NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”),
AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT


 


CONVERTIBLE
PROMISSORY NOTE


 


	Effective
    Date: September 27, 2019	U.S.
    $4,000,000


 


FOR
VALUE RECEIVED, Surge Holdings, Inc., a Nevada corporation (“Borrower” or “Company”), promises
to pay to GBT Technologies Inc., or their successors or assigns (“Lender”), $4,000,000 (four million dollars)
and any amounts accrued hereunder on the date that is eighteen (18) months after the Effective Date (the “Maturity Date”)
in accordance with the terms set forth herein. This Convertible Promissory Note (this “Note”) is issued and
made effective as of September 27, 2019 (the “Effective Date”). This Note shall not bear interest. This Note
is issued as the consideration for those certain assets being bought by the Borrower from the Lender pursuant to that certain
Asset Purchase Agreement dated September 27, 2019, by and between Borrower and Lender (the “APA”). Certain
capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.


 


1.
Payment; Prepayment.


 


1.1.
Payment. All payments owing hereunder shall be in lawful money of the United States of America or shares of Common Stock,
as provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments
shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, and thereafter, to (c) principal.


 


1.2.
Prepayment. Notwithstanding the foregoing, Borrower shall have the right to prepay all or any portion of the principal
without any prepayment penalty.


 


2.
Lender Conversion.


 


2.1.
Lender Conversion. Following the six month anniversary of the Effective Date, at the option of the Lender (subject to the
right of the Borrower to prepay the principal), the Lender may convert the Conversion Amount into fully paid and non-assessable
shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the
Borrower into which such Common Stock shall hereafter be changed or reclassified (the “Conversion Shares”).
The term “Conversion Amount” means, with respect to any conversion of this Note, the portion of the principal
amount of this Note to be converted into Conversion Shares in such conversion. The Conversion Amount shall be divided by the Conversion
Price (as defined in Section 2.2) determined as provided herein in order to determine the number of Conversion Shares to be issued
in connection with said conversion (each a “Conversion”). In no event, however, shall the Lender be entitled
to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Lender and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion
of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to
which the determination of this proviso is being made, would result in beneficial ownership by the Lender and its affiliates of
more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso,
provided, further, however, that the limitations on conversion may be waived by the Lender upon, at the election of the Lender,
not less than 61 calendar days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue
to apply until such 61st day (or such later date, as determined by the Lender, as may be specified in such notice of waiver).


 




    	 	 	 



    	 



    

 


2.2.
Conversion Price. Subject to the adjustments described herein, and provided that no Event of Default (as defined in Section 3.1)
has occurred, the conversion price (the “Conversion Price”) shall equal (subject to equitable adjustments for
stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities
of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar
events) the volume weighted average price of the Common Stock on the OTCQX, OTCQB, or the OTC Pink marketplaces, Nasdaq, NYSE,
or other trading market on which the Common Stock is then trading over the previous twenty (20) Trading Days prior to the conversion
date in question (the “VWAP”); provided, however, the Conversion Price shall never be lower than $0.10 (the
“Floor Price”) or higher than $0.70 (the “Ceiling Price”). By way of example only, if the
VWAP for a conversion date equals $0.08, the Conversion Price shall equal the Floor Price and if the VWAP for a conversion date
equals $0.78, the Conversion Price shall equal the Ceiling Price.


 


3.
Defaults and Remedies.


 


3.1.
Defaults. The following are events of default under this Note (each, an “Event of Default”): (a) Borrower
fails to pay any principal, fees, charges, or any other amount when due and payable hereunder; (b) a receiver, trustee or other
similar official shall be appointed over Borrower or a material part of its assets and such appointment shall not be dismissed
or discharged within sixty (60) calendar days; (c) Borrower makes a general assignment for the benefit of creditors; (d) Borrower
files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); and (e) an involuntary bankruptcy
proceeding is commenced or filed against Borrower and is not dismissed within sixty (60) calendar days.


 


3.2.
Remedies. At any time and from time to time after Lender becomes aware of the occurrence of any Event of Default, Lender
may accelerate this Note by written notice to Borrower, with the principal becoming immediately due and payable in cash at the
Mandatory Default Amount. Notwithstanding the foregoing, at any time following the occurrence of any Event of Default, Lender
may, at its option, elect to increase the principal by applying the Default Effect (subject to the limitation set forth below)
via written notice to Borrower without accelerating the principal, in which event the principal shall be increased as of the date
of the occurrence of the applicable Event of Default pursuant to the Default Effect, but the principal shall not be immediately
due and payable. For the avoidance of doubt, Lender may continue engaging in Conversions at any time following an Event of Default
until such time as the principal is paid in full. Such acceleration may be rescinded and annulled by Lender at any time prior
to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any, as Lender receives full
payment pursuant to this Section 3.2. No such rescission or annulment shall affect any subsequent Event of Default or impair any
right consequent thereon.


