Document:

Exhibit 4.11

 

		THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATES IN THE UNITED STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. CONVERTIBLE PROMISSORY NOTE Note Series: Nov 2020 Date of Note: November 5, 2020 Principle Amount of Note: Up to $1,000,000 For value received Denim.La Inc., a corporation (the "Company"), promises to pay to the undersigned holder or such party's assigns (the "Holder") the principal amount set forth above with simple interest on the outstanding principal amount at the rate of 6% per annum. Interest shall commence with the date hereof and shall continue on the outstanding principal amount until paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed. All unpaid interest and principal shall be due and payable upon request of the Majority Holders on or after November 5, 2022 (the "Maturity Date"). BASIC TERMS. Series of Notes. This convertible promissory note (the "Note") is issued aspart of a series of notes designated by the Note Series above (collectively, the "Notes") and issued in a series of multiple closings to certain persons and entities (collectively, the "Holders"). The Company shall maintain a ledger of all Holders. Payments. All payments of interest and principal shall be in lawful money of the United States of America and shall be made pro rata among all Holders. All payments shall be applied first to accrued interest, and thereafter to principal. Prepayment. The Company may not prepay this Note prior to the Maturity Date without the consent of the Holders of a majority of the outstanding principal amount of the Notes (the "Majority Holders"). CONVERSION AND REPAYMENT. Conversion upon a Qualified Financing. In the event that the Company issues and sells shares of its equity securities ("Equity Securities") to investors (the "Investors") while this Note remains outstanding in an equity financing with total proceeds to the Company of not less than $1,000,000 (excluding the conversion of the Notes) (a "Qualified Financing"), then the outstanding principal amount of this Note and any unpaid accrued interest shall automatically convert in whole without any further action by the Holder into Equity Securities sold in the Qualified Financing at a conversion price equal to the price paid per share for Equity Securities by the Investors in the Qualified Financing multiplied by 0.7. The issuance of Equity Securities pursuant to the conversion of this Note shall be upon and subject to the same terms and conditions applicable to Equity Securities sold in the Qualified Financing Change of Control. If the Company consummates a Change of Control (as defined below) while this Note remains outstanding, the Company shall repay the Holder in cash in an amount equal to the outstanding principal amount of this Note plus any unpaid accrued interest on the original principal. For purposes of this Note, a"Change of Control"means (i) a consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the shares of capital stock of the Company immediately prior to such consolidation, merger or reorganization continue to represent a majority of the voting
power of the surviving entity immediately after such consolidation, merger or reorganization; (ii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company's voting power is transferred; or (iii) the sale or transfer of all or substantially all of the Company's assets, or the exclusive license of all or substantially all of the Company's material intellectual property; provided that a Change of Control shall not include any transaction or series of 

 

    

     

    

		transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor, indebtedness of the Company is cancelled or converted or a combination thereof. The Company shall give the Holder notice of a Change of Control not less than 10 days prior to the anticipated date of consummation of the Change of Control. Any repayment pursuant to this paragraph in connection with a Change of Control shall be subject to any required tax withholdings, and may be made by the Company (or any party to such Change of Control or its agent) following the Change of Control in connection with payment procedures established in connection with such Change of Control. Procedure for Conversion. In connection with any conversion of this Note into capital stock, the Holder shall surrender this Note to the Company and deliver to the Company any documentation reasonably required by the Company (including, in the case of a Qualified Financing, all financing documents executed by the Investors in connection with such Qualified Financing). The Company shall not be required to issue or deliver the capital stock into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company any such documentation. Upon the conversion of this Note into capital stock pursuant to the terms hereof, in lieu of any fractional shares to which the Holder would otherwise be entitled, the Company shall pay the Holder cash equal to such fraction multiplied by the price at which this Note converts. Interest Accrual. If a Change of Control or Qualified Financing is consummated, all interest on this Note shall be deemed to have stopped accruing as ofa date selected by the Company thatis up to 10 days prior to the signing of the definitive agreement for the Change of Control or Qualified Financing. REPRESENTATIONS AND WARRANTIES Representaitons and Warranties of the Company Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect onthe Company or its business (a"Material Adverse Effect"). Corporate Power. The Company has allrequisite corporate power to issue this Note and to carry out and perform its obligations under this Note. Authorization. All corporate action on the part of the Company necessary for the issuance and delivery of this Note has been taken. This Note constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. Any securities issued upon conversion of this Note (the "Conversion Securities"), when issued in compliance with the provisions of this Note, will be validly issued, fully paid, nonassessable, free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws. Governmental Consents. All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations or filings with, any governmental authority required on the part of the Company in connection with issuance of this Note has been obtained. Compliance with Laws. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of
any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which violation of which would have a Material Adverse Effect. Compliance with Other Instruments. The Company is not in violation or default of any term of its certificate of incorporation or bylaws, or of any provision of any mortgage, indenture or contract to which itisaparty and by which itisbound or of any judgment, decree, order or writ, other than such violation(s) that would not have a Material Adverse Effect. The execution, delivery and performance of this Note will not result in any such violation or be in conflict with, or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, decree, order or writ or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. Without limiting the foregoing, the Company has obtained all waivers reasonably necessary with respect to any preemptive rights, rights of first refusal or similar rights, including any notice or offering periods provided for as part of any such rights, in order for the Company to consummate the transactions contemplated hereunder without any third party obtaining any rights to cause the Company to offer or issue any securities of the Company as a result of the consummation of the transactions contemplated hereunder. No "Bad Actor" Disqualification. The Company has exercised reasonable care todetermine whether any Company Covered Person (as defined below) is subject to any of the "bad actor" disqualifications described in Rule 506(d)(1)(i) through (viii), as modified by Rules 506(d)(2) and (d) (3), under the Act ("Disqualification Events"). To the Company's knowledge, no Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent 

 

    

     

    

		required, with any disclosure obligations under Rule 506(e) under the Act. For purposes of this Note, "Company Covered Persons" are those persons specified in Rule 506(d)(1) under the Act; provided, however, that Company Covered Persons do not include (a) any Holder, or (b) any person or entity thatisdeemed to be an affiliated issuer of the Company solely asaresult of the relationship between the Company and any Holder. Offering. Assuming the accuracy of the representations and warranties of the Holder contained in subsection (b) below, the offer, issue and sale of this Note and the Conversion Securities (collectively, the "Securities") are and will be exempt from the registration and prospectus delivery requirements of the Act, and have been registered or qualified (or are exempt from registration and qualification) underthe registration, permit or qualification requirements of all applicable state securities laws. Use of Proceeds. The Company shall use theproceeds ofthis Note solely for the operations of its business, and not for any personal, family or household purpose. Representations and Warranties of the Holder. The Holder hereby represents and warrants to the Company as of the date hereof as follows: Purchase for Own Account. The Holder is acquiring the Securities solely for the Holder's own account and beneficial interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention. Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in subsection (a) above, the Holder hereby: (A) acknowledges that the Holder has received all the information the Holder has requested from the Company and the Holder considers necessary or appropriate for deciding whether to acquire the Securities, (B) represents that the Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and to obtain any additional information necessary to verify the accuracy of the information given the Holder and (C) further represents that the Holder has such knowledge and experience in financial and business matters that the Holder is capable of evaluating the merits and risk of this investment. Ability to Bear Economic Risk. The Holder acknowledges that investment in the Securities involves a high degree of risk, and represents that the Holder is able, without materially impairing the Holder's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Holder's investment. Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of the Securities unless anduntil: There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or The Holder shall have notified the Company of the proposed disposition and furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Act or any applicable state securities laws; provided that no such opinion shall be required for dispositions in compliance with Rule 144 under the Act, except in unusual circumstances. Notwithstanding the provisions of paragraphs (1) and (2) above, no such registration statement or opinion of counsel shall be necessary for
a transfer by the Holder to a partner (or retired partner) or member (or retired member) of the Holder in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent asifthey were the Holders hereunder. No "Bad Actor" Disqualification. The Holder represents and warrants that neither (A) the Holder nor (B) any entity that controls the Holder or is under the control of, or under common control with, the Holder, is subject to any Disqualification Event, except for Disqualification Events covered by Rule 506(d) (2)(ii) or (iii) or (d)(3) under the Act and disclosed in writing in reasonable detail to the Company. The Holder represents that the Holder has exercised reasonable care to determine the accuracy of the representation made by the Holder in this paragraph, and agrees to notify the Company if the Holder becomes aware of any fact that makes the representation given by the Holder hereunder inaccurate. Foreign Investors. If the Holder is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the"Code")), the Holder hereby represents thathe, she or it has satisfied itself as to the full observance of the laws of the Holder's jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Note, including (A) the legal requirements within the Holder's jurisdiction for the purchase of the Securities, (B) any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. The Holder's subscription, payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Holder's jurisdiction. Forward-Looking Statements. With respect to any forecasts, projections of results and other forward- 

