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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (“Agreement”), dated as of November 4,

2015 is by and among WALA INC. d/b/a ARCMAIL TECHNOLOGY, a Louisiana corporation

(“Company”), Rory Welch (”Seller”) and IGAMBIT INC., a Delaware corporation

(“Purchaser”).

R E C I T A L S

Company is engaged in the business of creating and providing email archiving

and management solutions to customers throughout the United States.

Seller owns all of the issued and outstanding shares of capital stock of the

Company.

Purchaser desires to Purchase from Seller, and Seller desires to sell to Purchaser,

all of the Purchased Stock upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the Recitals and the respective covenants,

agreements, conditions, representations and warranties hereinafter contained, and intending to be

legally bound hereby, Purchaser, and the Seller hereby agree as follows:

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.

“Acquired Business” means the business operated by the Company up to the Closing

Date including without limitation the creating and providing of email archiving and management

solutions to customers throughout the United States.

“Agreement” means this Stock Purchase Agreement.

“Audited Financial Statements” means the annual financial statements (balance sheets

statements of income and retained earnings, statement of cash flow and supplementary

statements, together with footnotes) for the Company for the fiscal years ended December 31,

2013 and December 31, 2014 audited, reviewed and prepared by a certified public accounting

firm.

“Benefit Plans” means any pension plan, profit sharing plan, bonus plan, incentive

compensation plan, stock ownership plan, stock purchase plan, stock option plan, stock

appreciation plan, employee benefit plan, employee benefit policy, retirement plan, deferred

compensation plan or agreement, cafeteria plan, dependent care plan, fringe benefit program,

employee insurance plan, severance plan or agreement, change in control plan or agreement,

employment agreement (other than the Employment Agreements), disability plan, health care

plan, sick leave plan, death benefit plan, multi-employer pension or welfare benefit plan, or any

other plan or program to provide retirement income, fringe benefits or other benefits to former or

current employees.

“Claim” means an action, suit, proceeding, demand, claim or counterclaim or legal,

administrative or arbitral proceeding or investigation.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the Four Million (4,000,000) authorized shares of common

stock of the Company, without par value.

“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 the Seller or Company is a party.

“Copyrights” means all copyrights (whether or not registered), Moral Rights, and all

registrations and applications for registration thereof, as well as rights to renew copyrights, in

each case that are licensed by Company and/or otherwise used in the Acquired Business as

currently operated.

“Creditors” means, those parties to which either Seller or Company owes any one or

more of the liabilities included in the Noteholder Debt amount, as set forth on Schedule 2.8.

“Environmental Claim” means any claim, action, cause of action, investigation or notice

by any person or entity alleging liability (including, without limitation, liability for investigatory

costs, cleanup costs, governmental response costs, natural resources damages, property damages,

personal injuries, or penalties) arising out of, based on or resulting from (i) the presence, or

release into the environment, of any Material of Environmental Concern at any location, or (ii)

any violation, or alleged violation, of any Environmental Laws.

“Environmental Laws” means all Laws relating to pollution or protection of human

health or the environment (including, without limitation, ambient air, surface water, ground

water, land surface or subsurface strata), including, without limitation, Laws relating to

emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or

to the generation, manufacture, processing, handling, distribution, use, treatment, storage,

disposal, transport or handling of Materials of Environmental Concern.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as

amended.

“ERISA Affiliate” means a Person aggregated with another Person as a single employer

under any of Sections 414(b), 414(c), 414(m), or 414(o) of the Code.

“Existing Plans” means the existing Benefit Plans of the Company listed and described

on Schedule 3.24.

“Financial Statements” means the Audited Financial Statements and Interim Financial

Statements, collectively.

“GAAP” means United States generally accepted accounting principles.

“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 (each, a “Governmental Authority”).

“Holdback Amount” means One Million (1,000,000) iGambit Common voting shares as

defined in Section 2.3(a).

“Indebtedness” means all liabilities or obligations of the relevant Person, whether

primary or secondary or absolute or contingent: (a) for borrowed money; (b) evidenced by

notes, bonds, debentures, guaranties or similar obligations; (c) under leases which in accordance

with GAAP constitute capital leases; (d) secured by liens on any assets of that Person; or (e)

resulting from cash, book or bank overdrafts.

“Intellectual Property” means 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 Company and/or otherwise used

in the Acquired 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, in each case that

are licensed by Company and/or otherwise used in the Acquired Business as currently operated.

“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.

“Interim Financial Statements” means the unaudited, internally prepared financial

statements (balance sheet and statement of income) for the Company for the period beginning

January 1, 2015 through September 30, 2015, reviewed and prepared by a certified public

accounting firm.

“Investment” by any Person means: (a) any transfer or delivery of cash, stock or other

property or value by such Person in exchange for Indebtedness, stock or any other security of

another Person; (b) any loan, advance or capital contribution to or in any other Person; (c) any

guaranty, creation or assumption of any liability or obligation of any other Person; or (d) any

investments in any fixed property or fixed assets other than fixed properties and fixed assets

acquired and used in the ordinary course of the business of that Person.

“Key Company Employees or Company Employees” means the following employees of

Company: Rory Welch, Edward Dunn and Philip Clarke.

“Know-how” means 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, which, in each case, are licensed to or owned by Company and/or otherwise used in

the Acquired Business as currently operated; and any and all other confidential or proprietary

technical and business information which are licensed to or owned by Company and/or otherwise

used in the Acquired Business as currently operated.

“Knowledge” means, with respect to a given matter the actual knowledge of the Seller, or

any officer of Company, or the knowledge that the Seller, or any officer of Company, should

possess in the exercise of reasonable diligence and investigation with respect to the matter.

“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).

“Law” means any federal, state, local, foreign, provincial or other governmental law, rule

or regulation of any kind, and any and all rules and regulations promulgated thereunder.

“Liens” means (i) liens arising in the ordinary course of the business by operation of law

for amounts not yet due in favor of carriers, warehousemen, mechanics, landlords and

materialmen and (ii) liens for Taxes which are not yet due or payable.

“Leased Real Estate” means the real property subject to the Real Estate Leases,

including all buildings, structures, improvements and fixtures thereon.

“Material Adverse Effect” means any material adverse change in or effect upon (a) the

financial condition, assets, liabilities, or operations of (x) the Company taken as a whole, (y) the

Acquired Business of the Company and the Company assets (taken as a whole), or (b) the ability

of the Seller to execute, deliver and perform this Agreement, provided that none of the following

shall be deemed to constitute, and none of the following shall be taken into account in

determining whether there has been, a Material Adverse Effect: any adverse change, event,

development, or effect arising from or relating to (i) general business or economic conditions,

including such conditions which affect the Acquired Business industry generally (provided they

do not have a materially disproportionate effect on the Company, as a whole), (ii) national or

international political or social conditions, (iii) financial, banking, or securities markets

(including any disruption thereof and any decline in the price of any security or any market

index), (iv) changes in United States generally accepted accounting principles, or (v) changes in

law, rules, regulations, orders, or other binding directives issued by any governmental authority,

provided they do not have a materially disproportionate effect on the Company.

