Document:

Exhibit
10.2

 

SECURITY
AGREEMENT

 

SECURITY
AGREEMENT, dated as of June 22, 2015 (this “Agreement”), between Vapor Corp., a Delaware corporation (the “Grantor”),
and Redwood Management, LLC, in its capacity as collateral agent (the “Collateral Agent”) on behalf of the
Secured Parties (as defined below).

 

The
Grantor and certain Purchasers (together with the Collateral Agent, each a “Secured Party” and collectively,
the “Secured Parties”), are or will be parties to a certain Securities Purchase Agreement (as amended, amended
and restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), providing, subject
to the terms and conditions thereof, for the purchase of the Debentures (as defined therein).

 

Accordingly,
the parties hereto agree as follows:

 

Section
1. Definitions, Terms Generally; Etc.

 

1.01
Definitions. Capitalized terms used but not defined herein shall have the meanings given to them in the Purchase Agreements.

 

1.02
Certain Uniform Commercial Code Terms. As used herein, the terms “Accession”, “Account”,
“As-Extracted Collateral”, “Chattel Paper”, “Commodity Account”, “Commodity
Contract”, “Deposit Account”, “Document”, “Electronic Chattel Paper”,
“Equipment”, “Fixture”, “General Intangible”, “Goods”,
“Instrument”, “Inventory”, “Investment Property”, “Letter-of-Credit
Right”, “Payment Intangible”, “Proceeds”, “Promissory Note”,
“Software” and “Tangible Chattel Paper” have the respective meanings set forth in Article 9
of the NYUCC, and the terms “Certificated Security”, “Financial Asset”, “Instruction”,
“Securities Account”, “Security”, “Security Certificate”, “Security
Entitlement” and “Uncertificated Security” have the respective meanings set forth in Article 8
of the NYUCC.

 

1.03
Additional Definitions. In addition, as used herein:

 

“Collateral”
has the meaning assigned to such term in Section 3.

 

“Contingent
Secured Obligations” means obligations of the Grantor in respect of any claim that may be payable to the Secured
Party by the Grantor under any Transaction Document that is not yet due and payable.

 

“Copyright
Collateral” means all Copyrights of the Grantor, whether now owned or hereafter acquired by the Grantor, including each
Copyright identified in Annex 4.

 

“Copyrights”
means all copyrights, copyright registrations and applications for copyright registrations, including all renewals and extensions
thereof, all rights to recover for past, present or future infringements thereof and all other rights whatsoever accruing thereunder
or pertaining thereto.

 

“Default”
means any of the following events: (a) any of the Secured Obligations shall have been declared, or shall become, due and
payable prior to the stated maturity therefor, (b) the Grantor shall fail to pay when due any principal amount in respect of a
Secured Obligation, (c) the Grantor shall fail to pay any interest, fees, commissions, indemnities, costs and other expenses
in respect of any Secured Obligations for three or more business days after the date on which such amounts first become due or
(d) any event of default or termination (however described) under any Transaction Document shall occur and be continuing.

 

Annex
8 to Security Agreement

 

    	 

    	 

    

 

“Foreign
Subsidiary” means any subsidiary of the Grantor with respect to which the Collateral Agent determines that a pledge
of more than 66-2/3% of the total number of shares of voting stock of such subsidiary would result in material adverse tax consequences
under Section 956 of the Code.

 

“Initial
Pledged Shares” means the Shares of each Issuer beneficially owned by the Grantor on the date hereof and identified
in Annex 3 (Part A).

 

“Intellectual
Property” means, collectively, all Copyright Collateral, all Patent Collateral, all Trademark Collateral and all improvements,
modifications, derivative works now known or later developed related thereto, together with (a) all inventions, processes,
production methods, proprietary information, know-how and trade secrets; (b) all licenses or user or other agreements granted
to the Grantor with respect to any of the foregoing, in each case whether now or hereafter owned or used; (c) all information,
customer lists, identification of suppliers, data, plans, blueprints, specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards, processing standards, performance standards, catalogs, source
code computer and automatic machinery software and programs; (d) all field repair data, sales data and other information
relating to sales or service of products now or hereafter manufactured; (e) all accounting information and all media in which
or on which any information or knowledge or data or records may be recorded or stored and all computer programs used for the compilation
or printout of such information, knowledge, records or data; (f) all licenses, consents, permits, variances, certifications
and approvals of governmental agencies now or hereafter held by the Grantor; and (g) all causes of action, claims and warranties
now or hereafter owned or acquired by the Grantor in respect of any of the items listed above.

 

“Issuers”
means, collectively, (a) the respective Persons identified on Annex 3 (Part A) under the caption “Issuer”,
(b) any other Person that shall at any time be a subsidiary of the Grantor, and (c) the issuer of any equity securities
hereafter owned by the Grantor.

 

“Liens”
means any pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security
interest under the Uniform Commercial Code or comparable law of any jurisdiction).

 

“Motor
Vehicles” means motor vehicles, tractors, trailers and other like property, if the title thereto is governed by a certificate
of title or ownership.

 

“NYUCC”
means the Uniform Commercial Code as in effect from time to time in the State of New York.

 

“Patent
Collateral” means all Patents of the Grantor, whether now owned or hereafter acquired by the Grantor, including each
Patent identified in Annex 5, and all income, royalties, damages and payments now or hereafter due and/or payable under or
with respect thereto.

 

    	 

    	 

    

 

“Patents”
means all patents and patent applications, including the inventions and improvements described and claimed therein together with
the reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof, all income, royalties, damages
and payments now or hereafter due and/or payable with respect thereto, all damages and payments for past or future infringements
thereof and rights to sue therefor, and all rights corresponding thereto throughout the world.

 

“Person”
means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

 

“Permitted
Lien” means (a) Liens imposed by law for taxes that are not yet due or are being contested in good faith and for which
adequate reserves have been established in accordance with generally accepted accounting principles; (b) carriers’, warehousemen’s,
mechanic’s, material men’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days or that are being contested in good faith and by
appropriate proceedings; (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case
in the ordinary course of business; (e) Liens created with respect to the financing of the purchase of new property in the ordinary
course of the Grantor’s business up to the amount of the purchase price of such property; (f) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not
secure any monetary obligations and do not materially detract from the value of the affected; (g) Liens which are junior to the
Lien held by the Secured Parties hereunder; and (h) the Liens in favor of Entrepreneur Growth Capital LLC, certain note holders
who entered into a Secured Line of Credit Agreement with Emagine the Vape Stores, LLC on December 1, 2014 and the real party in
interest to the extent reflected on Exhibit A.

