Document:

Exhibit 10.17

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement
(this "Agreement") is entered into as of May 11, 2016, but is effective for all purposes as of January 1, 2016
(the "Effective Date"), by and among Deep Down, Inc., a Nevada corporation (the "Company") and
Ronald E. Smith (the "Executive").

 

WITNESSETH:

 

WHEREAS, the Company
has determined that it is in its best interests and those of its shareholders to retain the Executive;

 

WHEREAS, the Company
desires to employ the Executive on the terms set forth below to provide services to the Company and its affiliated companies, and
the Executive is willing to accept such employment and provide such services on the terms set forth in this Agreement;

 

WHEREAS, the Company
and the Executive previously entered into an Amended and Restated Employment Agreement (the "Employment Agreement") dated
and effective as of January 1, 2010 pursuant to which certain services of the Executive have been provided to the Company on the
terms set forth therein;

 

WHEREAS, the Company
and the Executive desire to terminate the Employment Agreement and further desire to enter into this Agreement, which has been
drafted to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended; and

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration, the parties hereto do hereby agree as follows:

 

1. Certain Definitions.

 

(a)               
"Accrued Obligation" means the sum of (x) the Executive's Annual Base Salary through the Date of Termination
for periods through but not following his Separation From Service and (y) any accrued vacation pay earned by the Executive subject
to any applicable Company policies on carryover of accrued vacation pay, and in each case, to the extent not theretofore paid.

 

(b)              
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Exchange Act. 

 

(c)               
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

(d)              
"Benefit Obligation" shall mean all benefits to which the Executive (or his designated beneficiary or legal
representative, as applicable) is entitled or has become vested (or becomes entitled or vested as a result of termination) under
the terms of all employee benefit and compensation plans, agreements and arrangements (collectively, "Benefit Plans")
in which the Executive is a participant as of the Date of Termination.

 

(d)              
"Board" shall mean the Board of Directors of the Company.

 

(e)               
"Cause" shall mean:

 

(i)                       the
Executive seeking federal bankruptcy protection, and, in the view of the Board such action reflects negatively upon the reputation
and standing of the Company;

 

(ii)                       the
Executive commits an action which may subject Company to legal liability, including but not limited to commission of acts which
violate: (a) the Americans with Disabilities Act of 1990, as amended; (b) Title VII of the Civil Rights Act of 1964, as amended
and including 42 U.S.C. Sec 2000(e) et seq.; (c) the Civil Rights Act of 1991; (d) The Civil Rights Acts of 1866, 1871 and 1964,
as amended; (e) 42 U.S.C. Sec 1981; (f) the Age Discrimination in Employment Act of 1967, as amended; (g) the Texas Commission
on Human Rights Act of 1983, as amended; or other law which may expose the company to liability;

 

 

 

 

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(iii)                       the Executive develops a drug or alcohol problem which the Company deems to materially affect its reputation or which the
Executive fails or refuses to treat and end within a reasonable period of time upon request of the Board;

 

(iv)                       
the continued failure of the Executive to substantially perform the Executive's duties with the Company (other than any
such failure resulting from incapacity due to physical or mental illness), which such failure continues or remains uncorrected
for 30 days after a written Notice of Termination; or

 

(v)                       a judicial determination that Executive has engaged in illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.

 

Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or of
a more senior officer of the Company or based upon the advice of counsel for the Company (which may be counsel employed by the
Company or its subsidiaries) shall be conclusively presumed to not give rise to Cause.

 

(f)               
"Change of Control" shall be deemed to have occurred if any event set forth in any one of the following
paragraphs shall have occurred:

 

(i)                       
any Person is or becomes the Beneficial Owner, directly or indirectly, of 30% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding Company Common Shares") or (B) the combined
voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"), excluding any Person who becomes such a Beneficial Owner in connection
with the issuance of equity securities directly by Company to such Person in a Board approved equity financing or otherwise
in connection with a transaction that complies with clauses (A) and (B)  of paragraph (iii) below;

 

(ii)                       
individuals, who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the Incumbent Board (including in connection with an equity financing by the Company or in connection
with preparing for a listing of Company equity securities on a national stock exchange) shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors
or any other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(iii)                       
the consummation of a reorganization, merger, amalgamation, consolidation, scheme of arrangement, exchange offer or similar
transaction of the Company or any of its subsidiaries or the sale, transfer or other disposition of all or substantially all of
the Company's Assets (each, a "Business Combination"), unless, following such Business Transaction or series
of related Business Transactions, as the case may be, (A) individuals and entities (which, for purposes of this Agreement,
shall include, without limitation, any corporation, partnership, association, joint-stock company, limited liability company,
trust, unincorporated organization or other business entity) who were the beneficial owners, respectively, of more than fifty
percent (50%) of, respectively, the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately
prior to such Business Transaction beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding
common shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election
of directors (or other governing body), as the case may be, of the entity resulting from such Business Transaction (including,
without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's
Assets either directly or through one (1) or more subsidiaries or entities), as the case may be, (B) no person (excluding
any entity resulting from such Business Transaction or any employee benefit plan (or related trust) of the Company or such entity
resulting from such Business Transaction) beneficially owns, directly or indirectly, 25% or more of, respectively, then
the outstanding shares of common stock of the entity resulting from such Business Transaction or the combined voting power of
the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Transaction,
and (C) at least a majority  the members of the board of directors (or other governing body) of the entity resulting from
such Business Transaction were members of the Incumbent Board at the time of the approval of such Business Transaction; or

 

 

 

 

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(iv)                       
approval or adoption by the Board of Directors or the shareholders of the Company of a plan or proposal which would result
directly or indirectly in the liquidation, transfer, sale or other disposal of all or substantially all of the Company's Assets
or the dissolution of the Company.

 

(g)              
"Company" shall mean Deep Down, Inc., a Nevada corporation, or any successor thereto, including (but not
limited to) any Entity into which Deep Down, Inc. is merged, consolidated or amalgamated, or any Entity otherwise resulting from
a Business Transaction.

 

(h)              
"Company's Assets" shall mean the assets (of any kind) owned by the Company, including (but not limited
to) the securities of the Company's Subsidiaries and any of the assets owned by the Company's Subsidiaries.

 

(i)                
“Competition” shall mean engaging in, or otherwise directly or indirectly being employed by or acting
as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of,
or permitting his name to be used in connection with the activities of any other business or organization which competes, directly
or indirectly, with the business of the Company as the same shall be constituted at any time during the Term.

 

(j)                
“Confidential Information” shall mean Company’s or Company’s affiliate’s information
which is used in the Company’s business and is (i) proprietary to, about or created by the Company; (ii) gives Company some
competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to
the interests of Company; (iii) designated as Confidential Information by Company, or from all the relevant circumstances should
reasonably be assumed by the Employee to be confidential and proprietary to Company; or (iv) not generally known by persons or
businesses outside of Company. Such Confidential Information includes, but is not limited to, the following types of information
and other information of a similar nature (whether or not reduced to writing or designated as confidential):

 

(i)                            
Work Product. Means product or information resulting from or related to work or projects performed or to be performed
for Company;

 

 

 

 

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(ii)                          
Other Proprietary Information. Employee is aware of and acknowledges that Company has developed special competence
and knowledge in the subsea oilfield service industry and has accumulated information not generally known to others in the field
which is of unique value in the conduct and growth of Company’s business and which Company treats as proprietary. This information
includes data relating to Company’s proprietary rights prior to any public disclosure thereof, including but not limited
to the nature of the proprietary rights, production data, the status and details of research and development of products and services,
and information regarding acquiring, protecting, enforcing and licensing proprietary rights (including patents, copyrights and
trade secrets);

 

(iii)                        
Third-Party Information. Confidential or proprietary information from third parties subject to a duty on the Company's
part to maintain the confidentiality of such information and to use it only for certain limited purposes.

 

(iv)                        
Business Operations. Internal personnel and financial information, vendor names and other vendor information (including
vendor characteristics, services and agreements), purchasing and internal cost information, internal services and operational manuals,
and the manner and methods of conducting Company’s business;

 

(v)                          
Marketing and Development Operations. Marketing and development plans, price and cost data, price and fee amounts,
pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast
assumptions and volumes, and future plans and potential strategies of Company which have been or are being discussed; and

 

(vi)                        
Clients. Names of Company clients and their representatives, contracts and their contents and parties, customer services,
and data provided by clients.

