STOCK PLEDGE AND SECURITY AGREEMENT

 

This STOCK PLEDGE AND SECURITY AGREEMENT, dated as of September 30, 2015 (as
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof, this “Agreement”), made by and among Katherine J. Poppe
and Micah L. Camden (collectively, the “Pledgors”), in favor of LBB Acquisition,
LLC, a limited liability company organized under the laws of the state of North
Carolina (the “Secured Party”).

 

WHEREAS, pursuant to the terms of a certain Membership Interest Purchase
Agreement dated July 31, 2015 (the “Purchase Agreement”), the Secured Party
purchased the membership interests of various entities operating under the
“Little Big Burger” gourmet fast-casual restaurant concept in exchange for the
Cash Consideration and Stock Consideration set forth in the Purchase Agreement;

 

WHEREAS, pursuant to the terms of the Purchase Agreement, the Pledgors agreed to
pledge Two Hundred Thousand Dollars ($200,000) from their Cash Consideration
(the “Cash Pledge”) and the Pledged Shares in order to secure the Pledgors’
obligations to pay for all Losses associated with the Employment Litigation;

 

WHEREAS, this Agreement is given by the Pledgor in favor of the Secured Party to
secure the payment and performance of all of the Secured Obligations; and

 

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Definitions.

 

(a) Unless otherwise specified herein, all references to Sections and Schedules
herein are to Sections and Schedules of this Agreement. Unless otherwise defined
herein, or defined in the UCC, all capitalized terms shall be defined as set
forth in the Purchase Agreement.

 

(b) Unless otherwise defined herein, terms used herein that are defined in the
UCC shall have the meanings assigned to them in the UCC. However, if a term is
defined in Article 9 of the UCC differently than in another Article of the UCC,
the term has the meaning specified in Article 9.

 

(c) For purposes of this Agreement, the following terms shall have the following
meanings:

 

“Cash and Securities Account” means the Cash and Securities Account held by each
of Katherine Poppe and Micah Camden with T.R. Winston & Company, LLC, where the
Collateral shall be deposited and held.

 

“Cash Pledge” has the meaning set forth in the Recitals.

 

 

 

 

“Collateral” has the meaning set forth in Section 2.

 

“Event of Default” shall mean the failure of either of the Pledgors to pay any
Secured Obligations within five (5) business days of written notice from Secured
Party for the requirement of such payment.

 

“Pledged Shares” means the shares of stock described in Schedule 1 hereto and
issued by Company pursuant to the terms of the Purchase Agreement, and the
certificates, instruments and agreements representing the Pledged Shares and
includes any securities or other interests, howsoever evidenced or denominated,
received by each Pledgor in exchange for or as a dividend or distribution on or
otherwise received in respect of the Pledged Shares.

 

“Proceeds” means “proceeds” as such term is defined in Section 9-102 of the UCC
and, in any event, shall include, without limitation, all dividends or other
income from the Pledged Shares, collections thereon or distributions with
respect thereto.

 

“Secured Obligations” has the meaning set forth in Section 4.

 

“Securities Account Control Agreement” means the Securities Account Control
Agreement dated September 30, 2015 by and between each of the Pledgors, the
Secured Party and the Collateral Agent.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Delaware or, when the laws of any other state govern the method or
manner of the perfection or enforcement of any security interest in any of the
Collateral, the Uniform Commercial Code as in effect from time to time in such
state.

 

2. Pledge. Each of the Pledgors hereby pledges, assigns and grants to the
Secured Party, and hereby creates a continuing first priority lien and security
interest in favor of the Secured Party in and to all of its right, title and
interest in and to the following, wherever located, whether now existing or
hereafter from time to time arising or acquired (collectively, the
“Collateral”): (a) the Pledged Shares; (b) the Cash Pledge; (c) all Proceeds and
products of the foregoing; and (d) all assets held in the Cash and Securities
Account.

