Document:

Exhibit 10.1

 

 

 

PROMISSORY
NOTE

 

	
        Principal

        $151,200.00
	
        Loan Date

        06-18-2020
	
        Maturity

        06-18-2025
	Loan No 

<REDACTED>	
        Call / Coll

        OP
	
        Account

        ***
	Officer EMG	Initials
	References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. 

Any item above containing "***" has been omitted due to text length limitations.

 

	Borrower:	
        QS
ENERGY, INC.2

        6-400 Kuykendahl
Rd #C180-313

        Tomball, TX 77375-2882
	Lender:	
        CADENCE
BANK, N.A.

        SBA Middle Georgia

        Duluth Branch

        1970
Satellite Blvd

        Duluth, GA 30097

 

 

 

	Principal Amount: $151,200.00	Date of Note: June 18, 2020

 

PROMISE TO PAY. QS ENERGY,
INC. ("Borrower") promises to pay to CADENCE BANK, N.A. ("Lender"), or order, in lawful money of the United
States of America, the principal amount of One Hundred Fifty-one Thousand Two Hundred & 00/100 Dollars ($151,200.00), together
with interest on the unpaid principal balance from June 18, 2020, until paid in full.

 

PAYMENT. Borrower will
pay this loan in accordance with the following payment schedule, which calculates interest on the unpaid principal balances as
described in the "INTEREST CALCULATION METHOD" paragraph using the interest rates described in this paragraph: 53 monthly
consecutive principal and interest payments of $2,584.57 each, beginning January 2, 2021, with interest calculated on the unpaid
principal balances using an interest rate of 1.000% per annum based on a year of 360 days; and one principal and interest payment
of $18,775.37 on June 18, 2025, with interest calculated on the unpaid principal balances using an interest rate of 1.000% per
annum based on a year of 360 days. This estimated final payment is based on the assumption that all payments will be made exactly
as scheduled; the actual final payment will be for all principal and accrued interest not yet paid, together with any other unpaid
amounts under this Note. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid
interest; then to principal; and then to any late charges. Borrower will pay Lender at Lender's address shown above or at such
other place as Lender may designate in writing.

 

INTEREST CALCULATION
METHOD. Interest on this Note is computed on a 30/360 simple interest basis; that is, with the exception of odd days before the
first full payment cycle, monthly interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied
by the outstanding principal balance, multiplied by a month of 30 days. Interest for the odd days before the first full month is
calculated on the basis of the actual days and a 360-day year. All interest payable under this Note is computed using this method.

 

PREPAYMENT. Borrower
may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early
payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send
Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further
amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: CADENCE BANK, N.A., 3500 Colonnade
Parkway, Suite 600 Birmingham, AL 35243.

 

LATE CHARGE. If a
payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment, regardless
of any partial payments Lender has received.

 

 

 

 

 

    	 	 	 

     

    

 

	 	PROMISSORY NOTE	 
	Loan No: 22159438	(Continued)	Page 2

 

 

INTEREST AFTER DEFAULT.
Upon default, at Lender's option, and if permitted by applicable law, Lender may add any unpaid accrued interest to principal
and such sum will bear interest therefrom until paid at the rate provided in this Note. Upon default, the total sum due under this
Note will continue to accrue interest at the interest rate under this Note, with the final interest rate described in this Note
applying after maturity, or after maturity would have occurred had there been no default. However, in no event will the interest
rate exceed the maximum interest rate limitations under applicable law.

 

DEFAULT.
Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default.
Borrower fails to make any payment when due under this Note.

 

Other Defaults. Borrower
fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related
documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between
Lender and Borrower.

 

Default in Favor of Third
Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's
ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

 

False Statements. Any
warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading
at any time thereafter.

 

Insolvency. The dissolution
or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.

 

Creditor or Forfeiture
Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes
a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not
apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits
with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion,
as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor.
Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness
or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of,
or liability under, any guaranty of the indebtedness evidenced by this Note.

 

Change
In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

 

 

 

 

    	 	 	 

     

    

 

	 	PROMISSORY NOTE	 
	Loan No: 22159438	(Continued)	Page 3

 

 

Adverse Change. A
material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of
this Note is impaired.

 

Insecurity. Lender in good faith believes
itself insecure.

 

SBA. When SBA is
the holder, this Note will be interpreted and enforced under Federal law, including SBA regulations. Lender or SBA may use state
or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such
procedures, SBA does not waive any Federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower
may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt Federal
law.

 

PAYCHECK PROTECTION PROGRAM
.. Lender is making this loan pursuant to the Paycheck Protection Program (the "PPP") created by Section 1102 of the
Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and governed by the CARES Act, section 7(a)(36)
of the Small Business Act, any rules or guidance that has been issued by the Small Business Administration implementing the PPP,
or any other applicable Loan Program Requirements, as defined in 13 CFR 120.10, as amended from time to time (collectively "PPP
Loan Program Requirements"). Notwithstanding anything to the contrary herein, Borrower (a) agrees that this Promissory Note
shall be interpreted and construed to be consistent with the PPP Loan Program Requirements and (b) authorizes the Lender to unilaterally
amend any provision to the Promissory Note to the extent required to comply with the PPP Loan Program Requirements.

 

NOTE FORGIVENESS.
Borrower may apply to Lender for forgiveness of the amount due on this Note in an amount equal to the sum of the following costs
incurred by Borrower during the 8-week period beginning on the date of first disbursement of this Note:

a.Payroll costs

b.Any
payment of interest on a covered mortgage obligation (which shall not include any prepayment of or principal on a covered mortgage
obligation)

c.Any payment
on a covered rent obligation

d.Any covered
utility payment

 

The amount of forgiveness
shall be calculated (and may be reduced) in accordance with the requirements of the PPP, including the provisions of Section 1106
of the CARES Act. Not more than 25% of the amount forgiven can be attributed to non-payroll costs. If Borrower has received an
Economic Injury Disaster Loan ("EIDL") advance, then the amount of the advance shall be subtracted from the loan forgiveness
amount.