 

(k)              
"Date of Termination" shall mean the date of last employment for Executive as identified in the Notice
of Termination which shall be in compliance with the applicable provision of Section 4 setting the minimum required notice
period for termination of the Agreement by Executive or Company.

 

(l)                
"Disability" shall mean the absence of the Executive from performance of the Executive's duties with the
Company on a substantial basis for one hundred twenty (120) consecutive or non-consecutive calendar days or more within any
12-month period as a result of incapacity due to mental or physical illness.

 

(m)            
"Employment Period" shall mean the period commencing on the Effective Date and ending on the third anniversary
of the Effective Date; provided, however, that commencing on the third anniversary of the Effective Date, and on
each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), unless previously terminated, the Employment Period shall be automatically extended for an additional annual period(s)
(until the next annual anniversary of the Effective Date), unless, at least 90 days prior to the applicable Renewal Date, the Company
or Executive shall give notice to the other that the Employment Period shall not be so extended.

 

(n)              
"Entity" shall mean any corporation, partnership, association, joint-stock company, limited-liability company,
trust, unincorporated organization or other business entity.

 

(o)              
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

 

(p)              
"Good Reason" shall mean the occurrence of any of the following:

 

(i)                       except as provided herein regarding a Change of Control, the assignment to the Executive of any position, authority, duties
or responsibilities that are not materially consistent with the Executive's position (including status, offices and titles), authority,
duties or responsibilities as contemplated by Section 3(a) of this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action
not taken in bad faith and which is remedied by the Company after receipt of notice thereof given by the Executive;

 

 

 

 

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(ii)                       
any material failure by the Company to comply with any of the material provisions of this Agreement (including, without
limitation, its obligations under Section 3(a)) or any other agreements between the Executive and the Company, which
is not cured within 30 days of the Notice of Termination provided by Executive;

 

(iii)                       
any material reduction to Executive's Annual Base Salary (as such term is defined in Section 3(b)) or Executive's
bonus, retirement, pension, savings, life insurance, medical, health and accident, or disability plans, which is not cured within
30 days of the Notice of Termination provided by Executive;

 

(iv)                       
the Company's requiring the Executive to be based at any office or location other than as provided in Section 3(a)(i)
hereof;

 

(v)                       
any failure by the Company to comply with and satisfy Section 9(b) of this Agreement;

 

(vi)                       
the failure of Executive and Company to mutually agree to the criteria, terms and conditions for calculation of the Annual
Bonus (as defined in Section 3(b)(ii) within 30 days after the date such criteria are communicated to Executive.

 

In the event of a Change of Control or
other Business Transaction, following the Change of Control or the consummation of such other Business Transaction, "Good
Reason" shall be deemed to exist in the event Executive is assigned to any position, authority, duties or responsibilities
that are (A) not at or with the ultimate parent company of the successor to the Company or the Entity surviving or resulting from
such Business Transaction, or (b) materially inconsistent with the Executive's position (including status, offices, titles and
excluding Executive's reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a).

 

(q)              
“Invention” shall mean any and all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are (i) conceived or made by the Executive, solely or jointly with another, during
the Employment Period, (ii) directly related to the business or activities of the Company or its Subsidiaries, and (iii) conceived
by the Executive as a result of the Executive's employment by the Company.

 

(r)                
"IRS" shall mean the Internal Revenue Service.

 

(s)               
"Notice of Termination" shall mean a written notice which: (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the provision so indicated, (iii) the Date of Termination,
and (iv) whether the Company invokes Section 4(f) for all or a portion of the remainder of Executive’s employment
in the event of termination by Executive.

 

(t)                
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering by the Company of such securities, or (iv) a
corporation or other Entity owned, directly or indirectly, by the shareholders of the Company in the same proportions as their
ownership of Outstanding Company Common Shares.

 

 

 

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(u)              
“Restricted Period” shall mean the period of Executive’s employment and a period of 24 months following
the Date of Termination of Executive’s employment with Company.

 

(v)              
"Section 409A" means Section 409A of the Internal Revenue Code of 1986, as amended.

 

(w)             
"Section 409A Amounts" means those amounts that are deferred compensation subject to Section 409A.

 

(x)              
"Separation From Service" shall have the meaning ascribed to such term in Section 409A.

 

(y)              
"Specified Employee" means a person who is a "specified employee" within the meaning of Section
409A.

 

(z)               
"Subsidiary" shall mean any majority-owned subsidiary of the Company or any majority-owned subsidiary thereof,
or any other Entity in which the Company owns, directly or indirectly, a majority of the economic interest therein.

 

(aa)           
“Waiting Period” shall mean the six-month period commencing on the date after the Executive's Separation
From Service.

 

2. Employment Period. The
Company and Executive hereby agree that unless this Agreement is earlier terminated as provided for herein, the Company will continue
to employ Executive throughout the Employment Period.

 

3. Terms of Employment.

 

(a)               
Position and Duties.

 

(i)                       
During the Employment Period, the Executive's position (including status, offices, titles, authority, duties and responsibilities)
shall be Chief Executive Officer of the Company. The Executive’s services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or location less than 35 miles from such location.

 

(ii)                       
During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled,
the Executive agrees to devote reasonable attention and time during normal business hours for a similarly situated executive to
the reasonable business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions
and (C) manage personal investments, so long as such activities in clause (A), (B), and (C) together do not significantly
interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement
or otherwise negatively impact the good will of the Company as viewed in the eyes of the Board. It is expressly understood and
agreed that to the extent that such activities have been conducted by the Executive prior to the date hereof, and are listed on
Exhibit “A”, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the date hereof shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities
to the Company.

 

 

 

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(b)              
Compensation.

 

(i)                       
Base Salary. During the Employment Period, the Executive shall receive an annualized base salary (the "Annual
Base Salary"), not less than the base salary the Executive earned during the prior 12-month period, including any portion
of the salary paid to Executive which was earned but deferred. Such Annual Base Salary shall be paid in not less than 12 monthly
installments according to the regular payroll practices of the Company. During the Employment Period, the Annual Base Salary shall
be reviewed for possible increase at least once every 12 months. Any increase in the Annual Base Salary may not serve to limit
or reduce any other obligation to the Executive under this Agreement. The Annual Base Salary shall not be reduced after any such
increase and the Annual Base Salary as utilized in this Agreement shall refer to the Annual Base Salary as so increased.

 

(ii)                       
Annual Bonus. The Executive shall be eligible to earn a cash bonus payment each fiscal year under this Agreement
the (“Annual Bonus Payment”). The Annual Bonus Payment shall be calculated based upon achievement of a target financial
objective set by the Board’s Compensation Committee upon the Effective Date of this Agreement for the first fiscal year
during which this Agreement is performable and thereafter within three months of the beginning of each fiscal year thereafter.
Such Annual Bonus Payment shall be based upon the target financial objective for the Company as compared to EBITDA for the prior
fiscal year.

 

If the
Board subsequently determines the financial statements of the Company must be materially restated for any fiscal year involved
in the determination of the Annual Bonus Payment, the Executive may be required to repay any portion of the Annual Bonus Payment
in excess of what Executive’s Annual Bonus Payment would be under the restated financial statements. Conversely, if Executive
would be entitled to a larger Annual Bonus Payment under the restated financial statements, the Company shall pay to Executive
the difference between what the Executive has previously been paid and what the Executive would have earned under the restated
financial statements.

 

For purposes
of the determination of the Annual Bonus Payment, EBITDA shall be defined as follows: The net income (loss) of the Company plus
interest expense-net, income taxes, depreciation and amortization (including amortization of purchased receivables). The determination
of EBITDA, for purposes of the Annual Bonus Payment, shall be made by the Board in accordance with generally accepted accounting
principles in effect in the United States, applied on a consistent basis (“GAAP”). EBITDA shall be adjusted for the
following purposes: (A) to exclude net gains and losses on the disposal of assets and other non-operating income or expense items;
(B) to exclude EBITDA generated from acquisitions of new businesses or companies during the year (an acquisition of a new office
would not be deemed to be a material acquisition); (C) to exclude capitalized costs that would otherwise be expenses of the period;
and (D) for other items in the discretion of the Board, provided, however that as to Executive Officers, the Board may not exercise
discretion to increase EBITDA for purposes of the Annual Bonus Payment.

