Exhibit 10.2


 


 


20%
OID PROMISSORY NOTE


 


NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE/EXERCISABLE] HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE 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, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.


 


	Original Issue
    Date: July 28, 2022	Subscription Amount:	$ 500,000
	 	 	 
	Maturity
        Date: October 31, 2022
	Original Issue Discount:	$ 125,000
	 	 	 
	Original Interest Discount:
    20%	Original Principal Amount:	$ 625,000


 


DIGITAL
BRANDS GROUP, INC.


 


20%
OID PROMISSORY NOTE


 


THIS
20% OID PROMISSORY NOTE (this “Note”) is one of a series of duly authorized and validly issued 20% OID Promissory
Notes of Digital Brands Group, Inc., a Delaware corporation (the “Company”), designated as such by the Company
(such series of notes, collectively with this Note, the “Notes”).


 


FOR
VALUE RECEIVED, the Company promises to pay to ______________, a ______________company, or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the Original Principal Amount of $ 625,000 on October 31, 2022 (the “Maturity
Date”), and to pay interest to the Holder on the aggregate then outstanding principal amount of this Note in accordance with
the provisions hereof. This Note is subject to the following additional provisions:


 


1.             Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:


 


“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency, or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary
thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not
dismissed within sixty (60) days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent
or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant
Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged
or stayed within sixty (60) calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a
general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors
with a view to arranging a composition, adjustment, or restructuring of its debts, (g) the Company or any Significant Subsidiary
thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or any Significant Subsidiary
thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes
any corporate or other action for the purpose of effecting any of the foregoing.


 






    	 	1	 



     


    

 


“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; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required
by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any
other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so
long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the City of New York are generally
are open for use by customers on such day.


 


“Change
of Control Transaction” means the occurrence after Original Issue Date of any 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, (b) the Company merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of
the Company immediately prior to such transaction own less than fifty percent (50%) of the aggregate voting power of the Company or the
successor entity of such transaction, (c) the Company (and all of its Subsidiaries, taken as a whole) sells or transfers all or
substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less
than fifty percent (50%) of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement
at one time or within a three (3) year period of more than one-half (1/2) of the members of the Board of Directors which is not
approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (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), or (e) 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 in clauses (a) through (d) above.


 


“Common
Stock” means the Common Stock, par value $0.0001 per share, of the Company, and/or any other class of securities into which
such securities may hereafter be reclassified or changed subsequent to the Original Issue Date.


 


“Conversion
Price” means the Nasdaq official closing price of the Common Stock on The Nasdaq Capital Market (as reflected on Nasdaq.com)
on the Conversion Date.


 


“Conversion
Shares” shall have the meaning set forth in Section 7.


 


“Convertibility
Date” shall have the meaning set forth in Section 6.


 






    	 	2	 



     


    

 


“Fundamental
Transaction” means the occurrence after Original Issue Date of any of the following transactions: (i) the Company, directly
or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the
Company (and all of its Subsidiaries, taken as a whole), directly or indirectly, effects any sale, lease, license, assignment, transfer,
conveyance, or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any,
direct or indirect, purchase offer, tender offer, or exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of common stock are permitted to sell, tender, or exchange their shares for other securities, cash, or property and
has been accepted by the holders of fifty percent (50%) or more of the outstanding common stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of the common stock or any compulsory
share exchange pursuant to which the common stock is effectively converted into or exchanged for other securities, cash, or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, or scheme of arrangement)
with another Person whereby such other Person acquires more than fifty percent (50%) of the outstanding shares of common stock (not including
any shares of common stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock or share purchase agreement or other business combination).


 


“Holder”
shall have the meaning set forth in the Preamble.


 


“Indebtedness”
means any liabilities of the Company for borrowed money or amounts owed and all guaranties made by the Company of borrowed money or amounts
owed by others.


 


“Maturity
Date” has the meaning set forth in the Preamble.


 


“Maximum
Rate” shall have the meaning set forth in Section 8(k).


 


“New
York County Courts” shall have the meaning set forth in Section 8(d).


