AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as
of January ___, 2013, by and among CHANTICLEER HOLDINGS, INC., a Delaware
corporation (the “Parent”), CHANTICLEER RESTAURANTS, LLC a Delaware limited
liability company and a wholly owned subsidiary of Parent (“Purchaser 1”),
CHANTICLEER KITCHENS, LLC, a Delaware limited liability company and a wholly
owned subsidiary of Parent (“Purchaser 2,” and collectively with Purchaser 1,
the “Purchasers”), EXPRESS RESTAURANT HOLDINGS, LLC and EXPRESS RESTAURANT
HOLDINGS BEVERAGE, LLC (collectively, “Express” or the “Seller”), DALLAS SPOON,
LLC, a Texas limited liability company and wholly owned subsidiary of Express
(“Spoon”), and DALLAS SPOON BEVERAGE, LLC, a Texas limited liability company and
wholly owned subsidiary of Express (“Spoon Beverage” and collectively with
Dallas Spoon, the “Companies” collectively with the aforementioned entities, the
“Party” or “Parties”).

 

RECITALS

 

WHEREAS, the Board of Directors of the Parent, the members of each Purchaser,
the members of the Seller, and the members and managers of each Company, have
determined that this Agreement and the transactions contemplated hereby,
including the Mergers (as defined below), are advisable and fair to, and in the
best interests of, the Parent, the Purchasers, the Companies, the Seller, and
their respective owners or stockholders;

 

WHEREAS, the Board of Directors of the Parent, the members of each Purchaser,
the Seller, and the members and managers of each Company have each adopted
resolutions approving the execution of this Agreement and the consummation of
the transactions contemplated hereby;

 

WHEREAS, the Board of Directors of the Parent, the members of each Purchaser,
the members of the Seller, and the members and managers of each Company, have
approved and declared advisable and in the best interests of each respective
Party, this Agreement and the transactions contemplated hereby, and have
determined that this Agreement and the transactions contemplated hereby,
including the Mergers, are fair to and in the best interests of their respective
owners or stockholders;

 

WHEREAS, each of the Parent, the Purchasers, the Seller, and the Companies
desire to make certain representations, warranties, covenants and agreements in
connection with this Agreement; and

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1              Definitions. The following terms, as used herein, shall have
the following meanings:

 

 

 

 

(a)                “Action” means any action, claim, dispute, proceeding, suit
or investigation (whether civil, criminal, administrative or investigative), or
any appeal therefrom.

 

(b)               “Affiliate” means any Person, a spouse of such Person, any
child or parent sharing the same household with such Person, any director or
officer of such Person, and any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such Person.

 

(c)                “Agreement” means this Agreement and Plan of Merger and shall
include all of the Schedules and Exhibits attached hereto.

 

(d)               “Alternative Transaction” has the meaning assigned to it in
Section 6.4.

 

(e)                “Annual Financial Statements” has the meaning assigned to it
in Section 4.8(a).

 

(f)                “Approval” means any approval, authorization, consent,
license, franchise, order, registration, permit or other confirmation of or by,
or filing with, a Person.

 

(g)               “Business Day” means any day other than a Saturday, a Sunday,
a legal holiday in the State of Delaware or the State of North Carolina or the
State of Texas or a day on which commercial banks in the State of Delaware or
the State of North Carolina or the State of Texas are permitted or authorized to
close.

 

(h)               “Certificates of Merger” has the meaning assigned to it in
Section 2.3.

 

(i)                 “Closing” and “Closing Date” have the meanings assigned to
them in Section 2.2.

 

(j)                 “Code” means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.

 

(k)               “Company Employee Plans” has the meaning assigned to it in
Section 4.16(a).

 

(l)                 “Company Employee Benefit Plans” means a qualified, defined
contribution, employee benefit (ERISA) plan designed to invest primarily in the
equity of a Company.

 

(m)             “Contracts” has the meaning assigned to it in Section 4.10(b).

 

(n)               “Damages” means any claim, loss, deficiency (financial or
otherwise), Liability, cost or expense (including, without limitation,
reasonable attorneys’ fees, costs and expenses) or damage of any kind or nature
whatsoever.

 

(o)               “Effective Time” has the meaning assigned to it in
Section 2.3.

 

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(p)               “Environmental Laws” means all currently existing foreign,
federal, state and local laws, regulations, rules and ordinances relating to
pollution or protection of the environment or human health and safety,
including, without limitation, laws relating to releases or threatened releases
of Hazardous Materials into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, release, transport or handling of
Hazardous Materials and all laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials, and all laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural resources.

 

(q)               “ERISA” has the meaning assigned to it in Section 4.16(a).

 

(r)                 “Financial Statements” has the meaning assigned to it in
Section 4.8(a).

 

(s)                “GAAP” means United States generally accepted accounting
principles.

 

(t)                 “Governmental Authority” means any United States federal,
state, local, foreign or other governmental, administrative or regulatory
authority, body, agency, court, tribunal or similar entity.

 

(u)               “Hazardous Materials” means any substance: (i) the presence of
which requires or may require investigation or remediation of any kind under any
Environmental Laws; (ii) which is defined as “hazardous waste,” “hazardous
material,” “residual waste,” “hazardous substance,” “pollutant” or “contaminant”
under any federal, state or local statute, regulation, rule or ordinance or
amendments thereto including, without limitation, CERCLA and/or the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) or (iii) which is
otherwise regulated pursuant to any applicable Environmental Law.

 

(v)               “Indemnified Party” means any party entitled to
indemnification pursuant to Article 10 hereof.

 

(w)             “Indemnifying Party” means any party required to indemnify an
Indemnified Party pursuant to Article 10 hereof.

 

(x)               “Intellectual Property” means trademarks, service marks, trade
names, Internet domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and applications
related to the foregoing (collectively, “Trademarks”); patents and industrial
designs (including any continuations, divisionals, continuations-in-part,
renewals, reissues, and applications for any of the foregoing); copyrights
(including any registrations and applications for any of the foregoing);
software; “mask works” (as defined under 17 USC ss. 901) and any registrations
and applications for “mask works”; Trade Secrets; rights of publicity and
privacy relating to the use of the names, likenesses, voices, signatures and
biographical information of real persons.

 

(y)               “Interim Balance Sheets” means the unaudited balance sheets of
the Companies as of December 31, 2013 previously delivered to the Parent.

 

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(z)                “Interim Financial Statements” means the Interim Balance
Sheets together with the unaudited statements of income and cash flow of the
Companies for the six-month period ended December 31, 2013 previously delivered
to the Parent.

 

(aa)            “Knowledge of the Company,” or similar phrases, means the actual
knowledge of [OWNERS].

 

(bb)           “Law” means any federal, state, local or foreign law, statute,
rule, regulation, ordinance, standard, requirement, administrative ruling, order
or process (including, without limitation, any zoning or land use law or
ordinance, building code, Environmental Law, securities, blue sky, civil rights
or occupational health and safety law or regulation) or administrative
interpretation thereof, and any court, or arbitrator’s order or process.

 

(cc)            “Leased Real Property” has the meaning assigned to it in
Section 4.20(b).

 

(dd)          “Liability” means any debt, liability, commitment or obligation of
any kind, character or nature whatsoever, whether known or unknown, secured or
unsecured, accrued, fixed, absolute, contingent or otherwise, and whether due or
to become due.

 

(ee)            “License Agreements” has the meaning assigned to it in
Section 4.11(b).

 

(ff)             “Lien” means any lien, statutory lien, pledge, mortgage,
security interest, charge, encumbrance, easement, right of way, covenant, claim,
restriction, right, option, conditional sale or other title retention agreement
of any kind or nature.

 

(gg)           “Material Adverse Effect” means any change, event, development,
condition, occurrence or effect that is, or would reasonably be expected to be
(a) materially adverse to the business, financial condition, assets,
liabilities, or result of operations of the Companies or the Parent, as the case
may be, taken as a whole, or (b) prevents or materially delays or would
reasonably be expected to prevent or materially delay, consummation of the
Mergers or performance by the Companies of any of their material obligations
under this Agreement, excluding, however, in the case of each of (a) and (b),
any result, event, fact, change or effect resulting from, arising out of or
relating to: (i) general financial or capital market, economic or political
conditions (including, without limitation, any changes arising out of acts of
terrorism or war, extreme or severe weather conditions or other force majeure
events), provided that such changes do not have a substantially disproportionate
impact on the relevant Party or Parties, taken as a whole, relative to other
companies operating in the same industry in which the relevant Party operates,
(ii) the announcement of this Agreement or the pendency of the transactions
contemplated hereby, as the case may be, including, without limitation, any loss
of, or adverse change in, the relationships of the Party with its employees,
licensors, licensees, customers, distributors, partners or suppliers that is
related thereto, (iii) any failure to take any action or the taking of any
action at the written direction, or with the prior written consent, of the
relevant counter-Party hereto, (iv) events or conditions that generally affect
the industry in which a Party hereto operates; or (v) the taking of any action
required by this Agreement or the failure to take any action prohibited by this
Agreement.

 

(hh)           “Mergers” has the meaning assigned to it in Section 2.1.

 

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(ii)               “Parent Common Stock” means the common stock of the Parent.

