SUBSIDIARY GUARANTEE

 

This Subsidiary Guarantee, dated as of January 27, 2016 (this “Guarantee”), is
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the “Guarantors”), in favor of the
purchasers signatory (together with their permitted assigns, the “Secured
Parties”) to that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated as of the date hereof, among Epic Stores Corp., a Nevada
corporation (the “Company”) and the Secured Parties.

 

W I T N E S S E T H:

WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to sell and
issue to the Secured Parties, and the Secured Parties have agreed to purchase
from the Company the Notes (as defined in the Purchase Agreement), subject to
the terms and conditions set forth therein;

WHEREAS, each Guarantor will directly benefit from the extension of credit to
the Company represented by the issuance of the Notes; and

WHEREAS, as a material inducement to the Secured Parties to enter into the
Purchase Agreement and all the other agreements to be entered into in connection
therewith, the Secured Parties have requested the Guarantors and the Company to
enter into this Guarantee;

NOW, THEREFORE, in consideration of the premises, each Guarantor hereby agrees
with the Secured Parties as follows:

1.                  Definitions. Unless otherwise defined herein, terms defined
in the Purchase Agreement and used herein shall have the meanings given to them
in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and
“hereunder” and words of similar import when used in this Guarantee shall refer
to this Guarantee as a whole and not to any particular provision of this
Guarantee, and Section and Schedule references are to this Guarantee unless
otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The following
terms shall have the following meanings:

“Guarantee” means this Subsidiary Guarantee, as the same may be amended,
supplemented or otherwise modified from time to time.

“Obligations” means, in addition to all other costs and expenses of collection
incurred by Secured Parties in enforcing any of such Obligations and/or this
Guarantee, all of the liabilities and obligations (primary, secondary, direct,
contingent, sole, joint or several) due or to become due, or that are now or may
be hereafter contracted or acquired, or owing to, of the Company or any
Guarantor to the Secured Parties, including, without limitation, all obligations
under this Guarantee, the Note, that certain Security Agreement (the “Security
Agreement”), dated as of the date hereof, among the Company, the Guarantors and
the Secured Parties, and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith, in each case,
whether now or hereafter existing, voluntary or involuntary, direct or indirect,

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absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any of the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term “Obligations” shall include,
without limitation: (i) principal of, and interest on the Notes and the loans
extended pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Company or any Guarantor from time to time
under or in connection with this Guarantee, the Notes, the Security Agreement,
and any other instruments, agreements or other documents executed and/or
delivered in connection herewith or therewith; and (iii) all amounts (including
but not limited to post-petition interest) in respect of the foregoing that
would be payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company or any Guarantor.

2.                     Guarantee.

(a)                Guarantee.

(i)                 The Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantee to the Secured Parties and their
respective successors, endorsees, transferees and assigns, the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.

(ii)               Anything herein or in any other Transaction Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Transaction Documents shall in no event exceed the amount which
can be guaranteed by such Guarantor under applicable federal and state laws,
including laws relating to the insolvency of debtors, fraudulent conveyance or
transfer or laws affecting the rights of creditors generally (after giving
effect to the right of contribution established in Section 2(b)).

(iii)             Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Secured Parties hereunder.

(iv)             The guarantee contained in this Section 2 shall remain in full
force and effect until all the Obligations and the obligations of each Guarantor
under the guarantee contained in this Section 2 shall have been satisfied by
indefeasible payment in full.

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(v)               No payment made by the Company, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Secured
Parties from the Company, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Guarantor
in respect of the Obligations or any payment received or collected from such
Guarantor in respect of the Obligations), remain liable for the Obligations up
to the maximum liability of such Guarantor hereunder until the Obligations are
indefeasibly paid in full.

(vi)             Notwithstanding anything to the contrary in this Guarantee,
with respect to any defaulted non-monetary Obligations the specific performance
of which by the Guarantors is not reasonably possible (e.g. the issuance of the
Company's Common Stock), the Guarantors shall only be liable for making the
Secured Parties whole on a monetary basis for the Company's failure to perform
such Obligations in accordance with the Transaction Documents.

(b)               Right of Contribution. Subject to Section 2(c), each Guarantor
hereby agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and conditions
of Section 2(c). The provisions of this Section 2(b) shall in no respect limit
the obligations and liabilities of any Guarantor to the Secured Parties and each
Guarantor shall remain liable to the Secured Parties for the full amount
guaranteed by such Guarantor hereunder.

