Exhibit 10.26


 


 





SUBSCRIPTION AGREEMENT


 


Ladies and Gentlemen:


 


1.Subscription.  The
undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably agrees to purchase from Rackwise,
Inc., a Nevada corporation (the “Company”), the number of units (the “Units” or the “PPO Units”)
set forth on the signature page hereof at a purchase price of $0.15 per Unit (the “Purchase Price”). Each Unit consists
of (i) one (1) share of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and (ii) a
five (5) year warrant (each, an “Investor Warrant” and collectively, the “Investor Warrants”) to purchase
one (1) share of Common Stock at an exercise price of $0.30 per share. The form of Investor Warrant is annexed hereto as Exhibit
A. The Investor Warrants will have “weighted average” anti-dilution protection subject to customary exceptions,
including but not limited to, issuances under the Company’s 2011 Equity Incentive Plan.


 


2.Offering.  (a)This
subscription is submitted to you in accordance with and subject to the terms and conditions described in this Subscription Agreement,
as amended or supplemented from time to time, including all attachments, schedules and exhibits hereto, relating to the offering
(the “Offering”) by the Company of a maximum of twenty five million (25,000,000) Units (the “Maximum Offering
Amount”). In the event the Maximum Offering Amount is sold, the Placement Agent (as defined below) and the Company shall
have the right to place an additional five million (5,000,000) Units to cover over-allotments.


 


(b)Subject to Section
5 of this Subscription Agreement, provided that the Purchaser subscribes for the Units in the Offering for the amount equal to
at least fifty percent (50%) of the subscription amount(s) such Purchaser previously invested in the aggregate in the private placements
conducted by the Company since September 21, 2011 (collectively, “Prior Offerings”), the Company will reduce the exercise
price of such Purchaser’s unexercised warrants, if any, issued by the Company in the Prior Offerings (the “Prior Warrants”)
to $0.30 (“New Warrant Exercise Price”). The Purchaser understands and agrees that the Company, in its sole and absolute
discretion, reserves the right to determine if the Purchaser’s subscription(s) in the Prior Offerings entitles such Purchaser’s
Prior Warrants to have the New Warrant Exercise Price, notwithstanding the acceptance of the Purchaser’s subscription by
the Company under this Subscription Agreement. Subject to Section 5 of this Subscription Agreement, in the event such determination
is made by the Company, no action in connection with the Prior Warrants will be required by the Purchaser and the Company will
provide such Purchaser with a determination letter setting forth which Prior Warrants and the number of such warrants were deemed
by the Company to have the exercise price equal to the New Warrant Exercise Price. The Purchaser acknowledges and agrees that any
such determination shall be binding upon the Purchaser.


 


3.Payment.  The Purchaser
will send directly a check payable to, or will make a wire transfer payment to, “CSC Trust Company of Delaware, Escrow Agent
for Rackwise, Inc.” in the full amount of the Purchase Price of the Units being subscribed for. Wire transfer instructions
are set forth under the heading “To subscribe for Units in the private offering of Rackwise, Inc.” Such funds will
be held for the Purchaser’s benefit in escrow pursuant to the terms of the Escrow Agreement entered into by and among the
Company, Escrow Agent (as defined below) and the Placement Agent (as defined below), in the form attached hereto as Exhibit
B, and will be returned promptly, without interest or offset if this Subscription Agreement is not accepted by the Company
or the Offering is terminated pursuant to its terms by the Company prior to the Closing (as defined in Section 4). Together with
a check for, or wire transfer of, the full Purchase Price, the Purchaser is delivering a completed and executed Signature Page
to this Subscription Agreement, together with the Purchaser’s completed Accredited Investor Certification, Investor Profile
and Anti-Money Laundering Information Form, in the form attached to this Subscription Agreement, and any other documents, agreements,
supplements and additions thereto required by the Company (collectively, the “Subscription Documents”).


 






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4.Deposit of Funds.  All
payments made as provided in Section 3 hereof shall be sent directly to CSC Trust Company of Delaware (the “Escrow Agent”)
or by the Company and credited as soon as practicable after receipt thereof with the Escrow Agent, in a non-interest-bearing escrow
account (the “Escrow Account”). The initial closing of the purchase and sale of the Units (the “Closing”)
shall take place as soon as practicable following the satisfaction of the conditions to the Closing set forth herein. There may
be multiple Closings until such time as all the Units offered pursuant to this Subscription Agreement are sold, subject to over-allotment
(the date of any such Closing is hereinafter referred to as a “Closing Date”). Subject to the satisfaction of the terms
and conditions of this Subscription Agreement, on each Closing Date, (i) the Escrow Agent shall deliver to the Company in accordance
with the terms of the Escrow Agreement the full Purchase Price for the Units to be issued and sold to the Purchaser(s) on such
Closing Date, and (ii) the Company shall promptly thereafter deliver directly to the Purchaser(s), the shares of Common Stock comprising
the purchased Units and the applicable number of Investor Warrants, duly executed on behalf of the Company. The last of such Closings
will occur on or before December 30, 2012, which date may be mutually extended by the Company and the Placement Agent in writing
until February 1, 2013 (the “Termination Date”). Each Closing shall occur on a Closing Date at the offices of Gottbetter
& Partners, LLP, 488 Madison Avenue, 12th Floor, New York, New York 10022 (or such other place as is mutually agreed
to by the Company and the Purchaser(s)).


 


5.Acceptance of Subscription.  The
Purchaser understands and agrees that the Company, in its sole and absolute discretion, reserves the right to accept or reject
this or any other subscription for Units, in whole or in part, prior to the Closing of such Units, notwithstanding prior receipt
by the Purchaser of notice of acceptance of this subscription. The Company shall have no obligation hereunder until the Company
shall execute and deliver to the Purchaser an executed copy of this Subscription Agreement. If this subscription is rejected in
whole or the Offering is terminated, all funds received from the Purchaser will be returned without interest or offset, and this
Subscription Agreement shall thereafter be of no further force or effect. If this subscription is rejected in part, the funds for
the rejected portion of this subscription will be returned without interest or offset, and this Subscription Agreement will continue
in full force and effect to the extent this subscription was accepted.


