Document:

Exhibit 4.2

 

Warrant Certificate No. ___

 

NEITHER THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT
SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.

 

	Effective Date: ______________ ___, 2013	Void After: ______________ ___, 2018

 

RACKWISE, INC.

 

WARRANTS TO PURCHASE COMMON STOCK

 

Rackwise, Inc., a Nevada
corporation (the “Company”), for value received on ______________ ___, 2013 (the “Effective Date”), hereby
issues to [                              ]
(the “Holder” or “Warrant Holder”) [               ]
Warrants (collectively, the “Warrant”) to purchase an aggregate of [               ]
shares, (each such share as from time to time adjusted as hereinafter provided being a “Warrant Share” and all such
shares being the “Warrant Shares”) of the Company’s Common Stock (as defined below), at the Exercise Price (as
defined below), as adjusted from time to time as provided herein, on or before ______________ ___, 2018 (the “Expiration
Date”), all subject to the following terms and conditions. This Warrant is one of a series of warrants of like tenor that
have been issued in connection with the Company’s private offering (the “Offering”), solely to accredited investors
and/or non-U.S. investors, of units in accordance with, and subject to, the terms and conditions described in the Subscription
Agreement of the Company dated ______________ ___, 2013, as the same may be amended and supplemented from time to time (the “Subscription
Agreement”). Capitalized terms not defined herein shall have the meaning given to them in the Subscription Agreement. Warrants
may not be exercised prior to the maturity date for the Notes comprising part of the Units of which the Warrants are a part. In
connection with a Threshold Conversion of the Notes comprising part of the Units sold in the Offering, this Warrant shall be cancelled
and the Company shall have no further obligation to the Holder hereunder.

 

As used in this Warrant,
(i) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City
of New York, New York, are authorized or required by law or executive order to close; (ii) “Common Stock” means the
common stock of the Company, par value $0.0001 per share, including any securities issued or issuable with respect thereto or into
which or for which such shares may be exchanged for, or converted into, pursuant to any stock dividend, stock split, stock combination,
recapitalization, reclassification, reorganization or other similar event; (iii) “Exercise Price” means $0.01 per share
of Common Stock, subject to adjustment as provided herein; (iv) “Trading Day” means any day on which the Common Stock
is traded (or available for trading) on its principal trading market; (v) “Affiliate” means any person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, a person, as such
terms are used and construed in Rule 144 promulgated under the U.S. Securities Act of 1933, as amended (the “Securities Act”)
and (vi) “Warrantholders” means the holders of Warrants issued pursuant to the Subscription Agreement.

 

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1.          DURATION
AND EXERCISE OF WARRANTS

 

(a)          Exercise
Period. Subject to prior cancellation in connection with a Threshold Conversion of the Notes, the Holder may exercise this
Warrant at any time after the maturity date for the Note, in whole or in part, on any Business Day on or before 5:00 P.M., Eastern
Time, on the Expiration Date, at which time this Warrant shall become void and of no value.

 

(b)          Exercise
Procedures.

 

(i)          While
this Warrant remains outstanding and exercisable in accordance with Section 1(a), in addition to the manner set forth in Section
1(b)(ii) below, the Holder may exercise this Warrant in whole or in part at any time and from time to time by:

 

(A)         delivery
to the Company of a duly executed copy of the Notice of Exercise attached as Exhibit A;

 

(B)         surrender
of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify
in writing to the Holder; and

 

(C)         payment
of the then-applicable Exercise Price per share multiplied by the number of Warrant Shares being purchased upon exercise of the
Warrant (such amount, the “Aggregate Exercise Price”) made in the form of cash, or by certified check, bank draft or
money order payable in lawful money of the United States of America.

 

(ii)         In
addition to the provisions of Section 1(b)(i) above, the Holder may, in its sole discretion, exercise all or any part of the Warrant
in a “cashless” or “net-issue” exercise (a “Cashless Exercise”) by delivering to the Company
(1) the Notice of Exercise and (2) the original Warrant, pursuant to which the Holder shall surrender the right to receive upon
exercise of this Warrant, a number of Warrant Shares having a value (as determined below) equal to the Aggregate Exercise Price,
in which case, the number of Warrant Shares to be issued to the Holder upon such exercise shall be calculated using the following
formula:

 

                            X           =          Y
* (A - B)

      
     A

 

with:          X =          the
number of Warrant Shares to be issued to the Holder

 

           Y =          the
number of Warrant Shares with respect to which the Warrant is being exercised

 

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          A =          the
fair value per share of Common Stock on the date of exercise of this Warrant

 

          B =          the then-current
Exercise Price of the Warrant

 

Solely for the purposes
of this paragraph, “fair value” per share of Common Stock shall mean the average Closing Price (as defined below) per
share of Common Stock for the twenty (20) trading days immediately preceding the date on which the Notice of Exercise is deemed
to have been sent to the Company. “Closing Price” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on the New York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market or any other national securities exchange,
the closing price per share of the Common Stock for such date (or the nearest preceding date) on the primary eligible market or
exchange on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock are then quoted on OTC Markets,
the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; or (c) if prices for
the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or
a similar organization or agency succeeding to its functions of reporting prices), the most recent closing bid price per share
of the Common Stock so reported. If the Common Stock is not publicly traded as set forth above, the “fair value” per
share of Common Stock shall be reasonably and in good faith determined by the Board of Directors of the Company as of the date
which the Notice of Exercise is deemed to have been sent to the Company.

