Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”), dated March 31, 2015, is
entered into by and between BT’s Burgerjoint Management, LLC, a North Carolina
limited liability company, (“BT Management”), BT Burger Acquisition LLC, a North
Carolina limited liability company (“Purchaser”) and Chanticleer Holdings, Inc.,
a Delaware corporation (“Parent”).

 

RECITALS

 

WHEREAS, the Sellers (as hereinafter defined) are engaged in the fast casual
hamburger restaurant business under the name “BT’s Burger Joint” (the
“Business”); and

 

WHEREAS, BT Management is the parent to various wholly owned subsidiaries listed
on Schedule 3.1 of the Disclosure Schedules (as hereinafter defined) that each
operate a restaurant location (the “Operational Subsidiaries”) (BT Management
and the Operational Subsidiaries are sometimes hereinafter referred to
collectively as the “Sellers”).

 

WHEREAS, Sellers wish to sell to the Purchaser, and the Purchaser wishes to
purchase from Sellers, the rights of Sellers to the Assets (as defined herein)
relating to the Business, subject to the terms and conditions set forth herein;

 

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

 

ARTICLE I.

PURCHASE AND SALE OF THE ASSETS

 

SECTION 1.1. The Closing. The sale and transfer of the Assets (as defined
herein) and the consummation of all of the other transactions contemplated by
this Agreement (the “Closing” or the “Closing Date”) shall occur at the offices
of Ruskin Moscou Faltischek, P.C., Uniondale, New York, at such time and on such
date as the parties may jointly agree, as the same may be extended by the mutual
agreement of the Purchaser and the Sellers and subject to Section 9.7 hereof,
provided the terms and conditions of this Agreement are satisfied (the
applicable date of the Closing being referred to as the “Closing Date”). At the
Closing, the Sellers and the Purchaser shall exchange certificates, instruments
and other documents required to be delivered under Article VII hereof.

 

SECTION 1.2. Purchase and Sale of the Assets. At the Closing, the Sellers shall
sell, assign, transfer and convey to the Purchaser, free and clear of all liens,
pledges, security interests, mortgages, claims, debts, charges, agreements or
other encumbrances or restrictions on transfer of any kind whatsoever
(collectively, the “Encumbrances”) other than Permitted Encumbrances (as
hereinafter defined), all of their property, rights, title privileges and
interests, whether tangible or intangible, real, personal or mixed, that are
held or leased or used in connection with the assets listed on Schedule 1.2 of
the Disclosure Schedules, (collectively, the “Assets”) other than the Excluded
Assets (as defined on Schedule 1.2).  The Assets shall include, but not be
limited to, all of Seller’s rights in, but only with regard to the Assets: (a)
the membership interests of the Operational Subsidiaries; (b) all business
assets, inventory, equipment and fixtures, recipes, telephone numbers, websites,
other intangible assets of the Business; (c) Material Contracts and personal
property leases; (d) licenses and permits, which may require consent to
assignment;  (e) patents, trademarks, copyrights and all other intellectual
property, if any, which may require consent to assignment;  (f) know how and
trade secrets; (g) accounts receivable;  (h) customer lists and account
information; (i) goodwill; and (j) copies of all files, books and records. The
Assets shall exclude the Excluded Assets. For purposes of this Agreement,
“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and
the Purchaser concurrently with the execution and delivery of this Agreement.
For purposes of this Agreement, “Permitted Encumbrances” means those
encumbrances set forth on Schedule 1.2.

 

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SECTION 1.3. Excluded Liabilities. Except for the Assumed Liabilities, the
Purchaser shall not assume or be deemed to have assumed any debts, liabilities
or obligations of any kind, character or nature, whether known or unknown,
fixed, contingent, absolute or otherwise, arising or made prior to, on or after
the Closing Date, of the Sellers (each an “Excluded Liability” and collectively,
the “Excluded Liabilities”). Except as set forth in the Disclosure Schedules
immediately prior to, and in conjunction with, the Closing, the Sellers covenant
and agree to timely and fully discharge and satisfy all Excluded Liabilities
that reasonably could be asserted against the Assets, the Purchaser or the
Parent.

 

SECTION 1.4. Assumed Liabilities. At the Closing, the Purchaser shall assume
only those liabilities set forth in Schedule 1.4 of the Disclosure Schedule (the
“Assumed Liabilities”). Notwithstanding the Purchaser's assumption of the
Assumed Liabilities, the Purchaser may seek indemnification from the Sellers for
any and all Losses (as defined below) resulting from a breach of any of its
representations and warranties hereunder.

 

ARTICLE II.

CONSIDERATION FOR TRANSFER

 

SECTION 2.1. Purchase Price. The purchase price (the “Purchase Price”) shall
consist of:

 

(a)          The assumption by the Purchaser of the Assumed Liabilities;

 

(b)          One Million Four Hundred Thousand Dollars ($1,400,000.00) payable
in cash by certified check or wire transfer of immediately available funds to an
account provided to the Purchaser by the Seller (“Cash Consideration”);

 

(c)          The payment of such amount listed on Schedule 2.1(c) of the
Disclosure Schedules reflecting leasehold improvements; and

 

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(d)          Such number of shares of Parent’s common stock (the “Stock
Consideration”), in an amount equal to One Million Dollars ($1,000,000.00)
provided that the Stock Consideration shall be valued at a price per share equal
to the lesser of (i) $2.358 per share, or (ii) the average closing price of the
Parent’s common stock listed on the NASDAQ Stock Market for the five (5)
Business Days prior to the Closing. Notwithstanding anything to the contrary,
the aggregate number of shares of Stock Consideration shall not exceed 19.9% of
either (a) the total number of shares of common stock outstanding on the
Execution Date or Closing Date, or (b) the total voting power of the Company's
securities outstanding on the Execution Date or Closing Date that are entitled
to vote on a matter being voted on by holders of the common stock (the “Stock
Consideration Cap”). In the event the Stock Consideration at Closing would
result in an amount in excess of the Stock Consideration Cap, the Parent shall
issue the Stock Consideration up to the Stock Consideration Cap and shall pay
the remaining balance of such Stock Consideration in cash.

 

The certificate for the Stock Consideration shall bear a legend under the
Securities Act of 1933, as amended (the “Securities Act”) relating to the status
of the Stock Consideration as restricted securities and will also 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.”

 

SECTION 2.2. Payment of the Purchase Price. At the Closing, the Purchaser shall
pay the Cash Consideration and shall issue the Stock Consideration by delivery
to the Sellers of one or more certificates representing the same and shall
assume the Assumed Liabilities.

 

SECTION 2.3. Allocation of Purchase Price. The Sellers and the Purchaser agree
to allocate the Purchase Price among the Assets for all purposes (including tax
and financial accounting) in accordance with Schedule 2.3. The Purchaser and
Sellers shall file all tax returns (including amended returns and claims for
refund) and information reports in a manner consistent with such allocation.

 

SECTION 2.4. Payment of Sales and Transfer Taxes. Each of Sellers and the
Purchaser shall pay one half of any and all sales, use or other transfer taxes
payable by reason of the transfer and conveyance of the Assets hereunder. The
parties will prepare and deliver and if necessary file at or before Closing all
transfer tax returns and other filings necessary to vest in the Purchaser full
right, title and interest in the Assets and to comply with applicable reporting
obligations.

 

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SECTION 2.5. Third Party Consents. To the extent that Seller's rights under any
contract or permit constituting a portion of the Asset, or any other Asset, may
not be assigned to the Purchaser without the consent of another person which has
not been obtained, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment would constitute a breach thereof or be
unlawful, and Seller, at its expense, shall use its reasonable best efforts to
obtain any such required consent(s) as promptly as possible. If any such consent
shall not be obtained or if any attempted assignment would be ineffective or
would impair the Purchaser’s rights under the Asset in question so that the
Purchaser would not in effect acquire the benefit of all such rights, Seller, to
the maximum extent permitted by law and the Asset, shall act after the Closing
as the Purchaser’s agent in order to obtain for it the benefits thereunder and
shall cooperate, to the maximum extent permitted by law and the Asset, with the
Purchaser in any other reasonable arrangement designed to provide such benefits
to the Purchaser. Notwithstanding any provision in this Section 2.5 to the
contrary, the Purchaser shall not be deemed to have waived its rights under
Section 7.2(e) hereof unless and until the Purchaser either provides written
waivers thereof or elects to proceed to consummate the transactions contemplated
by this Agreement at Closing. For purposes of this Agreement, “Person” means any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Authority or other entity of any kind or
nature.

