Exhibit 4.1


 


NEITHER THE ISSUANCE AND 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 OR OTHER APPLICABLE EXEMPTION. 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: US$195,000.00	Issue Date: July 26, 2022
	Purchase Price: US$176,000.00	 


 


PROMISSORY NOTE


 


FOR VALUE RECEIVED,
C-BOND SYSTEMS INC., a Colorado corporation (hereinafter called the “Borrower”) (Trading Symbol: CBNT), hereby promises
to pay to the order of GS CAPITAL PARTNERS, LLC, a Nevada limited liability company, or registered assigns (the “Holder”)
the sum of US$195,000.00 (the “Principal”) together with guaranteed interest (the “Interest”) on the Principal
balance hereof in the amount of eight percent (8%) (the “Interest Rate”) per calendar year from the date hereof (the “Issue
Date”). All Principal and Interest owing hereunder, along with any and all other amounts, to the extent not paid earlier as set
forth herein, shall be due and owing on the first annual anniversary of the Issue Date as set forth above (the “Maturity Date”).
This note (the “Note”) shall contain an original issue discount of $19,000 resulting in a purchase price of $176,000. Principal
payments shall be made in ten (10) installments each in the amount of US$21,060.00 plus accrued interest to such payment date, commencing
on the ninetieth (90th) day anniversary following the Issue Date and continuing thereafter each thirty (30) days for nine (9)
months. Notwithstanding the forgoing, the final payment of Principal and Interest shall be due on the Maturity Date. This Note may be
prepaid in whole or in part as set forth herein. Any amount of Principal or Interest on this Note which is not paid when due shall bear
interest at the rate of the lesser of (i) twenty-four percent (24%) per annum and (ii) the maximum amount permitted under law from the
due date thereof until the same is paid (the “Default Interest”). Default Interest shall commence accruing upon an Event of
Default and shall be computed on the basis of a 360-day year and the actual number of days elapsed. All payments due hereunder (to the
extent not converted into common stock, par value $0.001 per share, of the Borrower (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 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. Each capitalized term used
herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date
hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”). The Borrower and the Holder may be referred
to herein individually as a “Party” and collectively as the “Parties”.


 




     


     


    

 


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 terms shall
also apply to this Note:


 


Article
I. CONVERSION RIGHTS


 


1.1 Conversion
Right. The Holder shall have the right from time to time, and at any time following an Event of Default (as defined below), and ending
on the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of
the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal, interest,
penalties, and all other amounts under 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 (as defined below) 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 this Note 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, except as otherwise provided in clause (1) of such proviso. 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; 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, provided however, that the Borrower shall
have the right to pay any or all interest in cash plus (3) at the Holder’s option, Default Interest, if any, on the amounts
referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the
Holder pursuant to Section 1.3 and Section 1.4(g).


 




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1.2 Conversion
Price.


 


(a) Calculation
of Conversion Price. Subject to the adjustments described herein, the conversion price shall be equal to $0.011 per share (the “Conversion
Price”). Provided, however that in the event that following the Issue Date the closing trading price of the Common Stock on the
OTC Pink, OTCQB or on the principal securities exchange or other securities market on which the Common Stock is then being traded (as
applicable, the “Trading Market”) is below $0.011 per share (the “Base Value”) for more than ten (10)
consecutive Trading Days (as defined below), then the Conversion Price shall be equal to $0.004 per share. To the extent the Conversion
Price is less than the par value per share of the Common Stock, the Borrower will take all
steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. To the extent
permitted by applicable law, the Borrower agrees to honor all conversions submitted pending this adjustment. If the shares of the Common
Stock have not been delivered within three (3) business days to the Borrower or Borrower’s transfer agent, the Notice of Conversion
may be rescinded. 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 Holder. “Trading Day” shall mean any day on
which the Common Stock is tradable for any period on the Trading Marker. The Borrower shall be responsible for the fees of its transfer
agent and all DTC fees associated with any such issuance. Holder shall be entitled to deduct $750.00 from the conversion amount in each
Notice of Conversion to cover Holder’s deposit fees associated with each Notice of Conversion. The Conversion Price and the Base
Value shall be subject to equitable adjustments for stock splits and stock dividends by the Borrower relating to the Common Stock, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events that occur on or after the Issue Date. By way of example
and not limitation, in the event of forward split of the Common Stock following the Issue Date in which each share of Common Stock is
converted into two shares of Common Stock, the Conversion Price shall be reduced by 50%, and in the event of a reverse split of the Common
Stock following the Issue Date in which each two shares of Common Stock are converted into one share of Common Stock, the Conversion Price
shall be increased by 100%. Such adjustments shall be undertaken each time such an event occurs.


