Document:

Exhibit
4.2

 

WARRANT

 

THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN GENERALLY ACCEPTABLE FORM THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

 

KRAIG
BIOCRAFT LABORATORIES, INC.

 

Warrant
To Purchase Common Stock

 

	Warrant
    No.: KBLB 2 1-1	Number
    of Shares: 	8,000,000
	 	 	 
	 	Warrant
    Exercise Price:	$0.25
	 	 	 
	 	Expiration
Date: March 25, 2026

 

Date
of Issuance: March 25, 2021

 

Kraig
Biocraft Laboratories, Inc., a Wyoming corporation (the “Company”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, YAII PN, LTD. (the “Holder”),
the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the
Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) up to 8,000,000 fully paid and nonassessable shares of Common Stock (as defined herein)
of the Company (the “Warrant Shares”) at the exercise price per share provided in Section 1(b) below or as
subsequently adjusted; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number
of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares
of the Common Stock following such exercise, except within 60 days of the Expiration Date (however, such restriction may be waived
by Holder (but only as to itself and not to any other holder) upon not less than 65 days prior notice to the Company). For purposes
of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of
such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by the holder and its affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation
contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written request of any holder, the Company shall promptly, but in no event later than 1 Business
Day following the receipt of such notice, confirm in writing to any such holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the exercise of Warrants
(as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock
was reported.

 

    	 

    	 

    

 

Section
1.

 

(a)
This Warrant is issued pursuant to the Securities Purchase Agreement (“Securities Purchase Agreement”) dated
the date hereof between the Company and the Holder or issued in exchange or substitution thereafter or replacement thereof. Each
Capitalized term used, and not otherwise defined herein, shall have the meaning ascribed thereto in the Securities Purchase Agreement.

 

(b)
Definitions. The following words and terms as used in this Warrant shall have the following meanings:

 

(i)
“Approved Stock Plan” means a stock plan that has been approved by the Board of Directors of the Company prior
to the date of the Securities Purchase Agreement, pursuant to which the Company’s securities may be issued only to any employee,
officer or director for services provided to the Company.

 

(ii)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City
of New York are authorized or required by law to remain closed.

 

(iii)
“Closing Bid Price” means the closing bid price (or closing trade if there is no closing bid price) of Common
Stock as quoted on the Principal Market (as reported by Bloomberg, LP (“Bloomberg”) through its “Volume
at Price” function).

 

(iv)
“Common Stock” means (i) the Company’s Class A common stock, no par value per share, and (ii) any capital
stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common
Stock.

 

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(v)
“Event of Default” means an event of default under the Securities Purchase Agreement or the Convertible Debenture
issued in connection therewith.

 

(vi)
“Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an
Approved Stock Plan, (b) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of the Convertible
Debenture or exercise of the Warrants, (c) shares of Common Stock or other securities issued in connection with a strategic acquisition,
intellectual property licensing agreement or other similar transaction not initiated for the purpose of capital raising, (d) warrants
and options existing and issued as of the Issuance Date and shares issued pursuant to the exercise of said warrants and options,
and (e) any securities of the Company registered in registration statement No. 333-238883 currently on file with the SEC.

 

(vii)
“Expiration Date” means the date set forth on the first page of this Warrant.

 

(viii)
“Issuance Date” means the date hereof.

 

(ix)
“Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

 

(x)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or agency thereof.

 

(xi)
“Primary Market” means the OTC Markets’ OTCQB® Market.

 

(xii)
“Securities Act” means the Securities Act of 1933, as amended.

 

(xiii)
“Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.

 

(xiv)
“Warrant Exercise Price” shall be $0.25 or as subsequently adjusted as provided in Section 8 hereof.

 

(c)
Other Definitional Provisions.

 

(i)
Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company’s
successors and (B) to any applicable law defined or referred to herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to time.

 

(ii)
When used in this Warrant, the words “herein”, “hereof”, and “hereunder”
and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words
“Section”, “Schedule”, and “Exhibit” shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified.

 

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(iii)
Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural,
and vice versa.

 

Section
2. Exercise of Warrant.

 

(a)
Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of
the Company, pro rata as hereinafter provided, at any time on any Business Day on or after the opening of business on such Business
Day, commencing with the first day after the date hereof, and prior to 5:00 P.M. Eastern Time on the Expiration Date (i) by delivery
of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “Exercise Notice”),
of such holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased,
payment to the Company of an amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to which this Warrant is being exercised (plus any
applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in cash or wire transfer of immediately
available funds and the surrender of this Warrant (or an indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction) to a common carrier for overnight delivery to the Company or (ii) if at the time of exercise,
the Warrant Shares are not subject to an effective registration statement or if an Event of Default has occurred and is continuing,
by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise Price in cash or wire transfer, elect
instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following
formula (the “Cashless Exercise”):

 

	Net
    Number = 	(A
    x B) – (A x C)
	 	B

 

For
purposes of the foregoing formula:

 

A
= the total number of Warrant Shares with respect to which this Warrant is then being exercised.

 

B
= the Closing Bid Price of the Common Stock on the date of exercise of the Warrant.