 

SECTION 2.6. Working Capital Adjustments. The Target Net Working Capital at
closing shall be equal to such amount set forth on Schedule 2.6 of the
Disclosure Schedules. If the Net Working Capital is less than the Target Working
Capital, then the Cash Consideration shall be reduced dollar-for-dollar by the
amount of such shortfall. If the Net Working Capital is greater than the Target
Working Capital, then the Cash Consideration shall be increased
dollar-for-dollar by the amount of such excess. For purposes of this Section
2.6, the Net Working Capital shall be computed by the Sellers and the Purchaser
and shall be comprised of the difference between (x) the sum of cash, account
receivables, inventory, prepaid expense and other current assets and (y) current
liabilities incurred in the ordinary course of the Sellers’ business, including
accounts payable and outstanding gift certificates, calculated in a manner
consistent with Sellers' historic financial statements. To the extent the amount
of any such shortfall or excess in Target Net Working Capital cannot be
determined on the Closing Date, this Section 2.6 shall survive the Closing and
any such amounts shall be separately paid as soon as practicable thereafter upon
written notice to the owing party.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF

THE SELLER AND THE SUBSIDIARIES

 

For purposes hereof, “Seller's knowledge” or “the best of the Seller's
knowledge” shall mean the knowledge of each of Thomas A. Hager, Brad E. Smith,
Dennis L. Thompson and David Lawwill, in their capacities as owners and managers
of BT Management and the Operational Subsidiaries, and shall include information
which such individuals actually knew or should have known through the
performance of the duties of such individual’s position in a manner that is
customary in the industry of the Business. BT Management and the Operational
Subsidiaries hereby jointly and severally represent and warrant to the Purchaser
and the Parent, as of the date hereof (except as to any representation or
warranty which specifically relates to an earlier date), and as of the moment
immediately prior to Closing, as follows:

 

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SECTION 3.1. Organization and Qualification. Each Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
its state of formation, with all requisite power and authority to own its share
of the Assets, lease its properties, and to conduct the Business as it is
presently conducted, except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material Adverse Effect.
Each Seller is qualified to do business and is in good standing in each
jurisdiction in which it owns assets, leases property or conducts the Business,
except where the failure to be so qualified or in good standing would not
reasonably be expected to have a Material Adverse Effect. Each Seller has
delivered to the Purchaser true and complete copies of its Articles of Formation
and Operating Agreements and all amendments thereto. A list of the Operational
Subsidiaries is set forth on Schedule 3.1.

 

SECTION 3.2. Authorization. Each Seller has full power and authority to perform
the transactions contemplated by this Agreement. Each Seller’s execution and
delivery of this Agreement and its performance of the transactions contemplated
herein have been duly authorized by all requisite action, including, without
limitation, by such Seller’s officers and directors. This Agreement has been
duly and validly executed and delivered by each Seller and constitutes the
legal, valid and binding obligation of such Seller, enforceable in accordance
with its terms, except to the extent that such enforcement may be subject to
applicable bankruptcy, insolvency or similar laws relating to creditors' rights
and remedies generally.

 

SECTION 3.3. No Violation. Neither the execution nor delivery of this Agreement
by each Seller and the performance of each Seller’s obligations hereunder, nor
the purchase and sale of the Assets, will: (a) violate or result in any breach
of any provision of a each Seller’s Articles of Organization or operating
agreement; (b) except as set forth on Schedule 3.3 of the Disclosure Schedule
violate, conflict with or result in a violation or breach of, or constitute a
default (with or without due notice or lapse of time or both) under, or permit
the termination of, or require the consent of any other party to, or result in
the acceleration of, or entitle any party to accelerate (whether as a result of
a change in control of any Seller or otherwise) any obligation under, or result
in the loss of any benefit under, any Material Contract, or give rise to the
creation of any Encumbrance upon any of the Assets; or (c) violate any order,
writ, judgment, injunction, decree, statute, law, rule, regulation or ordinance
of any court or governmental, quasi-governmental or regulatory department
(including, without limitation, the U.S. Securities and Exchange Commission (the
“SEC”)) or authority (“Governmental Authority”) applicable to each Seller or any
of the Assets, except, in each case, for such violations, defaults or
impositions that would not have a Material Adverse Effect.

 

SECTION 3.4. Ownership. The presently authorized, issued and outstanding
membership interests of each Seller and the names of the owners thereof as shown
on the records of such Seller are as set forth on Schedule 3.4. To the best of
each Seller’s knowledge, each of such owners is the lawful record and beneficial
owner of the number of membership interests of such Seller set forth opposite
his name, free and clear of any liens, claims, encumbrances or restrictions of
any kind. BT Management is the sole lawful record and beneficial owner of all of
the membership interests of the Operational Subsidiaries. There are no
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatsoever under which any Seller is or may become obligated
to issue, assign or transfer any shares of its membership interests.

 

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SECTION 3.5. Consents and Approvals. Except as noted in Schedule 3.5, no filing
or registration with, no notice to, and no permit, authorization, consent or
approval of any Governmental Authority or any other Person is necessary for a
Seller to execute and deliver this Agreement, including all contract and lease
assignments or to enable the Purchaser, after the Closing, to continue to
conduct the Business as presently conducted, except for such filings,
registrations, consents or approvals that would arise as a result of the
business or activities in which Purchaser, Parent or their affiliates is engaged
or as a result of any acts or omissions by, or the status of any facts
pertaining to, Purchaser, Parent or their affiliates.

 

SECTION 3.6. Financial Statements. The Seller have delivered to the Purchaser
the unaudited consolidated financial statements of BT Management and the
Operational Subsidiaries for the fiscal year ended December 31, 2013, unaudited
consolidated financial statements of the Sellers for the fiscal year ended
December 31, 2014, and unaudited consolidated financial statements of BT
Management and the Operational Subsidiaries for the period ended January 27,
2015 (the “Financial Statements”). The Financial Statements fairly presents in
all material respects the financial condition of the Sellers as of the date
thereof and the results of the operations of the Business for the period
indicated in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as may be stated in
the notes thereto), except that the unaudited Financial Statements are subject
to normal year-end adjustments and lack the footnote disclosure otherwise
required by generally accepted accounting principles. A copy of the Financial
Statements is attached hereto as Schedule 3.6 of the Disclosure Schedule.

 

SECTION 3.7. Absence of Undisclosed Liabilities. Except as set forth on Schedule
3.7 of the Disclosure Schedule, as of January 27, 2015, the Sellers have no
liability (whether accrued, absolute, contingent or otherwise, and whether then
due or to become due) nor loss contingency, except as reflected on the Financial
Statements, which would be required to be included therein in accordance with
cash based accounting, and the Sellers have no knowledge of any valid basis for
the assertion of any such liability or loss contingency.

 

SECTION 3.8. Absence of Certain Changes. Except as disclosed in Schedule 3.8 of
the Disclosure Schedule, since January 27, 2015, each Seller has conducted the
Business and utilized the Assets in the usual ordinary course, and, without
limiting the generality of the foregoing, since such date, there has not been:

 

(a) a Material Adverse Effect (as hereinafter defined);

 

(b) any capital expenditure or commitment thereof in excess of $25,000
individually or $50,000 in the aggregate, or the making of any loans;

 

(c) any sale, lease, license, Encumbrance or other transfer or disposition of
any assets or properties of the Sellers, except in the ordinary course of the
Business;

 

(d) any forgiveness or cancellation of any debts or claims;

 

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(e) any entry into or commitment to enter into any Material Contract by a Seller
or any change or amendment to any Material Contract, or any entry into any or
commitment to enter into any contract with an affiliate of any Seller;

 

(f) any damage, destruction or loss to the properties or assets owned, leased or
used by a Seller, whether or not covered by insurance, which materially and
adversely affected the operations of the Business;

 

(g) any change by any Seller in its financial or tax accounting principles or
methods, or any failure to maintain the books, accounts and records of any
Seller in the usual, regular and ordinary manner on a basis consistent with
prior practice;

 

(h) any acquisition (by merger, consolidation or acquisition of stock or assets)
by any Seller of any business entity or division or significant assets thereof;

 

(i) any change made or authorized in any Seller’s articles of organization or
operating agreement; or

 

(j) any failure by any Seller to use its customary efforts to preserve such any
Seller’s goodwill with suppliers, customers and others with which it has
business relationships and to maintain its business, employees, licenses and
operations consistent with past practices.

 

For purposes of this Agreement, a “Material Adverse Effect” means any event,
occurrence, fact, condition or change that is, or could reasonably be expected
to become, individually or in the aggregate, materially adverse to (A) the value
of the Assets; (B) the value of the business, results of operations, condition
(financial or otherwise) or assets of the Business, or (C) the ability of Seller
to consummate the transactions contemplated hereby on a timely basis; provided
that none of the following shall be taken into account in determining whether
there is a Material Adverse Effect: any adverse change, event, development, or
effect arising from or relating to: (i) general business, industry or economic
conditions; (ii) local, regional, national or international political or social
conditions, including the engagement (whether new or continuing) by the United
States in hostilities, whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or terrorist attack, any
natural or man-made disaster or acts of God; (iii) changes in financial,
banking, or securities markets (including any disruption thereof); (iv) any
failure of any Company to meet any projections or forecasts; (v) changes in
generally accepted accounting principles or any other regulatory accounting
principle applicable to any Seller; (vi) changes in Laws, including proposed or
enacted regulatory changes; (vii) the transactions contemplated by this
Agreement or the announcement thereof; (viii) changes affecting generally the
industries or markets in which the Sellers compete; or (ix) any actions or
omissions by Purchaser, Parent or their affiliates.