 


6.Placement Agent.  Gottbetter
Capital Markets, LLC has been engaged as non-exclusive placement agent in connection with the Offering (the “Placement Agent”).
The Placement Agent, a licensed broker-dealer with the Financial Industry Regulatory Authority (“FINRA”), has been
engaged as the non-exclusive Placement Agent for the Offering on a best efforts basis pursuant to the terms of a placement agency
agreement (the “Placement Agency Agreement), dated as of September 1, 2012, entered into between the Company and the Placement
Agent. The Placement Agent together with other participating broker-dealers, including sub-agents, if any, will be paid a cash
commission of up to 10% of funds raised in the Offering plus broker warrants to purchase such number of shares of Common Stock
up to a maximum of 10% of the number of shares of Common Stock contained in the Units sold in the Offering, which 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.


 






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7.Representations and Warranties
of the Purchaser.  The Purchaser hereby acknowledges, represents, warrants, and agrees as follows:


 


(a)None of the
Units, the shares of Common Stock underlying the Units, the Investor Warrants or the shares of Common Stock issuable upon exercise
of the Investor Warrants (the “Investor Warrant Shares”) offered pursuant to this Subscription Agreement are registered
under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Purchaser understands
that the offering and sale of the Units is intended to be exempt from registration under the Securities Act, by virtue of Section
4(2) thereof and the provisions of Regulation D (“Regulation D”) and/or Regulation S (“Regulation S”) each
as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) thereunder, based, in part, upon the representations,
warranties and agreements of the Purchaser contained in this Subscription Agreement;


 


(b)Prior to the
execution of this Subscription Agreement, the Purchaser and the Purchaser’s attorney, accountant, purchaser representative
and/or tax adviser, if any (collectively, the “Advisers”), have received this Subscription Agreement and all other
documents requested by the Purchaser, have carefully reviewed them and understand the information contained therein;


 


(c)Neither the
SEC nor any state securities commission or other regulatory authority has approved the Units, the Common Stock, the Investor Warrants
or the Investor Warrant Shares, or passed upon or endorsed the merits of the offering of the Units;


 


(d)All documents,
records, and books pertaining to the investment in the Units have been made available for inspection by such Purchaser and its
Advisers, if any;


 


(e)The Purchaser
and/or its Advisers, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons
acting on behalf of the Company concerning the offering of the Units and the business, financial condition and results of operations
of the Company, and all such questions have been answered to the full satisfaction of the Purchaser and its Advisers, if any;


 


(f)In evaluating
the suitability of an investment in the Company, the Purchaser has not relied upon any representation or information (oral or written)
other than as stated herein;


 


(g)The Purchaser
is unaware of, is in no way relying on, and did not become aware of the Offering of the Units through or as a result of, any form
of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication
published in any newspaper, magazine or similar media or broadcast over television, radio or the Internet (including, without limitation,
internet “blogs,” bulletin boards, discussion groups and social networking sites) in connection with the Offering and
sale of the Units and is not subscribing for the Units and did not become aware of the Offering of the Units through or as a result
of any seminar or meeting to which the Purchaser was invited by, or any solicitation of a subscription by, a person not previously
known to the Purchaser in connection with investments in securities generally;


 






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(h)Subject to Section
6(a), the Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders’
fees or the like relating to this Subscription Agreement or the transactions contemplated hereby (other than commissions to be
paid by the Company to the Placement Agent and other participating broker-dealers, if any);


 


(i)The Purchaser,
together with its Advisers, if any, has such knowledge and experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made available to it in connection with the Offering to
evaluate the merits and risks of an investment in the Units and the Company and to make an informed investment decision with respect
thereto;


 


(j)The Purchaser
is not relying on the Company, the Placement Agent or any of their respective employees or agents with respect to the legal, tax,
economic and related considerations of an investment in the Units, and the Purchaser has relied on the advice of, or has consulted
with, only its own Advisers;


 


(k)The Purchaser
is acquiring the Units solely for such Purchaser’s own account for investment purposes only and not with a view to or intent
of resale or distribution thereof, in whole or in part. The Purchaser has no agreement or arrangement, formal or informal, with
any person to sell or transfer all or any part of the Units, the shares of Common Stock, the Investor Warrants or the Investor
Warrant Shares, and the Purchaser has no plans to enter into any such agreement or arrangement;


 


(l)The Purchaser
must bear the substantial economic risks of the investment in the Units indefinitely because none of the securities included in
the Units may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable
state securities laws or an exemption from such registration is available (including, without limitation, under Regulation S).
Legends to the following effect shall be placed on the securities included in the Units to the effect that they have not been registered
under the Securities Act or applicable state securities laws:


 


THE SECURITIES REPRESENTED
HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH (I) REGULATION S UNDER THE
SECURITIES ACT, IF AVAILABLE, (II) ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, IF AVAILABLE, OR (III) UNDER
AN EFFECTIVE REGISTRATION STATEMENT, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF, MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. RELIANCE ON AN EXEMPTION FROM REGISTRATION WILL REQUIRE THE HOLDER TO PROVIDE THE
COMPANY WITH AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION MUST BE SATISFACTORY TO THE COMPANY.


 






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Appropriate notations will be made in the
Company’s stock books to the effect that the securities included in the Units have not been registered under the Securities
Act or applicable state securities laws. Stop transfer instructions will be placed with the transfer agent with respect to the
Common Stock comprising part of the Units and the Investor Warrant Shares and on the Company’s books with respect to Units
and the Investor Warrants. The Company has agreed that purchasers of the Units will have, with respect to the shares of Common
Stock comprising part of the Units and the Investor Warrant Shares, piggyback registration rights, the terms of which are discussed
in Section 18 hereof. Notwithstanding such piggyback registration rights, there can be no assurance that there will be any market
for resale of the Common Stock or the Investor Warrant Shares, nor can there be any assurance that such securities will be freely
transferable at any time in the foreseeable future. In addition, the Investor Warrants issued to Purchasers purchasing Units in
this Offering in an offshore transaction outside the United States in reliance on Regulation S will bear an additional restrictive
legend to the following effect:


 


THIS WARRANT MAY NOT BE EXERCISED
IN THE UNITED STATES OR BY OR ON BEHALF OF A “U.S. PERSON” OR A PERSON IN THE UNITED STATES UNLESS THE WARRANT AND
THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR ANY OTHER EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE.
“UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE SECURITIES ACT. RELIANCE ON
AN EXEMPTION FROM REGISTRATION WILL REQUIRE THE HOLDER TO PROVIDE THE COMPANY WITH AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION
MUST BE SATISFACTORY TO THE COMPANY.


