Document:

EXHIBIT 10.2

  

NOTICE
OF EXCHANGE 

 

(To
be Executed by the Registered Holder in Order to Exchange the Series O-1 Note and

Series O-1 Warrant for the Series O-2 Note and Series
O-2 Warrant)

 

FROM:
_________________________________________________________________________________(“Holder”)

 

	RE:	 	Exchange of the Series O-1 Promissory Note (“Series O-1 Note”) and Series O-1
    Common Stock Purchase Warrant (“Series O-1 Warrant”) issued by QuantumSphere, Inc. (“Company”)
    to Holder on May 28, 2015

 

The
Holder hereby elects to exchange all outstanding principal and accrued interest represented by the Series O-1 Note for the securities
comprising the Series O-2 round (i.e., Series O-2 Note and Series O-2 Warrant as set forth in Exhibit A attached hereto). The
Holder acknowledges and agrees that (i) the exchange will occur on the date of the initial closing of the Series O-2 round, (ii)
interest on the Series O-1 Note shall accrue through the date of the initial closing of the Series O-2 round, and (iii) the calculation
of the amount of accrued interest on the Series O-1 Note will be provided to Holder in writing on or before the date of the initial
closing of the Series O-2 round for purposes of determining the original principal amount of the Series O-2 Note and the number
of shares underlying the Series O-2 Warrant.

 

For
the avoidance of doubt, Holder will be required to (i) return the original Series O-1 Note for cancellation, and (ii) Series O-1
Common Stock Purchase Warrant for cancellation, each of which shall occur simultaneous with the issuance of the new Series O-2
Note and Series O-2 Warrant.

 

IN
WITNESS WHEREOF, the Holder has executed this Notice of Exchange effective as fo the date set forth below.

 

	By:	 	 	Date:	 
		 	 	 	 
	Name:	 	 	 	 

 

	Title
    (if applicable):	 	 	 	 

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

EXHIBIT
A

 

SERIES
O-2 TERM SHEET

 

	Borrower:	QuantumSphere,
                                         Inc., a Nevada corporation (“QSI” or the “Company”)

        

	 	 
	Lenders:   	Accredited
    Investors only (collectively, “Lenders”)
	 	 
	Offering
    (Min/Max):	Minimum:
                                         One Million Dollars ($1,000,000) (“Minimum Offering”)

        Maximum:
        Three Million Dollars ($3,000,000) ( “Maximum Offering”)

        

	 	 
	Minimum
    Investment:	Twenty-Five
                                         Thousand Dollars ($25,000) 

	 	 
	Form
    of Securities:	10%
    Subordinated Convertible Promissory Notes (“Notes”) with detachable common stock purchase warrants
    (“Warrants”).
	 	 
	Security:	The
    Notes shall be secured by all of the assets of QSI, including, without limitation, all tangible and intangible assets (collectively,
    the “Assets”). Novus Capital Group, LLC (“Novus”) is the Company’s
    senior secured lender as evidenced by that certain Loan and Security Agreement between Novus and QSI dated June 18, 2014.
    Lenders will receive a security interest (the “Security Interest”) in the Assets of QSI, junior,
    or subordinated, to the senior security interest of Novus, and pari passu to the convertible noteholders who collectively
    purchased $510,000 of convertible notes from QSI on May 28, 2015. The Security Interest in the Assets will be evidenced by
    a security agreement, and financing statement on Form UCC-1 filed with the Secretary of State of California.
	 	 
	Maturity:	The
    Maturity Date shall be the earlier of (i) one (1) year from the date of issuance of the Notes, or (ii) closing of an
    equity financing of Four Million Dollars ($4,000,000) or more (“Qualifying Equity Financing”).
	 	 
	Interest:	The
    Notes shall bear simple interest at the rate of 10% per annum. The default interest rate shall be eighteen percent (18%) per
    annum. All interest shall accrue and be payable at maturity in the form of either, (i) cash, in the event a Qualifying
    Equity Financing has not occurred prior to the one (1) year anniversary of the Notes, or (ii) common stock, if a Qualifying
    Equity Financing has occurred prior to the one (1) year anniversary of the Notes, with such conversion on the terms outlined
    herein.
	 	 