 

SECTION 3.9. Litigation. Except as set forth in Schedule 3.9 of the Disclosure
Schedule, there is no action, dispute, suit, litigation, hearing, inquiry,
proceeding, arbitration or investigation, as it relates to the Assets, pending
against any Seller, or any of its properties, assets or rights, before any
court, arbitrator or Governmental Authority, nor is there any judgment, decree,
injunction, rule or order of any court, arbitrator or Governmental Authority
outstanding against, and unsatisfied by, any Seller (any of the foregoing being
herein referred to as “Existing Litigation”), nor to Seller’s knowledge, is
there any threatened action, suit, inquiry, judicial or administrative
proceeding, arbitration or investigation against any Seller. There is no action,
suit, proceeding or investigation by any Seller or pending or that any Seller
intends to initiate or is considering initiating.

 

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SECTION 3.10. Title to Assets. Except as set forth in Schedule 3.10 of the
Disclosure Schedule, Seller has good and marketable title to its respective
share of the Assets, free and clear of any and all Encumbrances other than
Permitted Encumbrances.

 

SECTION 3.11. Contracts. Schedule 3.11 of the Disclosure Schedule sets forth a
complete and accurate list of all of the contracts, agreements and arrangements,
which relate to the Assets that either (i) require a payment in excess of
$50,000 per calendar year; or (ii) have a term in excess of twenty-four months
(the “Material Contracts”). Other than as set forth in Schedule 3.11 of
Disclosure Schedule, no Seller is in default in any material respect with
respect to any obligation to be performed under any Material Contract, and to
the knowledge of Seller, each other party to a Material Contract is not in
default with respect to any obligation to be performed. Except as set forth in
Schedule 3.11 of the Disclosure Schedule, no consent by, notice to or approval
from any third party is required under any Material Contract as a result of or
in connection with the execution, delivery or performance of this Agreement or
the consummation of the transactions contemplated herein. The contracts to be
assumed by the Purchaser include the contracts marked with an asterisk on
Schedule 3.11.

 

SECTION 3.12. Employee Benefit Plans; Labor Relations; Employees.

 

(a)          Schedule 3.12(a) of the Disclosure Schedule contains a complete and
accurate list of each employee benefit plan, program, agreement or arrangement
covering employees, former employees or managers of the Sellers, or providing
benefits to such persons in respect of services provided to the Sellers
(collectively, the “Benefit Plans”), but excluding normal payroll practices,
including the continuation of regular wage payments on account of vacation,
holiday, jury duty or other like absence. Schedule 3.12(a) of the Disclosure
Schedule indicates which of the Benefit Plans is an “employee benefit plan”
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), and which of the Benefit Plans is subject to
Section 302 or Title IV of ERISA. With respect to each Benefit Plan, the Seller
heretofore delivered to the Purchaser an accurate and complete copy of such
Benefit Plan and any amendments thereto (or if the Benefit Plan is not a written
plan, an accurate and detailed written description thereof), and, if applicable,
(i) any related trust or other funding documents, and (ii) any reports or
summaries required under ERISA and the most recent determination letter received
from the Internal Revenue Service with respect to each Benefit Plan intended to
qualify under section 401 of the Code.

 

(b)          No Seller is a party to any collective bargaining agreement or
other labor agreement with any union or labor organization, and to the knowledge
of the Sellers, there is no activity or proceeding of any labor organization or
employee group to organize any such employees.

 

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(c)          Schedule 3.12(c) of the Disclosure Schedules contains a list of all
persons who are employees, independent contractors or consultants of the
Business as of the date hereof (each an “Service Provider”), including any
employee who is on a leave of absence of any nature, paid or unpaid, authorized
or unauthorized, and sets forth for each such individual the following: (i)
name; (ii) title or position (including whether full or part time); (iii) hire
date; (iv) current annual base compensation rate; (v) commission, bonus or other
incentive-based compensation; and (vi) a description of the taxable fringe
benefits provided to each such individual as of the date hereof. Except for the
Benefit Plans or as noted in Schedule 3.12(c), as of the date hereof, all
compensation, including wages, commissions and bonuses due and payable to all
employees, independent contractors or consultants of the Business for services
performed on or prior to the date hereof have been paid in full and there are no
outstanding agreements, understandings or commitments of the Sellers with
respect to any such compensation, commissions or bonuses.

 

(d)          To the knowledge of the Sellers: (i) no employee intends to
terminate his or her employment with the Sellers (other than by virtue of the
transactions contemplated by this Agreement); and (ii) no employee or Service
Provider is a party to or is bound by any confidentiality agreement,
noncompetition agreement or other Contract (with any Person) that may have a
material adverse effect on: (A) the performance by such Service Provider or
employee of any of his or her duties or responsibilities as a Service Provider
or employee of a Seller; or (B) the Business with respect to the employee or
Service Providers.

 

SECTION 3.13. Taxes.

 

(a)          Except as set forth in Schedule 3.13 of the Disclosure Schedule or
attachment thereto: (i) the Sellers have timely filed or caused to be filed with
appropriate governmental agencies or departments all Federal, state, local and
foreign returns (the “Tax Returns”) for Taxes (as hereinafter defined) required
to be filed by it; (ii) the Sellers have made available to the Purchaser
complete and accurate copies of such Tax Returns for the past three (3) years;
(iii) each Seller has paid or caused to be paid all Taxes (including any
additions or penalties if any) if any required to be paid by such Seller in
respect of the periods for which its Tax Returns are due; (iv) no extensions or
waivers of statutes of limitations have been given or requested with respect to
any Taxes (as hereinafter defined) of any Seller; (v) all deficiencies asserted,
or assessments made, against any Seller as a result of any examinations by any
taxing authority have been fully paid; (vi) Sellers are not a party to any
action by any taxing authority and there are no pending or, to Seller’s
knowledge, threatened actions by any taxing authority; and (vii) there are no
Encumbrances, other than Permitted Encumbrances, for Taxes upon any of the
Assets nor, to Sellers’ knowledge, is any taxing authority in the process of
imposing any Encumbrances for Taxes on any of the Assets. The Tax Returns are
complete and accurate in all material respects, and the calculations and
deductions set forth therein have been made, in all material respects, in
compliance with all applicable Tax statutes, laws, rules and regulations.

 

(b)          The term “Tax” or “Taxes” shall include all taxes, charges,
withholdings, fees, levies, penalties, additions, interest or other assessments
imposed by any United States Federal, state or local and foreign or other taxing
department or authority on any Seller (including, without limitation, as a
result of being a member of an affiliated, combined or unitary group or as a
result of any obligation arising out of an agreement to indemnify any other
Person), and including, but not limited to, those related to income, gross
receipts, gross income, sales, use, excise, occupation, services, leasing,
valuation, transfer, license, customs duties or franchise.

 

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SECTION 3.14. Environmental Matters. Except as disclosed in Schedule 3.14 of the
Disclosure Schedule, (i) the Sellers are in compliance in all material respects
with all Environmental Laws, (ii) the Sellers do not have knowledge of any
notice of any suit, litigation, arbitration, hearing, investigation, dispute or
other action (whether civil, criminal, administrative or investigative) brought
by or before any court, Governmental Authority or arbitration against any
Seller. Notwithstanding any other provision of this Agreement to the contrary,
the representations and warranties set forth in this Section 3.14 shall
constitute the sole and exclusive representations and warranties made by Seller
with respect to environmental matters, and no other representation or warranty
contained in any other section of this Agreement, shall be deemed to be made
with respect to environmental matters. “Environmental Laws” means all applicable
Laws now in effect relating to the environment or otherwise relating to
hazardous substances generation, production, use, storage, treatment,
transportation or disposal.

 

SECTION 3.15. Compliance with Applicable Laws; Permits and Licenses. Schedule
3.15 of the Disclosure Schedule sets forth all of the material licenses,
franchises, permits, consents and authorizations of any Governmental Authority
necessary for the lawful conduct of the Business. Except as set forth in
Schedule 3.15 of the Disclosure Schedule, each Seller properly holds, and at all
relevant times during the past two years has held, all material licenses,
franchises, permits, consents and authorizations of any Governmental Authority
necessary for the lawful conduct of the Business, except where the failure to do
so would not reasonably be expected to have a Material Adverse Effect. The
Business is not being and, during the relevant statute of limitations period,
has not been conducted in violation in any material respect of any provision of
any federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit, consent or
license or other governmental authorization of any Governmental Authority
(“Law”) applicable to it. Except as set forth in Schedule 3.15 of the Disclosure
Schedule, during the past two years, no Seller has received any written
notification of any failure by such Seller to comply with any Law applicable to
it.

 

SECTION 3.16. Brokers' Fees and Commissions. Except as set forth on Schedule
3.16 of the Disclosure Schedule, neither the Sellers nor any of their managers,
officers, employees or agents has employed any investment banker, broker, finder
or intermediary, and no fee or other commission is owed to any third party, in
connection with the transactions contemplated herein.

 

SECTION 3.17. Proprietary Rights.