 


(b) Conversion
Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower
is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets
of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more
of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is
hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date
and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion
Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise
be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in
Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed
transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made,
the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates
or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this
Section 1.2(b) to become operative.


 




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(c) Pro
Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection
with a conversion of this Note, the Borrower shall issue to the Holder the number of shares of Common Stock not in dispute and resolve
such dispute in accordance with Section 4.13.1


 


(d) 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
the Conversion Price hereunder shall equal such par value for such conversion and the Conversion Amount for such conversion shall 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 subject to the minimum price set forth in this Section 1.2(c).


 


1.3 Authorized
Shares. Subject to the terms and conditions herein, the Borrower covenants that during the period while any outstanding balance is
owing hereunder, 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. Subject to the terms and conditions herein,
the Borrower is required at all times to have authorized and reserved four (4) times the number of shares that is actually issuable upon
full conversion of the Note (based on the Conversion Price of this Note in effect from time to time) initially 70,909,090 shares (the
“Reserved Amount”). The Reserved Amount shall be increased from time to time by written instructions of the Holder upon notice
to the Borrower’s transfer agent and the Borrower, provided that the Holder shall not have the right to increase the Reserved Amount
more than two (2) times in any calendar month period. 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 number of shares of Common Stock into which this Note 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 portion of this Note. 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 or replenish the Reserved Amount, as required herein.
within three (3) business days of the request of the Holder at a time when Borrower is required to adjust the Reserved Amount herein,
the principal amount of this Note shall increase by Five Thousand and No/100 United States Dollars ($5,000) (under Holder’s and
Borrower’s expectation that any principal amount increase will tack back to the Issue Date) per occurrence. Notwithstanding anything
to the contrary herein, Borrower shall not be required to increase the Reserved Amount more than two (2) times in any calendar month period.


 


 






		1	Section below deleted since conversion price being below
par value is addressed above.



 




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1.4 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 an Event of Default, by (A) submitting to the Borrower 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.


 




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(d) Delivery
of Common Stock Upon Conversion. Upon receipt by the 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 three (3) 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 and the Purchase Agreement.


 


(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 received by the Borrower 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 commercially reasonable 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 At Custodian
(“DWAC”) system.


 


(g) DTC
Eligibility & Market Loss. If the Borrower fails to maintain its status as “DTC Eligible” for any reason, the principal
amount of the Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000) (under Holder’s and Borrower’s
expectation that any principal amount increase will tack back to the Issue Date).


 


(h) Failure
to Deliver Common Stock Prior to Delivery 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, which failure shall be
governed by such Section 1.3) 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 until the Borrower issues and delivers a certificate to the Holder or credit the Holder’s balance account
with OTC for the number of shares of Common Stock to which the Holder is entitled upon such Holder’s conversion of any Conversion Amount
(under Holder’s and Borrower’s expectation that any damages will tack back to the Issue Date). 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 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(h) are justified.


 




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(i) Rescindment
of a Notice of Conversion. If (i) the Borrower fails to respond to Holder within one (1) business day from the Conversion Date confirming
the details of Notice of Conversion, (ii) the Borrower fails to provide any of the shares of the Borrower’s Common Stock requested
in the Notice of Conversion by the Deadline, (iii) the Holder is unable to procure a legal opinion required to have the shares of the
Common Stock issued hereunder unrestricted and/or deposited to sell for any reason related to the Borrower’s standing, (iv) the
Holder is unable to deposit the shares of the Common Stock requested in the Notice of Conversion for any reason related to the Borrower’s
standing, (v) at any time after a missed Deadline, at the Holder’s sole discretion, or (vi) if OTC Markets changes the Borrower’s
designation to ‘Limited Information’ (Yield), ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull
& Crossbones), ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign) or other trading restriction
on the day of or any day after the Conversion Date, then Holder maintains the option and sole discretion to rescind the Notice of Conversion.


