Document:

Form of Series B Warrant

 

EXHIBIT 4.01

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

SERIES B COMMON STOCK PURCHASE WARRANT

SOCIAL REALITY, INC.

		
	Warrant Shares: [_______]       

	Initial Exercise Date: November 29, 2018

THIS SERIES B COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [__________________] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on [*], 2022 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Social Reality, Inc., a Delaware corporation (the “Company”), up to [_______] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock.

Section 1.

Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated [______], 2017, among the Company and the purchasers signatory thereto.

Section 2.

Exercise.

a)

Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company or the Transfer Agent (or such other office or agency that the Company may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company), as applicable, of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (“Notice of Exercise”).  Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate 

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Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.  No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b)

Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $3.00, subject to adjustment hereunder (the “Exercise Price”).

c)

Cashless Exercise.  If at any time after the six-month anniversary of the Closing Date, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of 

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Exercise is both executed and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant.  The Company agrees not to take any position contrary to this Section 2(c).

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in 

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interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

d)

Mechanics of Exercise. 

i.

Delivery of Warrant Shares Upon Exercise.  Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) the earlier of (A) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and (B) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).   Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided  that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) three Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise.  If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

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ii.

Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii.

Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv.

Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to 

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the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v.

No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi.

Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii.

Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

e)

Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the 

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unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be [4.99%] [9.99%] of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this 

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paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

f)

[RESERVED]

g)

Call Provision.  Subject to the provisions of Section 2(e), Section 2(f) and this Section 2(g), if, after the Effective Date, (i) the VWAP for each of 10 consecutive Trading Days (the “Measurement Period,” which 10 consecutive Trading Day period shall not have commenced until after the Effective Date) exceeds $10.00 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Initial Exercise Date), (ii) the average daily volume for such Measurement Period exceeds $100,000 per Trading Day  and (iii) the Holder is not in possession of any information that constitutes, or might constitute, material non-public information which was provided by the Company, any of its Subsidiaries, or any of their officers, directors, employees, agents or Affiliates, then the Company may, within 1 Trading Day of the end of such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered (such right, a “Call”) for consideration equal to $.01 per Warrant Share.  To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a “Call Notice”), indicating therein the portion of unexercised portion of this Warrant to which such notice applies.  If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the tenth Trading Day after the date the Call Notice is received by the Holder (such date and time, the “Call Date”).  Any unexercised portion of this Warrant to which the Call Notice does not pertain will be unaffected by such Call Notice.  In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date.  The parties agree that any Notice of Exercise delivered following a Call Notice which calls less than all the Warrants shall first reduce to zero the number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under this Warrant.  For example, if (A) this Warrant then permits the Holder to acquire 100 Warrant Shares, (B) a Call Notice pertains to 75 Warrant Shares, and (C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (x) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (y) the Company, in the time and manner required under this Warrant, will have issued and delivered to the 

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Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice, and (z) the Holder may, until the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent Call Notices).  Subject again to the provisions of this Section 2(g), the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise.  Notwithstanding anything to the contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice shall be void), unless, from the beginning of the Measurement Period through the Call Date, (1) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by  6:30 p.m. (New York City time) on the Call Date, and (2) the Registration Statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Holder for the resale of all such Warrant Shares, and (3) the Common Stock shall be listed or quoted for trading on the Trading Market, and (4) there is a sufficient number of authorized shares of Common Stock for issuance of all Securities under the Transaction Documents, and (5) the issuance of the shares shall not cause a breach of any provision of Section 2(e) or Section 2(f) herein.  The Company’s right to call the Warrants under this Section 2(g) shall be exercised ratably among the Holders based on each Holder’s initial purchase of Warrants.

Section 3.

Certain Adjustments.

a)

Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)

Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any 

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Common Stock or Common Stock Equivalents, at an effective price per share less than the Exercise Price then in effect (120% of such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price, provided that the Base Share Price shall not be less than $1.40 (subject to adjustment for forward and reverse splits and the like).  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance or interest payments under the Debentures.  The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance and in the event of an exercise of this Warrant, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

c)

Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if 

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ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). 

d)

Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

e)

Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each 

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Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction.  “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.  The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction).  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the 

12

 

option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

f)

Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

g)

Notice to Holder.  

i.

Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. 

ii.

Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company 

13

 

shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4.

Transfer of Warrant.

a)

Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full.  The Warrant, if properly 

14

 

assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.  

b)

New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto. 

c)

Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)

Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

e)

Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

Section 5.

Miscellaneous.

a)

No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.  

b)

Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to 

15

 

the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c)

Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

d)

Authorized Shares.  

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).  

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body 

16

 

having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e)

Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f)

Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g)

Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h)

Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

i)

Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j)

Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

17

 

k)

Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l)

Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m)

Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n)

Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

18

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	
	SOCIAL REALITY, INC.

	By:__________________________________________

     Name:

     Title:

19

 

NOTICE OF EXERCISE

TO:

SOCIAL REALITY, INC.

(1)

The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)

Payment shall take the form of (check applicable box):

[  ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)

Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

EXHIBIT B

ASSIGNMENT FORM

 (To assign the foregoing Warrant, execute this form and supply required information.  Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

		
	Name:

	______________________________________

	 
	(Please Print)

	Address:

	______________________________________

	

Phone Number:

Email Address: 

	(Please Print)

______________________________________

______________________________________

	Dated: _______________ __, ______

	 

	Holder’s Signature:____________________

	 

	Holder’s Address: ____________________Exhibit 4.7

 

STOCK OPTION PLAN OF

PETROTEQ ENERGY INC.

 

(November 23, 2018)

 

PART 1 - INTRODUCTION

 

1.01       Purpose

 

The purpose of the
Plan is to secure for the Corporation and its shareholders the benefits of incentive inherent in share ownership by the directors,
officers, key employees and, subject to the terms and conditions herein, consultants of the Corporation and its Affiliates who,
in the judgment of the Board, will be largely responsible for its future growth and success.

 

1.02       Definitions

 

		(a)	“Affiliate” has the meaning ascribed thereto in the Business Corporations Act
(Ontario) as amended from time to time.

 

		(b)	“Associate” has the meaning ascribed to such term in the Securities Act (Ontario).

 

		(c)	“Blackout Period” means a period during which the Corporation prohibits Optionees from
exercising their Options.

 

		(d)	“Board” means the board of directors of the Corporation.

 

		(e)	“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

		(f)	“Consultant” has the meaning ascribed to such term in Policy 4.4.

