Document:

THIS
WARRANT AND THE SECURITIES UNDERLYING THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS AND THE
RULES AND REGULATIONS THEREUNDER.

 

MUSCLE
MAKER, INC.

 

WARRANT

 

TO
PURCHASE COMMON STOCK OF THE COMPANY

 

	Warrant
    No. 2018-__	Original
    Issue Date: September ___, 2018

 

FOR
VALUE RECEIVED, MUSCLE MAKER, INC., a California corporation (the “Company”), grants the following
rights to _______________, and its permitted assigns, heirs, executors and administrators (individually and collectively, the
“Holder”), as of September ___ 2018 (the “Issue Date”). This warrant (the
“Warrant”) has been issued pursuant to that certain Securities Purchase Agreement, dated September __,
2018, between the Company and the Holder (the “Agreement”).

 

Section
1. Grant.

 

The
Holder is hereby granted the right (collectively, the “Purchase Rights”), in accordance with the terms
and conditions of this Warrant, from the date hereof until the expiration of the Exercise Period (as defined in Section 3 hereof),
to purchase from the Company that number of fully paid and non-assessable shares of the common stock, no par value per share (the
“Common Stock”) of the Company, set forth in Section 2 hereof, at the Exercise Price (as defined in
Section 5 hereof), upon delivery to the Company of this Warrant along with the Notice of Exercise form attached as Exhibit
1 hereto, duly executed, and upon tender of the Exercise Price for the shares of Common Stock to be purchased, which Payment
shall be made in cash, wire transfer or bank cashier’s check.

 

Section
2. Number of Shares of Common Stock Purchasable.

 

2.1
Subject to the other provisions of this Section 2, this Warrant entitles the Holder to purchase from time to time up to [an
amount of shares equal to 50% of the conversion shares] shares1 of the Company’s Common Stock (the “Warrant
Shares”).

 

2.2
In case prior to the expiration of the Purchase Rights by exercise or by the terms of this Warrant, the Company shall undertake
any reclassification, stock split or combination, stock dividend or any similar proportionately-applied change or of any reorganization
of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this
Warrant) or any similar corporate reorganization at any time while this Warrant is outstanding (collectively, a “Reclassification”)
of outstanding shares of Common Stock (other than a change solely in, of, or from par value), the Holder shall thereafter be entitled,
upon exercise of this Warrant for the same total consideration as presently required, to purchase the kind and amount of shares
of stock and other securities and property receivable upon such Reclassification by a holder of the number of shares of Common
Stock which this Warrant entitles the Holder hereof to purchase immediately prior to such Reclassification. Notice of any such
Reclassification shall be given to the Holder pursuant to Section 11 hereof.

 

 

1 The amount shall be 50% of the
shares of the Conversion Shares or 50% of the Conversion Shares the Holder would be entitled to as of the date the Note is repaid
by the Company in cash.

 

 

    	 

    	 

    

 

2.3
Subject to Section 2.4 below, in case prior to the expiration of the Purchase Rights by exercise or by the terms of this Warrant,
the Company shall determine to consolidate or merge with, or convey all, or substantially all, of its property or assets to, any
other corporation or corporations, or to dissolve, liquidate or wind up (each a “Fundamental Transaction”),
then, as a condition precedent to such consolidation, merger, conveyance, dissolution, liquidation or winding up, notice shall
be given to the Holder pursuant to Section 11 hereof and lawful and adequate provision shall be made whereby the Holder shall
thereafter have the right to receive from the Company or from the Company’s successors or assigns, as the case may be, upon
the basis and upon the terms and conditions specified in this Warrant, in lieu of the shares of Common Stock of the Company theretofore
purchasable upon the exercise of the Purchase Rights, such shares of stock, securities, or assets as may be issued or payable
with respect to, or in exchange for, the number of shares of Common Stock of the Company theretofore purchasable upon the exercise
of the Purchase Rights had such consolidation, merger, conveyance, dissolution, liquidation or winding-up not taken place; and
in any such event the rights of the Holder to an adjustment of the number of shares of Common Stock purchasable upon the exercise
of the Purchase Rights as herein provided, shall continue and be preserved in respect of any stock or securities which the Holder
becomes entitled to purchase.

 

2.4
Notwithstanding the foregoing, in the event of a Fundamental Transaction, the Company shall have the right, but not the obligation,
in its sole discretion upon 30 days prior written notice to the Holder (a “Purchase Notice”), to purchase
this Warrant from the Holder by paying to the Holder on the effective date of the Fundamental Transaction (or within five Business
Days after delivery of such notice, whichever occurs later), cash in an amount equal to the Black Scholes Value of the remaining
unexercised portion of this Warrant as of the date of such Fundamental Transaction. For purposes of this Section 2.4, the following
definitions shall apply:

 

“Black
Scholes Value” means the value of this Warrant based on th30e Black and Scholes Option Pricing Model calculated
using (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant
as of the delivery date of the Purchase Notice, (ii) an expected volatility determined in good faith by the Board of Directors
of the Company, and (iii) the underlying price per share equal to the sum of the price per share to be paid in cash, if any, plus
the value of any non-cash consideration, if any, to be paid in the Fundamental Transaction.

 

“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.

 

Section
3. Exercise Period. The Purchase Rights represented hereby shall be exercisable in whole or in part from time to
time, subject to the terms and conditions set forth herein, after the Issue Date of this Warrant until 5:00 p.m. Eastern time
on the fifth (5th) anniversary of the Issue Date hereof (the “Exercise Period”).

 

Section
4. Exercise.

 

4.1
Exercise for Cash. The Purchase Rights represented by this Warrant are exercisable at the option of the Holder
in whole or in part from time to time, subject to the terms and conditions set forth herein, but not for less than one hundred
(100) shares at a time, at any time and from time to time during the Exercise Period upon the delivery of the Notice of Exercise
form to the Company with such notice duly executed and upon tender of the Exercise Price for the shares of Common Stock to be
purchased, which Payment shall be made in cash, wire transfer or bank cashier’s check. The Purchase Rights shall be deemed
to have been exercised, and the Holder shall be deemed to have become a stockholder of record of the Company for the purposes
of receiving dividends and for all other purposes whatsoever with respect to the shares of Common Stock so purchased, as of the
date of delivery of such properly executed notice accompanied by proper tender of the Exercise Price at the principal office of
the Company. As promptly as practicable on or after such date, and in any event within three (3) business days thereafter, the
Company at its expense shall issue and deliver, or cause to be issued and delivered, to the person or persons entitled to receive
the same, a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is
exercised in part, the Company at its expense shall execute and deliver a new warrant of like tenor exercisable for the number
of shares for which this Warrant may then be exercised.

 

    	 

    	 

    

 

Section
5. Exercise Price.

 

5.1
The exercise price for each share of Common Stock issuable to the Holder hereunder shall be $1.20 per share (the “Exercise
Price”). In the event the Conversion Price as set forth in Section 4.3 of that certain 15% Senior Secured Convertible
Promissory Note issued by the Company on September __, 2018 is adjusted as contemplated therein, then the Exercise Price shall
be adjusted to equal 120% of the adjusted Conversion Price.

 

5.2
Cashless Exercise. In connection with a cashless exercise, this Warrant shall represent the right to subscribe for and
acquire the number of Warrant Shares equal to (i) the number of Warrant Shares specified by the Holder in its Notice of Exercise
(the “Total Number”) less (ii) the number of Warrant Shares equal to the quotient obtained by dividing
(A) the product of the Total Number and the applicable existing Exercise Price by (B) the Fair Market Value. “Fair Market
Value” shall mean: (1) if the Warrant Shares are listed on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the Pink OTC Markets (or any successors
to any of the foregoing), the last reported sale price of the Warrant Shares on such exchange on the date for which the determination
is being made; or (2) if the Warrant Shares are not so listed, “Fair Market Value” shall be determined in good faith
by the Board of Directors of the Company.

 

Section
6. Company’s Warranties and Covenants as to Capital Stock.

 

The
Company has taken all action necessary and appropriate to properly authorize, reserve and issue those shares of Common Stock issuable
to the Holder pursuant to this Warrant including an authorization of issuance and setting of the Exercise Price. The Common Stock
deliverable on the exercise of the Purchase Rights represented hereby shall, when issued, be duly and validly issued, fully paid
and non-assessable. The Company shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all
Purchase Rights hereby granted.

 

Section
7. Transfer; Compliance with Securities Laws

 

The
Purchase Rights shall be registered on the books of the Company, which shall be kept by it at its principal office for that purpose.
This Warrant and the Common Stock issuable upon exercise of the Purchase Rights, may not be transferred or assigned in whole or
in part without compliance with all applicable federal and state securities laws by the transferor and the transferee, including,
if requested by the Company, an opinion of counsel satisfactory to the Company to the effect that the transfer or assignment is
in compliance with applicable federal and state securities laws. Subject to such compliance, the Purchase Rights shall be transferable
on said books, in whole or in part, by the Holder in person or by duly authorized attorney upon surrender of this Warrant properly
endorsed by the Holder executing the Permitted Transfer or Assignment Form attached hereto and made a part hereof as Exhibit
2. All reasonable and documented costs associated with any transfer or assignment, including, without limitation, the reasonable
fees of counsel to the Company shall be borne by the transferor or assignor. The Company agrees that, while the Purchase Rights
remain valid and outstanding, its stock transfer books shall not be closed for any purpose whatsoever except under arrangements
which shall inure to persons exercising warrants or applying for transfer of stock, all rights and privileges which they might
have had or received if the stock transfer books had not been closed and they had exercised their Purchase Rights at any time
during which such transfer book shall have been closed.

 

Section
8. Charges, Taxes and Expenses.

 

Issuance
of certificates for shares of Common Stock issuable upon the exercise of this Warrant or any portion thereof (and issuance of
a replacement warrant certificate in the event of partial exercise) shall be made without charge to the Holder hereof for any
issue taxes or any other incidental expenses in respect of the issuance of such certificates to and in the name of the registered
Holder of this Warrant, all of which taxes and expenses shall be paid by the Company. Certificates may be issued in a name other
than that of the Holder upon the request of and payment by the Holder of any applicable transfer taxes and compliance with all
applicable federal and state securities laws and with all applicable provisions of this Warrant, including but not limited to
Section 7 hereof.

 

Section
9. Exchange for Other Denominations.

 

This
Warrant is exchangeable for new certificates of like tenor and date representing in the aggregate the right to purchase the number
of shares purchasable hereunder in denominations designated by the Holder at the time of surrender. In the event of the purchase,
at any time prior to the expiration of the Exercise Period, of less than all of the shares of Common Stock purchasable hereunder,
the Company shall cancel this Warrant upon surrender thereof, and shall promptly execute and deliver to the Holder hereof a new
warrant of like tenor and date for the balance of the shares purchasable hereunder.

 

    	 

    	 

    

 

Section
10. Loss, Theft, Destruction or Mutilation of Warrant.

 

Upon
receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement
to the Company of all reasonable and documented expenses incidental thereto, and upon surrender of this Warrant, if mutilated,
the Company shall promptly make and deliver a new warrant of like tenor and date, in lieu of this Warrant and shall cancel this
Warrant.

 

Section
11. Notices Including Certificate of Company in Event of Adjustment.

 

(a)
Whenever the number of shares of Common Stock purchasable hereunder shall be adjusted pursuant to Section 2 hereof, the Company
shall issue a certificate signed by its Chief Financial Officer or its Chief Executive Officer or by such other appropriate officer,
setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the number of shares purchasable hereunder after giving effect to such adjustment, and shall cause
a copy of such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant.

 

(b)
In case:

 

(i)
the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to
receive any other right;

 

(ii)
of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger
of the Company with or into another corporation, or any conveyance of all or substantially all of the assets of the Company to
another entity; or

 

(iii)
of any voluntary dissolution, liquidation or winding-up of the Company;

 

then,
and in each such case under sub-clauses (i) through (iii), the Company shall mail or deliver, or cause to be mailed or delivered,
to the Holder a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend, distribution or right; or (B) the date on which
such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, at which the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities, assets or other property of the Company deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be mailed or delivered at least fifteen
(15) business days prior to the date therein specified.

 

(c)
All notices, requests, consents and demands required by this Warrant shall be in writing and shall be personally delivered or
mailed, postage prepaid, to the principal office of the Company at:

 

Muscle
Maker, Inc.

308
E. Renfro St. Suite 101

Burleson,
TX 76028

Attn:
Michael Roper, CEO

 

and
to the Holder at:

 

c/o
Catalytic Holdings 1 LLC

135
Oceana Drive East, # 4E

Brooklyn,
NY 11235

Telephone:
917-724-9222

Email:
ds@catalytic-capital.com

 

    	 

    	 

    

 

Any
notice, request or other communication required or permitted hereunder shall be in writing and shall conclusively be deemed to
have been duly given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed facsimile if sent during
the normal business hours of the recipient, if not, then on the next business day, (iii) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery with written verification of receipt.

 

Section
12. Miscellaneous

 

(a)
No Stockholder Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder or any other
person the right to vote, consent or receive notice as a stockholder in respect of any meeting of stockholders for the election
of directors of the Company or any other matters, or any other rights whatsoever of a stockholder of the Company.

 

(b)
Successors and Assigns. Subject to the restrictions on transfer described in Section 7 hereof, the rights and obligations
of the Company and the Holder of this Warrant shall be binding upon, and benefit the successors and assigns of, the parties hereto.

 

(c)
Governing Law. In all respects, including all matters of construction, validity and performance, this Warrant shall be
governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to principles thereof
relating to conflicts or choice of law.

 

(d)
Waiver and Amendment. This Warrant may be changed, waived, discharged or terminated only by a statement in writing signed
by the party against which enforcement of such change, waiver, discharge or termination is sought. In case any provision of this
Warrant shall be, in whole or in part, invalid, illegal or unenforceable, such provision shall be enforced to the extent, if any,
that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.

 

(e)
Headings; References. All headings used herein are used for convenience only and shall not be used to construe or interpret
this Warrant. Except where otherwise indicated, all references herein to Sections refer to Sections hereof.

 

[SIGNATURE
PAGE FOLLOWS.]

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and delivered on its behalf as of the Issue Date set
forth above.

 

	 	MUSCLE
    MAKER, INC.
	 	 	 
	 	By:
    	 
	 	 	Michael
    Roper
	 	 	Chief
    Executive Officer

 

    	 

    	 

    

 

EXHIBIT
1

 

NOTICE
OF EXERCISE PURSUANT TO

ATTACHED
WARRANT

 

___________,
2018

 

To:
Muscle Maker, Inc.

 

(1)
The undersigned, the Holder of record of the attached Warrant of MUSCLE MAKER, INC., hereby exercises the option granted by the
Purchase Rights evidenced by the attached Warrant and hereby elects to purchase ____ shares of Common Stock of MUSCLE MAKER, INC.,
pursuant to the provisions of Section 4.1 of the attached Warrant, and tenders herewith payment of the Exercise Price as determined
by the Warrant for such shares in full. All capitalized terms used but not defined in this notice have the meanings assigned to
such terms in the Warrant.

 

(2)
In exercising this Warrant, the undersigned hereby confirms and acknowledges that (a) the undersigned has complied with all terms
and conditions as defined in the Warrant, including the requirement that the offer and sale of the Shares was limited to “accredited”
investors only, (b) the shares of the Common Stock to be issued are being acquired solely for investment and solely for the account
of the undersigned, (c) the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities
laws, and (d) as required under the terms of the Warrant, the certificate or certificates representing said shares of Common Stock
shall bear a restrictive legend prohibiting and restricting transfer of such shares except in compliance with applicable federal
and state securities laws.

 

(3)
Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such
other name as is specified below.

 

(4)
Please issue a new Warrant for the unexercised portion of the attached Warrant, if any, in the name of the undersigned or in such
other name as is specified below:

 

	ATTEST:	HOLDER:

 

	 	By:	 
	 	Name:	 
	 	Title:	 

 

(If
certificates for Common Stock or new Warrants are requested in a name other than the undersigned, be advised that the delivery
of the certificates and/or new Warrants will be delayed until the Company assures itself that such change is permitted under Section
7 of the Warrant that such change does not violate applicable federal and state securities laws.)