 

(jj)               “Person” means any individual, partnership, corporation,
Limited Liability Company, association, business trust, joint venture,
governmental entity, business entity or other entity of any kind or nature,
including any business unit of such Person.

 

(kk)           “Party” means a party to the Agreement.

 

(ll)               “Personal Property Leases” has the meaning assigned to it in
Section 4.10(a).

 

(mm)       “Real Property Leases” has the meaning assigned to it in
Section 4.20(b).

 

(nn)           “Representatives” means with respect to any Person, its
stockholders, employees, officers, directors, investment bankers, attorneys,
agents, representatives or Affiliates.

 

(oo)           “SEC Documents” has the meaning assigned to it in Section 5.9(b).

 

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

 

(qq)           “Securities Exchange Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations thereto.

 

(rr)              “Subsidiary” or “Subsidiaries” when used with respect to any
Person or entity means any other Person or entity, whether incorporated or
unincorporated, of which (i) more than fifty percent of the securities or other
ownership interests or (ii) securities or other interests having by their terms
ordinary voting power to elect more than fifty percent of the board of directors
or others performing similar functions with respect to such corporation or other
organization, is directly owned or controlled by such Person or by any one or
more of its Subsidiaries.

 

(ss)             “Surviving Company” has the meaning assigned to it in
Section 2.1.

 

(tt)              “Tax” means any United States federal, state or local or
foreign income, gross receipts, license, severance, occupation, premium,
environmental (including taxes under Code Section 59A), customs, duties,
profits, disability, registration, alternative or add-on minimum, estimated,
withholding, payroll, employment, unemployment insurance, social security (or
similar), excise, sales, use, value-added, occupancy, franchise, real property,
personal property, business and occupation, windfall profits, capital stock,
stamp, transfer, workmen’s compensation or other tax, fee or imposition of any
kind whatsoever, including any interest, penalties, additions, assessments or
deferred liability with respect thereto, whether disputed or not.

 

(uu)           “Tax Audits” has the meaning assigned to it in Section 4.14(e).

 

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(vv)           “Tax Law” means the Law (including any applicable regulations or
any administrative pronouncement) of any Governmental Authority relating to any
Tax.

 

(ww)       “Tax Return” means any federal, state, local or foreign return,
declaration, report, claim for refund, amended return, declaration of estimated
Tax or information return or statement relating to Taxes, and any schedule,
exhibit, attachment or other materials submitted with any of the foregoing, and
any amendment thereto.

 

(xx)           “Third Party Claim” has the meaning assigned to it in
Section 10.4.

 

(yy)           “Trade Secrets” means any and all technology, trade secrets and
other confidential information, know-how, inventions, proprietary processes,
formulae, algorithms, models, and methodologies held for use or used in or
necessary for the conduct of the Company’s or its Subsidiaries’ business as
currently conducted or contemplated to be conducted.

 

1.2              Accounting Terms. All accounting terms not specifically defined
in this Agreement shall be construed in accordance with GAAP consistently
applied.

 

1.3              Singular and Plural Forms. The use herein of the singular form
also denotes the plural form, and the use of the plural form herein also denotes
the singular form, as in each case the context may require.

 

1.4              Gender Forms. The use herein of any gender word (such as “he”
or “his”) includes both the male and female genders.

 

ARTICLE II
THE MERGERS

 

2.1              The Mergers.

 

(a)                Spoon Merger. Upon the terms and subject to the conditions
set forth herein, and in accordance with the relevant provisions of the State of
Texas Limited Liability Company Act, Purchaser 1 shall be merged with and into
Spoon (the “Merger 1”). Spoon shall be the surviving limited liability company
in the merger (“Surviving Company 1”) under the name “Dallas Spoon, L.L.C.” and
shall continue its existence under the Law of the State of Texas. In connection
with Merger 1, the separate limited liability company existence of Purchaser 1
and Spoon’s affiliation with Express shall cease.

 

(b)               Spoon Beverage Merger. Upon the terms and subject to the
conditions set forth herein, and in accordance with the relevant provisions of
the State of Texas Limited Liability Company Act, Purchaser 2 shall be merged
with and into Spoon Beverage (the “Merger 2”). Spoon Beverage shall be the
surviving limited liability company in the merger (“Surviving Company 2”) under
the name “Dallas Spoon Beverage, L.L.C.” and shall continue its existence under
the Law of the State of Texas. In connection with Merger 2, the separate limited
liability company existence of Purchaser 2 and Spoon Beverage’s affiliation with
Express shall cease.

 

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2.2              Closing. The closing of the Mergers (the “Closing”) shall take
place (i) at the offices of Chanticleer Holdings, Inc., 11220 Elm Lane,
Suite 203; Charlotte, North Carolina 28277, or through the simultaneous
exchanging of documents through facsimile, on or about January 31, 2014, but in
any event within three Business Days after the day on which the last to be
fulfilled or waived of the conditions set forth in Articles VII and VIII (other
than those conditions that by their nature are to be fulfilled at the Closing,
but subject to the fulfillment or waiver of such conditions) shall be fulfilled
or waived in accordance with this Agreement, or (ii) at such other place and
time or on such other date as the parties may agree in writing (the “Closing
Date”). Notwithstanding anything to the contrary, if Parent is required to
obtain complete NASDAQ review of this Agreement and transaction contemplated
hereby (the “Nasdaq Review”) then the Closing will be held at the earliest
practicable date following Parent’s receipt of review completion.

 

2.3              Effective Time of the Mergers. The Mergers shall become
effective on the date and at the time at which properly executed certificates of
merger (the “Certificates of Merger”) are duly filed with the Secretary of State
of the State of Texas, or at such later date and time as may be specified
therein. The Certificate of Merger filings shall be made as soon as practicable
on or after the Closing Date. When used in this Agreement, the term “Effective
Time” means the date and time on which such Certificates of Merger are so filed
or such later time as the parties shall designate therein.

 

2.4              Certificate of Formation/Articles of Organization and Operating
Agreements. The Restated Certificate of Formation and/or the Restated Articles
of Organization of Spoon and Spoon Beverage shall, by virtue of the Mergers, be
amended and restated in their entirety to read as set forth in Annex A-1 and
A-2, respectively, to this Agreement and, as so amended and restated, shall be
the Certificate of Formation/Articles of Organization of Surviving Company 1,
and Surviving Company 2, respectively, until thereafter amended as permitted by
Law and this Agreement. The Restated Operating Agreements of the Purchasers (the
“Operating Agreements”), as in effect immediately prior to the Effective Time,
shall, by virtue of the Mergers, be amended and restated in their entirety to
read as set forth in Annex B-1 and B-2 to this Agreement and, as so amended and
restated, shall be the Operating Agreements of Surviving Company 1 and Surviving
Company 2, respectively, until thereafter amended as permitted by Law and this
Agreement.

 

2.5              Officers. The officers of the Purchasers immediately prior to
the Effective Time shall be the officers, respectively, of Surviving Company 1
and Surviving Company 2, respectively until their respective death, permanent
disability, resignation or removal or until their respective successors are duly
elected and qualified.

 

2.6              Allocation. The Purchase Price shall be allocated in accordance
with Schedule 2.6 hereof. After the Closing, the parties shall make consistent
use of the allocation, fair market value and useful lives specified in
Schedule 2.6 for all tax purposes and in all filings, declarations and reports
with the IRS in respect thereof, including the reports required to be filed
under the Code. The Seller shall prepare and deliver IRS Form 8594 to Parent
within forty-five (45) days after the Closing Date to be filed with the IRS.
Parent shall timely and properly prepare, execute, file and deliver all such
documents, forms, and other information as the Seller may reasonably request to
prepare such allocation.

 

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ARTICLE III
CONVERSION OF SHARES

 

3.1              Effect on Membership Interests.

 

(a)                Membership Interests. At the Effective Time, by virtue of the
Mergers and without any action on the part of the Parent, the Purchasers, the
Seller, the Companies, or any owners thereof, the Companies’ membership
interests issued and outstanding immediately prior to the Effective Time, shall
be converted into the right to receive such number of shares according to the
Exchange Ratio in Section 3.1(b) of the Parent’s Units. All of the Companies’
membership interests converted in accordance with this Section 3.1 shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such interests
shall cease to have any rights with respect thereto, except the right to receive
the consideration set forth in this Section 3.1, upon the surrender of such
certificate in accordance with Section 3.3 hereof.

 

(b)               Exchange Ratio. The Seller shall receive an aggregate amount
of one hundred and ninety five thousand (195,000) Parent Units (as hereinafter
defined) (the “Purchase Price”) with each Parent Unit consisting of one (1)
share of common stock of Parent and one (1) five year detachable warrant in
substantially the form of Exhibit 3.1(b) hereto to purchase one (1) share of
common stock of Parent (the “Common Stock”), one half of which will be offered
at an initial exercise price of five dollars and fifty cents per share and the
other one half offered at an initial exercise price of seven dollars per share
(the “Warrants,” collectively with the Common Stock, the “Parent Units”).

 

(c)                Options and Warrants. Any outstanding options or warrants of
the Companies shall be cancelled or be deemed canceled immediately prior to the
Effective Time.