 

		(g)	“Corporation” means Petroteq Energy Inc., a corporation duly incorporated under the laws
of the Province of Ontario, and its Affiliates, if any, and includes any successor or assignee entity or entities into which the
Corporation may be merged, changed, or consolidated; any entity for whose securities the securities of the Corporation shall be
exchanged; and any assignee of or successor to substantially all of the assets of the Corporation.

 

		(h)	“Market Price” has the meaning ascribed to such term in Policy 1.1.

 

		(i)	“Disability” or “Disabled” means permanent and total disability as defined
in Section 22(e)(3) of the Code.

 

		(j)	“Eligible Person” shall mean an officer or director of the Corporation (“Executive”)
or an employee of the Corporation (“Employee”) or a Management Company Employee or a Consultant.

 

		(k)	“Exchange” means the TSX Venture Exchange.

 

		(l)	“Exercise Notice” means the notice respecting the exercise of an Option, substantially
in the form attached to the Option Certificate, duly executed by the Optionee.

 

		(m)	“Exercise Price” means the price at which an Option may be exercised as determined in
accordance with section 2.03.

 

		(n)	“Fair Market Value” means, if the Shares are listed on any national securities exchange
within the meaning of Section 409A of the Code, the closing sales price, if any, on the largest such exchange on the valuation
date, or, if none, on the most recent trade date immediately prior to the valuation date provided such trade date is no more than
thirty (30) days prior to the valuation date. If the Shares are not then listed on any such exchange, or there has been no trade
date within such thirty (30) day period, the fair market value shall be determined in good faith by the Board.

 

     

     

    

 

		(o)	“Section 422 Stock Option” means an Option which is intended to qualify as an incentive
stock option under Section 422 of the Code.

 

		(p)	“Insider” means (i) an insider as defined in the Securities Act (Ontario), other
than a person who falls within the definition solely by virtue of being a director or senior officer of a subsidiary of the Corporation,
and (ii) an Associate of any person who is an insider by virtue of the preceding sub-clause (i).

 

		(q)	“Investor Relations Activities” has the meaning ascribed to such term in Policy 1.1.

 

		(r)	“Management Company Employee” has the meaning ascribed to such term in Policy 4.4.

 

		(s)	“Material Information” has the meaning ascribed to such term in Policy 1.1.

 

		(t)	“Option” shall mean an option granted under the terms of the Plan.

 

		(u)	“Option Certificate” means the certificate, substantially in the form set out as Schedule
“A” hereto, evidencing an Option.

 

		(v)	“Option Period” shall mean the period during which an option may be exercised.

 

		(w)	“Optionee” shall mean an Eligible Person to whom an Option has been granted under the
terms of the Plan.

 

		(x)	“Outstanding Issue” means the number of Shares outstanding on a non-diluted basis.

 

		(y)	“Plan” means the stock option plan established and operated pursuant to Part 2 hereof.

 

		(z)	“Policy 1.1” means the Exchange’s Policy 1.1 entitled “Interpretation”
as amended from time to time.

 

		(aa)	“Policy 4.4” means the Exchange’s Policy 4.4 entitled “Incentive Stock Options”
as amended from time to time.

 

		(bb)	“Shares” shall mean the common shares of the Corporation.

 

PART 2 - SHARE OPTION PLAN

 

2.01       Participation

 

Options shall be granted
only to Eligible Persons.

 

2.02       Determination
of Option Recipients

 

The Board shall make
all necessary or desirable determinations regarding the granting of Options to Eligible Persons and may take into consideration
the present and potential contributions of a particular Eligible Person to the success of the Corporation and any other factors
which it may deem proper and relevant.

 

2.03       Price

 

The price at which
an Optionee may purchase a Share upon the exercise of an Option shall be determined from time to time by the Board and shall be
as set forth in the Option Certificate issued in respect of such Option but, in any event, shall not be less than the Market Price,
and in the case of an Eligible Person employed or performing services in the United States or otherwise subject to Section 409A
of the Code, shall not be less than Fair Market Value on the date of grant. If the Optionee owns directly or by reason of the applicable
attribution rules more than 10% of the total combined voting power of all classes of stock of the Corporation, the Option price
per share of the Shares covered by each Option which is intended to be a Section 422 Stock Option shall be not less than one hundred
ten percent (110%) of the Fair Market Value on the date of the grant.

 

    -2-

     

    

 

2.04       Grant
of Options

 

The Board may at any
time authorize the granting of Options to such Eligible Persons as it may select for the number of Shares that it shall designate,
subject to the provisions of the Plan. The date of each grant of Options shall be determined by the Board when the grant is authorized.

 

In the event that Options
are granted to Employees, Management Company Employees or Consultants, the Corporation represents that such Optionees shall be
bona fide Employees, Management Company Employees or Consultants, as the case may be.

 

The Corporation may
at the time of granting options hereunder provide for additional terms and conditions which are not inconsistent with Part 2 hereof
including, without limitation, terms and conditions deferring or delaying the date at which an Option may be exercised in whole
or in part. Such additional terms and conditions shall be as set forth in the Option Certificate issued in respect of such Option.

 

The Option Certificate
of any Option which is intended to qualify as an Section 422 Stock Option shall contain such limitations and restrictions upon
the exercise of the Option as shall be necessary in order that such Option qualifies as an “incentive stock option”
within the meaning of Section 422 of the Code. Further, the Option Certificate authorized under the Plan shall be subject to such
other terms and conditions including, without limitation, restrictions upon the exercise of the Option, as the Board shall deem
advisable and which are not inconsistent with the requirements of Section 422 of the Code.

 

Notwithstanding any
of the foregoing provisions, the Board may authorize the grant of an Option to a person not then in the employ of the Corporation
or of an Affiliate, conditioned upon such person becoming eligible to become an Eligible Person at or prior to the execution of
the Option Certificate evidencing the actual grant of such Option.

 

2.05       Term
of Options

 

Unless otherwise expired
pursuant to the terms of the Plan, all Options granted to an Optionee pursuant to this Plan shall expire at the close of business
ten (10) years from the date of grant or such earlier date as the Board shall decide when the Option is granted, subject to earlier
termination as herein provided; provided, however, that if the Option price is required under section 2.03 to be at least 110%
of Fair Market Value, each such Option shall terminate not more than five (5) years from the date of the grant thereof, and shall
be subject to earlier termination as herein provided.

 

Upon the expiration
of the Option Period, the Options granted shall forthwith expire and terminate and be of no further force or effect whatsoever
as to such of the Shares in respect of which the Option hereby granted has not then been exercised.

