Document:

ex_146354.htm

Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “Agreement”) made and entered into as of ________________ (the “Effective Date”) by and between DiaMedica Therapeutics Inc., a corporation organized and existing under the laws of British Columbia (the “Company”), and ___________________ (the “Indemnitee”).

 

WHEREAS, the Company recognizes that competent and experienced persons are increasingly reluctant to serve or to continue to serve as directors and officers of corporations unless they are protected by comprehensive liability insurance or indemnification, or both, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no reasonable relationship to the compensation of such directors;

 

WHEREAS, directors and officers of public companies are subject to an increased risk of litigation and claims being asserted against them;

 

WHEREAS, the Company’s articles (the “Articles”) require the Company to indemnify its directors and officers to the extent permitted under the Business Corporations Act (British Columbia), or other applicable law;

 

WHEREAS, Indemnitee is or has agreed to become or will continue to serve as a director or officer of the Company or an Affiliate of the Company;

 

WHEREAS, the Company desires (i) to provide Indemnitee with specific contractual assurance that the protection promised by such Articles will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Articles, change in the composition of the Company’s Board of Directors (“Board of Directors”), or any change in the ownership of the Company, (ii) to provide for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and (iii) to the extent insurance is available, to provide for continued coverage of Indemnitee under the Company’s directors and officers liability insurance policies; and

 

WHEREAS, Indemnitee is relying upon the rights afforded under this Agreement in accepting or continuing Indemnitee’s position as a director or officer of the Company or an Affiliate of the Company.

 

NOW, THEREFORE, in consideration of the Indemnitee’s agreement to serve or continue to serve as a director and/or officer of the Company or an Affiliate of the Company and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company has agreed to the covenants set forth herein for the purpose of further securing to the Indemnitee the indemnification provided by the Articles:

 

 

 

 

	
			1.

				
			Definitions.

			

 

	 	
			(a)

				
			“Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder.

			

 

	 	
			(b)

				
			“Agreement” shall have the meaning specified in the introductory paragraph hereof.

			

 

	 	
			(c)

				
			“Articles” shall have the meaning specified in the Recitals hereto.

			

 

	 	
			(d)

				
			“Change in Control” shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all the Company’s assets.

			

 

	 	
			(e)

				
			“Claim” means any threatened, pending, or completed action, suit, or proceeding, or any inquiry or investigation, whether instituted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other and whether formal or informal.

			

 

	 	
			(f)

				
			“Company” shall have the meaning specified in the introductory paragraph hereof.

			

 

2

 

 

	 	
			(g)

				
			“Expense Advance” shall have the meaning specified in Section 2(b).

			

 

	 	
			(h)

				
			“Expenses” include reasonable attorneys’ fees and all other costs, expenses and obligations (including, without limitation, experts’ fees, court costs, retainers, transcript fees, duplicating, printing and binding costs, as well as telecommunications, postage and courier charges) paid or incurred in connection with investigating, defending, being a witness in or participating in, or preparing to investigate, defend, be a witness in or participate in, any Claim relating to any Indemnifiable Event.

			

 

	 	
			(i)

				
			“Indemnifiable Amounts” include any and all Expenses, damages, judgments, fines, penalties, excise taxes and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties, excise taxes or amounts paid in settlement) arising out of or resulting from any Claim relating to an Indemnifiable Event.

			

 

	 	
			(j)

				
			“Indemnifiable Event” means any event or occurrence arising out of or related to the fact that Indemnitee is or was a director, officer, employee, or agent of the Company or an Affiliate of the Company, or is or was serving at the request of the Company or an Affiliate of the Company as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, or by reason of anything done or not done by Indemnitee in any such capacity.

			

 

	 	
			(k)

				
			“Indemnitee” shall have the meaning specified in the introductory paragraph hereof.

			

 

	 	
			(l)

				
			“Independent Legal Counsel” means an attorney or firm of attorneys, selected in accordance with the provisions of Section 3, who shall not have otherwise performed services for the Company or Indemnitee within the last five (5) years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

			

 

	 	
			(m)

				
			“Reviewing Party” means any appropriate person or body consisting of a member or members of the Board of Directors or any other person or body appointed by the Board who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.

			

 

	 	
			(n)

				
			“Voting Securities” are any securities of the Company that vote generally in the election or appointment of directors.