	Warrants:	Lenders
    shall be issued warrants to purchase common stock (“Warrants”) equal to100% of the face value of
    the Notes based upon an exercise price (the “Exercise Price”) of $3.00 per share. The Warrants shall
    be exercisable for a period of five (5) years. For illustration purposes only, assuming an investment of $150,000, and an
    Exercise Price of $3.00 per share, the Lender would receive a warrant to purchase 50,000 shares of common stock, exercisable
    at $3.00 per share for a period of five (5) years. The shares of common stock issued upon exercise of the Warrants shall be
    referred to as Registrable Securities herein.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

	Warrant
                                         - Call Provision

         
	The
    Warrants may be called by the Company upon the common stock of the Company having an average closing bid price of $3.60 per
    share over ten (10) consecutive trading days. Upon the Company calling the Warrants, the Warrant holders shall have a period
    of thirty (30) days to exercise their respective Warrants. In the event the Warrants are not exercised, then in such event
    the Company may redeem the Warrants, in whole or in part, at a redemption price equal to $0.01 per share of common stock underlying
    the Warrants (the “Redemption”).
	 	 
	Conversion:	All
    outstanding principal and accrued interest under the Notes will be automatically converted into shares of common stock
    of the Company at the closing of a Qualifying Equity Offering based upon a conversion price of $1.60 per share. The outstanding
    principal and accrued interest may be voluntarily converted, at the sole discretion of the Lender, at any time prior
    to the close of the Qualifying Equity Offering, in whole or in part, at a conversion price of $1.60 per share as well. The
    shares of common stock issued upon conversion of the Notes shall be referred to as Registrable Securities herein.
	 	 
	Make
    Good Provision	In
    the event that, prior to the closing of a Qualifying Equity Financing, the Company elects to undertake another convertible
    debt financing on terms more favorable to the terms set forth herein, then the terms hereof shall be modified to reflect the
    more favorable convertible debt financing terms.
	 	 
	Use
    of Proceeds	The
    proceeds of the Offering shall be used to fund (i) capital expenditures relating to catalyst manufacturing equipment and ancillary
    equipment for existing reactors, (ii) production of additional QSI-Nano iron catalysts for follow-on commercial validations
    and potential purchase orders, and (iii) working capital for general corporate purposes.
	 	 
	Capital
    Structure:	As
    of the date of this Term Sheet, QSI has the following issued and outstanding shares of common stock: (i) 22,511,884 shares
    of common stock, $0.001 par value.
	 	 
	Piggyback
    Registration Rights:	Lenders
    will receive unlimited piggyback registration rights with respect to all equity securities issued in conjunction with (i)
    the conversion of the Notes (if applicable), and (ii) the exercise of Warrants. The foregoing securities are referred to herein
    as the “Registrable Securities.” With respect to any future registration statement, filed on Form S-1 or S-3 (collectively,
    the “Registration Statement”) with the Securities and Exchange Commission for the purpose of registering
    the Registrable Securities along with other securities of the Company in the future, the Company shall keep such Registration
    Statement effective for a period equal to the later of the following: (a) the sale of all shares of common stock issued upon
    the conversion of the Notes and (b) the sale of all shares issued upon exercise of the Warrants. The Company shall comply
    with all Federal and state laws or regulations necessary for the holders of Registrable Securities to effect a sale or disposition
    of Registrable Securities. The Company shall pay all expenses of registration. All selling expenses shall be borne exclusively
    by the holders of Registrable Securities.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

	Disclosure
    Documents:	The
    Company is utilizing the following public filings made with the SEC pursuant to its reporting obligations under the Securities
    Exchange Act of 1934, as amended, as its disclosure documents:
	 	 
	 	(i)
                                         Transition Report on Form 10-KT, as filed on September 26, 2014;

        (ii)
        Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, as filed on November 14, 2014;

        (iii)
        Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2014, as filed on February 17, 2015;

        (iv)
        Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015, as filed on May 14, 2015; and

        (v)
        Annual Report on Form 10-K for the annual period ended June 30, 2015, as filed on September 28, 2015.

	 	 
	Transaction
    Documents:	The
                                         following will comprise the transaction documents for the Offering:

        (i)
        Term Sheet;

        (ii)
        Note Purchase Agreement;

        (iii)
        10% Subordinated Convertible Promissory Note;

        (iv)
        Security Agreement;

        (v)
        Common Stock Purchase Warrant;

        (vi)
        Intercreditor Agreement; and

        (vii)
        Registration Rights Agreement.