 

For purposes of Rule
144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for such shares shall be deemed
to have commenced, on the date this Warrant was originally issued.

 

(iii)        Upon
the exercise of this Warrant in compliance with the provisions of this Section 1(b), the Company shall promptly issue and cause
to be delivered to the Holder a certificate for the Warrant Shares purchased by the Holder. Each exercise of this Warrant shall
be effective immediately prior to the close of business on the date (the “Date of Exercise”) that the conditions set
forth in Section 1(b) have been satisfied, as the case may be. On the first Business Day following the date on which the Company
has received each of the properly completed Notice of Exercise and the Aggregate Exercise Price in cleared funds (the “Exercise
Delivery Documents”), the Company shall transmit an acknowledgment of receipt of the Exercise Delivery Documents to the Company’s
transfer agent (the “Transfer Agent”). On or before the fifth Business Day following the date on which the Company
has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall use its best efforts
to cause its transfer agent to issue and dispatch by certified or registered mail or overnight courier (at the Holder’s cost)
to the address as specified in the Notice of Exercise, a certificate, registered in the Company’s share register in the name
of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.

 

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(c)          Partial
Exercise. This Warrant shall be exercisable, either in its entirety or, from time to time, for part only of the number of Warrant
Shares referenced by this Warrant. If this Warrant is submitted in connection with any exercise pursuant to Section 1 and the number
of Warrant Shares represented by this Warrant submitted for exercise is greater than the actual number of Warrant Shares being
acquired upon such an exercise, then the Company shall as soon as practicable and in no event later than seven (7) Business Days
after any exercise and at its own expense, issue a new Warrant of like tenor representing the right to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised.

 

(d)          Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance
with Section 16.

 

2.          ISSUANCE
OF WARRANT SHARES

 

(a)          The
Company covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) duly authorized,
fully paid and non-assessable, and (ii) free from all liens, charges and security interests, with the exception of claims arising
through the acts or omissions of any Holder and except as arising from applicable Federal and state securities laws.

 

(b)          The
Company shall register this Warrant upon records to be maintained by the Company for that purpose in the name of the record holder
of such Warrant from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner thereof
for the purpose of any exercise thereof, any distribution to the Holder thereof and for all other purposes.

 

(c)          The
Company will not, by amendment of its certificate of incorporation, by-laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the taking of all action necessary or appropriate in order to
protect the rights of the Holder to exercise this Warrant, or against impairment of such rights.

 

3.          ADJUSTMENTS
OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES

 

(a)          The
Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events described in this Section 3; provided, that notwithstanding the provisions of this
Section 3, the Company shall not be required to make any adjustment if and to the extent that such adjustment would require the
Company to issue a number of shares of Common Stock in excess of its authorized but unissued shares of Common Stock, less all amounts
of Common Stock that have been reserved for issue upon the conversion of all outstanding securities convertible into shares of
Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common Stock. If
the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment, the Company
shall use its commercially best efforts to obtain the necessary stockholder consent to increase the authorized number of shares
of Common Stock to make such an adjustment pursuant to this Section 3.

 

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(i)          Subdivision
or Combination of Stock. In case the Company shall at any time subdivide (whether by way of stock dividend, stock split or
otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior
to such subdivision shall be proportionately reduced and the number of Warrant Shares shall be proportionately increased, and conversely,
in case the outstanding shares of Common Stock of the Company shall be combined (whether by way of stock combination, reverse stock
split or otherwise) into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Shares shall be proportionately decreased. The Exercise Price and the Warrant
Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in
this Section 3(a)(i).

 

(ii)         Reorganization,
Reclassification, Consolidation, Merger or Sale.

 

(A)         If
any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of
the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected
in such a way that there is no “Change of Control” of the Company (as hereafter defined) and holders of Common Stock
shall be entitled to receive stock, securities, or other assets or property in exchange for their Common Stock (an “Organic
Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby
the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of
stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable assuming
the full exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be
made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, registration rights) shall thereafter be applicable, in relation to any shares of stock or securities
thereafter deliverable upon the exercise hereof. The Company will not effect any such Organic Change unless, prior to the consummation
thereof, the successor corporation (if other than the Company) resulting from such Organic Change purchasing such assets shall
assume by written instrument reasonably satisfactory in form and substance to the then holders of a majority of the Warrants issued
in the Offering executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on
the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such Holder may be entitled to purchase.

