THIS SUBSCRIPTION AGREEMENT IS EXECUTED IN RELIANCE UPON (1) THE EXEMPTION
PROVIDED BY SECTION 4(2) AND REGULATION D, RULE 506 FOR TRANSACTIONS NOT
INVOLVING A PUBLIC OFFERING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR (2) THE EXEMPTION TO AN OFFERING OF SECURITIES IN AN
OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN)
PURSUANT TO RULE 903 OF REGULATION S (“REGULATION S”) PROMULGATED UNDER THE
SECURITIES ACT THIS OFFERING IS BEING MADE TO ACCREDITED INVESTORS AND/OR TO
NON-U.S. PERSONS PURSUANT TO RULE 903 OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT. NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION RELATES HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS,
AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY,
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION D OR REGULATION S UNDER
THE SECURITIES ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH
CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
ACCORDANCE WITH THE SECURITIES ACT.

 

 

 

SMARTMETRIC, INC.

 

SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (“Subscription Agreement”) made as of this ___ day of
________, 2013 between SmartMetric, Inc., a Nevada corporation (the “Company”),
and the undersigned (the “Subscriber”).

 

WHEREAS, the Company is conducting a private offering (the “Offering”),
consisting of up to a maximum of up to 425 Units (the “Units”), each Unit
consisting of 75,000 shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”) and a warrant to purchase 75,000 shares of Common
Stock on a cashless basis (the “Warrants” and collectively with the Units and
Common Stock, the “Securities”) for aggregate gross proceeds of a up to a
maximum of $5,100,000 (the “Maximum Offering”). Each Unit will be sold at a
negotiated price of $12,000 per Unit (the “Unit Purchase Price”). Each Warrant
has an initial exercise price equal to $0.50 per share, subject to adjustment
(the “Exercise Price”) and is exercisable until April 22, 2015. Fractional Units
are available upon request. The Securities being subscribed for pursuant to this
Subscription have not been registered under the Securities Act. The offer of the
Securities and, if this Subscription is accepted by the Company, the sale of
Securities, is being made in reliance upon Section 4(2) and/or Rule 506 of
Regulation D of the Securities Act or Rule 903 of Regulation S promulgated under
the Securities Act; and

 

WHEREAS, the Subscriber desires to purchase that number of Units set forth set
forth opposite such Subscriber’s name on such signature page hereto on the terms
and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and the mutual representations
and covenants hereinafter set forth, the parties hereto do hereby agree as
follows:

 

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I.SUBSCRIPTION FOR SECURITIES; COVENANTS OF THE COMPANY

 

1.1 Subscription for Securities. Subject to the terms and conditions hereinafter

set forth and in the Confidential Offering Memorandum dated April 23, 2013 (such
memorandum, together with all amendments thereof and supplements and exhibits
thereto, the “Memorandum”), the Subscriber hereby irrevocably subscribes for and
agrees to purchase from the Company, and the Company agrees to sell to the
Subscriber, such number of Units as is set forth on the signature page hereof.
The purchase price is payable by wire transfer to the Company, in accordance
with the wire instructions set forth on Exhibit B attached hereto, and Risks of
the Offering are attached herto as Exhibit C.

 

1.2 Offering Period. The Shares will be offered for sale until the earlier of
(i) the date upon which subscriptions for the Maximum Offering offered hereunder
have been accepted, (ii) June 30, 2013 (subject to the right of the Company to
extend the offering for up to an additional 90 days without further notice to
investors), or (iii) the date upon which the Company elects to terminate the
Offering (the “Termination Date”). The Offering is being conducted on a
“best-efforts” basis.

 

1.3 Closing. The Company may hold an initial closing (“Initial Closing”) at any
time after the receipt of accepted subscriptions from qualified investors prior
to the Termination Date. After the Initial Closing, subsequent closings with
respect to additional Securities may take place at any time prior to the
Termination Date as determined by the Company, with respect to subscriptions
accepted prior to the Termination Date (each such closing, together with the
Initial Closing, being referred to as a “Closing”). The last Closing of the
Offering, occurring on or prior to the Termination Date, shall be referred to as
the “Final Closing”. Any subscription documents or funds received after the
Final Closing will be returned, without interest or deduction. In the event that
the any Closing does not occur prior to the Termination Date, all amounts paid
by the Subscriber shall be returned to the Subscriber, without interest or
deduction.

