Document:

Exhibit 10.31

 

DALECO RESOURCES CORPORATION

NON-QUALIFIED INDEPENDENT DIRECTOR
STOCK OPTION PLAN

 

DALECO RESOURCES CORPORATION,
a corporation organized under the laws of the State of Nevada, hereby adopts this Non-Qualified Stock Option Plan (the "Plan"
as described below). The Plan provides for the grant of non-qualified stock options to participants and will be submitted for the
approval of the Company's stockholders at the first annual meeting of shareholders after the date of the Plan's initial adoption
by the Board and the Plan will become effective subject to obtaining such approval.

 

1.
 DEFINITIONS

 

Whenever the following
terms are used in this Plan, they shall have the meanings specified below unless the context clearly indicates to the contrary.

 

1.1 "Affiliate"
shall mean any corporation in which the Company owns, directly or indirectly, twenty-five percent or more of the voting stock.

 

1.2 “Award”
shall mean the granting of an Option by the Committee.

 

1.3 "Board"
shall mean the Board of Directors of the Company.

 

1.4 "Code"
shall mean the Internal Revenue Code, in effect from time to time. Reference to a specific section of the Code shall include such
section, any valid regulation promulgated thereunder and any comparable provision of any future legislation amending, supplementing
or superseding such section.

 

1.5 "Committee"
shall mean the committee which has been appointed to administer the Plan under the provisions of Section 2 of the Plan; if no committee
has been formed, it shall mean the Board.

 

1.6 "Company"
shall mean Daleco Resources Corporation, a Nevada corporation.

 

1.7 "Fair Market
Value" shall be the mean of the average of the closing bid and asked prices of the Company's common stock as quoted by
the National Association of Securities Dealers Automated Quotation System ("NASDAQ") for the five trading days immediately
preceding the date of the Award.

 

1.8 "Option"
shall mean an option granted under the provisions of Section 4 of the Plan to purchase common stock, par value $.01 per share,
of the Company.

 

1.9 "Optionee"
shall mean a Participant to whom an Option is granted.

 

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1.10 "Participant"
shall mean an "independent outside director" to whom an Option is awarded.

 

1.11 "Plan"
shall mean this Non-Qualified Stock Option Plan.

 

1.12 "Secretary"
shall mean the Secretary or Assistant Secretary of the Company.

 

1.13 "Subsidiary"
shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty percent or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

 

1.14 "Total Disability"
shall mean a permanent and total disability so determined in accordance with Section 72(m)(7) of the Code.

 

2. ADMINISTRATION

 

2.1 APPOINTMENT OF
COMMITTEE

 

The Committee shall
consist of at least three (3) Directors, appointed by and holding office at the pleasure of the Board and who are not eligible
to receive the grant of an Award.

 

2.2 DUTY AND POWER
OF COMMITTEE

 

It shall be the duty
of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have
the power to interpret the Plan and to adopt rules for the administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. The Committee shall have the discretion to determine who will receive
an Award and determine the number of shares subject to any Award consistent with the provisions of this Plan, but not otherwise.
Moreover, the Committee shall not have the authority to take any action or make any determination that would materially increase
the benefits accruing to Optionees under the Plan. The Secretary shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to effectuate the intent and purposes thereof.

 

2.3 COMMITTEE ACTIONS

 

The Committee may act
either by vote of a majority of its members at a meeting or by a memorandum or other written instrument signed by all members of
the Committee.

 

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2.4 COMPENSATION;
PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS

 

Members of the Committee
shall not receive any compensation for their services as members, but all expenses and liabilities they incur in connection with
the administration of the Plan shall be borne by the Company. The Committee may, with the approval of the Board, employ attorneys,
consultants, accountants, or other persons. The Committee, the Company, and its officers and directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made
by the Committee in good faith shall be final and binding upon all Optionees, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect
to the Plan and all members of the Committee shall be fully protected and indemnified by the Company in respect to any such action,
determination or interpretation.