 

BORROWER'S CERTIFICATION.
In connection with the application submitted to Lender for a loan under the PPP, Borrower hereby certifies to the Lender the following:

a. The
"Average Monthly Payroll" that Borrower reported in the Application was calculated in accordance with the instructions
for the PPP Application Form (SBA From 2483).

b. Borrower
had and has the requisite corporate power and authority to execute and deliver the Application and any related documents, and to
perform Borrower's obligations thereunder.

c. Borrower understands
that this Borrower Certification is being delivered to Lender in addition to the representations, authorizations and certifications
Borrower made in the Application. Borrower further understands that the Lender will rely on the statements contained in this Borrower
Certification and the Application for purposes of making a loan to Borrower under the Program.

 

 

 

    	 	 	 

     

    

 

	 	PROMISSORY NOTE	 
	Loan No: 22159438	(Continued)	Page 4

 

 

d. The
statements contained in this Borrower Certification and the representations, authorizations and certifications in the Application
are true and correct in all respects.

e. Borrower
agrees to indemnify and hold harmless Lender, its officers, directors, employees, agents and controlling persons thereof, past,
present or future, from and against any and all liabilities, losses, costs, damages and expenses, including costs and reasonable
attorneys' fees arising out of or related to any loan made by Lender to Borrower under the PPP, including any misrepresentation,
omission, or inaccuracy contained in this Borrower's Certification, the Application or any supporting documentation provided by
Borrower in connection with obtaining a loan under the PPP.

 

LENDER'S RIGHTS. Upon
default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due,
and then Borrower will pay that amount.

 

ATTORNEYS' FEES; EXPENSES.
Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount.
This includes, subject to any limits under applicable law, Lender's costs of collection, including court costs and fifteen percent
(15%) of the principal plus accrued interest as attorneys' fees, if any sums owing under this Note are collected by or through
an attorney at law, whether or not there is a lawsuit, and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court
costs, in addition to all other sums provided by law.

 

JURY WAIVER. Lender and
Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other.

 

GOVERNING LAW. This Note
will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of
Georgia without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Georgia.

 

CHOICE OF VENUE. If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Gwinnett County, State
of Georgia.

 

COLLATERAL. This loan is unsecured.

 

SUCCESSOR INTERESTS.
The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and
assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

NOTIFY US OF INACCURATE
INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any inaccurate information
about Borrower's account(s) to a consumer reporting agency. Borrower's written notice describing the specific inaccuracy(ies) should
be sent to Lender at the following address: CADENCE BANK, N.A. 3500 Colonnade Parkway, Suite 600 Birmingham, AL 35243.

 

 

 

 

    	 	 	 

     

    

 

	 	PROMISSORY NOTE	 
	Loan No: 22159438	(Continued)	Page 5

 

 

GENERAL
PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay
or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties
waive any right to require Lender to take action against any other party who signs this Note as provided in O.C.G.A. Section
10-7-24 and agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that
Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is
made. The obligations under this Note are joint .and several.

 

THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED
THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

 

BORROWER:

 

 

QS ENERGY, INC.

 

 

By: /s/ Michael McMullen                                                                    

Michael McMullen, Chief Financial Officer of QS ENERGY, INC.Exhibit 10.2

 

 

SECURITIES PURCHASE
AGREEMENT

Convertible Promissory
Notes and Stock Purchase Warrants

 

THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of _____________, 2020 by and between
QS Energy, Inc., a Nevada corporation (the “Issuer”) and those individuals and entities who sign and deliver an executed
copy of this Agreement to the Issuer (each, a “Purchaser” and collectively, the “Purchasers”), with reference
to the following:

 

RECITALS

 

A.                 
Purchasers desire to purchase from Issuer and Issuer desires to sell to Purchaser certain of Issuer’s Convertible
Notes, in the aggregate face amount up to a maximum of Four Hundred Thousand Dollars ($750,000) in the form of Exhibit A
attached hereto (individually, a “Note” and collectively, the “Notes”), and certain of Issuer’s Stock
Purchase Warrants to purchase up to a certain number of shares of the common stock (the “Common Stock”) of the Issuer
equal to 50% of the number of shares initially issuable on conversion of the Notes, in the form of Exhibit B attached hereto
(individually, the “Warrants” and collectively with the Notes, the “Securities”). The face amount of the
Note each Purchaser has committed to purchase, and the amount of the purchase price thereof to be paid to the Issuer by the Purchaser
(a “Commitment”) is listed on the signature page such Purchaser executes and delivers to the Issuer. Minimum Commitment
shall be no less than $10,000.

 

B.                 
Issuer’s sale of the Securities to the Purchasers may be made in reliance upon the provisions of Section 4(a)(2) under
the Securities Act of 1933, as amended (the "Securities Act") or Rule 506 of Regulation D promulgated by the Securities
and Exchange Commission (the ”SEC”) thereunder, or other applicable rules and regulations of the SEC or upon such other
exemption from the registration requirements of the Securities Act as may be available with respect to the transactions contemplated
hereby.

 

C.                 
At any time when any amount of principal or interest of the Notes shall be outstanding, such unpaid amounts shall be convertible,
at the election of the Purchaser, into shares of the Issuer’s Common Stock at a price of $0.035 per share (the “Conversion
Price”).

 

D.                 
The Warrants shall be issued at the same time each Note is issued to the Purchaser hereunder and shall be exercisable at
$0.035 per share (the “Exercise Price”), for such number of shares equal to 50% of the result obtained by dividing

(i) 
the face amount of the Notes issued simultaneously with the Warrant by (ii) the Conversion Price. The Warrants shall expire
one (1) year from the date of issuance thereof.

 

AGREEMENT

 

NOW
THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants
and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Purchasers and the Issuer hereby agree as follows

 

1.  
Purchase of the Notes and Warrants. On the terms and subject to the conditions set forth in this Agreement and in
the Notes and Warrants, the Purchasers shall purchase from the Issuer and the Issuer shall sell to the Purchaser the Securities.

 

2. 
Purchaser’s Representations, Warranties and Covenants. In order to induce the Issuer to sell and issue the
Securities to the Purchaser under one or more exemptions from registration under the Securities Act, the Purchasers, severally
and not jointly, represent and warrant to the Issuer, and covenant with the Issuer, that:

 

 

 

 

    	 	1	 

     

    

 

(a) 
(i) Such Purchaser has the requisite power and authority to enter into and perform this Agreement, and each of the other
agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively,
the "Transaction Documents"), and to purchase the Securities in accordance with the terms hereof and thereof.

