Exhibit 10.4


 


 


NEITHER THE ISSUANCE
NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


 


 


	Principal Amount: $43,000.00	Issue Date: July 16, 2019 
	Purchase Price: $41,500.00	 
	Original Issue Discount: $1,500.00	 







 


 


CONVERTIBLE PROMISSORY NOTE


 


FOR
VALUE RECEIVED, CLOUDCOMMERCE, INC., a Nevada corporation (hereinafter called the “Borrower”) (Trading Symbol:
CLWD), hereby promises to pay to the order of _______________________, a _______________________, or registered assigns
(the “Holder”) the principal sum of $43,000.00 (the “Principal Amount”), together with interest at the
rate of ten percent (10%) per annum (with the understanding that the first twelve months of interest shall be guaranteed), at maturity
or upon acceleration or otherwise, as set forth herein (the “Note”). The consideration to the Borrower for this Note
is $41,500.00 (the “Consideration”). The Holder shall pay the Consideration within two (2) business days of the full
execution of the transactional documents related to this Note. The maturity date shall be twelve (12) months from the Issue Date
(the “Maturity Date”), and is the date upon which the principal sum, as well as any accrued and unpaid interest and
other fees, shall be due and payable. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth
herein. Any amount of principal or interest on this Note, which is not paid by the Maturity Date, shall bear interest at the rate
of the lesser of (i) fifteen percent (15%) per annum or (ii) the maximum amount permitted by law from the due date thereof until
the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Consideration is fully
paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to
the extent not converted into the Borrower’s common stock (the “Common Stock”) in accordance with the terms hereof)
shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter
give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be
due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full,
the extension of the due date thereof shall




    	1 



    	 



    

not be taken into account for
purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall
mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized
or required by law or executive order to remain closed.


 


This Note
carries a prorated original issue discount of $1,500.00 (the “OID”), to cover the Holder’s accounting fees, due
diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which
is included in the principal balance of this Note. Thus, the purchase price of this Note shall be $41,500.00, computed as follows:
the Principal Amount minus the OID.


 


This Note
is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.


 


The following additional terms shall apply to this Note:


 


ARTICLE I. CONVERSION RIGHTS


 


1.1           
Conversion Right. The Holder shall have the right at any time after the 180th calendar
day after the Issue Date to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest
of this Note 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 at
the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided,
however, that in no event shall the Holder 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 Holder 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 Holder 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. The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the
applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit
A (the “Notice of Conversion”), delivered to the Borrower or Borrower’s transfer agent by the Holder in accordance
with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting
in, or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York,
New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with
respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus
(2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred
to in the immediately preceding




    	2 



    	 



    

clauses (1) and/or (2) plus (4)
at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.


 


		1.2	Conversion Price.



 


(a) 
Calculation of Conversion Price. The Conversion Price shall be the Variable Conversion
Price (as defined herein) (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) (also subject to adjustment as further described herein). The
"Variable Conversion Price" shall mean 50% multiplied by the Market Price (as defined herein) (representing a discount
rate of 50%). “Market Price” means the lowest one (1) Trading Price (as defined below) for the Common Stock during
the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Price”
means, for any security as of any date, the lesser of the (i) lowest traded price or (ii) lowest closing bid price on the Over-the-Counter
Pink Marketplace, OTCQB, or applicable trading market (the “Principal Market”) as reported by a reliable reporting
service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the Principal Market is not the principal
trading market for such security, on the principal securities exchange or trading market where such security is listed or traded
or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday
price of any market makers for such security that are quoted on the OTC Markets. If the Trading Price cannot be calculated for
such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined
by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading
Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which
the Common Stock is tradable for any period on the Principal Market, or on the principal securities exchange or other securities
market on which the Common Stock is then being traded. 


 


Holder shall
be entitled to deduct $1,000.00 from the conversion amount in each Notice of Conversion to cover Holder’s deposit fees associated
with each Notice of Conversion.


If at any time
the Conversion Price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the
sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such conversion and the Conversion Amount
for such conversion may be increased to include Additional Principal, where “Additional Principal” means such additional
amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares issuable upon such
conversion to equal the same number of conversion shares as would have been issued had the Conversion Price not been adjusted by
the Holder to the par value price.


