Exhibit 10.5

 

PLACEMENT AGENCY AGREEMENT

 

April 10, 2013

 

Gottbetter Capital Markets, LLC

Mr. Julio A. Marquez, President

488 Madison Avenue

12th Floor

New York, New York 10022

 

Re:     NAVESINK RACK, LLC

 

Dear Mr. Marquez:

 

This Placement Agency Agreement (“Agreement”) sets forth the terms upon which
Gottbetter Capital Markets, LLC, a registered broker-dealer and member of the
Financial Industry Regulatory Authority (“FINRA”), (hereinafter referred to as
the “Placement Agent” or “Markets”), shall be engaged by Navesink RACK, LLC
(hereinafter referred to as “Navesink” or the “Company”), a Delaware limited
liability company, to act as the exclusive placement agent of its Class B LLC
Membership Interests (the “Membership Interests”) in Navesink (“Navesink
Offering”). Navesink was formed for the express and limited purpose to purchase
the RACK Units (as defined below) in the Rackwise Offering (as defined below).
The Navesink Offering will be made on a best efforts basis until the Navesink
Offering expires May 31, 2013, which date may be extended at the discretion of
Navesink and the Placement Agent for an additional 90 days (the last date of the
Navesink Offering shall be referred to as the “Termination Date”).

 

The Placement Agent shall accept subscriptions only from (i) persons or entities
who qualify as “accredited investors,” as such term is defined in Rule 501 of
Regulation D (“Regulation D”) as promulgated by the U.S. Securities and Exchange
Commission (the “SEC”) under Section 4(2) of the Securities Act of 1933, as
amended (the “Act”) and (ii) persons or entities who are offered and purchase
the Membership Interests in an Offshore Transaction (as such term is defined in
Regulation S (“Regulation S”) as promulgated by the SEC under the Act) and who
are not U.S. Persons (as such term is defined in Regulation S) and are not
acting for the account or benefit of a person in the United States or a U.S.
Person.

 

With respect to the Navesink Offering, the Company shall provide the Placement
Agent, on terms set forth herein, the right to offer and sell all of the
available Membership Interests being offered during the Navesink Offering
Period. It is understood that no sale shall be regarded as effective unless and
until accepted by the Company. The Company may, in its sole discretion, accept
or reject, in whole or in part, any prospective investment in the membership
Interests or allot to any prospective subscriber less than the number Membership
Interests that such subscriber desires to purchase. Purchases of the Membership
Interests may be made by the Placement Agent and its officers, directors,
employees and affiliates and by the officers, directors, employees and
affiliates of the Company for the Navesink Offering.

 

 

 

 

The Navesink Offering will be made by the Company pursuant to the LLC Membership
Interest Purchase Agreement, as amended or supplemented from time to time,
including all attachments, schedules and exhibits thereto (the “LLC Membership
Interest Agreement”), which at all times will be in form and substance
reasonably acceptable to the Company and the Placement Agent and their
respective counsel and contain such legends and other information as the Company
and the Placement Agent and their respective counsel, may, from time to time,
deem necessary and desirable to be set forth therein.

 

Rackwise, Inc., a publicly traded Nevada corporation (hereinafter referred to as
“Rackwise” or the “RACK”), is engaging in the private placement (the “Rackwise
Offering”) of units of its securities (the “RACK Units”) at a purchase price of
Ten Thousand United States Dollars ($10,000 USD) per RACK Unit.1 Each RACK Unit
consists of (i) a $10,000 principal amount of Secured Promissory Note of
Rackwise (each a “RACK Note” and collectively the “RACK Notes”) that will have a
term of one (1) year (“Maturity”) and will bear interest at a rate of twelve
percent (12%) per annum, compounding annually, payable at Maturity or earlier
conversion and (ii) eighty thousand (80,000) five (5) year warrants (each, an
“RACK Investor Warrant” and collectively, the “RACK Investor Warrants”), each to
purchase one (1) share of Rackwise’s common stock (the “RACK Common Stock”) at
an exercise price of $0.01 per share. The Rackwise Offering will consist of a
maximum of five hundred (500) Membership Interests or Five Million United States
Dollars ($5,000,000 USD) (the “Maximum Offering Amount”). No minimum amount of
RACK Units must be sold to close and complete the Navesink Offering. The
Rackwise Offering will continue through May 31, 2013 (the “RACK Initial Offering
Period”), which date may be mutually extended at the discretion of Rackwise, the
Placement Agent and Navesink for up to an additional 90 days (the last date of
the Rackwise Offering shall be referred to as the “RACK Termination Date”).

 

The RACK Notes mature one year from the date of issuance and are convertible at
any time, in whole or in part, at the holder’s option, into shares of RACK
common stock at a price per share (the “Conversion Price”) equal to the lesser
of (i) $0.05 and (ii) 80% of the five (5) day VWAP immediately preceding the
conversion date. “VWAP” means, for any date, the price determined by the first
of the following clauses that applies: (a) if RACK common stock is then listed
or quoted on a Trading Market (as defined below), the daily volume weighted
average price of RACK common stock for such date (or the nearest preceding date)
on the Trading Market on which RACK common stock is then listed or quoted as
reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:00 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a
Trading Market, the volume weighted average price of RACK common stock for such
date (or the nearest preceding date) on the OTC Bulletin Board, (c) if RACK
common stock is not then listed or quoted for trading on the OTC Bulletin Board
and if prices for RACK common stock are then reported in the “Pink Sheets”
published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of RACK common stock so reported, or (d) in all other cases, the fair
market value of a share of RACK common stock as determined by an independent
appraiser selected in good faith by the holders of a majority in interest of the
principal amount of RACK Notes then outstanding and reasonably acceptable to
RACK, the fees and expenses of which shall be paid by RACK. “Trading Market”
means any of the following markets or exchanges on which RACK common stock is
listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board (or any successors to any of
the foregoing).

 

 

1 Provided that the full amount of the purchase price paid by each investor in
the Navesink Offering (the “Navesink RACK Purchase Price”) shall be considered
as the purchase price for the purposes of Navesink purchasing RACK Units from
Rackwise, notwithstanding that the aggregate Navesink RACK Purchase Price will
be lower than the aggregate purchase price for the number of RACK Units to be
sold by Rackwise to Navesink RACK.

 

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1.          Appointment of Placement Agent. On the basis of the written and
documented representations and warranties of the Company provided herein and the
representations and warranties of Rackwise, subject to the terms and conditions
set forth herein, the Placement Agent is appointed as an exclusive Placement
Agent of the Company during the Navesink Offering Period to assist the Company
in finding qualified subscribers for the Navesink Offering. The Placement Agent
may sell Membership Interests through other broker-dealers who are FINRA members
and may reallow all or a portion of the Brokers’ Fees (as defined in Section
3(a) below) it receives to such other broker-dealers or pay a finders or
consultant fee as allowed by applicable law. On the basis of such
representations and warranties and subject to such terms and conditions, the
Placement Agent hereby accepts such appointment and agrees to perform its
services hereunder diligently and in good faith and in a professional and
businesslike manner and in compliance with applicable law and to use its best
efforts to assist the Company in (A) finding subscribers of the Membership
Interests who either (i) qualify as “accredited investors,” as such term is
defined in Rule 501 of Regulation D, or (ii) are offered and purchase the
Membership Interests outside the United States in an Offshore Transaction (as
such term is defined in Regulation S) and who are not U.S. Persons (as such term
is defined in Regulation S) and are not acting for the account or benefit of a
person in the United States or a U.S. Person and (B) completing the Navesink
Offering. The Placement Agent has no obligation to purchase any of the
Membership Interests. Unless sooner terminated in accordance with this
Agreement, the engagement of the Placement Agent hereunder shall continue until
the later of the Termination Date or the Final Closing (as defined below).

