Document:

Hybrid Coating Technologies Inc. - Exhibit 10.2 - Filed by newsfilecorp.com

Exhibit 10.2

SECURITIES PURCHASE
AGREEMENT 

SECURITIES PURCHASE AGREEMENT (this "Agreement,"
“Purchase Agreement,” or “Securities
Purchase Agreement” ), dated as of _____, 2014, by and
among Hybrid Coating Technologies Inc., a Nevada corporation, ("Company"
), and ___________ (including its successors and assigns, the “Buyer”
) (individually the “Party” and collectively the “Parties” ).

WHEREAS:

           
A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from the securities registration afforded under
Regulation S ("Regulation S") as promulgated by the United States Securities and
Exchange Commission (the “Commission” or the "SEC") under the Securities Act of
1933, as amended (the "1933 Act"); 

            B.
Buyer desires to purchase and the Company desires to issue and sell in a private
offering, upon the terms and conditions set forth in this Agreement, a 10%
convertible debenture of the Company, (each individually “Debenture” and
collectively “Debentures”) . The aggregate Subscription Amount of this offering
of the Debentures to the Buyer shall be __________ U.S. Dollars (U.S. $_______ )
(the or “Subscription Amount”) (collectively, the “Offering”);

            
C. The outstanding principal amount of a Debenture may be converted at the sole
option of the Buyer, at any time commencing at the earlier occurrence of: (a) 12
(twelve) months after the date of Closing (as defined below) or (b) once the
average closing price for any one 5 (five) consecutive trading day period
exceeds $0.60. In any event the Debenture may be converted no later than 24
(twenty -four) months from the date of issuance (“Maturity Date”) into
___________ (_________ ) units of the Company (“Unit” or “Units”), at a price
per Unit equal to the Conversion Price (as defined in the Debenture) . Each Unit
shall be comprised of the following: (i) 1 (one) share of the Company’s Common
Stock (“Share” or “Shares”); and (ii) 1 (one) stock purchase warrant to purchase
one share of Common Stock of the Company. Each stock purchase warrant (“Warrant”
and collectively “Warrants”) is exercisable at an exercise price per share equal
to the Conversion Price (as defined in the Debenture), at any time after
issuance and shall expire 3 (three) years from the date of issuance (“Warrant
Maturity Date”). 

            
D. The terms of the Debentures, including the terms on which the Debentures may
be converted into Common Stock, are set forth in the Debenture, in the form
attached hereto as Exhibit A; 

1 

            
E.        The terms of the Warrant, including
the terms on which the Warrant may be exercised, are set forth in the Warrant,
in the form attached hereto as Exhibit B; 

       NOW THEREFORE
, the Company and the Buyer hereby agree as follows: 

      
1.        PURCHASE
AND SALE OF DEBENTURES. 

           
(a)    Certain Definitions. The
Company and the Buyer mutually agree to the terms of each of the Transaction
Documents. For purposes hereof: 

           
“1934 Act” shall mean the Securities Exchange Act of 1934. 

            
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the State of Nevada are authorized or required
by law or executive order to remain closed. 

           
“Common Stock” shall have the meaning set forth in Recital “C”
above.

            
“Common Stock Equivalents” means any securities of the
Company which would entitle the Buyer thereof to acquire, directly or
indirectly, at any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles
the Buyer thereof to receive, Common Stock. 

           
“Conversion Shares” shall have the meaning set forth in Section 3(a)
below. 

           
“Closing” shall occur around March 1, 2015, but in any event no later
than March 31, 2015. 

            
“Person” shall mean an individual, a limited liability company, a
partnership, a joint venture, an exempted company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof. 

2 

           
“Purchase Price” shall have the meaning set forth in Section
1(b)(iii) below. 

           
“Securities” shall have the meaning set forth in Section 3 (a) below.

            
“Transaction Documents” shall mean this
Securities Purchase Agreement, the Debenture, the Warrants and any other
agreements, if any, delivered together with this Agreement or in connection
herewith. 