 

(a)          Set forth in Schedule 3.17(a) of the Disclosure Schedule is a
complete and accurate list of all registered patents, copyrights, trademarks,
trade names trade secrets and other intellectual property in which any Sellers
owns, has proprietary rights and relates to the Assets (hereinafter referred to
as the “Proprietary Rights”) and all licenses, sublicenses or other agreements
with respect thereto. Except as noted in Schedule 3.17(a), the applicable Seller
owns all of the Proprietary Rights and to the best of each Seller’s knowledge,
the use of such Proprietary Rights does not infringe upon the rights of any
other Person. No Seller has received any written notice of a claim of such
infringement nor was any such claim the subject of any legal action, suit or
proceeding involving such Seller. The Sellers have no knowledge of any
infringement or improper use by any third party of the Proprietary Rights, nor
has any Seller instituted any action, suit or proceeding in which an act
constituting an infringement of any of the Proprietary Rights was alleged to
have been committed by a third party.

 

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(b)          Schedule 3.17(b) of the Disclosure Schedule identifies (i) all of
the software and computer databases (excluding generally commercially available
software programs) (collectively, the “DataBases”) that are used in the conduct
of Business and utilization of the Assets, (ii) states whether such DataBases
are owned or licensed by a Seller and, (iii) if licensed, the name of such
licensor. Except as set forth on Schedule 3.17(b) of the Disclosure Schedule,
the each Seller has the legal right in all material respects to use the
DataBases owned by such Seller as they are currently being used, and the
Purchaser will continue to have the legal right to use such DataBases in this
manner following the consummation of the transactions contemplated herein. The
use of the DataBases owned by each Seller, to the Sellers’ knowledge, does not
infringe upon the rights of any other Person, nor has any Seller received any
written notice of a claim of such infringement. Except as listed on Schedule
3.17(b) of the Disclosure Schedule, there are no licenses, sublicenses or other
agreements relating to the use of the DataBases by the Sellers.

 

SECTION 3.18. Accounts Receivable. The accounts receivable reflected on Schedule
3.18 and the accounts receivable arising after the date thereof have arisen from
bona fide transactions entered into by the Sellers involving the sale of goods
or the rendering of services in the ordinary course of business consistent with
past practice and/or have arisen as royalties with respect to franchises granted
by the Sellers in the ordinary course of business consistent with past practice.

 

SECTION 3.19. Insurance. Schedule 3.19 of the Disclosure Schedule sets forth a
complete and accurate list (including the name of the insurer, name, address and
telephone number of the insurance broker or agent, type of coverage, premium,
policy number, limits of liability for personal injury and property damage and
expiration date) of all binders, policies of insurance, self insurance programs
or fidelity bonds, other than bonds for excise taxes and custom duties
(collectively the “Insurance Policies”) maintained by the Sellers or for which
any Seller is a named insured. All of the Insurance Policies have been issued
for the benefit of one or more Sellers, and are in amounts and for risks,
casualties and contingencies customarily insured against by enterprises with
operations similar to those of the Sellers. Except as provided in Schedule 3.19,
all of the Insurance Policies are currently valid, issued, outstanding and
enforceable. There are no pending or asserted claims against any Insurance
Policy as to which any insurer has denied liability, and there are no claims
under any Insurance Policy that have been disallowed or improperly filed.

 

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SECTION 3.20. Real Estate. Schedule 3.20 of the Disclosure Schedules sets forth
each parcel of real property leased by the Sellers and used in or necessary for
the conduct of the Business as currently conducted (together with all rights,
title and interest of the Sellers in and to leasehold improvements relating
thereto, including but not limited to, security deposits, reserves or prepaid
rents paid in connection therewith, collectively the “Leased Real Property”),
and a true and complete list of all leases, subleases, licenses, and
concessions, including all amendments, extensions, renewals, and guaranties with
respect thereto, pursuant to which a Seller holds any Leased Real Property
(collectively, the “Real Estate Leases”). Sellers have delivered to the
Purchaser a true and complete copy of each Real Estate Lease. With respect to
each Real Estate Lease: (i) Real Estate Lease is valid, binding, enforceable and
in full force and effect, and the Sellers enjoy peaceful and undisturbed
possession of the Leased Real Property; (ii) no Seller is in breach or default
in any material respect under any such Real Estate Lease, and to each Seller’s
knowledge no event has occurred or circumstance exists which, with the delivery
of notice, passage of time or both, would constitute such a breach or default in
any material respect, and the applicable Seller has paid all rent due and
payable under such Real Estate Lease; (iii) no Seller has received nor given any
notice of any default or event that with notice or lapse of time, or both, would
constitute a default by such Seller under any of the Real Estate Leases and, to
the knowledge of the Sellers, no other party is in default thereof or has
exercised any termination rights with respect thereto; (iv) no Seller subleased
or assigned or otherwise granted any Person the right to use or occupy such
Leased Real Property or any portion thereof; and (v) except as noted in Schedule
3.20, no Seller has pledged, mortgaged or otherwise granted an Encumbrance,
other than a Permitted Encumbrance, on its leasehold interest in any Leased Real
Property.

 

SECTION 3.21. [Reserved].

 

SECTION 3.22. Suppliers of the Sellers. Schedule 3.22 of the Disclosure
Schedules sets forth with respect to the Business (i) each supplier to whom the
Sellers has paid consideration for goods or services rendered in an amount
greater than or equal to $25,000 for each of the two (2) most recent fiscal
years (collectively, the “Material Suppliers”); and (ii) the amount of purchases
from each Material Supplier during such periods. Sellers have not received any
notice that any of the Material Suppliers have ceased, or intends to cease, to
supply goods or services to the Business or the Sellers or to otherwise
terminate or materially reduce its relationship with the Sellers.

 

SECTION 3.23. Inventory. All inventory, finished goods, raw materials, work in
progress, packaging, supplies, parts and other inventories (“Inventory”),
whether or not reflected in the Balance Sheet, consists of a quality and
quantity usable and salable in the ordinary course of business consistent with
past practice, except for obsolete, damaged, defective or slow-moving items that
have been written off or written down to fair market value or for which adequate
reserves have been established or that have otherwise expired or become
unsalable in the ordinary course of business. All Inventory is owned by Sellers
free and clear of all Encumbrances other than Permitted Encumbrances, and no
Inventory is held on a consignment basis. The quantities of each item of
Inventory (whether raw materials, work-in-process or finished goods) are not
excessive, but are reasonable in the present circumstances of the Sellers.

 

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SECTION 3.24. Untrue or Misleading Statements. No representation or warranty
contained in this Article III contains any untrue statement of a material fact
or omits to state a material fact required to be stated herein or necessary in
order to make the statements herein, in light of the circumstances under which
they are made, not misleading.

 

SECTION 3.25. Disclaimer of Warranties. The Business, including the Assets, is
being sold on an “as is”, “where is” basis as of the Closing and in its
condition as of Closing with “all faults” and, except as set forth in this
Article III, neither any Seller nor any of their officers, managers, directors,
employees or representatives make or have made any other representation or
warranty, express or implied, at Law or in equity, in respect of the Business or
any of the Assets.

 

SECTION 3.26.    Condition and Sufficiency of Assets. The buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and other items
of tangible personal property included in the Assets are structurally sound, are
in good operating condition and repair, normal wear and tear excepted, and are
adequate for the uses to which they are being put, and none of such buildings,
plants, structures, furniture, fixtures, machinery, equipment, vehicles and
other items of tangible personal property is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. The Assets are materially sufficient for the continued conduct
of the Business after the Closing in substantially the same manner as conducted
prior to the Closing and constitute all of the rights, property and assets
reasonably necessary to conduct the Business as currently conducted.

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser and Parent hereby, jointly and severally, represent and warrant to
the Sellers, as of the date hereof (except as to any representation or warranty
which specifically relates to an earlier date) and immediately prior to Closing,
as follows:

 

SECTION 4.1. Organization and Qualification. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of North Carolina, with all requisite power and authority and legal
right to own assets, to lease properties, and to conduct its business as
presently conducted. The Purchaser has delivered to the Seller true and complete
copies of the Purchaser's Articles of Formation, and all amendments thereto, and
each as so delivered is in full force and effect

 

SECTION 4.2. Authorization. The Purchaser has full corporate power and authority
to execute and deliver this Agreement and the Related Agreements and to
consummate the transactions contemplated herein. The execution and delivery of
this Agreement by the Purchaser and the performance by the Purchaser of its
obligations hereunder have been duly authorized by all requisite corporate
action. This Agreement has been duly and validly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, or similar laws relating to creditors' rights and
remedies generally.

 

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SECTION 4.3. No Violation. Neither the execution and delivery of this Agreement
by the Purchaser, nor the performance by the Purchaser of its obligations
hereunder, will: (a) violate or result in any breach of any provision of the
Purchaser's Articles of Incorporation or bylaws; or (b) violate any order, writ,
judgment, injunction, decree, statute, rule or regulation of any court or
Governmental Authority applicable to the Purchaser.