 


1.5 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 Securities Act of 1933, as amended (the “Securities 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 Securities Act (or a successor rule) (“Rule 144”) or other applicable exemption 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 (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase
Agreement (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 Securities Act or otherwise may be sold pursuant to Rule 144 or other applicable exemption
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 OR OTHER APPLICABLE EXEMPTION. 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 Securities Act, which opinion shall be reasonably 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 Securities Act or otherwise may be sold pursuant to Rule
144 or other applicable exemption 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 unreasonably rejects the opinion of counsel provided by the Buyer with respect to the transfer of
shares of Common Stock issuable hereunder 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.


 




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1.6 Effect
of Certain Events.


 


(a) Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the
assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of
the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into
any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default
(as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition
to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b). “Person”
shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.


 


(b) Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of this
Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result
of which shares of Common Stock shall be changed into the same or a different number of shares of another class or classes of stock or
securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower
other than in connection with a plan of complete liquidation of the Borrower, then the Holder shall thereafter have the right to receive
upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive
in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion
set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of
this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and
of the number of shares of Common Stock issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction
described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any
event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there
is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor
or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall
similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.


 


(c) Adjustment
Due to Distribution. If, at any time when this Note is issued and outstanding and prior to conversion of all of this Note, the Borrower
shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock
repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash
or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the
Holder shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution,
to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon
such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.


 




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(d) Purchase
Rights. If, at any time when this Note is issued and outstanding and prior to conversion of all of this Note, the Borrower issues
any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro
rata to the record holders of any class of Common Stock, then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.


 


(e) Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the
Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment
is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth
(i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.


 


1.7 Status
as Shareholder. Upon submission of a Notice of Conversion by Holder, (i) the portion of this Note and the portion of the Principal
Amount and interest as set forth in the Notice of Conversion 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 Holder because of a
failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if 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.


 


1.8 Prepayment.
Provided that an Event of Default has not occurred under this Note, the Borrower may prepay the amounts outstanding hereunder by paying
an amount equal to the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest
on the unpaid principal amount of this Note plus (y) Default Interest, if any. Any notice of prepayment hereunder (an “Optional
Prepayment Notice”) shall be delivered to the Holder of the Note pursuant to the notice provisions herein and shall state: (1) that
the Borrower has elected to prepay this Note, and (2) the date of the prepayment, which shall be not more than three (3) business days
from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower
shall make payment of the applicable prepayment amount to the Holder. If the Borrower delivers an Optional Prepayment Notice, and Borrower
fails to pay the applicable prepayment amount due to the Holder prior to the date which is two (2) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to prepay this Note pursuant to this Section 1.8.


 




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Article
II. CERTAIN COVENANTS


 


2.1 Distributions
on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s
written consent, such consent not to be unreasonably withheld, conditioned or delayed, (a) pay, declare or set apart for such payment,
any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on
shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary
make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights
plan which is approved by a majority of the Borrower’s disinterested directors.


 


2.2 Restriction
on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s
written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise)
in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options
to purchase or acquire any such shares.


 


2.3 Most
Favored Nations Beginning on the Issuance Date of this Note, so long as the Borrower shall have any obligation under this Note, the
Conversion Price and other terms will be adjusted on a ratchet basis if the Borrower offers a more favorable term such as Conversion Price,
Interest Rate, (whether through a straight discount or in combination with an original issue discount) or other more favorable term to
another party.


 


2.4 Borrowings.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent,
such consent not to be unreasonably withheld, conditioned or delayed, create, incur, assume guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the
endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings
in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, or (b)
indebtedness to trade creditors financial institutions or other lenders incurred in the ordinary course of business.2


 


2.5 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, such consent not to be unreasonably withheld, conditioned or delayed, sell, lease or otherwise dispose of any significant portion
of its assets outside the ordinary course of business.


