Document:

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of January 27, 2016, between Epic Stores Corp.,
a Nevada corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively, the “Purchasers”). 

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of
1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and
sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.

 

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

 

ARTICLE
I. 

DEFINITIONS

 

1.1
  Definitions.  In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms
that are not otherwise defined herein have the meanings given to such terms in the Notes (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1:

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.6.

 

“Action”
shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. 

 

“Board
of Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York or Arizona are authorized or required by law or other governmental
action to close.

 

“Closing(s)”
means the one or more closings of the purchase and sale of the Securities pursuant to Section 2.2.

 

“Closing
Dates” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligations to pay
the

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Subscription
Amount as to such Closing and (ii) the Company’s obligations to deliver the Securities as to such Closing, in each
case, have been satisfied or waived.

 

“Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.0001
per share, and any other class of securities into which such securities may hereafter be
reclassified or changed. 

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock. 

   

“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.

 

“Effective
Date” means the earliest of (a) the
SEC Effective Date, (b) the date that all of the Registrable Securities have been sold
pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance
with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, or (c) following
the one year anniversary of the Closing Date, provided that a holder of Registrable Securities is not an Affiliate of the Company,
the date that all of the Registrable Securities may be sold pursuant to an exemption from registration under Section 4(a)(1)
of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing
written unqualified opinion that resales may then be made by such holders of the Registrable Securities pursuant to such exemption
which opinion shall be in form and substance reasonably acceptable to such holders.

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(q).

 

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

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors, advisors or
independent contractors of the Company pursuant to any stock or option plan or equity incentive plan duly adopted for such purpose,
(b) shares of Common Stock, warrants or options to employees, officers, directors, advisors or independent contractors of the
Company for compensatory purposes, (c) securities upon the exercise or exchange of or conversion of any Securities issued hereunder
and/or other securities exercisable or exchangeable for or convertible

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into
shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or
conversion price of such securities, (d) securities issuable pursuant to any contractual antidilution obligations of the Company
in effect as of the date of this Agreement, provided that such obligations have not been materially amended since the date of
this Agreement, (e) shares of Common Stock issued for consideration other than cash pursuant to a merger, consolidation, acquisition,
or similar business combination approved by the Board of Directors and (f) securities issued pursuant to acquisitions or strategic
transactions approved by the Board of Directors, except for a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

“Filing
Date” means the date the Registration Statement is filed with the Commission.

 

“First
Closing” shall have the meaning ascribed to such term in Section 2.1.

 

“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(jj).

 

“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m). 

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Note”
means the 10% Senior Secured Convertible Promissory Note due, subject to the terms therein, twelve (12) months from the date of
issuance, issued by the Company to the Purchaser hereunder, in the form of Exhibit A attached hereto.

 

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

 

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“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.13(b). 

 

“Principal
Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature
pages hereto next to the heading “Principal Amount” in United States Dollars. 

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened. 

 

“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b). 

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.9.

 

“Registrable
Securities” shall have the meaning ascribed to such term in the Registration Rights Agreement.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit B attached hereto. 

 

“Registration
Statement” means the registration statement that the Company is required to file pursuant to this Agreement to register
the Underlying Shares. The Registration Statement
shall register all Underlying Shares in connection with each Tranche.

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon conversion in full of all Notes
(including Underlying Shares issuable as payment of interest on the Notes), ignoring any conversion or exercise limits set forth
therein, and assuming that the conversion price is at all times on and after the date of determination 100% of the then conversion
price on the Trading Day immediately prior to the date of determination. 

 

“Robinson
Brog” means Robinson Brog Leinwand Greene Genovese & Gluck P.C., with offices located at 875 Third Avenue, 9th Floor,
New York, NY 10022.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

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“SEC
Effective Date” means the date the Registration Statement is declared effective
by the Commission. 

 

“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities”
means the Notes and the Underlying Shares. 

 

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

 

“Security
Agreement” means the Security Agreement, dated the date hereof, among the Company and the Purchasers, in the form of
Exhibit C attached hereto.

 

“Security
Documents” shall mean the Security Agreement,
the Subsidiary Guarantee and any other documents and filings required thereunder in order
to grant the Purchasers a first priority security interest in the assets of the Company and the Subsidiaries as provided in the
Security Agreement, including all UCC-1 filing receipts.

 

“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. 

 

“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes purchased hereunder as specified below
such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds. 

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.13(a).

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.13(b). 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof. 

 

“Subsidiary
Guarantee” means the Subsidiary Guarantee, dated the date hereof, by each Subsidiary in favor of the Purchasers, in
the form of Exhibit D attached hereto.

 

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

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market;

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the
New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to any of the foregoing). 

 

“Tranche(s)”
shall have the meaning ascribed to such term in Section 2.1. 

 

“Transaction
Documents” means this Agreement, the Notes, the Registration Rights Agreement, the Security Agreement, the Subsidiary
Guarantee, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the
transactions contemplated hereunder. 

 

“Transfer
Agent” means Clear Trust LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive, Suite 210, Lutz, Florida 33558, and any successor transfer agent of the Company. 

 

“Transfer
Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent
to issue Underlying Shares pursuant to the Transaction Documents, in the form of Exhibit E attached hereto. 

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Notes and issued and
issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes.

 

 

ARTICLE
II. 

PURCHASE
AND SALE 

 

2.1
  Purchase.  The Purchasers will purchase an aggregate of up to $500,000 in Subscription Amount corresponding
to an aggregate of up to $543,478 in Principal Amount of Notes. The purchase will occur in up to four (4) tranches (each a “Tranche,”
and collectively the “Tranches”), with the first Tranche of $250,000 being closed upon execution of this Agreement
(the “First Closing”). The second Tranche will be for $50,000 and will occur within three (3) Trading Days
of the Filing Date. The third Tranche will be for $50,000 and will occur within three (3) Trading Days of the date that the Company
receives initial comments from the Commission on the Registration Statement or the date that the Company is notified by the Commission
that the Registration Statement will not be reviewed. The fourth Tranche will be for $150,000 and will occur within three (3)
Trading Days of the SEC Effective Date. The Purchasers shall not be
required to fund any of the second through fourth Tranches if clauses (a), (b) and (d) of the Equity Conditions (as defined in
the Notes) are not met on each of the applicable Closing Dates.

 

2.2
  Closing.  On each Closing Date, upon the terms and subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the parties hereto with respect to the First Closing, the Company
agrees to sell, and each Purchaser, severally and not jointly, agrees to purchase, such Purchaser’s Closing Subscription
Amount as set forth on the signature page hereto executed by such Purchaser (an aggregate of up to

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$500,000
in Subscription Amount corresponding to an aggregate of up to $543,478 in Principal Amount of Notes).  At each Closing,
each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to such
Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall
deliver to each Purchaser its respective Note, as determined pursuant to Section 2.3(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.3 deliverable at the First Closing.  Upon satisfaction of
the covenants and conditions set forth in Sections 2.3 and 2.4 for each Closing, each Closing shall occur at the offices
of Robinson Brog or such other location as the parties shall mutually agree.

 

2.3
  Deliveries.

 

(a)
  On or prior to each Closing Date (except as noted), the Company shall deliver or cause to be delivered to each Purchaser
the following:

 

(i)  
as to the First Closing, this Agreement duly executed by the Company;

 

(ii)
 the Transfer Agent Instruction Letter duly executed by the Company and the Transfer Agent; 

 

(iii)
 a Note with a principal amount equal to such Purchaser’s Principal Amount as to the applicable Closing, registered
in the name of such Purchaser; 

 

(iv)
 as to the First Closing, the Registration Rights Agreement, duly executed by the Company; and

 

(v)
as to the First Closing, the Security Agreement, duly executed by the Company and each Subsidiary, along with all of the Security
Documents, including the Subsidiary Guarantee,
duly executed by the parties thereto.