 

    

     

    

		looking statements and information provided to the Holder, the Holder acknowledges that such statements were prepared based upon assumptions deemed reasonable by the Company at the time of preparation. There is no assurance that such statements will prove accurate, and the Company has no obligation to update suchstatements. EVENTS OF DEFAULTS Ifthere shall be any Event of Default (as defined below) hereunder, at the option and uponthe declaration of the Majority Holders and upon written notice to the Company (which election and notice shall notbe required inthecase ofan Event ofDefault under subsection(ii)or (iii) below), this Note shall accelerate and all principal and unpaid accrued interest shall become due and payable. The occurrence ofany one or more of thefollowingshall constitute an"Event ofDefault": The Company fails to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or any unpaid accrued interest or other amounts due under this Note on the date the same becomes due and payable; The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; or An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within 60 days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company). In the event of any Event of Default hereunder, the Company shall pay all reasonable attorneys' fees and court costs incurred by the Holder in enforcing and collecting this Note. MISCELLANEOUS PROVISIONS Waivers. The Company hereby waives demand, notice, presentment, protest and notice of dishonor. Further Assurances. The Holder agrees and covenants that atany time and from time to time the Holder will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Note and to comply with state or federal securities laws or other regulatory approvals. Transfers of Notes. This Note may be transferred only upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or anew Note for likeprincipal amount andinterest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of the Company's obligation to pay such interest and principal. Market Standoff. To the extent requested by the Company or anunderwriter of securities of the Company, each Holder and any permitted transferee thereof shall not, without the prior written consent of the managing underwriters in the IPO (as hereafter defined), offer, sell, make any short sale of, grant or sell any option for the purchase of, lend, pledge, otherwise transfer or dispose of (directly or indirectly), enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership (whether any such transaction is described above or is to be settled by delivery of Securities or other securities, in cash, or otherwise), any Securities or other shares of stock of the Company then owned by such Holder or any transferee thereof, or enter into an agreement to do any of the foregoing, for up to 180 days following the effective date of the
registration statement of the initial public offering of the Company (the "IPO") filed under the Securities Act. For purposes of this paragraph, "Company" includes any wholly owned subsidiary of the Company into which the Company merges or consolidates. The Company may place restrictive legends on the certificates representing the shares subject to this paragraph and may impose stop transfer instructions with respect to the Securities and such other shares of stock of each Holder and any transferee thereof (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. Each Holder and any transferee thereof shall enter into any agreement reasonably required by the underwriters to the IPO to implement the foregoing within any reasonable timeframe so requested. The underwriters for any IPO are intended third party beneficiaries of this paragraph and shall have the right, power and authority to enforce the provisions of this paragraph as though they were parties hereto. Amendment and Waiver. Any term of this Note may be amended or waivedwith the written consent of the Company and the Holder. In addition, any term of this Note may be amended or waived with the written consent of the Company and the Majority Holders. Upon the effectuation of such waiver or amendment with the consent of the Majority Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes, and the Company shall promptly give written notice thereof to the Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver. Governing Law. This Note shall be governed by and construed under the laws of the State of Delaware, without giving effect toconflicts of laws principles. Binding Agreement. Theterms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Note, expressed or implied, is 

 

    

     