            “Underlying
Shares” or “Shares ” means the shares of Common Stock issuable
upon conversion or redemption of the Debentures, upon the exercise of the
Warrants and issuable in lieu of the cash payment of interest on the Debentures
in accordance with their terms. 

                   
(b) Purchase of Debentures. Upon the signing of this
Agreement, the Company shall sell to the Buyer and the Buyer agrees to purchase
from the Company Debentures in the aggregate principal amount equal to the
Subscription Amount. The Buyer acknowledges that the Company shall immediately
have the right to make full use of the Subscription Amount and that the delivery
of the Debentures by the Company to Buyer shall occur at Closing. 

           
(i) Form of Debenture. The . A Debenture shall be in the form attached
hereto as Exhibit

           
(ii) Form of Warrant. The Warrant . B shall be in the form attached
hereto as Exhibit 

            (iii)
Form of Payment. The aggregate purchase price for the Debentures shall be equal
to the Subscription Amount (“Purchase Price”). The Purchase Price shall be
deposited in the Company’s Account pursuant to Section 1(c) below). 

                   
(c) Closing Deliveries. The
Closing deliveries required
hereunder and in Sections 4 and 5 below, shall be
made as follows:

           
(i) On the Closing Date, the Company will deliver or cause to be delivered to
the Buyer (the “Company Documents” ):

           
(A) this Securities Purchase Agreement duly executed by the Company, 

3 

            (B) duly
executed Debentures with a principal amount equal to the Subscription Amount
issued in the name of the Buyer, 

     (ii) On the
Closing Date, the Buyer shall deliver or cause to be delivered to the Company
the following (the “Buyer Documents” ): 

            (A) this
Securities Purchase Agreement duly executed by the Buyer, 

            (B) the
Buyer’s Subscription Amount by certified check or wire transfer in accordance
with Sub-section 

           
(c) below. 

             (C) The Buyer
shall wire the Subscription Amount to the following: 

      
2.        REGULATION
S AGREEMENT OF THE BUYER

      
2.1        The Buyer represents and warrants
to the Company that the Buyer is not a "U.S. Person" as defined by Regulation S
of the Securities Act and is not acquiring the Shares for the account or benefit
of a U.S. Person. 

           
A "U. S. Person" is defined by Regulation S of the Securities Act to be any
person who is: 

i.              
Any natural person resident in the United States; 

ii.              Any
partnership or corporation organized or incorporated under the laws of the
United States; 

4 

iii.              
Any estate of which any executor or administrator is a U.S. person; iv. Any
trust of which any trustee is a U.S. person; v. Any agency or branch of a
foreign entity located in the United States; 

vi.              
Any 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;

vii.            
Any 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 

viii.            
Any partnership or corporation if: 

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 Act, unless it is organized or incorporated,
and owned, by accredited investors (as defined in Rule 501(a)) who are not
natural persons, estates or trusts. 

2.2              
The Buyer acknowledges that the Buyer was not in the United States at the time
the offer to purchase the Shares was received. 

2.3              
The Buyer acknowledges that the Shares are "restricted securities" within the
meaning of the Securities Act and will be issued to the Buyer in accordance with
Regulation S of the Securities Act. 

2.4              
The Buyer agrees not to engage in hedging transactions with regard to the Shares
unless in compliance with the Securities Act. 

2.5              
The Buyer and the Company agree that the Company will refuse to register any
transfer of the Shares not made in accordance with the provisions of Regulation
S of the Securities Act, pursuant to registration under the Securities Act,
pursuant to an available exemption from registration, or pursuant to this
Agreement. 

5 

2.6              
The Buyer agrees to resell the Shares only in accordance with the provisions of
Regulation S of the Securities Act, pursuant to registration under the
Securities Act, or pursuant to an available exemption from registration pursuant
to the Securities Act. 

      
3.        BUYER’S
REPRESENTATIONS AND WARRANTIES. The Buyer represents and warrants to
the Company that: 

            (a)
As of the date hereof, the Buyer is purchasing the Debenture and the shares
of Common Stock issuable upon conversion of the Debenture or otherwise pursuant
to the Debenture and the other Transaction Documents (such shares of Common
Stock being collectively referred to herein as the") Shares
“Conversion and the Warrants issuable upon conversion of the
Debenture and the shares of Common Stock issuable upon exercise of the Warrants
(the "Warrant Shares" and, collectively with the Debenture,
Warrants and Conversion Shares, the "Securities" ) for its own
account.