 

C
= the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

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In
the event of any exercise of the rights represented by this Warrant in compliance with this Section 2, the Company shall on or
before the 3rd Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and
this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) and
the receipt of the representations of the holder specified in Section 6 hereof, if requested by the Company (the “Exercise
Delivery Documents”), and if the Warrant Shares are subject to an effective and current Registration Statement and the
Common Stock is DTC eligible, credit such aggregate number of shares of Common Stock to which the holder shall be entitled to
the holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the holder
who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if the Warrant Shares are
not subject to an effective and current Registration Statement and the Common Stock is not DTC eligible then the Company shall,
on or before the 3rd Business Day following receipt of the Exercise Delivery Documents, issue and surrender to a common
carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the holder,
for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. The Warrant Shares shall
be issued with a legend unless they are subject to an effective and current Registration Statement or they are being transferred
pursuant to an exemption from such registration requirements, the availability of which is confirmed in an opinion of counsel
acceptable to the Company’s Transfer Agent. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to
in clause (i) or (ii) above the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has been exercised. In the case of a dispute as to the determination
of the Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly
issue to the holder the number of Warrant Shares that is not disputed and shall submit the disputed determinations or arithmetic
calculations to the holder via facsimile within 1 Business Day of receipt of the holder’s Exercise Notice.

 

(b)
If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or arithmetic calculation
of the Warrant Shares within 1 day of such disputed determination or arithmetic calculation being submitted to the holder, then
the Company shall immediately submit via electronic mail (i) the disputed determination of the Warrant Exercise Price or the Closing
Bid Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares
to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may
be, to perform the determinations or calculations and notify the Company and the holder of the results no later than 72 hours
from the time it receives the disputed determinations or calculations. Such investment banking firm’s or accountant’s
determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.

 

(c)
Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon
as practicable and in no event later than 5 Business Days after any exercise and at its own expense, issue a new Warrant identical
in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such
Warrant is exercised.

 

(d)
No fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant, but rather the number of Warrant Shares
issued upon such exercise of this Warrant shall be rounded up or down to the nearest whole number.

 

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(e)
If the Company or its Transfer Agent shall fail for any reason or for no reason to issue to the holder within 5 days of receipt
of the Exercise Delivery Documents, a certificate for the number of Warrant Shares to which the holder is entitled or to credit
the holder’s balance account with The Depository Trust Company for such number of Warrant Shares to which the holder is
entitled upon the holder’s exercise of this Warrant, unless such failure results from a failure of the Company’s Transfer
Agent to issue such shares as a result of an act of terrorism, war, natural disaster, act of god or other force majure event,
the Company shall, in addition to any other remedies under this Warrant or otherwise available to such holder, pay as additional
damages in cash to such holder on each day the issuance of such certificate for Warrant Shares is not timely effected an amount
equal to 0.025% of the product of (A) the sum of the number of Warrant Shares not issued to the holder on a timely basis and to
which the holder is entitled, and (B) the Closing Bid Price of the Common Stock for the trading day immediately preceding the
last possible date which the Company could have issued such Common Stock to the holder without violating this Section 2.

 

(f)
If within 5 days after the Company’s receipt of the Exercise Delivery Documents and the written request of the Holder that
a new Warrant be issued, the Company fails to deliver a new Warrant to the holder for the number of Warrant Shares to which such
holder is entitled pursuant to Section 2 hereof, then, in addition to any other available remedies under this Warrant, or otherwise
available to such holder, the holder shall be entitled to exercise or transfer its rights under such new warrant as if it had
received such new Warrant and the Company shall be obligated to honor such exercises or transfers as if the holder had submitted
the new Warrant without violating this Section 2.

 

Section
3. Covenants as to Common Stock. The Company hereby covenants and agrees as follows:

 

(a)
This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized
and validly issued.

 

(b)
All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

 

(c)
During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized
and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented
by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price.
If at any time the Company does not have a sufficient number of shares of Common Stock authorized and available, then the Company
shall call and hold a special meeting of its stockholders within 60 days of that time for the sole purpose of increasing the number
of authorized shares of Common Stock.

 

(d)
If at any time after the date hereof the Company shall file a Registration Statement, the Company shall include the Warrant Shares
issuable to the holder, pursuant to the terms of this Warrant and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant on the Primary
Market or such national securities exchange or automated quotation system on which the Common Stock of the Company is listed;
and the Company shall so list on the Primary Market or such national securities exchange or automated quotation system on which
the Common Stock of the Company is listed, as the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant Shares if and so long as any shares of the same class shall be
listed on the Primary Market or such national securities exchange or automated quotation system on which the Common Stock of the
Company is listed. Provided, however, that the foregoing requirement shall not apply to registration statement No. 333-23888,
which is currently on file with the SEC (including any related registration statement, prospectus or supplement required by Rule
462 or 424 of the Securities Act).

 

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(e)
The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation,
merger, 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 to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. The Company will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant.

 

(f)
This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially
all of the Company’s assets.

 

Section
4. Taxes. The Company shall pay any and all taxes, except any applicable withholding, which may be payable with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

 

Section
5. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this
Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which
he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding
this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

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Section
6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this
Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under
the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant
or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the
Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.
The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an “accredited
investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act (an “Accredited Investor”). Upon exercise of this Warrant the holder shall, if requested
by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired
solely for the holder’s own account and not as a nominee for any other party, for investment, and not with a view toward
distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities
upon exercise of this Warrant shall not violate any United States or state securities laws.

 

Section
7. Ownership and Transfer.

 

(a)
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person
in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.