 

The Annual
Bonus Payment, if earned, will be paid in cash no later than 30 days after the completion of the annual audit of the Company’s
consolidated financial statements, unless the Executive shall elect to defer the receipt of such Annual Bonus Payment pursuant
to an arrangement which meets the requirements of Section 409A. In any event, for purposes of Section 409A, the Annual Bonus Payment
will not be considered earned by the Executive until the completion of the annual audit of the Company’s consolidated financial
statements.

 

 

 

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(iii)                       
Stock Award. The Executive shall receive a restricted common stock award as provided in the attached Restricted
Stock Agreement (Exhibit “B”) upon the Effective Date of the Agreement. From Time to time Company may provide Executive
additional restricted stock offers in the same general form as that identified in the Restricted Stock Agreement.

 

(iv)                       
Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be eligible to participate
in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives
of the Company, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less favorable, in the whole, than the most favorable
of those provided by the Company for the Executive under such plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company, subject to the terms and conditions of the applicable
plans, practices, policies and programs.

 

(v)                       
Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible to participate in all welfare benefit plans, practices, policies and programs provided by the Company; including,
without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs (the “Plans”) from time to time to the extent applicable generally
to, and no less favorable than those provided to other peer executives at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other
peer executives of the Company. The Company shall pay 100% of all premiums with respect to such Plans.

 

(vi)                       
Fringe Benefits. During the Employment Period, the Executive shall be entitled to such fringe benefits (including,
without limitation, payment of cellular telephone, vehicle allowance, payment of club dues, payment of professional fees and taxes
and related expenses, as appropriate) in accordance with the plans, practices, programs and policies of the Company for other
peer executives at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer executives of the Company. Notwithstanding the foregoing,
any amounts payable under this Section 3(b)(vi) that are Section 409A Amounts shall be paid in a manner and at
such times so as to be compliant with or exempt from Section 409A.

 

(vii)                       Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable business expenses incurred by the Executive subject to the terms of the Company's applicable expense reimbursement
policies applicable to other peer executives at any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of
the Company. Notwithstanding the foregoing, any amounts payable under this Section 3(b)(vii) that are Section 409A
Amounts shall be paid in a manner and at such times so as to be compliant with or exempt from Section 409A.

 

 

 

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(viii)                       Vacation. During the Employment Period, the Executive shall be entitled to up to six weeks paid vacation per calendar
year or such greater amount of paid vacation as may be applicable generally to other peer executives at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company. To the extent not used in any fiscal year, Executive may carry over
up to eight weeks of paid vacation to a subsequent calendar year. Executive may not take more than two consecutive weeks of paid
vacation in any 30 day period.

 

(ix)                       
Legal Fees. In the event of any dispute between Company and Executive as to the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance of this Agreement, Executive shall be entitled
to reimbursement of all legal fees and expenses incurred by him, if Executive is the prevailing party in any such dispute, or
any litigation, arbitration or other proceedings arising out of such dispute.

 

(c)               
Certain Additional Payments by the Company.

 

(i)                       Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution
by the Company or any of its affiliated companies to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement, any other plan, agreement or contract or otherwise, but determined without
regard to any additional payments required under this Section 3(c)) (a “Payment”) would be subject
to any additional tax or excise tax imposed by sections 409A, 457A or 4999 of the Code (and any successor provisions or sections
to sections 409A, 457A and 4999) or any interest or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”),
then the Executive shall be entitled to promptly receive from the Company an additional payment (a “Gross-Up Payment”)
in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Any Gross-Up Payment shall be made by the Company at least 10 days prior to the date that the
Executive is required to remit to the relevant taxing authority any federal, state and local taxes imposed upon the Executive,
including the amount of additional taxes imposed upon the Executive due to the Company’s payment of the initial taxes on
such amounts. Notwithstanding any provision of this Agreement to the contrary, any amounts to which the Executive would otherwise
be entitled under this Section 3(c)(i) during the first six months following the date of the Executive’s Separation
From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation
From Service. All reimbursements by the Company under this Section 3(c)(i) shall be paid no later than the earlier of (i) the
time periods described above and (ii) the last day of the Executive’s taxable year next following the taxable year
in which the expense was incurred.

 

(ii)                       Subject to the provisions of Section 3(c)(iii), all determinations required to be made under this Section 3(c),
including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination shall be made by PricewaterhouseCoopers or, as provided below, such other certified public accounting
firm as may be designated by the Executive (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business days after the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group effecting a Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section 3(c), shall be paid by the Company to the Executive
within five (5) days after the receipt of the Accounting Firm’s determination. Any determination by the Accounting
Firm, absent manifest error, shall be binding upon the Company and the Executive, subject to the last sentence of Section 3(c)(i),
and in no event later than the payment deadline specified in Section 3(c)(i). As a result of the uncertainty in the
application of section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to
Section 3(c)(iii) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive, subject to the last sentence of Section 3(c)(i), and in no event later than the
payment deadline specified in Section 3(c)(i).

 

 

 

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(iii)                       The Executive shall notify the Company in writing of any claim by the IRS that, if successful, would require the payment
by the Company of the Gross-Up Payment (or an additional Gross-Up Payment in the event the IRS seeks higher payment). Such notification
shall be given as soon as practicable, but no later than ten (10) business days after the Executive is informed in writing of
such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the thirty (30)-day period following the date on which he gives
such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

 

(A)           give the Company any information reasonably requested by the Company relating to such claim,

 

(B)           take such action in connection with contesting such claim as the Company shall reasonably request in writing from time
to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected
by the Company,

 

(C)            cooperate with the Company in good faith in order to effectively contest such claim, and

 

(D)           
permit the Company to participate in any proceedings relating to such claims; provided, however, that the
Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred at any time
during the period that ends ten (10) years following the lifetime of the Executive in connection with such proceedings and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3(c)(iii), the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund,
the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited solely to such contested amount. The Company shall
not direct the Executive to pay such a claim and sue for a refund if, due to the prohibitions of section 402 of the Sarbanes-Oxley
Act of 2002, the Company may not advance to the Executive the amount necessary to pay such claim. All such costs and expenses
shall be made by the Company at least ten (10) days prior to the date that the Executive is required to pay or incur such
costs and expenses. The costs and expenses that are subject to be paid by the Company pursuant to this Section 3(c)(iii)
shall not be limited as a result of when the costs or expenses are incurred. The amounts of costs or expenses that are eligible
for payment pursuant to this Section 3(c)(iii)(D) during a given taxable year of the Executive shall not affect the
amount of costs or expenses eligible for payment in any other taxable year of the Executive. The right to payment of costs and
expenses pursuant to this Section 3(c)(iii)(D) is not subject to liquidation or exchange for another benefit. Notwithstanding
any provision of this Agreement to the contrary, any amounts to which the Executive would otherwise be entitled under this Section
3(c)(iii)(D) during the first six months following the date of the Executive’s Separation From Service shall be accumulated
and paid to the Executive on the date that is six months following the date of his Separation From Service. All reimbursements
by the Company under this Section 3(c)(iii)(D) shall be paid no later than the earlier of (i) the time periods
described above and (ii) the last day of the Executive’s taxable year next following the taxable year in which the
expense was incurred.

 

 

    	 	10	 

     

    

 

(iv)                       
If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 3(c)(iii),
the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 3(c)(iii)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 3(c)(iii), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall not be required
to be repaid.

 

(v)                       
Any provision in this Agreement or any other plan or agreement to the contrary notwithstanding, if the Company is required
to pay a Gross-Up Payment pursuant to the provisions of this Agreement and pursuant to the provisions of another plan or agreement,
then the Company shall pay the total of the amounts determined pursuant to this Agreement and the provisions of such other plan
or agreement.

 

4. Termination of Employment.

 

(a)               
Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the
Employment Period without necessity of Notice of Termination. If the Company determines in good faith that the Executive has a
Disability, the Company may terminate the Agreement upon not less than 30 days written notice.

