Exhibit 10.27


 


 


 


PLACEMENT AGENCY AGREEMENT


 


 


September 1, 2012


 


Gottbetter Capital Markets, LLC


Mr. Julio A. Marquez, President


488 Madison Avenue


12th Floor


New York, New York 10022


 


Re:RACKWISE, INC.


 


Dear Mr. Marquez:


 


This Placement Agency
Agreement (this “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 Rackwise, Inc., a publicly traded Nevada corporation, (hereinafter
referred to as the “Company”), to act as a non-exclusive Placement Agent in connection with the private placement
(the “Offering”) of the units (the “Units”) of securities of the Company.


 


The Offering of the
Units will be made by the Placement Agent and certain selected dealers, with each Unit consisting of one (1) share of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”), and a redeemable warrant to purchase one share (1)
share of Common Stock at an exercise price of $0.30 per full share for five (5) years (the “Investor Warrants”). The
Offering Price per Unit will be equal to the lesser of (i) Twenty Cents ($0.20) and (ii) 5-day VWAP immediately prior to the applicable
closing date. The Offering will consist of a maximum of Twenty Five Million (25,000,000) Units (the “Maximum Amount”).
In the event the Offering is oversubscribed, the Company may sell up to an additional Five Million (5,000,000) Units (the “Over-allotment
Option”). The Investor Warrants shall have “weighted average” anti-dilution protection, subject to customary
exceptions, as per the terms set forth therein.


 


If the investor elects
to participate in the Proposed Offering for at least 50% of the funds such investor has invested in the Company since September
21, 2011, the Company, at its sole discretion, will agree to reduce the exercise price of such investor’s warrants previously
issued by the Company as part of such investment to $0.30 (the “New Warrant Exercise Price”).


 


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 United States 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 Units 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. The Units will be offered until the earlier
of the time that all Units offered in the Offering are sold or until December 30, 2012 (the “Initial Offering Period”),
which date may be extended by the Company in writing (this additional period and the Initial Offering Period shall be referred
to as the “Offering Period”). The date on which the Offering is terminated shall be referred to as the “Termination
Date.”


 


With respect to the
Offering, the Company shall provide the Placement Agent, on terms set forth herein, the right to offer and sell all of the available
Units being offered during the Offering Period (subject to prior sale of some of the Units). 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 Units or allot to any prospective subscriber less than the number of Units
that such subscriber desires to purchase. Purchases of Units 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 Offering.


 






    	 



    	 



    

 


The Offering will be
made by the Company pursuant to the Subscription Agreement and the Exhibits attached thereto (the “Subscription Agreement”),
including, but not limited to, the form of the Investor Warrants, and any documents, agreements, supplements and additions thereto
(collectively, the “Subscription Documents”), 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.


 


1.Appointment
of Placement Agent. On the basis of the written and documented representations and warranties of the Company provided herein,
and subject to the terms and conditions set forth herein, the Placement Agent is appointed as a non-exclusive Placement
Agent of the Company during the Offering Period to assist the Company in finding qualified subscribers for the Offering. The Placement
Agent may sell Units 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 Units 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 Units 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 Offering. The Placement Agent has no obligation to purchase
any of the Units. 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 or in the Company’s SEC Filings, 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:


 


(a) The Subscription
Documents have 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 Offering, and the applicable securities laws and the rules and
regulations of those jurisdictions wherein the Placement Agent notifies the Company that the Units are to be offered and sold excluding
any foreign jurisdictions. The Units 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 Units 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 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 Units, 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 Units 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 Units pursuant to this Agreement outside the United States
to non-U.S. Persons.


 






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(b) As to the Company,
the Subscription Documents, as prepared and completed by the Company, will not and do 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 Subscription
Documents or which is not disclosed in the filings that the Company has made with the SEC on or after September 27 17, 2011 to
the date hereof (the “SEC Filings”) 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 (“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.


