Document:

EXHIBIT 4.46

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is dated as of September 9, 2016, between ICE Studio Productions Inc., an Ontario corporation
(the “Company”) and Ritwik Uban (the “Executive”).

 

WITNESSETH:

 

A.       WHEREAS,
the parties desire for the Executive to act as President for the Company and Intelligent Content Enterprises Inc., (“ICE”)
commencing the date hereof and during the term hereof.

 

B.       WHEREAS,
the parties desire to execute and deliver this Agreement to provide for the continued employment of Executive by the Company.

 

NOW, THEREFORE, in consideration
of the foregoing premises and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged,
the parties agree as follows:

 

AGREEMENT:

 

1.             Engagement.
The Company hereby engages the Executive and the Executive hereby accepts such engagement upon the terms and conditions hereinafter
set forth.

 

2.             Term.
This Agreement shall commence on the date hereof (the “Commencement Date”) and shall have an initial, probationary
period of one hundred and fifty (150) days at which termination may be initiated by either party without notice and without cause
and shall otherwise remain in effect for a period of One (1) year thereafter (the “Term”). This Agreement shall automatically
renew for Three (3) additional One (1) year periods at the end of the Term unless either party gives written Sixty (60) days written
notice of termination of this Agreement pursuant to Section 13 of this Agreement.

 

3.             Duties.
The Company hereby engages the Executive to serve as the President of the Company and ICE, as such, he shall perform all duties
commonly incident to the executive offices, including such additional duties not inconsistent with such position as the Board of
Directors of ICE (the “Board”) shall prescribe from time to time. From time to time, any outside business activities
beyond the Company and ICE must be agreed to by the Board. A list of those outside business activities, and their expected time
commitments as agreed to as of the execution of this Agreement, will be attached as a separate Schedule to this Agreement.

 

4.             Performance
of Duties. During the term of this Agreement, the Executive shall devote his best efforts, ability and attention to the business
of the Company and ICE. These duties shall include, but shall not be limited to those in the attached Schedule, to be revised from
time to time. As President the Executive shall report to the Board and / or their designate(s).

 

5.             Compensation.

 

A. Salary.
For all services rendered by the Executive under this Agreement as President of the Company and ICE, the Company shall pay the
Executive Ninety Thousand Dollars ($90,000 CDN) (the “Base Salary”) as defined in the attached separate schedule and
as mutually revised in writing from time to time which will form part of this Agreement. The Executive’s Base Salary shall
be payable within the established payroll cycle for the Company’s salaried officers or employees, which currently is on the
15th of the month and the last business day of the month. Salary payments shall be subject to federal withholding and
other applicable payroll deductions and taxes. All salary not paid herein shall accrue. The Base Salary will be reviewed on a yearly
basis commensurate with the renewal periods.

 

     

     

    

 

B. Options Within
thirty (30) days of the execution of this agreement, the Executive shall have the right to be granted One Million (1,000,000) common
share purchase options of Intelligent Content Enterprises Inc. common stock exercisable for a period of up to five (5) years (the
“Options”) as follows:

 

	Number of Common 
Shares Granted	 	 	Exercise Price
 ($ per share)	 	Expiry 
Date	 	Vesting 
Date
	 	300,000	 	 	CDN$1.30	 	September 8, 2021	 	February 6, 2017
	 	350,000	 	 	CDN$1.50	 	September 8, 2021	 	September 9, 2017
	 	350,000	 	 	CDN$1.50	 	September 8, 2021	 	September 9, 2018

 

C. Benefits.
The Executive shall be eligible to participate in all group insurance plans of the Company, and other existing or new perquisites
or benefits offered to executive management of the Company.

 

D. Bonus. The Executive shall
be eligible to receive a bonus as determined by the Board of up to 100% of the annual salary.

 

6.             Reimbursement
of Expenses. The Company shall reimburse the Executive for all reasonable and necessary expenses incurred in carrying out his
duties under this Agreement upon presentation by the Executive to the Company of appropriate documentation indicating the amount
and purpose for such expense, including but not limited to, $500 expended on behalf of the Company for expenses in the ordinary
course of business. All expenses above $500 must be approved in advance by the Company. All travel expenses must be approved by
the Company and follow the Company’s travel policies.

 

7.             Vacation.
Executive shall be entitled to two (2) weeks’ vacation during each year of the Term. Other requirements for additional Vacation
or other allowances will be mutually agreed upon.

