totaling $17,000 at September 30, 2009 and December 31, 2008. The loans bear interest at a rate of 6% and are due on December 31, 2009.
Accrued interest on the note was $763 and $449 for the nine months ended September 30, 2009 and 2008, respectively.
The Company provided advances to two stockholders and former officers totaling $198,281 and $79,281 as of December 31, 2008, against their respective deferred compensation balances. The advances to the stockholders were collateralized with their common shares issued and outstanding of 5,470,000 shares each. The former officers repaid the advances to the Company during the nine months ended September 30, 2009.

F-27


Table of Contents

IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
Lease Commitment
The Company entered into an operating lease for office space for a term of 12 months effective June 1, 2009. Monthly rent under the lease is $2,600.
Rent expense of $7,800 was charged to operations for the nine months ended September 30, 2009.
Note 10 — Commitments and Contingencies
The Company provides accruals for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated.
Note 11 — Recent Accounting Pronouncements
In June 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”. This Statement establishes the FASB Accounting Standards Codification, (“Codification”) as the single source of authoritative GAAP to be applied by nongovernmental entities, except for the rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Company is required to adopt this standard in the first quarter of fiscal year 2010.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS 165), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company is required to adopt SFAS 165 prospectively to both interim and annual financial periods ending after June 15, 2009. The adoption of the standard is not expected to result in a change in current practice.
In April 2009, three FASB Staff Positions (FSPs) were issued addressing fair value of financial instruments: FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”; FSP FAS 115-2, “Recognition and Presentation of Other Than Temporary Impairments”; and FSP FAS 107-1,“Interim Disclosure about Fair Value of Financial Instruments.” The Company will adopt these FSPs in its fourth quarter of fiscal year 2009. The adoption of these FSPs is not expected to have a material impact on the Company’s financial condition and results of operations.

F-28


Table of Contents

IGAMBIT INC.
Notes to Financial Statements
September 30, 2009 and 2008
Note 12 — Subsequent Events
Acquisition of Business
Effective October 1, 2009, the Company acquired Gotham Innovation Lab Inc. (“Gotham”) in exchange for 500,000 shares of the Company’s common stock. Subsequently, Gotham acquired substantially all of the assets of Jekyll Island Ventures Inc. doing business as Gotham Photo Company (“Jekyll”) in exchange for 500,000 its shares of common stock in the Company, and for 1,500,000 options to purchase the Company’s common stock over a three year period conditioned upon Gotham achieving revenue goals.

F-29

Exhibit 3.1(i)
CERTIFICATE OF INCORPORATION
OF
BIGVAULT.COM, INC.
*****
FIRST : The name of the corporation is BigVault.com, Inc. (hereinafter called the “Corporation”).
SECOND : The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD : The nature of the business and of the purposes to be conducted or promoted by the Corporation are to conduct any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
FOURTH : The total number of shares of stock which the Corporation shall have authority to issue is Thirty Million (30,000,000) shares, all of which are $.001 par value each and all of which are of one class and are designated as Common Stock.
FIFTH : The name and mailing address of the sole incorporator is as follows:
     
NAME
  MAILING ADDRESS
 
   
L. J. Vitalo
  c/o Corporation Trust Center
 
  1209 Orange Street
 
  Wilmington, DE 19801
SIXTH : The Corporation is to have perpetual existence.
SEVENTH : In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized:
     To make, alter or repeal the by-laws of the Corporation.

 


 

EIGHTH : The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
NINTH : A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit.
     THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 13 th day of April, 2000.
         
     
  /s/ L. J. Vitalo    
  Incorporator   
     

 

Exhibit 3.1(ii)
CERTIFICATE OF MERGER
of
BigVault.com, Inc. (a New York corporation)
into
BigVault.com, Inc. (a Delaware corporation)
     Pursuant to Section 252 of the General Corporation Law of the State of Delaware (the “DGCL”), BigVault.com, Inc., a Delaware corporation,
      DOES HEREBY CERTIFY THAT:
      FIRST: The name and state of incorporation of each of the constituent corporations (the “Constituent Corporations”) in the merger is as follows:
         
Name   State of Incorporation  
 
       
BigVault.com, Inc.
  Delaware
BigVault.com, Inc.
  New York
      SECOND: An Agreement and Plan of Merger dated as of April 18, 2000 (the “Merger Agreement”) by and among BigVault.com, Inc., a New York corporation, and BigVault.com, Inc., a Delaware corporation, has been approved, adopted, certified, executed and acknowledged by each of the Constituent Corporations in accordance with the Business Corporation Law of the State of New York and Sections 251(f) and 252 of the DGCL.
      THIRD: BigVault.com, Inc., a New York corporation has 10,000,000 authorized shares, par value $.001 each and all of which are of one class and are designated as Common Stock with full voting rights.
      FOURTH : The surviving corporation in the merger is BigVault.com, Inc., a Delaware corporation.
      FIFTH: The certificate of incorporation of BigVault.com, Inc. (a Delaware Corporation) which is surviving the merger, shall be the certificate of incorporation of the surviving corporation.

 


 

      SIXTH: An executed Merger Agreement is on file at an office of the surviving corporation located at 47 Mall Drive, Commack, New York 11725.
      SEVENTH: A copy of the Merger Agreement will be furnished by the surviving corporation, on request and without cost to any stockholder of any Constituent Corporation.
      EIGHTH: The Merger Agreement having been adopted without a vote of stockholders pursuant to the second sentence of Section 251(f) of the DGCL, it is hereby certified that no shares of stock of BigVault.com, Inc. were issued prior to the adoption by the Board of Directors of the resolution approving the Merger Agreement.
      NINTH: This Certificate of Merger and the merger provided for herein shall become effective upon filing.

 


 

      IN WITNESS WHEREOF , this Certificate of Merger has been executed as of the 17 th day of April, 2000.
         
  BigVault.com, Inc. (a Delaware corporation)
 
 
  By:      
    Name:   John Salerno   
    Title:   President   
 

 

Exhibit 3.1(iii)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BIGVAULT.COM, INC.
     BigVault.com Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “GCL”):
     DOES HEREBY CERTIFY:
     FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of BigVault.com, Inc. be amended by changing the First Article thereof so that, as amended, said Article shall be and read as follows:
          “The name of the corporation is BigVault Storage Technologies Inc.”
     SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with the provisions of Section 228 of the GCL and written notice of the adoption of the amendment has been given as provided in accordance with such section to every stockholder entitled to such notice.
     THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the GCL of the State of Delaware.

 


 

     In WITNESS WHEREOF, said BigVault.com Inc. has caused this certificate to be signed by Elisa Salerno, its Secretary, this 18 th day of December 2000.
         
  BigVault.com Inc.
 
 
  By      
    Elisa Salerno   
    Secretary   
 

2

Exhibit 3.1(iv)
CERTIFICATE OF MERGER
of
BigVault Inc. (a Nevada corporation)
into
BigVault Storage Technologies Inc. (a Delaware corporation)
     Pursuant to Title 8, Section 252 of the Delaware General Corporation Law, BigVault Storage Technologies Inc., a Delaware Corporation, executed the following Certificate of Merger.
      FIRST: The name and state of incorporation of each of the constituent corporations (the “Constituent Corporations”) in the merger is as follows:
     
Name   State of Incorporation
BigVault Storage Technologies Inc.
  Delaware
BigVault Inc.
  Nevada
      SECOND: An Agreement and Plan of Merger dated as of December 19, 2005 (the “Merger Agreement”) by and among BigVault Storage Technologies Inc., a Delaware corporation, and BigVault Inc., a Nevada corporation, has been approved, adopted, certified, executed and acknowledged by each of the Constituent Corporations in accordance with Chapter 92A.200 of the Nevada Revised Statutes and pursuant to Title 8 Section 252 of the DGCL.
      THIRD : The name of the surviving corporation in the merger is BigVault Storage Technologies Inc., a Delaware corporation.
      FOURTH: The certificate of incorporation of BigVault Storage Technologies Inc. (a Delaware Corporation) which is surviving the merger shall be the certificate of incorporation of the surviving corporation.
      FIFTH: BigVault Inc., a Nevada corporation has 1,000,000 authorized shares, par value $.001 each and all of which are of one class and are designated as Common Stock with full voting rights.

 


 

      SIXTH: This Certificate of Merger and the merger provided for herein shall become effective upon filing.
      SEVENTH: An executed Merger Agreement is on file at an office of the surviving corporation located at 47 Mall Drive, Commack, New York 11725.
      EIGHTH: A copy of the Merger Agreement will be furnished by the surviving corporation, on request and without cost to any stockholder of any Constituent Corporation.
      NINTH: The Merger Agreement having been adopted without a special meeting of the shareholders pursuant to Section 228(a) of the Delaware General Corporation Law, it is hereby CERTIFIED that consents in writing, setting forth the Plan of Merger were signed by holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present.
      IN WITNESS WHEREOF , this Certificate of Merger has been executed as of the 17 th day of February, 2006.
         
  BigVault Storage Technologies Inc.
(a Delaware corporation)
 
 
  By:      
    Name:   Elisa Salerno   
    Title:   Secretary   
 

 

Exhibit 3.1(v)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BIGVAULT STORAGE TECHNOLOGIES INC.
     The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 372 of Title 8 of the Delaware Code does hereby certify:
      FIRST : That at a meeting of the Board of Directors of BigVault Storage Technologies, Inc., resolutions were duly adopted setting forth a proposed amendment to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows:
      RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “FIRST” so that, as amended, said Article shall be and read as follows:
     The name of the corporation is iGambit Inc.
      SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.
      THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
      IN WITNESS WHEREOF , said corporation has caused this certificate to be signed this 5th day of April, 2006 A.D.
         
     
  By:      
    John Salerno, President   
       
 

         
Exhibit 3.1(vi)
PAGE 1
  Delaware  
The First State
      I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF “IGAMBIT INC.”, FILED IN THIS OFFICE ON THE SECOND DAY OF DECEMBER, A.D. 2009, AT 3:24 O’CLOCK P.M.
      A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.
         
 
  ((SEAL)   /s/ Jeffrey W. Bullock
 
    Jeffrey W. Bullock, Secretary of State
3211383       8100
    AUTHENTICATION: 7673304
 
     
091062593
    DATE: 12-02-09
 
     
You may verify this certificate online
at corp.delaware.gov/authver. shtml
     

 


 

     
    State of Delaware
Secretary of State
Division of Corporations
Delivered 03:24 PM 12/02/2009
FILED 03:24 PM 12/02/2009
SRV 091062593 — 3211383 FILE
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IGAMBIT INC.
     The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 372 of Title 8 of the Delaware Code does hereby certify:
      FIRST: That at a meeting of the Board of Directors of iGambit Inc., resolutions were duly adopted setting forth a proposed amendment to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows:
      RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “FOURTH” so that, as amended, said Article shall be and read as follows:
     The total number of shares of stock which the Corporation shall have authority to issue is seventy five million (75,000,000) shares, all of which are $.001 par value each and all of which are of one class and are designated as Common Stock.
      SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.
      THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
      IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 2 nd day of a December, 2009 A.D.
         
     
  By:   /s/ James Charles    
    James Charles, Secretary   
       
 

 

Exhibit 3.2
EXHIBIT A
BIGVAULT.COM, INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
     Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware.
     Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
     Section 1. All meetings of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.


 

-2-

     Section 2. Annual meetings of stockholders shall be held at such date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors and transact such other business as may properly be brought before the meeting.
     Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.
     Section 4. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the chairman or the president and shall be called by the president or secretary at the request in writing of (a) a majority of the board of directors or (b) stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.
     Section 5. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting.
     Section 6. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.


 

-3-

     Section 7. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
     Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been


 

-4-

transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
     Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question.
     Section 10. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.
     Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a


 

-5-

meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
     Section 1. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders.
     Section 2. The number of directors which shall constitute the whole board shall be not less than one nor more than seven. Within the limits above specified, the number of directors shall be fixed from time to time by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.
     Section 3. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director,


 

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and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.
MEETINGS OF THE BOARD OF DIRECTORS
     Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.
     Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting


 

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may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.
     Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.
     Section 7. Special meetings of the board may be called by the chairman or the president on two days’ notice to each director, either personally or by mail or by telegram; special meetings shall be called in like manner and on like notice on the written request of two directors, unless the board consists of only one director in which case special meetings shall be called in like manner and on like notice on the written request of the sole director.
     Section 8. At all meetings of the board, a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
     Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the


 

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board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.
     Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
     Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.
     In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint


 

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another member of the board of directors to act at the meeting in the place of any such absent or disqualified member.
     Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation, or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall


 

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have such name or names as may be determined from time to time by resolution adopted by the board of directors.
     Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
     Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
     Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.


 

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ARTICLE IV
NOTICES
     Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.
     Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
     Section 1. The officers of the corporation shall be chosen by the board of directors and shall consist of a president and a secretary. The board of directors may also choose one or more vice-presidents, a treasurer, one or more assistant treasurers and one or more assistant secretaries. Any number of offices may be


 

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held by the same person, unless the certificate of incorporation or these by-laws otherwise provide.
     Section 2. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.
     Section 3. The board of directors at its first meeting after each annual meeting of stockholders shall choose the officers of the corporation who shall hold their offices until their successors are chosen and qualified, or until their resignation or removal. If any officers are not chosen at an annual meeting, any such officers may be chosen at any subsequent regular or special meeting.
     Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors.
     Section 5. The officers of the corporation shall hold office until their successors are chosen and qualified. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors.


 

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THE CHAIRMAN
     Section 6. The chairman shall preside at all stockholders’ meetings and all meetings of the board of directors at which he is present and shall have such other duties as may be assigned to him by the board of directors.
THE PRESIDENT
     Section 7. The president shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. In the absence of the chairman or in the event of his inability or refusal to act, the president shall also perform the duties of the chairman and, when so acting, shall have all the powers of and be subject to all the restrictions upon the chairman.
     Section 8. The president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. The president shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.


 

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THE VICE-PRESIDENTS
     Section 9. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president and, when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
     Section 10. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. The secretary shall have custody of the corporate seal of the corporation and the secretary, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and, when so affixed, it may be attested by the secretary’s signature or by the signature of such assistant


 

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secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by that officer’s signature.
     Section 11. The assistant secretary or, if there be more than one, the assistant secretaries in the order determined by the board of directors (or, if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
     Section 12. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors.
     Section 13. The treasurer shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chairman, the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation.


 

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     Section 14. If required by the board of directors, the treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of the treasurer’s office and for the restoration to the corporation, in case of the treasurer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the treasurer’s possession or under the treasurer’s control belonging to the corporation.
     Section 15. The assistant treasurer or, if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or, if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
     Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, (a) the chairman or the president or a vice-president of the corporation and (b) the treasurer or an assistant treasurer or the secretary or an assistant secretary of the corporation.


 

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     Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of Delaware or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
     Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
     Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in


 

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its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
     Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation.
FIXING RECORD DATE
     Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or


 

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entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
     Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.


 

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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
     Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation.
     Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
ANNUAL STATEMENT
     Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.


 

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CHECKS
     Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate.
FISCAL YEAR
     Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors.
SEAL
     Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
     Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware.


 

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ARTICLE VIII
AMENDMENTS
     Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws.
         
     
April 13, 2000      
  John Salerno, President   
     
 

Exhibit 10.1
iGambit Inc.
2006 LONG-TERM INCENTIVE PLAN
AMENDED December 31, 2006
     1.  Definitions . In this Plan, except where the context otherwise indicates, the following definitions shall apply:
          1.1. “Agreement” means a written agreement evidencing an Award.
          1.2. “Award” means a grant of an Option, Right or Performance Award or an award of Restricted Shares or Incentive Shares.
          1.3. “Board” means the Board of Directors of the Company.
          1.4. “Code” means the Internal Revenue Code of 1986, as amended.
          1.5. “Committee” means a committee or subcommittee of the Board appointed by the Board to administer this Plan and programs hereunder. The Committee may, in its discretion, appoint a subcommittee to administer the Plan with respect to specific Awards hereunder. If no such appointment is in effect at any time, “Committee” shall mean the Board.
          1.6. “Common Stock” means the common stock, par value $0.01 per share, of the Company.
          1.7 “Company” means iGambit Inc.
          1.8. “Date of Exercise” means the date on which the Company receives notice of the exercise of an Option in accordance with the terms of Section 8.1.
          1.9. “Date of Grant” means the date on which an Option, Right or Performance Award is granted or Restricted Shares or Incentive Shares are awarded under this Plan.
          1.10. “Director” means a member of the Board of Directors of the Company or any Subsidiary.
          1.11. “Employee” means any person determined by the Committee to be an employee of the Company or a Subsidiary, including an Employee Director, consultant or any person who has been hired to be an employee or consultant of the Company or a Subsidiary.
          1.12. “Employee Director” means a Director who is also an Employee.
          1.13. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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          1.14. “Fair Market Value” means an amount equal to the then fair market value of a Share as determined by the Committee pursuant to a reasonable method adopted in good faith for such purpose, or, unless otherwise determined by the Committee, if the Shares become traded on a securities exchange or automated dealer quotation system, fair market value shall be the last sale price for a Share on such securities exchange or automated dealer quotation system as reported by such source as the Committee may select.
          1.15. “Incentive Shares” means an award providing for the contingent grant of Shares pursuant to the provisions of Section 10.
          1.16. “Incentive Stock Option” means an Option granted under this Plan that the Company designates as an incentive stock option under Section 422 of the Code in the Agreement granting the Option.
          1.17. “Nonstatutory Stock Option” means an Option granted under this Plan that is not an Incentive Stock Option.
          1.18. “Option” means an option to purchase Shares granted under this Plan in accordance with the terms of Section 6.
          1.19. “Option Period” means the period during which an Option may be exercised.
          1.20. “Option Price” means the price per Share at which an Option may be exercised. Subject to the terms of the Plan, the Option Price shall be determined by the Committee; provided, however, that in no event shall the Option Price be less than the par value of the each Share.
          1.21. “Participant” means a Director, Employee, Employee Director, and Individual to whom an Award has been granted under this Plan. Awards may be granted only to Employees, members of the Board of directors, individuals who render services to the Company.
          1.22. “Performance Award” means a performance award granted under the Plan in accordance with the terms of Section 11.
          1.23. “Performance Goals” means performance goals established by the Committee which may be based on earnings or earnings growth, sales, return on assets, cash flow, total shareholder return, equity or investment, regulatory compliance, satisfactory internal or external audits, improvement of financial ratings, achievement of balance sheet or income statement objectives, or any other goals established by the Committee, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. Such performance standards may be particular to an employee or the department, branch, Subsidiary or other division in which he or she works, or may be based on the performance of the Company generally, and may cover such period as may be specified by the Committee.
          1.24. “Plan” means the iGambit Inc. 2006 Long-Term Incentive Plan, as amended from time to time.

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          1.25. “Related Option” means the Option in connection with which, or by amendment to which, a specified Right is granted.
          1.26. “Related Right” means the Right granted in connection with, or by amendment to, a specified Option.
          1.27. “Restricted Shares” means Shares awarded under the Plan pursuant to the provisions of Section 9.
          1.28. “Right” means a stock appreciation right granted under the Plan in accordance with the terms of Section 7.
          1.29. “Right Period” means the period during which a Right may be exercised.
          1.30. “Share” means one share of Common Stock.
          1.31. “Subsidiary” means a corporation at least 50% of the total combined voting power of all classes of stock of which is owned by the Company, either directly or through one or more other Subsidiaries.
          1.32. “Ten-Percent Shareholder” means a Participant who (applying the rules of Section 424(d) of the Code) owns shares possessing more than 10% of the total combined voting power of all classes of shares of the Company or a Subsidiary.
     2.  Purpose . This Plan is intended to assist the Company and its Subsidiaries in attracting and retaining Directors, Employees, Employee Directors and other Individuals of outstanding ability and to promote the identification of their interests with those of the shareholders of the Company.
     3.  Administration . The Committee shall administer this Plan and shall have plenary authority, in its discretion, to award Options, Rights, Restricted Shares, Incentive Shares and Performance Awards to Directors, Employees and Employee Directors, subject to the provisions of this Plan. The Committee shall have plenary authority and discretion, subject to the provisions of this Plan, to determine the Directors, Employees or Employee Directors to whom Options, Rights or Performance Awards shall be granted and to whom Restricted Shares or Incentive Shares shall be awarded, the terms (which terms need not be identical) of all Awards to Directors, Employees and Employee Directors, including without limitation the Option Price of Options, the time or times at which Awards are made, the number of Shares covered by Awards, whether an Option shall be an Incentive Stock Option or a Nonstatutory Stock Option, any exceptions to non-transferability, any Performance Goals applicable to Awards, any provisions relating to vesting, any circumstances in which the Options would terminate, the period during which Options and Rights may be exercised, and the period during which Restricted Shares shall be subject to restrictions. In making these determinations, the Committee may take into account the nature of the services rendered or to be rendered by the Award recipients, their present and potential contributions to the success of the Company and its Subsidiaries, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of this Plan, the Committee shall have plenary authority to interpret this Plan, prescribe, amend and rescind rules and regulations relating to it, and make all

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other determinations deemed necessary or advisable for the administration of this Plan. The determinations of the Committee on the matters referred to in this Section 3 shall be binding and final.
     4.  Eligibility . Options, Rights, Restricted Shares, Incentive Shares and Performance Awards may be granted or awarded only to Employees, Directors and Individuals, provided, however, that Individuals and Directors, other than Employee Directors, may not be granted Incentive Stock Options. A Director, Employee, Employee Director or Individual who has been granted an Option, Right or Performance Award or awarded Restricted Shares or Incentive Shares may be granted additional Options, Rights or Performance Awards or awarded additional Shares of Restricted Shares or Incentive Shares.
     5.  Stock Subject to Plan .
          5.1. Subject to adjustment as provided in Section 12, the maximum number of Shares that may be issued under this Plan is 10,000,000 Shares plus an annual increase, effective as of the first day of each calendar year, commencing with 2006, equal to 10% of the number of outstanding Shares as of the first day of such calendar year, but in no event more than 15,000,000 Shares in the aggregate. Such Shares may be authorized but unissued Shares, Shares held in the treasury, or both. The full number of Shares available may be used for any type of Option or other Benefit.
          5.2. If an Option or Right expires or terminates for any reason (other than termination by virtue of the exercise of a Related Option or Related Right, as the case may be) without having been fully exercised, if Shares of Restricted Shares are forfeited or if Shares covered by an Incentive Share Award or Performance Award are not issued or are forfeited, the unissued or forfeited Shares which had been subject to the Award shall become available for the grant of additional Awards.
          5.3. Upon exercise of a Right (regardless of whether the Right is settled in cash or Shares), the number of Shares with respect to which the Right is exercised shall be charged against the number of Shares issuable under the Plan and shall not become available for the grant of other Awards.
     6.  Options .
          6.1. Options granted under this Plan to Employees shall be either Incentive Stock Options or Nonstatutory Stock Options, as designated by the Committee. Each Option granted under this Plan shall be clearly identified either as a Nonstatutory Stock Option or an Incentive Stock Option and shall be evidenced by an Agreement that specifies the terms and conditions of the grant. If not otherwise designated or specified by the Committee or identified in the Agreement, such Options shall be deemed to be Nonstatutory Stock Options. Options shall be subject to the terms and conditions set forth in this Section 6 and such other terms and conditions not inconsistent with this Plan as the Committee may specify.
          6.2. The price per Share at which an Incentive Stock Option granted under this Plan may be exercised shall not be less than one hundred percent (100%) of the Fair Market Value of the

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Shares on the Date of Grant. Notwithstanding the foregoing, in the case of an Incentive Stock Option granted to a Participant who is a Ten-Percent Shareholder, the exercise price per Share shall not be less than one hundred and ten percent (110%) of the Fair Market Value of the Shares on the Date of Grant.
          6.3. The Option Period shall be determined by the Committee and specifically set forth in the Agreement; provided, however, that an Option shall not be exercisable after ten years (five years in the case of an Incentive Stock Option granted to a Ten-Percent Shareholder) from its Date of Grant.
          6.4. The Committee, in its discretion, may provide in an Agreement for the right of the Participant to surrender to the Company an Option (or a portion thereof) that has become exercisable and to receive upon such surrender, without any payment to the Company (other than required tax withholding amounts) that number of Shares (equal to the highest whole number of Shares) having an aggregate fair market value as of the date of surrender equal to that number of Shares subject to the Option (or portion thereof) being surrendered multiplied by an amount equal to the excess of (a) the Fair Market Value on the date of surrender over (b) the Option Price, plus an amount of cash equal to the fair market value of any fractional Share to which the Participant would be entitled but for the parenthetical above relating to whole number of Shares. Any such surrender shall be treated as the exercise of the Option (or portion thereof).
     7.  Rights .
          7.1. Rights granted under the Plan shall be evidenced by an Agreement specifying the terms and conditions of the grant.
          7.2. A Right may be granted under the Plan:
               (a) in connection with, and at the same time as, the grant of an Option under the Plan;
               (b) by amendment of an outstanding Option granted under the Plan; or
               (c) independently of any Option granted under the Plan.
          7.3. A Right granted under Section 7.2(a) or Section 7.2(b) of this Plan is a Related Right. A Related Right may, in the Committee’s discretion, apply to all or any portion of the Shares subject to the Related Option.
          7.4. A Right may be exercised in whole or in part as provided in the applicable Agreement, and, subject to the terms of the Agreement, entitles a Participant to receive, without payment to the Company (but subject to required tax withholding), either cash or that number of Shares (equal to the highest whole number of Shares), or a combination thereof, in an amount or having a fair market value determined as of the Date of Exercise not to exceed the number of Shares subject to the portion of the Right exercised multiplied by an amount equal to the excess of (a) the Fair Market Value on the Date of Exercise of the Right over (b) either (i) the Fair Market Value on

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the Date of Grant of the Right if it is not a Related Right (or such amount in excess of such Fair Market Value as may be specified by the Committee), or (ii) the Option Price as provided in the Related Option if the Right is a Related Right.
          7.5. The Right Period shall be determined by the Committee and specifically set forth in the Agreement, subject to the following conditions:
               (a) a Right will expire no later than the earlier of (i) ten years from the Date of Grant, or (ii) in the case of a Related Right, the expiration of the Related Option;
               (b) a Right may be exercised only when the Fair Market Value on the Date of Exercise exceeds either (a) the Fair Market Value on the Date of Grant of the Right if it is not a Related Right (or such amount in excess of such Fair Market Value as may be specified by the Committee), or (b) the Option Price of the Related Option if the Right is a Related Right; and
               (c) a Right that is a Related Right to an Incentive Stock Option may be exercised only when and to the extent the Related Option is exercisable.
          7.6. The exercise, in whole or in part, of a Related Right shall cause a reduction in the number of Shares subject to the Related Option equal to the number of Shares with respect to which the Related Right is exercised. Similarly, the exercise, in whole or in part, of a Related Option shall cause a reduction in the number of Shares subject to the Related Right equal to the number of Shares with respect to which the Related Option is exercised.
     8.  Exercise of Options and Rights .
          8.1. An Option or Right may, subject to the terms of the applicable Agreement under which it was granted, be exercised in whole or in part by the delivery to the Company of written notice of the exercise, in such form as the Committee may prescribe, accompanied, in the case of an Option, by (a) a full payment for the Shares with respect to which the Option is exercised or (b) irrevocable instructions to a broker to deliver promptly to the Company cash equal to the exercise price of the Option. To the extent provided in the applicable Option Agreement, payment may be made in whole or in part by delivery (including constructive delivery) of Shares valued at Fair Market Value on the Date of Exercise or by delivery of a promissory note as provided in Section 8.2 hereof.
          8.2. To the extent provided in an Agreement and permitted by applicable law, the Committee may accept as partial payment of the Option Price a promissory note executed by the Participant evidencing his or her obligation to make future cash payment thereof. Promissory notes made pursuant to this Section 8.2 shall be payable upon such terms as may be determined by the Committee, shall be secured by a pledge of the Shares received upon exercise of the Option, or other securities the Committee may deem to be acceptable for such purposes, and shall bear interest at a rate fixed by the Committee.
          8.3. Options and Rights granted under this Plan shall not be transferable except by will, the laws of descent and distribution, or as provided by the Committee in an Agreement.