 

(b)              
By the Company with Cause. Subject to the limitations of Section 1(d) regarding notice and cure, the Company
may terminate the Executive's employment immediately during the Employment Period for Cause by providing a Notice of Termination.

 

(c)               
By the Executive with Good Reason. Subject to the limitations of Section 1(n) regarding notice and cure, the
Executive's employment may be terminated immediately by the Executive at any time during the Employment Period for Good Reason
by providing a Notice of Termination.

 

(d)              
By the Company without Cause. The Executive's employment may be terminated by the Company at any time during the
Employment Period without Cause at any time by providing a Notice of Termination and upon not less than 60 days written notice.

 

(e)               
By the Executive without Good Reason. The Executive's employment may be terminated by the Executive at any time during
the Employment Period without good Reason by providing a Notice of Termination and upon not less than 60 days written notice.

 

 

 

 

    	 	11	 

     

    

 

(f)               
Garden Leave. In the event of termination by Executive with or without Good Reason, the Company may elect to relieve
Executive of any and all duties under this Agreement and deny Executive access to Company property so long as Company makes any
and all payments otherwise due under the Agreement during the Notice of Termination period. The Company may elect to place Executive
on Garden Leave at any time during the remainder of Executive’s employment identified in the Notice of Termination. Such
leave shall not prejudice either Company or Executive to any other rights or payments due under this Agreement.

 

5. Obligations of the Company Upon
Termination.

 

(a)               
Death or
Disability. If, during the Employment Period, the Executive's employment is terminated by reason of the Executive's death
or Disability:

 

(i)                       the Company shall pay to the Executive (or Executive's heirs, beneficiaries or representatives, as applicable) in a lump
sum in cash, within 30 days after the Date of Termination, the Accrued Obligation; and

 

(ii)                       the Company shall pay or cause the Executive (or Executive's heirs, beneficiaries or representative, as applicable) to
be paid the Benefit Obligation at the times specified in and in accordance with the terms of the applicable Benefit Plans.

 

(b)               
Good Reason
or Other Than for Cause. If, during the Employment Period, the Executive is terminated by the Executive for Good Reason or
by the Company for any reason other than for Cause, then:

 

(i)                       
The Company shall pay to the Executive, at the times specified in Section 5(b)(ii) below, the following amounts:

 

(A)           
the Accrued Obligation,

 

(B)           
the Benefit Obligation,

 

(C)           
a lump sum in cash equal to one time the Executive's Annual Base Salary (at the rate in effect as of the Date of Termination);
provided, however, that if such termination occurs prior to the date that is 12 months following a Change of Control,
then the amount of such lump sum cash payment shall be equal to three times the Executive's Annual Base Salary (at the rate in
effect as of the Date of Termination),

  

(D)           
a lump sum in cash equal to the average annual bonus paid to the Executive for the prior two full fiscal years preceding
the Date of Termination; provided, however, that if such termination occurs prior to the date that is 12 months
following a Change of Control, then the amount of such lump sum cash payment shall be equal to two times the average Annual Bonus
paid to the Executive for the prior two full fiscal years preceding the Date of Termination,

 

 

 

 

    	 	12	 

     

    

 

(E)           
a lump sum in cash equal to a pro rata portion of the Annual Bonus payable for the period in which the Date of Termination
occurs based on actual performance under the Company's annual incentive bonus arrangement; provided, however, that such pro
rata portion shall be calculated based on Executive's Annual Bonus for the previous fiscal year; provided, further that if
no previous Annual Bonus has been paid to ex-Executive, then the lump-sum cash payment shall be no less than 50% of Executive’s
Annual Base Salary, and

 

(F)           
if such termination occurs prior to the date that is 12 months following a Change of Control, then each and every share
option, restricted share award and other equity-based award that is outstanding and held by the Executive shall immediately vest
and become exercisable.

 

(ii)                       
The Company shall pay the Executive the Benefit Obligation at the times specified in and in accordance with the terms of
the applicable Benefit Plans. The Company shall pay the Executive the amounts described under Section 5(b)(i)(A) within
thirty (30) days after the Date of Termination. The Company shall pay to the Executive the amounts or benefits described in Sections
5(b)(i)(C) and 5(b)(i)(D) within 90 days following the date of Executive's Separation From Service if he is
not a Specified Employee or on the date that is six months following the date of his Separation From Service if he is a Specified
Employee. Amounts payable pursuant to Section 5(b)(i)(E) will be paid at time payment is made to employees generally pursuant
to the terms of the Company's annual incentive bonus arrangement or, if Executive is a Specified Employee, on the date that is
six months following the date of his Separation From Service, if later.

 

(iii)                       Payments to the Executive under this Section 5(b) (other than the Accrued Obligation and the Benefit Obligation)
are contingent upon the Executive's execution (and non-revocation) of a release substantially in the form of Exhibit “A”
hereto no later than 60 days following Executive's Separation From Service.

 

(c)               
Cause.
If the Executive's employment is terminated by the Company for Cause during the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than the obligation to pay to the Executive (x) the Accrued Obligation
and (y) the Benefit Obligation in accordance with the terms of the applicable Benefit Plans. In such case, the Accrued Obligation
shall be paid to the Executive in a lump sum in cash within 30 days after the Date of Termination and the Benefit Obligation shall
be paid in accordance with the terms of the applicable Benefit Plans.

 

(d)               
Termination
by Executive Other Than for Good Reason. If the Executive voluntarily terminates his employment during the Employment Period
for any reason other than for Good Reason, the Executive's employment shall terminate without further obligations to the Executive,
other than for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section 6. In such
case, the Accrued Obligation shall be paid to the Executive in a lump sum in cash within 30 days after the Date of Termination
and the Benefit Obligation shall be paid in accordance with the terms of the applicable Benefit Plans.

 

 

 

    	 	13	 

     

    

 

(e)               
General.
Notwithstanding anything herein to the contrary, if the Executive is a Specified Employee on the date of his Separation From Service,
any payments or benefits hereunder that are deferred compensation subject to Section 409A, are payable upon his Separation From
Service, and are not otherwise exempt from Section 409A, shall not be paid during the Waiting Period, and on the first business
day following the expiration of the Waiting Period all payment and benefits that were payable during the Waiting Period will be
paid to the Executive in a cash lump sum payment, without interest, and thereafter payments and benefits will be paid as provided
herein.

 

6. Other Rights. Except as
provided herein, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or agreement with the Company. Except as otherwise provided
herein, amounts which are vested benefits, which vest according to the terms of this Agreement or which the Executive is otherwise
entitled to receive under any of the Benefit Plans or any other plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.

 

7. Full Settlement.

 

(a)               
No Rights of Offset. The Company’s obligation to make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others.

 

(b)              
No Mitigation Required. The Company agrees that, if the Executive’s employment with the Company terminates,
the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive
by the Company pursuant to this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not
be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

 

8. Competition, Disclosure, Ownership,
and Solicitation.

 

(a)               
Non-Disclosure. Executive shall not, without the prior written consent of the Company or as may otherwise be required
by law or legal process, communicate, use, disclose or divulge any Confidential Information of the Company or its affiliates at
any time. Any termination of the Executive's employment or of this Agreement shall have no effect on the continuing operation of
this Section 8(a).

 

(b)              
Return of Confidential Information. The Executive agrees to return all Confidential Information, including all photocopies,
extracts and summaries thereof, and any such information stored electronically on tapes, computer disks or in any other manner
to the Company at any time upon request by the Company and upon the termination of his employment hereunder for any reason without
request of the Company. In no event shall an asserted violation of the provision of this Section 8(b) constitute a basis
for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

 

(c)               
Non-Competition. In exchange for the provision of Confidential Information and training by the Company, the Executive
shall not engage in Competition during the Restricted Period, provided, that it shall not be a violation of this Section 9(c)
for the Executive to become the registered or beneficial owner of up to five percent (5%) of any class of the capital stock of
a corporation registered under the Securities Exchange Act of 1934, as amended, provided that the Executive does not actively participate
in the business of such corporation until such time as this covenant expires.