“Materials of Environmental Concern” means any substance or material that is on the

date hereof or on the Closing Date prohibited, controlled or regulated by any governmental

authority under any Environmental Laws, including, without limitation, chemicals, pollutants,

contaminants, wastes, toxic substances, hazardous substances, petroleum, petroleum derivatives

or other hydrocarbons, petroleum products, dangerous substances, designated substances,

controlled products or subject waste, all as defined in or pursuant to any Environmental Laws.

“Noteholder Debt” means all note holder debt of Company to certain Creditors

described in that certain Stock Purchase and Redemption Agreement, Promissory Notes and

Security Agreements dated September 1, 2014 by and between Wala Inc., d/b/a Arcmail

Technology, Rory Welch and those entities and/or individuals listed in the Stock Purchase and

Redemption Agreement, Promissory Notes and Security Agreements, (the “Noteholders”) as set

forth on Schedule 2.8.

“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.”

“Owned Real Estate” means the real property, if any, titled in the name of the Company,

together with all buildings, structures, improvements and fixtures thereon and all rights

pertaining thereto.

“Patents” means 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 or licensed to Company and/or

otherwise used in the Acquired Business as currently operated.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Permitted Liens” means: (i) the Noteholder Debt and liens associated therewith and (ii)

with respect to Licensed Intellectual Property, the rights held by the applicable licensors thereof.

“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.

“Preferred Stock” means the One Million, Fifty Thousand (1,050,000) authorized

shares of Series A preferred stock of the Company, with a par value ($0.10) and a face amount of

Three and 50/100 dollars ($3.50), (“Series A Preferred’), and Two Million (2,000,000)

authorized shares of Series B preferred stock of the Company, with a par value ($0.10) and a

face amount of Two and 50/100 dollars ($2.50), (“Series B Preferred’).

“Purchased Stock” means collectively, all of the issued and outstanding shares of the

Preferred Stock, as set forth in Section 3.2(d)(i).

“Real Estate Leases” means the real estate leases, subleases and other occupancy

agreements to which the Company is a party listed separately as set forth on Schedule 3.10(a).

“Software Programs” means all of the Company’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.

“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” means (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 Acquired 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 Company and/or otherwise used in the Acquired Business

as currently operated.

PURCHASE OF PURCHASED STOCK.

2.1

Stock Purchased. Subject to and upon the terms and conditions set forth in

this Agreement, Seller will validly sell, transfer, assign and convey to Purchaser, and Purchaser

will accept and purchase from Seller, on the Closing Date, the Purchased Stock.

2.2

Delivery of Stock. At the Closing, the Seller shall deliver, transfer and

assign all of the Purchased Stock to Purchaser by delivering stock certificates representing all of

the Purchased Stock duly endorsed or accompanied by stock powers duly executed in blank,

with any required transfer stamps affixed thereto, and otherwise in proper form for transfer, as

shall be necessary to vest in Purchaser full, complete, good and marketable title to such

Purchased Stock free and clear of all Liens (other than Permitted Liens), claims and

encumbrances of any kind whatsoever, all such documents to be in form and substance

satisfactory to counsel for Purchaser.

2.3

Purchase Price. The “Purchase Price” to be paid by Purchaser to the

Seller for the Purchased Stock shall be referred to as the “Shares” and is composed of the

following:

(a) 10,500,000 of iGambit Inc.’s Common voting shares to the Seller,

and/or Seller’s designees at Closing; plus

(b) the Holdback Amount.

2.4

[Intentionally Omitted

2.5

[Intentionally Omitted

2.6

Closing.

(a)

Time and Place. Subject to the terms and conditions of this Agreement,

the sale and purchase of the Purchased Stock contemplated hereby (the “Closing”) shall take

place at the offices of iGambit Inc., 1050 W. Jericho Tpke., Suite A, Smithtown, New York,

11787, 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 hereof, or remotely by exchanging executed counterparts of

this Agreement, and the other agreements, instruments, certificates and other documents to be

entered into, or delivered, in connection herewith or therewith (collectively, the “Transaction

Documents”), and delivery of the Purchase Price. 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)

instructions to its transfer agent to issue certificates,

registered in the name of the Seller or Seller’s designee in the amount of 11,500,000 of iGambit

Inc.’s duly authorized, validly issued, fully paid and non-assessable Common Voting Shares;

such shares shall be issued in two certificates, one certificate for 10,500,000 Shares and one

certificate for the Holdback Amount of 1,000,000 Shares, and the Purchaser shall instruct its

transfer agent to cause the Certificates to be deposited with Ayres, Shelton, Williams, Benson &

Paine, LLC (the “Escrow Agent”) in an escrow account (the “Shares in Escrow”), which the

Escrow Agent shall hold pursuant to the provisions of an escrow agreement (the “Agreed

Shares Escrow Agreement”) in such form as may be agreed by the parties hereto prior to

Closing and thereafter attached hereto as Exhibit 2.6(b)(1).

The Shares in Escrow shall remain with the Escrow Agent as collateral to the

Noteholders in connection to the Stock Purchase and Redemption Agreement, Promissory Notes

and Security Agreements dated September 1, 2014 by and between the Company, Seller and

those entities and/or individuals listed in the Stock Purchase and Redemption Agreement in

consideration of the consent of the holders of the Noteholder Debt, which waive restrictions on

the transfer of the Purchased Stock. The Escrow Agent shall release any remaining Shares to

Seller upon repayment of all such debt obligation.

(ii)

The Employment Agreements (as defined herein), executed

by the Purchaser;

(iii) A Certificate of the Secretary of Purchaser showing the

signatures of those officers of Purchaser, respectively, authorized to sign this Agreement, the

Employment Agreement, and all other Transaction Documents on behalf of Purchaser certifying

that said signatures are the signatures of said authorized officers;

(iv)

Good standing certificates of Purchaser, dated no earlier

than ten (10) calendar days prior to the Closing Date, certifying that Purchaser is in good

standing in the State of Delaware;

(v)

Resolutions of the shareholders (if necessary) and the

directors of Purchaser certified by the Secretary of Purchaser 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 Purchaser of this Agreement and other Transaction Documents, and authorizing the

performance by Purchaser of the transactions contemplated hereby and thereby;

(vi)

A duly executed certificate of Purchaser described in

Section 7.1 hereof; and

(vii) All other documents necessary or appropriate, in the

reasonable opinion of Seller, to effectuate the purchase and sale of Purchased Stock at the

Closing in accordance with the provisions of this Agreement.