 

Section
8. Adjustment of Warrant Exercise Price. The Warrant Exercise Price of this Warrant shall be adjusted from time to time
as follows:

 

(a)
Adjustment of Warrant Exercise Price. If and whenever on or after the Issuance Date of this Warrant, the Company issues
or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Excluded Securities) for a consideration
per share (the “New Issuance Price”) less than the Warrant Exercise Price, in effect immediately prior to such
issuance or sale (the “Applicable Price”), then immediately after such issue or sale the Warrant Exercise Price
then in effect shall be reduced to an amount equal to such New Issuance Price.

 

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(b)
Effect on Warrant Exercise Price of Certain Events. For purposes of determining the adjusted Warrant Exercise Price under
Section 8(a) above, the following shall be applicable:

 

(i)
Issuance of Options. If after the date hereof, the Company in any manner grants any Options, other than Excluded Securities,
and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange of any convertible securities issuable upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting
or sale of such Option for such price per share. For purposes of this Section 8(b)(i), the lowest price per share for which one
share of Common Stock is issuable upon exercise of such Options shall be equal to the sum of the lowest amounts of consideration
receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise
of the Option or upon conversion or exchange of any convertible security issuable upon exercise of such Option. No further adjustment
of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock or of such convertible securities upon
the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such convertible
securities.

 

(ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells any convertible securities, other than
Excluded Securities, and the lowest price per share for which 1 share of Common Stock is issuable upon the conversion or exchange
thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such convertible securities for such price per share. For
the purposes of this Section 8(b)(ii), the lowest price per share for which one share of Common Stock is issuable upon such conversion
or exchange shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the convertible security and upon conversion or exchange of
such convertible security. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such convertible securities, and if any such issue or sale of such convertible securities
is made upon exercise of any Options for which adjustment of the Warrant Exercise Price had been or are to be made pursuant to
other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issue
or sale.

 

(iii)
Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, other than Excluded Securities,
the additional consideration, if any, payable upon the issue, conversion or exchange of any convertible securities, or the rate
at which any convertible securities are convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise
Price in effect at the time of such change shall be adjusted to the Warrant Exercise Price which would have been in effect at
such time had such Options or convertible securities provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 8(b)(iii), if
the terms of any Option or convertible security that was outstanding as of the Issuance Date of this Warrant, other than Excluded
Securities, are changed in the manner described in the immediately preceding sentence, then such Option or convertible security
and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the
date of such change. No adjustment pursuant to this Section 8(b) shall be made if such adjustment would result in an increase
of the Warrant Exercise Price then in effect.

 

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(iv)
Calculation of Consideration Received. If any Common Stock, Options or convertible securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefore will be deemed to be the gross amount received by the
Company therefore. If any Common Stock, Options or convertible securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration
consists of marketable securities, in which case the amount of consideration received by the Company will be the market price
of such securities on the date of receipt of such securities. If any Common Stock, Options or convertible securities are issued
to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount
of consideration therefore will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or convertible securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the holders of Warrants representing at least two-thirds
(b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly selected by the Company and the holders of Warrants representing
at least two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding. The determination of such
appraiser shall be final and binding upon all parties and the fees and expenses of such appraiser shall be borne jointly by the
Company and the holders of Warrants.

 

(v)
Integrated Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which any specific consideration or no consideration is allocated to such Options
by the parties thereto (1) the per-share value of the shares of Common Stock included in such integrated transaction shall be
the sole determinate as to whether the Warrant Exercise Price is to be adjusted in accordance with the provisions of Section 8(a),
above, (2) if no shares of Common Stock are included in such integrated transaction, but shares of the Company’s preferred
stock are included in such integrated transaction, then the per-share conversion price of shares of that preferred stock shall
be the sole determinate as to whether the Warrant Exercise Price is to be adjusted in accordance with the provisions of Section
8(a), above, and (3) if no shares of Common Stock and no shares of the Company’s preferred stock are included in such integrated
transaction, but debt convertible into shares of Common Stock (whether directly or through an intermediate step, e.g.,
an initial conversion of that debt into shares of the Company’s preferred stock that, thereafter, could be converted into
shares of Common Stock), then the per-share conversion price of shares of such debt shall be the sole determinate as to whether
the Warrant Exercise Price is to be adjusted in accordance with the provisions of Section 8(a), above; provided, however,
that, if the exercise price of the Option is less than the Warrant Exercise Price (after having taken into account any adjustments
thereto in accordance with the provisions of (1), (2), or (3), immediately above), then the Option exercise price shall be utilized
in connection with the Warrant Exercise Price adjustment provisions of Section 8(a), above.

 

(vi)
Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of
Common Stock.

 

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(vii)
Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive
a dividend or other distribution payable in Common Stock, Options or in convertible securities or (2) to subscribe for or purchase
Common Stock, Options or convertible securities, then such record date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the case may be.

 

(c)
Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after
the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of
this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased
and the number of Warrant Shares issuable upon exercise of this Warrant will be proportionately decreased. Any adjustment under
this Section 8(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(d)
Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant,
then, in each such case:

 

(i)
any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination
of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be
the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution
(as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and

 

(ii)
either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal
to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set
forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose
common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant
shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant,
except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this
Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise
price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant
to the terms of the immediately preceding clause (i).