	 	 
	Accredited
                                         Investors Only:

         
	The
    Notes and Warrants may be purchased by accredited investors only as that term is defined in Rule 501 of Regulation D, promulgated
    under The Securities Act of 1933, as amended. All investors in the Offering will be required to make a written representation
    that they satisfy the accredited investor requirements set forth thereunder.
	 	 
	Governing
    Law:	The
    Notes and the Warrants will be governed by, and construed under, the laws of State of Nevada, without giving effect to applicable
    principles of conflict of laws, to the extent that the application of the laws of another jurisdiction would be required thereby.
	 	 
	Closings:	The
                                         Company may hold an initial closings upon achieving the Minimum Offering (“Initial
                                         Closing”), and follow-on closings at any time through November 13, 2015 (the “Final
                                         Closing”), subject to the Company’s right to extend the Offering for up to
                                         an additional thirty (30) days. The Company will maintain an escrow account for all subscriptions
                                         received in the Offering.

         

	Confidentiality:

         

         
	The
                                         investment by Lenders shall be held confidential by the Company at all times. The Company
                                         will not distribute or disclose the foregoing other than to its employees, officers,
                                         directors, legal advisors and auditors, as applicable, each of whom shall be subject
                                         to the foregoing terms of confidentiality. The Company will disclose the offering, or
                                         as may be required by state or Federal securities laws at Closing. 

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.comEXHIBIT 10.3

 

 

 

	 	Gregory
    L. Hrncir
	 	Chief
    Strategy Officer
	 	Office:
    714.545.6266 
	 	E-mail:
    ghrncir@qsinano.com

 

November
5, 2015

 

Re:
Exchange Offer

 

Dear
_____________,

 

Thank
you for your investment in the QuantumSphere, Inc. (“QSI”) promissory notes offering (“Notes Offering”)
in the third quarter of 2015. We greatly appreciate your support of QSI and the Notes Offering provided us runway capital to achieve
some of our objectives over the last few months.

 

As
you may be aware, we are presently undertaking a convertible promissory note and common stock purchase warrant financing round
(“Series O-2”), the terms of which are attached hereto as Appendix A, for purposes of securing additional capital
to meet additional stated goals and objectives.

 

At
this time, we would like to offer you the opportunity to exchange the promissory note (“Note”) issued to you in the
Notes Offering for a convertible promissory note (“Convertible Note”) and a common stock purchase warrant (“Warrant”)
on the terms of the Series O-2 financing set forth in Appendix A. You are under no obligation to accept the exchange offer and
if you decline the exchange offer, we will pay you the outstanding principal and accrued interest as of the date of closing of
the Series O-2 round.

 

Specifically,
the exchange offer consists of the following:

 

	 	(i)	All
    principal and accrued interest represented by your Note issued to you in the Notes Offering would be exchanged for a newly
    issued convertible promissory note (“Series O-2 Note”) on the terms set forth in Appendix A. For illustration
    purposes only, if the original principal amount of your Note is $50,000 and you have accrued $15,000 of interest as of the
    exchange date, then you would receive a Series O-2 Note in the original principal amount of $65,000. The Note issued to you
    in the Notes Offering would be cancelled simultaneous with the issuance of the Series O-2 Note; and
	 	 	 
	 	(ii)	In
    addition to the above, all principal and accrued interest represented by your Note would be counted towards the number of
    warrants issued to you should you decide to accept the exchange offer. Assuming the above illustration, the $65,000 in original
    principal and accrued interest would result in the issuance of a common stock purchase warrant (“Series O-2 Warrant”)
    to purchase $65,000 of common stock of QSI at an exercise price of $3.00 per share, and exercisable for a period of five (5)
    years from the date of issuance. Based on the foregoing illustration, you would receive a Series O-2 warrant to purchase 21,667
    shares (i.e., $65,000/$3.00) of common stock, exercisable at $3.00 per share for a period of five (5) years.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

Page
2

Re:
Exchange Offer

November
5, 2015

 

	 	 	The
    key terms of the Series O-2 financing round are as follows:
	 	 	 
	 	(a)	Term
    of Note - Maturity Date. The Series O-2 Notes mature upon the earlier of (i) one (1) year from the date of issuance, or
    (ii) closing of an equity financing of Four Million Dollars ($4,000,000) or more (a “Qualifying Equity Financing”);
	 	 	 