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     9.  Restricted Share Awards .
          9.1. Restricted Share awards under this Plan shall consist of Shares that are restricted against transfer, subject to forfeiture, and subject to such other terms and conditions as may be determined by the Committee. Such terms and conditions may provide, in the discretion of the Committee, for the lapse of forfeiture and transfer restrictions to be contingent upon the achievement of one or more specified Performance Goals.
          9.2. Restricted Share awards under this Plan shall be evidenced by Agreements specifying the terms and conditions of the Award. Each Agreement evidencing an Award of Restricted Shares shall contain the following:
               (a) prohibitions against the sale, assignment, transfer, exchange, pledge, hypothecation, or other encumbrance of (i) the Shares awarded as Restricted Shares under this Plan, (ii) the right to vote the Shares, and (iii) the right to receive dividends thereon, in each case during the restriction period applicable to the Shares; provided, however, that the Participant shall have all the other rights of a shareholder including without limitation the right to receive dividends and the right to vote the Shares;
               (b) a requirement that each certificate representing Shares of Restricted Shares shall be deposited with the Company, or its designee, and shall bear the following legend:
“This certificate and the Shares represented hereby are subject to the terms and conditions (including the risks of forfeiture and restrictions against transfer) contained in iGambit Inc. 2006 Long-Term Incentive Plan and an Agreement entered into between the registered owner and iGambit Inc. or one of its affiliates. Release from such terms and conditions shall be made only in accordance with the provisions of this Plan and the Agreement, a copy of each of which is on file in the office of the Secretary of iGambit Inc.; and
               (c) the terms and conditions upon which any restrictions applicable to Shares of Restricted Shares shall lapse and new certificates free of the foregoing legend shall be issued to the Participant or his or her legal representative.
          9.3. The Committee may include in any Agreement awarding Restricted Shares a requirement that, in the event of a Participant’s termination of employment for any reason prior to the lapse of restrictions, all Shares of Restricted Shares shall be forfeited by the Participant to the Company without payment of any consideration by the Company and neither the Participant nor any successors, heirs, assigns or personal representatives of the Participant shall thereafter have any further rights or interest in the Shares or certificates.

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     10.  Incentive Share Awards . Incentive Shares awarded under this Plan shall be evidenced by an Agreement specifying the terms and conditions of such Award. Incentive Share Awards shall provide for the issuance of Shares to a Participant at such times and subject to such terms and conditions as the Committee shall deem appropriate, including without limitation terms that condition the issuance of Shares upon the achievement of Performance Goals.
     11.  Performance Awards . Performance Awards granted under this Plan shall be evidenced by an Agreement specifying the terms and conditions of such Award. Performance Awards shall become payable on account of attainment of one or more Performance Goals established by the Committee. Performance Awards may be paid by the delivery of Shares or cash, or any combination of Shares and cash, as specified in the Agreement. If a Performance Award is paid in cash, the Award shall be deemed, for purposes of Section 5.1 hereof, to cover a number of Shares equal to the quotient obtained by dividing the dollar amount of the Award payment by the Fair Market Value of a Share as of the date of payment, rounded to the next highest whole number.
     12.  Capital Adjustments . In the event of any change in the outstanding number of Shares by reason of any stock dividend, split-up, recapitalization, reclassification, combination or exchange of shares, merger, consolidation or liquidation and the like, the Committee may, in its discretion, provide for a substitution for or adjustment in (a) the number and class of Shares subject to outstanding Options, Rights and Awards of Restricted Shares, Incentive Shares or Performance Awards, (b) the Option Price of Options and the base price upon which payments under Rights that are not Related Rights are determined, and (c) the aggregate number and class of Shares for which Awards thereafter may be made under this Plan.
     13.  Termination or Amendment . The Board may amend, alter or terminate this Plan in any respect at any time; provided, however, that, after this Plan has been approved by the shareholders of the Company, no amendment, alteration or termination of this Plan shall be made by the Board without approval of (a) the Company’s shareholders to the extent shareholder approval of the amendment is required by applicable law or regulations or the requirements of the principal exchange or interdealer quotation system on which the Shares are listed or quoted, if any, and (b) each affected Participant if such amendment, alteration or termination would adversely affect his or her rights or obligations under any Award made prior to the date of such amendment, alteration or termination.
     14.  Modification, Extension, Renewal, Substitution .
          14.1. Subject to the terms and conditions of this Plan, the Committee may modify, extend or renew outstanding Options and Rights, or accept the surrender of outstanding Options and Rights granted under this Plan or options and stock appreciation rights granted under any other plan of the Company or a Subsidiary (to the extent not theretofore exercised), and authorize the granting of new Options and Rights pursuant to this Plan in substitution therefor. Any substituted Options or Rights may specify a lower exercise price than the surrendered options and stock appreciation rights, a longer term than the surrendered options and stock appreciation rights, or have any other provisions that are authorized by this Plan. Subject to the terms and conditions of this Plan, the

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Committee may modify the terms of any outstanding Awards. Notwithstanding the foregoing, however, no modification of an Award shall, without the consent of the Participant, alter or impair any of the Participant’s rights or obligations under such Award.
          14.2. Anything contained herein to the contrary notwithstanding, Awards may, at the discretion of the Committee, be granted under this Plan in substitution for options and such other awards covering capital stock of another corporation (a) which is merged into, consolidated with, or all or a substantial portion of the property or stock of which is acquired by, the Company or one of its Subsidiaries or (b) which acquires, directly or indirectly, all or a substantial portion of the property or Shares of the Company. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in this Plan to such extent as the Committee may deem appropriate in order to conform, in whole or part, to the provisions of the awards in substitution for which they are granted.
     15.  Effectiveness of this Plan . This Plan and any amendments hereto requiring shareholder approval pursuant to Section 13 are subject to approval by vote of the shareholders of the Company following adoption by the Board. Subject to such shareholder approval, this Plan and any amendments hereto shall be effective as of the date specified by the Board.
     16.  Withholding . The Company’s obligation to deliver Shares or pay any amount pursuant to the terms of any Award hereunder shall be subject to satisfaction of applicable federal, state and local tax withholding requirements. To the extent provided in the applicable Agreement and in accordance with rules prescribed by the Committee, a Participant may satisfy any such withholding tax obligation by any of the following means or by a combination of such means: (a) tendering a cash payment, (b) authorizing the Company to withhold Shares otherwise issuable to the Participant, or (c) delivering to the Company already-owned and unencumbered Shares.
     17.  Term of this Plan . Unless sooner terminated by the Board pursuant to Section 13, this Plan shall terminate on December 1, 2009, and no Awards may be granted or awarded after such date. The termination of this Plan shall not affect the validity of any Award outstanding on the date of termination.
     18.  Indemnification of Committee . In addition to such other rights of indemnification as they may have as Directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with this Plan or any Option, Right, Restricted Shares, Incentive Shares or Performance Awards granted or awarded hereunder, and against all amounts reasonably paid by them in settlement thereof or paid by them in satisfaction of a judgment in any such action, suit or proceeding, if such members acted in good faith and in a manner which they believed to be in, and not opposed to, the best interests of the Company.
     19.  General Provisions .

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          19.1. The establishment of this Plan shall not confer upon any Director, Employee or Employee Director any legal or equitable right against the Company, any Subsidiary or the Committee, except as expressly provided in this Plan.
          19.2. This Plan does not constitute inducement or consideration for the employment of any Employee or the service of any Director or Employee Director, nor is it a contract between the Company or any Subsidiary and any Director, Employee or Employee Director. Participation in this Plan shall not give a Director, Employee or Employee Director any right to be retained in the service of the Company or any Subsidiary.
          19.3. Neither the adoption of this Plan nor its submission to the Shareholders shall not be taken to impose any limitations on the powers of the Company or its Subsidiaries to issue, grant, or assume options, warrants, rights, restricted shares, or other awards otherwise than under this Plan, or to adopt other stock option, restricted shares or other plans or to impose any requirement of shareholder approval upon the same.
          19.4. The interests of any Director, Employee or Employee Director under this Plan are not subject to the claims of creditors and may not, in any way, be assigned, alienated or encumbered except as provided in an Agreement.
          19.5. This Plan shall be governed, construed and administered in accordance with the laws of the State of New York.
          19.6. The Committee may require each person acquiring Shares pursuant to Awards hereunder to represent to and agree with the Company in writing as to restrictions on transfer of the Shares and that such person is acquiring the Shares without a view to distribution thereof. The certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Shares issued pursuant to this Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under any applicable laws, rules and regulations, any stock exchange upon which the Shares are then listed or interdealer quotation system upon which the Shares are then quoted, and any applicable United States federal or state securities laws. The Committee may place a legend or legends on any such certificates to make appropriate reference to such restrictions.
          19.7. The Company shall not be required to issue any certificate or certificates for Shares with respect to Awards under this Plan, or record any person as a holder of record of such Shares, without obtaining, to the complete satisfaction of the Committee, the approval of all regulatory bodies deemed necessary by the Committee, and without complying to the Board’s or Committee’s complete satisfaction, with all rules and regulations, under United States federal, state or local law deemed applicable by the Committee.

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Exhibit 10.2
ASSET PURCHASE AGREEMENT
     THIS ASSET PURCHASE AGREEMENT (“ Agreement ”), dated as of December 21, 2005, is by and among bigVAULT STORAGE TECHNOLOGIES, INC., a Delaware corporation (“ BVST ”), and BIG VAULT, INC., a Nevada corporation (“ BVI ” and, together with BVST, collectively, the “ Seller ”), and JOHN SALERNO (“ John ”) and ELISA SALERNO (“ Elisa ” and, together with John, the “ Shareholders ”), and DIGI-DATA CORPORATION, a Maryland corporation (“ Purchaser ”).
WITNESSETH :
     Seller is in the business of providing remote, internet-based storage vaulting services to end users and resellers, and related ancillary services (the “ Vault Business ”).
     The parties hereto wish to enter into this Agreement which sets forth the terms and conditions upon which Purchaser agrees to purchase from the Seller and the Seller agrees to sell to Purchaser, for the consideration stated herein, all of the assets of the Seller (other than to the extent specifically set forth herein) free and clear of all liens, liabilities and encumbrances.
     In consideration of the foregoing and of the covenants, agreements, conditions, representations and warranties hereinafter contained, and intending to be legally bound hereby, Purchaser, the Seller and the Shareholders hereby agree as follows:
     1. DEFINITIONS.
     Unless otherwise defined below in this Section 1, the various capitalized terms used in this Agreement shall have the definitions ascribed to them herein. As used in this Agreement, the following terms shall have the meanings specified in this Section 1:
     “ Accounts Receivable ” means: (1) all trade accounts receivable and other rights to payment from customers of the Seller and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of services rendered to customers of the Seller; (2) all other accounts or notes receivable of the Seller and the full benefit of all security for such accounts or notes; and (3) any Claim, remedy or other right related to any of the foregoing.
     “ Agreed Liabilities Amount means $ 1,500,000.
      Assigned Contracts means all of the Contracts except for the Excluded Contracts.
     “ Claim ” means an action, suit, proceeding, demand, claim or counterclaim or legal, administrative or arbitral proceeding or investigation.

 


 

      Contract means all agreements, whether oral or written and whether express or implied (whether legally binding or not), including contracts, contract rights, promises, commitments, undertakings, customer accounts, orders, leases, guarantees, warranties and representations and franchises to which either Seller is a party.
     “ Copyrights ” shall mean all copyrights (whether or not registered), moral rights, and all registrations and applications for registration thereof, as well as rights to renew copyrights.
     “ Creditors ” means those parties to which either Seller owes any one or more of the liabilities included in the Agreed Liabilities Amount, as set forth on Schedule 2.2(b)(2) .
      Excluded Contracts shall mean the Contracts not to be assigned by Seller pursuant to this Agreement, as set forth on Schedule 3.22 .
     “ Governmental Authorities ” means all agencies, authorities, bodies, boards, commissions, courts, instrumentalities, legislatures and offices of any nature whatsoever of any government, quasi-governmental unit or political subdivision, whether foreign, federal, state, county, district, municipality, city or otherwise.
     “ Intellectual Property ” shall mean all (i) Patents, (ii) Know-how, (iii) Trademarks, (iv) Copyrights, (v) Software Programs (including but not limited to “off-the-shelf” shrink-wrap and click-wrap Software Programs), in each case that are licensed by Seller and/or otherwise used in the Vault Business as currently operated, and (vi) all other intellectual property rights and industrial property rights (of every kind and nature throughout the universe and however designated), whether arising by operation of law, contract, license or otherwise.
     “ Intellectual Property Rights ” means, collectively, any and all known or hereafter known tangible and intangible rights under patent, trademark, copyright and trade secret laws, and any other intellectual property, industrial property and proprietary rights worldwide, of every kind and nature throughout the universe, however designated, whether arising by operation of law, contract, license or otherwise.
     “ Key Seller Employees ” means the following employees of Seller: John Salerno, Elisa Salerno and Mehul Mehta.
     “ Know-how ” shall mean any and all product specifications, processes, methods, product designs, plans, trade secrets, ideas, concepts, inventions, manufacturing, engineering and other manuals and drawings, physical and analytical, safety, quality control, technical information, data, research records, all promotional literature, customer and supplier lists and similar data and information, and any and all other confidential or proprietary technical and business information which are licensed to or owned by Seller and/or otherwise used in the Vault Business as currently operated.

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     “ Liability ” means any direct or indirect indebtedness, liability, assessment, expense, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, disputed or undisputed, joint or several, vested or unvested, executory or not, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, determinable or undeterminable, accrued or unaccrued, absolute or not, actual or potential, contingent or otherwise (including but not limited to any liability under any guarantees, letters of credit, performance credits or with respect to insurance loss accruals).
      “License Agreement” shall have the meaning set forth in Section 11.4.
     “ Moral Rights ” means, collectively, rights to claim authorship of a work, to object to or prevent any modification of a work, to withdraw from circulation or control the publication or distribution of a work, and any similar rights, whether existing under judicial or statutory law of any country or jurisdiction worldwide, or under any treaty or similar legal authority, regardless of whether such right is called or generally referred to as a “moral right.”
     “ Patents ” shall mean all patents, patent disclosures and patent applications (including, without limitation, all reissues, divisions, continuations, continuations-in-part, renewals, re-examinations and extensions of the foregoing) owned by Seller and/or otherwise used in the Vault Business as currently operated.
     “ Person ” means any individual, corporation, joint venture, partnership, limited partnership, limited liability company, limited liability partnership, syndicate, trust, association, entity or government or political subdivision, agency or instrumentality of a government.
     “ Software Programs ” shall have the meaning set forth in Section 3.21(f) .
     “ Tangible Personal Property ” means all machinery, equipment, tools, furniture, fixtures and equipment, computer hardware, supplies, materials, leasehold improvements, automobiles, computing and telecommunications equipment and other items of tangible personal property, of every kind owned or leased by the Seller and/or otherwise used in the Vault Business (wherever located and whether or not carried on the books of the Seller), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof, and all maintenance records and other documents relating thereto.
     “ Taxes ” means: (1) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind, imposed by any Governmental Authority or taxing authority, including taxes or other charges on, measured by, or with respect to income, franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration and documentation fees; and customers’ duties, tariffs and similar charges; (2) any Liability for the payment of any amounts of the type described in (1) as a result of being a member of an affiliated, combined, consolidated or unitary group for any taxable period; (3) any

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Liability for the payment of amounts of the type described in (1) or (2) as a result of being a transferee of, or a successor in interest to, any Person or as a result of an express or implied obligation to indemnify any Person; and (4) any and all interest, penalties, additions to tax and additional amounts imposed in connection with or with respect to any amounts described in (1), (2) or (3).
      Tax Return means any return, report, statement, form or other documentation (including any additional or supporting material and any amendments or supplements) filed or maintained, or required to be filed or maintained, with respect to or in connection with the calculation, determination, assessment or collection of any Taxes.
     “ Trademarks ” shall mean (i) trademarks, service marks, trade names, trade dress, labels, logos and all other names and slogans used exclusively with any products or embodying associated goodwill of the Vault Business related to such products, whether or not registered, and any applications or registrations therefor, and (ii) any associated goodwill incident thereto, in each case owned by or licensed to Seller and/or otherwise used in the Vault Business as currently operated.
     “ Vault Net Revenues ” shall mean the gross revenue of the Purchaser actually received by the Purchaser that is solely and directly attributable to the Vault Business, to the extent that such revenue is derived from the provision of vault services and/or vault appliances which use the Big Vault core technology, less the sum of (i) any discount given by Purchaser in compensation for early payment, (ii) returns, allowances, quantity discounts and credits, (iii) any accounting reserve amount, as determined in accordance with GAAP, and (iv) shipping and mailing costs, duties, taxes and insurance.
     2. PURCHASE AND SALE OF ASSETS.
     2.1 Assets Included .
          On the terms and subject to the conditions set forth in this Agreement, and in reliance upon the covenants, representations and warranties of the Seller and the Shareholders, at the Closing (as defined in Section 2.3 hereof), Purchaser shall purchase from the Seller, and the Seller shall sell, assign, transfer and deliver to Purchaser, free and clear of any and all Liabilities, pledges, liens, obligations, claims, charges, tenancies, security interests, exceptions or encumbrances whatsoever (collectively, “ Liens ”), all assets, rights and properties of the Seller, of every nature, kind and description whatsoever, tangible and intangible, wherever located and as they exist on the date hereof, other than the assets set forth on Schedule 2.1 and identified thereon as “ Excluded Assets ” (collectively, the “ Assets ”). The parties hereto acknowledge and agree that Schedule 2. 1 identifies cash and Accounts Receivable as Excluded Assets, but as to Accounts Receivable, only to the extent that all goods or services to be provided with respect thereto have already been provided in full, and Seller hereby represents and warrants such to be the case with respect to all Accounts Receivable set forth on Schedule 2.1. The Assets are more

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fully set forth on Schedule 2.1 of the disclosure schedules attached hereto and include (but are not limited to) the following:
          (a) All Tangible Personal Property;
          (b) All Accounts Receivable;
          (c) All of the Assigned Contracts;
          (d) All permits relating to the acquisition or ownership of the Assets or the operation of the Vault Business;
          (e) All data, records, files, manuals, blueprints and other documentation related to the Seller, the Assets and the operation of the Vault Business, including but not limited to (1) service and warranty records; (2) sales promotion materials, creative materials, art work, photographs, public relations and advertising materials, studies, reports, correspondence and other similar documents and records used in the Vault Business, whether in electronic form or otherwise; (3) all client and customer lists, telephone numbers and electronic mail addresses with respect to past, present or prospective clients and customers; (4) all accounting and tax books, ledgers and records and other financial records relating to the Vault Business and the Assets; (5) all sales and credit records and brochures relating to the Vault Business, purchasing records and records relating to suppliers; and (6) subject to applicable Law, copies of all personnel records of all Seller employees, including the Key Seller Employees.
          (f) All of the Seller’s furniture and fixtures, as set forth on Schedule 2.1.2(f) hereto (the “ Furniture and Fixtures ”);
          (g) All of the Seller’s tools and equipment, as set forth on Schedules 2.1.2(g) hereto (the “ Equipment ”);
          (h) All of the inventory, merchandise, stores of supplies, spare parts, stock-in-trade and work in progress, including, without limitation, the items set forth on the Inventory Statement attached hereto as Schedule 2.1.2(h) ;
          (i) All Intellectual Property owned, developed or used in connection with the Assets or the Vault Business;
          (j) All policies and procedures, methods of delivery of services, trade secrets, disks, drawings and specifications, market studies, consultants’ reports, prototypes, and all similar property of any nature, tangible or intangible, used in connection with the Vault Business;

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          (k) All goodwill incident to the Vault Business, including the value of the names associated with the Vault Business that are transferred to Purchaser hereunder and the value of good customer relations;
          (l) All computers, Software Programs, automation systems, accounting systems, master disks of source codes, and other proprietary information owned or licensed, whether for general business usage (e.g. accounting, word processing, graphics, spreadsheet analysis, etc.) or specific, unique-to-the-business usage, and all computer operating, security or programming software, owned or licensed and used in the operation of the Vault Business;
          (m) All tangible and intangible forms, whether or not stored, compiled or memorialized, electronically, graphically, photographically, or in writing; and
          (n) All other intangible assets (including all Claims, contract rights and warranty and product liability claims against third parties) relating to the Assets or the Vault Business.
     2.2. Purchase Price .
          (a)  Purchase Price Payable . In reliance on the representations and warranties of the Seller and the Shareholders, and the performance of the covenants and fulfillment of the conditions set forth in this Agreement, Purchaser will, at the Closing, purchase the Assets from the Seller and in respect thereof will, subject to the provisions of this Agreement, pay an aggregate purchase price (“ Purchase Price ”) to Seller equal to the sum of the amounts set forth in (1) and (2) below.
          (1) The Agreed Liability Amount, payable pursuant to the provisions of Section 2.2(b) below; and
          (2) The Contingent Quarterly Payment and the Additional Contingent Payment (collectively, the “ Contingent Payment ”), if applicable in each case, calculated and payable in accordance with Sections 2.2(c) and 2.2(d) below.
          (b) Payment of Agreed Liability Amount .
               (1) Notwithstanding the provisions hereof, including but not limited to the provisions of Section 2.2(b)(2) hereof, the Seller shall transfer the Assets to the Purchaser at Closing free and clear of any and all Liens and any and all Liabilities, and (2) the Purchaser shall not, by virtue of its purchase of the Assets, assume or become responsible for any Liabilities of the Seller or of any other Person whatsoever. All Liabilities of the Shareholders or either Seller whatsoever, whether or not disclosed to Purchaser, and whether or not discharged pursuant to the provisions of Section 2.2(b)(2) hereof or otherwise under this Agreement or the Schedules attached hereto, shall constitute “ Excluded Liabilities .” The Seller and the Shareholders hereby jointly and severally covenant and agree to indemnify and hold Purchaser harmless with respect