 

(b)
  On or prior to the applicable Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable,
the following:

 

(i)
  as to the First Closing, this Agreement duly executed by such Purchaser; 

 

(ii)
such Purchaser’s Subscription Amount as to the applicable Closing by wire transfer to the account specified in writing by
the Company;

 

(iii)
as to the First Closing, the Registration Rights Agreement duly executed by the Purchaser; and 

 

(iv)
as to the First Closing, the Security Agreement duly executed by the Purchaser.

 

2.4
  Closing Conditions.

 

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(a)
  The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being
met:

 

(i)
 the accuracy in all material respects on the applicable Closing Date of the representations and warranties of the Purchasers
contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)
 all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the applicable Closing
Date shall have been performed; and

 

(iii)
 the delivery by each Purchaser of the items set forth in Section 2.3(b) of this Agreement.

 

(b)
  The respective obligations of the Purchasers hereunder in connection with each Closing are subject to the following conditions
being met:

 

(i)
  the accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties
of the Company contained herein (unless as of a specific date therein);

 

(ii)
 all obligations, covenants and agreements of the Company required to be performed at or prior to the applicable Closing
Date shall have been performed;

 

(iii)
 the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement;

 

(iv)
  there is no existing Event of Default (as defined in the Notes) and no existing event which, with the passage of time or
the giving of notice, would constitute an Event of Default;

 

(v)
  there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

  

(vi)
  from the date hereof to the applicable Closing Date, trading in the Common Stock shall not have been suspended by the Commission  or
the Company’s principal Trading Market and, at any time prior to the applicable Closing Date, trading in securities generally
as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either
by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial
market

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which,
in each case, in the reasonable judgment of such Purchaser makes it impracticable or inadvisable to purchase the Securities at
the applicable Closing.

 

 

ARTICLE
III. 

REPRESENTATIONS
AND WARRANTIES 

 

3.1
  Representations and Warranties of the Company.  Except as set forth in the disclosure schedules provided
by the Company to the Purchasers (the “Disclosure Schedules”), which Disclosure Schedules shall be deemed a
part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser as
of the date hereof:

 

(a)
  Subsidiaries.  All Subsidiaries of the Company are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

(b)
  Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with
the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect
on the legality, validity or enforceability of any Transaction Document; (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a
whole; or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and
no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail
such power and authority or qualification.

  

(c)
  Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into
and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to
carry out its

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obligations
hereunder and thereunder.  The execution and delivery of this Agreement and each of the other Transaction Documents
by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s
stockholders in connection herewith or therewith other than in connection with the Required Approvals.  This Agreement
and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other
equitable remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)
  No Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other
Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions
contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or
any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents; (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in
the creation of any Lien (except Liens in favor of the Purchasers) upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected; or (iii) subject to the Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse Effect.

  

(e)
  Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filing with the Commission of the Registration Statement, (ii) the filings required pursuant to Section 4.14
of this Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of
the Securities and the listing of the Underlying Shares for trading

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thereon
in the time and manner required thereby and (iv) the filing of Form D with the Commission and such filings as are required
to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)
  Issuance of the Securities.  The Securities are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Underlying
Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The
Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying
Shares at least equal to 300% of the Required Minimum on the date hereof.

 

(g)
  Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g ), which Schedule 3.1(g)
shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as
of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of stock options under the Company’s stock option plans, the issuance of shares
of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or
exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange
Act.   No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of the Securities and securities issued to employees and other
service providers of the Company pursuant to the Company’s stock option plans and other than as set forth on Schedule
3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which
the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The
issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities.  There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.

 

    	 	11	 

    	 	 	 

    

(h)
  SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and
other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the one (1) year preceding the date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As
of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 

 

(i)                   
Material Changes; Undisclosed Events, Liabilities or Developments.  Since
the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent
SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission; (iii) the Company has not altered its method of accounting; (iv) the
Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed
or made any agreements to purchase or redeem any shares of its capital stock; and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans and other than as set
forth on Schedule 3.1(i).  The Company does not have pending before the
Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this
Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected
to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets
or financial condition, that would be required to be disclosed by the Company under applicable

    	 	12	 

    	 	 	 

    

securities
laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day
prior to the date that this representation is made. 

 

(j)
  Litigation.  Except as set forth on Schedule 3.1(jj), there is no action, suit, inquiry, notice
of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency
or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely
affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could,
if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, and neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company.   The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act
or the Securities Act.

 

(k)
  Labor Relations.  No labor dispute exists or, to the knowledge of the Company, is imminent with respect
to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the
Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge
of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement,
or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each
such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

(l)
  Compliance.  Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other agreement or

    	 	13	 

    	 	 	 

    

instrument
to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is
or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result
in a Material Adverse Effect.

  

(m)
  Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in
a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material Permit.

 

(n)
  Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all
real property owned by them and good and marketable title in all personal property owned by them that is material to the business
of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves
have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any
real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(o)
  Intellectual Property.  The Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses
and other intellectual property rights and similar rights as described in the SEC Reports as necessary or required for use in
connection with their respective businesses as presently conducted and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither
the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company

    	 	14	 

    	 	 	 

    

and
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(p)
  Transactions with Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers
or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered;
(ii) reimbursement for expenses incurred on behalf of the Company; and (iii) other employee benefits, including stock
option or stock award agreements under any stock option plan of the Company. 

 

(q)
  Sarbanes-Oxley; Internal Accounting Controls.  The Company and the Subsidiaries are in compliance with
any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the
applicable Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and
designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports
it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most
recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date,
there have been no changes in the internal control over financial reporting (as such

    	 	15	 

    	 	 	 

    

term
is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its Subsidiaries.

 

(r)
  Certain Fees.  Other than as set forth on Schedule 3.1(r), no brokerage or finder’s
fees or commissions are or will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction
Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.

  

(s)
  Private Placement.  Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company
to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and
regulations of the Trading Market.

 

(t)
  Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for
the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment
company” subject to registration under the Investment Company Act of 1940, as amended.

 

(u)
  Registration Rights.  Other than the Purchasers and
as set forth on Schedule 3.1(u), no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the Company or any Subsidiaries.

 

(v)
  Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration.  The Company has not, in the twelve (12) months preceding
the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance
requirements.

 

(w)
  Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights

    	 	16	 

    	 	 	 

    

agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(x)
  Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any
of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public
information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions
in securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were
made, not misleading.    The Company acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2
hereof.

 

(y)
  No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth
in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the
Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(z)
  No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold
any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale
only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities
Act.

 

(aa)
  Foreign Corrupt Practices.  Neither the Company nor any Subsidiary, nor to the knowledge of the Company
or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political
activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic
political parties or

    	 	17	 

    	 	 	 

    

campaigns
from corporate funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is  in violation of law; or (iv) violated in any
material respect any provision of FCPA.

 

(bb)
  Accountants.  The Company’s accounting firm is set forth on Schedule 3.1(bb) of the
Disclosure Schedules.  To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting
firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included
in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

 

(cc)
  No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing,
or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the
Company’s ability to perform any of its obligations under any of the Transaction Documents.

 

(dd)
  Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees
that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase
of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement
and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby
by the Company and its representatives.

  

(ee)
  Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid
to the Company’s placement agent in connection with the placement of the Securities.

 

(ff)
  Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted
(i) in accordance with the terms of such stock option plan, and (ii) with an exercise price at least equal to the fair
market value of the Common Stock on the date such stock option would be considered granted under GAAP

    	 	18	 

    	 	 	 

    

and
applicable law. No stock option granted under the Company’s stock option plan has been backdated.  The Company
has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information
regarding the Company or its Subsidiaries or their financial results or prospects.