 

(ii)  The
execution and delivery of the Transaction Documents by the Purchaser and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by the Purchaser's organizational documents and no further consent
or authorization is required by the Purchaser.

 

(iii) 
The Transaction Documents have been duly and validly executed and delivered by the Purchaser.

 

(iv) 
The Transaction Documents, and each of them, constitutes the valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with their respective terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies.

 

(a) 
The execution, delivery and performance of the Transaction Documents by the Purchaser and the consummation by the Purchaser
of the transactions contemplated thereby will not conflict with or constitute a default under any agreement or instrument to which
the Purchaser is a party or by which the Purchaser is bound.

 

(b) 
The Purchaser is acquiring the Securities for investment for its own account, and not with a view toward distribution thereof,
and with no present intention of dividing its interest with others or reselling or otherwise transferring or disposing of all or
any portion of either the Notes or Warrants. The undersigned has not offered or sold a participation in this purchase of either
the Notes or Warrants, and will not offer or sell any interest therein. The Purchaser further acknowledges that the Purchaser does
not have in mind any sale of either the Notes or Warrants currently or after the passage of a fixed or determinable period of time
or upon the occurrence or non-occurrence of any predetermined events or consequence; and that it has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for or which is likely to compel a disposition
of either the Notes or Warrants and is not aware of any circumstances presently in existence that are likely in the future to prompt
a disposition thereof.

 

(e) 
The Purchaser acknowledges that the Securities have been offered to it in direct communication between itself and the Issuer
and not through any advertisement, article, notice or other communication regarding the Securities published in any newspaper,
magazine or similar media or on the Internet or broadcast over television or radio or presented in any seminar or any other general
solicitation or general advertisement.

 

(f) 
The Purchaser acknowledges that the Issuer has given it access to all information relating to the Issuer’s business
that it has requested. The Purchaser has reviewed all materials relating to the Issuer's business, finance and operations which
it has requested and the Purchaser has reviewed all of such materials as the Purchaser, in the Purchaser’s sole and absolute
discretion shall have deemed necessary or desirable. The Purchaser has had an opportunity ask questions of and to discuss the business,
management and financial affairs of the Issuer with the Issuer's management. Specifically but not by way of limitation, the Purchaser
acknowledges the Issuer’s publicly available filings made periodically with the SEC, which filings are available at www.sec.gov
and which filings the Purchaser acknowledges reviewing or having had the opportunity of reviewing.

 

 

 

 

 

    	 	2	 

     

    

 

(g) 
The Purchaser acknowledges that it has, by reason of its business and financial experience, knowledge, sophistication and
experience in financial and business matters and in making investment decisions of this type that it is capable of (i) evaluating
the merits and risks of an investment in the Securities and making an informed investment decision in connection therewith; (ii)
protecting its own interest; and (iii) bearing the economic risk of such investment for an indefinite period of time for Securities
which are not transferable or freely tradable. The undersigned hereby agrees to indemnify the Issuer thereof and to hold each of
such persons and entities, and the officers, directors and employees thereof harmless against all liability, costs or expenses
(including reasonable attorneys’ fees) arising by reason of or in connection with any misrepresentation or any breach of
warranties of the undersigned contained in this Agreement, or arising as a result of the sale or distribution of the Securities
or the Common Stock issuable upon conversion of the Notes or exercise of the Warrants, by the undersigned in violation of the Securities
Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any other applicable law, either federal
or state. This subscription and the representations and warranties contained herein shall be binding upon the heirs, legal representatives,
successors and assigns of the Purchaser.

 

(h) 
The Purchaser is familiar with the definition of an "accredited investor" as that term is defined in Rule 501(a)
of Regulation D of the Securities Act and represents and warrants to the Issuer that it is either (i) an accredited investor at
such time it was offered the Securities and will be on each date which it converts any of the Notes or exercises any of the Warrants
as so defined or (ii) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act. Such Purchaser
is not required to be registered as a broker-dealer under Section 15 of the Exchange act. If the Purchaser is not a resident of
the United States, the Purchaser is not a “U.S. person[s]” as that term is defined in Rule 902 of Regulation S promulgated
under the Securities Act of 1933, as amended.

 

(i) 
During the term of this Agreement and the other Transaction Documents, the Purchaser will comply with the provisions of
Section 9 of the Exchange Act, and the rules and regulations promulgated thereunder, with respect to transactions involving the
Common Stock. Commencing on the date on which the Purchaser received a term sheet from the Company or any representative or agent
of the Company (written or oral) setting forth the material terms of the transactions contemplated hereunder until the date hereof
and during the term of this Agreement and the other Transaction Documents, the Purchaser agrees not to sell the Issuer's Common
Stock short or engage in any hedging transactions in the Issuer’s Common Stock, either directly or indirectly, through its
affiliates, principals, agents or advisors.

 

(j) 
The Purchaser is aware that the Notes and the Warrants, and the shares of Common Stock issuable upon conversion of the Notes
or exercise of the Warrants are restricted securities as defined under federal securities laws and are not freely tradeable and
may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Notes and
the Warrants, and the shares of Common Stock issuable upon conversion of the Notes or exercise of the Warrants, other than pursuant
to an effective registration statement or Rule 144, the Issuer may require the transferor thereof to provide to the Issuer an opinion
of counsel, the form and substance of which opinion shall be reasonably satisfactory to the Issuer, to the effect that such transfer
does not require registration of such transferred Securities under the Securities Act. Further, the Purchaser understands and acknowledges
that any certificates evidencing the Notes, the Warrants or the shares of Common Stock issuable upon conversion of the Notes or
exercise of the Warrants will be restricted securities and not freely tradeable and will bear the legend in substantially the following
form:

 

THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE
SECURITIES LAWS (COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED
OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION
REQUIREMENTS OF SUCH SECURITIES LAWS.

 

 

 

 

    	 	3	 

     

    

 

(k) 
The Purchaser understands and acknowledges that following the purchase of the Notes, the Warrants and any shares of Common
Stock issuable upon conversion of the Notes or exercise of the Warrants, each may only be disposed of pursuant to either (i) an
effective registration statement under the Securities Act or (ii) an exemption from the registration requirements of the Securities
Act.