(c)                No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Secured Parties, no Guarantor shall be entitled to be subrogated to any of
the rights of the Secured Parties against the Company or any other Guarantor or
any collateral security or guarantee or right of offset held by the Secured
Parties for the payment of the Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Secured Parties by the Company on account of the
Obligations are indefeasibly paid in full. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Secured Parties, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Agent (as defined in the Security Agreement) in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Agent, if required),
applied against the Obligations, whether matured or unmatured, in such order as
the Secured Parties may determine.

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(d)               Amendments, Etc. With Respect to the Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Obligations made
by the Secured Parties may be rescinded by the Secured Parties and any of the
Obligations continued, and the Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Secured Parties, and the Purchase Agreement and
the other Transaction Documents and any other documents executed and delivered
in connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Secured Parties may deem advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
the Secured Parties for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. The Secured Parties shall have no obligation to
protect, secure, perfect or insure any Lien at any time held by them as security
for the Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.

(e)                Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Secured Parties upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Company and any of the Guarantors, on the one hand,
and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. Each Guarantor waives to the extent permitted by
law diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Company or any of the Guarantors with respect to the
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment and performance without regard to (a) the validity or
enforceability of the Purchase Agreement or any other Transaction Document, any
of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Secured Parties, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance or fraud by Secured Parties) which may at any
time be available to or be asserted by the Company or any other Person against
the Secured Parties, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Company or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the Company
for the Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Secured Parties may, but shall be under no obligation to, make a
similar demand on or otherwise pursue such rights and remedies as they may have
against the Company, any other Guarantor or any other Person or against

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any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Secured Parties to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Company, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Company, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Secured Parties against any Guarantor. For the purposes
hereof, “demand” shall include the commencement and continuance of any legal
proceedings.

(f)                Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Secured Parties upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Company or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.

(g)               Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Secured Parties without set-off or counterclaim in
U.S. dollars at the address set forth or referred to in the signature pages to
the Purchase Agreement.

3.                  Representations and Warranties. Each Guarantor hereby makes
the following representations and warranties to Secured Parties as of the date
hereof:

(a)                Organization and Qualification. The Guarantor is an entity,
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the applicable jurisdiction set forth on Schedule 3(a), with
the requisite corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. The Guarantor has no
subsidiaries other than those identified as such on the Disclosure Schedules to
the Purchase Agreement. The Guarantor is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of any of this
Guarantee in any material respect, (y) have a material adverse effect on the
results of operations, assets, prospects, or financial condition of the
Guarantor or (z) adversely impair in any material respect the Guarantor's
ability to perform fully on a timely basis its obligations under this Guarantee
(a “Material Adverse Effect”).

(b)               Authorization; Enforcement. The Guarantor has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Guarantee, and otherwise to carry out its obligations
hereunder. The execution and delivery of this Guarantee by the Guarantor and the
consummation by it of the

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transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of the Guarantor. This Guarantee has been duly
executed and delivered by the Guarantor and constitutes the valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

(c)                No Conflicts. The execution, delivery and performance of this
Guarantee by the Guarantor and the consummation by the Guarantor of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate or articles of incorporation, by-laws
or other organizational documents (ii) conflict with, constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Guarantor
is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Guarantor is subject (including federal and state
securities laws and regulations), or by which any material property or asset of
the Guarantor is bound or affected, except in the case of each of clauses (ii)
and (iii), such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as could not, individually or in the aggregate,
have or result in a Material Adverse Effect. The business of the Guarantor is
not being conducted in violation of any law, ordinance or regulation of any
governmental authority, except for violations which, individually or in the
aggregate, do not have a Material Adverse Effect.

(d)               Consents and Approvals. The Guarantor is not required to
obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local, foreign or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Guarantor of this Guarantee.

(e)                Purchase Agreement. The representations and warranties of the
Company set forth in the Purchase Agreement as they relate to such Guarantor,
each of which is hereby incorporated herein by reference, are true and correct
as of each time such representations are deemed to be made pursuant to such
Purchase Agreement, and the Secured Parties shall be entitled to rely on each of
them as if they were fully set forth herein, provided that each reference in
each such representation and warranty to the Company's knowledge shall, for the
purposes of this Section 3, be deemed to be a reference to such Guarantor's
knowledge.

(f)                Foreign Law. If applicable, each Guarantor has consulted with
appropriate foreign legal counsel with respect to any of the above
representations for which non-U.S. law is applicable. Such foreign counsel has
advised each applicable Guarantor that such counsel knows of no reason why any
of the above representations

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would not be true and accurate. Such foreign counsel was provided with copies of
this Guarantee and the Transaction Documents prior to rendering its advice.