 

3.2              Surrender of Certificates Representing Ownership. At and after
the Effective Time, each member of the Companies shall be entitled to receive
the consideration set forth in Section 3.1 in accordance with Schedule 3.1(b).
At and after the Effective Time, all membership interests of the Companies shall
be deemed cancelled and surrendered to the Parent. Each certificate representing
shares of Parent Common Stock issued upon surrender of each Company’s membership
interests shall bear a legend stating:

 

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
APPLICABLE STATE SECURITIES LAWS AND THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SALE OR TRANSFER
IS EFFECTIVE UNDER THE ACT OR (II) THE TRANSACTION IS EXEMPT FROM REGISTRATION
UNDER THE ACT, AND IF THE ISSUER REQUESTS, AN OPINION SATISFACTORY TO THE
CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

3.3              No Fractional Shares. No certificates or scrip representing
fractional shares of the Parent’s Common Stock and/or Warrants shall be issued
upon the surrender for exchange of certificates representing shares of each
Company’s membership interests. In lieu of any such fractional shares of the
Parent’s Common Stock and/or Warrants, each holder of shares of each Companies
membership interests who would otherwise have been entitled to a fraction of a
share of the Parent’s Common Stock and/or Warrants upon surrender of membership
interests for exchange pursuant to this Article III will be issued one full
share, rounded to the highest number, of the Parent’s Common Stock and/or one
full Warrant in consideration of said fractional share of the Parent’s Common
Stock.

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES

 

Each Company hereby represents and warrants to the Parent and Purchasers, as of
the date hereof and as of the Closing Date, as follows:

 

4.1              Organization and Good Standing. The Companies are limited
liability companies organized and validly existing and in good standing under
the laws of the State of Texas. The Companies have the requisite power and
authority and all material governmental licenses, authorizations, consents and
approvals required to own, operate and lease its properties and assets and to
conduct their business as it is now being owned, operated, leased and conducted.
The Companies are duly qualified or licensed to do business as a limited
liability companies, and is in good standing as limited liability companies, in
every jurisdiction in which the failure to be so qualified or licensed or in
good standing would have a Material Adverse Effect.

 

4.2              Corporate Records. Copies of the articles of organization of
the Companies, certified by the Secretary of State of Texas, and of the
operating agreement of the Companies, certified by the Manager of each Company,
heretofore delivered to the Purchaser are true and complete copies of such
instruments as amended to the date of this Agreement. Such certificate of
formation/articles of organization and operating agreement of the Companies are
in full force and effect. The Companies are not in violation of any provision of
their certificate of formation/articles of organization or operating agreement.

 

4.3              Limited Liability Company Power and Authority. The Companies
have the requisite limited liability company power and authority to execute and
deliver this Agreement, perform its obligations hereunder and consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Companies, the performance by them of their obligations hereunder, and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary limited liability company actions on the part of the
Companies. This Agreement constitutes the legal, valid and binding obligation of
the Companies, enforceable against it in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect relating to creditors’ rights generally
and subject to general principles of equity.

 

4.4              Capitalization.

 

(a)                The authorized membership interests of the Companies consist
solely of common Company membership interests. All common Company membership
interests outstanding immediately prior to Closing are being cancelled
concurrently with the Closing. No preferred membership interests are
outstanding. No membership interests are held as treasury shares, and no
preferred membership interests are held as treasury shares.

 

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(b)               All of the issued and outstanding Company membership interests
are validly issued and free of preemptive rights and were issued in compliance
with all applicable Laws concerning the issuance of securities. There are not
any membership interests of the Companies issued or outstanding or any options,
warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating the Companies to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its membership interests
or securities. There are not any notes, bonds, debentures or other indebtedness
of the Companies having the right to vote (or convertible into or exchangeable
for securities having the right to vote) on any matters upon which the
Companies’ members may vote. There are no outstanding contractual obligations,
commitments, understandings or arrangements of the Companies to repurchase,
redeem or otherwise acquire or make any payment in respect of or measured or
determined based on the value or market price of any membership interests of the
Companies, and there are no irrevocable proxies with respect to membership
interests of the Companies. There are no agreements or arrangements pursuant to
which the Company is or could be required to register shares of Company
membership interests or other securities under the Securities Act.

 

4.5              Subsidiaries. The Companies do not own, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
limited liability company, joint venture or other business association or
entity.

 

4.6              No Violation. Except for the filing of the applicable
Certificates of Merger, neither the execution and delivery of this Agreement by
the Companies, the performance by them of their obligations hereunder, nor the
consummation by it of the transactions contemplated hereby, will (a) contravene
any provision of the certificate of formation or articles of organization or
operating agreement of the Companies; (b) violate, be in conflict with,
constitute a default under, permit the termination of, cause the acceleration
(whether after the giving of notice or the lapse of time or both) of the
maturity of, any debt or obligation of the Companies or binding on a Surviving
Company after the Closing, require the consent of any other party to constitute
a breach of, create a loss of a benefit under, or result in the creation or
imposition of any Lien upon any of the properties or assets of the Companies
under, any note, bond, license, mortgage, indenture, lease, contract, agreement,
instrument or commitment relating to the Companies to which it is a party or by
which it or any of their assets or properties constituting part of the business
of the Companies are bound.

 

4.7              Approvals.

 

(a)                Except as set forth in Schedule 4.7(a) and except for the
filing of the applicable Certificates of Merger, no declaration, filing or
registration with, notice to, or Approval of, any Governmental Authority is
required to be made, obtained or given by or with respect to the Companies in
connection with the execution, delivery or performance by the Companies of this
Agreement, the performance by them of their obligations hereunder or the
consummation by it of the transactions contemplated hereby.

 

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(b)               The Companies have all Approvals required for their operation
and the use and ownership or leasing of their properties and assets that
constitute part of the business, as currently operated, used, owned or leased.
All of such Approvals are valid, in full force and effect and in good standing.
There is no proceeding pending or, to the knowledge of the Companies,
threatened, that disputes the validity of any such Approval or that is likely to
result in the revocation, cancellation or suspension, or any adverse
modification of any such Approval.

 

4.8              Financial Statements; No Undisclosed Liabilities.

 

(a)                The Companies have delivered to the Parent, and Parent
acknowledges the receipt of, true, correct and complete copies of the Companies’
balance sheets as of December 31, 2011, 2012, and 2013 and the statements of
income for the years ended December 31, 2011, 2012, and 2013 (the “Annual
Financial Statements”). The Companies shall deliver to the Purchaser unaudited
financial statements for the monthly periods ended December 31, 2013 and the
related statements of cash flows, once such financial statements have been
prepared by the Companies (the “Alternate Financial Statements,” collectively
with the Annual Financial Statement, the “Financial Statements”). The Financial
Statements are based upon the information contained in the books and records of
the Companies and fairly present, in all material respects, the financial
condition of the Companies as of the dates thereof and results of operations for
the periods referred to therein.

 

(b)               Except for the indebtedness set forth on Schedule 4.8(b) or as
reflected in the Interim Balance Sheet, the Companies do not have, and as a
result of the transactions contemplated by this Agreement, will not have, any
Liabilities (whether absolute, accrued, contingent or otherwise, and whether due
or to become due), except for Liabilities (i) incurred in the ordinary course of
business consistent with past practice since the date of the Interim Balance
Sheet, or (ii) which, individually or in the aggregate, will not have a Material
Adverse Effect.

 

4.9              Absence of Certain Changes.

 

(a)                Since December 31, 2012 and, prior to the date hereof, the
Companies have conducted their business in the ordinary course, consistent with
past practice, and there have not been any events, occurrences or developments
which, individually or in the aggregate, would have a Material Adverse Effect on
the Companies, other than as shown on the Interim Financial Statements:

 

(i)                 any grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director, officer or
employee of the Companies; entering into of any employment, deferred
compensation, supplemental retirement or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Companies; increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or employment
agreements; or increase in or enhancement of any rights or features related to
compensation, bonus or other benefits payable to directors, officers or senior
employees of the Companies, in each case, other than in the ordinary course of
business consistent with past practice.

 

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(ii)               any declaration, setting aside or payment of any distribution
with respect to any membership interests of the Companies or any repurchase,
redemption or other acquisition by the Companies of any outstanding membership
interests or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments which obligate the Companies to
issue, transfer, sell, redeem, repurchase or otherwise acquire any securities;

 

(iii)             any amendment of any material term of any outstanding security
of the Companies;

 

(iv)             any change in any method of accounting or accounting practice
by the Companies, except for any such change which is not material or which is
required by reason of a concurrent change in GAAP; or

 

(v)               any material Tax election made or changed, any material audit
settled or any material amended Tax Returns filed.

 

4.10          Leases of Personal Property; Material Contracts; No Default.

 

(a)                Schedule 4.10(a) hereto sets forth a true and complete list
of each lease of personal property to which the Companies are a party or by
which it or its properties or assets are bound which provides for payments in
excess of $10,000 per annum and which has a remaining term in excess of one year
(collectively, the “Personal Property Leases”). The Companies have delivered or
made available to the Parent a true and complete copy of each of the Personal
Property Leases.

 

(b)               Schedule 4.10(b) hereto sets forth a true and complete list of
all agreements (including, but not limited to any agreements relating to
indebtedness or future expenditures) involving amounts greater than $10,000.00
individually or $25,000.00 in the aggregate, to which the Companies are a party
or by which they or any of their properties or assets are bound (collectively,
the “Contracts”). The Companies have delivered or made available to the Parent a
true and complete copy of each of the Contracts or other agreements listed on
Schedule 4.10(b) hereto.