 

(l) 
The Purchaser understands and acknowledges that the Issuer has neither filed a registration statement with the SEC or any
state authorities nor agreed to do so, nor contemplates doing so in the future for the transactions contemplated by this Agreement
or the other Transaction Documents, and in the absence of such a registration statement or exemption, the undersigned may have
to hold the Notes, the Warrants and any shares of Common Stock issuable upon conversion of the Notes or exercise of the Warrants,
indefinitely and may be unable to liquidate any of them in case of an emergency.

 

(m) 
The Purchaser is purchasing the Notes and Warrants, and will acquire any shares of Common Stock issuable upon conversion
of the Notes or exercise of the Warrants, for its own account for investment purposes and not with a view towards distribution
and agrees to resell or otherwise dispose of any of the Notes or the Warrants, or any shares of Common Stock issuable upon conversion
of the Notes or exercise of the Warrants, in accordance with the registration provisions of the Securities Act (or pursuant to
an exemption from such registration provisions).

 

(n) 
The Purchaser is not and will not be required to be registered as a "dealer" under the Exchange Act, either as
a result of its execution and performance of its obligations under this Agreement or otherwise.

 

(o) 
The Purchaser understands and acknowledges that proceeds raised in connection with this Agreement will be used by Issuer
for general working capital purposes, including without limitation, the payment of salaries and professional fees, overhead and
general administrative expenses.

 

(p) 
The Purchaser understands that it is liable for its own tax liabilities and has obtained no tax advice from the Issuer in
connection with the purchase of the Securities.

 

(q) 
The Purchaser will not pay or receive any finder’s fee or commission in respect of the consummation of the transactions
contemplated by this Agreement.

 

(r) 
Purchaser hereby agrees and acknowledges that it has been informed of the following: (i) there are factors relating to the
subsequent transfer of any of the Securities or shares of Common Stock underlying the Notes and Warrants that could make the resale
of such Securities or shares of Common Stock underlying the Notes and Warrants difficult; and (ii) there is no guarantee that the
Purchaser will realize any gain from the purchase of the Securities. The purchase of the Securities involves a high degree of risk
and is subject to many uncertainties. These risks and uncertainties may adversely affect the Company’s business, operating
results and financial condition. In such an event, the trading price for the Common Stock could decline substantially and Purchaser
could lose all or part of its investment. Purchaser is urged to review the risks identified under the Risk Factors section of Issuer’s
Form 10-K for the year ended December 31, 2018, as filed with the SEC on April 1, 2019.

 

(s) 
Purchaser understands and acknowledges that the Notes have an implied annual interest rate of 10%, inasmuch as the Notes
will be issued and paid in an amount equal to 110% of the Commitment, except that if a Note is not paid on the Maturity Date, which
is twelve (12) months from the date of issue of the Note, then the balance of the unpaid amount of the Note shall be increased
by 10% and the Issuer shall then commence paying interest thereon at the rate of 10% per annum until all sums due under the Note
are paid.

 

 

 

 

    	 	4	 

     

    

 

 3. Issuer’s Representations, Warranties and Covenants. The Issuer represents and warrants to the Purchaser that:

 

(a) 
The Issuer is a corporation duly organized and validly existing in good standing under the laws of the State of Nevada,
and has the requisite corporate power and authorization to own its properties and to carry on its business as now being conducted.

 

(b)  i) 
The Issuer has the requisite corporate power and authority to enter into and perform this Agreement, and each of the other
agreements entered into by the parties hereto in connection with the transactions contemplated by the Transaction Documents,
and to issue the Notes and Warrants in accordance with the terms hereof and thereof.

 

(ii) 
the execution and delivery of the Transaction Documents by the Issuer and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation the reservation for issuance and the issuance of the Notes and Warrants pursuant
to this Agreement, have been duly and validly authorized by the Issuer's Board of Directors and no further consent or authorization
is required by the Issuer, its Board of Directors, or its shareholders.

 

 (iii)  The Transaction Documents have been duly and validly executed and delivered by the Issuer.

 

(iv) 
The Transaction Documents, and each of them, constitutes the valid and binding obligation of the Issuer enforceable against
the Issuer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of creditors' rights and remedies.

 

(c)  The
execution, delivery and performance of the Transaction Documents by the Issuer and the consummation by the Issuer of the
transactions contemplated thereby will not conflict with or constitute a default under any agreement or instrument to which
the Issuer is a party or under any organizational documents of the Purchaser.

 

 4. Closing and Deliverables.

 

(a) 
Subject to the provisions of Section 4(b) below, provided that the Issuer shall have received on or prior to March 27, 2020
copies of this Agreement executed by Purchaser, there shall be a closing or closings (each, a “Closing Date”) at which:

 

(i) 
Purchaser shall deliver to the Issuer immediately available funds, by check or by wire transfer (bank wiring instructions
to be provided by Issuer on request) in an amount equal to the amount of the Purchaser’s Commitment as set forth beside
the name of the Purchaser on the Purchaser’s signature page hereto. Funds paid to Issuer under this Agreement will be deposited
in Issuer’s operating account and used as working capital.

 

(ii) 
The Issuer shall deliver to the Purchaser (x) a Note, in the face amount equal to 110% of the Purchaser’s Commitment
and (y) a Warrant to purchase the exercisable amount of the Issuer’s Common Stock at the Exercise Price. The Note and Warrant
will be dated as of the Closing Date, as such date may be extended by us.

 

 

 

 

    	 	5	 

     

    

 

(b) 
The Issuer may continue to accept Commitments from Purchasers and issue and sell Securities to Purchasers at Closings on
the terms and subject to the conditions set forth in this Agreement until (i) the aggregate amount of the Commitments equals $750,000
or (ii) on or before March 27, 2020, whichever shall first occur.

 

 5. Miscellaneous.

 

(a)  Each
party shall pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transactions Documents.

 

(b) 
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided
that a facsimile signature or signature transmitted by e-mail shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original signature.

 

(c) 
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and neutral shall
include the masculine and feminine.

 

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

 

(e) 
This Agreement and the Notes and Warrants represent the final agreement between the Purchasers and the Issuer with respect
to the terms and conditions set forth herein, and, the terms of this Agreement and the Notes and Warrants may not be contradicted
by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. No provision of this Agreement and the Notes
and Warrants may be amended other than by an instrument in writing signed by the Purchaser and the Issuer, and no provision hereof
or thereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

(f) 
Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii)
one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications shall be:

 

If to the Issuer:

 

QS Energy, Inc.