 

    	11

    	 

    

 

(e)
Certain Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features, but excluding Excluded Securities), then the Company’s Board of Directors will make an appropriate
adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so
as to protect the rights of the holders of the Warrants; provided, except as set forth in section 8(c),that no such adjustment
pursuant to this Section 8(e) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable
as otherwise determined pursuant to this Section 8.

 

(f)
Voluntary Adjustments By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

 

(g)
Notices.

 

(i)
Immediately upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment.

 

(ii)
The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to
any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change
(as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.

 

(iii)
The Company will also give written notice to the holder of this Warrant at least 10 days prior to the date on which any Organic
Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to such holder.

 

Section
9. Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.

 

(a)
In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, convertible
securities or rights to purchase stock, warrants, securities or other property other than Excluded Securities, pro rata to the
record holders of any class of Common Stock (the “Purchase Rights”), then the holder of this Warrant 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 exercise of this Warrant 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.

 

    	12

    	 

    

 

(b)
Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s
assets to another Person or other transaction in each case which is affected in such a way that holders of Common Stock are entitled
to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common
Stock is referred to herein as an “Organic Change.” Prior to the consummation of any (i) sale of all or substantially
all of the Company’s assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving
entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in
each case, the “Acquiring Entity”) a written agreement (in form and substance satisfactory to the holders of
Warrants representing at least two-thirds (iii) of the Warrant Shares issuable upon exercise of the Warrants then outstanding)
to deliver to each holder of Warrants in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant and satisfactory to the holders of the Warrants (including
an adjusted warrant exercise price equal to the value for the Common Stock reflected by the terms of such consolidation, merger
or sale, and exercisable for a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the Warrants
without regard to any limitations on exercise, if the value so reflected is less than any Applicable Warrant Exercise Price immediately
prior to such consolidation, merger or sale). Prior to the consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the holders of Warrants representing a majority of the Warrant Shares issuable
upon exercise of the Warrants then outstanding) to insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the Warrant Shares immediately theretofore issuable and
receivable upon the exercise of such holder’s Warrants (without regard to any limitations on exercise), such shares of stock,
securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number
of Warrant Shares which would have been issuable and receivable upon the exercise of such holder’s Warrant as of the date
of such Organic Change (without taking into account any limitations or restrictions on the exercisability of this Warrant).

 

Section
10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company
shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new
Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

 

Section
11. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii)
1 Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed
to the party to receive the same, or (iii) receipt, when sent by electronic mail (provided that the electronic mail transmission
is not returned in error or the sender is not otherwise notified of any error in transmission. The addresses and e-mail addresses
for such communications shall be:

 

    	13

    	 

    

 

	If
    to Holder:	YAII
    PN, Ltd. 
	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ 07092
	 	Attention:         Mark
    A. Angelo
	 	Telephone:      (201)
    536-5114
	 	Email:
    mangelo@yorkvilleadvisors.com
	 	 
	With
    Copy to:	David
    Gonzalez, Esq.
	 	1012
    Springfield Avenue 
	 	Mountainside,
    NJ 07092
	 	Telephone:      (201)
    536-5109
	 	Email:
    dgonzalez@yorkvilleadvisors.com
	 	 
	 	 
	If
    to the Company, to:	Kraig
    Biocraft Laboratories, Inc.
	 	2723
    South State Street – Suite 150
	 	Ann
    Arbor, MI 48104

	 	Attention: Kim Thompson

Telephone: (734) 619-8066

	 	

        

        Email: 

        
	Thompson@kraiglabs.com

                          Jon.Rice@kraiglabs.com

	 	 
	With
                                         a copy (which shall not constitute notice) to:

         

         
	Hunter
                                         Taubman Fischer & Li LLC

        800
        Third Avenue, Suite 2800

        New
        York, NY 10022

         

	 	Attention:
                                         Louis Taubman, Esq.

        Telephone:
        (917) 512-0827

        Email:
ltaubman@htflawyers.com

 

or
at such other address and/or electronic email address and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party 3 Business Days prior to the effectiveness of such change. Written confirmation
of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s computer containing the time, date, recipient’s electronic mail address and the text of
such electronic mail or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of
personal service, receipt by electronic mail or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

    	14

    	 

    

 

Section
12. Date. The date of this Warrant is set forth on page 1 hereof. This Warrant, in all events, shall be wholly void and
of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of Section 3(d) shall continue in full force and effect after such date as to any Warrant Shares or other securities
issued upon the exercise of this Warrant.

 

Section
13. Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrant may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the holders of Warrants representing at least 2/3rds of the Warrant Shares issuable upon exercise
of the Warrants then outstanding; provided that, except for Section 8(c), no such action may increase the Warrant Exercise Price
or decrease the number of shares or class of stock obtainable upon exercise of any Warrant without the written consent of the
holder of such Warrant.

 

Section
14. Assignment. This Warrant may be assigned by the Holder only if such assignment is made in compliance with all applicable laws,
including federal and state securities laws. In connection with any permitted transfer, the transferee shall make such representation
and warranties to the Company, consistent with Section 6 hereof, s the Company may reasonably request.

 

Section
15. Descriptive Headings; Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant. The corporate laws of the State of New Jersey
shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of
New Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New Jersey
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New Jersey.
Each party hereby irrevocably submits to the exclusive jurisdiction of the Superior Court of the state courts sitting in Union
County New Jersey and the Federal District Court for the District of New Jersey sitting in Newark, New Jersey, for the adjudication
of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such 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 manner permitted
by law.