 

Notwithstanding the
foregoing, if the expiration of the Option Period falls within a Blackout Period the expiration of the Option Period shall be automatically
extended for ten (10) business days after the expiry of the Blackout Period on the condition that (i) the Blackout Period was formally
imposed by the Corporation pursuant to its internal trading policies as a result of the bona fide existence of undisclosed Material
Information, (ii) the Blackout Period must be deemed to have expired upon the general disclosure of the undisclosed Material Information,
and (iii) the automatic extension of an Optionee’s options will not be permitted where the Optionee or the Corporation is
subject to a cease trade order (or similar order under applicable securities laws) in respect of the Corporation’s securities.

 

No Optionee or his
or her legal representative, legatees or distributees will be, or will be deemed to be, a holder of any Shares subject to an Option,
unless and until certificates for such Shares are issued to him, her or them or a securities intermediary with whom the Optionee
(or his or her legal representative, legatees or distributees) has an account, is recorded as the owner of such Shares in a book-entry
system under the terms of the Plan.

 

    -3-

     

    

 

2.06       Exercise
of Options

 

Except as set forth
in section 2.10, no Option may be exercised unless the Optionee is at the time of such exercise;

 

		(a)	in the case of an Employee, in the employ of the Corporation or any Affiliate and shall have been
continuously so employed since the grant of his or her Option, or have been a Consultant of the Corporation during such time thereafter,
but absence on leave, having the approval of the Corporation or such Affiliate, shall not be considered an interruption of employment
for any purpose of the Plan;

 

		(b)	in the case of a Consultant, under contract with the Corporation or any Affiliate and shall have
been continuously so contracted since the grant of the Option; or

 

		(c)	in the case of an Executive, a director or officer of the Corporation or any Affiliate and shall
have been such a director or officer continuously since the grant of his or her Option.

 

No Option may be exercised
by an Optionee until the Plan has been approved by the shareholders of the Corporation.

 

The exercise of any
Option will be contingent upon receipt by the Corporation of cash payment of the full Exercise Price of the Shares being purchased
by 5:00 p.m. (EST) on the last day of the Option Period by delivering to the Corporation an Exercise Notice, the applicable Option
Certificate and a certified cheque or bank draft payable to the Corporation in an amount equal to the aggregate Exercise Price
of the Shares to be purchased pursuant to the exercise of the Option.

 

2.07       Vesting
of Options

 

Executives, Employees,
Management Company Employees and Consultants

 

All Options granted
to an Eligible Person, other than Optionees performing Investor Relations Activities, pursuant to this Plan shall vest and become
fully exercisable as determined by the Board when the Option is granted.

 

Optionees performing
Investor Relations Activities

 

All Options granted
to Optionees performing Investor Relations Activities, pursuant to this Plan shall vest and become full exercisable as follows
or as determined by the Board when the Option is granted, but in any event such Options shall not vest any sooner:

 

		(a)	one quarter (1/4) of the Options on the date which is three (3) months from the date said Options
are granted;

 

		(b)	one quarter (1/4) of the Options on the date which is six (6) months from the date said Options
are granted;

 

		(c)	one quarter (1/4) of the Options on the date which is nine (9) months from the date said Options
are granted; and

 

		(d)	the final one quarter (1/4) of the Options on the date which is twelve (12) months from the date
said Options are granted.

 

2.08       Restrictions
on Grant of Options

 

The granting of Options
shall be subject to the following conditions:

 

		(a)	not more than two (2%) percent of the Outstanding Issue may be granted to any one Consultant in
any 12 month period;

 

    -4-

     

    

 

		(b)	not more than an aggregate of two (2%) percent of the Outstanding Issue may be granted in aggregate
to Eligible Persons conducting Investor Relations Activities in any 12 month period;

 

		(c)	unless the Corporation has obtained disinterested shareholder approval, not more than five (5%)
percent of the Outstanding Issue may be issued to any one individual in any 12 month period;

 

		(d)	unless the Corporation has obtained disinterested shareholder approval, not more than an aggregate
of ten (10%) percent of the Outstanding Issue may be issued to Insiders in any 12 month period; and

 

		(e)	unless the Corporation has obtained disinterested shareholder approval, the Corporation shall not
decrease the Exercise Price of Options previously granted to Insiders.

 

No Options shall be
granted after the expiration of ten (10) years from the earlier of the date of the adoption of the Plan by the Corporation or the
approval of the Plan by the stockholders of the Corporation, and provided further, that the fair market value of the Shares (determined
at the time the Option is granted) as to which Options designated as Section 422 Stock Options are exercisable for the first time
by any Eligible Person during any single calendar year (under the Plan and under any other incentive stock option plan of the Corporation
or an Affiliate) shall not exceed US$100,000.

 

If disinterested shareholder
approval is required, the proposed grant(s) or plan must be approved by a majority of the votes cast by all shareholders at the
shareholders’ meeting excluding votes attaching to shares beneficially owned by (i) Insiders to whom options may be granted
under the stock option plan; and (ii) Associates of such Insiders. Holders of non-voting and subordinate voting shares must be
given full voting rights on a resolution that requires disinterested shareholder approval.

 

2.09       Lapsed
Options

 

If Options are surrendered,
terminated or expire without being exercised in whole or in part, new Options may be granted covering the Shares not purchased
under such lapsed Options.

 

2.10       Effect
of Termination of Employment, Death or Disability

 

		(a)	If an Optionee shall die while employed or retained by the Corporation, or while an Executive,
any Options held by the Optionee at the date of death, which have vested pursuant to section 2.07, shall become exercisable, in
whole or in part, but only by the persons or persons to whom the Optionee’s rights under the Option shall pass by the Optionee’s
will or the laws of descent and distribution (the “Successor Optionee”). All such Options shall be exercisable
only to the extent that the Optionee was entitled to exercise the Option at the date of his or her death and only for one (1) year
after the date of death or prior to the expiration of the Option Period in respect thereof, whichever is sooner, except that in
the event the expiration of the Option Period is earlier than one (1) year after the date of death, with the consent of the Exchange,
the Options shall be exercisable for up to one (1) year after the date of death of the Optionee as determined by the Board. Notwithstanding
the foregoing, the Board, in its discretion, may resolve that up to all of the Options held by an Optionee at the date of death
which have not yet vested shall vest immediately upon death.