            (b)
The Buyer acknowledges that the Underlying Shares to be issued are
"restricted securities" within the meaning of the Securities Act and the Buyer
acknowledges that the Shares are being offered and sold in accordance with an
exemption from the registration requirements under the Act.

           
(c) The Buyer and the Company agree that if applicable, the
Company will refuse to register any transfer of the Underlying Shares not made
in accordance with the provisions of the Securities Act, pursuant to
registration under the Securities Act, pursuant to an available exemption from
registration, or pursuant to this Agreement. 

            
(d) The Buyer acknowledges that the Shares have not been
registered under the U.S. Securities Act of 1933, as amended (the “Act”) or any
state securities act and are instead being offered and sold in reliance on U.S.
federal and state exemptions from such registration requirements.

           
(e) The purchase of the Shares involves a high degree of risk
and the Buyer acknowledges that the Buyer can bear the complete economic risk of
the purchase of the Shares, including the total loss of the investment
represented hereby. 

            (f)
The Buyer has the sophistication, knowledge and business acumen necessary to
adequately evaluate an investment in the Company and understands completely the
terms, conditions, and risks associated with any such investment in the Company.

6 

            (g)
The Shares are being acquired solely for the Buyer’s own account, for investment
and not with a view to or for the sale, distribution, subdivision or
fractionalization thereof, and the Buyer has no plans to enter into, and has not
entered into, any contract, undertaking, agreement or arrangement to such end.

            (h)
The Buyer, if a corporation, partnership, trust or other form of business
entity, is authorized and otherwise duly qualified to purchase and hold the
Shares, such entity has its principal place of business as set forth on the
signature page and such entity has not been formed for the specific purpose of
acquiring the Shares. 

            (i)
The Buyer acknowledges and is aware that no federal or state agency has made any
finding or determination as to the fairness of the offering of the Shares for
investment or any recommendation or endorsement of same. 

           
(j) The Buyer understands that the Securities are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities. 

            (k)
The Buyer and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
the Buyer or its advisors. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigation conducted by Buyer or any of its
advisors or representatives shall modify, amend or affect Buyer's right to rely
on the Company's representations and warranties contained in Section 4 below.
The Buyer understands that its investment in the Securities involves a
significant degree of risk. 

           
(l) The Buyer resides at the following address:

            (m)
Buyer has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment in the
Securities. 

7 

            (n)
The Buyer has independently evaluated the merits of its decision to purchase the
Securities pursuant to the Transaction Documents, and the Buyer confirms that it
has not relied on the advice of the Company and/or its legal counsel,
consultants or representatives in making such decision.

       4.       
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Buyer as follows: 

            (a)
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. The Company has the
power and the authority to own and operate its assets and carry on the Business
as is now being conducted. 

            (b)
The authorized capital of the Company consists of 75,000,000 shares of
common stock, with a par value of $0.001 per share. There are currently
21,529,594 shares of common stock issued and outstanding. 

            (c)
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and all other agreements to be entered into in connection
with the transactions contemplated herein and to which it is a party, and to
perform its obligations hereunder and thereunder.

            (d)
The representations and warranties of the Company contained in this
Agreement, shall be true and correct in all material respects as of the date
when made and as of the Closing date, as though made at such time (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date) and
the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date.

           
(e) Upon issuance of any Underlying Shares upon conversion of the
Debenture, and in accordance with its terms, upon any subsequent exercise of the
Warrants and receipt of the exercise price therefor, the Conversion Shares, the
Warrant Shares along with any other shares issued pursuant to the terms of the
Transaction Documents, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances and shall not be subject
to preemptive rights or other similar rights of stockholders of the Company and
will not impose personal liability upon the Buyer thereof.