23902 FM 2978

Tomball, TX 77375

Telephone: (281) 738-1893

Fax: (281) 738-5366

 

If to a Purchaser:

 

To the address set forth on the Purchaser’s signature
page hereto.

 

 

 

 

    	 	6	 

     

    

 

Each party shall provide five (5) days prior written
notice to the other party of any change in address or facsimile number.

 

 (g)  This Agreement may not be assigned by Purchaser.

 

(h) 
This Agreement is intended for the benefit of the parties hereto and is not for the benefit of, nor may any provision hereof
be enforced by, any other person.

 

(i) 
The representations and warranties of the Purchaser and the Issuer contained herein shall survive each of the Closings and
the termination of this Agreement and the other Transaction Documents.

 

(j)
 The Purchaser and the Issuer shall consult with each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby, except that no consultation shall be required if such disclosure is required
by law or the rules and regulations of the SEC.

 

(k)  Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.

 

(l) 
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party, as the parties mutually agree that each has had a full and
fair opportunity to review this Agreement and the other Transaction Documents and seek the advice of counsel on it and them.

 

(m) 
The Purchaser and the Issuer each shall have all rights and remedies set forth in this Agreement and all rights and remedies
which such holders have been granted at any time under any other agreement or contract and all of the rights which the Purchaser
has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any default or breach of any provision of this Agreement,
including the recovery of reasonable attorneys’ fees and costs, and to exercise all other rights granted by law.

 

(n) 
This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts
made and to be performed wholly within such state.

 

 

[remainder of page intentionally left blank]

 

 

 

 

 

 

    	 	7	 

     

    

 

IN WITNESS WHEREOF
the Purchasers and the Issuer have executed this Agreement as of the date first above written.

 

THE ISSUER

 

QS ENERGY, INC.

 

 

By:__________________________

       Mike
McMullen

Its:  Chief Financial Officer

 

 

THE PURCHASER

 

 

	
        _______________________________

        Name (signature)
	 	
        _______________________________

        Amount of Commitment

        (U.S. Dollars)

	 	 	 
	
        _______________________________

        Print Name
	 	
        _______________________________

        Date

	 	 	 
	
        _______________________________

        Address
	 	 
	 	 	 
	
        _______________________________

        Address
	 	 
	 	 	 
	
        _______________________________

        Phone Number
	 	 
	 	 	 
	
        _______________________________

        Fax Number
	 	 
	 	 	 
	
        _______________________________

        Social Security Number
	 	 
	 	 	 
	
        _______________________________

        E-mail Address
	 	 

 

 

 

 

 

    	 	8	 

     

    

 

EXHIBIT
A

 

CONVERTIBLE NOTE

  

THE SECURITIES EVIDENCED BY THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS
(COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED
FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS
OF SUCH SECURITIES LAWS.

 

	$__________	_____________, 2020 (“Issuance Date”)

 

FOR VALUE RECEIVED,
QS ENERGY, INC., a corporation organized under the laws of the State of Nevada (the “Company”), promises to
pay to the order of ____________________________ “Investor”, as that term is defined on the Acknowledgement and Acceptance
page of this Convertible Note (“Note”) (hereafter, together with any subsequent holder hereof, called “Holder”),
at “Investor’s Address,” as that term is set forth on such page or at such other place as Holder may direct,
the amount noted above, payable in full Twelve (12) Months from the Issuance Date (the “Maturity Date”).

 

If this Note is not
paid in full on or prior to the Maturity Date the remaining balance shall be increased by 10% and the Company shall pay interest
thereon at the rate of 10% per annum until all sums due hereunder are paid in full.

 

Payments of both principal
and interest will be made in immediately available funds in lawful money of the United States of America to the Holder at the Investor’s
Address.

 

This Note is subject
to the following additional provisions:

 

1.  The Company shall
be entitled to withhold from all payments of principal and/or interest of this Note any amounts required to be withheld under the
applicable provisions of the U.S. Internal Revenue Code of 1986, as amended, or other applicable laws at the time of such payments.

 

2.  This
Note has been issued subject to representations, warranties and covenants of the original Holder hereof as contained in that
certain Securities Purchase Agreement (“Agreement”) of even date herewith, and subject to all restrictions,
terms, conditions and disclosures in the Agreement, and may be transferred or exchanged only in compliance with the
Securities Act of 1933, as amended, and applicable state and other securities laws. Prior to the due presentment for such
transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly
registered on the Company's Note register as the owner hereof for the purpose of receiving payment as herein provided and all
other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary. The transferee shall be bound, as the original Holder, by the same representations and terms described
herein and under the Agreement.

 

 

 

 

    	 	9	 

     

    

 

3.  The
Holder may, at such Holder’s option, at any time while any sums are outstanding and unpaid hereunder, convert the
then-outstanding principal amount of this Note or any portion thereof, and any interest and any penalties accrued and unpaid
thereon (the “Conversion Amount”), into a number shares of fully paid and nonassessable Common Stock of the
Company (the “Conversion Shares”) pursuant to the following formula: the Conversion Amount divided by $0.035 (the
“Conversion Price”). The Holder may exercise the right to convert all or any portion of the Conversion Amount by
delivering to the Company (i) an executed and completed notice of conversion in the form attached to this Note (the
"Notice of Conversion") to the Company and (ii) this Note. The business day on which a Notice of Conversion and
this Note are delivered to the Company in accordance with the provisions hereof shall be deemed a "Conversion
Date.” The Company will transmit the certificates representing Conversion Shares issuable upon such conversion of this
Note within a reasonable time after the Conversion Date to the Holder electronically through the Company’s transfer
agent by means of a direct registration system (“DRS”). Physical stock certificates will be issued upon written
request subject to shipping cost paid by holder of the Shares. No fractional shares shall be issued upon conversion of this
Note. The amount of any of the Conversion Amount which is less than a whole share of Common Stock shall be paid to the Holder
in cash. Any delay due to such circumstance shall not be an event of default under this Note.

 

4.  The
principal amount of this Note, and any accrued interest thereon, shall be reduced as per that principal amount indicated on
the Notice of Conversion upon the proper receipt by the Holder of such Conversion Shares due upon such Notice of
Conversion.