 

“Pledged
Shares” means, collectively, (i) the Initial Pledged Shares and (ii) all other Shares of any Issuer now or
hereafter owned by the Grantor, together in each case with (a) all certificates representing the same, (b) all shares,
securities, moneys or other property representing a dividend on or a distribution or return of capital on or in respect of the
Pledged Shares, or resulting from a split-up, revision, reclassification or other like change of the Pledged Shares or otherwise
received in exchange therefor, and any warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged
Shares, and (c) without prejudice to any provision of any of the Transaction Documents prohibiting any merger or consolidation
by an Issuer, all Shares of any successor entity of any such merger or consolidation.

 

“Secured
Obligations” means, collectively, the obligations of the Grantor to the Secured Parties in respect of the principal
of and interest on any amounts owed to the Secured Parties under the Transaction Documents, and all other amounts from time to
time owing to the Secured Parties by the Grantor under the Transaction Documents, together with in each case interest thereon
and expenses relating thereto, including any interest or expenses accruing or arising after the commencement of any case with
respect to the Grantor under the United States Bankruptcy Code or any other bankruptcy or insolvency law (whether or not such
interest or expenses are allowed or allowable as a claim in whole or in part in such case).

 

“Shares”
means shares of capital stock of a corporation, limited liability company interests, partnership interests and other ownership
or equity interests of any class in any Person.

 

    	 

    	 

    

 

“Trademark
Collateral” means all Trademarks of the Grantor, whether now owned or hereafter acquired by the Grantor, including each
Trademark identified in Annex 6, together, in each case, with the product lines and goodwill of the business connected with
the use of, and symbolized by, each such trade name, trademark and service mark. Notwithstanding the foregoing, the Trademark
Collateral does not and shall not include any Trademark that would be rendered invalid, abandoned, void or unenforceable by reason
of its being included as part of the Trademark Collateral.

 

“Trademarks”
means all trade names, trademarks and service marks, logos, trademark and service mark registrations, and applications for trademark
and service mark registrations, including all renewals of trademark and service mark registrations, all rights to recover for
all past, present and future infringements thereof and all rights to sue therefor, and all rights corresponding thereto throughout
the world.

 

Section
2. Representations and Warranties. The Grantor represents, warrants and covenants to the Secured Party that:

 

2.01
Names, Etc. The full and correct legal name, type of organization, jurisdiction of organization, organizational ID number
(if applicable) and mailing address of the Grantor as of the date hereof are correctly set forth in Annex 1. Said Annex 1 correctly
specifies (a) the place of business of the Grantor or, if the Grantor has more than one place of business, the location of the
chief executive office of the Grantor and (b) each location where any financing statement naming the Grantor as debtor is currently
on file.

 

2.02
Changes in Circumstances. The Grantor has not (a) within the period of four months prior to the date hereof, changed its location
(as defined in Section 9 307 of the NYUCC), (b) except as specified in Annex 1, heretofore changed its name, or (c) except as
specified in Annex 2, heretofore become a “new debtor” (as defined in Section 9 102(a)(56) of the NYUCC) with respect
to a currently effective security agreement previously entered into by any other Person.

 

2.03
Pledged Shares.

 

(a)
The Initial Pledged Shares constitute (i) 100% of the issued and outstanding Shares of each Issuer other than a Foreign Subsidiary
beneficially owned by the Grantor on the date hereof (other than any Shares held in a Securities Account referred to in Annex
7), whether or not registered in the name of the Grantor and (ii) in the case of each Issuer that is a Foreign Subsidiary, (A)
65% of the issued and outstanding shares of voting stock of such Issuer and (B) 100% of all other issued and outstanding shares
of capital stock of whatever class of such Issuer beneficially owned by the Grantor on the date hereof, in each case whether or
not registered in the name of the Grantor. Annex 3 (Part A) correctly identifies, as at the date hereof, the respective Issuers
of the Initial Pledged Shares.

 

(b)
The Initial Pledged Shares are, and all other Pledged Shares in which the Grantor shall hereafter grant a security interest pursuant
to Section 3 will be, (i) duly authorized, validly existing, fully paid and non assessable (in the case of any Shares issued by
a corporation) and (ii) duly issued and outstanding (in the case of any equity interest in any other entity), and none of such
Pledged Shares are or will be subject to any contractual restriction, or any restriction under the charter, by laws, partnership
agreement or other organizational instrument of the respective Issuer thereof, upon the transfer of such Pledged Shares (except
for any such restriction contained herein or in the Transaction Documents, or under such organizational instruments).

 

    	 

    	 

    

 

2.04
Promissory Notes. Annex 3 (Part B) sets forth a complete and correct list of all Promissory Notes (other than any held in
a Securities Account referred to in Annex 7) held by the Grantor on the date hereof having an aggregate principal amount in excess
of $50,000.

 

2.05
Intellectual Property.

 

(a)
Annexes 4, 5 and 6, respectively, set forth a complete and correct list of all copyright registrations, patents, patent applications,
trademark registrations and trademark applications owned by the Grantor on the date hereof (or, in the case of any supplement
to said Annexes 4, 5 and 6, effecting a pledge thereof, as of the date of such supplement).

 

(b)
Except pursuant to licenses and other user agreements entered into by the Grantor in the ordinary course of business that are
listed in said Annexes 4, 5 and 6 (including as supplemented by any supplement effecting a pledge thereof), the Grantor has done
nothing to authorize or enable any other Person to use any Copyright, Patent or Trademark listed in said Annexes 4, 5 and 6 (as
so supplemented), and all registrations listed in said Annexes 4, 5 and 6 (as so supplemented) are, except as noted therein, in
full force and effect.

 

(c)
To the Grantor’s knowledge, (i) except as set forth in said Annexes 4, 5 and 6 (as supplemented by any supplement effecting
a pledge thereof), there is no violation by others of any right of the Grantor with respect to any Copyright, Patent or Trademark
listed in said Annexes 4, 5 and 6 (as so supplemented), respectively, and (ii) the Grantor is not infringing in any respect upon
any Copyright, Patent or Trademark of any other Person; and no proceedings alleging such infringement have been instituted or
are pending against the Grantor and no written claim against the Grantor has been received by the Grantor, alleging any such violation,
except as may be set forth in said Annexes 4, 5 and 6 (as so supplemented).

 

(d)
The Grantor does not own any Trademarks registered in the United States of America to which the last sentence of the definition
of Trademark Collateral applies.