8 

            (f)
To the best knowledge of the Company, there is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the best
knowledge of the Company, threatened against or affecting the Company, or their
officers or directors in their capacity as such. The Company is unaware of any
facts or circumstances which might give rise to any of the foregoing. 

            (g)
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
securities or solicited any offers to buy any securities under circumstances
that would require registration under the 1933 Act of the issuance of the
Securities to the Buyer.

            (h)
The Company has taken no action which would give rise to any claim by any
person for brokerage commissions, finder's fees or similar payments relating to
this Agreement or the transactions contemplated hereby. The Company shall
indemnify and hold harmless the Buyer, its employees, officers, directors,
agents, and partners, and their respective Affiliates, from and against all
claims, losses, damages, costs (including the costs of preparation and
attorney's fees) and expenses suffered in respect of any such claimed or
existing fees. 

      
5.        CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company
hereunder to issue and sell the Debentures to the Buyer at the Closing is
subject to the satisfaction of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion: 

            (a)
The Buyer shall have executed the Transaction Documents requiring Buyer’s
signature, and delivered the same to the Buyer. 

           
(b) The Buyer shall have delivered the applicable Purchase Price in accordance
with Section 1(b) and 1 (c) above. 

            (c)
The representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date), and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at or prior
to the Closing Date. 

            (d)
No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated herein which
prohibits the consummation of any of the transactions contemplated by this
Agreement. 

9 

      
6.        CONDITIONS
TO BUYER'S OBLIGATION TO PURCHASE. The obligation of the Buyer
hereunder to purchase the Debenture at Closing is subject to the satisfaction,
of the following conditions:

           
(a) The Company shall have executed this Agreement and delivered the same to the
Buyer. 

            (b)
No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
herein which prohibits the consummation of any of the transactions contemplated
by this Agreement. 

            (c)
The Company shall have received funds from the Buyer representing the Purchase
Price in an amount equal to the Subscription Amount. 

      
7.        GOVERNING
LAW; MISCELLANEOUS. 

           
(a) Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Nevada and shall be enforceable
exclusively in the courts thereof.

            (b)
Counterparts; Signatures By Facsimile.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become effective when
counterparts have been signed by each Party and delivered to the other Party.
This Agreement, once executed by a Party, may be delivered to the other Party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the Party so delivering this Agreement. 

            (c)
Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. 

            (d)
Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction. 

10 

            (e)
Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the Parties
with respect to the matters covered herein and therein and supersede all
previous communication, representation, or Agreements whether oral or written,
between the parties with respect to the matters covered herein. Except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. The Agreement may only be modified in writing by both Parties. The
Parties waive the right to rely on any oral representations made by the other
Party, whether in the past or in the future, regarding the subject matter of the
Agreement, the instruments referenced herein or any other dealings between the
Parties related to investments or potential investments into the Company or any
securities transactions or potential securities transactions with the Company.

            (f)
Notices. Any notices required or
permitted to be given under the terms of this
Agreement shall be sent by certified or
registered mail (return receipt
requested) or delivered personally or
by courier (including a recognized
overnight delivery service) or by
facsimile and shall be effective five (5) days after
being placed in the mail, if mailed by regular United States mail,
or upon receipt, if delivered
personally or by courier (including a
recognized overnight delivery
service) or by facsimile, in each case
addressed to a party. The addresses for such
communications shall be: 

If to the Company, to: 

Attn:

________________________________________

________________________________________

________________________________________ 

If to the Buyer:

ATTN:

________________________________________

________________________________________ 

11 

________________________________________

________________________________________ 

Each Party shall provide notice to the other Party of any
change in address. 

      
     (g) Successors And
Assigns. This Agreement shall be binding upon and inure to the
benefit of the Parties and their successors and assigns. Neither the Company nor
the Buyer shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing
and subject to Section 2(e), Buyer may assign its rights hereunder to any person
that purchases Securities in a private transaction from the Buyer or to any of
its "Affiliates," as that term is defined under the 1934 Act, without the
consent of the Company. 

            (h)
Third Party Beneficiaries. This Agreement is intended for the benefit
of the Parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person. 