 


(c) The Company is
a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada 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 Subscription Documents and/or
the SEC Filings), 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, the Subscription Agreement and the other agreements
contemplated hereby (this Agreement, Subscription 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 Board of Directors of the Company and Company stockholder approvals, to issue, sell and deliver the Units, the shares
of Common Stock underlying the Units, and the shares of Common Stock issuable upon exercise of the Investor Warrants (the “Warrant
Shares”) 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 (when executed by all parties hereto), and each of the other Company Transaction Documents, upon
due execution and delivery, will constitute (when executed by all parties thereto), 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) 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 Articles of Incorporation (the “Articles
of Incorporation”) or By-laws (the “By-laws”) of the Company, 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 Articles of Incorporation or By-laws) which would not, or could not reasonably
be expected to, have a Company Material Adverse Effect.


 






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(e) The Company’s
financial statements, together with the related notes, if any, included in the Company’s SEC Filings, present fairly, in
all material respects, the financial position of the Company as of the dates specified and the results of operations for the periods
covered thereby. Such financial statements and related notes were prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the periods indicated, except that the unaudited financial statements
omit full notes, and except for normal year end adjustments. During the period of engagement of the Company’s independent
certified public accountants, there have been no disagreements between the accounting firm and the Company on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or procedures. The Company has made and kept books and
records and accounts which are in reasonable detail and which fairly and accurately reflect the activities of the Company in all
material respects, subject only to year-end adjustments. Except as set forth in such financial statements or otherwise disclosed
in the Subscription Documents, the Company’s senior management has no knowledge of any material liabilities of any kind,
whether accrued, absolute or contingent, or otherwise, and subsequent to the date of the Subscription Documents 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. The other financial and statistical information
with respect to the Company and any pro forma information and related notes included in the SEC Filings present fairly the information
shown therein on a basis consistent with the financial statements of the Company included in the SEC Filings. Except as disclosed
in the Subscription Documents, the Company does not know of any facts, circumstances or conditions which could materially adversely
affect its operations, earnings or prospects that have not been fully disclosed in the financial statements appearing in the SEC
Filings.


 


(f) Immediately prior
to the First Closing, the shares of Common Stock underlying the Units and the Investor Warrants 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 Common Stock underlying the Units and the Investor Warrants will
be subject to personal liability solely by reason of being such a holder, and except as described in the Subscription Documents,
none of the shares of Common Stock underlying the Units and the Investor Warrants will be subject to preemptive or similar rights
of any stockholder or security holder of the Company or an adjustment under the antidilution or exercise rights of any holders
of any outstanding shares of capital stock, options, warrants or other rights to acquire any securities of the Company. 
Immediately prior to the First Closing, a sufficient number of authorized but unissued shares of Common Stock will have been reserved
for issuance upon the exercise of the Investor Warrants.


 


(g) Except as described
in the Subscription Documents and/or the Company’s SEC Filings, 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 described in the Company’s SEC Filings and except as
such regulation is applicable to US public companies and 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 Subscription Documents and/or the Company’s SEC Filings, 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 Subscription
Documents and/or the Company’s SEC Filings are the only material agreements to which the Company is bound or by which its
assets are subject, are accurately described in the Subscription Documents and/or the Company’s SEC Filings 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.


 






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(i) Subsequent to the
respective dates as of which information is given in the Subscription Documents, the Company has operated its business in the ordinary
course and, except as may otherwise be set forth in the Subscription Documents or the Company’s SEC Filings, 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.


 


(j) Except as set forth
in the Subscription Documents and/or the Company’s SEC Filings, 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 Articles of Incorporation or By-laws; (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 Subscription Documents, Schedule 2(l) attached hereto and/or the Company’s SEC Filings, 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 Offering (other than to the Placement Agent), 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 Units except for negotiations with the designated Placement Agent(s). Except as set forth in the Subscription Documents and
the Company’s SEC Filings, 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 Offering without the Placement
Agent’s prior written consent, which consent will not unreasonably be withheld or delayed.


 


(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, except for required filings with the SEC and the
applicable state securities commissions relating specifically to the 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).


 






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(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 the Company.  Gottbetter
& Partners, LLP is counsel to the company and has represented the company in the proposed transaction for which it will
receive legal fees in accordance with an executed retainer agreement.  Gottbetter Capital Markets, LLC is a placement
agent for the private placement offering in the proposed transaction for which it may receive placement agent fees in accordance
with an executed placement agent agreement.