 

		(b)	If the employment or engagement of an Optionee shall terminate with the Corporation due to disability
while the Optionee is employed or retained by the Corporation, any Option held by the Optionee on the date the employment or engagement
of the Optionee is terminated due to disability, which have vested pursuant to section 2.07, shall become exercisable, in whole
or in part. All such Options shall be exercisable only to the extent that the Optionee was entitled to exercise the Option at the
date of his or her termination due to disability and only for one (1) year after the date of termination or prior to the expiration
of the Option Period in respect thereof, whichever is sooner, provided that Options that become exercisable due to disability shall
only be exercisable by the person or persons who have the legal authority to act on behalf of the Optionee in connection with the
rights of the Optionee to the Options. Notwithstanding the foregoing, the Board, in its discretion, may resolve that up to all
of the Options held by an Optionee on the date the employment or engagement of the Optionee is terminated due to disability which
have not yet vested shall vest immediately upon such date.

 

    -5-

     

    

 

		(c)	Subject to section 2.10 (d), if an Optionee ceases to be an Eligible Person (other than as provided
in section 2.10 (a) or (b)), any Options held by the Optionee on the date such Optionee ceased to be an Eligible Person, which
have vested pursuant to section 2.07, shall be exercisable only to the extent that the Optionee was entitled to exercise the Option
at the date such Optionee ceased to be an Eligible Person and only for ninety (90) days after the date such Optionee ceased to
be an Eligible Person, subject to the Board’s discretion to extend such period for up to one (1) year, or prior to the expiration
of the Option Period in respect thereof, whichever is sooner. Notwithstanding the foregoing, the Board, in its discretion, may
resolve that up to all of the Options held by an Optionee on the date the Optionee ceased to be an Eligible Person which have not
yet vested shall vest immediately upon such date.

 

		(d)	If the employment of an Employee or Consultant is terminated for cause (as determined by the Board)
no Option held by such Optionee may be exercised following the date upon which Termination occurred.

 

To the extent required by law, the Corporation
shall make adjustments to, and interpret, the Options as required by the U.S. Uniformed Services Employment and Reemployment Rights
Act.

 

2.11       Effect
of Offer or Sale

 

If at any time when
the Option hereby granted remains unexercised with respect to any Shares, (a) a general offer to purchase all of the issued shares
of the Corporation is made by a third party or (b) the Corporation proposes to sell all or substantially all of its assets and
undertaking or to merge, amalgamate or be absorbed by or into any other company (save and except for a subsidiary or subsidiaries
of the Corporation) under any circumstances which involve or may involve or require the liquidation of the Corporation, a distribution
of its assets among its shareholders, or the termination of its corporate existence, the Corporation shall use its reasonable best
efforts to provide notice of such offer or proposal to the Optionee as soon as practicable and (i) the Corporation may, at its
option, permit the Option hereby granted to be exercised, as to all or any of the Optioned Shares in respect of which such Option
has not previously been exercised by the Optionee at any time up to and including (but not after) a date twenty (20) days following
the date of notice of such offer, sale or other similar transaction or prior to the close of business on the expiration date of
the Option Period, whichever is the later; and (ii) the Corporation may, at its option, determine that upon the expiration of such
twenty (20) day period, all rights to exercise the Option shall terminate and cease to have any further force or effect.

 

The Corporation may,
in its sole discretion and without the consent of Optionees, provide for one or more of the following: (i) the assumption of the
Plan and outstanding Options by the surviving entity or its parent; (ii) the substitution by the surviving entity or its parent
of Options with substantially the same terms for such outstanding Options; (iii) immediate exercisability of such outstanding Options
followed by cancellation of such Options; and (iv) settlement of the intrinsic value of the outstanding vested Options in cash
or cash equivalents or equity followed by the cancellation of all Options (whether or not then vested or exercisable).

 

2.12       Effect
of Amalgamation, Consolidation or Merger

 

If the Corporation
amalgamates, consolidates with or merges with or into another corporation, upon the exercise of an Option following such amalgamation,
consolidation or merger, the Optionee shall be entitled to receive, and shall accept, in lieu of Shares, the securities, property
or cash which the Optionee would have received upon such amalgamation, consolidation or merger if the Optionee had exercised his
Option and held Shares immediately prior to the effective date of such amalgamation, consolidation or merger, and the number of
Shares and the option price shall be adjusted appropriately by the directors of the Corporation and such adjustment shall be binding
for all purposes herein.

 

    -6-

     

    

 

2.13       Adjustment
in Shares Subject to the Plan

 

If there is any change
in the Shares through or by means of a declaration of stock dividends of Shares or consolidations, subdivisions or reclassification
of Shares, or otherwise, the number of Shares available under the Plan, the Shares subject to any Option, and the Exercise Price
thereof shall be adjusted appropriately by the Board and such adjustment shall be effective and binding for all purposes of the
Plan. No such adjustment shall be made under the Plan which shall, within the meaning of Sections 424 and 409A of the Code, constitute
such a modification, extension, or renewal of an Option as to cause the adjustment to be considered as the grant of a new Option.

 

2.14       Hold
Period

 

All Options and any
Shares issued on the exercise of Options may be subject to and legended with a four month hold period commencing on the date the
Options were granted pursuant to the rules of the Exchange and applicable securities laws. Any Shares issued on the exercise of
Options may be subject resale restrictions contained in National Instrument 45-102 – Resale of Securities which would
apply to the first trade of the Shares.

 

2.15       Notification
of Grant of Option

 

Following the granting
of an Option by the Board, the Corporation shall notify the Optionee in writing of the Option and shall enclose with such notice
the Option Certificate representing the Option so granted. Each Optionee, concurrently with the notice of the grant of an Option,
shall be provided with a copy of the Plan.

 

2.16       Options
Granted To Corporations

 

Except in relation
to a Consultant that is a corporation, Options may only be granted to an individual or a corporation that is wholly-owned by an
Eligible Person. If a corporation is an Optionee, it must provide the Exchange with a completed Form 4F – Certification
and Undertaking Required from a Corporation Granted an Incentive Stock Option. The corporation must agree not to effect or
permit any transfer of ownership or option of shares of the corporation nor to issue further shares of any class in the corporation
to any other individual or entity as long as the Option remains outstanding, except with the written consent of the Exchange.

 

PART 3 - GENERAL

 

3.01       Number
of Shares

 

The aggregate number
of Shares that may be reserved for issuance, at any time, under the Plan shall not exceed 17,969,849 Shares, being 20% of the total
Outstanding Issue as at the date hereof.