 

 

 

    	 	14	 

     

    

 

(d)              
Non-Solicitation; Non-Interference. During the Restricted Period, the Executive agrees that the Executive will not,
directly or indirectly, for his benefit or for the benefit of any other person, firm or Entity, do any of the following:

 

(i)                       
solicit from any customer doing business with the Company or any of its Subsidiaries, as of the Date of Termination, business
of the same or of a similar nature to the business of the Company or any of its Subsidiaries with such customer;

 

(ii)                       
solicit from any potential customer (that is known to the Executive) of the Company or any of its Subsidiaries business
of the same or of a similar nature to that which has been the subject of a known written or oral bid, offer or proposal by the
Company or any of its Subsidiaries, or of substantial preparation with a view to making such a bid, proposal or offer, within
six months prior to such Date of Termination;

 

(iii)                       
solicit the employment or services of any person employed by or a consultant to the Company upon the Date of Termination,
or within six months prior thereto (provided, however, that the provisions hereof shall be deemed not to prohibit
the Executive, on the Executive's behalf or on behalf of other persons, firms or Entities, from placing advertisements in newspapers
or other media of general circulation advertising employment opportunities and offering employment to individuals responding to
those advertisements); or

 

(iv)                       
otherwise knowingly interfere with the business or accounts of the Company or any of its Subsidiaries.

 

(e)               
Reformation. Should any provision within this Section 8 of this Agreement be determined too broad under any law or
statute, the parties expressly request the agreement be reformed to provide the maximum possible protection to Company.

 

(f)               
Extension Due to Breach. For any period of time during which Executive is in breach of the covenant not to compete
set out in this Section 8, Employee agrees the non-competition and non-solicitation obligations shall be extended for an
equal period.

 

(g)              
Incorporation of Prior Agreements. This Agreement incorporates all non-competition, non-disclosure, and non-solicitation
obligations of Employee to Company from any prior agreements between Executive and Company which were in effect immediately preceding
entry into this Agreement. Such incorporated obligations shall remain in force and effect until such time, if any, as sufficient
consideration for the provisions of Section 10 above has been imparted to Employee.

 

(h)              
General. The Executive and the Company agree and acknowledge that the Company has a substantial and legitimate interest
in protecting the Company's and its Subsidiaries' Confidential Information and goodwill. The Executive and the Company further
agree and acknowledge that the provisions of this Section 8 are necessary to protect the Company's legitimate business interests
and are designed to protect the Company's and its Subsidiaries' Confidential Information and goodwill. The Executive agrees that
the scope of the restrictions as to time, geographic area, and scope of activity in this Section 8 are necessary for the
protection of the Company's legitimate business interests and are not oppressive or injurious to the public interest. The Executive
agrees that in the event of a breach or threatened breach of any of the provisions of this Section 8 the Company shall be
entitled to injunctive relief against the Executive's activities to the extent allowed by law, and the Executive waives any requirement
for the posting of any bond by the Company in connection with such action. The Executive further agrees that any breach or threatened
breach of any of the provisions of Section 8 would cause injury to the Company for which monetary damages alone would not
be a sufficient remedy. The Executive hereby agrees that the period during which the agreements and covenants of the Executive
made in Section 8(b) shall be effective shall be computed by excluding from such computation any time during which the Executive
is in violation of any provision of Section 8(b).

 

 

    	 	15	 

     

    

 

(i)                
Inventions. The Executive shall disclose promptly to the Company any and all Inventions. The Executive hereby assigns
and agrees to assign the Executive's interest in any such Invention, improvement or valuable discovery to the Company or its nominee.
Whenever requested to do so by the Company, the Executive shall execute any and all applications, assignments or other instruments
that the Company shall deem necessary to protect the Company's or any Subsidiary's interest in any such Invention, improvement
or valuable discovery.

 

9. Successors. This Agreement,
and any rights and obligations hereunder, is personal to the Executive and shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

10. Miscellaneous.

 

(a)               
Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the Executive and the Company or, in the case of a waiver,
by the party waiving compliance. No delay on the party of any party in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any waiver on the part of any party of any such right, power or privilege hereunder, not
any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. Notwithstanding anything herein to the contrary, the Company may amend
this Agreement in writing in any manner so that payments or benefits hereunder comply with or continue to be exempt from Section
409A, including, but not limited to, (i) adding a requirement that no payment or benefits due on account of the Executive's Separation
From Service shall be paid during the six-month period commencing on the Executive's Date of Termination and (ii) making payment
of any amounts due to the Executive hereunder such that any such payment is exempt from Section 409A (including making payment
as soon as administratively practicable, within the meaning of Section 409A, for such purpose).

 

(b)              
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.

 

(c)               
Headings. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

 

(d)              
Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	 	 	If to the Executive:	 	
        Ronald E. Smith

        at the address set forth in his personnel
        file at Deep Down, Inc.
	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	If to the Company:	 	 
	 	 	 	 	
        Deep Down, Inc.

        8827 W. Sam Houston Pkwy N., Suite 100
	 
	 	 	 	 	Houston, Texas 77040	 
	 	 	 	 	
        Attention: General Counsel
	 

 

 

 

 

    	 	16	 

     

    

 

or to such other address as either party
shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually
received by the addressee.

 

(e)               
Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.

 

(f)               
Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(g)              
Entire Agreement. Except as set out in Section 8(g), this Agreement constitutes the entire agreement and understanding
between the parties relating to the subject matter hereof and supersedes all prior agreements between the parties relating to the
subject matter hereof.

 

(h)              
Deferred Compensation and Specified Employee. The Executive acknowledges and understands that none of the Company,
its Affiliates, nor any of their officers, directors or employees are responsible or liable for and none of them guarantee the
tax consequences of any payments or benefits under this Agreement, including, but not limited to, any excise taxes or interest
that may be incurred under Section 409A.

 

11. Indemnity.

 

(a)Legal Fees.To
the extent permitted by applicable law, and the By-Laws of the Company, the Company agrees to defend, indemnify and hold harmless
the Executive from any and all claims, demands or causes of action, including reasonable attorneys' fees and expenses, suffered
or incurred by the Executive as a result of the assertion or filing of any claim, demand, litigation or other proceedings based,
in whole or in part, upon statements, acts or omissions made by or on behalf of the Executive pursuant to this Agreement and/or
in the course and scope of the Executive's employment by the Company. Within ten (10) days after notice from the Executive of the
filing or assertion of any claim for which indemnification is provided (or sooner if action is required sooner in order to properly
defend the Executive), the Company shall designate competent, experienced counsel to represent the Executive, at the Company's
expense, which counsel shall be subject to the Executive's approval, which shall not be unreasonably withheld. Should the Company
fail to so designate or pay, or make arrangements for payment of, such counsel, then Executive shall have the right to engage counsel
of the Executive's choosing, and the Company shall be obligated to pay or reimburse any and all fees and expenses incurred by the
Executive in defending himself in connection with any such claim.

 

(b)Insurance.During
the entire employment period, and for a period of not less than five years after termination of the Executive's employment, the
Company shall maintain, and pay all applicable premiums for, directors' and officers' liability insurance, of which the Executive
shall be an insured, which shall provide full coverage for the defense and indemnification of the Executive, to the fullest extent
permitted by applicable law.

 

[SIGNATURE PAGE FOLLOWS] 

 

 

 

    	 	17	 

     

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date first above written.

 

	 	 	 	 	 
	 	
        EXECUTIVE
	 
	 	 	 
	 	/s/ Ronald E. Smith	 
	 	Ronald E. Smith	 
	 	 	 
	 	 	 
	 	
        DEEP DOWN, INC.
	 
	 	 	 
	 	By:  	/s/ Eugene L. Butler	 
	 	 	Name:  Eugene L. Butler	 
	 	 	Title:    Executive Chairman and Chief Financial Officer	 

 

 

 

 

 

 

 

 

 

 

 

    	 	18	 

     

    

 

EXHIBIT A

 

RELEASE

 

The Executive hereby
irrevocably and unconditionally releases, acquits and forever discharges the Company (as defined in the Executive's Employment
Agreement) and its affiliated companies and their directors, officers, employees and representatives (collectively "Releasees"),
from any and all claims, liabilities, obligations, damages, causes of action, demands, costs, losses and/or expenses (including
attorneys' fees) of any nature whatsoever, whether known or unknown, including, but not limited to, rights arising out of alleged
violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort,
or any legal restrictions on the Company's right to terminate employees, or any federal, state or other governmental statute, regulation,
or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, and the Age Discrimination
in Employment Act of 1967, as amended, which the Executive claims to have against any of the Releasees (in each case, except as
to indemnification provided by (a) the Executive's Employment Agreement with the Company (as amended or superseded from time
to time) and/or (b) by the Company's bylaws and any indemnification agreement or arrangement permitted by applicable law and
by directors, officers and other liability insurance coverages to the extent you would have enjoyed such coverages had you remained
a director or officer of the Company). In addition, the Executive waives all rights and benefits afforded by any state laws which
provide in substance that a general release does not extend to claims which a person does not know or suspect to exist in his favor
at the time of executing the release which, if known by him, must have materially affected the Executive's settlement with the
other person. The only exception to the foregoing are claims and rights that may arise after the date of execution of this Release,
claims and rights arising under any employee benefit plan and claims and rights arising under Section 5 of the Executive's
Employment Agreement.