 

(c)                Except as set forth on Schedule 4.10(c) hereto, the Companies
have performed in all material respects, or is now performing in all material
respects, their obligations under, and are not in default (and would not by the
lapse of time or the giving of notice or both be in default) under, or in breach
or violation of, nor have they received notice of any asserted claim of a
material default by the Companies under, or a material breach or violation by a
Companies of, any of the Personal Property Leases or Contracts and, to the
Knowledge of the Companies, the other party or parties thereto are performing in
all material respects and are not in violation thereunder.

 

4.11          Intellectual Property Matters.

 

(a)                Schedule 4.11(a) sets forth, for all Intellectual Property
owned by the Companies, a complete and accurate list, of all U.S. and foreign:
(i) patents and patent applications; (ii) registered Trademarks and material
unregistered Trademarks; and (iii) copyright registrations, copyright
applications and material unregistered copyrights.

 

12

 

 

(b)               Schedule 4.11(b) sets forth a complete and accurate list of
all agreements granting or obtaining any right to use or practice any rights
under any Intellectual Property, or right to compensation from the Companies by
reason of the use, exploitation, or sale of any Intellectual Property, to which
the Companies are a party or otherwise bound, as licensee or licensor
thereunder, including, without limitation, license agreements, settlement
agreements and covenants not to sue (collectively, the “License Agreements”).

 

(c)                Except as set forth on Schedule 4.11(c): (i) the Companies
own or have the right to use all Intellectual Property, free and clear of all
liens or other encumbrances; (ii) any Intellectual Property owned or used by the
Companies have been duly maintained, is valid and subsisting, in full force and
effect and has not been cancelled, expired or abandoned; to the Knowledge of the
Companies, the Companies have no knowledge that any of their operations
constitute infringement or misappropriation, on any Intellectual Property right
of another Person; (iii) the Companies have not received notice from any third
party regarding any assertion or claim challenging the validity of any
Intellectual Property owned or used by the Companies and the Companies do not
have any Knowledge of any basis for such a claim; (iv) the Companies have not
licensed or sublicensed their rights in any Intellectual Property; and (v) the
Companies have no Knowledge that any third party is misappropriating,
infringing, diluting or violating any Intellectual Property owned by the
Companies;

 

4.12          Litigation. Except as set forth on Schedule 4.12, there is no
Action pending against or affecting or, to the Knowledge of the Companies,
threatened against or affecting, the Companies, or any of their assets,
properties or rights before any court or arbitrator or any other Governmental
Authority.

 

4.13          Compliance with Laws. The Companies are in compliance in all
material respects with all Laws applicable thereto. The Companies are not at
present charged with or, to the Knowledge of the Companies, threatened with any
charge concerning or under any investigation with respect to, any violation, in
any material respect, of any provision of any Law, and the Companies are not in
violation of or in default under, and to the Knowledge of the Companies, no
event has occurred which, with the lapse of time or the giving of notice or
both, would result in the violation of or default under, the terms of any
judgment, decree, order, injunction or writ of any court or other Governmental
Authority.

 

4.14          Taxes.

 

(a)                The Companies have duly and timely filed (or there has been
filed on its behalf) with the appropriate Governmental Authorities all material
Tax Returns required to be filed by them, and all such Tax Returns are true,
correct and complete in all material respects; and timely paid (or properly
accrued on the Companies’ books), or there has been paid on their behalf all
Taxes due from them or claimed to be due from them by any Governmental Authority
(whether or not set forth on any Tax Return);

 

13

 

 

(b)               The Companies have complied in all material respects with all
applicable Tax Laws relating to the payment and withholding of Taxes and has,
within the time and manner prescribed by law, withheld and paid over to the
proper Governmental Authority all amounts required to be withheld and paid over
under all applicable Tax Laws;

 

(c)                There are no Liens for Taxes upon the assets or properties of
the Companies except for statutory Liens for current Taxes not yet due;

 

(d)               The Companies have not requested any extension of time within
which to file any Tax Return in respect of any taxable year which has not since
been filed, and no outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns has been given by or on behalf of the Companies;

 

(e)                No federal, state, local or foreign audits, review, or other
Actions (“Tax Audits”) exist or have been initiated with regard to any Taxes or
Tax Returns of the Companies, and the Companies have not received any notice of
such a Tax Audit;

 

(f)                All Tax deficiencies which have been claimed, proposed or
asserted against the Companies by any taxing authority have been fully paid, and
there are no other Tax Audits by any taxing authority in progress relating to
the Companies or the business of the Companies, nor have the Companies or to the
Companies’ Knowledge, any of their members or officers received any notice from
any taxing authority that it intends to conduct such an audit or investigation.
No issue has been raised by any taxing authority in any current or prior
examination which, by application of the same principles, would reasonably be
expected to result in a proposed deficiency for any subsequent period. The
Companies are not subject to any private letter ruling of the Internal Revenue
Service or any comparable ruling of any other taxing authority;

 

(g)               No claim has been made by a Taxing authority in a jurisdiction
where the Companies do not file Tax Returns to the effect that the Companies is
or may be subject to taxation by that jurisdiction;

 

4.15          Insurance. Schedule 4.15 hereto sets forth a true and complete
list of all insurance policies or binders maintained by or for the benefit of
the Companies and their Parent, officers, employees or agents. The Companies
have delivered or made available to the Parent true and complete copies of such
policies and binders. Except as set forth on Schedule 4.15 hereto, (a) all such
policies or binders are in full force and effect and no premiums due and payable
thereon are delinquent, (b) there are no pending material claims against such
insurance policies or binders by the Companies as to which the insurers have
denied liability, (c) the Companies have complied in all material respects with
the provisions of such policies and (d) there exist no material claims under
such insurance policies or binders that have not been properly and timely
submitted by the Companies to their insurers.

 

4.16          Employee Benefit Plans.

 

(a)                For purposes of this Agreement, the term “Company Employee
Plans” shall mean and include: all Company Employee Benefit Plans, arrangement
or policy applicable to any employee or former employee of the Companies and
each plan, program, policy, agreement or arrangement (written or oral),
providing for compensation, bonuses, profit-sharing, option or other equity
related rights or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured arrangements), health
or medical benefits, disability benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) or other employee benefits of any kind, whether funded or unfunded,
which is maintained, administered or contributed to by the Company and covers
any employee or former employee of the Companies, or under which the Companies
have any Liability contingent or otherwise (including but not limited to each
material “employee benefit plan,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), but excluding any
such plan that is a “multiemployer plan,” as defined in Section 3(37) of ERISA).
Neither the Company nor any of its Affiliates contributes to, or is required to
contribute to, any “multiemployer plan” as defined in Section 3(37) of ERISA.
Schedule 4.16(a) sets forth a true, accurate and complete list of all Company
Employee Plans.

 

14

 

 

(b)               Each Company Employee Plan has been established and maintained
in compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations (including but not limited to ERISA and
the Code) which are applicable to such Company Employee Plan, except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Companies.

 

(c)                Except as set forth on Schedule 4.16(c), (i) no officer or
other employee of the Companies will become entitled to any retirement,
severance or similar benefit or enhanced or accelerated benefit (including any
acceleration of vesting or lapse of repurchase rights or obligations with
respect to any Company Employee Plan or other benefit under any compensation
plan or arrangement of the Company) solely as a result of the transactions
contemplated hereby; and (ii) no payment made or to be made to any current or
former employee of the Companies or any of their Affiliates by reason of the
transactions contemplated hereby (whether alone or in connection with any other
event, including, but not limited to, a termination of employment) will
constitute an “excess parachute payment” within the meaning of Section 280G of
the Code.

 

(d)               The Companies are in compliance in all material respects with
all applicable federal, state, local and foreign statutes, laws (including,
without limitation, common law), judicial decisions, regulations, ordinances,
rules, judgments, orders and codes respecting employment, employment practices,
labor, terms and conditions of employment and wages and hours, and no work
stoppage or labor strike against the Companies are pending or threatened, nor
are the Companies or any Subsidiaries involved in or threatened with any labor
dispute, grievance, or litigation relating to labor matters involving any
employees. There are no suits, Actions, disputes, claims (other than routine
claims for benefits), investigations or audits pending or, to the Knowledge of
the Companies, threatened in connection with any Company Employee Plan.

 

(e)                Schedule 4.16(e) sets forth all management, consulting,
non-compete and employment agreements of the Companies.

 

15

 

 

4.17          Environmental Matters. No written notice, notification, demand,
request for information, citation, summons, complaint or order has been received
by, and no investigation, Action, claim, suit, proceeding or review is pending
or, to the Knowledge of the Companies, threatened by any Person against, the
Companies or any Subsidiaries, and no penalty has been assessed against the
Companies or any Subsidiaries, in each case, with respect to any matters
relating to or arising out of any Environmental Law; the Companies are in
compliance with all Environmental Laws; and there are no Liabilities of or
relating to the Companies relating to or arising out of any Environmental Law
and there is no existing condition, situation or set of circumstances which
could reasonably be expected to result in such a Liability.