 


“Note”
and “Notes” shall have the meanings set forth in the Preamble.


 


“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the
number of instruments which may be issued to evidence such Notes.


 


“Original
Principal Amount” of this Note is the amount set forth opposite such term above the Preamble.


 


“Permitted
Indebtedness” means: (a) the Indebtedness evidenced by the Notes, (b) existing Indebtedness as of the Original Issue
Date hereof, (c) Indebtedness of up to an aggregate of $50,000, inclusive of any interest, fees, penalties, or other amounts due
or payable thereunder (excluding trade debt and debt for professional services incurred in the ordinary course of business), (d) any
issuances of debt which is the subject of that signed proposal dated February 18, 2022 by and between the Company and GRA Capital
Group LLC, a copy of which the parties hereto acknowledge has been provided by the Company to the Lead Investor, or (e) indebtedness
under agreements or arrangements refinancing the Indebtedness permitted under the foregoing clause (a) or (d), provided that
the terms of such refinancing are more favorable to the Company and are no more favorable to the holders of such Indebtedness than the
terms of the Notes.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or un-incorporated association, joint-venture, limited liability
company, joint-stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 






    	 	3	 



     


    

 


“Prepayment
Amount” shall have the meaning set forth in Section 2.


 


“Principal
Balance” of this Note at any date: (A)(i) on or prior to the Maturity Date, the Original Principal Amount and (ii) after
the Maturity Date, the product of (x) the Original Principal Amount and (y) 120% less (B) any prior payments or
prepayments of principal hereunder.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of July 22, 2022 and the First Amendment to the Securities
Purchase Agreement, dated as of July 28, 2022, by and among the Company and the original Holders, as amended, modified or supplemented
from time to time in accordance with its terms.


 


“Significant
Subsidiary” shall have the meaning set forth in the definition of “Bankruptcy Event.”


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means any of the following markets or exchanges: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB, or OTCQX (or any successors to any of the foregoing).


 


“Trigger
Financing” means any securities, capital raising, loan, investment or other transaction, or series of related transactions,
whether publicly offered or privately arranged, resulting in a debt and/or equity financing of the Company or any Subsidiary.


 


2.             Interest.
Interest shall accrue on the outstanding Principal Balance of this Note at an annual rate of (i) zero percent (0%) on or prior to
the Maturity Date and (ii) twenty percent (20%) thereafter, and shall be payable in cash on the first day of each calendar month
following the Maturity Date. Such interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods,
and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued
and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest shall cease to accrue
with respect to any principal amount converted, provided that the Company actually delivers the Conversion Shares within the time period
required by Section 7 herein. Interest hereunder will be paid to the Person in whose name this Note is registered on the records
of the Company regarding registration and transfers of this Note.


 


3.             Prepayment.


 


a.            Optional
Prepayment. The Company shall have the option to prepay this Note with no penalties at any time after the Original Issue Date and
prior to the Maturity Date in an amount equal to the sum of: (A) the then Principal Balance of this Note plus (B) accrued
and unpaid interest thereon as provided herein plus (C) all other amounts, costs, and expenses then due in respect of this
Note (such sum, the “Prepayment Amount”).


 


b.            Mandatory
Prepayment.


 


i.              Upon
the closing of any Trigger Financing below $4,000,000 at any time after the Original Issue Date and prior to the Maturity Date, the Company
shall prepay 50% of this Note with no penalties (the “Partial Repayment”). Upon the closing of a subsequent Trigger
Financing following the Partial Repayment, the Company shall prepay the remaining balance of this Note with no penalties, in full or
in part, with the net proceeds of such subsequent Trigger Financing.


 






    	 	4	 



     


    

 


ii.              Upon
the closing of any Trigger Financing of $4,000,000 or greater at any time after the Original Issue Date and prior to the Maturity Date,
the Company shall prepay 100% of this Note with no penalties.


 


4.            Registration
of Transfers and Exchanges.


 


(a)            Different
Denominations. This Note is exchangeable for an equal aggregate Original Principal Amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.