 

3.  SHARES
SUBJECT TO PLAN

 

3.1 LIMITATIONS

 

The shares of stock issuable
pursuant to options shall be shares of the Company's $.01 par value common stock ("Shares"). The total number of such
Shares which may be subjected to Options granted under the Plan shall not exceed 1,600,000 in the aggregate. The Shares deliverable
upon the exercise of an Option may be made available from authorized but unissued Shares or Shares reacquired by the Company, including
Shares purchased in the open market or in private transactions.

 

3.2 EFFECT OF UNEXERCISED
OR CANCELED OPTIONS

 

If an Option expires or
is canceled for any reason without having been fully exercised or vested, the number of Shares subject to such Option which were
not purchased or did not vest prior to such expiration or cancellation will be available under the plan for subsequent Awards.

 

3.3 CHANGES IN COMPANY'S
SHARES

 

In the event that the
outstanding Shares hereafter increased or decreased or changed into or exchanged for a different number or kind of capital stock
or other securities of the Company, or of another corporation, by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, stock dividend (either in Shares or of another class of the Company's stock), and/or spin-off or
combination of Shares, appropriate adjustments shall be made by the Committee in the aggregate number and kind of Shares which
may be issued on exercise of Options.

 

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3.4 CORPORATE TRANSACTIONS

 

New Options may be
substituted for the Options granted under this Plan, or the Company's obligations as to Options outstanding under this Plan may
be assumed by an employer corporation other than the Company, or by a parent or subsidiary of such employer corporation, in connection
with any merger, consolidation, acquisition, separation, reorganization, liquidation or like occurrence in which the Company is
involved. Notwithstanding the foregoing, if such employer corporation, or parent or subsidiary of such employer corporation, does
not substitute new and substantially equivalent options for the Options granted hereunder, or assume the Options granted hereunder,
the options granted hereunder shall terminate (A) upon dissolution or liquidation of the Company, or similar occurrence, or (B)
upon any merger, consolidation, acquisition, separation, or similar occurrence, where the Company will not be a surviving corporation;
provided, however, that each Optionee shall be mailed notice at least sixty (60) days prior to such dissolution, liquidation, merger,
consolidation, acquisition, separation, or similar occurrence, and shall have at least thirty (30) days after the mailing of such
notice to exercise his or her Option in whole or in part, without regard to whether the Option is then immediately exercisable.

 

4.  STOCK
OPTIONS

 

4.1 GRANTING OF
OPTIONS

 

4.1.1.  ELIGIBILITY

 

Each outside Director
independently elected by the shareholders of the Company and not a Director who is either: (x) an officer or employee of the Company
or an affiliate of the Company, or (y) a Director nominated and/or appointed pursuant to a contract between the Company and a third
party, shall be eligible for an Award. An eligible Director shall not be entitled to more than one Award under this Plan.

 

4.1.2.  GRANTING
OF OPTIONS

 

Options may be granted
to Participants at the discretion of the Board of Directors. The Options shall be granted for a period of five (5) years from the
date of grant, and shall be in an amount not greater than 200,000 per Award.

 

4.2 TERMS OF
OPTIONS

 

4.2.1. OPTION
AGREEMENT

 

Each Option shall be evidenced
by a written stock option agreement which shall be executed by the Optionee and the Company and which shall contain such terms
and conditions as the Committee determines are required by the Plan.

 

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4.2.2.  OPTION
PRICE

 

The price of the shares
subject to each Option shall be the Fair Market Value of the Shares as of the date of the Award.

 

4.2.3.  DATE
OF GRANT, GRANTING OF AN AWARD

 

The date on which an Award
shall be granted shall be the date of the letter notifying the Optionee of the Award.

 

4.2.4.  VESTING
OF AN AWARD

 

An Option granted under
this plan shall vest as follows:

 

4.2.4.1.          After
the first full year of service as a Director of the Company, the Optionee shall be vested in one-half of the Options granted.

 

4.2.4.2.           After
the second consecutive year of service as a Director of the Company, the Optionee shall be vested in one-half of the remaining
Options granted.

 

4.2.4.3.           After
the third consecutive year of service as Director of the Company, the Optionee shall be vested in the remainder of the Options
granted.