 


(b)  
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the
issuance of Common Stock upon the full conversion of this Note. The Borrower is required at all times to have authorized and
reserved five times the number of shares that are actually issuable upon full conversion of the Note (based on the Conversion
Price in effect from time to time) (the “Reserved Amount”). The Reserved Amount shall be increased from time to
time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or
make any change to its capital structure which would change the




    	3 



    	 



    

number of shares of Common
Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make
proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free
from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed
its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance
of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this
Note.


If, at any time the Borrower
does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.


 


		1.3	Method of Conversion.



 


(a)  
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after the 180th calendar day after the Issue Date, by (A) submitting to the Borrower or Borrower’s
transfer agent a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the
Conversion Date prior to 11:59 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at
the principal office of the Borrower.


 


(b)  
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this
Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower
unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records
showing the principal amount so converted and the dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be
controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is
converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the
Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor,
registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note,
acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note,
the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the
face hereof.


 


(c)  
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a
name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such
shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in
whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have
paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax
has been paid.


 


(d) 
 Delivery of Common Stock Upon Conversion. Upon receipt by the




    	4 



    	 



    

Borrower from the Holder of a
facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements
for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or
upon the order of the Holder certificates for the Common Stock issuable upon such conversion within two (2) business days after
such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof,
surrender of this Note) in accordance with the terms hereof.


 


(e) 
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a
Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion,
the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion,
and, unless the Borrower defaults on its obligations under this Article I, all rights
with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock
or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of
Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be
absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any
failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective
of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is
sent to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time, on such date.


 


(f)  
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the
provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of
Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.


 


(g)   Failure
to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section
1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for
each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder
by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice
to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the
principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and
such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The
Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting




    	5 



    	 



    

from a failure, attempt to frustrate,
interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the
liquidated damages provision contained in this Section 1.4(g) are justified.


 


 


1.4           
 Concerning the Shares. The shares of Common Stock issuable upon conversion of this
Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act
or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred
may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant
to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate”
(as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section
1.5 and who is an Accredited Investor. Except as otherwise provided (and subject to the removal provisions set forth below), until
such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may
be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately
sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal
of the legend, shall bear a legend substantially in the following form, as appropriate:


 


“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 


The legend
set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend
if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without
registration under the Act, which opinion shall be accepted by the Borrower so that the sale or transfer is effected or (ii) in
the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an
effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to
the number of securities as of a particular date that can then be immediately sold. In the event that the Borrower does not reasonably
accept the opinion of




    	6 



    	 



    

counsel provided by the Holder
with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the
Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.


 


1.5           
[Intentionally Omitted].


 


1.6           
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the
shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s
allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii)
the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right
to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in
equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing,
if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration
of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects
to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of
this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted
Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not
been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right
to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any
subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined
in accordance with Section 1.3) for the Borrower’s failure to convert this Note.


 


ARTICLE II. CERTAIN COVENANTS


 


2.1                                                     
Sale of Assets. So long as the Borrower shall have any obligation under this Note,
the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion
of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified
use of the proceeds of disposition.


 


ARTICLE III. EVENTS OF DEFAULT


 


If any of the following events of default (each, an “Event
of Default”) shall occur:


 


3.1                                                     
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof
or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise, and such breach continues for a
period of five (5) days.


 


3.2                                                     
Conversion and the Shares. The Borrower fails to reserve a sufficient amount of shares
of common stock as required under the terms of this Note (including Section 1.3 of this Note) and such breach continues for a period
of five (5) days, fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor
its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this
Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) shares of Common
Stock issued to the Holder upon




    	7 



    	 



    

conversion of or otherwise pursuant
to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or
hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) shares of Common Stock to be issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs
its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or
to withdraw any stop transfer instructions in respect thereof) on any shares of Common Stock issued to
the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written
announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure
shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in
writing) for two (2) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower
to remain current in its obligations to its transfer agent. It shall be an event of
default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to
its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order
to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within five (5) business days of a demand
from the Holder, either in cash or as an addition to the balance of the Note, and such choice of payment method is at the discretion
of the Borrower.


 


3.3                                                     
Breach of Covenants. The Borrower breaches any material covenant or other material
term or condition contained in this Note and any collateral documents and such breach continues for a period of twenty (20) days
after written notice thereof to the Borrower from the Holder.