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to all Excluded Liabilities. If, subsequent to the Closing, any Excluded Liability is asserted against the Purchaser or any affiliate thereof, then, notwithstanding any provision hereof to the contrary, the Purchaser shall be permitted to pay, satisfy and discharge such Excluded Liability in any manner Purchaser determines, in its sole and absolute discretion, and such payment, satisfaction or discharge shall in no way undermine or diminish the obligations of Seller and the Shareholder to indemnify the Purchaser with respect thereto. In addition, Purchaser shall be entitled to the remedy of recoupment with respect to any such payment, satisfaction or discharge of any Excluded Liability by Purchaser in accordance with the foregoing. Notwithstanding the foregoing, subsequent to the Closing, Purchaser, rather than Seller or the Shareholders, shall be responsible for the satisfaction of any obligation owed to a vendor set forth under the heading “Accounts Payable” on Schedule 2.2(b)(2) attached hereto, but only to the extent that any such obligation relates to goods or services provided by such vendor to Purchaser subsequent to the Closing.
               (2) At the Closing (as defined in Section 2.3 hereof), the Purchaser shall deposit cash in the aggregate amount of the Agreed Liabilities Amount with DLA Piper Rudnick Gray Cary US LLP (“ Escrow Agent ”) in an escrow account (the “ Agreed Liabilities Escrow ”), which the Escrow Agent shall hold pursuant to the provisions of an escrow agreement (the “ Agreed Liabilities Escrow Agreement ”) in such form as may be agreed by the parties hereto prior to Closing and thereafter attached hereto as Exhibit 2.2(b)(2) . Attached hereto as Schedule 2.2(b)(2) is a list of all Creditors, and the last known amount owed to each such Creditor. Prior to the Closing, Seller shall update Schedule 2.2(b)(2) to reflect, as to each Creditor, the amount that such Creditor has agreed to accept in order to fully and completely discharge all obligations of either Seller in favor of such Creditor, and Seller shall provide evidence to Purchaser, including payoff letters from each Creditor, in form and substance satisfactory to Purchaser, indicating that each Creditor has in fact agreed to accept the amount set forth next to its name on such updated Schedule 2.2(b)(2) to fully and completely discharge all obligations of either Seller in favor of such Creditor, with the aggregate amount reflected on such updated Schedule 2.2(b)(2) to be equal to or less than the Agreed Liabilities Amount. Notwithstanding the foregoing, as to each Creditor set forth on Schedule 2.2(b)(2) attached hereto as of the date hereof under the heading “Accounts Payable”, to the extent that the designated last known amount owed as of the date hereof set forth on such Schedule 2.2(b)(2) is less than $25,000 (each a “ Minor Creditor ”), Seller shall not be obligated to update Schedule 2.2(b)(2) as to such Minor Creditor in accordance with the foregoing, and such Minor Creditor shall not be satisfied out of the Agreed Liabilities Escrow in accordance with this Section 2.2(b)(2) . However, the liabilities or obligations owed to all such Minor Creditors shall nevertheless constitute Excluded Liabilities, and the provisions of Section 2.2(b)(1) hereof shall apply with respect to such items in the same manner as with respect to all Excluded Liabilities. In addition, to the extent that a Creditor has agreed to accept equity in the Seller in full or in partial satisfaction of any obligation owed to such Creditor, the updated Schedule 2.2(b)(2) shall so state, and evidence of such agreement satisfactory to Purchaser shall be provided to Purchaser prior to Closing. As shall be set forth in further detail in the Agreed Liabilities Escrow Agreement, at such time as each of the Creditors specified on Schedule 2.2(b)(2) attached hereto

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(other than the Minor Creditors) presents the Escrow Agent with a duly executed satisfaction and release (and with respect to Creditors holding recorded Liens, an appropriate instrument of release), each in such form as is satisfactory to the Purchaser in its sole and absolute discretion, the Escrow Agent shall release the amount of cash set forth opposite such Creditor’s name (if any) on such updated Schedule 2.2(b)(2) to such Creditor. Once a duly executed satisfaction and release has been received from each of the Creditors (other than the Minor Creditors), any funds remaining in the Agreed Liabilities Escrow shall be returned to the Seller.
          (c) Payment of Contingent Quarterly Payment and Additional Contingent Payment .
               (1)  Calculation and Payment . The Contingent Quarterly Payment payable by Purchaser to Seller pursuant to Section 2.2(a)(2) shall be calculated in accordance with this Section 2.2(c) . Not later than sixty (60) days after the close of each calendar quarter after the Closing Date, the Purchaser shall calculate the Vault Net Revenue for the prior quarter (each such quarter, a “ Measurement Period ”). Once the Vault Net Revenue for any Measurement Period has been calculated, the payment of the Contingent Quarterly Payment with respect to such Measurement Period shall become due and payable (subject to the provisions of Section 2.2(c)(5) ). The Contingent Quarterly Payment payable with respect to each Measurement Period shall equal the product of the Vault Net Revenue for such Measurement Period and ten percent (10%).
               (2)  Additional Contingent Payment . In addition to the Contingent Quarterly Payment described in Section 2.2(c)(1) hereof, Seller may be entitled to additional contingent payments (each an “ Additional Contingent Payment ”), as determined pursuant to this Section 2.2(c)(2). Seller shall not be entitled to any Additional Contingent Payment with respect to the first four (4) quarterly Measurement Periods. After the end of each of the eight (8 th ), twelfth (12 th ), sixteenth (16 th ) and twentieth (20 th ) quarterly Measurement Periods, the Purchaser shall calculate (i) the total Vault Net Revenue for such quarterly Measurement Period and the immediately preceding three (3) quarterly Measurement Periods (in each case, the “ Current Annual Vault Revenue ”), and (ii) the total Vault Net Revenue for the four (4) quarterly Measurement Periods immediately preceding the four (4) quarterly Measurement Periods as to which the Current Annual Vault Net Revenue has been calculated (in each case the “ Prior Annual Vault Net Revenue ”). The Purchaser shall then determine the excess (if any) of, in each case, the Current Annual Vault Net Revenue over the Prior Annual Vault Net Revenue (each an “ Annual Increase ”). If an Annual Increase exists, Purchaser shall pay to Seller an Additional Contingent Payment equal to five percent (5%) of any such Annual Increase. To the extent payable hereunder, each Additional Contingent Payment shall be payable within sixty (60) days of the end of the eighth (8 th ), twelfth (12 th ), sixteenth (16 th ) or twentieth (20 th ) quarterly Measurement Periods, as applicable.
               (3)  Uncertain Nature of Contingent Quarterly Payment and Additional Contingent Payments . The Seller and the Shareholders acknowledge and agree that (i)

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Purchaser’s obligation to pay the Contingent Quarterly Payment and the Additional Contingent Payment pursuant to the terms hereof shall be contingent upon Purchaser’s attaining Vault Net Revenue with respect to the relevant Measurement Period and (ii) Purchaser shall have no obligation to pay to Seller any Contingent Quarterly Payment or Additional Contingent Payment with respect to any Measurement Period with respect to which the Purchaser does not, for any reason, achieve a positive Vault Net Revenue. Furthermore, the Purchaser shall have no obligation whatsoever to make any further Contingent Quarterly Payments or Additional Quarterly Payments attributable to any period of time after the twentieth (20 th ) quarterly Measurement Period (that is, Seller’s right to receive, and Purchaser’s obligation to pay, Contingent Payments shall terminate on the fifth (5 th ) anniversary of the Closing Date).
               (4)  No Standard of Care Imposed on Purchaser; Initial Investment Commitment . The obligation to pay the Contingent Quarterly Payment and the Additional Contingent Payment shall not be deemed or otherwise construed to impose any standard of care or duty upon the Purchaser with respect to its conduct of its business, which may, subject only to the terms of this Section 2.2(c)(4) , be conducted by the Purchaser in the exercise of its sole and absolute discretion. The Purchaser agrees to arrange for up to One Million Dollars ($1,000,000) in funding for the acquired Vault Business during the period beginning on the Closing Date and ending one (1) year later to support the operational expenses of its conduct of the Vault Business, which may be in the form of loans (from its shareholder, any affiliate, or a third party), and/or equity or some combination (the “ Initial Investment Commitment ”). Except for the Initial Investment Commitment, the Purchaser does not agree to provide any financing or invest any certain amount of time, money or effort with respect to the Vault Business and shall have no duties or obligations to the Seller or the Shareholders whatsoever with respect to the operation of the Vault Business or the Purchaser’s other business, all of which shall be conducted in the exercise of the Purchaser’s sole and absolute discretion.
               (5)  Escrow of Contingent Quarterly Payments and Additional Contingent Payments . For each of the first twelve (12) quarterly Measurement Periods, twenty five percent (25%) of the Contingent Quarterly Payment applicable to each such quarterly Measurement Period, if payable hereunder, as well as twenty five percent (25%) of any Additional Contingent Payment payable hereunder with respect to the periods ending with the eight (8 th ) and the twelfth (12 th ) quarterly Measurement Periods, shall be deposited by Purchaser in an escrow account (the Contingent Payment Escrow Account ”) which the Escrow Agent shall hold pursuant to the provisions of an escrow agreement (the “ Contingent Payment Escrow Agreement ”) in such form as mutually agreed by the parties hereto prior to Closing and attached hereto as Exhibit 2.2(c)(5) , in order to secure the indemnification obligations of Seller and the Shareholders set forth herein, provided, however, that no more than $300,000 in the aggregate shall be deposited into the Contingent Payment Escrow Account in accordance with the foregoing. The Contingent Payment Escrow Agreement will provide for 50% of the funds held therein to be released after three (3) years and the balance to be released after five (5) years (subject to holdback with respect to claims asserted prior to the release date).

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               (6)  Application of Contingent Quarterly Payments and Additional Contingent Payments . In addition to the deposit of a portion of the Contingent Payments otherwise payable hereunder into the Contingent Payment Escrow pursuant to Section 2.2(c)(5) hereof, twenty five percent (25%) of all Contingent Payments otherwise payable hereunder shall be applied to repay any cash advances made by Purchaser to Seller, either prior to or subsequent to the date hereof, including but not limited to any advances made by Purchaser to Seller pursuant to the provisions of Section 10 hereof, until such time as all advances shall have been repaid in full.
          (d)  Audit of Vault Net Revenues Determination . Promptly following the Purchaser’s determination of Vault Net Revenue in accordance with the foregoing (which shall be the basis for initially determining the Contingent Quarterly Payment and, if applicable, the Additional Contingent Payment, with respect to the relevant Measurement Period), the accountants for the Purchaser shall review such Vault Net Revenue determination and shall forward the results of such review to the Purchaser, the Seller and the Shareholders. The Seller and the Shareholders shall then have the right for ten (10) days to provide written comments and suggested changes to the Purchaser’s accountants, with a copy to the Purchaser. If after consideration of such written comments, the parties are not able to agree upon the Vault Net Revenue within an additional ten (10) day period, then the matter shall be submitted to a reputable accounting firm selected by the Purchaser’s accountants, and the determination of Vault Net Revenue made by such accounting firm shall be conclusive and binding upon all parties for all purposes of this Agreement and for all purposes of the Employment Agreements. If the Vault Net Revenue determined by the Purchaser’s accountants (or in the event of a dispute, by the selected accounting firm) differ from the Vault Net Revenue determined by the Purchaser, then the Contingent Quarterly Payment and, if applicable, the Additional Contingent Payment, made pursuant to Section 2.2(c) with respect to the relevant Measurement Period based upon the Purchaser’s determination of Vault Net Revenue for such Measurement Period shall be increased or decreased, as applicable, by applying the formula set forth in Section 2.2(6) to such re-determined Vault Net Revenue amount. If any change in the Vault Net Revenue calculation results in an increase in the required payment, then the Purchaser shall promptly pay such additional amount to the Seller. If any change in the Vault Net Revenue calculation results in a decrease in the required payment, then the Seller shall promptly pay the amount of any such decrease to the Purchaser. If in accordance with the foregoing any dispute as to the Purchaser’s Vault Net Revenue is submitted to another accounting firm and the Vault Net Revenue as determined by such other accounting firm is not materially different than the Vault Net Revenue calculated by the Purchaser’s accountants, then the Seller and the Shareholders shall pay the other accounting firm’s costs and expenses. If the Vault Net Revenue as determined by such other accounting firm differs from the Vault Net Revenue calculated by the Purchaser’s accountant by ten percent (10%) or more, then the Purchaser shall pay the other accounting firm’s costs and expenses.
          (e)  Purchaser’s Right of Set-Off . In addition to the rights and remedies set forth elsewhere in this Agreement (including, but not limited to Section 2.2(c)(5) and Section

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2.2(c)(6) ), the Purchaser shall have the right to set off against any payment otherwise due to Seller hereunder the amount of loss, liability or damages (including reasonable attorneys’ fees and expert fees) sustained by Purchaser due to the breach by the Seller and/or any Shareholder of any representation or warranty or other provision contained in this Agreement, in the Non-Competition Agreement or in any Employment Agreement, or due to the default by the Seller and/or any Shareholder under any of the foregoing agreements, including but not limited to amounts as to which Seller and the Shareholders are required to indemnify the Purchaser under this Agreement.
          (f)  Prepaid Items . Liabilities for prepaid items attributable to the Assets, such as real estate taxes, personal property taxes, rent, fuel, telephone or other utility and service charges, shall be prorated and allocated between the Seller and Purchaser as of the close of business on the Closing Date, and the amount of such proration shall be a deduction or addition, as the case may be, to the Purchase Price.
          (g)  Allocation of Purchase Price . The Purchaser and the Seller shall, prior to Closing, agree upon an allocation of the Purchase Price pursuant to Section 1060 of the Code and the Income Tax Regulations, and, once agreed, such allocation shall be attached as Exhibit2.2(g) . The Purchaser and the Seller agree to reflect such allocation on IRS Form 8594 (Asset Acquisition Statement) under Section 1060, including any required amendments or supplements thereto (“ Form 8594 ”), and shall jointly prepare such Form 8594 for execution promptly after Closing. The parties hereto further agree that (a) the agreed upon allocation of the Purchase Price shall be used in filing all required forms under Section 1060 of the Code and all tax returns; and (b) they will not take any position inconsistent with such allocation upon any examination of any such tax return, in any refund claim or in any tax litigation.
     2.3 Closing .
          (a)  Time and Place . Subject to the terms and conditions of this Agreement, the sale and purchase of the Assets contemplated hereby (the “ Closing ”) shall take place at the offices of DLA Piper Rudnick Gray Cary US LLP, 6225 Smith Avenue, Baltimore, Maryland 21209-3600, within three (3) days of the satisfaction (or waiver, as applicable), of the conditions to Closing set forth in Section 8 hereof, or at such other time, date or place as the parties hereto may mutually agree upon in writing. The time and date of the Closing are herein referred to as the “ Closing Date ,” and the term “Closing Date” shall include the date on which the transactions contemplated hereunder are consummated.
          (b)  Deliveries by Purchaser to the Seller . At the Closing, Purchaser (or its designee) shall deliver or cause to be delivered each of the following:
          (i) Cash in the amount of the Agreed Liability Amount, payable to the Escrow Agent, as provided for under Section 2.2(b) hereof;

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               (ii) The Employment Agreements (as defined herein), executed by the Purchaser;
               (iii) The Agreed Liabilities Escrow Agreement, executed by the Purchaser; and
               (iv) The Contingent Payment Escrow Agreement, executed by the Purchaser.
          (c) Deliveries by the Seller and the Shareholders . At Closing, the Seller and/or the Shareholders, as applicable, shall deliver or cause to be delivered to the Purchaser (or its designee) each of the following:
               (i) An Assignment and Bill of Sale, in such form as mutually agreed by the parties, executed by the Seller, selling, assigning, transferring and delivering to Purchaser all of the Assets, free and clear of any and all Liens;
               (ii) A Certificate of the Secretary of each of BVI and BVST showing the signatures of those officers of BVI and BVST, respectively, authorized to sign this Agreement on behalf of BVI and BVST and certifying that said signatures are the signatures of said authorized officers;
               (iii) A copy of the Articles of Incorporation and By-Laws of each of BVI and BVST, together with all amendments and supplements thereto, certified by the Secretary of each of BVI and BVST, as applicable, as being true and complete;
               (iv) Good standing certificates of each of BVST and BVI dated no earlier than ten (10) calendar days prior to the Closing Date, certifying respectively (i) that BVST is in good standing in the State of Delaware and is qualified to do business in the State of New York; (ii) that BVST is qualified to do business in all of the other states in which BVST then does business; (iii) that BVI is in good standing in the State of Nevada and is qualified to do business in the State of New York; and (iv) that BVI is qualified to do business in all of the other states in which BVI then does business.
               (v) Resolutions of the shareholders and the directors of each of BVI and BVST certified by the Secretary of each of BVI and BVST as having been duly and validly adopted and as being in full force and effect on the date hereof, authorizing the execution and delivery by each of BVI and BVST of this Agreement and other agreements and instruments executed and delivered by BVI and BVST as provided for herein, and authorizing the performance by BVI and BVST of the transactions contemplated hereby and thereby;
               (vi) A duly executed certificate described in Section 8.1 hereof;

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               (vii) Duly executed non-competition agreements from each of the Shareholders, BVI, BVST and any employee of Seller that is also a shareholder of either Seller in a form satisfactory to Purchaser, providing for a five (5) year non-compete term (collectively, the “ Non-Competition Agreements ”).
               (viii) Duly executed employment agreements from each of the Key Seller Employees in a form satisfactory to Purchaser (collectively, the “ Employment Agreements ”) which shall provide a minimum three (3) year term, and shall provide that such Key Employees will participate in the programs generally offered to the Purchaser’s executive team with respect to performance bonuses, medical benefits, insurance and the like.
               (ix) Duly executed intellectual property assignments from each of the employees, prior employees, consultants and prior consultants of Seller specified on Schedule 2.3(c)(ix) attached hereto in a form satisfactory to Purchaser (collectively, the “ Intellectual Property Assignments ”).
               (x) Duly executed confidentiality agreements from each of Seller’s employees that are offered and accept employment with the Purchaser (including but not limited to the Key Seller Employees) in a form satisfactory to Purchaser (collectively, the “ Confidentiality Agreements ”).
               (xi) Duly executed assignments from Seller, assigning all of Seller’s rights in, to and under the Assigned Contracts to the Purchaser on such terms and conditions as the Purchaser shall in the exercise of its sole and absolute discretion determine (collectively, the “ Contract Assignments ”).
               (xii) Duly executed written consents from each of the parties to each of the Assigned Contracts, to the extent such consent is required pursuant to the terms thereof, consenting to the assignment of the Contracts to the Purchaser, in such form as Purchaser shall in the exercise of its sole and absolute discretion determine (collectively, the “ Consents ”).
               (xiii) A duly executed assignment of the existing Lease referred to on Schedule 3.20 from Seller to Purchaser, in form and substance satisfactory to Purchaser, and the consent of the landlord under such Lease to such assignment.
               (xiv) An opinion of counsel to the Seller in form and substance satisfactory to Purchaser covering the items described in Section 8.9 hereof (the “ Legal Opinion ”).
               (xv) A duly executed termination of the Intercompany License Agreement in form and substance satisfactory to the Purchaser.
               (xvi) Evidence satisfactory to the Purchaser that the Retention Program, as defined herein, has been established.

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               (xvii) The Agreed Liabilities Escrow Agreement and the Contingent Payment Escrow Agreement, duly executed by Seller.
               (xviii) A duly executed assignment of Seller’s rights to the Big Vault trademark, and a duly executed assignment of Seller’s rights to all of the third party software identified on Schedule 3.21(f), in each case, in form and substance satisfactory to the Purchaser.
               (xix) All other documents necessary or appropriate, in the opinion of Purchaser, to effectuate the purchase and sale of the Assets at the Closing, free and clear of all liens, in accordance with the provisions of this Agreement.
     2.4 Further Assurances .
          In addition to the actions, documents and instruments specifically required to be taken or delivered hereby, prior to and after the Closing and without further consideration, the Seller and the Shareholders shall execute, acknowledge and deliver such other assignments, transfers, consents and other documents and instruments and take such other actions as Purchaser or its counsel may reasonably request to complete and perfect the transactions contemplated by this Agreement.
     3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE SELLER.
          The Seller and the Shareholders hereby jointly and severally represent and warrant to Purchaser that the following representations and warranties are true and correct in all material respects on the date hereof and will be true and correct in all material respects on and as of the Closing Date:
     3.1 Organization and Good Standing .
          (a) BVST is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and in all other states in which BVST does business, is qualified to do business in the State of New York and all other states in which BVST does business and has full corporate power to execute, deliver and perform its obligations under this Agreement.
          (b) BVI is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and all other states in which BVI does business, is qualified to do business in the State of New York and all other states in which BVI does business and has full corporate power to execute, deliver and perform its obligations under this Agreement.

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     3.2 Authority and Consents .
          The Seller and the Shareholders have full power to enter into and to carry out the terms of this Agreement. The Seller and its directors have taken all action, corporate and otherwise, necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery of any and all instruments necessary or appropriate to effectuate fully the terms and conditions of this Agreement. Except as set forth on Schedule 3.2 , no consent or approval of any third party, court, governmental agency, other public authority or third party with any actual or alleged interest in the Seller’s business or the Assets is required as a condition to (a) the authorization, execution, delivery and performance of this Agreement or any other instruments necessary to effectuate this Agreement; or (b) the consummation by the Seller of the transactions contemplated herein. This Agreement has been properly executed and delivered by the Shareholders and the Seller and constitutes the valid and legally binding obligation of the Shareholders and the Seller and is enforceable against the Shareholders and the Seller in accordance with its terms.
     3.3 Rights of First Refusal; Right of First Negotiation, Etc.
     There are no applicable rights of first refusal, rights of first negotiation, rights of first offer or similar rights of any kind that would require either Seller or the Shareholders to provide any third party with notice, an opportunity to discuss, negotiate or to engage in any of the transactions contemplated hereby prior to consummating the transactions contemplated hereby.
     3.4 No Conflict .
          Neither the execution and delivery of this Agreement nor the carrying out of the transactions contemplated hereby will result in (a) any violation, termination or modification of, or conflict with, the articles of incorporation or By-Laws of either Seller or any of the contracts or other instruments to which either Seller or any of the Shareholders is a party, or of any judgment, decree or order applicable to either Seller or the Shareholders; or (b) the creation of any Lien on all or any portion of the Assets.
     3.5 Broker’s and Finder’s Fees .
          All negotiations relating to this Agreement have been carried on between the parties directly without the intervention of any person that would give rise to a valid claim against any of the parties for a brokerage commission, finder’s fee, advisory fee or other like payment (each, a “ Broker’s Fee ”). The Seller and the Shareholders shall jointly and severally indemnify and hold the Purchaser harmless from and against any cost, expense, liability or obligation associated with any Broker’s Fee payable to any party by virtue of the purchase and sale contemplated by this Agreement.

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     3.6 Litigation and Compliance .
          Except as set forth on Schedule 3.6. , there is no Claim pending or threatened against the Assets, either Seller, or the Shareholders; nor is there any valid basis for any such litigation, arbitration, mediation, investigation or other proceeding relating to the Assets, either Seller, the Shareholders or the transactions contemplated by this Agreement. Neither Seller nor the Shareholders are subject to any order of any court, regulatory commission, board or administrative body entered in any proceeding to which BVST, BVI or either of the Shareholders is a party or of which any of the foregoing has knowledge. The Seller has complied with and is currently in compliance with all laws, rules, regulations, orders, ordinances, judgments and decrees of any governmental authority applicable to the Assets or the Seller’s Vault Business.
     3.7 Title and Condition of Assets .
          The Seller has good and marketable title to all of the Assets, free and clear of all Liens, other than the Liens set forth on Schedule 3.7 , all of which shall be fully and entirely discharged by Seller at or prior to the Closing. The Assets are in good operating condition and repair, and constitute all of the assets necessary to the conduct by the Seller of its Vault Business in accordance with its past practice.
     3.8 Accounts Receivable .
          All Accounts Receivable of the Seller reflected in the balance sheet for the most recently ended period included in the Financial Statements, and all Accounts Receivable that have arisen since the date of the latest balance sheet of Seller included in the Financial Statements (except Accounts Receivable that have been collected since such date) are valid and enforceable claims, and constitute bona fide Accounts Receivable resulting from the provision of services in the ordinary course of the Seller’s Vault Business. The Accounts Receivable are subject to no valid defense, offsets, returns, allowances or credits of any kind, and are fully collectible within sixty (60) days from their due date. Except for the Accounts Receivable, the Seller has not made any loan or advance to any Person.
     3.9 [Reserved.]
     3.10 Financial and Full Information .
          The Seller has delivered to Purchaser financial statements covering the periods from                      until                            (the “ Financial Statements ”), copies of which are attached hereto as Exhibit 3.10 . The Financial Statements have been prepared in accordance with generally accepted accounting principles (“ GAAP ”), are true, correct and complete in all material respects, and accurately reflect the financial position of the Seller for the periods set forth therein. The Seller has provided to Purchaser all information material to the Assets and/or the Vault Business, and no representation or warranty made in this Agreement or information

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furnished pursuant hereto to Purchaser, including that set forth in any Schedules or Exhibits hereto, contains any untrue statement or omits to state any material fact relevant to the Assets or the Vault Business.
     3.11 Absence of Undisclosed Liabilities .
          As of the date hereof and as of the Closing Date, the Seller does not have and shall not have any indebtedness or other liability of any kind whatsoever, absolute or contingent, that is not either specifically reflected on the Financial Statements or otherwise specifically disclosed in writing to Purchaser in this Agreement. In addition, all indebtedness and/or other liabilities whatsoever (including trade payables) of Seller are accurately reflected on Schedule 2.2(b)(2) , and Seller has no indebtedness and/or other liabilities (including trade payables) whatsoever other than as set forth on Schedule 2.2(b)(2) , attached hereto.
     3.12 [Reserved.]
     3.13 Licenses and Permits .
           Schedule 3.13 of the Disclosure Schedules sets forth a complete list of all of the certificates, licenses, consents, permits or other approvals required of or obtained by the Seller in connection with the operation of the Vault Business, including all certificates of use and occupancy (collectively, the “ Licenses and Permits ”). The Seller has provided the Purchaser with true and complete copies of all of the Licenses and Permits. All of the Licenses and Permits are in full force and effect and the Seller is not in violation in any material respect with respect to any of them. No proceedings are pending or threatened by any applicable authority to revoke or limit the scope of any of the Licenses and Permits. Other than those listed on Schedule 3.13 , there are no Licenses or Permits necessary for the conduct of the Vault Business as it is currently being conducted. None of the Licenses and Permits would be rendered ineffective or be required to be reissued as a result of the consummation of the transactions contemplated hereby.
     3.14 Business Records .
          All business records of the Seller have been provided to Purchaser for review, are complete and correct in all material respects, and fairly reflect the operations of the Vault Business.
     3.15 Insurance .
          Set forth on Schedule 3.15 is a true and complete list and description of all insurance in force on the date hereof with respect to the Assets and/or the Vault Business, together with a summary description of the hazards insured against. Such policies are in full force and effect with reputable insurers and copies thereof have been provided to Purchaser. There are no outstanding unpaid claims under any such policy, and neither the Seller nor the Shareholders are aware of any notice of cancellation or non-renewal of any such policy. There

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are and have been no inaccuracies in any application for such policies, nor any failure to pay premiums thereon when due. Neither the Seller nor the Shareholders have received any notice from any of its insurance carriers that any insurance premiums will be materially increased in the future or that any insurance coverage will not be available to the Seller in the future on substantially the same terms as now in effect. No such insurance policies call for any retrospective premium adjustments. All such insurance policies are freely assignable by the Seller to Purchaser without the consent of any party.
     3.16 Operation of the Vault Business .
          The Assets are sufficient to operate the Vault Business in accordance with past practice. All of the Assets are in good condition and repair, and have been maintained in accordance with appropriate manufacturer’s standards.
     3.17 Absence of Certain Changes . Since January 1, 2005, except as set forth on Schedule 3.17 , there has not been:
          (a) any material adverse change in the Seller’s financial position, results of operations, manner of conducting business, assets, liabilities or net worth;
          (b) any acquisition or disposition by the Seller of any asset or property, or any agreement to do the same other than in the ordinary and regular course of business;
          (c) created, incurred or permitted to exist any Lien on any of the Seller’s assets or properties;
          (d) any material damage, destruction or loss, whether or not covered by insurance;
          (e) any change in the Seller’s authorized or issued capital stock; grant of any stock option or right to purchase shares of capital stock of the Seller; issuance of any security convertible into such capital stock; grant of any registration rights; purchase, redemption, retirement or other acquisition by the Seller of any shares of any such capital stock; or declaration or payment of any dividend or other distribution or payment in respect of shares of capital stock, other than the issuance of shares of Seller to certain creditors of Seller in lieu of, and in satisfaction of, all or some portion of the indebtedness of Seller in favor of such creditors, as set forth in detail on Schedule 3.17(e) ;
          (f) any amendment to the charter or by-laws of the Seller; or
          (g) any other event or condition experienced by the Seller of any character which would alone or in the aggregate with other events or conditions have a material adverse effect on the Seller or the Vault Business.