 


(b)            Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may
treat the Person in whose name this Note is duly registered on the note register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall
be affected by notice to the contrary.


 


5.            Negative
Covenants. As long as any portion of this Note remains outstanding, unless the holders of at least sixty-seven percent (67%) in principal
amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any
of its subsidiaries to, directly or indirectly:


 


(a)            other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee, or suffer to exist any Indebtedness;


 


(b)            amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder unless consented to by the Holder;


 


(c)            repay,
repurchase, or offer to repay or repurchase, any Indebtedness, other than the Notes if on a pro-rata basis, other than regularly scheduled
payments as such terms are in effect as of the Original Issue Date;


 


(d)            pay
cash dividends or distributions on any equity securities of the Company;


 


(e)            enter
into any material transaction with any affiliate of the Company, 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 board approval);
or


 


(f)            enter
into any agreement with respect to any of the foregoing.


 


6.            Events
of Default. “Event of Default” means, wherever used herein, any of the following events (whatever the reason for
such event and whether such event 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):


 


(a)           any
default in the payment of: (i) the Original Principal Amount of any Note, or (ii) interest and other amounts owing to a Holder
on any Note, as and when the same shall become due and payable, which default, solely in the case of an interest payment or other default
under clause (ii) above, is not cured within five (5) Trading Days;


 






    	 	5	 



     


    

 


(b)          the
Company shall fail to observe or perform any other covenant or agreement contained in the Notes which failure is not cured, if possible
to cure, within the earlier to occur of (i) five (5) Trading Days after notice of such failure sent by the Holder or by any
other Holder to the Company and (ii) seven (7) Trading Days after the Company has become or should have become aware of such
failure;


 


(c)          any
written statement pursuant hereto or thereto or any other report, financial statement, or certificate made or delivered to the Holder
or any other Holder shall be untrue or incorrect in any material respect as of the date when made;


 


(d)          the
Company or any Significant Subsidiary shall be subject to a Bankruptcy Event;


 


(e)          the
Company shall default on any of its obligations under 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 that (a) involves an obligation greater than $250,000, whether
such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise become due and payable;


 


(f)           the
Company (and all of its subsidiaries, taken as a whole) shall be a party to any Change of Control Transaction or Fundamental Transaction
or shall agree to sell or dispose of all or in excess of thirty-three percent (33%) of its assets in one transaction or a series of related
transactions (whether or not such sale would constitute a Change of Control Transaction or Fundamental Transaction); or


 


(g)          a
final non-appealable judgment by any competent court in the United States for the payment of money in an amount of at least $250,000
is rendered against the Company, and the same remains undischarged and unpaid for a period of forty-five (45) days during which execution
of such judgment is not effectively stayed.


 


If
any Event of Default occurs: (A) the Face Value of the Note will be automatically increased to 120%; (B) interest on the Original
Principal Amount of this Note shall immediately begin to accrue at a rate equal to twenty (20%) per annum which shall be paid in cash
monthly to Holder until the default is cured’ and (C) and is continuing for fourteen (14) calendar days or more (as the may
be, the “Convertibility Date”), this Note shall immediately thereupon become convertible in accordance with the provisions
of Section 7 of this Note.


 