 

(B)         Except
as otherwise provided herein, if any recapitalization, reclassification or reorganization of the capital stock of the Company,
or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or
other transaction shall be effected in such a way that there is a “Change of Control” of the Company (as hereafter
defined) and holders of Common Stock shall be entitled to receive stock, securities, or other assets or property in exchange for
their Common Stock (a “Control Change”), then, the Holder shall be required to accept the net value of the Warrant
(the fair market value less the exercise price) in exchange for the cancellation of the Warrant. Such consideration shall be paid
to the Holder at the same time as the consideration from the Control Change is paid to the holders of the Company’s Common
Stock. As a condition of such Control Change, the Company shall be required to comply with subsection (C) below. “Change
of Control” shall mean (i) the acquisition by any person or group (as that term is defined in the Act and the rules promulgated
thereunder) in a single transaction or a series of transactions of 30% or more in voting power of the Common Stock of the Company;
(ii) a sale of substantially all of the assets of the Company to an entity that is not a subsidiary or the Company; (iii) a merger,
consolidation or reorganization involving the Company, following which the current stockholders of the Company as of the date hereof
(the “Current Stockholders”) will not have voting power with respect to at least 50% of the voting securities entitled
to vote generally in the election of directors of the surviving entity; or (iv) the consummation of a sale by the Current Stockholders
to a third party (the “Acquiring Party”) of some or all of the shares of Common Stock held by the Current Stockholders,
which sale results in the Current Stockholders having voting power with respect to less than 50% of the voting securities entitled
to vote in the election of directors of the Company.

 

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(C)         If
there is an Organic Change or a Control Change, then the Company shall cause to be mailed to the Holder at its last address as
it shall appear on the books and records of the Company, at least 10 calendar days before the effective date of the Organic Change
or the Control Change, a notice stating the date on which such Organic Change or Control Change is expected to become effective
or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their
shares for securities, cash, or other property delivered upon such Organic Change or Control Change; provided, that the failure
to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required
to be specified in such notice. The Holder is entitled to exercise this Warrant during the 10-day period commencing on the date
of such notice to the effective date of the event triggering such notice. In any event, the successor corporation (if other than
the Company) resulting from an Organic Change (but not from a Control Change) shall be deemed to assume such obligation to deliver
to such Holder such shares of stock, securities or assets even in the absence of a written instrument assuming such obligation
to the extent such assumption occurs by operation of law.

 

(b)          Certificate
as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company at its expense
shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant
a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment
is based. The certificate shall also set forth the number of shares and the amount, if any, of other property which at the time
would be received upon the exercise of the Warrant.

 

(c)          Certain
Events. If any event occurs as to which the other provisions of this Section 3 are not strictly applicable but the lack of
any adjustment would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent
and principles of such provisions, or if strictly applicable would not fairly protect the purchase rights of the Holder under this
Warrant in accordance with the basic intent and principles of such provisions, then the Company’s Board of Directors will,
in good faith, make an appropriate adjustment to protect the rights of the Holder; provided, that no such adjustment pursuant to
this Section 3(c) will increase the Exercise Price or decrease the number of Warrant Shares except as otherwise determined pursuant
to this Section 3.

 

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(d)          Adjustment
of Exercise Price Upon Issuance of Additional Shares of Common Stock. In the event the Company shall at any time prior to the
Expiration Date issue Additional Shares of Common Stock, as defined below, without consideration or for a consideration per share
less than the Exercise Price (as such amount may be adjusted just prior to such issue pursuant to this Section 3), then the Exercise
Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such
Exercise Price by a fraction, (A) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately
prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received or to be received
by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Exercise Price; and (B)
the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number
of such Additional Shares of Common Stock so issued; provided that, (i) for the purpose of this Section 3(d), all shares of Common
Stock issuable upon conversion or exchange of convertible securities outstanding immediately prior to such issue shall be deemed
to be outstanding, and (ii) the number of shares of Common Stock deemed issuable upon conversion or exchange of such outstanding
convertible securities shall be determined without giving effect to any adjustments to the conversion or exchange price or conversion
or exchange rate of such convertible securities resulting from the issuance of Additional Shares of Common Stock that is the subject
of this calculation. For purposes of this Warrant, “Additional Shares of Common Stock” shall mean all shares of Common
Stock issued by the Company after the Effective Date (including without limitation any shares of Common Stock issuable upon conversion
or exchange of any convertible securities or upon exercise of any option or warrant, on an as-converted basis), other than: (i)
shares of Common Stock issued or issuable upon conversion or exchange of any convertible securities or exercise of any options
or warrants outstanding on the Effective Date; (ii) shares of Common Stock issued or issuable by reason of a dividend, stock split,
split-up or other distribution on shares of Common Stock that is covered by Sections 3(a) above; (iii) shares of Common Stock (or
options with respect thereto) issued or issuable to employees or directors of, or consultants to, the Company or any of its subsidiaries
pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company including, but not limited to, the
Company’s 2011 Equity Incentive Plan described in the Company’s SEC Filings; (iv) any securities issued or issuable
by the Company pursuant to the Subscription Agreement; (v) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of disinterested directors of the Company, provided that any such issuance shall only be to a person which
is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in
which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities;
and (vi) securities issued to financial institutions, institutional investors or lessors in connection with credit arrangements,
equipment financings or similar transactions approved by a majority of disinterested directors of the Company. The provisions of
this Section 3(d) shall not operate to increase the Exercise Price.

 

Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 3(d), the number of Warrant Shares issuable upon exercise of this
Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product
so obtained by the adjusted Exercise Price.