 

2.06
Deposit Accounts and Securities Accounts. Annex 7 sets forth a complete and correct list of all Deposit Accounts, Securities
Accounts and Commodity Accounts of the Grantor on the date hereof.

 

2.07
Commercial Tort Claims. Annex 8 sets forth a complete and correct list of all commercial tort claims of the Grantor in existence
on the date hereof.

 

2.08
Fair Labor Standards Act. Any goods now or hereafter produced by the Grantor or any of its subsidiaries included in the Collateral
have been and will be produced in compliance with the requirements of the Fair Labor Standards Act, as amended.

 

Section
3. Collateral. As collateral security for the payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the Secured Obligations in accordance with the terms of the Transaction Documents, the Grantor hereby pledges
and grants to the Collateral Agent, for the ratable benefit of the Secured Parties, as hereinafter provided a first priority (subject
to Permitted Liens) security interest in all of the Grantor’s right, title and interest in, to and under the following property,
in each case whether tangible or intangible, wherever located, and whether now owned by the Grantor or hereafter acquired and
whether now existing or hereafter coming into existence (all of the property described in this Section 3 being collectively
referred to herein as “Collateral”):

 

(a)
all Accounts;

 

(b)
all As-Extracted Collateral;

 

    	 

    	 

    

 

(c)
all Chattel Paper;

 

(d)
all Deposit Accounts;

 

(e)
all Documents;

 

(f)
all Equipment;

 

(g)
all Fixtures;

 

(h)
all General Intangibles;

 

(i)
all Goods not covered by the other clauses of this Section 3;

 

(j)
the Pledged Shares;

 

(k)
all Instruments, including all Promissory Notes;

 

(l)
all Intellectual Property;

 

(m)
all Inventory;

 

(n)
all Investment Property not covered by other clauses of this Section 3, including all Securities, all Securities Accounts
and all Security Entitlements with respect thereto and Financial Assets carried therein, and all Commodity Accounts and Commodity
Contracts;

 

(o)
all Letter-of-Credit Rights;

 

(p)
all commercial tort claims, as defined in Section 9-102(a)(13) of the NYUCC, arising out of the events described in Annex 8;

 

(q)
all other tangible and intangible personal property whatsoever of the Grantor; and

 

(r)
all Proceeds of any of the Collateral, all Accessions to and substitutions and replacements for, any of the Collateral, and all
offspring, rents, profits and products of any of the Collateral, and, to the extent related to any Collateral, all books, correspondence,
credit files, records, invoices and other papers (including all tapes, cards, computer runs and other papers and documents in
the possession or under the control of the Grantor or any computer bureau or service company from time to time acting for the
Grantor),

 

IT
BEING UNDERSTOOD, HOWEVER, that (A) in the case of any of the foregoing that consists of general or limited partnership interests
in a general or limited partnership, the security interest hereunder shall be deemed to be created only to the maximum extent
permitted under the applicable organizational instrument pursuant to which such partnership is formed, (B) in no event shall
the security interest granted under this Section 3 attach to any lease, license, contract, property rights or agreement to
which the Grantor is a party (or to any of its rights or interests thereunder) if the grant of such security interest would constitute
or result in either (i) the abandonment, invalidation or unenforceability of any right, title or interest of the Grantor
therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract,
property rights or agreement (other than to the extent that any such term would be rendered ineffective by Section 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code as in effect in the relevant jurisdiction), and (C) the security interest
created hereby in Shares constituting voting stock of any Issuer that is a Foreign Subsidiary shall be limited to that portion
of such voting stock that does not exceed 65% of the aggregate issued and outstanding voting stock of such Issuer.

 

    	 

    	 

    

 

Section
4. Intentionally Omitted.

 

Section
5. Further Assurances; Remedies. In furtherance of the grant of the security interest pursuant to Section 3, the
Grantor hereby agrees with the Collateral Agent and the other Secured Parties as follows:

 

5.01
Delivery and Other Perfection. The Grantor shall promptly from time to time give, execute, deliver, file, record, authorize
or obtain all such financing statements, continuation statements, notices, instruments, documents, agreements or consents or other
papers as may be necessary or desirable in the judgment of the Collateral Agent (including, without limitation, any filings that
may be required by the United States Patent and Trademark Office (the “USPTO”) and the United States Copyright
Office in order to perfect the security interest granted by the Grantor in and to the Intellectual Property) to create, preserve,
perfect, maintain the perfection of or validate the first priority (subject to Permitted Liens) security interest granted pursuant
hereto or to enable the Collateral Agent to exercise and enforce its rights hereunder with respect to such security interest,
and without limiting the foregoing, shall:

 

(a)
if any of the Pledged Shares, Investment Property or Financial Assets constituting part of the Collateral are received by the
Grantor, forthwith (x) deliver to the Collateral Agent the certificates or instruments representing or evidencing the same,
duly endorsed in blank or accompanied by such instruments of assignment and transfer in such form and substance as the Collateral
Agent may reasonably request, all of which thereafter shall be held by the Collateral Agent, pursuant to the terms of this Agreement,
as part of the Collateral and (y) take such other action as the Collateral Agent may reasonably deem necessary or appropriate
to duly record or otherwise perfect the security interest created hereunder in such Collateral;

 

(b)
promptly from time to time deliver to the Collateral Agent any and all Instruments constituting part of the Collateral, endorsed
and/or accompanied by such instruments of assignment and transfer in such form and substance as the Collateral Agent may request;
provided that (other than in the case of the promissory notes described in Annex 3 (Part B)) so long as no Default
shall have occurred and be continuing, the Grantor may retain for collection in the ordinary course any Instruments received by
the Grantor in the ordinary course of business and the Collateral Agent shall, promptly upon request of the Grantor, make appropriate
arrangements for making any Instrument delivered by the Grantor available to the Grantor for purposes of presentation, collection
or renewal (any such arrangement to be effected, to the extent requested by the Collateral Agent, against trust receipt or like
document);

 

(c)
promptly from time to time enter into such control agreements, each in form and substance reasonably acceptable to the Collateral
Agent, as may be required to perfect the security interest created hereby in any and all Deposit Accounts, Investment Property,
Electronic Chattel Paper and Letter-of-Credit Rights, and will promptly furnish to the Collateral Agent true copies thereof;

 

    	 

    	 

    

 

(d)
promptly from time to time upon the request of the Collateral Agent, execute and deliver such short-form security agreements as
the Collateral Agent may reasonably deem necessary or desirable to protect the interests of the Secured Parties in respect of
that portion of the Collateral consisting of Intellectual Property;

 

(e)
promptly upon request of the Collateral Agent, cause the Collateral Agent to be listed as the lienholder on any certificate of
title or ownership covering any Motor Vehicle (other than Motor Vehicles constituting Inventory) and within 120 days of such request
deliver evidence of the same to the Collateral Agent;

 

(f)
keep full and accurate books and records relating to the Collateral, and stamp or otherwise mark such books and records in such
manner as the Collateral Agent may reasonably require in order to reflect the security interests granted by this Agreement; and

 

(g)
permit representatives of the Collateral Agent, upon reasonable notice, at any time during normal business hours to inspect and
make abstracts from its books and records pertaining to the Collateral, and permit representatives of the Collateral Agent to
be present at the Grantor’s place of business to receive copies of communications and remittances relating to the Collateral,
and forward copies of any notices or communications received by the Grantor with respect to the Collateral, all in such manner
as the Collateral Agent may require.