 

8.             Agreement
Not to Disclose Trade Secrets or Confidential Information. During the term of this Agreement and after its termination, the
Executive shall not disclose or utilize any trade secrets, confidential information, or other proprietary information acquired
by the Executive during the course of his employment with the Company and ICE, its successors or assigns, or any of its affiliates,
including affiliated companies (collectively, the “Company Affiliates”). As used herein, “trade secret”
means the whole or any portion or phase of any formula, pattern, device, combination of devices, source-code of any proprietary
software, or compilation of any scientific, technical or commercial information, including any design, list of suppliers, list
of customers or improvement thereof, as well as pricing information or methodology, contractual arrangements with vendors or suppliers,
business development plans or activities, or financial information of the Company, ICE or any of the Company Affiliates that is
for use, or is used, in the operation of the Company, ICE or any of the Company Affiliates’ businesses that is not commonly
known by or available to the public and that derives economic value from not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. The Executive agrees to return to the Company any and all such trade
secrets, confidential information or other proprietary information immediately upon the termination of this Agreement.

 

9.             Non-Solicitation
of Customers and Suppliers. Executive agrees that during his employment hereunder, he shall not, whether as an individual or
sole proprietor, or as a principal, agent, officer, director, employer, employee, consultant, independent contractor, partner or
shareholder of any firm, corporation or other entity or group or otherwise, directly or indirectly, solicit the trade or business
of, or trade, or conduct business with, any customer, prospective customer that has already been approached by the Company or ICE,
supplier, or prospective supplier of the Company Affiliates for any purpose other than for the benefit of the Company Affiliates.
Executive further agrees that for two (2) years following termination of his employment hereunder for any reason, Executive shall
not, directly or indirectly, solicit the trade or business of, or trade, or conduct business with any customers or suppliers, or
prospective customers or suppliers, of the Company Affiliates.

 

     

     

    

 

10.           Death
or Disability.

 

A.   In
the event of the Executive’s death during the term of this Agreement, this Agreement and the Executive’s future Base
Salary, incentive compensation and benefits shall automatically be terminated. In such event, the Company shall pay severance to
the Executive’s estate (i) any unpaid Base Salary; and (ii) all accrued but unpaid allowances and expense reimbursements.

 

B.   If
the Executive becomes unable to perform his employment duties during the term of this Agreement because of the “disability”
of the Executive, the Company may terminate this Agreement and the Executive’s employment hereunder. In such event, the Company
shall pay to the Executive (i) any unpaid Base Salary; and (ii) all accrued but unpaid allowances and expense reimbursements. For
purposes of this provision, the term disability shall mean the Executive is unable to perform his material duties as an employee
for the Company, ICE or any of the Company Affiliates, due to mental or physical illness or injury, for a period of at least one
hundred (180) days, in the opinion of a qualified physician selected mutually by the Company and the Executive.

 

13.           Termination
by the Company, the Board or the Executive.

 

A.   Termination
by the Company or the Board for Cause. The Company or the Board may terminate this Agreement and the Executive’s employment
hereunder “for cause” at any time. As used herein, for “cause” shall mean any one of the following:

 

		(1)	The willful breach or intentional neglect by the Executive of his job duties and responsibilities;

 

		(2)	Conviction of any felony;

 

		(3)	Commission of an act of fraud, embezzlement or material misappropriation against the Company, ICE
or Company Affiliates; or

 

		(4)	A material breach of this Agreement by the Executive;

 

		(5)	Failure to achieve financial targets set by the Board.

 

B.   In
the event the Company or the Board terminates the Executive’s employment for cause, the Executive’s Base Salary and
benefits shall automatically terminate as of the effective date of such termination and the Company shall pay to the Executive
(i) any unpaid Base Salary through the date of termination; and (ii) all accrued but unpaid allowances and expense reimbursements,
and the Executive shall not be entitled to receive any other compensation or severance allowance, including any incentive compensation
earned after termination, under this Agreement. In addition, all options received and not exercised shall be cancelled and the
Executive shall not be entitled to any options hereunder.

 

With respect to matters
set forth in subsections (1), (3) and (4) above, the Company or the Board shall give prompt notice to the Executive if it believes
grounds for termination under any of such provisions exist, and the Executive shall have a reasonable period of time (not to exceed
ten business days, to respond and to cure any such grounds for “cause” as may be alleged or to reply to any such claims
or charges. Termination under such provisions shall be warranted only after the Board has determined, in good faith that such “cause”
exists after having afforded the Executive the opportunity to respond or to cure as set forth above.