 

4.2.4.4.           Fully
upon the occurrence of an event set forth in Paragraph 3.4 above.

 

4.2.5.  EXPIRATION
OF OPTIONS

 

4.2.5.1.           Except
as otherwise provided in Section 4.2 above, each Award shall terminate on the expiration of five (5) years from the date the Award
was granted if not exercised prior to that date.

 

4.2.5.2.           Each
Option which has become exercisable may be exercised until the first to occur of the following events:

 

4.2.5.2.1.  The
expiration of the options in accordance with their terms; or

 

4.2.5.2.2.  Three
months after the termination of the Optionee's affiliation with the Company, or any subsidiary of the Company without cause; or

 

4.2.5.2.3.  Upon
his discharge for cause; or

 

4.2.5.2.4.  The
expiration of six (6) months from the date Optionee's death.

 

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4.2.6.  ADJUSTMENT
IN OUTSTANDING OPTIONS

 

In the event that the
outstanding Shares of the stock subject to Options are increased or decreased or changed into or exchanged for a different number
or kind of capital stock of the Company, or other securities of the Company, or of another corporation, by reason of reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend (either in Shares or of another class
of the Company's stock), or spin-off or combination of shares, the Committee shall make an appropriate and equitable adjustment
in the number and kind of Shares as to which all outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be maintained as before the occurrence of such event.
Such adjustment in an outstanding Option shall be made without change in the total price applicable to the Option or the unexercised
portion of the Option (except for any change in the aggregate price resulting from rounding-off of share quantities or prices)
and with any necessary corresponding adjustment in Option price per share. Any such adjustment made by the Committee shall be final
and binding upon all Optionees, the Company and all other interested persons.

 

4.3 EXERCISE
OF OPTIONS

 

4.3.1.  PERSON
ELIGIBLE TO EXERCISE

 

Only the Optionee may
exercise an Option granted to him or her or any portion thereof except as provided in Paragraph 5.1.

 

4.3.2.  FRACTIONAL
SHARES

 

The Company shall not
be required to issue fractional shares on exercise of an option.

 

4.3.3.  MANNER
OF EXERCISE

 

An exercisable Option,
or any exercisable portion thereof, may be exercised solely by delivery to the Secretary or his or her office of all of the following:

 

4.3.3.1.           Notice
in writing signed by the Optionee stating that such Option or portion is exercised, such notice complying with all applicable rules
established by the Committee;

 

4.3.3.2.           Full
cash payment for the Shares with respect to which such Option or portion is thereby exercised and which are to be delivered to
him or her pursuant to such exercise; and

 

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4.3.3.3.           Such
representations and documents as the Committee, in its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any other federal or state securities laws or regulations.
The Committee may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and issuing stop-transfer orders to transfer agents and registrars.

 

4.3.4.CONDITIONS
TO ISSUANCE OF STOCK CERTIFICATES

 

The Company shall not
be required to issue or deliver any certificate or certificates for Shares purchased upon the exercise of any Option or portion
thereof prior to fulfillment of all of the following conditions:

 

4.3.4.1.           The
admission of such Shares to listing on all stock exchanges on which such class of stock is then listed;

 

4.3.4.2.           The
completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory body, which the Company shall, in its absolute discretion,
deem necessary or advisable;

 

4.3.4.3.           The
obtaining of any approval or other clearance from any state or federal governmental agency which the Company shall, in its absolute
discretion, determine to be necessary or advisable;

 

4.3.4.4.           The
provision for any income tax withholding which the Company shall, in its absolute discretion, determine to be necessary or advisable;
and

 

4.3.4.5.           The
lapse of such reasonable period of time following the exercise of an Option as the Company may determine, in its absolute discretion,
from time to time to be necessary or advisable for reasons of administrative convenience.

 

4.3.5.  RIGHTS
OF STOCKHOLDERS

 

An Optionee shall not
be, nor have any of the rights of, a stockholder of the Company in respect to any Shares which may be purchased upon the exercise
of any option or portion thereof unless and until certificates representing such shares have been issued by the Company to such
Optionee.