 

The Executive understands
and agrees that:

 

	 	A.	He has a period of twenty-one (21) days within which to consider whether he desires to execute this Agreement, that
no one hurried him into executing this Agreement during that twenty-one (21)-day period, and that no one coerced him into executing
this Agreement.
	 	 	 
	 	B.	He has carefully read and fully understands all of the
provisions of this Release, and declares that this Release is written in a manner that he fully understands.
	 	 	 
	 	C.	He is, through this Release, releasing the Releasees from any and all claims he may have against the Releasees, and that
this Release constitutes a release and discharge of claims arising under the Age Discrimination in Employment Act of 1967, as amended,
29 U.S.C. §§ 621-634, including the Older Workers' Benefit Protection Act, 29 U.S.C. § 626(f).
	 	 	 
	 	D.	He declares that his agreement to all of the terms set forth
in this Release is knowing and is voluntary.
	 	 	 

 

 

 

 

    	 	19	 

     

    

 

	 	E.	He knowingly and voluntarily intends to be legally bound by the terms of this Release.
	 	 	 
	 	F.	He was advised and hereby is advised in writing to consult
with an attorney of his choice concerning the legal effect of this Release prior to executing this Release.
	 	 	 
	 	G.	He understands that rights or claims that may arise
after the date this Release is executed are not waived.
	 	 	 
	 	H.	He understands that, in connection with the release
of any claim of age discrimination, he has a period of seven (7) days to revoke his acceptance of this Release, and that he may
deliver notification of revocation by letter or facsimile addressed to the President of the Company, at 8827 W. Sam Houston Pkwy
N., Suite 100, Houston, TX 77040. Executive understands that this Release will not become effective and binding with respect to
a claim of age discrimination until after the expiration of the revocation period. The revocation period commences when Executive
executes this Release and ends at 11:59 p.m. on the seventh calendar day after execution, not counting the date on which
Executive executes this Release. Executive understands that if he does not deliver a notice of revocation before the end of the
seven-day period described above, that this Release will become a final, binding and enforceable release of any claim of age discrimination.
This right of revocation shall not affect the release of any claim other than a claim of age discrimination arising under federal
law.
	 	 	 
	 	I.	He understands that nothing in this Release shall be construed to prohibit Executive from filing a charge or complaint,
including a challenge to the validity of this Release, with the Equal Employment Opportunity Commission or participating in any
investigation or proceeding conducted by the Equal Employment Opportunity Commission.

 

AGREED
AND ACCEPTED, on this _____________ day of ___________________, _______.

 

____________________________________

[Name of Executive]

 

 

 

 

 

 

 

 

 

    	 	20Exhibit 10.122

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement
(“Agreement”) is entered into as of April 1, 2017 (the “Effective Date”), by and between QS Energy, Inc.
a Nevada corporation (“Employer”) and Jason Lane (“Employee”) (collectively, the “Parties”).

 

Employee desires to
set forth herein the terms and conditions pursuant to which he will agree to employment by Employer, and Employer desires by the
terms and conditions of this Agreement to agree to employ Employee.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the promises and the mutual covenants hereinafter set forth, the Parties agree as follows:

 

1.     Employment.

 

1.1     Acceptance
of Employment. Effective the Effective Date, Employer agrees to employ Employee, and Employee agrees to employment
with Employer, on the terms and conditions set forth in this Agreement.

 

1.2     Duties and Powers. Employee shall serve as the Company’s Chief Executive Officer (CEO), and in such capacity
shall be one of the Company’s senior executive officers. Employee’s duties shall be consistent with such position,
including bringing capital in to the Company. In carrying out his duties, Employee shall use Employee’s best efforts, skills,
judgment, and abilities, and shall at all times promote the Company’s interest and perform and discharge well and faithfully,
those duties. In addition, Employee shall abide by all of the requirements of the Securities and Exchange Commission (“SEC”),
and adhere to the policies and requests of the Company with respect thereto, as the same may exist from time to time, applicable
to executive officers of public companies. Employee shall perform or do all such duties, services, acts or things necessary or
advisable at the direction of Employer and subject at all times to the policies set by the Board of Directors of the Employer (the
“Services”).

 

1.3     Supervision. Employee shall report to the Board of Directors of the Employer in connection with the performance of
his duties hereunder.

 

1.4     Location. Executive shall perform his duties at Employer’s offices located at ______________________________________________________________________,
or at such other location as directed by Employer.

 

1.5     Hours of Employment. Employee shall devote his full energies, abilities and productive time to the performance of
his duties, which is expected to be, on average, not less than 40 hours each week.

 

2.     Confidential Information. Employee hereby acknowledges that, during and solely as a result of his employment by Employer,
he will have access to confidential information and business and professional contacts. Employee hereby agrees as follows:

 

2.1     Definition. “Confidential Information” shall mean any information, tangible or intangible, relating to
the business of Employer and its affiliated companies, and their products, finances, budgets, methods, policies, procedures, business,
plans, computer or other data, techniques, designs, research or development projects or results, customers or clients, employees,
trade secrets, intellectual property, or other knowledge or processes of or developed by Employer and its affiliated companies,
and any other confidential information relating to or dealing with the businesses of Employer and its affiliated companies, made
known to Employee or learned or acquired by Employee while in the employ of Employer, but Confidential Information shall not include
information lawfully known generally by or readily accessible to the trade or the general public.

 

 

 

    	 	1	 

     

    

 

2.2     Use. During the Term (defined below), Employee shall use and disclose Confidential Information only for the benefit
of Employer and only as necessary to carry out Employee’s responsibilities under this Agreement. After the Term, Employee
shall not, directly or indirectly, disclose to any person or entity, or use for the direct or indirect benefit of any person or
entity, any Confidential Information, without the express written permission of Employer. At no time shall Employee, directly or
indirectly, remove or cause to be removed from the premises of Employer any Confidential Information (including copies, extracts
and summaries thereof) except in furtherance of the performance of Employee’s duties hereunder.

 

2.3     Proprietary Interests. Employee acknowledges and agrees that all Confidential Information, whether developed by him
or others, is and will remain the sole and exclusive property of Employer. Employee further recognizes and agrees that all work
performed or work product developed by him in the course of his employment with Employer is and shall remain the sole and exclusive
property of Employer. Employee hereby assigns to Employer any rights Employee may have or acquire in such Confidential Information
and agrees to sign any additional document(s) that Employer may determine is/are necessary to effectuate such assignment. This
Agreement does not apply to an invention by Employee that qualifies as a nonassignable invention under Section 2870 of the California
Labor Code.

 

2.4     Return of Confidential Information. Upon the termination of Employee’s employment with Employer for any reason,
or at the request of Employer before, at or after termination, Employee will promptly deliver to Employer all records, files, memoranda,
documents, lists and other information containing any Confidential Information, including all copies or summaries thereof, in Employee’s
possession or control, whether prepared by Employee or others. Should Employee discover such items in his possession after his
separation and departure from employment with Employer, he agrees to return them promptly to Employer without retaining copies.

 

3.     Term of Employment. Subject to earlier termination as provided herein, Employee hereby agrees to continue to be employed
by Employer for a term of two (2) years (“Term”) beginning on the Effective Date of this Agreement, and Employer hereby
agrees to employ Employee during such Term.