 


(m)The Purchaser
has adequate means of providing for such Purchaser’s current financial needs and foreseeable contingencies and has no need
for liquidity of its investment in the Units for an indefinite period of time;


 


(n)The Purchaser
is aware that an investment in the Units is high risk, involving a number of very significant risks and has carefully read and
considered the matters set forth in the “Risk Factors” section of the Company’s Registration Statement on Form
S-1, as amended (Registration No. 333-179020) filed with the SEC on May 29, 2012 and, in particular, acknowledges that the Company
has a limited operating history, has had operating losses since inception, and is engaged in a highly competitive business;


 


(o)The Purchaser
either


 


		i.	meets the requirements of at least one of the suitability standards for an “accredited investor”
as that term is defined in Rule 501(a)(3) of Regulation D and as set forth on the Accredited Investor Certification contained herein;
or



 






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		ii.	is not a “U.S. Person” as defined in Regulation S; and specifically the Purchaser is
not (all Purchasers who are not a U.S. Person must INITIAL the appropriate section of the Accredited Investor
Certification to confirm their careful review and understanding of this Section 7(o)(ii)): 



 


		A.	a natural person resident in the United States of America, including its territories and possessions
(“United States”);



 


		B.	a partnership or corporation organized or incorporated under the laws of the United States;



 


		C.	an estate of which any executor or administrator is a U.S. Person;



 


		D.	a trust of which any trustee is a U.S. Person;



 


		E.	an agency or branch of a foreign entity located in the United States;



 


		F.	a non-discretionary account or similar account (other than an estate or trust) held by a dealer
or other fiduciary for the benefit or account of a U.S. Person;



 


		G.	a discretionary account or similar account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an individual) resident in the United States; and



 


		H.	a partnership or corporation: (A) organized or incorporated under the laws of any foreign jurisdiction;
and (B) formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Act) who are not
natural persons, estates or trusts.



 


And, in addition:


 


		I.	the Purchaser was not offered the Units in the United States;



 


		J.	at the time the buy-order for the Units was originated, the Purchaser was outside the United States;
and



 


		K.	the Purchaser is purchasing the Units for its own account and not on behalf of any U.S. Person
(as defined in Regulation S) and a sale of the Units has not been pre-arranged with a purchaser in the United States.



 


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


 






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(q)The Purchaser
and its Advisors have been furnished with all documents and materials relating to the business, finances and operations of the
Company and all such other information that the Purchaser and/or its Advisors have requested and deemed material to making an informed
investment decision regarding its the Securities. The Purchaser and the Advisers, if any, have had the opportunity to obtain any
additional information, to the extent the Company has such information in its possession or could acquire it without unreasonable
effort or expense, necessary to verify the accuracy of the information contained herein and all documents received or reviewed
in connection with the purchase of the Units and have had the opportunity to have representatives of the Company provide them with
such additional information regarding the terms and conditions of this particular investment and the financial condition, results
of operations, business of the Company deemed relevant by the Purchaser or the Advisers, including the annual reports, quarterly
reports, current reports, registration statements and other information filed by the Company with the SEC (see www.sec.gov), and
all such requested information, to the extent the Company had such information in its possession or could acquire it without unreasonable
effort or expense, has been provided to the full satisfaction of the Purchaser and the Advisers;


 


(r)Any information
which the Purchaser has heretofore furnished or is furnishing herewith to the Company or the Placement Agent is complete and accurate
and may be relied upon by the Company and the Placement Agent in determining the availability of an exemption from registration
under federal and state securities laws in connection with the offering of the Units. The Purchaser further represents and warrants
that it will notify and supply corrective information to the Company and the Placement Agent immediately upon the occurrence of
any change therein occurring prior to the Company’s issuance of the securities contained in the Units;


 


(s)The Purchaser
has significant prior investment experience, including investment in non-listed and non-registered securities. The Purchaser is
knowledgeable about investment considerations in development-stage companies with limited operating histories. The Purchaser has
a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur. The Purchaser’s
overall commitment to investments which are not readily marketable is not excessive in view of the Purchaser’s net worth
and financial circumstances and the purchase of the Units will not cause such commitment to become excessive. The investment is
a suitable one for the Purchaser;


 






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(t)The Purchaser
is satisfied that the Purchaser has received adequate information with respect to all matters which it or the Advisers, if any,
consider material to its decision to make this investment;


 


(u)The Purchaser
acknowledges that any estimates or forward-looking statements or projections included in this Subscription Agreement were prepared
by the Company in good faith but that the attainment of any such projections, estimates or forward-looking statements cannot be
guaranteed by the Company and should not be relied upon;


 


(v)No oral or written
representations have been made, or oral or written information furnished, to the Purchaser or the Advisers, if any, in connection
with the Offering which are in any way inconsistent with the information contained herein;


 


(w)Within five
(5) days after receipt of a request from the Company or the Placement Agent, the Purchaser will provide such information and deliver
such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company or the Placement
Agent is subject;


 


(x)The Purchaser’s
substantive relationship with the Placement Agent or subagent through which the Purchaser is subscribing for Units predates the
Placement Agent’s or such subagent’s contact with the Purchaser regarding an investment in the Units;


 


(y)THE SECURITIES
OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. RELIANCE ON AN EXEMPTION FROM REGISTRATION WILL REQUIRE THE HOLDER TO PROVIDE
THE COMPANY WITH AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION MUST BE SATISFACTORY TO THE COMPANY. THE SECURITIES HAVE NOT
BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM OR THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL;


 


The Purchaser acknowledges
that the Company was, until September 21, 2011, a “shell company” as defined in Rule 12b-2 under the U.S. Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Pursuant to Rule 144(i), securities issued by a current or former
shell company (that is, the securities included in the Units) that otherwise meet the holding period and other requirements of
Rule 144 nevertheless cannot be sold in reliance on Rule 144 until one year after the Company (a) is no longer a shell company;
and (b) has filed current “Form 10 information” (as defined in Rule 144(i)) with the SEC reflecting that it is no longer
a shell company, and provided that at the time of a proposed sale pursuant to Rule 144, the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act and has filed all reports and other materials required to be filed by Section
13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was
required to file such reports and materials), other than Current Reports on Form 8-K reports. As a result, the restrictive legends
on certificates for the securities included in the Units cannot be removed except in connection with an actual sale meeting the
foregoing requirements or pursuant to an effective registration statement. The Company included current “Form 10 information”
reflecting that it was no longer a shell company in its Current Report on Form 8-K, as amended, which was initially filed with
the SEC on September 27, 2011.