 

     

     

    

 

C.   Termination
by the Executive Without Good Reason. The Executive may terminate this Agreement and his employment with the Company without
“good reason” (as defined below) upon 90 days’ prior written notice to the Company. In such a case, the Executive
may be required to perform his business duties and shall be paid his regular salary up to the date of the termination. At the option
of the Company, the Company may require the Executive to depart from the Company any day after receiving said 90 days’ notice
from the Executive of the termination of this Agreement. In such event, the Company shall pay to the Executive (i) his regular
salary up to the date of the termination; and (ii) all accrued but unpaid allowances and expense reimbursements, and the Executive
shall not be entitled to receive any other compensation or severance allowance, including any incentive compensation earned after
termination, under this Agreement. In addition, all options received and not exercised shall be cancelled and the Executive shall
not be entitled to any options hereunder.

 

D.   Termination
by the Company or the Board Without Cause or by the Executive for Good Reason. The Company may terminate this Agreement and
the Executive’s employment without cause at any time upon 90 days’ prior written notice to the Executive. The Executive
shall have the right to terminate this Agreement at any time for “good reason.”

 

As used herein, “good
reason” shall mean the occurrence of any of the following without the Executive’s prior written consent:

 

(i) a material reduction
in the benefits payable to the Executive;

 

(ii) a change in control
of the Company such that one entity (directly or through affiliates) purchases control of over 75% of the Company’s common
stock and does not agree, commensurate with the change of control, to assume the terms and conditions of this Agreement;

 

The Company shall pay
to the Executive on the date of termination without cause or for good reason (i) a severance allowance equal to 90 days of Executive’s
regular salary up to the date of the termination or the remainder Executive’s salary through the end of the Term, whichever
is less, at the then-effective rate; and (ii) all accrued but unpaid allowances and expense reimbursements.

 

14.           Indemnification.
The Executive shall be entitled to indemnification from the Company to the fullest extent permitted under the Company’s then
current Articles of Incorporation and Bylaws and under the law of the jurisdiction of the Company’s incorporation as may
be in effect from time to time.

 

15.           Notices.
All notices, requests, demands and other communications provided for in this Agreement shall be in writing. Any notice, request,
demand, claim or other communication hereunder shall be deemed duly given if it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

 

To the
Executive: Ritwik Uban

60 Town Centre
Court, Unit 2901

Toronto, ON M1P
0B1

 

To the
Company: ICE Studio Productions, Inc.

1 King Street West,
Suite 1505

Toronto, ON, Canada
M5H 1A1

 

Any party may send any
notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using
any other means (including personal delivery, expedited courier, messenger service, facsimile, ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually
is received or refused by the intended recipient. Any party may change the address to which notices, requests, demands, claims
and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth.

 

     

     

    

 

16.           Assignment.
Neither this Agreement nor any of the parties’ rights and obligations hereunder may be assigned by a party without the prior
written consent of the other party hereto.

 

17.           Voluntary
Agreement. The Executive acknowledges that before entering into this Agreement, the Executive has had the opportunity to consult
with any attorney or other advisor of his choice, and that this constitutes advice from the Company to do so if he chooses. The
Executive further acknowledges that he has entered into this Agreement of his own free will, and that no promises or representations
have been made to him by any person to induce him to enter into this Agreement other than the express terms set forth herein. The
Executive further acknowledges that he has read this Agreement and understands all of its terms, including the waiver of rights
set forth in Section 17.

 

18.           Binding
Effect. This Agreement shall bind the parties hereto, their respective successors and permitted assigns.

 

19.           Amendment.
No provisions of this Agreement may be amended, modified, waived or discharged unless such amendment, waiver, modification or discharge
is agreed to in writing signed by the Executive and on behalf of the Company by such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

 

20.           Entire
Agreement. This Agreement constitutes the entire agreement between the parties, pertaining to the subject matter hereof, and
supersedes all prior or contemporaneous written or verbal agreements and understandings with the Executive in connection with the
subject matter hereof.

 

21.           Governing
Law. This Agreement and the rights and obligations hereunder shall be governed by the laws of the Province of Ontario without
regard to its conflicts principles and the parties to this Agreement specifically consent to the jurisdiction of the courts of
the Province of Ontario over any action arising out of or related to this Agreement.

 

22.           Survival.
All covenants, agreements, representations and warranties made herein or otherwise made in writing by any party pursuant hereto
shall survive the termination of this Agreement and the employment of the Executive hereunder.

 

23.           Severability.
If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall, nevertheless, continue in full force and effect without being impaired or invalidated in any way.