 

SECTION 4.4. Consents and Approvals. Except as listed on Schedule 4.4 of the
Disclosure Schedule, no filing or registration with, no notice to and no permit,
authorization, consent or approval of any third party or any Governmental
Authority not heretofore delivered to the Seller is necessary for the
Purchaser's consummation of the transactions contemplated herein. The execution
and delivery of this Agreement by Purchaser, the performance of its obligations
hereunder and the consummation of the transaction contemplated herein will not
constitute or result in (A) a breach or violation of, or a default under, the
Purchaser's Certificate of Incorporation and bylaws; (B) a breach or violation
of, a termination (or right of termination) or default under, the creation or
acceleration of any obligations under, or the creation of an Encumbrance on, any
of the assets of Purchaser (with or without notice, lapse of time or both)
pursuant to any agreement, lease, license, contract, note, mortgage, indenture,
arrangement or other obligation binding upon Purchaser, or (C) conflict with,
breach or violate any Law applicable to Purchaser or by which its properties are
bound or affected, except, in each case, for such violations, defaults or
impositions that would not have a Material Adverse Effect.

 

SECTION 4.5. Brokers' Fees and Commissions. Except as set forth on Schedule 4.5
of the Disclosure Schedule, neither the Purchaser nor any of its shareholders,
directors, officers, employees or agents has employed any investment banker,
broker, finder or intermediary, and such no fee or other commission is owed to
any third party, in connection with the transactions contemplated herein.

 

SECTION 4.6. Untrue or Misleading Statements. No representation or warranty
contained in this Article IV contains any untrue statement of a material fact or
omits to state a material fact required to be stated herein or necessary in
order to make the statements herein, in light of the circumstances under which
they are made, not misleading.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE PARENT

 

The Purchaser and Parent hereby, jointly and severally, represent and warrant to
the Sellers, as of the date hereof (except as to any representation or warranty
which specifically relates to an earlier date) and immediately prior to Closing,
as follows:

 

SECTION 5.1. Organization. The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to lease its properties and to conduct its
business as it is presently conducted. The Parent is qualified to do business
and is in good standing in each jurisdiction in which it owns assets, leases
property or conducts its business. The Parent has delivered to the Seller true
and complete copies of the Parent's Certificate of Incorporation and bylaws, and
all amendments thereto, and each as so delivered is in full force and effect.

 

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SECTION 5.2. Authorization. The Parent has full power and authority to perform
the transactions contemplated by this Agreement. The Parent's execution and
delivery of this Agreement, its performance of its obligations hereunder and the
consummation of the transactions contemplated herein have been duly authorized
by all requisite action, including, without limitation, by the Parent's board of
directors. This Agreement has been duly and validly executed and delivered by
the Parent and constitutes the legal, valid and binding obligation of the
Parent, enforceable in accordance with its terms, except to the extent that such
enforcement may be subject to applicable bankruptcy, insolvency or similar laws
relating to creditors' rights and remedies generally.

 

SECTION 5.3. Valid Issuance.    The Stock Consideration to be issued to the
Seller at the Closing pursuant to Section 2.1 hereof, when issued and delivered
in accordance with the terms hereof, will be duly and validly issued, fully paid
and nonassessableand and will not be subject to any option, call, preemptive,
subscription or similar rights under any provision of applicable Law, the
Parent's Certificate of Incorporation and bylaws, any stockholder or other
agreement and will be free and clear of all Encumbrances. Upon issuance, the
Stock Consideration will not be subject to any voting trust agreement or other
contract, agreement or arrangement restricting or otherwise relating to the
voting, dividend rights or disposition of such Equity Interests, except for
restrictions pursuant to applicable Laws. Upon consummation of the transactions
contemplated herein, Seller will acquire good and valid title to the Stock
Consideration.

 

SECTION 5.4. Consents and Approvals. Except as listed on Schedule 5.4 of the
Disclosure Schedule, no filing or registration with, no notice to and no permit,
authorization, consent or approval of any third party or any Governmental
Authority not heretofore delivered to the Sellers is necessary for the Parent's
consummation of the transactions contemplated herein. The execution and delivery
of this Agreement by Parent, the performance of its obligations hereunder and
the consummation of the transaction contemplated herein will not constitute or
result in (A) a breach or violation of, or a default under, the Parent's
Certificate of Incorporation and bylaws; (B) a breach or violation of, a
termination (or right of termination) or default under, the creation or
acceleration of any obligations under, or the creation of an Encumbrance on, any
of the assets of Parent (with or without notice, lapse of time or both) pursuant
to any agreement, lease, license, contract, note, mortgage, indenture,
arrangement or other obligation binding upon Parent, or (C) conflict with,
breach or violate any Law applicable to Parent or by which its properties are
bound or affected, except, in each case, for such violations, defaults or
impositions that would not have a Material Adverse Effect.

 

SECTION 5.5. Brokers' Fees and Commissions. Except as set forth on Schedule 4.5
of the Disclosure Schedule, neither the Parent nor any of its directors,
officers, employees or agents has employed any investment banker, broker, finder
or intermediary, and no fee or other commission is owed to any third party, in
connection with the transactions contemplated herein.

 

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SECTION 5.6 Capitalization. As of the date of this Agreement, the Parent is
authorized to issue 45,000,000 shares of common stock, of which 12,306,230
shares are issued and outstanding as of immediately prior to the Closing. All
issued and outstanding shares of capital stock of the Parent have been duly
authorized, validly issued, fully paid and nonassessable and were issued in
compliance with all applicable Laws concerning the issuance of securities. At
the Closing, Parent will have sufficient authorized but unissued shares or
treasury shares of the Parent’s common stock for Purchaser and Parent to meet
their obligations to deliver the Stock Consideration under this Agreement.
Parent owns all of the Equity Interests of the Purchaser. “Equity Interests”
means (i) any capital stock of a corporation, any partnership interest, any
limited liability company interest or any other equity interest; (ii) any
security or right convertible into, exchangeable for, or evidencing the right to
subscribe for, any such stock, equity interest or security referred to in clause
(i); (iii) any stock appreciation right, contingent value right or similar
security or right that is derivative of any such stock, equity interest or
security referred to in clause (i) or (ii); and (iv) any contract to grant,
issue, award, convey or sell any of the foregoing

 

SECTION 5.7 Dividends and Repurchases. Since December 31, 2014 and through the
date hereof, Parent has not made any declaration, setting aside or payment of
any dividend or other distribution with respect to any shares of the Parent’s
common stock or any repurchase or other acquisition by Parent of any outstanding
shares of Parent’s common stock or any agreement or other commitment related to
any of the foregoing.

 

SECTION 5.8 Absence of Certain Changes. Since December 31, 2014 and prior to the
date hereof, Parent has conducted its business only in, and has not engaged in
any material transaction other than in accordance with, the ordinary course of
such business consistent with past practice, and there has not been any: (i)
merger or consolidation between Parent or any of its subsidiaries with any other
Person, except for any such transactions among wholly-owned subsidiaries of
Parent, or any restructuring, reorganization or complete or partial liquidation
or similar transaction or the entry into any agreements or arrangements imposing
material changes or restrictions on its assets, operations or businesses; (ii)
material damage, destruction or other casualty loss with respect to any material
asset, or property otherwise used by Parent or any of its subsidiaries, whether
or not covered by insurance which is expected to have, either individually or in
the aggregate, a Material Adverse Effect on the Parent’s business; (iii)
material change in any method of financial accounting or accounting practice by
the Parent or any of its subsidiaries, except for any such change required by
changes in generally accepted accounting principles or applicable Law; (iv)
agreement to do any of the foregoing; or (vii) any effect that is, or could
reasonably be expected to become, individually or in the aggregate, materially
adverse to (a) the business, results of operations, condition (financial or
otherwise) or assets of the Parent or any of its subsidiaries, or (b) the
ability of Parent or Purchaser to consummate the transactions contemplated
hereby on a timely basis.

 

SECTION 5.9 Parent SEC Reports; Financial Statements. Parent has filed all
reports, schedules, forms, statements and other documents required to be filed
by it under the Exchange Act of 1934, as amended (the "Exchange Act")(and the
rules promulgated by the SEC thereunder) including pursuant to Section 13(a) or
15(d) thereof, for the twelve months preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”),
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective filing dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

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ARTICLE VI

COVENANTS

 

SECTION 6.1. Conduct of the Business Prior to the Closing. During the period
from the date of this Agreement and continuing until the Closing Date, the
Sellers agree that, except as expressly contemplated or permitted by this
Agreement or to the extent that the Purchaser shall otherwise consent in
writing, the Sellers shall carry on the Business and use the Assets in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted in all material respects. The Sellers agree to promptly
notify the Purchaser within two (2) business days of any event or series of
events which has resulted in any of the representations and warranties as to the
Sellers being misleading in any material respect (receipt of such notice will
not be a waiver with respect to the same). Without limiting the generality of
the foregoing, prior to the Closing, and except as expressly contemplated or
permitted by this Agreement, the Sellers will not, without the prior written
consent of the Purchaser, take any action that would constitute a change which
violates the terms of Section 3.8 hereof.