 

5.  The
number of Conversion Shares shall be adjusted as follows:

 

a. If the Company
shall at any time after the Issuance Date subdivide its outstanding shares of Common Stock into a greater number of shares of Common
Stock, the number of Conversion Shares in effect immediately prior to such subdivision shall be proportionately increased, and
conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such combination shall be proportionately reduced.

 

b.  If
the Company shall at any time or from time to time after the Issuance Date makes, or fixes a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock,
then and in each such event the number of Conversion Shares issuable upon conversion of this Note shall be proportionately increased;
provided, however, that if such record date is fixed and such dividend is not fully paid, or if such distribution is not fully
made on the date fixed therefor, the number of Conversion Shares shall be recomputed to reflect that such dividend was not fully
paid or that such distribution was not fully made.

 

c.  If
Company at any time or from time to time after the Issuance Date makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in securities of Company other than shares of Common
Stock, then and in each such event provision shall be made so that Holder shall receive upon exercise of the conversion right of
this Note, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of Company which
Holder would have received had the Conversion Amount of this Note been exercised on the date of such event and had it thereafter,
during the period from the date of such event to and including the date of conversion or purchase, retained such securities receivable
during such period.

 

d.  If
the Common Stock issuable upon the conversion of this Note or option to purchase is changed into the same or a different number
of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a transaction
described elsewhere in Section 5 of this Note), then, and in any such event, each Holder shall have the right thereafter, upon
conversion of this Note or purchase pursuant to option to receive the kind and amount of stock and other securities and property
receivable upon such reorganization or other change, in an amount equal to the amount that Holder would have been entitled to had
it immediately prior to such reorganization, reclassification or change converted this Note, but only to the extent this Note is
actually converted, all subject to further adjustment as provided herein.

 

6. No provision
of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, upon an Event of Default
(as defined below), to pay the principal of, and interest on this Note at the place, time, and rate, and in the coin or currency
herein prescribed.

 

 

 

 

    	 	10	 

     

    

 

a. Events of Default.
Each of the following occurrences is hereby defined as an “Event of Default:”

 

Nonpayment.
The Company shall fail to make any payment of principal, interest, or other amounts payable hereunder when and as due; or

 

Dissolutions,
etc. The Company or any subsidiary shall fail to comply with any provision concerning its existence or any prohibition against
dissolution, liquidation, merger, consolidation or sale of assets; or

 

Noncompliance
with this Agreement. The Company shall fail to comply in any material respect with any provision hereof, which failure does
not otherwise constitute an Event of Default; or

 

Insolvency.
The institution of bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted by or against Company, which proceedings shall not have
been vacated by appropriate court order within sixty (60) days of such institution.

 

If one or
more "Events of Default" shall occur, then, or at any time thereafter, and in each and every such case, unless such Event
of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default)
or cured as provided herein, at the option of the Holder, and in the Holder's sole discretion, the Holder may elect to consider
this Note (and all interest through such date) immediately due and payable. In order to so elect, the Holder must deliver written
notice of the election and the amount due to the Company via certified mail, return receipt requested, at the Company’s address
as set forth herein (or any other address provided to the Holder), and thereafter the Company shall have thirty (30) business days
upon receipt to cure the Event of Default or pay this Note, or convert the amount due on the Note pursuant to the conversion formula
set forth above.

 

7.  In case
any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected
or impaired thereby.

 

8.  This
Note does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company prior to the
conversion into Common Stock thereof, except as provided by applicable law. If, however, at the time of the surrender of this
Note and conversion the Holder hereof shall be entitled to convert this Note, the Conversion Shares so issued shall be and be
deemed to be issued to such holder as the record owner of such shares as of the close of business on the Conversion Date.

 

9.  The Holder shall
pay all issue and transfer taxes and other incidental expenses in respect of the issuance of certificates for Conversion Shares
upon the conversion of this Note, and such certificates shall be issued in the name of the Holder of this Note.

 

10.  This Note may be
prepaid in whole or in part at any time or from time to time without premium or penalty upon 10 days’ prior written notice
from the Company to the Holder.

 

11.  Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and in case of
loss, theft or destruction of this Note, upon delivery of an indemnity agreement or security reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Note, and upon reimbursement
to the Company of all reasonable expenses incidental thereto, the Company will make and deliver to the Holder, in lieu thereof,
a new Note in substantially identical form.

  

12.  If the last
or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or
a Sunday or shall be a legal holiday in the United States or the State of California, then such action may be taken or such right
may be exercised on the next succeeding business day.

 

 

 

 

    	 	11	 

     

    

 

13.         (a)
This Note shall be governed by and construed in accordance with the laws of the State of California applicable to contracts
made and to be performed wholly within such state.

 

(b) Except as
otherwise provided herein, any notice or demand which, by the provisions hereof, is required or which may be given to or served
upon the parties hereto shall be in writing and, if by e-mail or facsimile transmission, shall be deemed to have been validly served,
given or delivered when sent, and if by personal delivery, shall be deemed to have been validly served, given or delivered upon
actual delivery and, if mailed, shall be deemed to have been validly served, given or delivered three (3) business days after deposit
in the United States mails, as registered or certified mail, with proper postage prepaid and addressed to the party or parties
to be notified.

 

(c)  The
Holder acknowledges that the Conversion Shares acquired upon the exercise of this Note will have restrictions upon its resale imposed
by state and federal securities laws, together with other restrictions, terms, conditions and disclosures as fully set forth in
the Agreement.

 

(d)  With
regard to any power, remedy or right provided herein or otherwise available to any party hereunder (i) no waiver or extension of
time shall be effective unless expressly contained in a writing signed by the waiving party; and (ii) no alteration, modification
or impairment shall be implied by reason of any previous waiver, extension of time, delay or omission in exercise, or other indulgence.

 

(e)  This Note
may not be amended, altered or modified except by a writing signed by the Company and the Holder. 

 

IN WITNESS WHEREOF, the Company has caused
this Convertible Note to be duly executed by an officer thereunto duly authorized.

 

QS ENERGY, INC.