			

 

3

 

 

	
			2.

				
			Indemnification Arrangement; Advancement of Expenses.

			

 

	 	
			(a)

				
			In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable, but in any event no later than thirty (30) days after written demand is presented to the Company, against any and all Indemnifiable Amounts. For the avoidance of doubt, the foregoing indemnification obligation includes, without limitation, claims for monetary damages against Indemnitee in respect of an alleged breach of fiduciary duties, to the fullest extent permitted under applicable law.

			

 

	 	
			(b)

				
			If requested by Indemnitee, and subject to the limitations contained in Sections 2(c) and 2(d), the Company shall advance, to the fullest extent permitted by applicable law, any and all Expenses incurred by Indemnitee (an “Expense Advance”). The Company, in its sole discretion, shall, in accordance with such request (but without duplication), either (i) pay such Expenses on behalf of Indemnitee, or (ii) reimburse Indemnitee for such Expenses within thirty (30) days of receiving invoices or other documentation itemizing the Expenses incurred. Subject to the limitations contained in Sections 2(c) and 2(d), Indemnitee’s right to an Expense Advance is absolute and shall not be subject to any prior determination by the Reviewing Party or any other person, that the Indemnitee has satisfied any applicable standard of conduct for indemnification. In making any request for an Expense Advance, Indemnitee shall submit to the Company a schedule setting forth in reasonable detail the dollar amount expended or incurred and expected to be expended or incurred. Each such listing shall be supported by the bill, agreement, or other documentation relating thereto, each of which shall be appended to the schedule as an exhibit.

			

 

	 	
			(c)

				
			Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification or an Expense Advance pursuant to this Agreement in connection with any Claim initiated by Indemnitee unless (i) the Company has joined in or the Board of Directors has authorized or consented to the initiation of such Claim or (ii) the Claim is one to enforce Indemnitee’s rights under this Agreement.

			

 

4

 

 

	 	
			(d)

				
			Notwithstanding anything in this Agreement to the contrary, (i) the indemnification obligations of the Company under Section 2(a) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 2(b) shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid (it being understood and agreed that the foregoing agreement by Indemnitee shall be deemed to satisfy any requirement that Indemnitee provide the Company with an undertaking to repay any Expense Advance if it is ultimately determined that the Indemnitee is not entitled to indemnification under applicable law); provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee’s undertaking to repay such Expense Advances shall be unsecured and interest-free. If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control, the Reviewing Party shall be the Independent Legal Counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld). If there has been no determination by the Reviewing Party within thirty (30) days after written demand is presented to the Company or if the Reviewing Party determines that Indemnitee would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in accordance with this Agreement seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.

			

 

	
			3.

				
			Change in Control. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and any Expense Advance under this Agreement or any other agreement or the Articles, now or later in effect, relating to Claims for Indemnifiable Events, the Company shall seek legal advice only from Independent Legal Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

			

 

	
			4.

				
			Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys’ fees) and, if requested by Indemnitee, shall advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or the Articles, now or later in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors and officers liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment, or insurance recovery, as the case may be.

			

 

5

 

 

	
			5.

				
			Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines, penalties, and amounts paid in settlement of a Claim but not, however, for all of the total amount of the Claim, the Company shall nevertheless indemnify Indemnitee for the portion of the Claim to which Indemnitee is entitled. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter related to an Indemnifiable Event, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

			

 

	
			6.

				
			Burden of Proof. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder the Reviewing Party or court shall presume that the Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the burden of proof shall be on the Company to establish, by a preponderance of the evidence, that Indemnitee is not so entitled.

			

 

	
			7.

				
			Reliance. For purposes of this Agreement, Indemnitee shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company if Indemnitee’s actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to Indemnitee by the officers or employees of the Company in the course of their duties, or by committees of the Board of Directors, or by any other person (including legal counsel, accountants, consultants and financial advisors) as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any other director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnity hereunder.

			

 

	
			8.

				
			No Presumptions. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding by judgment, order, settlement (whether with or without court approval), or conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Company (including, without limitation, the Board of Directors, any committee of the Board of Directors, legal counsel, or the stockholders) to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Company (including, without limitation, the Board of Directors, any committee of the Board of Directors, legal counsel, or the stockholders) that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief.