 

1.4 Subsequent Equity Sales. If at any time during the 6 month period following
the first closing of this Offering the Company sells or issues any Common Stock
entitling any person to acquire shares of Common Stock at an effective price per
share that is lower than $0.16 (such lower price, the “Base Share Price” and
such issuances, collectively, a “Dilutive Issuance”), then the Company shall
issue to each Subscriber such number of additional shares of Common Stock equal
to the difference between (i) the number of Shares held by the Subscriber on the
date of the Dilutive Issuance multiplied by a fraction, the numerator of which
is $0.16 and the denominator of which is the Base Share Price, and (ii) the
number of Shares held by the Subscriber on the date of the Dilutive
Issuance.   Notwithstanding the foregoing, no adjustment will be made under this
Section 1.4 in respect of an Exempt Issuance. “Exempt Issuance” means the
issuance of (a) securities of the Company issued pursuant any Approved Stock
Plan, (b) securities upon the exercise of or conversion of any securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities or to decrease the
exercise or conversion price of any such securities, (c) securities issued
pursuant to acquisitions or strategic transactions, provided that any such
issuance shall only be to a person which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Company
and shall provide to the Company additional benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities and (d) securities issued in
connection with any bona fide commercial loan or debt transaction with third
persons, provided that the primary purpose of such transaction is not to raise
equity capital and is approved by the Company’s Board of Directors in good
faith. “Approved Stock Plan" means any employee benefit plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, consultant, officer or
director for services provided to the Company.

 

2

 

  

1.5 Stockholder Approval. The Company shall use its best efforts to file a proxy
or information statement with the Securities and Exchange Commission as soon as
practicable and use its best efforts to obtain such approvals of the Company’s
stockholders as may be required to increase the total number of authorized
shares of the Company’s Common Stock from 200,000,000 to 300,000,000 and issue
all of the shares of Common Stock and the Warrant Shares (as defined below) in
accordance with Nevada law and any applicable rules or regulations of any
national securities exchange and/or over-the-counter trading platform on which
the Company’s Common Stock is traded and/or quoted.

 

II.REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER

 

The Subscriber represents and warrants to the Company, with the intent that the
Company will rely thereon, that:

 

2.1 Accredited Investor or Non-U.S. Person The Subscriber is either (i) an
“accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act, it is able to bear the economic risk of
any investment in the Securities and the information furnished in the
accompanying investor questionnaire, which is attached hereto as Exhibit A-1, is
accurate and complete in all material respects or (ii) it is not a U.S. Person
(a “Reg S Person”), and the representations contained in the information
furnished in the accompanying investor questionnaire, which is attached hereto
as Exhibit A-2, is accurate and complete in all material respects.

 

2.2 Reliance on Exemptions. The Subscriber acknowledges that the Offering has
not been reviewed by the Securities and Exchange Commission (the “Commission”)
or any state agency because it is intended to be an offering exempt from the
registration requirements of the Securities Act and state securities laws. The
Subscriber understands that the Company is relying in part upon the truth and
accuracy of, and the Subscriber’s compliance with the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Subscriber to acquire the Securities.

 

2.3 Investment Purpose. The Subscriber is purchasing the Securities as principal
for its own account, and, in the case of a Non-U.S. Person, not for the account
or benefit of, directly or indirectly, any U.S. Person. The Subscriber is
purchasing the Securities for investment purposes only and not with an intent or
view towards further sale or distribution (as such term is used in Section 2(11)
of the Securities Act) thereof, and has not pre-arranged any sale with any other
purchaser and has no plans to enter into any such agreement or arrangement. If
the Subscriber is a Non-U.S. Person, such Subscriber has no intention to
distribute either directly or indirectly any of the Units in the United States
or to U.S. Persons.

 

2.4 Risk of Investment. The Subscriber recognizes that the purchase of the
Securities involves a high degree of risk in that: (a) an investment in the
Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Securities; (b) transferability of the Securities is limited; and (c) the
Company may require substantial additional funds to operate its business and
subsequent equity financings will dilute the ownership and voting interests of
Subscriber.

 

2.5 No Registration. The Securities have not been registered under the
Securities Act or any state securities laws and may not be transferred, sold,
assigned, hypothecated or otherwise disposed of unless registered under the
Securities Act and applicable state securities laws or unless an exemption from
such registration is available (including, without limitation, under Rule 144 of
the Securities Act, as such rule may be amended, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect (“Rule 144”)). The Subscriber represents and warrants and hereby agrees
that all offers and sales of the Units shall be made only pursuant to such
registration or to such exemption from registration.