 

4.     Compensation. In consideration for the performance of Employee’s duties and the rendition by Employee of the
Services to be provided under this Agreement, and in consideration of Employee’s agreement to continue his Employment with
Employer, Employer shall compensate Employee as follows:

 

4.1     Base Salary. Throughout the Term, Employer shall pay Employee an annual base salary (“Base Salary”) of
One Hundred Fifty Thousand Dollars ($150,000). All Base Salary shall be payable ratably in bi-weekly installments, or more or less
often in accordance with Employer’s standard payroll practices in effect from time to time, net of all amounts required to
be withheld by Employer for taxes imposed on Employee pursuant to all applicable laws.

 

4.2     Options. As an inducement to Employee to agree to his employment with Employer pursuant to the terms and conditions
of this Agreement, Employer agrees to issue to Employee options to purchase 3,000,000 shares of restricted common stock of the
Company (the “Options”) The Options shall vest pursuant to a two (2) year vesting schedule, as follows: 500,000 of
the Options at $0.15 per share and 500,000 of the Options at $0.25 per share, shall vest twelve (12) months from the date hereof,
and thereafter 1,000,000 of the Options at $0.30 per share and 1,000,000 of the Options at $0.40 per share, shall vest on the two
year anniversary of the date hereof. Notwithstanding the foregoing, if this Agreement is terminated for any reason, except for
termination by Employer Without Cause (defined below), all unvested Options shall terminate and be of no force or effect. The Options
shall expire ten (10) years from the date hereof, and shall be of no force or effect thereafter. In connection with Employee’s
agreement to accept the Options hereunder, Employee agrees and acknowledges the following:

 

 

 

    	 	2	 

     

    

 

		(i)	Employee is aware of Employer’s business affairs and financial condition, and has been advised
to review Employer’s SEC filings, which may be accessed online at www.sec.gov. Employee has had an opportunity to ask questions
and receive answers from Employer regarding its business and the Options.

 

		(ii)	Employee acknowledges that the acceptance of the Options involves a high degree of risk, and that
the stock to be issued in connection therewith may need to be held for an indefinite period of time.

 

		(iii)	Employee acknowledges that he is acquiring the Options for his personal account, for investment
purposes only, and not with a view to or for resale in connection with any distribution of the Options. Employee also understands
that the Options and the shares to be issued in connection with the Options will not be registered under federal or state securities
laws by reason of specific exemptions thereunder.

 

		(iv)	Employee understands that the Options to be issued and shares to be issued in connection therewith
are “restricted securities” under applicable federal securities laws and that Employee may dispose of the shares only
pursuant to an effective registration statement under federal securities laws or exemption therefrom.

 

4.3     Bonus. Employee shall be eligible to receive bonus compensation based upon achievement of certain Company goals and
Executive’s performance (“Bonus Compensation”). Notwithstanding the terms of this Section 4.3, if this Agreement
is terminated for any reason prior to the completion of the Term, except for termination by Employer Without Cause (defined below),
Employee shall no longer be entitled to any further Bonus Compensation otherwise payable following termination by Employer for
any reason except for Without Cause. Employer will award Bonus Compensation to Employee as follows:

 

		(i)	For any lease-based contracts for Employer’s AOT Technology, sourced by Employee for Employer,
Employee shall receive eight percent (8%) of gross cash flow for eligible contracts signed by the Employer in the first year of
the Term, and six percent (6%) of gross cash flow for eligible contracts signed by Employer in the second year of the Term. Any
payments due to Employee under this Section 4.3(i) shall be made to Employee on a quarterly basis for so long as the lease contract
shall remain in effect.

 

		(ii)	For any AOT Technology sales or other non-lease contracts sourced by Employee for Employer during
the Term, Employee shall receive a one-time payment of ten percent (10%) of the net profit of the sale or contract. Any payments
due to Employee under this Section 4.3(ii) shall be made with sixty (60) days of receipt of the monies by Employer under the terms
of the sale or contract.

 

4.4     
Reimbursement of Expenses. Employer agrees to pay, or promptly to reimburse, Employee for all reasonable out-of-pocket
business expenses incurred by Employee in connection with the performance of his duties hereunder, including business-related entertainment
expenses, travel expenses, food and lodging while away from home, all subject to such reasonable policies as Employer may from
time to time determine. Employee agrees that prior to incurring any expense or debt on behalf of Employer, Employee shall comply
with such approval policies and procedures as Employer establishes from time to time.

 

4.5     Health Benefits. Employee shall be eligible to receive monthly health benefits, including payment of health insurance
premiums, in an amount not to exceed $888.00 per month. Notwithstanding any other provision in this Agreement, the Employee may
elect to participate in, and apply this health benefits allocation to, any group health insurance plan which may be offered to
employees of the Company. If the Employee elects not to participate in such group health insurance plan, the Employee shall be
paid on the last day of each month during the Term the lesser of (i) $888.00 and (ii) the sums paid by the Executive in connection
with maintain private health insurance for the Executive.

 

 

 

    	 	3	 

     

    

 

5.     Other Benefits.

 

5.1     General. In addition to any specific benefits herein granted to Employee, Employee shall be entitled to participate
in all benefit programs, if any, such as pension or retirement plans, profit-sharing plans, life insurance, and any other plans
or benefits, that Employer provides from time to time to its employees, subject to the terms and conditions of Employer’s
policies and benefit plans.

 

5.2      Vacation. For work performed, Employee shall earn paid vacation at the rate of two (2) weeks for each calendar year,
or prorated portion thereof, as applicable, of his employment. Any vacation time not taken in the year during which it accrues
shall cumulate until taken, up to a maximum of four (4) weeks. Once the maximum accrual amount is reached, no further vacation
time shall be earned until some vacation is used, and the amount of accrued vacation falls below the permitted maximum. Vacations
shall be taken at a time and for a period reasonably convenient to Employer. Except as provided herein, vacation shall be governed
by Employer’s standard policy on vacation for all full time employees.

 

5.3     Illness. Employee shall be entitled to six (6) days per year as sick leave with full pay. Sick leave may not be cumulated.

 

6.     Termination of Employment by Employer. Employer may terminate Employee’s employment only for the following
reasons:

 

6.1     Death. Upon the death of the Employee.

 

6.2     Disability. After any disability that prevents Employee from fulfilling the essential duties of his position for
more than three (3) consecutive months, unless otherwise required by law. It is understood and agreed that Employee will, during
the three (3) month period, be provided all vacation time, sick leave and benefits, and any reasonable accommodations that are
legally required, and will also be provided during the three (3) month period, subject to Section 7, below, all Base Salary. As
used herein, the term “disability” means an illness, injury or similar incapacity of Employee, including, without limitation,
physical or mental incompetence, by reason of which Employee is rendered substantially unable to perform his duties hereunder during
any consecutive three (3) month period. Employee agrees first to submit to a medical examination by a physician or health care
provider selected and paid for by Employer, and any follow up examinations that may be reasonably necessary, solely for the purpose
of determining the issue of disability. Thereafter, any dispute as to Employee’s disability shall be determined by arbitration
pursuant to Section 8.5 hereof.

 

6.3     For Cause. As used herein, “Cause” for termination shall mean Employee’s employment is terminated
because Employee has: (a) committed any act or omission constituting a material breach of this Agreement; (b) engaged in gross
negligence or willful misconduct in connecition with the Company’s business; (c) been convicted of, or plead guilty or nolo
contender in connection with, fraud or any crime that constitutes a felony or that involves moral turpitude or theft; (d) has
committed any intentional act of embezzlement, theft, misappropriation of Employer’s funds, dishonesty, fraud or unauthorized
use of Employer’s funds or property; or (e) undertaken any act injurious to the Company’s business, including insubordination
or failure to follow a directive of the Employer’s Board of Directors.

 

6.4     Without Cause. As used herein, “Without Cause” shall mean any termination by Employer, except for termination
for Cause, death or disability.

 

7.     Effect of Termination.

 

7.1     Termination Due to Death or Disability. If Employee’s employment is terminated pursuant to any of Section 6.1
or 6.2 hereof, Employee (or his estate) shall be entitled only to his Base Salary, all earned but unpaid Bonus Compensation, and
all compensation attributable to accrued but unused vacation and sick leave, prorated up through the date of such termination.
Subject to Section 8.6, as applicable, all other rights and obligations of Employer to Employee and Employee to Employer under
this Agreement shall be completely extinguished.