 

    	 

    	 

    

 

EXHIBIT
2

 

PERMITTED
TRANSFER OR ASSIGNMENT FORM

 

NOTE:
THIS ASSIGNMENT BEARS A RESTRICTIVE LEGEND BELOW

 

FOR
VALUE RECEIVED, the undersigned Holder of record of this Warrant of MUSCLE MAKER, INC. (the “Company”), which is dated
____________, 2018, hereby sells, assigns and transfers unto the Assignee named below all of the rights, including, without limitation,
the Purchase Rights (as such term is defined in this Warrant) of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock set forth below:

 

	Name
    of Transferee/Assignee	 	Address	 	No.
    of Shares

 

and
does hereby irrevocably constitute and appoint the Secretary of MUSCLE MAKER, INC. to make such transfer on the books of MUSCLE
MAKER, INC, maintained for the purpose, with full power of substitution in the premises.

 

Attached
hereto, if and to the extent requested by the Company, is an opinion of counsel that the assignment does not violate or is exempt
from, any federal and state securities laws. As provided in the Warrant, including but not limited to Section 7 of the Warrant,
the Company may, in its sole discretion, decide whether such opinion is satisfactory, and Assignee and Holder agree to any reasonable
delay in transfer caused by such evaluation and further acknowledge and agree that they shall bear all reasonable and documented
costs associated with any transfer or assignment, including, without limitation, the reasonable fees of counsel to the Company
shall be borne by the transferor or assignor.

 

The
undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of Common Stock
to be issued upon exercise hereof or conversion thereof are being acquired for investment and that the Assignee will not offer,
sell or otherwise dispose of this Warrant or any shares of stock to be issued upon exercise hereof or conversion thereof except
under circumstances which will not result in a violation of the Securities Act of 1933, as amended (the “Act”), or
any state securities laws. Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested
by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Common Stock so purchased are being
acquired for investment and not with a view toward distribution or resale in violation of applicable securities laws.

 

Accordingly,
the following restrictive legend is made applicable to this assignment (and to this Warrant and securities covered by this Warrant
as assigned hereby to Assignee):

 

This
Assignment and this Warrant and the securities underlying this Warrant as assigned hereby, have not been registered under the
Act, and may not be offered, sold or otherwise transferred, assigned, pledged or hypothecated in the absence of such registration
or an exemption therefrom under such Act, any applicable state securities laws and the rules and regulations thereunder.

 

[Signatures
appear on following page.]

 

    	 

    	 

    

 

 

	Dated:	HOLDER:	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	Dated:	ASSIGNEE:	 
	 	 	Name
    & Title:SECURITIES
PURCHASE AGREEMENT

 

by
and among

 

EACH
PURCHASER IDENTIFIED ON THE SIGNATURE PAGES HERETO

(THE “PURCHASERS”)

 

and

 

MUSCLE
MAKER, INC (THE “COMPANY”)

 

    	 

    	 

    

 

SECURITIES
PURCHASE AGREEMENT

 

THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of September ___ 2018, by and among Muscle Maker,
Inc, a California corporation (the “Company”), and the purchasers identified on the signature pages hereto
(collectively, the “Purchasers” and each a “Purchaser”).

 

RECITALS

 

A.
The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b)
of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the
“SEC” or the “Commission”) under the Securities Act.

 

B.
The Purchasers wish to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, the Notes
(in the form attached hereto as Exhibit A) and the Warrants (in the form attached hereto as Exhibit C).

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows:

 

ARTICLE
1

DEFINITION

 

1.1
Defined Terms. In addition to terms defined elsewhere in this Agreement or in any Supplement, Amendment or Exhibit hereto,
when used herein, the following terms shall have the following meanings:

 

(a)
“Additional Purchasers” has the meaning set forth in Section 2.6 hereof.

 

(b)
“Additional Securities” has the meaning set forth in Section 2.6 hereof.

 

(c)
“Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls,
is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled
by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract
or otherwise.

 

(d)
“Business Day” means any day other than a Saturday or Sunday or any other day on which the Federal Reserve
Bank of New York is not open for business.

 

(e)
“Closing” has the meaning set forth in Section 2.1 hereof.

 

(f)
“Closing Date” means the date the Notes and Warrants are purchased by the Purchasers from the Company.

 

(g)
“Contingent Obligation” means as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose
or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that
the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

(h)
“Conversion Shares” shall have the meaning ascribed to such term in the Notes.

 

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

 

    	 

    	 

    

 

(j)
“Common Stock Equivalents” means any capital stock or other security of the Company that is at any time and
under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, and/or which otherwise entitles
the holder thereof to acquire, any Common Stock.

 

(k)
“Dollar(s)” and “$” means lawful money of the United States.

 

(l)
“Environmental Laws” means any and all laws, rules, orders, regulations, statutes, ordinances, guidelines,
codes, decrees, or other legally enforceable requirements (including, without limitation, common law) of any international authority,
foreign government, the United States, or any state, local, municipal or other governmental authority, regulating, relating to
or imposing liability or standards of conduct concerning protection of the environment or of human health, or employee health
and safety, as has been, is now, or may at any time hereafter be, in effect.

 

(m)
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.

 

(n)
“Event of Default” shall have the meaning ascribed to such term in the Notes.

 

(o)
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.

 

(p)
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time
to time.

 

(q)
“Indebtedness” means, with respect to any Person at any date, without duplication, (i) all indebtedness of
such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other
than trade payables and accrued expenses incurred in the ordinary course of business), (iii) all obligations of such Person evidenced
by notes, bonds, debentures or other similar instruments, (iv) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the
seller or the Purchasers under such agreement in the event of default are limited to repossession or sale of such property), (v)
the capitalized amount of all capital lease obligations of such Person that would appear on a balance sheet in accordance with
GAAP, (vi) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter
of credit, surety bond or similar facilities, (vii) all obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any capital stock of such Person, (viii) all obligations for any earn-out consideration,
(ix) the liquidation value of preferred capital stock of such Person, (x) all guarantee obligations of such Person in respect
of obligations of the kind referred to in clauses (i) through (ix) above, (xi) all obligations of the kind referred to in clauses
(i) through (ix) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise,
to be secured by) any lien on property (including, without limitation, accounts and contract rights) owned by such Person, whether
or not such Person has assumed or become liable for the payment of such obligation and all obligations of such Person in respect
of hedge agreements; and (xii) all Contingent Obligations in respect to indebtedness or obligations of any Person of the kind
referred to in clauses (i)-(xi) above. The Indebtedness of any Person shall include, without duplication, the Indebtedness of
any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms
of such Indebtedness expressly provide that such Person is not liable therefor.

 

(r)
“Initial Closing” has the meaning set forth in Section 2.1 hereof.

 

(s)
“Knowledge” including the phrase “to the best of the Company’s knowledge,” or any
similar phrase, shall mean the actual knowledge of Michael Roper.

 

(u)
“Liens” or “liens” means a lien, mortgage, charge pledge, security interest, encumbrance,
right of first refusal, preemptive right or other restriction, or other clouds on title.

 

    	2

    	 

    

 

(v)
“Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of the Company
to the Purchasers, howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired
by assignment), absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising
through discount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited
to, those created pursuant to the Notes, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid
interest on the Notes the principal, any letter of credit, any standby letter of credit, and/or outside attorneys’ fees
or charges relating to preparation of the Transaction Documents or the enforcement of the Purchasers’ rights, remedies and
powers under this Agreement, the Notes and/or the other Transaction Documents.

 

(w)
“Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, operations,
or condition (financial or otherwise) of Company, (b) the validity or enforceability of this Agreement, the Notes, and/or any
of the other Transaction Documents or (c) the rights or remedies of the Purchasers hereunder or thereunder.

 

(x)
“Notes” means all of the 15% Senior Secured Convertible Promissory Notes of the Company in the aggregate principal
amount up to $4,000,000, issued by the Company to the Purchasers hereunder, in the form attached hereto as Exhibit A.

 

(y)
“OFAC” means the United States Department of the Treasury’s Office of Foreign Assets Control.

 

(z)
“OFAC Regulations” means the regulations promulgated by OFAC, as amended from time to time.

 

(aa)
“Permitted Indebtedness” means (i) Indebtedness of the Company evidenced by the Notes, this Agreement and/or
any other Transaction Document in favor of the Purchasers including all Liabilities, (ii) Indebtedness of the Company set forth
in Company’s Disclosure Schedules and on Schedule 1(aa), provided none of such Indebtedness, has been increased, extended
and/or otherwise changed since the date hereof unless such Indebtedness is subordinated to and not equal to or senior to the Notes,
(iii) Indebtedness that is subordinated to and not equal to or senior to the Notes, (iv) trade Indebtedness incurred in the ordinary
course of business, and (v) Indebtedness secured by Permitted Liens described in clause “(iv)” of the definition of
Permitted Liens.

 

(bb)
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any
Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in
the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good
faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company to secure the purchase
price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment,
and (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment, (v) any Liens for Permitted Indebtedness perfecting security
interests in the Permitted Indebtedness set forth in clauses (i) through (iii) of the definition of Permitted Indebtedness, (vi)
Liens by various service providers against the Fountain Valley, CA location, (vii) Liens for taxes, interest and penalties in
the approximate amount of $350,000, and (viii) Lien by Stern’s Bank against a food truck.

 

(cc)
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal
or otherwise including, without limitation, any instrumentality, division, agency, body or department thereof).

 

(dd)
“Purchase Price” means the price to be paid by the Purchasers to purchase such Purchasers’ Notes and
Warrants.

 

(ee)
“Rule 144” has the meaning set forth in Section 8.10 hereof.

 

(ff)
“Securities” means the Notes and the Warrants purchased pursuant to this Agreement, including the Additional
Securities, and all Underlying Shares and any securities of the Company issued in replacement, substitution and/or in connection
with any exchange, conversion and/or any other transaction pursuant to which all or any of such securities of the Company to the
Purchasers.

 

    	3

    	 

    

 

(gg)
“Security Agreement” means the Security and Pledge Agreement dated on or about the date hereof by and among
the Company and the Purchasers, as hereinafter amended and/or supplemented altogether with all exhibits, schedules and annexes
to such Security Agreement, pursuant to which all Liabilities and Indebtedness of the Company to the Purchasers under the Transaction
Documents including, but not limited to, the Notes are secured by the Collateral which security interest in the Collateral shall
be perfected by the Purchasers’ UCC-1s, filed with the Secretary of State of the State of California or other state, as
applicable, to the extent perfectable by the filing of a UCC-1 Financing Statement and such other documents and instruments related
thereto, a form of which is attached hereto as Exhibit B.

 

(hh)
“Solvent” means, with respect to any Person, as of any date of determination, (i) the amount of the “present
fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of
such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (ii) the present fair saleable value of the assets
of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on
its debts as such debts become absolute and matured, (iii) such Person will not have, as of such date, an unreasonably small amount
of capital with which to conduct its business, and (iv) such Person will be able to pay its debts as they mature. For purposes
of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (a)
right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (b) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

 

(ii)
“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

 

(jj)
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global
Select Market; the New York Stock Exchange; OTCQX, OTCQB, OTCBB or OTC Pink Sheets (or any successors to any of the foregoing).

 

(kk)
“Transaction Documents” means collectively, this Agreement, the Notes, the Warrants, the Security Agreement
(in the form attached hereto as Exhibit B), UCC-1 Financing Statements of the Purchasers on all of the assets of the Company
(collectively, the “Purchasers’ UCC-1s”) to be filed with the Secretary of State of California by the
Purchasers on or about the initial Closing Date, and all financing statements (or comparable documents now or hereafter filed
in accordance with the UCC or other comparable or similar laws, rules or regulations) in favor of the Purchasers as secured parties
perfecting all Liens the Purchasers have on the Collateral (as defined in the Security Agreement) and such other documents, instruments,
certificates, supplements, amendments, exhibits and schedules required and/or attached pursuant to this Agreement and/or any of
the above documents, and/or any other document and/or instrument related to the above agreements, documents and/or instruments,
and the transactions hereunder and/or thereunder and/or any other agreement, documents or instruments required or contemplated
hereunder or thereunder, whether now existing or at any time hereafter arising.

 

(ll)
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided,
however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority,
or remedies with respect to the Purchasers’ Liens on any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial
code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.

 

    	4

    	 

    

 

(mm)
“Underlying Shares” means all Conversion Shares and Warrant Shares.

 

(nn)
“Warrants” shall have the meaning ascribed to such term in Section 2.4 hereof.

 

(oo)
“Warrant Shares” means all shares of Common Stock issuable upon exercise of the Warrants and/or any other securities
issuable upon exercise of the Warrants.

 

(pp)
Variable Rate Transaction” shall have the meaning set forth in Section 4.2(n) of this Agreement.

 

1.2
Other Definitional Provisions.

 

(a)
Use of Defined Terms. Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Transaction Documents or any certificate or other document made or delivered pursuant hereto or thereto.

 

(b)
Accounting Terms. As used herein and in the other Transaction Documents, and any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms relating to Company not defined in Section 1.1 and accounting terms partly
defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP (provided that
all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts referred to herein
shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred
to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any Indebtedness or other liabilities of Company at “fair value”,
as defined therein, and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards
Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or
effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at
all times be valued at the full stated principal amount thereof).

 

(c)
Construction. The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. The meanings
given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

(d)
UCC Terms. Terms used in this Agreement which are defined in the UCC shall, unless the context indicates otherwise or are
otherwise defined in this Agreement, have the meanings provided for by the UCC.

 

ARTICLE
2

PURCHASE OF NOTES AND WARRANTS

 

2.1
Closings. (a) Initial Closing. The initial purchase and sale of the Notes and the Warrants shall take place remotely
via the exchange of documents and signatures, when the Escrow Agent has an aggregate amount of $1,365,000 or at such time and
place as the Company and the Purchasers mutually agree upon, orally or in writing, which date shall be no later than September
30, 2018 (which time and place are designated as the “Initial Closing”). Concurrent with the Initial Closing,
$635,000 in exist debt payable to Catalytic Capital LLC shall be converted into Notes. In the event there is more than one closing,
the term “Closing” shall apply to each such closing unless otherwise specified.

 

(b)
Subsequent Closings. After the Initial Closing, there shall be two additional Closings in the amount of $1,000,000 each
provided the Company achieves the milestones in Schedule 2.1(b).

 

2.2
Conditions to Purchase of Notes and Warrants. Subject to the terms and conditions of this Agreement, the Purchasers will
at the Initial Closing, purchase from the Company the Notes and Warrants in the amounts and for the Purchase Price set forth on
Schedule I hereto, provided that (i) no Event of Default (or event that with the passage of time or the giving of notice,
or both, would become an Event of Default), shall have occurred or would result therefrom; and (ii) the conditions in Section
5.1 have been satisfied.

 

2.3
Purchase Price and Payment of the Purchase Price for the Notes and Warrants. The Purchase Price for the Notes and Warrants
to be purchased by the Purchasers shall be paid at the Closing by the Purchasers by wire transfer of immediately available funds
to the Company in accordance with the Company’s written wiring instructions, against delivery of the Notes and Warrants.

 

    	5

    	 

    

 

2.4
Warrants. Subject to the terms and conditions of this Agreement, at each Closing each Purchaser shall receive warrants
(the “Warrants”) to purchase the number of shares of Common Stock equal to 50% of the number of shares underlying
each Purchaser’s Note, subject to the terms provided in the form of Warrant attached hereto as Exhibit C.