 

3

 

  

2.6 Prior Investment Experience. The Subscriber is sufficiently experienced in
financial and business matters to be capable of evaluating the merits and risks
of its investments, and to make an informed decision relating thereto, and to
protect its own interests in connection with the purchase of the Shares.

 

2.7 Information. The Subscriber acknowledges careful review of this Agreement,
the Memorandum, including the Warrant and all other exhibits thereto
(collectively, the “Offering Documents”) as well as the Company’s filings with
the Commission, as required pursuant to the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”) which are available on the Internet at
www.sec.gov, all of which the undersigned acknowledges have been provided to the
undersigned. The undersigned has been given the opportunity to ask questions of,
and receive answers from, the Company concerning the terms and conditions of
this Offering and the Offering Documents and to obtain such additional
information, to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense, necessary to verify the accuracy of
same as the undersigned reasonably desires in order to evaluate the investment.
The undersigned understands the Offering Documents, and the undersigned has had
the opportunity to discuss any questions regarding any of the Offering Documents
with its counsel or other advisor. Notwithstanding the foregoing, the only
information upon which the undersigned has relied is that set forth in the
Offering Documents. The undersigned has received no representations or
warranties from the Company, its employees, agents or attorneys in making this
investment decision other than as set forth in the Offering Documents. The
undersigned does not desire to receive any further information.

 

2.8 Investment Decision. In making the decision to invest in the Securities the
Subscriber has relied solely upon the information provided by the Company in the
Offering Materials. To the extent necessary, the Subscriber has retained, at its
own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and the
purchase of the Securities hereunder. The Subscriber disclaims reliance on any
statements made or information provided by any person or entity in the course of
Subscriber’s consideration of an investment in the Securities other than the
Offering Materials.

 

2.9 No Representations. The Subscriber hereby represents that, except as
expressly set forth in the Offering Documents, no representations or warranties
have been made to the Subscriber by the Company or any agent, employee or
affiliate of the Company, and in entering into this transaction the Subscriber
is not relying on any information other than that contained in the Offering
Documents and the results of independent investigation by the Subscriber.

 

2.10 Tax Consequences. The Subscriber acknowledges that the Offering may involve
tax consequences and that the contents of the Offering Documents do not contain
tax advice or information. The Subscriber acknowledges that it must retain its
own professional advisors to evaluate the tax and other consequences of an
investment in the Securities.

 

2.11 No Recommendation or Endorsement. The Subscriber understands that no
federal, state or other regulatory authority has passed on or made any
recommendation or endorsement of the Units. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the adequacy of this
Agreement or the Memorandum. Any representation to the contrary is a criminal
offense.

 

4

 

  

2.12 No General Solicitation. The Subscriber represents that the Subscriber was
not induced to invest by any form of general solicitation or general advertising
including, but not limited to, the following: (a) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over the news or radio; and (b) any seminar or meeting whose
attendees were invited by any general solicitation or advertising.

 

2.13 No Directed Selling Efforts. If the Subscriber is a non-U.S. Person, the
Subscriber has not acquired the Units as a result of, and will not itself engage
in, any “directed selling efforts” (as defined in Regulation S under the
Securities Act) in the United States in respect of the Units which would include
any activities undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States for
the resale of the Units; provided, however, that the Subscriber may sell or
otherwise dispose of the Units pursuant to registration thereof under the
Securities Act and any applicable state and provincial securities laws or under
an exemption from such registration requirements;

 

2.14 No Plan or Scheme. If the Subscriber is a non-U.S. Person, the Subscriber
acknowledges that the statutory and regulatory basis for the exemption from U.S
registration requirements claimed for the offer of the Units, although in
technical compliance with Regulation S, would not be available if the offering
is part of a plan or scheme to evade the registration provisions of the
Securities Act or any applicable state or provincial securities laws;

 