 






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(z)In making an
investment decision investors must rely on their own examination of the Company and the terms of the Offering, including the merits
and risks involved. The Purchaser should be aware that it will be required to bear the financial risks of this investment for an
indefinite period of time;


 


(aa)(For ERISA
plans only).  The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed
of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan
assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification
of plan assets and impose other fiduciary responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the decision
to invest in the Company; (b) is independent of the Company or any of its affiliates; (c) is qualified to make such investment
decision; and (d) in making such decision, the Purchaser fiduciary or Plan has not relied primarily on any advice or recommendation
of the Company or any of its affiliates;


 


(bb)The Purchaser
should check the Office of Foreign Assets Control (“OFAC”) website at <http://www.treas.gov/ofac> before making
the following representations. The Purchaser represents that the amounts invested by it in the Company in the Offering were
not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations,
including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by OFAC prohibit,
among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories,
entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website
at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit
dealing with individuals1 or entities in certain countries regardless of whether such individuals or entities appear
on the OFAC lists;


 


(cc)To the best
of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser; (3)
if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for whom
the Purchaser is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named
on an OFAC list, or a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept any
amounts from a prospective investor if such prospective investor cannot make the representation set forth in the preceding paragraph.
The Purchaser agrees to promptly notify the Company and the Placement Agent should the Purchaser become aware of any change in
the information set forth in these representations. The Purchaser understands and acknowledges that, by law, the Company may be
obligated to “freeze the account” of the Purchaser, either by prohibiting additional subscriptions from the Purchaser,
declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations, and
the Placement Agent may also be required to report such action and to disclose the Purchaser’s identity to OFAC. The Purchaser
further acknowledges that the Company may, by written notice to the Purchaser, suspend the redemption rights, if any, of the Purchaser
if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company
and the Placement Agent or any of the Company’s other service providers. These individuals include specially designated nationals,
specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs;


 





 



1
These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject
to OFAC sanctions and embargo programs.


 






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(dd)To the best
of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser; (3)
if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for whom
the Purchaser is acting as agent or nominee in connection with this investment is a senior foreign political figure2,
or any immediate family3 member or close associate4 of a senior foreign political figure, as such terms
are defined in the footnotes below; and


 


(ee)If the Purchaser
is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Purchaser receives deposits from, makes
payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Purchaser represents and warrants
to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the
Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking
activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking
activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.


 


(ff)The Purchaser
acknowledges that Adam S. Gottbetter is the owner of Gottbetter Capital Group, Inc., Gottbetter & Partners, LLP (“G&P”)
and Gottbetter Capital Markets, LLC (collectively, the “G&P Entities”). Gottbetter Capital Group, Inc. and/or its
affiliates may from time to time own shares of the Company. G&P is the corporate and securities counsel to the Company and
receives legal fees in accordance with an executed retainer agreement between the Company and G&P. Gottbetter Capital Markets,
LLC is the placement agent for this Offering, for which it will receive placement agent fees in accordance with the executed Placement
Agency Agreement.


 





 






2 A
“senior foreign political figure” is defined as a senior official in the executive, legislative, administrative,
military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign
political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign
political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a
senior foreign political figure.


 


3
“Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse,
children and in-laws.


 


4 A “close associate” of
a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with
the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international
financial transactions on behalf of the senior foreign political figure.







 






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(gg)The Purchaser
acknowledges that the net proceeds from the Offering will be used by the Company as general working capital.


 


8.Representations
and Warranties of the Company. Except as previously disclosed herein or in the Company’s SEC Filings (as defined
below), the Company represents and warrants to each of the Purchasers that:


 


(a)          The
Company is a corporation duly organized and validly existing in good standing under the laws of the State of Nevada, and has the
requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would
not have a Material Adverse Effect, as defined below. Except as set forth on Schedule 8(a), the Company has no subsidiaries.


 


(b)          (i) The
Company has the requisite corporate power and authority to enter into and perform this Subscription Agreement and the Escrow Agreement
and all other documents necessary or desirable to effect the transactions contemplated hereby (collectively the “Transaction
Documents”) to which it is a party and to issue the shares of Common Stock comprising the Units (the “Shares”),
the Investor Warrants and the Warrant Shares, if any (the Shares, the Investor Warrants and the Warrant Shares are collectively
referred to herein as the “Securities”), in accordance with the terms hereof and thereof, (ii) the execution and delivery
of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Securities have been duly authorized by the Company’s Board of Directors (the “Board
of Directors”) and no further consent or authorization is required by the Company, the Board of Directors or the Company’s
stockholders, (iii) the Transaction Documents will be duly executed and delivered by the Company, (iv) the Transaction Documents
when executed will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.


 


(c)          The
authorized and outstanding capital stock of the Company is described on Schedule 8(c) attached hereto. Except as set forth on Schedule
8(c) or as contemplated by the Transaction Documents, there are no subscriptions, convertible securities, options, warrants or
other rights (contingent or otherwise) currently outstanding to purchase any of the authorized but unissued capital stock of the
Company. Except as set forth in Schedule 8(c) or as contemplated by the Transaction Documents, the Company has no obligation to
issue shares of its capital stock, or subscriptions, convertible securities, options, warrants, or other rights (contingent or
otherwise) to purchase any shares of its capital stock or to distribute to holders of any of its equity securities, any evidence
of indebtedness or asset. No shares of the Company’s capital stock are subject to a right of withdrawal or a right of rescission
under any applicable securities law. Except as set forth in Schedule 8(c), there are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. To the knowledge of the Company, except as described in Schedule 8(c)
or otherwise contemplated by this Subscription Agreement, there are no agreements to which the Company is a party or by which it
is bound with respect to the voting (including without limitation voting trusts or proxies), registration under any applicable
securities laws, or sale or transfer (including without limitation agreements relating to pre-emptive rights, rights of first refusal,
co-sale rights or “drag-along” rights) of any securities of the Company. Except as provided in Schedule 8(c), to the
knowledge of the Company, there are no agreements among other parties, to which the Company is not a party and by which it is not
bound, with respect to the voting (including without limitation voting trusts or proxies) or sale or transfer (including without
limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities
of the Company.