 

2.5
Piggyback Registration Rights. If the Company shall determine to register for sale for cash any of its Common Stock, for
its own account or for the account of others (other than the Purchasers), other than (i) a registration relating solely to employee
benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by
such consultants could be registered on Form S-8) (ii) a registration relating solely to a Securities Act Rule 145 transaction
or a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization or similar event, or (iii)
in connection with any offering involving an underwriting of Common Stock to be issued by the Company, the managing underwriter
shall prohibit the inclusion of shares of Common Stock by selling holders in such registration statement or shall impose a limitation
on the number of shares of such Common Stock which may be included in any such registration statement because, in its judgment,
such limitation is necessary to effect an orderly public distribution, and such limitation is imposed pro rata with respect to
all securities whose holders have a contractual, incidental (piggyback) right to include such securities in the registration statement
and as to which inclusion has been requested pursuant to such right and there is first excluded from such registration statement
all shares of Common Stock sought to be included therein by (A) any holder thereof not having any such contractual, incidental
registration rights, and (B) any holder thereof having contractual, incidental registration rights subordinate and junior to the
Purchasers’ Registrable Shares, the Company shall then be obligated to include in such registration statement only such
limited portion (which may be none) of the Purchasers’ Registrable Shares with respect to which such holder has requested
inclusion hereunder. The Company shall promptly give to the Purchasers written notice thereof (and in no event shall such notice
be given less than 10 calendar days prior to the filing of such registration statement), and shall include as a Piggyback Registration
all of the Underlying Shares specified in a written request delivered by the Purchaser thereof within 5 calendar days after receipt
of such written notice from the Company. However, the Company may, without the consent of the Purchasers, withdraw such registration
statement prior to its becoming effective if the Company or such other stockholders have elected to abandon the proposal to register
the securities proposed to be registered thereby. Registrable Shares means the Conversion Shares and Warrant Shares; provided,
however, that shares of Common Stock shall cease to be Registrable Shares upon any sale of such shares pursuant to (i) a registration
statement filed under the Securities Act, or (ii) Rule 144 promulgated under the Securities Act.

 

2.6
Sale of Additional Notes and Warrants. After the Initial Closing, the Company may, but has no obligation to, sell, on the
same terms and conditions as those contained in this Agreement, additional Notes and Warrants (the “Additional Securities”),
to one or more purchasers (the “Additional Purchasers”), provided that each Additional Purchaser shall become
a party to the Transaction Agreements (as defined below), by executing and delivering a counterpart signature page to each of
the Transaction Documents. Schedule I to this Agreement shall be updated to reflect the number of Additional Securities
purchased at each such Closing and the parties purchasing such Additional Securities.

 

ARTICLE
3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

3.1
Representation and Warranties. The Company represents and warrants to the Purchasers that on the Closing Date:

 

(a)
Organization, Etc. The Company is duly organized, validly existing and in good standing under the laws of the state of
its organization and is duly qualified and in good standing or has applied for qualification as a foreign corporation authorized
to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required
except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.

 

(b)
Authorization: No Conflict. The execution, delivery and performance of the Transaction Documents and the transactions contemplated
thereby by the Company, including, but not limited to, the sale and issuance of the Notes and Warrants for the Purchase Price
(i) are within Company’s corporate powers, (ii) have been duly authorized by all necessary action by or on behalf of Company
(and/or its stockholders to the extent required by law), (iii) the Company has received all necessary and/or required governmental,
regulatory and other approvals and consents (if any shall be required), (iv) do not and shall not contravene or conflict with
any provision of, or require any consents under (A) any law, rule, regulation or ordinance, (B) Company’s organizational
documents; and/or (C) any agreement binding upon Company or any of Company’s properties except as would not reasonably be
expected to have a Material Adverse Effect, and (v) do not result in, or require, the creation or imposition of any Lien and/or
encumbrance on any of Company’s properties or revenues pursuant to any law, rule, regulation or ordinance or otherwise.

 

    	6

    	 

    

 

(c)
Validity and Binding Nature. The Transaction Documents to which the Company is a party are the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization and other similar laws of general application affecting the rights and
remedies of creditors and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

(d)
Title to Assets. Except as set forth on Schedule 3.1(d), the Company has good and marketable title to all assets owned
by the Company.

 

(e)
No Violations of Laws. The Company is not in violation of any law, ordinance, rule, regulation, judgment, decree or order
of any federal, state or local governmental body or court and/or regulatory or self-regulatory body.

 

(f)
Burdensome Obligations. Except as otherwise disclosed in Schedule 3.1(f), the Company is not a party to any indenture,
agreement, lease, contract, deed or other instrument, or subject to any partnership restrictions or has any knowledge of anything
which could have a Material Adverse Effect.

 

(g)
Taxes. Except as set forth on Schedule 3.1(g), all federal, and material state and local tax returns required to be filed
by the Company have been filed with the appropriate governmental agencies and all taxes due and payable by the Company have been
timely paid.

 

(h)
Employee Benefit Plans. The term “Plan” means an “employee pension benefit plan” (as defined
in Section 3 of Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”)) which
is or has been established or maintained, or to which contributions are or have been made, by the Company or by any member of
the Controlled Group. Each plan and/or employee benefit plan, if any, (as defined in Section 3(3) of ERISA) maintained by the
Company complies in all material respects with all applicable requirements of law and regulations and all payments and contributions
required to be made with respect to such plans have been timely made.

 

(i)
Federal Laws and Regulations. The Company is not (i) an “investment company” or a company “controlled”,
whether directly or indirectly, by an “investment company”, within the meaning of the Investment Company Act of 1940,
as amended; or (ii) engaged principally, or as one of its important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System).

 

(j)
Fiscal Year. The fiscal year of the Company ends on December 31 of each year.

 

(k)
Subsidiaries. Except as set forth on Schedule 3.1(k), the Company does not have any Subsidiaries.

 

(l)
Rule 506(d) Bad Actor Disqualification Representations and Covenants.

 

(i)
No Disqualification Events. Neither the Company, nor any of the Company’s predecessors, affiliates, any manager,
executive officer, other officer of the Company participating in the offering of the Securities, any beneficial owner (as that
term is defined in Rule 13d-3 under the Exchange Act) of 20% or more of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected
with the Company in any capacity as of the date of this Agreement and on the Closing Date (each, a “Company Covered Person”
and, together, the “Company Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for
a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine (i) the identity
of each person that is a Company Covered Person; and (ii) whether any Company Covered Person is subject to a Disqualification
Event. The Company will comply with its disclosure obligations under Rule 506(e).

 

    	7

    	 

    

 

(ii)
Other Covered Persons. The Company is not aware of any person (other than any Company Covered Person) that has been or
will be paid (directly or indirectly) remuneration in connection with the purchase and sale of the Notes and/or the Warrants that
is subject to a Disqualification Event (each an “Other Covered Person”).

 

(iii)
Reasonable Notification Procedures. With respect to each Company Covered Person, the Company has established procedures
reasonably designed to ensure that the Company receives notice from each such Company Covered Person of (i) any Disqualification
Event relating to that Company Covered Person, and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to that Company Covered Person; in each case occurring up to and including the Closing Date.

 

(iv)
Notice of Disqualification Events. The Company will notify the Purchasers immediately in writing upon becoming aware of
(i) any Disqualification Event relating to any Company Covered Person and (ii) any event that would, with the passage of time,
become a Disqualification Event relating to any Company Covered Person and/or Other Covered Person.

 

(m)
Accuracy of Information, etc. No statement or information contained in this Agreement, the Disclosure Schedules, any other
Transaction Document or any other document, certificate or statement furnished to the Purchasers by or on behalf of Company in
writing for use in connection with the transactions contemplated by this Agreement and/or the other Transaction Documents, contained
as of the date such statement, information, document or certificate was made or furnished, as the case may be, any untrue statement
of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein, taken as
a whole, not materially misleading. There is no fact known to Company that could have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Transaction Documents, or in any other documents, certificates and statements furnished
to the Purchasers for use in connection with the transactions contemplated hereby and by the other Transaction Documents.

 

(n)
Solvency. The Company is not Solvent as of the date hereof not after giving effect to the incurrence of all Indebtedness
and all other obligations being incurred by the Company pursuant hereto and the other Transaction Documents.

 

(o)
Affiliate Transactions. The Company has not purchased, acquired or leased any property from, or sold, transferred or leased
any property to, or entered into any other transaction with (i) any Affiliate, (ii) any officer, director, manager, shareholder
or member of the Company or any Affiliate of any thereof, or (iii) any member of the immediate family of any of the foregoing,
except on terms comparable to the terms which would prevail in an arms- length transaction between unaffiliated third parties
and have been disclosed to the Purchasers in writing.

 

(p)
Intellectual Property. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar
rights as described in the Disclosure Schedules as necessary or required for use in connection with its business and which the
failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
None of, and the Company has not received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired,
terminated or been abandoned, or is expected to expire or terminate or be abandoned. As of the date hereof, the Company has not
received a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. Except
as set forth on Schedule 3.1(p), to the best of the Company’s knowledge, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure
to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. All Intellectual
Property Rights of the Company are set forth in the Disclosure Schedules and in Schedule 3.1(p).

 

(q)
Variable Rate Transactions. The Company has not directly and/or indirectly entered into, nor has any agreement, intention
and/or obligation to enter into any Variable Rate Transaction.

 

    	8

    	 

    

 

(r)
USA Patriot Act. The Company is in compliance, in all material respects, with the Trading with the Enemy Act, as amended,
and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V,
as amended) and any other enabling legislation or executive order relating thereto, and the USA Patriot Act (Title III of Pub.
L. 107-56, signed into law October 26, 2001) (the “Act”). No part of the proceeds of the Notes will be used,
directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party,
candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

(s)
Foreign Asset Control Laws. The Company is not a Person named on a list published by OFAC or a Person with whom dealings
are prohibited under any OFAC Regulations.

 

(t)
Indebtedness; Liens, Etc. Except for Permitted Indebtedness and Permitted Liens, the Company has no Indebtedness nor any
Liens.

 

(u)
Authorization; Enforcement. All corporate action on the part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of the Transaction Documents and the performance of all obligations of the Company
under the Transaction Documents, and have been taken on or prior to the date hereof. Each of the Transaction Documents has been
duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.

 

(v)
Valid Issuance of the Notes, Warrants and Underlying Shares, Etc. Each of the Notes and Warrants has been duly authorized
and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens and all restrictions on transfer other than those expressly imposed by the federal securities laws
and vest in the Purchasers full and sole title and power to the Notes and the Warrants purchased hereby by the Purchasers, free
and clear of all Liens, and restrictions on transfer other than those imposed by the federal securities laws. All Conversion Shares
when issued pursuant to conversion of the Notes and all Warrant Shares when issued pursuant to any exercise of the Warrants will
be duly and validly issued, fully paid and nonassessable, will be free and clear of all Liens and all restrictions on transfer
other than those expressly imposed by the federal securities laws and vest in the holder full and sole title and power to such
securities. The Notes, the Warrants, the Conversion Shares and the Warrant Shares shall sometimes be collectively referred to
as the “Securities”.

 

(w)
Offering. Assuming the accuracy of the representations and warranties set forth in Article 8 hereof, the offer and
sale of the Notes and Warrants as contemplated by this Agreement, are exempt from the registration requirements of the Securities
Act, and the qualification or registration requirements of state securities laws or other applicable blue sky laws. Neither the
Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

 

(x)
Capitalization and Voting Rights. The authorized capital stock of the Company and all securities of the Company issued
and outstanding are set forth in the Disclosure Schedules as of the dates reflected therein. All of the outstanding shares of
Common Stock and other securities of the Company have been duly authorized and validly issued, and are fully paid and non-assessable.
Except as set forth in the Disclosure Schedules, there are no agreements or arrangements under which the Company is obligated
to register the sale of any of the Company’s securities under the Securities Act, other than disclosed in Schedule 3.1(x).
Except as set forth in the Disclosure Schedules and on Schedule 3.1(x), no shares of Common Stock and/or other securities of the
Company are entitled to preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings,
or arrangements by which the Company is or may become bound to issue additional shares of the capital stock and/or other securities
of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company other than those
issued or granted in the ordinary course of business pursuant to the Company’s equity incentive and/or compensatory plans
or arrangements. Except for customary transfer restrictions contained in agreements entered into by the Company to sell restricted
securities and/or as set forth in the Disclosure Schedules, the Company is not a party to, and it has no knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock and/or other securities of the Company. Except as set forth
in the Disclosure Schedules, the offer and sale of all capital stock, convertible or exchangeable securities, rights, warrants,
options and/or any other securities of the Company when any such securities of the Company were issued complied with all applicable
federal and state securities laws, and no current and/or prior holder of any securities of the Company has any right of rescission
or damages or any “put” or similar right with respect thereto that would have a Material Adverse Effect. Except as
set forth in the Disclosure Schedules, there are no securities or instruments of the Company containing anti-dilution or similar
provisions that will be triggered by the issuance and/or sale of the Securities and/or the consummation of the transactions described
herein or in any of the other Transaction Documents

 

    	9

    	 

    

 

(y)
Financial Statements. All financial statements filed with the Securities and Exchange Commission (the “Financial
Statements”) have been prepared in accordance GAAP applied on a consistent basis throughout the periods indicated and
with each other, except that unaudited Financial Statements may not contain all footnotes required by generally accepted accounting
principles. The Financial Statements fairly present, in all material respects, the financial condition and operating results of
the Company as of the dates, and for the periods, indicated therein, subject in the case of unaudited Financial Statements to
normal year-end audit adjustments.

 

(z)
Arbitration, Absence of Litigation. Except as set forth in the Disclosure Schedules and on Schedule 3.1(z), there is no
action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the best of the Company’s knowledge, threatened against or affecting the Company, the Common Stock
or any of the Company’s officers or directors or 5% or greater shareholders in their capacities as such.

 

(aa)
Material Changes; Undisclosed Events, Liabilities or Developments. Except as provided in Schedule 3.1 (aa), since
December 31, 2017: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses and short term debt incurred for operational expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected in the Company’s Financial Statements pursuant
to GAAP (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or affiliate,
except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability,
fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect
to the Company or its business, properties, operations, assets or financial condition, that would be required to be disclosed
by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly
disclosed at least one Trading Day prior to the date that this representation is made.

 

(bb)
Disclosure. The Company understands and confirms that the Purchasers will rely on the Transaction Documents and the information
included therein in purchasing the Notes and Warrants. All of the disclosure furnished by or on behalf of the Company to the Purchasers
in the Transaction Documents regarding, among other matters relating to the Company, its business and the transactions contemplated
in the Transaction Documents, are true and correct in all material respects as of the date made and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that the Purchasers do not
make nor have they made any representations or warranties with respect to the transactions contemplated in the Transaction Documents
other than those specifically set forth in Article 8 hereof.

 

(cc)
No Integrated Offering. Assuming the accuracy of the representations and warranties set forth in Article 8 hereof,
neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the issuance
and/or sale of the Securities to be integrated with prior offerings of securities by the Company for purposes of (i) the Securities
Act which would require the registration of any such Securities and/or securities of the Company under the Securities Act, or
(ii) any shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed, eligible
for quotation and/or designated.

 

    	10

    	 

    

 

(dd)
Bankruptcy Status; Indebtedness. The Company has no current intention or expectation to file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the applicable representation date, provided,
however, with respect to subsidiaries operating locations that have or are closing store locations, the Company, in its sole discretion,
may file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction with respect to such
subsidiary. All outstanding secured and unsecured Indebtedness of the Company, or for which the Company has commitments, is set
forth in the Disclosure Schedules and on Schedule 3.1(dd).

 

(ee)
No Consents, Etc. No direct or indirect consent, approval, authorization or similar item is required to be obtained by
the Company to enter into this Agreement, the Notes, the Warrants and/or the other Transaction Documents to which it is a party
and to perform or undertake any of the transactions contemplated pursuant to this Agreement, the Notes, the Warrants and/or any
of the other Transaction Documents to which it is a party.

 

(ff)
Intentionally left blank.

 

(gg)
No General Solicitation. Neither the Company, nor any of its affiliates, nor any Person acting on its behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. Except as provided in Schedule 3.1 (gg), the Company has not engaged any placement agent or other
agent in connection with the sale of the Securities.

 

(hh)
Acknowledgment Regarding Purchasers’ Purchase of Notes and Warrants. The Company acknowledges and agrees that each
Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the other Transaction Documents
and the transactions contemplated hereby and thereby and that such Purchaser is not (i) an officer or director of the Company,
(ii) an Affiliate of the Company or (iii) to the best of the Company’s knowledge, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Exchange Act. The Company further acknowledges
that each Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect
to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by such Purchaser or any
of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to such Purchaser’s purchase of the Securities. The Company further represents to the Purchasers that
the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

 

(ii)
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and
is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

 

(jj)
Internal Accounting and Disclosure Controls. The Company does not maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities
is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability
for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference (collectively, the “Internal Controls”). The Company is in process of reviewing,
adopting and implementing its Internal Controls.