 

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(e)          Notwithstanding
the provisions of this Section 3, the Company shall not be required to make any adjustment if and to the extent that such adjustment
would require the Company to issue a number of Warrant Shares in excess of its authorized but unissued shares of Common Stock,
less all amounts of Common Stock that have been reserved for issue upon the conversion of all outstanding securities convertible
into shares of Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common
Stock. If the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment,
the Company shall use its commercially best efforts to obtain the necessary stockholder consent to increase the authorized number
of shares of Common Stock to make such an adjustment pursuant to this Section 3.

 

4.          TRANSFERS
AND EXCHANGES OF WARRANT AND WARRANT SHARES

 

(a)          Registration
of Transfers and Exchanges. Subject to Section 4(c) of this Warrant, upon the Holder’s surrender of this Warrant, with
a duly executed copy of the Form of Assignment attached hereto as Exhibit B, to the Secretary of the Company at its principal
offices or at such other office or agency as the Company may specify in writing to the Holder, the Company shall register the transfer
of all or any portion of this Warrant. Upon such registration of transfer, the Company shall issue a new Warrant, in substantially
the form of this Warrant, evidencing the acquisition rights transferred to the transferee and a new Warrant, in similar form, evidencing
the remaining acquisition rights not transferred, to the Holder requesting the transfer.

 

(b)          Warrant
Exchangeable for Different Denominations. The Holder may exchange this Warrant for a new Warrant or Warrants, in substantially
the form of this Warrant, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased
hereunder, each of such new Warrants to be dated the date of such exchange and to represent the right to purchase such number of
Warrant Shares as shall be designated by the Holder. The Holder shall surrender this Warrant with duly executed instructions regarding
such re-certification of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency
as the Company may specify in writing to the Holder.

 

(c)          Restrictions
on Transfers. This Warrant may not be transferred at any time without (i) registration under the Securities Act or (ii) an
exemption from such registration and a written opinion of legal counsel addressed to the Company that the proposed transfer of
the Warrant may be effected without registration under the Securities Act, which opinion will be in form and from counsel reasonably
satisfactory to the Company.

 

5.          MUTILATED
OR MISSING WARRANT CERTIFICATE

 

If this Warrant is
mutilated, lost, stolen or destroyed, upon request by the Holder, the Company will, at its expense, issue, in exchange for and
upon cancellation of the mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant, a new Warrant, in substantially
the form of this Warrant, representing the right to acquire the equivalent number of Warrant Shares; provided, that, as a prerequisite
to the issuance of a substitute Warrant, the Company may require satisfactory evidence of loss, theft or destruction as well as
an indemnity from the Holder of a lost, stolen or destroyed Warrant.

 

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6.          PAYMENT
OF TAXES

 

The Company will pay
all transfer and stock issuance taxes attributable to the preparation, issuance and delivery of this Warrant and the Warrant Shares
(and replacement Warrants) including, without limitation, all documentary and stamp taxes; provided, however, that the Company
shall not be required to pay any tax in respect of the transfer of this Warrant, or the issuance or delivery of certificates for
Warrant Shares or other securities in respect of the Warrant Shares to any person or entity other than to the Holder.

 

7.          FRACTIONAL
WARRANT SHARES

 

No fractional Warrant
Shares shall be issued upon exercise of this Warrant. The Company, in lieu of issuing any fractional Warrant Share, shall round
down the aggregate number of Warrant Shares issuable to a Holder to the nearest whole share.

 

8.          NO
STOCK RIGHTS AND LEGEND

 

No holder of this Warrant,
as such, shall be entitled to vote or be deemed the holder of any other securities of the Company that may at any time be issuable
on the exercise hereof, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, the
rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting
stockholders (except as provided herein), or to receive dividends or subscription rights or otherwise (except as provide herein).

 

Each certificate for
Warrant Shares initially issued upon the exercise of this Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION
OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.”

 

9.          REGISTRATION
RIGHTS

 

The Holder shall be
entitled to piggyback registration rights with respect to the Warrant Shares to the extent provided in the Subscription Agreement.

 

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10.         NOTICES

 

All notices, consents,
waivers, and other communications under this Warrant must be in writing and will be deemed given to a party when (a) delivered
to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile
or e-mail with confirmation of transmission by the transmitting equipment; (c) received or rejected by the addressee, if sent by
certified mail, return receipt requested, if to the registered Holder hereof; or (d) seven days after the placement of the notice
into the mails (first class postage prepaid), to the Holder at the address, facsimile number, or e-mail address furnished by the
registered Holder to the Company in accordance with the Subscription Agreement by and between the Company and the Holder, or if
to the Company, to it at 2365 Iron Point Road, Suite 190, Folsom, CA 95630, Attention: Chief Executive Officer (or to such other
address, facsimile number, or e-mail address as the Holder or the Company as a party may designate by notice the other party) with
a copy to Gottbetter & Partners, LLP, 488 Madison Avenue, 12th Floor, New York, NY 10022, Attention: Adam S. Gottbetter,
Esq.

 

11.         SEVERABILITY

 

If a court of competent
jurisdiction holds any provision of this Warrant invalid or unenforceable, the other provisions of this Warrant will remain in
full force and effect. Any provision of this Warrant held invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.