 

3.02       Transferability

 

All benefits, rights
and options accruing to any Optionee in accordance with the terms and conditions of the Plan shall not be transferable or assignable
unless specifically provided herein. During the lifetime of an Optionee, all benefits, rights and options may only be exercised
by the Optionee.

 

3.03       Employment

 

Nothing contained in
any Plan shall confer upon any Optionee any right with respect to employment or continuance of employment with the Corporation
or any Affiliate, or interfere in any way with the right of the Corporation or any Affiliate to terminate the Optionee’s employment
at any time. Participation in any Plan by an Optionee is voluntary.

 

3.04       Approval
of Plan

 

Options issued under
the Plan shall only become exercisable after the Plan has been approved by the shareholders of the Corporation; provided, however:

 

		(a)	unless consistent with the terms contained herein and approved by the Board, nothing contained
herein shall in any way affect Options previously granted by the Corporation and currently outstanding;

 

    -7-

     

    

 

		(b)	the Plan must receive shareholder approval yearly, at the Corporation’s annual general meeting.

 

The obligation of the
Corporation to sell and deliver Shares in accordance with the Plan is subject to the approval of any governmental authority having
jurisdiction or any stock exchanges on which the Shares are listed for trading which may be required in connection with the authorization,
issuance or sale of such Shares by the Corporation. If any Shares cannot be issued to any Optionee for any reason including, without
limitation, the failure to obtain such approval, then the obligation of the Corporation to issue such Shares shall terminate and
any Optionee’s option price paid to the Corporation shall be returned to the Optionee.

 

3.05       Administration
of the Plan

 

The Board is authorized
to interpret the Plan from time to time and to adopt, amend and rescind rules and regulations for carrying out the Plan. The interpretation
and construction of any provision of the Plan by the Board shall be final and conclusive. Administration of the Plan shall be the
responsibility of the appropriate officers of the Corporation and all costs in respect thereof shall be paid by the Corporation.

 

3.06       Income
Taxes

 

As a condition of and
prior to participation in the Plan, if requested by the Board, a Optionee shall authorize the Corporation in written form to withhold
from any remuneration otherwise payable to such Optionee any amounts required by any taxing authority to be withheld for taxes
of any kind as a consequence of such participation in the Plan.

 

In addition, if the
Corporation is required under the Income Tax Act (Canada) or any other applicable law to make source deductions in respect
of employee stock option benefits to the Optionee and to remit to the applicable governmental authority an amount on account of
tax on the value of the taxable benefit associated with the issuance of Shares on exercise of Options, then the Optionee shall
(i) pay to the Corporation, in addition to the Exercise Price for the Options, sufficient cash as is reasonably determined by the
Corporation to be the amount necessary to permit the required tax remittance, (ii) authorize the Corporation, on behalf of the
Optionee, to sell in the market on such terms and at such time or times as the Corporation determines a portion of the Shares being
issued upon exercise of the Options to realize cash proceeds to be used to satisfy the required tax remittance, or (iii) make other
arrangements acceptable to the Corporation to fund the required tax remittance.

 

3.07       Amendments
to the Plan

 

The Board reserves
the right to amend, modify or terminate the Plan at any time if and when it is advisable in the absolute discretion of the Board.
However, any amendments of the Plan which could result, at any time, in:

 

		(a)	a material increase in the benefits under the Plan; or

 

		(b)	an increase in the number of Shares which would be issued under the Plan (except any increase resulting
automatically from an increase in the total Outstanding Issue); or

 

		(c)	a material modification in the requirement as to eligibility for participation in the Plan;

 

shall be effective
only upon the approval of the shareholders of the Corporation. Any amendment to any provision of the Plan shall be subject to approval,
if required, by any regulatory body having jurisdiction over the securities of the Corporation.

 

3.08       No
Representation or Warranty

 

The Corporation makes
no representation or warranty as the future market value of any Shares issued in accordance with the provisions of the Plan.

 

3.09       Interpretation

 

The Plan will be governed
by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

    -8-

     

    

 

3.10       Savings
Clause

 

This Plan is intended
to comply in all respects with applicable law and regulations, including Section 409A of the Code. In case any one or more provisions
of this Plan shall be held invalid, illegal, or unenforceable in any respect under applicable law and regulation (including Section
409A of the Code), the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired
thereby and the invalid, illegal, or unenforceable provision shall be deemed null and void; however, to the extent permitted by
law, any provision that could be deemed null and void shall first be construed, interpreted, or revised retroactively to permit
this Plan to be construed in compliance with all applicable law (including Section 409A of the Code) so as to foster the intent
of this Plan.

 

3.11       Compliance
with Applicable Law, etc.

 

If any provision of
the Plan or of any Option Certificate delivered pursuant to the Plan contravenes any law or any order, policy, by-law or regulation
of any regulatory body or stock exchange having authority over the Corporation or the Plan then such provision shall be deemed
to be amended to the extent required to bring such provision into compliance therewith.

 

    -9-

     

    

 

SCHEDULE “A”

PETROTEQ ENERGY INC.

STOCK OPTION PLAN

If issued to officers or directors or at a discount to the Market Price - WITHOUT PRIOR WRITTEN APPROVAL OF TSX VENTURE EXCHANGE
AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE
BENEFIT OF A CANADIAN RESIDENT UNTIL [INSERT DATE THAT IS FOUR MONTHS AND A DAY FROM THE GRANT DATE].

 

Insert the following U.S.
legend if the Option is being issued to an Optionee who is in the United States or who is a U.S. person:

 

[THE OPTION REPRESENTED BY THIS CERTIFICATE
AND THE COMMON SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF,
BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER
THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND
REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND IT HAS, IN THE CASE OF EACH OF (C) AND (D), PRIOR TO SUCH TRANSFER
FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION
TO SUCH EFFECT.]

 

PETROTEQ ENERGY INC.

 

STOCK OPTION PLAN

OPTION CERTIFICATE

 

This Certificate is issued pursuant to
the provisions of the Petroteq Energy Inc. (the “Corporation”) stock option plan (the “Plan”)
and evidences that ______________________________ is the holder (the “Optionee”) of an option (the “Option”)
to purchase up to _______________________________ common shares (the “Shares”) in the capital stock of the Corporation
at a purchase price of CAD$_________ per Share (the “Exercise Price”).