 

4.18          Labor Matters. There is no unfair labor practice charge or
complaint against the Companies or any Subsidiaries pending before the National
Labor Relations Board, any state labor relations board or any court or tribunal
and, to the Knowledge of the Companies, none is or has been threatened; there is
no labor strike, dispute, request for representation, organizing activity,
slowdown or stoppage actually pending against or affecting the Companies or any
Subsidiaries and, to the Knowledge of the Companies, none is or has been
threatened. No individual who has performed services for or on behalf of the
Companies, and who has been treated by the Companies as an independent
contractor, is classifiable as a “leased employee,” within the meaning of
Section 414(n)(2) of the Code, with respect to the Companies, or with respect to
any customer of the Companies.

 

4.19          Personal Property. Schedule 4.19 hereto sets forth a true and
complete list of all equipment and fixtures having an acquisition cost of
$25,000 or more owned by the Companies.

 

4.20          Real Property.

 

(a)                The Companies do not own any real property.

 

(b)               Set forth on Schedule 4.20(b) hereto is a list of all leases,
subleases, licenses and other agreements (collectively, the “Real Property
Leases”) under which the Companies use or occupy or have the right to use or
occupy any real property used by the Companies (the land, buildings and other
improvements covered by the Real Property Leases being herein called the “Leased
Real Property”).

 

(c)                The Companies have performed in all material respects, or is
now performing in all material respects, its obligations under, and is not in
default (and would not by the lapse of time or the giving of notice or both be
in default) under, or in breach or violation of, nor has it received notice of
any asserted claim of a material default by the Companies under, or a material
breach or violation by the Companies of any of the Real Property Leases and, to
the Knowledge of the Companies, the other party or parties thereto are
performing in all material respects and are not in violation thereunder.

 

4.21          Accounts Receivable. The accounts receivable of the Companies
(i) arose from bona fide transactions in the ordinary course of business, are
payable on ordinary trade terms and are, to the Knowledge of the Companies, not
subject to any valid setoff, counterclaims or defense, and (ii) are legal, valid
and binding obligations of the respective debtors.

 

16

 

 

4.22          Inventory. Schedule 4.22 sets forth the Companies’ inventory as of
December 31, 2013.

 

4.23          Finders’ or Advisors’ Fees. Except as set forth in Schedule 4.23,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Companies or the
Companies’ members who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.

 

4.24          Related-Party Transactions. Except as set forth in Schedule 4.24,
no employee, or officer of the Companies or member of his or her immediate
family is currently indebted to the Companies, nor are the Companies indebted
(or committed to make loans or extend or guarantee credit) to any of such
individuals. No employee or officer of the Companies and no member of the
immediate family of any employee, officer, or director of the Companies are
directly or indirectly interested in any material contract with the Companies.

 

4.25          Required Vote. The affirmative vote or consent of the holders of a
majority of the membership interests of the Companies with respect to which
votes are entitled to be cast in connection with the approval of this Agreement,
is the only vote or consent of the holders of any class or series of equity
interests of the Companies necessary to approve this Agreement or the Merger.
Such vote or consent has been obtained prior to execution of this Agreement.

 

4.26          Disclosure. Neither this Agreement, nor any of the Exhibits or
Schedules hereto nor any list, certificate, schedule or other instrument,
document, agreement or writing furnished or to be furnished to, or made with
Purchasers or Parent pursuant hereto or in connection with the negotiation,
execution or performance hereof, contains any untrue statement by the Companies
or the Seller of a material fact or omits to state any material fact necessary
to make any statement herein or therein not misleading.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERs AND PARENT

 

Each of the Parent and the Purchasers hereby represent and warrant to the Seller
and Companies as follows:

 

5.1              Organization and Good Standing. Each Purchaser is a limited
liability company, and the Parent is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and have
the requisite power and authority and all governmental licenses, authorizations,
consents and approvals required to own, operate and lease their properties and
assets and to conduct their business as it is now being owned, operated, leased
and conducted. Each Purchaser and Parent are duly qualified or licensed to do
business as a foreign corporation or foreign limited liability companies, as
applicable, and are in good standing as a foreign corporation or foreign limited
liability company, as applicable, in every jurisdiction in which the failure to
be so qualified or licensed or in good standing would have a Material Adverse
Effect on a Purchaser’s or Parent’s business or operations or would adversely
affect its ability to consummate the transactions provided for or contemplated
by this Agreement.

 

5.2              Corporate Records. Copies of the certificate of incorporation
of the Parent and the articles of organization or certificate of formation, as
applicable, of the Purchasers, certified by the Secretary of State of the State
of Delaware, and of the by-laws of the Parent and the limited liability company
agreements of the Purchasers, certified by the Secretary of such company,
heretofore delivered to the Companies are true and complete copies of such
instruments as amended to the date of this Agreement. Such governing documents
of the Parent and Purchasers are in full force and effect. The Parent and
Purchasers are not in violation of any provision of their respective governing
documents.

  

17

 

 

5.3              Corporate Power and Authority. Each of the Parent and
Purchasers has the requisite corporate or limited liability company power and
authority to execute and deliver this Agreement, perform its obligations
hereunder and consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by each of the Parent and each Purchaser, the
performance by each of its obligations hereunder and the consummation by each of
the transactions contemplated hereby have been duly authorized by all necessary
corporate and company actions of the Parent and Purchaser. This Agreement
constitutes the legal, valid and binding obligation of each of the Parent and
each Purchaser, enforceable against each in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect relating to creditors’ rights generally
and subject to general principles of equity.

 

5.4              Finders’ or Advisors’ Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of the Parent and/or Purchasers who might be entitled to any
fee or commission in connection with the transactions contemplated by this
Agreement.

 

5.5              No Violation. Except for the filing of the Certificates of
Merger and any filings required pursuant to federal or state securities laws,
neither the execution and delivery of this Agreement by the Parent and
Purchasers, the performance by Parent and Purchasers of their respective
obligations hereunder, nor the consummation by Parent and Purchasers of the
transactions contemplated hereby, will (a) contravene any provision of the
governing documents of the Parent or Purchasers; (b) violate, be in conflict
with, constitute a default under, permit the termination of, cause the
acceleration (whether after the giving of notice or the lapse of time or both)
of the maturity of, any debt or obligation of the Parent or Purchasers, require
the consent of any other party to, constitute a breach of, create a loss of a
benefit under, or result in the creation or imposition of any Lien upon any of
the properties or assets of the Parent or Purchasers under, any note, bond,
license, mortgage, indenture, lease, contract, agreement, instrument or
commitment relating to the Parent or Purchasers to which it is a party or by
which it or any of its assets or properties constituting part of its businesses
is bound.

 

5.6              Capitalization. As of the date of this Agreement, Parent is
authorized to issue 20,000,000 shares of common stock, of which, 5,362,897
shares were issued and outstanding. All issued and outstanding shares of capital
stock of the Parent are validly issued, fully paid and nonassessable. Except as
set forth on Schedule 5.7 hereto, outside of the outstanding shares disclosed in
this Section 5.7, there are no contracts existing as of the date of this
Agreement relating to the issuance, sale or transfer of any equity securities or
other securities of Parent.

 

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5.7              Parent’s Common Stock and NASDAQ Compliance.

 

(a)                At the time of each issuance of Parent’s Common Stock
pursuant to this Agreement, including any issuance pursuant to the exercise of
any Warrant, and at the time of issuance of each Warrant, pursuant to this
Agreement, Parent Common Stock is not, and will not be, subject to any
preemptive rights, rights of first refusal, subscription or similar rights that
have not been properly waived. At the time of each issuance of Parent Common
Stock pursuant to this Agreement, such Parent Common Stock, including any
issuance pursuant to the exercise of any Warrant, and at the time of issuance of
each Warrant, pursuant to this Agreement, has been, and will be, duly authorized
by all necessary corporate action on the part of Parent, and any Parent Common
Stock issued pursuant to the terms of this Agreement will be validly issued,
fully paid and non-assessable and free from any Lien.

 

5.8              Issuance Valid; SEC Filings; Financial Statements.

 

(a)                At the time of each issuance of Parent Common Stock pursuant
to this Agreement, such issuance will be exempt from the registration
requirements of the Securities Act and all applicable state securities laws, and
will have been issued in compliance with all applicable rules and regulations of
the NASDAQ Stock Market (or such other securities exchange or quoting service
that makes the primary market in shares of Parent Common Stock if it is not then
listed on the NASDAQ Stock Market). Upon the effectiveness of a registration
statement relating to, or covering, any shares of Parent Common Stock issued to
the Seller pursuant to this Agreement, such shares of Parent Common Stock and
shares underlying the Warrants shall be freely tradable under the Securities Act
by the holder thereof without restriction under the Securities Act.

 

5.9              Quotation of Parent Common Stock. At the time of Closing, the
shares of Parent Common Stock issued pursuant to this Agreement shall be
approved for quotation on The NASDAQ Stock Market or other national securities
exchange, subject only to official notice of issuance.

 

5.10          Disclosure. Neither this Agreement, nor any of the Exhibits or
Schedules hereto nor any list, certificate, schedule or other instrument,
document, agreement or writing furnished or to be furnished to, or made with a
Company or a Seller pursuant hereto or in connection with the negotiation,
execution or performance hereof, contains any untrue statement by the Parent or
Purchasers of a material fact or omits to state any material fact necessary to
make any statement herein or therein not misleading.

