RACKWISE, INC.


101 California Street, Suite 2450


San Francisco, CA   94111







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 $0.375 per Unit.  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-quarter (1/4) of one share of Common Stock at an exercise price of $1.00 per full share (the “Investor Warrant Shares”).  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 Equity Incentive Plan.


 


2.           Offering.  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 eight million (8,000,000) Units ($3,000,000) (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 two million six hundred sixty-six thousand, six hundred sixty-seven (2,666,667) Units ($1,000,000) to cover over-allotments.  Gottbetter Capital Markets, LLC has been engaged as non-exclusive placement agent in connection with the Offering (the “Placement Agent”).


 


3.           Payment.  The Purchaser encloses herewith a check payable to, or will immediately 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, 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 First 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 Omnibus Signature Page to this Subscription Agreement and the Registration Rights Agreement (the “Registration Rights Agreement”).  The form of Registration Rights Agreement is annexed hereto as Exhibit B.







4.           Deposit of Funds.  All payments made as provided in Section 3 hereof shall be deposited by the Company or the Placement Agent as soon as practicable after receipt thereof with CSC Trust Company of Delaware (the “Escrow Agent”), in a non-interest-bearing escrow account (the “Escrow Account”) until the earliest to occur of (a) the first closing of the sale of the Units (the “First Closing”), (b) the rejection of such subscription, and (c) the termination of the Offering by the Company or the Placement Agent.  The Units will be offered until the earlier of the time that all Units offered in the Offering are sold or until December 15, 2011, which date may be extended by the Company in writing until December 31, 2011.


 



  





  











  








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, 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 of Units 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.           [Reserved]


 


7.           Placement Agent.  The Placement Agent, a licensed broker-dealer, 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 Agent together with other participating broker-dealers, including sub-agents, if any, will be paid a cash commission equal to 10% of funds raised in the Offering from investors introduced by them plus broker warrants to purchase such number of shares of Common Stock equal to up to a maximum of 10% of the number of shares of Common Stock contained in the Units sold through them in the Offering, which warrants shall have a term of five (5) years and an exercise price of $0.375 per share.


 


8.           Representations and Warranties.  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 Units;






  





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(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 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;


 


(h)           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:






  





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THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES 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.


 


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 of the Units.  The Company has agreed that purchasers of the Units will have, with respect to the shares of Common Stock and the Investor Warrant Shares, the registration rights described in the Registration Rights Agreement. Notwithstanding such 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 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 U.S. 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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(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” set forth in the Current Report on Form 8-K of the Company filed with the SEC on September 27, 2011 and amended on November 17, 2011 (the “Super 8-K”), 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 Regulation D and as set forth on the Accredited Investor Certification contained herein; or







 




	 	
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 this section as indicated to confirm their careful review and understanding of this Section 5(o)(ii))        Initial _______:









 



	
  

	
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.







 




  





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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;


 


(q)           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 (including the Super 8-K) and other information filed by the Company with the SEC, the capitalization of the Company for a closing on the Maximum Offering Amount annexed hereto as Exhibit C and the Use of Proceeds annexed hereto as Exhibit D, 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;






  





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(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;


 


(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;






  





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(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 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 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 the Super 8-K, which was initially filed with the SEC on September 27, 2011.


 


(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;



 












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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(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;


 


(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


 





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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(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 understands that Navesink Capital Advisors (“Navesink”) and the Company have signed a consulting agreement pursuant to which Navesink is providing to the Company certain consulting services relating to business development and corporate finance.  The Purchaser acknowledges that Navesink is not a broker-dealer; that Navesink, its affiliates, and any officer, director or stockholder, client or any member of their families may from time to time receive as compensation, purchase, sell or have a position in any securities of the Company; that Navesink, and/or its directors, officers, and employees or clients may serve as a director of the Company; and that Navesink accepts no liability for any loss or damage of any kind whatsoever arising out of the use of the information contained in this Subscription Agreement or other documents relating to this Subscription Agreement.


 


(gg)           The Purchaser acknowledges Adam S. Gottbetter is the owner of Gottbetter Capital Group, Inc., Gottbetter & Partners, LLP and Gottbetter Capital Markets, LLC.  Gottbetter Capital Group, Inc. owns shares of the Company.  Gottbetter & Partners, LLP is counsel to the Company and receives legal fees in accordance with a retainer agreement.  Gottbetter Capital Markets, LLC is a placement agent for this Offering, for which it may receive placement agent fees in accordance with a placement agent agreement.


 


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.           Immaterial Modifications to the Registration Rights Agreement.  The Company may, at any time prior to the First Closing, amend the Registration Rights Agreement if necessary to clarify any provision therein, without first providing notice or obtaining prior consent of the Purchaser, if, and only if, such modification is not material in any respect.


 


13.           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 101 California Street, Suite 2450, San Francisco, CA 94111, Attn: President 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 13).  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.


 


14.           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.


 


15.           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.


 


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.           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 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.






  





11











  








19.           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.


 


(d)           This Subscription Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.


 


(e)           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.


 


(f)           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.


 


(g)           The Purchaser understands and acknowledges that there may be multiple closings for this Offering.


 


20.           Omnibus Signature Page.  This Subscription Agreement is intended to be read and construed in conjunction with the Registration Rights Agreement pertaining to the issuance by the Company of the shares of Common Stock and Investor Warrants to subscribers pursuant to this Subscription Agreement. Accordingly, pursuant to the terms and conditions of this Subscription Agreement and such related agreements it is hereby agreed that the execution by the Purchaser of this Subscription Agreement, in the place set forth herein, shall constitute agreement to be bound by the terms and conditions hereof and the terms and conditions of the Registration Rights Agreement, with the same effect as if each of such separate but related agreements were separately signed.







[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






  





12











  








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 Omnibus Signature Page of the Subscription Agreement.







 



	
2.

	
Complete and return the Anti-Money Laundering Information Form.







 



	
3.

	
Initial the Accredited Investor Certification page attached to this letter.







 



	
4.

	
Complete and return 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:  Vernon A. Archibald


Email:  vaa@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 PPO 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, 2711 Centerville Road, One little Falls Centre, 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.; 79-1648; [insert Purchaser’s name]








	 	
Escrow Agent Contact: 

	
Alan R. Halpern











  





13











  








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.






  





14











  











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


(Circle one or more)

	 	
       or       

	 	
Identity Card







 



	
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



(Circle one or more)



	 	
Other ____________








	
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


 






  





15











  








RACKWISE, INC.


OMNIBUS SIGNATURE PAGE TO THE


SUBSCRIPTION AGREEMENT


AND REGISTRATION RIGHTS AGREEMENT


 


Subscriber hereby elects to subscribe under the Subscription Agreement for a total of __________ Units at a price of $0.375 per Unit (NOTE: to be completed by subscriber) and executes the Subscription Agreement and the Registration Rights Agreement.


 


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


 









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 Subscriber(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:

	  	
State of Organization


	  	
Title:

	  	  
	  	  	  
	
Date

	  	
Address


	  	  	  
	
RACKWISE, INC.


a Nevada corporation

	  	
GOTTBETTER CAPITAL MARKETS, LLC


	  	  	  
	
By:

	  	  	
By:

	  
	
Authorized Officer

	  	
Authorized Officer







 










  





16











  








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.











  





17











  








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