 

24.           Counterparts.
This Agreement may be executed by the parties in one or more counterparts, each of which when so executed shall be an original
and all such counterparts shall constitute one and the same instrument. Confirmation of execution by electronic transmission of
a facsimile signature page shall be binding upon any party so confirming.

 

[SIGNATURES ON FOLLOWING PAGE]

 

     

     

    

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first set forth above.

 

	 	EXECUTIVE:
	 	 	 
	 	/s/ Ritwik Uban
	 	 	 
	 	COMPANY:
	 	 
	 	
        ICE Studio Productions Inc.

	 	 	 
	 	By: 	/s/ James Cassina
	 	Name: 	James Cassina
	 	Title: 	President
	 	 	 
	 	
        Intelligent Content Enterprises Inc.

	 	 	 
	 	By:	/s/ James Cassina
	 	Name: 	James Cassina
	 	Title: 	PresidentNEITHER
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 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. 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: $48,000.00	Issue
    Date: March 14, 2017 
	Purchase
    Price: $48,000.00 	 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, QUANTUMSPHERE, INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of POWER UP LENDING GROUP LTD., a Virginia corporation, or registered assigns (the “Holder”)
the sum of $48,000.00 together with any interest as set forth herein, on December 30, 2017 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%)(the “Interest Rate”)
per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. 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 when due shall bear interest at the rate of twenty
two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall
commence accruing on the date that the Note 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 common stock, $0.001 par value per share
(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. 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”).

 

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 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 during the period beginning on the
date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date
and (ii) the date of payment of the Default Amount (as defined in 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 amount 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, except as otherwise provided in clause (1)
of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election
of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall
continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of
waiver). 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 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 before 6:00 p.m., New York, New York time
on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York,
New York time the Conversion Date shall be the next business day. 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 clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to
Sections 1.4 hereof.

 

    	 

    	 	 

    

 

1.2
Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as
defined herein) (subject to equitable adjustments by the Borrower relating to the Borrower’s securities or the securities
of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar
events). The “Variable Conversion Price” shall mean 60% multiplied by the Market Price (as defined herein) (representing
a discount rate of 40%). “Market Price” means the average of the lowest three (3) Trading Prices (as defined below)
for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion
Date. “Trading Price” means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets
electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting
Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security,
the closing bid price of such security on the principal securities exchange or trading market where such security is listed or
traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid
prices of any market makers for such security that are listed in the “pink sheets”. 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 OTC, or on the principal securities exchange or other securities
market on which the Common Stock is then being traded.

 

1.3
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 issued pursuant to the Purchase Agreement. The Borrower is required at all
times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the Note
( it has been agreed to by the Borrower and the holder that initially the share reserve shall be 75,000,000; however within 120
days of the date hereof, the Borrower shall increase the share reserve to six times the number of shares that is actually issuable
upon full conversion of the Note)(the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with
the consent of the Holder) 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 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 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 the Reserved Amount it will be considered an Event of Default under Section 3.2 of
the Note.

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time during the period beginning
on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity
Date and (ii) the date of payment of the Default Amount, this Note may be converted by the Holder in whole or in part at any time
from time to time after the Issue Date, 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 6:00 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 (upon payment in full of any amounts owed hereunder).

 

    	 

    	 	 

    

 

(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.

 

(c)
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. 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 hereunder, 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.

 

(d)
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 set forth
herein, 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.

 

(e)
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 due to action and/or inaction of the Borrower, 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 (the
“Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result
of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts
of the Borrower to effect delivery of 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 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(e) are justified.

 

    	 

    	 	 

    

 

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 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (iii) 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).

 

Any
restrictive legend on certificates representing shares of Common Stock issuable upon conversion of this Note shall be removed
and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer
agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Stock may be made without
registration under the Act, which opinion shall be accepted by the Company 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 an exemption from registration. In
the event that the Company does not reasonably accept the opinion of counsel provided by the Holder with respect to the transfer
of Securities pursuant to an exemption from registration (such as Rule 144), at the Deadline, it will be considered an Event of
Default pursuant to Section 3.2 of the Note.

 

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 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).
“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 the 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 of the Borrower 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 of this Note 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
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, ten (10) days prior written notice (but in any event at least five
(5) 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 Note. The above provisions shall similarly
apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c)
Adjustment Due to Distribution. If 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 of this Note 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.