 

2.          Representations, Warranties and Covenants.

 

A.          Representations, Warranties and Covenants of the Company. Except as
previously disclosed herein, the representations and warranties of the Company
contained in this Section 2A are true and correct as of the date of execution of
this Agreement by the Company and the Company covenants as follows, as
applicable.

 

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(a) The LLC Membership Interest Agreement has been and/or will be prepared by
the Company, in conformity with all applicable laws, and in compliance with
Regulation D, Regulation S and/or Section 4(2) of the Act and the requirements
of all other rules and regulations (the “Regulations”) of the SEC relating to
offerings of the type contemplated by the Navesink Offering, and the applicable
securities laws and the rules and regulations of those jurisdictions wherein the
Placement Agent notifies the Company that the Membership Interests are to be
offered and sold excluding any foreign jurisdictions. The Membership Interests
will be offered and sold pursuant to the registration exemption provided by
Regulation D, Regulation S and/or Section 4(2) of the Act as a transaction not
involving a public offering and the requirements of any other applicable state
securities laws and the respective rules and regulations thereunder in those
United States jurisdictions in which the Placement Agent notifies the Company
that the Membership Interests are being offered for sale. None of the Company,
its affiliates, or any person acting on its or their behalf (other than the
Placement Agent, its affiliates or any person acting on its behalf, in respect
of which no representation is made) has taken nor will it take any action that
conflicts with the conditions and requirements of, or that would make
unavailable with respect to the Navesink Offering, the exemption(s) from
registration available pursuant to Rule 506 of Regulation D, Rule 903 of
Regulation S and/or Section 4(2) of the Act, or knows of any reason why any such
exemption would be otherwise unavailable to it (including, without limitation,
any Directed Selling Efforts (as such term is defined in Regulation S)). None of
the Company, its predecessors or affiliates has been subject to any order,
judgment or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining such person for failing to comply with
Section 503 of Regulation D. The Company has not, for a period of six months
prior to the commencement of the offering of Membership Interests, sold, offered
for sale or solicited any offer to buy any of its securities in a manner that
would cause the exemption from registration set forth in Rule 506 of Regulation
D to become unavailable with respect to the offer and sale of the Membership
Interests pursuant to this Agreement in the United States or to, by or for the
benefit or account of, U.S. Persons, or would cause the exclusion from
registration provided by Rule 903 of Regulation S to become unavailable for
offers and sales of the Membership Interests pursuant to this Agreement outside
the United States to non-U.S. Persons.

 

(b) As to the Company, the LLC Membership Interest Agreement will not and does
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading: provided, however, the foregoing does not apply to any statements or
omissions made solely in reliance on and in conformity with written information
furnished to the Company by the Placement Agent specifically for use in the
preparation thereof. To the knowledge of the Company, none of the statements,
documents, certificates or other items made, prepared or supplied by the Company
with respect to the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances in
which they were made. There is no fact which the Company has not disclosed in
the LLC Membership Interest Agreement and of which the Company is aware that
materially adversely affects or that could reasonably be expected to have a
material adverse effect on the (i) assets, liabilities, results of operations,
condition (financial or otherwise), business or business prospects of the
Company or (ii) ability of the Company to perform its obligations under this
Agreement and the other LLC Membership Interest Agreement (the “Company Material
Adverse Effect”). Notwithstanding anything to the contrary herein, the Company
makes no representation or warranty with respect to any estimates, projections
and other forecasts and plans (including the reasonableness of the assumptions
underlying such estimates, projections and other forecasts and plans) that may
have been delivered to the Placement Agent or its representatives, except that
such estimates, projections and other forecasts and plans have been prepared in
good faith on the basis of assumptions stated therein, which assumptions were
believed to be reasonable at the time of such preparation.

 

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(c) The Company is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and is qualified
and in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by the Company or the property owned or leased
by the Company requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a Company
Material Adverse Effect. The Company has all requisite corporate power and
authority to conduct its business as presently conducted and as proposed to be
conducted (as described in the LLC Membership Interest Agreement), has all the
necessary and requisite documents and approvals from all state authorities, has
all requisite corporate power and authority to enter into and perform its
obligations under this Agreement and the LLC Membership Interest Agreement and
the other agreements contemplated hereby (this Agreement, LLC Membership
Interest Agreement, and the other agreements contemplated hereby that the
Company is required to execute and deliver are collectively referred to herein
as the “Company Transaction Documents”) and subject to necessary approvals, to
issue, sell and deliver the Membership Interests, and to make the
representations in this Agreement accurate and not misleading. Prior to the
First Closing, as defined herein, each of the Company Transaction Documents will
have been duly authorized. This Agreement has been duly authorized, executed and
delivered and constitutes, and each of the other Company Transaction Documents,
upon due execution and delivery, will constitute, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms (i) except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect related to laws affecting creditors’ rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers, and except that no representation is
made herein regarding the enforceability of the Company’s obligations to provide
indemnification and contribution remedies under the securities laws and (ii)
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).

 

(d) Except as described in the LLC Membership Interest Agreement, none of the
execution and delivery of or performance by the Company under this Agreement or
any of the other Company Transaction Documents or the consummation of the
transactions herein or therein contemplated conflicts with or violates, or will
result in the creation or imposition of, any lien, charge or other encumbrance
upon any of the assets of the Company under any agreement or other instrument to
which the Company is a party or by which the Company or its assets may be bound,
or any term of the certificate of formation or limited liability company
operating agreement, or any license, permit, judgment, decree, order, statute,
rule or regulation applicable to the Company or any of its assets, except in the
case of a conflict, violation, lien, charge or other encumbrance (except with
respect to the Company’s certificate of formation or limited liability company
operating agreement) which would not, or could not reasonably be expected to,
have a Company Material Adverse Effect.

 

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(e) The Company was formed for the exclusive purpose of investing in the
Rackwise Offering and does not have any financial statements. The Company will
keep and maintain books and records and accounts which will be in reasonable
detail and which will fairly and accurately reflect the activities of the
Company in all material respects, subject only to year-end adjustments. Except
as disclosed in the LLC Membership Interest Agreement, subsequent to the date of
the LLC Membership Interest Agreement and prior to the date of the First Closing
it shall not enter into any material transactions or commitments without
promptly thereafter notifying the Placement Agent in writing of any such
material transaction or commitment.

 

(f) Immediately prior to the First Closing, the Membership Interests will have
been duly authorized and, when issued and delivered against payment therefor as
provided in the Company Transaction Documents, will be validly issued, fully
paid and nonassessable. No holder of any of the shares of Membership Interests
will be subject to personal liability solely by reason of being such a holder.

 

(g) The Company has no subsidiaries and does not own any equity interest and has
not made any loans or advances to or guarantees of indebtedness to any person,
corporation, partnership or other entity. The conduct of business by the Company
as presently and proposed to be conducted is not subject to continuing
oversight, supervision, regulation or examination by any governmental official
or body of the United States, or any other jurisdiction wherein the Company
conducts or proposes to conduct such business, except as such regulation is
applicable to commercial enterprises generally. The Company has obtained all
material licenses, permits and other governmental authorizations necessary to
conduct its business as presently conducted. The Company has not received any
notice of any violation of, or noncompliance with, any federal, state, local or
foreign laws, ordinances, regulations and orders (including, without limitation,
those relating to environmental protection, occupational safety and health,
securities laws, equal employment opportunity, consumer protection, credit
reporting, “truth-in-lending”, and warranties and trade practices) applicable to
its business, the violation of, or noncompliance with, would have a Company
Material Adverse Effect, and the Company knows of no facts or set of
circumstances which could give rise to such a notice.