 

(gg)
  Office of Foreign Assets Control.  Neither the Company nor any Subsidiary nor, to the Company's knowledge,
any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(hh)
  U.S. Real Property Holding Corporation.  The Company is not and has never been a U.S. real property holding
corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify
upon Purchaser’s request.

 

(ii)
  Bank Holding Company Act.  Neither the Company nor any of its Subsidiaries or Affiliates is subject to
the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of
the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates
owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation
by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the
management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(jj)
Indebtedness. Schedule 3.1(jj)
sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required
to be capitalized in accordance with GAAP. Except as set forth on Schedule 3.1(jj), neither the Company nor any Subsidiary
is in default with respect to any Indebtedness.

 

(kk)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state
and local income

    	 	19	 

    	 	 	 

    

and
all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.

 

(ll)
Seniority. Except as set forth on Schedule 3.1(ll), as of each Closing Date, no Indebtedness or other claim against
the Company is senior to the Notes in right of payment, whether with respect to interest or upon liquidation or dissolution, or
otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).

 

(mm)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.

 

3.2
  Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby
represents and warrants as of the date hereof and as of each Closing Date to the Company as follows (unless as of a specific date
therein):

 

(a)
  Organization; Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated
by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of
the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the
part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser,
and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally;

    	 	20	 

    	 	 	 

    

(ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)
  Own Account.  Such Purchaser understands that the Securities are “restricted securities” and
have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities
in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business.

 

(c)
  Purchaser Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof
it is, and on each date on which it converts any Notes it will be an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d)
  Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such
Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete
loss of such investment.

 

(e)
  General Solicitation.  Such Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(f)
  Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder,
such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such
Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing
as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing
the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution
hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct

    	 	21	 

    	 	 	 

    

knowledge
of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.  Other than to other Persons party to this Agreement,
such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including
the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability
of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

The
Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated hereby. 

 

ARTICLE
IV. 

OTHER
AGREEMENTS OF THE PARTIES 

 

4.1
  Transfer Restrictions.

 

(a)
  The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with
any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate
of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.  As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under
this Agreement.

 

(b)
  The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities
in the following form:

 

[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE] HAS [NOT] 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,

    	 	22	 

    	 	 	 

    

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 WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. 

 

The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees
or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice
shall be required of such pledge.  At the appropriate Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or
transfer of the Securities. 

 

(c)
  Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b)
hereof): (i) while a registration statement covering the resale of such security is effective under the Securities Act; (ii) following
any sale of such Underlying Shares pursuant to Rule 144; (iii) if such Underlying Shares are eligible for sale under Rule 144
without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 as
to such Underlying Shares and without volume or manner-of-sale restrictions; or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).
The Company shall upon request of a Purchaser
and at such Purchaser’s expense cause its counsel to issue a legal opinion to the Transfer Agent promptly after any of the
events described in (i)-(iv) in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder
(with a copy to the applicable Purchaser and its broker). If all or any portion of a Note
is converted at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144 and the Company is then in compliance with the current public information requirement
under Rule 144, or if the Underlying Shares may be sold under Rule 144 without the requirement for the Company to be in compliance
with the current public information requirement under Rule 144 as to such Underlying Shares and without volume or manner-of-sale
restrictions, or if such legend is not

    	 	23	 

    	 	 	 

    

otherwise
required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission) then such Underlying Shares shall be issued free of all legends.  The Company agrees that
following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later
than three (3) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing
Underlying Shares issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), instruct
the Transfer Agent to deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from
all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  Certificates for Underlying Shares
subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the
Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.

 

(d)
In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, $1,000 per Trading Day for each Trading Day after the Legend Removal Date until such certificate
is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s
failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall
have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. 

 

(e)
Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any
Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this
understanding.

 

4.2
  Acknowledgment of Dilution.  The Company acknowledges that the issuance of the Securities may result in
dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions.  The
Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation
to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right
of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders
of the Company.

 

4.3
  Furnishing of Information; Public Information.

 

    	 	24	 

    	 	 	 

    

(a)
  Until no Purchaser owns Securities or the two (2)-year anniversary of the last Closing, whichever is earlier, the Company
covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file
(or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements
of the Exchange Act.

 

(b)    At
any time during the period commencing on the six (6)-month anniversary of the Closing Date and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Purchaser’s
other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2%) of
the aggregate Subscription Amount of such Purchaser’s Securities on the day of a Public Information Failure and on every
thirtieth (30th) day (pro-rated for periods totaling less than thirty (30) days) thereafter until the earlier of (a) the date
such Public Information Failure is cured and (b) such time that such public information is no longer required  for the Purchasers
to transfer the Underlying Shares pursuant to Rule 144.  The payments to which a Purchaser shall be entitled pursuant to
this Section 4.3(b) are referred to herein as “Public Information Failure Payments.”  Public Information
Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the
Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief. 

 

 

 

4.4
  Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of
the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that
would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained
before the closing of such subsequent transaction. 

 

    	 	25	 

    	 	 	 

    

4.5
  Conversion and Exercise Procedures.  The form of Notice of Conversion included in the Notes sets forth
the totality of the procedures required of the Purchasers in order to convert the Notes.  Without limiting the preceding
sentences, 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 in order to convert the Note.  No additional legal opinion,
other information or instructions shall be required of the Purchasers to convert their Notes.  The Company shall honor
conversions of the Notes and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth
in the Transaction Documents.

 

4.6
  Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the
Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement
in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company
and the Purchasers.

 

4.7
  Non-Public Information.  Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its
behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding
the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the Company.

 

4.8
  Use of Proceeds.  The Company shall use the net proceeds hereunder for working capital purposes and for
the expenses of this offering and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for
the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in
violation of FCPA or OFAC regulations.

 

4.9
  Indemnification of Purchasers.   Subject to the provisions of this Section 4.9, the Company will
indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any
other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating
to (a) any breach of any of the

    	 	26	 

    	 	 	 

    

representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants
under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or
any violations by such  Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which
constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there
is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for
any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party
in this Agreement or in the other Transaction Documents.  The indemnification required by this Section 4.9 shall be
made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received
or are incurred.  The indemnity agreements contained herein shall be in addition to any cause of action or similar right
of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

4.10
  Reservation and Listing of Securities.

 

(a)
  The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.

 

(b)
    If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less
than 300% of the Required Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend
the Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common
Stock to at least 300% of the Required Minimum at such time, as soon as possible and in any event not later than the 75th day
after such date; provided that the

    	 	27	 

    	 	 	 

    

Company
will not be required at any time to authorize a number of shares of Common Stock greater than the maximum remaining number of
shares of Common Stock that could possibly be issued after such time pursuant to the Transaction Documents.

 

(c)
  The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file
with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to
the Required Minimum on the date of such application; (ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing or quotation on such Trading Market as soon as possible thereafter; (iii) provide to the Purchasers evidence
of such listing or quotation; and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the
Required Minimum on such date on such Trading Market or another Trading Market.

 

4.11
  Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document)
shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless
the same consideration is also offered to all of the parties to this Agreement. Further, the Company shall not make any payment
of principal or interest on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on
the Notes at any applicable time.  For clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers
as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

 

4.12
  Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants
that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, will execute any Short Sales
of any of the Company’s securities during the period commencing with the execution of this Agreement and ending on the date
that the Notes are no longer outstanding (provided that this provision shall not prohibit any sales made where a corresponding
Notice of Conversion is tendered to the Company and the shares received upon such conversion or exercise are used to close out
such sale) (a “Prohibited Short Sale”). Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant
to the press release described in Section 4.14, such Purchaser will maintain the confidentiality of the existence and terms of
this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing,
and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i)
no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the
press release as described in Section 4.14, (ii) except for a Prohibited Short Sale, no Purchaser shall be restricted or prohibited
from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after
the time that the

    	 	28	 

    	 	 	 

    

transactions
contemplated by this Agreement are first publicly announced pursuant to the press release as described in Section 4.14, and (iii)
no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the press release
as described in Section 4.14. 