 

12.         BINDING
EFFECT

 

This Warrant shall
be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, and the registered Holder
or Holders from time to time of this Warrant and the Warrant Shares.

 

13.         SURVIVAL
OF RIGHTS AND DUTIES

 

This Warrant shall
terminate and be of no further force and effect on the earlier of 5:00 p.m. Eastern Time, on the Expiration Date or the date on
which this Warrant has been exercised in full.

 

14.         GOVERNING
LAW

 

This Warrant will be
governed by and construed under the laws of the State of New York without regard to conflicts of laws principles that would require
the application of any other law.

 

15.         DISPUTE
RESOLUTION

 

In the case of a dispute
as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two Business Days of receipt of the Notice of Exercise
giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination
or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall, within two Business Days, submit via facsimile (a) the disputed
determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder
or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed
determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.

 

    	10

    	 

    

 

16.         NOTICES
OF RECORD DATE

 

Upon (a) any establishment
by the Company of a record date of the holders of any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or right or option to acquire securities of the Company, or any other
right, or (b) any capital reorganization, reclassification, recapitalization, merger or consolidation of the Company with or into
any other corporation, any transfer of all or substantially all the assets of the Company, or any voluntary or involuntary dissolution,
liquidation or winding up of the Company, or the sale, in a single transaction, of a majority of the Company’s voting stock
(whether newly issued, or from treasury, or previously issued and then outstanding, or any combination thereof), the Company shall
mail to the Holder at least ten (10) Business Days, or such longer period as may be required by law, prior to the record date specified
therein, a notice specifying (i) the date established as the record date for the purpose of such dividend, distribution, option
or right and a description of such dividend, option or right, (ii) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up, or sale is expected to become effective and (iii) the
date, if any, fixed as to when the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reorganization, reclassification, transfer, consolation, merger, dissolution,
liquidation or winding up.

 

17.         RESERVATION
OF SHARES

 

Subject to Section
3(e) of this Warrant, the Company shall reserve and keep available out of its authorized but unissued shares of Common Stock for
issuance upon the exercise of this Warrant, free from pre-emptive rights, such number of shares of Common Stock for which this
Warrant shall from time to time be exercisable. The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation. Subject to Section
3(e) of this Warrant, without limiting the generality of the foregoing, the Company covenants that it will use commercially reasonable
efforts to take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Warrant Shares upon the exercise of this Warrant and use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents, including but not limited to consents from the Company’s stockholders or Board of
Directors or any public regulatory body, as may be necessary to enable the Company to perform its obligations under this Warrant.

 

18.         NO
THIRD PARTY RIGHTS

 

This Warrant is not
intended, and will not be construed, to create any rights in any parties other than the Company and the Holder, and no person or
entity may assert any rights as third-party beneficiary hereunder.

 

[Signature page follows]

 

    	11

    	 

    

 

IN WITNESS WHEREOF, the Company has caused
this Warrant to be duly executed as of the date first set forth above.

 

	 	RACKWISE, INC.
	 	 	 
	 	By:	                 
	 	Name:  Guy A. Archbold
	 	Title:    President and Chief Executive Officer

 

    	 

    	 

    

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

(To be executed by the Holder of Warrant
if such Holder desires to exercise Warrant)

 

To Rackwise, Inc.:

 

The undersigned hereby
irrevocably elects to exercise this Warrant and to purchase thereunder, ___________________ shares of Rackwise, Inc. common stock
issuable upon exercise of the Warrant and delivery of (i) $_________ (in cash as provided for in the foregoing Warrant) and any
applicable taxes payable by the undersigned pursuant to such Warrant; or (ii) __________ shares of Common Stock (pursuant to a
Cashless Exercise in accordance with Section 1(b)(ii) of this Warrant).

 

The undersigned requests
that certificates for such shares be issued in the name of:

 

 

_________________________________________

(Please print name, address and social
security or federal employer

identification number (if applicable))

 

_________________________________________

 

_________________________________________

 

If the shares issuable
upon this exercise of the Warrant are not all of the Warrant Shares which the Holder is entitled to acquire upon the exercise of
the Warrant, the undersigned requests that a new Warrant evidencing the rights not so exercised be issued in the name of and delivered
to:

 

 

_________________________________________

(Please print name,
address and social security or federal employer

identification number (if applicable))

 

_________________________________________

 

_________________________________________

 

	 	Name of Holder (print):	 

 

	 	(Signature):	 

 

	 	(By:)	 

 

	 	(Title:)	 

 

	 	Dated:	 

 

    	 

    	 

    

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED,
___________________________________ hereby sells, assigns and transfers to each assignee set forth below all of the rights of the
undersigned under the Warrant (as defined in and evidenced by the attached Warrant) to acquire the number of Warrant Shares set
opposite the name of such assignee below and in and to the foregoing Warrant with respect to said acquisition rights and the shares
issuable upon exercise of the Warrant:

 

	Name of Assignee	 	Address	 	Number of Shares
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

If the total of the
Warrant Shares are not all of the Warrant Shares evidenced by the foregoing Warrant, the undersigned requests that a new Warrant
evidencing the right to acquire the Warrant Shares not so assigned be issued in the name of and delivered to the undersigned.