 

(h) Except as described in the LLC Membership Interest Agreement, no default by
the Company or, to the knowledge of the Company, any other party, exists in the
due performance under any material agreement to which the Company is a party or
to which any of its assets is subject (collectively, the “Company Agreements”).
The Company Agreements, if any, disclosed in the LLC Membership Interest
Agreement are the only material agreements to which the Company is bound or by
which its assets are subject, are accurately described in the LLC Membership
Interest Agreement and are in full force and effect in accordance with their
respective terms, subject to any applicable bankruptcy, insolvency or other laws
affecting the rights of creditors generally and to general equitable principles
and the availability of specific performance.

 

(i) Subsequent to the respective dates as of which information is given in the
LLC Membership Interest Agreement, the Company has operated its business in the
ordinary course and, except as may otherwise be set forth in the LLC Membership
Interest Agreement, there has been no: (i) Company Material Adverse Effect;
(ii) material transaction otherwise than in the ordinary course of business
consistent with past practice; (iii) damage, loss or destruction, whether or not
covered by insurance, with respect to any material asset or property of the
Company; or (iv) agreement to permit any of the foregoing.

 

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(j) Except as set forth in the LLC Membership Interest Agreement, there are no
actions, suits, claims, hearings or proceedings pending before any court or
governmental authority or, to the knowledge of the Company, threatened, against
the Company, or involving its assets or any of its officers or directors (in
their capacity as such) which, if determined adversely to the Company or such
officer or director, could reasonably be expected to have a Company Material
Adverse Effect or adversely affect the transactions contemplated by this
Agreement or the enforceability hereof.

 

(k) The Company is not: (i) in violation of its Certificate of Formation or
limited liability company operating agreement; (ii) in default of any contract,
indenture, mortgage, deed of trust, note, loan agreement, security agreement,
lease, alliance agreement, joint venture agreement or other agreement, license,
permit, consent, approval or instrument to which the Company is a party or by
which it is or may be bound or to which any of its assets may be subject, the
default of which could reasonably be expected to have a Company Material Adverse
Effect; (iii) in violation of any statute, rule or regulation applicable to the
Company, the violation of which would have a Company Material Adverse Effect; or
(iv) in violation of any judgment, decree or order of any court or governmental
body having jurisdiction over the Company and specifically naming the Company,
which violation or violations individually, or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect.

 

(l) Except as disclosed in the LLC Membership Interest Agreement, as of the date
of this Agreement, no current or former stockholder, director, officer or
employee of the Company, nor, to the knowledge of the Company, any affiliate of
any such person is presently, directly or indirectly through his/her affiliation
with any other person or entity, a party to any loan from the Company or any
other transaction (other than as an employee) with the Company providing for the
furnishing of services by, or rental of any personal property from, or otherwise
requiring cash payments to any such person.

 

(m) The Company is not obligated to pay, and has not obligated the Placement
Agent to pay, a finder’s or origination fee in connection with the Navesink
Offering (other than to the Placement Agent and other participating broker
dealers, if any), and hereby agrees to indemnify the Placement Agent from any
such claim made by any other person as more fully set forth in Section 8 hereof.
The Company has not offered for sale or solicited offers to purchase the
Membership Interests except for negotiations with the designated Placement
Agent. Except as set forth in the LLC Membership Interest Agreement, no other
person has any right to participate in any offer, sale or distribution of the
Company’s securities to which the Placement Agent’s rights, described herein,
shall apply.

 

(n) Until the earlier of (i) the Termination Date or (ii) the Final Closing (as
hereinafter defined), the Company will not issue any press release, grant any
interview, or otherwise communicate with the media in any manner whatsoever with
respect to the Navesink Offering without the Placement Agent’s prior written
consent, which consent will not unreasonably be withheld or delayed.

 

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(o) No representation or warranty contained in Section 2A of this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein not misleading in the context of
such representations and warranties. The Placement Agent shall be entitled to
rely on such representations and warranties.

 

(p) No consent, authorization or filing of or with any court or governmental
authority is required in connection with the issuance or the consummation of the
transactions contemplated herein or in the other Company Transaction Documents
and the applicable state securities commissions relating specifically to the
Navesink Offering (all of which filings will be duly made by, or on behalf of,
the Company), and those which are required to be made after the First Closing
(all of which will be duly made on a timely basis).

 

(q) The Company acknowledges that Adam S. Gottbetter is the owner of Gottbetter
Capital Group, Inc., Gottbetter & Partners, LLP and Gottbetter Capital Markets,
LLC.  Gottbetter Capital Group owns shares of Rackwise.  Gottbetter & Partners,
LLP is counsel to the Company and Rackwise and has represented the Company and
Rackwise in the proposed transaction for which it will receive legal fees in
accordance with executed retainer agreements.  Gottbetter & Partners, LLP will
continue to serve as securities and corporate counsel to Rackwise for which it
will receive legal fees in accordance with executed retainer agreement.
Gottbetter Capital Markets, LLC is a placement agent for the Navesink Offering
in the proposed transaction for which it may receive placement agent fees in
accordance with this Agreement.

 

(r) Neither the sale of the Membership Interests by the Company nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended,
nor do any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto. Without limiting the foregoing,
the Company is not (a) a person whose property or interests in property are
blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) a person who
engages in any dealings or transactions, or be otherwise associated, with any
such person. The Company and its subsidiaries, if any, are in compliance, in all
material respects, with the USA Patriot Act of 2001 (signed into law October 26,
2001).

 

                2B.          Representations, Warranties and Covenants of
Placement Agent. The Placement Agent hereby represents and warrants to the
Company that the following representations and warranties are true and correct
as of the date of this Agreement:

 

(a) The Placement Agent is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to enter into this Agreement and to
carry out and perform its obligations under the terms of this Agreement.

 

(b) This Agreement has been duly authorized, executed and delivered by the
Placement Agent, and upon due execution and delivery by the Company, this
Agreement will be a valid and binding agreement of the Placement Agent
enforceable against it in accordance with its terms, except as may be limited by
principles of public policy and, as to enforceability, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditor’s rights from time to time in effect and subject to
general equity principles.

 

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(c) The Placement Agent is a member of FINRA and is registered as a
broker-dealer under the Exchange Act (as defined below), and under the
securities acts of each state into which it is making offers or sales of the
Membership Interests. None of the Placement Agent or its affiliates, or any
person acting on behalf of the foregoing (other than the Company, its or their
affiliates or any person acting on its or their behalf, in respect of which no
representation is made) has taken nor will it take any action that conflicts
with the conditions and requirements of, or that would make unavailable with
respect to the Navesink Offering, the exemption(s) from registration available
pursuant to Rule 506 of Regulation D, Rule 903 of Regulation S or Section 4(2)
of the Act, or knows of any reason why any such exemption would be otherwise
unavailable to it. The Placement Agent will conduct the Navesink Offering in
compliance with all applicable securities laws.

 

(d) None of the Placement Agent or its affiliates, or any person acting on
behalf of the foregoing, has engaged or will engage in any Directed Selling
Efforts (as such term is defined in Regulation S).