           
The undersigned acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the Company as
indicated below. 

[INTENTIONALLY LEFT BLANK]

12 

IN WITNESS WHEREOF, the undersigned Buyer does represent and
certify under penalty of perjury that the foregoing statements are true and
correct and that the Buyer by the following signature executed this Agreement.

Dated this _______ day of _________ ,2014. 

____________________________________                                 
_______________________________

                       
Your
Signature                                                                    PRINT
EXACT NAME IN WHICH YOU
WANT 
                                                                                                                       THE
SECURITIES TO BE REGISTERED 

Buyer’s Subscription Amount: US$_______________ 

Principal Amount of Debentures Subscribed for: US$____________

(Subscription Amount) 

Buyer’s Entity Type and Residency:

	___________________________________________	       DELIVERY
      INSTRUCTIONS: 
	Name: Please Print 	Please type or print address where your
      security is to be delivered 
	 	 
	 	       ATTN.:
      ___________________________________________ 
	___________________________________________	 
	Title/Representative Capacity (if applicable) 	 
	 	 
	___________________________________________	     
      _______________________________________________________ 
	Name of Company You Represent (if applicable) 	       Street Address 
	 	 
	___________________________________________	      
      _______________________________________________________ 
	Place of Execution of this Agreement 	       City,
      State or Province, Country, Offshore Postal Code 

__________________________________________________ 
Phone
Number (For Federal Express) and Fax Number (re: Notice) 

13 

THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT
OF
$____________ USD (“SUBSCRIPTION AMOUNT”) ON THIS ________ DAY OF _____,
2014

 

By:___________________ 
Print Name
:_ 
Title: __________________ 

14 

 

EXHIBIT A 

15 

EXHIBIT B 

16 

17Hybrid Coating Technologies Inc. - Exhibit 10.3 - Filed by newsfilecorp.com

Exhibit 10.3

THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER. 

AN INVESTMENT IN THESE SECURITIES
INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE
INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. 

Date: ___________ 

HYBRID COATING TECHNOLOGIES INC. 

Warrant for the Right to
Purchase                                                 
Shares of Common Stock 

No. W- 

            For
value received, this Warrant is hereby issued by Hybrid Coating Technologies
Inc., a Nevada corporation (the “Company”), to ___________ or any of his
assignees (the “Holder”). This Warrant is being issued pursuant to the
conversion of 10% convertible debentures issued by the Company to the Holder on
_________, 2014 (the "Debentures") issued pursuant to a Securities Purchase
Agreement entered into between the Company and the Holder on ____, 2014.

            Subject
to the provisions of this Warrant, the Company hereby grants to Holder the right
to purchase from the Company __________ shares of Common Stock, at a price per
share calculated as follows (the “Exercise Price”):

           
The Exercise Price shall be equal to the Conversion Price (as defined in the
Debenture)

            The
term “Common Stock” means the Common Stock, par value $0.001 per share, of the
Company as constituted on the date set forth above (the “Base Date”). The number
of shares of Common Stock to be received upon the exercise of this Warrant may
be adjusted from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter referred to as “Warrant Stock.” The term “Other Securities” means
any other equity or debt securities that may be issued by the Company in
addition thereto or in substitution for the Warrant Stock. 

            The
Holder agrees with the Company that this Warrant is issued, and all the rights
hereunder shall be held, subject to all of the conditions, limitations and
provisions set forth herein. 