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     3.18 Employee Matters .
          (a)  Schedule 3.18 contains a complete and correct list of all Employee Benefit Plans (as defined below) and any other employee benefit arrangements or payroll practices, including, without limitation, employment agreements, severance agreements, executive compensation arrangements, incentive programs or arrangements, sick leave, vacation pay, severance pay policies, salary continuation for disability, consulting or other compensation arrangements, workers’ compensation, retirement, deferred compensation, bonus, stock purchase, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, any plans providing benefits or payments in the event of a change of control, change in ownership, or sale of a substantial portion (including all or substantially all) of the assets of the Seller, maintained by the Seller or to which the Seller has contributed or is obligated to make payments, in each case with respect to any employees (or, if the Seller has any existing liability, former employees) of the Seller (hereinafter, the “ Employee Benefit Plans ”). All Employee Benefit Plans which constitute Employee Pension Plans (as defined below) (hereinafter, the “ Employee Pension Plans ”) are separately listed on Schedule 3.18 of the Disclosure Schedules. The Seller and its ERISA Affiliates do not and have never maintained or participated in any Employee Benefit Plans which are: (a) subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) or the minimum funding requirements of Section 412 of the Code; (b) Multiemployer Plans (as defined below); (c) multiple employer plans subject to Sections 4063 and 4064 of ERISA (“ Multiple Employer Plans ”); or (d) plant closing benefit plans. As used in this Agreement, (i) “ Employee Benefit Plan ” shall have the meaning ascribed to such term by Section 3(3) of ERISA, (ii) “ Employee Pension Plan ” shall have the meaning ascribed to such term by Section 3(2) of ERISA, (iii) “ ERISA Affiliate ” shall refer to any trade or business, whether or not incorporated, the employees of which, together with the employees of the Seller, are treated as employed by a single employer under Section 414(b), (c), (m) or (o) of the Code, and (iv) “ Multiemployer Plans ” shall mean any multiemployer plan as defined in Section 3(37) of ERISA to which the Seller or an ERISA Affiliate has contributed or is or was obligated to make payments, in each case with respect to any current or former employees of the Seller or an ERISA Affiliate before the Closing Date.
          (b) Except as set forth on Schedule 3.18 :
               (i) the Employee Pension Plans which are “defined contribution plans” intended to qualify under Section 401 of the Code are so qualified and the trusts maintained pursuant thereto are exempt from federal income taxation under Section 501 of the Code, and nothing has occurred with respect to the operation of such plans which could cause the loss of such qualification or exemption or the imposition of any material liability, lien, penalty, or Tax under ERISA or the Code;
               (ii) true, correct and complete copies of the following documents, with respect to the Employee Benefit Plans have been delivered to Purchaser: (A) all plan documents,

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including trust agreements, insurance policies and service agreements and amendments thereto, (B) the most recent Forms 5500 and any financial statements attached thereto and those for the prior three years, (C) the last Internal Revenue Service determination letter, and the applications and supporting disclosure documents submitted to the Internal Revenue Service with respect to such determination letter, and all other correspondence or filings with a governmental agency or entity including without limitation compliance program applications, (D) summary plan descriptions, (E) employee handbooks or manuals, and (F) the most recent actuarial written descriptions of all non-written agreements relating to any such plan;
               (iii) there are no pending Claims which have been asserted or instituted by or against the Employee Benefit Plans, against the assets of any of the trusts under such plans or by or against the plan sponsor, plan administrator, or any fiduciary of the Employee Benefit Plans (other than routine benefit claims) nor do the Seller and/or the Shareholders have knowledge of facts which could form the basis for any such Claims;
               (iv) all amendments and actions required to bring the Employee Benefit Plans into conformity in all material respects with all of the applicable provisions of ERISA, the Code and any other applicable laws (including the rules and regulations thereunder) have been made or taken except to the extent that such amendments or actions are not required by Law to be made or taken until a date after the Closing Date and are disclosed on Schedule 3.18 (b)(iv) ;
               (v) the Employee Benefit Plans have been maintained, in form and operation, in all material respects in accordance with their plan documents and with all provisions of the Code and ERISA (including rules and regulations thereunder) and other applicable Law, and none of the Shareholders, the Seller nor any “party in interest” or “disqualified person” with respect to the Employee Benefits Plans has engaged in a “prohibited transaction” within the meaning of Section 4975 of the Code or Title I, Part 4 or ERISA;
               (vi) none of the Employee Benefit Plans contains any provisions which would prohibit the transactions contemplated by this Agreement or which would give rise to any severance, termination or other payments or liabilities, including without limitation any acceleration in benefit vesting or distribution, as a result of the transactions contemplated by this Agreement;
          (c) Attached hereto as Schedule 3.18(c) is a complete and correct list of (i) all employee grievances and (ii) each person who, as of the date set forth in such list, is employed by the Seller, including each active employee and each employee classified as inactive as a result of disability, leave of absence, layoff or other absence. With respect to such persons, such list includes the positions and the current wages for the most recent payroll period. Schedule 3.18(c) also contains a description of all existing severance, accrued vacation obligations or retiree benefits of any current or former director, officer, employee or consultant of the Seller. The employment or consulting arrangement of Seller with all such persons are terminable at will.

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The Seller has not made any written or oral agreement with or promise to any employee, officer or consultant regarding continued employment by the Purchaser after the Closing Date.
          (d) The Seller and the Shareholders shall undertake good faith efforts to cause the Seller’s employees to become employees of the Purchaser subsequent to the Closing, but the parties hereto acknowledge and agree that, except for the Purchaser’s obligation to employ the Key Seller Employees pursuant to the Employment Agreements, the Purchaser shall have no obligation whatsoever to hire any such employee. In furtherance of the obligations of Seller and the Shareholders pursuant to the foregoing provision, the Seller agrees to offer, at its sole cost and expense, an incentive/retention program upon terms and conditions satisfactory to the Purchaser to encourage the Seller’s employees to become and remain employees of the Purchaser subsequent to the Closing (the “ Retention Program ”).
     3.19 Environmental Matters .
          (a) The Seller has not released, emitted, buried or otherwise disposed of Regulated Substances (as hereinafter defined) on any property. No one else has released, emitted, buried or otherwise disposed of Regulated Substances on any real property included in the Assets or any real property the leasehold interest of which is included in the Assets (each a “ Property ” and together the “ Properties ”). No storage tanks, underground or otherwise, are or have been located on any of the Properties. The Seller has complied with all Environmental Laws (as hereinafter defined) pertaining to the use, ownership, and operation of the Properties. There are no asbestos containing materials (“ ACM’s ”), polychlorinated biphenyls (“ PCB’s ”) or radioactive substances located on the Properties. The Seller has not received any notice, demand, suit or information request pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (“ CERCLA ”) or any comparable state Law with respect to any Property, nor does it have knowledge of any other party’s receipt of same relating to any of the Properties. None of the Properties is listed on any regulatory list of contaminated properties, including but not limited to the National Priorities List promulgated pursuant to CERCLA, the CERCLIS or any federal, state or local counterpart. The Seller has no existing or potential liability under any Environmental Laws pertaining to any of the Properties. No environmental approvals, clearances or consents are required under applicable Law from any governmental entity or authority in order for the Purchaser and the Seller to consummate the transactions contemplated herein. There are no conditions on any adjacent properties which threaten any Property. The Seller is not required to have, nor does the Seller have, any permits or approvals issued under any Environmental Law. The Seller and the Shareholders have disclosed, prior to the date of this Agreement, the Seller’s waste practices, use of Regulated Substances and all potentially material environmental matters pertaining to the Properties, and has disclosed all reports, assessments, remedial action plans or other similar documents relating to any environmental condition, whether or not material, of the Properties.
          (b) As used in this Agreement: (i) “ Environmental Law ” means any statute, regulation, rule, code, common law, order or judgment of any applicable federal, state, local or

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foreign jurisdiction relating to pollution, hazardous substances, hazardous wastes, petroleum or otherwise relating to protection of the environment, natural resources or human health, including, by way of example and not by way of limitation, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act (“ RCRA ”), the Comprehensive Environmental Response Compensation and Liability Act (“ CERCLA ”), the Toxic Substances Control Act (“ TSCA ”), and the Emergency Planning and Community Right-to-Know Act, all as currently amended; (ii) “ Regulated Substances ” means any substance regulated under Environmental Laws, including but not limited to hazardous waste, as defined pursuant to RCRA, hazardous substances, as defined pursuant to CERCLA, toxic substances as defined under TSCA, hazardous materials, as defined under the Hazardous Materials Transportation Act, petroleum and its fractions, ACM’s and PCB’s; and (iii) “the Seller” includes any predecessors or affiliates of the Seller.
     3.20 Property .
          (a) None of the Property is the subject of any lease or other use or occupancy agreement (whether oral or written) whatsoever, except as set forth on Schedule 3.20 (“ Leases ”).
          (b) All of the Leases are valid and in full force and effect, enforceable against the Seller and against the other parties thereto, and have not been assigned, modified, supplemented or amended. The Seller has delivered to the Purchaser true and complete copies of all of the Leases, all amendments thereto, and all material correspondence related thereto, including all correspondence pursuant to which any party to any of the Leases declared a default thereunder or provided notice of the exercise of any option granted to such party under such Lease.
          (c) There are no pending or threatened condemnation proceedings, lawsuits or administrative actions relating to any of the Property or any other matters which do or may adversely effect the current use, occupancy or value thereof.
          (d) The Property and all present uses and operations of the Property comply with all applicable zoning, land-use, building, fire, labor, safety, subdivision and other governmental requirements and all deed or other title covenants or restrictions applicable thereto. Neither the Shareholders nor the Seller has received any notice that any of the Property, or the use, occupancy or operation thereof violates any governmental requirements or deed or other title covenants or restrictions.
          (e) The Seller has obtained all approvals of governmental authorities (including certificates of use and occupancy, licenses and permits) required in connection with the current ownership, use, occupation and operation of the Property. None of the Property is dependent upon or benefit from any “non-conforming use” or similar zoning classification.
          (f) Except as set forth on Schedule 3.20(a) , there are no parties other than the Seller in possession of any of the Property or any portion thereof, and there are no leases,

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subleases, licenses, concessions or other agreements, written or oral, granting to any party or parties other than the Seller the right of use or occupancy of any of the Property or any portion thereof other than the Leases. There are no outstanding options or rights of first refusal to purchase any of the Property, or any portion thereof or interest therein.
     3.21 Intellectual Property .
          (a)  Schedule 3.21(a) contains a true and complete list of the Intellectual Property, and includes details of all due dates for further filings, maintenance and other payments or other actions falling due in respect of the Intellectual Property within twelve (12) months following the Closing Date, and the current status of the corresponding registrations, filings, applications and payments. All of the registrations and applications arising from or relating to the Intellectual Property are and remain valid and subsisting, in good standing, with all fees, payments and filings due as of the Closing Date duly made, and the due dates specified on Schedule 3.21(a) are accurate and complete in all material respects. All of these registrations and applications are enforceable. The Seller has delivered correct and complete copies of all of these registrations and applications, and has made available for review correct and complete copies of all other written documentation evidencing ownership of each of the foregoing. The Seller has made all other registrations relating to the Vault Business that it is required to have made and is in good standing with respect to such registrations with all fees due as of the Closing duly made.
          (b) The Intellectual Property consists solely of items and rights that are: (1) owned by the Seller; (2) in the public domain; or (3) rightfully used by the Seller pursuant to a valid license, sublicense, consent or other similar written agreement (the Licensed Intellectual Property ). The parties and date of each such agreement regarding the Licensed Intellectual Property are set forth on Schedule 3.21(b) . The Seller has all rights in the Intellectual Property necessary and sufficient to carry out the Seller’s current activities and proposed activities relating to the Vault Business (and had all rights necessary to carry out its former activities at the time such activities were being conducted), including and to the extent required to carry out such activities, rights to make, use, reproduce, modify, adapt, create derivative works based on, translate, distribute (directly and indirectly), transmit, display and perform publicly, license, rent and lease and, as applicable, assign and sell, the Intellectual Property. The Seller has delivered correct and complete copies of all material license agreements to the Purchaser, and, as applicable, has made available for review correct and complete copies of all other written documentation evidencing that the Seller has the necessary and sufficient rights in each of the foregoing.
          (c) The Seller has not infringed upon or misappropriated any Intellectual Property Rights or personal right of any person anywhere in the world. No Claims or written notice (1) challenging the validity, effectiveness or ownership by the Seller of any of the Intellectual Property, or (2) to the effect that the use, distribution, licensing, sublicensing, sale or any other exercise of rights in any product, service, work, technology or process as now used or

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offered or proposed for use, licensing, sublicensing, sale or other manner of commercial exploitation by the Seller infringes or will infringe on any Intellectual Property Rights or personal right of any Person have been asserted or are threatened by any Person, nor are there any valid grounds for any bona fide Claim of any such kind. There is and has been no unauthorized use, infringement or misappropriation of any Intellectual Property by any third party, employee or former employee.
          (d) All personnel (including employees, agents, consultants and contractors), who have contributed to or participated in the conception and/or development of the Intellectual Property on behalf of the Seller have executed nondisclosure agreements in the form set forth on Schedule 3.21(d) and either (1) have been a party to a “work-for-hire” and/or other arrangement or agreements with the Seller in accordance with applicable international, national, state and local Law that has accorded the Seller full, effective, exclusive and original ownership of all tangible and intangible property and Intellectual Property Rights thereby arising or relating thereto, or (2) have executed appropriate instruments of assignment in favor of the Seller as assignee that have conveyed to the Seller effective and exclusive ownership of all tangible and intangible property and intellectual property rights thereby arising and related thereto. Prior to the date hereof, the Seller has provided copies of all such written agreements or provided a summary of the terms of any such oral agreements to Purchaser.
          (e) The Seller is not, nor as a result of the execution or delivery of this Agreement, or performance of the Seller’s obligations hereunder, will the Seller be, in violation of any license, sublicense, agreement or instrument relating to the Intellectual Property to which the Seller is a party or otherwise bound, nor will execution or delivery of this Agreement, or performance of the Seller’s obligations hereunder, cause the diminution, termination or forfeiture of any Intellectual Property or any rights therein or thereto.
          (f)  Schedule 3.21(f) contains a true and complete list of all of the Seller’s computer software programs, products and services included in the Intellectual Property, including all program code, databases and documentation, without regard to form of media or storage (collectively, the “ Software Programs ”). Except with respect to third party software or technology licensed by the Seller (to which the Seller holds appropriate and valid licenses providing the Seller with the rights necessary to conduct the Vault Business as presently conducted or as anticipated to be conducted), the Seller owns full and unencumbered right and good, valid and marketable title to such Software Programs free and clear of all Liens.
          (g) The source code and system documentation relating to the Software Programs (1) have at all times been maintained in strict confidence; (2) have been disclosed by the Seller only to employees who have a “need to know” the contents thereof in connection with the performance of their duties to the Seller and who have executed the nondisclosure agreements referred to in Section 3.21(d) ; and (3) have not been disclosed to any third party, except those third parties set forth on Schedule 3.21(d) who have executed restrictive license and nondisclosure agreements and/or source code escrow agreements with the Seller. Schedule

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3.21(g) identifies all agreements pursuant to which source code to the Software Programs has been escrowed with any third party. The Seller has provided true and complete copies of all such escrow agreements and such other license and nondisclosure agreements as are identified above, and as applicable, has made available for review correct and complete copies of all other written documentation evidencing agreements to release of any source code of the Software Programs to any third party.
          (h) The Software Programs do not contain any open source program code, modules, utilities or libraries that are covered by open source licenses that require as a condition of use, modification or redistribution of such Software Program and/or other software programs combined or distributed with any such Software Program that it be (1) disclosed or distributed in source code form, (2) licensed for the purpose of making derivative works, or (3) redistributable at no charge subject to the open source license applicable to such open source program code, modules, utilities or libraries (collectively, “ Open Source Code ”). All Software Programs will be scanned for Open Source Code prior to Closing. If Purchaser determines that any Software Program includes any Open Source Code, this will need to be remedied to Purchaser’s satisfaction at Seller’s sole cost and expense prior to and as a condition to Closing.
          (i) The Seller has taken all reasonable steps, in accordance with normal industry practice, to preserve and maintain complete notes and records relating to the Intellectual Property and to cause the same to be readily understood, identified and available.
          (j) The Intellectual Property is free and clear of any and all Liens and nothing shall interfere with the quiet enjoyment of the Purchaser with respect to the Intellectual Property following consummation of the transactions contemplated hereby.
          (k) Except as set forth on Schedule 3.21(k) , the Seller does not owe any royalties, license fees, guaranteed maintenance fees or other payments to third parties in respect of the Intellectual Property. All royalties, license fees, guaranteed maintenance fees or other payments set forth on Schedule 3.21(k) that have accrued, or will accrue, prior to the Closing have been paid or will be paid prior to Closing. The Seller will not owe any such payments or any additional payments as a result of the consummation of the transactions contemplated hereby.
          (l) The Seller has used its commercially reasonable efforts to regularly scan the Software Programs and the other items of Intellectual Property with “best-in-class” virus detection software. The Software Programs and other Intellectual Property contain no “viruses”, Trojan horses, trap doors, Easter eggs, time bombs, cancel bots or other computer programming routines that are intended to damage, detrimentally interfere with or surreptitiously intercept with or expropriate any system, data or personal information. For the purposes of this Agreement, “virus” means any computer code intentionally designed to disrupt, disable or harm in any manner the operation of any software or hardware. None of the foregoing contains any worm, bomb, backdoor, clock, timer, or other disabling device code, or any other design or routine that

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causes any system, software, data or information to be erased, inoperable, or otherwise incapable of being used, either automatically or upon command by any party.
          (m) The Seller has taken and will continue to take all reasonable measures to protect the secrecy, confidentiality, and value of all trade secrets and Intellectual Property Rights included in the Intellectual Property transferred pursuant to this Agreement. Neither the Seller nor any other party has taken any action or failed to take any action that directly or indirectly caused any Intellectual Property to enter the public domain or in any way adversely affect its value to the Purchaser, or its absolute ownership thereof. The Seller acknowledges and agrees that from and after the Closing, the Purchaser will have a legitimate and continuing proprietary interest in the protection of trade secrets and non-public confidential information, knowledge, data and similar information relating to the Intellectual Property and the confidential information included therein (the Confidential Information ). The Seller agrees that prior to and following the Closing it shall secure and maintain the confidentiality of the Confidential Information in a manner consistent with the importance and value of such information and the maintenance of the Purchaser’s rights therein, but in no event using less than reasonable efforts. The Seller shall not use, sell, transfer, publish, disclose or otherwise make available any of the Confidential Information to any third party. If the Seller is compelled by a duly authorized subpoena, court order or government authority to disclose any of the Confidential Information, the Seller shall immediately notify the Purchaser of same prior to disclosure, and fully cooperate with the appropriate party in seeking a protective order or other appropriate remedy prior to disclosure.
     3.22 Contracts .
          (a)  Schedule 3.22(a) sets forth a list of all Contracts to which the Seller is a party or by which the Seller, the Vault Business or any of the Assets is bound as of the date hereof including:
               (1) any Contract for the Seller’s provision of engineering or other services related to the Vault Business;
               (2) any continuing Contract for management or consulting services or services of independent contractors or subcontractors;
               (3) any Contract that expires more than one year after the date of this Agreement and any Contract that may be renewed at the option of any person other than the Seller so as to expire more than one year after the date of this Agreement;
               (4) any trust indenture, mortgage, promissory note, loan agreement or other Contract for the borrowing of money, any currency exchange, commodities or other hedging arrangement or any leasing transaction of the type required to be capitalized in accordance with GAAP;

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               (5) any Contract for capital expenditures in excess of $5,000 in the aggregate;
               (6) any Contract limiting the freedom of the Seller to engage in any line of business or to compete with any other Person, or any confidentiality, secrecy or non-disclosure contract or any contract that may be terminable as a result of the Seller’s status as a competitor of any party to such contract;
               (7) any Contract pursuant to which the Seller is a lessor of any Tangible Personal Property, pursuant to which payments in excess of $5,000 remain outstanding;
               (8) any Contract with an affiliate;
               (9) any agreement of guarantee, support, indemnification, assumption or endorsement of, or any similar commitment with respect to, the Liabilities of any other Person other than customary customer agreements made in the ordinary course of the Vault Business;
               (10) any employment Contract, arrangement or policy (including any collective bargaining contract or union agreement) that may not be immediately terminated without financial notifications or penalty (or any augmentation or acceleration of benefits);
               (11) any Contract providing for a joint venture or partnership with any other Person;
               (12) any oral contract, true and correct summaries of which have been provided to the Seller; and
               (13) any Contract that is otherwise in any way material to the Assets and/or the Vault Business and is not described in any of the categories specified in this Section 3.22(a) .
          (b) The Seller has performed all of the obligations required to be performed by it and is entitled to all benefits under, and is not alleged to be in default in respect of any Assigned Contract. Each of the Assigned Contracts is valid and binding and in full force and effect, and except as disclosed on Schedule 3.22(b) , there exists no default or event of default or event, occurrence, condition or act, with respect to the Seller, or with respect to the other contracting party, that, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default under any Assigned Contract. The Seller has not received written or oral notice of cancellation, modification or termination of any Assigned Contract. Seller does not have actual or constructive notice that one or more of the parties to any Assigned Contract intends to terminate or alter the provisions thereof by reason of the transactions contemplated hereby. Since the date of the latest balance sheet of the Seller