 

3. Delivery of Collateral. In conjunction with the execution of this Agreement
and upon the simultaneous closing of the transactions described in the Purchase
Agreement, each of the Pledgors shall immediately deliver the Cash Pledge and
the Collateral to T.R. Winston & Company, LLC (the “Collateral Agent”) for
deposit into the Cash and Securities Account and shall be subject to the terms
of the Securities Account Control Agreement. Each Pledger shall execute and
deliver to the Collateral Agent all assignments, endorsements, powers and other
documents reasonably requested at any time and from time to time by the
Collateral Agent or the Secured Party with respect to the Collateral and the
rights and powers granted to the Collateral Agent or the Secured Party
hereunder, and will deliver to the Collateral Agent any stock certificates
representing stock dividends on, or stock splits of, any of the Collateral,
together with a stock power fully executed in blank.

 

2

 

 

4. Secured Obligations. The Collateral secures the due and prompt payment and
performance of the obligations of each of the Pledgors from time to time arising
under the Purchase Agreement relating to all Losses relating to the Employment
Litigation as they are incurred, to the extent not covered by the Employment
Insurance Policies, including but not limited to attorneys’ fees, court costs,
judgments and settlement awards (all such obligations, covenants, duties, debts,
liabilities, sums and expenses set forth in this Section 4 being herein
collectively called the “Secured Obligations”). For any payments owed by
Pledgors to satisfy the Secured Obligations, such payments shall be paid: (i)
first, in equal parts by each Pledgor’s Cash and Securities Account, provided
that each Pledgor’s Cash and Securities Account holds sufficient cash to satisfy
half of such Secured Obligations; and (ii) in the event the Cash and Securities
Account of a Pledgor does not contain sufficient cash to satisfy half of a
Secured Obligation, the Secured Party may draw the necessary funds from either
Cash and Securities Account in whatever amount is required to satisfy the
Secured Obligations.

 

5. Perfection of Pledge.

 

(a) Each Pledgor shall, from time to time, as may be required by the Secured
Party with respect to all Collateral, immediately take all actions as may be
requested by the Secured Party to perfect the security interest of the Secured
Party in the Collateral, including, without limitation, with respect to all
Collateral over which control may be obtained within the meaning of Section
8-106 of the UCC, each Pledgor shall immediately take all actions as may be
requested from time to time by the Secured Party so that control of such
Collateral is obtained and at all times held by the Secured Party. All of the
foregoing shall be at the sole cost and expense of the Pledgors upon whom such
request is made.

 

(b) Each Pledgor hereby irrevocably authorizes the Secured Party at any time and
from time to time to file in any relevant jurisdiction any financing statements
and amendments thereto that contain the information required by Article 9 of the
UCC of each applicable jurisdiction for the filing of any financing statement or
amendment relating to the Collateral, without the signature of the Pledgor where
permitted by law. Each of the Pledgors agrees to provide all information
required by the Secured Party pursuant to this Section promptly to the Secured
Party upon request.

 

6. Representations and Warranties. Each Pledgor represents and warrants as
follows:

 

(a) The Pledged Shares are subject to no options to purchase or similar rights.
All information set forth in Schedule 1 relating to the Pledged Shares is
accurate and complete.

 

(b) At the time the Collateral becomes subject to the lien and security interest
created by this Agreement, such Pledgor will be the sole, direct, legal and
beneficial owner thereof, free and clear of any lien, security interest,
encumbrance, claim, option or right of others except for the security interest
created by this Agreement.

 

(c) The pledge of the Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Collateral, securing the
payment and performance when due of the Secured Obligations.

 

3

 

 

(d) Each Pledgor has full power, authority and legal right to pledge the
Collateral pursuant to this Agreement.

 

(e) This Agreement has been duly authorized, executed and delivered by each
Pledgor and constitutes a legal, valid and binding obligation of such Pledgor
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors’ rights generally and subject to equitable principles (regardless of
whether enforcement is sought in equity or at law).