4.                  Covenants.

(a)          Each Guarantor covenants and agrees with the Secured Parties that,
from and after the date of this Guarantee until the Obligations shall have been
indefeasibly paid in full, such Guarantor shall take, and/or shall refrain from
taking, as the case may be, each commercially reasonable action that is
necessary to be taken or not taken, as the case may be, so that no Event of
Default (as defined in the Notes) is caused by the failure to take such action
or to refrain from taking such action by such Guarantor.

(b)         So long as any of the Obligations are outstanding, unless Secured
Parties holding at least 67% of the aggregate principal amount of the then
outstanding Notes shall otherwise consent in writing, each Guarantor will not
directly or indirectly on or after the date of this Guarantee:

                                                                   
i.                        enter into, create, incur, assume or suffer to exist
any indebtedness for borrowed money of any kind, including but not limited to, a
guarantee, 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 therefrom;

                                                                 
ii.                        enter into, create, incur, assume or suffer to exist
any Liens 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
therefrom except for Permitted Liens (as defined in the Security Agreement);

                                                               
iii.                        amend its certificate or articles of incorporation,
bylaws or other charter documents so as to adversely affect any rights of any
Secured Party;

                                                               
iv.                        repay, repurchase or offer to repay, repurchase or
otherwise acquire more than a de minimis number of shares of its securities or
debt obligations;

                                                                 
v.                        pay cash dividends on any equity securities of the
Company;

                                                               
vi.                        enter into any transaction with any Affiliate of the
Guarantor which would be required to be disclosed in any public filing of the
Company with the Commission, unless such transaction is made on an arm’s-length
basis and expressly approved by a majority of the disinterested directors of the
Company (even if less than a quorum otherwise required for approval of the Board
of Directors); or

                                                             
vii.                        enter into any agreement with respect to any of the
foregoing.

 

 

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5.                  Miscellaneous.

(a)                Amendments in Writing. None of the terms or provisions of
this Guarantee may be waived, amended, supplemented or otherwise modified except
in writing by the Secured Parties.

(b)               Notices. All notices, requests and demands to or upon the
Secured Parties or any Guarantor hereunder shall be effected in the manner
provided for in the Purchase Agreement, provided that any such notice, request
or demand to or upon any Guarantor shall be addressed to such Guarantor at its
notice address set forth on Schedule 5(b).

(c)                No Waiver by Course of Conduct; Cumulative Remedies. The
Secured Parties shall not by any act (except by a written instrument pursuant to
Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any default under the
Transaction Documents, including any Event of Default (as defined in the Notes).
No failure to exercise, nor any delay in exercising, on the part of the Secured
Parties, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Secured Parties of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Secured Parties would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

(d)               Enforcement Expenses; Indemnification.

(i)                 Each Guarantor agrees to pay, or reimburse the Secured
Parties for, all its reasonable costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Guarantee and the other
Transaction Documents to which such Guarantor is a party, including, without
limitation, the reasonable fees and disbursements of counsel to the Secured
Parties.

(ii)               Each Guarantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable in connection with any of the transactions
contemplated by this Guarantee.

(iii)             Each Guarantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Guarantee to the extent the Company would
be required to do so pursuant to the Purchase Agreement.

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(iv)             The agreements in this Section 5(d) shall survive repayment of
the Obligations and all other amounts payable under the Purchase Agreement and
the other Transaction Documents.

(e)                Successor and Assigns. This Guarantee shall be binding upon
the successors and assigns of each Guarantor and shall inure to the benefit of
the Secured Parties and their respective successors and assigns; provided that
no Guarantor may assign, transfer or delegate any of its rights or obligations
under this Guarantee without the prior written consent of the Secured Parties.

(f)                Set-Off. Each Guarantor hereby irrevocably authorizes the
Secured Parties at any time and from time to time while an Event of Default (as
defined in the Notes) or other default under any of the Transaction Documents
shall have occurred and be continuing, without notice to such Guarantor or any
other Guarantor, any such notice being expressly waived by each Guarantor, to
set off and appropriate and apply any and all deposits, credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Secured
Parties to or for the credit or the account of such Guarantor, or any part
thereof in such amounts as the Secured Parties may elect, against and on account
of the obligations and liabilities of such Guarantor to the Secured Parties
hereunder and claims of every nature and description of the Secured Parties
against such Guarantor, in any currency, whether arising hereunder, under the
Purchase Agreement, any other Transaction Document or otherwise, as the Secured
Parties may elect, whether or not the Secured Parties have made any demand for
payment and although such obligations, liabilities and claims may be contingent
or unmatured. The Secured Parties shall notify such Guarantor promptly of any
such set-off and the application made by the Secured Parties of the proceeds
thereof, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Secured Parties
under this Section 5(f) are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) which the Secured
Parties may have.