 

ARTICLE VI
COVENANTS

 

6.1              Each Company covenants and agrees that from the date of this
Agreement until the Closing Date, except as otherwise consented to by the Parent
in writing:

 

(a)                Conduct of the Companies. From the date of this Agreement
until the Closing, the Companies shall conduct their businesses in the ordinary
course consistent with past practice and shall use its commercially reasonable
best efforts to preserve intact its business organization.

 

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Without limiting the generality of the foregoing and, without the prior written
consent of the Parent, from the date of this Agreement until the Closing:

 

(i)                 The Companies will not adopt or propose any change in its
certificate of formation or articles of organization or operating agreement;

 

(ii)               The Companies will not adopt a plan or agreement of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Companies;

 

(iii)             The Companies will not issue or sell any equity of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any equity of any class or series
of the Companies;

 

(iv)             The Companies will not (A) split, combine, subdivide or
reclassify its outstanding equity, or (B) declare, set aside or pay any
distribution payable in cash, equity or property with respect to their equity;

 

(v)               The Companies will not redeem, purchase or otherwise acquire
directly or indirectly any equity of the Companies;

 

(vi)             The Companies will not amend the terms (including the terms
relating to accelerating the vesting or lapse of repurchase rights or
obligations) of any employee equity options or other equity based awards;

 

(vii)           The Companies will not (A) grant any severance or termination
pay to (or amend any such existing arrangement with) any officer or employee of
the Companies, (B) enter into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
officer or employee of the Companies, (C) increase any benefits payable under
any existing severance or termination pay policies or employment agreements,
(D) increase (or amend the terms of) any compensation, bonus or other benefits
payable to officers or employees of the Companies, or (E) permit any officer or
employee who is not already a party to an agreement or a participant in a plan
providing benefits upon or following a “change in control” to become a party to
any such agreement or a participant in any such plan;

 

(viii)         The Companies will not acquire any assets or property of any
other Person except in the ordinary course of business consistent with past
practice;

 

(ix)             The Companies will not sell, lease, license or otherwise
dispose of any assets or property except pursuant to existing contracts or
commitments or except in the ordinary course of business consistent with past
practice;

 

(x)               The Companies will not enter into any joint venture,
partnership or other similar arrangement;

 

20

 

 

(xi)             The Companies will not take any action that would make any
representation or warranty of the Companies hereunder inaccurate in any material
respect at, or as of any time prior to, the Closing Date;

 

(xii)           The Companies will not make or change any material Tax election,
settle any material audit or file any material amended Tax Returns;

 

(xiii)         The Companies will not incur any indebtedness, other than
ordinary trade payables incurred in the ordinary course (it being understood and
agreed that the accrual of interest with respect to indebtedness in existence on
the date of this Agreement shall not be deemed to be incurrence of
indebtedness); and

 

(xiv)         The Companies will not agree or commit to do any of the foregoing.

 

6.2              The Parent covenants and agrees that from the date of this
Agreement until the Closing Date, except as otherwise consented to by the
Companies in writing:

 

(i)                 The Parent and the Purchasers will not take any action that
would make any representation or warranty of the Parent and the Purchasers
hereunder inaccurate in any material respect at, or as of any time prior to, the
Closing Date;

 

(ii)               The Parent shall promptly seek Nasdaq review of the quotation
of all shares of Parent Common Stock to be issued hereunder, if required, and
shall promptly respond to any Nasdaq inquiry or request for information relating
to such Nasdaq review;

 

(iii)             The Parent will timely file all SEC Documents required to be
filed by it;

 

(iv)             The Parent will not take any action that would make any
representation or warranty of the Parent hereunder inaccurate in any material
respect at, or as of any time prior to, the Closing Date.

 

(v)               Conduct of the Parent. From the date of this Agreement until
the Closing, the Parent shall conduct its business in the ordinary course
consistent with past practice and shall use its commercially reasonable best
efforts to preserve intact its business organization.

 

(vi)             The Parent will not agree or commit to do any of the foregoing.

 

6.3              Consents and Approvals. The Companies shall use their best
efforts to obtain at the earliest practicable date, and in any event prior to
Closing, all Approvals reasonably requested by the Parent with respect to the
Companies’ Contracts or that are necessary to obtain fulfillment of the
conditions set forth in Article VII hereof.

 

6.4              No Solicitation of Transaction. The Companies and Seller shall
not, and shall use their best efforts to cause their Representatives not to,
directly or indirectly, take any of the following actions with any Person other
than the Parent and Purchasers without the prior written consent of the Parent:
(A) solicit, initiate, facilitate or encourage, or furnish information with
respect to the Companies, in connection with, any inquiry, proposal or offer
with respect to any merger, consolidation or other business combination
involving the Companies or the acquisition of all or a substantial portion of
the assets of, or any securities of, the Companies (an “Alternative
Transaction”); (B) negotiate, discuss, explore or otherwise communicate or
cooperate in any way with any third party with respect to any Alternative
Transaction; or (C) enter into any agreement, arrangement or understanding with
respect to an Alternative Transaction or requiring the Companies to abandon,
terminate or refrain from consummating a transaction with the Parent and the
Purchasers.

 

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6.5              Payment of Taxes. The Seller, on the one hand, and the Parent,
on the other hand, will each pay, or reimburse the other party for, 50% of the
aggregate sales, use and transfer taxes resulting from the consummation of the
Mergers and the transactions contemplated by this Agreement.

 

6.6              Access and Investigation. Between the date of this Agreement
and the Closing Date, and upon reasonable advance notice received from Parent,
the Companies shall: (a) afford Parent and its representatives full and free
access, during regular business hours, to the Companies’ personnel, properties,
assets, contracts, licenses, permits, books and records and other documents and
data, such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of the Companies; and (b) otherwise
cooperate and assist, to the extent reasonably requested by Parent, with
Parent’s investigation of the properties, assets and financial condition related
to the Companies.

 

6.7              Company Licensing. Seller, including any and all subsidiaries,
officers, and employees of Seller, shall be removed from, and released of all
ongoing obligations and liabilities under, all liquor and other licenses of the
Companies, and the Parent and the Companies will use their commercially
reasonable best efforts to facilitate the installation of Michael D. Pruitt,
Chief Executive Officer of the Parent and President of the Purchasers, as the
correct party under such licenses and permits. The Companies and Seller shall
reasonably assist in the transfer of all Company Licensing.

 

6.8              Replacement Guaranties. Parent shall deliver replacement
guaranties to the landlords under all real property leases of the Companies. The
Seller, the Companies and their Affiliates shall be released from any and all
guarantee obligations with respect to any Company real property leases.

 

ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS AND/OR PARENT

 

The obligations of the Purchasers and/or Parent to effect the Closing hereunder
are subject to the satisfaction, at or prior to the Closing, of all of the
following conditions:

 

7.1              Representations and Warranties True. The representations and
warranties contained in Article IV hereof, in the Schedules to this Agreement,
and in all certificates delivered by the Companies to the Parent pursuant hereto
or in connection with the transactions contemplated hereby shall be true and
accurate in all material respects as of the date when made and shall be deemed
to be made again at and as of the Closing Date and shall then be true and
accurate in all material respects (except for changes contemplated by this
Agreement and except for representations and warranties that by their terms
speak as of the date of this Agreement or some other date which shall be true
and correct only as of such date).

 

22

 

 

7.2              Performance of Covenants. The Companies shall have performed
and complied with each and every covenant, agreement and condition required by
this Agreement to be performed or complied with by them prior to or on the
Closing Date.

 

7.3              No Governmental Proceeding. No Governmental Authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
prohibits the consummation of the transactions contemplated by this Agreement.

 

7.4              Certificates. The Companies shall have furnished the Parent
with such certificates to evidence compliance with the conditions set forth in
this Article VII as may be reasonably requested by Parent.

 

7.5              Consents. The Companies shall have obtained all consents which,
the failure to so obtain would have a Material Adverse Effect.

 

7.6              No Material Adverse Effect. There shall have been, between the
date of this Agreement and the Closing Date, no Material Adverse Effect.

 

7.7              Delivery of Good Standing Certificates and Resolutions. The
Purchaser shall have received certificates of good standing with respect to the
Company and its Subsidiaries issued by the jurisdiction of its organization. The
Purchaser shall have received copies of the resolutions of each Company and its
Subsidiaries approving this Agreement, the Merger and the transactions
contemplated herein, certified by an appropriate officer.

 

7.8              Financial Statements. Each Company shall have provided the
Parent with copies of the Annual Financial Statements and the Interim Financial
Statements.

 

7.9              Officer Resignations. Effective as of the Effective Time, each
of the Companies’ officers shall have resigned.

 

7.10          Certain Notices. From and after the date of this Agreement until
the Effective Time, each Company shall promptly notify the Parent of: (a) the
occurrence, or non-occurrence of any event that would be likely to cause any
condition to the obligations of any party to effect the Mergers or any other
transaction contemplated by this Agreement not to be satisfied or (b) the
failure of the Companies to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement
which would reasonably be expected to result in any condition to the obligations
of any party to effect the Mergers or any other transaction contemplated by this
Agreement not to be satisfied; provided, however, that the delivery of any
notice pursuant to this Section 7.11 shall not cure any breach of any
representation, warranty, covenant or agreement contained in this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.