 

Section
16. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant, in any other agreement between the Company and the Holder,
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining
any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

Section
17. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE TRANSACTION
DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

 

REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

    	15

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the date first set forth above.

 

	 	KRAIG
    BIOCRAFT LABORATORIES, INC.
	 	 	 
	 	By:	 
	 	Name:	Kim
    Thompson
	 	Title:	CEO

 

    	16

    	 

    

 

EXHIBIT
A TO WARRANT

 

EXERCISE
NOTICE

 

TO
BE EXECUTED

BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

 

KRAIG
BIOCRAFT LABORATORIES, INC.

 

The
undersigned holder hereby exercises the right to purchase ______________ of the shares of Common Stock (“Warrant Shares”)
of KRAIG BIOCRAFT LABORATORIES, INC. (the “Company”), evidenced by the attached Warrant (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

Specify
Method of exercise by check mark:

 

	 	1.
    ___	Cash
    Exercise
	 	 	 
	 	 	(a)
    Payment of Warrant Exercise Price. The holder shall pay the Aggregate Exercise Price of $______________ to the Company
    in accordance with the terms of the Warrant.
	 	 	 
	 	 	(b)
    Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with
    the terms of the Warrant.
	 	 	 
	 	2.
    ___	Cashless
    Exercise
	 	 	 
	 	 	(a)
    Payment of Warrant Exercise Price. In lieu of making payment of the Aggregate Exercise Price, if permitted by the terms
    of the Warrant, the holder elects to receive upon such exercise the Net Number of shares of Common Stock determined in accordance
    with the terms of the Warrant.
	 	 	 
	 	 	(b)
    Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with
    the terms of the Warrant.

 

Date:
_______________ __, ______

 

Name
of Registered Holder

 

	By:	 	 
	Name:	 	 
	Title:	 	 

 

Address:

Taxpayer
ID No.:

 

    	 

    	 

    

 

EXHIBIT
B TO WARRANT

 

FORM
OF WARRANT POWER

 

FOR
VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________,
a warrant to purchase ____________ shares of the capital stock of KRAIG BIOCRAFT LABORATORIES, INC. represented by warrant certificate
no. _____, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute
and appoint ______________, attorney to transfer the warrant of said corporation, with full power of substitution in the premises.

 

	Dated:	 	 	 
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title:Exhibit 4.3

 

NEITHER
THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

KRAIG
BIOCRAFT LABORATORIES, INC.

 

Amended
and Restated

 

Secured
Convertible Debenture

 

	Original
    Issuance Date: December 11, 2020	Original
    Principal Amount:	$1,000,000
	A
    and R Issuance Date: March 25, 2021	Original
    Issue Discount:	5%
	 	 	 
	No.
    KBLB-1-1	 	 

 

FOR
VALUE RECEIVED, KRAIG BIOCRAFT LABORATORIES, INC., a Wyoming corporation (the “Company”), hereby promises
to pay to the order of YAII PN, LTD. or registered assigns (the “Holder”) the amount set out above as the Original
Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”)
when due, on the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the
terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate
from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable,
whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms
hereof). This Convertible Debenture (including all Convertible Debentures issued in exchange, transfer or replacement hereof,
this “Debenture”) is issued pursuant to the Securities Purchase Agreement. Certain capitalized terms used herein
are defined in Section 17.

 

(1)
GENERAL TERMS

 

(a)
Exchange of Original Convertible Debenture issued on December 11, 2020 (the “Original Convertible Debenture”) for
this exchanged secured Convertible Debenture. On the date hereof, upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Debenture, the Company hereby agrees to issue this Debenture solely in exchange
for the surrender and cancellation of the Original Convertible Debenture, for no additional consideration. All interest that has
accrued on the Original Convertible Debenture shall be deemed to have accrued on this Debenture for which it is exchanged. The
date of issuance of this Debenture shall be deemed to be the Original Issuance Date.

 

    	 

    	 

    

 

(b)
Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest. The “Maturity Date” shall be January 11, 2022, as may be extended at
the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined below) shall have occurred
and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall have occurred and be
continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure
to cure would result in an Event of Default. Other than as specifically permitted by this Debenture, the Company may not prepay
or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

 

(c)
Interest. Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to 10% (“Interest
Rate”). Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent
permitted by applicable law. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder
or its assignee in whose name this Debenture is registered on the records of the Company regarding registration and transfers
of Debentures at the option of the Company in cash, or, provided that the Equity Conditions are then satisfied converted into
Common Stock at the Market Conversion Price on the Trading Day immediately prior to the date paid.

 

(d)
Original Issue Discount. The Original Principal Amount of this Debenture shall have an original issue discount of 5% (the
“OID”) which the Holder previously deducted from the gross proceeds of the Original Principal Amount when this
Debenture was issued.

 

(e)
Security and Guaranty. This Debenture is secured by (i) a security interest in all of the assets of the Company and of
each of the Company’s subsidiaries pursuant to the Security Agreement by and among the Company, its wholly owned subsidiaries
and the Investor dated the date hereof (all such security agreements shall be referred to as the “Security Agreement”)
and (ii) subject to a global guarantee pursuant to the Global Guaranty by and among each of the Company’s wholly owned subsidiaries
and the Investor dated the date hereof and the intellectual property security agreement by and between the Investor, the Company
and the Company’s subsidiaries referenced therein dated the date hereof (all such security agreements shall be referred
to as the “IP Security Agreement”) (the “Guaranty” and collectively with the Security Agreement
and the IP Security Agreement shall be referred to as the “Security Documents”).