 

    	11

    	 

    

 

ARTICLE
4

COVENANTS

 

4.1
Affirmative Covenants. Commencing on the Closing Date and until the earlier to occur of (i) the listing of the Common Stock
on a national securities exchange (the “Listing Event”) or (ii) such time that the Notes are no longer outstanding,
the Company covenants and agrees that:

 

(a)
Financial Statements and Certificates. Subject to Section 4.1(j), the Company will furnish the following to the Purchasers,
all in form and scope acceptable to the Purchasers:

 

(i)
within 120 days after the close of each fiscal year of the Company, a copy of the annual report of the Company consisting of a
balance sheet, statement of operating results and retained earnings, statement of cash flows and notes to financial statements,
profit and loss statement and statement of changes in financial position of the Company, prepared in conformity with GAAP, duly
prepared by certified public accountants of recognized standing selected by the Company and reasonably approved by the Purchasers;

 

(ii)
within 50 days after the end of each fiscal quarter, starting with the fiscal quarter ending March 31, 2019, (A) a copy of an
unaudited financial statement of the Company prepared in the same manner as the report referred to in paragraph (i) above, signed
by the chief financial officer of the Company and consisting of a balance sheet as at the close of such fiscal quarter and statements
of earnings, cash flow, income and source and application of funds for such fiscal quarter and for the period from the beginning
of such fiscal year to the close of such fiscal quarter, and (B) a duly completed compliance certificate, dated the date of such
financial statements and certified as true and correct by the chief executive officer or chief financial officer of the Company,
stating that the Company has not become aware of any Event of Default that has occurred and is continuing or, if there is any
such Event of Default describing it and the steps, if any, being taken to cure it;

 

(iii)
copies of any and all reports, examinations, notices, warnings and citations issued by any governmental or quasi-governmental
(whether federal, state or local), unit, agency, body or entity with respect to the Company that could have a Material Adverse
Effect; and

 

(iv)
such other information as the Purchasers from time to time reasonably request.

 

(b)
Books, Records and Inspections. The Company shall (i) maintain complete and accurate books and records; (ii) permit access
by the Purchasers and its agents and/or representatives to such books and records as they relate to this Agreement, the Securities,
and/or the other Transaction Documents; and (iii) permit such persons, upon three (2) Business Days prior written notice, to inspect
the properties, whether real or personal, and operations of the Company, except in the case of an Event of Default, when no notice
is required.

 

(c)
Insurance. The Company shall maintain such insurance as may be required by law and such other insurance to the extent and
against such hazards and liabilities as is customarily maintained by companies similarly situated.

 

(d)
Taxes and Liabilities. The Company shall pay when due all material taxes, assessments and other liabilities except as contested
in good faith and by appropriate proceedings and for which adequate reserves in conformity with GAAP have been established and
except for taxes presently outstanding for which the Company is attempting to settle.

 

(e)
Maintenance of Business; Company Names. The Company shall (i) keep all property and systems useful and necessary in its
business in good working order and condition, (ii) preserve its existence, rights and privileges in the jurisdiction of its organization
or formation, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing
in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary (iii) not operate in any business other than a business substantially the same as the business
as in effect on the date of this Agreement; provided, however, that it may change its jurisdiction of organization
or formation establishment upon thirty (30) days prior written notice to the Purchasers. The Company shall give the Purchasers
thirty (30) days’ prior written notice before the Company changes its name or does business under any other name.

 

(f)
Employee Benefit Plans, Etc. The Company shall (i) maintain each plan and/or each employee benefit plan as to which it
may have any liability in substantial compliance with all applicable requirements of law and regulations; (ii) make all payments
and contributions required to be made pursuant to such Plans and/or plans in a timely manner; and (iii) neither establish any
new Plan and/or employee benefit plan, agree or contribute to any Plan and/or multi-employer plan nor amend any existing Plan
and/or employee pension benefit plan in a manner which would increase its obligation to contribute to such Plan and/or plan.

 

    	12

    	 

    

 

(g)
Good Title. Except as set forth in the Disclosure Schedules, the Company shall at all times maintain good and marketable
title to all of its assets necessary for the operation of its business.

 

(h)
Maintenance of Intellectual Property Rights. The Company will take all reasonable action necessary or advisable to maintain
all of the Intellectual Property Rights of the Company that are necessary or material to the conduct of its business in full force
and effect.

 

(i)
Locations. The Company shall give the Purchasers thirty (30) days prior written notice of a change in (i) its jurisdiction
of organization or the location of its Chief Executive Office or sole place of business or principal residence or (ii) its name.

 

(j)
Securities Law Disclosure; Publicity. The Company shall afford the Purchasers and its counsel with a reasonable opportunity
to review and comment upon, shall consult with the Purchasers and its counsel on the form and substance of, and shall give due
consideration to all such comments from the Purchasers and its counsel on, any press release or any other public disclosure made
by or on behalf of the Company relating to the Purchasers, the Transaction Documents and/or the transactions contemplated by any
Transaction Document, prior to the issuance, filing or public disclosure thereof, and the Company shall not issue, file or publicly
disclose any such information to which the Purchasers shall reasonably object, unless required by law.

 

(i)
The Company confirms that neither it nor any other person acting on its behalf shall provide the Purchasers or their agents or
counsel with any information that constitutes or might constitute material, non-public information, unless a simultaneous public
announcement thereof is made by the Company in the manner contemplated by Regulation FD. In the event of a breach of the foregoing
covenant by the Company or any person acting on its behalf (as determined in the reasonable good faith judgment of the Purchasers),
in addition to any other remedy provided herein or in the other Transaction Documents, if the Purchasers are holding any securities
of the Company at the time of the disclosure of material, non-public information, the Purchasers shall have the right to make
a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, non-public information
without the prior approval by the Company; provided such Purchasers shall have first provided notice to the Company that it believes
it has received information that constitutes material, non-public information, the Company shall have 48 hours publicly to disclose
such material, non-public information prior to any such disclosure by the Purchasers or demonstrate to the Purchasers in writing
why such information does not constitute material, non-public information, and (assuming the Purchasers and Purchasers’
counsel disagree with the Company’s determination) the Company shall have failed to publicly disclose such material, non-public
information within such time period. The Purchasers shall not have any liability to the Company, any of its Subsidiaries, or any
of their respective directors, officers, employees, stockholders or agents, for any such disclosure. The Company understands and
confirms that the Purchasers shall be relying on the foregoing covenants and obligations in effecting transactions in securities
of the Company.

 

(k)
Notices. The Company shall, after receipt of knowledge thereof, give prompt written notice to the Purchasers of:

 

(i)
the occurrence of any Event of Default or any event which with the passage of time or the giving of notice or both would become
an Event of Default;

 

(ii)
subject to Section 4.1(j), any litigation, investigation or proceeding which may exist at any time between Company and any governmental
authority, that in either case, if not cured or if adversely determined, as the case may be, could have a Material Adverse Effect;

 

(iii)
subject to Section 4.1(j), any litigation or proceeding affecting Company (A) in which the amount involved is $25,000 or more,
(B) in which injunctive and/or other equitable relief is sought and/or (C) which relates to the Purchasers, any Transaction Document
and/or any of the transactions contemplated by any Transaction Document;

 

    	13

    	 

    

 

(iv)
subject to Section 4.1(j), any Lien (other than security interests created hereby or Permitted Liens) and/or any Indebtedness
other than Indebtedness related to the Transaction Documents or Permitted Indebtedness; and

 

(v)
subject to Section 4.1(j), any matter, development and/or event that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including any such matter arising from: any breach or non-performance of, or any default, terms of
default or event of default under the Transaction Documents, and/or any other material agreements that the Company is a party
to and/or any of its property is bound by;

 

(vi)
subject to Section 4.1(j), each notice pursuant to this Section 4.1(k) shall be accompanied by a statement of Company setting
forth details of the occurrence referred to therein and stating what action Company proposes to take with respect thereto.

 

(l)
Environmental Laws. The Company shall (i) comply in all material respects with, and endeavor to ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and endeavor to ensure that all tenants and subtenants obtain and comply in all material
respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental
Laws, and (ii) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all governmental
authorities regarding Environmental Laws.

 

(m)
Further Assurances. The Company shall, from time to time execute and deliver, or cause to be executed and delivered, such
additional instruments, certificates or documents, such as a confession of judgment, and take such actions, as the Purchasers
may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Transaction
Documents. Upon the exercise by the Purchasers of any power, right, privilege or remedy pursuant to this Agreement or the other
Transaction Documents which requires any consent, approval, recording, qualification or authorization of any governmental authority,
the Company will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments
and other documents and papers that the Purchasers may be required to obtain from the Company for such governmental consent, approval,
recording, qualification or authorization.

 

(n)
Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Documents) shall be offered
or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. 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 Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

(o)
Board Representation. Until the one-year anniversary of the Listing Event, the Company covenants that it shall hold regular meetings
of its board of directors at least once per calendar quarter and the Purchaser Representative shall be entitled to designate one
member (the “Member”) and one observer (the “Observer”) to the board of directors of the Company, which
Member and Observer shall receive (at the same time and in the same manner provided to the directors) notice of and copies of
all materials provided to directors in connection with, and shall be entitled to attend, all meetings of the board of directors
of the Company, and any committee thereof. Such Member and Observer shall also receive (at the same time and in the same manner
provided to the directors) notice of and copies of all materials provided to the directors of the Company in connection with any
actions to be taken by written consent of the board of directors of the Company, and any committee thereof. The Company shall
reimburse the reasonable expenses (including all travel, meal and lodging expenses) incurred by the Member and Observer in connection
with attending any meetings described above. Catalytic Holdings 1 LLC shall be the initial Purchaser Representative unless the
Company receives written notice from a majority-in-interest of the Purchasers that a new Purchaser Representative has been appointed
or Catalytic Holdings 1 LLC resigns as the Purchaser Representative.

 

    	14

    	 

    

 

(p)
Employment Agreement. Michael Roper shall enter into an employment agreement with the Company with non-compete provisions, acceptable
to the Purchaser Representative, for a period no shorter than two years.

 

(q)
The Company shall engage an investor relations firm mutually agreed to by the Company and the Purchaser Representative from the
time of the Listing Event until six months after the Listing Event. If mutual agreement cannot be reached then the Company shall
engage an investor relations firm selected by the Purchaser Representative. If the Purchasers are subject to a lock-up agreement,
the Company shall engage the investor relations firm for a period of at least three months after Purchasers’ lock-up agreement
expires.

 

4.2
Negative Covenants. Until all Liabilities are paid in full, the Company covenants and agrees that:

 

(a)
Restriction on the Use of Funds. Except for Permitted Indebtedness and as set forth in Schedule 4.2(k), the Company shall
not, directly or indirectly, use any funds derived from the purchase of the Notes and Warrants by the Purchasers to repay any
existing loans or debts of the Company.

 

(b)
Restricted Payments. Except to the Purchasers, the Company shall not directly or indirectly, redeem, defease, repurchase,
repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open
market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness, except for Permitted
Indebtedness.

 

(c)
Restriction on Redemption and Dividends. Except to the Purchasers, the Company shall not, directly or indirectly, redeem,
repurchase or declare or pay any dividend or distribution on any of its capital stock whether in cash, stock rights and/or property.

 

(d)
Restriction on Transfer of Assets. The Company shall not, directly or indirectly, sell or otherwise dispose of any assets
or rights of the Company owned or hereafter acquired whether in a single transaction or a series of related transactions, other
than sales and other dispositions of such assets or rights by the Company in the ordinary course of business; provided,
however, that in the event that the Company wishes to effect a transaction under this Section 4.2(d) it shall, prior to
undertaking such effort, provide the Purchasers with a high-level understanding of the objectives and deal terms of such anticipated
transaction. No fewer than four (4) Business Days prior to the execution of each of a binding term sheet and definitive documentation,
the Company shall deliver to the Purchasers a written notice of any material terms and/or changes since the prior notice given
to the Company and shall include a term sheet or similar document relating thereto as an attachment. Thereafter, upon receipt
of draft execution copies of such definitive documentation, the transaction shall be subject to the Purchasers’ consent,
which consent will not be unreasonably withheld. Notwithstanding the foregoing, the Company may license its assets or rights in
any transaction with any Person that is not an Affiliate.

 

(e)
Change in Nature of Business. The Company shall not, directly or indirectly, engage in any business substantially different
from the business conducted by the Company on the Closing Date or any business substantially related or incidental thereto. The
Company shall not, directly or indirectly, modify its or their corporate structure for any purpose.

 

(f)
Indebtedness. The Company shall not incur or permit to exist any Indebtedness, except for Permitted Indebtedness without
the consent of the Purchaser Representative.

 

(g)
Liens. The Company shall not create or permit to exist any Liens or security interest with respect to any assets whether
now owned or hereafter acquired and owned, except for Permitted Liens.

 

(h)
Guaranties, Loans or Advances. The Company shall not become or be a guarantor or surety of, or otherwise become or be responsible
in any manner with respect to any undertaking of any other Person, or make or permit to exist any loans or advances to or investments
in any other Person, except for the endorsement, in the ordinary course of collection, of instruments payable to it or to its
order.

 

(i)
Violation of Law. The Company shall not violate any law, statute, ordinance, rule, regulation, judgment, decree, order,
writ or injunction of any federal, state or local authority, court, agency, bureau, board, commission, department or governmental
body.

 

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(j)
Unconditional Purchase Obligations. The Company shall not enter into or be a party to any contract for the purchase of
materials, supplies or other property or services if such contract requires that payment be made by it regardless of whether or
not delivery is ever made of such materials, supplies or other property or services.

 

(k)
Use of Proceeds. The Company shall use the proceeds hereunder only for purposes as set forth on Schedule 4.2(k).
The Company shall not permit any proceeds of the Notes to be used either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of “purchasing or carrying any margin stock” within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, as amended from time to time.

 

(l)
Hedge Agreements. The Company shall not enter into any hedge agreement other than hedge agreements entered into in the
ordinary course of business, and not for speculative purposes, to protect against changes in interest rates or foreign exchange
rates.

 

(m)
ERISA. The Company shall not create or become obligated under any Plan.

 

(n)
No Variable Rate Transactions, Etc. For as long as the Notes and/or Warrants remain outstanding, the Company shall be prohibited
from effecting or entering into an agreement to effect any issuance by the Company of Common Stock Equivalents (or a combination
of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which
the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include
the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to
being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified
or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock, (ii) enters
into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company
may issue securities at a future determined price, (iii) cooperates with any person to effect any exchange of securities and/or
Indebtedness of the Company in connection with a proposed sale of such securities from an existing holder of such securities to
a third party, or (iv) reduces and/or otherwise changes the exercise price, conversion price and/or exchange price of any Common
Stock Equivalent of the Company and/or amends any non-convertible Indebtedness of the Company to make it convertible into securities
of the Company. Any Purchaser shall be entitled to obtain injunctive relief against the Company (without the need for the posting
of any bond or similar item, which the Company hereby expressly and irrevocably waives the requirement for) to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.

 

(o)
Transactions with Affiliates. The Company shall not directly and/or indirectly enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, lending funds to an Affiliate and/or borrowing
funds from any Affiliate, the purchase, sale, lease, transfer or exchange of property, securities or assets of any kind or the
rendering of services of any kind) with any officer, director, Affiliate and/or any Affiliate of such person, except for Permitted
Indebtedness.

 

(p)
Subsidiaries. The Company will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary
unless the Company pledges its ownership in the additional Subsidiaries to the Purchasers. The Company shall not, and shall not
permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary to any Person. Neither the
Company nor any Subsidiary shall have any foreign Subsidiaries.

 

(q)
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for,
or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Purchasers.

 

(r)
Officer Compensation. The Company shall not increase the compensation for the Company’s Officer and Directors until
after the Listing Event unless approved by the Purchaser Representative; provided, however, the salary for Michael Roper may be
increased by $25,000 upon the Company achieving the first set of milestones described in Schedule 4.2(k).

