SECURITIES PURCHASE AGREEMENT

COPSYNC, INC.

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) is made as of October 14, 2009, by and among COPsync, Inc., a Delaware corporation (the “ Company ”), and the persons and entities (each, an “ Investor ” and collectively, the “ Investors ”) listed on the Schedule of Investors attached hereto as Exhibit A (the “ Schedule of Investors ”).

SECTION 1

Authorization, Sale and Issuance of Series B Preferred Stock   and Warrants

1.1       Authorization

.  The Company will, prior to the Closing (as defined below), authorize (a) the sale and issuance of up to 375,000 shares (the “ Shares ”) of the Company’s Series B Preferred Stock, par value $0.0001 per share (the “ Series B Preferred ”), having the rights, privileges, preferences and restrictions set forth in the Series B Convertible Preferred Stock Certificate of Designations of the Company, in the form attached hereto as Exhibit B (the “ Certificate of Designations ”); (b) the issuance of warrants, in the form attached hereto as Exhibit C (the “ Warrants ”), for the purchase of up to 3,000,000 shares of the Company’s Common Stock, par value $0.0001 per shares (the “ Common Stock ”); and (c) the reservation of shares of Common Stock for issuance upon conversion of the Shares (the “ Conversion Shares ”) and upon exercise of the Warrants (the “ Warrant Shares ”).

1.2       Sale and Issuance of Shares

.  Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase, and the Company agrees to sell and issue to each Investor, the number of Shares set forth in the column designated “Number of Series B Shares” opposite such Investor’s name on the Schedule of Investors, at a cash purchase price of $4.00 per share (the “ Purchase Price ”).  The Company’s agreement with each Investor is a separate agreement, and the sale and issuance of the Shares to each Investor is a separate sale and issuance.

1.3       Issuance of Warrants

.  The Company shall issue to each Investor a Warrant to purchase up to the number of Warrant Shares equal to twenty percent (20%) the number of Conversion Shares issuable upon conversion of the Shares purchased by such Investor pursuant to Section  1.2 of this Agreement, rounded up to the nearest whole number.  The Warrants shall be exercisable at a price per share equal to $0.20 per Warrant Share, subject to adjustment in accordance with the terms of the Warrants.  The Company’s agreement with each Investor is a separate agreement, and the issuance of a Warrant to each Investor is a separate issuance.

1.4            Use of Proceeds

.  The Company will use the proceeds from the sale of the Shares and Warrant Shares for ordinary and necessary expenses in the normal course of the Company’s business.

SECTION 2

Closing and Delivery

2.1       Closing

. 

(a)      The closing of the purchase, sale and issuance of the Shares   and the Warrants (the “ Closing ”) shall take place at the offices of Phillips & Reiter, PLLC, 6805 Capital of Texas Highway North, Suite 318, Austin, Texas 78731, at 4:00 p.m. local time on the date hereof, or such other location or date as the Company and Investors representing a majority of the Shares shall agree, which Closing may be implemented by the exchange of signature pages by facsimile or email.  At the Closing, the Company will issue and sell the Shares and the Warrants to the Investors and each of the Investors will purchase the number of Shares and Warrants indicated opposite such Investors’ name on Exhibit A.

(b)      At the Closing, each Investor will execute this Agreement and the Investors’ Rights Agreement in substantially the form attached hereto as Exhibit D (the “ Rights Agreement ,” and together with this Agreement, the “ Agreements ”).

2.2       Delivery

.  At the Closing, the Company will deliver to each Investor (i) a copy of instructions to the transfer agent for the Company to issue to such Investor a certificate registered in such Investor’s name representing the number of Shares that such Investor is purchasing, and (ii) an executed Warrant to purchase up to the number of Warrant Shares equal to twenty percent (20%) of the number of Conversion Shares issuable upon conversion of the Shares purchased by such Investor, rounded up to the nearest whole number, against payment of the purchase price therefor as set forth in the column designated “Purchase Price” opposite such Investor’s name on the Schedule of Investors, by (a) certified check payable to the Company, or (b) a confirmed wire transfer in accordance with the Company’s instructions.