 

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5.  MISCELLANEOUS
PROVISIONS

 

5.1 OPTIONS NOT
TRANSFERABLE

 

No Option or interest
or right therein or part thereof shall be liable for the debts, contracts or engagements of the Optionee or his or her successors
in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means, whether such disposition is voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment,
or any other legal or equitable proceedings (including bankruptcy) and any attempted disposition thereof shall be null and void
and of no effect; provided, however, that nothing in this Section 5.1 shall prevent transfers by will or by the applicable laws
of descent and distribution.

 

5.2 AMENDMENT,
SUSPENSION, OR TERMINATION OF THE PLAN

 

The Plan may be wholly
or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board. However, without
approval of the Company's stockholders given within 12 months before or after the action by the Board, no action of the Board may,
modify the requirements as to eligibility for participation in this Plan, increase the limits imposed in Section 3.1 on the maximum
number of shares which may be the subject of Options granted under the Plan, amend Section 4 generally or (B) to permit the exercise
of an option after expiration of 5 years from the date the Option was granted or otherwise materially increase the benefits accruing
to participants under the Plan. Neither the amendment, suspension, nor termination of the Plan shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Option theretofore granted. No Option may be granted during any period
of suspension or after termination of the Plan.

 

5.3 LIMITATION
OF RIGHTS

 

Neither the Plan, the
granting of an Award nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding,
express or implied, between a Participant and the Company, other than as set forth in the Plan.

 

5.4 EFFECTIVE
DATE, SHAREHOLDERS APPROVAL AND DURATION

 

The Plan shall become
effective as of its adoption by the Board upon approval of the Shareholders. No Option may be exercised until this Plan is approved
by a vote of the holders of a majority of the outstanding shares of the Company's common stock at the first annual meeting of Shareholders
next following the effective date. If the Shareholders do not approve the Plan, the Plan shall not be effective and any and all
actions taken prior to such disapproval shall be null and void or shall, if necessary, be deemed to have been fully rescinded.
The period during which options may be granted shall terminate on the day following the annual meeting of shareholders in the year
2016 (unless the Plan is extended or terminated at an earlier date by the shareholders), but such termination shall not affect
the terms of any then outstanding options.

 

5.5 TITLES

 

Titles are provided herein
for convenience only and are not to serve as a basis for interpretation or construction of the Plan,

 

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TO RECORD
the adoption of this Plan, the Board has caused this instrument to be executed on this 20th day of June 2013.

 

	 	DALECO RESOURCES CORPORATION
	 	 	 
	 	By:	/s/ MICHAEL D. PARRISH
	 	 	Michael D. Parrish, Director

 

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STOCK OPTION AGREEMENT

DALECO RESOURCES CORPORATION

 

A STOCK OPTION
for a total of __________ shares of Common Stock, par value of $.01, of Daleco Resources Corporation, a Nevada corporation (herein
the "Company"), is hereby granted to _________________________________________ (herein the "Optionee"), subject
in all respects to the terms and provisions of the Non-Qualified Stock Option Plan of Daleco Resources Corporation (herein the
"Plan"), dated ____________________, which has been adopted by the Company and which is incorporated herein by reference.

A.        The
option price as determined by the Board of Directors of the Company is $____ per share.

B.         This
Option may not be exercised if the issuance of shares of Common Stock of the Company upon such exercise would constitute a violation
of any applicable Federal or State securities or other law or valid regulation. The Optionee, as a condition to his exercise of
this Option, shall represent to the Company that the shares of Common Stock of the Company that he acquires under this Option are
being acquired by him for investment and not with a present view to distribution or resale, unless counsel for the Company is then
of the opinion that such a representation is not required under the Securities Act of 1933 or any other applicable law, regulation,
or rule of any governmental agency.

C.         This
Option may not be transferred in any manner and may be exercised during the lifetime of the Optionee only by the Optionee and not
by any agent or representative thereof.

 

DALECO RESOURCES
CORPORATION

 

Date:_________________, 200__

By:_____________________________________

 

Title:___________________________________

 

The Optionee acknowledges
receipt of a copy of the Plan, a copy of which is annexed hereto, and represents that he is familiar with the terms and provisions
thereof. The Optionee hereby accepts this Option subject to all the terms and provisions of the Plan. The Option hereby agrees
to accept as binding, conclusive, and final all decisions and interpretations of the Committee of the Board of Directors upon any
questions arising under the Plan.