2.15 The Subscriber. The Subscriber (i) if a natural person, represents that the
Subscriber has reached the age of 21 and has full power and authority to execute
and deliver this Agreement and all other related agreements or certificates and
to carry out the provisions hereof and thereof; (ii) if a corporation,
partnership, or limited liability company or partnership, or association, joint
stock company, trust, unincorporated organization or other entity, represents
that such entity was not formed for the specific purpose of acquiring the Units,
such entity is duly organized, validly existing and in good standing under the
laws of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this Subscription and all other
related agreements or certificates and to carry out the provisions hereof and
thereof and to purchase and hold the Securities, the execution and delivery of
this Subscription has been duly authorized by all necessary action, this
Agreement has been duly executed and delivered on behalf of such entity and is a
legal, valid and binding obligation of such entity; or (iii) if executing this
Agreement in a representative or fiduciary capacity, represents that it has full
power and authority to execute and deliver this Subscription in such capacity
and on behalf of the subscribing individual, ward, partnership, trust, estate,
corporation, or limited liability company or partnership, or other entity for
whom the Subscriber is executing this Agreement, and such individual,
partnership, ward, trust, estate, corporation, or limited liability company or
partnership, or other entity has full right and power to perform pursuant to
this Subscription and make an investment in the Company, and represents that
this Subscription constitutes a legal, valid and binding obligation of such
entity. The execution and delivery of this Agreement will not violate or be in
conflict with any order, judgment, injunction, agreement or controlling document
to which the Subscriber is a party or by which it is bound;

 

2.16 Legends. The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities and, when issued, the
shares of Common Stock issuable upon exercise of the Warrant (the “Warrant
Shares”) that such securities have not been registered under the Securities Act
or any state securities or “blue sky” laws and setting forth or referring to the
restrictions on transferability and sale thereof contained in this Agreement.
The Subscriber is aware that the Company will make a notation in its appropriate
records with respect to the restrictions on the transferability of such
Securities. The legend to be placed on each certificate shall be in form
substantially similar to the following:

 

5

 

  

For U.S. Persons:

   

THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION FROM THE
REGISTRATION PROVISIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED PROVIDED BY
RULE 506 OF REGULATION D UNDER SUCH ACT AND/OR SECTION 4(2) OF SUCH ACT. THESE
SECURITIES CANNOT BE TRANSFERRED, OFFERED, OR SOLD UNLESS THE SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.

   

For Non-U.S. Persons:

 

THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF
THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY
BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN) OR, DIRECTLY OR
INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE
WITH THE 1933 ACT. “UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY
REGULATION S UNDER THE 1933 ACT.

 

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if (a) such Securities are being sold pursuant to a registration
statement under the Securities Act, (b) such holder delivers to the Company an
opinion of counsel, in a reasonably acceptable form, to the Company that a
disposition of the Securities is being made pursuant to an exemption from such
registration, or (c) such holder provides the Company with reasonable assurance
that a disposition of the Securities may be made pursuant to the Rule 144 under
the Securities Act without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold.

 

2.17 Address. The Subscriber hereby represents that the address of the
Subscriber furnished by the Subscriber at the end of this Subscription Agreement
is the undersigned’s principal residence if the Subscriber is an individual or
its principal business address if it is a corporation or other entity.

 

2.18 Foreign Subscriber. If the Subscriber is not a United States person, such
Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Subscription Agreement,
including: (a) the legal requirements within its jurisdiction for the purchase
of the Securities; (b) any foreign exchange restrictions applicable to such
purchase; (c) any governmental or other consents that may need to be obtained;
and (d) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Securities. Such
Subscriber’s subscription and payment for, and its continued beneficial
ownership of the Securities, will not violate any applicable securities or other
laws of the Subscriber’s jurisdiction.

 

6

 

  

2.19 Survival. The representations and warranties of the Subscriber contained
herein will be true at the date of execution of this Agreement by the Subscriber
and as of the Closing Date in all material respects as though such
representations and warranties were made as of such times and shall survive the
Closing Date and the delivery of the Units. The Subscriber agrees that it will
notify and supply corrective information to the Company immediately upon the
occurrence of any change therein occurring prior to the Company’s issuance of
the Units.

 

III.REPRESENTATIONS BY THE COMPANY

 

The Company represents and warrants to the Subscriber, except as set forth in
the disclosure schedules attached hereto:

 

3.1 Organization. The Company is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization. The Company has
full power and authority to own, operate and occupy its properties and to
conduct its business as presently conducted, and is registered or qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the Company’s financial condition (a “Material
Adverse Effect”), and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.