 

	 	Name of Holder (print):	 

 

	 	(Signature):	 

 

	 	(By:)	 

 

	 	(Title:)	 

 

	 	Dated:Exhibit 10.1

 

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 $10,000 per Unit (the “Purchase Price”)1.
Each Unit consists of (i) $10,000 principal amount of 12% Secured Convertible Promissory Notes of the Company (each a “Note”
and collectively the “Notes”), and (ii) eighty thousand (80,000) five (5) year warrants (each, an “Investor
Warrant” and collectively, the “Investor Warrants”), each to purchase one (1) share of the Company’s common
stock, $0.0001 par value per share (the “Common Stock”), at an exercise price of $0.01 per share. The form of Note
is annexed hereto as Exhibit A. The form of Investor Warrant is annexed hereto as Exhibit B.

 

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

 

 

1 Provided that the full amount
of the Navesink RACK Purchase Price (as defined in Section 6 of this Agreement) paid by all of the investors to Navesink RACK
(as defined in Section 6 of this Agreement) shall be considered as the Purchase Price under this Agreement, notwithstanding that
the aggregate Navesink RACK Purchase Price will be lower than the aggregate Purchase Price for the number of Units to be sold
to Navesink RACK.

 

    	 

    	 

    

 

Notwithstanding the
foregoing, if a minimum of $1,500,000 in Units are purchased by Purchasers, the Purchasers may collectively, on a one time basis,
at any time during their remaining term, convert the Notes, including all accrued interest due thereon (the “Threshold Conversion”),
into shares of Common Stock (the “Conversion Shares”) in an amount which upon issuance will represent 85% of the Company’s
issued and outstanding shares of Common Stock on a fully diluted bases. By agreement the Purchasers, Navesink RACK, LLC and Black
Diamond Financial Group, LLC (together with their respective member, assigns and affiliates) will each receive 42.5% of the Conversion
Shares without regard to their respective subscription amounts. The Purchasers may determine to convert the Notes prior to the
completion of the Offering. In such event, subscriptions for additional Units otherwise issuable to the Purchasers in connection
with subsequent subscriptions will be treated as contributions to capital. In conjunction with the conversion and the issuance
of the Conversion Shares, the Investor Warrants purchased by the Purchasers shall be cancelled. Loans to the Company made by Navesink
RACK, LLC on April 12, 2013 ($112,500) and on May 15, 2013 ($200,035) and by Black Diamond Financial Group, LLC in May 2013 ($500,000)
shall be rolled into the Offering and counted towards the achievement of the Threshold Amount.

 

The Notes will be secured
by the Company’s assets as provided in the Security Agreement, in the form annexed hereto as Exhibit E, to be entered
into on behalf of the Purchasers (the “Security Agreement”) and will be senior to all indebtedness of the Company,
except for the Company’s indebtedness to its current factor, trade debt and as otherwise set forth on Schedule 8(e).
The interest payable on the Notes will accrue until the earlier of payment or conversion and will be payable in cash or Common
Stock at the discretion of the Company.

 

The Investor Warrants
will be exercisable on a cashless basis. The Common Stock underlying the Investor Warrant and Notes will have piggyback registration
rights. Purchasers will have the right to participate in subsequent Company financings on the same terms and conditions as other
investors in such financings.

 

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 five hundred (500) Units or $5,000,000 (the “Maximum Offering
Amount”). No minimum amount of Units must be sold to close and complete the Offering.

 

3.           Payment.  The
Purchaser will send directly a check payable to, or will make a wire transfer payment to the Company 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.” 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”).

 

    	2

    	 

    

 

4.          Deposit
of Funds.  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 (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 Purchaser shall deliver to the Company or to persons as otherwise directed by the Company 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 Notes and Investor Warrants comprising the purchased Units, duly executed
on behalf of the Company. The last of such Closings will occur on or before June 30, 2013 (the “Initial Offering Period”),
which date may be mutually extended at the discretion of the Issuer and the Depositor for up to an additional 90 days (this additional
period and the Initial Offering Period shall be referred to as the “Offering Period”, and the last date of the Offering
shall be referred to as 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 Placement Agent).

 

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.  (a)     The Placement Agent, a licensed broker-dealer
with the Financial Industry Regulatory Authority (“FINRA”), has been engaged as the 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 April 10, 2013, entered into between the Company, Navesink RACK, LLC, a Delaware limited labiality company (“Navesink
RACK”), and the Placement Agent. The Placement Agent together with other participating broker-dealers, including sub-agents,
if any, was paid a cash commission of up to 10% of the gross proceeds received by Navesink RACK form the sale of its Class B LLC
Membership Interests to its investors (the “Navesink RACK Purchase Price”) for the purposes of Navesink RACK purchasing
the Units in the Offering (the “Navesink Offering”), the proceeds of which are now being used to purchase the Units.
In addition, Navesink RACK will deliver to the Placement Agent Class B Membership Interests of Navesink RACK equal to 5% of the
number of Class B Membership Interests sold in the Navesink Offering. The Placement Agent was also paid a non-accountable expense
allowance at each closing of the Navesink Offering not to exceed 3% of the gross proceeds raised in the Navesink Offering. Notwithstanding
the foregoing, the Placement Agent shall not receive any cash commissions, broker warrants or non-accountable expense allowance
payments with respect to any investments in the Offering by Black Diamond Financial Group LLC.