            1.
Exercise of Warrant. Subject to the terms and conditions set forth
herein, this Warrant may be exercised in whole or in part, pursuant to the
procedures provided below, at any time as of the date of this Warrant,
(following appropriate adjustment in the event of any stock dividends, stock
splits, combination or other similar recapitalization affecting such shares).
This Warrant will expire on ___________ 5:00 p.m., Eastern time (the “Expiration
Date”) or, if such day is a day on which banking institutions in New York are
authorized by law to close, then on the next succeeding day that shall not be
such a day. To exercise this Warrant the Holder shall present and surrender this
Warrant to the Company at its principal office, with the Warrant Exercise Form
attached hereto duly executed by the Holder and accompanied by payment (either
in cash or by check, payable to the order of the Company) of the aggregate
Exercise Price for the total aggregate number of shares for which this Warrant
is exercised. Upon receipt by the Company of this Warrant, together with the
executed Warrant Exercise Form and payment of the Exercise Price for the shares
to be acquired, in proper form for exercise, and subject to the Holder’s
compliance with all requirements of this Warrant for the exercise hereof, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
(or Other Securities) issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder; provided, however, that no exercise of this Warrant
shall be effective, and the Company shall have no obligation to issue any Common
Stock or Other Securities to the Holder upon any attempted exercise of this
Warrant, unless the Holder shall have first delivered to the Company, in form
and substance reasonably satisfactory to the Company, appropriate
representations so as to provide the Company reasonable assurances that the
securities issuable upon exercise may be issued without violation of the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities laws, including without
limitation representations that the exercising Holder is an “accredited
investor” as defined in Regulation D under the Securities Act and that the
Holder is familiar with the Company and its business and financial condition and
has had an opportunity to ask questions and receive documents relating thereto
to his reasonable satisfaction. 

- 2 - 

            2.
Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Fair Market Value (as defined below) of one share of Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Warrant
Exercise Form and notice of such election, in which event the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula: 

X = Y
(A-B) 
            A

	 	Where 	
      X = the number of shares of Common Stock to be issued to
      the Holder 

	 	  	
       

	 		
      Y = the number of shares of Common Stock purchasable
      under the Warrant or, if only a portion of the Warrant is being exercised,
      the portion of the Warrant being exercised (at the date of such
      calculation) 

	 	  	
       

	 		
      A = the Fair Market Value (as defined below) of one share
      of the Company’s Common Stock (at the date of such calculation) 

	 	  	
       

	 	  	
      B = Exercise Price (as adjusted to the date of such
      calculation) 

            3.       
Reservation of Shares. The Company will at all times reserve for issuance
and delivery upon exercise of this Warrant all shares of Common Stock or other
shares of capital stock of the Company (and Other Securities) from time to time
receivable upon exercise of this Warrant. All such shares (and Other Securities)
shall be duly authorized and, when issued upon such exercise, shall be validly
issued, fully paid and non-assessable and free of all preemptive rights. 

            4.       
Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant, but the Company shall
pay the Holder an amount equal to the Fair Market Value of such fractional share
of Common Stock in lieu of each fraction of a share otherwise called for upon
any exercise of this Warrant. 

            5.        Fair Market Value. For
purposes of this Warrant, the Fair Market Value of a share of Common Stock (or
Other Security) shall be determined as of any date (the “Value Date”) by the
Company’s Board of Directors in good faith; provided, however, that where there
exists a public market for the Company’s Common Stock on the Value Date, the
fair market value per share shall be either: 

           
(a)        If the Common Stock is listed on a
national securities exchange or listed for trading on the NASDAQ system, the
Fair Market Value shall be the last reported sale price of the security on such
exchange or system on the last business day prior to the Value Date or if no such sale is made on such day, the
average of the closing bid and asked prices for such day on such exchange or
system; or

- 3 - 

            (b)       
If the Common Stock is not so listed but is traded in the over-the-counter
market, the Fair Market Value shall be the mean of the last reported bid and
asked prices reported by the over-the-counter market on the last business day
prior to the Value Date. 

            6.       
Assignment or Loss of Warrant. Subject to the transfer restrictions
herein (including Section 9), upon surrender of this Warrant to the Company or
at the office of its stock transfer agent, if any, with the Assignment Form
annexed hereto duly executed and funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and of reasonably satisfactory indemnification by the Holder, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a replacement Warrant of like tenor and date.

            7.       
Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a stockholder in the Company, either at law or in equity, and
the rights of the Holder are limited to those expressed in this Warrant. 