	 	(b)	Security
    Interest. The Series O-2 Note is secured by the assets of QSI, junior in priority only to the senior note of Novus Capital,
    which presently represents $438,000 in outstanding principal and interest, and equal in priority to the convertible note holders
    who invested in the QSI Series O-1 round in May 2015 in the collective original principal amount of $510,000. The junior security
    interest to be provided to all Series O-2 round participants will be evidenced by a Financing Statement on Form UCC-1 filed
    with the California Secretary of State for purposes of perfecting the holder’s junior security interest in the assets
    of QSI;
	 	 	 
	 	(c)	Interest
    Accrual. Simple interest on the Series O-2 Note accrues at the rate of ten percent (10%) per annum;
	 	 	 
	 	(d)	Conversion
    Terms. All outstanding principal and accrued interest represented by the Series O-2 Notes may be converted into common
    stock, either (i) voluntarily by the holder at any time at a price of $1.60 per share, or (ii) automatically at a price of
    $1.60 per share upon the close of a Qualifying Equity Offering of $4,000,000 or more;
	 	 	 
	 	(e)	Warrant
    – Call Feature. The Series O-2 Warrants may be called by QSI if the closing bid price of QSI common stock is $3.60
    or higher for ten (10) consecutive trading days;
	 	 	 
	 	(f)	Registration
    Rights. Participants in the Series O-2 round will receive unlimited piggy-back registration rights with respect to (i)
    the shares of common stock issued upon conversion of the Series O-2 Note, and (ii) the shares of common stock underlying the
    Series O-2 Warrant; and
	 	 	 
	 	(g)	Make-Good
    Provision. In the event that, prior to the closing of a Qualifying Equity Financing, the Company elects to undertake another
    convertible debt financing on terms more favorable to the terms of the Series O-2 round, then in such event the Series O-2
    terms shall be modified to reflect the more favorable convertible debt financing terms.

 

Please
confer with your legal, financial, tax and other advisors for purposes of making the best decision for your circumstances and
investment objectives.

 

We
need a response from you in writing on or before the close of business on Friday, November 13, 2015, either to accept or decline
the above exchange offer. If you desire to accept the exchange offer, please complete and execute the Notice of Conversion attached
hereto as Appendix B and return it to Stephanie Hargis at shargis@qsinano.com.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

Page
3

Re:
Exchange Offer

November
5, 2015

 

We
will calculate the interest accrual on your Note through the close date of the Series O-2 round to determine:

 

(x)
Should you accept the exchange offer, the original principal amount of your Series O-2 Note and the number of shares represented
by your Series O-2 Warrant; or

 

(y)
Should you decline the exchange offer, the repayment amount.

 

Thank
you again for your investment in, and support of, QuantumSphere, Inc. If you have any questions please feel free to contact me
anytime at 818.400.5930.

 

	Very
    truly yours,	 
	 	 
	/s/
    Gregory L. Hrncir	 
	Gregory
    L. Hrncir	 
	Chief
    Strategy Officer	 

 

cc:
Kevin Maloney

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

APPENDIX
A

 

SERIES
O-2 TERM SHEET

 

	Borrower:	QuantumSphere,
    Inc., a Nevada corporation (“QSI” or the “Company”)
	 	 
	Lenders:	Accredited
    Investors only (collectively, “Lenders”)
	 	 
	Offering
    (Min/Max):	Minimum:
    One Million Dollars ($1,000,000) (“Minimum Offering”)
	 	Maximum:
    Three Million Dollars ($3,000,000) (“Maximum Offering”)
	 	 
	Minimum
    Investment:	Twenty-Five
    Thousand Dollars ($25,000)
	 	 
	Form
                                         of Securities:

         
	10%
                                         Subordinated Convertible Promissory Notes (“Notes”) with detachable
                                         common stock purchase warrants (“Warrants”).

	 	 
	Security:
    	The
                                         Notes shall be secured by all of the assets of QSI, including, without limitation, all
                                         tangible and intangible assets (collectively, the “Assets”).
                                         Novus Capital Group, LLC (“Novus”) is the Company’s senior
                                         secured lender as evidenced by that certain Loan and Security Agreement between Novus
                                         and QSI dated June 18, 2014. Lenders will receive a security interest (the “Security
                                         Interest”) in the Assets of QSI, junior, or subordinated, to the senior
                                         security interest of Novus, and pari passu to the convertible noteholders who collectively
                                         purchased $510,000 of convertible notes from QSI on May 28, 2015. The Security Interest
                                         in the Assets will be evidenced by a security agreement, and financing statement on Form
                                         UCC-1 filed with the Secretary of State of California. 