7.             Default
Conversion. At any time on or after the Convertibility Date (the “Conversion Date”), at the discretion of the
Holder, the Holder may elect, upon written notice to the Company as set forth in Annex A, to convert all or any portion of the Prepayment
Amount of this Note into shares of the Common Stock, par value $0.0001 per share, and/or or any other class of securities into which
such securities may be reclassified or changed after the Original Issue Date (as the case may be, “Conversion Shares”)
at the Conversion Price; provided that: (A) if on or after the Convertibility Date (in the notice of conversion, or otherwise)
the Holder (with the consent of the Lead Investor) elects a “Default Conversion Election”): (i) the Company shall
use commercially reasonable efforts to submit to its stockholders as soon as practicable in order to obtain as soon as practicable the
approval of the Company’s stockholders for the Company to issue the number of Conversion Shares necessary to complete such conversion
(inclusive of the Original Issue Discount of this Note) at the Conversion Price in accordance with Nasdaq Rule 5635(a)(1) and/or
5635(d) (as applicable, the “20% Rule”), Delaware corporate law and the Exchange Act; (ii) if such stockholder
approval is obtained, such conversion shall be effected hereunder within one Business Day of such approval at the Conversion Price (which
shall be the “Share Delivery Date” for such Conversion Shares for purposes of this Section 7), (iii) to
the extent that, prior to obtaining such stockholder approval, the Company may then issue Conversion Shares in such conversion at the
Conversion Price without violating the 20% Rule (the “Maximum Amount”), the Company shall on the Share Delivery
issue to the Holder the Maximum Amount of Conversion Shares at the Conversion Price; and (iv) if such stockholder approval is not
obtained within 14 calendar days of the Conversion Date, then the Company shall cause (1) all members of its management team to
pledge their shares of Common Stock to the Holders of the Notes to secure the repayment of amounts due under the Notes and (2) the
Chief Executive Officer to personally guarantee the repayment of all amounts due hereunder and thereunder.


 






    	 	6	 



     


    

 


(i)             Delivery
of Certificate Upon Conversion; Payment of Transfer Taxes. Not later than three (3) Business Days after the Conversion Date
(the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates
representing the Conversion Shares. If Conversion Shares are to be issued in the name of a Person other than the present Holder, the
Holder will pay all transfer taxes payable with respect thereto and will deliver the Note for cancellation. No fee will be charged to
the Holder for any conversion, except for such transfer taxes, if any. In lieu of issuing fractional Conversion Shares upon conversion
of all or any portion of this Note, the Company shall pay cash in an amount equal to the product of the then applicable Conversion Price
(or Default Conversion Price, as the case may be) per Conversion Share and the number of fractional shares that would otherwise be issuable
hereunder. If less than all of the outstanding principal amount of this Note is converted pursuant to the terms of the Purchase Agreement
and this Note, the Company will additionally deliver to the Holder an amended and restated Note, containing an original principal amount
equal to that portion of the then-outstanding principal amount not converted containing the other terms and provisions of this Note and
otherwise in form and substance reasonably satisfactory to the Holder. Upon the conversion of this Note, all rights of the Holder, except
the right to receive the Conversion Shares in accordance with the Purchase Agreement and this Note, will cease as to that portion of
the Note so converted and this Note will no longer be deemed to be outstanding as to that portion of the Note so converted.


 


(ii)            Failure
to Deliver Certificates. If, upon conversion pursuant to Section 3(a), such Conversion Share certificate or certificates are
not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate or certificates to rescind such Conversion, in which event
the Company shall promptly return to the Holder any original Note delivered to the Company.


 


(iii)            Obligation
Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver
or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of
any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion
Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against
the Holder.


 


(iv)            Adjustment.
The number of Conversion Shares issuable upon conversion of this Note or any portion thereof (or any shares of stock or other securities
or property at the time receivable or issuable upon conversion of this Note or any portion thereof) and the Conversion Price therefor
are subject to adjustment upon the occurrence of any of the following events between the Original Issue Date and the date that all obligations
hereunder are repaid or this Note is converted into Conversion Shares:


 


(a)            The
Conversion Price and Default Conversion Price of this Note will be proportionally adjusted to reflect any stock dividend, stock split,
reverse stock split, reclassification, recapitalization or other similar event affecting the number of outstanding Conversion Shares.