 

SECTION 6.2. Access to Information. During the period from the date of this
Agreement and continuing until the Closing, at all reasonable times without
causing unreasonable disruption to the Assets or related Business, the Sellers
shall give the Purchaser and its authorized representatives full access to all
personnel, offices and other facilities, and to all books and records of the
Sellers (including, without limitation, Tax Returns and accounting work papers)
and will permit the Purchaser to make, and will fully cooperate with regard to,
such inspections in order to conduct, among other things, interviews of
individuals and visual inspections of facilities as the Purchaser may reasonably
require and will fully cooperate in such interviews and inspections and will
cause the Sellers’ officers to furnish to the Purchaser such financial and
operating data and other information with respect to the Assets and related
Business as the Purchaser may from time to time reasonably request.

 

SECTION 6.3. Maintenance of Employee and Customer Relations. During the period
from the date of this Agreement and continuing until the Closing, the Sellers
shall use their best commercial efforts to retain the services and goodwill of
the employees of the Business and the Assets and to maintain the goodwill of its
customers, and shall not take, nor permit any manager, officer, employee, agent
or independent contractor of the Sellers to take, any action (i) with respect to
any employee, which action is intended to solicit, entice, persuade or induce
such employee to terminate his or her employment with the Sellers which action
is in contravention of the foregoing requirements, and (ii) with respect to its
customers, which action is intended to cause its customers, to terminate or
substantially diminish their business dealings with the Sellers which action is
in contravention of the foregoing requirements.

 

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SECTION 6.4. All Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done as
promptly as practicable, all things necessary, proper and advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement including, without limitation, fulfillment of the Conditions of
Closing set forth in Article VI hereof. If at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement including, without limitation, the execution of additional
instruments, the proper officers and directors of the Purchaser and the Seller
shall take all such necessary action.

 

SECTION 6.5. Consents and Approvals. The parties hereto each will cooperate with
one another and use all reasonable efforts to prepare all necessary
documentation to effect promptly all necessary filings and to obtain all
necessary permits, consents, approvals, orders and authorizations of or any
exemptions by, all third parties and Governmental Authorities necessary to
consummate the transactions contemplated herein.

 

SECTION 6.6. Public Announcements. Except as may be required by applicable law
or based upon the advice of counsel that such disclosure would be prudent under
applicable securities laws, the Purchaser and the Sellers will consult with each
other and will mutually agree upon the content and timing of any press releases
or other public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and agreement.

 

SECTION 6.7. Confidentiality. Neither the Purchaser, the Parent, the Seller or
each of Thomas A. Hager, Brad E. Smith, Dennis L. Thompson or David Lawwill
shall, for a period of two years from the Closing Date, use, publish, or
disclose to any other Person any confidential or proprietary information
comprising part of the Assets or relating to the Business or the transactions
contemplated by this Agreement; provided, however, that the foregoing
restrictions shall not apply to information: (a) that is necessary to enforce
the rights of the Sellers under, or defend against a claim asserted under, this
or any other agreement with the Purchaser, (b) that is necessary or appropriate
to disclose to any Governmental or Regulatory Authority having jurisdiction over
the Sellers, or as otherwise required by law, (c) that becomes generally known
other than through a breach of this Agreement by the Sellers, or (d) that is
necessary or appropriate in the ordinary course of each of the Sellers’
Business. The Purchaser acknowledges that the Sellers, and the Sellers
acknowledge that the Purchaser, do (does) not have an adequate remedy at law for
the breach of this Section 6.7 and that, in addition to any other remedies
available, injunctive relief may be granted for any such breach.

 

SECTION 6.8. No Trading. The Sellers, and to the best of the Sellers’ knowledge
each Seller’s members, directly or indirectly, and no Person acting on behalf of
or pursuant to any understanding with them, shall engage at or prior to closing,
nor has engaged, in any transactions in the securities of the Parent (including,
without limitation, any short sales involving any of Parent’s securities) since
the time that the Sellers were first contacted by the Parent, any of Parent’s
representatives or any other Person regarding Parent’s acquisition of the
Assets.

 

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SECTION 6.9. Bulk Sale Laws. The parties hereby waive compliance with the
provisions of any bulk sales, bulk transfer or similar laws of any jurisdiction
that may otherwise be applicable with respect to the sale of any or all of the
Assets to the Purchaser, it being understood that any liabilities arising out of
the failure of Sellers to comply with the requirements and provisions of any
bulk sales, bulk transfer or similar laws of any jurisdiction which would not
otherwise constitute Assumed Liabilities shall be treated as Excluded
Liabilities.

 

SECTION 6.10. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC that may permit the sale of the
Stock Consideration to the public without registration, Parent agrees, until the
first anniversary of the Closing Date:

 

(a) to use its best efforts to make and keep public information available, as
those terms are understood and defined in Rule 144(c) under the Securities Act;

 

(b) to use its best efforts to file with the SEC in a timely manner all reports
and other documents required to be filed by the Company under the Securities Act
and the Exchange Act; and

 

(c) furnish to any holder of any portion of the Stock Consideration promptly
upon request (i) a written statement by Parent that it has complied with the
reporting requirements of Rule 144 and (ii) such other information as such
holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing such holder to sell any such Stock Consideration without
registration.

 

SECTION 6.11. Disclosure Supplements. Prior to the Closing, each party to this
Agreement will promptly supplement or amend the Disclosure Schedule with respect
to any matter heretofore existing or hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Disclosure Schedule or which is necessary to
correct any information in such Disclosure Schedule which has been rendered
inaccurate thereby. Soley for purposes of determining the accuracy of the
representations and warranties of the Sellers contained in Article III hereof in
determining satisfaction of the conditions to closing set forth in Section 7.2
hereof, the Disclosure Schedule delivered by the Sellers shall be deemed to
include only that information contained therein on the date of this Agreement
and shall be deemed to exclude any information contained in any subsequent
supplement or amendment thereto.

 

SECTION 6.12. Restrictions on Transfer. The Sellers agree that prior to a
termination under this Agreement pursuant to Section 9.7 and Section 9.8 hereof,
it will not directly or indirectly sell, assign, transfer, give, pledge,
encumber or otherwise dispose of any portion of the Assets and the Sellers
further agrees not to enter into any agreement relating to these matters or to
conduct any discussions related to any of these matters.

 

SECTION 6.13. No Solicitation of Transaction. The Sellers shall not, and shall
use its best efforts to cause its representatives not to, directly or
indirectly, take any of the following actions with any person other than the
Purchaser without the prior written consent of the Purchaser: (A) solicit,
initiate, facilitate, engage in or encourage, or furnish information with
respect to the Sellers, in connection with, any inquiry, proposal or offer with
respect to any merger, consolidation or other business combination involving the
Sellers or the acquisition of all or a substantial portion of the assets of, or
any securities of, the Sellers, (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 Sellers to abandon, terminate or refrain from
consummating a transaction with the Purchaser.

 

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ARTICLE VII

CLOSING CONDITIONS

 

SECTION 7.1. Conditions to Each Party's Obligations under this Agreement. Each
party's obligations under Article I and Article II of this Agreement shall be
subject to each of the Parties having obtained any and all approvals, consents,
licenses, permits and authorizations from Governmental Authorities, if any, in
form and substance satisfactory to the other Party, necessary to permit such
Party to perform its obligations hereunder, to consummate the transactions
contemplated herein, and to continue to conduct the Business as presently
conducted and in accordance with applicable Law.

 

SECTION 7.2. Conditions to the Obligations of the Purchaser. The Purchaser's
obligations under this Agreement shall be further subject to the satisfaction or
to the waiver by the Purchaser of the following conditions precedent:

 

(a)          Performance of Obligations of Seller. Each of the Seller’s
pre-Closing obligations shall have been duly performed in all material respects,
and each of the representations and warranties of the Seller contained in this
Agreement shall be true and correct, in all material respects, as of the date of
this Agreement and as of the Closing as if made immediately prior to the Closing
(except as to any representation or warranty which specifically relates to
another date).

 

(b)          Executive Manager's Certificate Authorizing Transaction. The
Purchaser shall have received from the Executive Manager of BT Management, in a
form reasonably satisfactory to the Purchaser, a certificate enclosing the filed
Articles of Organization and Operating Agreement of each Seller, a resolution
authorizing all of the transactions contemplated herein by BT Management, on its
behalf and in its capacity as Manager of each Operational Subsidiary, and a good
standing certificate of each Seller dated as of a date reasonably close to the
Closing Date.

 

(c)          Executive Manager’s Certificate Regarding Representations and
Warranties. The Purchaser shall have received a certificate from the Executive
Manager of BT Management, in a form reasonably satisfactory to the Purchaser,
that the representations and warranties of the Sellers set forth in Article III
hereof are true and accurate as of the execution hereof and as of the Closing
Date.

 

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(e)          Financial Statements. BT Management shall have delivered to the
Purchaser the Financial Statements.

 

(f)          Contract Consents. Except as set forth in Section 2.5, any and all
requisite consents, waivers or authorizations from third parties required for
the assumption by the Purchaser of the assumed contracts shall have been
obtained without any material adverse effect on the terms of such contracts.