 

(e) Any offer or solicitation of an offer to buy the Membership Interests made
by the Placement Agent or its affiliates, or any person acting on behalf of the
foregoing, in reliance on Rule 903 of Regulation S and in reliance upon similar
exemptions from registration available under applicable state securities laws,
will be made outside of the United States exclusively to persons or entities
that are, and will be at the time of the delivery of the Membership Interests,
not a U.S. Person (as such term is defined in Regulation S) and were, and are at
the time of the delivery of the Membership Interests, not acting for the account
or benefit of a person in the United States or a U.S. Person.

 

(f) Adam S. Gottbetter is the owner of Gottbetter Capital Group, Inc.,
Gottbetter & Partners, LLP and Gottbetter Capital Markets, LLC.  Gottbetter
Capital Group owns shares of Rackwise.  Gottbetter & Partners, LLP is counsel to
the Company and Rackwise and has represented the Company and Rackwise in the
proposed transaction for which it will receive legal fees in accordance with
executed retainer agreements.  Gottbetter Capital Markets, LLC is a placement
agent for the private placement Navesink Offering in the proposed transaction
for which it may receive placement agent fees in accordance with an executed
placement agent agreement.

 

3.          Placement Agent Compensation.

 

(a) In connection with the Navesink Offering, the Company will pay a cash fee
(the “Agent Cash Fee”) to the Placement Agent at each Closing equal to Ten
Percent (10%) of the funds raised in the Navesink Offering. In addition, the
Company will deliver to the Placement Agent Class B Membership Interests equal
to Five Percent (5%) of the number of Class B Membership Interests sold in the
Navesink Offering (“Agent Membership Interests”). The Placement Agent will also
be paid a non-accountable expense allowance at each closing not to exceed Three
Percent (3%) of the gross proceeds raised in the Navesink Offering. The “Agent
Cash Fee” and “Agent Membership Interests” are sometimes referred to
collectively as (“Brokers’ Fees”).

 

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(b) The Company shall also pay to the Placement Agent a broker’s fee if any
person or entity contacted by the Placement Agent in connection with the
Navesink Offering, which person had not been introduced to the Company prior to
or during the Navesink Offering by someone other than the Placement Agent,
invests in the Company at any time prior to the date that is twelve (12) months
after the Termination Date or the Final Closing, whichever is applicable,
regardless of whether such Post-Closing Investor purchased Membership Interests
in the Navesink Offering. Any such broker’s fee payable pursuant to this Section
3(b) will be based on the fee structure in place for broker-dealers
participating in the applicable offering. In the event there are no
participating broker-dealers, the broker’s fee payable pursuant to this Section
3(b) will be based on a fee arrangement negotiated between Placement Agent and
the Company.

 

(c) To the extent there is more than one Closing, payment of the proportional
amount of the Brokers’ Fees will be made out of the proceeds of subscriptions
for the Membership Interests sold at each Closing.

 

4.          Subscription and Closing Procedures.

 

(a) The Company shall cause to be delivered to the Placement Agent copies of the
LLC Membership Interest Agreement and has consented, and hereby consents, to the
use of such copies for the purposes permitted by the Act and applicable
securities laws and in accordance with the terms and conditions of this
Agreement, and hereby authorizes the Placement Agent and its agents and
employees to use the LLC Membership Interest Agreement in connection with the
sale of the Membership Interests until the earlier of (i) the Termination Date
or (ii) the Final Closing, and no person or entity is or will be authorized to
give any information or make any representations other than those contained in
the LLC Membership Interest Agreement or to use any offering materials other
than those contained in the LLC Membership Interest Agreement in connection with
the sale of the Membership Interests, unless the Company first provides the
Placement Agent with notification of such information, representations or
offering materials.

 

(b) The Company shall make available to the Placement Agent and its
representatives such information, including, but not limited to, financial
information, and other information regarding the Company (the “Information”), as
may be reasonably requested in making a reasonable investigation of the Company
and its affairs. The Company shall provide access to the officers, directors,
employees, independent accountants, legal counsel and other advisors and
consultants of the Company as shall be reasonably requested by the Placement
Agent. The Company recognizes and agrees that the Placement Agent (i) will use
and rely primarily on the Information and generally available information from
recognized public sources in performing the services contemplated by this
Agreement without independently verifying the Information or such other
information, (ii) does not assume responsibility for the accuracy of the
Information or such other information, and (iii) will not make an appraisal of
any assets or liabilities owned or controlled by the Company or its market
competitors.

 

10

 

 

(c) Each prospective purchaser will be required to complete and execute the LLC
Membership Interest Agreement, Anti-Money Laundering Form and other documents
which will be forwarded or delivered to the Placement Agent at the Placement
Agent’s offices at the address set forth in Section 12 hereof.

 

(d) Simultaneously with the delivery to the Placement Agent of the LLC
Membership Interest Agreement, the subscriber’s check or other good funds will
be forwarded directly by the subscriber to the escrow agent and deposited into a
non interest bearing escrow account (the “Escrow Account”) established for such
purpose (the “Escrow Agent”). All such funds for subscriptions will be held in
the Escrow Account pursuant to the terms of an escrow agreement among the
Company, Rackwise, the Placement Agent and the Escrow Agent. The Company will
pay all fees related to the establishment and maintenance of the Escrow Account.
Subject to the receipt of subscriptions, the Company will either accept or
reject, for any or no reason, the LLC Membership Interest Agreement in a timely
fashion and at each Closing will countersign the LLC Membership Interest
Agreement and provide duplicate copies of such documents to the Placement Agent
for distribution to the subscribers. The acceptance of any LLC Membership
Interest Agreement will be subject to the reasonable approval of the Company.
The Company will give notice to the Placement Agent of its acceptance of each
subscription. The Company, or the Placement Agent on the Company’s behalf, will
promptly return to subscribers incomplete, improperly completed, improperly
executed and rejected subscriptions and give written notice thereof to the
Placement Agent upon such return.

 

(e) If subscriptions for a Closing have been accepted prior to the Termination
Date, the funds therefor have been collected by the Escrow Agent and all of the
conditions set forth elsewhere in this Agreement are fulfilled, a closing shall
be held promptly with respect to the Membership Interests sold (the “First
Closing”). Thereafter, the remaining Membership Interests will continue to be
offered and sold until the Termination Date. Additional closings (“Closings”)
may from time to time be conducted at times mutually agreed to between the
Placement Agent and the Company with respect to additional Membership Interests
sold, with the final closing (“Final Closing”) to occur within 10 days after the
earlier of the Termination Date. Delivery of payment for the accepted
subscriptions for Membership Interests from the funds held in the Escrow Account
will be made at each Closing at the Placement Agent’s offices against delivery
of the Membership Interests by the Company at the address set forth in
Section 12 hereof (or at such other place as may be mutually agreed upon between
the Company and the Placement Agent), net of amounts due to the Placement Agent
and the Company’s Blue Sky counsel as of such Closing. Executed certificates for
the Membership Interests will be in such authorized denominations and registered
in such names as the Placement Agent may request on or before the date of each
Closing (“Closing Date”). The certificates will be forwarded to the subscriber
directly by the Company’s designated agent at each Closing. The Company will
issue the certificates for the Membership Interests within twenty (20) days of
each Closing.

 

(f) If the LLC Membership Interest Agreement has not been received and accepted
by the Company on or before the Termination Date for any reason, the Navesink
Offering will be terminated, no Membership Interests will be sold, and the
Escrow Agent will, at the request of the Placement Agent, cause all monies
received from subscribers for the Membership Interests to be promptly returned
to such subscribers without interest, penalty, expense or deduction.