 






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(d)          
The Units, the Shares, the Investor Warrants and the Warrant Shares are duly authorized and, upon issuance in accordance with the
terms hereof, shall be duly issued, fully paid and nonassessable, are free from all taxes, liens and charges with respect to the
issue thereof.


 


(e)          The
execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of Incorporation of the Company (the “Articles of
Incorporation”), any certificate of designations of any outstanding series of preferred stock of the Company or the By-Laws
of the Company (the “By-Laws”) or (ii) violate or conflict with, or result in a breach of any provision of, or constitute
a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party,
or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the Company is bound or affected except for those which
could not reasonably be expected to have a material adverse effect on the assets, business, condition (financial or otherwise),
results of operations or future prospects of the Company (a “Material Adverse Effect”). Except those which could not
reasonably be expected to have a Material Adverse Effect, the Company is not in violation of any term of or in default under its
Articles of Incorporation or By-Laws. Except those which could not reasonably be expected to have a Material Adverse Effect, the
Company is not in violation of any term of or in default under any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company. The business of the Company
is not being conducted, and shall not be conducted in violation of any material law, ordinance, or regulation of any governmental
entity, except to the extent it could reasonably be expected not to have a Material Adverse Effect. Except as specifically contemplated
by this Subscription Agreement and as required under the Securities Act and any applicable state securities laws, the Company is
not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Subscription Agreement
or the Escrow Agreement in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is unaware of any facts or circumstance, which might give rise to any of the foregoing.


 


(f)          Since
September 27, 2011, the Company has filed (and, except for certain Current Reports on Form 8-K), has timely filed (subject to 12b-25
filings with respect to certain periodic filings) all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing and all other documents
filed with the SEC prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to herein as the “SEC Filings”). The SEC Filings
are available to the Purchasers via the SEC’s EDGAR system. As of their respective dates, the SEC Filings complied in all
material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and
none of the SEC Filings, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of their respective dates, the audited financial statements of the Company included
in the Company’s SEC Filings for the fiscal years ended December 31, 2011 and December 31, 2010, and the subsequent unaudited
interim financial statements included in the Company’s SEC Filings (collectively, the “Financial Statements”)
complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements were prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be otherwise indicated in such Financial Statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements), and fairly present in all material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). As of the date hereof, there are no outstanding or unresolved comments in comment letters received
from the staff of the SEC with respect to any of the SEC Filings. No other information provided by or on behalf of the Company
to the Purchaser including, without limitation, information referred to in this Subscription Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.


 






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(g)          There
is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory
organization or body pending against or affecting the Company, wherein an unfavorable decision, ruling or finding would (i) adversely
affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Subscription
Agreement or any of the documents contemplated herein, or (ii) have a Material Adverse Effect.


 


(h)          The
Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect
to this Subscription Agreement and the transactions contemplated hereby. The Company further acknowledges that each Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Subscription Agreement
and the transactions contemplated hereby and any advice given by such Purchaser or any of their respective representatives or agents
in connection with this Subscription Agreement and the transactions contemplated hereby is merely incidental to such Purchaser’s
purchase of the Securities. The Company further represents to the Purchasers that the Company’s decision to enter into this
Subscription Agreement has been based solely on the independent evaluation by the Company and its representatives.


 


(i)          Neither
the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with the offer or sale of any of the Securities.


 


(j)          Neither
the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the
Securities under the Securities Act or cause this offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act.


 


(k)         The
Company is not involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. None of the
Company’s employees is a member of a union, and the Company believes that its relations with its one employee are good.


 






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(l)          The
Company has no proprietary intellectual property. The Company has not received any notice of infringement of, or conflict with,
the asserted rights of others with respect to any intellectual property that it utilizes.


 


(m)        Environmental
Laws. (i) The Company has complied with all applicable Environmental Laws (as defined below), except for violations of Environmental
Laws that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.
There is no pending or, to the knowledge of the Company, threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information request, relating to any Environmental Law involving
the Company, except for litigation, notices of violations, formal administrative proceedings or investigations, inquiries or information
requests that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.
For purposes of this Subscription Agreement, “Environmental Law” means any federal, state or local law, statute, rule
or regulation or the common law relating to the environment or occupational health and safety, including without limitation any
statute, regulation, administrative decision or order pertaining to (A) treatment, storage, disposal, generation and transportation
of industrial, toxic or hazardous materials or substances or solid or hazardous waste; (B) air, water and noise pollution; (C)
groundwater and soil contamination; (D) the release or threatened release into the environment of industrial, toxic or hazardous
materials or substances, or solid or hazardous waste, including without limitation emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (E) the protection of wild life, marine life and wetlands, including without
limitation all endangered and threatened species; (F) storage tanks, vessels, containers, abandoned or discarded barrels, and other
closed receptacles; (G) health and safety of employees and other persons; and (H) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials regulated under any law as pollutants, contaminants, toxic
or hazardous materials or substances or oil or petroleum products or solid or hazardous waste. As used above, the terms “release”
and “environment” shall have the meaning set forth in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (“CERCLA”).


 


(ii)         To
the knowledge of the Company there is no material environmental liability with respect to any solid or hazardous waste transporter
or treatment, storage or disposal facility that has been used by the Company.


 


(iii)        Except
to the extent it could reasonably be expected not to have a Material Adverse Effect, the Company (A) has received all permits,
licenses or other approvals required of them under applicable Environmental Laws to conduct its business and (B) is in compliance
with all terms and conditions of any such permit, license or approval.