 

(b)          The
Purchaser understands that Adam S. Gottbetter is the owner of Gottbetter Capital Group, Inc., Gottbetter & Partners, LLP (“G&P”)
and Gottbetter Capital Markets, LLC. Gottbetter Capital Group, Inc., Adam S. Gottbetter and/or another affiliate of Mr. Gottbetter
may own securities of the Company. G&P has been and will continue as the Company’s corporate and securities counsel.
Such engagement of G&P by the Company is pursuant to an executed written agreement between the Company and G&P. Gottbetter
Capital Markets, LLC is acting as a placement agent for the Offering.

 

    	3

    	 

    

 

(c)          In
evaluating the suitability of an investment in the Units, the Purchaser has read and is making the representations set forth in
Exhibit C to this Agreement. 

 

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

 

(a)          None
of the Units, the Notes or the shares of Common Stock issuable upon conversion of the Notes (the “Note Conversion Shares”),
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 Notes, the Note Conversion
Shares, 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;

 

    	4

    	 

    

 

(h)          Subject
to Section 6, 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. Except as permitted by such Purchaser’s constituent
documents, the Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part
of the Units, Notes, Note Conversion Shares, 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.

 

    	5

    	 

    

 

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
Note Conversion Shares and the Investor Warrant Shares and on the Company’s books with respect to Units, the Notes and the
Investor Warrants. The Company has agreed that purchasers of the Units will have, with respect to the shares of Common Stock comprising
the Note Conversion Shares 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 Note Conversion Shares 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, Notes and 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 SECURITY MAY NOT BE CONVERTED
OR EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A “U.S. PERSON” OR A PERSON IN THE UNITED STATES UNLESS THIS
SECURITY 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 Annual Report on Form
10-K, initially filed with the SEC on April 16, 2013 (File No. 000-54519) 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

 

    	6

    	 

    

 

		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.

 

    	7

    	 

    

 

(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 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 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;

 

    	8

    	 

    

 

(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 July 18, 2012, a “shell company” as defined in Rule 12b-2 under the Exchange Act. Pursuant
to Rule 144(i), securities issued by a current or former shell company (that is, the Securities) 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 Commission 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 cannot be removed except in connection with an actual sale meeting
the foregoing requirements or pursuant to an effective registration statement.

 

    	9

    	 

    

 

(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 individuals2 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;

 

 

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

 

    	10

    	 

    

 

(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 figure3,
or any immediate family4 member or close associate5 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., Bretton James, Inc., Gottbetter
& Partners, LLP (“G&P”) and Gottbetter Capital Markets, LLC (collectively, the “G&P Entities”).
Gottbetter Capital Group, Inc., Bretton James, Inc. and/or their 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.

 

 

3 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.

 

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

 

5 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.

 

    	11

    	 

    

 

(gg)         The
Purchaser acknowledges that the net proceeds from the Offering will be used by the Company set forth in Exhibit D, annexed
hereto.

 

(hh)         The
Purchaser will not engage in any short sales with respect to the Common Stock until the later of maturity or full conversion of
the Purchaser’s Note.

 

8.           Representations
and Warranties of the Company. Except as previously disclosed herein, in the Company’s SEC Filings (as defined
below) and the schedules referred to in this Section 8 (collectively with the other Schedules
to this Agreement, the “Schedules”), which Schedules shall be deemed a part hereof and shall qualify any representation
or otherwise made herein, 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, the Security Agreement
and the Escrow Agreement and all other documents necessary or desirable to effect the transactions contemplated hereby (collectively
with the Notes, the Investor Warrants, the Guaranty and all exhibits and schedules hereto and thereto and any other documents or
agreements executed in connection with the transactions contemplated hereunder, the “Transaction Documents”) to which
it is a party and to issue the Notes and Note Conversion Shares, if any, the Investor Warrants and the Warrant Shares, if any (the
Notes, Note Conversion 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 or its subsidiary (as applicable), (iv) the Transaction Documents
when executed will constitute the valid and binding obligations of the Company or its subsidiary (as applicable) enforceable against
the Company or its subsidiary (as applicable) 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.

 

    	12

    	 

    

 

(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), the SEC Filings 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.

 

(d)          Except
as set forth on Schedule 8(d), the Units, the Notes, the Note Conversion 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)          Except
as set forth on Schedule 8(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.

 

    	13

    	 

    

 

(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, 2012 and December 31, 2011, 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.

 

(g)          Except
as set forth on Schedule 8(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.

 

    	14

    	 

    

 

(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.

 

(l)          The
Company has no proprietary intellectual property. Except as set forth in Schedule 8(l), 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)          (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”).

 

    	15

    	 

    

 

(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 “Permitted Liens”), 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)          Except
as set forth in Schedule 8(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.

 

(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.

 

    	16

    	 

    

 

(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.