(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)

the certificates, documents and instruments of transfer and

conveyances set forth in Section 2.2 of this Agreement duly endorsed or executed by the Seller,

as provided therein;

(ii)

A Certificate of the Secretary of Company showing the signatures

of those officers of Company, authorized to sign this Agreement on behalf of Company and

certifying that said signatures are the signatures of said authorized officers;

(iii) A copy of the Articles of Incorporation and By-Laws of Company,

together with all amendments and supplements thereto, certified by the Secretary of Company as

being true and complete in all material respects;

(iv)

Good standing certificates of Company dated no earlier than ten

(10) calendar days prior to the Closing Date, certifying respectively (i) that Company is in good

standing in the State of Louisiana and is qualified to do business in the State of Louisiana; (ii)

that Seller is qualified to do business in all of the other states in which Company then does

business;

(v)

Resolutions of the shareholders and the directors of Company

certified by the Secretary of Company 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 Seller of this

Agreement and other Transaction Documents, and authorizing the performance by Seller of the

transactions contemplated hereby and thereby;

(vi)

A duly executed certificate of Seller described in Section 8.3

hereof;

(vii) Duly executed employment agreement from the Key Company

Employees in a form attached hereto as Exhibit 2.3(c)(vii) (the “Employment Agreements”)

which shall provide a minimum three (3) year term, and shall provide that such Key Company

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;

(viii) [Intentionally Omitted];

(ix) [Intentionally Omitted];

(x) [Intentionally Omitted];

(xi) Duly executed written consents from each of the parties to each of

the Significant Contracts referred to in Section 3.13 and set forth on Schedule 3.13, attached

hereto, to the extent such consent is required pursuant to the terms thereof, in such form as

Purchaser shall in the exercise of reasonable discretion determine (collectively, the “Consents”);

(xii) Duly executed assignments of the existing Leases referred to on

Schedule 3.10(a) attached hereto, from Company to Purchaser, in form and substance reasonably

satisfactory to Purchaser, and the consent of the landlord under such Lease to such assignment;

(xiii) Duly executed confidentiality agreements from each

Company’s employees that are offered and accept employment with the Purchaser (other than

Key Company Employees, whose non-competition obligations shall be set forth in the

Employment Agreement ) in a form satisfactory to Purchaser (collectively, the “Confidentiality

Agreements”);

(xiv) [Intentionally Omitted];

(xv) the original corporate record books and stock record books of the

Company; and

(xvi) All other documents necessary or appropriate, in the reasonable

opinion of Purchaser, to effectuate the purchase and sale of the Purchased Stock at the Closing,

free and clear of all Liens (other than Permitted Liens), in accordance with the provisions of this

Agreement.

2.7

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, each party shall execute, acknowledge and deliver such other assignments,

transfers, consents and other documents and instruments and take such other actions as any party

or its/his 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 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, except as modified by the

schedules attached hereto:

3.1

Ownership of Purchased Stock; Authority; Consents.

(a) Ownership. Except for Permitted Liens, Seller is the owner of, and has good

and marketable title to, that number of the shares of Purchased Stock as is set forth in Schedule

3.2(d), attached hereto, as being owned by such Seller, free and clear of all liens, claims and

encumbrances, and has full legal title and power and the authorizations and approvals necessary

to sell, transfer and deliver such shares of the Purchased Stock to Purchaser. Seller has not

granted a currently effective power of attorney or proxy to any Person with respect to all or any

portion of its shares of the Purchased Stock. Upon delivery of the certificates for such shares of

Purchased Stock by Seller pursuant to this Agreement, Purchaser will acquire good and

marketable title to such shares of Purchased Stock, free and clear of all liens, claims and

encumbrances.

(b) Authority. Seller has all requisite power and authority to enter into this

Agreement, and the related agreements referred to herein, and to carry out Seller’s obligations

hereunder. The execution and delivery by Seller of this Agreement and the other documents and

instruments to be executed and delivered by Seller pursuant hereto and the consummation by

Seller of the transactions contemplated hereby and thereby has been duly authorized by Seller.

This Agreement and the related agreements, documents and instruments referred to herein have

been duly executed and delivered by Seller who is a party thereto and constitutes the valid and

legally binding obligations of Seller, enforceable against Seller in accordance with their

respective terms.

governmental agency or body is required for the consummation by Seller of the transactions

contemplated by this Agreement, except those set forth in Schedule 3.1(c) or Schedule 3.13,

attached hereto. Except as disclosed on Schedule 3.1(c) or Schedule 3.13, the execution,

delivery and performance by the Company and the Seller of this Agreement, and the

consummation by the Company and the Seller of the transactions contemplated hereby, does not

and will not, with or without the giving of notice or the lapse of time or both, require the consent

of any third party under any contract, agreement, lease or license to which the Company or the

Seller is a party.

3.2

Corporate Matters.

(a)

Organization and Qualification; Power. The Company is a corporation

duly organized, validly existing and in good standing under the Laws of the State of Louisiana.

The Company is duly qualified and/or licensed, as the case may be, and in good standing in each

of the jurisdictions listed on Schedule 3.2(a), attached hereto, which are the only jurisdictions

where the nature of its activities or the character of the properties owned, leased or operated by it

require such qualification or licensing. The Company has all requisite corporate power and

authority to own, lease and operate all of its properties and assets and to carry on its business as

it is now being conducted.

(b)

Subsidiaries. The Company has no subsidiaries and does not own any

stock, limited liability company interests or other equity interests in any Person.

(c)

Compliance; Binding Effect. Except as provided on Schedule 3.2(c), the

execution and delivery of this Agreement and the related agreements, documents and instruments

referred to herein, and the consummation of the transactions contemplated hereby, will not: (i)

violate any provision of the Articles of Incorporation or Bylaws of the Company; (ii) constitute a

default under, or constitute an event which with the giving of notice or the lapse of time or both

would become a default under, or result in the creation or imposition of any lien, charge, pledge,

security interest or other encumbrance upon any of the assets of the Company under, or create

any rights of termination, cancellation, purchase, or acceleration in any Person under, any

mortgage, lien, lease, agreement or other instrument or obligation to which the Company is a

party or by which the Company or its assets are bound; or (iii) violate or conflict with any Law,

order, writ, injunction, judgment, arbitration award, decree or other restriction of any kind or

character to which the Company or its assets are subject or bound.

(d)

Capitalization of the Company; Ownership of Common Stock.

(i) The entire authorized capital stock of the Company consists of the

Preferred Stock, of which, one thousand (1,000) shares of Series A Preferred are issued and

outstanding, no shares of Series B Preferred are issued and outstanding, and Common Stock, of

which no shares are issued and outstanding. Seller is the sole owner of record of the issued and

outstanding one thousand (1000) shares of Series A Preferred Stock ,who is the only owner of

any equity interest in the Company. All of the issued and outstanding shares of the Preferred

Stock and Common Stock have been duly authorized and validly issued, are fully paid and

nonassessable and are owned of record by the Seller as set forth in Schedule 3.2(d), attached

hereto, and except for the Permitted Liens are free and clear of all liens, claims, encumbrances

and restrictions whatsoever. The Company has complied with, and is in material compliance

with, all applicable securities Laws, including without limitation with respect to the issuance,

sale and/or the repurchase of any shares of Preferred Stock and Common Stock.

(ii) There are no outstanding options, warrants, conversion rights or other

rights to subscribe for or purchase, or other contracts with respect to, any capital stock of the

Company pursuant to which the Company is or may become obligated to issue or redeem or

exchange any shares of the Company’s capital stock.

(e)

Articles of Incorporation; Bylaws; Minute Books; Records. The

Company has heretofore delivered to Purchaser true and complete copies of the Articles of

Incorporation and Bylaws of the Company, as amended and in effect on the date of this

Agreement. The minute books of the Company which heretofore have been provided to

Purchaser for examination contain complete and accurate records of all written corporate action

taken by the board of directors and stockholders of the Company through the date hereof, and

completely and accurately reflect all transactions in the shares of capital stock of the Company.

The accounting books and records of the Company are complete and correct and are maintained

in a manner consistent with past practice. The officers and directors of the Company as of the

date of this Agreement are as set forth in Schedule 3.2(e), attached hereto, to this Agreement.