 






    	 	7	 



     


    

 


(b)           In
case of any Change of Control Transaction or Fundamental Transaction then, the Holder, upon the conversion of this Note at any time after
the consummation of such Change of Control Transaction or Fundamental Transaction (as the case may be), will be entitled to receive,
in lieu of the stock or other securities and property receivable upon the conversion of this Note prior to such consummation, the stock
or other securities or property to which the Holder would have been entitled upon the consummation of such Change of Control Transaction
or Fundamental Transaction (as the case may be) if the Holder had converted this Note immediately prior thereto, subject to further adjustment
as provided in this Note, and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company)
will be made in the application of the provisions in this Section with respect to the rights and interests thereafter of the Holder,
to the end that the provisions set forth in this Section will thereafter be applicable, as nearly as reasonably may be, in relation
to any securities or other property thereafter deliverable upon the conversion of this Note. The successor or purchasing corporation
in any such reorganization, consolidation or merger (if other than the Company) will duly execute and deliver to the Holder a supplement
hereto reasonably acceptable to the Holder acknowledging such entity’s obligations under this Note and, in each such case, the
terms of the Note will be applicable to the shares of stock or other securities or property receivable upon the conversion of this Note
after the consummation of such reorganization, consolidation or merger.


 


(c)           In
case all the authorized Conversion Shares of the Company is converted, pursuant to the Company’s Certificate of Incorporation,
into other securities or property, or the Common Stock otherwise ceases to exist, then, in such case, the Holder, upon conversion of
this Note at any time after the date on which the Common Stock is so converted or ceases to exist (the “End Date”),
will receive, in lieu of the number of Conversion Shares that would have been issuable upon such exercise immediately prior to the End
Date (the “Former Number of Conversion Shares”), the stock and other securities and property which the Holder would
have been entitled to receive upon the End Date if the Holder had converted this Note with respect to the Former Number of Conversion
Shares immediately prior to the End Date (all subject to further adjustment as provided in this Note).


 


(v)           The
Company will, at its expense, cause an authorized officer promptly to prepare a written certificate showing each adjustment or readjustment
of the Conversion Price, or the number of Conversion Shares or other securities issuable upon conversion of this Note and cause such
certificate to be delivered to the Holder in accordance with the notice provisions of the Purchase Agreement. The certificate will describe
the adjustment or readjustment and include a description in reasonable detail of the facts on which the adjustment or readjustment is
based. The form of this Note need not be changed because of any adjustment in the Conversion Price, as the case may be, or in the number
of Conversion Shares issuable upon its conversion.


 






    	 	8	 



     


    

 


(vi)           Holder’s
Exercise Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert
any portion of this Note, pursuant to Section 7 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting
as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (I) exercise of the remaining, non-exercised portion of this Note
beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised
or non-converted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 7(vi), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this Section 7(vi) applies, the determination of whether this Note
is convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which
portion of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall
be deemed to be the Holder’s determination of whether this Note is convertible (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which portion of this Note is convertible, in each case subject to the Beneficial
Ownership Limitation, and the Company shall not have any obligation to verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this Section 7(vi), 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 (A) the
Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement
by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing
to the 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 conversion or exercise of securities of the Company, including this Note, by the Holder or its
Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% (or, upon election by a Holder in compliance with this Section 7(vi) prior to
the issuance of any Notes, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock issuable upon exercise of this Note. The Holder, upon notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 7(vi), provided that the Beneficial Ownership Limitation in no event exceeds 9.99%
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section 7(vi) shall continue to apply. Any increase
in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the
Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the
terms of this Section 7(vi) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.


 






    	 	9	 



     


    

 


8.             Miscellaneous.


 


(a)           Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally,
by email attachment, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address provided
by the Company, or such other, email address, or address as the Company may specify for such purposes by notice to the Holder delivered
in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number, email address, or address of the Holder appearing on the books of the Company,
or if no such facsimile number or email attachment or address appears on the books of the Company, at the principal place of business
of such Holder, as provided by such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
or email attachment to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (Pacific time)
on any date, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto on a day that
is not a Business Day or later than 5:30 p.m. (Pacific time) on any Business Day, (iii) the second (2nd) Business
Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, and (iv) upon actual receipt
by the party to whom such notice is required to be given.


 


(b)           Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, and accrued interest, as applicable, on this Note at the time, place, and rate,
and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with
all other Notes and all other senior Indebtedness now or hereafter issued under the terms set forth herein.


 


(c)           Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen, or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen, or destroyed Note,
a new Note for the principal amount of this Note so mutilated, lost, stolen, or destroyed, but only upon receipt of evidence of such
loss, theft, or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.