SECTION 3

Representations and Warranties of the Company

A Schedule of Exceptions, attached hereto as Exhibit E (the “ Schedule of Exceptions ”) shall be delivered to the Investors in connection with each Closing.  Except as set forth on the Schedule of Exceptions delivered to the Investors at the applicable Closing, the Company hereby represents and warrants to the Investors as of the date of the Closing as follows:

3.1       Organization, Good Standing and Qualification

.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company has all requisite corporate power and authority to own and operate its properties and assets, to carry on its business as presently conducted, to execute and deliver the Agreements, to issue and sell the Shares, the Warrants, the Conversion Shares and the Warrant Shares and to perform its obligations pursuant to the Agreements.  The Company is presently qualified to do business as a foreign corporation in the State of Texas.

3.2       Capitalization

. 

(a)      Immediately prior to the Closing, the authorized capital stock of the Company will consist of 500,000,000 shares of Common Stock, of which 123,796,335 shares are issued and outstanding and 1,000,000 shares of Preferred Stock, of which 100,000 shares are designated “Series A Preferred Stock,” all of which are issued and outstanding, and 375,000 shares of which are designated Series B Preferred, none of which are issued and outstanding.  The Common Stock, the Series A Preferred Stock and the Series B Preferred shall have the rights, preferences, privileges and restrictions set forth in the Company’s Amended and Restated Certificate of Incorporation, as amended by the Certificate of Designations (the “ Certificate of Incorporation ”).  For the avoidance of doubt, no other series of Preferred Stock has any priority over the Series B Preferred with respect to dividends, liquidation distributions or any other distributions.

(b)      The outstanding shares (i) have been duly authorized and validly issued and are fully paid and nonassessable, and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities.

(c)      The Company has reserved and shall at all times maintain sufficient amounts of authorized stock, as applicable, for the following:

(i)      the Shares for issuance pursuant to this Agreement;

(ii)      100,000 shares of Common Stock (as may be adjusted in accordance with the provisions of the Certificate of Incorporation) for issuance upon conversion of the Series A Preferred Stock;

(iii)                 15,000,000 Conversion Shares (as may be adjusted in accordance with the provisions of the Certificate of Incorporation) for issuance upon conversion of the Shares; and

(iv)           3,000,000 Warrant Shares for issuance upon exercise of the Warrants;

(v)      10,000,000 shares of Common Stock authorized for issuance to employees, consultants and directors pursuant to its 2009 Long-Term Incentive Plan; and

(vi)                 26,001,800 shares of Common Stock reserved for issuance under all other instruments, plans, agreements or other commitments to issue stock or securities described in subsection 3.2(g) below (other than the Shares and the Common Stock identified in subsections (ii) through (v) above).

(d)      The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designations.

(e)      The Shares, when issued and delivered and paid for in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable.  The Conversion Shares have been duly and validly reserved and, when issued in compliance with the provisions of this Agreement, the Certificate of Designations and applicable law, will be validly issued, fully paid and nonassessable.  The Warrant Shares have been duly and validly reserved and, when issued in compliance with the provisions of this Agreement, the Warrants and applicable law, will be validly issued, fully paid and nonassessable.

(f)      The Shares, the Warrants, the Warrant Shares and the Conversion Shares will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon the Investors; provided, however , that the Shares, the Warrants, the Warrant Shares and the Conversion Shares are subject to restrictions on transfer under U.S. state and/or federal securities laws and as set forth herein and in the Agreements and the Warrants.  Except as set forth in the Agreements, the Shares, Warrants, the Warrant Shares and the Conversion Shares are not subject to any preemptive rights or rights of first refusal.

(g)      Section 3.2(g) of the Schedule of Exceptions describes each existing convertible note, debenture, warrant, stock option or stock  purchase agreement, employee stock bonus or stock award plan, executive compensation arrangement, and any other agreement or commitment under or pursuant to which any stock or other securities of the Company will or may be issued (whether contingent or unvested and whether or not the conditions for issuance have been satisfied), and the maximum number of shares of  Common Stock that would be issued under each of such instruments, plans, agreements or other commitments.

3.3       Authorization

.  All corporate action on the part of the Company and its directors, officers and stockholders necessary for the authorization, execution and delivery of the Agreements (and any additional agreements or instruments referred to herein or contemplated hereby) by the Company, the authorization, sale, issuance and delivery of the Shares, the Warrants, the Warrant Shares and the Conversion Shares, and the performance of all of the Company’s obligations under the Agreements

has been taken or will be taken prior to the Closing.  The Agreements and the Warrants, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors, (ii) as limited by rules of law governing specific performance, injunctive relief or other equitable remedies and by general principles of equity, and (iii) to the extent the indemnification provisions contained in the Rights Agreement may further be limited by applicable laws and principles of public policy.