 

 

 

    	 	4	 

     

    

 

7.2     Termination For Cause. If Employee’s employment is terminated pursuant to Section 6.3 (for Cause), Employee
shall be entitled only to his Base Salary and all compensation attributable to accrued but unused vacation and sick leave, prorated
through the date of termination for Cause. Subject to Section 8.6, as applicable, all other rights and obligations of Employer
to Employee and Employee to Employer under this Agreement shall be completely extinguished.

 

7.3     Employee’s Resignation. In the event Employee resigns from employment prior to the end of the Term of this
Agreement for any reason, Employee shall be entitled only to his Base Salary, all earned but unpaid Bonus Compensation, and all
compensation attributable to accrued but unused vacation and sick leave, prorated through the last day of employment. Subject to
Section 8.6, as applicable, all other rights and obligations of Employer to Employee and Employee to Employer under this Agreement
shall be completely extinguished.

 

7.4     Without Cause. If Employee’s employment is terminated Without Cause, Employer shall be obligated to pay Employee
his Base Salary through the date of expiration of the Term, all earned but unpaid Bonus Compensation, and all compensation attributable
to accrued but unused vacation and sick leave, prorated up through the date of termination. Subject to the terms of Section 4.2,
all unvested Options shall immediately vest.

 

8.     Miscellaneous.

 

8.1     Captions. The captions of the sections hereof are included for convenience only and shall not affect the construction
or interpretation of any provisions hereof.

 

8.2     Notices. All notices, requests, demands, consents, approvals and other communications required or permitted under
this Agreement shall be in writing and shall be deemed given upon receipt if delivered personally or by courier, by fax (if a fax
number is indicated and confirmation of the transmission is received by the sender) or three days after being mailed, certified
or registered, postage prepaid, return receipt requested, to the party to whom the same is so delivered or mailed, as follows:

 

	 	8.2.1	If to Employer:	 
	 	 	QS Energy, Inc.	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	Attn:	 
	 	 	Michael McMullen,
CFO	 
	 	 	 	 
	 	8.2.2	If to Employee:	 
	 	 	 	 
	 	 	JASON LANE	 
	 	 	 	 
	 	 	 	 

 

or to such other address or fax number
as any of the above shall have specified by notice duly given hereunder.

 

 

 

 

 

    	 	5	 

     

    

 

8.3     Severability. Should any provisions or portion of this Agreement be held unenforceable or invalid for any reason
by an arbitrator or court of competent jurisdiction, that provision shall be deemed modified to the extent necessary to allow enforceability
of the provision as so limited, it being the intention of the parties that they should receive the benefits contemplated by this
Agreement to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of the arbitrator
or court, the provision shall be deemed deleted and the validity and enforceability of the remaining provisions and portions of
this Agreement shall be unaffected by such holding.

 

8.4     Waivers. Neither party hereto shall be deemed as a consequence of any act, delay, failure, omission, forbearance
or other indulgences granted from time to time by the other party hereto: (a) to have waived, or to be estopped from exercising,
any of its rights or remedies under this Agreement; or (b) to have modified, changed, amended, terminated, rescinded, or superseded
any of the terms of this Agreement, unless such waiver modification, etc. is expressed, in writing and signed by the party that
is to be bound thereby. No single or partial exercise by either party hereto of any right or remedy will preclude any other or
further exercise thereof or preclude the exercise of any other right or remedy, and a waiver expressly made in writing on one occasion
will be effective only in that specific instance and only for the precise purpose for which given, and will not be construed as
a consent to or a waiver of any right or remedy on any future occasion or a waiver of any right or remedy against the other party.

 

8.5     Arbitration.

 

8.5.1     Arbitrable Claims. To the fullest extent permitted by law, all disputes between Employee (and his heirs and assigns)
and Employer relating in any manner whatsoever to the employment or termination of Employee by Employer, including, without limitation,
all disputes arising under this Agreement (“Arbitrable Claims”), shall be resolved by arbitration. Arbitrable Claims
shall include, but are not limited to, contract (express or implied) and tort claims of all kinds, as well as all claims based
on any federal, state or local law, statute or regulation, to the fullest extent permitted by law and excepting claims under applicable
workers’ compensation law and unemployment insurance claims.

 

8.5.2     Procedure. Arbitration of Arbitrable Claims shall be in accordance with the then current National Rules for the Resolution
of Employment Disputes of the American Arbitration Association, as amended (“AAA Employment Rules”), as augmented in
this Agreement. Arbitration shall be initiated as provided by the AAA Employment Rules, although the written notice to the other
party initiating arbitration shall also include a statement of the claim(s) asserted and the facts upon which the claim(s) are
based. The Arbitration shall be final and binding upon the parties and shall be the exclusive remedy for all Arbitrable Claims.
Either party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise,
neither party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. Notwithstanding
the foregoing, either party may, at its option, seek injunctive relief pursuant to section 1281.8 of the California Code of Civil
Procedure. All arbitration hearings under this Agreement shall be conducted in Los Angeles County, California. THE PARTIES HEREBY
WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING, WITHOUT LIMITATION, ANY RIGHT TO TRIAL
BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY OR ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE.

 

8.5.3     Arbitrator Selection and Authority. All disputes involving Arbitrable Claims shall be decided by a single arbitrator.
The arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of the effective date of the notice
initiating the arbitration. If the parties cannot agree on an arbitrator, then the complaining party shall notify the AAA and request
selection of an arbitrator in accordance with AAA Employment Rules. The arbitrator shall have authority to award equitable relief,
damages, costs and fees to the same extent that, but not greater than, a state or federal district court in California would have.
The fees of the arbitrator shall be split between both parties equally, unless this would render this Section of Arbitration unenforceable,
in which case the arbitrator shall apportion said fees and any statutory remedies so as to preserve enforceability. The arbitrator
shall have exclusive authority to resolve all Arbitrable Claims, including, but not limited to, whether any particular claim is
arbitrable and whether all or any part of this Agreement is void or unenforceable. Upon completion of the arbitration proceedings,
the arbitrator shall issue a written report to both parties which reveals the essential findings and conclusions upon which any
award was based.

 

 

 

 

    	 	6	 

     

    

 

8.6     Continuing Obligations. The rights and obligations of Employee and Employer set forth in Section 2 and subparts (Confidential
Information), Section 4 and subparts (Compensation), Section 7 and subparts (Effect of Termination) and Section 8 and subparts
(including Arbitration and other Miscellaneous provisions) and any other provision which by its terms are intended to continue
shall survive the termination of Employee’s employment and the expiration of this Agreement to the extent reasonably necessary
to enforce the terms of this Agreement.

 

8.7     Attorney’s Fees. In the event that either of the parties hereto (or any successor thereto) resorts to legal
action, including arbitration, in order to enforce, defend or interpret any of the terms or the provisions of this Agreement, the
prevailing party shall be entitled to an award of reasonable attorneys fees if otherwise provided by law and the arbitrator determines
such an award is warranted. In addition, when attorneys fees are awarded by the arbitrator, the prevailing party shall be entitled
to recover from the non-prevailing party post-judgment attorneys’ fees incurred by the prevailing party in enforcing a judgment
against the non-prevailing party. Notwithstanding anything in this Agreement to the contrary, the provisions of the preceding sentence
are intended to be severable from the balance of this Agreement, shall survive any judgment rendered in connection with the aforesaid
legal action, and shall not be merged into any such judgment.

 

8.8     Entire Agreement; Amendment. This Agreement embodies the entire agreement and understanding of the parties hereto
with respect to the subject matter herein and supercedes all prior or contemporaneous oral or written understandings and agreements
of the Parties. This Agreement cannot be amended or terminated orally, but only by a writing duly executed by the parties hereto.

 

8.9     Applicable Law. This Agreement shall be governed by, and construed and enforced in accordance with, the internal
laws of the state of California.

 

IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the Effective Date.

 

	 	“EMPLOYER”
	 	 
	 	QS ENERGY, INC.
	 	 
	 	 
	By:   	/s/ MICHAEL MCMULLEN
	 	Michael McMullen, CFO
	 	
	 	“EMPLOYEE”
	 	 
	 	 
	 	/s/ JASON LANE
	 	Jason Lane

 

 

 

    	 	7

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