3.3

Authority; Validity. The execution and delivery by the Company of this

Agreement and the other documents and instruments to be executed and delivered by the

Company pursuant hereto and the consummation by the Company of the transactions

contemplated hereby and thereby have been duly authorized by the Company. Other than

instruments required pursuant to this Agreement, no further corporate act or proceeding on the

part of the Company is necessary to authorize this Agreement or the other documents and

instruments to be executed and delivered by the Company pursuant hereto or the consummation

by the Company of the transactions contemplated hereby and thereby. This Agreement and the

related agreements, documents and instruments referred to herein to which the Company is a

party have been duly executed and delivered by the Company and constitute the valid and legally

binding obligations of the Company, enforceable against the Company in accordance with their

respective terms.

3.4

Financial. The Seller previously furnished to Purchaser materially true and

correct copies of the Company’s Financial Statements, copies of all of which are attached hereto

as Schedule 3.4. Except as indicated in Schedule 3.4 attached hereto, the Financial Statements

were prepared in accordance with GAAP consistently applied through the applicable periods

involved (except that the Interim Financial Statements are subject to normal year-end

adjustments and do not include footnotes), and present fairly the financial condition of the

Company as of the respective dates of such Financial Statements and the results of operations for

the respective periods then ended. Since December 31, 2012, there has been no change in the

accounting methods or practices of the Company, no change in the Company’s policies with

respect to depreciation or amortization including useful lives of assets or rates for depreciation or

amortization, and no change in the Company’s policies with respect to pricing inventory or

capitalizing costs.

3.5

Absence of Changes.

(a)

Except as set forth in Schedule 3.5, attached hereto, and except as

disclosed in the Financial Statements, since January 1, 2013, there has been no (i) adverse

change in the business, property or condition (financial or otherwise) or results of operations of

the Company, either individually or taken as a whole, from that shown in the Financial

Statements, (ii) damage, destruction or loss (whether or not covered by insurance) which singly

or in the aggregate adversely affects the Company’s assets or the business or financial condition

of the Company, (iii) commitment to increase or effected increase in either the rate of

compensation or the actual compensation payable or to become payable by the Company to any

of its officers or employees over the amount paid for the fiscal year ended December 31, 2014,

(iv) new contract, agreement, license or transaction or termination of any previously existing

contract, agreement or license other than in the ordinary course of business, (v) actual or, to the

Knowledge of the Seller, threatened labor trouble or strike affecting the Company, (vi)

cancellation or other written termination of a relationship with the Company, or written notice to

the Company of a future cancellation or other termination of a relationship with the Company,

by any single supplier or customer of the Company who accounted for more than 2% of the

Company’s purchases or sales, determined by reference to the Company’s fiscal year ended

December 31, 2014, (vii) commitment for, declaration, setting aside, or payment of any dividend

or other distribution in respect of any of the Company’s capital stock, or (viii) transaction or

transactions by the Company outside the ordinary course of business.

(b)

Except as set forth in Schedule 3.5, since January 1, 2015, there has been

no direct or indirect redemption, purchase or other acquisition by the Company of any shares of

its capital stock.

(c)

Except as set forth in Schedule 3.5, since January 1, 2015, the Company

has not granted or permitted any increase in the compensation payable or to become payable to

any of the Company’s officers or employees, or granted or permitted any increase in the benefits

under any bonus, insurance, pension or other benefit plan, payment or arrangement made to, for

or with any such employees or officers (including without limitation any sale bonus or stay

bonus to employees with respect to the transactions contemplated herein).

3.6

Absence of Undisclosed Liability. Except as set forth in Schedule 3.6

attached hereto, or as disclosed on the Financial Statements, to the Knowledge of the Seller there

are no liabilities or obligations of any kind whatsoever, whether direct, indirect, accrued,

contingent or absolute, and whether or not determined or determinable (other than the liabilities

of the Company set forth on the Financials Statements), to which the Company or the Acquired

Business will be subject following consummation of the transactions contemplated hereby, and

there is no existing claim, condition, situation or set of circumstances which could reasonably be

expected to result in any such liability or obligation.

3.7

Powers of Attorney. Except as set forth in Schedule 3.7 attached hereto,

there are no employees or agents of the Company who hold powers of attorney to act with

respect to the Company, its assets or the Acquired Business.

3.8

Litigation. Except as set forth in Schedule 3.8 attached hereto, the

Company is not bound by any order, judgment, stipulation or consent decree of any court or

governmental agency affecting its assets, or limiting or affecting its operations; there is no suit,

action, or legal, administrative, arbitration or other proceeding or governmental investigation

pending or, to the Knowledge of the Seller, threatened in writing that could adversely affect the

business, financial condition or assets of the Company; there are no labor strikes, filed

grievances or other labor troubles pending or, to the Knowledge of the Seller, threatened against

the Company, and there is no pending arbitration proceeding arising out of any union agreement

to which the Company is or was a party; there are not currently pending or, to the Knowledge of

the Seller, threatened against the Company any investigations of charges or complaints, and

there are no outstanding uncorrected or unresolved citations, charges, complaints, orders or

judgments, issued or made by any governmental agency, or by a court, with respect to its

application or enforcement of the Laws relating to the Company’s business operations,

environmental protection, labor relations, employee safety and health, wages, hours and other

labor standards, and fair employment; and no judgment or pending or, to the Knowledge of the

Seller, threatened claim exists under any applicable worker’s compensation Law by reason of

employment of the employees of the Company that is not fully covered by worker’s

compensation insurance.

3.9

Licenses; Compliance With Laws and Regulations.

(a) Governmental Licenses. To the Knowledge of the Seller the Company

has all governmental licenses and permits necessary to conduct its business, and such licenses

and permits are in full force and effect and listed on Schedule 3.9(a). Except as set forth in

Schedule 3.9(a), no violations are or have been recorded and remain outstanding in respect of

such licenses or permits and no proceeding looking toward the revocation or limitation of any of

them is pending or threatened to the Knowledge or Seller. Set forth in attached Schedule 3.9(a)

is a complete list of all inspection reports, complaints, citations and notices of violations or

alleged violations received by the Company within the period of two (2) years prior to the date

hereof from any governmental agency having jurisdiction over the Company or its business.

(b) Compliance With Laws and Regulations. Except as provided in

Schedule 3.9(b), attached hereto, to the Knowledge of the Seller the Company is in compliance

with all applicable Laws relating to the operation of its business and its products, the Leased

Real Estate, and its other assets, including, without limitation, all zoning, building, fire,

plumbing, product, health and safety Laws including applicable product, safety and consumer

protection specifications, guidelines and standards, including without limitation those related to

the lead content of children’s products, and no notice has been served upon it claiming violation

of any of the foregoing. Except as provided in Schedule 3.10(e) attached hereto, to the

Knowledge of the Seller the Leased Real Estate and all buildings and improvements situated

thereon, and the use thereof by the Company complies with all Laws, easements and restrictions,

if any.

3.10 Title to and Condition of Property.

(a)

Real Property Used. The Leased Real Estate, as set forth on

Schedule 3.10(a) attached hereto, constitutes all real property used by the Company in the

Acquired Business. The Company does not own any Owned Real Estate.

