Document:

REGISTRATION
RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS
AGREEMENT (the “Agreement”) is dated April 23, 2012 by and between QuantumSphere, Inc., a California corporation (the
“Company”), and ____________________ (the “Investor”).

 

RECITALS

 

WHEREAS, to
induce the Investor to invest in the Offering described in the accompanying subscription agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “Securities Act”), and applicable state securities laws.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

 

AGREEMENT

 

1.           DEFINITIONS.

 

As used in this Agreement, the following
terms shall have the following meanings:

 

a.           “Person”
means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.

 

b.           “Register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor
rule providing for offering securities on a continuous or delayed basis (“Rule 415”), and the declaration or ordering
of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the “SEC”).

 

c.           “Registrable
Securities” means shares of common stock issuable to investor upon conversion of the convertible promissory notes in the
Offering (“Shares”), and the shares of common stock issuable upon exercise of the warrants issued to Investor pursuant
to the Offering (“Warrant Shares”).

 

d.           “Registration
Statement” means a registration statement filed with the SEC, pursuant to the Securities Act, that covers the Registrable
Securities.

 

2.           REGISTRATION.

 

a.           Piggyback
Registration Rights. Investor shall be afforded unlimited piggyback registration rights with respect to the Shares and Warrant
Shares. The Company shall notify the Investor in writing no less than fifteen (15) calendar days prior to the filing of any Registration
Statement on Form S-1 or S-3 of its intention to file such registration statement with the Securities and Exchange Commission.
The Investor shall have a period of ten (10) calendar days to notify the Company of its intention to have its Registrable Securities
included in such Registration Statement. 

 

    	 

    	 

    

 

b.           Sufficient
Number of Shares Registered. The number of shares of common stock available under the Registration Statement filed pursuant to
Section 2(a) shall be sufficient to cover all of the Registrable Securities that the Investor has been issued pursuant to the Offering.

 

3.           RELATED
OBLIGATIONS.

 

a.           The
Company shall keep the Registration Statement effective pursuant to Rule 415 at all times until the date on which the Investor
shall have sold all the Registrable Securities covered by such Registration Statement (the “Registration Period”),
which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain
any untrue statement of a material fact or omit to a material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.

 

b.           The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule
424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof
as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required
to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company’s filing a report
on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Company shall have incorporated such report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the Exchange Act report is filed which created the requirement
for the Company to amend or supplement the Registration Statement.

 

c.           The
Company shall furnish to the Investor without charge, (i) at least one (1) copy of such Registration Statement as declared effective
by the SEC and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference,
all exhibits and each preliminary prospectus, (ii) one (1) copy of the final prospectus included in such Registration Statement
and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such
other documents as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

 

d.           The
Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests,
(ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii)
take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition
thereto to (w) make any change to its certificate of incorporation or by-laws, (x) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor of
the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or
its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

    	 

    	 

    

 

e.           As
promptly as practicable after becoming aware of such event or development, the Company shall notify the Investor in writing of
the happening of any event as a result of which the prospectus included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall
such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement
to correct such untrue statement or omission, and deliver one (1) copy of such supplement or amendment to each Investor. The Company
shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness
shall be delivered to the Investor by facsimile on the same day of such effectiveness), (ii) of any request by the SEC for amendments
or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s
reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. 

 

f.            The
Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction within the
United States of America and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such order and the resolution thereof or its receipt
of actual notice of the initiation or threat of any proceeding for such purpose.

 

g.           At
the reasonable request of the Investor, the Company shall furnish to the Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as the Investor may reasonably request (i) a letter, dated such date,
from the Company’s independent certified public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering, if any, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering (if applicable), addressed to the Investor.

 

h.           The
Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information
is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction,
or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement
or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor
is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to
the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, such information.

 

i.            The
Company shall use its best efforts either to cause all the Registrable Securities covered by a Registration Statement (i) to be
listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any,
if the listing of such Registrable Securities is then permitted under the rules of such exchange or to secure the inclusion for
quotation on the Over-The Counter Bulletin Board for such Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(i).

 

    	 

    	 

    

 

j.            The
Company shall cooperate with the Investor to the extent applicable, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement
and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor may reasonably request
and registered in such names as the Investor may request; provided, however, delivery of such certificates shall not be made until
such Registration Statement is declared effective by the SEC and all applicable state securities regulatory agencies. 

 

k.          The
Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.

 

l.            The
Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.

 

m.           Within
two (2) business days after a Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investor) confirmation that such Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit 1.

 

n.           The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.