 

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7.11          Public Announcements. Each Company agrees that no public release
or announcement concerning the transactions contemplated hereby shall be issued
by any party without the prior written consent of the Parent (which consent
shall not be unreasonably withheld or delayed), except as such release or
announcement may be required by applicable law or the rules or regulations of
any applicable United States securities exchange or regulatory or governmental
body to which the relevant party is subject, in which case the party required to
make the release or announcement shall use its reasonable best efforts to allow
each other party reasonable time to comment on such release or announcement in
advance of such issuance. Each Company agrees that the press release announcing
the execution and delivery of this Agreement shall be a joint release of, and
shall not be issued prior to the approval of the Parent.

 

7.12          Approval of Company Members and Managers. The approval of this
Agreement by the Members and Managers of the Companies shall have been obtained
and the Companies shall have provided evidence satisfactory to Parent that the
Members are all “accredited investors” within the meaning of the Securities Act.

 

7.13          Shareholder Approval of Parent Shareholders. If required, the
approval of this Agreement by the Parent’s shareholders shall have been
obtained.

 

ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANIES

 

The obligations of the Companies to effect the Closing hereunder are subject to
the satisfaction, at or prior to the Closing, of all of the following
conditions:

 

8.1              Representations and Warranties True. The representations and
warranties contained in Article V hereof and in all certificates delivered by
the Parent and Purchasers to the Companies pursuant hereto or in connection with
the transactions contemplated hereby shall be true and accurate in all material
respects as of the date when made and shall be deemed to be made again at and as
of the Closing Date and shall then be true and accurate in all material respects
(except for changes contemplated by this Agreement and except for
representations and warranties that by their terms speak as of the date of this
Agreement or such other date which shall be true and accurate only as of such
date).

 

8.2              Performance of Covenants. The Parent and Purchasers shall have
performed and complied with each and every covenant, agreement and condition
required by this Agreement to be performed or complied with by Parent and
Purchasers prior to or on the Closing Date.

 

8.3              No Governmental Proceeding. No Governmental Authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered into any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
prohibits the consummation of the transactions contemplated by this Agreement.

 

8.4              Certificates. The Parent and Purchasers shall have furnished
the Companies with such certificates to evidence compliance with the conditions
set forth in this Article VIII as may be reasonably requested by the Companies.

 

24

 

 

8.5              Consents. Parent and Purchasers shall have obtained all
consents which, the failure to so obtain would have a Material Adverse Effect on
the Parent or Purchasers.

 

8.6              Delivery of Good Standing Certificates and Resolutions. The
Companies shall have received certificates of good standing with respect to the
Parent and Purchasers issued by the jurisdiction of their incorporation or
organization. The Companies shall have received copies of the resolutions of the
Parent and Purchasers approving this Agreement, the Mergers and the transactions
contemplated herein, certified by an appropriate officer.

 

8.7              Certain Notices. From and after the date of this Agreement
until the Effective Time, each of the Parent and each Purchaser shall promptly
notify the Company of: (a) the occurrence, or non-occurrence of any event that
would be likely to cause any condition to the obligations of any party to effect
the Mergers or any other transaction contemplated by this Agreement not to be
satisfied or (b) the failure of the Parent or Purchasers, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement which would reasonably be expected
to result in any condition to the obligations of any party to effect the Mergers
or any other transaction contemplated by this Agreement not to be satisfied;
provided, however, that the delivery of any notice pursuant to this Section 8.7
shall not cure any breach of any representation, warranty, covenant or agreement
contained in this Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.

 

8.8              Approval. The approval of the Parent and Purchaser’s
shareholders and members, respectively, shall have been obtained, if required.
In addition, NASDAQ shall have confirmed in writing or otherwise acknowledged to
Parent and the Seller that the transactions contemplated by this Agreement will
not be aggregated with other transactions involving Parent or any of its
Affiliates.

 

8.9              Company Licensing. Seller, including any and all subsidiaries,
officers, and employees of Seller, shall have been removed from, and released of
all ongoing obligations and liabilities under, all liquor and other licenses of
the Companies, and the Companies will use their commercially reasonable efforts
to facilitate the installation of Michael D. Pruitt, Chief Executive Officer of
the Parent and President of the Purchasers, as the correct party under such
licenses and permits. The Companies and Seller shall reasonably assist in the
transfer of all Company Licensing.

 

8.10          Registration Rights Agreement. The Parent and the Companies shall
have entered into the Registration Rights Agreement attached hereto as Exhibit
8.10.

 

8.11          Replacement Guaranties. Parent shall have delivered replacement
guaranties to the landlords under all real property leases of the Companies. The
Seller, the Companies and their Affiliates shall have been released from any and
all guarantee obligations with respect to any Company real property leases.

 

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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER

 

9.1              Termination. This Agreement may be terminated at any time prior
to the Closing Date:

 

(a)                by mutual consent of the Parent and the Companies;

 

(b)               by either the Parent or the Companies if there has been a
material misrepresentation or material breach on the part of the other parties
(i.e., the Seller Parties or the Buyer Parties) in the representations,
warranties or covenants set forth in this Agreement which is not cured within
ten Business Days after such other party has been notified in writing of the
intent to terminate this Agreement pursuant to this clause (b);

 

(c)                by either the Parent or the Companies, if any permanent
injunction or action by any court or other Governmental Authority of competent
jurisdiction enjoining, denying Approval of or otherwise prohibiting
consummation of any of the transactions contemplated by this Agreement shall
become final and nonappealable;

 

(d)               by Parent if the Closing has not occurred on or before March
1, 2014, or such later date as the parties may agree upon, unless the Parent or
Purchasers are in breach of this Agreement; or

 

(e)                by the Companies if the Closing has not occurred on or before
March 1, 2014, or such later date as the parties may agree upon, unless the
Seller or a Company are in breach of this Agreement.

 

9.2              Effect of Termination. In the event of termination of this
Agreement as expressly permitted under Section 9.1 hereof, this Agreement shall
forthwith become void (except for this Section 9.2) and there shall be no Action
on the part of a Company, a Company’s members, the Purchasers, the Parent or
their respective officers, directors or affiliates; provided, that, if such
termination shall result from a material misrepresentation by a party or the
willful breach by a party of the covenants of such party contained in this
Agreement, such party shall be fully liable for any and all Damages sustained or
incurred as a result of such breach.

 

9.3              Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties hereto.

 

9.4              Extension; Waiver. At any time prior to the Closing, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in writing in an
instrument signed by or on behalf of such party. The waiver by any party hereto
of a breach of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.

 

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ARTICLE X
INDEMNITY

 

10.1          Indemnification by the Seller. If the Closing occurs, the Seller,
covenants and agrees to indemnify, defend, protect and hold harmless the Parent
and its officers, directors, members, managers, employees, stockholders,
assigns, successors and Affiliates (individually, a “Buyer Party” and
collectively “Buyer Parties”) from, against and in respect of all Damages,
Actions, and interest (including interest from the date of such Damages)
suffered, sustained, incurred or paid by any Buyer Party, in any Action: between
a Buyer Party and a third party, in connection with, resulting from or arising
out of, directly or indirectly: (i) the inaccuracy of any representation or the
breach of any warranty set forth in this Agreement or certificates delivered on
the part of a Company in connection with the Closing; (ii) the nonfulfillment of
any covenant or agreement on the part of a Company set forth in this Agreement
or in any agreement or certificate executed and delivered by a Company pursuant
to this Agreement or in the transactions contemplated hereby; (iii) claims
(whether based on contract, tort, fiduciary or any other theory) of any actual
or purported, beneficial or record, current or past, holder of a Company’s debt
or equity securities (or any interest or right therein) in connection with,
resulting from or arising out of, directly or indirectly, such debt or equity
securities (or any interest or right therein) that is based on any action taken
at or prior to the Effective Time.

 

10.2          Indemnification by the Parent and Purchasers. If the Closing
occurs, each of the Parent and the Purchasers, jointly and severally, covenants
and agrees to indemnify, defend, protect and hold harmless the Seller and its
officers, directors, members, managers, employees, stockholders, assigns,
successors and Affiliates (individually, a “Seller Party” and collectively
“Seller Parties”) from, against and in respect of all Damages, Actions, and
interest (including interest from the date of such Damages) suffered, sustained,
incurred or paid by any Seller Party, in connection with, resulting from or
arising out of, directly or indirectly: (i) the inaccuracy of any representation
or the breach of any warranty set forth in this Agreement or certificates
delivered on the part of the Parent or a Purchaser in connection with the
Closing; or (ii) the nonfulfillment of any covenant or agreement on the part of
the Parent or a Purchaser set forth in this Agreement or in any agreement or
certificate executed and delivered by the Parent or a Purchaser pursuant to this
Agreement or in the transactions contemplated hereby.