 

(g)          Assignment of Membership Interests; Bill of Sale. The Purchaser
shall have received an Assignment of Membership Interests and Resignation of
Manager transferring to Purchaser all of the outstanding membership interests in
the Operational Subsidiaries, which own the Business and substantially all of
the Assets, and a Bill of Sale selling and transferring to Purchaser any
interests in the Business and the Assets owned by BT Management, executed by the
Executive Manager of BT Management and in the form and substance reasonable
acceptable to the Parties and all other transfer documents reasonably requested
by it.

 

(h)          Due Diligence. Purchaser and Parent shall have completed its due
diligence of the operation of the Assets and Business of the Sellers, the
results of which shall have been deemed satisfactory in the sole discretion of
Purchaser and Parent, their agents, employees and representatives.

 

(i)          Regulatory Approval. The Purchaser shall have received approval of
the transactions contemplated by this Agreement, if required, by Nasdaq.

 

(j)          Other Documents. The Purchaser shall have received any such other
documents or other materials it may reasonably request to consummate the
transactions contemplated herein.

 

SECTION 7.3. Conditions to the Obligations of the Seller. The Seller’s
obligations under Article I and Article II of this Agreement shall be further
subject to the satisfaction or to the waiver by the Seller of the following
conditions precedent:

 

(a)          Closing Payment. BT Management shall have received the Cash
Consideration, payments owed pursuant to Section 2.1(c) and the Stock
Consideration and the Purchaser and Parent shall have assumed the Assumed
Liabilities.

 

(b)          Performance of Obligations of the Purchaser. Each of the
pre-Closing obligations of the Purchaser and the Parent shall have been duly
performed, and the representations and warranties of the Purchaser and the
Parent contained in this Agreement shall be true and correct, in all material
respects as of the date of this Agreement and as of the Closing Date as though
made immediately prior to the Closing (except as to any representation or
warranty which specifically relates to another date).

 

(c)          Secretary's Certificates. The Sellers shall have received from the
Secretary of the Purchaser and from the Secretary of the Parent, in a form
reasonably satisfactory to the Sellers, certificates enclosing the filed Article
of Incorporation and/or Articles of Formation of Purchaser and of Parent,
respectively, the resolutions authorizing all of the transactions contemplated
herein, and good standing certificates of the Purchaser and the Parent,
respectively, dated as of a date reasonably close to the Closing Date.

 

21

 

 

(d)          Officer’s Certificates. The Sellers shall have received
certificates from an officer of the Purchaser and from an officer of the Parent,
respectively, in a form reasonably satisfactory to the Sellers, that the
representations and warranties of the Purchaser set forth in Article IV and the
representations and warranties of the Parent set forth in Article V,
respectively, hereof are true and accurate as of the execution hereof and as of
the Closing Date.

 

(e)          Continued Employment. The Purchaser shall have offered employment
to the individuals listed on Schedule 7.3(e) on terms substantially similar to
each individual’s current terms of employment.

 

(f)          Other Documents. The Sellers shall have received from the Purchaser
any such other documents or other materials as the Sellers may reasonably
request to consummate the transactions contemplated herein.

 

ARTICLE VIII

SURVIVAL AND INDEMNIFICATION

 

SECTION 8.1. Survival. All representations and warranties contained in this
Agreement shall be deemed to have been relied upon by the parties hereto, and
shall survive the Closing; provided that any such representations and warranties
terminate at, and a claim with respect thereto may not be made following, the
twelve (12) month anniversary of the Closing Date, and shall thereafter be of no
further force or effect, except that the representations and warranties set
forth in Section 3.13 (Taxes), Section 3.14 (Environmental Matters), Section 4.5
(Broker’s Fees and Commissions), Section 5.3 (Valid Issuance), Section 5.5
(Broker’s Fees and Commissions) and Section 5.6 (Capitalization) shall survive
termination, and a claim with respect thereto may not be made following, the
expiration of the applicable period of limitations. Additionally, the parties
agree that the indemnification obligations set forth in this Article VIII shall
survive with respect to any litigation set forth on Schedule 3.9 and as to any
claims made within the applicable survival period until finally resolved.

 

SECTION 8.2. Indemnification of the Purchaser. From and after the Closing, the
Seller, jointly and severally agree to indemnify, defend and hold harmless the
Purchaser and the Parent and their respective directors, officers, employees,
owners, agents and affiliates and their successors and assigns or heirs and
personal representatives, as the case may be (each a “Purchaser Indemnified
Party”) from and against, and to promptly pay to or reimburse a Purchaser
Indemnified Party for, any and all actual losses, damages and expenses
(including, without limitation, reasonable attorneys' fees and expenses), suits,
actions, claims, deficiencies, liabilities or obligations (collectively, the
“Losses”) sustained by such Purchaser Indemnified Party relating to, caused by
or resulting from: (a) any misrepresentation, breach of warranty, or failure to
fulfill or satisfy any covenant or agreement made by the Seller; (b) the
operations and business of the Business by the Sellers through the Closing Date,
to the extent such Losses do not constitute Assumed Liabilities and (c) the
Excluded Liabilities.

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SECTION 8.3. Indemnification of the Seller. From and after the Closing, the
Purchaser and Parent, jointly and severally, agree to indemnify, defend and hold
harmless the Seller and its directors, officers, employees, owners, agents and
affiliates and their successors and assigns or heirs and personal
representatives, as the case may be (each, a “Seller Indemnified Party”) from
and against, and to promptly pay to or reimburse a Seller Indemnified Party for,
any and all Losses sustained by such Seller Indemnified Party relating to,
caused by or resulting from: (a) any misrepresentation, breach of warranty, or
failure to fulfill or satisfy any covenant or agreement made by the Purchaser
contained herein; and (b) the Assumed Liabilities.

 

SECTION 8.4. Indemnification Procedure for Third Party Claims Against
Indemnified Parties.

 

(a)          Notice. With respect to any matter for which indemnification is
claimed pursuant to Section 8.2, the Purchaser Indemnified Party will notify the
Seller in writing promptly after becoming aware of such matter. With respect to
any matter for which indemnification is claimed pursuant to Section 8.3, the
Seller Indemnified Party will notify the Purchaser in writing promptly after
becoming aware of such matter. A failure or delay to promptly notify an
indemnifying party of a claim will only relieve such indemnifying part of its
obligations pursuant to this Article VIII to the extent, if at all, that such
party is prejudiced by reason of such failure or delay.

 

(b)          Defense of Claim. Promptly after receipt of any notice pursuant to
Section 8.4, the indemnifying party shall defend, contest, settle, compromise or
otherwise protect the indemnified party against any such claim for Losses at its
own cost and expense. Each indemnified party will have the right, but not the
obligation, to participate, at its own expense, in the defense by counsel of its
own choosing; provided, however, that the indemnifying party will be entitled to
control the defense unless the indemnified party has relieved the indemnifying
party in writing from liability with respect to the particular matter. The
indemnified party shall reasonably cooperate with the indemnifying party’s
requests, and at the indemnifying party’s expenses (including, but not limited
to, indemnifying party’s paying or reimbursing the indemnified party’s
reasonable attorneys’ fees and investigation expenses), concerning the defense
of the claim for Losses. The indemnifying party shall include the indemnified
party in any settlement discussions.

 

(c)          Failure to Defend. If the indemnifying party does not timely
defend, contest or otherwise protect against a claim for Losses after receipt of
the required notice, the indemnified party will have the right, but not the
obligation, to defend, contest or otherwise protect against same, make any
compromise or settlement therefor, and record the entire cost therefor from the
indemnifying party, including, without limitation, reasonable attorneys’ fees,
disbursements and all amounts paid as a result of such suit, action,
investigation and Losses.

 

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SECTION 8.5. Limitations on Liability.

 

(a)          Notwithstanding anything to the contrary contained herein, the
Sellers, Purchaser and Parent shall not have any obligation to indemnify a
Purchaser Indemnified Party under Section 8.2 or a Seller Indemnified Party
under Section 8.3 unless and until (i) the amount of any individual Loss exceeds
$5,000 (the “Per Claim Threshold”) and (ii) the aggregate of all such Losses
greater than the Per Claim Threshold suffered by all such Purchaser Indemnified
Party under Section 8.2 or by all such Seller Indemnified Party under Section
8.3 exceeds $30,000 (the “Threshold”), whereupon, provided the other
requirements of this Article VIII have been complied with and subject to the
other limitations of this Article VIII, Seller. Purchaser or Parent, as the case
may be, shall be liable to indemnify the Purchaser Indemnified Parties under
Section 8.2 or the Seller Indemnified Party under Section 8.3 for only the
excess of Losses over the amount of the Threshold. Notwithstanding anything to
the contrary contained herein, in no event shall the aggregate of all
indemnification paid by Seller, Purchaser or Parent hereunder pursuant to
Section 8.2 or Section 8.3 exceed $140,000 (the “Cap”).