 


(r)
Neither the sale of the Units 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.


 


(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 Units. 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 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 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 Units 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 Units, 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
Units, 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 the Company.  Gottbetter & Partners, LLP is counsel to the company
and has represented the company in the proposed transaction for which it will receive legal fees in accordance with an executed retainer
agreement.  Gottbetter Capital Markets, LLC is a placement agent for the private placement offering in the proposed transaction
for which it may receive placement agent fees in accordance with an executed placement agent agreement.


 






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3.Placement
Agent Compensation.


 


(a) In connection with
the Offering, the Company will pay a cash fee (the “Agent Cash Fee”) to the Placement Agent at each Closing equal to
up to Ten Percent (10%) of the gross sales price of the Units purchased by those investor(s) introduced to the Company at such
Closing.. Additionally, the Company will deliver to the Placement Agent redeemable warrants exercisable for a period of five (5)
years from the Closing Date, to purchase a number of shares of Common Stock equaling up to Ten Percent (10%) of the number of Units
sold to the investor(s) at such Closing (the “Broker Warrants), as applicable (“Agent Cash Fee” and the “Broker
Warrants” are referred to collectively as “Brokers’ Fees”). The Broker Warrants shall be identical to the
Investor Warrants in all material respects, except that (i) the resale of the Common Stock underlying Broker Warrants will not
be covered by a registration statement and (ii) the Broker Warrants will have an exercise price of $0.20 per share.


 


(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 Offering, which person had not been introduced to the Company prior to or during the 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 earlier of the Termination
Date or the final Closing Date, regardless of whether such person purchased Units in the 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 Units sold at each Closing.


 


4.Subscription
and Closing Procedures.


 


(a) The Company shall
cause to be delivered to the Placement Agent copies of the Subscription Documents 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 Subscription Documents in
connection with the sale of the Units 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 Subscription
Documents or to use any offering materials other than those contained in the Subscription Documents in connection with the sale
of the Units, 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.


 


(c) Each prospective
purchaser will be required to complete and execute the Subscription Documents, Anti-Money Laundering Form and other documents (the
“Subscription 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.


 






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(d) Simultaneously
with the delivery to the Placement Agent of the Subscription Documents, 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, 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 for the amount for Closing, the Company will either accept or reject, for any or no reason, the Subscription Documents
in a timely fashion and at each Closing will countersign the Subscription Documents and provide duplicate copies of such documents
to the Placement Agent for distribution to the subscribers. The acceptance of any Subscription Documents 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 Units
sold (the “First Closing”). Thereafter, the remaining Units 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 Units sold, with the final closing (“Final Closing”) to occur within
10 days after the earlier of the Termination Date and the date on which the Maximum Amount has been subscribed for. Delivery of
payment for the accepted subscriptions for Units from the funds held in the Escrow Account will be made at each Closing at the
Placement Agent’s offices against delivery of the Units 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 its Blue Sky counsel as of such Closing. Executed certificates for the shares of Common Stock comprising the
Units and the Investor Warrants and the Brokers’ Warrants 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 transfer agent or the Company’s designated agent at each Closing. The Company
will issue the certificates for the Common Stock comprising the Units and the Investor Warrants and Brokers’ Warrants within
twenty (20) days of the applicable Closing Date.


 


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


 


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 Subscription Documents 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 Subscription Documents 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 Subscription Documents 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 Subscription Documents, 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.


 






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(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 Units are qualified or registered for sale or exempt
from such qualification or registration, so as to permit the continuance of the sales of the Units, 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.


 


(d) The Company shall
use best efforts to qualify the Units 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 Offering.


 


(e) The Company shall
place a legend on the certificates representing the shares of Common Stock comprising the Units and the Investor Warrants and the
Brokers’ Warrants 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 Units for the purposes substantially as described in the Subscription Documents. Except
as set forth in the Subscription Documents, the Company shall not use any of the net proceeds of the Offering to repay indebtedness
to officers (other than accrued salaries incurred in the ordinary course of business), directors or stockholders of the Company
without the prior written consent of the Placement Agent.