 


(n)          The
Company does not own any real property. Except as set forth on Schedule 8(n), the Company has good and marketable title to all
of its personal property and assets free and clear of any material restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance which would have a Company Material Adverse Effect. Except as set forth on Schedule
8(n), with respect to properties and assets it leases, the Company is in material compliance with such leases and holds a valid
leasehold interest free of any liens, claims or encumbrances which would have a Material Adverse Effect.


 


(o)          The
Company is not subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect.


 






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(p)          Except
as set forth in Schedule 8(p), the Company has made and filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company has set aside
on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, and
has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. Except as set forth in Schedule 8(p), there are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction and the officers of the Company know of no basis for any such
claim.


 


(q)          Except
as set forth in Schedule 8(q) and except for arm’s length transactions pursuant to which the Company makes payments in the
ordinary course of business upon terms no less favorable than the Company could obtain from third parties, none of the officers,
directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director
or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or partner.


 


(r)          The
Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third
parties.


 


(s)          The
Company acknowledges that the Purchasers are relying on the representations and warranties made by the Company hereunder and in
the Company’s SEC Filings and that such representations and warranties are a material inducement to the Purchasers purchasing
the Units. The Company further acknowledges that without such representations and warranties of the Company made hereunder, the
Purchasers would not enter into this Subscription Agreement.


 


(t)          
The Company does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect
to the transactions contemplated by this Subscription Agreement, except for applicable brokerage and consulting fees.


 


9.Indemnification.  The
Purchaser agrees to indemnify and hold harmless the Company, the Placement Agent, and their respective officers, directors, employees,
agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever
(including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced
or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Purchaser of any covenant or agreement made by the Purchaser herein or in
any other document delivered in connection with this Subscription Agreement.


 


10.Irrevocability; Binding Effect.  The
Purchaser hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Purchaser, except as required by
applicable law, and that this Subscription Agreement shall survive the death or disability of the Purchaser and shall be binding
upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall be joint and several
and the agreements, representations, warranties, and acknowledgments herein shall be deemed to be made by and be binding upon each
such person and such person’s heirs, executors, administrators, successors, legal representatives, and permitted assigns.


 






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11.Modification.  This
Subscription Agreement shall not be modified or waived except by an instrument in writing signed by the party against whom any
such modification or waiver is sought.


 


12.Notices.  Any notice
or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be given (a) if to the Company, at 2365 Iron Point
Road, Suite 190, Folsom, CA 95630, Attn: Guy A. Archbold, CEO, with a copy to Gottbetter & Partners, LLP, 488 Madison Avenue,
12th Floor, New York, NY 10022, Attn: Scott E. Rapfogel, Esq., or (b) if to the Purchaser, at the address set forth
on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 12). Any notice or other communication given by certified mail shall be deemed given at the
time of certification thereof, except for a notice changing a party’s address which shall be deemed given at the time of
receipt thereof.


 


13.Assignability.  This
Subscription Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Purchaser
and the transfer or assignment of the shares of Common Stock or the Investor Warrants shall be made only in accordance with all
applicable laws.


 


14.Applicable Law.  This
Subscription Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts
to be wholly performed within said State.


 


15.Arbitration/Mediation. The
parties agree to submit all controversies to arbitration in accordance with the provisions set forth below and understand that:


 


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 SUBSCRIPTION 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 SUBSCRIPTION
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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16.Blue Sky Qualification.  The
purchase of Units under this Subscription Agreement is expressly conditioned upon the exemption from qualification of the offer
and sale of the Units from applicable federal and state securities laws. The Company shall not be required to qualify this transaction
under the securities laws of any jurisdiction and, should qualification be necessary, the Company shall be released from any and
all obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction.


 


17.Use of Pronouns.  All
pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.


 


18.Piggyback Registration Rights.  If
the Company at any time proposes to register any of its securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both, except with respect to registration statements on Form S-4,
S-8 or another form not available for registering (i) shares of Common Stock included in the Units and (ii) the Investor Warrant
Shares (collectively, the “Registrable Securities”) for sale to the public, provided the Registrable Securities are
not otherwise registered for resale by the Purchasers pursuant to an effective registration statement, each such time it will give
at least ten (10) days’ prior written notice to each record holder of Registrable Securities of its intention so to do. Upon
the written request of the holder, received by the Company within ten (10) days after the giving of any such notice by the Company,
to register any of the Registrable Securities not previously registered, the Company will cause such Registrable Securities as
to which registration shall have been so requested to be included with the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the sale or other disposition of the Registrable Securities
so registered by the holder of such Registrable Securities; provided that the holder provides the Company in writing with such
information regarding the holder and such holder’s securities ownership as the Company may reasonably request in connection
with preparing a registration statement. In the event that any registration pursuant to this Section 18 shall be, in whole or in
part, an underwritten public offering of Common Stock of the Company, the number of shares of Registrable Securities to be included
in such an underwriting may be reduced by the managing underwriter if and to the extent that the Company and the underwriter shall
reasonably be of the opinion that such inclusion would adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the holder in writing of any such reduction. Notwithstanding anything
to the contrary herein, the Company may withdraw or delay or suffer a delay of any registration statement referred to in this Section
18 without thereby incurring any liability to the holders. Further, the foregoing piggyback registration rights shall not apply
to any Registrable Securities that may be sold under the Securities Act without volume limitations either pursuant to Rule 144
of the Securities Act or otherwise during any ninety (90) day period.


 






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19.Confidentiality.  The
Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about the Company, not otherwise
properly in the public domain, was received in confidence. The Purchaser agrees not to divulge, communicate or disclose, except
as may be required by law or for the performance of this Subscription Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any confidential information of the Company, including any scientific,
technical, trade or business secrets of the Company and any scientific, technical, trade or business materials that are treated
by the Company as confidential or proprietary, including, but not limited to, ideas, discoveries, inventions, developments and
improvements belonging to the Company and confidential information obtained by or given to the Company about or belonging to third
parties.


 


20.Miscellaneous.


 


(a)This Subscription
Agreement, together with the attached Exhibits constitute the entire agreement between the Purchaser and the Company with respect
to the subject matter hereof and supersede all prior oral or written agreements and understandings, if any, relating to the subject
matter hereof. The terms and provisions of this Subscription Agreement may be waived, or consent for the departure therefrom granted,
only by a written document executed by the party entitled to the benefits of such terms or provisions.