	 	 
	Maturity:	The
                                         Maturity Date shall be the earlier of (i) one (1) year from the date of issuance
                                         of the Notes, or (ii) closing of an equity financing of Four Million Dollars ($4,000,000)
                                         or more (“Qualifying Equity Financing”). 

	 	 
	Interest:	The
                                         Notes shall bear simple interest at the rate of 10% per annum. The default interest rate
                                         shall be eighteen percent (18%) per annum. All interest shall accrue and be payable at
                                         maturity in the form of either, (i) cash, in the event a Qualifying Equity Financing
                                         has not occurred prior to the one (1) year anniversary of the Notes, or (ii) common
                                         stock, if a Qualifying Equity Financing has occurred prior to the one (1) year anniversary
                                         of the Notes, with such conversion on the terms outlined herein. 

	 	 
	Warrants:	Lenders
    shall be issued warrants to purchase common stock (“Warrants”) equal to100% of the face value of
    the Notes based upon an exercise price (the “Exercise Price”) of $3.00 per share. The Warrants shall
    be exercisable for a period of five (5) years. For illustration purposes only, assuming an investment of $150,000, and an
    Exercise Price of $3.00 per share, the Lender would receive a warrant to purchase 50,000 shares of common stock, exercisable
    at $3.00 per share for a period of five (5) years. The shares of common stock issued upon exercise of the Warrants shall be
    referred to as Registrable Securities herein.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

	Warrant
    - Call Provision	The
    Warrants may be called by the Company upon the common stock of the Company having an average closing bid price of $3.60 per
    share over ten (10) consecutive trading days. Upon the Company calling the Warrants, the Warrant holders shall have a period
    of thirty (30) days to exercise their respective Warrants. In the event the Warrants are not exercised, then in such event
    the Company may redeem the Warrants, in whole or in part, at a redemption price equal to $0.01 per share of common stock underlying
    the Warrants (the “Redemption”).
	 	 
	Conversion:

         
	All
    outstanding principal and accrued interest under the Notes will be automatically converted into shares of common stock
    of the Company at the closing of a Qualifying Equity Offering based upon a conversion price of $1.60 per share. The outstanding
    principal and accrued interest may be voluntarily converted, at the sole discretion of the Lender, at any time prior
    to the close of the Qualifying Equity Offering, in whole or in part, at a conversion price of $1.60 per share as well. The
    shares of common stock issued upon conversion of the Notes shall be referred to as Registrable Securities herein.
	 	 
	Make
    Good Provision	In
    the event that, prior to the closing of a Qualifying Equity Financing, the Company elects to undertake another convertible
    debt financing on terms more favorable to the terms set forth herein, then the terms hereof shall be modified to reflect the
    more favorable convertible debt financing terms.
	 	 
	Use
    of Proceeds	The
    proceeds of the Offering shall be used to fund (i) capital expenditures relating to catalyst manufacturing equipment and ancillary
    equipment for existing reactors, (ii) production of additional QSI-Nano iron catalysts for follow-on commercial validations
    and potential purchase orders, and (iii) working capital for general corporate purposes.
	 	 
	Capital
    Structure:	As
    of the date of this Term Sheet, QSI has the following issued and outstanding shares of common stock: (i) 22,411,884 shares
    of common stock, $0.001 par value.
	 	 
	Piggyback
    Registration Rights:	Lenders
    will receive unlimited piggyback registration rights with respect to all equity securities issued in conjunction with (i)
    the conversion of the Notes (if applicable), and (ii) the exercise of Warrants. The foregoing securities are referred to herein
    as the “Registrable Securities.” With respect to any future registration statement, filed on Form S-1 or S-3 (collectively,
    the “Registration Statement”) with the Securities and Exchange Commission for the purpose of registering
    the Registrable Securities along with other securities of the Company in the future, the Company shall keep such Registration
    Statement effective for a period equal to the later of the following: (a) the sale of all shares of common stock issued upon
    the conversion of the Notes and (b) the sale of all shares issued upon exercise of the Warrants. The Company shall comply
    with all Federal and state laws or regulations necessary for the holders of Registrable Securities to effect a sale or disposition
    of Registrable Securities. The Company shall pay all expenses of registration. All selling expenses shall be borne exclusively
    by the holders of Registrable Securities.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