 

 

The Plan provides for the granting of stock
options that either (i) are intended to qualify as “Incentive Stock Options” within the meaning of Section 422 of the
United States Internal Revenue Code of 1986 (“Section 422 Stock Options”), as amended (the “Code”),
or (ii) do not qualify as Section 422 Stock Options (“Non-Qualified Stock Options”). This Option is intended
to be (select one):

 

 ̈
a Section 422 Stock Option; or

 

 ̈
a Non-Qualified Stock Option.

 

     

     

    

 

Subject to the provisions of the Plan:

 

		(a)	the effective date of the grant of the Option is __________, 20__;

		(b)	the Option expires at 5:00 p.m. (EST) on ______________, 20__; and

		(c)	the Options shall vest as follows:

 

	Date	 	Percent of Stock Options Vested	 	Number of Stock Options Vested	 	Aggregate Number of Stock Options Vested
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

The vested portion or portions of the Option
may be exercised at any time and from time to time from and including the date of the grant of the Option through to 5:00 p.m.
(EST) on the expiration date of the Option Period by delivering to the Corporation an Exercise Notice, in the form attached as
Appendix “I” hereto, together with this Certificate and a certified cheque or bank draft payable to the Corporation
in an amount equal to the aggregate of the Exercise Price of the Shares in respect of which the Option is being exercised.

 

All Options and any Shares issued on the
exercise of Options may be subject to resale restrictions and may be subject to and legended with a four month hold period commencing
on the date the Options were granted pursuant to the rules of the Exchange and applicable securities laws. The Options hereby granted
are subject to the approval of the Exchange.

 

This Certificate and the Option evidenced
hereby is not assignable, transferable or negotiable and is subject to the detailed terms and conditions contained in the Plan,
the terms and conditions of which the Optionee hereby expressly agrees with the Corporation to be bound by. This Certificate is
issued for convenience only and in the case of any dispute with regard to any matter in respect hereof, the provisions of the Plan
and the records of the Corporation shall prevail.

 

If the Optionee is a U.S. person or is
located in the United States, the Optionee acknowledges and agrees as follows:

 

		(a)	The Option and the Shares (collectively, the “Securities”) have not been and
will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”),
or the securities laws of any state of the United States, and the Option is being granted to the Optionee in reliance on an exemption
from the registration requirements of the U.S. Securities Act and applicable state securities laws.

 

		(b)	The Securities will be “restricted securities”, as defined in Rule 144 under the U.S.
Securities Act, and the rules of the United States Securities and Exchange Commission provide in substance that the Optionee may
dispose of the Securities only pursuant to an effective registration statement under the U.S. Securities Act or an exemption therefrom,
and the Corporation has no obligation to register any of the Securities or to take action so as to permit sales pursuant to the
U.S. Securities Act (including Rule 144 thereunder, if available).

 

		(c)	If the Optionee decides to offer, sell or otherwise transfer any of the Shares, the Optionee will
not offer, sell or otherwise transfer the Option directly or indirectly, unless:

 

		(i)	the sale is to the Corporation;

 

		(ii)	the sale is made outside the United States in a transaction meeting the requirements of Rule 904
of Regulation S under the U.S. Securities Act (“Regulation S”) and in compliance with applicable local laws
and regulations;

 

    A-2

     

    

 

		(iii)	the sale is made pursuant to the exemption from the registration requirements under the U.S. Securities
Act provided by Rule 144 thereunder, if available, and in accordance with any applicable state securities or “blue sky”
laws; or

 

		(iv)	the Shares are sold in a transaction that does not require registration under the U.S. Securities
Act or any applicable state laws and regulations governing the offer and sale of securities;

 

and, in the case of each of (iii)
and (iv) it has prior to such sale furnished to the Corporation an opinion of counsel reasonably satisfactory to the Corporation
stating that such transaction is exempt from registration under applicable securities laws.

 

		(d)	The Option may not be exercised by or for the account or benefit of a person in the United States
or a U.S. person unless registered under the U.S. Securities Act and any applicable state securities laws, unless an exemption
from such registration requirements is available.

 

		(e)	The certificate(s) representing the Shares will be endorsed with the following or a similar legend
until such time as it is no longer required under the applicable requirements of the U.S. Securities Act or applicable state securities
laws:

 

“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, (THE “U.S. SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES
FOR THE BENEFIT OF THE CORPORATION, THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION;
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (C) IN ACCORDANCE WITH
THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN
OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. THE PRESENCE OF
THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY
ON A CANADIAN STOCK EXCHANGE.”

 

provided, that if the Shares are
being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S and such Shares were acquired
at a time when the Corporation is a “foreign issuer” as defined in Regulation S, the legend set forth above may be
removed by providing an executed declaration to the registrar and transfer agent of the Corporation, in substantially the form
set forth as Appendix “II” hereto (or in such other form as the Corporation may prescribe from time to time) and, if
requested by the Corporation or the transfer agent, an opinion of counsel of recognized standing in form and substance satisfactory
to the Corporation and the transfer agent to the effect that such sale is being made in compliance with Rule 904 of Regulation
S; and provided, further, that, if any Shares are being sold otherwise than in accordance with Regulation S and other than to the
Corporation, the legend may be removed by delivery to the registrar and transfer agent and the Corporation of an opinion of counsel,
of recognized standing reasonably satisfactory to the Corporation, that such legend is no longer required under applicable requirements
of the U.S. Securities Act or state securities laws.

 

		(f)	Rule 905 of Regulation S provides in substance that any “restricted securities” that
are equity securities of a “domestic issuer” (including an issuer that no longer qualifies as a “foreign issuer”)
will continue to be deemed to be restricted securities notwithstanding that they were acquired in a resale transaction pursuant
to Rule 901 or 904 of Regulation S; that Rule 905 of Regulation S will apply in respect of Shares if the Corporation is not a “foreign
issuer” at the time of exercise of the related Options; and that the Corporation is not obligated to remain a “foreign
issuer”.

 

    A-3

     

    

 

		(g)	“Domestic issuer”, “foreign issuer”, “United States”
and “U.S. person” are as defined in Regulation S.

 

		(h)	If the Optionee is resident in the State of California on the effective date of the grant of the
Option, then, in addition to the terms and conditions contained in the Plan and in this Certificate, the Optionee acknowledges
that the Corporation, as a reporting issuer under the securities legislation in the Provinces of British Columbia, Alberta and
Ontario, is required to publicly file with the securities regulators in those jurisdictions continuous disclosure documents, including
audited annual financial statements and unaudited quarterly financial statements (collectively, the “Financial Statements”).
Such filings are available on the System for Electronic Document Analysis and Retrieval (SEDAR), and documents filed on SEDAR may
be viewed under the Corporation’s profile at the following website address: www.sedar.com. Copies of Financial Statements
will be made available to the Optionee by the Corporation upon the Optionee’s request.