3.2 Due Authorization and Valid Issuance. The Company has all requisite power
and authority to execute, deliver and perform its obligations under the Offering
Documents, and when executed and delivered by the Company will constitute legal,
valid and binding agreements of the Company enforceable against the Company in
accordance with their terms, except as rights to indemnity and contribution may
be limited by state or federal securities laws or the public policy underlying
such laws, and except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally, and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

 

3.3 Noncontravention. The execution and delivery of the Offering Documents, the
issuance and sale of the Securities under the Offering Documents, the
fulfillment of the terms of the Offering Documents, and the consummation of the
transactions contemplated thereby will not (i) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under (1) any
material bond, debenture, note or other evidence of indebtedness, lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which it or
any of its properties are bound, (2) the charter, bylaws or other organizational
documents of the Company or any subsidiary or (3) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or its properties, except for any
such conflicts, violations or defaults that are not reasonably likely to have a
Material Adverse Effect, or (ii) result in the creation or imposition of any
lien, encumbrance, claim, security interest or restriction whatsoever upon any
of the material properties or assets of the Company or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of indebtedness, indenture,
mortgage, deed of trust or any other agreement or instrument to which the
Company is a party or by which it is bound or to which any of the material
property or assets of the Company is subject. No consent, approval,
authorization or other order of, or registration, qualification or filing with,
any regulatory body, administrative agency, or other governmental body in the
United States or any other person is required for the execution and delivery of
the Offering Documents and the valid issuance and sale of the Securities to be
sold pursuant to the Offering Documents, other than such as have been made or
obtained, and except for any post-closing securities filings or notifications
required to be made under federal or state securities laws.

 

7

 

  

3.4 No Violation. The Company is not (a) in violation of its charter, bylaws or
other organizational document; (b) in violation of any law,

 

 

IV.INDEMNIFICATION

 

4.1 The Subscriber agrees to indemnify and hold harmless the Company, Placement
Agent and all Selected Dealers and Finders against and in respect of any and all
loss, liability, claim, damage, deficiency, and all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses whatsoever (including, but
not limited to, attorneys' fees reasonably incurred in investigating, preparing,
or defending against any litigation commenced or threatened or any claim
whatsoever through all appeals) arising out of or based upon any false
representation or warranty or breach or failure by the Subscriber to comply with
any covenant, representation or other provision made by it herein or in any
other document furnished by it in connection with this Agreement, provided,
however, that such indemnity, shall in no event exceed the net proceeds received
by the Company from the Subscriber as a result of the sale of Units to the
Subscriber.

 

4.2 The Company agrees to indemnify and hold harmless the Subscriber against and
in respect of any and all loss, liability, claim, damage, deficiency, and all
actions, suits, proceedings, demands, assessments, judgments, costs and expenses
whatsoever (including, but not limited to, attorneys' fees reasonably incurred
in investigating, preparing, or defending against any litigation commenced or
threatened or any claim whatsoever through all appeals) arising out of or based
upon any false representation or warranty or breach or failure by the Company to
comply with any covenant, representation or other provision made by it herein or
in any other document furnished by it in connection with this Agreement.

 

V.MISCELLANEOUS

 

5.1 Notice. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Subscription Agreement must be in
writing and will be deemed to have been delivered: (a) upon receipt, when
delivered personally, (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party), or (c) one (1) business day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:

 

To the Company:

 

SmartMetric, Inc.

101 Convention Center Drive

Las Vegas, Nevada 89101

Attention: C. Hendrick

(786) 664-0642

 

8

 

    

With a copy to (which shall not constitute notice):

 

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Attention: Andrea Cataneo

Facsimile: (212) 930-9725

 

  

If to the Subscriber, to its address and facsimile number set forth at the end
of this Subscription Agreement, or to such other address and/or facsimile number
and/or to the attention of such other person as specified by written notice
given to the Company five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (a) given by the recipient of such notice,
consent, waiver or other communication, (b) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (c)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (a), (b) or (c) above, respectively.

 

5.2 Entire Agreement; Amendment; Waiver. This Agreement supersedes all other
prior oral or written agreements between the Subscriber, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Subscriber makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended or waived other than by an instrument in writing
signed by the Company and the holders of at least a majority of the Securities
then outstanding (determined on an as exercised to common stock basis) (or if
prior to the closing, the Subscribers purchasing at least a majority of the
Securities to be purchased at the closing). No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Securities
then outstanding.

 

5.3 Severability. If any provision of this Subscription Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Subscription Agreement in that jurisdiction or the validity or
enforceability of any provision of this Subscription Agreement in any other
jurisdiction.

 

5.4 Governing Law; Jurisdiction; Waiver of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Subscription
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in New York County, New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Subscription Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each party
hereby irrevocably waives any right it may have, and agrees not to request, a
jury trial for the adjudication of any dispute hereunder or in connection with
or arising out of this Subscription Agreement or any transaction contemplated
hereby.