23902 FM 2978

Tomball, TX 77375

 

 

 

By ____________________________

Name: Mike McMullen

Title:   Chief Financial Officer

 

ACKNOWLEDGED AND ACCEPTED:

 

 

 

_______________________________

Investor Name (Signature)

 

 

_______________________________

Print Name

 

_______________________________

 

_______________________________

Investor Address

 

 

 

    	 	12	 

     

    

 

NOTICE OF EXERCISE OF CONVERSION RIGHT

 

TO:     (Company Name)

 

(1)  The
undersigned hereby elects to convert $______________ of the attached Note into ______________ shares of Common Stock (the "Shares")
of QS Energy, Inc. (“Company”) pursuant to the terms of the attached Note.

 

(2)  Please
issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified
below:

 

	 	
        _______________________________________________

        (Print Name)

         

        Address:

        _______________________________________________

        _______________________________________________

        _______________________________________________
	 

  

(3) The Company shall issue the Shares
electronically through its transfer agent by means of a direct registration system (“DRS”)1.
Physical stock certificates will be issued upon written request subject to shipping cost paid by holder of the Shares.

 

(4)  The undersigned confirms that the Shares
are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with,
the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.

 

(5)  The undersigned accepts such
shares subject to the restrictions on transfer and other terms, conditions and disclosures set forth in the attached Note and
set forth in that certain Securities Purchase Agreement between the Company and the undersigned dated as of the date of the
attached Note.

 

 

 

	
        __________________________

        (Date)
	
        __________________________

        (Signature)

	 	 
	 	
        __________________________

        (Print Name)

 

 

 

 

 

 

 

____________________

1
The Company’s transfer agent, Nevada Agency and Transfer Company (“NATCO”) is a participant in the Depository
Trust Company’s FAST program. The FAST program allows NATCO to provide DWAC (deposit/withdrawal at custodian) and DRS (direct
registration system) services to the Company and its shareholders. This eliminates the risk of lost certificates and courier fees
by providing electronic transfers.

 

    	 	13	 

     

    

 

EXHIBIT
B

 

STOCK PURCHASE WARRANT

 

THIS WARRANT AND ANY SHARES ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION
OF ANY SHARES ISSUED UPON EXERCISE HEREOF MAY BE AFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION
OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT. THE TRANSFER
OF THIS WARRANT IS RESTRICTED AS SET FORTH HEREIN.

 

	No. ______	______________, 2020

 

QS ENERGY, INC.

WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:00 P.M. (Pacific Time) ON
______________, 2021

 

THIS CERTIFIES that,
for the value received, the holder identified on the last page of this Warrant __________________________ (the "Holder")
is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date of this Warrant
and on or prior to 5:00 p.m. P.S.T. on the first anniversary of the date of this Warrant (the "Expiration Time"), but
not thereafter, to subscribe for and purchase, from QS ENERGY, INC., a Nevada corporation (the "Company"), up to ________________
(#) shares of the Company's Common Stock (the "Shares") at a purchase price per share equal to $0.035 (the "Exercise
Price").

 

1. Exercise
of Warrant.

 

The purchase rights represented
by this Warrant are exercisable by the Holder, in whole or in part, at any time after the date of this Warrant and before the Expiration
Time by the surrender of this Warrant and the Notice of Exercise annexed hereto duly executed at the office of the Company, in
Tomball, Texas (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address
of the Holder appearing on the books of the Company), and upon payment of an amount equal to the aggregate Exercise Price for the
number of Shares thereby purchased (by cash or by check or certified bank check payable to the order of the Company in an amount
equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a stock certificate
representing the number of Shares so purchased. The Company agrees that if at the time of the surrender of this Warrant and purchase
of the Shares, and the Holder shall be entitled to exercise this Warrant, the Shares so purchased shall be and be deemed to be
issued to such holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have
been exercised as aforesaid.

 

Upon partial exercise
of this Warrant, the Holder shall be entitled to receive from the Company a new Warrant in substantially identical form for the
purchase of that number of Shares as to which this Warrant shall not have been exercised. Certificates for Shares purchased hereunder
shall be delivered to the Holder within a reasonable time after the date on which this Warrant shall have been exercised as aforesaid.

  

2. No Fractional
Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.
With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied
by the Exercise Price shall be paid in cash to the Holder.

 

 

3. Charges, Taxes
and Expenses. The Holder shall pay all issue and transfer taxes and other incidental expenses in respect of the issuance of
certificates for Shares upon the exercise of this Warrant, and such certificates shall be issued in the name of the Holder of this
Warrant.

 

4. No Rights as
a Stockholder. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise hereof.

 

 

 

 

    	 	14	 

     

    

 

5. Loss, Theft,
Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or destruction of this Warrant, upon delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender
and cancellation of such Warrant, and upon reimbursement to the Company of all reasonable expenses incidental thereto, the Company
will make and deliver to the Holder, in lieu thereof, a new Warrant in substantially identical form and dated as of such cancellation.

 

6. 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 be a Saturday or a Sunday or shall be a legal holiday in the United States or the State of California, then
such action may be taken or such right may be exercised on the next succeeding business.

 

7. Merger, Reclassification,
etc.

 

(a) Merger, etc.
If at any time the Company proposes (A) the acquisition of the Company by another entity by means of any transaction or series
of related transactions (including, without limitation, any reorganization, merger, consolidation or stock issuance) that results
in the transfer of fifty percent (50%) or more of the then outstanding voting power of the Company; or (B) a sale of all or substantially
all of the assets of the Company, then the Company shall give the Holder ten (10) days notice of the proposed effective date of
the transaction. If, in the case of such acquisition of the Company, and the Warrant has not been exercised by the effective date
of the transaction, this Warrant shall be exercisable into the kind and number of shares of stock or other securities or property
of the Company or of the entity resulting from such merger or acquisition to which such Holder would have been entitled if immediately
prior to such acquisition or merger, it had exercised this Warrant. The provisions of this Section 7(a) shall similarly apply to
successive consolidations, mergers, sales or conveyances.

  

(b) Reclassification,
etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any
of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class
or classes, this Warrant shall thereafter be to acquire such number and kind of securities as would have been issuable as the result
of such change with respect to the securities which were subject to the purchase rights under this Warrant immediately prior to
such subdivision, combination, reclassification or other change. If the Shares are subdivided or combined into a greater or smaller
number of Shares, the Exercise Price under this Warrant shall be proportionately reduced in case of subdivision of shares or proportionately
increased in the case of combination of shares, in both cases by the ratio which the total number of Shares to be outstanding immediately
after such event bears to the total number of Shares outstanding immediately prior to such event.