 


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


 


(h) Except 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 Subscription Documents (i) engage in or commit to engage in any transaction outside
the ordinary course of business as described in the Subscription Documents, (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 Offering and the issuance of the shares comprising the Units and the Investor Warrants and will also pay for the
Company’s expenses for accounting fees, legal fees, printing costs, and other costs involved with the Offering. The Company
will provide at its own expense such quantities of the Subscription Documents and other documents and instruments relating to the
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 Units, 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 Units for offer and sale under the securities or Blue Sky laws of such jurisdictions,
payable within five (5) days of being invoiced; and at the First Closing, or, if there is no Closing, within ten (10) days after
written request therefore following the Termination Date, legal fees and expenses of the Placement Agent’s counsel, which
legal fees shall not exceed $15,000 plus expenses provided that such limitation shall in no way affect the obligations of the Company
with respect to indemnification and contribution as set forth in Sections 8 and 9 herein.


 






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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 as of the date of this Agreement and as of 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 representations and warranties that speak as of a specific 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 this Agreement at or before the Closing.


 


(c) The Subscription
Documents do 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 Subscription Documents or enjoining the Offering or sale of the Units 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 of the Chief Executive 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. The foregoing certificate shall only
be required to be delivered on the first Closing Date, unless any information contained in the certificate has changed.


 


(f) The Company shall
have delivered to the Placement Agent: (i) a good standing certificate dated as of a date within 10 days prior to the Closing Date
from the secretary of state of its jurisdiction of incorporation and (ii) resolutions of the Company’s Board of Directors
approving this Agreement and the transactions and agreements contemplated by this Agreement, and the Subscription Documents, all
as certified by the Chief Executive 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.


 


(h) All proceedings
taken at or prior to the Closing in connection with the authorization, issuance and sale of the shares comprising the Units and
the Investor Warrants will be reasonably satisfactory in form and substance to the Placement Agent and its counsel, and such counsel
shall have been furnished with all such documents, certificates and opinions as it may reasonably request upon reasonable prior
notice in connection with the transactions contemplated hereby.


 






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7.
Conditions of the Company’s Obligations.


 


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


 


(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 Units that are part of such Closing less applicable Broker Fees.


 


7A. Mutual Condition.
The obligations of the Placement Agent and the Company hereunder are subject to the execution by each investor of Subscription
Documents 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 Units 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 Subscription Documents, 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 Subscription Documents 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 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.


 


(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 Subscription Documents made in reliance upon and in conformity with information contained in the Subscription
Documents 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 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.


 






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(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 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.


 






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10.Termination.


 


(a) The Offering may
be terminated by the Placement Agent at any time prior to the expiration of the Offering Period in the event that: (i) any of the
representations, warranties or covenants of the Company contained herein or in the Subscription Documents 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 Offering may
be terminated by the Company at any time prior to the expiration of the Offering Period (i) in the event that the Placement Agent
or any subagent shall have failed to perform any of its material obligations hereunder, or (ii) on account of the Placement Agent’s
or any subagent’s fraud, illegal or willful misconduct or gross negligence or (iii) a material breach of this Agreement by
the Placement Agent or any subagent. 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 Offering may
be terminated upon mutual agreement of the Company and the Placement Agent at any time prior to the expiration of the 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 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 Offering shall terminate.


 


(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 Units not accepted by the Company to be promptly returned to such subscribers without interest,
penalty or deduction.


 






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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, and 8 through 17 shall survive the sale of the Units
or any termination of this Agreement.


 


(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 Units or any termination of the 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, sent by overnight courier or telefaxed and confirmed 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 Rackwise, Inc. will be mailed, sent by overnight
courier, or certified mail, return receipt requested and confirmed to 2365 Iron Point Road, Suite 190, Folsom, CA 95630 Attn: Guy
A. Archbold, President and CEO, telefax number (415) 358-4665 with a copy to: Gottbetter & Partners, LLP 488 Madison Avenue,
12th Floor, New York, NY 10022 telefax: 212-400-6901 Attn: Scott Rapfogel, Esq.


 


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. 


 






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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 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.


 






    	15



    	 



    

 


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]





 



    	16



    	 



    




 


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


 


RACKWISE, INC. 