 

9

 

 

5.5 Headings. The headings of this Subscription Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Subscription Agreement.

 

5.6 Successors And Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns. The
Company shall not assign this Subscription Agreement or any rights or
obligations hereunder without the prior written consent of the holders of at
least a majority the Securities then outstanding, except by merger or
consolidation. The Subscriber shall not assign its rights hereunder without the
consent of the Company, which consent shall not be unreasonably withheld.

 

5.7 No Third Party Beneficiaries. This Subscription Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

5.8 Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

5.9 Legal Effect. The Subscriber acknowledges that: (a) it has read this
Agreement and the exhibits hereto; and (b) it understands the terms and
consequences of this Agreement and is fully aware of its legal and binding
effect.

 

5.10 No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

5.11 Independent Legal Advice. The parties hereto acknowledge that they have
each received independent legal advice with respect to the terms of this
Agreement and the transactions contemplated herein or have knowingly and
willingly elected not to do so

 

5.12 Counterparts. This Agreement may be executed in two or more counterparts
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

  

[Signature page follows.]

 

10

 

 

NUMBER OF UNITS _________ X $12,000 = $_________ (the “Purchase Price”)

 

___________________________   ____________________________ Signature       
Signature (if purchasing jointly)       ___________________________  
____________________________ Name Typed or Printed   Name Typed or Printed      
___________________________   ____________________________ Title (if Subscriber
is an Entity)   Title (if Subscriber is an Entity)      
___________________________   ____________________________ Entity Name (if
applicable   Entity Name (if applicable)       ___________________________  
____________________________ Address   Address       ___________________________
  ____________________________ City, State and Zip Code   City, State and Zip
Code       ___________________________   ____________________________
Telephone-Business   Telephone-Business       ___________________________  
____________________________ Telephone-Residence   Telephone-Residence      
___________________________   ____________________________ Facsimile-Business  
Facsimile-Business       ___________________________  
____________________________ Facsimile-Residence   Facsimile-Residence       Tax
ID # or Social Security #   Tax ID # or Social Security # Name in which
securities should be issued:   ____________________________

 

Dated: ___________________, 2013

 

This Subscription Agreement is agreed to and accepted as of ________________,
2013.

 

SmartMetric, Inc.

 

By:____________________________________

Name: C. Hendrick

Title: President and Chief Executive Officer

 

11

 

  

CERTIFICATE OF SIGNATORY

 

(To be completed if Shares are

being subscribed for by an entity)

 

 

I, ____________________________, am the ____________________________ of

__________________________________________ (the “Entity”).

 

I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Securities (including the Warrant Shares), and certify further that the
Subscription Agreement has been duly and validly executed on behalf of the
Entity and constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand this ________ day of _________________,
2013

 

 

      (Signature)

 

12

 

  

EXHIBIT A-1 - ACCREDITED INVESTOR PAGE FOR U.S. SUBSCRIBERS ONLY

 

The undersigned Subscriber is an “accredited investor” as that term is defined
in Regulation D promulgated under the Securities Act and amended by the
Dodd-Frank Wall Street Reform and Consumer Protection Act by virtue of being
(initial all applicable responses):

 

______A small business investment company licensed by the U.S. Small Business
Administration under the Small Business Investment Company Act of 1958,

 

______A business development company as defined in the Investment Company Act of
1940,

 

______A national or state-chartered commercial bank, whether acting in
an  individual or fiduciary capacity,

 

____An insurance company as defined in Section 2(13) of the Securities Act,

 

____An investment company registered under the Investment Company Act of 1940,

 

_____An employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, where the investment decision is made by
a plan fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, insurance company, or registered investment advisor, or an employee
benefit plan which has total assets in excess of $5,000,000,

 

_____A private business development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940,

 

_____An organization described in Section 501(c)(3) of the Internal Revenue
Code, a corporation or a partnership with total assets in excess of $5,000,000,

 

_____A natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of purchase exceeds $1,000,000.  For purposes of
this Exhibit A-1, “net worth” means the excess of total assets at fair market
value over total liabilities. For purposes of calculating net worth under this
section, (i) the primary residence shall not be included as an asset, (ii) to
the extent that the indebtedness that is secured by the primary residence is in
excess of the fair market value of the primary residence, the excess amount
shall be included as a liability, and (iii) if the amount of outstanding
indebtedness that is secured by the primary residence exceeds the amount
outstanding 60 days prior to the execution of this questionnaire, other than as
a result of the acquisition of the primary residence, the amount of such excess
shall be included as a liability.