 

(2)
EVENTS OF DEFAULT.

 

(a)
An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and
whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body:

 

(i)
the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this
Debenture (including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder) or
any other Transaction Document;

 

    	2

    	 

    

 

(ii)
The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary
of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the
Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect
relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company
any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 61
days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company
or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view
to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by
any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate
or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

 

(iii)
The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage,
credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued,
or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness
now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable;

 

(iv)
If the Common Stock ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on the OTCQB-MKT
(the “Primary Market”) within 5 Trading Days of such delisting, unless such cessation is the result of the
Common Stock being listed on the Nasdaq Capital Markets or a similar exchange;

 

(v)
The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 6) unless
in connection with such Change of Control Transaction this Debenture is retired;

 

    	3

    	 

    

 

(vi)
the Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within
3 Business Days after the applicable Conversion Failure or (B) notice, written or oral, to any holder of the Debenture, including
by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into
shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(e);

 

(vii)
The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within 3 Business
Days after such payment is due;

 

(viii)
The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach
or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction
Documents (as defined in Section 17) which is not cured within the time prescribed.

 

(ix)
any Event of Default occurs with respect to any Transaction Document, which is not cured within any applicable cure period set
forth therein.

 

(b)
During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal
amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall
become at the Holder’s election, immediately due and payable in cash; provided however, the Holder may request (but shall
have no obligation to request) payment of such amounts in Common Stock of the Company. If an Event of Default occurs and for so
long as such Event of Default remains uncured, the Interest Rate on this Debenture shall immediately become 15% per annum and
shall remain at such increased interest rate until the applicable Event of Default is cured. Furthermore, in addition to any other
remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of
Default at the Market Conversion Price. The Holder need not provide and the Company hereby waives any presentment, demand, protest
or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable
law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent thereon.

 

    	4

    	 

    

 

(3)
COMPANY REDEMPTION.

 

Company’s
Cash Redemption. The Company at its option shall have the right to redeem (a “Redemption”), in part or
in whole, outstanding Principal and Interest under this Debenture prior to the Maturity Date. The Company shall pay an amount
equal to the principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to 1) if
such Redemption occurs within 180 calendar days from the date hereof an amount equal to 10% of the outstanding Principal Amount
being redeemed plus outstanding and accrued Interest and 2) if such Optional Redemption occurs after 180 calendar days from the
date hereof an amount equal to 15% of the outstanding Principal Amount plus outstanding and accrued Interest. In order to make
a Redemption pursuant to this Section, the Company shall first provide 7 business days advanced written notice to the Holder of
its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal and Interest
it desires to redeem plus the applicable Redemption Premium (the “Redemption Amount”). After receipt of the
Redemption Notice the Holder shall have 7 Business Days to elect to convert all or any portion of this Debenture, subject to the
limitations set forth in Section 3(e). On the 8th Business Day after the Redemption Notice, the Company shall deliver
to the Holder via wire transfer of immediately available funds the Redemption Amount with respect to the Principal Amount and
Interest redeemed after giving effect to conversions by the Holder effected during the 7 Business Day period.

 

(4)
CONVERSION OF DEBENTURE. This Debenture shall be convertible into shares of the Company’s Common Stock, on the terms
and conditions set forth in this Section 4.

 

(a)
Conversion Right. Subject to the provisions of Section 4(e), at any time or times on or after the A and R Issuance Date
or as provided for in Section 4(d), the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion
Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(e)(i), at the
Market Conversion Price. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this
Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Market Conversion Price (the “Conversion
Rate”). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would
result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock
up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

 

(b)
“Conversion Amount” means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise
with respect to which this determination is being made.

 

(c)
“Market Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination,
90% of the lowest VWAP of the Company’s Common Stock during the 10 Trading Days immediately preceding the Conversion Date.
All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction.
In that event that the Company’s Common Stock is uplisted to the Nasdaq as the Primary Market the Market Conversion Price
shall not be less than 20% of the Market Conversion Price for the first conversion hereunder (the “Nasdaq Floor Price”).

 

    	5

    	 

    

 

(d)
Mechanics of Conversion.

 

(i)
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall (A) transmit by electronic mail (or otherwise deliver), for receipt on or prior to 5:00 p.m., New York Time,
on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company and (B) if required by Section 4(d)(iv), surrender this Debenture to a nationally recognized
overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company
with respect to this Debenture in the case of its loss, theft or destruction). On or before the 3rd Business Day following the
date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not
required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreement and provided that the Transfer
Agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program,
credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder
shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to Section 2(g) of the Securities
Purchase Agreement. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture
is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable
and in no event later than 3 Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder
a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of
Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of
such shares of Common Stock upon the transmission of a Conversion Notice pursuant to this Section 4(e)(i).

 

(ii)
Company’s Failure to Timely Convert. If within 3 Trading Days after the Company’s receipt by electronic mail
of a copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s
balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such conversion of any
Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an
open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable
upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company
shall, within 3 Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket
expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which
point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Closing Bid Price on the Conversion Date.

 

    	6

    	 

    

 

(iii)
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless
(A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with
prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical
surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal and Interest converted and
the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Debenture upon conversion.

 

(e)
Limitations on Conversions.