 

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(s)
Lock-Up Agreement. The Purchaser agrees that if requested by an underwriter of the Company’s common stock, it will
agree to not transfer, offer, pledge, sell, contract to sell, grant any options for the sale of or otherwise dispose of, directly
or indirectly, any shares of common stock or other securities held by such Purchaser for a period to be determined by the underwriter.
If requested by an underwriter, each Purchaser will reaffirm the agreement set forth in this section in a separate writing in
a form satisfactory to such underwriter. The Company may impose stop-transfer instructions with respect to the securities subject
to such lock-up. The Purchaser shall not be required to enter into a lock-up agreement with a lock-up period longer than three
months, unless required by the underwriter, following a Listing Event. If the lock-up period required by the underwriter is longer
than three months, it shall not be an Event of Default.

 

ARTICLE
5

CLOSING CONDITIONS

 

5.1
Closing Conditions of the Purchasers. The Purchasers’ obligation to enter into the Transaction Documents and purchase
the Notes and Warrants is subject to the fulfillment of each and every one of the following conditions prior to or contemporaneously
with the Purchasers entering into the Transaction Documents and purchasing the Notes and the Warrants (unless waived by the Purchasers
in writing in their sole and absolute discretion):

 

(a)
Delivery of Transaction Documents. The Purchasers shall have received from the Company each of the following (together
with all Exhibits, Schedules, annexes to each of the following), in form and substance reasonably satisfactory to the Purchasers
and their counsel, and where applicable, duly executed and recorded (to the extent required):

 

(i)
a certificate of the Secretary of the Company certifying as to (A) copies of the Certificate of Incorporation and by-laws of the
Company, as restated or amended as of the date of this Agreement; (B) resolutions of the Board of Directors of the Company approving
the Transaction Documents and the transactions contemplated under the Transaction Documents; and (C) the names of the directors
and officers of the Company authorized to sign the Transaction Documents, together with a sample of the true signature of each
such Person;

 

(ii)
a certificate of the Chief Executive Officer of the Company certifying that all representations and warranties of the Company
made herein are true and correct in all respects as of the Closing (provided, however, that to the extent such representation
and warranty expressly relates to an earlier date, such representation and warranty shall be true and correct as of such earlier
date);

 

(iii)
this Agreement;

 

(iv)
the Notes;

 

(v)
the Warrants;

 

(vi)
the Security Agreement;

 

(vii)
certificates of good standing for the Company in the jurisdiction of its incorporation, in the principal places in which Company
conducts business and in places in which the Company owns real estate or, if the certificate of good standing is not readily available,
other evidence of good standing acceptable to the Purchaser Representative;

 

(viii)
all Purchasers’ UCC Documents with proof of filing thereof;

 

(ix)
such other documents, certificates, opinions, instruments and/or other items reasonably requested by the Purchasers and/or their
legal counsel.

 

(b)
Approvals. The receipt by the Purchasers of all governmental and third party approvals necessary in connection with the
continuing operations of the Company, the execution and performance of the Transaction Documents and the transactions contemplated
thereby, all of which consents/approvals shall be in full force and effect.

 

    	17

    	 

    

 

(c)
Additional Conditions. The fulfillment of each and every one of the following conditions prior to or contemporaneously
with the purchase of the Notes and the Warrants:

 

(i)
Representations and Warranties. Each of the representations and warranties made by the Company in or pursuant to the Transaction
Documents and all Schedules and/or Exhibits to this Agreement and/or any of the other Transaction Documents shall be true and
correct in all material respects on and as of the Closing Date as if made (or given) on and as of such date (except where such
representation and warranty speaks of a specific date in which case such representation and warranty shall be true and correct
as of such date).

 

(ii)
No Events of Default. No breach, Event of Default, or any event which with the passage of time or the giving of notice
or both would become a breach, and/or an Event of Default shall have occurred or would result from the sale of the Notes and the
Warrants to the Purchasers of the performance of any other transaction set forth or contemplated by any of the Transaction Documents.

 

(iii)
Compliance with Laws. The Company shall have complied with all applicable federal, state and local governmental laws, rules,
regulations and ordinances in connection with the execution, delivery and performance of this Agreement and the other Transaction
Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, including, without
limitation, the Company shall have obtained all permits and qualifications required by any applicable state securities or “Blue
Sky” laws for the offer and sale of the Securities by the Company to the Purchasers).

 

(iv)
No Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened in writing or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation
of or which would materially modify or delay the execution and performance of the Transaction Documents and/or any of the transactions
contemplated by the Transaction Documents.

 

(v)
No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority
shall have been commenced or threatened in writing, and no inquiry or investigation by any governmental authority shall have been
commenced or threatened in writing, against the Company, or any of the officers, directors or affiliates of the Company, seeking
to restrain, prevent or change the Transaction Documents and/or any of the transactions contemplated by the Transaction Documents,
or seeking material damages in connection with such Transaction Documents and/or transactions.

 

(vi)
No Material Adverse Effect. No condition, occurrence, state of facts or event constituting a Material Adverse Effect shall
have occurred and be continuing.

 

(vii)
Completion of Due Diligence. The Purchasers shall have completed their legal, business and financial due diligence of the
Company to their full satisfaction and are fully satisfied with the results thereof. The Purchasers have had an opportunity to
review the available data room and discuss all such due diligence information including legal, business and financial matters
with management of the Company and have no further questions.

 

(viii)
Purchasers’ UCC Documents. All the Purchasers’ UCC Documents shall be in form and substantially satisfactory
to the Purchasers and shall have been filed with the Secretary of State of the State of California.

 

(ix)
Conversion of Existing Convertible Notes. All current holders of debt, with a principal amount of $2,626,000, shall convert
such debt into common stock at a conversion price not less than $1.00 per share or agree to extend until August 2019; provided,
however, that holders of certain debt with a principal balance of $185,000 remains due and payable and outstanding as of the date
hereof.

 

(x)
Consulting Agreement. The Company shall enter into an agreement with Insight Advisory LLC for consulting services.

 

    	18

    	 

    

 

5.2
Closing Conditions of Company. The obligation of the Company to sell and issue the Notes and the Warrants to the Purchasers
at the Closing is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or contemporary at the
Closing, of each of the following conditions (unless waived by the Company):

 

(a)
Representations and Warranties. Each of the representations and warranties made by the Purchasers in or pursuant to the
Transaction Documents and all Schedules and/or Exhibits to this Agreement and/or any of the other Transaction Documents shall
be true and correct in all material respects on and as of the Closing Date as if made (or given) on and as of such date (except
where such representation and warranty speaks of a specific date in which case such representation and warranty shall be true
and correct as of such date).

 

(b)
No Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened in writing or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation
of or which would materially modify or delay any of the transactions contemplated by the Transaction Documents.

 

(c)
Receipt of the Purchase Price. The Company shall receive at or substantially simultaneously with the Closing, the Purchase
Price of the Purchasers.

 

ARTICLE
6

ESCROW

 

6.1
The Parties hereby agree to establish an escrow account (the “Escrow Account”) with Carmel, Milazzo & DiChiara,
as Escrow Agent, whereby the Escrow Agent shall hold the Purchase Price deposited into the Escrow Account. The Company further
agrees to pay all fees, costs and expenses charged by the Escrow Agent with respect to its services rendered pursuant to this
Agreement and acknowledge that Purchasers shall not be liable for any such fees, costs or expenses.

 

ARTICLE
7

MISCELLANEOUS

 

7.1
No Waiver; Modifications in Writing. No failure or delay on the part of the Purchasers in exercising any right, power or
remedy pursuant to the Transaction Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification, supplement, termination or waiver of any provision of the Transaction Documents, nor any consent by
the Purchasers to any departure by the Company therefrom, shall be effective unless the same shall be in writing and signed by
the Purchasers. Any waiver of any provision of the Transaction Documents and any consent by the Purchasers to any departure by
the Company from the terms of any provision of the Transaction Documents shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances.

 

7.2
Set-Off. The Purchasers shall have the right to set-off, appropriate and apply toward payment of any of the Liabilities,
in such order of application as the Purchasers may from time to time and at any time elect, any cash, credit, deposits, accounts,
securities and any other property of the Company which is in transit to or in the possession, custody or control of the Purchasers,
or any agent, bailee, or Affiliate of the Purchasers. The Company hereby grants to the Purchasers a security interest in all such
property.

 

7.3
Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex, facsimile or e-mail if sent during normal business
hours of the recipient; if not, then on the next Business Day, (c) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt:

 

If
to the Company:

 

Muscle
Maker, Inc.

308
East Renfro Street, Suite 101

Burleson,
Texas 76028

Attn: Michael Roper, CEO

Email: Michael.roper@musclemakergrill.com

 

    	19

    	 

    

 

With
copies to (which shall not constitute notice):

 

Carmel,
Milazzo & DiChiara LLP

55 West 39th Street, 18th Floor

New York, New York 10018

Attention: Peter DiChiara, Esq.

Telephone: (212) 658-0458

Email: pdichiara@cmdllp.com

 

If
to the Purchasers:

 

As
set forth on the signature pages hereto.

 

With
copies to

(which shall not constitute notice):

 

Catalytic
Holdings 1 LLC

135
Oceana Drive East, # 4E

Brooklyn,
NY 11235

Telephone:
917-724-9222

Email:
ds@catalytic-capital.com

 

Any
party hereto may from time to time change its address for notices by giving written notice of such changed address to the other
party hereto.

 

7.4
Costs, Expenses and Taxes. Other than expenses paid by the Company for the Purchasers before the Closing Date, each of
the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions contemplated hereby, whether or not the transactions
contemplated hereby are consummated.

 

7.5
Indemnity, Etc. In addition to the payment of expenses pursuant to Section 7.4, whether or not all and/or any of the transactions
contemplated hereby shall be consummated, the Company agrees to indemnify, pay and hold the Purchasers, and the Purchasers’
assignees and affiliates and their respective officers, directors, employees, agents, consultants, auditors, and attorneys of
any of them (collectively called the “Indemnities”) harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative
or judicial proceeding commenced or threatened, whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner relating to or arising out of the this Agreement (inclusive
of the Disclosure Schedules) and/or the other Transaction Documents, the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents, the statements contained in any term sheet delivered by the Purchasers, the Purchasers’
agreement to purchase the Notes and Warrants, the use or intended use of the proceeds of the Notes or Warrants or the exercise
of any right or remedy hereunder or under the other Transaction Documents (the “Indemnified Liabilities”);
provided that the Company shall have no obligation to Indemnitee hereunder with respect to Indemnified Liabilities directly
resulting from the gross negligence or willful misconduct of that Indemnitee, as determined by a court of competent jurisdiction
by a final and nonappealable judgment. In no event shall the Purchasers and/or any of their respective employees, agents, partners,
affiliates, members, equity and/or debt holders, managers, officers, directors and/or other related or similar type of Person,
have any liability to the Company and/or any of its officers, directors, employees, agent, attorneys, affiliates, consultants,
equity and/or debt holders except for any actions or lack of actions of such persons that are found by a court of competent jurisdiction
after the time for all appeals has passed to have resulted directly from Purchasers’ intentional misconduct or gross negligence.

 

7.6
Counterparts; Signatures. This Agreement may be executed in any number of counterparts, each of which counterparts, once
they are executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute
but one and the same agreement. This Agreement and the Transaction Documents may be executed by any party to this Agreement or
any of the Transaction Documents by original signature, facsimile and/or electronic signature.

 

    	20

    	 

    

 

7.7
Binding Effects; Assignment. This Agreement shall be binding upon, and inure to the benefit of, the Purchasers, the Company
and their respective successors, assigns, representatives and heirs. The Company shall not assign any of its rights nor delegate
any of its obligations under Transaction Documents without the prior written consent of the Purchasers. Each Purchaser may delegate
any of its obligations under the Transaction Documents without the prior written consent of the Company, each Purchaser may assign
any of its rights, hereunder, and/or in any of the other Transaction Documents, subject only to compliance with the federal securities
laws, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions
of the Transaction Documents that apply to the “Purchaser.”

 

7.8
Headings. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit
or extend the scope or intent of this Agreement or any provision of this Agreement and shall not affect the construction of this
Agreement.

 

7.9
Entire Agreement. This Agreement, together with the other Transaction Documents, contains the entire agreement between
the parties hereto with respect to the transactions contemplated herein and therein and supersedes all prior representations,
agreements, covenants and understandings, whether oral or written, related to the subject matter of this Agreement and the other
Transaction Documents. The Purchasers make no covenants to the Company, including, but not limited to, any commitments to provide
any additional financing to the Company.

 

7.10
GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED EXCLUSIVELY IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT
OF LAWS.

 

7.11
Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

7.12
JURISDICTION; WAIVER. THE COMPANY ACKNOWLEDGES THAT THIS AGREEMENT IS BEING SIGNED BY THE PURCHASERS IN PARTIAL CONSIDERATION
OF THE PURCHASERS’ RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THE TERMS AND PROVISION OF THIS AGREEMENT AND THE DOCUMENTS.
THE COMPANY IRREVOCABLY CONSENTS TO THE EXCLUSIVE AND SOLE JURISDICTION IN NEW YORK, NEW YORK AND VENUE IN ANY FEDERAL OR STATE
COURT IN NEW YORK, NEW YORK FOR SUCH PURPOSES AND WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE AND ANY OBJECTION
THAT NEW YORK, NEW YORK IS NOT CONVENIENT. COMPANY WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST THE PURCHASERS IN ANY JURISDICTION
EXCEPT NEW YORK, NEW YORK. THE PURCHASERS AND COMPANY HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY WITH RESPECT TO ANY MATTER WHATSOEVER
RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE LOAN, THE DOCUMENTS AND/OR THE TRANSACTIONS WHICH ARE THE SUBJECT
OF THE DOCUMENTS.

 

7.13
SERVICE OF PROCESS. THE COMPANY AGREES THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A
COPY THEREOF BY CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO THE
COMPANY AT THE ADDRESS SET FORTH IN SECTION 7.3 OR AT SUCH OTHER ADDRESS OF WHICH THE PURCHASERS SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO. THE COMPANY AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON THE COMPANY IN ANY SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND HELD TO BE VALID
PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE COMPANY. SOLELY TO THE EXTENT PROVIDED BY APPLICABLE LAW, SHOULD THE COMPANY,
AFTER BEING SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS
PRESCRIBED BY LAW AFTER THE DELIVERY OR MAILING THEREOF, THE COMPANY SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY
BE ENTERED BY THE COURT AGAINST COMPANY AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING HEREIN
SHALL AFFECT THE PURCHASERS’ RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

    	21

    	 

    

 

7.14
Survival. The representations, and warranties of the Company and each Purchaser herein and/or in the other Transaction
Documents shall survive the execution and delivery hereof and the Closing Date; the obligations, Liabilities, agreements and covenants
of the Company and each Purchaser set forth herein and/or in the other Transaction Documents shall survive the execution and delivery
hereof and the Closing Date, as shall all rights and remedies of the Company and the Purchasers set forth in this Agreement and/or
in any of the other Transaction Documents.

 

7.15
No Integration. Neither the Company, nor any of its affiliates, nor any person acting on behalf of the Company or such
affiliate, will sell, offer for sale, or solicit offers to buy or otherwise negotiate with respect to any security (as defined
in the Securities Act) which will be integrated with the sale and/or issuance of any of the Securities in a manner which would
require the registration of the Securities under the Securities Act, or require stockholder approval, under the rules and regulations
of the Trading Market for the Common Stock. The Company will take all action that is appropriate or necessary to assure that its
offerings of other securities will not be integrated for purposes of the Securities Act or the rules and regulations of the Trading
Market, with the issuance of Securities contemplated herein.

 

7.16
No Frustration. From and after the date hereof and so long as the Notes and/or Warrants are outstanding, the Company, nor
any of its respective officers, employees, directors, agents or other representatives, will, without the prior written consent
of the Purchasers (which consent may be withheld, delayed or conditioned in the Purchasers’ sole discretion), effect, enter
into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction (or issue, amend or waive any
security) that would or would reasonably be expected to restrict, delay, conflict with or impair the ability or right of the Company
to timely perform its obligations under the Transaction Documents.