 

4.           OBLIGATIONS
OF THE INVESTOR.

 

The Investor agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e),
the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until the Investor’s receipt of a copy of the supplemented or amended prospectus contemplated
by Section 3(e) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended certificates for shares of Common Stock to a transferee of the Investor
in accordance with the terms of the Offering in connection with any sale of Registrable Securities with respect to which the Investor
has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any
event of the kind described in Section 3(f) or the first sentence of 3(e) and for which the Investor has not yet settled. All selling
expenses relating to the Registrable Securities shall be borne exclusively by the Investor.

 

5.           EXPENSES
OF REGISTRATION.

 

All expenses incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing
and qualifications fees, printers, legal and accounting fees shall be paid by the Company.

 

6.           INDEMNIFICATION.

 

With respect to Registrable Securities
which are included in a Registration Statement under this Agreement:

 

    	 

    	 

    

 

a.           To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if any, who controls the Investor within the meaning
of the Securities Act or the Exchange Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory
agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification
of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein,
in light of the circumstances under which the statements therein were made, not misleading; or (iii) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law,
or any rule or regulation there under relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement
(the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). The Company shall reimburse
the Investor and each such controlling person promptly as such expenses are incurred and are due and payable, for any legal fees
or disbursements or other reasonable expenses incurred by them in connection with investigating or defending any such Claims. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement thereto; (y) shall not be available to the extent such
Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company,
if such prospectus was timely made available by the Company pursuant to Section 3(e); and (z) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not
be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf
of the Indemnified Person. In connection with a Registration Statement, the Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in this Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (each an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them
may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or is based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by the Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(d), the Investor will reimburse any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained
in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable Securities pursuant
to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained
in this Section 6 with respect to any prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the prospectus was corrected and such new prospectus was delivered to the Investor prior
to the Investor’s use of the prospectus to which the Claim relates.

 

    	 

    	 

    

 

b.           Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall,
if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel
with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between
such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available
to the Indemnified Party or Indemnified Person that relates to such action or claim. The indemnifying party shall keep the Indemnified
Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect
thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.
No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such
claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend
such action.

 

c.           The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

    	 

    	 

    

 

d.           The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject
to pursuant to the law.

 

7.           CONTRIBUTION.

 

To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however,
that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation;
and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received
by such seller from the sale of such Registrable Securities.

 

8.           REPORTS
UNDER THE EXCHANGE ACT.

 

With a view to making available to the
Investor the benefits of Rule 144 promulgated under the Securities Act or any similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public without registration (“Rule 144”) the
Company agrees, upon becoming a publicly reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), to:

 

a.           make
and keep public information available (from the date the Company becomes subject to the periodic reporting requirements of the
Exchange Act), as those terms are understood and defined in Rule 144;

 

b.           file
with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange
Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company’s
obligations under Section 6 hereof) and the filing of such reports and other documents is required for the applicable provisions
of Rule 144; and

 

c.           furnish
to the Investor, so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

 

9.           AMENDMENT
OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively),
only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this Section
9 shall be binding upon the Investor and the Company. No consideration shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the
parties to this Agreement.

 

    	 

    	 

    

 

10.          MISCELLANEOUS.

 

a.           A
Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities.

 

b.           Any
notices, consents, waivers 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 business 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 Company, to:	QuantumSphere, Inc.	 
	 	2905 Tech Center Dr.	 
	 	Santa Ana, CA 92705	 
	 	Attention:  Kevin D. Maloney	 
	 	Facsimile:  (714) 545-6266 	 
	 	 	 
	If to the Investor, to:	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

Any party may change its address by providing
written notice to the other parties hereto at least five (5) days prior to the effective date of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first
page of such transmission, or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

 

c.           Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

 

d.           This
Agreement shall be governed by and construed under the law of the State of California, disregarding any principles of conflicts
of law that would otherwise provide for the application of the substantive law of another jurisdiction. The Company and the Investor
each: (a) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted
exclusively in California, or in the United States District Court, Los Angeles, California; (b) waives any objection to the
venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum; and (c) irrevocably
consents to the jurisdiction of the California State Court, or the United States District Court, Los Angeles, California in any
such suit, action or proceeding. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

    	 

    	 

    

 

e.           The
Agreement, the Subscription Agreement, and the Common Stock Purchase Warrant constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. The foregoing agreements supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

 

f.            This
Agreement shall inure to the benefit of and be binding upon the permitted heirs, personal representatives, successors and assigns
of each of the parties hereto.