 


(d)          Governing
Law. All questions concerning the construction, validity, enforcement, and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of Arizona, without regard to the principles of conflict of laws thereof.
Each party agrees that all legal proceedings concerning the interpretation, enforcement, and defense of the transactions (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, employees, or agents) shall be commenced exclusively
in the state and federal courts sitting in New York City (the “New York County Courts”). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York County Courts 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 suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York County Courts, or such
New York County Courts are improper or inconvenient venue for such proceeding. 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 via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by applicable 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 Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s
fees and other costs and expenses incurred in the investigation, preparation, and prosecution of such action or proceeding.


 






    	 	10	 



     


    

 


(e)            Severability.
If any provision of this Note is invalid, illegal, or unenforceable, the balance of this Note 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.


 


(f)            Remedies,
Characterizations, Other Obligations, Breaches, and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any
failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance thereof). 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 shall be entitled, in addition to
all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing
economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the
Holder that is reasonably requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions
of this Note.


 


(g)            Next
Business Day. 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.


 


(h)            Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect
any of the provisions hereof.


 


(i)            Amendments;
Waiver. No provision of this Purchase Agreement may be waived, modified, supplemented, or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Holders holding at least a majority in principal amount of the Notes then
outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any
default with respect to any provision, condition, or requirement of this Purchase Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition, or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 


(j)            Equal
Treatment of Holder. No consideration (including any modification of this Note) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision hereof. Further, the Company shall not make any payment of principal or interest
on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable time.
For clarification purposes, this provision constitutes a separate right granted to each Holder by the Company and negotiated separately
by each Holder and is intended for the Company to treat the Holders as a class and shall not in any way be construed as the Holders acting
in concert or as a group with respect to the purchase or disposition of the Notes or otherwise.


 






    	 	11	 



     


    

 


(k)          Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any action or proceeding that may be brought by any Holder in order to enforce any right or remedy, including,
without limitation, any law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest
on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the
performance of this Note, 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 impede 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. It is expressly agreed
and provided that the total liability of the Company under the Notes for payments in the nature of interest shall not exceed the maximum
lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event
shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the
Company may be obligated to pay exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law is
increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of
interest allowed by law will be the Maximum Rate applicable to the Notes from the effective date thereof forward, unless such application
is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company
to any Holder with respect to indebtedness evidenced by the Notes, such excess shall be applied by such Holder to the unpaid principal
amount of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Holder’s election.


 


(Signature
Page Follows)


 






    	 	12	 



     


    

 


IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.


 


	 	DIGITAL BRANDS GROUP, INC. 
	 	 
	 	By: 	/s/
    John Hilburn Davis IV
	 	 	Name: John Hilburn Davis IV
	 	 	Title: Chief Executive Officer



 






    	 	13	 



     


    

 


ANNEX
A


 


TO
20% OID PROMISSORY NOTE-- NOTICE OF CONVERSION


 


The
undersigned (the “Holder”) hereby elects to convert $             amount
of this Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of this Note (“Common
Stock”) as set forth below, of Digital Brands Group, Inc. (the
 “Company”), according to the conditions of the 20% OID Promissory Note of the Company dated as of July 28,
2022 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except
for transfer taxes, if any.


 


Box
Checked as to applicable instructions:


 





	 ̈	Default Conversion Election
	 	 
	 ̈	The Company shall electronically transmit the Common
    Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit
    Withdrawal Agent Commission system (“DWAC Transfer”).
	 	 
	 	Name of DTC Prime
	 	Broker: Account Number:
	 	 
	 ̈	The undersigned hereby requests that the Company issue
    a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s
    calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment
    hereto:
	 	 
	 	[______]
	 	e-mail: [______]


 





	Date
    of conversion:	_________
	Applicable
    Conversion Price:	$________
	Number
    of shares of Common Stock to be

    issued pursuant to the conversion of this Note:	_________
	Amount
    of Principal Balance due remaining under this Note after this conversion:	_________


 


 





	[______]	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	Date:	 	 


 


 






    	 	14