 

5.02
Other Financing Statements or Control. Except as otherwise permitted under the Transaction Documents, other than
with respect to Permitted Liens, the Grantor shall not (a) file or suffer to be on file, or authorize or permit to be filed
or to be on file, in any jurisdiction, any financing statement or like instrument with respect to any of the Collateral in which
the Collateral Agent is not named as the sole secured party, or (b) cause or permit any Person other than the Collateral
Agent or a Secured Party to have “control” (as defined in Section 9-104, 9-105, 9-106 or 9-107 of the NYUCC)
of any Deposit Account, Electronic Chattel Paper, Investment Property or Letter-of-Credit Right constituting part of the Collateral.

 

5.03
Preservation of Rights. The Collateral Agent shall not be required to take steps necessary to preserve any rights against
prior parties to any of the Collateral.

 

5.04
Special Provisions Relating to Certain Collateral.

 

(a)
Pledged Shares.

 

(i)
The Grantor will cause the Pledged Shares to constitute at all times (1) 100% of the total number of Shares of each Issuer other
than a Foreign Subsidiary then outstanding owned by the Grantor and (2) in the case of any Issuer that is a Foreign Subsidiary,
65% of the total number of shares of voting stock of such Issuer and 100% of the total number of shares of all other classes of
capital stock of such Issuer then issued and outstanding owned by the Grantor.

 

(ii)
So long as no Default shall have occurred and be continuing, the Grantor shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Shares for all purposes not inconsistent with the terms of this Agreement,
the Transaction Documents or any other instrument or agreement referred to herein or therein, provided that the Grantor agrees
that it will not vote the Pledged Shares in any manner that is inconsistent with the terms of this Agreement, the Transaction
Documents or any such other instrument or agreement; and the Collateral Agent shall execute and deliver to the Grantor or cause
to be executed and delivered to the Grantor all such proxies, powers of attorney, dividend and other orders, and all such instruments,
without recourse, as the Grantor may reasonably request for the purpose of enabling the Grantor to exercise the rights and powers
that it is entitled to exercise pursuant to this Section 5.04(a)(ii).

 

    	 

    	 

    

 

(iii)
Unless and until a Default shall have occurred and be continuing, the Grantor shall be entitled to receive and retain any dividends,
distributions or proceeds on the Pledged Shares paid in cash out of earned surplus.

 

(iv)
intentionally omitted.

 

(b)
Intellectual Property.

 

(i)
For the purpose of enabling the Collateral Agent to exercise rights and remedies under Section 5.05 at such time as the Collateral
Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, the Grantor hereby grants to
the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty
or other compensation to the Grantor) to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter
acquired by the Grantor, wherever the same may be located, including in such license reasonable access to all media in which any
of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

 

(ii)
Notwithstanding anything contained herein to the contrary, but subject to any provision of the Transaction Documents that limit
the rights of the Grantor to dispose of its property, so long as no Default shall have occurred and be continuing, the Grantor
will be permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect
to the Intellectual Property in the ordinary course of the business of the Grantor. In furtherance of the foregoing, so long as
no Default shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of the Grantor,
execute and deliver any instruments, certificates or other documents, in the form so requested, that the Grantor shall have certified
are appropriate in its judgment to allow it to take any action permitted above (including relinquishment of the license provided
pursuant to clause (i) immediately above as to any specific Intellectual Property). Further, upon the payment in full of
all of the Secured Obligations and the expiration and termination of all obligations of the Secured Parties to the Grantor, or
earlier expiration of this Agreement or release of the Collateral, the Collateral Agent shall grant back to the Grantor the license
granted pursuant to clause (i) immediately above. The exercise of rights and remedies under Section 5.05 by the Collateral
Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Grantor in accordance
with the first sentence of this clause (ii).

 

(iii)
The Grantor shall deliver a copy of an updated source code as soon as reasonably practicable after such update to the source code
is made available.

 

(c)
Chattel Paper. The Grantor will (i) deliver to the Secured Party each original of each item of Chattel Paper at any
time constituting part of the Collateral, and (ii) cause each such original and each copy thereof to bear a conspicuous legend,
in form and substance reasonably satisfactory to the Secured Party, indicating that such Chattel Paper is subject to the security
interest granted hereby and that purchase of such Chattel Paper by a Person other than the Secured Party without the consent of
the Secured Party would violate the rights of the Secured Party.

 

    	 

    	 

    

 

5.05
Remedies.

 

(a)
Rights and Remedies Generally upon Default. If a Default shall have occurred and is continuing, and any Purchaser or the
Grantor shall have notified the Collateral Agent in writing thereof, the Collateral Agent, on behalf of the Secured Parties, shall
have all of the rights and remedies with respect to the Collateral of a secured party under the NYUCC (whether or not the Uniform
Commercial Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies
to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including the right, to the fullest extent permitted by law, to exercise all voting, consensual and other powers
of ownership pertaining to the Collateral as if the Collateral Agent were the sole and absolute owner thereof (and the Grantor
agrees to take all such action as may be appropriate to give effect to such right); and without limiting the foregoing, the Collateral
Agent may:

 

(i)
in its discretion, in its name or in the name of the Grantor or otherwise, demand, sue for, collect or receive any money or other
property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation
to do so;

 

(ii)
make any reasonable compromise or settlement deemed desirable with respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral;

 