 


(b)The representations
and warranties of the Company and the Purchaser made in this Subscription Agreement shall survive the execution and delivery hereof
and delivery of the shares of Common Stock and Investor Warrants contained in the Units.


 


(c)Each of the
parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged
by such party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.


 


(a)This Subscription
Agreement may be executed in one or more counterparts each of which may be executed by less than all of the parties and shall be
deemed an original, but all of which shall together constitute one and the same instrument, enforceable against the parties actually
executing such counterparts. The exchange of copies of the Subscription Agreement and of signature pages by facsimile transmission
or in pdf format shall constitute effective execution and delivery of this Subscription Agreement as to the parties and may be
used in lieu of the original Subscription 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.


 






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(b)Each provision
of this Subscription Agreement shall be considered separable and, if for any reason any provision or provisions hereof are determined
to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining
portions of this Subscription Agreement.


 


(c)Paragraph titles
are for descriptive purposes only and shall not control or alter the meaning of this Subscription Agreement as set forth in the
text.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]


 






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To subscribe for Units in the private
offering of Rackwise, Inc.:


 


		1.	Date and Fill in the number of Units being purchased and Complete and Sign the Signature
Page of the Subscription Agreement.



 


		2.	Complete and Sign the Anti-Money Laundering Information Form.



 


		3.	Initial the Accredited Investor Certification page attached to this letter.



 


		4.	Complete and Sign the Investor Profile.



 


		5.	Fax or email all forms and then send all signed original documents to:



 


Gottbetter & Partners, LLP


488 Madison Avenue, 12th
Floor


New York, NY 10022


Facsimile Number: 212.400.6901


Telephone Number: 212.400.6900


Attention: Kathleen Rush


Email: klr@gottbetter.com


 


		6.	If you are paying the Purchase Price by check, a check for the exact dollar amount of the
Purchase Price for the number of Units you are offering to purchase should be made payable to the order of “CSC Trust Company
of Delaware, as Escrow Agent for Rackwise, Inc.” and should be sent to CSC Trust Company of Delaware, Little Falls Centre
One, 2711 Centerville Road, Wilmington, DE 19808, Attention: Alan R. Halpern.



 


		7.	If you are paying the Purchase Price by wire transfer, you should send a wire transfer for
the exact dollar amount of the Purchase Price of the number of PPO Units you are offering to purchase according to the following
instructions:



 





	 	Bank Name:	PNC Bank
	 		300 Delaware Avenue
	 		Wilmington, DE 19899
	 	ABA Routing Number:	031100089
	 	Account Name:	CSC Trust Company of Delaware
	 	Account Number:	5605012373
	 	Reference:	Rackwise, Inc.; 79-1782; [insert Purchaser’s name]
	 	Escrow Agent Contact:	Alan R. Halpern


 






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RACKWISE, INC.


SIGNATURE PAGE TO THE


SUBSCRIPTION AGREEMENT


 


Purchaser hereby elects to subscribe
under the Subscription Agreement for a total of __________ ($__________) at a price of $0.15 per Unit (NOTE: to be completed by
Purchaser) and executes the Subscription Agreement.


 


Date (NOTE: To be completed by Purchaser):
__________________


 





If the Purchaser is an INDIVIDUAL, and
if purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:


	 	 	 
	 	 	 
	Print Name(s)	 	Social Security Number(s)
	 	 	 
	 	 	 
	Signature(s) of Purchaser(s)	 	Signature
	 	 	 
	 	 	 
	Date	 	Address


 


If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY OR TRUST:


	 	 	 
	 	 	 
	Name of Partnership, Corporation, Limited Liability Company or Trust	 	Federal Taxpayer Identification Number
	 	 	 
	By:	 	 	 
	
        Name:

        Title:
	 	State of Organization
	 	 	 
	Date	 	Address
	 	 	 
	
        RACKWISE, INC.

        a Nevada corporation

         
	 	 
	 	 	 
	By:	 	 	 	 
	Authorized Officer	 	 
	 	 	 










 






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ANTI MONEY LAUNDERING REQUIREMENTS


 


The USA PATRIOT Act


 


The USA PATRIOT Act is designed to detect,
deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage
firms and financial institutions. Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money
laundering programs.


 


To help you understand these efforts, we
want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.


 


What is money laundering?


 


Money laundering is the process of disguising
illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection
with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.


 


How big is the problem and why is it
important?


 


The use of the U.S. financial system by
criminals to facilitate terrorism or other crimes could well taint our financial markets. According to the U.S. State Department,
one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.


 


What are we required to do to eliminate
money laundering?


 


Under rules required by the USA PATRIOT
Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent
audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with such laws.
As part of our required program, we may ask you to provide various identification documents or other information. Until you provide
the information or documents we need, we may not be able to effect any transactions for you.


 






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MEMBER: FINRA, SIPC


 


ANTI-MONEY LAUNDERING INFORMATION FORM


The following is required in accordance
with the AML provision of the USA PATRIOT ACT.


(Please fill out and return with requested
documentation.)


 





	INVESTOR NAME:	________________________________________________
	 	 
	LEGAL ADDRESS:	________________________________________________
	 	 
	 	________________________________________________
	SSN# or TAX ID#	 
	OF INVESTOR:	________________________________________________
	 	 
	FOR INVESTORS WHO ARE INDIVIDUALS: 
	 	 






	YEARLY INCOME:  _________________	AGE:  _________
	 	 






	NET WORTH (excluding value of primary residence):  ____________________
	 	 
	OCCUPATION:   ___________________________________________________
	 	 
	ADDRESS OF EMPLOYER: __________________________________________
	 	 
	    __________________________________________
	 	 
	INVESTMENT OBJECTIVE(S):   ______________________________________







 


IDENTIFICATION & DOCUMENTATION
AND SOURCE OF FUNDS:


 


		1.	Please submit a copy of non-expired identification for the authorized signatory(ies) on the investment
documents, showing name, date of birth, address and signature. The address shown on the identification document MUST match the
Investor’s address shown on the Investor Signature Page.