 

(f) No authorization, approval, or other action by, and no notice to or filing
with, any governmental authority, regulatory body or any other entity is
required for the pledge by each Pledgor of the Collateral pursuant to this
Agreement or for the execution and delivery of this Agreement by each Pledgor or
the performance by each Pledgor of its obligations thereunder.

 

(g) The execution and delivery of this Agreement by each Pledgor and the
performance by each Pledgor of its obligations thereunder, will not violate any
provision of any applicable law or regulation or any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, applicable to such Pledgor or any of its property, or any agreement or
instrument to which a Pledgor is party or by which it or its property is bound.

 

(h) Each Pledgor has taken all action required on its part for control (as
defined in Section 8-106 of the UCC) to have been obtained by the Secured Party
over all Collateral with respect to which such control may be obtained pursuant
to the UCC. No person other than the Secured Party, or the Collateral Agent, has
control or possession of all or any part of the Collateral. Without limiting the
foregoing, all certificates, agreements or instruments representing or
evidencing the Pledged Shares in existence on the date hereof have been
delivered to the Collateral Agent in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in blank.

 

7. Dividends and Voting Rights.

 

(a) The Secured Party agrees that unless an Event of Default shall have occurred
and be continuing, each Pledgor may, to the extent such Pledgor has such right
as a holder of the Pledged Shares, vote and give consents, ratifications and
waivers with respect thereto, except to the extent that, in the Secured Party’s
reasonable judgment, any such vote, consent, ratification or waiver could
detract from the value thereof as Collateral or which could be inconsistent with
or result in any violation of any provision of this Agreement.

 

(b) The Pledgors and Secured Party agree that any payment of cash or dividends
received relating to the Pledged Shares shall be deposited in the Cash and
Securities Account and shall be subject to this Agreement.

 

4

 

 

8. Further Assurances.

 

(a) Each Pledgor shall, at its own cost and expense, defend title to the
Collateral and the first priority lien and security interest of the Secured
Party therein against the claim of any person claiming against or through a
Pledgor and shall maintain and preserve such perfected first priority security
interest for so long as this Agreement shall remain in effect.

 

(b) Each Pledgor agrees that at any time and from time to time, at the expense
of the Pledgors, such Pledgor will promptly execute and deliver all further
instruments and documents, obtain such agreements from third parties, and take
all further action, that may be necessary or desirable, or that the Secured
Party may reasonably request, in order to create and/or maintain the validity,
perfection or priority of and protect any security interest granted or purported
to be granted hereby or to enable the Secured Party to exercise and enforce its
rights and remedies hereunder or under any other agreement with respect to any
Collateral.

 

9. Transfers and Other Liens. The Pledgors agrees that they will not sell, offer
to sell, dispose of, convey, assign or otherwise transfer, grant any option with
respect to, restrict, or grant, create, permit or suffer to exist any mortgage,
pledge, lien, security interest, option, right of first offer, encumbrance or
other restriction or limitation of any nature whatsoever on, any of the
Collateral or any interest therein except as follows: (a) as expressly provided
for herein, (b) pursuant to trading instructions by the Pledgors permitted under
Section 3(a) of the Securities Account Control Agreement and (c) with the prior
written consent of the Secured Party.

 

10. Secured Party Appointed Attorney-in-Fact. Each Pledgor hereby appoints the
Secured Party the Pledgor’s attorney-in-fact, with full authority in the place
and stead of each Pledgor and in the name of each Pledgor or otherwise, from
time to time in the Secured Party’s discretion to take any action and to execute
any instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to a Pledgor
representing any dividend, interest payment or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same (but
the Secured Party shall not be obligated to and shall have no liability to the
Pledgors or any third party for failure to do so or take action). Such
appointment, being coupled with an interest, shall be irrevocable. Each Pledgor
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof.

 

11. Secured Party May Perform. If a Pledgor fails to perform any obligation
contained in this Agreement, the Secured Party may itself perform, or cause
performance of, such obligation, and the expenses of the Secured Party incurred
in connection therewith shall be payable by such Pledgor; provided that the
Secured Party shall not be required to perform or discharge any obligation of
the Pledgors.