(g)               Counterparts. This Guarantee may be executed by two or more of
the parties to this Guarantee on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

(h)               Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

(i)                 Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

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(j)                 Integration. This Guarantee and the other Transaction
Documents represent the agreement of the Guarantors and the Secured Parties with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Secured Parties relative to
the subject matter hereof and thereof not expressly set forth or referred to
herein or in the other Transaction Documents.

(k)               Governing Laws. All questions concerning the construction,
validity, enforcement and interpretation of this Guarantee shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each of
the Company and the Guarantors agree that all proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Guarantee (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan. Each of the Company and each
Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court or that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Guarantee 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. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Guarantee or the transactions
contemplated hereby.

(l)                 Acknowledgements. Each Guarantor hereby acknowledges that:

(i)                 it has been advised by counsel in the negotiation, execution
and delivery of this Guarantee and the other Transaction Documents to which it
is a party;

(ii)               the Secured Parties have no fiduciary relationship with or
duty to any Guarantor arising out of or in connection with this Guarantee or any
of the other Transaction Documents, and the relationship between the Guarantors,
on the one hand, and the Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

(iii)             no joint venture is created hereby or by the other Transaction
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Guarantors and the Secured Parties.

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(m)             Additional Guarantors. The Company shall cause each of its
subsidiaries formed or acquired on or subsequent to the date hereof to become a
Guarantor for all purposes of this Guarantee by executing and delivering an
Assumption Agreement in the form of Annex 1 hereto.

(n)               Release of Guarantors. Each Guarantor will be released from
all liability hereunder concurrently with the indefeasible repayment in full of
all amounts owed under the Purchase Agreement, the Notes and the other
Transaction Documents.

(o)               Seniority. The Obligations of each of the Guarantors hereunder
rank senior in priority to any other Indebtedness (as defined in the Purchase
Agreement) of such Guarantor.

(p)               WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, THE SECURED PARTIES, HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE
AND FOR ANY COUNTERCLAIM THEREIN.

 

[Signature Pages Follow]

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly
executed and delivered as of the date first above written.

EPIC STORES LLC

 

By: /s/ Brian Davidson

      Name: Brian Davidson

      Title: CEO

EPIC STORES 2, llC

 

By: /s/ Brian Davidson

      Name: Brian Davidson

      Title: CEO

 

EPIC STORES III, LLC

 

By: /s/ Brian Davidson

      Name: Brian Davidson

      Title: CEO

Consented and agreed to:

 

EPIC STORES CORP.

 

 

By: /s/ Brian Davidson

      Name: Brian Davidson

      Title:  CEO

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DISCLOSURE SCHEDULES

 

Subsidiary Guarantee

 

 

Schedule 3(a) Organization and Qualification

 

Schedule 5(b) Notices

 

 13 

   

ANNEX 1

TO

SUBSIDIARY GUARANTEE

 

FORM OF ASSUMPTION AGREEMENT

 

Assumption Agreement, dated as of ____ __, ______ made by
______________________________, a ______________ [corporation] (the “Additional
Guarantor”), in favor of the Secured Parties, as defined in the Guarantee
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in the Purchase Agreement (as defined below).

 

W I T N E S S E T H :

 

WHEREAS, Epic Stores Corp., a Nevada corporation (the “Company”) and the Secured
Parties have entered into a Securities Purchase Agreement, dated as of January
27, 2016 (as amended, supplemented or otherwise modified from time to time, the
“Purchase Agreement”);

 

WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the
Company (other than the Additional Guarantor) have entered into the Subsidiary
Guarantee, dated as of January 27, 2016 (as amended, supplemented or otherwise
modified from time to time, the “Guarantee”) in favor of the Secured Parties;

 

WHEREAS, the Guarantee requires the Additional Guarantor to become a party to
the Guarantee; and

 

WHEREAS, the Additional Guarantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee;

 

NOW, THEREFORE, IT IS AGREED:

 

1.                  Guarantee. By executing and delivering this Assumption
Agreement, the Additional Guarantor, as provided in Section 5(m) of the
Guarantee, hereby becomes a party to the Guarantee as a Guarantor thereunder
with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of a Guarantor thereunder. The information set
forth in Annex 1 hereto is hereby added to the information set forth in the
Disclosure Schedules to the Guarantee. The Additional Guarantor hereby
represents and warrants that each of the representations and warranties
contained in Section 3 of the Guarantee is true and correct on and as the date
hereof as to such Additional Guarantor (after giving effect to this Assumption
Agreement) as if made on and as of such date.

 

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2.                  Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

 

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.

[ADDITIONAL GUARANTOR]

By:
Name:
Title:

 

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ANNEX 1

TO

ASSUMPTION AGREEMENT

 

DISCLOSURE SCHEDULES

 16