 

g.           The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

h.           This
Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

i.            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 consummation of the transactions contemplated hereby.

 

j.            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.

 

k.          This
Agreement is intended for the benefit of the parties hereto and their respective permitted heirs, personal representatives, successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by any other Person.

 

IN WITNESS WHEREOF, the parties have caused
this Registration Rights Agreement to be duly executed as of the date first written above.

 

QUANTUMSPHERE, INC.,

A California Corporation

 

	By:	 	 
	Name:	Kevin D. Maloney	 
	Title:	
        Chief Executive Officer and President

        
	 

 

INVESTOR

 

	By:	 	 
	Name:	 	 

	Title (if applicable):EMPLOYMENT AGREEMENT

 

This
Employment Agreement (this “Agreement”) is made and entered into as of this _______________, by and between
QuantumSphere, Inc., a California corporation (“COMPANY”), and ________________, an individual (“EXECUTIVE”).

 

WITNESSETH:

 

WHEREAS, COMPANY and EXECUTIVE deem it to
be in their respective best interests to enter into an agreement providing for COMPANY's employment of EXECUTIVE pursuant to the
terms herein stated.

 

NOW, THEREFORE, in consideration of the
premises and the mutual promises and agreements contained herein, it is hereby agreed as follows:

 

1.            Term.
COMPANY hereby employs and EXECUTIVE hereby accepts employment with COMPANY for a period of three (3) years beginning on the date
hereof ("Term"). Unless COMPANY or EXECUTIVE provides written notice that this Agreement shall be allowed to expire and
the employment relationship thereby terminated at least thirty (30) days prior to the expiration of the Term or any Renewal Term
(as defined herein), this Agreement shall continue in effect for an additional term of one (1) year ("Renewal Term").

 

2.            Duties
of EXECUTIVE. EXECUTIVE’s position with COMPANY will be ________________________________. EXECUTIVE shall do and perform
all services, acts, or things reasonably necessary or advisable to accomplish the objectives of the COMPANY's __________________________.
COMPANY may assign EXECUTIVE to another position so long as the compensation paid to EXECUTIVE is equal to or greater than the
compensation provided in this Agreement.

 

3.            Devotion
of Time to Company's Business. EXECUTIVE shall be a full-time EXECUTIVE of COMPANY and shall devote such substantial and sufficient
amounts of his productive time, ability, and attention to the business of COMPANY during the Term of this Agreement as may be reasonable
and necessary to accomplish the objectives and complete the tasks assigned to EXECUTIVE. EXECUTIVE may devote reasonable time to
activities other than those required under this Agreement, including activities involving professional, charitable, community,
educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other
organizations and similar types of activities to the extent that such activities do not inhibit or prohibit the performance of
services under this Agreement.

 

4.            Uniqueness
of Services. EXECUTIVE hereby acknowledges that the services to be performed by him under the terms of this Agreement are of a
special and unique value. Accordingly, the obligations of EXECUTIVE under this Agreement are non-assignable.

 

5.            Compensation
of EXECUTIVE.

 

a.           Base
Annual Salary. Subject to other specific provisions in this Agreement, as compensation for services hereunder, EXECUTIVE shall
receive a Base Annual Salary of $____________ payable in accordance with the Company's ordinary payroll practices (and in any event
no less frequently than monthly). On each anniversary date hereof, EXECUTIVE's Base Annual Salary will be reviewed and may be increased
by the COMPANY’S Board of Directors.

 

    	-1-

    	 

    

 

b.           Cash
Bonus. EXECUTIVE shall receive an annual bonus, in an amount to be determined by the COMPANY’s Board of Directors.

 

c.           Business
Expenses. COMPANY will reimburse EXECUTIVE for all reasonable business expenses directly incurred in performing EXECUTIVE's duties
and promoting the business of COMPANY.

 

d.           Vacation.
EXECUTIVE shall be entitled to ________ (__) days per annum of paid time off (PTO) as well as national holidays recognized per
the COMPANY’s employee handbook.

 

6.            Termination
of Employment.

 

a.           Either
party shall have the right to terminate this Agreement upon thirty (30) days written notice to the other. In the event COMPANY
should terminate this Agreement other than for just "Cause" as defined in Section 6(b) below ("termination without
Cause"), COMPANY shall pay to EXECUTIVE the greater of [1] a sum equal to one (1) time EXECUTIVE's Base Salary for the most
recent calendar year or [2] a sum equal to the Base Salary payable to EXECUTIVE over the remaining term of this Agreement. Any
sum payable under this Section 6 shall be paid in full upon the effective date of the termination of the employment relationship
between COMPANY and EXECUTIVE. Upon the expiration of this Agreement without renewal by COMPANY, COMPANY shall pay to EXECUTIVE
a sum equal to EXECUTIVE's Base Salary for the most recent calendar year. Said sum shall be paid in full upon the effective date
of the termination of the employment relationship between COMPANY and EXECUTIVE.