    

		intended to confer upon any third party any rights, remedies, obligations or liabilities under or by reason of this Note, except as expressly provided in this Note. Counterparts; Manner of Delivery. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. Titles and Subtitles. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications to a party shall be sent to the party's address in their Wefunder account at such other address(es) as such party may designate by 10 days' advance written notice to the other party hereto. Expenses. The Company and the Holder shall each bear its respective expenses and legal fees incurred with respect to the negotiation, execution and delivery of this Note and the transactions contemplated herein. Delays or Omissions. It isagreed that no delay or omission to exercise anyright, power or remedy accruing to the Holder, upon any breach or default of the Company under this Note shall impair any such right, power or remedy, nor shall it be construed to be awaiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by the Holder ofanybreach or default under this Note, or anywaiver by the Holder of any provisions or conditions of this Note, must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Note, or by law or otherwise afforded to the Holder, shall be cumulative and not alternative. This Note shall be void and of no force or effect in the event that the Holder fails to remit the full principal amount to the Company within five calendar days of the date of this Note. Entire Agreement. This Note constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof, and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein. Exculpation among Holders. The Holder acknowledges that the Holder isnotrelying on any person, firm or corporation, other than the Company and its officers and Board members, in making its investment or decision to invest in the Company. Senior Indebtedness. The indebtedness evidenced by this Note is subordinated in right of payment to the prior payment in full of any Senior Indebtedness in existence on the date of this Note or hereafter incurred. "Senior Indebtedness" shall mean, unless expressly subordinated to or made on a parity with the amounts due under this Note, all amounts due in connection
with (i) indebtedness of the Company to banks or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions and their affiliates, which sometimes engage in lending activities but which are primarily engaged in investments in equity securities), and (ii) any such indebtedness or any debentures, notes or other evidence of indebtedness issued in exchange for such Senior Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a guarantor. Broker's Fees. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this subsection being untrue. California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS NOTE HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS NOTE ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION BEING AVAILABLE. [Signature pages follow] 

 

    

     

    

		IN WITNESS WHEREOF, the parties have executed this agreement as of. Investment Amount: COMPANY: Denim.La Inc. Signature Name: Title: Read and Approved (For IRA Use Only): SUBSCRIBER By:By: Investor Signature Name: [INVESTOR NAME] Title: The Subscriber is an "accredited investor" as that term is defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act. Please indicate Yes or No by checking the appropriate box: Accredited Not Accredited 327048782.1 SIGNATURE PAGEExhibit 10.5

 

NOTICE OF GRANT OF NON-QUALIFIED STOCK OPTION
AWARD

 

DIGITAL BRANDS GROUP, INC.

2020 OMNIBUS INCENTIVE PLAN

 

FOR GOOD AND VALUABLE CONSIDERATION, Digital Brands
Group, Inc. (the “Company”) hereby grants, pursuant to the provisions of the Company’s 2020 Omnibus Incentive Plan
(the “Plan”), to the Participant designated in this Notice of Grant of Non-Qualified Stock Option Award (the “Notice”)
an option to purchase the number of shares of the common stock of the Company set forth in the Notice (the “Shares”), subject
to certain restrictions as outlined below in this Notice and the additional provisions set forth in the attached Terms and Conditions
of Stock Option Award (collectively, the “Agreement”). Also enclosed is a copy of the information statement describing important
provisions of the Plan.

 

Optionee:     [__________]

 

	Date of Grant:               ____________	Type of Option:  Non-Qualified Stock Option
	Exercise Price per Share:           $____	Expiration Date:                ____________
	Total Number of 

Shares Granted:                      _______	Total Exercise Price:                              $______
	Vesting Schedule:   75% on the date of grant and the remaining 25% in equal monthly installments on the [___] day of each month for 36 months beginning with
[first monthly vesting date]
	
    Exercise After Termination of Service:

     

    Termination of Service for any reason: any non-vested portion
    of the Option expires immediately;

     

    Termination of Service due to death or Disability: vested portion
    of the Option is exercisable by the Optionee (or, in the event of the Optionee’s death, the Optionee’s Beneficiary) for one
    year after the Optionee’s Termination;

     

    Termination of Service for any reason other than death or Disability:
    vested portion of the Option is exercisable for a period of ninety days following the Optionee’s Termination.

     

    In no event may this Option be exercised after the Expiration Date
    as provided above.

 

By signing below, the Optionee agrees that this Non-Qualified Stock
Option Award is granted under and governed by the terms and conditions of the Company’s 2020 Omnibus Incentive Plan and the attached
Terms and Conditions.

 

	Participant	 	Digital Brands Group, Inc.
	 	 	 