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contained in the Financial Statements, except as set forth on Schedule 3.22(b) , the Seller has not waived any right under any Assigned Contract, amended or extended any Assigned Contract or failed to renew (or received notice of termination or failure to renew with respect to) any Assigned Contract. True, correct and complete copies of all Assigned Contracts have been delivered to the Purchaser.
          (c) Schedule 3.22(a) denotes with an asterisk all of the Contracts (if any) that will be Excluded Contracts.
          (d) Except as expressly designated on Schedule 3.22(a) , none of the Assigned Contracts was awarded to the Seller as a result of (in whole or in part) the Seller’s status as a minority-owned or disadvantaged business or similar status.
          (e) All of the Assigned Contracts may be assigned to the Purchaser without obtaining the consent of any party thereto, other than to the extent specifically set forth on Schedule 3.22(e) .
     3.23 Taxes and Tax Returns .
          (a) Except as set forth on Schedule 3.23 :
               (1) The Seller has timely filed or timely requested extensions to file those Tax Returns that are currently due or, if not yet due, will timely file or timely request extensions to file all Tax Returns required to be filed by it for all taxable periods ending on or before the Closing Date and all such Tax Returns are, or will be when filed, true, correct and complete. Copies of all such Tax Returns for the periods ending on or after December 31, 2004 have been given to the Purchaser;
               (2) The Seller has paid to the appropriate Governmental Authority, or, if payment is not yet due, will pay, to the appropriate Governmental Authority, or has established, in accordance with GAAP and consistent with past practice, accruals that are reflected on the Seller’s financial statements (as provided to the Purchaser hereunder) for the payment of all Taxes imposed on the Seller or for which the Seller could be liable, whether to taxing authorities or to other persons (pursuant to a tax sharing agreement or otherwise) for all taxable periods beginning on or before the Closing Date;
               (3) No extension of time has been requested or granted for the Seller to file any Tax Return that has not yet been filed or to pay any Tax that has not yet been paid;
               (4) The Seller has not received notice of a determination by a Governmental Authority that Taxes are owed by the Seller (such determination to be referred to as a Tax Deficiency ) that has not been resolved as of the date of Closing and, to the Seller’s Knowledge, no Tax Deficiency is proposed or threatened;

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               (5) All Tax Deficiencies have been paid or finally settled and all amounts determined by settlement to be owed have been paid;
               (6) Except in the case of a Lien for ad valorem property taxes not yet due and payable, there is no unpaid Tax (a) that constitutes a Lien upon any of the Assets or (b) for which the Purchaser would be liable under applicable Law by reason of having acquired the Assets;
               (7) There are no presently outstanding waivers or extensions or requests for waiver or extension of the time within which a Tax Deficiency may be asserted or assessed;
               (8) No issue has been raised in any examination, investigation, audit, Claim or proceeding relating to Taxes (a Tax Audit ) which, by application of similar principles to any past, present or future period, would result in a Tax Deficiency for such period and no Claim has ever been made by a Governmental Authority in a jurisdiction where the Seller does not file Tax Returns that it is or may be subject to taxation by that jurisdiction;
               (9) There are no pending or, to the Seller’s knowledge, threatened, Tax Audits of the Seller;
               (10) There are no requests for rulings in respect of any Tax pending between the Seller and any Governmental Authority;
               (11) The Seller has complied with all applicable Laws relating to the withholding and payment of Taxes and has timely withheld and paid to the proper Governmental Authorities all amounts required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor or shareholder;
               (12) The Seller has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code;
               (13) After the date hereof, no election with respect to Taxes will be made without the written consent of the Purchaser other than those elections that would not have a material adverse effect and that are consistent with past practices of the Seller;
               (14) None of the Assets of the Seller is property that it is required to be treated as being owned by any other person pursuant to the “safe harbor lease” provisions of former Section 168(f)(8) of the Code;

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               (15) None of the Assets of the Seller directly or indirectly secures any debt, the interest on which is tax-exempt under Section 103(a) of the Code;
               (16) None of the Assets of the Seller is “tax-exempt use property” within the meaning of Section 168(h) of the Code;
               (17) The Seller does not have, and has not had, a permanent establishment in any foreign country, as defined in any applicable tax treaty or convention between the United States and such foreign country;
               (18) The Seller is not a party to any Tax allocation or Tax sharing agreement; and
               (19) The Acquisition is not subject to Tax withholding provisions of the Code.
          (b) Schedule 3.23 contains: (1) a schedule of the filing dates of all Tax Returns required to be filed by the Seller; (2) a description of all past Tax Audits involving the Seller; (3) a list of all elections made by the Seller relating to Taxes, including whether the Seller has made an election pursuant to Section 754 of the Code; and (4) a list of the states, territories and jurisdictions (whether foreign or domestic) to which any Tax is properly payable by the Seller. Except as set forth on Schedule 3.23 , the Seller has retained all supporting and backup papers, receipts, spreadsheets and other information necessary for: (A) the preparation of all Tax Returns that have not yet been filed; and (B) the defense of all Tax Audits involving taxable periods either ending on or during the six years prior to the Closing Date or from which there are unutilized net operating loss, capital loss or investment tax credit carryovers.
          (c) The Seller has collected and remitted to the appropriate Governmental Authority all sales and use or similar Taxes required to have been collected, including any interest and any penalty, addition to tax or additional amount unpaid, and has been furnished properly completed exemption certificates for all exempt transactions. The Seller has collected and/or remitted to the appropriate Governmental Authority all property Taxes, customs duties, fees, and assessments which are other than in the nature of income taxes or charge of any kind whatsoever (including Taxes assessed to real property and water and sewer rents relating thereto), including any interest and any penalty, addition to tax or additional amount unpaid.
     3.24 Solvency .
          No insolvency proceeding of any character including bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting, the Seller (other than as a creditor) or any of the Assets are pending or are being contemplated by the Seller, or are being threatened against the Seller by any other Person, and the Seller has not made any assignment for the benefit of creditors or taken any action in contemplation of which

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that would constitute the basis for the institution of such insolvency proceedings. Immediately after giving effect to the consummation of the transactions contemplated hereby, the Seller will be able to pay the Excluded Liabilities as they become due; (b) the value of the remaining assets (if any) of the Seller (calculated at fair market value) will exceed the Excluded Liabilities; and (c) taking into account all pending and threatened litigation, final judgments against the Seller in actions for money damages are not reasonably anticipated to be rendered at a time when, or in amounts such that, the Seller will be unable to satisfy any such judgments promptly in accordance with their terms (taking into account the maximum probable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered) as well as all other obligations of the Seller.
     4. COVENANTS OF THE SELLER AND THE SHAREHOLDERS.
     The Seller and the Shareholders hereby covenant and agree as follows:
     4.1 Full Cooperation; Access to Information .
          The Seller and the Shareholders shall cooperate in good faith with Purchaser in causing the transactions that are the subject of this Agreement to be consummated. Seller shall permit Purchaser and its counsel, accountants, employees and other representatives, prior to Closing, to make such investigations of Seller’s business, operations, assets, employees, contracts, books, records and financial information, all as Purchaser deems necessary or advisable in the conduct of its due diligence investigation into Seller’s business, operations and assets. Seller shall give to Purchaser and its counsel, accountants, employees and other representatives access, to the fullest extent possible without unreasonably interfering with Seller’s business operations, to all of Seller’s personnel, properties, books, contracts, commitments and records, and will promptly furnish to Purchaser copies of all such documents and records and information with respect to Seller’s affairs as Purchaser may from time to time in the exercise of its sole and absolute discretion request. Purchaser shall not be under any obligation to continue with its due diligence investigation if, at any time, the results of its due diligence investigation are not fully satisfactory to it for any reason in its sole discretion.
     4.2 No Inconsistent Action .
          Neither the Seller nor the Shareholders will take any action which is inconsistent with or impairs the consummation of the transactions contemplated by this Agreement or which would make inaccurate the representations or warranties made by the Shareholders or the Seller herein.
     4.3 Non-Solicitation .
          In consideration of the expense and effort that will be expended by Purchaser in its due diligence investigation, neither the Shareholders nor the Seller, nor their affiliates will, directly, indirectly or otherwise, solicit or entertain offers from, negotiate with or in any manner

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encourage, discuss, entertain, accept or consider any proposal of any other person or entity relating to a disposition (directly or indirectly) of all or any portion of the Assets of the Seller, the stock of either Seller, or a merger involving either Seller, or the issuance of any shares of or other equity securities of either Seller, other than as contemplated pursuant to Section 3.17(e) hereof, at any time during the term of this Agreement, or to raise funds in the form of debt or equity for use in the Vault Business, until the earlier to occur of March 1, 2006, or, if applicable, the termination of this Agreement.
     4.4 [Reserved] .
     4.5 Prohibited Actions Pending Closing .
          Unless otherwise provided for herein or approved by Purchaser in writing, from the date hereof until the Closing Date, the Seller and the Shareholders shall cause the Seller not to do or enter into the following:
          (a) amend or otherwise change its Articles of Incorporation, By-Laws or other organizational documents;
          (b) issue or sell, authorize for issuance or sale, grant any options or make any other agreements with third parties with respect to the Seller’s stock, other than to the extent specifically contemplated by Section 3.17(e) hereof;
          (c) authorize or incur any additional debt for money borrowed, or incur any additional debt, liability or obligation, other than in favor of Purchaser;
          (d) mortgage, pledge or subject to Lien or other encumbrance any of its properties or assets, or agree to do so;
          (e) sell or otherwise dispose of, or agree to sell or dispose of any of its assets or properties;
          (f) amend or terminate any lease, contract, undertaking or other commitment listed in any of the disclosure schedules annexed hereto to which it is a party, or to take action or fail to take any action, constituting any event of default thereunder;
          (g) assume, guarantee or otherwise become responsible for the obligations of any other party or agree to do so;
          (h) make any change in accounting methods or principles;
          (i) compromise or settle any material Claim, other than with the consent of the Purchaser;

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          (j) acquire the capital stock or other ownership interests of any other entity or acquire all or substantially all of the assets of another entity;
          (k) take any action prior to the Closing Date which would breach any of the representations and warranties contained in this Agreement;
          (l) take any action or omit to take any action if taking or omitting to take such action could have a Material Adverse Effect, as defined in Section 8.5 hereof, or
          (m) agree to take any of the actions described in this Section 4.5 .
     4.6 Conduct of Business Pending Closing .
          From the date hereof until the Closing Date, the Seller and the Shareholders covenant and agree to cause the Seller to:
          (a) maintain its existence in good standing;
          (b) maintain proper business and accounting records;
          (c) maintain all insurance on the Assets in effect on the date of this Agreement; and
          (d) continue to diligently operate its business in the ordinary course.
     4.7 Change of Corporate Name .
          Immediately subsequent to the Closing, the Seller acknowledges and agrees that each Seller shall change its name to something that does not contain the phrase “BigVault” or any derivation thereof, and thereafter neither the Seller, the Shareholders nor any affiliate shall use such name or any confusingly similar name at any time subsequent to the Closing.
     5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
          Purchaser hereby represents and warrants to the Seller and the Shareholders, that the following representations and warranties are true and correct in all material respects on the date hereof and will be true and correct in all material respects on and as of the Closing Date:
     5.1 Organization and Good Standing .
          Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and has full power to carry on its business as it is now being conducted and to own or hold under lease the properties it now owns or holds under lease.

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     5.2 Authority .
          Purchaser has full power and authority to enter into this Agreement. Purchaser and its members, officers and directors have taken all action necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery of any and all instruments necessary or appropriate to effectuate fully the terms and conditions of this Agreement. This Agreement has been properly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery thereof by the Seller and the Shareholders) constitutes the valid and legally binding obligation of Purchaser and is enforceable against Purchaser in accordance with its terms.
     5.3 No Conflict .
          Neither the execution and delivery of this Agreement nor the carrying out of the transactions contemplated hereby will result in any violation, termination or modification of, or conflict with, the articles of organization or by-laws of Purchaser or any of the contracts or other instruments to which Purchaser is a party, or of any judgment, decree or order applicable to Purchaser.
     6. INDEMNIFICATION AND SURVIVAL.
     6.1 Indemnification by the Seller and the Shareholders . The Seller and the Shareholders hereby covenant and agree to jointly and severally indemnify and hold harmless the Purchaser and its respective successors and assigns, at all times from and after the date of Closing, against and in respect of the following:
     (i) any damage or loss resulting from any misrepresentation, breach of warranty or breach or non-fulfillment of any agreement or covenant on the part of the Seller or either Shareholder under this Agreement, the Intellectual Property Assignments, the Non-Competition Agreements or any Employment Agreement, or from any inaccuracy or misrepresentation in or omission from any certificate or other instrument or document furnished or to be furnished by or on behalf of the Seller or the Shareholders at Closing;
     (ii) any and all losses, interest, penalties, attorneys’ fees, and expenses resulting from or associated in any way with the Excluded Liabilities;
     (iii) any and all losses, interest, penalties, attorneys’ fees and expenses arising from or associated in any way with the waiver of bulk sales compliance pursuant to Section 10.13 hereof; and

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     (iv) all Claims, assessments, judgments, costs, reasonable attorneys’ fees and expenses of any nature incident to any of the matters indemnified against pursuant to this Section 6.1 , including, without limitation, all such costs and expenses incurred in the defense thereof or in the enforcement of any rights of the Purchaser hereunder.
     The parties hereto hereby acknowledge and agree that the Contingent Payment Escrow Agreement will provide that funds held in the Contingent Payment Escrow will be the first (but not the sole) source of satisfaction of the indemnification obligation of the Seller and the Shareholders hereunder.
     6.2 Indemnification by Purchaser . The Purchaser hereby covenants and agrees to indemnify and hold harmless the Seller and the Shareholders and their respective successors and assigns, at all times from and after the date of Closing against and in respect of the following:
     (i) any damage or loss resulting from any misrepresentation, breach of warranty or breach or non-fulfillment of any agreement or covenant on the part of the Purchaser under this Agreement, or from any inaccuracy or misrepresentation in or omission from any certificate or other instrument or document furnished or to be furnished by the Purchaser at Closing; and
     (ii) all Claims, assessments, judgments, costs, reasonable attorneys’ fees and expenses of any nature incident to any of the matters indemnified against pursuant to this Section 6.2 , including, without limitation, all such costs and expenses incurred in the defense thereof or in the enforcement of any rights of the Seller or the Shareholders hereunder.
     6.3 Notice and Defense . If at any time a party entitled to indemnification hereunder (the “ Indemnitee ”) shall receive notice from any third party of any asserted liability, damage, loss or expense (together, a “ Loss ”) claimed to give rise to indemnification hereunder, the Indemnitee shall promptly give notice thereof (“ Claims Notice ”) to the party obligated to provide indemnification (the “ Indemnitor ”) of such Loss. The Claims Notice shall set forth a brief description of the Loss, and, if known or reasonably estimable, the amount of the Loss that has been or may be suffered by the Indemnitee. Thereafter, the Indemnitor shall have, at its election, the right to compromise or defend any such matter at the Indemnitor’s sole cost and expense through counsel chosen by the Indemnitor and approved by the Indemnitee (which approval shall not unreasonably be withheld); provided, however, that (i) Indemnitor provides evidence reasonably satisfactory to Indemnitee that Indemnitor has the financial wherewithal (including but not limited to funds available in the Contingent Payment Escrow) to satisfy and discharge the Loss in full, and (ii) any such compromise or defense shall be conducted in a manner which is reasonable and not contrary to the Indemnitee’s interests, and the Indemnitee shall in all events have a right to veto any such compromise or defense which is unreasonable or which would jeopardize in any material respect any assets or business of the Indemnitee or any of its affiliates or increase the potential liability of, or create a new liability for, the Indemnitee

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or any of its affiliates and, provided further that the Indemnitor shall in all events indemnify the Indemnitee and its affiliates against any damage resulting from the manner in which such matter is compromised or defended, including any failure to pay any such claim while such litigation is pending. In the event that the Indemnitor does so undertake to compromise and defend a claim, the Indemnitor shall notify the Indemnitee of its intention to do so. Each party agrees in all cases to cooperate with the defending party and its counsel in the compromise of or defending of any such liabilities or claims. In addition, the nondefending party shall at all times be entitled to monitor such defense through the appointment, at its own cost and expense, of advisory counsel of its own choosing.
     7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER AND THE SHAREHOLDERS.
          The obligations of the Seller and the Shareholders under this Agreement are subject only to the delivery by Purchaser to the Escrow Agent of the Agreed Liabilities Amount, the delivery of the documents described in Section 2.3(b) hereof and the satisfaction of the condition set forth below, as Section 7.1:
     7.1 Each of the representations and warranties of the Purchaser contained herein and in any other agreements or instruments provided for herein shall have been true and correct in all material respects on the date hereof, and shall be true and correct in all material respects for that period of time between the signing hereof and the Closing Date, and as of the Closing Date as though made on and as of such date. Purchaser shall deliver to Seller and the Shareholders a certificate to such effect at the Closing as to the representations and warranties of the Purchaser.
     8. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
          The obligations of Purchaser to proceed to Closing under this Agreement are subject to the fulfillment (or, at the option of Purchaser, the waiver) at or prior to the Closing Date of each of the following conditions:
     8.1 Accuracy of Representations and Warranties .
          Each of the representations and warranties of the Seller and the Shareholders contained herein and in any other agreements or instruments provided for herein shall have been true and correct in all material respects on the date hereof, and shall be true and correct in all material respects for that period of time between the signing hereof and the Closing Date, and as of the Closing Date as though made on and as of such date. Each of Seller and the Shareholders shall deliver to Purchaser a certificate to such effect at the Closing as to the representations and warranties of the Seller and the Shareholders.

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     8.2 Performance of Agreements .
          The Shareholders and the Seller shall have performed all obligations and agreements and complied with all covenants and conditions contained in this Agreement to be performed or complied with by them at or prior to the Closing.
     8.3 No Action or Proceeding .
          No claim, action, suit, investigation or other court proceeding shall be pending or threatened before any court or governmental agency which presents a risk of the restraint or prohibition of the transactions contemplated by this Agreement or the obtaining of material damages or other relief in connection therewith.
     8.4 Consents and Actions; Contracts .
     All requisite regulatory and/or other consents and approvals of third parties, including but not limited to those set forth on Schedule 3.2 or Schedule 3.22(e) , shall have been obtained and completed. The Seller and the Shareholders shall have provided Purchaser with evidence satisfactory to Purchaser in its sole and absolute discretion that (i) there are no applicable rights of first refusal, rights of first negotiation, rights of first offer or similar rights of any kind that would require Seller or the Shareholders to provide any third party with notice, an opportunity to discuss, consent, negotiate or to engage in any of the transactions contemplated hereby prior to consummation by Seller and the Shareholders hereof; or (ii) that any and all such rights (including any such rights in favor of Vaultrx and Spiderboy) have been waived by the party possessing such rights.
     8.5 No Material Adverse Changes .
          There shall not have been any Material Adverse Change in the business, assets or prospects of the Seller since January 1, 2005. For purposes of this Agreement, “ Material Adverse Change ” or “ Material Adverse Effect ” means any change or effect that is or, so far as can reasonably be determined, is reasonably likely to be materially adverse to the Vault Business, its prospects or the Assets.
     8.6 Satisfactory Due Diligence Review .
     The Purchaser shall have completed its due diligence investigation into the business, operations and assets of the Seller, the Assets and the Vault Business and determined in the exercise of its sole and absolute discretion that it is satisfied with the results of such investigation. If the Purchaser is not satisfied at any time with the results of such investigation, for any reason or no reason at all, it shall have the option to terminate this Agreement, without any liability whatsoever to the Seller, the Shareholders or any other party, upon written notice to the Seller and the Shareholders. The Seller and the Shareholders hereby acknowledge and agree that, notwithstanding the Purchaser’s due diligence investigation, Purchaser is relying upon the

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representations and warranties made by the Seller and the Shareholders herein as a material inducement to the consummation of the transactions described herein, and Purchaser’s due diligence investigation shall in no way undermine or diminish the representations and warranties made by the Seller and the Shareholders or the Purchaser’s reliance thereon.
     8.7 Ordinary Course of Business .
     The Seller shall have operated the Vault Business in a manner consistent with past practice and shall not have made any payments outside the ordinary course of its business.
     8.8 Agreed Liabilities Amount .
     The Seller shall have provided Purchaser with an updated Schedule 2.2(b)(2) reflecting a total amount needed to satisfy all of the Creditors (other than the Minor Creditors) in full of $1,500,000 or less, together with evidence satisfactory to Purchaser in its sole and absolute discretion that payment of the Agreed Liabilities Amount to each of the Creditors (other than the Minor Creditors) in the amount set forth on such updated Schedule 2.2(b)(2) with respect to each Creditor (other than the Minor Creditors) shall be sufficient in all respects to satisfy fully and discharge all Liabilities of Seller (other than Liabilities owed to Minor Creditors) and in all events to enable Seller to transfer title to the Assets to the Purchaser at the Closing free and clear of any and all Liens.
     8.9 Opinion of Counsel Regarding Due Authorization .
     The Seller shall have provided Purchaser with an opinion of counsel to the Seller that (i) the Seller and the Shareholders have full power to enter into and to carry out the terms of this Agreement; (ii) each Seller and its directors and shareholders have taken all action, corporate and otherwise, necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery of any and all instruments necessary or appropriate to effectuate fully the terms and conditions of this Agreement; (iii) any consent or approval of any court, governmental agency, other public authority or third party that is required as a condition to (a) the authorization, execution, delivery and performance of this Agreement or any other instruments necessary to effectuate this Agreement; or (b) the consummation by the Seller of the transactions contemplated herein has been obtained; and (iv) this Agreement has been properly executed and delivered by the Shareholders and the Seller and constitutes the valid and legally binding obligation of the Shareholders and the Seller and is enforceable against the Shareholders and the Seller in accordance with its terms.
     8.10 Evidence of Resolution of Litigation .
     The Seller shall have provided Purchaser with evidence satisfactory to Purchaser in its sole and absolute discretion that all pending or threatened suits, actions, proceedings or litigation

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pending against the Seller have been fully and finally resolved or adjudicated, as the case may be.
     8.11 Termination of Contracts .
     The Seller shall have provided Purchaser with evidence satisfactory to Purchaser in its sole and absolute discretion that each of the following contracts has been terminated: (i) that certain Technology Licensing and Consulting Agreement dated                           by and between BVST and BVI (the “ Intercompany License Agreement ”); (ii) the employment agreements to which BVST or BVI or any employee of either BVST or BVI is a party; and (iii) those contracts identified in Exhibit 8.11 attached hereto.
     8.12 Delivery of Ancillary Agreements .
     The Seller and the Shareholders shall have furnished to Purchaser fully executed Non-Competition Agreements, Employment Agreements and Intellectual Property Assignments in accordance with Section 2.3 hereof.
     8.13 Delivery of Lease Agreement .
     The Seller and the Shareholders shall have furnished to Purchaser a fully executed assignment of Lease and consent of Landlord pursuant to Section 2.3(c)(xiii) hereof, a consent of the Landlord to the sublease of space to Total Computer Care, and a sublease to Total Computer Care, each in such form as satisfactory to Purchaser in its sole and absolute discretion.
     8.14 Other Evidence .
          The Seller and the Shareholders shall have furnished to Purchaser such further certificates and documents evidencing their due action in accordance with this Agreement as Purchaser shall reasonably request.
     9. TERMINATION.
          This Agreement may be terminated only as follows:
          (a) At any time upon the mutual written consent of the parties hereto;
          (b) At any time prior to the Closing by Purchaser by written notice to the Seller and the Shareholders if Purchaser is not satisfied for any reason with its due diligence review; or
          (c) Automatically and without further act if the Closing has not occurred on or prior to December 31, 2005, as such date may have been extended by the mutual written consent of the parties hereto.

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          In the event of the default by the Seller or the Shareholders hereunder or the breach by the Seller or the Shareholders of any representation, warranty or covenant contained in this Agreement, Purchaser shall have all rights available to it at law and/or in equity, including but not limited to the right to specific performance, notwithstanding the termination of the Agreement in accordance with this Section 9 .
     10. CERTAIN CASH ADVANCES
          Prior to the date hereof, Purchaser has made available $275,000 of “bridge financing” to the Seller, $200,000 of which is currently characterized as Advance Fees (as such term is defined in the License Agreement) under the License Agreement, and $75,000 of which is reflected pursuant to that certain Promissory Note of even date herewith by Seller in favor of Purchaser. The parties hereto hereby contemplate that, from and after the date hereof and prior to the Closing Date, Purchaser may continue to make additional bridge financing available to the Seller, although Purchaser shall have no obligation to do so. If the transaction that is the subject of this Agreement proceeds to Closing, all such advances (including the above-described $200,000 and $75,000, and all additional advances made subsequent to the date hereof) shall be repaid by Seller in the manner contemplated by Section 2.2(c)(6) hereof. If the transaction that is the subject of this Agreement does not proceed to Closing on or prior to December 31, 2005 (as such date may be extended by the mutual, written agreement of the parties hereto), then the Seller shall be obligated to repay all such advances (other than the above-described $200,000) pursuant to the provisions of such Promissory Note. The provisions of this Section 10 shall survive any termination of this Agreement.
     11. MISCELLANEOUS.
     11.1 Expenses .
          Each party to this Agreement shall pay all of its own closing costs and other expenses relating hereto, including fees and disbursements of its counsel and accountants, whether or not the transactions contemplated hereby are consummated.
     11.2 Taxes .
          The Shareholders and the Seller shall bear any and all Taxes of any nature or type whatsoever that may become due and payable as a result of the consummation of the transactions contemplated hereby, and the Shareholders and the Seller shall jointly and severally indemnify and hold Purchaser harmless with respect thereto.