           
8.        Adjustments. 

                 
    8.1       
Adjustment for Recapitalization. If the Company shall at any time after
the Base Date subdivide its outstanding shares of Common Stock (or Other
Securities at the time receivable upon the exercise of the Warrant) by
recapitalization, reclassification or split-up thereof, or if the Company shall
declare a stock dividend or distribute shares of Common Stock to its
stockholders, the number of shares of Common Stock (or Other Securities) subject
to this Warrant immediately prior to such subdivision shall be proportionately
increased, and if the Company shall at any time after the Base Date combine the
outstanding shares of Common Stock by recapitalization, reclassification or
combination thereof, the number of shares of Common Stock subject to this
Warrant immediately prior to such combination shall be proportionately
decreased. Any such adjustment and adjustment to the Exercise Price pursuant to
this Section 8.1 shall be effective at the close of business on the effective
date of such subdivision or combination or if any adjustment is the result of a
stock dividend or distribution then the effective date for such adjustment based
thereon shall be the record date therefor. 

Whenever the number of shares of Common Stock purchasable upon
the exercise of this Warrant is adjusted, as provided in this Section 8.1, the
Exercise Price shall be adjusted to the nearest cent by multiplying such
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise immediately prior to such adjustment, and (y) the denominator
of which shall be the number of shares of Common Stock so purchasable
immediately thereafter. 

                  
     8.2       
Adjustment for Change of Entity Transaction. Change of Entity Transaction
shall mean a consolidation, merger, exchange of shares, recapitalization,
reorganization, business combination, as a result of which shares of Common
Stock shall be changed into (or the shares of Common Stock become entitled to
receive) the same or a different number of shares of the same or another class
or classes of stock or securities of the Company or another entity (“Share
Exchange”). 

So long as any portion of this Warrant remains outstanding,
should the Company enter into or be party to a Change of Entity Transaction, the
Company shall cause any Person purchasing the Company’s assets or Common Stock,
or any successor entity resulting from such Change of Entity Transaction (in
each case, a “Successor Entity”), to assume in writing all of the obligations of
the Company under this Warrant by delivering to the holder of this Warrant in
exchange for such Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, having an exercise price equal to the Exercise
Price of this Warrant, having similar exercise rights as this Warrant (including
but not limited to similar exercise price adjustment provisions), and reasonably
satisfactory to the holder of this Warrant. Upon the occurrence of any
Change of Entity Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Change of Entity
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under the
Warrant with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of a Change of Entity Transaction, the
Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon exercise or redemption of this Warrant at any time after the
consummation of the Change of Entity Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property) issuable upon
the exercise of this Warrant prior to such Change of Entity Transaction, such
shares of common stock (or their equivalent) of the Successor Entity, as
adjusted in accordance with the provisions of this Warrant and on the same terms
as those of the Share Exchange applicable to all holders of shares of Common
Stock. The provisions of this Section shall apply similarly and equally to
successive Change of Entity Transactions and shall be applied without regard to
any limitations on the exercise of the Warrant.

- 4 - 

                  
     8.3       
Certificate as to Adjustments. The adjustments provided in this Section 8
shall be interpreted and applied by the Company in such a fashion so as to
reasonably preserve the applicability and benefits of this Warrant (but not to
increase or diminish the benefits hereunder). In each case of an adjustment in
the number of shares of Common Stock receivable on the exercise of the Warrant,
the Company at its expense will compute such adjustment in accordance with the
terms of the Warrant and prepare a certificate executed by an officer of the
Company setting forth such adjustment and showing in detail the facts upon which
such adjustment is based. The Company will forthwith mail a copy of each such
certificate to each Holder.

                       
8.4         Notices of Record Date,
Etc. In the event that: 

                                                      
the Company shall declare any dividend or other distribution to the holders of
Common Stock, or authorizes the granting to all Common Stock holders of any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities; or 

                                                      
the Company authorizes any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation or
entity; or 

                                                      
the Company authorizes any voluntary or involuntary dissolution, liquidation or
winding up of the Company, 

then, and in each such case, the Company shall mail or cause to
be mailed to the holder of this Warrant at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place, and the time, if any is
to be fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrant) shall be
entitled to exchange their shares of Common Stock (or such Other Securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up. Such notice shall be mailed at least 15 days prior to the date
therein specified. 