(iii)
require the Grantor to notify (and the Grantor hereby authorizes the Collateral Agent to so notify) each account debtor in respect
of any Account, Chattel Paper or General Intangible, and each obligor on any Instrument, constituting part of the Collateral that
such Collateral has been assigned to the Collateral Agent hereunder, and to instruct that any payments due or to become due in
respect of such Collateral shall be made directly to the Collateral Agent or as it may direct (and if any such payments, or any
other Proceeds of Collateral, are received by the Grantor they shall be held in trust by the Grantor for the benefit of the Collateral
Agent and as promptly as possible remitted or delivered to the Collateral Agent for application as provided herein);

 

(iv)
require the Grantor to assemble the Collateral at such place or places, reasonably convenient to the Collateral Agent and the
Grantor, as the Collateral Agent may direct;

 

(v)
intentionally omitted;

 

(vi)
require the Grantor to cause the Pledged Shares to be transferred of record into the name of the Collateral Agent or its nominee
(and the Collateral Agent agrees that if any of such Pledged Shares is transferred into its name or the name of its nominee, the
Collateral Agent will thereafter promptly give to the Grantor copies of any notices and communications received by it with respect
to such Pledged Shares); and

 

    	 

    	 

    

 

(vii)
sell, lease, assign or otherwise dispose of all or any part of the Collateral, at such place or places as the Collateral Agent
deems best, and for cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private
sale, without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except
such notice as is required by applicable statute and cannot be waived), and the Collateral Agent, any Secured Party or anyone
else may be the purchaser, lessee, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or,
to the extent permitted by law, at any private sale) and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or otherwise), of the Grantor, any such demand, notice
and right or equity being hereby expressly waived and released. In the event of any sale, assignment, or other disposition of
any of the Trademark Collateral, the goodwill connected with and symbolized by the Trademark Collateral subject to such disposition
shall be included. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time
or place to which the sale may be so adjourned.

 

The
Proceeds of each collection, sale or other disposition under this Section 5.05, including by virtue of the exercise of any
license granted to the Secured Party in Section 5.04(b), shall be applied in accordance with Section 5.09.

 

(b)
Certain Securities Act Limitations. The Grantor recognizes that, by reason of certain prohibitions contained in the Securities
Act of 1933, as amended, and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale
of all or any part of the Collateral, to limit purchasers to those who will agree, among other things, to acquire the Collateral
for their own account, for investment and not with a view to the distribution or resale thereof. The Grantor acknowledges that
any such private sales may be at prices and on terms less favorable to the Secured Parties than those obtainable through a public
sale without such restrictions, and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Collateral for the period of time necessary to permit the issuer thereof to register
it for public sale.

 

(c)
Notice. The Grantor agrees that to the extent the Collateral Agent is required by applicable law to give reasonable prior
notice of any sale or other disposition of any Collateral, ten business days’ notice shall be deemed to constitute reasonable
prior notice.

 

5.06
Deficiency. If the proceeds of sale, collection or other realization of or upon the Collateral pursuant to Section 5.05
are insufficient to cover the costs and expenses of such realization and the payment in full of the Secured Obligations, the Grantor
shall remain liable for any deficiency.

 

5.07
Locations; Names, Etc. Without at least 30 days’ prior written notice to the Collateral Agent, the Grantor shall
not (i) change its location (as defined in Section 9-307 of the NYUCC), (ii) change its name from the name shown
as its current legal name on Annex 1, or (iii) agree to or authorize any modification of the terms of any item of Collateral
that would result in a change thereof from one Uniform Commercial Code category to another such category (such as from a General
Intangible to Investment Property), if the effect thereof would be to result in a loss of perfection of, or diminution of priority
for, the security interests created hereunder in such item of Collateral, or the loss of control (within the meaning of Section 9-104,
9-105, 9-106 or 9-107 of the NYUCC) over such item of Collateral.

 

5.08
Private Sale. The Collateral Agent shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 conducted in a commercially reasonable manner. The Grantor hereby waives
any claims against the Collateral Agent arising by reason of the fact that the price at which the Collateral may have been sold
at such a private sale was less than the price that might have been obtained at a public sale or was less than the aggregate amount
of the Secured Obligations, even if the Collateral Agent accepts the first offer received and does not offer the Collateral to
more than one offeree.

 

    	 

    	 

    

 

5.09
Application of Proceeds. Except as otherwise herein expressly provided and except as provided below in this Section 5.09,
the Proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other
cash at the time held by the Collateral Agent under Section 3 or this Section 5, shall be applied by the Collateral
Agent:

 

First,
to the payment of the costs and expenses of such collection, sale or other realization, including reasonable out-of-pocket costs
and expenses of the Collateral Agent and the fees and expenses of its agents and counsel, and all expenses incurred and advances
made by the Collateral Agent in connection therewith;

 

Next,
to the payment in full of the Secured Obligations (or, in the case of any Contingent Secured Obligations, to the provision of
cover as provided below), in such order as the Collateral Agent shall in its sole discretion determine; and

 

Finally,
to the payment to the Grantor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining.

 

5.10
Attorney-in-Fact. Without limiting any rights or powers granted by this Agreement to any Secured Party or the Collateral
Agent while no Default has occurred and is continuing, upon the occurrence and during the continuance of any Default the Collateral
Agent is hereby appointed the attorney-in-fact of the Grantor for the purpose of carrying out the provisions of this Section 5
and taking any action and executing any instruments that the Collateral Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality
of the foregoing, so long as the Collateral Agent shall be entitled under this Section 5 to make collections in respect of
the Collateral, the Collateral Agent shall have the right and power to receive, endorse and collect all checks made payable to
the order of Grantor representing any dividend, payment or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.

 

5.11
Perfection and Recordation. The Grantor hereby authorizes the Collateral Agent to (a) file Uniform Commercial Code
financing statements describing the Collateral as “all assets” or “all personal property and fixtures”
of the Grantor (provided that no such description shall be deemed to modify the description of Collateral set forth in Section 3),
(b) file all necessary agreements, documents, applications and instruments with the USPTO and/or the United States Copyright Office
necessary or desirable for the Collateral Agent to perfect, monitor and maintain the first priority (subject to Permitted Liens)
security interest in the Intellectual Property granted by the Grantor under this Agreement, and (c) take possession of Collateral
and/or take any other action necessary in order for the Collateral Agent to perfect its first priority (subject to Permitted Liens)
security interest in the Collateral.