  

b.           COMPANY
shall have the right to terminate EXECUTIVE's employment at any time for Cause by giving EXECUTIVE written notice of the effective
date of Termination. For the purposes of this Agreement, "Cause" shall mean:

 

(1)         Fraud,
misappropriation, embezzlement or any other action of material misconduct against COMPANY or any of its affiliates or subsidiaries;

 

(2)         Substantial
failure to render services in accordance with the provisions of this Agreement, provided that:

 

(i)          a
written demand for performance has been delivered to EXECUTIVE at least ten (10) days prior to termination identifying the manner
in which COMPANY believes that EXECUTIVE has failed to perform; and

 

(ii)         EXECUTIVE
has thereafter failed to remedy such failure to perform;

 

(3)         Material
violation of any law, rule or regulation of any governmental or regulatory body material to the business of COMPANY;

 

(4)         Conviction
or a guilty plea or nolo contendere plea to a felony;

 

(5)         Repeated
and persistent failure to abide by the policies established by COMPANY after written warning from COMPANY;

 

    	-2-

    	 

    

 

(6)         Any
acts of violence or threats of violence made by EXECUTIVE against COMPANY or anyone associated with COMPANY's business;

 

(7)         The
solicitation or acceptance of payment or gratuity from any existing or potential customer or supplier of COMPANY without the prior
written consent of COMPANY's Board of Director’s.

 

(8)         Drug
dependency or habitual insobriety; or

 

(9)         Gross
incompetence.

 

c.           In
the event of termination for cause, EXECUTIVE shall be paid EXECUTIVE's salary through the effective date of termination on the
date of termination. After the effective date of Termination, EXECUTIVE shall not be entitled to accrue or vest in any further
salary, severance pay, benefits, fringe benefits or entitlements except as may be required by statute or regulation of any agency
of competent jurisdiction; provided that EXECUTIVE shall retain the right to exercise any options which are vested as of the effective
date of termination as provided in Section 5(c) herein.

 

d.           This
Agreement shall terminate automatically in the event that: (i) EXECUTIVE fails or is unable to perform EXECUTIVE 's duties due
to injury, illness or other incapacity for ninety (90) days in any twelve (12) month period (except that EXECUTIVE may be entitled
to disability payments pursuant to COMPANY's disability plan, if any); or (ii) Death of EXECUTIVE .

 

7.            Covenant
of Confidentiality. All documents, records, files, manuals, forms, materials, supplies, computer programs, trade secrets and other
information which comes into EXECUTIVE's possession from time to time during EXECUTIVE's employment by COMPANY and/or any of COMPANY's
subsidiaries or affiliates, shall be deemed to be confidential and proprietary to COMPANY and shall remain the sole and exclusive
property of COMPANY. EXECUTIVE acknowledges that all such confidential and proprietary information is confidential and proprietary
and not readily available to COMPANY's business competitors. On the effective date of the termination of the employment relationship
or at such other date as specified by COMPANY, EXECUTIVE agrees that he will return to COMPANY all such confidential and proprietary
items (including, but not limited to, Company marketing material, business cards, keys, etc.) in his control or possession, and
all copies thereof, and that he will not remove any such items from the offices of COMPANY.

 

8.            Covenant
of Non-Disclosure. Without the prior written approval of COMPANY, EXECUTIVE shall keep confidential and not disclose or otherwise
make use of any of the confidential or proprietary information or trade secrets referred to in Section 7 nor reveal the same to
any third party whomsoever, except as required by law.

 

9.            Covenant
of Non-Solicitation. During the Term of this Agreement and for a period of one (1) year following the effective date of termination,
EXECUTIVE, either on EXECUTIVE's own account or for any person, firm, Company or other entity, shall not solicit, interfere with
or induce, or attempt to induce, any EXECUTIVE of COMPANY, or any of its subsidiaries or affiliates to leave their employment or
to breach their employment agreement, if any, with COMPANY.

 

    	-3-

    	 

    

 

10.          Covenant
of Cooperation. EXECUTIVE agrees to cooperate with COMPANY in any litigation or administrative proceedings involving any matters
with which EXECUTIVE was involved during his employment by COMPANY. COMPANY shall reimburse EXECUTIVE for reasonable expenses incurred
in providing such assistance.