3.4       Company Filings

.  The Company’s Annual Report on Form 10-K for the year ended December 31, 2008, the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 and all Current Reports on Form 8-K filed by the Company since December 31, 2008 (collectively, the “ Company Documents ”), as of the respective dates thereof, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  Except for filings required as a result of the Agreements, the Company has prepared and filed with the Securities and Exchange Commission all filings and reports required by the Securities Act of 1933, as amended (the “ Securities Act ”) and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) to make the Company’s filings and reports current in all respects.

3.5       Intellectual Property

.  For purposes of this Agreement, “ Intellectual Property ” means all intangible property rights including, but not limited to, inventions, discoveries, trade secrets, processes, algorithms, know-how, proprietary confidential information, United States and foreign patents, patent applications, trade names, trademarks, service marks and trade dress (together with associated goodwill), domain names and copyrights, moral rights, rights of publicity, any registrations or applications for registrations relating to any of the foregoing, any common law rights and any other proprietary rights relating to any of the foregoing.  

(a)      Section 3.5(a) of the Schedule of Exceptions accurately identifies and describes:  (1) all software applications or other products or services developed, owned, produced, marketed, sold, licensed or otherwise made available by the Company (each, a “ Company Product ,” and collectively, the “ Company Products ”) to any third party; (2) all Intellectual Property owned by, licensed to or otherwise controlled by the Company or used in, developed for use in or necessary to the conduct of the Company’s business as presently conducted and as contemplated to be conducted in the future (collectively, the “ Company IP ”), including, without limitation, all Intellectual Property owned or used by, licensed to or otherwise controlled by the Company in connection with, or that is included in or embodied by, any of the Company Products (collectively the “ Company Product IP ”); (3) all of the agreements, understandings, contracts  (whether written or oral) or any other documents, if any, pursuant to which such Intellectual Property is owned, licensed to, used or otherwise controlled by, the Company or licensed by the Company to a third party; (4) whether any

license or licenses granted to the Company are exclusive or nonexclusive.  The Company is not bound by, and no Company Product is subject to, any agreement containing any covenant or other provision that materially limits or restricts the ability of the Company to use, exploit, assert, or enforce any Company IP anywhere in the world.  The Company exclusively owns, or licenses, as the case may be, free and clear of any lien, security interest, pledge, claim, charge or encumbrance of any kind (each, a “ Lien ” and collectively, “ Liens ”) all right, title and interest to and in the Company Product IP, and all other Intellectual Property used by the Company in connection with the Company’s business.

(b)      Each person or entity who is or was an employee or an independent contractor of the Company and who is or was involved in the creation or development of any Company Product or Company Product IP has signed a valid and enforceable agreement containing an irrevocable assignment of all Intellectual Property rights to the Company and confidentiality provisions protecting the Company Product IP.  No funding, facilities or personnel of any governmental agency or body were used, directly or indirectly, to develop or create, in whole or in part, any Company Product IP or any other owned Company IP.  The Company has taken reasonable steps to maintain the confidentiality of and otherwise protect and enforce its rights in all trade secrets, know-how and other proprietary information held by the Company.  The Company has not assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, any Company Product IP or any other owned Company IP to any third party.  The Company IP constitutes all of the Intellectual Property used in and necessary for the conduct of the business conducted by the Company as currently conducted and as contemplated to be conducted in the future.  No application for a patent or for a copyright or trademark registration has been filed by or on behalf of the Company or has been abandoned, allowed to lapse or rejected.  There is no basis for a claim that any Company Product IP or any other owned Company IP is invalid or unenforceable.

(c)      To the knowledge of the Company or its founders, officers or other representatives, no third party has infringed, misappropriated, or otherwise violated, or is currently infringing, misappropriating or otherwise violating, any Company Product IP or any other Company IP.  Neither the Company nor any of the Company Product infringes, misappropriates, or otherwise violates (directly, contributorily, by inducement or otherwise), or has in the past infringed, misappropriated or otherwise violated any Intellectual Property of any third party.  No infringement, misappropriation or similar claim or legal proceeding is pending or has been threatened against the Company or against any third party who may be entitled to be indemnified, defended, held harmless or reimbursed by the Company with respect to such claim or legal proceeding in connection with the Company Product IP.  The Company is not bound by any agreement to indemnify, defend, hold harmless or reimburse any third party with respect to any Intellectual Property infringement, misappropriation or similar claim.