 

(i)
Beneficial Ownership. The Company shall not affect any conversions of this Debenture and the Holder shall not have the
right to convert any portion of this Debenture or receive shares of Common Stock as payment of interest hereunder to the extent
that after giving effect to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof,
would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder)
in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt
of shares as payment of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common
Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares
of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of which portion of the principal amount of this Debenture
is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a
principal amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact
and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance
with Section 4(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding
under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder)
upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

 

(f)
Other Provisions.

 

(i)
The Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common
Stock issuable upon conversion of all outstanding amounts under this Debenture; and within 3 Business Days following the receipt
by the Company of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall
promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

 

(ii)
All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

 

    	7

    	 

    

 

(iii)
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as
herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder,
not less than such number of shares of the Common Stock as shall (subject to any additional requirements of the Company as to
reservation of such shares set forth in this Debenture or in the Transaction Documents) be issuable (taking into account the adjustments
and restrictions set forth herein) upon the conversion of the outstanding principal amount of this Debenture and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and, if a registration statement has been declared and remains effective under
the Securities Act, registered for public sale in accordance with such registration statement.

 

(iv)
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section
2 herein for a Conversion Failure and such Holder shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post
a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.

 

(5)
Purchase Rights.

 

(a)
Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this
Debenture) 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.

 

(b)
Other Events. If any event occurs of the type contemplated by the provisions of this Section 4 but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion
Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion
Price as otherwise determined pursuant to this Section 5.

 

    	8

    	 

    

 

(c)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture,
at the Holder’s option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or
other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common
Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions
on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion,
such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such
Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with
conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration
commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory
to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall
be applied without regard to any limitations on the conversion or redemption of this Debenture.

 

(d)
In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2)
sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of
related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount
of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed
to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such
event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which
such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or
sale would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder
a convertible Debenture with a principal amount equal to the aggregate principal amount of this Debenture then held by such Holder,
plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Debenture shall have
terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights
and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued.
In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible
Debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such
transaction and the Market Conversion Price, (in the event a conversion utilizing the Market Conversion Price hereunder is pending),
as applicable, in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger,
sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash
and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly
apply to successive such events.

 

    	9

    	 

    

 

(6)
REISSUANCE OF THIS DEBENTURE.

 

(a)
Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the
Company will, subject to the satisfaction of the transfer provisions of the Securities Purchase Agreement, forthwith issue and
deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered
transferee or assignee, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of
the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal
represented by this Debenture may be less than the Principal stated on the face of this Debenture.

 

(b)
Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of
this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing
the outstanding Principal.

 

(c)
Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the
aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.

 

(d)
Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture,
such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new
Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section
6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued
in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to
such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is
the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall
represent accrued and unpaid Interest from the Issuance Date.

 

    	10

    	 

    

 

(7)
NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii) 1 Business
Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the
party to receive the same, or (iii) receipt, when sent by electronic mail (provided that the electronic mail transmission is not
returned in error or the sender is not otherwise notified of any error in transmission. The addresses and e-mail addresses for
such communications shall be:

 

	If
    to the Company, to:	Kraig
    Biocraft Laboratories, Inc.
	 	2723
    South State Street – Suite 150 
	 	Ann
    Arbor, MI 48104
	 	Attention:
                                         Kim Thompson

        Telephone:
        (734) 619-8066

	 	Email:	Thompson@kraiglabs.com

        Jon.Rice@kraiglabs.com

 

	With a copy (which shall not

                                                                     constitute notice) to: 
	Hunter
                                         Taubman Fischer & Li LLC

        800
        Third Avenue, Suite 2800

        New
        York, NY 10023

	 	Attention:
    Louis Taubman, Esq.
	 	Telephone:
    (917)512-0827
	 	Email:
    ltaubman@htflawyers.com 

 

	If
    to the Holder:	YAII
                                         PN, Ltd.

        c/o
        Yorkville Advisors Global, LP

	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ 07092
	 	Attention:
                                         Mark Angelo

        Telephone:
        (201) 536-5114

	 	Email:
    mangelo@yorkvilleadvisors.com
	 	 
	With
    a copy to:	David
    Gonzalez, Esq. 
	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ 07092
	 	Telephone:
    (201) 536-5109
	 	Email:
    dgonzalez@yorkvilleadvisors.com 

 

or
at such other address and/or electronic email address and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party 3 Business Days prior to the effectiveness of such change. Written confirmation
of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s computer containing the time, date, recipient’s electronic mail address and the text of
such electronic mail or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of
personal service, receipt by electronic mail or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

    	11

    	 

    

 

(8)
Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which
are absolute and unconditional, to pay the principal of, interest and other charges (if any) on, this Debenture at the time, place,
and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company. As long as this
Debenture is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder,
(i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder
(which shall include combining (by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares);
(ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its Common Stock or other equity securities
other than as to the Underlying Shares to the extent permitted or required under the Transaction Documents; or (iii) enter into
any agreement with respect to any of the foregoing. Notwithstanding the foregoing, the Company shall be permitted to affect a
reverse stock split in order to comply with the initial listing requirements of Nasdaq.

 

(9)
This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation,
the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the
terms hereof.

 

(10)
No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. Without the Holder’s consent, the Company will not and will not permit any of their
subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits
there from that is senior in any respect to the obligations of the Company under this Debenture.