 


3.4                                                     
Breach of Representations and Warranties. Any representation or warranty of the Borrower
made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith, shall be
false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material
adverse effect on the rights of the Holder with respect to this Note.


 


3.5                                                     
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part
of its property or business, or such a receiver or trustee shall otherwise be appointed.


 


3.6                                                     
[Intentionally Omitted].


 


 


3.7                                                     
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted
by or against the Borrower or any subsidiary of the Borrower.


 


3.8                                                     
Delisting of Common Stock. The Borrower shall fail to maintain the listing or quotation
of the Common Stock on the OTC Pink, OTCQB, OTCQX, or an equivalent replacement exchange, the Nasdaq Global Market, the Nasdaq
Capital Market, the New York Stock Exchange, or the NYSE MKT.


 


3.9                                                     
Failure to Comply with the Exchange Act. The Borrower




    	8 



    	 



    

shall fail to comply with
the reporting requirements of the Exchange Act and/or the Borrower shall cease to be subject to the reporting requirements of the
Exchange Act.


 


3.10                                                 
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial
portion of its business.


 


3.11                                                 
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits
it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s
ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay
its debts as they become due, or any disposition or conveyance of any material asset of the Borrower.


 


3.12                                                 
Financial Statement Restatement. The Borrower replaces its auditor, or any restatement
of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of
this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated
financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.


 


3.13                                                  
Replacement of Transfer Agent. In the event that the Borrower replaces its transfer
agent, and the Borrower fails to provide prior to the effective date of such replacement, a fully executed Irrevocable Transfer
Agent Instructions (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount)
signed by the successor transfer agent to Borrower and the Borrower.


 


3.14                                                    
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the
other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained
in any of the other financial instrument, including but not limited to all convertible promissory notes, currently issued, or hereafter
issued, by the Borrower, to the Holder or any other 3rd party
(the “Other Agreements”), after the passage of all applicable notice and cure or grace periods, shall, at the option
of the Holder, be considered a default under this Note, in which event the Holder shall be entitled to apply all rights and remedies
of the Holder under the terms of this Note by reason of a default under said Other Agreement or hereunder.


 


3.15                                                      
Inside Information. Any attempt by the Borrower or its officers, directors, and/or
affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers,
directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns,
which is not immediately cured by Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.


 


3.16                                                        
No bid. At any time while this Note is outstanding, the lowest Trading Price on the
Principal Market or other applicable principal trading market for the Common Stock is equal to or less than $0.0001.


 


Upon the
occurrence of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14,
3.15, and/or 3.16, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount equal to 150% multiplied by the then outstanding entire




    	9 



    	 



    

balance of the Note (including
principal and accrued and unpaid interest) plus Default Interest, if any, plus any amounts owed to the Holder pursuant to Sections
1.4(g) hereof (collectively, in the aggregate of all of the above, the “Default Amount”), and all other amounts payable
hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly
waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at law or in equity.


 


The Holder
shall have the right at any time, to require the Borrower, to immediately issue, in lieu of
the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion
Price then in effect, subject to the terms of this Note (including but not limited to the beneficial ownership limitations contained
in this Note).


 


ARTICLE IV. MISCELLANEOUS


 


4.1                                                                                                               Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


4.2                                                                                                              
Notices. All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, facsimile, or electronic mail addressed as set forth
below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery, upon electronic mail delivery, or
delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated
below (if delivered on a business day during normal business hours where such notice is to be received), or the first business
day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall
be:


 


If to the Borrower, to:


 


CLOUDCOMMERCE, INC.


321 Sixth Street


San Antonio, TX 78215


e-mail: info@cloudcommerce.com


 


If to the Holder:


 


____________________


____________________


____________________


Attn: _______________________


e-mail: _____________________


 




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4.3                                                                                                              
Amendments. This Note and any provision hereof may only be amended by an instrument
in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.


 


4.4                                                                                                              
Assignability. This Note shall be binding upon the Borrower and its successors and
assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Notwithstanding anything to the contrary
herein, the rights, interests or obligations of the Borrower hereunder shall not be assigned, by operation of law or otherwise,
in whole or in part, by the Borrower without the prior signed written consent of the Holder, which consent may be withheld at the
sole discretion of the Holder (any such assignment or transfer shall be null and void if the Borrower does not obtain the prior
signed written consent of the Holder). This Note or any of the severable rights and obligations inuring to the benefit of or to
be performed by Holder hereunder may be assigned by Holder to a third party, in whole or in part, without the need to obtain the
Company’s consent thereto. Each transferee of this Note must be an “accredited investor” (as defined in Rule
501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection
with a bona fide margin account or other lending arrangement.