 


 


By:  /s/ Guy A. Archbold                          


Name: Guy A. Archbold


Title: President and Chief Executive Officer


  2365 Iron Point Road


   Suite 190


   Folsom, CA 95630


 


Accepted and agreed to this


1st day of September 2012:


 


GOTTBETTER CAPITAL MARKETS, LLC 


 


 


By: /s/ Julio A. Marquez                        


Name:Julio A. Marquez


Title: President


 






    	 



    	 



    

 





AMENDMENT NO. 1 TO


PLACEMENT AGENCY AGREEMENT


 


This Amendment No.
1 to the Placement Agency Agreement (this “Amendment”) is entered into as of the 30th day of December
2012, by and between Rackwise, Inc., a Nevada corporation (the “Company”), and Gottbetter Capital Markets, LLC
(“Markets”), and amends that certain Placement Agency Agreement, dated as of September 1, 2012 (as amended,
the “PAA”). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such
terms in the PAA.


 


1. The parties
to the PAA hereby amend and restate in its entirety the second paragraph of the PAA to read as follows:


 


The Offering
of the Units will be made by the Placement Agent and certain selected dealers, with each Unit consisting of one (1) share of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”), and a redeemable warrant to purchase
one share (1) share of Common Stock at an exercise price of $0.30 per full share for five (5) years (the “Investor Warrants”).
The Offering Price per Unit will be Fifteen Cents ($0.15). The Offering will consist of a maximum of Twenty Five Million (25,000,000)
Units (the “Maximum Amount”). In the event the Offering is oversubscribed, the Company may sell up to an additional
Five Million (5,000,000) Units (the “Over-allotment Option”). The Investor Warrants shall have “weighted average”
anti-dilution protection, subject to customary exceptions, as per the terms set forth therein.


 


2.The parties to
the PAA hereby amend and restate in its entirety the fourth paragraph of the PAA to read as follows:





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 United States 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 Units 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. The Units will be
offered until the earlier of the time that all Units offered in the Offering are sold or until December 30, 2012 (the “Initial
Offering Period”), which date may be mutually extended by the Company and the Placement Agent in writing until February 1,
2013 (this additional period and the Initial Offering Period shall be referred to as the “Offering Period”). The date
on which the Offering is terminated shall be referred to as the “Termination Date.”


 


3.The parties to
the PAA hereby amend and restate in its entirety Paragraph 3(a) Placement Agent Compensation of the PAA to read as follows:


 





	 	 	3. Placement Agent Compensation


 


	 	 	(a) In connection with the Offering, the Company will pay a cash fee (the “Agent Cash Fee”) to the Placement Agent at each Closing equal to up to Ten Percent (10%) of the gross sales price of the Units purchased by those investor(s) introduced to the Company at such Closing. Additionally, the Company will deliver to the Placement Agent redeemable warrants exercisable for a period of five (5) years from the Closing Date, to purchase a number of shares of Common Stock equaling up to Ten Percent (10%) of the number of Units sold to the investor(s) at such Closing (the “Broker Warrants), as applicable (“Agent Cash Fee” and the “Broker Warrants” are referred to collectively as “Brokers’ Fees”). The Broker Warrants shall be identical to the Investor Warrants in all material respects, except that (i) the resale of the Common Stock underlying Broker Warrants will not be covered by a registration statement and (ii) the Broker Warrants will have an exercise price of $0.15 per share.


 






    	 



    	 



    

 


4.This Amendment
is hereby made part of and incorporated into the PAA, with all the terms and conditions of the PAA remaining in full force and
effect, except to the extent modified hereby.


 


5. 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.


 


[Signature Page Follows]


 






    	 



    	 



    

 


IN WITNESS WHEREOF,
the undersigned have executed, or caused to be executed on their behalf by an agent thereunto duly authorized, this Amendment No.
1 to Placement Agency Agreement as of the date first above written.


 


 


RACKWISE, INC. 


 


 


By:  /s/ Guy A. Archbold                   


Name: Guy
A. Archbold


Title:
President and Chief Executive Officer


 


 


GOTTBETTER CAPITAL MARKETS, LLC


 


 


By:  /s/ Julio A. Marquez                   


Name: Julio A. Marquez


Title: President