 

11

 

 

5.          Further Covenants.

 

The Company hereby covenants and agrees that:

 

(a) Except upon prior written notice to the Placement Agent, the Company shall
not, at any time prior to the Final Closing, knowingly take any action which
would cause any of the representations and warranties made by it in this
Agreement not to be complete and correct in all material respects on and as of
each Closing Date with the same force and effect as if such representations and
warranties had been made on and as of each such date (except to the extent any
representation or warranty relates to an earlier date).

 

(b) If, at any time prior to the Final Closing, any event shall occur that
causes a Company Material Adverse Effect which as a result it becomes necessary
to amend or supplement the LLC Membership Interest Agreement so that the
representations and warranties herein remain true and correct in all material
respects, or in case it shall be necessary to amend or supplement the LLC
Membership Interest Agreement to comply with Regulation D or any other
applicable securities laws or regulations, the Company will promptly notify the
Placement Agent and shall, at its sole cost, prepare and furnish to the
Placement Agent copies of appropriate amendments and/or supplements in such
quantities as the Placement Agent may reasonably request. The Company will not
at any time before the Final Closing prepare or use any amendment or supplement
to the LLC Membership Interest Agreement of which the Placement Agent will not
previously have been advised and furnished with a copy, or which is not in
compliance in all material respects with the Act and other applicable securities
laws. As soon as the Company is advised thereof, the Company will advise the
Placement Agent and its counsel, and confirm the advice in writing, of any order
preventing or suspending the use of the LLC Membership Interest Agreement, or
the suspension of any exemption for such qualification or registration thereof
for offering in any jurisdiction, or of the institution or threatened
institution of any proceedings for any of such purposes, and the Company will
use their best efforts to prevent the issuance of any such order and, if issued,
to obtain as soon as reasonably possible the lifting thereof.

 

(c) The Company shall comply with the Act, the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and the rules and regulations thereunder, all
applicable state securities laws and the rules and regulations thereunder in the
states in which Placement Agent’s Blue Sky counsel has advised the Placement
Agent and/or the Company that the Membership Interests are qualified or
registered for sale or exempt from such qualification or registration, so as to
permit the continuance of the sales of the Membership Interests, and will file
or cause to be filed with the SEC, and shall promptly thereafter forward or
cause to be forwarded to the Placement Agent, any and all reports on Form D as
are required. The Company will pay the attorney’s fee and out of pocket expenses
related to the filings for registrations of sale or exemption from such
qualifications with any state securities commissions and any other regulatory
agencies. Such fees will be paid at the time of invoicing, or at the time of
Closing, if known, and if not yet invoiced, funds will remain in escrow to cover
the estimated invoice.

 

12

 

 

(d) The Company shall use best efforts to qualify the Membership Interests for
sale under the securities laws of such jurisdictions in the United States as may
be mutually agreed to by the Company and the Placement Agent, and the Company
will make or cause to be made such applications and furnish information as may
be required for such purposes, provided that the Company will not be required to
qualify as a foreign corporation in any jurisdiction or execute a general
consent to service of process. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualifications in effect for so long a period as the Placement Agent may
reasonably request with respect to the Navesink Offering.

 

(e) The Company shall place a legend on the certificates representing the
Membership Interests that the securities evidenced thereby have not been
registered under the Act or applicable state securities laws, setting forth or
referring to the applicable restrictions on transferability and sale of such
securities under the Act and applicable state laws.

 

(f) The Company shall apply the net proceeds from the sale of the Membership
Interests for the purposes substantially as described in the LLC Membership
Interest Agreement. The Company will purchase the number of RACK Units in an
amount equal to the gross funds raised in the Navesink Offering, notwithstanding
the deductions from the gross funds raised.

 

(g) During the Navesink Offering Period, the Company shall afford each
prospective purchaser of the Membership Interests the opportunity to ask
questions of and receive answers from an officer of the Company concerning the
terms and conditions of the Navesink Offering and the opportunity to obtain such
other additional information necessary to verify the accuracy of the LLC
Membership Interest Agreement to the extent the Company possesses such
information or can acquire it without unreasonable expense.

 

(h) Except as provided in the LLC Membership Interest Agreement or with the
prior written consent of the Placement Agent, the Company shall not, at any time
prior to the earlier of the Final Closing or the Termination Date, except as
contemplated by the LLC Membership Interest Agreement (i) engage in or commit to
engage in any transaction outside the ordinary course of business as described
in the LLC Membership Interest Agreement, (ii) issue, agree to issue or set
aside for issuance any securities (debt or equity) or any rights to acquire any
such securities, (iii) incur, outside the ordinary course of business, any
material indebtedness, (iv) dispose of any material assets, (v) make any
material acquisition or (vi) change its business or operations in any material
respect.

 

(i) The Company shall pay all reasonable expenses incurred in connection with
the preparation and printing of all necessary offering documents and instruments
related to the Navesink Offering and the issuance of the Membership Interests
and will also pay for the Company’s expenses for accounting fees, legal fees,
printing costs, and other costs involved with the Navesink Offering. The Company
will provide at its own expense such quantities of the LLC Membership Interest
Agreement and other documents and instruments relating to the Navesink Offering
as the Placement Agent may reasonably request. The Company will pay at its own
expense in connection with the creation, authorization, issuance, transfer and
delivery of the Membership Interests, including, without limitation, fees and
expenses of any transfer agent or registrar; the fees and expenses of the Escrow
Agent; all fees and expenses of legal, accounting and other advisers to the
Company; the registration or qualification of the Membership Interests for offer
and sale under the securities or Blue Sky laws of such jurisdictions, payable
within five (5) days of being invoiced.

 

13

 

 

6.          Conditions of Placement Agent’s Obligations.

 

The obligations of the Placement Agent hereunder to affect a Closing are subject
to the fulfillment, at or before each Closing, of the following additional
conditions:

 

(a) Each of the representations and warranties made by the Company (when read
without regard to any qualification as to materiality or Material Adverse Effect
contained therein) shall be true and correct on each Closing Date, except to the
extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct as
of such earlier date except for any untrue or incorrect representation and
warranty that, individually or in the aggregate, does not have a Company
Material Adverse Effect.

 

(b) The Company shall have performed and complied in all material respects with
all agreements, covenants and conditions required to be performed, and complied
with by it at or before the Closing.

 

(c) The LLC Membership Interest Agreement does not, and as of the date of any
amendment or supplement thereto will not, include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

(d) No order suspending the use of the LLC Membership Interest Agreement or
enjoining the Navesink Offering or sale of the Membership Interests shall have
been issued, and no proceedings for that purpose or a similar purpose shall have
been initiated or pending, or, to the best of the Company’s knowledge, be
contemplated or threatened.

 

(e) The Placement Agent shall have received a certificate from the authorized
officer of the Company, dated as of the Closing Date, certifying, as to the
fulfillment of the conditions set forth in subparagraphs (a), (b), (c) and (d)
above.

 

(f) The Company shall have delivered to the Placement Agent resolutions of the
Company approving this Agreement and the transactions and agreements
contemplated by this Agreement, and the LLC Membership Interest Agreement, all
as certified by the authorized officer of the Company.

 

(g) At each Closing, the Company shall pay and/or issue to the Placement Agent
the Brokers’ Fees earned in such Closing.

 

7.          Conditions of the Company’s Obligations.

 

The obligations of the Company hereunder are subject to the satisfaction of each
of the following conditions:

 

14

 

 

a.The satisfaction or waiver of all conditions to closing as set forth herein.

b.As of each Closing, each of the representations and warranties made by
Placement Agent herein being true and correct as of the Closing Date for such
Closing.

c.At each Closing, the Company shall have received the proceeds from the sale of
the Membership Interests that are part of such Closing less applicable Brokers’
Fees and other offering expenses.