 

11.          Covenant
Against Competition.

 

a.           Scope
and Term. During the Term of this Agreement and for an additional period ending one (1) year after the effective date of termination
or expiration of this Agreement, whichever occurs first, EXECUTIVE shall not directly or indirectly engage in or become a partner,
officer, principal, EXECUTIVE, consultant, investor, creditor or stockholder of any business, proprietorship, association, firm,
corporation or any other business entity which is engaged or proposes to engage or hereafter engages in any business which competes
with the business of COMPANY and/or any of COMPANY's subsidiaries or affiliates in any geographic area in which COMPANY conducts
business at the time of the termination or expiration of the employment relationship.

 

12.          Rights
to Inventions.

 

a.           Inventions
Defined. "Inventions" means discoveries, concepts, and ideas, whether patentable or not, relating to any present or contemplated
activity of COMPANY, including without limitation devices, processes, methods, formulae, techniques, and any improvements to the
foregoing.

 

b.           Application.
This Section 12 shall apply to all Inventions made or conceived by EXECUTIVE, whether or not during the hours of his employment
or with the use of COMPANY facilities, materials, or personnel, either solely or jointly with others, during the Term of his employment
by COMPANY and for a period of one (1) year after any termination of such employment. This Section 12 does not apply to any invention
disclosed in writing to COMPANY by EXECUTIVE prior to the execution of this Agreement.

 

c.           Assignment.
EXECUTIVE hereby assigns and agrees to assign to COMPANY all of his rights to Inventions and to all proprietary rights therein,
based thereon or related thereto, including without limitation applications for United States and foreign letters patent and resulting
letters patent.

 

d.           Reports.
EXECUTIVE shall inform COMPANY promptly and fully of each Invention by a written report, setting forth in detail the structures,
procedures, and methodology employed and the results achieved ("Notice of Invention"). A report shall also be submitted
by EXECUTIVE upon completion of any study or research project undertaken on COMPANY's behalf, whether or not in EXECUTIVE's opinion
a given study or project has resulted in an Invention.

 

e.           Patents.
At COMPANY's request and expense, EXECUTIVE shall execute such documents and provide such assistance as may be deemed necessary
by COMPANY to apply for, defend or enforce any United States and foreign letters patent based on or related to such Inventions.

 

    	-4-

    	 

    

 

13.          Remedies.
Notwithstanding any other provision in this Agreement to the contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE commits
a material breach of the Covenant of Confidentiality (Section 7), Covenant of Non-Disclosure (Section 8), Covenant of Non-Solicitation
(Section 9), Covenant of Cooperation (Section 10), Covenant Against Competition (Section 11), or Rights to Inventions (Section
12), COMPANY shall have the right to have the obligations of EXECUTIVE specifically enforced by any court having jurisdiction on
the grounds that any such breach will cause irreparable injury to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies at law or equity, all of which remedies shall be cumulative
and not exclusive. EXECUTIVE further acknowledges and agrees that the obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE's future employment and business opportunities, and are commensurate with the
compensation arrangements set out in this Agreement.

 

14.         Survivability.
Sections 7 through 13, of this Agreement shall survive termination of the employment relationship and this Agreement.

 

15.         General
Provisions.

 

a.           Arbitration.
Any controversy between the parties regarding the construction, application or performance of any services under this Agreement,
and any claim arising out of or relating to this Agreement or its breach, shall be submitted to binding arbitration upon the written
request of one party after the service of that request on the other party. The parties shall appoint one person to serve as arbitrator.
If the parties cannot agree on one party, each opposing party shall appoint their party arbitrator. The party arbitrators shall
then choose a neutral arbitrator who will preside over the arbitration proceedings. The arbitration shall be conducted pursuant
to the rules of California Code of Civil Procedure Sections 1280-1288.8. Attorney and Client shall each have the right of discovery
in connection with any arbitration proceeding in accordance with Code of Civil Procedure Section 1283.05. The cost of the arbitration,
excluding legal fees and costs, shall be borne equally by the parties or in such proportion as the arbitrator shall decide. The
prevailing party shall be awarded reasonable attorney fees and costs as determined by the neutral arbitrator or single arbitrator
as applicable. The sole and exclusive venue for the arbitration and or any legal dispute shall be Orange County, California. In
consideration of each party's agreement to submit to arbitration any and all disputes that arise under this Agreement, each party
agrees that the arbitration provisions of this Agreement shall constitute his/its exclusive remedy and each party expressly waives
the right to pursue redress of any kind in any other forum. Notwithstanding the foregoing, any party shall have the limited right
to seek equitable relief in the form of a temporary restraining order or preliminary injunction in a court of competent jurisdiction
to protect itself from actual or threatened irreparable injury resulting from an alleged breach of this Agreement pending a final
decision in arbitration. This Agreement governs only disputes arising directly out of the terms of this Employment Agreement. It
specifically excludes any and all disputes arising out of the ownership and propriety of patents, intellectual property and inventions
arising out of activities of the Company.