(b)

Title. Except for the Permitted Liens and ordinary Liens, the

Company owns good and marketable title to, and has undisputed possession of, all of its assets

and properties, free and clear of all options, adverse claims, restrictions, tenancies, debts, claims,

security interests, defects of title, mortgages, liens, pledges, charges or encumbrances of any

nature whatsoever.

(c)

Condition; Sufficiency. The assets of the Company (together with

the Leased Real Estate) constitute all of the property relating to or used or held for use in

connection with the Acquired Business on this date, and comprise all property necessary for the

continued conduct of the Acquired Business after the Closing by the Company as conducted

prior to the Closing by the Company. To the Knowledge of the Seller, subject only to ordinary

wear and tear, the assets of the Company are usable and used in the Acquired Business, have

been well maintained and are in good operating condition and repair. Since January 1, 2014, no

such asset essential to the operation of the Acquired Business has been destroyed, diverted by the

Company to other uses, or otherwise disposed of by the Company without having been

adequately replaced.

(d)

Insurance. The Company, the Acquired Business, the Leased Real

Estate and all of the Company’s assets have been and are insured, and will be insured through

the Closing Date, in the amounts and against the risks set forth in Schedule 3.10(d), attached

hereto. The Company is not in default with respect to any provision contained in any insurance

policy for the Company and has not failed to give notice or present any claim under any such

policy in due and timely fashion. During the last two years, the Company has not had any

insurance policy or coverage thereunder cancelled, withdrawn or not renewed by the insurer.

The Company has not received notice of and the Seller are not aware of any cancellation or

threat of cancellation of such insurance. Except as set forth in Schedule 3.10(d), no property

damage, personal injury or products liability claims have been made, or are pending, against the

Company that are not fully covered by insurance (except to the extent of co-insurance and

deductibles reflected in the applicable insurance policies).

(e)

Leased Real Estate. There are no commenced, or to the Knowledge of the

Seller, planned public improvements related to the Leased Real Estate which may result in

special assessments or area wide charges for which the Company would be responsible as lessee

of the Leased Real Estate, or which might otherwise adversely affect such Leased Real Estate;

no governmental agency or court order has been issued requiring repairs, alterations or

correction of any existing conditions of the Leased Real Estate; there is no pending or, to the

Knowledge of the Seller, planned or contemplated condemnation or similar action or change in

any zoning or building ordinance affecting the Leased Real Estate; to the Knowledge of the

Seller there are no structural or mechanical defects in the Leased Real Estate, including

adequacy and quality of well and sanitary disposal systems or defects which are reasonably

likely to result in the discharge of pollutants into the environment; to the Knowledge of the

Seller there is no violation of or nonconformance with any Law requiring or calling attention to

the need for any work, repairs, construction, alteration or installation affecting the Leased Real

Estate; to the Knowledge of the Seller all buildings and other improvements situated on the

Leased Real Estate are located within the boundary lines thereof and any applicable setback lines

without overlap; and to the Knowledge of the Seller no part of the Leased Real Estate is located

within a flood or lakeshore erosion hazard area. All of the Leased Real Estate has rights of

access to public roads.

3.11 Taxes and Tax Returns.

(a)

Except as set forth on Schedule 3.11:

(1)

The Company has timely filed or timely requested extensions to

file those Tax Returns that are currently due for all taxable periods ending on or before the

Closing Date and all such Tax Returns are true, correct and complete. Copies of all such Tax

Returns for the periods ending on or after December 31, 2014 have been given to the Purchaser;

(2)

The Company has paid to the appropriate Governmental Authority,

or has established, in accordance with GAAP and consistent with past practice, accruals that are

reflected on the Company’s financial statements (as provided to the Purchaser hereunder) for the

payment of all Taxes imposed on the Company or for which the Company 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

Company to file any Tax Return that has not yet been filed or to pay any Tax that has not yet

been paid;

(4)

The Company has not received notice of a determination by a

Governmental Authority that Taxes are owed by the Company (such determination to be referred

to as a “Tax Deficiency”) that has not been resolved as of the date of Closing and, to the

Company’s Knowledge, no Tax Deficiency is proposed or threatened;

(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 of the

Company or (b) for which the Purchaser would be liable under applicable Law by reason of

having acquired the Purchased Stock;

(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

Company 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 Company;

(10) To Seller’s Knowledge, there are no requests for rulings in respect

of any Tax pending between the Company and any Governmental Authority;

(11) To Seller’s Knowledge, the Company has complied with all

applicable Laws in all material respects 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) To Seller’s Knowledge, the Company 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) To Seller’s Knowledge, none of the assets of the Company 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;

(14) None of the assets of the Company directly or indirectly secures

any debt, the interest on which is tax-exempt under Section 103(a) of the Code;

(15) None of the assets of the Company is “tax-exempt use property”

within the meaning of Section 168(h) of the Code;

(16) The Company 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; and

(17) Neither the Company is not a party to any Tax allocation or Tax

sharing agreement

(b)

Schedule 3.11 contains: (1) a schedule of the filing dates of all Tax

Returns required to be filed by the Company; (2) a description of all past Tax Audits involving

the Company; and (3) a list of the states, territories and jurisdictions (whether foreign or

domestic) to which any Tax is properly payable by the Company. Except as set forth on

Schedule 3.11, to Seller’s Knowledge, the Company has retained all supporting and backup

papers, receipts, spreadsheets and other information reasonably 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)

To Seller’s Knowledge, the Company 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.

To Seller’s Knowledge, the Company 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.

3.12 Vacation Pay. Schedule 3.12, attached hereto, sets forth the true and

correct amount of vacation, holiday and sick pay unpaid as of the date hereof for all employees

of the Company (i) who have not as of the date hereof taken vacation, holiday or sick time

earned prior to the date hereof; or (ii) who have not earned vacation, holiday or sick time as of

the date hereof but will earn vacation, holiday or sick time for any period or partial period of

employment prior to the date hereof if they continue as employees of the Company to the date

when such vacation, holiday or sick time will accrue to them. Except as set forth in Schedule

3.12, as of the date hereof, the Company does not have any liability, obligation or commitment

to any of its employees for vacation, holiday or sick pay earned or accrued up to and including

the date hereof, whether or not vested.

3.13 Contracts and Commitments.

(a)

Significant Contracts. Except for the Contracts set forth in Schedule 3.13

to this Agreement, the Company and the Seller are not a party to, and are not in any way

obligated under, (i) any agreement, contract or commitment containing any covenant limiting the

freedom of the Company to engage in any line of business or compete with any Person; (ii) any

contract, agreement or commitment with the Company’s present or past officers, employees,

agents, consultants or advisors that is not cancelable by the Company on notice of not longer

than thirty (30) days and without liability, penalty or premium; (iii) any contract, agreement or

commitment relating to the disposition of assets of the Company, other than in the ordinary

course of business; (iv) any agreement requiring the consent of any other person to the transfer

or the sale by the Company of all or substantially all of the Company’s assets or to a change in

control with respect to the Company; (v) any lease of, or agreement to purchase or sell, any

capital asset; (vi) any management, consulting, personal service, agency or other contract which

provides for rendition of services or for any commission, bonus, incentive, consulting or

additional compensation; (vii) any agreement or note evidencing any Indebtedness; (viii) any

license, other than licenses for off-the-shelf software applications; (ix) any agreement with an

agent, dealer, distributor, sales representative or franchisee; (x) any agreement for the storage,

transportation, treatment or disposal of any Materials of Environmental Concern; (xi) any

agreement restricting the right of the Company to use or disclose any information in its

possession; (xii) any partnership, joint venture or similar relationship; (xiii) any open purchase

order by the Company to any vendor, or from any customer of the Company, which involves an

amount in excess of $25,000; (xiv) any other agreement which involves an amount in excess of

$25,000, or is not in the ordinary course of business of the Company; or (xv) any agreement with

any third party for the manufacture of the Company’s products.