 

7A. Mutual Condition. The obligations of the Placement Agent and the Company
hereunder are subject to the execution by each investor of a Securities Purchase
Agreement in form and substance acceptable to the Placement Agent and the
Company and deposit by such investor with the escrow agent of all funds required
to be so deposited by such investor.

 

8.          Indemnification.

 

(a) The Company will: (i) indemnify and hold harmless the Placement Agent, its
agents and their respective officers, directors, employees, selected dealers and
each person, if any, who controls the Placement Agent within the meaning of the
Act and such agents (each an “Indemnitee” or a “Placement Agent Party”) against,
and pay or reimburse each Indemnitee for, any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), severally (which will, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys’ fees, including appeals), to which
any Indemnitee may become subject (a) under the Act or otherwise, in connection
with the offer and sale of the Membership Interests and (b) as a result of the
breach of any representation, warranty or covenant made by the Company herein,
regardless of whether such losses, claims, damages, liabilities or expenses
shall result from any claim by any Indemnitee or by any third party; and (ii)
reimburse each Indemnitee for any legal or other expenses reasonably incurred in
connection with investigating or defending against any such loss, claim, action,
proceeding or investigation; provided, however, the Company will not be liable
in any such case to the extent that any such claim, damage or liability is
finally judicially determined to have resulted from (A) an untrue statement or
alleged untrue statement of a material fact made in the LLC Membership Interest
Agreement, or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, made solely in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent specifically for use
in the LLC Membership Interest Agreement or (B) any violations by the Placement
Agent of the Act or state securities laws which does not result from a violation
thereof by the Company or any of their respective affiliates or (C) due to the
intentional or negligent misrepresentation and/or malfeasance of the Placement
Agent. In addition to the foregoing agreement to indemnify and reimburse, the
Company will indemnify and hold harmless each Indemnitee against any and all
losses, claims, damages, liabilities or expenses whatsoever (or actions or
proceedings or investigations in respect thereof), joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys’
fees, including appeals) to which any Indemnitee may become subject insofar as
such costs, expenses, losses, claims, damages or liabilities arise out of or are
based upon the claim of any person or entity that he or it is entitled to
broker’s or finder’s fees from any Indemnitee in connection with the Navesink
Offering as a result of the Company obligating itself or any Indemnitee to pay
such a fee, other than fees due to the Placement Agent, its dealers, sub-agents
or finders. The foregoing indemnity agreements will be in addition to any
liability the Company may otherwise have.

 

15

 

 

(b) The Placement Agent will indemnify and hold harmless the Company, its
subsidiaries, and their respective officers, directors, and each person, if any,
who controls such entity within the meaning of the Act (collectively, the
“Company Indemnitees”) against, and pay or reimburse any such person for, any
and all losses, claims, damages, liabilities or expenses whatsoever (or actions,
proceedings or investigations in respect thereof) to which the Company or any
such person may become subject under the Act or otherwise, whether such losses,
claims, damages, liabilities or expenses shall result from any claim of the
Company or any such person who controls the Company within the meaning of the
Act or by any third party, but only to the extent that such losses, claims,
damages or liabilities are based upon any violations by the Placement Agent of
the Act or state securities laws which does not result from a violation thereof
by the Company or any of their respective affiliates, any untrue statement or
alleged untrue statement of any material fact contained in the LLC Membership
Interest Agreement made in reliance upon and in conformity with information
contained in the LLC Membership Interest Agreement relating to the Placement
Agent, or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in either case, if made or omitted in reliance upon and in
conformity with written information furnished to the Company by the Placement
Agent, specifically for use in the preparation thereof or due to the intentional
or negligent misrepresentation and/or malfeasance of the Placement Agent. The
Placement Agent will reimburse the Company or any such person for any legal or
other expenses reasonably incurred in connection with investigating or defending
against any such loss, claim, damage, liability or action, proceeding or
investigation to which such indemnity obligation applies. In addition to the
foregoing agreement to indemnify and reimburse, the Placement Agent will
indemnify and hold harmless each Company Indemnitee against any and all losses,
claims, damages, liabilities or expenses whatsoever (or actions or proceedings
or investigations in respect thereof), joint or several (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys’ fees, including
appeals) to which any Company Indemnitee may become subject insofar as such
costs, expenses, losses, claims, damages or liabilities arise out of or are
based upon the claim of any person or entity that he or it is entitled to
broker’s or finder’s fees from any Company Indemnitee in connection with the
Navesink Offering as a result of the Placement Agent obligating itself or any
Company Indemnitee to pay such a fee. The foregoing indemnity agreements are in
addition to any liability which the Placement Agent may otherwise have.

 

16

 

 

(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, claim, proceeding or investigation
(the “Action”), such indemnified party, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, will notify the
indemnifying party of the commencement thereof, but the omission to so notify
the indemnifying party will not relieve it from any liability that it may have
to any indemnified party under this Section 8 unless the indemnifying party has
been substantially prejudiced by such omission. The indemnifying party will be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party, to assume the defense thereof subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party. The indemnified party will have the right to employ separate
counsel in any such Action and to participate in the defense thereof, but the
fees and expenses of such counsel will not be at the expense of the indemnifying
party if the indemnifying party has assumed the defense of the Action with
counsel reasonably satisfactory to the indemnified party, provided, however,
that if the indemnified party shall be requested by the indemnifying party to
participate in the defense thereof or shall have concluded in good faith and
specifically notified the indemnifying party either that there may be specific
defenses available to it that are different from or additional to those
available to the indemnifying party or that such Action involves or could have a
material adverse effect upon it with respect to matters beyond the scope of the
indemnity agreements contained in this Agreement, then the counsel representing
it, to the extent made necessary by such defenses, shall have the right to
direct such defenses of such Action on its behalf and in such case the
reasonable fees and expenses of such counsel in connection with any such
participation or defenses shall be paid by the indemnifying party. No settlement
of any Action against an indemnified party will be made without the consent of
the indemnifying party and the indemnified party, which consent shall not be
unreasonably withheld or delayed in light of all factors of importance to such
party, and no indemnifying party shall be liable to indemnify any person for any
settlement of any such claim effected without such indemnifying party’s consent.

 

9.          Contribution.

 

To provide for just and equitable contribution, if: (i) an indemnified party
makes a claim for indemnification pursuant to Section 8 hereof and it is finally
determined, by a judgment, order or decree not subject to further appeal that
such claims for indemnification may not be enforced, even though this Agreement
expressly provides for indemnification in such case; or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the Exchange Act, or
otherwise, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Placement Agent on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Placement Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from the Navesink Offering (before
deducting expenses) received by the Company bear to the total Brokers’ Fees
received by the Placement Agent. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission or alleged omission will be
determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by the Company or
by the Placement Agent, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and the Placement Agent
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Placement Agent for contribution were determined by pro rata
allocation of the aggregate losses, liabilities, claims, damages and expenses or
by any other method or allocation that does not reflect the equitable
considerations referred to in this Section 9. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any, who
controls the Placement Agent within the meaning of the Act will have the same
rights to contribution as the Placement Agent, and each person, if any, who
controls the Company within the meaning of the Act will have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 9. Anything in this Section 9 to the contrary notwithstanding, no party
will be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 9 is intended to
supersede, to the extent permitted by law, any right to contribution under the
Act, the Exchange Act or otherwise available.