 

(c) Cash Distributions.
No adjustment on account of cash dividends or interest on the Shares or other securities purchasable hereunder will be made to
the Exercise Price under this Warrant.

 

8. Restrictions
on Transfer.

 

(a) Restrictions on
Transfer of Shares. In no event will the Holder make a disposition of this Warrant or the Shares unless and until, if requested
by the Company, it shall have furnished the Company with an opinion of counsel satisfactory to the Company and its counsel to the
effect that appropriate action necessary for compliance with the Securities Act of 1933, as amended (the "Act") relating
to sale of an unregistered security has been taken. Notwithstanding the foregoing, the restrictions imposed upon the transferability
of the Shares shall terminate as to any particular Share when (i) such security shall have been sold without registration in compliance
with Rule 144 under the Act, or (ii) a letter shall have been issued to the Holder at its request by the staff of the Securities
and Exchange Commission or a ruling shall have been issued to the Holder at its request by such Commission stating that no action
shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration
under the Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no
subsequent restrictions on transfer are required, or (iii) such security shall have been registered under the Act and sold by the
Holder thereof in accordance with such registration.

 

(b) Subject to the provisions
of Section 8(a) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of the Warrant
with a properly executed assignment at the principal office of the Company.

 

 

 

 

    	 	15	 

     

    

 

(c) Restrictive Legends.
The stock certificates representing the Shares and any securities of the Company issued with respect thereto shall be imprinted
with legends restricting transfer except in compliance with the terms hereof and with applicable federal and state securities laws
substantially as follows:

 

“THE SHARES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT”.

 

9. Miscellaneous.

 

(a) Governing Law.
This Warrant shall be governed by and construed in accordance with the laws of the State of California applicable to contracts
made and to be performed wholly within such state.

 

(b) Restrictions.
The Holder acknowledges that the Shares acquired upon the exercise of this Warrant will have restrictions upon its resale imposed
by state and federal securities laws.

 

(c) Waivers Strictly
Construed. With regard to any power, remedy or right provided herein or otherwise available to any party hereunder (i) no waiver
or extension of time shall be effective unless expressly contained in a writing signed by the waiving party; and (ii) no alteration,
modification or impairment shall be implied by reason of any previous waiver, extension of time, delay or omission in exercise,
or other indulgence.

 

(d) Modifications.
This Warrant may not be amended, altered or modified except by a writing signed by the Company and the Holder of this Warrant.

 

IN WITNESS WHEREOF,
QS ENERGY, INC. has caused this Warrant to be executed by its duly authorized representative dated as of the date first set forth
above.

 

	
         

         

        Holder:

         

         

         

         

        _____________________

         
	
         

        QS ENERGY, INC.

        23902 FM 2978

        Tomball, TX 77375

         

         

         

        By: __________________________

        Name:   Mike McMullen

        Title:     Chief Financial Officer

 

 

 

 

 

 

 

 

 

    	 	16	 

     

    

 

NOTICE OF EXERCISE

 

TO:     QS ENERGY, INC., a Nevada corporation

 

(1) 
The undersigned hereby elects to purchase ______________ shares of Common Stock (the "Shares") of QS Energy, Inc.
(“Issuer”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.

 

(2)  Please
issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified
below:

 

	
        Name:

         

        ________________________________

        (Print Name)
	
        Address:

         ______________________________

         ______________________________

         ______________________________

 

(3)  The Company shall issue the Shares electronically
through its transfer agent by means of a direct registration system (“DRS”)2.
Physical stock certificates will be issued upon written request subject to shipping cost paid by holder of the Shares.

 

(4)  The undersigned
confirms that he is an “accredited investor” as defined by Rule 501(a) under the Securities Act of 1933, as amended,
at the time of execution of this Notice.

 

(5)  The
undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view
to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing
or selling the Shares.

 

(6)  The
undersigned accepts such Shares subject to the restrictions on transfer set forth in the attached Warrant.

 

(7)  The
undersigned acknowledges that the Issuer has given it access to all information relating to the Issuer’s business that the
undersigned has requested. The undersigned has reviewed all materials relating to the Issuer’s business, financial condition
and operations which it has requested and the undersigned has reviewed all of such materials as the undersigned, in the undersigned’s
sole and absolute discretion has deemed necessary or desirable. The undersigned has had an opportunity to ask questions of and
discuss the business, management and financial affairs of the Issuer with the Issuer’s management. Specifically but not by
way of limitation, the undersigned acknowledges the Issuer’s publicly available filings made periodically with the SEC, which
filings are available at www.sec.gov, and which filings the undersigned acknowledges reviewing or having had the opportunity of
reviewing.

 

(8)  The
undersigned acknowledges that it has, by reason of its business and financial experience, such knowledge, sophistication and experience
in financial and business matters and in making investment decisions of this type that it is capable of (i) evaluating the merits
and risks of an investment in the Shares and making an informed investment decision in connection therewith; (ii) protecting its
own interest; and (iii) bearing the economic risk of such investment for an indefinite period of time for shares which are not
transferable or freely tradable. The undersigned hereby agrees to indemnify the Issuer and the officers, directors and employees
thereof harmless against all liability, costs or expenses (including reasonable attorneys’ fees) arising by reason of or
in connection with any misrepresentation or any breach of warranties or representations of the undersigned contained in this Notice,
or arising as a result of the sale or distribution of the Shares issuable upon exercise of the Warrants. The representations
and warranties contained herein shall be binding upon the heirs, legal representatives, successors and assigns of the undersigned.

 

	
        ________________________

        (Date)
	
        ___________________________________

        (Signature)

        ___________________________________

        (Print Name)

 

 

__________________

2
The Company’s transfer agent, Nevada Agency and Transfer Company (“NATCO”) is a participant in the Depository
Trust Company’s FAST program. The FAST program allows NATCO to provide DWAC (deposit/withdrawal at custodian) and DRS (direct
registration system) services to the Company and its shareholders. This eliminates the risk of lost certificates and courier fees
by providing electronic transfers.

 

    	 	17

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