 

5

 

 

12. Remedies Upon Default.

 

(a) If any Event of Default shall have occurred and be continuing, the Secured
Party may, without any other notice to or demand upon the Pledgors, assert all
rights and remedies of a secured party under the UCC or other applicable law,
including, without limitation, the right to take possession of, hold, collect,
sell, lease, deliver, grant options to purchase or otherwise retain, liquidate
or dispose of all or any portion of the Collateral. If notice prior to
disposition of the Collateral or any portion thereof is necessary under
applicable law, written notice mailed to the Pledgors at their respective notice
addresses as provided in Section 16 hereof ten (10) calendar days prior to each
of the dates of such dispositions shall constitute reasonable notice, but notice
given in any other reasonable manner shall be sufficient. So long as the sale of
the Collateral is made in a commercially reasonable manner, the Secured Party
may sell such Collateral on such terms and to such purchaser(s) as the Secured
Party in its absolute discretion may choose, without assuming any credit risk
and without any obligation to advertise or give notice of any kind other than
that necessary under applicable law. Without precluding any other methods of
sale, the sale of the Collateral or any portion thereof shall have been made in
a commercially reasonable manner if conducted in conformity with reasonable
commercial practices of creditors disposing of similar property. To the extent
permitted by applicable law, the Pledgors waive all claims, damages and demands
they may acquire against the Secured Party arising out of the exercise by it of
any rights hereunder. The Pledgors hereby waive and release to the fullest
extent permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Secured Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the Secured
Party or any custodian may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption. Neither the
Secured Party, the Collateral Agent nor any custodian shall be liable for
failure to collect or realize upon any or all of the Collateral or for any delay
in so doing, nor shall it be under any obligation to take any action whatsoever
with regard thereto.

 

(b) If any Event of Default shall have occurred and be continuing, any cash held
by the Secured Party as Collateral and all cash Proceeds received by the Secured
Party in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied in whole or in part by the
Secured Party to the payment of expenses incurred by the Secured Party in
connection with the foregoing or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of the
Secured Party hereunder, including reasonable attorneys’ fees, and the balance
of such proceeds shall be applied or set off against all or any part of the
Secured Obligations in such order as the Secured Party shall elect. Any surplus
of such cash or cash Proceeds held by the Secured Party and remaining after
payment in full of all the Secured Obligations shall be paid over to the
Pledgors or to whomsoever may be lawfully entitled to receive such surplus. The
Pledgors shall remain jointly and severally liable for any deficiency if such
cash and the cash Proceeds of any sale or other realization of the Collateral
are insufficient to pay the Secured Obligations and the fees and other charges
of any attorneys employed by the Secured Party to collect such deficiency.

 

(c) If the Secured Party shall determine to exercise its rights to sell all or
any of the Collateral pursuant to this Section, the Pledgors agree that, upon
request of the Secured Party, the Pledgors will, at their own expense, do or
cause to be done all such acts and things as may be necessary to make such sale
of the Collateral or any part thereof valid and binding and in compliance with
applicable law.

 

6

 

 

13. No Waiver and Cumulative Remedies. The Secured Party shall not by any act
(except by a written instrument pursuant to Section 15), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default. All rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
provided by law.

 