 


2.6 Advances
and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written
consent, such consent not to be unreasonably withheld, conditioned or delayed, lend money, give credit or make advances to any person,
firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the
Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder
in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.


 


2.7 Section
3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement
structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities Act
(a “3(a)(9) Transaction”) or Section 3(a)(l0) of the Securities Act (a “3(a)(l0) Transaction”). In the event that
the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(l0) Transaction while this
note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand
Dollars $15,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of cash payment
or addition to the balance of this Note.


 


 


 






		2	Please see changes in use of proceeds section below.



 




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2.8 Preservation
of Existence, etc. The Borrower shall maintain and preserve, and cause each of its subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its subsidiaries (other than dormant subsidiaries that have no or minimum
assets) to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such qualification necessary.


 


2.9 Non-circumvention.
The Borrower hereby covenants and agrees that the Borrower will not, by amendment of its Certificate or Articles of Incorporation or Bylaws,
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all the provisions of this Note and take all action as may be required to protect the rights of the Holder.


 


Article
III. EVENTS OF DEFAULT


 


3.1 Events
of Default. If any of following events in this Section 3.1 occur, it shall be an “Event of Default” hereunder:


 


(a) 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 failure is not cured within three (3) business days of notice thereof from the Holder
to the Borrower.


 


(b) Conversion
and the Shares. The Borrower (i) 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, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate
for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note,
(iii) 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) any certificate for 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, (iv) 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 certificate for 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 three (3) business days after the Holder shall have delivered a Notice of Conversion, (v) fails
to remain current in its obligations to its transfer agent, (vi) causes a conversion of this Note is delayed, hindered or frustrated due
to a balance owed by the Borrower to its transfer agent, (vii) fails to repay Holder, within forty eight (48) hours of a demand from the
Holder, any amount of funds advanced by Holder to Borrower’s transfer agent in order to process a conversion, (viii) fails to reserve
sufficient amount of shares of common stock to satisfy the Reserved Amount at all times, (ix) fails to provide a Rule 144 opinion letter
from the Borrower’s legal counsel to the Holder, covering the Holder’s resale into the public market of the respective conversion
shares under this Note, within two (2) business days of the Holder’s submission of a Notice of Conversion to the Borrower (provided
that the Holder must request the opinion from the Borrower at the time that Holder submits the respective Notice of Conversion and the
date of the respective Notice of Conversion must be on or after the date which is six (6) months after the date that the Holder funded
the Purchase Price under this Note), and/or (x) an exemption under Rule 144 is unavailable for the Holder’s deposit into Holder’s
brokerage account and resale into the public market of any of the conversion shares under this Note at any time after the date which is
six (6) months after the date that the Holder funded the Purchase Price under this Note, and in the case of each of the forgoing, such
failure or event is not cured within three (3) business days of notice thereof from the Holder to the Borrower.


 




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(c) Breach
of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral
documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice
thereof to the Borrower from the Holder.


 


(d) 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 (including, without limitation, the Purchase Agreement), 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 or the Purchase Agreement.


 


(e) Receiver
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors or commence proceedings
for its dissolution, 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 for the Borrower or for a substantial part of its property or
business without its consent and shall not be discharged within sixty (60) days after such appointment.


 


(f) Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of
its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days
unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


(g) 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,
or the Borrower admits in writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition
for bankruptcy relief, all under federal or state laws as applicable or the Borrower admits in writing its inability to pay its debts
generally as they mature, or have filed against it an involuntary petition for bankruptcy relief, all under international, federal or
state laws as applicable.


 


(h) Delisting
of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq
National Market, Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange.


 


(i) Failure
to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including
but not limited to becoming delinquent in its filings); and/or the Borrower shall cease to be subject to the reporting requirements of
the Exchange Act.


 




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(j) Liquidation.
Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business occurs.


 


(k) Cessation
of Operations. Any cessation of operations by Borrower occurs 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.