 

Date:____________________

By:________________________________

 

    	1Exhibit 4.1

 

For U.S. Investors:

 

THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY.
HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

For Non-U.S. Investors:

 

THESE SECURITIES WERE ISSUED IN AN OFFSHORE
TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S) PURSUANT TO REGULATION S PROMULGATED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). ACCORDINGLY, NONE OF THE SECURITIES REPRESENTED HEREBY
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED
OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND
IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE SECURITIES ACT.

 

    	 

    	 

    

 

 

12% CONVERTIBLE PROMISSORY NOTE

 

RACKWISE, INC.

 

Due __________, 2014

 

	Original Issue Date:  _______, 2013	US$_______

 

This Secured Convertible
Promissory Note is one of a series of duly authorized and issued convertible promissory notes of Rackwise, Inc., a Nevada corporation
(the “Company”), designated its 12% Secured Convertible Promissory Notes due __________, 2014 (the “Note”),
issued to ___________________________________________ (together with its permitted successors
and assigns, the “Holder”) in accordance with exemptions from registration under the Securities Act of
1933, as amended (the “Securities Act”), pursuant to the Subscription Agreement, dated as of __________, 2013
(the “Subscription Agreement”), entered into between the Company and the Holder. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Subscription Agreement.

 

ARTICLE I

 

Section 1.01         Principal
and Interest. (a) For value received, the Company hereby promises to pay to the order of the Holder, in lawful money of the
United States of America and in immediately available funds the principal sum of _________________________________________ Dollars
($_______) on __________ 2014 (the “Maturity Date”)

 

(b)          The
Company further promises to pay interest on the unpaid principal amount of this Note at a rate per annum equal to twelve percent
(12%), commencing to accrue on the date hereof and payable on the Maturity Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months for the actual number of days elapsed. Interest may be paid in cash or Common Stock of the Company
at the Company’s discretion.

 

(c)          From
and after the occurrence of an Event of Default, the interest rate shall be increased to fourteen percent (14%). In the event that
such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as
of the date of such cure; provided that the interest as calculated at such increased rate during the continuance of such Event
of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and
including the date of cure of such Event of Default.

 

(d)          Except
as otherwise set forth in this Note, the Company may not prepay any portion of the principal amount of this Note without the prior
written consent of the Holder.

 

Section 1.02        Conversion.
(a) If the Threshold Amount is not achieved, the Note is convertible at any time following the completion of the Offering, at
the option of the Holder, into shares of the Company’s 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. No fractional
shares of the Company’s Common Stock will be issued upon conversion, but the number of shares shall be rounded to the nearest
whole number of shares. “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).

 

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(b)          If
the Threshold Amount is achieved during the term of this Note, this Note together with all of the other Notes sold or to be sold
in the Offering, may be collectively converted by the Purchasers, on a one-time basis, into shares of Common Stock in an aggregate
amount which, upon issuance, will represent 85% of the Company’s issued and outstanding shares of Common Stock on a fully
diluted basis.

 

(c)          The
Holder shall have piggyback registration rights with respect to the shares of common stock issuable upon conversion.

 

Section 1.03         Absolute
Obligation/Ranking. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and liquidated damages (if any) on, this Note at the
time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This
Note ranks pari passu with all other Notes issued pursuant to the Subscription Agreement.

 

Section 1.04         Paying
Agent and Registrar. Initially, the Company will act as paying agent and registrar. The Company may change any paying agent
or registrar, by giving the Holder not less than five (5) business days’ written notice of its election to do so, specifying
the name, address, telephone number and facsimile number of the paying agent or registrar. Upon an assignment of the Note to the
Company, the Company may act as paying agent and registrar without regard to the notice provision provided above.

 

Section 1.05         Different
Denominations; Transfer. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized
denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration of transfer
or exchange. This Note and any shares of Common Stock issued upon conversion of this Note may only be offered, sold, assigned or
transferred by the Holder without the consent of the Company, provided that the provisions of the Subscription Agreement are complied
with in all respects.