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     11.3 Notices .
          All notices and other communications hereunder or in connection herewith shall be in writing and delivered as follows:
          If to the Seller or the Shareholders, to:
c/o Mr. John Salerno
bigVault Storage Technologies, Inc.
47 Mall Drive
Commack, NY 11725
with a copy to:
Mark X. LoPresti, Esq.
Lederer, Nojima, Tagliaferro, LoPresti & Blakely, LLP
32 Old Slip, 5 th Floor
New York, New York 10005
          If to Purchaser, to:
Digi-Data Corporation
8920-D Route 108
Columbia, Maryland 21045
Attn: Dennis Cindrich
          With a copy to:
Jordan I. Bailowitz, Esquire
DLA Piper Rudnick Gray Cary US LLP
6225 Smith Avenue
Baltimore, Maryland 21209-3600
          Except as otherwise specifically provided herein, all notices, requests, instructions and demands which may be given by any party hereto to any other party in the course of the transactions herein contemplated shall be in writing and shall be served by express mail through the U.S. Postal Service or similar expedited overnight commercial carrier. Service of such notices, demands and requests shall be presumed to have occurred on the date that is one (1) day after the date upon which the item was delivered to the U.S. Postal Service or similar expedited overnight commercial carrier, provided the item was properly addressed, all postage and shipping charges were prepaid by the sender and the commercial carrier issued a dated receipt to the sender acknowledging the commercial carrier’s receipt of the item. All such

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notices, demands and requests shall be addressed as set forth above. Any party may change the address at which it is to receive notice by like written notice to all other parties hereunder.
     11.4 Entire Agreement .
          This Agreement (including the exhibits hereto and the lists, schedules and documents delivered pursuant hereto, which are a part hereof) is intended by the parties to and does constitute the entire agreement of the parties with respect to the transactions contemplated by this Agreement. This Agreement supersedes any and all prior understandings, written or oral, between the parties, including but not limited to that certain Strategic Alliance and License Agreement by and between Purchaser and BVST dated August 31, 2005 (the “ License Agreement ”), which shall be deemed terminated as of the Closing Date, and this Agreement may be amended, modified, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the amendment, modification, waiver, discharge or termination is sought.
     11.5 Severability .
          If any provision of this Agreement shall be declared by any court of competent jurisdiction illegal, void or unenforceable, the other provisions shall not be effected, but shall remain in full force and effect.
     11.6 Modification and Amendment .
          This Agreement may not be modified or amended except by an instrument in writing duly executed by the parties hereto, and no waiver of compliance of any provision or condition hereof and no consent provided for herein shall be effective unless evidenced by an instrument in writing duly executed by the party hereto seeking to be charged with such waiver or consent.
     11.7 Time of the Essence .
          Time is of the essence in every provision of this Agreement where time is a factor.
     11.8 Governing Law; Jurisdiction; Exclusive Venue .
          (a) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, exclusive of the choice of law rules thereof.
          (b) Exclusive Venue . The parties hereto agree that exclusive venue for any litigation, action or proceeding arising from or relating to this Agreement shall lie in the Circuit Court in and for Baltimore County, Maryland or, if federal diversity jurisdiction then exists, in

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the United States District Court for the District of Maryland and each of the parties hereto expressly waives any right to contest such venue for any reason whatsoever.
          (c) Waiver of Trial By Jury . EACH OF THE PARTIES HERETO EXPRESSLY WAIVES THE RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION, ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT.
     11.9 Specific Performance .
          The parties hereto recognize that if the Shareholders and/or the Seller do not perform under the provisions of this Agreement or any other agreements or instruments provided for in this Agreement, then monetary damages alone would not be adequate to compensate the Purchaser for its injury. The Purchaser shall therefore be entitled, in addition to any remedies that may be available at law or in equity including, without limitation, monetary damages, to obtain specific performance of the obligations of the Seller or the Shareholders. If any action is brought by the Purchaser to specifically enforce this Agreement or any other agreements or instruments provided for herein, the Shareholders and the Seller shall waive the defense that there is an adequate remedy at law.
     11.10 Binding Effect .
          This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legatees, beneficiaries, personal representatives and other legal representatives and assigns, as the case may be. This Agreement may not be assigned by any party hereto without the prior written consent of each other party hereto; provided, however , that (i) the Purchaser may assign its rights and obligations hereunder to any affiliate of the Purchaser, (ii) the Seller may assign its rights to receive the Contingent Payments, subject in all respects to the provisions of Sections 2.2(c)(5) , 2.2(c)(6) , and 2.2(e ), to any party without the requirement of the consent of the Purchaser. Other than as set forth above, no other rights of Seller hereunder may be assigned without the prior written consent of the Purchaser, which the Purchaser may grant or withhold in the exercise of its sole and absolute discretion.
     11.11 Enumerations and Headings .
          The enumerations and headings contained in this Agreement are for convenience of reference only and shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision or the scope or intent of this Agreement, or in any way effect this Agreement.
     11.12 Counterparts .
          This Agreement may be signed in two or more counterparts, all of which taken together shall be deemed to constitute one original Agreement.

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     11.13 Waiver of Bulk Sales Compliance . Each of the parties hereto waives compliance with any applicable bulk sales or similar provisions, provided however, that the Shareholders and the Seller hereby jointly and severally agree to indemnify and hold harmless Purchaser from and against any and all losses, expenses, claims, liabilities or attorneys fees arising as a result of such waiver.
     11.14 Disclosure . The parties hereto will consult with each other and reach mutual agreement before issuing any press release or otherwise making any statement or disclosure, oral or written, with respect to this Agreement or the transactions contemplated hereby; provided, however, that each party will be permitted to make, without the agreement of the other, such disclosures to the public or to governmental entities as that party’s counsel reasonably deems necessary to maintain compliance with applicable laws. Except as provided above, the existence and/or contents of this Agreement shall not be disclosed by the Shareholders or the Seller without the Purchaser’s prior written consent.
     11.15 Confidentiality . Except as required by law or to carry out the transactions contemplated by this Agreement (the “ Transactions ”), neither the Seller, the Shareholders nor the Purchaser, nor the employees, attorneys, accountants and other agents and representatives of any of the foregoing (collectively, “ Representatives ”) will disclose or use any Confidential Information (as defined below), whether already furnished or to be furnished in the future to any party hereto or their Representatives in any manner other than in connection with the evaluation and negotiation of the transactions proposed in this Agreement once executed and delivered. For purposes of this Agreement, “ Confidential Information ” means the existence and terms of this Agreement and any information regarding Purchaser, the Seller or the Shareholders, their affiliates or the Transactions. Confidential Information does not include information that a party to this Agreement can demonstrate (i) is generally available to or known by the public other than as a result of improper disclosure; (ii) is obtained by the disclosing party from a source other than the other party or its Representatives; or (iii) was in the possession of the other party prior to the date hereof other than as a result of improper disclosure and was obtained other than in connection with consideration of the transactions set forth in this Agreement, provided that such source was not bound by a duty of confidentiality with respect to such information. Upon the written request of any party, the other party will promptly return any Confidential Information in its possession or in the possession of its Representatives.
     11.16 Survival . All representations and warranties made by the parties in this Agreement and in any other certificates and documents delivered in connection herewith shall survive the Closing.

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     IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement under seal on the date first above written.
                     
WITNESS:       PURCHASER:    
 
                   
        DIGI-DATA CORPORATION,
a Maryland corporation
   
 
 
      By:           (SEAL)
                 
 
          Name:        
 
             
 
   
 
          Title:        
 
             
 
   
 
                   
        SELLER:    
 
                   
        BigVAULT STORAGE TECHNOLOGIES, INC.
a Delaware corporation
   
 
 
      By:           (SEAL)
                 
Andrew Bello Jr.
          Name:   John Salerno    
 
          Title:   President and CEO    
 
                   
        BIG VAULT, INC.,
a Nevada corporation
   
 
                   
 
      By:           (SEAL)
                 
Andrew Bello Jr.
          Name:   John Salerno    
 
          Title:   President and CEO    
 
                   
        SHAREHOLDERS:    
 
                   
 
                  (SEAL)
             
Andrew Bello Jr.       John Salerno    
 
                   
 
                   
 
                  (SEAL)
             
Andrew Bello Jr.       Elisa Salerno    

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AMENDMENT TO ASSET PURCHASE AGREEMENT
AND CONTINGENT PAYMENT ESCROW AGREEMENT
     THIS AMENDMENT TO ASSET PURCHASE AGREEMENT AND CONTINGENT PAYMENT ESCROW AGREEMENT (“ Amendment ”) is dated March ___, 2008 by and among bigVAULT STORAGE TECHNOLOGIES, INC., a Delaware corporation (“ BVST ”); BIG VAULT, INC., a Nevada corporation (“ BVI ” and, together with BVST, the “ Seller ”); JOHN SALERNO (“ John ”) and ELISA SALERNO (“ Elisa ” and, together with John, the “ Shareholders ”); DIGI-DATA CORPORATION, a Maryland corporation (“ Purchaser ”), and DLA PIPER US LLP (the “ Escrow Agent ”).
Explanatory Statements:
     A. Purchaser, Seller and the Shareholders are parties to that certain Asset Purchase Agreement dated as of December 21, 2005, as amended by that certain Amendment dated February 23, 2006 (the “ Original Purchase Agreement ”), and Purchaser, Seller, the Shareholders and the Escrow Agent are parties to that certain Contingent Payment Escrow Agreement dated February 23, 2006 (the “ Original Escrow Agreement ”).
     B. The parties hereto now desire to amend the Original Purchase Agreement and the Original Escrow Agreement in the manner set forth herein.
     NOW, THEREFORE, in consideration of the Explanatory Statements and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser, Seller, the Shareholders and the Escrow Agent, intending to be legally bound, hereby amend the Original Purchase Agreement and the Original Escrow Agreement as follows:
     1.  Defined Terms . Capitalized and undefined terms used herein shall have the meanings given to them by the Original Purchase Agreement or the Original Escrow Agreement, as applicable.
     2.  Partial Release of Escrow Fund . Notwithstanding any provision of the Original Purchase Agreement or the Original Escrow Agreement to the contrary, Sixty Seven Thousand Dollars ($67,000) of the Escrow Fund is hereby released to iGambit Inc., successor-in-interest to the Seller, on the date hereof.
     3.  Effect on Original Agreement; Integration . Except as expressly amended by this Amendment, the Original Purchase Agreement and the Original Escrow Agreement shall remain unmodified and in full force and effect. The Original Purchase Agreement and the Original Escrow Agreement, as amended by this Amendment, reflects the complete and exclusive agreement of the parties with respect to the subject matter hereof, and merges and supersedes all prior discussions, representations, negotiations and agreements with respect thereto.
     4.  Counterparts . This Amendment may be executed by facsimile in one or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.

 


 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Asset Purchase Agreement and Contingent Payment Escrow Agreement, intending to be legally bound, as of the day and year first above written.
         
  PURCHASER :

DIGI-DATA CORPORATION
 
 
  By:     (SEAL) 
    Name:   Dennis Cindrich   
    Title:   President & CEO   
 
  SELLER :

bigVAULT STORAGE TECHNOLOGIES, INC.
 
 
  By:     (SEAL) 
    Name:   John Salerno   
    Title:   President & CEO   
 
  BIG VAULT, INC.
 
 
  By:     (SEAL) 
    Name:   John Salerno   
    Title:   President & CEO   
 
  SHAREHOLDERS:
 
 
     
  John Salerno   
     
     
  Elisa Salerno   
     
  ESCROW AGENT :

DLA PIPER US LLP
 
 
  By:      
    Jordan I. Bailowitz, Esq.   
       
 

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AMENDMENT TO ASSET PURCHASE AGREEMENT
     THIS AMENDMENT TO ASSET PURCHASE AGREEMENT (“ Amendment ”) is made and entered into effective as of February ______, 2006, between and among bigVAULT STORAGE TECHNOLOGIES, INC., a Delaware corporation (“ BVST ”); BIG VAULT, INC., a Nevada corporation (“ BVI ” and, together with BVST, the “ Seller ”); JOHN SALERNO (“ John ”) and ELISA SALERNO (“ Elisa ” and, together with John, the “ Shareholders ”); and DIGI-DATA CORPORATION, a Maryland corporation (“ Purchaser ”).
Explanatory Statements:
     A. Purchaser, Seller and the Shareholders entered into an Asset Purchase Agreement dated as of December 21, 2005 (the “ Original Agreement ”) pursuant to which Purchaser agreed to purchase, and Seller agreed to sell, all of the assets of the Purchaser (other than to the extent specified in the Agreement), free and clear of all liens, liabilities and encumbrances.
     B. Purchaser, Seller and the Shareholders now desire to amend the Original Agreement in the manner set forth herein.
     NOW, THEREFORE, in consideration of the Explanatory Statements and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser, Seller and the Shareholders, intending to be legally bound, hereby agree to amend the Original Agreement as follows:
     1.  Defined Terms . Capitalized and undefined terms used herein shall have the meanings given to them by the Original Agreement.
     2.  Post-Initial Investment Commitment Financing . The final sentence of Section 2.2(c)(4) of the Original Agreement is deleted and the following is substituted in its place:
“At any time after the Initial Investment Commitment has been satisfied, Seller may propose to Purchaser alternative sources of debt and/or equity financing to fund the continued operations of the Vault Business, and Purchaser shall consider such proposals in good faith. Notwithstanding the foregoing, Purchaser shall have the right to determine, in its sole and absolute discretion, whether or not to pursue any such alternative sources of debt and/or equity or any other source of financing with respect to the Vault Business, whether on terms more, less or equally favorable to Purchaser or otherwise. Notwithstanding anything else to the contrary contained herein, except for the Initial Investment Commitment, this Section 2.2(c)(4) shall not be deemed to impose (i) any obligation whatsoever on Purchaser to provide any financing or invest any certain amount of time, money or effort with respect to the Vault Business; (ii) any duties or obligations to Seller or the Shareholders whatsoever with respect to the operation of the Vault Business or Purchaser’s other business, all of which shall be conducted in the

 


 

exercise of Purchaser’s sole and absolute discretion; and/or (iii) to seek or obtain any particular alternative sources of financing or any other financing.”
     3.  No Assignment of Certain Agreements . Notwithstanding Section 3.22 , Schedule 3.22(a) and Schedule 3.22(e) of the Original Agreement, Purchaser, Seller and the Shareholders agree that the following agreements shall not be assigned to Purchaser at the Closing:
  (i)   License and Distribution Agreement dated August 6, 2004 (the “ StrorageCraft License ”) by and between Seller and StorageCraft, Inc.;
 
  (ii)   End User License Agreement from BrowserHawk (Cyscape); and
 
  (iii)   Software License Agreement from Xythos Software, Inc. dated September 30, 2002.
Each of the Purchaser, Seller and Shareholder hereby covenants and agrees to cooperate in good faith subsequent to the Closing in order to determine the manner in which to proceed with respect to the StorageCraft License.
     4.  Verizon Contract Related Matters.
  (i)   Additional Representations of Seller and Shareholders . Seller and the Shareholders hereby jointly and severally represent and warrant (i) that the representations and warranties contained in Section 3.22 of the Original Agreement are true and correct in all material respects on the date hereof, and will be true and correct in all material respects on and as of the Closing Date, with respect to that certain Agreement for Reseller Services dated August 11,2003 by and between Verizon Internet Services, Inc. and GTE.Net LLC d/b/a/ Verizon Internet Solutions (the Verizon Agreement ), and (ii) that there are no Verizon Liabilities (as defined below) as of the date hereof and will be no Verizon Liabilities on and as of the Closing Date.
 
  (ii)   Assumption of Pre-Closing Liabilities . Notwithstanding anything to the contrary contained in the Original Agreement, Purchaser hereby covenants and agrees that it will assume, from and after the date of the Closing, those liabilities of BVST arising from or relating to the Verizon Agreement, to the extent that those liabilities accrued prior to the Closing (the Verizon Liabilities ”).
 
  (iii)   Indemnification by Seller and Shareholders . Notwithstanding the foregoing, each of the Seller and the Shareholders herby jointly and severally covenant and agree to indemnify and hold Purchaser harmless with respect to the Verizon Liabilities. If, subsequent to the Closing, any Verizon Liability is asserted against Purchaser or any affiliate thereof,

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      then, notwithstanding any provisions of the original Agreement, as amended by this Amendment, to the contrary, Purchaser shall be permitted to pay, satisfy and discharge such Verizon Liability in any manner that Purchaser determines, in its sole and absolute discretion, and such payment, satisfaction, or discharge shall in no way undermine or diminish the obligations of Seller and the Shareholders to indemnify Purchaser with respect thereto. In additional, Purchaser shall be entitled to the remedy of recoupment with respect to any such payment, satisfaction or discharge of any Verizon Liability by Purchaser in accordance with the foregoing.
 
  (iv)   Right of Set-Off . In addition to the rights and remedies set forth elsewhere in the Original Agreement, as amended by this Amendment, Purchaser shall have the right to set-off against any payment otherwise due to Seller under the Original Agreement, as amended hereby, the amount of loss, liability or damages (including reasonable attorneys’ fee and expert fees) sustained by Purchaser due to the breach by the Seller and/or any Shareholder of the representations and warranties set forth in Section 4(i) of this Amendment, or due to any default by the Seller and/or any Shareholder under the Verizon Agreement.
 
  (v)   Right to Make Claims Against Contingent Payment Escrow Account . In addition to the rights and remedies set forth elsewhere in the Original Agreement, as amended by this Amendment, Purchaser shall be entitled to make claims for indemnity pursuant to the terms of that certain Contingent Payment Escrow Agreement to be entered into between and among Seller, the Shareholders and Purchaser in order to obtain the indemnification set forth in Section 4(iii) of this Amendment.
     5.  Termination . Section 9(c) of the Original Agreement is amended and restated in its entirety to read as follows:
          “(c) Automatically and without further act if the Closing has not occurred on or prior to March 1, 2006, as such date may have been extended by the mutual written consent of the parties hereto.”
     6.  Extension of Date for Repayment of Bridge Financing . The final two (2) sentences of Section 10 of the Original Agreement are deleted and the following is substituted in its place:
“If the transaction that is the subject of this Agreement does not proceed to Closing on or prior to March 1, 2006 (as such date may be extended by the mutual, written agreement of the parties hereto), then the Seller shall be obligated to repay all such advances (other than the above-described $200,000) pursuant to the provisions of such Promissory Note. The provisions of this Section 10 shall survive any termination of this Agreement.”

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     7.  Purchaser Election to Exit Vault Business . The following new Section 11 is added to the Original Agreement in place of Section 11 of the Original Agreement, and Section 11 of the Original Agreement is renumbered as Section 12 and all subsections of Section 11 are renumbered as the corresponding subsections of Section 12 :
“11. CERTAIN RIGHTS OF SELLER UPON PURCHASER’S ELECTION TO EXIT VAULT BUSINESS.
11.1 Exit From Vault Business Without Sale to Third Party .
     If, within [ five (5) ] years from the date of this Agreement, Purchaser elects (i) to exit the Vault Business subsequent to the Closing, but (ii) not to sell all or any portion of the Vault Business to a third party, then Purchaser shall provide written notice (the “ Abandonment Notice ”) to the Seller stating such election. Subsequent to the provision of the Abandonment Notice, the Seller shall have the right, but not the obligation, to purchase the Vault Business under the terms and conditions of this Section 11.1 . The right of the Seller to purchase the Vault Business pursuant to this Section 11.1 shall be exercisable by written notice given to Purchaser not later than thirty (30) days after delivery of the Abandonment Notice (the “ Exercise Period ”). The purchase price for the Vault Business pursuant to this Section 11.1 shall be equal to the sum, as of the date prior to the Re-Purchase Closing, of (u) the Agreed Liabilities Amount, (v) the amount of the Initial Investment Commitment funded by Purchaser, (w) the sum of the Contingent Quarterly Payments made by Purchaser to Seller, (x) the sum of the Additional Contingent Payments made by Purchaser to Seller, (y) the amount of any investment in the Vault Business funded by Purchaser in excess of the Initial Investment Commitment (if any), and (z) the then-remaining principal balance, and all accrued and unpaid interest and other amounts due thereon, of any outstanding loans made by the Purchaser to the Seller. The purchase price determined in accordance with this Section 11.1 (the “ Re-Purchase Price ”) shall be binding and conclusive upon the parties hereto. The Seller shall pay the Re-Purchase Price to Purchaser in full in cash upon the closing of such purchase (the “ Re-Purchase Closing ”), which shall occur at a location determined by Purchaser not later than thirty (30) days following determination of the Re-Purchase Price pursuant to this Section 11.1 .
11.2 Exit From Vault Business With Sale to Third Party .
     If, within [ five (5) ] years from the date of this Agreement, Purchaser elects both (i) to exit the Vault Business subsequent to the Closing and (ii) to sell all or any portion of the Vault Business to a third party, then Purchaser shall provide written notice (the “ Sale Notice ”) to the Seller promptly after making such election. At any time thereafter, the Seller may submit to Purchaser an offer to purchase the Vault Business, and Purchaser shall consider such offer, if any, in good faith. In addition, Purchaser shall keep Seller informed as to the status of its discussions with third parties regarding the sale of the Vault Business.

4


 

Notwithstanding the foregoing, however, this Section 11.2 shall not be deemed (i) to create a right of first negotiation, right of first offer, right of first refusal or any other type of preemptive right whatsoever on the part of the Seller with respect to the sale of all or any portion of the Vault Business; (ii) create any duty or obligation on the part of Purchaser to consummate any sale of the Vault Business with the Seller and/or any third party identified by the Seller; or (iii) create any duty or obligation on the part of Purchaser not to consummate any sale of the Vault Business to a third party. For purposes of clarity, Purchaser may at any time consummate a sale with a third party on the terms and conditions that it, in its sole and absolute discretion, determines are advisable, regardless of whether those terms and conditions are more, less or equally as favorable to Purchaser as any offers submitted to the Purchaser by the Seller.”
     8.  Retention Program . Notwithstanding Section 2.3(c)(xvi) and Section 3.18(d) of the Original Agreement, Purchaser acknowledges that the Retention Program will not have been implemented by Seller at the time of Closing. Seller and the Shareholders hereby covenant and agree that, promptly after Closing, Seller will implement a Retention Program containing terms and conditions satisfactory to Purchaser in accordance with Section 3.18(d) of the Original Agreement; and (ii) issuing the incentives set forth in Exhibit A attached hereto to the individuals set forth thereon.
     9.  Effective Date . The parties hereto hereby acknowledge and agree that the transfer of the Assets pursuant to the provisions of the Agreement shall be deemed effective as of 12.01 a.m. on March 1, 2006, provided, however, that the employees of BVI and of BVST who become employees of Purchaser pursuant to the provisions hereof shall be moved onto Purchaser’s payroll effective as of 12:01 a.m. on February 27, 2006.
     10.  Notices . The address of Mark X. LoPresti, Esq. for notices and other communications set forth in Section 11.3 of the Original Agreement is amended to read as follows:
“Mark X. LoPresti, Esq.
Lederer, Nojima, Tagliaferro, LoPresti & Blakely, LLP
45 Broadway, Suite 2200
New York, New York 10006”
     11.  References to Original Agreement . The Original Agreement is hereby amended such that all references to “Agreement” contained therein shall be deemed to refer to the Original Agreement, as amended by this Amendment. All references contained in the Original Agreement to Sections of the Original Agreement that have been modified by this Amendment shall hereafter be deemed to refer to such Sections as so amended.
     12.  Effect on Original Agreement; Integration . Except as expressly amended by this Amendment, the Original Agreement shall remain unmodified and in full force and effect. The Original Agreement, as amended by the Amendment, reflects the complete and exclusive

5


 

agreement of the parties with respect to the subject matter hereof, and merges and supersedes all prior discussions, representations, negotiations and agreements with respect thereto.
     13.  Counterparts . This Amendment may be executed by facsimile in one or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.
*****
[ signatures appear on the following page ]

6


 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Asset Purchase Agreement, intending to be legally bound, as of the day and year first above written.
         
  PURCHASER :

DIGI-DATA CORPORATION
 
 
  By:       (SEAL) 
    Name:   Dennis Cindrich   
    Title:   President & CEO   
 
  SELLER :

bigVAULT STORAGE TECHNOLOGIES, INC.
 
 
  By:       (SEAL) 
    Name:   John Salerno   
    Title:   President & CEO   
 
  BIG VAULT, INC.
 