 

4.13
Right of First Refusal.

(a)
  From the date hereof until the date that
is the 9-month anniversary of the last Closing, upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common
Stock Equivalents or debt for cash consideration, Indebtedness or a combination of units hereof (a “Subsequent Financing”),
the Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent
Financing on the same terms, conditions and price provided for in the Subsequent Financing.

 

(b)
 At least five (5) Trading Days prior to
the closing of the Subsequent Financing, the Company shall deliver to the Purchaser a written notice of its intention to effect
a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Purchaser if it wants to review the details
of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of the Purchaser,
and only upon a request by the Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than one
(1) Trading Day after such request, deliver a Subsequent Financing Notice to the Purchaser. The Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet
or similar document relating thereto as an attachment.

 

(c)
 If the Purchaser desires to participate
in such Subsequent Financing, the Purchaser must provide written notice to the Company that the Purchaser is willing to participate
in the Subsequent Financing, the amount of the Purchaser’s participation, and representing and warranting that the Purchaser
has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.

 

(d)
  If notifications by the Purchaser of its
willingness to participate in the Subsequent Financing (or to cause its designees to participate) are, in the aggregate, less
than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing
on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

(e)
  The Company must provide the Purchaser
with a second Subsequent Financing Notice, and the Purchaser will again have the right of participation set forth above in this
Section 4.13, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason
on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial Subsequent
Financing Notice.

    	 	29	 

    	 	 	 

    

 

(f)
  The Company and the
Purchaser agree that if the Purchaser elects to participate in the Subsequent Financing, the transaction documents related to
the Subsequent Financing shall not include any term or provision whereby the Purchaser shall be required to agree to any restrictions
on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or
grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser.

 

(g)
  Notwithstanding anything
to the contrary in this Section 4.13 and unless otherwise agreed to by the Purchaser, the Company shall either confirm in writing
to the Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its
intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser will not
be in possession of any material, non-public information, by the tenth (10th) Trading Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such transaction has been received by the Purchaser, such
transaction shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries. 

 

(h)
  Notwithstanding the foregoing, this Section
4.13 shall not apply in respect of an Exempt Issuance.

 

4.14
Securities Laws Disclosure; Publicity.
The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press
release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including
the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after
the issuance of such press release, the Company represents to the Purchaser that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company
and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of
the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior
notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of the Purchaser, except: (a) as required by federal securities law in connection with any registration
statement

    	 	30	 

    	 	 	 

    

contemplated
by this Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company
shall provide the Purchaser with prior notice of such disclosure permitted under this clause (b).

 

4.15
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the applicable Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of the Purchaser.

 

 

 

ARTICLE
V. 

MISCELLANEOUS

 

5.1
  Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder
only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the
other parties, if the First Closing has not been consummated on or before January 29, 2016; provided, however, that such termination
will not affect the right of any party to sue for any breach by any other party (or parties).

 

5.2
  Fees and Expenses.  The Company has agreed to reimburse the Purchaser up to $5,000 for its legal fees
at the First Closing. Accordingly, the aggregate amount that the Purchaser is to pay for the Securities at the First Closing shall
be reduced by $5,000 in lieu thereof. The
Company shall deliver to each Purchaser, prior to each Closing, a completed and executed copy of the Closing Statement, attached
hereto as Annex A.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall
pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by
such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company
shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction
letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3
  Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements
and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules.

 

5.4
  Notices.  Any and all notices or other communications or deliveries required or permitted to be provided
hereunder shall be in writing and 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

    	 	31	 

    	 	 	 

    

facsimile
number set forth on the signature pages attached hereto at or prior to 12:00 p.m. (New York City time) on a Trading Day; (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 (2nd) 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.  The
address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5
  Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 67% in
interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived
provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair
the exercise of any such right.

 

5.6
  Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.

 

5.7
  Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties
and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any
or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that
such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchasers.”

 

5.8
  No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.9.

 

5.9
  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 conflicts of law thereof.  Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction
Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute

    	 	32	 

    	 	 	 

    

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 any such court, that such suit, action or proceeding is improper
or is an 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 Agreement
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 law.   If
either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition
to the obligations of the Company under Section 4.9, the prevailing party in such action, suit or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

5.10
  Survival.  The representations and warranties contained herein shall survive the Closings and the delivery
of the Securities.

 

5.11
  Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together
shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and
delivered to each other party, it being understood that the parties need not sign the same counterpart.  In the event
that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with
the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.12
  Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13
  Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting
any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company,
any relevant notice, demand or election in whole or

    	 	33	 

    	 	 	 

    

in
part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of a conversion of
a Note, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion
notice concurrently with the return to such Purchaser of the aggregate conversion price paid to the Company for such shares.

 

5.14
  Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof
(in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate
or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated
with the issuance of such replacement Securities.

 

5.15
  Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including
recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate.

 

5.16
  Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction
Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.17
  Usury.  To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or
in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought
by any Purchaser in order to enforce any right or remedy under any Transaction Document.  Notwithstanding any provision
to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company
under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest
or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated
to pay under the Transaction Documents exceed such Maximum Rate.  It is agreed that if the maximum contract rate of
interest allowed by law

    	 	34	 

    	 	 	 

    

and
applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to
the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction
Documents from the effective date thereof forward, unless such application is precluded by applicable law.  If under
any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness
evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any
such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.

 

5.18
  Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under
any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible
in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create
a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and
it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each
Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.

 

5.19
  Liquidated Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which
such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.20
Saturdays,
Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

5.21
  Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

 

    	 	35	 

    	 	 	 

    

5.22
  WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST
ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY,
UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

 

 

[Signature
Pages Follow] 

  

    	 	36	 

    	 	 	 

    

 

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

 

	EPIC STORES CORP.

                            

                           By: /s/ Brian Davidson

                           Name: Brian Davidson

                           Title: CEO
	Address for Notice:

20805 N 19th Ave H 2

Phoenix, AZ 85027

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK 

SIGNATURE
PAGE FOR PURCHASER FOLLOWS] 

 

 

    	 	37	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO EPIC STORES CORP. 

SECURITIES
PURCHASE AGREEMENT] 

 

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

 

Name
of Purchaser: Old Main Capital, LLC                                                                                                                             

Signature
of Authorized Signatory of Purchaser: /s/ Old Main Capital LLC                                                                              

 

Name
of Authorized Signatory: Mark Rozeboom    
                                                                                                                          

Title
of Authorized Signatory: Managing
Partner                                                                                                                            

Email
Address of Authorized Signatory: ____________________________________                                                                                                            

Facsimile
Number of Authorized Signatory: ____________________________________                                                                                                        

 

Address
for Notice to Purchaser: 

 

 

 

Address
for Delivery of Securities to Purchaser (if not same as address for notice): 

 

 

 

First
Closing Principal Amount: 

  

First
Closing Subscription Amount: 

 

Second
Closing Principal Amount: 

  

Second
Closing Subscription Amount: 

 

Third
Closing Principal Amount: 

  

Third
Closing Subscription Amount: 

 

Fourth
Closing Principal Amount: 

  

    	 	38	 

    	 	 	 

    

Fourth
Closing Subscription Amount: 

 

 

 

EIN
Number: _______________________ 

 

 

    	 	39	 

    	 	 	 

    

Annex
A 

 

CLOSING
STATEMENT

 

Pursuant
to the attached Securities Purchase Agreement, dated as of the date hereof, the purchasers shall purchase Notes from Epic
Stores Corp. (the “Company”). All funds will be wired into an account maintained by the Company. All
funds will be disbursed in accordance with this Closing Statement.