 

Section 1.06         Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in
the Subscription Agreement and may be transferred or exchanged only in compliance with the Subscription Agreement and applicable
federal and state securities laws and regulations.

 

Section 1.07         Reliance
on Note Register. Prior to due presentment to the Company for transfer or conversion of this Note, the Company and any agent
of the Company may treat the person in whose name this Note is duly registered on the Note Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the
Company nor any such agent shall be affected by notice to the contrary.

 

Section 1.08         Other
Rights. In addition to the rights and remedies given it by this Note and the Subscription Agreement, the Holder shall have
all those rights and remedies allowed by applicable laws. The rights and remedies of the Holder are cumulative and recourse to
one or more right or remedy shall not constitute a waiver of the others.

 

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ARTICLE II

 

Section 2.01         Certain
Adjustments.

 

(a)          Stock
Dividends and Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of this Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by
way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then in each case the Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event, and the number of shares issuable upon conversion of this Note shall be proportionately adjusted such that the
aggregate Conversion Price of this Note shall remain unchanged. Any adjustment made pursuant to this Section 2.01(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b)          Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 2.01(a) above, if at any time
the Company grants, issues or sells any common stock equivalents or rights to purchase stock, Notes, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note
(without regard to any limitations on conversion hereof) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of
Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(c)          Pro
Rata Distributions. If the Company, at any time while this Note is outstanding, shall distribute to all holders of Common Stock
(and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or Notes to subscribe
for or purchase any security, then in each such case the Conversion Price shall be adjusted by multiplying the Conversion Price
in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets
or evidence of indebtedness or rights or Notes so distributed applicable to one outstanding share of the Common Stock as determined
by the Company’s board of directors in good faith. In either case the adjustments shall be described in a statement provided
to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately
after the record date mentioned above.

 

    	4

    	 

    

 

(d)          Calculations.
All calculations under this Section 2.01 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 2.01, the number of shares of Common Stock deemed to be issued and outstanding as of
a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

(e)          Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 2.01, the Company
shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and any resulting adjustment
to the number of shares underlying this Note and setting forth a brief statement of the facts requiring such adjustment.

 

ARTICLE III

 

Section 3.01         Events
of Default. Each of the following events shall constitute a default under this Note (each an “Event of Default”):

 

(a)          failure
by the Company to pay the principal amount when due hereunder within five (5) business days of receipt of written notice thereof;

 

(b)          failure
by the Company for five (5) business days after notice to it to comply with any of its other agreements in this Note;

 

(c)          the
Company shall: (1) make a general assignment for the benefit of its creditors; (2) apply for or consent to the appointment
of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets and properties;
(3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code; (4) file with or otherwise
submit to any governmental authority any petition, answer or other document seeking: (A) reorganization, (B) an arrangement
with creditors or (C) to take advantage of any other present or future applicable law respecting bankruptcy, reorganization,
insolvency, readjustment of debts, relief of debtors, dissolution or liquidation; (5) file or otherwise submit any answer
or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted
against it in any proceeding under any such applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of competent
jurisdiction;

 

(d)          any
case, proceeding or other action shall be commenced against the Company for the purpose of effecting, or an order, judgment or
decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in Section 3.01(c)
hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect
to the Company, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of
the assets and properties of the Company, and any of the foregoing shall continue unstayed and in effect for any period of sixty
(60) days;

 

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(e)          default
shall occur with respect to any indebtedness for borrowed money of the Company or under any agreement under which such indebtedness
may be issued by the Company and such default shall continue for more than the period of grace, if any, therein specified, if the
aggregate amount of such indebtedness for which such default shall have occurred exceeds $25,000;

 

(f)          default
shall occur with respect to any contractual obligation of the Company under or pursuant to any contract, lease, or other agreement
to which the Company is a party and such default shall continue for more than the period of grace, if any, therein specified, if
the aggregate amount of the Company’s contractual liability arising out of such default exceeds or is reasonably estimated
to exceed $25,000;

 