 

10.3          Notice of Claims. An Indemnified Party shall notify the
Indemnifying Party within a reasonable period of time after becoming aware of
any Damages which the Indemnified Party shall have determined has given rise to
a claim for indemnification under Section 10.1 or 10.2 hereof. Such notice shall
include an estimate of the Damages that the Indemnified Party has determined may
be incurred. As soon as practicable after the date of such notice, the
Indemnified Party shall provide to the Indemnifying Party all information and
documentation necessary to support and verify the Damages so claimed and the
Indemnifying Party and its agents shall be given access to all books and records
in the possession or control of the Indemnified Party which the Indemnifying
Party reasonably determines to be related to such claim. If the Indemnifying
Party notifies the Indemnified Party that it does not dispute the claim or the
estimated amount of Damages described in such notice, or fails to notify the
Indemnified Party within 30 days after delivery of such notice by the
Indemnified Party whether the Indemnifying Party disputes the claim or the
estimated amount of Damages described in such notice, the estimated Damages in
the amount specified in the Indemnified Party’s notice will be conclusively
deemed a liability of the Indemnifying Party and the Indemnifying Party shall
pay the amount of such Damages to the Indemnified Party.

 

27

 

 

10.4          Matters Involving Third Parties.

 

(a)                If any third party shall commence an Action against any
Indemnified Party with respect to any matter (a “Third Party Claim”) which may
give rise to a claim for indemnification under Section 10.1 or 10.2, the
Indemnified Party shall notify the Indemnifying Party in writing as soon as
practicable.

 

(b)               The Indemnifying Party shall have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice and
reasonably acceptable to the Indemnified Party so long as (i) the Indemnifying
Party shall notify the Indemnified Party in writing (within 30 days after its
receipt of notice, in accordance with Section 12.5, of the Third Party Claim as
provided in Section 10.4 or, if the Indemnifying Party has disputed the claim
for indemnification, then within ten days of a final determination that such
claim is a valid claim under Section 10.1 or 10.2) that the Indemnified Party
will be entitled to indemnification under Section 10.1 or 10.2 hereof from and
against any Damages the Indemnified Party may suffer arising out of the Third
Party Claim and (ii) the Indemnifying Party diligently conducts the defense of
the Third Party Claim. It is agreed that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party of a claim (including any Third Party
Claim) will relieve the Indemnifying Party thereby unless said Indemnifying
Party is prejudiced by such failure to give notice.

 

(c)                So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 10.4(b) above, (i) the
Indemnified Party may retain separate co-counsel, at its sole cost and expense,
and participate in the defense of the Third Party Claim; provided that, if there
is a conflict between the Indemnified Party and the Indemnifying Party with
respect to the subject matter of the Third Party Claim, the Indemnified Party
may retain separate counsel at the expense of the Indemnifying Party, (ii) the
Indemnified Party shall not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed, (iii) the Indemnified Party shall cooperate within reason
with the Indemnifying Party’s defense of such Third Party Claim and (iv) the
Indemnifying Party shall not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed.

 

10.5          Limitations on Amount.

 

(a)                Notwithstanding any provision herein, no party hereto shall
in any event be liable to any other party hereto or its Affiliates, officers,
directors, employees, agents or representatives on account of any indemnity
obligation set forth in this Article 10 for any indirect, consequential,
special, incidental or punitive damages (including lost profits, loss of use,
damage to goodwill or loss of business); provided that such limitation shall not
limit recovery with respect to any Third-Party Claim.

 

28

 

 

10.6          Time Limitations.

 

(a)                If the Closing occurs, the Seller will have liability (for
indemnification or otherwise) with respect to any breach of a representation or
warranty in this Agreement only if on or before the nine (9) month anniversary
of the Closing Date, Parent notifies the Seller of a claim specifying the
factual basis of the claim in reasonable detail to the extent then known by
Parent.

 

(b)               If the Closing occurs, the Parent will have liability (for
indemnification or otherwise) with respect to any breach of a representation or
warranty in this Agreement only if on or before the nine (9) month anniversary
of the Closing Date, the Seller notify the Parent of a claim specifying the
factual basis of the claim in reasonable detail to the extent then known by the
Seller.

 

10.7 Sole and Exclusive Remedy. Each party hereto acknowledges and agrees that,
from and after the Closing, its and its Affiliates’ sole and exclusive remedy
with respect to any and all claims (other than claims arising from fraud or
willful misconduct) relating to this Agreement shall be pursuant to the
indemnification provisions set forth in this Article 10. In furtherance of the
foregoing, each party hereto hereby waives, on behalf of itself and each of its
Affiliates, from and after the Closing, to the fullest extent permitted under
any Law any and all rights, claims and causes of action for damages it or any of
its Affiliates may have against another party hereto or any of their respective
Affiliates arising under or based upon this Agreement or any of the transactions
contemplated hereby or any Law, except pursuant to claims arising from fraud or
willful misconduct on the part of a party hereto and pursuant to the
indemnification provisions set forth in this Article 10.

 

ARTICLE XI
OTHER AGREEMENTS

 

The parties hereto agree that:

 

11.1          Best Efforts. The Parent, the Purchasers, the Seller and each
Company shall each cooperate with the others and use (and shall cause their
respective Subsidiaries to use) their respective commercially reasonable best
efforts to promptly (i) take or cause to be taken all necessary actions, and do
or cause to be done all things, necessary, proper or advisable under this
Agreement and applicable laws to consummate and make effective the Mergers and
the other transactions contemplated by this Agreement as soon as practicable,
including, without limitation, preparing and filing promptly and fully all
documentation to effect all necessary filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents and
(ii) obtain all Approvals required to be obtained from any third party
necessary, proper or advisable to consummate the Mergers and other transactions
contemplated by this Agreement.

 

11.2          Public Announcements. At the proper time, as determined by the
parties hereto in good faith consultation with each other, the Surviving
Companies shall issue a press release or make a public statement concerning this
Agreement and the related transactions containing disclosure which is mutually
agreeable to the parties; provided, that prior to the issuance of a press
release, none of the parties hereto shall make any announcement of such
transaction or disclose the existence of and/or particulars of any negotiations
related thereto, including, but not limited to, the terms, conditions,
consideration to be paid or other facts related to this Agreement and the
related transactions.

 

29

 

 

11.3          Expenses. Each Party shall be responsible for its own expenses
incurred in this transaction.

 

ARTICLE XII
MISCELLANEOUS

 

12.1          Entire Agreement. This Agreement (including the documents and
instruments referred to herein) embody the entire agreement and understanding of
the parties with respect to the transactions contemplated hereby and supersede
all other prior commitments, arrangements or understandings, both oral and
written, between the parties with respect thereto. There are no agreements,
covenants, representations or warranties with respect to the transactions
contemplated hereby other than those expressly set forth herein.

 

12.2          Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.

 

12.3          Headings and Exhibits. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof. Schedules and documents referred to
in this Agreement are an integral part of this Agreement.

 

12.4          Survival of Representations, Warranties and Covenants. All
representations and warranties made by any party in or pursuant to this
Agreement or in any document delivered pursuant hereto shall survive for one (1)
year after the Closing; provided, however, that in the event of fraud by any
party, the representations and warranties of the party shall survive the Closing
for an indefinite period of time. Notwithstanding the foregoing, if a claim
notice is sent pursuant to Section 10.3, the representation or warranty with
respect to which such claim notice is sent, and the related indemnification
obligations set forth in Article X with respect to the claim notice, shall
survive until the resolution of the claim for Damages to which such claim notice
relates, or such longer period as provided in the preceding sentence. All
covenants made by any party pursuant to this Agreement shall survive the Closing
pursuant to their terms.

 

12.5          Notices. Any notices or other communications required or permitted
hereunder shall be in writing and personally delivered at the addresses
designated below, by facsimile transmission to the respective facsimile numbers
designated below (with electronic confirmation of delivery), or mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows, or to such other address or addresses as may hereafter be
furnished by one party to the other party in compliance with the terms hereof:

 

30

 

 

If to the Parent, Purchaser, or Surviving Corporation:       CHANTICLEER
HOLDINGS, INC.   Attention: Michael Pruitt   11220 Elm Lane, Suite 203  
Charlotte, NC 28277   Facsimile No.: 704.366.2463       If to the Companies
(pre-Closing) or the Seller (post-Closing):       EXPRESS WORKING CAPITAL, LLC  
Attn: Joe Womack    545 E. John Carpenter Freeway, Ste. 670   Irving, Texas
75062   Facsimile No.: 214.420.5100

 

 

or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval, or other communication shall
be deemed to have been given as of the date personally delivered or telefaxed,
five Business Days after deposit with the U.S. Postal Service if mailed, or one
Business Day if delivered by overnight mail, and, if given by any other means,
shall be deemed given only when actually received by the addressees.

 

12.6          Counterparts. This Agreement may be executed in any number of
counterparts (which may be by facsimile or other electronic means) each of
which, when executed, shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.

 

12.7          Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

 

[Signatures follow on Next Page]

 

31

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

  PARENT:         CHANTICLEER HOLDINGS, INC.               By:     Print Name:  
  Title:                 PURCHASERS:         CHANTICLEER RESTAURANTS, LLC      
  By:     Print Name: Michael D. Pruitt   Title: Manager              
CHANTICLEER KITCHENS, LLC         By:     Print Name: Michael D. Pruitt   Title:
Manager

 

32

 

 

COMPANIES:

 

DALLAS SPOON, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: Manager

 

DALLAS SPOON BEVERAGE, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: President

SELLER:

 

EXPRESS RESTAURANT HOLDINGS, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: President

 

EXPRESS RESTAURANT HOLDINGS BEVERAGE, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: Manager

 

33