	 	 	By:	 
	 	 	Title:	 
	Date:	  	 	Date:	  

 

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TERMS AND CONDITIONS OF STOCK OPTION AWARD

 

1.            Grant
of Option. The Option granted to the Optionee and described in the Notice of Grant is subject to the terms and conditions of the Plan,
which is incorporated by reference in its entirety into these Terms and Conditions of Stock Option Award.

 

The Board of Directors of the Company has authorized
and approved the 2020 Omnibus Incentive Plan (the “Plan”), which has been approved by the stockholders of the Company. The
Committee has approved an award to the Optionee of a number of shares of the Company’s common stock, conditioned upon the Participant’s
acceptance of the provisions set forth in the Notice and these Terms and Conditions within 60 days after the Notice and these Terms and
Conditions are presented to the Optionee for review. For purposes of the Notice and these Terms and Conditions, any reference to the Company
shall include a reference to any Affiliate.

 

If designated in the Notice of Grant as an Incentive
Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the
Code. Nevertheless, to the extent that the Option fails to meet the requirements of an ISO under Section 422 of the Code, this Option
shall be treated as a Non-Qualified Stock Option (“NSO”).

 

The Company intends that this Option not be considered
to provide for the deferral of compensation under Section 409A of the Code and that this Agreement shall be so administered and construed.
Further, the Company may modify the Plan and this Award to the extent necessary to fulfill this intent.

 

2.            Exercise
of Option.

 

(a)            Right
to Exercise. This Option shall be exercisable, in whole or in part, during its term in accordance with the Vesting Schedule set out
in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement. No Shares shall be issued pursuant to
the exercise of an Option unless the issuance and exercise comply with applicable laws. Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. The
Committee may, in its discretion, (i) accelerate vesting of the Option, or (ii) extend the applicable exercise period to the
extent permitted under Section 6.03 of the Plan.

 

(b)            Method
of Exercise. The Optionee may exercise the Option by delivering an exercise notice in a form approved by the Company (the “Exercise
Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised,
and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Shares exercised. This Option shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by the aggregate Exercise Price.

 

(c)            Acceleration
of Vesting on Change in Control. Unless otherwise specified in the Notice of Grant, in the event of a Change in Control, no accelerated
vesting of any Options outstanding on the date of such Change in Control shall occur.

 

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3.            Method
of Payment. If the Optionee elects to exercise the Option by submitting an Exercise Notice under Section 2(b) of this Agreement,
the aggregate Exercise Price (as well as any applicable withholding or other taxes) shall be paid by cash or check; provided, however,
that the Committee may consent, in its discretion, to payment in any of the following forms, or a combination of them:

 

(a)            cash
or check;

 

(b)            a
 “net exercise” (as described in the Plan or such other consideration received by the Company under a cashless exercise program
approved by the Company in connection with the Plan;

 

(c)            surrender
of other Shares owned by the Optionee which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of
the Exercised Shares and any applicable withholding; or

 

(d)            any
other consideration that the Committee deems appropriate and in compliance with applicable law.

 

4.            Restrictions
on Exercise. This Option may not be exercised until such time as the Plan has been approved by the stockholders of the Company, or
if the issuance of the Shares upon exercise or the method of payment of consideration for those shares would constitute a violation of
any applicable law or regulation.

 

5.            Non-Transferability
of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee; provided, however, that the Optionee may transfer the Options (i) pursuant
to a qualified domestic relations order (as defined by the Code or the rules thereunder) or (ii) to any member of the Optionee’s
Immediate Family or to a trust, limited liability company, family limited partnership or other equivalent vehicle, established for the
exclusive benefit of one or more members of his Immediate Family by delivering to the Company a Notice of Assignment in a form acceptable
to the Company. No transfer or assignment of the Option to or on behalf of an Immediate Family member under this Section 5 shall
be effective until the Company has acknowledged such transfer or assignment in writing. “Immediate Family” means the Optionee’s
parents, spouse, children, siblings, and grandchildren. Following transfer, the Options shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer. In the event an Option is transferred as contemplated in this Section 5,
such Option may not be subsequently transferred by the transferee except by will or the laws of descent and distribution. The terms of
the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

6.            Term
of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Option Agreement.

 

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7.            Withholding.