 

5.12
Termination. When all Secured Obligations shall have been paid in full or converted into Common Stock and all obligations
of the Collateral Agent to the Grantor shall have expired or terminated, this Agreement shall terminate, and the Collateral Agent
shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to or on the order of the Grantor and to be released
and canceled all licenses and rights referred to in Section 5.04(b). The Collateral Agent shall also, at the expense of the
Grantor, execute and deliver to the Grantor upon such termination such Uniform Commercial Code termination statements, certificates
for terminating the liens on the Motor Vehicles and such other documentation as shall be reasonably requested by the Grantor to
effect the termination and release of the liens on the Collateral as required by this Section 5.12. For avoidance of doubt,
following a termination of this Agreement in accordance with this Section 5.12, there shall be no collateral securing the Debentures.

 

    	 

    	 

    

 

5.13
Further Assurances. The Grantor agrees that, from time to time upon the written request of the Secured Party, the Grantor
will execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request
in order fully to effect the purposes of this Agreement. The Collateral Agent shall release any lien covering any asset that has
been disposed of in accordance with the provisions of the Transaction Documents.

 

Section
6. Miscellaneous.

 

6.01
GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE TRANSACTION
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF. EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE INTERPRETATION,
ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY ANY OF THE TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A PARTY
HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED IN THE STATE AND
FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, COUNTY OF NEW YORK (THE “NEW YORK COURTS”). EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE NEW YORK COURTS FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUITE, ACTION OR PROCEEDING, ANY CLAIM THAT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH NEW YORK COURTS, OR SUCH NEW YORK COURTS ARE IMPROPER OR INCONVENIENT VENUE FOR
SUCH PROCEEDING. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE
OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE TRANSACTION DOCUMENTS AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. IF EITHER PARTY SHALL COMMENCE A PROCEEDING
TO ENFORCE ANY PROVISION OF THE TRANSACTION DOCUMENTS, THEN THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE REIMBURSED
FOR ITS REASONABLE ATTORNEYS’ FEES AND OTHER REASONABLE COSTS AND EXPENSES INCURRED IN THE INVESTIGATION, PREPARATION AND
PROSECUTION OF SUCH ACTION OR PROCEEDING.

 

6.02
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY ARISING OUT OF OR RELATING TO THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVERS FOREVER TRIAL BY JURY.

 

    	 

    	 

    

 

6.03
Amendments. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed
by the Grantor and the Collateral Agent.

 

6.04
Agents and Attorneys in Fact. The Collateral Agent may employ agents and attorneys in fact in connection herewith and
shall not be responsible for the negligence or misconduct of any such agents or attorneys in fact selected in good faith.

 

6.05
Expenses. Grantor shall pay on demand all reasonable fees and expenses, including reasonable attorneys’ fees
and expenses, incurred by the Secured Parties in connection with the custody, preservation or sale of, or other realization on,
any of the Collateral or the enforcement or attempt to enforce any of the Secured Obligations which are not performed as and when
required by this Agreement.

 

6.06
Indemnification. The Grantor agrees to pay, indemnify and hold harmless each of the Collateral Agent and its Affiliates,
agents, sub-agents and attorneys-in-fact and their respective officers, directors, employees, agents and advisors, from and against
any and all obligations, claims, damages, losses, penalties, suits, costs, liabilities and expenses (including, without limitation,
the costs, fees and expenses of its legal counsel and of any experts and agents) that may at any time be imposed on, incurred
by or asserted or awarded against any such Person, in each case arising out of or in connection with or resulting from this Agreement
or the other Transaction Documents, as applicable, except to the extent that such claim, damage, loss, liability or expense is
caused by the indemnified party’s gross negligence or willful misconduct as determined by a final and non-appealable judgment
of a court of competent jurisdiction. The foregoing indemnity in this Section shall survive any resignation of the Collateral
Agent.

 

[Signatures
on following page]

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed and delivered as of the day and year
first above written.

 

	 	VAPOR
    CORP.,
	 	as
    Grantor
	 	 	 
	 	By:	
	 	Name:	Jim Martin
	 	Title:	Chief Financial
    Officer

 

	REDWOOD
    MANAGEMENT LLC,	 
	as
    Collateral Agent	 
	 	 
	By 	 	 
	Name:	 	 
	Title:Exhibit
10.3

 

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.

 

Original
Issue Date: June __, 2015

 

$________

 

ORIGINAL
ISSUE DISCOUNT 

SENIOR
SECURED CONVERTIBLE DEBENTURE

DUE
DECEMBER 22, 2015

 

THIS
ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued Original
Issue Discount Senior Secured Convertible Debentures of Vapor Corp., a Delaware corporation (the “Company”),
having its principal place of business at 3001 Griffin Road, Dania Beach, FL 33312 designated as its Original Issue Discount Senior
Secured Convertible Debenture due December 22, 2015 (this Debenture, the “Debenture” and, collectively with the other
Debentures of such series, the “Debentures”).

 

FOR
VALUE RECEIVED, the Company promises to pay to _________ or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $_______ on December 22, 2015 (the “Maturity Date”)
or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions
hereof. This Debenture is subject to the following additional provisions:

 

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

 

    	1

    	 

    

 

“Alternate
Consideration” shall have the meaning set forth in Section 5(e).

 

“Amortization
Payment” shall have the meaning set forth in Section 2(d).

 

“Amortization
Payment Date” shall mean dates Amortization Payments are due as set forth on Appendix A hereto.

 

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

 

“Base
Conversion Price” shall have the meaning set forth in Section 5(b).

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“Buy-In”
shall have the meaning set forth in Section 4(c)(v).

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and
the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any
Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately
after the transaction, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through (c) above.

 

    	2

    	 

    

 

“Conversion”
shall have the meaning ascribed to such term in Section 4.

 

“Conversion
Date” shall have the meaning set forth in Section 4(a).

 

“Conversion
Price” shall have the meaning set forth in Section 4(b).

 

“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.

 

“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with
the terms hereof.

 

“Debenture
Register” shall have the meaning set forth in Section 2(b).

 

“Default
Conversion Price” means 55% of the lowest traded price during the 20 Trading Day-period immediately prior to the applicable
Conversion Date.

 

“DTC”
means the Depository Trust Company.

 

“DWAC”
means Deposit Withdrawal at Custodian as defined by the DTC.

 

“Event
of Default” shall have the meaning set forth in Section 6(a).

 

“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).

 

“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Debenture and accrued and unpaid
interest hereon, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

 

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

 

“Notice
of Conversion” shall have the meaning set forth in Section 4(a).

 

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

 

    	3

    	 

    

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June __, 2015 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

 

“Successor
Entity” shall have the meaning set forth in Section 5(e).

 

Section
2. Amortization, Prepayment and Interest.