 

All terms not otherwise defined in this
Certificate shall have the meanings given to them under the Plan.

 

Dated this ____ day of _____________, 20___.

 

PETROTEQ ENERGY INC.

 

	Per:  	 	 
	 	 	 
	 	Authorized Signatory	 

 

    A-4

     

    

 

APPENDIX “I”

PETROTEQ ENERGY INC.

 

STOCK OPTION PLAN

EXERCISE NOTICE

 

TO:PETROTEQ ENERGY INC. (the “Corporation”)

 

1.       The
undersigned (the “Optionee”), being the holder of options to purchase ________________ common shares of the
Corporation at the exercise price of ______ per share, hereby irrevocably gives notice, pursuant to the stock option plan of the
Corporation (the “Plan”), of the exercise of the Option to acquire and hereby subscribes for ____________ of
such common shares of the Corporation.

 

2.       The
Optionee tenders herewith a certified cheque or bank draft payable to the Corporation in an amount equal to the aggregate Exercise
Price of the aforesaid common shares exercised and directs the Corporation to issue a share certificate evidencing said common
shares in the name of the Optionee to be mailed to the Optionee at the following address:

 

___________________________________

___________________________________

___________________________________

___________________________________

 

3.       By
executing this Exercise Notice, the Optionee hereby confirms that the undersigned has read the Plan and agrees to be bound by the
provisions of the Plan. All terms not otherwise defined in this Exercise Notice shall have the meanings given to them under the
Plan or the attached Option Certificate.

 

4.       The
Optionee is resident in __________ [name of state/province].

 

5.       The Optionee represents,
warrants and certifies as follows (please check all of the categories that apply):

 

		(a) ☐	the Optionee at the time of exercise of the Option is not
in the United States, is not a “U.S. person” as defined in Regulation S under the United States Securities Act of
1933, as amended (the “U.S. Securities Act”) and is not exercising the Option on behalf of, or for the account
or benefit of a U.S. person or a person in the United States and did not execute or deliver this exercise form in the United States;

 

		(b) ☐	the undersigned holder is resident in the United States
or is a U.S. person who is a resident of the jurisdiction referred to in the address appearing above, and is a U.S. Accredited
Investor and has completed the U.S. Accredited Investor Status Certificate in the form attached to this Exercise Notice;

 

		(c) ☐	the undersigned holder is resident in the United States
or is a U.S. person who is a resident of the jurisdiction referred to in the address appearing above, and is a natural person
who is either: (i) a director, officer or employee of the Corporation or of a majority-owned subsidiary of the Corporation (each,
an “Eligible Company Optionee”), (ii) a consultant who is providing bona fide services to the Corporation or
a majority-owned subsidiary of the Corporation that are not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for the Corporation’s securities (an “Eligible
Consultant”), or (iii) a former Eligible Company Optionee or Eligible Consultant; and/or

 

		(d) ☐	if the undersigned holder is resident in the United States
or is a U.S. person, the undersigned holder has delivered to the Corporation and the Corporation’s transfer agent an opinion
of counsel (which will not be sufficient unless it is in form and substance satisfactory to the Corporation) or such other evidence
satisfactory to the Corporation to the effect that with respect to the securities to be delivered upon exercise of the Option,
the issuance of such securities has been registered under the U.S. Securities Act and applicable state securities laws or an exemption
from the registration requirements of the U.S. Securities Act and applicable state securities laws is available;

 

     

     

    

 

6.       “United States”
and “U.S. person” are as defined in Regulation S under the U.S. Securities Act.

 

Note: Certificates representing Shares
will not be registered or delivered to an address in the United States unless Box 5(b), (c) or (d) above is checked.

 

7.       If
the undersigned Optionee has marked Box 5(b), (c) or (d) above, the undersigned Optionee hereby represents, warrants, acknowledges
and agrees that:

 

		(a)	funds representing the subscription price for the Shares which will be advanced by the undersigned
to the Corporation upon exercise of the Options will not represent proceeds of crime for the purposes of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”),
and the undersigned acknowledges that the Corporation may in the future be required by law to disclose the undersigned’s name and
other information relating to this exercise form and the undersigned’s subscription hereunder, on a confidential basis, pursuant
to the PATRIOT Act. No portion of the subscription price to be provided by the undersigned (i) has been or will be derived from
or related to any activity that is deemed criminal under the laws of the United States of America, or any other jurisdiction, or
(ii) is being tendered on behalf of a person or entity who has not been identified to or by the undersigned, and it shall promptly
notify the Corporation if the undersigned discovers that any of such representations ceases to be true and provide the Corporation
with appropriate information in connection therewith;

 

		(b)	the financial statements of the Corporation have been prepared in accordance with Canadian generally
accepted accounting principles or International Financial Reporting Standards, which differ in some respects from United States
generally accepted accounting principles, and thus may not be comparable to financial statements of United States companies;

 

		(c)	there may be material tax consequences to the Optionee of an acquisition or disposition of any
of the Shares. The Corporation gives no opinion and makes no representation with respect to the tax consequences to the Optionee
under United States, state, local or foreign tax law of the undersigned’s acquisition or disposition of such securities.
In particular, no determination has been made whether the Corporation will be a “passive foreign investment company”
within the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended; and

 

		(d)	if the undersigned has marked Box 5(c) above, the Corporation may rely on the registration exemption
in Rule 701 under the U.S. Securities Act and a state registration exemption, but only if such exemptions are available; in the
event such exemptions are determined by the Corporation to be unavailable, the undersigned may be required to provide additional
evidence of an available exemption, including, without limitation, the legal opinion contemplated by Box 5(d).

 

8.       If
the undersigned Optionee has marked Box 5(b) above, the undersigned represents and warrants to the Corporation that:

 

		(a)	the Optionee has such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of an investment in the Shares, and the undersigned is able to bear the economic risk of loss
of his or her entire investment;

 

		(b)	the Corporation has provided to the undersigned the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering, and the undersigned has had access to such information concerning the Corporation
as the Optionee has considered necessary or appropriate in connection with his or her investment decision to acquire the Shares;

 

    I-2

     

    

 

		(c)	the undersigned is: (i) purchasing the Shares for his or her own account or for the account of
one or more U.S. Accredited Investors with respect to which the undersigned is exercising sole investment discretion, and not on
behalf of any other person; and (ii) is purchasing the Shares for investment purposes only and not with a view to resale, distribution
or other disposition in violation of United States federal or state securities laws; and

 

		(d)	the undersigned has not exercised the Option as a result of any form of general solicitation or
general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or
similar media or broadcast over radio, television or other form of telecommunications, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising.