(g)          final
judgment for the payment of money in excess of $25,000 shall be rendered against the Company and the same shall remain undischarged
for a period of twenty (20) days during which execution shall not be effectively stayed;

 

(h)          any
event of default of the Company under any agreement, note, mortgage, security agreement or other instrument evidencing or securing
indebtedness that ranks senior in priority to, or pari passu with, the obligations under this Note and the Subscription Agreement;

 

(i)          any
material breach by the Company of any of its representations or warranties under the Subscription Agreement; or

 

(j)          any
material default, whether in whole or in part, shall occur in the due observance or performance of any obligations or other covenants,
terms or provisions to be performed under this Note or the Subscription Agreement which is not cured by the Company within five
(5) business days after receipt of written notice thereof.

 

Section 3.02        If
any Event of Default specified in clauses 3.01(c) or (d) occurs, then the full principal amount of this Note, together with any
other amounts owing in respect thereof, to the date of the Event of Default, shall become immediately due and payable without any
action on the part of the Holder, and if any other Event of Default occurs, the full principal amount of this Note, together with
any other amounts owing in respect thereof, to the date of acceleration shall become, at the Holder’s election, immediately
due and payable in cash. The Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights
and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled
by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a Note holder until such time, if
any, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

 

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ARTICLE IV

 

Section 4.01         Negative
Covenants. So long as this Note shall remain in effect and until any outstanding principal and interest and all fees and all
other expenses or amounts payable under this Note and the Subscription Agreement have been paid in full, unless all Holders shall
otherwise consent in writing, the Company shall not:

 

(a)          Senior
or Pari Passu Indebtedness. Incur, create, assume, guaranty or permit to exist any indebtedness other than indebtedness to
the Company’s present factor, that ranks senior in priority to, or pari passu with, the obligations under this Note and the
Subscription Agreement, except for (i) indebtedness existing on the date hereof and set forth in Schedule A attached hereto
and only to the extent that such indebtedness ranks senior in priority to or pari passu with the obligations under this Note and
the Purchase Agreement on the Original Issue Date,

 

(b)          (i)
indebtedness created as a result of a subsequent financing if the gross proceeds to the Company of such financing are equal to
or greater than the aggregate principal amount of the Notes and the Notes are repaid in full upon the closing of such financing
and (ii) indebtedness created as a result of the Subsequent Offering.

 

(c)          Liens.
Create, incur, assume or permit to exist any lien on any property or assets (including stock or other securities of the Company)
now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

 

(i)          liens
on property or assets of the Company existing on the date hereof and set forth on Schedule A attached hereto, provided that
such liens shall secure only those obligations which they secure on the date hereof;

 

(ii)         any
lien created under this Note or the Subscription Agreement;

 

(iii)        any
lien existing on any property or asset prior to the acquisition thereof by the Company, provided that

 

		1)	such lien is not created in contemplation of or in connection with such acquisition and

 

		2)	such lien does not apply to any other property or assets of the Company;

 

(iv)        liens
for taxes, assessments and governmental charges;

 

(v)         carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other like liens arising in
the ordinary course of business and securing obligations that are not due and payable;

 

(vi)        pledges
and deposits made in the ordinary course of business in compliance, with workmen’s compensation, unemployment insurance and
other social security laws or regulations;

 

(vii)       deposits
to secure the performance of bids, trade contracts (other than for indebtedness), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(viii)      zoning
restrictions, easements, licenses, covenants, conditions, rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business and minor irregularities of title that, in the aggregate, are not substantial
in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of
the business of the Company;

 

    	7

    	 

    

 

(ix)         purchase
money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Company, provided that

 

		1)	such security interests secure indebtedness permitted by this Note,

 

		2)	such security interests are incurred, and the indebtedness secured thereby is created, within 90
days after such acquisition (or construction),

 

		3)	the indebtedness secured thereby does not exceed 85% of the lesser of the cost or the fair market
value of such real property, improvements or equipment at the time of such acquisition (or construction) and

 

		4)	such security interests do not apply to any other property or assets of the Company;

 

(x)          liens
arising out of judgments or awards (other than any judgment that constitutes an Event of Default hereunder) in respect of which
the Company shall in good faith be prosecuting an appeal or proceedings for review and in respect of which it shall have secured
a subsisting stay of execution pending such appeal or proceedings for review, provided the Company shall have set aside on its
books adequate reserves with respect to such judgment or award; and

 

(xi)         deposits,
liens or pledges to secure payments of workmen’s compensation and other payments, public liability, unemployment and other
insurance, old-age pensions or other social security obligations, or the performance of bids, tenders, leases, contracts (other
than contracts for the payment of money), public or statutory obligations, surety, stay or appeal bonds, or other similar obligations
arising in the ordinary course of business.