 

17

 

 

10.          Termination.

 

(a) The Navesink Offering may be terminated by the Placement Agent at any time
prior to the expiration of the Navesink Offering Period in the event that: (i)
any of the representations, warranties or covenants of the Company contained
herein or in the LLC Membership Interest Agreement shall prove to have been
false or misleading in any material respect when actually made; (ii) the Company
shall have failed to perform any of its material obligations hereunder or under
any other Company Transaction Document or any other transaction document; (iii)
there shall occur any event, within the control of the Company that is
reasonably likely to materially and adversely affect the transactions
contemplated hereunder or the ability of the Company to perform hereunder; or
(iv) the Placement Agent determines that it is reasonably likely that any of the
conditions to Closing to be fulfilled by the Company set forth herein will not,
or cannot, be satisfied.

 

(b) The Navesink Offering may be terminated by the Company at any time prior to
the expiration of the Navesink Offering Period (i) in the event that the
Placement Agent shall have failed to perform any of its material obligations
hereunder, or (ii) on account of the Placement Agent’s fraud, illegal or willful
misconduct or gross negligence or (iii) a material breach of this Agreement by
the Placement Agent. In the event of any such termination by the Company, the
Placement Agent shall not be entitled to any amounts whatsoever except (i) as
may be due under any indemnity or contribution obligation provided herein or in
any other Company Transaction Document, at law or otherwise and (ii) it shall
retain any Brokers’ Fees received for Closings that occurred prior to the
Termination Date.

 

(c) This Navesink Offering may be terminated upon mutual agreement of the
Company and the Placement Agent at any time prior to the expiration of the
Navesink Offering Period.

 

(d) Before any termination by the Placement Agent under Section 10(a) or by the
Company under Section 10(b) shall become effective, the terminating party shall
give five (5) days prior written notice to the other party of its intention to
terminate the Navesink Offering (the “Termination Notice”). The Termination
Notice shall specify the grounds for the proposed termination. If the specified
grounds for termination, or their resulting adverse effect on the transactions
contemplated hereby, are curable, then the other party shall have three (3) days
from the Termination Notice within which to remove such grounds or to eliminate
all of their material adverse effects on the transactions contemplated hereby;
otherwise, the Navesink Offering shall terminate.

 

18

 

 

(e) Upon any termination pursuant to this Section 10, the Placement Agent and
the Company will instruct the Escrow Agent to cause all monies received with
respect to the subscriptions for the Membership Interests not accepted by the
Company to be promptly returned to such subscribers without interest, penalty or
deduction.

 

11.          Survival.

 

(a) The obligations of the parties to pay any costs and expenses hereunder and
to provide indemnification and contribution as provided herein shall survive any
termination hereunder. In addition, the provisions of Sections 3, 8 through 17
shall survive the sale of the Membership Interests or any termination of the
Navesink Offering hereunder.

 

(b) The respective indemnities, covenants, representations, warranties and other
statements of the Company and the Placement Agent set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of, and regardless of any access to
information by the Company or the Placement Agent, or any of their officers or
directors or any controlling person thereof, and will survive the sale of the
Membership Interests or any termination of the Navesink Offering hereunder.
Notwithstanding the foregoing, if either party effects a Closing with knowledge
that one or more of the other party’s representations and warranties has become
untrue or inaccurate in any material respect or that such other party has failed
to comply or satisfy in any material respect a covenant, condition or agreement
of it or them, the party so effecting the Closing shall be deemed to have waived
any claim based on the breach of such inaccurate representation and warranty or
the failure to have complied with the specific covenant or condition.

 

12.          Notices.

 

All communications hereunder will be in writing and, except as otherwise
expressly provided herein or after notice by one party to the other of a change
of address, if sent to the Placement Agent, will be mailed, postage prepaid,
certified mail, return receipt request or overnight courier or delivered by hand
and signed by addressee to Gottbetter Capital Markets, LLC 488 Madison Avenue,
12th Floor, New York, New York 10022, Attention: Mr. Julio A. Marquez,
President, telefax number (212) 400-6999, with a copy to: Law Offices of Barbara
J. Glenns, Esq. 30 Waterside Plaza, Suite 25G, New York, New York 10010, Attn:
Barbara J. Glenns, Esq., telefax number (212) 689-6578, if sent to Navesink
RACK, LLC will be mailed, postage prepaid, certified mail, return receipt or
overnight courier or delivered by hand and signed by addressee to: Alan D.
Goddard, Managing Member, c/o Navesink RACK, LLC 1200 Federal Highway, Suite
300, Boca Raton, FL 33432, telefax number (561) 997-0041, and if to Rackwise,
Inc. will be mailed, postage prepaid, certified mail, return receipt or
overnight courier or delivered by hand and signed by addressee to 2365 Iron
Point Road, Suite 190, Folsom, CA 95630 Attn: Guy A. Archbold, Chairman and CEO,
telefax number (415) 358-4665. A copy shall be sent to: Gottbetter & Partners,
LLP, 488 Madison Avenue, 12th Floor, New York, NY 10022 telefax: 212-400-6901
Attn: Scott Rapfogel, Esq. Notices sent by certified mail shall be deemed
received five days thereafter, notices sent by hand delivery or overnight
delivery shall be deemed received on the date of the relevant written record of
receipt.

 

19

 

 

13.          Governing Law, Jurisdiction.

 

This Agreement shall be deemed to have been made and delivered in New York City
and shall be governed as to validity, interpretation, construction, effect and
in all other respects by the internal laws of the State of New York without
regard to principles of conflicts of law thereof.

 

THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO the exclusive
jurisdiction of finra ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH
BELOW AND UNDERSTAND THAT (A) ARBITRATION IS FINAL AND BINDING ON THE PARTIES,
(B) THE PARTIES ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING
THE RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE
LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS NOT
REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO
APPEAL OR TO SEEK MODIFICATION OF RULES BY ARBITRATORS IS STRICTLY LIMITED, (E)
THE PANEL OF FINRA ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS
WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F) ALL
CONTROVERSIES WHICH MAY ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT
SHALL BE DETERMINED BY ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO
FINRA. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEw york. JUDGMENT ON ANY AWARD OF
ANY SUCH ARBITRATION MAY BE ENTERED IN THE SUPREME COURT OF THE STATE OF NEW
YORK OR IN ANY OTHER COURT HAVING JURISDICTION OVER THE PERSON OR PERSONS
AGAINST WHOM SUCH AWARD IS RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF
THE ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM. THE PREVAILING PARTY,
AS DETERMINED BY SUCH ARBITRATORS, IN A LEGAL PROCEEDING SHALL BE ENTITLED TO
COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE ATTORNEY’S FEES FROM THE OTHER
PARTY. PRIOR TO FILING AN ARBITRATION, THE PARTIES HEREBY AGREE THAT THEY WILL
ATTEMPT TO RESOLVE THEIR DIFFERENCES FIRST BY SUBMITTING THE MATTER FOR
RESOLUTION TO A MEDIATOR, ACCEPTABLE TO ALL PARTIES, AND WHOSE EXPENSES WILL BE
BORNE EQUALLY BY ALL PARTIES. THE MEDIATION WILL BE HELD IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, ON AN EXPEDITED BASIS. IF THE PARTIES CANNOT
SUCCESSFULLY RESOLVE THEIR DIFFERENCES THROUGH MEDIATION, THE MATTER WILL BE
RESOLVED BY ARBITRATION. THE ARBITRATION SHALL TAKE PLACE IN THE COUNTY OF NEW
YORK, THE STATE OF NEW YORK, ON AN EXPEDITED BASIS.