 

(a)            The
Committee shall determine the amount of any withholding or other tax required by law to be withheld or paid by the Company with respect
to any income recognized by the Optionee with respect to the Option Award.

 

(b)            The
Optionee shall be required to meet any applicable tax withholding obligation in accordance with the provisions of Section 11.05 of
the Plan.

 

(c)            Subject
to any rules prescribed by the Committee, the Optionee shall have the right to elect to meet any withholding requirement (i) by
having withheld from this Award at the appropriate time that number of whole shares of common stock whose fair market value is equal to
the amount of any taxes required to be withheld with respect to such Award, (ii) by direct payment to the Company in cash of the
amount of any taxes required to be withheld with respect to such Award or (iii) by a combination of shares and cash.

 

8.            Defined
Terms. Capitalized terms used but not defined in the Notice and these Terms and Conditions shall have the meanings set forth in the
Plan, unless such term is defined in any Employment Agreement between the Optionee and the Company or an Affiliate. Any terms used in
the Notice and these Terms and Conditions, but defined in the Optionee’s Employment Agreement are incorporated herein by reference
and shall be effective for purposes of the Notice and these Terms and Conditions without regard to the continued effectiveness of the
Employment Agreement.

 

9.            Optionee
Representations. The Optionee hereby represents to the Company that the Optionee has read and fully understands the provisions of
the Notice, these Terms and Conditions and the Plan and the Optionee’s decision to participate in the Plan is completely voluntary.
Further, the Optionee acknowledges that the Optionee is relying solely on his or her own advisors with respect to the tax consequences
of this stock option award.

 

10.            Regulatory
Limitations on Exercises. Notwithstanding the other provisions of this Option Agreement, no option exercise or issuance of shares
of Common Stock pursuant to this Option Agreement shall be effective if (i) the shares reserved under the Plan are not subject to
an effective registration statement at the time of such exercise or issuance, or otherwise eligible for an exemption from registration,
or (ii) the Company determines in good faith that such exercise or issuance would violate any applicable securities or other law
or regulation.

 

11.            Miscellaneous.

 

(a)            Notices.
All notices, requests, deliveries, payments, demands and other communications which are required or permitted to be given under these
Terms and Conditions shall be in writing and shall be either delivered personally or sent by registered or certified mail, or by private
courier, return receipt requested, postage prepaid to the parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall be deemed duly given hereunder when delivered or mailed
as provided herein.

 

(b)            Waiver.
The waiver by any party hereto of a breach of any provision of the Notice or these Terms and Conditions shall not operate or be construed
as a waiver of any other or subsequent breach.

 

    4

     

    

 

(c)            Entire
Agreement. These Terms and Conditions, the Notice and the Plan constitute the entire agreement between the parties with respect to
the subject matter hereof.

 

(d)            Binding
Effect; Successors. These Terms and Conditions shall inure to the benefit of and be binding upon the parties hereto and to the extent
not prohibited herein, their respective heirs, successors, assigns and representatives. Nothing in these Terms and Conditions, express
or implied, is intended to confer on any person other than the parties hereto and as provided above, their respective heirs, successors,
assigns and representatives any rights, remedies, obligations or liabilities.

 

(e)            Governing
Law. The Notice and these Terms and Conditions shall be governed by and construed in accordance with the laws of the State of Delaware.

 

(f)            Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of these Terms and Conditions.

 

(g)            Conflicts;
Amendment. The provisions of the Plan are incorporated in these Terms and Conditions in their entirety. In the event of any conflict
between the provisions of these Terms and Conditions and the Plan, the provisions of the Plan shall control. The Agreement may be amended
at any time by written agreement of the parties hereto.

 

(h)            No
Right to Continued Employment. Nothing in the Notice or these Terms and Conditions shall confer upon the Optionee any right to continue
in the employ or service of the Company or affect the right of the Company to terminate the Optionee’s employment or service at
any time.

 

(i)            Further
Assurances. The Optionee agrees, upon demand of the Company or the Committee, to do all acts and execute, deliver and perform all
additional documents, instruments and agreements which may be reasonably required by the Company or the Committee, as the case may be,
to implement the provisions and purposes of the Notice and these Terms and Conditions and the Plan.

 

    5

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