(b)

[Intentionally Omitted].

(c)

Consents; Renewals; Defaults. The Company has not received any notice

or other written information indicating (i) that any of the Contracts set forth in the attached

Schedule 3.13 will not be renewed upon expiration or (ii) that with respect to any Contract set

forth in the attached Schedule 3.13 requiring consent as a result of the transactions contemplated

by this Agreement, the party whose consent is required will not give that consent. The Company

is not in default under any of the Contracts, and there has not occurred any event which with the

lapse of time or giving of notice or both would constitute such a default by the Company. To the

Knowledge of the Seller the Contracts are valid and binding in accordance with their respective

terms and are in full force and effect without any default, waiver or indulgence thereunder by the

Company, or, to the Knowledge of the Seller, by any other party thereto.

3.14 Intellectual Property, Copyrights, Patents, Trademarks and Trade Names.

Schedule 3.14 sets forth a true and correct listing of all intellectual property, patents, trade

names, trademarks, service marks, common-law trademarks, copyrights (registered and

common-law), and domain names, and all registrations and applications for any of the foregoing,

owned, possessed, licensed or used by the Company or otherwise used in the Acquired Business.

Except as set forth in Schedule 3.14, the Company owns the entire right, title and interest in and

to the items listed on Schedule 3.14, and such items are not subject to any pending or, to the

Knowledge of the Seller, threatened litigation or other adverse claims. To the Knowledge of the

Seller such items do not violate any Intellectual Property Rights of any other Person. There have

been no written claims or assertions by any other Person of infringement of any of such items by

the Company. None of the items listed on Schedule 3.14 is invalid or unenforceable, and all

filings required to keep such items effective and enforceable have been made by the Company.

The Company has not infringed, misappropriated or otherwise conflicted with, and the operation

of the Acquired Business as currently conducted will not infringe, misappropriate or otherwise

conflict with, any Intellectual Property Rights of any Person, and the Company has not received

notice of any claims alleging any of the foregoing. The Company owns and possesses, or has a

valid and enforceable right to use, all Intellectual Property Rights used in the operation of the

Acquired Business as presently conducted.

3.15 Environmental Matters.

Except as set forth on Schedule 3.15

(a)

The Company is and has been in material compliance with all

Environmental Laws and has not received any communication (written or oral), whether from a

governmental authority, citizens group, employee or otherwise, that alleges that the Company is

not in compliance with applicable Environmental Laws, and to the Knowledge of the Seller there

are no present circumstances that may prevent or interfere with such compliance in the future.

(b)

There is no Environmental Claim pending or, to the Knowledge of the

Seller, threatened against the Company, or against any person or entity whose liability for any

Environmental Claim the Company has or may have retained or assumed either contractually or,

to the Knowledge of the Seller, by operation of law.

circumstances, conditions, events or incidents, including, without limitation, the release,

emission, discharge, presence, or disposal of any Material of Environmental Concern, that could

form the basis of any Environmental Claim against the Company or any person or entity whose

liability for any Environmental Claim the Company has or may have retained or assumed either

contractually or , to the Knowledge of the Seller, by operation of Law. To the Knowledge of the

Seller, no Person has caused any past or present actions, activities, circumstances, conditions,

events or incidents, including, without limitation, the release, emission, discharge, presence, or

disposal of any Material of Environmental Concern, that could form the basis of any

Environmental Claim against the Company or any person or entity whose liability for any

Environmental Claim the Company has or may have retained or assumed either contractually or,

to the Knowledge of the Seller, by operation of Law.

(d)

Without in any way limiting the generality of the foregoing, (i) the

Company has not stored, disposed or arranged for the disposal of Materials of Environmental

Concern on all off site and on site locations, (ii) to the Knowledge of the Seller, there are no

underground storage tanks located on property at any time owned or leased by the Company, (iii)

to the Knowledge of the Seller, there is no asbestos contained in or forming part of the Leased

Real Estate or any building, building component, structure or office space owned or leased by

the Company, and (iv) to the Knowledge of the Seller, no polychlorinated biphenyls (PCB’s) are

used or stored at the Leased Real Estate or any property owned, leased or used by the Company.

3.16 Computer Systems. To the Knowledge of Seller and other than the

normal rotation of older computer hardware, software and equipment that have not been

disposed of, all of the computer hardware and software systems, and all equipment including

imbedded microprocessors, owned, leased or used by the Company (including, without

limitation, those related to equipment, manufacturing processes, quality control activities,

accounting and bookkeeping records and record keeping activities, environmental, HVAC and

other facility controls, and security and communications systems) are fully operational and are

operating properly as designed.

3.17 Transactions with Affiliates. Except as set forth in Schedule 3.17 hereto,

since December 31, 2013, the Company has not, directly or indirectly, purchased, leased from or

otherwise acquired any property or obtained any services from, or sold, leased to or otherwise

disposed of any property or furnished any services to, or otherwise dealt with, in the ordinary

course of business or otherwise, any Seller or any other Person which, directly or indirectly,

controls, is controlled by or is under common control with the Company.

3.18 Bank Accounts. Schedule 3.18 attached hereto contains a complete list of

each bank, financial institution and brokerage company in which the Company has an account

together with the type of account and the names of all persons authorized to draw thereon or

have access thereto.

3.19 No Pending Transactions. Except for this Agreement, neither the

Company nor the Seller is a party to or is bound by any agreement, undertaking or commitment:

(a) to merge or consolidate the Company with, or to have the Company acquire all or

substantially all of the properties and assets of, any other Person; (b) to sell, lease or exchange all

or substantially all of the Company’s properties and assets to any other Person; (c) to sell or

exchange all or substantially all of the capital stock of the Company to any other Person; or (d)

to reorganize the Company.

3.20 Indebtedness; Investments.

(a)

Except as disclosed in Schedule 3.20 attached hereto, the Company

does not have any Indebtedness.

(b)

Except as disclosed in Schedule 3.20, the Company does not own,

or have any right or obligation to acquire, any Investment.

(c)

Any indebtedness of the Company to the Seller is subordinated to

the Noteholder Debt so that the Seller is only repaid after the Noteholders are repaid on the

Noteholder Debt.

3.21 Product Warranties. Disclosed on Schedule 3.21 to this Agreement is a

true and accurate list of all of the forms of product warranty or guaranty now in effect or

outstanding with respect to products sold or leased by the Company and all of the forms of

product warranty or guaranty which have been issued by the Company during the past two years.