 

a)
Payment of Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal
amount of this Debenture at the rate of 10% per annum, which will be due and payable on each Amortization Payment Date, except
as otherwise set forth in this Debenture. In addition to the interest payable under this Section 2(a), this Debenture was issued
for an original issue discount of 5% of the principal amount.

 

b)
Interest Calculations. Subject to Section 2(a), interest shall be calculated on the basis of a 360-day year, consisting
of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder,
has been made. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of this Debenture (the “Debenture Register”).

 

c)
Late Fee. Subject to Section 6(b) of this Debenture, all overdue accrued and unpaid interest to be paid hereunder shall
entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law (the
“Late Fees”) which shall accrue daily from the date such interest is due hereunder through and including the
date of actual payment in full.

 

d)
Amortization Payments. The Company shall repay this Debenture and any accrued but unpaid interest in accordance with the
Amortization Schedule attached as Appendix A (each, an “Amortization Payment”). Each Amortization Payment
shall, at the sole discretion of the Holder, be made in cash (subject to a 25% premium) or in Common Stock valued at the Conversion
Price (or, at any time after the occurrence of any Event of Default, at the Default Conversion Price). The Holder shall notify
the Company within 5 days of any Amortization Payment Date of its election to receive an Amortization Payment in cash or Common
Stock, provided that, in the event the Holder fails to provide any notice to the Company prior to an Amortization Payment Date
of the Holder’s election to receive an Amortization Payment in cash or Common Stock, the Company shall make such Amortization
Payment in cash.

 

    	4

    	 

    

 

e)
Prepayment. At any time upon ten (10) days written notice to the Holder, the Company may prepay any portion of the principal
amount of this Debenture and any accrued and unpaid interest. If the Company exercises its right to prepay any portion of the
Debenture, the Company shall make payment to the Holder of an amount in cash equal to the sum of the then outstanding principal
amount of this Debenture being prepaid and accrued interest thereon multiplied by 125%. The Holder may continue to convert the
Debenture from the date notice of the prepayment is given until the date of the prepayment.

 

Section
3. Registration of Transfers and Exchanges.

 

a)
Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.

 

b)
Investment Representations. This Debenture has been issued subject to certain investment representations of the original
Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement
and applicable federal and state securities laws and regulations.

 

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

 

Section
4. Conversion.

 

a)
Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture
(including principal and accrued but unpaid interest on any principal being converted, if any) shall be convertible, in whole
or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion
limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion,
the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein
the principal amount (and any accrued interest) of this Debenture to be converted and the date on which such conversion shall
be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion,
the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of
Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Conversion form be required by the Company. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest
thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this
Debenture (and accrued interest thereon, if applicable) in an amount equal to the applicable conversion. The Holder and the Company
shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an
objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The
Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less
than the amount stated on the face hereof. 

 

    	5

    	 

    

 

b)
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $0.50, subject to adjustment
herein (the “Conversion Price”). The Conversion Price will be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common
Stock during such measuring period. Notwithstanding the foregoing, at any time after the occurrence of any Event of Default the
Holder may, at such Holder’s option and otherwise in accordance with the provisions for conversion herein, convert all or
any part of this Debenture into Common Stock at the Default Conversion Price. Nothing herein shall limit a Holder’s right
to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue
all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.

 

c)
Mechanics of Conversion.

 

i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion
hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be
converted by (y) the Conversion Price.

 

ii.
Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without
the need for current public information and the Company has received an opinion of counsel to such effect reasonably acceptable
to the Company, shall be free of restrictive legends and trading restrictions (other than those which may then be required by
the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture. All
certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered electronically
through the Depository Trust Company or another established clearing corporation performing similar functions. If the Conversion
Date is prior to the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current
public information, the Conversion Shares shall bear a restrictive legend in substantially the following form, as appropriate:

 

    	6

    	 

    

 

“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. 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, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.”

 

Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company shall obtain a legal opinion to allow for such sales under Rule 144.

 

iii.
Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not
delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall
promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares (but subject to Section 4(e)
of this Debenture); provided, however, that such delivery shall not operate as a waiver by the Company of any such
action the Company may have against the Holder. In the event the Holder of this Debenture shall elect to convert any or all of
the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated
or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason (except as otherwise
provided in the Transaction Documents), unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion
of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond for the benefit of the
Holder which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver
to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per
Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion.
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section
6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall
have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce
damages pursuant to any other Section hereof or under applicable law.

 

    	7

    	 

    

 

v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available
to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery
Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the
Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to
the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements
under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion
Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of
the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture as
required pursuant to the terms hereof.

 

vi.
Reservation of Shares Issuable Upon Conversion. The Company covenants that, following filing of the Authorized Shares Amendment,
it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock a number of shares of
Common Stock at least equal to 300% of the Required Minimum for the sole purpose of issuance upon conversion of this Debenture
and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall (subject
to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions
of Section 5) upon the conversion of the then outstanding principal amount of this Debenture and payment of interest hereunder.
The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable.

 

    	8

    	 

    

 

vii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the
Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.

 

viii.
Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Debenture
shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of
the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than
that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Conversion.

 

d)
Holder’s Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall
not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth
on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group
together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture
with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder
or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Debenture is convertible
(in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Debenture
is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to
be the Holder’s determination of whether this Debenture may be converted (in relation to other securities owned by the Holder
together with any Affiliates) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time
it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following:
(i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent
public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent
setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In
any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Debenture, by the Holder or its Affiliates since the date as of which such number
of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of
the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon conversion of this Debenture held by the Holder. The Holder, upon not less than 61 days’ prior notice to the
Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this Debenture held by the Holder and the Beneficial Ownership
Limitation provisions of this Section 4(d) shall continue to apply. Any such increase or decrease will not be effective until
the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d)
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this Debenture.

 

    	9

    	 

    

 

e)
Limitation on Issuing Shares. Notwithstanding any provision in the Transaction Documents to the contrary, unless and until
the Nasdaq Shareholder Approval has been obtained and deemed effective or is not required, the Company shall not upon the conversion
of any Debenture issued pursuant to the Purchase Agreement issue shares of Common Stock to the extent that such issuance, together
with all previous issuances of Common Stock pursuant to the conversion of Debentures issued pursuant to the Purchase Agreement,
would in the aggregate exceed a number of shares of Common Stock equal to more than 19.99% of its issued and outstanding Common
Stock on the Closing Date. Until Nasdaq Shareholder Approval has been obtained and deemed effective, each Holder shall be entitled
to convert its Debenture only to the extent the total number of shares of Common Stock issuable to the Holder upon conversion
of such Debenture does not exceed the Holder’s pro rata share of 19.99% of the number of issued and outstanding shares of
Common Stock on the Closing Date. Such Holder’s pro rata share shall be the quotient obtained by dividing the Subscription
Amount paid by such Holder, by the total Subscription Amount paid by all Holders pursuant to the Purchase Agreement.