14. Security Interest Absolute. Each Pledgor hereby waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. All rights of the
Secured Party and liens and security interests hereunder, and all Secured
Obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of: (a) any illegality or lack of validity or enforceability of any
Secured Obligation or any related agreement or instrument; (b) any change in the
time, place or manner of payment of, or in any other term of, the Secured
Obligations, or any rescission, waiver, amendment or other modification of the
Purchase Agreement, this Agreement or any other agreement, including any
increase in the Secured Obligations resulting from any extension of additional
credit or otherwise; (c) any taking, exchange, substitution, release, impairment
or non-perfection of any Collateral or any other collateral, or any taking,
release, impairment, amendment, waiver or other modification of any guaranty,
for all or any of the Secured Obligations; (d) any manner of sale, disposition
or application of proceeds of any Collateral or any other collateral or other
assets to all or part of the Secured Obligations; (e) any default, failure or
delay, wilful or otherwise, in the performance of the Secured Obligations; (f)
any defense, set-off or counterclaim (other than a defense of payment or
performance) that may at any time be available to, or be asserted by, the
Pledgors against the Secured Party; or (g) any other circumstance (including,
without limitation, any statute of limitations) or manner of administering the
Secured Obligations or any existence of or reliance on any representation by the
Secured Party that might vary the risk of a Pledgor or otherwise operate as a
defense available to, or a legal or equitable discharge of, a Pledgor or any
other grantor, guarantor or surety.

 

15. Amendments. None of the terms or provisions of this Agreement may be
amended, modified, supplemented, terminated or waived, and no consent to any
departure by a Pledgor therefrom shall be effective unless the same shall be in
writing and signed by the Secured Party and each Pledgor to whom such amendment,
modification, supplement, waiver or consent may apply, and then such amendment,
modification, supplement, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which made or given.

 

16. Addresses For Notices. All notices and other communications provided for in
this Agreement shall be in writing and shall be given in the manner and become
effective as set forth in the Purchase Agreement, and addressed to the
respective parties at their addresses as specified on the signature pages hereof
or as to either party at such other address as shall be designated by such party
in a written notice to each other party.

 

17. Continuing Security Interest; Further Actions. This Agreement shall create a
continuing first priority lien and security interest in the Collateral and shall
(a) subject to Section 18, remain in full force and effect until payment and
performance in full of the Secured Obligations and the Employment Litigation
shall be concluded in its entirety, (b) be binding upon the Pledgors, their
successors and assigns, and (c) inure to the benefit of the Secured Party and
its successors, transferees and assigns; provided that the Pledgors may not
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the Secured Party.

 

7

 

 

18. Termination; Release. On the date on which all Secured Obligations have been
paid and performed in full, the Secured Party will, at the request and sole
expense of the Pledgors, (a) duly assign, transfer and deliver to or at the
direction of the Pledgors (without recourse and without any representation or
warranty) such of the Collateral as may then remain in the possession of the
Secured Party, together with any monies at the time held by the Secured Party
hereunder or held in the Cash and Securities Account, and (b) execute and
deliver to the Pledgors a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement. On the date on which (a) the
amount that all of the Secured Obligations have been finally determined and (b)
the Pledgor’s Cash and Securities Accounts in the aggregate contain cash in
excess of the amount of the Secured Obligations yet to be paid and performed in
full, the Secured Party shall release the Collateral in excess of the amount of
such remaining Secured Obligations (the “Excess Collateral”), with such release
first to be of the Pledged Shares and second of the cash in the Cash and
Securities Accounts, and shall within three business days of such date instruct
Collateral Agent in writing that such Excess Collateral has been released and
may be withdrawn by the Pledgors from the Cash and Securities Accounts.

 

19. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule.

 

20. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the Party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.

 

21. Expenses. Except as otherwise expressly provided in this Agreement, each
party will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the transactions
contemplated by this Agreement, including, without limitations, all fees and
expenses of agents, representatives, counsel, and accountants.

 

[SIGNATURE PAGE FOLLOWS]

 

8

 

 

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

 

  Katherine J. Poppe, as Pledgor         By: /s/ Katherine J. Poppe

 

  Micah L. Camden, as Pledgor         By: /s/ Micah L. Camden

 

 

LBB Acquisition, LLC, a limited liability company organized under the laws of
the state of North Carolina, as Secured Party

 

  By: /s/ Michael D. Pruitt   Name: Michael D. Pruitt   Title: Chief Executive
Officer  

Address for Notices:

7621 Little Avenue, Suite 414

Charlotte, North Carolina 28226

 

9