3.22 Warranty Claims and Customer Complaints. Except as set forth on

Schedule 3.22, there are no existing or, to the Knowledge of the Seller, threatened claims or

customer complaints against the Company (i) for or related to any alleged defective product or

(ii) for or related to any product which alleges failure to meet any service or product warranties

of the Company or any applicable standard or specification of any contract or purchase order for

such product or any applicable foreign, federal, state or local Law, in either case which involve

costs to the Company in excess of $5,000 or which in the aggregate for all claims and customer

complaints against the Company exceed $25,000. Schedule 3.22 accurately describes all such

claims or customer complaints (exceeding the dollar thresholds set forth in the previous

sentence) received by the Company during the past two years including, with respect to each

such claim or customer complaint, a description of (i) the nature of the claim or customer

complaint and (ii) the date of the claim or customer complaint.

3.23 Employees.

(a)

To the Knowledge of the Seller, the Company is in compliance with all

applicable Laws respecting labor and employment, applicant and employee background

checking, immigration, discrimination in employment, terms and conditions of employment,

wages, hours and occupational safety and health and employment practices, and is not engaged

in any unfair labor practice. There are no outstanding claims against the Company for any

payment to any trust or other fund or to any governmental entity, with respect to unemployment

compensation benefits, social security or other benefits or obligations for employees other than

routine payments to be made in the ordinary course. Except as set forth on Schedule 3.23, there

are no pending claims against the Company under any workers compensation plan or policy or

for long term disability. Except as set forth on Schedule 3.23, there is not currently, and there

has not been in the past three years, any legal proceeding against the Company based on actual

or alleged wrongful termination, unlawful or unfair dismissal, or race, age, sex, disability or

other harassment or discrimination. Except as set forth on Schedule 3.23, to the Knowledge of

the Seller there are not currently, and there have not been in the past three years, any activities or

proceedings of any labor union to organize any employees of the Company. Except as set forth

on Schedule 3.23, none of the managers or corporate staff departments’ heads of the Company

have given written notice to the Company within the past six months that any such employee

intends to terminate his or her employment with the Company.

(b)

Schedule 3.23 contains a complete and accurate list of the following

information for each employee of the Company, including each employee on leave of absence or

layoff status: name; job title; and the current and the prior year’s compensation or remuneration

(including any bonus). Except as set forth on Schedule 3.23, the Company has not made any

promises for the payment of any bonuses, backpay or other remuneration to any employees,

contractors or other Persons in any way related to the transactions contemplated by this

Agreement.

(c)

Except as set forth in Schedule 3.23, attached hereto, the Company is not a

party to, and is not negotiating, any collective bargaining or other labor union contract or

employment agreements with its employees or with any organization representing any of its

employees, and is not bound by any other agreement with a labor organization; the Company

does not have any agreements, arrangements or commitments that contain any severance or

termination pay or liabilities or obligations for any bonus, deferred compensation, pension, profit

sharing or retirement arrangement with any employee or former employee, and the Company is

not presently paying any pension, deferred compensation or retirement allowance to any former

employee.

3.24 Benefit Plans.

(a)

Except for the Existing Plans, as set forth on Schedule 3.24 attached

hereto, the Company does not maintain any Benefit Plan. The Seller has delivered to Purchaser

true and correct copies of each of the Existing Plans for which written documentation exists,

together with copies of any summary plan or similar description thereof and the most recent

actuarial reports, reviewed financial statements and Form 5500 and schedules, if any, with

respect thereto. Each of the Existing Plans is in compliance in all respects with applicable Law,

including without limitation, the Code and ERISA, and any Benefit Plan terminated by the

Company during the five-year period ending with the date of this Agreement was in compliance

with such Law and was terminated in compliance with such Law. All of the Existing Plans

which are intended to meet the requirements of Section 301(a) of the Code have been determined

by the Internal Revenue Service to be “qualified” within the meaning of Section 301(a) of the

Code or timely application has been made therefor, and there are no facts Known to the Seller

which would adversely affect the qualified status of such Existing Plans. The Company is not in

default in any respect in performing its obligations under any of the Existing Plans, and all

contributions, payments, liabilities or obligations under any Existing Plans that are required to

have been paid on or before the date hereof have been paid or that are required to have been

accrued on the date hereof on the books of account of the Company by GAAP applied

consistently with the past practice of the Company for year-end financial statements have been

so accrued.

(b)

With respect to each Existing Plan, all reports required under ERISA or

any other applicable Law or regulation to be filed by or on behalf of such Plan with the relevant

governmental authority the failure of which to file could reasonably result in liability to the

Company have been duly filed and all such reports are true and correct as of the date given.

(c)

Neither the Company nor any of its ERISA Affiliates nor any Existing

Plan has engaged in a “prohibited transaction” (as such term is defined in Section 3975 of the

Code and Sections 306 and 308 of ERISA), which would subject the Company (after giving

effect to any exemption) or any Existing Plan to the tax or penalty on prohibited transactions

imposed by Section 3975 of the Code, Section 502 of ERISA or any other liability.

(d)

Except for the Company’s voluntary discontinuance of a non-matching

401-K Plan, due to five (5) years employee non-participation, no Existing Plan has been

terminated, nor has any “accumulated funding deficiency” (as defined in Section 312(a) of the

Code) been incurred (without regard to any waiver granted under Section 312 of the Code), and

no funding waiver from the Internal Revenue Service has been received or requested with

respect to any Existing Plan and neither the Company nor any of its ERISA Affiliates failed to

make any contributions or to pay any amounts due and owing as required by Section 312 of the

Code, Section 302 of ERISA or the terms of any Existing Plan prior to the due date of such

contribution under Section 312 of the Code or Section 302 of ERISA, nor has there been any

reportable event or any event requiring disclosure under Section 3031(c)(3)(C), 3063(a) or

3068(f) of ERISA with respect to any Existing Plan.

(e)

The value of the assets of each Existing Plan which is a “defined benefit”

plan (as defined in Section 3(35) of ERISA) equaled or exceeded the present value of the

“benefit liabilities” (as defined in Section 3001(a)(16) of ERISA) of each such plan as of the end

of the preceding plan year, using the plan’s actuarial assumptions as in effect for such plan year.

(f)

There are no claims (other than claims for benefits in the normal course),

actions or lawsuits asserted or instituted against, and there are no pending or to the Knowledge

of the Seller threatened litigation or claims against, the assets of any Existing Plan or against any

fiduciary of such Existing Plan with respect to the operation of such Existing Plan, which, if

adversely determined, could have an adverse effect on the business, operations, properties, assets

or condition (financial or otherwise) of the Company.

(g)

Except as specified otherwise in Schedule 3.24 attached to this

Agreement, each of the Existing Plans can be terminated by the Company within a period of 30

days following the Closing Date, without payment of any additional compensation or amount or

the additional vesting or acceleration of any benefits under any of such plans, and none of the

transactions contemplated by this Agreement shall result in the acceleration of any payments

under any Existing Plan.

(h)

Neither the Company nor any of its ERISA Affiliates has incurred (a) any

liability to the PBGC (other than routine claims and premium payments), (b) any withdrawal

liability (and no event has occurred which, with the giving of notice under Section 3219 of

ERISA, would result in such liability) under Section 3201 of ERISA as a result of a complete or

partial withdrawal (within the meaning of Section 3203 or 3205 of ERISA) from a

multiemployer plan described in Section 3(37) of ERISA or (c) any liability under ERISA

Section 3062 to the PBGC, or to a trustee appointed under Section 3032 of ERISA.