 


4.5                                                                                                              
Cost of Collection. If default is made
in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’
fees.


 


4.6                                                                                                              
Governing Law. This Note shall be governed by and construed in accordance with the
laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Note shall be brought only in the state and/or federal courts of New York City,
NY. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower
and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Note or any other agreement
delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall
be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process
being served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.





 


4.7                                                                                                              
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an
amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and
unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder
from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents
stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this
Note and 



    	11 



    	 



    

to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of
the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages
is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to
convert this Note into shares of Common Stock.


 


4.8                                                                                                              
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly,
the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees,
in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled,
in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof,
without the necessity of showing economic loss and without any bond or other security being required.


 


4.9                                                                                                                      
Prepayment. Notwithstanding anything to the contrary contained in this Note, the Borrower
may prepay any amount outstanding under this Note, during the initial 60 calendar day period after the issuance of this Note, by
making a payment to the Holder of an amount in cash equal to 125% multiplied the amount that the Borrower is prepaying, subject
to the Holder’s prior written acceptance in Holder’s sole discretion. Notwithstanding anything to the contrary contained
in this Note, the Borrower may prepay any amount outstanding under this Note, during the 61st
through 120 calendar day period after the issuance of this Note, by making a payment to the
Holder of an amount in cash equal to 135% multiplied the amount that the Borrower is prepaying, subject to the Holder’s prior
written acceptance in Holder’s sole discretion. Notwithstanding anything to the contrary contained in this Note, the Borrower
may prepay any amount outstanding under this Note, during the 121st through
180 calendar day period after the issuance of this Note, by making a payment to the Holder of an amount in cash equal to 145% multiplied
the amount that the Borrower is prepaying, subject to the Holder’s prior written acceptance in Holder’s sole discretion.
The Borrower may not prepay any amount outstanding under this Note after the 180th calendar
day after the issuance of this Note.


 


4.10                                                                                                                         
Usury. If it shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable provision shall automatically be revised to equal the maximum rate
of interest or other amount deemed interest permitted under applicable law. The Borrower covenants (to the extent that it may lawfully
do so) that it shall not seek to claim or take advantage of any law that would prohibit or forgive the Borrower from paying all
or a portion of the principal or interest on this Note.




    	12 



    	 



    




 


4.11                                                                                                                         
Section 3(a)(10) Transactions. If at any time while this Note is outstanding, the Borrower
enters into a transaction structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10)
of the Securities Act (a “3(a)(10) Transaction”), then a liquidated damages charge of 25% of the outstanding principal
balance of this Note at that time, will be assessed and will become immediately due and payable to the Holder, either in the form
of cash payment or as an addition to the balance of the Note, as determined by mutual
agreement of the Borrower and Holder.


 


 


 


 


[signature page to
follow]




    	13 



    	 



    

 


 


 


IN WITNESS WHEREOF, Borrower has
caused this Note to be signed in its name by its duly authorized officer this July 16, 2019.


 


CLOUDCOMMERCE, INC.


 


By: ____________________


Name: Andrew Noy


Title: Chief Executive Officer




    	14 



    	 



    

 


 


EXHIBIT A -- NOTICE OF CONVERSION


 


The undersigned
hereby elects to convert $ principal amount of the Note (defined below) into that number of shares of Common Stock to
be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of CLOUDCOMMERCE, INC., a Nevada
corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of July 16,
2019 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.


 


Box Checked as to applicable instructions:


 


[ ] The Borrower
shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned
or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).


 


Name of DTC Prime Broker: Account Number:


 


[ ] The
undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set
forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below
or, if additional space is necessary, on an attachment hereto:


 


____________________


____________________


____________________


Attn: _______________________


e-mail: _____________________


 


Date of Conversion: ____________________


 


Applicable Conversion Price:$______________


Number
of Shares of Common Stock to be Issued


Pursuant to Conversion of
the Notes: ____________________


Amount of Principal Balance Due remaining


Under the Note after this conversion: ______________________


 


_____________________________


 


By:_______________________


Name:____________________


Title:_____________________


Date: _____________________