 

20

 

 

14.          Miscellaneous.

 

A.          No provision of this Agreement may be changed or terminated except
by a writing signed by the party or parties to be charged therewith. Unless
expressly so provided, no party to this Agreement will be liable for the
performance of any other party’s obligations hereunder. Either party hereto may
waive compliance by the other with any of the terms, provisions and conditions
set forth herein; provided, however, that any such waiver shall be in writing
specifically setting forth those provisions waived thereby. No such waiver shall
be deemed to constitute or imply waiver of any other term, provision or
condition of this Agreement. Neither party may assign its rights or obligations
under this Agreement to any other person or entity without the prior written
consent of the other party.

 

B.          Each party shall, without payment of any additional consideration by
any other party, at any time on or after the date of any Closings, take such
further action and execute such other and further documents and instruments as
the other party may reasonably request in order to provide the other party with
the benefits of this Agreement.

 

C.          The Parties to this Agreement each hereby confirm that they will
cooperate with each other to the extent that it may become necessary to enter
into any revisions or amendments to this Agreement, in the future to conform to
any federal or state regulations as long as such revisions or amendments do not
materially alter the obligations or benefits of either party under this
Agreement.

 

15.          Entire Agreement; Severability.

 

This Agreement together with any other agreement referred to herein supersedes
all prior understandings and written or oral agreements between the parties with
respect to the Navesink Offering and the subject matter hereof. If any portion
of this Agreement shall be held invalid or unenforceable, then so far as is
reasonable and possible (i) the remainder of this Agreement shall be considered
valid and enforceable and (ii) effect shall be given to the intent manifested by
the portion held invalid or unenforceable.

 

16.          Counterparts.

 

This Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or in pdf format shall constitute effective execution and
delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted by
facsimile or in pdf format shall be deemed to be their original signatures for
all purposes.

 

21

 

 

17.          Confidentiality.

 

(a)          The Placement Agent will maintain the confidentiality of the
Information and, unless and until such information shall have been made publicly
available by the Company or by others without breach of a confidentiality
agreement, shall disclose the Information only as authorized by the Company or
as required by law or by order of a governmental authority or court of competent
jurisdiction. In the event the Placement Agent is legally required to make
disclosure of any of the Information, the Placement Agent will give prompt
notice to the Company prior to such disclosure, to the extent the Placement
Agent can practically do so.

 

(b)          The foregoing paragraph shall not apply to information that:

 

(i)          at the time of disclosure by the Company, is or thereafter becomes,
generally available to the public or within the industries in which the Company
conducts business, other than as a result of a breach by the Placement Agent of
its obligations under this Agreement;

 

(ii)          prior to or at the time of disclosure by the Company, was already
in the possession of, the Placement Agent or any of its affiliates, or could
have been developed by them from information then lawfully in their possession,
by the application of other information or techniques in their possession,
generally available to the public; at the time of disclosure by the Company
thereafter, is obtained by the Placement Agent or any of its affiliates from a
third party who the Placement Agent reasonably believes to be in possession of
the information not in violation of any contractual, legal or fiduciary
obligation to the Company with respect to that information; or is independently
developed by the Placement Agent or its affiliates.

 

The exclusions set forth in sub-section (b) above shall not apply to pro forma
financial information of the Company, which pro forma Information shall in all
events be subject to sub-section (a) above.

 

(c)          Nothing in this Agreement shall be construed to limit the ability
of the Placement Agent or its affiliates to pursue, investigate, analyze, invest
in, or engage in investment banking, financial advisory or any other business
relationship with entities other than the Company, notwithstanding that such
entities may be engaged in a business which is similar to or competitive with
the business of the Company, and notwithstanding that such entities may have
actual or potential operations, products, services, plans, ideas, customers or
supplies similar or identical to the Company’s, or may have been identified by
the Company as potential merger or acquisition targets or potential candidates
for some other business combination, cooperation or relationship. The Company
expressly acknowledges and agrees that they do not claim any proprietary
interest in the identity of any other entity in its industry or otherwise, and
that the identity of any such entity is not confidential information.

 

[Signatures on following page.]

 

22

 

 

If the foregoing is in accordance with your understanding of the agreement among
the Company, Rackwise, Inc. and the Placement Agent, kindly sign and return this
Agreement, whereupon it will become a binding agreement as provided herein,
among the Company, Rackwise, Inc. and the Placement Agent in accordance with its
terms.

 

  NAVESINK RACK, LLC         By: /s/ Alan D. Goddard      Alan D. Goddard    
 Managing Member      1200 Federal Highway      Suite 200      Boca Raton,
FL  33432         RACKWISE, INC.         By:  /s/ Guy A. Archbold      Guy A.
Archbold      CEO      2365 Iron Point Road      Suite 190      Folsom, CA 95630

 

Accepted and agreed to this

10th day of April, 2013:

 

GOTTBETTER CAPITAL MARKETS, LLC

 

By:  /s/ Julio A. Marquez      Julio A. Marquez      President  

 

 

 

 

AMENDMENT

 

This Amendment (“Amendment”) is entered into as of the 5th day of June 2013, by
and between Navesink RACK, LLC (“Company”), Rackwise, Inc. and Gottbetter
Capital Markets, LLC (“Placement Agent”) and amends the Placement Agency
Agreement (“PAA”) dated 10th day of April 2013.

 

The Parties to the Agreement hereby amend Paragraph 3(a) Placement Agent
Compensation as follows:

 

a)In connection with the Navesink Offering, the Company will pay a cash fee (the
“Agent Cash Fee”) to the Placement Agent at each Closing and as a condition to
closing, equal to Ten Percent (10%) of the gross sales price of the securities
purchased by those Investor(s) directly introduced to the Company by Markets or
through other sub agents pursuant to executed subagency agreements (collectively
referred to as “Markets Clients”), as listed on the attached Schedule A as
amended and updated from time to time. In addition, the Placement Agent will
also be paid a non-accountable expense allowance at each closing not to exceed
Three Percent (3%) of the gross sales price of the securities purchased by
Markets Clients. Additionally, the Company will pay an Agent Cash Fee to the
Placement Agent at each Closing equal to Ten Percent (10%) of the gross sales
price of the securities purchased by those Investors identified as Referral
Clients listed on Schedule A.

 

Further, the Company will deliver to the Placement Agent Class B Membership
Interests equal to Five Percent (5%) of the number of Class B Membership
Interests sold in the Navesink Offering (“Agent Membership Interests”) to
Markets Clients and Referral Clients. The “Agent Cash Fee” and “Agent Membership
Interests” are sometimes referred to collectively as (“Brokers’ Fees”).

 

This Amendment may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. The exchange of copies of this Amendment and of signature pages by
facsimile transmission or in pdf format shall constitute effective execution and
delivery of this Amendment as to the parties and may be used in lieu of the
original Amendment for all purposes. Signatures of the parties transmitted by
facsimile or in pdf format shall be deemed to be their original signatures for
all purposes.

 

 

 

 

This Amendment and Schedule A, as amended, is hereby made part of and
incorporated into the Placement Agency Agreement, with all the terms and
conditions of the Agreement remaining in full force and effect, except to the
extent modified hereby. The Parties agree for and on behalf of their respective
party this 5th day of June 2013.

 

NAVESINK RACK, LLC         By: /s/ Alan D. Goddard      Alan D. Goddard    
 Managing Member         RACKWISE, INC.         By: /s/ Guy A. Archbold      Guy
A. Archbold      President         GOTTBETTER CAPITAL MARKETS, LLC         By: 
/s/ Julio A. Marquez      Julio A. Marquez      President