 

7.17
Finders’ Fees. Each party represents that it neither is nor will be obligated for any finders’ fee or commission
in connection with this transaction. The Company shall indemnify and hold harmless the Purchasers from any liability for any commission
or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or representatives is responsible.

 

ARTICLE
8

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

Each
Purchaser hereby represents and warrants, severally and not jointly, to the Company as follows:

 

8.1
Authorization. The Purchaser has full power and authority to enter into this Agreement and each Transaction Document to
which the Purchaser is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby and has taken all action necessary to authorize the execution and delivery of this Agreement and the applicable
Transaction Documents, the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby.

 

8.2
Accredited Investor Status; Investment Experience. The Purchaser is an “Accredited Investor” as that term is
defined in Rule 501(a) of Regulation D.

 

8.3
Reliance on Exemptions. The Purchaser understands that the Notes and Warrants are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company
is relying in part upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of the Purchaser to acquire the Notes and Warrants.

 

8.4
Information. The Purchaser has been furnished with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Notes and the Warrants which have been requested by the Purchaser.
Neither such inquiries nor any other due diligence investigations conducted by the Purchaser shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties contained herein. The Purchaser understands
that its investment in the Notes and the Warrants involves a high degree of risk. The Purchaser has sought such accounting, legal
and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Notes
and the Warrants.

 

8.5
No Governmental Review. The Purchaser understands that no United States federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement of the Notes and the Warrants or the fairness or
suitability of the investment in the Notes and the Warrants nor have such authorities passed upon or endorsed the merits of the
offering of the Notes and the Warrants.

 

    	22

    	 

    

 

8.6
Validity; Enforcement; No Conflicts. This Agreement and each Transaction Document to which the Purchasers are a party have
been duly and validly authorized, executed and delivered on behalf of the Purchasers and shall constitute the legal, valid and
binding obligations of the Purchasers enforceable against the Purchasers in accordance with their respective terms, except as
such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights
and remedies.

 

8.7
Organization and Standing. If the Purchaser is an entity, the Purchaser is a corporation, limited liability company, partnership
or any other entity duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization.

 

8.8
Brokers or Finders. The Purchaser represents and warrants, no finder, broker, agent, financial advisor or other intermediary,
nor any purchaser representative or any broker-dealer acting as a broker, are entitled to any compensation in connection with
the transactions contemplated by this Agreement or the transactions contemplated hereby.

 

8.9
Ability to Perform. There are no actions, suits, proceedings or investigations pending against any Purchaser or such Purchaser’s
assets before any court or governmental agency (nor is there any threat thereof) which would impair in any way such Purchaser’s
ability to enter into and fully perform its commitments and obligations under this Agreement or the transactions contemplated
hereby.

 

8.10
Transfer or Resale. The Purchaser understands that (a) the Securities have not been and are not being registered under
the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (i) subsequently
registered thereunder, (ii) the Purchaser shall have delivered to the Company an opinion of counsel, in a form reasonably acceptable
to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (iii) the Purchaser provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144 A promulgated under the Securities Act, as amended, (or
a successor rule thereto) (collectively, “Rule 144”); (b) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the Person) through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules
and regulations of the SEC thereunder; and (iii) except as otherwise provided in the Transaction Documents, neither the Company
nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged
in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Purchasers in effecting
a pledge of Securities shall not be required to provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 8.10.

 

8.11
State of Residence or Principal Place of Business. If the Purchaser is an individual, then the Purchaser resides in the
state or province identified in the address of the Purchaser set forth on such Purchaser’s signature page hereto; if the
Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of the Purchaser
in which its principal place of business is identified in the address or addresses of the Purchaser set forth such Purchaser’s
signature page hereto.

 

    	23

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this SECURITIES PURCHASE AGREEMENT to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

	 	MUSCLE
    MAKER, INC
	 	 	 
	 	By:	 
	 	Name:	Michael
    Roper
	 	Title:	Chief
    Executive Officer

 

    	 

    	 

    

 

PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT

 

IN
WITNESS WHEREOF, the undersigned have caused this SECURITIES PURCHASE AGREEMENT to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

Name
of Purchaser: ________________________________________________

 

Signature
of Authorized Signatory of Purchaser: _________________________________________________________

 

Name
of Authorized Signatory:___________________________________________________

 

Title
of Authorized Signatory:__________________________________________________

 

Email
Address of Authorized Signatory:_____________________________________________________

 

Facsimile
Number of Authorized Signatory:____________________________________________________________

 

Address
for Notice to Purchaser:

 

	 	 
	 	 
	 	 

 

EIN
Number: ______

 

    	 

    	 

    

 

SCHEDULE
I

 

Purchase
Price; Securities Purchased

 

    	 

    	 

    

 

EXHIBIT
A

 

Form
of Notes

 

    	 

    	 

    

 

EXHIBIT
B

 

Form
of Security Agreement

 

    	 

    	 

    

 

EXHIBIT
C

 

Form
of Warrants

 

    	 

    	 

    

 

DISCLOSURE
SCHEDULES

 

This
Disclosure Schedule (this “Disclosure Schedule”) is part of and delivered pursuant to that certain Securities
Purchase Agreement, dated as of September ____, 2018 (the “Agreement”), between Muscle Maker, Inc (the “Company”)
and each Purchaser identified on the signature pages thereto. All capitalized terms used but not defined herein shall have the
meanings as defined in the Agreement, unless otherwise provided. The section numbers below correspond to the section numbers of
the representations and warranties in the Agreement; provided, however, that any information disclosed herein
under any section number shall be deemed to be disclosed and incorporated into any other section number under the Agreement where
such disclosure would be appropriate and such appropriateness is reasonably apparent from the face of such disclosure. Nothing
in this Disclosure Schedule is intended to broaden the scope of any representation or warranty contained in the Agreement or to
create any covenant. Inclusion of any item in this Disclosure Schedule (1) does not represent a determination that such item is
material or establish a standard of materiality, (2) does not represent a determination that such item did not arise in the ordinary
course of business, (3) does not represent a determination that the transactions contemplated by the Agreement require the consent
of third parties, and (4) shall not constitute, or be deemed to be, an admission to any third party concerning such item. This
Disclosure Schedule includes brief descriptions or summaries of certain agreements and instruments, copies of which are available
upon reasonable request. Such descriptions do not purport to be comprehensive, and are qualified in their entirety by reference
to the text of the documents described, true and complete copies of which have been provided to the Investors or their respective
counsel.

 

Schedule
1.1(aa) – Permitted Indebtedness

 

	Accounts
    Payable as of 7/24/18	 	$	2,060,893	 
	Co-op/Gift
    Card/Ad Fund repayment	 	$	370,000	 
	Past
    Due Sales Taxes	 	$	350,000	 
	Existing
    Note Holders	 	$	2,626,000	 
	Food
    Truck Stearns Bank Title Lien	 	$	69,000	 
	Potential
    Litigation from existing leases on closed locations estimated at $100,000 average per location	 	$	500,000	 
	Fountain
    Valley Lien amounts	 	$	108,000	 
	Judgment
    Payable to Note Holder	 	$	171,000	 
	Obligations
    pursuant to Settlement Agreements	 	$	268,000	 

 

Schedule
3.1(d) – Title To Assets

 

	Food
    Truck Lien on Title (Stearns Bank).	 	$	69,000	 
	Mechanical
    Liens from Fountain Valley location (resolute contractors, etc). The Company has mechanical liens placed against the Fountain
    Valley property by various companies for work and materials performed but not paid	 	$	108,000	 
	Back
    sales taxes owed and not paid in the following states: Illinois, California, North Carolina, New York & New Jersey	 	$	350,000	 
	Judgment
    Payable to Note Holder	 	$	171,000	 

 

    	 

    	 

    

 

Schedule
3.1(f) – Burdensome Obligations

 

The
Company has potential liabilities under several leases from closed locations. These leases are from the following locations: Upper
East Side, Gramercy, Columbia, Chicago, Springfield, Santa Ana and Fountain Valley.

 

The
Company has a settlement agreement in place for the closed Belmont location. The remaining balance on this settlement, as of 8/28/18,
is in the amount of $66,664.

 

The
Company is also under leases from the following open locations: Fort Bliss, Fort Benning, Irvine, Colonia and Tribeca. The Company
also entered into a lease for Fort Sill on 8/24/18.

 

The
Company currently has known Accounts Payable owed as of 7/24/18 in the amount of $2,060,893.

 

The
Company owes approximately $350,000 in back sales taxes to various states, including: Illinois, New York, New Jersey, North Carolina
and California.

 

The
Company owes approximately $370,000 payable to the co-op/ad fund/gift card fund.

 

The
Company currently has 61 outstanding notes in the amount of $2,262,000 payable in August 2019. As part of the $2,262,000, the
company was issued a default judgement for Daniel Pettit in the amount of $171,000 and will be paid with the proceeds from the
first round of funding.

 

Schedule
3.1(g) – Taxes

 

The
Company filed extensions for filing Federal, State and local tax returns for fiscal year ending 12/31/2017. These filings are
expected to be completed before the 9/15/18 filing deadlines.

 

2017
Filings include:

 

MMB
Santa Ana, filing Federal and California returns

MMB
Gramercy, filing Federal, New York State, and New York City returns

MMB
Irvine, filing Federal and California returns

MMB
Columbia, filing Federal, New York State, and New York City returns

MMB
Ft Bliss, filing Federal and Texas

MMB
Tribeca, filing Federal, New Jersey, New York State, and New York City returns

MMB
Upper East Side, filing Federal, New Jersey, New York State, and New York City returns

MMB
Winston Salem, filing Federal & North Carolina

MMB
West Belmont, filing Federal & Illinois

MMB
West Jackson, filing Federal & Illinois

MMB
Fountain Valley, filing Federal & California

MMB
Fort Benning, filing Federal & Georgia

MMB
Springfield, filing Federal & New Jersey

MMB
Colonia, filing Federal & New Jersey

Muscle
Maker Development, filing Federal, Nevada, California and New Jersey

Muscle
Maker Brands, filing consolidated Federal, & final New Jersey

Muscle
Maker Inc, filing federal and California

Muscle
Maker Corporate, filing federal and Nevada

 

    	 

    	 

    

 

Schedule
3.1(k) – Subsidiaries

 

	State
    Name		Entities
    Registered		Status	 		Jurisdiction	 		Entity
    Type	 		Initial
    Filing	 		State
    ID
	California		Muscle
    Maker Brands, Inc		Dissolved	 		California	 		Domestic
    Stock	 		10/16/2014	 		3720012
	 		Muscle
    Maker Irvine, Inc		Active	 		California	 		Domestic
    Stock	 		12/15/2015	 		3849987
	 		Muscle
    Maker Santa Ana, Inc.		Active	 		California	 		Domestic
    Stock	 		12/15/2015	 		3849986
	 		Muscle
    Maker, Inc		Active	 		California	 		Domestic
    Stock	 		12/8/2014	 		3731484
	 		Muscle
    Maker Brands, LLC		Converted
    Out	 		California	 		Domestic	 		12/22/2014	 		201436010035
	 		Muscle
    Maker Development, LLC		Active	 		California	 		Domestic	 		3/23/2017	 		201709410148
	 		Muscle
    Maker of CA, LLC		Active	 		Nevada	 		Foreign	 		1/16/2018	 		201801610478
	 		MMG
    Fountains Valley CA, Inc		Active	 		California	 		Domestic
    Stock	 		11/7/2016	 		3961092
	 	 	 	 	 	 			 			 			 		
	New
    York		Muscle
    Maker Corp, LLC		Active	 		Nevada	 		Foreign
    LLC	 		1/16/2018	 		5267326
	 		Muscle
    Maker of NY, LLC		Website
    shows same info as Muscle Maker Corp, LLC, this name labeled as “Fictitious”	 		
	 		MMG
    Columbia NY, Inc		Active	 		New
    York	 		Domestic
    Business Corp	 		1/21/2016	 		4882854
	 		MMG
    Gramercy NY, Inc		Active	 		New
    York	 		Domestic
    Business Corp	 		1/21/2016	 		4882856
	 		MMG
    Upper East Side NY, Inc		Active	 		New
    Jersey	 		Foreign
    Business Corp	 		11/25/2016	 		5043181
	 	 	 			 			 			 			 		
	New
    Jersey		Muscle
    Maker Brands Limited Liability Company			 		Colonia	 		FLC	 		1/20/2015	 		0400717546
	 		Muscle
    Maker Development, LLC			 		Colonia	 		FLC	 		7/27/2017	 		0450187491
	 		Muscle
    Maker Franchising Limited Liability Company			 		Colonia	 		LLC	 		11/20/2007	 		0400205329
	 		Muscle
    Maker of NJ, LLC			 			 		FLC	 		1/17/2018	 		0600447732
	 		Muscle
    Maker, Inc			 		Houston	 		FR	 		1/17/2018	 		0450232580
	 		MMG
    Tribeca NY, Inc			 		Tribeca	 		DP	 		7/21/2016	 		0450091813
	 		MMG
    Upper East Side NY, Inc			 		Colonia	 		DP	 		9/22/2016	 		0450106666
	North
    Carolina		MMG
    Winston Salem NC, Inc		Active	 			 		Business
    Corporation	 		10/7/2016	 		1548326

 

    	 

    	 

    

 

 

	Georgia	 	No
    Muscle Maker or MMG Name Located	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nevada	 	Muscle
    Maker Corp, LLC	 	Active	 	Nevada	 	Domestic
    LLC	 	7/18/2017	 	NV20171452844
	 	 	Muscle
    Maker Development, LLC	 	Active	 	Nevada	 	Domestic
    LLC	 	7/18/2017	 	NV20171452837
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Texas	 	Muscle
    Maker Corp, LLC	 	Active	 	Nevada	 	 	 	1/30/2018	 	0802921485
	 	 	Muscle
    Maker Development, LLC	 	Active	 	Nevada	 	 	 	1/26/2018	 	0802917961
	 	 	Muscle
    Maker, Inc	 	Active	 	California	 	 	 	1/26/2018	 	0802917933
	 	 	MMG
    Ft. Bliss, Inc	 	Active	 	Texas	 	 	 	1/26/2016	 	0802377107
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Illinois	 	MMG
    W. Belmont IL, Inc	 	Dissolved	 	Illinois	 	Corp	 	10/18/2016	 	70974452
	 	 	MMG
    W. Jackson IL, Inc.	 	Dissolved	 	Illinois	 	Corp	 	10/18/2016	 	70974525

 

Schedule
3.1(p) – Intellectual Property

 

There
is a potential issue regarding a company called “Muscle Maker Food in Kuwait”. The Kuwaiti franchisee notified the
Company in June 2018 of a potential trademark infringement. The franchise agreement states that the Kuwait franchisee has the
rights to use the name Muscle Maker Grill and that the Company would file for trademarks in Kuwait. The Company has not filed
any international trademarks for Muscle Maker Grill as of August 31, 2018.