 

Disbursement
Date:January __, 2016

 

 

	I.
                                         PURCHASE PRICE

         
	
		Gross
    Proceeds to be Received 	$
		
	II.DISBURSEMENTS

         
	
			$
			$
			$
			$
			$
		
	Total
    Amount Disbursed:	$
		
		
		
	WIRE
                                         INSTRUCTIONS:

         

         
	
		
	 

         

        Duly
        executed this __ day of January, 2016:

         

        Epic
        Stores Corp.

         

        By:
        ___________________

        Name:

        Title:

         
	
	 	 	 

 

    	 	40	 

    	 	 	 

    

 

DISCLOSURE
SCHEDULES

 

The
following are the Disclosure Schedules (the “Disclosure Schedules”) referred to in that certain Securities
Purchase Agreement, dated as of January 27, 2016 (the “Agreement”), by and between Epic Stores Corp., a Nevada
corporation (the “Company”), and each purchaser identified on the signature pages thereto (each, including
its successors and assigns, a “Purchaser” an collectively, the “Purchasers”).

 

 

Schedule
3.1(a) Subsidiaries

Effective
August 18, 2015, Epic Stores Corp., a Nevada corporation was formed. 

As
a result of the closing of the Exchange Agreement, our principal offices are now located at 20805 North 19th Avenue,
Suite 2, Phoenix, Arizona, USA 85027. As of the date of this prospectus, Epic and its wholly-owned subsidiaries, Epic LLC, Epic
2 and Epic 3, each as defined below, are our sole wholly-owned subsidiaries.

Epic
Stores, L.L.C.  (“Epic 1”) was incorporated on December 2, 2010 as an Arizona limited liability company.
It then formed a company, Epic Stores 2 LLC (“Epic 2”), a Nevada limited liability company, on September 20,
2011. On February 16, 2012, a second company, Epic Stores III LLC (“Epic 3”), a Nevada limited liability company,
was formed.

On
February 11, 2015, Epic Stores LLC (“Epic LLC”), a Nevada limited liability company, was formed. On February
11, 2015, Epic 1 merged with and into Epic LLC, with Epic LLC as the surviving corporation, for the purposes of changing its jurisdiction
of formation from Arizona to Nevada. On May 4, 2015, Epic was incorporated under the laws of the State of Nevada. Pursuant to
a contribution agreement dated May 12, 2015, Epic LLC contributed all of its assets, including all of the membership interests
in Epic 2 and Epic 3, to Epic.

 

Epic
Stores Corp - EIN = 45-5355653

Epic
Stores LLC – EIN 38-3955110

Epic
Stores 2, LLC - EIN 45-3593054

Epic
Stores III, LLC - EIN 45-4675513

  

    	 	41	 

    	 	 	 

    

Schedule
3.1(g) Capitalization

 

The
Company has 687,500,000 shares of Common Stock authorized. As of the date hereof, 38,123,120 shares of Common Stock are issued
and outstanding.

 

	Name and Address of Beneficial Owner	Title of Class	Amount and Nature

of Beneficial Ownership	Percentage

of Class
	Brian Davidson

24654 North Lake Pleasant Parkway Suite 103-269

Peoria, AZ 85383	Common Stock	1,878,188	5.0%
	Zachary Bradford

8778 South Maryland Parkway

Suite 110

Las Vegas, NV 89123	Common Stock	300,943	0.8%
	Bob Riggs

20805 North 19th Avenue, Suite 2

Phoenix, AZ 85027	Common Stock	2,580,893	6.9%
	Wayne Riggs

20805 North 19th Avenue, Suite 2

Phoenix, AZ 85027	Common Stock	5,565,042	14.9%
	Directors and Officers as a group (4 persons)	10,325,066	27.4%
	Water Tigers, LLC

7183 North Via de Amigos

Scottsdale, AZ 85258	Common Stock	2,187,363	5.9%
	Clay Land, LLC

10645 North Tatum Boulevard

Suite 445

Phoenix, AZ 85028	Common Stock	3,540,888	9.5%

 

The
Company has 10,000,000 shares of Preferred Stock authorized. As of the date hereof, no shares of Preferred Stock are issued and
outstanding.

 

Schedule
3.1(h) SEC Reports; Financial Statements

On
January 12, 2016, we came to the conclusion that the following financial statements of our company should not be relied upon:

	 	·	Audited
    annual financial statements for the year ended December 31, 2014 and 2013 included in the Form S-1 filed on August 31, 2015
    and in our Form 8-K filed on June 30, 2015;

 

	 	·	Unaudited
    interim financial statements for the quarter ended June 30, 2015 included in our quarterly report on Form 10-Q  filed
    on August 19, 2015; and

 

	 	·	Unaudited
    interim financial statements for the quarter ended September 30, 2015 included in our quarterly report on Form 10-Q filed
    on November 23, 2015.

The
non-reliance is based on our determination that Atlas Global, LLC does not meet the criteria of being a “variable interest
entity” in accordance with ASC 810-10-15-14(a)(b) and therefore should not be included in our consolidated financial statements.
We came to this conclusion after extensive discussions with our auditors and the Securities and Exchange Commission in connection
with its review of our registration statement on Form S-1.

We
anticipate that our revenues for the periods noted above will increase/(decrease) by

    	 	42	 

    	 	 	 

    

 

	 	·	$(8,995)
    for the three months ended September 30, 2015;

 

	 	·	$(6,663)
    for the nine months ended September 30, 2015;

 

	 	·	$2,362
    for the three months ended June 30, 2015;

 

	 	·	$2,362
    for the six months ended June 30, 2015;

 

	 	·	$(463,771)
    for the year ended December 31, 2014; and

 

	 	·	$(1,306,497)
    for the year ended December 31, 2013. 

In
connection with the foregoing, we also determined that certain shares sold at a discount to existing shareholders should be accounted
for under ASC 718 Compensation – Stock Compensation and recorded as compensation. 

As
a result of the revisions to our accounting treatment as discussed above, we anticipate filing amended reports for the periods
affected as soon as practicable.

 

Schedule
3.1(i) Material Changes; Undisclosed Events, Liabilities or Developments 

 

 

Schedule
3.1(r) Certain Fees

 

None

 

Schedule
3.1(u) Registration Rights 

 

Effective
June 24, 2015, we entered into the Rights Agreement pursuant to which we agreed to register for resale the Registrable Securities
acquired by the investors in our June 2015 private placement financing. Pursuant to the Rights Agreement, we agreed to use our
reasonable best efforts to file a registration statement with the SEC for the resale of the Registrable Securities within 60 days
following the closing of the financing and to use our reasonable best efforts to cause the registration statement to be declared
effective as soon as practicable after the filing thereof, but in any event no later than 90 days following the closing of the
financing.

In
the event that the registration statement, among other things, (i) has not been filed by 60 days following the closing of the
financing, (ii) has not been declared effective by 90 days following the closing of the financing, or (iii) ceases to remain continuously
effective as to all Registrable Securities for more than 10 consecutive days or 20 days during any 12-month period, then we have
agreed to make payments to each investor as liquidated damages in an amount equal to 1.5% of the aggregate amount invested by
each such investor per 30-day period. In addition, we have agreed to keep the registration statement continuously effective until
the earliest to occur of (i) the date on which all of the Registrable Securities registered thereunder have been sold and

    	 	43	 

    	 	 	 

    

(ii)
the date on which all of the Registrable Securities covered by the registration statement may be sold without restriction pursuant
to Rule 144 under the Securities Act.

Effective
October 7, 2015, the Company issued 1,250,000 units of the Company, at a price of $0.20 per unit, for proceeds of $250,000. Each
unit was comprised of one share of common stock in the capital of the Company and one share purchase warrant, with each warrant
being exercisable into one additional share at an exercise price of $0.30 per share for a period of two years after the closing
of the financing. The shares are included in our most recently filed S-1.

 

Effective
November 20, 2015, the Company issued 1,250,000 units of the Company, at a price of $0.20 per unit, for proceeds of $250,000.
Each unit was comprised of one share of common stock in the capital of the Company and one share purchase warrant, with each warrant
being exercisable into one additional share at an exercise price of $0.30 per share for a period of two years after the closing
of the financing. The shares are included in our most recently filed S-1.