 

_____Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Section 506(b)(2)(ii) of Regulation D,

 

_____A natural person who had an individual income in excess of $200,000 in each
of the two most recent calendar years, and has a reasonable expectation of
reaching the same income level in the current calendar year. For purposes of
this Exhibit A-1, “income” means annual adjusted gross income, as reported for
federal income tax purposes, plus (i) the amount of any tax-exempt interest
income received; (ii) the amount of losses claimed as a limited partner in a
limited partnership; (iii) any deduction claimed for depletion; (iv) amounts
contributed to an IRA or Keogh retirement plan; (v) alimony paid; and (vi) any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income pursuant to the provisions of Section 1202 of the
Internal Revenue Code of 1986, as amended.

 

_____A corporation, partnership, trust or other legal entity (as opposed to a
natural person) and all of such entity's equity owners fall into one or more of
the categories enumerated above. (Note: additional documentation may be
requested).

 

  Name of Subscriber (Print)   Name of Joint Subscriber (if any) (Print)
                                                                                       
      Signature of Subscriber   Signature of Joint Subscriber (if any)        
Capacity of Signatory (for entities)      Date

 

13

 

   

EXHIBIT A-2 - REGULATION S PAGE FOR NON-U.S. SUBSCRIBERS

 

The undersigned Subscriber (a “Reg S Person”) is not a U.S. Person as defined in
Section 902 of Regulation S promulgated under the Securities Act, and hereby
represents that the representations in paragraphs (1) through (9) are true and
correct with respect to such Reg S Person.

 

(1) Such Reg S Person acknowledges and warrants that (i) the issuance and sale
to such Reg S Person of the Securities is intended to be exempt from the
registration requirements of the Securities Act, pursuant to the provisions of
Regulation S; (ii) it is not a “U.S. Person,” as such term is defined in
Regulation S and herein, and is not acquiring the Securities for the account or
benefit of any U.S. Person; and (iii) the offer and sale of the Securities has
not taken place, and is not taking place, within the United States of America or
its territories or possessions. Such Reg S Person acknowledges that the offer
and sale of the Securities has taken place, and is taking place in an “offshore
transaction,” as such term is defined in Regulation S.

 

(2) Such Reg S Person acknowledges and agrees that, pursuant to the provisions
of Regulation S, the Securities cannot be sold, assigned, transferred, conveyed,
pledged or otherwise disposed of to any U.S. Person or within the United States
of America or its territories or possessions for a period of six months from and
after the Closing Date, unless such Securities are registered for sale in the
United States pursuant to an effective registration statement under the
Securities Act or another exemption from such registration is available. Such
Reg S Person acknowledges that it has not engaged in any hedging transactions
with regard to the Securities.

 

(3) Such Reg S Person consents to the placement of a legend on any certificate,
note or other document evidencing the Securities and understands that the
Company shall be required to refuse to register any transfer of Securities not
made in accordance with applicable U.S. securities laws.

 

(4) Such Reg S Person is not a “distributor” of securities, as that term is
defined in Regulation S, nor a dealer in securities. Such Reg S Person is
purchasing the Securities as principal for its own account, for investment
purposes only and not with an intent or view towards further sale or
distribution (as such term is used in Section 2(11) of the Securities Act)
thereof, and has not pre-arranged any sale with any other purchaser and has no
plans to enter into any such agreement or arrangement.

 

(5) Such Reg S Person is not an Affiliate of the Company nor is any Affiliate of
such Reg S Person an Affiliate of the Company. An “Affiliate” is an individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind (each of the
foregoing, a “Person”) that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act. With respect to a Reg S Person, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Reg S Person will be deemed to be an Affiliate of such Reg S Person.

 

(6) Such Reg S Person understands that the Securities have not been registered
under the Securities Act or the securities laws of any state and are subject to
substantial restrictions on resale or transfer. The Securities are “restricted
securities” within the meaning of Regulation S and Rule 144, promulgated under
the Securities Act.

 

14

 

  

(7) Such Reg S Person acknowledges that the Securities may only be sold offshore
in compliance with Regulation S or pursuant to an effective registration
statement under the Securities Act or another exemption from such registration,
if available. In connection with any resale of the Securities pursuant to
Regulation S, the Company will not register a transfer not made in accordance
with Regulation S, pursuant to an effective registration statement under the
Securities Act or in accordance with another exemption from the Securities Act.