 

1.7
Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on
the table immediately following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable
on not more than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.7. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading 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 Optional Prepayment Amount (as defined below) to Holder, or upon the direction of the Holder
as specified by the Holder in a writing to the Borrower (which shall direction to be sent to Borrower by the Holder at least one
(1) business day prior to the Optional Prepayment Date). If the Borrower exercises its right to prepay the Note, the Borrower
shall make payment to the Holder of an amount in cash equal to the percentage (“Prepayment Percentage”) as set forth
in the table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by 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
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z)
any amounts owed to the Holder pursuant to Section 1.4 hereof (the “Optional Prepayment Amount”). If the Borrower
delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two
(2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant
to this Section 1.7.

 

    	 

    	 	 

    

 

	Prepayment Period	 	Prepayment Percentage	 
	1. The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date.	 	 	120	%
	2. The period beginning on the date which is thirty-one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date.	 	 	125	%
	3. The period beginning on the date which is sixty-one (61) days following the Issue Date and ending on the date which is ninety (90) days following the Issue Date.	 	 	130	%
	4. The period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date.	 	 	135	%
	5. The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date.	 	 	140	%
	6. The period beginning on the date that is one hundred fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date.	 	 	145	%

 

After
the expiration of one hundred eighty (180) days following the Issue Date, the Borrower shall have no right of prepayment.

 

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 and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from
the Holder.

 

    	 

    	 	 

    

 

3.2
Conversion and the Shares. The Borrower 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) 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, 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) 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,
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 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. 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 forty-eight (48) hours of a demand from the Holder.

 

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 including but not limited to the Purchase Agreement 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 (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.

 

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
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.

 

3.7
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC
(which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange,
the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 

    	 

    	 	 

    

 

3.8
Failure to Comply with the Exchange Act. The Borrower 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.

 

3.9
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.10
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.

 

3.11 Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC at any time after
180 days after the Issuance Date for any date or period 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.

 

3.12
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.

 

3.13
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, 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: (1) the
Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory
notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this
Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future
debt of Borrower to the Holder.

 

    	 

    	 	 

    

 

Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date), 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 the Default Sum
(as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, 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: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation
of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.7, 3.8,
3.10, 3.11, 3.12, 3.13, and/or 3.14 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default
Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure
to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), 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
the greater of (i) 150% times 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 to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to
in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity value”
of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion
of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the
Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price,
unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion
Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning
on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (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.

 

If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, 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.

 

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, 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 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: 
	 	 
	 	QUANTUMSPHERE,
    INC. 
	 	2905
    Tech Center Drive 
	 	Santa
    Ana, CA 92705 
	 	Attn:
    Kevin D. Maloney, President and Chief Executive Officer 
	 	Fax:
    
	 	Email:
    
	 	 
	 	If
    to the Holder: 
	 	 
	 	POWER
    UP LENDING GROUP LTD. 
	 	111
    Great Neck Road, Suite 214 
	 	Great
    Neck, NY 11021 
	 	Attn:
    Curt Kramer, Chief Executive Officer 
	 	e-mail:
    info@poweruplending.com 
	 	 
	 	With
    a copy by fax only to (which copy shall not constitute notice): 
	 	 
	 	Naidich
    Wurman LLP 
	 	111
    Great Neck Road, Suite 216 
	 	Great
    Neck, NY 11021 
	 	Attn:
    Allison Naidich 
	 	facsimile:
    516-466-3555 
	 	e-mail:
    allison@nwlaw.com

 

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
(and the other Notes issued pursuant to the Purchase Agreement) 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. Each transferee of this Note must be an “accredited investor” (as defined
in Rule 501(a) of the Securities and Exchange Commission). 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; and may be assigned by the
Holder without the consent of the Borrower.

 

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 Virginia 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 courts of New York or in the federal courts located in the state and county of
Nassau. 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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
Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase
Agreement.

 

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.

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this on March 14, 2017

 

	QUANTUMSPHERE,
    INC. 	 
	 	 	 
	By:	 	 
	 	Kevin
    D. Maloney 	 
	 	President
    and Chief Executive Officer 	 

 

    	 

    	 	 

    

 

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 QUANTUMSPHERE,
INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated
as of March 14, 2017 (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: 
	 	 
	 	POWER
    UP LENDING GROUP LTD. 
	 	111
    Great Neck Road, Suite 214 
	 	Great
    Neck, NY 11021 
	 	Attention:
    Certificate Delivery 
	 	e-mail:
    info@poweruplendinggroup.com
	 	 
	 	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: ______________ 

 

	 	POWER
    UP LENDING GROUP LTD. 	 
	 	 	 
	 	By:	 	 
	 	Name:	Curt
    Kramer 	 
	 	Title:	Chief
    Executive Officer 	 
	 	 	 	 
	 	Date:
    __________________

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