 


(l) Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the future), or any disposition or conveyance of any material asset of
the Borrower.


 


(m)Financial Statement
Restatement.The 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 un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note
or the Purchase Agreement. The foregoing shall be inapplicable if the restatement is not due to any act(s) by the Borrower, but rather
is an issue of the Borrower’s auditor choosing to use a different accounting method then was originally reported.


 


(n) Reverse
Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days’ prior written notice to the Holder.


 


(o) Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to
the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant
to the Purchase Agreement (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.


 


(p) Cessation
of Trading. Any cessation of trading of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National Market, Nasdaq Small
Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange occurs, and such cessation of trading shall continue
for a period of five consecutive (5) Trading Days.


 


(q) 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 Agreements (as defined herein), 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 and the Other
Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under
the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder.
“Other Agreements” means, collectively, all agreements and instruments between, among or by the Borrower, on the one
hand, and the Holder or and any affiliate of the Holder on the other hand, including, without limitation, promissory notes, provided,
however, the term “Other Agreements” shall not include the agreements and instruments defined as the Documents (as defined
in the Purchase Agreement).


 




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(r) Bid
Price. The Borrower shall lose the “bid” price for its Common Stock ($0.0001 on the “Ask” with zero market
makers on the “Bid” per Level 2) and/or a market (including the OTC Pink, OTCQB or an equivalent replacement exchange).


 


(s) OTC
Markets Designation. OTC Markets changes the Borrower’s designation to ‘Caveat Emptor’ (Skull and Crossbones), or
‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign).


 


(t) Inside
Information. The Borrower or its officers, directors, and/or affiliates transmits, conveys or discloses 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, or the immediately following business day if such date or time is not a business day.


 


(u) Unavailability
of Rule 144. If, at any time on or after the date which is six (6) months after the Issue Date, the Holder is unable to (i) obtain
a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Borrower, the Holder’s
brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s conversion
of any portion of the Note into free trading shares of the Borrower’s Common Stock pursuant to Rule 144, and (ii) thereupon deposit
such shares into the Holder’s brokerage account.


 


(v) Delisting
or Suspension of Trading of Common Stock. If, at any time on or after the Issue Date, the Borrower’s Common Stock (i) is suspended
from trading, (ii) halted from trading, and/or (iii) fails to be quoted or listed (as applicable) on any level of the OTC Markets, any
tier of the NASDAQ Stock Market, the New York Stock Exchange, or the NYSE American.


 


3.2 Consequences
of an Event of Default. UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT SPECIFIED IN Article III OF THIS NOTE, THIS NOTE SHALL BECOME
IMMEDIATELY AND AUTOMATICALLY DUE AND PAYABLE WITHOUT DEMAND, PRESENTMENT, OR NOTICE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL
SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (A) the then outstanding principal
amount of this Note plus (B) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the
“Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (A) and (B),
MULTIPLIED BY ONE point two (120%). The Holder shall have the right at any time after an Event of Default occurs under this Note
and prior to full payment of this Note as set forth herein, to require the Borrower, to immediately issue, in lieu of the payments of
the amounts as set forth in this Section 3.2 (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, pursuant to the terms of this Note (including but not limited
to any beneficial ownership limitations contained herein).3
In the event that the Holder elects to convert a portion of this Note and the Principal Amount and accrued interest into shares of Common
Stock as set forth herein following an Event of Default, such portion of this Note and the Principal Amount and accrued interest shall
be so converted and the remaining Default Amount to be paid by the Borrower shall be appropriately reduced.


 


 


 






		3	Attorney fees covered below.



 




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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, electronic mail, or facsimile, 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 or delivery by electronic mail or 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:


 


C-BOND SYSTEMS INC


6035 South Loop East


Houston, TX 77033


Attn: Scott R. Silverman


 


If to the Holder:


 


GS CAPITAL PARTNERS, LLC


1 East Liberty Street
Suite 600


Reno, Nevada 89501


Attn: Gabe Sayegh


 


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.