 

b.           Authorization.
COMPANY and EXECUTIVE each represent and warrant to the other that he has the authority, power and right to deliver, execute and
fully perform the terms of this Agreement.

 

    	-5-

    	 

    

 

c.           Entire
Agreement. EXECUTIVE understands and acknowledges that this document constitutes the entire agreement between EXECUTIVE and COMPANY
with regard to EXECUTIVE's employment by COMPANY and EXECUTIVE's post-employment activities concerning COMPANY. This Agreement
supersedes any and all other written and oral agreements between the parties with respect to the subject matter hereof. Any and
all prior agreements, promises, negotiations, or representations, either written or oral, relating to the subject matter of this
Agreement not expressly set forth in this Agreement are of no force and effect. This Agreement may be altered, amended, or modified
only in writing signed by all of the parties hereto. Any oral representations or modifications concerning this instrument shall
be of no force and effect.

 

d.           Severability.
If any term, provision, covenant, or condition of this Agreement is held by a court or other tribunal of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of such provisions and all of the remaining provisions hereof shall remain
in full force and effect to the fullest extent permitted by law and shall in no way be affected, impaired, or invalidated as a
result of such decision.

 

e.           Governing
Law. Except to the extent that federal law may preempt California law, this Agreement and the rights and obligations hereunder
shall be governed, construed and enforced in accordance with the laws of the State of California.

 

f.            Taxes.
All compensation payable hereunder is gross and shall be subject to such withholding taxes and other taxes as may be provided by
law. EXECUTIVE shall be responsible for the payment of all taxes attributable to the compensation provided by this Agreement except
for those taxes required by law to be paid or withheld by COMPANY.

 

g.           Assignment.
This Agreement shall be binding upon and inure to the benefit of the successors and assigns of COMPANY. EXECUTIVE may not sell,
transfer, assign, or pledge any of his rights or interests pursuant to this Agreement.

 

h.           Waiver.
Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, or prevent that party thereafter from enforcing such provision or provisions and each and every
other provision of this Agreement.

 

i.            Captions.
Titles and headings to sections in this Agreement are for the purpose of reference only and shall in no way limit, define, or otherwise
affect any provisions contained therein.

 

j.            Breach
- Right to Cure. A party shall be deemed in breach of this Agreement only upon the failure to perform any obligation under this
Agreement after receipt of written notice of breach and failure to cure such breach within ten (10) days thereafter; provided,
however, such notice shall not be required where a breach or threatened breach would cause irreparable harm to the other party
and such other party may immediately seek equitable relief in a court of competent jurisdiction to enjoin such breach.

 

16.         Acknowledgement.
EXECUTIVE acknowledges that he has been given a reasonable period of time to study this Agreement before signing it. EXECUTIVE
certifies that he has fully read, has received an explanation of, and completely understands the terms, nature, and effect of this
Agreement. EXECUTIVE further acknowledges that he is executing this Agreement freely, knowingly, and voluntarily and that EXECUTIVE's
execution of this Agreement is not the result of any fraud, duress, mistake, or undue influence whatsoever. In executing this Agreement,
EXECUTIVE does not rely on any inducements, promises, or representations by COMPANY other than the terms and conditions of this
Agreement.

 

    	-6-

    	 

    

 

17. Effective Only Upon Execution by Authorized
Officer of COMPANY. This Agreement shall have no force or effect and shall be unenforceable in its entirety until it is executed
by a duly authorized officer of COMPANY and such executed Agreement is delivered to EXECUTIVE.

 

IN WITNESS WHEREOF, the parties hereto have
read, understood, and voluntarily executed this Agreement as of the day and year first above written.

 

	EXECUTIVE 	 	COMPANY 
	 	 	 	 	 
	By:	 	 	By:	 
	 	[Name of Executive]	 	 	[Name of Officer]
	 	 	 	Title:	[Title of Officer]

 

    	-7-

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