 

9.       If
the undersigned has indicated that the undersigned is a U.S. Accredited Investor by marking Box 5(b) above, or if the undersigned
has marked Box 7(c) above on the basis that the exercise of the Option is subject to the registration exemption in Rule 701 under
the U.S. Securities Act and an available state registration exemption, the undersigned also acknowledges and agrees that:

 

		(a)	the Shares have not been and will not be registered under the U.S. Securities Act or the securities
laws of any state of the United States, and the Shares will be issued as “restricted securities” (as such term is defined
in Rule 144(a)(3) under the U.S. Securities Act) and may not be offered, sold, pledged, or otherwise transferred, directly or indirectly,
without prior registration under the U.S. Securities Act and applicable state securities laws absent an exemption from such registration
requirements; and

 

		(b)	the certificate(s) representing the Shares will be endorsed with a U.S. restrictive legend substantially
in the form set forth in the Option Certificate until such time as it is no longer required under the applicable requirements of
the U.S. Securities Act or applicable state securities laws.

 

10       The
undersigned Optionee hereby represents, warrants, acknowledges and agrees that the certificate(s) representing the Shares may be
subject to and legended with a four month hold period commencing on the date the Options were granted pursuant to the rules of
the Exchange and applicable securities laws.

 

 

DATED the ________ day of ____________________,
__________.

 

	 	 
		Signature of Optionee

 

    I-3

     

    

 

U.S.
ACCREDITED INVESTOR STATUS CERTIFICATE

 

In connection with the exercise of an option
to purchase common shares of Petroteq Energy Inc. (the “Corporation”) by the Optionee, the Optionee hereby
represents and warrants to the Corporation that the Optionee satisfies one or more of the following categories of Accredited Investor
(please initial each category that applies):

 

	______	(1)	Any director or executive officer of the Corporation; or

 

	______	(2)	A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase of the Shares contemplated by the accompanying Exercise Notice, exceeds US$1,000,000 (for the purposes of calculating net worth: (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the purchase of the Shares, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time execution of the accompanying Exercise Notice exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability); or

 

	______	(3)	A natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

 

	______	(4)	An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of US$5,000,000; or

 

	______	(5)	An entity in which all of the equity owners meet the requirements of at least one of the above categories (if this alternative is checked, you must identify each equity owner and provide statements signed by each demonstrating how each qualifies as an Accredited Investor).

 

     

     

    

 

PETROTEQ ENERGY INC.

 

STOCK OPTION PLAN

FORM OF DECLARATION FOR REMOVAL
OF LEGEND

 

		TO:	Petroteq Energy Inc. (the “Company”)

 

		AND TO:	Registrar and transfer agent for the common shares of the
Company

 

The undersigned (a)
acknowledges that the sale of ____________________________________ (the “Securities”) of the Company, represented
by certificate number _________________________________, to which this declaration relates is being made in reliance on Rule 904
of Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “U.S.
Securities Act”), and (b) certifies that (1) the undersigned is not (A) an “affiliate” of the Company (as that term
is defined in Rule 405 under the U.S. Securities Act), (B) a “distributor” as defined in Regulation S or (C) an
affiliate of a distributor; (2) the offer of such securities was not made to a person in the United States and either (A) at the
time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably
believed that the buyer was outside the United States, or (B) the transaction was executed on or through the facilities of the
Toronto Stock Exchange, the TSX Venture Exchange, the Canadian Securities Exchange or another “designated offshore securities
market”, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a
buyer in the United States; (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf
has engaged or will engage in any “directed selling efforts” in the United States in connection with the offer and sale
of such securities; (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed
because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the U. S. Securities
Act); (5) the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S with fungible unrestricted
securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions, which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U. S. Securities Act. Terms
used herein have the meanings given to them by Regulation S.

 

Dated: __________________ .

	 	X
	 	Signature of individual (if Seller is an individual)
	 	 
	 	X
	 	Authorized signatory (if Seller is not an individual)
	 	 
	 	 
	 	Name of Seller (please print)
	 	 
	 	 
	 	Name of authorized signatory (please print)
	 	 
	 	 
	 	Official capacity of authorized signatory (please print)

 

     

     

    

 

Affirmation by Seller’s Broker-Dealer

(Required for sales pursuant to Section (b)(2)(B) above)

 

We have read the foregoing representations
of our customer, _________________________ (the “Seller”) dated _______________________, with regard to the sale,
for such Seller’s account, of _________________ common shares (the “Securities”) of the Company represented by
certificate number ______________. We have executed sales of the Securities pursuant to Rule 904 of Regulation S under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act”), on behalf of the Seller. In that connection,
we hereby represent to you as follows:

 

		(1)	no offer to sell Securities was made to a person in the United States;

 

		(2)	the sale of the Securities was executed in, on or through the facilities of the Toronto Stock Exchange,
the TSX Venture Exchange, the Canadian Securities Exchange or another designated offshore securities market (as defined in Rule
902(b) of Regulation S under the U.S. Securities Act), and, to the best of our knowledge, the sale was not pre-arranged with a
buyer in the United States;

 

		(3)	no “directed selling efforts” were made in the United States by the undersigned, any
affiliate of the undersigned, or any person acting on behalf of the undersigned; and

 

		(4)	we have done no more than execute the order or orders to sell the Securities as agent for the Seller
and will receive no more than the usual and customary broker’s commission that would be received by a person executing such
transaction as agent.

 

For purposes of these representations:
“affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the undersigned; “directed selling efforts” means any activity
undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United
States for the Securities (including, but not be limited to, the solicitation of offers to purchase the Securities from persons
in the United States); and “United States” means the United States of America, its territories or possessions,
any State of the United States, and the District of Columbia.

 

Legal counsel to the Company shall be entitled
to rely upon the representations, warranties and covenants contained herein to the same extent as if this affirmation had been
addressed to them.

 

	Dated:		 
	 	 	 
	 	 
	Name of Firm	 

 

	By:	 	 
	 	Authorized Officer	 

 

    II-2

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