 

Section
5. Certain Adjustments.

 

a)
Stock Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

    	10

    	 

    

 

b)
Subsequent Equity Sales. If at any time while this Debenture is outstanding, the Company or any Subsidiary, as applicable,
sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces
any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price,
the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if
the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no
adjustment will be made under this Section 5(b) in respect of an Exempt Issuance (as defined in the Purchase Agreement). The Company
shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive
Issuance, the Holder will be entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after
the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price.

 

c)
Subsequent Rights Offerings. If at any time the Company grants, issues or sells any Common Stock Equivalents or rights
to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares
of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

    	11

    	 

    

 

d)
Intentionally Omitted.

 

e)
Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange
for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard
to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with
the same effect as if such Successor Entity had been named as the Company herein.

 

    	12

    	 

    

 

f)
Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued
and outstanding.

 

g)
Notice to the Holder.

 

i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5,
the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.

 

ii.
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed
at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder
at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

    	13

    	 

    

 

Section
6. Events of Default.

 

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

 

i.
any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts
owing to the Holder on the Debenture, as and when the same shall become due and payable (whether on a Conversion Date or an Amortization
Payment Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under
clause (B) above, is not cured within 3 Trading Days;

 

ii.
the Company shall fail to observe or perform any other material covenant or agreement contained in the Debenture (other than a
breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed
in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after
notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has
become or should have become aware of such failure;

 

iii.
a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents (including, without limitation, any failure to obtain the Authorized Shares
Shareholder Approval or file the Authorized Shares Amendment in accordance with Section 4.14 of the Purchase Agreement, or any
failure to obtain the Nasdaq Shareholder Approval in accordance with Section 4.15 of the Purchase Agreement) or (B) any other
material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause
(vi) below);

 

iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect
in any material respect as of the date when made or deemed made;

 

v.
the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

vi.
the Company or any Subsidiary shall default (subject to any grace or cure period provided in the applicable agreement, document
or instrument) on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness
for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than
$175,000, whether such indebtedness now exists or shall hereafter be created and (b) results in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise become due and payable;

 

vii.
the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through DTC is no
longer available or “chilled”;

 

    	14

    	 

    

 

viii.
the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose
of all or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction);

 

ix.
the Company shall fail for any reason to deliver certificates to the Holder prior to the third Trading Day after a Conversion
Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement,
of the Company’s intention to not honor requests for conversions of the Debenture in accordance with the terms hereof;

 

x.
the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it
is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);

 

xi.
if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian
or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;

 

xii.
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company
or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty
(60) days;

 

xiii.
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company
or any Subsidiary having an aggregate fair value or repair cost in excess of $175,000, and any such levy, seizure or attachment
shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;

 

xiv.
the Company shall fail to maintain sufficient reserved shares pursuant to Section 4.10 of the Purchase Agreement; or

 

xv.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

 

    	15

    	 

    

 

b)
Remedies Upon Event of Default. If any Event of Default occurs, then the outstanding principal amount of this Debenture,
plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration,
shall become, at the Holder’s election by notice in writing to Company, immediately due and payable in cash at the Mandatory
Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the
interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 2% per month (24% per annum) or the maximum
rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender
this Debenture to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide,
and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and
without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available
to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and
the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant
to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent
thereon.

 

Section
7. Security. The Company’s obligations hereunder are secured pursuant to a security agreement, dated on or about
the date hereof, between the Company and the Collateral Agent named therein.

 

Section
8. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth in the Purchase Agreement or such other facsimile
number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section
8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the
facsimile number or address of the Holder as set forth in the Purchase Agreement, or as appearing on the books of the Company,
or such other facsimile number or address as the Holder may specify for such purposes by notice to the Company delivered in accordance
with this Section 8(a). Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth
on the signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any Trading Day, (iii)
the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv)
upon actual receipt by the party to whom such notice is required to be given.

 

    	16

    	 

    

 

b)
Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation
of the Company to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company.

 

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

 

d)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Debenture or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action
or proceeding.

 

    	17

    	 

    

 

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

 

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

 

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

 

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

 

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

 

*********************

 

(Signature
Pages Follow)

 

    	18

    	 

    

 

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

 

	 	VAPOR CORP.

	 	 
	 	By:	 
	 	Name:	Jim Martin
	 	Title:	Chief Financial
    Officer

 

    	 

    	 

    

 

APPENDIX
A

 

Amortization
Schedule

 

	Date	 	Payment
    Amount (Cash)	 	Payment
    Amount (Common Stock)
	 	 	 	 	 
	9/22/2015	 	[1/3
    of principal] (plus interest) [times 125%]	 	[1/3
    of principal] (plus interest) 
	 	 	 	 	 
	10/22/2015	 	[1/3
    of principal] (plus interest) [times 125%]	 	[1/3
    of principal] (plus interest) 
	 	 	 	 	 
	12/22/2015	 	[1/3
    of principal] (plus interest) [times 125%]	 	[1/3
    of principal] (plus interest)

 

    	 

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Original Issue Discount Senior Secured Convertible Debenture due December
__, 2015 of Vapor Corp., a Nevada corporation (the “Company”), into shares of common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By
the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common
Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d)
of the Exchange Act.

 

The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with
any transfer of the aforesaid shares of Common Stock.

 

	Conversion
    calculations:
	 	Date
    to Effect Conversion:
	 	 
	 	Principal
    Amount of Debenture to be Converted:
	 	 
	 	Conversion
    Price:
	 	 
	 	Number
    of shares of Common Stock to be issued:
	 	 
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	DWAC
    Instructions:
	 	 	 
	 	Broker
    No:	 
	 	Account
    No:	 

 

    	 

    	 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

This
Original Issue Discount Senior Secured Convertible Debenture due on December __, 2015 in the original principal amount of $_______
is issued by Vapor Corp., a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above
referenced Debenture.

 

Dated:

 

	Date
of Conversion

        (or
        for first entry, 

Original Issue Date)
	 	Amount
of Conversion
	 	Aggregate
Principal 

Amount Remaining 

Subsequent to Conversion

        (or
        original Principal Amount)
	 	Company
Attest

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00246-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00246-of-00352.parquet"}]]