 
  By:       (SEAL) 
    Name:   John Salerno   
    Title:   President & CEO   
 
  SHAREHOLDERS:
 
 
     
  John Salerno   
     
     
  Elisa Salerno   
     
 

7

ASSET PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
     THIS ASSET PURCHASE AGREEMENT AND PLAN OF REORGANIZATION (“ Agreement ”), dated as of September 30, 2009 is by and between JEKYLL ISLAND VENTURES INC. , a New York corporation, doing business as Gotham Photo Company , the “ Seller ”), and GOTHAM INNOVATION LAB INC., a New York corporation (“ Purchaser ”).
WITNESSETH:
     Seller is in the business of providing complete web and software development solutions to businesses, including, but not limited to the real estate industry, and related ancillary services (the “ Development Business ”).
     Purchaser is a wholly owned subsidiary of iGambit Inc.
     The parties hereto wish to enter into this Agreement which sets forth the terms and conditions upon which Purchaser agrees to purchase from the Seller and the Seller agrees to sell to Purchaser, for the consideration stated herein, all of the assets of the Seller (other than to the extent specifically set forth herein) free and clear of all liens, liabilities and encumbrances.
     In consideration of the foregoing and of the covenants, agreements, conditions, representations and warranties hereinafter contained, and intending to be legally bound hereby, Purchaser and the Seller hereby agree as follows:
     1. DEFINITIONS.
     Unless otherwise defined below in this Section 1, the various capitalized terms used in this Agreement shall have the definitions ascribed to them herein. As used in this Agreement, the following terms shall have the meanings specified in this Section 1:
     “ Agreed Accounts Payable” means the total vendor and trade payables as set forth on Schedule 2.2 , including the monthly rent payment.
      Agreed Accounts Receivable” means the total customer receivables as of the date of closing as set forth on Schedule 2.1 .
      Agreed Cash Balance” means the Cash balance as of the date of closing as set forth on Schedule 2.1 .
      Assigned Contracts” means all of the Contracts.
     “ Claim” means an action, suit, proceeding, demand, claim or counterclaim or legal, administrative or arbitral proceeding or investigation.
      Contract” means all agreements, whether oral or written and whether express or implied (whether legally binding or not), including contracts, contract rights, promises, commitments, undertakings, customer accounts, orders, leases, guarantees, warranties and

1


 

representations and franchises to which Seller is a party.
     “ Copyrights ” shall mean all copyrights (whether or not registered), moral rights, and all registrations and applications for registration thereof, as well as rights to renew copyrights.
     “ Governmental Authorities ” means all agencies, authorities, bodies, boards, commissions, courts, instrumentalities, legislatures and offices of any nature whatsoever of any government, quasi-governmental unit or political subdivision, whether foreign, federal, state, county, district, municipality, city or otherwise.
     “ Intellectual Property ” shall mean all (i) Patents, (ii) Know-how, (iii) Trade Secrets, (iv) Trademarks, ( v) Copyrights, (vi) Software Programs (including but not limited to “off-the-shelf” shrink-wrap and click-wrap Software Programs), in each case that are licensed by Seller and/or otherwise used in the Development Business as currently operated, and (vii) all other intellectual property rights (of every kind and nature throughout the universe and however designated), whether arising by operation of law, contract, license or otherwise.
     “ Intellectual Property Rights ” means, collectively, any and all known or hereafter known tangible and intangible rights under patent, trademark, copyright and trade secret laws, and any other intellectual property, industrial property and proprietary rights worldwide, of every kind and nature throughout the universe, however designated, whether arising by operation of law, contract, license or otherwise.
     “ Key Seller Employees ” means, the following employees of Seller: David Pollack and Vincent Collura.
     “ Know-how ” shall mean any and all product specifications, processes, methods, product designs, plans, trade secrets, inventions reduced to writing or to practice, manufacturing, engineering and other manuals and drawings, safety, quality control, technical information, data, research records, and any and all other confidential or proprietary technical and business information which are licensed to or owned by Seller and/or otherwise used in the Development Business as currently operated.
     “ Liability ” means any direct or indirect indebtedness, liability, assessment, expense, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, disputed or undisputed, joint or several, vested or unvested, executory or not, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, determinable or undeterminable, accrued or unaccrued, absolute or not, actual or potential, contingent or otherwise (including but not limited to any liability under any guarantees, letters of credit, performance credits or with respect to insurance loss accruals).
     “ Moral Rights ” means, collectively, rights to claim authorship of a work, to object to or prevent any modification of a work, to withdraw from circulation or control the publication or distribution of a work, and any similar rights, whether existing under judicial or statutory law of any country or jurisdiction worldwide, or under any treaty or similar legal authority, regardless of whether such right is called or generally referred to as a “moral right”. “Moral Rights” does not include “ Residual Knowledge ”.

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     “ Patents ” shall mean all patents, patent disclosures and patent applications (including, without limitation, all reissues, divisions, continuations, continuations-in-part, renewals, re-examinations and extensions of the foregoing) owned by Seller and/or otherwise used in the Development Business as currently operated.
     “ Person ” means any individual, corporation, joint venture, partnership, limited partnership, limited liability company, limited liability partnership, syndicate, trust, association, entity or government or political subdivision, agency or instrumentality of a government.
      Residual Knowledge means knowledge and experience retained in intangible form in Sellers unaided memories as a result of working with and viewing the Intellectual Property.
     “ Tangible Personal Property ” means all machinery, equipment, tools, furniture, fixtures and equipment, computer hardware, supplies, materials, leasehold improvements, automobiles, computing and telecommunications equipment and other items of tangible personal property, of every kind owned or leased by the Seller and/or otherwise used in the Development Business (wherever located and whether or not carried on the books of the Seller), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof, and all maintenance records and other documents relating thereto.
     “ Taxes ” means: (1) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind, imposed by any Governmental Authority or taxing authority, including taxes or other charges on, measured by, or with respect to income, franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration and documentation fees; and customers’ duties, tariffs and similar charges; (2) any Liability for the payment of any amounts of the type described in (1) as a result of being a member of an affiliated, combined, consolidated or unitary group for any taxable period; (3) any Liability for the payment of amounts of the type described in (1) or (2) as a result of being a transferee of, or a successor in interest to, any Person or as a result of an express or implied obligation to indemnify any Person; and (4) any and all interest, penalties, additions to tax and additional amounts imposed in connection with or with respect to any amounts described in (1), (2) or (3).
      Tax Return means any return, report, statement, form or other documentation (including any additional or supporting material and any amendments or supplements) filed or maintained, or required to be filed or maintained, with respect to or in connection with the calculation, determination, assessment or collection of any Taxes.
     “ Trademarks ” shall mean (i) trademarks, service marks, trade names, trade dress, labels, logos and all other names and slogans used exclusively with any products or embodying associated goodwill of the Development Business related to such products, whether or not registered, and any applications or registrations therefor, and (ii) any associated goodwill incident thereto, in each case owned by or licensed to Seller and/or otherwise used in the Development Business as currently operated.

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     2. PURCHASE AND SALE OF ASSETS.
     2.1 Assets Included . On the terms and subject to the conditions set forth in this Agreement, and in reliance upon the covenants, representations and warranties of the Seller at the Closing (as defined in Section 2.4 hereof), Purchaser shall purchase from the Seller, and the Seller shall sell, assign, transfer and deliver to Purchaser, free and clear of any and all Liabilities, pledges, liens, obligations, claims, charges, tenancies, security interests, exceptions or encumbrances whatsoever (collectively, “ Liens ”), the Assets set forth on Schedule 2.1 of the schedules attached hereto and include (but are not limited to) the following:
  (a)   Cash in Bank;
 
  (b)   Accounts Receivable ;
 
  (c)   All Tangible Personal Property;
 
  (d)   All intangible property;
 
  (e)   All of the Assigned Contracts;
 
  (f)   All permits relating to the acquisition or ownership of the Assets or the operation of the Development Business;
 
  (g)   All data, records, files, manuals, blueprints and other documentation related to the Seller, the Assets and the operation of the Development Business, including but not limited to (1) service and warranty records; (2) sales promotion materials, creative materials, art work, photographs, public relations and advertising materials, studies, reports, correspondence and other similar documents and records used in the Development Business, whether in electronic form or otherwise; (3) all client and customer lists, telephone numbers and electronic mail addresses with respect to past, present or prospective clients and customers; (4) all accounting and tax books, ledgers and records and other financial records relating to the Development Business and the Assets; (5) all sales and credit records and brochures relating to the Development Business, purchasing records and records relating to suppliers; and (6) subject to applicable Law, copies of all personnel records of all Seller employees, including the Key Seller Employees;
 
  (h)   All of the Seller’s furniture and fixtures, as set forth on Schedule 2.1.2(f) hereto (the “ Furniture and Fixtures ”);
 
  (i)   All of the Seller’s tools and equipment, as set forth on Schedules 2.1.2(g) hereto (the “ Equipment ”);
 
  (j)   All of the inventory, merchandise, stores of supplies, spare parts, stock-in-trade and work in progress, including, without limitation, the items set forth on the Inventory Statement attached hereto as Schedule 2.1.2(h) ;

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  (k)   All Intellectual Property owned, developed or used in connection with the Assets or the Development Business;
 
  (l)   All policies and procedures reduced to writing or embodied in electronic form, methods of delivery of services, trade secrets, disks, drawings and specifications, market studies, consultants’ reports, prototypes, and all similar property of any nature, tangible or intangible, used in connection with the Development Business;
 
  (m)   All goodwill incident to the Development Business, including the value of the names associated with the Development Business that are transferred to Purchaser hereunder and the value of good customer relations;
 
  (n)   All computers, software programs, automation systems, accounting systems, master disks of source codes, and other proprietary information owned or licensed, whether for general business usage (e.g. accounting, word processing, graphics, spreadsheet analysis, etc.) or specific, unique-to-the-business usage, and all computer operating, security or programming software, owned or licensed and used in the operation of the Development Business;
 
  (o)   All Claims, contract rights and warranty and product liability claims against third parties) relating to the Assets or the Development Business.
     2.2 Accounts Payable Included . On the terms and subject to the conditions set forth in this Agreement, and in reliance upon the covenants, representations and warranties of the Seller at the Closing (as defined in Section 2.4 hereof), Purchaser shall assume from the Seller, and the Seller shall deliver to Purchaser, the agreed vendor and trade payables (“ Agreed Accounts Payables ”) as more fully set forth on Schedule 2.2 of the disclosure schedules attached. Seller shall assume all liability for such trade payables and shall pay same when due Purchaser does not assume or agree to pay, perform or discharge any liability or obligation of Seller, whether known or unknown, arising out of, incurred in connection with, or related to: (i) liabilities or obligations of Seller arising prior to the Closing Date which are not specifically included within the definition of “Agreed Accounts Payables” hereunder; (ii) liabilities or obligations of Seller incurred on or after the Closing Date; (iii) any pension or other benefit liability relating to Seller’s employees.
     2.3. Purchase Price .
          (a) Purchase Price Payable . In reliance on the representations and warranties of the Seller and the performance of the covenants and fulfillment of the conditions set forth in this Agreement, Purchaser shall at the Closing, purchase the Assets from the Seller and in respect thereof shall, subject to the provisions of this Agreement, pay an aggregate purchase price (“ Purchase Price ”) to Seller set forth below.
(1) Deliver 500,000 shares of iGambit Inc.’s common voting stock to the seller herein at Closing;

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(2) Seller will also receive options to purchase, iGambit Inc. Common voting shares over a three-year period starting on the first through third anniversary of signing of this agreement, based upon the following:
i. Year 1 the option shall be to purchase 500,000 common voting shares at $.01 per share. The exercise of this stock option is conditioned upon the performance of the Development Business. The exercise of this option in conditioned upon Development Business revenue for the year ended December 31, 2010 $1.2 million with a net of approximately $100,000.00
ii. Year 2 the option shall be to purchase 500,000 common voting shares at $.01 per share. The exercise of this stock option is conditioned upon the performance of the Development Business. The exercise of this option in conditioned upon Development Business revenue for the year ended December 31, 2011 to be approximately $1.5 million with a net of approximately (within 75%) $150,000.
iii Year 3 the option shall be to purchase 500,000 common voting shares at $.01 per share. The exercise of this option in conditioned upon Development Business revenue for the year ended December 31, 2012 to be approximately $2.0 million with a net of approximately (within 75%) $200,000.
(3) Purchaser shall assume the “ Agreed Accounts Payables”
          (b) Investment Commitment and Continued Operation of Business.
               (i)  Initial Investment Commitment . The Purchaser agrees to arrange for funding of Gotham Innovation Lab Inc., if necessary, during the period beginning on the Closing Date and ending one (1) year later to support the agreed upon Business Plan. Except for the Initial Investment Commitment and as mutually agreed to upon annual budget and business plan review as described in Section 2.3(b)(i) , the Purchaser does not agree to provide any financing or invest any certain amount of time, money or effort with respect to Gotham Innovation Lab Inc. and shall have no duties or obligations to the Seller whatsoever with respect to the operation of Gotham Innovation Lab Inc., all of which shall be conducted in the exercise of the Purchaser’s sole and absolute discretion.
                (ii) Continued Operation of Gotham Innovation Lab Inc. : The Purchaser shall fund and operate Gotham Innovation Lab Inc for at least three (3) years plus three (3) months after the Closing of this transaction.

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               (iii)  Default of Purchaser : The following shall be events of Purchaser’s default under this agreement:
(A) The Purchaser’s failure to perform any of the covenants contained in Section 2.3 (b) (ii) of this Agreement
(B) The Purchaser’s breach of any other covenant of this Agreement.
(C) The Purchaser becoming insolvent or otherwise unable to perform its obligations under this Agreement.
     Upon an event of default as set forth in paragraphs 2.3(iii) (A) and (B) the Seller may terminate and cancel this agreement upon ten (10) days written notice to the Purchaser, if Purchaser is unable to cure the default within ten (10) days after such notice. Upon the event of default contained in paragraph 2.3(iii) (C), the Agreement shall terminate and be cancelled upon occurrence of the default.
     The term “insolvent” shall be defined to include any of the following events: (i) the filing of a petition by or against the Purchaser for relief under the United States Bankruptcy Code and thirty (30) days after filing there has been no relief from the Bankruptcy filing, or (ii) if a receiver or trustee is appointed for all or a substantial portion of the Purchaser’s assets, or (iii) if any assignment for the benefit of the Purchaser’s creditors is made. The provisions of Section 2.3(b) shall survive the Closing
          2.4 Closing .
          (a) Time and Place . Subject to the terms and conditions of this Agreement, the sale and purchase of the Assets contemplated hereby (the “ Closing ”) shall take place at the offices of iGambit Inc., 1600 Calebs Path Extension, Suite 114, Hauppauge, NY 11788 within three (3) days of the satisfaction (or waiver, as applicable), of the conditions to Closing set forth in Section 8 hereof, or at such other time, date or place as the parties hereto may mutually agreed upon in writing. The time and date of the Closing are herein referred to as the “ Closing Date ,” and the term “Closing Date” shall include the date on which the transactions contemplated hereunder are consummated.
          (b) Deliveries by Purchaser to the Seller . At the Closing, Purchaser (or its designee) shall deliver or cause to be delivered each of the following:
          (i) Stock Certificates totaling 500,000 of iGambit Inc.’s Common Voting Shares and issued in the following names and denominations:
          Jekyll Island Ventures, Inc. 500,000
     (ii) Stock Option Agreements to purchase 1,500,000 of iGambit Inc.’s Common Voting Shares, at an exercise price of $.01 per share, and exercisable as per the terms set forth in Section 2.3 , and issued in the following names and denominations
          Jekyll Island Ventures, Inc. 1,500,000

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          (c) Deliveries by the Seller . At Closing, the Seller shall deliver or cause to be delivered to the Purchaser (or its designee) each of the following:
               (i) An Assignment and Bill of Sale, in such form as mutually agreed by the parties, executed by the Seller, selling, assigning, transferring and delivering to the Purchaser all of the Assets, free and clear of any and all Liens;
               (ii) Good standing certificates of Jekyll Island Ventures Inc. dated no earlier than ten (10) calendar days prior to the Closing Date, certifying (i) that Jekyll Island Ventures Inc. is in good standing in the State of New York and is qualified to do business in the State of New York; and (ii) that Jekyll Island Ventures Inc. is qualified to do business in all of the other states in which Jekyll Island Ventures Inc. then does business;
               (iii) Duly executed intellectual property assignments from each of the employees, prior employees, consultants and prior consultants of Seller specified on Schedule 2.4(c) attached hereto in a form satisfactory to Purchaser (collectively, the “ Intellectual Property Assignments ”).
               (iv) Duly executed assignments from Seller, assigning all of Seller’s rights in, to and under the Assigned Contracts to the Purchaser on such terms and conditions as the Purchaser shall in the exercise of its sole and absolute discretion determine (collectively, the “ Contract Assignments ”).
               (v)) Duly executed written consents from each of the parties to each of the Assigned Contracts, to the extent such consent is required pursuant to the terms thereof, consenting to the assignment of the Contracts to the Purchaser, in such form as Purchaser shall in the exercise of its sole and absolute discretion determine (collectively, the “ Consents ”).
               (vi) A duly executed assignment of Seller’s rights to Seller’s trademarks, and service marks, in each case, in form and substance satisfactory to the Purchaser.
               (vii) All other documents necessary or appropriate, in the opinion of Purchaser, to effectuate the purchase and sale of the Assets at the Closing, free and clear of all liens, in accordance with the provisions of this Agreement.
               2.5 Further Assurances . In addition to the actions, documents and instruments specifically required to be taken or delivered hereby, prior to and after the Closing and without further consideration, the Seller shall execute, acknowledge and deliver such other assignments, transfers, consents and other documents and instruments and take such other actions as Purchaser or its counsel may reasonably request to complete and perfect the transactions contemplated by this Agreement.
     3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
          The Seller represents and warrants to the Purchaser that the following

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representations and warranties are true and correct in all material respects on the date hereof and will be true and correct in all material respects on and as of the Closing Date:
     3.1 Organization and Good Standing . Jekyll Island Ventures Inc. is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and in all other states in which Jekyll Island Ventures Inc. does business, is qualified to do business in the State of New York and all other states in which Jekyll Island Ventures Inc. does business and has full corporate power to execute, deliver and perform its obligations under this Agreement.
     3.2 Authority and Consents . The Seller has full power to enter into and to carry out the terms of this Agreement. The Seller and its directors have taken all actions, corporate and otherwise, necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery of any and all instruments necessary or appropriate to effectuate fully the terms and conditions of this Agreement. Except as set forth on Schedule 3.2 , no consent or approval of any third party, court, governmental agency, other public authority or third party with any actual or alleged interest in the Seller’s business or the Assets is required as a condition to (a) the authorization, execution, delivery and performance of this Agreement or any other instruments necessary to effectuate this Agreement; or (b) the consummation by the Seller of the transactions contemplated herein. This Agreement has been properly executed and delivered by the Seller and constitutes the valid and legally binding obligation of the Seller and is enforceable against the Seller in accordance with its terms.
     3.3 Rights of First Refusal; Right of First Negotiation, Etc. There are no applicable rights of first refusal, rights of first negotiation, rights of first offer or similar rights of any kind that would require the Seller to provide any third party with notice, an opportunity to discuss, negotiate or to engage in any of the transactions contemplated hereby prior to consummating the transactions contemplated hereby.
     3.4 No Conflict . Neither the execution and delivery of this Agreement nor the carrying out of the transactions contemplated hereby will result in (a) any violation, termination or modification of, or conflict with, the articles of incorporation or By-Laws of either Seller or any of the contracts or other instruments to which the Seller is a party, or of any judgment, decree or order applicable to the Seller; or (b) the creation of any Lien on all or any portion of the Assets.
     3.5 Broker’s and Finder’s Fees . All negotiations relating to this Agreement have been carried on between the parties directly without the intervention of any person that would give rise to a valid claim against any of the parties for a brokerage commission, finder’s fee, advisory fee or other like payment (each, a “ Broker’s Fee ”). The Seller shall indemnify and hold the Purchaser harmless from and against any cost, expense, liability or obligation associated with any Broker’s Fee payable to any party by virtue of the purchase and sale contemplated by this Agreement.
     3.6 Litigation and Compliance . There is no Claim pending or threatened against the Assets, or the Seller; nor is there any valid basis for any such litigation,

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arbitration, mediation, investigation or other proceeding relating to the Assets, the Seller, or the transactions contemplated by this Agreement. The Seller is not subject to any order of any court, regulatory commission, board or administrative body entered in any proceeding to which Seller is a party or of which any of the foregoing has knowledge. The Seller has complied with and is currently in compliance with all laws, rules, regulations, orders, ordinances, judgments and decrees of any governmental authority applicable to the Assets or the Seller’s Development Business.
     3.7 Title and Condition of Assets . The Seller has good and marketable title to all of the Assets, free and clear of all Liens. The Assets are in good operating condition and repair, and constitute all of the assets necessary to the conduct by the Seller of its Development Business in accordance with its past practice.
     3.8 Accounts Receivable . All Accounts Receivable of the Seller reflected in the balance sheet for the most recently ended period included in the Financial Statements, and all Accounts Receivable that have arisen since the date of the latest balance sheet of Seller included in the Financial Statements (except Accounts Receivable that have been collected since such date) are valid and constitute bona fide Accounts Receivable resulting from the provision of services in the ordinary course of the Seller’s Development Business.
     3.9 Financial and Full Information . The Seller has provided to Purchaser all information material to the Assets and/or the Development Business, and to the best of the knowledge of the Seller none of the information furnished to the Purchaser, contains any untrue statement or omits to state any material fact relevant to the Assets or the Development Business.
     3.10 Absence of Undisclosed Liabilities . As of the date hereof and as of the Closing Date, the Seller does not have and shall not have any indebtedness or other liability of any kind whatsoever, absolute or contingent that is not either specifically reflected on the Financial Statements or otherwise specifically disclosed in writing to Purchaser in this Agreement. In addition, all indebtedness and/or other liabilities whatsoever (including trade payables) of Seller are accurately reflected on Schedule 2.2 , and Seller has no indebtedness and/or other liabilities (including trade payables) whatsoever other than as set forth on Schedule 2.2, attached hereto.
     3.11 Governmental Licenses and Permits . Seller has all governmental licenses and permits and other governmental authorizations and approvals which are material or necessary for the operation of the business and the use of the assets of Seller and has in the past been and is now in material compliance with the conditions and requirements of such government licenses, permits, authorizations and approvals, and all such governmental licenses, permits, authorizations and approvals are valid and in full force and effect.
     3.12 Business Records . All business records of the Seller have been provided to Purchaser for review, are complete and correct in all material respects, and fairly reflect the operations of the Development Business.

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     3.13 Insurance . Set forth on Schedule 3.13 is a true and complete list and description of all insurance in force on the date hereof with respect to the Assets and/or the Development Business, together with a summary description of the hazards insured against. Such policies are in full force and effect with reputable insurers and copies thereof have been provided to Purchaser. There are no outstanding unpaid claims under any such policy and the Seller is not aware of any notice of cancellation or non-renewal of any such policy. There are and have been no inaccuracies in any application for such policies, nor any failure to pay premiums thereon when due. The Seller has not received any notice from any of its insurance carriers that any insurance premiums will be materially increased in the future or that any insurance coverage will not be available to the Seller in the future on substantially the same terms as now in effect. No such insurance policies call for any retrospective premium adjustments. All such insurance policies are freely assignable by the Seller to Purchaser without the consent of any party.
     3.14 Absence of Certain Changes . Since the date of the Financial Statements there has not been any material adverse change, or occurrence or state of circumstances which, individually or in the aggregate, could reasonably be expected to result in a material adverse change, in the business, prospects, assets, condition (financial or otherwise) or results of operations of Seller taken as a whole. Since the date of the Financial Statements, Seller has caused the business of Seller to be conducted in the ordinary course.
     3.15 Intellectual Property .
     (a)  Schedule 3.15 sets forth a true and complete list of all registered patents, trademarks, trade names, service marks and copyrights (registered or not registered) and applications therefore owned, used, filed by or licensed to Seller or Seller that are material to the business of Seller (collectively, “Intellectual Property”). Except for software normally supplied through “shrink-wrap” licenses, the Intellectual Property includes all intellectual property used by Seller in their business as presently conducted.
     (b) Seller has not granted any options, licenses or agreements of any kind relating to any Intellectual Property. Seller owns all right, title and interest in and to the Intellectual Property, and all Intellectual Property listed in Schedule 3.15 is free and clear of the claims of others and of all liens and does not materially violate or infringe upon any rights relating to intellectual property of any person. The conduct of the business of Seller and Seller as presently conducted does not violate conflict with or infringe the intellectual property of any other person. All software used by Seller and Seller is used pursuant to appropriate licenses from the relevant software publisher.
     (c) All personnel (including employees, agents, consultants and contractors), who have contributed to or participated in the conception and/or development of the Intellectual Property on behalf of the Seller have executed nondisclosure agreements, and either (1) have been a party to a “work-for-hire” and/or other arrangement or agreements with the Seller in accordance with applicable international, national, state and local Law that has accorded the Seller full, effective, exclusive and original ownership of all

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tangible and intangible property and Intellectual Property Rights thereby arising or relating thereto, or (2) have executed appropriate instruments of assignment in favor of the Seller as assignee that have conveyed to the Seller effective and exclusive ownership of all tangible and intangible property and intellectual property rights thereby arising and related thereto. Prior to the date hereof, the Seller has provided copies of all such written agreements or provided a summary of the terms of any such oral agreements to Purchaser.
     3.16 Contracts . Schedule 3.16 sets forth a true and complete list of all contracts that are material to the operation of the business of Seller and Seller (the “Contracts”). To the best of the Seller’s knowledge, neither Seller nor its affiliate company Team5 have received any notice of noncompliance or breach of such Contracts. Neither Seller nor its affiliate company Team5 are in material breach pursuant to the terms of any of the Contracts nor, to the knowledge of the Seller, is any other party in breach of their obligations pursuant to the Contracts.
     3.17 Taxes and Tax Returns .
     (a) To the best of Sellers knowledge, all Returns, reports and statements required to be filed by Jekyll Island Ventures Inc. have been filed with the appropriate governmental agencies in all jurisdictions in which such Returns, reports and statements are required to be filed; and all Taxes shown to be due and payable on the Returns have been paid.
     (b) To the best of Sellers knowledge, Seller has withheld all Taxes required to be withheld in respect of wages, salaries and other payments to all employees, officers and directors and any Taxes required to be withheld from any other person and has timely paid all such amounts withheld to the proper taxing authority.
     3.18 Solvency . No insolvency proceeding of any character including bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting, the Seller (other than as a creditor) or any of the Assets are pending or are being contemplated by the Seller, or are being threatened against the Seller by any other Person, and the Seller has not made any assignment for the benefit of creditors or taken any action in contemplation of which that would constitute the basis for the institution of such insolvency proceedings.
     3.19 Sufficiency of Assets . To the best of Seller’s knowledge, the Assets constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate Gotham Innovation Lab Inc. in accordance with Seller and Seller’s affiliate company Team5 Corp.’s past practices, and include all of the operating assets of Seller.
     4. COVENANTS OF THE SELLER.
     The Seller hereby covenants and agrees as follows:
     4.1 Full Cooperation; Access to Information . The Seller shall cooperate in good faith with Purchaser in causing the transactions that are the subject of this