 

(11)
This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect
to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey
sitting in Union County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in
connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

 

(12)
If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly
for all reasonable fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the
Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout,
attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations,
(ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to
any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

 

    	12

    	 

    

 

(13)
Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist
upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must
be in writing.

 

(14)
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable
laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted
rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this
indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted
to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

(15)
Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day.

 

(16)
THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

 

(17)
CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

 

(a)
“Approved Stock Plan” means a stock plan, that has been approved by the Board of Directors of the Company,
pursuant to which the Company’s securities may be issued only to any employee, officer, or director or third party service
providers in the normal course of business, for services provided to the Company.

 

    	13

    	 

    

 

(b)
“Bloomberg” means Bloomberg Financial Markets.

 

(c)
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in
the United States or a day on which banking institutions are authorized or required by law or other government action to close.

 

(d)
“Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty
percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other
current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof),
(b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which
is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals
who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a
majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of
fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions
with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it
is bound, providing for any of the events set forth above in (a), (b) or (c).

 

(e)
“Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market
or on the exchange on which the Common Stock is then listed as quoted by Bloomberg.

 

(f)
“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for Common Stock.

 

(g)
“Commission” means the Securities and Exchange Commission.

 

(h)
“Common Stock” means the Class A common stock, no par value, of the Company and stock of any other class into
which such shares may hereafter be changed or reclassified.

 

(i)
“Equity Conditions” means that each of the following conditions is satisfied: (i) on each day during the period
beginning 2 weeks prior to the applicable date of determination and ending on and including the applicable date of determination
(the “Equity Conditions Measuring Period”), all applicable shares of Common Stock to be issued in connection
with the event requiring determination shall be eligible for sale without restriction and without the need for registration under
any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock
is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market
nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange
or Principal Market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or Principal
Market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares with respect to
any prior conversions of the Debenture, if any, to the Holder on a timely basis as set forth in Section 4(e)(ii) hereof; (iv)
any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full
without violating Section 4(f) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring
Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of
notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause any applicable
shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction
and without the need for registration under any applicable federal or state securities laws.

 

    	14

    	 

    

 

(j)
“Equity Conditions Failure” means that on any applicable date the Equity Conditions have not been satisfied
(or waived in writing by the Holder).

 

(k)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(l)
“Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an
Approved Stock Plan, (b) warrants and options existing and issued as of the Issuance Date and shares issued pursuant to the exercise
of said warrants and option, (c) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this
Debenture or the Warrant issued pursuant to the Securities Purchase Agreement, (d) shares of Common Stock or other securities
issued in connection with a strategic acquisition, intellectual property licensing agreement or other similar transaction not
initiated for the purpose of capital raising and (e) any securities of the Company registered in registration statement No. 333-238883
currently on file with the SEC.

 

(m)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.

 

(n)
“Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers
and regardless of the number of instruments, which may be issued to evidence such Debenture.

 

(o)
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government
or political subdivision thereof or a governmental agency.

 

(p)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(q)
“Securities Purchase Agreement” means the Securities Purchase Agreement dated the date hereof by and among
the Company and the Investor.

 

(r)
“Trading Day” means a day on which the shares of Common Stock are quoted on the Primary Market on which the
shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or
quoted, then Trading Day shall mean a Business Day.

 

    	15

    	 

    

 

(s)
“Transaction Documents” means the Securities Purchase Agreement or any other agreement delivered in connection
with the Securities Purchase Agreement, including, without limitation, the Irrevocable Transfer Agent Instructions, and the Warrant.

 

(t)
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as payment
of interest in accordance with the terms hereof.

 

(u)
“VWAP” means, for any security as of any date, the daily dollar volume-weighted average price for such security
as reported by Bloomberg, LP through its “Historical Price Table Screen (HP)” with Market: Weighted Ave function selected,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing
bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets”
by Pink Sheets LLC.

 

(v)
“Warrant” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all
warrants issued in exchange therefor or replacement thereof.

 

[Signature
Page Follows]

 

    	16

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Convertible Debenture to be duly executed by a duly authorized officer as of
the date set forth above.

 

	 	COMPANY:
	 	 
	 	KRAIG
    BIOCRAFT LABORATORIES, INC.
	 	 	 
	 	By:	 
	 	Name:	Kim
    Thompson
	 	Title:	CEO

 

    	 

    	 

    

 

EXHIBIT
I

CONVERSION
NOTICE

 

(To
be executed by the Holder in order to Convert the Debenture)

 

TO:

 

The
undersigned hereby irrevocably elects to convert $______________________________ of the principal amount of Debenture No. KBLB-1-1 into Shares of Common Stock
of KRAIG BIOCRAFT LABORATORIES, INC., according to the conditions stated therein, as of the Conversion Date written below.

 

	Conversion
    Date:	 	 
	 	 	 
	Conversion
    Amount to be converted:	 	$	 
	 	 	 	 
	Conversion
    Price:	 	$	 
	 	 	 	 
	Number
    of shares of Common Stock to be issued:	 	 
	 	 	 
	Amount
    of Debenture Unconverted:	 	$
    	 
	 	 	 	 
	Please
    issue the shares of Common Stock in the following name and to the following address:
	 
	Issue
    to:
	 	 	 
	 	 	 
	Authorized
    Signature:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Title:	 	 
	 	 	 
	Broker
    DTC Participant Code:	 	 
	 	 	 
	Account
    Number:

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