 

Effective
December 31, 2015, the Company issued 500,000 shares of common stock in the capital of the Company, at a price of $0.30 per share,
for proceeds of $150,000. The Shareholder was granted piggy back rights.

 

Effective
December 31, 2015, the Company issued 500,000 shares of common stock to one investor at a price of $0.30 per share for total consideration
of $150,000. The Shareholder was granted piggy back rights.

 

	 	Number
    of Warrant Shares	Weighted
    Average Exercise Price
	Balance,
    December 31, 2014	104,167		$	0.24
	Warrants
    granted and assumed	6,265,290			0.73
	Warrants
    expired	—  			—  
	Warrants
    cancelled	104,167			—  
	Warrants
    exercised	—  			—  
	Balance,
    December 31, 2015	6,265,290		$	0.73

  

Schedule
3.1(bb) Accountants

 

Seale
and Beers, CPAs

8250
W Charleston Blvd

Las Vegas, NV 89117

    	 	44	 

    	 	 	 

    

Toll-free 888.727.8251

Fax 888.782.2351

Local
Phone 702.522.1645

 

Schedule
3.1(jj) Indebtedness

 

		1.	On
                                         August 15, 2014, the Company issued two unsecured promissory notes to two investors,
                                         each in the principal amount of $250,000. The notes bear a 16% annual interest rate,
                                         maturing at the earlier of the sale of the Company or December 31, 2018. The notes also
                                         carry provisions that allow the holder to call the balance prior to maturity subject
                                         to early withdrawal penalties as follows: 12% if called in 2015, 8% if called in 2016
                                         and 4% if called in 2017.

 

Subsequent
to the year ended December 31, 2014, the Company and the note holders agreed to settle 50% of their respective balances by way
of the issuance of shares of Epic Corp.'s $0.001 par value common stock. 

		2.	On
                                         January 15, 2015, Epic Corp. issued an unsecured promissory note to an investor in the
                                         principal amount of $100,000. The note bears no interest and is due upon demand.

		3.	On
                                         August 13, 2015, Epic Corp. issued a secured promissory note to an investor in the principal
                                         amount of $195,000. The note carried an original issue discount of $45,000, therefore
                                         $150,000 was received by the Company, net of the discount. The loan will be repaid over
                                         126 equal payments of $1,547 over the six month term and is secured by all assets of
                                         the Company. The original issue discount was recorded as a reduction of the principal
                                         balance and is being amortized over the life of term of the note.

		4.	On
                                         November 3, 2015, Epic Corp. issued a secured promissory note to an investor in the principal
                                         amount of $217,500. The note carried an original issue discount of $67,000, therefore
                                         $150,000 was received by the Company, net of the discount. The loan will be repaid over
                                         126 equal payments of $1,726 and is secured by all assets of the Company. The original
                                         issue discount was recorded as a reduction of the principal balance and will be amortized
                                         over the life of term of the agreement.

		5.	On
                                         November 4, 2015, Epic Corp. issued a secured promissory note to an investor in the principal
                                         amount of $180,461. The note carried an original issue discount of $30,461, therefore
                                         $150,000 was received by the Company, net of the discount. The loan will be repaid over
                                         187 equal payments of $968 and is secured by all assets of the Company. The original
                                         issue discount was recorded as a reduction of the principal balance and will be amortized
                                         over the life of term of the agreement.

		6.	On
                                         November 20, 2015, the board authorized the issuance of 200,000 shares of the Company’s
                                         common stock pursuant to the terms of a letter agreement dated July 24, 2015

    	 	45	 

    	 	 	 

    

between
the Company and Consultant, the Consultant agreed to provide investor relations services to the Company in consideration of the
payment of a monthly fee of $15,000 per month and the issuance to 200,000 Shares for the initial six month term of the Agreement.
The shares were valued at $0.64 per share or $128,000.

		7.	On
                                         November 20, 2015, the board authorized the issuance of 40,000 shares of the Company’s
                                         common stock pursuant to the terms of an investor relations consulting agreement having
                                         an effective date of September 1, 2015 between the Company and Hayden IR, LLC (“Hayden”),
                                         Hayden agreed to provide investor relations services to the Company in consideration
                                         of: (i) the payment to Hayden a monthly fee of $3,500 per month for the first three months
                                         of the term, $5,000 per month for months four through six of the term, $7,500 per month
                                         for months seven through ten of the term, and $8,500 per month for months eleven through
                                         thirteen of the term, and (ii) the issuance to Hayden of 40,000 Shares. The shares were
                                         valued at $0.64 per share or $25,600.

		8.	On
                                         October 7, 2015, the Company issued an aggregate of 500,000 shares of its common stock
                                         an Investor for gross proceeds of $250,000, pursuant to the terms of a subscription agreement
                                         accepted by the Company on October 7, 2015. Subsequent to the investment the Investor
                                         and the Company entered into a rescission agreement dated November 20, 2015 pursuant
                                         to which the Company and the Investor agree that the October 7, 2015 Agreement is rescinded
                                         and deemed null and void as of October 7, 2015. The Investor and the Company have agreed
                                         that Egos will retain the Shares and the Company will retain the Proceeds, however each
                                         will be allocated towards the Investor’s participation in a November 20, 2015 financing
                                         as described below.

		9.	On
                                         November 20, 2015 the Company executed a private placement financing consisting of the
                                         issuance of a total of 2,500,000 units of the Company at a price of $0.20 per Unit, for
                                         total proceeds of $500,000 (including above investors proceeds). Each Unit is be comprised
                                         of one share of common stock in the capital of the Company and one share purchase warrant,
                                         with each warrant being exercisable into one additional Share at an exercise price of
                                         $0.30 per Share for a period of two years after the closing of the financing.

 

		10.	A
                                         Settlement Agreement was entered into as of the 5th day of December, 2015 (the “Effective
                                         Date”), by and between HH-Poca Fiesta, LLC, an Arizona limited liability company,
                                         and Epic Stores, L.L.C., an Arizona limited liability company dba Epic Thrift (“Epic
                                         AZ”), Epic Stores, LLC, a Nevada limited liability company (“Epic NV”),
                                         and Epic Stores Corp., a publicly traded Nevada corporation (“Epic Corp”)
                                         as filed on Form 8-K with the Commission on January 13, 2016.

 

		11.	On
                                         April 16, 2015, Epic Corp. issued a secured convertible promissory note to an investor
                                         in the principal amount of $200,000. The note bears a 23% annual interest rate and matured
                                         on June 30, 2015. The note was convertible into one Class B Unit of Epic LLC. The note
                                         is secured by all assets of Epic Corp. At the time of issuance, the Company evaluated
                                         the conversion feature and determined that the value associated with the conversion feature
                                         was $0.

    	 	46	 

    	 	 	 

    

 

In
connection with the contribution of all of the assets of Epic LLC to Epic Corp., the Company offer the noteholder the opportunity
to convert the note into 352,941 shares of Epic Corp.’s common stock, which represented the pro rata value provided to each
Class B Unit holder at the time of the contribution. The note holder did not accept the proposed terms and as a result the note
was not converted.

 

The
note carries a break-up provision which states that the parties shall use commercially reasonable efforts to negotiate future
financing and convert the then outstanding principal and interest of the note into securities of Epic Corp. The note provided
that, in the event the parties were unable to agree on mutually agreeable terms on or prior to June 30, 2015, the Company was
to pay the noteholder, in addition to any other amounts due and owing under the note, a break-up fee in an amount equal to $50,000.
The contingent balance of $50,000 has been accrued as of September 30, 2015. As the parties were unable to finalize the negotiation
of a future financing by June 30, 2015, this contingent fee became contractually due to the note holder as of July 1, 2015. As
of the date of this Agreement, the Company has only made interest payments and the note is in default. The Company and the note
holder continue to negotiate the final terms of settlement.