(i)

Neither the Company nor any of its ERISA Affiliates nor any organization

to which the Company or any of its ERISA Affiliates is a successor or parent corporation (as

described in Section 3069(a) of ERISA) has engaged in a transaction described in Section 3069

of ERISA.

(j)

The Company does not maintain and has not established any “welfare

benefit plan” (within the meaning of Section 3(1) of ERISA), other than those listed on Schedule

1.1 to this Agreement, which provides for continuing benefits or coverage for any participant or

any beneficiary of a participant after such participant’s termination of employment except as

may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended

(“COBRA”), and the regulations thereunder.

(k)

The Company and each of its ERISA Affiliates maintaining a “welfare

benefit plan” (within the meaning Section 3(1) of ERISA) has complied with all applicable

notice and continuation coverage requirements of COBRA and the regulations thereunder such

that there would not result any tax, penalty or liability to the Company.

(l)

Neither the Company nor any of its ERISA Affiliates has any liability as a

successor of any other organization to any Benefit Plan (or beneficiary, sponsor, trustee or

fiduciary of such plan) pursuant to successor liability rules of Title IV of ERISA or federal

common law. (m) Except as set forth in

3.25 Multi-Employer Plans. Neither the Company nor any of its ERISA

Affiliates contributes, is required to contribute and since January 1, 1976 has contributed, to any

multiemployer plan within the meaning of Section 3(37) of ERISA.

3.26 Benefit Claims. No person has asserted any claim under which the

Company has any liability under any Benefit Plan maintained by the Company or to which the

Company is a party, or under any worker’s compensation or similar Law, which is not fully

covered by insurance maintained with unaffiliated, financially sound, reputable insurers or, if not

insured, for which an adequate reserve is not reflected on the Financial

Statements.

3.27 Disclosure. No representation or warranty by the Seller in this

Agreement, and no statement, certificate or schedule furnished or to be furnished by or on behalf

of the Company or the Seller pursuant to this Agreement, or any document or certificate

delivered to Purchaser pursuant to this Agreement or in connection with actions contemplated

hereby, contains or shall contain any untrue statement of material fact or omits or shall omit a

material fact necessary to make the statements contained therein, in light of the circumstances in

which they were made, not misleading.

3.28 Broker’s and Finder’s Fees. Except for the persons listed on Schedule

3.28 attached to this Agreement, no broker, finder, agent, representative or similar intermediary

has acted as a broker for or on behalf of the Seller in connection with this Agreement or the

transactions contemplated hereby, and no broker, finder, agent or similar intermediary is entitled

to a brokerage commission, finder’s fee, advisory fee or other like payment (each, a “Broker’s

Fee”) in connection herewith, based on any agreement or understanding with Seller or any

action taken by Seller. Any such Broker’s Fee based on any agreement or understanding with

Seller or any action taken by Seller which may be due in connection with the purchase and sale

contemplated by this Agreement will be borne by the Seller who entered into the agreement to

pay.

3.29 Securities Act Acknowledgements, Representations, Warranties and

Covenants.

(a)

Acknowledgments. Seller, agrees and acknowledge that: (1) no federal or

state agency has made any finding or determination as to the fairness of the distribution of the

Shares for investment, or any recommendation or endorsement of the Shares; (2) the Shares have

not been registered under the Securities Act of 1933, as amended (the “Act”), or the securities

acts of any state and, as a result, the Shareholder must bear the economic risk of the investment

indefinitely because the Shares may not be sold unless subsequently registered under the Act and

the securities laws of any appropriate states or an exemption from such registration is available,

and that such registration under the Act and the securities laws of any such states is unlikely at

any time in the future; (3) iGambit does not have any present intention and is under no obligation

to register the Shares, whether upon initial issuance or upon any transfer thereof under the Act

and applicable state securities laws, and Rule 144 and/or Rule 145 may not be available as a

basis for exemption from registration; and (4) unless and until registered under the Act, all

certificates evidencing the Shares, whether upon initial issuance or upon any transfer thereof,

will bear a legend, prominently stamped or printed thereon, reading substantially as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES

MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN

EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE

SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO

AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT

AND APPLICABLE STATE SECURITIES LAWS.”

(b)

Representations, Warranties and Covenants. (1) The Shares are being

acquired for the Company’s Shareholder’s (collectively “Shareholder”) own account for

investment and not for distribution or resale to others and the Shareholder will not sell or

otherwise transfer the Shares, whether by dividend or other distribution or upon liquidation or

dissolution or otherwise, unless they are registered under the Act and the securities acts of any

appropriate state or unless an exemption from such registration is available and iGambit is

satisfied that such exemption is available; (2) the acquisition of the Shares by the Shareholder

hereunder is consistent with its general investment objectives and the Shareholder understands

that the acquisition of the Shares is a speculative investment involving a high degree of risk,

including the risk of total loss of such investment, and there is now no established market for

iGambit’s capital stock and there is no assurance that any public market for such stock will

develop; (3) the Shareholder has adequate means of providing for his current needs and possible

personal contingencies and he has no need for liquidity in this investment and can bear the risk

of losing his entire investment in the Shares; (4) iGambit has made available to the Shareholder

at a reasonable time prior to its investment the opportunity to ask questions and receive answers

concerning the Shares and to obtain any additional information which iGambit possesses or can

acquire without unreasonable effort or expense that is necessary in connection with the

investment but the Shareholder agrees and acknowledges, however, that he has relied solely

upon this Agreement and his own independent investigation in making the decision to invest in

the Shares; (5) the Shareholder understands that the distribution of the Shares is limited solely to

“accredited investors,” as that term is defined under Regulation D of the Securities Act and the

Seller is an “accredited investor” (as so defined); (6) the Shareholder is a sophisticated investor

and has such knowledge and experience in financial and business matters that he is capable of

understanding the merits and risks inherent in the proposed acquisition of the Shares; (7) the

Shareholder is acquiring the Shares without having been furnished any specific offering

literature or prospectus but has relied generally upon information filed by iGambit with the

Securities and Exchange Commission and acknowledges that no representations or warranties

have been made to the Shareholders or his representatives by iGambit or the Purchaser, or any

officer, employee, agent or affiliate of iGambit or the Purchaser other than as contained in this

Agreement and the Shareholder must independently seek advice from its own tax and other

advisor(s) and is not relying on any tax or other advice received from iGambit or the Purchaser

in connection with the transactions contemplated by this Agreement; and (8) the Shareholder has

neither relied upon nor seen any form of advertising or general solicitation in connection with

the distribution of the Shares.

COVENANTS OF THE SELLER.

The Seller hereby covenant and agree 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 Agreement to be

consummated. Seller shall permit Purchaser and its counsel, accountants, employees and other

representatives, prior to Closing, to make such investigations of Company’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

Company’s business operations, to all of Company’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 Company’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. 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 their 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 Company,

the stock of the Company, or a merger involving Company, or the issuance of any shares of or

other equity securities of the Company, at any time during the term of this Agreement, or, to

raise funds in the form of debt or equity for use in the Seller’s operations, other than as

contemplated pursuant to Section 10 hereof, until the earlier to occur of the Closing Date, or, if

applicable, the termination of this Agreement.

4.4

[Intentionally Omitted].

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 shall cause the Company not to do or enter into

the following:

(a)

amend or otherwise change its Articles of Incorporation, By-Laws or