 




    	 	2	 



    	 



    

 


4.
Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset
it now has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments or Conversions called
for herein in accordance with the terms of this Note.


 


5.
Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the
party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other
provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in
writing.


 


6.
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision hereof,
if Borrower at any time on or after the Effective Date subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. Without limiting any provision hereof, if Borrower at any
time on or after the Effective Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will
be proportionately increased. Any adjustment pursuant to this Section 6 shall become effective immediately after the effective
date of such subdivision or combination. If any event requiring an adjustment under this Section 6 occurs during the period that
a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect
such event.


 


7.
Method of Conversion Shares Delivery. On or before the close of business on the third (3rd) Trading Day following
a Conversion, as applicable (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible at such time,
deliver or cause its transfer agent to deliver the applicable Conversion Shares electronically via DWAC to the account designated
by Lender. If Borrower is not DWAC Eligible, it shall deliver to Lender or its broker (as designated by Lender, via reputable
overnight courier, certificates representing the number of shares of Common Stock to which Lender shall be entitled, registered
in the name of Lender or its designee. Moreover, and notwithstanding anything to the contrary herein or in the APA, in the event
Borrower or its transfer agent refuses to deliver any shares of Common Stock to Lender on grounds that such issuance is in violation
of Rule 144 under the Securities Act of 1933, as amended (“Rule 144”), Borrower shall deliver or cause its
transfer agent to deliver the applicable shares of Common Stock to Lender with a restricted securities legend, but otherwise in
accordance with the provisions of this Section 7. In conjunction therewith, Borrower will also deliver to Lender a written explanation
from its counsel or its transfer agent’s counsel opining as to why the issuance of the applicable shares of Common Stock
violates Rule 144.


 




    	 	3	 



    	 



    

 


8.
Leak-Out Agreement. Lender will not, for the eighteen (18) calendar months following the Effective Date, for the purpose
of open market trades, offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of shares of Common
Stock, directly or indirectly, in an amount greater than seven and one-half percent (7.5%) of the trading volume of the Common
Stock during the previous month on the OTCQX, OTCQB, or the OTC Pink marketplaces, Nasdaq, NYSE, or other trading market on which
the Common Stock is then trading. Other than via open market trades, Lender may not offer, pledge, sell, contract to sell, grant,
lend, or otherwise transfer or dispose of the Conversion Shares without the prior written consent of the Borrower. Borrower’s
consent to a transfer or disposal of the Conversion Shares by Lender shall be specifically conditioned on the transferee of the
Conversion Shares signing a Leak-Out Agreement with the Company with substantially the same terms as this Section 8. For the avoidance
of doubt, open market trades by the Lender do not require Borrower’s consent.


 


9.
No Illegal Transactions. Lender has not, directly or indirectly, and no person acting on behalf of or pursuant to any understanding
with it has, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as
defined below) involving any of the Company’s securities) since the time that Lender was first contacted by the Company
or any other person regarding the transactions contemplated herein or in the APA. Lender covenants that neither it nor any person
acting on its behalf or pursuant to any understanding with it will engage, directly or indirectly, in any transactions in the
securities of the Company (including Short Sales) prior to the time the transactions contemplated herein or in the APA are publicly
disclosed. “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of Regulation
SHO promulgated under the Exchange Act, and all types of direct and indirect stock pledges, forward sale contracts, options, puts,
calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions
through non-U.S. broker-dealers or foreign regulated brokers. The Lender covenants and agrees that, for the eighteen (18) calendar
months following the Effective Date, it will not be in a net short position with respect to the shares of Common Stock. For purposes
of this Section 9, a “net short position” means a sale of Common Stock by the Lender that is marked as a short sale
and that is made at a time when there is no equivalent offsetting long position in Common Stock held by the Lender. Borrower’s
consent to a transfer or disposal of the Conversion Shares by Lender shall be specifically conditioned on the transferee of the
Conversion Shares signing an agreement with the Company to not be in a net short position with respect to the shares of Common
Stock for the eighteen (18) calendar months following the Effective Date.


 


10.
Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the
right to have any such opinion provided by its counsel.


 




    	 	4	 



    	 



    

 


11.
Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Nevada, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the State of Nevada. The provisions set forth in the
APA to determine the proper venue for any disputes are incorporated herein by this reference.


 


12.
Cancellation. After repayment or conversion of the entire principal, this Note shall be deemed paid in full, shall automatically
be deemed canceled, and shall not be reissued.


 


13.
Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.


 


14.
Assignments. Borrower and Lender may not assign this Note without the prior written consent of the other party. If at the
time of any transfer of this Note or any shares of Common Stock issued upon conversion of this Note, the transfer of such securities
shall not be either (i) registered pursuant to an effective registration statement under the 1933 Act and under applicable state
securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that Lender or transferee,
as the case may be, comply with the transfer restrictions set forth on the restrictive legend on the face of such security.


 


15.
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with the subsection of the APA titled “Notices.”


 


16.
Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve
the objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full
force and effect.