			

 

6

 

 

	
			9.

				
			Nonexclusivity. The rights of the Indemnitee under this Agreement shall be in addition to any other rights that Indemnitee may have under the Articles (or under such other law as may be applicable pursuant to the second sentence of Section 19). To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Articles or this Agreement, it is the intent of the Company and Indemnitee that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.

			

 

	
			10.

				
			Amendments; Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by the Company and Indemnitee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement, nor shall such waiver constitute a continuing waiver.

			

 

	
			11.

				
			Insurance and Subrogation.

			

 

	 	
			(a)

				
			To the extent the Company or an Affiliate of the Company maintains an insurance policy or policies providing directors and officers liability insurance, Indemnitee shall be covered by such policy or policies in accordance with its or their terms and to the maximum extent of the coverage available for any Company or Affiliate director or officer.

			

 

	 	
			(b)

				
			The Company represents that it presently has in force and effect directors and officers liability insurance on behalf of Indemnitee against certain customary liabilities which may be asserted against or incurred by Indemnitee. The Company hereby agrees that, so long as Indemnitee shall continue to serve as a director or officer, and thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Indemnitee served as an officer or director, the Company shall purchase and maintain in effect for the benefit of Indemnitee such insurance providing (a) coverage at least comparable to that presently provided or (b) if such coverage is hereafter changed to provide any enhanced rights or benefits, the same coverage provided to the most favorably insured of the Company’s directors or officers; provided, however, if, the then Board of Directors determines in good faith that, either (x) the premium cost for such insurance is substantially disproportionate to the amount of coverage, or (y) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance, then and in that event, the Company shall not be required to maintain such insurance; provided further, however, that if, after a Change in Control, the Board of Directors determines that the Company shall not be required to maintain such insurance, the Company shall be required to purchase a “tail” policy which (i) has an effective term of six (6) years from a Change in Control, (ii) covers Indemnitee for actions and omissions occurring on or prior to the date of the Change in Control, (iii) contains terms and conditions that are, in the aggregate, no less favorable to Indemnitee than those of the Indemnitee immediately prior to the Change in Control. The Company shall promptly notify Indemnitee of any good faith determination to reduce or not provide such coverage.

			

 

7

 

 

	 	
			(c)

				
			In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be reasonably necessary to secure such rights, including the execution of such documents reasonably necessary to enable the Company effectively to bring suit to enforce such rights.

			

 

	
			12.

				
			No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy provision of the Certificate of Incorporation, By-law or otherwise) of the amounts otherwise indemnifiable under this Agreement.

			

 

	
			13.

				
			Defense of Claims. The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event or, in its sole discretion, to assume the defense of such Claim, with counsel reasonably satisfactory to the Indemnitee; provided, however, that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that (i) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict of interest, (ii) the named parties in any such Claim (including any impleaded parties) include both the Company and Indemnitee and Indemnitee concludes that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company, or (iii) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Claim) at the Company’s expense. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any Claim relating to an Indemnifiable Event effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any Claim relating to an Indemnifiable Event which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of Indemnitee from all liability on all claims that are the subject matter of such Claim. Neither the Company nor Indemnitee shall unreasonably withhold its or his or her consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee.

			

 

	
			14.

				
			Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, executors, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director or officer of the Company or of any other enterprise at the Company’s request. The Company shall require and cause any successor to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee and his or her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

			

 

8

 

 

	
			15.

				
			Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of the remaining provisions of this Agreement shall not be in any way impaired and shall remain enforceable to the fullest extent permitted by law.

			

 

	
			16.

				
			Service of Process and Venue. Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the state or federal courts located in the State of Delaware, including the Delaware Court of Chancery, in the event any dispute arises out of this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that it will not bring any action relating to this Agreement in any court other than the state or federal courts located in the State of Delaware, unless under applicable law exclusive jurisdiction over such matter is vested in another jurisdiction within the United States or Canada, and (iv) consents to service being made through the notice procedures set forth in Section 17. Each of the parties hereto hereby agrees that service of any process, summons, notice or document by U.S. certified mail, return receipt requested, to the respective addresses set forth in Section 17 shall be effective service of process for any suit or proceeding in connection with this Agreement.

			

 

	
			17.