 




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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. Neither the Borrower nor the Holder shall assign this Note or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, the Holder may assign its rights hereunder to any “accredited investor”
(as defined in Rule 501(a) of the Securities Act) in a private transaction from the Holder or to any of its “affiliates”,
as that term is defined under the Exchange Act, without the consent of the Borrower. 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. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that 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.


 


4.5 Cost
of Collection. If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation,
engaging an attorney the Holder shall be reimbursed by the Borrower for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.


 


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 Agreement
shall be brought only in the state courts of Nevada or in the federal courts located in the state Nevada and county or city of either
Washoe County, Nevada or Clark County, Nevada. The Parties 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.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED HEREBY. 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.


 




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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 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 Purchase
Agreement. By its acceptance of this Note, each Party agrees to be bound by the applicable terms of the Purchase Agreement.


 


4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a holder of Common Stock
unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the
event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other
right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance
of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the
Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days
prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring
notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of
this Section 4.9 including, but not limited to, name changes, recapitalizations, etc. as soon as possible under law.


 


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 will 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.


 




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4.11 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. No provision of this Note shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay
the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


4.12 Severability.
In the event that any provision of this Note 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 provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.


 


4.13 Dispute
Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment amount or
Default Amount or Maturity Date, the closing bid price, or fair market value (as the case may be) or the arithmetic calculation of the
Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or the Holder shall submit the disputed determinations
or arithmetic calculations via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute
to the Borrower or the Holder or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances
giving rise to such dispute. If the Holder and the Borrower are unable to agree upon such determination or calculation within two (2)
Business Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder,
then the Borrower shall, within two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, the
closing bid price, the or fair market value (as the case may be) to an independent, reputable investment bank selected by the Borrower
and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower
shall cause at its expense the investment bank or the accountant to perform the determinations or calculations and notify the Borrower
and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations.
Such investment bank’s or accountant’s determination or calculation shall be binding upon all Parties absent demonstrable
error.


 


4.14 Future
Raises; Repayment from Proceeds. Until the Note is satisfied in full, if the Borrower receives cash proceeds from any source or series
of related or unrelated sources, including but not limited to, from the issuance of equity and/or debt securities, the conversion of outstanding
warrants of the Borrower, the issuance of securities pursuant to an equity line of credit of the Borrower or the sale of assets, the Borrower
shall, within one (1) business day of Borrower’s receipt of such proceeds, inform the Holder of such receipt, following which the
Holder shall have the right in its sole discretion to require the Borrower to immediately apply up to 50% of such proceeds of such capital
raise to repay amounts due under this this Note. Failure of the Borrower to comply with this provision shall constitute an Event of Default
under Section 3.4 of the Note.


 


[signature page follows]


 




    18


     


    

 


IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer as of the date first above written.


 


	 	C-BOND SYSTEMS INC.
	 	 
	 	By:	/s/ Scott R. Silverman
	 	Name:  	Scott R. Silverman
	 	Title: 	Chief Executive Officer


 


	Agreed and accepted:	 
	 	 	 
	GS Capital Partners, LLC	 
	 	 	 
	By:	/s/ Gabe Sayegh	 
	Name:  	Gabe Sayegh	 
	Title:	Manager	 


 




    19


     


    

 


EXHIBIT A


NOTICE OF CONVERSION



 


The undersigned hereby elects
to convert $_________________principal amount of the Note (defined below) together with $________________ of accrued and unpaid interest
thereto, totaling $_____________ 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 C-Bond Systems Inc., a Colorado corporation (the
“Borrower”), according to the conditions of the convertible note of the Borrower dated as of ____________ (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
At Custodian 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:



 


Name: [NAME]


Address: [ADDRESS]


 


Date of Conversion:                           _____________


Applicable Conversion Price:                           $____________


Number of Shares of Common Stock to be
Issued


Pursuant to Conversion of the Note:                           ______________


Amount of Principal Balance Due remaining


Under the Note after this conversion:
                          ______________


Accrued
and unpaid interest remaining:                           ______________


 


[HOLDER]


 


	 	By:	 	 
	 	Name: [NAME]	 
	 	Title: [TITLE]	 
	 	Date: [DATE]