                  
      8.5       
No Impairment. The Company will not, by any 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 Section 8 and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against impairment. 

                  
      9.       
Transfer to Comply with the Securities Act. This Warrant and any Warrant
Stock or Other Securities may only be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, as follows: (a) to a person who, in the opinion of counsel
to the Company, is a person to whom this Warrant or the Warrant Stock or Other
Securities may legally be transferred without registration and without the
delivery of a current prospectus under the Securities Act with respect thereto
and then only against receipt of an agreement of such person to comply with the
provisions of this Section 9 with respect to any resale or other disposition of
such securities; or (b) to any person upon delivery of a prospectus then meeting
the requirements of the Securities Act relating to such securities and the
offering thereof for such sale or disposition, and thereafter to all successive
assignees.

- 5 - 

            10.       
Legend. Unless the shares of Warrant Stock or Other Securities have been
registered under the Securities Act, upon exercise of this Warrant and the
issuance of any of the shares of Warrant Stock, all certificates representing
shares shall bear on the face thereof substantially the following legend: 

  
    
      
        
          
            
                          “THE
                SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
                SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
                SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
                EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN
                OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO
                COUNSEL TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
                UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

            

          

        

      

    

  

            11.       
Notices. All notices required hereunder shall be in writing and shall be
deemed given when sent via facsimile or e-mail, with a confirmation of the
delivery thereof, and then only if followed up with a duplicate copy sent via
regular mail, delivered personally or within two days after mailing when mailed
by certified or registered mail, return receipt requested, to the Company or the
Holder, as the case may be, for whom such notice is intended, if to the Holder,
at the address of such party shown on the books of the Company, or if to the
Company, at the address set forth on the signature page hereof, Attn: Chief
Financial Officer, or at such other address of which the Company or the Holder
has been advised by notice hereunder. 

            12.       
Applicable Law. The Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the State of Nevada,
without regard to the conflict of laws provisions of such State. 

            IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed on its behalf,
in its corporate name, by its duly authorized officer, all as of the day and
year first above written. 

HYBRID COATING TECHNOLOGIES INC. 

By:     
________________________________
           
Joseph Kristul, Chief Executive Officer 

Address: 
950 John Daly blvd.,
Suite 260 
Daly City, CA 94015 

- 6 - 

WARRANT EXERCISE FORM 

           
The undersigned hereby irrevocably elects to (please check box): 

           
________ (i) exercise the within Warrant to purchase __________shares of the
Common Stock of Hybrid Coating Technologies Inc., a Nevada corporation, pursuant
to the provisions of Section 1 of the attached Warrant, and hereby makes payment
of $ __________in payment therefor, or

            ________
(ii) exercise the within Warrant to purchase that number of shares of Common
Stock purchasable pursuant to the net issue exercise procedure set forth in
Section 2 of the attached Warrant.

      
     The undersigned’s execution of this form
constitutes the undersigned’s agreement to all the terms of the Warrant and to
comply therewith. 

	 	 
	 	Signature 
	 	Print Name: 
	 	  
	 	 
	 	Signature, if jointly held 
	 	 
	 	Print Name: 
	 	  
	 	 
	 	Date 

- 7 - 

ASSIGNMENT FORM 

FOR VALUE RECEIVED _____________________________ (“Assignor”)
hereby sells, assigns and transfers unto _______________________________
(“Assignee”) all of Assignor’s right, title and interest in, to and under
Warrant No. W-____ issued by ____________________________, dated ______________.

 

DATED:  ________________________

	 	ASSIGNOR: 
	 	  
	 	  
	 	  
	 	  
	 	Signature 
	 	Print Name: 
	 	  
	 	  
	 	  
	 	Signature, if jointly held 
	 	Print Name: 

The undersigned agrees to all of the terms of the Warrant and
to comply therewith. 

	 	ASSIGNEE: 
	 	  
	 	  
	 	  
	 	  
	 	Signature 
	 	Print Name: 
	 	  
	 	  
	 	  
	 	Signature, if jointly held 
	 	Print Name:

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