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Agreement to be consummated. Seller shall permit Purchaser and its counsel, accountants, employees and other representatives, prior to Closing, to make such investigations of Seller’s business, operations, assets, employees, contracts, books, records and financial information, all as Purchaser deems necessary or advisable in the conduct of its due diligence investigation into Seller’s business, operations and assets. Seller shall give to Purchaser and its counsel, accountants, employees and other representatives access, to the fullest extent possible without unreasonably interfering with Seller’s business operations, to all of Seller’s personnel, properties, books, contracts, commitments and records, and will promptly furnish to Purchaser copies of all such documents and records and information with respect to Seller’s affairs as Purchaser may from time to time in the exercise of its sole and absolute discretion request.
     4.2 No Inconsistent Action . The Seller will not take any action which, is inconsistent with or impairs the consummation of the transactions contemplated by this Agreement or which would make inaccurate the representations or warranties made by the Seller herein.
     4.3 Non-Solicitation . In consideration of the expense and effort that will be expended by Purchaser in its due diligence investigation, the Seller, nor its affiliates will, directly, indirectly or otherwise, solicit or entertain offers from, negotiate with or in any manner encourage, discuss, entertain, accept or consider any proposal of any other person or entity relating to a disposition (directly or indirectly) of all or any portion of the Assets of the Seller, the stock of either Seller, or a merger involving either Seller, or the issuance of any shares of or other equity securities of either Seller, at any time during the term of this Agreement, or to raise funds in the form of debt or equity for use in the Development Business, until the earlier to occur of September 30, 2009, or, if applicable, the termination of this Agreement.
     4.4 Prohibited Actions Pending Closing . Unless otherwise provided for herein or approved by Purchaser in writing, from the date hereof until the Closing Date, the Seller shall cause the Seller not to do or enter into the following:
          (a) amend or otherwise change its Articles of Incorporation, By-Laws or other organizational documents;
          (b) mortgage, pledge or subject to Lien or other encumbrance any of its properties or assets, or agree to do so;
          (c) sell or otherwise dispose of, or agree to sell or dispose of any of its assets or properties;
          (d) amend or terminate any lease, contract, undertaking or other commitment listed in any of the disclosure schedules annexed hereto to which it is a party, or to take action or fail to take any action, constituting any event of default thereunder;
          (e) assume, guarantee or otherwise become responsible for the obligations of any other party or agree to do so;
          (f) make any change in accounting methods or principles;

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          (g) compromise or settle any material Claim, other than with the consent of the Purchaser;
          (h) acquire the capital stock or other ownership interests of any other entity or acquire all or substantially all of the assets of another entity;
          (i) take any action prior to the Closing Date which would breach any of the representations and warranties contained in this Agreement;
          (j) take any action or omit to take any action if taking or omitting to take such action could have a Material Adverse Effect, as defined in Section 8.3 hereof, or
     4.5 Conduct of Business Pending Closing . From the date hereof until the Closing Date, the Seller covenants and agrees to cause the Seller to:
  (a)   maintain its existence in good standing;
 
  (b)   maintain proper business and accounting records;
 
  (c)   maintain all insurance on the Assets in effect on the date of this Agreement; and
 
  (d)   continue to diligently operate its business in the ordinary course.
     4.6 Sellers Default . If Seller fails to make the required deliveries at the Closing, (unless an exception is agreed to by the Purchaser), or otherwise materially defaults under this Agreement, then Purchaser shall have the right to terminate this Agreement, and thereupon this Agreement shall be null and void and of no legal effect whatsoever. If so terminated, each party hereto shall suffer their own losses, costs, expenses or damages arising out of, under or related to this Agreement. This Section 4.6 shall survive the Closing.
     5.  REPRSENTATIONS WARRANTIES AND COVENANTS OF PURCHASER .
     Purchaser hereby represents and warrants to the Seller that the following representations and warranties are true and correct in all material respects on the date hereof and will be true and correct in all material respects on and as of the Closing Date:
     5.1 Organization and Good Standing . Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and has full power to carry on its business as it is now being conducted and to own or hold under lease the properties it now owns or holds under lease.
     5.2 Authority . Purchaser has full power and authority to enter into this Agreement. Purchaser and its members, officers and directors have taken all action necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery of any and all instruments necessary or appropriate to effectuate fully the terms and conditions of this Agreement. This Agreement has been properly executed and delivered by

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Purchaser and (assuming the due authorization, execution and delivery thereof by the Seller constitutes the valid and legally binding obligation of Purchaser and is enforceable against Purchaser in accordance with its terms.
     5.3 No Conflict . Neither the execution and delivery of this Agreement nor the carrying out of the transactions contemplated hereby will result in any violation, termination or modification of, or conflict with, the articles of organization or by-laws of Purchaser or any of the contracts or other instruments to which Purchaser is a party, or of any judgment, decree or order applicable to Purchaser.
     5.4 Ownership . Gotham Innovation Lab Inc. is a wholly owned subsidiary of iGambit Inc. iGambit Inc. is the sole shareholder of Gotham Innovation Lab Inc.
     5.5 Shares . At the time of Closing Gotham Innovation Lab Inc. owns 500,000 shares of iGambit Inc. Common Voting Stock free of all liens and encumbrances and are not subject to any transfer restriction except pursuant to SEC Rule 144, and Gotham Innovation Lab Inc. shall transfer the shares to Seller in accordance with Sections 2.3 and Section 2.4.
     5.6 Options. At the time of Closing Gotham Innovation Lab Inc. owns options to purchase up to 1.5 million shares of iGambit Inc. Common Voting Stock and Gotham Innovation Lab Inc. shall designate the Seller as optionee of these options in accordance with Sections 2.3 and Section 2.4.
     5.7 Sale of the Development Business by Purchaser :
     (a) The Purchaser shall not sell or transfer Gotham Innovation Lab Inc. within one (1) year of the Closing Date under this Agreement. In the event that the Purchaser shall sell or transfer Gotham Innovation Lab Inc. more than one year after the Closing Date and before the third anniversary of the Closing Date, then, in such event, the Seller shall become fully vested in the options on 1,500,000 shares of iGambit, Inc. as specified in Section 2.3 . Sale of Gotham Innovation Lab Inc. shall be defined as sale of all or such portion of the assets, customer list(s) intellectual property and other goodwill to a third party sufficient to allow the third party to operate Gotham Innovation Lab Inc. as an ongoing business
     (b) In the event that the Purchaser shall default in performance of the covenant not to sell or transfer Gotham Innovation Lab Inc. within one (1) year of the Closing Date, under Section 5.7 (a) of this Agreement, this agreement may be terminated upon ten (10) days written notice to the Purchaser. The provisions of this Section 5.7 shall survive the Closing.
6. INDEMNIFICATION AND SURVIVAL.
     6.1 Indemnification by Seller . Seller shall indemnify Purchaser and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (the “Purchaser Indemnified Parties”) against and hold them harmless

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from any loss, liability, claim, Tax, damage or expense (including reasonable legal fees and expenses) (“Losses”) suffered or incurred by any such Purchaser Indemnified Parties arising from the following: (i) any breach of any representation or warranty of Seller contained in this Agreement or in any certificate delivered pursuant hereto, or (ii) any breach of any obligation, covenant or agreement of the Seller contained in this Agreement.
     6.2. Indemnification by Purchaser . Purchaser shall indemnify each Seller and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (the “Seller Indemnified Parties”) against and hold them harmless from any Losses suffered or incurred by any such Seller Indemnified Parties arising from, (i) any breach of any representation or warranty of Purchaser contained in this Agreement or in any certificate delivered pursuant hereto, (ii) any breach of any obligation, covenant or agreement of Purchaser contained in this Agreement.
     6.3 Termination of Indemnification . The obligations of Purchaser and/or Seller to indemnify and hold harmless any other person (the “indemnified party”) pursuant to this Section 6 , shall terminate when the applicable representation or warranty terminates pursuant to Section 10.15 , provided , however , that such obligation to indemnify and hold harmless shall not terminate with respect to any item as to which the person to be indemnified or a related party thereto shall have, before the expiration of the applicable period, previously made a claim by delivering a notice of such claim (stating in reasonable detail the basis of such claim) to the indemnifying party.
     6.4 Procedures Relating to Indemnification . In order for an indemnified party to be entitled to any indemnification provided for under this Agreement (other than relating to Taxes) in respect of, arising out of or involving a claim or demand made by any person against the indemnified party (a “Third Party Claim”), such indemnified party must notify the indemnifying party of the Third Party Claim reasonably promptly and in any event within 30 days after receipt by such indemnified party of written notice of the Third Party Claim; provided, however, that failure to give such notification within such period shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been actually materially prejudiced as a result of such failure.
     If a Third Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses at its sole cost and upon written notice to the indemnified party acknowledging its obligation to indemnify the indemnified party therefore in accordance with the terms of this Agreement (including this Section 6), to assume the defense thereof with counsel selected by the indemnifying party. Should the indemnifying party so elect to assume the defense of a Third Party Claim, the indemnifying party shall not be liable to the indemnified party for legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party. The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has failed to

16


 

assume the defense thereof.
     If the indemnifying party so elects to assume the defense of any Third Party Claim, the indemnified parties shall cooperate with the indemnifying party in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party’s reasonable request) the provision to the indemnifying party of records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. If the indemnifying party shall have assumed the defense of a Third Party Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim which the indemnifying party may recommend and which by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Claim, which releases the indemnified party completely in connection with such Third Party Claim and which would not otherwise materially adversely affect the indemnified party. The indemnified party shall have the right to settle any Third Party Claim the defense of which shall not have been assumed by the indemnifying party.
     Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Third Party Claim (and shall be liable for the fees and expenses of counsel incurred by the indemnified party in defending such Third Party Claim) if the Third Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the indemnified party, and the indemnified party shall have the sole and exclusive right to settle any such Third Party Claim. The indemnification required by Sections 6(a) and 6(b) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Loss is incurred.
     7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER.
          The obligations of the Seller under this Agreement are subject only to the delivery by Purchaser of the documents described in Section 2.3(b) hereof and the satisfaction of the condition set forth below, as Section 7.1:
          7.1 Each of the representations and warranties of the Purchaser contained herein shall have been true and correct in all material respects on the date hereof, and shall be true and correct in all material respects.
     8. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
          The obligations of Purchaser to proceed to Closing under this Agreement are subject to the fulfillment (or, at the option of Purchaser, the waiver) at or prior to the Closing Date of each of the following conditions:
          8.1 Accuracy of Representations and Warranties . Each of the representations and warranties of the Seller contained herein and in any other agreements or instruments provided for herein shall have been true and correct in all material respects on the date hereof, and shall be true and correct in all material respects for that period of

17


 

time between the signing hereof and the Closing Date, and as of the Closing Date as though made on and as of such date.
          8.2 No Action or Proceeding . No claim, action, suit, investigation or other court proceeding shall be pending or threatened before any court or governmental agency which presents a risk of the restraint or prohibition of the transactions contemplated by this Agreement or the obtaining of material damages or other relief in connection therewith.
          8.3 No Material Adverse Changes . There shall not have been any Material Adverse Change in the business, assets or prospects of the Seller since January 1, 2009. For purposes of this Agreement, “ Material Adverse Change ” or “ Material Adverse Effect ” means any change or effect that is or, so far as can reasonably be determined, is reasonably likely to be materially adverse to the Development Business, its prospects or the Assets.
          8.4 Ordinary Course of Business . The Seller shall have operated the Development Business in a manner consistent with past practice and shall not have made any payments outside the ordinary course of its business.
          8.5 Delivery of Ancillary Agreements . The Seller shall have furnished to Purchaser fully executed Intellectual Property Assignments in accordance with Section 2.4 hereof.
          8.6 Other Evidence . The Seller shall have furnished to Purchaser such further certificates and documents evidencing their due action in accordance with this Agreement as Purchaser shall reasonably request.
     9. TERMINATION.
     This Agreement may be terminated only as follows: (a) At any time upon the mutual written consent of the parties hereto; or (b) at any time prior to the Closing by Purchaser by written notice to the Seller if Purchaser is not satisfied for any reason with its due diligence review or (c) pursuant to the default provisions contained in paragraphs 2.3(b), 4.6, and 5.7 of this agreement.
     10. MISCELLANEOUS.
          10.1 Expenses . Each party to this Agreement shall pay all of its own closing costs and other expenses relating hereto, including fees and disbursements of its counsel and accountants, whether or not the transactions contemplated hereby are consummated.
          10.2 Taxes . The Seller shall bear any and all Taxes of any nature or type whatsoever that may become due and payable as a result of the consummation of the transactions contemplated hereby, and the Seller shall indemnify and hold Purchaser harmless with respect thereto.

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          10.3 Notices . All notices and other communications hereunder or in connection herewith shall be in writing and delivered as follows:
          If to the Seller, to:
Jekyll Island Ventures Inc.
333 Park Ave South, Suite 2D
New York, NY 10010
Attn: Mr. Vincent Collura or Mr. David Pollack
          If to Purchaser, to:
Gotham Innovation Lab Inc.
c/o iGambit Inc
1600 Calebs Path Extension Suite 114
Hauppauge, NY 11788
Attn: Elisa Luqman
     Except as otherwise specifically provided herein, all notices, requests, instructions and demands which may be given by any party hereto to any other party in the course of the transactions herein contemplated shall be in writing and shall be served by express mail through the U.S. Postal Service or similar expedited overnight commercial carrier. Service of such notices, demands and requests shall be presumed to have occurred on the date that is one (1) day after the date upon which the item was delivered to the U.S. Postal Service or similar expedited overnight commercial carrier, provided the item was properly addressed, all postage and shipping charges were prepaid by the sender and the commercial carrier issued a dated receipt to the sender acknowledging the commercial carrier’s receipt of the item. All such notices, demands and requests shall be addressed as set forth above. Any party may change the address at which it is to receive notice by like written notice to all other parties hereunder.
     10.4 Entire Agreement . This Agreement (including the exhibits hereto and the lists, schedules and documents delivered pursuant hereto, which are a part hereof) is intended by the parties to and does constitute the entire agreement of the parties with respect to the transactions contemplated by this Agreement. This Agreement supersedes any and all prior understandings, written or oral, between the parties, and this Agreement may be amended, modified, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the amendment, modification, waiver, discharge or termination is sought.
     10.5 Severability . If any provision of this Agreement shall be declared by any court of competent jurisdiction illegal, void or unenforceable, the other provisions shall not be effected, but shall remain in full force and effect.
     10.6 Modification and Amendment . This Agreement may not be modified or amended except by an instrument in writing duly executed by the parties hereto, and no waiver of compliance of any provision or condition hereof and no consent provided for herein shall be effective unless evidenced by an instrument in writing duly executed by the party hereto seeking to be charged with such waiver or consent.

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     10.7 Governing Law; Jurisdiction; Exclusive Venue .
          (a) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, exclusive of the choice of law rules thereof.
          (b) Exclusive Venue . The parties hereto agree that exclusive venue for any litigation, action or proceeding arising from or relating to this Agreement shall lie in the County Court in and for Suffolk County, New York, or, if federal diversity jurisdiction then exists, in the United States District Court for the District of New York and each of the parties hereto expressly waives any right to contest such venue for any reason whatsoever.
          (c) Waiver of Trial By Jury . EACH OF THE PARTIES HERETO EXPRESSLY WAIVES THE RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION, ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT.
     10.8 Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legatees, beneficiaries, personal representatives and other legal representatives and assigns, as the case may be. This Agreement may not be assigned by any party hereto without the prior written consent of each other party hereto.
     10.9 Enumerations and Headings . The enumerations and headings contained in this Agreement are for convenience of reference only and shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision or the scope or intent of this Agreement, or in any way effect this Agreement.
     10.10 Counterparts . This Agreement may be signed in two or more counterparts, all of which taken together shall be deemed to constitute one original Agreement.
     10.11 Waiver of Bulk Sales Compliance . Each of the parties hereto waives compliance with any applicable bulk sales or similar provisions, provided however, that the Seller hereby agrees to indemnify and hold harmless Purchaser from and against any and all losses, expenses, claims, liabilities or attorneys fees arising as a result of such waiver.
     10.12 Disclosure . The parties hereto will consult with each other and reach mutual agreement before issuing any press release or otherwise making any statement or disclosure, oral or written, with respect to this Agreement or the transactions contemplated hereby; provided, however, that each party will be permitted to make, without the agreement of the other, such disclosures to the public or to governmental entities as that party’s counsel reasonably deems necessary to maintain compliance with applicable laws. Except as provided above, the existence and/or contents of this

20


 

Agreement shall not be disclosed by the Seller without the Purchaser’s prior written consent.
     10.13 Confidentiality . Except as required by law or to carry out the transactions contemplated by this Agreement (the “ Transactions ”), neither the Seller, nor the Purchaser, nor the employees, attorneys, accountants and other agents and representatives of any of the foregoing (collectively, “ Representatives ”) will disclose or use any Confidential Information (as defined below), whether already furnished or to be furnished in the future to any party hereto or their Representatives in any manner other than in connection with the evaluation and negotiation of the transactions proposed in this Agreement once executed and delivered. For purposes of this Agreement, “ Confidential Information ” means the existence and terms of this Agreement and any information regarding Purchaser or the Seller, their affiliates or the Transactions. Confidential Information does not include information that a party to this Agreement can demonstrate (i) is generally available to or known by the public other than as a result of improper disclosure; (ii) is obtained by the disclosing party from a source other than the other party or its Representatives; or (iii) was in the possession of the other party prior to the date hereof other than as a result of improper disclosure and was obtained other than in connection with consideration of the transactions set forth in this Agreement, provided that such source was not bound by a duty of confidentiality with respect to such information. Upon the written request of any party, the other party will promptly return any Confidential Information in its possession or in the possession of its Representatives.
     10.15 Survival . All representations and warranties made by the parties in this Agreement and in any other certificates and documents delivered in connection herewith shall not survive the Closing unless such survival in expressly provided for in this Agreement. Notwithstanding the above, each Party’s obligations under Sections of this Agreement, Section 6 entitled “Indemnification and Survival” and Section 10 entitled ‘Miscellaneous”, shall survive the Closing.
[ signatures appear on next page ]

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     IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase and Plan of Reorganization Agreement under seal on the date first above written.
                 
WITNESS:       PURCHASER:
 
               
        GOTHAM INNOVATION LAB INC .
a New York corporation
 
               
 
      By:       (SEAL)
 
               
            Name: John Salerno
Title:   Chairman and CEO
 
               
WITNESS:       SELLER:
 
               
        JEKYLL ISLAND VENTURES INC.
a New York corporation
 
               
 
               
 
               
 
               
 
      By:       (SEAL)
 
               
            Name: Vincent Collura
Title:   President

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Schedule 2.1 to Asset Purchase Agreement
Assets
Cash in Bank as of date of closing
Accounts Receivable as of date of closing
Client List Reports provided to Purchaser during Due Diligence.
Schedule 2.1.2 (f) Furniture and Fixtures
Accountants schedule attached.
Schedule 2.1.2 (g) List of Equipment
Accountants schedule attached.
Schedule 2.1.2 (h) Inventory Statement
NONE — No inventory

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Schedule 2.2 to Asset Purchase Agreement
Accounts Payable
Monthly lease payment for office space to Team5
Accounts payable schedule as of date of closing

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Schedule 2.4 (c) to Asset Purchase Agreement
List of Employees & Consultants
Current Employees
Vincent Collura
David Pollack
Pavel Sokolowski
Mindy Weinstein
Sarah Booze
Vanessa Cheung
Carol Nhan
Michael Fanuzzi
Independent Consultants
William Che Everich
Daniel Chang
Former Employees
Carmine Guida

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Schedule 3.2 to Asset Purchase Agreement
Third Party Consents
Client/Customer Contracts (Alternatively new agreements with the following parties can be entered into with Gotham Innovation Lab Inc.)
Norca/Kirchain Support and Maintenance Agreement
Prudential Douglas Elliman (Signed consent and assignment not required if new agreement signed. Then automatic as per agreement)
RealPlus Master Development and Revenue Share Agreement (Signed consent and assignment not required if new agreement signed. Then automatic as per agreement)
Non-Disclosure Agreements (Alternatively new Non-Disclosure Agreements with the following parties can be entered into with Gotham Innovation Lab Inc.)
CSH Capital Group
Runnyc
Prudential Douglas Elliman
Vendor Agreements (Alternatively new Agreements with the following parties can be entered into with Gotham Innovation Lab Inc.)
iNetu Hosting Agreement
Transbeam DSL Agreement

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Schedule 3.13 to Asset Purchase Agreement
List of Insurance
Jekyll Island Ventures
Business Policy — General Liability
Team 5 Corp .
State Farm Fire and Casualty Company
Business Policy General Liability # 92-BG-W212-2
Workers Compensation
Disability
Medical — United Healthcare Oxford Policy # TC1291*CSO4U
Dental
Franklin Templeton Bank and Trust Simple IRA Plan (Team5)

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Schedule 3.15 to Asset Purchase Agreement
Intellectual Property
Proprietary Software (unregistered Copyrights)
EXPO (all versions)
E-Brochure (all versions)
Gotham Media Management System (all versions)
Gotham Business Operations Systems (all versions)
Online Media Storing and Sharing APIs (all versions)
Team5_Aspnet-Funtions DLL Library (all versions)
Team5 Client services System (all versions)
Trade Names
Team5
Gotham
Gotham Photo Company
Jekyll Island Ventures
Domain Names
gotham-ny.com
team5.com
teamfive.com
50orchardstreet.com
50orchardstreet.com
631east9thstreet.com
cohen-group.com
elitesearchgroup.net
fccny.org
gothamlabs.com
gothamphotoco.com
gothamphotocompany.com
monstereasy.com
monsterez.com
monstersteamclean.com
monstersteamcleaner.com
wwwcambridgewhoswho.com
ALLACCESSNYC.COM
APARTMENTSPIN.COM
ATHINKINGTOY.COM
ATTACKOFTHEROBOTDINO.COM
BELOWASK.COM
BELOWASKING.COM
BUYLOWNYC.COM
COLLEGESAFTETYSIGNGENERATOR.COM
CREATIVELYGREENCORP.COM
CRGNYC.COM
CRGNYC.NET
DEALGATHERER.COM
DEALRAID.COM
DEALVADER.COM
FOREVERIZEIT.ORG
GREENDOLLSONLINE.COM
GREENINNOVATIONCORP.COM
GREENOVATIONCORP.COM
FINDACONDOFORME.COM
FINDALEASEFORME.COM
FINDARENTFORME.COM
FINDATOWNHOUSEFORME.COM
FINDMYCOOP.COM
FORCE5STUDIOS.COM
FORCEFIVESTUDIOS.COM
FOREVERIZE.COM
FOREVERIZEIT.BIZ
FOREVERIZEIT.COM
FOREVERIZEIT.INFO
Third Party Licensed Software
None

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List of Royalties, License Fees and Third Party Payments Owed regarding Intellectual Property
None
Schedule 3.16 to Asset Purchase Agreement
Contracts
Client/Customers Contracts or Work in Progress
Cambridge Whos Who
FCC NY
Heddings
J&R
Norca/Kirchain Support and Maintenance Agreement
Prudential Douglas Elliman
RealPlus Master Development and Revenue Share Agreement
Customers being Hosted by Seller at no charge. Post closing all of the following customers will be offered a Hosting Agreement from Gotham Innovation Lab Inc.
Euroflex
123 Washignton Place/ Moinian (2 sites)
CSH/Silver Cove
Gramercy Stark
Avenue NY
Families with Children from China
Bellmarc
Coco Realty
David Shuldiner
Elite Search Group.net
Heddings Property Group
Kiddie Soccer
Villasatanangiri.com
Nuzuc
Non-Disclosure Agreements
CSH Capital Group
Runnyc
Prudential Douglas Elliman
Vendor Agreements
iNetu Hosting Agreement
Transbeam DSL Agreement
Jive Communications
Electric Company

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Exhibit 21
     
Name of Subsidiary   State of Organization
Gotham Innovation Lab, Inc.
  New York

Exhibit 23.1
Michael F. Albanese, CPA
18 Lisa Court
Parsippany, NJ 07054
Phone (973) 887-8124; Fax 9103
Cell (201) 406-5733 E-mail: Mike@costreductionsolutions.com
CONSENT OF INDEPENDENT AUDITOR
The Board of Directors
iGambit Inc.:
I consent to the incorporation by reference in this Current Report on Form 10 filed with the Securities and Exchange Commission by iGambit, Inc., of our reports dated August 28, 2009, and referred to in Item 15, Exhibit F-l with respect to the statements of financial condition of iGambit Inc. as of December 31, 2008 and 2007 and with respect to the audits referred to on related statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2008, and the effectiveness of internal control over financial reporting as of December 31, 2008.
Michael F. Albanese, CPA
/s/ Michael F. Albanese
December 9, 2009
Parsippany, New Jersey
Certified Public Accountant