 

(u)          Each
award granted by the Company under the Company’s equity compensation plan was granted (i) in accordance with the terms of
the Company’s equity compensation plan and (ii) with an exercise price (if applicable) at least equal to the fair market
value of the Common Stock on the date such award would be considered granted under GAAP and applicable law. No award granted under
the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, equity compensation awards prior to, or otherwise knowingly coordinate the grant
of such awards with, the release or other public announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.

 

(v)         Neither
the Company nor any subsidiary of the Company nor, to the Company's knowledge, any director, officer, agent, employee or Affiliate
of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“OFAC”).

 

 (w)          Except
as set forth on Schedule 8(w), no indebtedness of the Company, at the Closing, will be senior to, or pari passu with,
the Notes in right of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution
or otherwise.

 

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.

 

    	17

    	 

    

 

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.

 

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 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 Notes 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. 

 

    	18

    	 

    

  

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) the Note Conversion Shares 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.

 

    	19

    	 

    

 

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. In the event that any signature is delivered by facsimile transmission or by electronic delivery
of a data file containing an electronic facsimile of a signature, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile were an
original thereof. 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)          This
Agreement is intended to be read and construed in conjunction with the Notes, the Investor Warrants, the Security Agreement and
the Guaranty. Accordingly, pursuant to the terms and conditions of this Agreement, the Security Agreement and the Guaranty, it
is hereby agreed that the execution by the Purchaser of this Agreement, in the place set forth on the Omnibus Signature Page below,
shall constitute agreement to be bound by the terms and conditions hereof and the terms and conditions of the Security Agreement
and the Guaranty, with the same effect as if each of such separate but related agreement were separately signed by such Purchaser.
“Guaranty” means the Guaranty, substantially in the form of Exhibit F attached hereto, executed by each of the
Company’s subsidiaries (as defined below) in favor of each Purchaser, pursuant to which each of them guarantees the obligations
of the Company under the Transaction Documents.

 

    	20

    	 

    

 

(c)          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 Notes and Investor Warrants contained in the Units.

 

(d)          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.

 

(e)          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.

 

(f)          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.

 

(g)          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] 

 

    	21

    	 

    

 

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:

 

Rackwise, Inc.

2365 Iron Point Road, Suite 190

Folsom, CA 95630

Email: dsanakidis@rackwise.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 “Rackwise, Inc.” and should be sent to Rackwise, Inc., at 2365 Iron Point Road, Suite 190,
Folsom, CA 95630, Attention: Jeff Winzeler, CFO.

 

		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:	Mechanics Bank
	 	 	4354 Town Center Blvd.
	 	 	El Dorado Hills, CA 95762
	 	ABA #:	121102036
	 	Acct No.:	041790944
	 	Acct Name:	Rackwise, Inc.
	 	Email:	dsanakidis@rackwise.com

  

    	22

    	 

    

 

RACKWISE, INC.

OMNIBUS SIGNATURE PAGE TO

SUBSCRIPTION AGREEMENT,

SECURITY AGREEMENT AND GUARANTY

 

Purchaser hereby elects to subscribe
under the Subscription Agreement for a total of __________ Units (NOTE: to be completed by Purchaser) ($____________________) at
a price of $10,000 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	 	 

 

 

  

    	 

    	 

    

 

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. We will ask
you for your name, address, date of birth and other information that will allow us to identify you. We will ask to see a non-expired
valid issued government identification, such as your driver’s license or other identifying documents. Until you provide
the information or documents we need, we may not be able to effect any transactions for you. 

 

    	 

    	 

    

 

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

 

    	 

    	 

    

 

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.

  

    	 

    	 

    

 

	 	 	 	 	
        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.

  

    	 

    	 

    

 

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
	 
	 	 	Wire funds or payment by check in accordance with 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
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

  

    	 

    	 

    

 

EXHIBIT A

 

[See Exhibit 4.1] 

 

    	 

    	 

    

 

EXHIBIT B

 

[See Exhibit 4.2] 

 

    	 

    	 

    

 

EXHIBIT C 

 

PURCHASER ACKNOWLEDGMENTS

 

These Acknowledgements
are being made in connection with the Subscription Agreement, dated as of _________________ ___, 2013, by and among the Company
and the undersigned Purchaser (the “Agreement”). Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Agreement.

 

Without limiting the
representations and warranties of the undersigned Purchaser (“I” or “me”) contained in the Agreement, I
hereby acknowledge:

 

		•	I have carefully studied the Agreement with my tax, accounting and legal advisors and understand
their provisions.

 

		•	I am an “accredited investor” under the Securities Act and have extensive knowledge
and experience in financial and business matters.

 

		•	I have adequate means of providing such my current financial needs and foreseeable contingencies
and have no need for liquidity of my investment in the Units for an indefinite period of time.

 

		•	My investment in the Units is extremely risky. I can afford a complete loss of my investment
and have been advised not to invest if this is not the case.

 

	 	PURCHASER:
	 	 
	 	By:	 
	 	Name of Purchaser:  
	 	Name of Signatory:  
	 	Title of Signatory:  

  

    	 

    	 

    

 

EXHIBIT D

 

[provided separately]

 

    	 

    	 

    

 

EXHIBIT E

 

[See Exhibit 10.2]

 

    	 

    	 

    

 

EXHIBIT F

 

[See Exhibit 10.3]

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