 

(d)          Dividends
and Distributions. In the case of the Company, declare or pay, directly or indirectly, any dividend or make any other distribution
(by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares
of its capital stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value any shares of any class
of its capital stock or set aside any amount for any such purpose.

 

(e)          Limitation
on Certain Payments and Prepayments.

 

(i)          Pay
in cash any amount in respect of any indebtedness or preferred stock that may at the obligor’s option be paid in kind or
in other securities; or

 

(ii)         Optionally
prepay, repurchase or redeem or otherwise defease or segregate funds with respect to any indebtedness of the Company, other than
for senior indebtedness existing on the date hereof and set forth in Schedule A attached hereto, indebtedness under this
Note or the Subscription Agreement.

 

    	8

    	 

    

 

ARTICLE V

 

Section 5.01         Security;
Other Rights. The obligations of the Company to the Holder under this Note are secured pursuant to the Subscription Agreement,
the Security Agreement and the Guaranty. In addition to the rights and remedies given it by the Subscription Agreement, the Note,
the Security Agreement and the Guaranty, the Holder shall have all those rights and remedies allowed by applicable laws. The rights
and remedies of the Holder are cumulative and recourse to one or more right or remedy shall not constitute a waiver of the others.

 

ARTICLE VI

 

Section 6.01         Notice.
Notices regarding this Note shall be sent to the parties at the following addresses, unless a party notifies the other parties,
in writing, of a change of address:

 

	If to the Company, to:	Rackwise, Inc.
	 	2365 Iron Point Road, Suite 190
	 	Folsom, CA 95630
	 	Attention:  Guy A. Archbold, Chairman and CEO
	 	Facsimile:  415-358-4665
	 	 
	With a copy to:	Gottbetter & Partners, LLP
	 	488 Madison Avenue, 12th Floor
	 	New York, NY 10022
	 	Attention:  Adam S. Gottbetter, Esq.
	 	Facsimile:  212-400-6901
	 	 
	If to the Holder:	At the address set forth in the Subscription Agreement

 

Section 6.02         Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect
for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

    	9

    	 

    

 

Section 6.03         Severability.
The invalidity of any of the provisions of this Note shall not invalidate or otherwise affect any of the other provisions of this
Note, which shall remain in full force and effect.

 

Section 6.04         Entire
Agreement and Amendments. This Note, together with the Subscription Agreement, represents the entire agreement between the
parties hereto with respect to the subject matter hereof and there are no representations, warranties or commitments, except as
set forth herein. This Note may be amended only by an instrument in writing executed by the parties hereto.

 

Section 6.05         Cancellation.
 After all Principal, accrued Interest and other amounts at any time owed on this Note has been paid in full, this Note shall
automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

Section 6.06        Construction;
Headings. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be construed
against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of,
or affect the interpretation of, this Note.

 

Section 6.07         Payment
of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements.

 

Section 6.08        Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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 of this Note, and will
at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights
of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall take
all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as any of the Notes are outstanding, take all
action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose
of effecting the conversion of the Notes, the maximum number of shares of Common Stock as shall from time to time be necessary
to effect the conversion of the Notes then outstanding (without regard to any limitations on conversion).

 

    	10

    	 

    

 

Section 6.09         Amendments
and Waiver of Default. The Note may not be amended without the consent of the Holder.

 

[Remainder of Page Intentionally Left
Blank]

 

    	11

    	 

    

 

IN WITNESS WHEREOF,
with the intent to be legally bound hereby, the Company as executed this Note as of the date first written above.

 

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

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