 


[Remainder
of page intentionally left blank; signature page follows]


 




    	 	5	 



    	 



    

 


IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date.


 


	 	 	 	BORROWER:
	 	 	 	 
	 	 	 	Surge
    Holdings, Inc.
	 	 	 	 	 
	 	 	 	By:
    	          
	 	 	 	Name:
    	 
	 	 	 	Title:
    	 
	 	 	 	 	 
	ACKNOWLEDGED,
    ACCEPTED AND AGREED:	 	 	 
	 	 	 	 
	LENDER:	 	 	 
	 	 	 	 
	GBT
    Technologies Inc.	 	 	 
	 	 	 	 	 
	By:
    	                      	 	 	 
	Name:
    	 	 	 	 
	Title:
    	 	 	 	 


 


[Signature
Page to Convertible Promissory Note]


 




    	 	 	 



    	 



    

 


ATTACHMENT
1


DEFINITIONS


 


For
purposes of this Note, the following terms shall have the following meanings:


 


A1.
“Common Stock” means the Borrower’s common stock par value $0.001 per share.


 


A2.
“Default Effect” means multiplying the principal as of the date the applicable Event of Default occurred by
fifteen percent (15%) and then adding the resulting product to the principal as of the date the applicable Event of Default occurred,
with the sum of the foregoing then becoming the principal under this Note as of the date the applicable Event of Default occurred;
provided that the Default Effect may only be applied three (3) times hereunder.


 


A3.
“DTC” means the Depository Trust Company or any successor thereto.


 


A4.
“DTC Eligible” means, with respect to the Common Stock, that such Common Stock is eligible to be deposited
in certificate form at the DTC, cleared and converted into electronic shares by the DTC and held in the name of the clearing firm
servicing Lender’s brokerage firm for the benefit of Lender.


 


A5.
“DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer program.


 


A6.
“DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.


 


A7.
“DWAC Eligible” means that (a) Borrower’s Common Stock is eligible at DTC for full services pursuant
to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system; (b) Borrower has
been approved (without revocation) by DTC’s underwriting department; (c) Borrower’s transfer agent is approved as
an agent in the DTC/FAST Program; (d) the Conversion Shares are otherwise eligible for delivery via DWAC; (e) Borrower has previously
delivered all Conversion Shares to Lender via DWAC; and (f) Borrower’s transfer agent does not have a policy prohibiting
or limiting delivery of the Conversion Shares via DWAC.


 


A8.
“Mandatory Default Amount” means the principal following the application of the Default Effect.


 


A9.
“Trading Day” means any day on which the OTCQX, OTCQB, or the OTC Pink marketplaces, Nasdaq, NYSE, or other
trading market on which the Common Stock is then trading is open for trading.


 


[Remainder
of page intentionally left blank]


 




    	Attachment 1 to Convertible Promissory Note, Page 1



    	 



    

 


EXHIBIT
A


 


Date:
__________________


 


CONVERSION
NOTICE


 


Surge
Holdings, Inc., a Nevada corporation (the “Borrower”), hereby consents to GBT Technologies Inc. (the “Lender”)
converting, pursuant to that certain Convertible Promissory Note made by Borrower in favor of Lender on September __, 2019 (the
“Note”), the portion of the Note balance set forth below into shares of Common Stock of Borrower as of the
date of conversion specified below. Such conversion shall be based on the Conversion Price set forth below.


 


In
the event of a conflict between this Conversion Notice and the Note, the Note shall govern. Capitalized terms used in this notice
without definition shall have the meanings given to them in the Note.


 


	A.	Date
    of Conversion: ____________
	B.	Principal
    Being Converted: ____________
	C.	Conversion
    Price: _______________
	D.	Shares
    of Common Stock: _______________ (B divided by C)
	E.	Remaining
    Principal of Note: ____________


 


Please
transfer the Shares of Common Stock electronically (via DWAC) to the following account:


 


	Broker:
                                                                   	 	Address:	 
	DTC#:                                                                	 	 	 
	Account
    #:                                                        	 	 	 
	Account
    Name:                                                	 	 	 


 


To
the extent the shares of Common Stock are not able to be delivered to Lender electronically via the DWAC system, deliver all such
certificated shares of Common Stock to Lender via reputable overnight courier after receipt of this Conversion Notice (by facsimile
transmission or otherwise) to:


_____________________________________


_____________________________________


_____________________________________


 




    	Exhibit A to Convertible Promissory Note, Page 1



    	 



    

 


[Signature
Page to Conversion Notice]


 


	LENDER:	 
	 	 
	GBT
    Technologies Inc.	 
	 	 	 
	By:
    	            	 
	Name:	 	 
	Title:
    	 	 
	 	 	 
	BORROWER:	 
	 	 
	Surge
    Holdings, Inc.	 
	 	 	 
	By:
    	 	 
	Name:
    	 	 
	Title:
    	 	 


 




    	Exhibit A to Convertible Promissory Note, Page 2