 


	Current Driver’s License	or	Valid Passport	or	Identity Card


(Circle one or more)


 


		2.	If the Investor is a corporation, limited liability company, trust or other type of entity, please
submit the following requisite documents: (i) Articles of Incorporation, By-Laws, Certificate of Formation, Operating Agreement,
Trust or other similar documents for the type of entity; and (ii) Corporate Resolution or power of attorney or other similar document
granting authority to signatory(ies) and designating that they are permitted to make the proposed investment.



 


		3.	Please advise where the funds were derived from to make the proposed investment:



 


	Investments	Savings	Proceeds of Sale	Other ____________


(Circle one or more)


 


Signature:  _________________________________


 


Print Name:  _______________________________


 


Title (if applicable):  _________________________


 


Date:  ____________________________________





 


 





488 Madison Ave., 12th Fl., New
York, NY 10022-5718


T 212.400.6990              F 212.400.6999







 






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RACKWISE, INC.


ACCREDITED INVESTOR CERTIFICATION


 


	 	 	 	 	
        For Individual Investors Only

        (all Individual Investors must INITIAL
        where appropriate):

	 	 	 	 	 
	Initial	 	______	 	I have a net worth (including homes, furnishings and automobiles, but excluding for these purposes the value of my primary residence) in excess of $1 million either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse.
	 	 	 	 	 
	Initial	 	______	 	I have had an annual gross income for the past two years of at least $200,000 (or $300,000 jointly with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year.
	 	 	 	 	 
	Initial	 	______	 	I am a director or executive officer of Rackwise, Inc.
	 	 	 	 	 
	 	 	 	 	
        For Non-Individual Investors

        (all Non-Individual Investors must INITIAL
        where appropriate):

	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet at least one of the criteria for Individual Investors set forth above.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least $5 million and was not formed for the purpose of investing in the Company.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of this Agreement.
	 	 	 	 	 
	Initial	 	______	 	The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.
	 	 	 	 	 
	Initial	 	______	 	The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in the Company.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is a trust with total assets of at least $5,000,000, not formed for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000.
	 	 	 	 	 
	Initial	 	______	 	The investor certifies that it is an insurance company as defined in §2(13) of the Securities Act of 1933, as amended, or a registered investment company.


 






    	24



    	 



    

 


	 	 	 	 	
        For Non-U.S.
        Person Investors

        (all Investors who are not a U.S. Person
        must INITIAL this section):

	 	 	 	 	 
	Initial	 	______	 	
        The investor
        is not a “U.S. Person” as defined in Regulation S; and specifically the investor is not:

         

        A.a
        natural person resident in the United States of America, including its territories and possessions (“United States”);

         

        B.a
        partnership or corporation organized or incorporated under the laws of the United States;

         

        C.an
        estate of which any executor or administrator is a U.S. Person;

         

        D.a
        trust of which any trustee is a U.S. Person;

         

        E.an
        agency or branch of a foreign entity located in the United States;

         

        F.a
        non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit
        or account of a U.S. Person;

         

        G.a
        discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated,
        or (if an individual) resident in the United States; or

         

        H.a
        partnership or corporation: (i) organized or incorporated under the laws of any foreign jurisdiction; and (ii) formed by a U.S.
        Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or
        incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons,
        estates or trusts.

         

        And, in
        addition:

         

        I.the
        investor was not offered the securities in the United States;

         

        J.at
        the time the buy-order for the securities was originated, the investor was outside the United States; and

         

        K.the
investor is purchasing the securities for its own account and not on behalf of any U.S. Person (as defined in Regulation S) and
a sale of the securities has not been pre-arranged with a purchaser in the United States.



 






    	25



    	 



    

 





RACKWISE, INC.


Investor Profile


(Must be completed by Investor)


 


Section A - Personal Investor Information


 


	Investor Name(s):	 
	Individual executing Profile or Trustee:	 
	Social Security Numbers / Federal I.D. Number:	 
	Date of Birth:	 	 	 	Marital Status:	 	 
	Joint Party Date of Birth:	 	 	 	Investment Experience (Years):	 	 
	Annual Income:	 	 	 	Liquid Net Worth:	 	 
	Net Worth (excluding value of primary residence):	 
	Tax Bracket:	 	 	15% or below	 	 	25% - 27.5%	 	 	Over 27.5%
	 	 
	Home Street Address:	 
	Home City, State & Zip Code:	 
	Home Phone:	 	Home Fax:	 	Home Email:	 
	Employer:	 
	Employer Street Address:	 
	Employer City, State & Zip Code:	 
	Bus. Phone:	 	Bus. Fax:	 	Bus. Email:	 
	Type of Business:	 
	(PLACEMENT AGENT) Account Executive / Outside Broker/Dealer:
	 
	If you are a United States citizen, please list the number and jurisdiction of issuance of any other government-issued document evidencing residence and bearing a photograph or similar safeguard (such as a driver’s license or passport), and provide a photocopy of each of the documents you have listed.
	 
	If you are NOT a United States citizen, for each jurisdiction of which you are a citizen or in which you work or reside, please list (i) your passport number and country of issuance or (ii) alien identification card number AND (iii) number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard, and provide a photocopy of each of these documents you have listed.  These photocopies must be certified by a lawyer as to authenticity.  
	 
	 
	Section B – Certificate Delivery Instructions
	 
	 	 	Please deliver certificate to the Employer Address listed in Section A.
	 	 	Please deliver certificate to the Home Address listed in Section A.
	 	 	Please deliver certificate to the following address:	 
	 
	Section C – Form of Payment – Check or Wire Transfer
	 
	 	 	Check payable to CSC Trust Company of Delaware , as Escrow Agent for Rackwise, Inc.
	 	 	Wire funds from my outside account according to the “How to subscribe for Units” Page.
	 	 	The funds for this investment are rolled over, tax deferred from __________ within the allowed 60 day window.
	 
	Please check if you are a FINRA member or affiliate of a FINRA member firm: ________
	
         

         

	 	 	 
	Investor Signature	 	Date
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 






    	26



    	 



    

 


EXHIBIT A


 


Form of Investor Warrant


 


[See Exhibit 4.10]


 






    	27



    	 



    

 


EXHIBIT B


 


Escrow Agreement


 


[See Exhibit 10.25]


 






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