 

Schedule
3.1(ll) Seniority

 

None.

    	 	47	 

    	 	 	 

    

 

Exhibit
A

 

Form
of 10% Senior Secured Convertible Promissory Note

    	 	48	 

    	 	 	 

    

 

Exhibit
B

 

Form
of Registration Rights Agreement

 

    	 	49	 

    	 	 	 

    

 

Exhibit
C

 

Form
of Security Agreement

    	 	50	 

    	 	 	 

    

Exhibit
D

 

Form
of Subsidiary Guarantee

    	 	51	 

    	 	 	 

    

 

Exhibit
E

 

Form
of Transfer Agent Instruction Letter

    	 	52NEITHER
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.

 

Original
Issue Date: January 27, 2016

Fixed
Conversion Price (subject to adjustment herein): $0.63

 

Principal
Amount: $271,739

Purchase
Amount: $250,000

 

 

10%
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

DUE
January 27, 2017

 

THIS
10% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued 10% Senior Secured Convertible
Promissory Notes of Epic Stores Corp., a Nevada corporation (the “Company”), having its principal place of
business at 20805 North 19th Avenue, #2, Phoenix, Arizona 85027, designated as its 10% Senior Secured Convertible Promissory Note
due January 27, 2017 (this Note, the “Note” and, collectively with the other Notes of such series, the “Notes”).

 

FOR
VALUE RECEIVED, the Company promises to pay to Old Main Capital, LLC or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $271,739 on January 27, 2017 (the “Maturity
Date”) or such earlier date as this Note 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 Note in accordance with the provisions
hereof. This Note is subject to the following additional provisions:

 

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

 

“Alternate
Conversion Price” means 50% of the lowest VWAP in the thirty (30) days prior to the Conversion Date.

 

“Amortization
Conversion Rate” means the lower of (a) the Fixed Conversion Price or (b) 54% of the lowest VWAP in the twenty (20)
consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Conversion Date.

 

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

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any 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 Subsidiary thereof, (b) there is commenced against the Company or any Subsidiary thereof any such case or proceeding that
is not dismissed within 60 days after commencement, (c) the Company or any 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 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 Subsidiary thereof makes a general assignment for
the benefit of creditors, (f) the Company or any 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 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(b)(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 33% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the
Securities issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges
into or consolidates with the Company and, after giving

    	 	2	 

    	 	 	 

    

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, (d) a replacement at one time or within
a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those
individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members
of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of
the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company
is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

“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
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 Note in accordance with the
terms hereof.

 

“Dilutive
Issuance” shall have the meaning set forth in Section 5(b).

 

“Dilutive
Issuance Notice” shall have the meaning set forth in Section 5(b).

 

“DTC”
means the Depository Trust Company.

 

“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.

 

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

 

“DWAC
Eligible” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements,
including, without limitation, transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation)
by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion
Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting
delivery of the Conversion Shares via DWAC.

 

“Equity
Conditions” means, during the period in question, (a) no Event of Default shall have occurred, (b) the Company has timely
filed (or obtained extensions in respect

    	 	3	 

    	 	 	 

    

thereof
and filed within the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest and/or principal,
the average daily dollar volume of the Common Stock for the previous twenty (20) Trading Days must be greater than $15,000, (d)
the Common Stock must be DWAC Eligible and not subject to a “DTC chill” and (e) the Conversion Shares must be delivered
via an “Automatic Conversion” of principal and/or interest.

 

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

 

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

 

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

 

“Late
Fees” shall have the meaning set forth in Section 2(c).

 

“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Note 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 Note.

 

“New
York Courts” shall have the meaning set forth in Section 7(d).

 

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

 

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

 

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

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of January 27, 2016 among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Company and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.

 

“Registration
Statement” means a registration statement covering the resale of the Underlying Shares by each Holder.

 

“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).

    	 	4	 

    	 	 	 

    

 

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

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTC Bulletin Board is
a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected
in good faith by the holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.

 

Section
2.Amortization and Interest.

 

a)                 
Payment of Interest in Cash or Kind. The Company shall pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Note at the rate of 10% per annum, which interest amount shall be guaranteed for six (6)
months and such interest due on the Note for a period of six (6) months shall be deemed earned as of the Original Issue Date.
All interest payments hereunder will be payable in cash, or subject to the Equity Conditions, in cash or Common Stock in the Company’s
discretion. Accrued and unpaid interest shall be due and payable on each Conversion Date and on the Maturity Date, or as otherwise
set forth herein. 

 

b)                 
Interest Calculations. 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 Note is registered on the records of the Company regarding registration
and transfers of this Note (the “Note Register”).

 

c)                 
Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal
to the lesser of 24% 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. 

 

    	 	5	 

    	 	 	 

    

d)                
Prepayment. At any time upon ten (10) days written notice to the Holder, but subject to the Holder’s conversion rights
set forth herein, the Company may prepay any portion of the principal amount of this Note and any accrued and unpaid interest.
If the Company exercises its right to prepay the Note, 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 Note and interest multiplied by 130%. The Holder may continue to convert
the Note from the date notice of the prepayment is given until the date of the prepayment. 

 

e)                 
Amortization and Installment Payments. At the earlier of the six (6) month anniversary of the Closing Date or the SEC Effective
Date, the Company shall redeem one-twelfth (1/12th) of the face amount of this Note and any accrued but unpaid interest on a bi-weekly
basis in accordance with the Amortization Schedule attached hereto as Schedule 2 (each, an “Amortization Payment”). 
Each Amortization Payment shall, at the option of the Company, be made in cash or, subject to the Equity Conditions, in Common
Stock pursuant to the Amortization Conversion Rate. Notwithstanding any provision in this Note to the contrary, the Company will
not be required to make any Amortization Payment to the extent any such Amortization Payment would result in the Company making
aggregate Amortization Payments in an amount greater than the balance of the Note. Any outstanding unpaid principal and accrued
interest on this Note as of the Maturity Date will be due and payable on the Maturity Date and may be paid in cash or, in the
Company’s discretion, subject to the Equity Conditions, in Common Stock. 

 

Section
3.Registration of Transfers and Exchanges.

 

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

 

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

 

Section
4.Conversion.

 

a)                 
Voluntary Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall
be convertible, in whole or in part, into

    	 	6	 

    	 	 	 

    

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 of this Note 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. To effect conversions
hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount
of this Note, 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 Note in an amount equal to the applicable conversion. The Holder and the
Company shall maintain a Conversion Schedule 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 Note, acknowledge and agree that, by reason of the provisions
of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may
be less than the amount stated on the face hereof.

 

b)                 
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to 64% of the lowest VWAP in the
five (5) Trading Days prior to the Closing Date (the “Fixed Conversion Price”). Notwithstanding anything herein
to the contrary, at any time after the occurrence of any Event of Default the Holder may require the Company to, at such Holder’s
option and otherwise in accordance with the provisions for conversion herein, convert all or any part of this Note into Common
Stock at the Alternate Conversion Price. All such foregoing determinations 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. 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

    	 	7	 

    	 	 	 

    

outstanding
principal amount of this Note to be converted and any accrued and unpaid interest to be converted by (y) the Fixed 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) 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 (which opinion the Company will be responsible for obtaining at its own cost) 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 Note, and (B) a bank check in the amount of accrued and unpaid
interest (if the Company has elected to pay accrued interest in cash). All certificate or certificates required to be delivered
by the Company under this Section 4(c) shall be delivered electronically through the DTC 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 the following
form, as appropriate:

 

“THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT 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.”