(d)      None of the Company Products contain any bug, defect or error that materially affects the use, functionality or performance of such Company Products or any product or system containing or used in conjunction with such Company Products or materially fail to comply with any applicable warranty or other contractual commitment relating to the use, functionality or

performance of such Company Products.  Other that as set forth on Section 13(d) of the Schedule of Exceptions, none of the Company Products include any open source code components or are subject to any “copyleft” or other obligation or condition (including any obligation or condition under any “open source” license such as without limitation the GNU Public License, Lesser GNU Public License or Mozilla Public License) that could or does require, or could or does condition the use or distribution of such Company Product on, the disclosure, licensing or distribution of any source code for any portion of such Company Product or could or does otherwise impose any limitation, restriction or condition on the right or ability of the Company to use or distribute any Company Product.  No source code for any Company Product has been delivered, licensed or made available to any escrow agent or other third party, and the Company has no duty or obligation (whether present, contingent or otherwise) to deliver, license or make available the source code for any Company Product to any escrow agent or other third party.  The Company has not received notification of any kind alleging that the Company has not complied with applicable data protection or privacy laws.

(e)      Section 3.5(e) of the Schedule of Exceptions identifies and lists the features and functionalities of the Company’s current primary Company Product.  The Company began development of such Company Product in May 2005 and said Company Product is currently being used in the following three separate user environments: (i) confidential Quality Assurance (QA)/Development Testing, which was established in May 2006 and is used for in-house testing of software; (ii) confidential Sales/Internal Staff Demo Application, which took place by August 2007 with limited functionality, with basic graphical user interface (GUI); and (iii) Production/End-User full production software release of such Company Product was released on December 8, 2008, and can only be accessed by officers sponsored and employed by a law enforcement agency that is a customer of the Company.  Except as otherwise specifically disclosed in Section 3.5(e) of the Schedule of Exceptions, none of the features and functionalities of such Company Product have been described in a printed publication in the United States or any foreign country for the purpose of marketing such Company Product, or have been in public use or on sale in the United States or any foreign country, prior to December 8, 2008.

3.6       Title to Properties and Assets; Liens

.  The Company owns all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that its purport to own in the books and records of the Company, including all of the properties and assets reflected on the balance sheet presented in the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2009 (the “ Most Recent Balance Sheet ”) and all of the properties and assets purchased or otherwise acquired by the Company since the date thereof.  The Company has good and marketable title to its tangible property and assets, and has good title to all of its leasehold interests, in each case subject to no material Lien, other than (i) Liens for current taxes not yet delinquent, (ii) Liens imposed by law and incurred in the ordinary course of business for obligations not past due and that do not materially impair the Company’s ownership or use of such property or assets, (iii) Liens in respect of pledges or deposits under workers’ compensation laws or similar legislation or (iv) Liens resulting in minor defects in title,

none of which, individually or in the aggregate, materially interferes with the ownership or use of such property.  With respect to the tangible property and assets it leases, the Company is in compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any liens, claims, or encumbrances, subject to clauses (i)-(iv) above.

3.7       Compliance with Other Instruments

.  The Company is not in violation or default in any material respect of any provision of its Certificate of Incorporation or Bylaws, each as amended to date.  The execution and delivery of the Agreements by the Company, the performance by the Company of its obligations pursuant to the Agreements, and the issuance of the Shares, the Warrants and the Warrant Shares, and the Conversion Shares, will not result in any material violation of, or materially conflict with, or constitute a material default under, the Company’s Certificate of Incorporation or Bylaws, each as amended to date, or any preemptive rights agreements, options, debentures, promissory notes, agreements, judicial or administrative orders, internal controls,  policies or guidelines, plans or contracts or commitments to which the Company is a party or with respect to which  its business or properties is subject.

3.8       Litigation

.  There are no claims, actions, suits, proceedings, arbitrations or, to the Company’s knowledge, investigations pending against the Company, the Company’s properties or, to the Company’s knowledge, any officer or key employee of the Company (nor has the Company received written notice of any threat thereof) before any court or governmental agency, including without limitation any claim or proceeding  that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by the Agreements.  The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  There is no action, suit or proceeding initiated by the Company currently pending.

3.9       Governmental Consent

.  No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of the Agreements, or the offer, sale or issuance of the Shares, the Warrants, the Warrant Shares and the Conversion Shares, or the consummation of any other transaction contemplated by this Agreement, except (i) filing of the Certificate of Designations with the office of the Secretary of State of the State of Delaware, (ii) th