 

Below
is existing trademarks, color licensing and fonts information:

 

 

 

    	 

    	 

    

 

Schedule
3.1(x)

Capitalization

 

MMI

Capitalization
Table

As
of 8/29/2018

 

	Description	 	Number
    of Shares	 	 	Conversion
    Price	 
	Common
    Stock - Issued and Outstanding	 	 	9,249,710	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Common
    Stock - Reserved for Future Issuance (1)	 	 	329,284	 	 	$	0.000	 
	 	 	 	 	 	 	 	 	 
	Common
    Stock - To be Issued (2)	 	 	750,000	 	 	$	0.000	 
	 	 	 	 	 	 	 	 	 
	Common
    stock Bridge if converted	 	 	1,400,000	 	 	$	1.000	 
	 	 	 	 	 	 	 	 	 
	Convertible
    notes auto converting	 	 	851,000	 	 	$	1.000	 
	 	 	 	 	 	 	 	 	 
	Interest
    owed on all current notes thru 9-1-2018	 	 	735,855	 	 	$	1.000	 
	 	 	 	 	 	 	 	 	 
	Total	 	 	13,315,849	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Convertible
    Note - ARHI $75,000	 	 	150,000	 	 	$	0.500	 
	 	 	 	 	 	 	 	 	 
	Warrants
- 1 (3)	 	 	791,000	 	 	$	1.625	 
	 	 	 	 	 	 	 	 	 
	Warrants
    - 2 (4)	 	 	425,500	 	 	$	3.250	 
	 	 	 	 	 	 	 	 	 
	Warrants
    - Catalytic (5)	 	 	157,466	 	 	$	1.625	 
	 	 	 	 	 	 	 	 	 
	Total	 	 	1,523,966	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Total
    Shares - Fully Diluted as if issued	 	 	14,839,815	 	 	 	 	 

 

    	 

    	 

    

 

Schedule
3.1 (z) – Arbitration, Absence of Litigation 

 

the
Company also provided a list of current and potential litigation as of 6/30/18 as described below:

 

As
of 6/30/2018

 

	Claimant	 	Open
    Litigation	 	Date
    Filed	 	Overview
    
	Gramercy
    - Closed Location	 	Gramercy
    (Crownhall Realty, LLC)	 	on
    or about 5/9/18	 	Muscle
    Maker Grill Gramercy, LLC, American Restaurant Holdings, Inc. and Robert E. Morgan (ex CEO) were listed as defendants to a
    lawsuit from Crownhall Realty, LLC filed by its attorneys with Supreme Cournt of the State of New York county of New York,
    #154467. Lawsuit is seeking $1,034,086.69 in damages for rent, interest and other expenses. The original lease was for a 10
    year period of time and commenced on January 1, 2016. Landlord seems willing to negotiate a settlement out of court on this
    amount and the Company has asked for them to stand down for 90 days from any further legal proceedings. The company has not
    heard back from the landlord on this request as of 6/30/18. Company seeks to hire council to address. For real estate/lease
    transactions, it is common practice to accellerate any future rents owed. It is likely that an amount much less than the demand
    will be settled upon, in the companies opinion.
	 	 	 	 	 	 	 
	Columbia
    - Closed Location	 	Limestone
    Associates LLC v. American Restaurant Holdings, Inc DBA Muscle Maker Grill, Civil Court of the City of New York, County of
    New York, #78549/2017	 	on
    or about 10/30/2017	 	Suit
    was filed by Limestone Properties, LLC on or about 10/27/2017 for commercial non-payment of rent for the amount of $25,748.22
    pluc cost and disbursements of this proceeding. Further legal action listed separately on this spreadsheet for damages. The
    company believes it will be able to reach a settlement with this entity for a sum far less than the damages sought.
	 	 	 	 	 	 	 
	Columbia
    - Closed Location	 	Limestone
    Associates LLC v. American Restaurant Holdings, Inc. and Robert Eugene Morgan, Supreme Court of the State of New York, County
    of New York, index # 154469	 	on
    or about 5/10/2018	 	American
    Restaurant Holdings, Inc and Robert E. Morgan (ex CEO) were listed as defendants to a lawsuit from Limestone Associates LLC
    filed by its attorneys with Supreme Cournt of the State of New York county of New York, #154469. Lawsuit is seeking $1,357,243.42
    in damages for rent, interest and other expenses. The original lease was for a 10 year period of time and commenced on December
    7, 2015. Landlord seems willing to negotiate a settlement out of court on this amount and the Company has asked for them to
    stand down for 90 days from any further legal proceedings. The company has not heard back from the landlord on this request
    as of 6/30/18. Company seeks to hire council to address.
	 	 	 	 	 	 	 
	Springfield
    - Closed Location	 	Springfield
    Company, LLC v. MMB Springfield, Inc, Superior Court of New Jersey, Law Division: Special Civil Part, Union County Landlord-Tenant
    Division. Docket #: LT-3107-18	 	on
    or about 4/13/18	 	The
    company operated a Muscle Maker Grill locations at 201-225 Morris Avenue, Springfield, NJ 07081. The eviction action was for
    non-payent of rent under a written lease signed December, 21 2002. Through various lease assignments, the Company has been
    in posession of the premises as of 5/1/2015. Prior to this filing, on or about 12/1/2016 the landlord commenced proceedings
    in the Superior Court of New Jersey, Special Civil Part, Union County docket number LT-010222-17 due to tenants defaults under
    the lease. This prior action was resolved between the parties on or around 1/23/2018. The company again defaulted under the
    terms of the lease. As of 5/1/2018, the company owes $17,164.88 plus attorneys fees. Total amounts owed on future rents, legal
    fees, etc. remains open. 
	 	 	 	 	 	 	 
	Winston-Salem
    Closed Location	 	700
    Stratford Road Partners LLC v. MMG Winston-Salem NC Inc, State of North Carolina, Forsyth County, File # 18CVM2809	 	on
    or about 4/2/2018	 	Suit
    was filed in the General Court of Justice District Court Division - Small Claims for a “monetary default” of the
    lease as well as a “habitual monetary default” Property has been vacated and the landlord offered a settlement
    of $10,000 and no further lease obligations, company has not signed the agreement as of 6/30/18
	 	 	 	 	 	 	 
	111
    W. Jackson - closed location	 	111
    west jackson holdings	 	on
    or about 1/28/2018	 	Company
    received 5 day notice of non-payment of rent from Jones Lang Lasalle on behalf of West Jackson Holdings LLC (landlord). Five
    day demand was for past rent in the amount of $17,411.30. Current past due amounts are estimated at $71,688.42. Company expects
    formal litigation proceedings on past due rents, interest, penalties and other obligations under the lease signed 9/21/2016.
    
	 	 	 	 	 	 	 
	Houston
    Office - Closed Location	 	JLW
    Real Estate Co	 	4/19/2018	 	The
    Company stopped paying rent to JLW Real Estate company for the corporate office located at 2200 space park drive, suite 310,
    Houston, TX 77058. The company received a warning notice from JLW demanding payment of back rent of $12,191.99 or risk further
    litigation and eviction. The company did not make any payments and vacated the property on 4/30/2018. The resolution on payments
    and settlement for future lease obligations is still open.

 

    	 

    	 

    

 

	Santa
    Anna - OPEN location	 	Santa
    Ana (Nationwide Theatres West Flagler, LLC)	 	on
    or about 5/15/18 	 	Past
    due rent proceedings Lawsuit filed in Orange County, CA against MMI and ARHI. Defeualt has been entered. The company plans
    to attempt to negotiate a settlement on the outstanding rents past due as well as future rent obligations. The landlord has
    indicated there is another tenant potentially ready to take over the space. The company also received an UD/Eviction proceedings
    initiated by landlord. Lawsuit filed in Orange County, CA against MMI. The company expects to vacate the premises within 30
    days.
	 	 	 	 	 	 	 
	Fountain
    Valley - Under Construction	 	Fountain
    Valley - Donahue Schriber Landlord	 	on
    or about 5/15/18 and on or about 6/1/18	 	Lawsuit
    filed in Orange County, CA on 6.1.18. Landlord seeking approximately $10,000 in damages and forfeiture of the lease agreement.
    The company is working on a potential solution to the outstanding rent owed and future lease obligations by placing a franchisee
    in the location. However, this is not guaranteed to occur. The Company received a “Notice To Perform Or Quit”,
    Code of civil Procedure section 1 161(3) from the landlord of the Fountain Valley location and their attorney, Corey E. Taylor,
    esq., APC from the law office of Corey E. Taylor. The notice was pursuant to the Lease signed July 21, 2016. The notice was
    in response for failure to perform under miscellaneous provisions of the lease specifically addressing: failure to pay all
    cost performed by on on account of tenant, failing to keep the premises and the project free and clear of mechanics’
    liens and failing to give landlord immediate notice of any liend filed against the premises or the project as a result of
    any work or improvement performed by on on behalf of tenant.
	 	 	 	 	 	 	 
	Fountain
    Valley - Under Construction	 	Mechanics’
    Lien - Resolute Contractors, Inc, Quality Tile, MTL Construction, Genesis Electric, JNB Interiors, Captive Aire	 	on
    or about 5/23/18	 	Mechanics
    Lien was filed by Resolute Contractors for labor, service, equipment and materials. Total amount owed is $98,005.22. It is
    believed that the listed companies are all rolled up into the total demanded amount. There could be more mechanics liens placed
    in the future and not listed or other legal actions. The company is working on a potential solution to the outstanding amounts
    owed by placing a franchisee in the location. The landlord will be executing a lock out of the property on 7/6/18.
	 	 	 	 	 	 	 
	Daniel
    Pettit	 	Daniel
    Pettit - Motion for damages re: prior entry of default judgement against defendant in the Iowa District Court for Polk County
    #CVCV056029	 	6/26/2018	 	Lawsuit
    filed in Polk County, Iowa against MMB, LLC for failure to pay balance of Note ($100,000 plus costs). Interest, attoney fees
    and other costs makes the total amount of the judgement at $171,034.89. Company is attempting to work out a payment plan but
    no response from Pettit.
	 	 	 	 	 	 	 
	Perla
    Mageno	 	Perla
    Mageno v. Muscle Maker Inc, et al Superior Court of California Count of Los Angeles Case # EC068752	 	on
    or about 6/1/18	 	Company
    received on 6/13/18 a summons for the Superior Court of California County of Los Angeles Case #EC068752. Civil case on the
    grounds of civil rights/discrimination. The Company has no definitive details as the the reason of the filing and has council
    following up on the suit. Response required by 7/13/18. The company has hired legal counsel to address this complaint.

 

	Claimant	 	Threatened
    Litigation	 	Date
    	 	Overview
    
	Jr
    Restaurant Group	 	JR
    Restaurant Group, Josh Fess and Ryan Johnson	 	on
    or about 4/27/2017	 	The
    Company entered into an LOI to purchase the franchise location at 1099 2nd avenue, New York. The LOI was contingent upon multiple
    conditions the company believes were not met. The company will be providing notice to the franchisee (verbally discussed in
    May 2018 and on June 28, 2018 with franchisee) of the LOI cancellation (mailed on 7/6/18). The franchisee has stated that
    he believes its a binding LOI and he will pursure legal action in the event the company does not continue with the purchase
    of the location. The proposed purchase price was $600,000. The LOI required the successful completion of an Initial Public
    Offering. In February, 2018 the franchisee believed the company became a public company, raised approximately $140,000 and
    therefore the LOI is now binding.
	 	 	 	 	 	 	 
	Corporate
    Traveler	 	Corporate
    Traveler	 	 	 	This
    is a travel agency the company used to book travel in the past. Corporate Traveler has threatened legal action to collect
    the outstanding amount owed. Our records indicate the amount owed is $16,009.94 and their records indicate the amount owed
    is $16,506 (likely penalties or interest owed has been added). Corporate Traveler has signed an agreement to suspend any collection
    activities for 90 days. This was signed on 6/29/18.
	 	 	 	 	 	 	 
	Service
    Management Group	 	Service
    Management Group	 	on
    or about 6/11/18	 	The
    Company became aware of an outstanding invoice amount for Service Management Group on or about 6/27/18. The letter is from
    an attorney/collection agency of The Cox Law Firm. The Company entered into an agreement with SMG on 3/1/17 to provide customer
    service questionnaires and data management. SMG through their attorneys have threatened litigation to collect the amount owed.
    The amount currently owed is $50,666.66. The company apparently stopped using this service in Q2, 2017. Company will contact
    SMG to work out a potential settlement on the amounts owed. 
	 	 	 	 	 	 	 
	American
    Arbitration Association	 	American
    Arbitration Association	 	 	 	Turned
    matter over to collection agency; Amount owed $2,268.10

 

    	 

    	 

    

 

	Tribeca	 	Settlement
    of rents owed	 	5/16/2018	 	Corporate
    Location “Tribeca” owed back rent in excess of $70,000 as of 5/16/18. Company reached a settlement agreement with
    landlord paying $15,000 on 5/18/18, and additional $15,000 on 5/31/18 and to pay current rents for June, July and August 2018.
    At end of August, Company owes remaining balance of back rent owed or roughly $40,000.
	 	 	 	 	 	 	 
	Accounts
    Payable	 	All
    Accounts Payable	 	as
    of 6/30/18	 	The
    Company has approximately $2.2M in Accounts Payable as of 6/30/18. Many of these accounts are more than 90 days past due.
    The Company is currently not paying any of these amounts nor plans to make any payments on these amounts until capital is
    raised or litigation by the creditor is filed. Therefore, there is potential for pending litigation from any and all of the
    creditors listed in the Accounts Payable schedule. This schedule is attached.
	 	 	 	 	 	 	 
	Back
    Sales Taxes Owed	 	various
    state entities	 	as
    of 6/30/18	 	Prior
    management team did not pay sales taxes in multiple locations. The total amount currently owed to various state entities for
    back sales taxes is $350,885. The company is currently working on payment plans for this amount. This number is included in
    the total Accounts Payable numbers
	 	 	 	 	 	 	 
	Food
    Truck	 	Stearns
    Bank Foreclosure for Food Truck	 	as
    of 6/30/18	 	Company
    owes approximatly $55,000 plus approximately $8,000 in sales tax on the purchase of a food truck. The company stopped making
    payments up to 6 months ago. Upon speaking with the bank, they indicated it will be going into foreclosure. The company may
    have a franchisee interested in purchasing the truck for the full amount owed. This is pending.
	 	 	 	 	 	 	 
	Upper
    East Side - closed location	 	 	 	as
    of 6/30/18	 	the
    company closed this location with remaining rent and lease obligations. To date, the company has not received any legal notices
    or litigation concerning this property but expects to receive something in the future.
	 	 	 	 	 	 	 
	All
    other closed locations	 	all
    closed locations	 	as
    of 6/30/18	 	All
    recently closed locations are a potential legal liability. Some have already filed suit (see above and second tab for details)
    while others have offered settlement amounts or not made any contact. The Company plans to attempt to work out settlements
    on each location but to date has only worked out the Belmont location for $100,000 ($8,333 per month) and an offer from winston-salem
    for $10,000 and forgiveness on all future lease obligations. The company, for planning purposes, is using $100,000 as the
    settlement amounts for closed locations but this number could be significantly higher.

 

    	 

    	 

    

 

The
following litigation was closed/settled as of 6/29/18:

 

	Claimant	 	Closed/Settled
    Litigation Since 2013 as of 6/29/2018	 	Date
    Filed	 	Overview
    
	Robyn
    Decicco	 	Robyn
    Decicco v. Muscle Maker Grill, LLC, Muscle Maker Franchising, LLC, Primo Services, LLC, J. Crown, Inc., John Marques, John
    Does 1-10 and ABC Corps. 1-10, Docket No. MID-L-4223-13, Superior Court of New Jersey Law Division: Middlesex County.	 	Action
    filed June 28, 2013	 	 This
    action was filed on June 28, 2013 by a former employee of a franchised Muscle Maker Grill restaurant. The former employee
    alleges John Marques, as owner of entities alleged to be the franchisee, engaged in racial discrimination in hiring and directed
    her to manipulate and change employees’ hours entered into the restaurant computer. The plaintiff alleges that she reported
    Mr. Marques’ alleged conduct to Muscle Maker Franchising, LLC’s employees and that her employment was wrongfully
    terminated by Mr. Marques in retaliation for her whistle-blowing activity by making the allegations. The plaintiff is seeking
    back pay and future pay with interest; compensatory damages for emotional pain and suffering, mental anguish, distress, humiliation
    and loss of reputation; punitive damages; attorneys’ fees; costs and disbursements; interest; an order to cease and
    desist alleged illegal or improper conduct; compelling defendants to initiate anti-discrimination and anti-retaliation training.
    Muscle Maker Franchising, LLC was removed as a third part to this suit. This matter is closed.
	 	 	 	 	 	 	 