				
			Form and Delivery of Communications. Any notice, request or other communication required or permitted to be given to the parties under this Agreement shall be in writing and either delivered in person or sent by telecopy, overnight mail or courier service, or certified or registered mail, return receipt requested, postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified from time to time by such party by like notice):

			

 

If to the Company:

 

DiaMedica Therapeutics, Inc.

c/o DiaMedica USA, Inc.

Two Carlson Parkway, Suite 265

Minneapolis, MN 55447

Attn: Corporate Secretary

Facsimile: 763-710-44556

 

If to Indemnitee, to the address set forth below Indemnitee’s name on the signature page hereto.

 

9

 

 

	
			18.

				
			Supersedes Prior Agreement. This Agreement supersedes any prior indemnification agreement between Indemnitee and the Company or its predecessors; provided, however, that this Agreement does not supersede or modify any prior agreement between Indemnitee and Company.

			

 

	
			19.

				
			Governing Law. This Agreement shall be governed exclusively by and construed according to the substantive laws of the Province of British Columbia, without regard to conflicts-of-laws principles that would require the application of any other law. If a court of competent jurisdiction shall make a final determination that the provisions of the law of any other jurisdiction govern indemnification by the Company of its officers and directors, then the indemnification provided under this Agreement shall in all instances be enforceable to the fullest extent permitted under such law, notwithstanding any provision of this Agreement to the contrary.

			

 

	
			20.

				
			Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.

			

 

	
			21.

				
			No Right to Continue Employment or Service. Nothing in this Agreement is intended to create in Indemnitee any right to employment or continued employment or to continue in the service of the Company or any Affiliate.

			

 

	
			22.

				
			Counterparts. This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

			

 

	
			23.

				
			Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements between the parties, whether written or oral, with respect to the subject matter hereof, except as provided in Section 18.

			

 

10

 

 

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

 

 

	 	DIAMEDICA THERAPEUTICS INC.
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	By:	 	 	 	 
	 	Name:	 	 
	 	Title:	 	 	 

 

 

	 	INDEMNITEE:
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	By:	 	 	 	 
	 	Name:	 	 
	 	Title:	 	 	 
	 	 	 
	 	Address for Notices:	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	Facsimile:	 
	 	 	 
	 	 	 
	 	 	 

 

11Exhibit 10.1

 

SECURITIES PURCHASE
AGREEMENT

Convertible Promissory
Notes and

Stock Purchase Warrants

 

THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of _____________, 2019 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 ($400,000) 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 $0.15 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 $0.15
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.

 

 

 

 

 

    	 	1	 

     

    

 

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:

 

(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.

 

 

 

 

 

    	 	2	 

     

    

 

(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.

 

(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.

 

 

 

 

 

    	 	3	 

     

    

 

(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.

 

(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.

 

 

 

 

    	 	4	 

     

    

 

(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.

 

 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.

 

 

 

 

    	 	5	 

     

    

 

 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 June 4, 2019
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.

 

(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 $400,000
or (ii) on or before June 4, 2019, 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.

 

 

 

 

    	 	6	 

     

    

 

(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.

 

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.

 

 

 

 

 

    	 	7	 

     

    

 

(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]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	8	 

     

    

 

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
	 	 

 

 

 

 

 

    	 	9	 

     

    

 

 

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.

 

	$__________	_____________, 2019 (“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.

 

 

 

 

 

    	 	10	 

     

    

 

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.

 

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 $0.15 (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.

 

 

 

 

 

    	 	11	 

     

    

 

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.

 

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.

 

 

 

 

 

    	 	12	 

     

    

 

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.

 

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. 

 

 

 

 

 

 

 

 

    	 	13	 

     

    

 

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

 

 

 

 

    	 	14	 

     

    

 

 

 

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.

 

 

 

 

    	 	15	 

     

    

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. ______	______________, 2019

 

 

QS ENERGY, INC.

WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:00 P.M. (Pacific Time) ON
______________, 2020

 

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 $0.15 (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.

  

 

 

 

 

    	 	16	 

     

    

 

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.

 

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.

 

 

 

 

    	 	17	 

     

    

 

(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.

 

(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.

 

 

 

 

 

    	 	18	 

     

    

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	19	 

     

    

 

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”)[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 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)

 

__________________________

 

[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.

 

 

 

 

    	 	20

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