 

    	 

    	 

    

 

	Disclosure
    Documents:	The
    Company is utilizing the following public filings made with the SEC pursuant to its reporting obligations under the Securities
    Exchange Act of 1934, as amended, as its disclosure documents:

 

	 	(i)	Transition
    Report on Form 10-KT, as filed on September 26, 2014;
	 	 	 
	 	(ii)	Quarterly
    Report on Form 10-Q for the quarterly period ended September 30, 2014, as filed on November 14, 2014;
	 	 	 
	 	(iii)	Quarterly
    Report on Form 10-Q for the quarterly period ended December 31, 2014, as filed on February 17, 2015;
	 	 	 
	 	(iv)	Quarterly
    Report on Form 10-Q for the quarterly period ended March 31, 2015, as filed on May 14, 2015; and
	 	 	 
	 	(v)	Annual
    Report on Form 10-K for the annual period ended June 30, 2015, as filed on September 28, 2015.

 

	Transaction
    Documents:	The
    following will comprise the transaction documents for the Offering:

 

	 	(i)	Term
    Sheet;
	 	 	 
	 	(ii)	Note
    Purchase Agreement;
	 	 	 
	 	(iii)	10%
    Subordinated Convertible Promissory Note;
	 	 	 
	 	(iv)	Security
    Agreement;
	 	 	 
	 	(v)	Common
    Stock Purchase Warrant;
	 	 	 
	 	(vi)	Intercreditor
    Agreement; and
	 	 	 
	 	(vii)	Registration
    Rights Agreement.

 

	Accredited
    Investors Only:	The
    Notes and Warrants may be purchased by accredited investors only as that term is defined in Rule 501 of Regulation D, promulgated
    under The Securities Act of 1933, as amended. All investors in the Offering will be required to make a written representation
    that they satisfy the accredited investor requirements set forth thereunder.
	 	 
	Governing
    Law:	The
    Notes and the Warrants will be governed by, and construed under, the laws of State of Nevada, without giving effect to applicable
    principles of conflict of laws, to the extent that the application of the laws of another jurisdiction would be required thereby.
	 	 
	Closings:	The
    Company may hold an initial closings upon achieving the Minimum Offering (“Initial Closing”), and
    follow-on closings at any time through October 31, 2015 (the “Final Closing”), subject to the Company’s
    right to extend the Offering for up to an additional fifteen (15) days. The Company will maintain an escrow account for all
    subscriptions received in the Offering.
	 	 
	Confidentiality:	The
    investment by Lenders shall be held confidential by the Company at all times. The Company will not distribute or disclose
    the foregoing other than to its employees, officers, directors, legal advisors and auditors, as applicable, each of whom shall
    be subject to the foregoing terms of confidentiality. The Company will disclose the offering, or as may be required by state
    or Federal securities laws at Closing.

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

 

    	 

    	 

    

 

APPENDIX
B

 

NOTICE
OF EXCHANGE

 

(To
be Executed by the Registered Holder in Order to Exchange the Note)

 

FROM:
____________________________________________________ (“Holder”)

 

DATE:
____________________________________________________

 

	RE:	Exchange
    of the Promissory Note (“Note”) issued by QuantumSphere, Inc. (“Company”) to Holder

 

The
Holder hereby elects to exchange all outstanding principal and accrued interest represented by the Note into the securities comprising
the Series O-2 round (i.e., Series O-2 Note and Series O-2 Warrant). The Holder acknowledges and agrees that (i) the exchange
will occur on the date of the initial closing of Series O-2 round, (ii) interest on the Note shall accrue through the date of
the initial closing of the Series O-2 round, and (iii) the calculation of the amount of accrued interest on the Note will be provided
to Holder in writing on or before the date of the initial closing of the Series O-2 round for purposes of determining the original
principal amount of the Series O-2 Note and the number of shares underlying the Series O-2 Warrant.

 

	 	 
	 	Signature
	 	 
	 	 
	 	Print
    Name

 

IMPROVING
CHEMICAL EFFICIENCIES WITH ADVANCED TECHNOLOGIES

 

2905
Tech Center Drive, Santa Ana, CA 92705 ● Ph: 714-545-6266 ● Fax: 714-545-6265 ● www.qsinano.com

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00252-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00252-of-00352.parquet"}]]