	John
    Marques	 	John
    Marques and J. Crown, Inc., Cross-Claim and Third Party Plaintiffs v. Muscle Maker Franchising, LLC, Cross-Claim Defendant,
    and Rodney Silva and Robert Morgan, Third Party Defendants, Docket No. MID-L-4223-13, Superior Court of New Jersey Law Division:
    Middlesex County. 	 	action
    filed on or about September 30, 2013	 	This
    action was filed on or about September 30, 2013 by John Marques and J. Crown, Inc. against our predecessor Muscle Maker Franchising,
    LLC and Rodney Silva and Robert Morgan, then MMF’s members and officers, by way of a cross-claim and third party complaint
    filed in the pending action bought by Robyn Decicco described above. John Marques brought this action as an investor in MMF
    and as a franchisee, and J. Crown, Inc. brought this action as a franchisee. John Marques and J. Crown, Inc. alleged misrepresentation
    and omissions in information provided when John Marques invested in MMF and in connection with the purchase of franchises;
    breach of fiduciary duty to a minority investor by acts of waste and mismanagement, refusal to provide information, exclusion
    from participation in the business and failure to advise of the allegations by Robyn Decicco; unjust enrichment and breach
    of contract. John Marques and J. Crown, Inc. sought an accounting, compensatory damages, interest, costs and attorneys’
    fees. MMF and Rodney Silva and Robert Morgan filed a Motion to Stay Crossclaim and Third Party Complaint Pending Arbitration
    or, in the Alternative, To Dismiss Based Upon Lack of Standing, Failure to Join Indispensible Parties and Failure to State
    Certain Claims Upon Which Relief Can be Granted on or about November 12, 2013. The court issued an Order Granting Defendant
    Muscle Maker Franchising, LLC’s and Third-Party Defendants Rodney Silva’s and Robert Morgan’s Motion to
    Stay Crossclaim and Third Party Complaint Pending Arbitration on January 17, 2014, severing the cross-claim and third party
    complaint brought by John Marques and J. Crown, Inc. against MMF, Rodney Silva and Robert Morgan, respectively, from the action
    brought by Robyn Decicco, and staying John Marques and J. Crown, Inc.’s actions until further order of the Court pending
    arbitration of the claims. No arbitration has been filed as of the date of this disclosure document. On 6/29/18 the arbitrator
    ruled all claims denied. This matter was completed and closed on 6/29/18.
	 	 	 	 	 	 	 
	Flor
    Compres-Juarez	 	Flor
    Compres-Juarez v. Muscle Maker Franchising, LLC, Superior Court of New Jersey for Somerset County, Case No. L-334-13. 	 	On
    or about March 11, 2013	 	Plaintiff,
    the former mother-in-law of another individual who signed a Franchise Agreement with Muscle Maker Franchising, LLC, brought
    an action against MMF on March 11, 2013, claiming that she had dealt directly with MMF as franchisee and had paid MMF a $35,000
    franchise fee, although she did not receive a franchise disclosure document or sign a franchise agreement with MMF. Plaintiff
    sought the return of the $35,000 franchise fee paid by her former son-in-law, alleging breach of contract, unjust enrichment,
    fraudulent inducement and conversion and sought treble damages, legal fees and costs of suit alleging violation of the New
    Jersey Consumer Fraud Act. On June 18, 2013, MMF filed a Motion to Dismiss Complaint Based Upon Failure to Join an Indispensable
    Party, or, in the Alternative, Motion to Dismiss for Failure to State a Claim Upon Which Relief Can be Granted. The Court
    preliminarily granted MMF’s motion without prejudice on July 15, 2013 for, among other things, the Plaintiff’s
    lack of standing/failure to join the franchisee as an indispensable party, and other bases pending a scheduled motion date.
    Prior to the motion date, Plaintiff through counsel reported the case as settled, even though the parties were still negotiating
    terms and a settlement had not been signed. On or about August 7, 2013, the Court dismissed the case as being settled before
    trial. This matter is closed.

 

    	 

    	 

    

 

	Paul
    Reidel	 	Paul
    Reidel and Samuel Lanasa v. Muscle Maker Franchising, LLC, Supreme Court of New York, County of Suffolk, Index No. 605568/2015.	 	On
    or about May 20, 2015	 	Plaintiffs,
    a former franchisee, brought an action on May 20, 2015, alleging that they were defrauded into entering into a franchise agreement
    with MMF, seeking (i) rescission of the franchise agreement, (ii) a return of all monies paid by Plaintiffs to MMF, (iii)
    all monies invested in the Muscle Maker Grill restaurant, (iv) an additional $100,000 in damages and (v) its attorney fees.
    MMF filed a Motion to Dismiss the Action on the basis that court lacks personal jurisdiction over MMF and that the franchise
    agreement required all disputes to be arbitrated in New Jersey. The motion to dismiss is currently pending. Plaintiffs have
    filed a motion for default judgment, which MMF has opposed on the basis that the Summons and Complaint were not properly served
    and MMF never received the Summons and Complaint. Arbitrator ruled in Muscle Maker’s favor. This matter is closed.
	 	 	 	 	 	 	 
	Ismael
    Sanchez	 	Ismael
    Sanchez v. Muscle Maker Franchising, LLC, Case No. 01-15-0005-0553 (American Arbitration Association).	 	 	 	In
    September, 2015, claimant, a former franchisee filed a demand for arbitration with the American Arbitration Association against
    our predecessor, MMF, claiming that MMF breached the franchise agreement, resulting in a loss of the claimant’s business
    and investment. MMF filed an Answer asserting that the arbitration demand fails to assert or otherwise sufficiently articulate
    any viable claim and denied all of claimant’s allegations. MMF intends to vigorously defend itself in this case. Case
    was ultimately dropped by Arbitrator. This matter is closed.
	 	 	 	 	 	 	 
	Eric
    Swartz	 	Eric
    Schwartz, MMG Merrick LLC and MMG East Meadow LLC v. Muscle Maker Franchising LLC, American Arbitration Association Commercial
    Arbitration. AAA Case No. 01-16-0005-2719	 	6/1/2013	 	Arbitration
    held on 1/18/2018. Claimants were seeking damages totalling $6,418,656 from the purchase of two Muscle Maker Grills. Their
    claim was seeking $969,254 in compensatory damages, $5,000,000 in punitive damages, $26,147 in costs, $423,255 in attorneys
    fees plus other fees as noted in the arbitration filing/ruling attached. Arbitrator ruled in favor of the Respondent Muscle
    Maker Franchising LLC dismissing with prejuduce all counts of the demand for arbitration. Parties each pay their own counsel
    and professional fees, equally share in costs of the arbitration. Administrative fees and expenses of AAA totaling $14,700
    are borne equally. This was finalized 1/18/18. See attached details.
	 	 	 	 	 	 	 
	William
    Telford	 	William
    Telford v. Intellectual Capital Management Inc, SMS Masterminds and Muscle Maker Franchising, LLC, United States Disctrict
    Court Eastern District of New York Case no: CV-140064	 	On
    or about 1/6/14	 	Plaintiff
    William Telford on his own behalf and on behalf of all other similarily situated persons brought a class action complaint
    regarding unauthorized text message marketing. This action has been closed.
	 	 	 	 	 	 	 
	Imperial
    Bag	 	Imperial
    Bag & Paper Co, LLC v. Muscle Maker Brands, Inc, filed 5/1/18 at 12:21pm, index #: 032446/2018	 	on
    or about 5/1/18	 	Supreme
    Court of the State of New York, County of Rockland. Plaintiff demands payment of $272,419.90. The amount breaks down as $194,585.64
    for goods purchased and $77,834.26 for fees and court costs. Of this amount, $44,585.65 was actually past due for goods received.
    The remainder was inventory, fees and court costs. This matter is still pending as of 6/30/18. However, the company did enter
    into an agreement (see below) with a payment plan. Imperial has yet to sign the document and file the dismissal.
	 	 	 	 	 	 	 
	Imperial
    Bag	 	Imperial
    Bag & Paper Co, LLC v. Muscle Maker Brands, Inc	 	6/29/2018	 	Stipulation
    of Settlement and Dismissal was signed on 6/29/18 by Muscle Maker Brands, Inc. Stipulation and Settlement calls for Muscle
    Maker Brands, Inc to pay $5,000 per month, beginning 7/1/18 and monthly thereafter until the balance is paid in full. Balance
    was $44,585.65 less a payment of $2,019,19 on 5/30/18 and a payment of $5,000 on or about 6/12/18. New balance due is $37,566.46.
    As of 6/30/18 the company has not received a counter signed document but believes this to be a closed matter. Signed stipulation
    of settlement and dismissal was signed by claimant on 7/2/18.
	 	 	 	 	 	 	 
	Oscar
    Rodriguez	 	NY
    State Department of Labor, Case No: LS11 2017004301	 	6/25/2018	 	Employee
    Oscar Rodriguez filed claim with NY Department of Labor for failure to pay overtime; During mediation, claimant agreed to
    accept the sum of $2,000.00 in full settlement of the wage underpayments he alleged were owed to him for work performed for
    Muscle Maker Grill. A payment plan was agreed to in the amount of $800.00 paid in June 2018, $600.00 paid in July 2018 and
    $600.00 paid in August of 2018. 
	 	 	 	 	 	 	 
	JR
    Restaurant Group	 	JR
    Restaurant Group LLC v. Muscle Maker Brands LLC & Muscle Maker Franchising LLC, Supreme Court of the State of New York,
    County of New York, Case #656156/16	 	on
    or about 11/30/2016	 	JR
    Restaurant Group, LLC filed an “order to show cause” complaint against Muscle Maker Brands LLC & Muscle Maker
    Franchising LLC concerning the opening of a corporately owned location in the franchisee’s Upper Eastside protected
    territory. Court assigned the case to arbitration (see other documentation provided below).
	 	 	 	 	 	 	 
	JR
    Restaurant Group	 	JR
    Restaurant Group LLC v. Muscle Maker Brands LLC & Muscle Maker Franchising LLC, Supreme Court of the State of New York,
    County of New York, Case #656156/16 	 	on
    or about 2/27/17	 	Motion
    to compel arbitration was granted as the parties agreement sets forth a broad arbitration clause requiring arbitration for
    all disputes. Parties were directed to proceed to arbitration. However, JR Restaurants has not moved to arbitration as of
    6/30/2018. 
	 	 	 	 	 	 	 
	Belmont
    - Closed Location	 	918
    924 Belmont, LLC	 	on
    or about 4/05/18	 	American
    Restaurant Holdings, Inc. entered into a settlement agreement with 918-924 Belmont,LLC on or about 4/5/18. The settlement
    was for $100,000 to be paid in monthly installments starting on 4/26/18 in the amount of $8,333.33 until paid in full. This
    settlement allowed the company to cancel the remaining terms of the lease for the property located at 920 West Belmont
	 	 	 	 	 	 	 
	Healthy
    Dining, LLC	 	Healthy
    Dining, LLC (franchise agreement)	 	on
    or about 11/20/2014	 	Notice
    of termination of franchise agreement dated february 10, 2010 (Staten Island, NY). Company terminated the frachise agreement
    of Healthy Dining, LLC for failiure to pay royalties and other matters. This matter is closed.

 

The
Company also provided leases for all closed and open locations as part of the due diligence process

 

    	 

    	 

    

 

Schedule
3.1 (aa) – Material Changes: undisclosed events, liabilities or developments

 

The
Company has incurred the following material events related to personnel since 12/31/2017:

 

	 	●	Grady
    Metoyer, CFO, resigned effective 12/3/2017 with his last day of January 4, 2018
	 	●	Robert
    Morgan, CEO, resigned effective April 11, 2018 
	 	●	On
    April 13, 2018, Merlin Spencer resigned as a director of the Company.
	 	●	Kevin
    Mohan was named Interim President effective April 16, 2018
	 	●	On
    April 17, 2018 Kevin Mohan and John Marques were appointed to the Board
	 	●	On
    April 30, 2018, Mr. Betts resigned as a director of the Company. 
	 	●	Michael
    Roper was named CEO effective May 1, 2018
	 	●	Peter
    Petrosian was added to the Board of Directors effective May 8, 2018
	 	●	Ferdinand
    Groenwald resigned as VP finance effective May 29, 2018
	 	●	Omprakash
    Vajinapalli was added to the Board of Directors effective June 14, 2018

 

The
Company has incurred the following material events related to closed locations since 12/31/2017:

 

	 	●	From
    March through July 2018, the Company closed 8 of its 13 corporately owned and operated locations

 

The
Company has incurred the following material events related to litigation since 12/31/2017:

 

	 	●	In
    May 2018 the company was involved in litigation concerning two closed locations. These locations were Gramercy/Crownhall Realty,
    LLC in the amount of $1,034,087 and Columbia/Limestone Associates, LLC in the amount of $1,357,243. The company received a
    default judgement on the Gramercy property in August 2018. The company has a preliminary settlement worked out with the landlord
    on both of these locations in the total amount of $300,000 (less existing security deposits to cover back rent owed). This
    settlement agreement is currently being documented. 
	 	 	 
	 	●	The
    Company received a judgement default regarding a complaint filed by Daniel Pettit in the amount of $171,035 ($100,000 plus
    penalties, fees and interest). The company has not paid this amount to Daniel Pettit as of 8/28/18.
	 	 	 
	 	●	The
    Company received mechanics liens for labor, service, equipment and materials in the amount of $108,000 pertaining to the Fountain
    Valley unopened location. The parties include: Resolute contractors, quality tile, MTL construction, Genesis Electric, JNB
    Interiors, Captive Aire and FSG lighting.

 

The
Company incurred significant accounts payable liabilities in regards to legal, financial, marketing, professional services, public
relations, etc. associated with the Regulation A offering of its common stock which payable are included in the Account Payable
description set forth under Schedule 1.1(aa).

 

The
Company has not paid sales taxes owed to various states prior to 5/1/2018 and currently has an estimated outstanding amount owed
of $350,000.

 

	 	●	The
    Company is current on all sales taxes collected and owed since January 2018 for all open locations and has worked out payment
    plans for Irvine, Colonia and Illinois properties. The Company is currently negotiating payment terms for Santa Ana, Winston-Salem,
    New York and New Jersey closed locations.

 

The
Company borrowed money from the co-op, ad fund and gift card fund in the estimated amount of $370,000 and is required to pay these
monies back into the various funds.

 

    	 

    	 

    

 

SCHEDULE
2.1(b)

 

MILESTONES

 

The
Company shall receive additional funds and issue additional Notes upon achieving the following milestones:

 

	 	1.	$1,000,000
    shall be released upon achieving the following milestones after September 1, 2018:

 

	 	a)	the
    Company shall open one (1) new store on a military base in addition to current stores located on military bases;
	 	b)	the
    Company shall open two (2) new franchised stores in addition to current franchised stores;
	 	c)	the
    Company shall have an agreement to open at least one (1) additional store on a military base in addition to the stores described
    in 1(a) hereof;
	 	d)	the
    Company shall have completed its audit for the year ended December 31, 2017;
	 	e)	the
    Company’s FDD (Franchise Disclosure Document) shall be updated and registered in all the states where the company plans
    to open franchised stores; 
	 	f)	all
    current holders of debt, with a principal amount of $2,626,000, shall convert such debt into common stock at a conversion
    price not less than $1.00 per share or agree to extend until February 2020; provided, however, that holders of certain debt
    with a principal balance of $185,000 shall not have to convert or extend their debt; and
	 	g)	the
    Company shall have hired a Chief Financial Officer or a Vice President of Finance.

 

	 	2.	$1,000,000
    shall be released upon achieving the following milestones after September 1, 2018:

 

	 	a)	the
    Company shall open two (2) new stores on military bases in addition to current stores located on military bases and have a
    total of five stores on military bases;
	 	b)	the
    Company shall open two (2) new franchised stores in addition to current franchised stores and the stores described in 2(b)
    hereof;
	 	c)	the
    Company shall have an agreement to open at least two (2) additional store on military bases in addition to the stores described
    in 2(a) hereof;
	 	d)	the
    Company shall have at least $550,000 in revenue for any 30-day period; 
	 	e)	the
    Company shall be current with its periodic filings with the U.S. Securities and Exchange Commission.

 

    	 

    	 

    

 

SCHEDULE
4.2(k)

 

USE
OF PROCEEDS

 

The
use of proceeds shall be for general corporate working capital with the following exceptions:

 

	1.	25%
    of the cash received from Purchasers shall be used on the build out and market new stores on military stores 
	2.	No
    more than 15% of the cash received from Purchasers may used defending against existing or threatened litigation and settling
    existing or threatened litigation (the “Litigation”). 

 

In
the event the Litigation requirements payments or payments for existing debt payments are in excess of the percentages contemplated
in the Agreement, then the Company may raise funds through equity sales for funds to make additional payments.

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