 

(8) Such Reg S Person represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with the offering of
the Securities, including: (a) the legal requirements within its jurisdiction
for the purchase of the Securities; (b) any foreign exchange restrictions
applicable to such purchase; (c) any governmental or other consents that may
need to be obtained; and (d) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale or transfer of
the Securities. Such Reg S person’s subscription and payment for, and its
continued beneficial ownership of the Securities, will not violate any
applicable securities or other laws of the jurisdiction of its residence.

 

(9) Such Reg S Person makes the representations, declarations and warranties as
contained in this Exhibit A-2 with the intent that the same shall be relied upon
by the Company in determining its suitability as a purchaser of such Securities.

 

 

 

  Name of Subscriber (Print)   Name of Joint Subscriber (if any) (Print)
                                                                                       
      Signature of Subscriber   Signature of Joint Subscriber (if any)        
Capacity of Signatory (for entities)      Date

 

15

 

 

EXHIBIT B - WIRE INSTRUCTIONS

 

 

 

  

16

 

 

EXHIBIT C- RISK FACTORS

 

There will be restrictions on resale of the Securities, including any Warrant
Shares issued upon exercise of the Warrants, and there is no assurance of the
registration of the Securities, including any Warrant Shares issued upon
exercise of the Warrants. Neither the Securities, nor the Warrant Shares when
issued in accordance with the Warrants, may be sold unless, at the time of such
intended sale, there is a current registration statement covering the resale of
the Securities or there exists an exemption from registration under the
Securities Act, and such Securities have been registered, qualified, or deemed
to be exempt under applicable securities or “blue sky” laws in the state of
residence of the seller or in the state where sales are being effected.
Investors in this Offering have certain registration rights relating to the
Common Stock issued as part of the Warrants and the Warrant Shares. There can be
no assurance that any registration statement required to be filed in accordance
with the terms of this Offering will become effective or if it becomes effective
that it will remain so. If no registration statement is filed and declared
effective covering the resale of any of the Common Stock or the Warrant Shares,
subscribers will be precluded from disposing of such securities unless such
securities may become eligible to be disposed of under the exemptions provided
by Rule 144 under the Securities Act without restriction. If the Securities sold
pursuant to this Offering are not registered for resale under the Securities
Act, or exempt therefrom, and registered or qualified under applicable
securities or “blue sky” laws, or deemed exempt therefrom, the value of such
Securities will be greatly reduced.

 

The offering price for the Units has been determined by the Company. The
offering price of the Units was arbitrarily determined by us. The price of the
Units does not necessarily bear any relationship to established valuation
criteria such as earnings, book value or assets. Rather, the price of the Units
was derived as a result of our negotiations with the investors or the Placement
Agents based upon various factors including prevailing market conditions, our
future prospects and our capital structure. These prices do not necessarily
accurately reflect the actual value of the Units or the price that may be
realized upon disposition of the Common Stock or the Warrant Shares.

 

We have significant discretion over the net proceeds. The maximum gross proceeds
to us from the sale of the Units will up to a maximum of $5,100,000. A
significant portion of the net proceeds of this Offering will be applied to
manufacturing, distribution, marketing and advertising as well as working
capital and other general corporate purposes. Accordingly, our management will
have broad discretion as to the application of such proceeds. The proceeds shall
be used to carry out the business plan of the Company, pay salaries to its
employees, and satisfy all expenses of the Company, foreseeable and
unforeseeable. As is the case with any business, particularly one without a
proven business model, it should be expected that certain expenses unforeseeable
to management at this juncture, will arise in the future. There can be no
assurance that management’s use of proceeds generated through this Offering will
prove optimal or translate into revenue or profitability for the Company.
Investors are urged to consult with their attorneys, accountants and personal
investment advisors prior to making any decision to invest in the Company.

 

An investment in the Units is speculative and there can be no assurance of any
return on any such investment. An investment in the Units is speculative and
there is no assurance that investors will obtain any return on their investment.
Investors will be subject to substantial risks involved in an investment in the
Company, including the risk of losing their entire investment.

 

The Units will be offered by us on a “best efforts basis,” and we may not raise
the Maximum Offering. We are offering the Units on a “best efforts” basis. In a
“best efforts” offering such as the one described in this Memorandum, there is
no assurance that we will sell either the Maximum Offering. Accordingly, we may
close upon amounts less than the Maximum Offering, which may not provide us with
sufficient funds to fully implement our business plan.

 

17