 

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, upon request of the

    	 	8	 

    	 	 	 

    

Holder
and at the expense of 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 Note 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 Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that
such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the
event the Holder of this Note shall elect to convert any or all of the outstanding principal or interest 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, unless an injunction from a court, on notice to Holder, restraining
and or enjoining conversion of all or part of this Note shall have been sought. If the injunction is not granted, the Company
shall promptly comply with all conversion obligations herein. In the absence of seeking 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, or at the option of the Holder, as an amount added to the outstanding balance of the Note, as liquidated
damages and not as a penalty, $1,000 per Trading Day 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

    	 	9	 

    	 	 	 

    

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.

 

                                                                 
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 Note 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 Note 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 Note as required pursuant to
the terms hereof.

 

                                                               
vi.                       
Reservation of Shares Issuable Upon Conversion. The Company covenants that 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 Note and payment of interest on this Note, each as herein provided,
free from preemptive rights or any other actual contingent purchase

    	 	10	 

    	 	 	 

    

rights
of Persons other than the Holder (and the other holders of the Notes), 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 Note 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, and, at such times as a Registration Statement covering such shares
is then effective under the Securities Act, will be registered for public resale in accordance with such Registration Statement.

 

                                                             
vii.                       
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
this Note. 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 Fixed 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 Note 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 Note 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 principal and/or interest of this
Note, and a Holder shall not have the right to convert any principal and/or interest of this Note, 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 Note 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 Note 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
(including, without limitation, any

    	 	11	 

    	 	 	 

    

other
Notes) 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 Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of
which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice
of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other
securities owned by the Holder together with any Affiliates) and which principal amount of this Note 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 (2) 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 Note, 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 Note 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 Note 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 Note.

    	 	12	 

    	 	 	 

    

 

Section
5.Certain Adjustments.

 

a)                 
Stock Dividends and Stock Splits. If the Company, at any time while this Note 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 Notes), (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 Fixed 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.

 

b)                 
Subsequent Equity Sales. If, at any time while this Note 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 Fixed 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 Fixed Conversion Price, such issuance shall be deemed to have occurred for less than the Fixed
Conversion Price on such date of the Dilutive Issuance), then the Fixed 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,
if a Dilutive Issuance involves issuance of both Common Stock and Common Stock Equivalents as units, no value will be attributed
to Common Stock Equivalents and the Base Conversion Price will be deemed to be a price per each such unit. Notwithstanding the
foregoing, no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance. 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

    	 	13	 

    	 	 	 

    

not
the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the
Holder is 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 in the Notice of Conversion.

c)                 
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, 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 Note (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).

 

d)                
Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Note, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a
record is taken for such Distribution, 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 participation in such Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).

    	 	14	 

    	 	 	 

    

 

e)                 
Fundamental Transaction. If, at any time while this Note 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 Note, 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 Note), 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 Note
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Note). For purposes of any such conversion, the determination of the Fixed 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 Fixed 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 Note 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 Note and the other Transaction Documents (as defined in the Purchase Agreement) 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

    	 	15	 

    	 	 	 

    

to
such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note
a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note
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 Note (without regard to any limitations on the
conversion of this Note) 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 Note 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 Note 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 Note and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein.

 

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 Fixed Conversion Price. Whenever the Fixed Conversion Price is adjusted pursuant to any provision of this
Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Fixed 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

    	 	16	 

    	 	 	 

    

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 Note, and shall cause to be
delivered to the Holder at its last address as it shall appear upon the Note 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 Note 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.

 

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 Note or (B) interest, liquidated damages and other amounts owing
to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity 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 five (5) Trading Days;

 

                                                                 
ii.                       
the Company shall fail to observe or perform any other covenant or agreement contained in the Notes (and 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) five (5) Trading Days after

    	 	17	 

    	 	 	 

    

notice
of such failure sent by the Holder or by any other Holder to the Company and (B) ten (10) Trading Days after the Company has 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 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 Note, 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 or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;

 

                                                                 
v.                       
the Company or any 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 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 $50,000, 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 (5) Trading Days or the transfer of shares of Common Stock through the DTC
is no longer available or “chilled”;

 

                                                           
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 a Holder prior to the third (3rd) 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 any Notes in accordance with the terms hereof;

 

    	 	18	 

    	 	 	 

    

                                                                 
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.                       
the Company or any Subsidiary shall: (a) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator
of it or any of its properties, (b) admit in writing its inability to pay its debts as they mature, (c) make a general assignment
for the benefit of creditors, (d) be adjudicated a bankrupt 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 (e) 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 (f) 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 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 (as the case may be) in excess of $100,000 individually or in
the aggregate, 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;

 

                                                             
xv.                       
the Company shall fail to file a preliminary Schedule 14A or Schedule 14C with the Commission to increase the number of authorized
shares of Common Stock pursuant to Section 4.10 of the Purchase Agreement within fifteen (15) days following receipt of notice
by the Holder;

 

                                                           
xvi.                       
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 forty-five (45) calendar days; or

    	 	19	 

    	 	 	 

    

 

                                                         
xvii.                       
the Company shall replace the Transfer Agent.

 

 

b)                 
Remedies Upon Event of Default. Subject to the Beneficial Ownership Limitation as set forth in Section 4(d), if any Event
of Default occurs, then the outstanding principal amount of this Note, 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, 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 Note, the interest rate on this Note shall accrue at an additional 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 Note 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 Note 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.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 above, 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 7(a). Any and all
notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally,
by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or
address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of
the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. 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,

    	 	20	 

    	 	 	 

    

(iii)
the second (2nd) 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.

 

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

 

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

 

d)                
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be
governed by and construed and enforced in accordance with the internal laws of the State of 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 Note and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this
Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees
and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

    	 	21	 

    	 	 	 

    

 

e)                 
Amendments; Waiver. Unless otherwise provided for hereunder, no provision of this Note may be amended, modified, supplemented
or waived without the written consent of the Company and the Holder. Any waiver by the Company or the Holder of a breach of any
provision of this Note 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 Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this
Note 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 Note on any other occasion.

 

f)                  
Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain
in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all
other Persons and circumstances. 

 

g)                 
Usury. 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 Note
as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance
of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted
to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

h)                 
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Note
shall be cumulative and in addition to all other remedies available under this Note 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 Note.  The Company covenants to the Holder that there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, 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

    	 	22	 

    	 	 	 

    

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 Note.

 

i)                   
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.

 

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

 

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

 

(Signature
Pages Follow)

    	 	23	 

    	 	 	 

    

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

 

 

	epic
                                         stores corp.

         

         

	By:
                                         /s/ Brian Davidson

        Name:
        Brian Davidson

        Title: CEO

         

        Facsimile
        No. for delivery of Notices: _______________

	
	

 

    	 	24	 

    	 	 	 

    

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the 10% Senior Secured Convertible Promissory Note due January 27, 2017 of
Epic Stores 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 Note, 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 Note to be Converted:

 

Payment
of Interest in Common Stock __ yes __ no

If
yes, $_____ of Interest Accrued on Account of Conversion at Issue.

Number
of Shares of Common Stock to be Issued:

Signature:

Name:

 

Delivery
Instructions:

 

 

    	 	25	 

    	 	 	 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

This
10% Senior Secured Convertible Promissory Note due on January 27, 2017 in the original principal amount of $271,739 is issued
by Epic Stores Corp., a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced
Note.

 

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

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

 

    	 	26	 

    	 	 	 

    

Schedule
2

 

AMORTIZATION
SCHEDULE

 

	Transaction	Amount	Timing
	Principal
    Amount:	$271,739	January
    27, 2016
	Amortization
    Payments	 	 
	First
    Payment		
	Second
    Payment		
	Third
    Payment		
	Fourth
    payment		
	Fifth
    Payment		
	Sixth
    Payment		
	Seventh
    Payment		
	Eighth
    Payment		
	Ninth
    Payment		
	Tenth
    Payment		
	Eleventh
    Payment		
	Twelfth
    Payment		

 

    	 	27

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