 

(b)          Each Purchaser Indemnified Party and Seller Indemnified Party shall
mitigate all Losses for which such Purchaser Indemnified Party or Seller
Indemnified Party is or may be entitled to indemnification hereunder to the
extent required by North Carolina Law in connection with a breach of a contract
and, in the event that any Purchaser Indemnified Party or Seller Indemnified
Party fails to so mitigate an indemnifiable Loss, the indemnifying party shall
have no liability for any portion of such Loss that could reasonably have been
avoided. If any Losses sustained by a Purchaser Indemnified Party or Seller
Indemnified Party are covered by an insurance policy or an indemnification,
contribution or similar obligation of another Person, Purchaser Indemnified
Party or Seller Indemnified Party shall use reasonable efforts to collect such
insurance proceeds or indemnity, contribution or similar payments. If Purchaser
Indemnified Party or Seller Indemnified Party receives such insurance proceeds
or indemnity, contribution or similar payments prior to being indemnified with
respect to such Losses under this Article VIII, the payment under this Article
VIII with respect to such Losses shall be reduced by the amount of such
insurance proceeds or indemnity, contribution or similar payments. If Purchaser
Indemnified Party or Seller Indemnified Party receives such insurance proceeds
or indemnity, contribution or similar payments after being indemnified with
respect to some or all of such Losses, Purchaser Indemnified Party or Seller
Indemnified Party shall pay to Seller, Purchaser or Parent, as applicable, the
lesser of (i) the amount of such insurance proceeds or indemnity, contribution
or similar payment and (ii) the aggregate amount paid by Seller to any Purchaser
Indemnified Party with respect to such Losses, or the aggregate amount paid by
Purchaser or Parent to any Seller Indemnified Party with respect to such Losses,
as applicable.

 

(c)          In no event shall any party be entitled to recover or make a claim
for any amounts in respect of, and in no event shall “Losses” be deemed to
include (i) indirect, expectation, incidental, special or consequential damages,
lost profits or revenues, business interruption, exemplary or punitive damages
or diminution in value and, in particular and without limiting the generality of
the foregoing, no “multiple of earnings” or “multiple of cash flow” or similar
valuation methodology shall be used in calculating the amount of any Losses, and
(ii) any loss, liability, damage or expense to the extent reflected as a
liability on the Financial Statements. The amount of any Loss payable under this
Article VIII by an indemnifying party shall be calculated net of any Tax benefit
arising from the incurrence or payment of any such Loss.

 

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(d)          Notwithstanding anything to the contrary in this Agreement, no
Purchaser Indemnified Party, Seller Indemnified Party or their respective
successors or assigns shall have any right or entitlement to indemnification
from Seller, Purchaser or Parent for any Losses relating to any matter arising
under the provisions of this Agreement, to the extent that any such Purchaser
Indemnified Party, Seller Indemnified Party or their respective successors and
assigns had already recovered Losses with respect to the same matter pursuant to
any other provision of this Agreement, and such Purchaser Indemnified Parties or
Seller Indemnified Party shall be deemed to have waived and released any claims
for such Losses and shall not be entitled to assert any such claim for
indemnification for such Losses.

 

(e)          From and after the Closing, indemnification pursuant to the
provisions of this Article VIII shall be the sole and exclusive remedy for any
breach of this Agreement or otherwise relating to the subject matter of this
Agreement and the transactions contemplated herein. Without limiting the
generality of the preceding sentence, from and after the Closing, each of
Purchaser, Parent and each Seller, for themselves and the other Purchaser
Indemnified Parties and Seller Indemnified Parties, (a) agree that no legal
action sounding in contribution, tort, strict liability or any other legal
theory may be maintained by any party hereto, any Purchaser Indemnified Party or
Seller Indemnified Party or any other Person for any breach of this Agreement or
otherwise with respect to the subject matter of this Agreement and the
transactions contemplated herein, and (b) hereby waives any and all statutory
rights of contribution or indemnification that any of them might otherwise be
entitled to under any Law or any similar rules of law embodied in the common
law.

 

ARTICLE IX

GENERAL PROVISION

 

SECTION 9.1.          Amendment and Modification; Waiver of Compliance. Neither
the Purchaser, on the one hand, nor the Sellers, on the other hand, will be
deemed as a consequence of any delay, failure, omission, forbearance or other
indulgence of such party: (i) to have waived, or to be estopped from exercising,
any of its rights or remedies under this Agreement; or (ii) to have modified or
amended any of the terms of this Agreement, unless such modification or
amendment is set forth in writing and signed by the party to be bound thereby.
No single or partial exercise by the Purchaser or the Sellers of any right or
remedy will preclude any other right or remedy, and a waiver expressly made in
writing on one occasion will be effective only in that specific instance and
only for the precise purpose for which given, and will not be construed as a
consent to or a waiver of any right or remedy on any future occasion or a waiver
of any right or remedy against any other party.

 

SECTION 9.2. Validity. If any provision of this Agreement or the application of
any such provision to any party hereto or any circumstances relating hereto
shall be determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such party or circumstances, other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by Law.

 

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SECTION 9.3. Parties in Interest. This Agreement shall not confer upon any other
Person any rights or remedies of any nature whatsoever.

 

SECTION 9.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon the earlier to occur of delivery thereof
if by hand or upon receipt or on the second business day after deposit if sent
by a recognized overnight delivery service or upon transmission if sent by
facsimile (in each case with receipt verified) as follows:

 

If to the Purchaser or Parent:   With a copy to:

Chanticleer Holdings, Inc.

7621 Little Avenue, Suite 414

Charlotte, North Carolina 28226

Attn: Michael D. Pruitt

 

 

Ruskin Moscou Faltischek, P.C.

1425 RXR Plaza

East Tower, 15th Floor

Uniondale, NY 11556

Attn: Seth I. Rubin, Esq.

 

If to the Seller:   With a copy to:

BT's Burgerjoint Management, LLC

13900 Conlan Circle

Suite 240

Charlotte, North Carolina 28277

Attn: Thomas A. Hager

 

Nelson Mullins Riley & Scarborough LLP

100 N. Tryon Street, 42nd Floor

Charlotte, NC 28202-4000

Attn: C. Wells Hall III

 

provided that each of the parties hereto shall promptly notify the other parties
hereto of any change of address, which address shall become such party's address
for the purposes of this Section 9.4.

 

SECTION 9.5. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
North Carolina, without giving effect to any choice or conflict of law provision
or rule. The parties further: (i) agree that any legal suit, action or
proceeding arising out of or relating to this Agreement shall be instituted
exclusively in any Federal or State court of competent jurisdiction within
Mecklenburg County, North Carolina, (ii) waive any objection that they may have
now or hereafter to the venue of any such suit, action or proceeding, and
(iii) irrevocably consent to the in personam jurisdiction of any Federal or
State court of competent jurisdiction within Mecklenburg County, North Carolina
in any such suit, action or proceeding. The parties each further agree to accept
and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in a Federal or State court of competent jurisdiction
within Mecklenburg County, North Carolina, and that service of process upon the
parties mailed by certified mail to their respective addresses shall be deemed
in every respect effective service of process upon the parties, in any action or
proceeding.

 

SECTION 9.6. Entire Agreement. This Agreement, including the Disclosure
Schedule, embody the entire agreement and understanding of the parties hereto
and supersede all prior agreements and understandings between the parties
hereto, whether written or oral, express or implied, with respect to such
subject matter herein and therein.

 

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SECTION 9.7. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned:

 

(i)          by mutual written consent of the Purchaser and the Sellers;

 

(ii)         by the Purchaser if any of the representations or warranties of the
Sellers contained herein are not in all material respects true, accurate and
complete, or if the Sellers breach any covenant or agreement contained herein in
any material respect, and the same is not cured within 10 days after notice
thereof;

 

(iii)        by the Sellers if any of the representations or warranties of the
Purchaser contained herein are not in all material respects true, accurate and
complete or if the Purchaser breaches any covenant or agreement contained herein
in any material respect; and the same is not cured within 10 days after notice
thereof;

 

(iv)       By Purchaser if (A) the Closing has not occurred by June 1, 2015, and
(B) such party has performed all of its obligations hereunder and has satisfied
all of the conditions to Closing to be satisfied for the other party to proceed;
or

 

(v) By Sellers if (A) the Closing has not occurred by June 1, 2015, and (B) such
parties have performed all of their obligations hereunder and have satisfied all
of the conditions to Closing to be satisfied for the other party to proceed.

 

Section 9.8. Effect of Termination. In the event of the termination of this
Agreement in accordance with this Article, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except: (a)
as set forth in this Article IX and Section 6.7 hereof; and (b) that nothing
herein shall relieve any party hereto from liability for any willful breach of
any provision hereof.

 

Section 9.9. Assignment. Sellers may not assign any of its rights under this
Agreement without the prior consent of the Purchaser. The Purchaser may assign
this Agreement without the prior consent of Sellers. Notwithstanding the
foregoing, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of and be enforceable by the respective successors and
permitted assigns of the parties.

 

Section 9.10. Enforceability. If any provision of this Agreement is found to be
unenforceable, the balance of this Agreement shall be deemed enforceable without
the provision in questions.

 

Section 9.11. 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.

 

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Section 9.12. 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]

 

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

 

  PURCHASER:       BT Burger Acquisition Inc., a North Carolina limited
liability company         By: /s/ Michael D. Pruitt     Name: Michael D. Pruitt
    Title:  Managing Member       PARENT:       Chanticleer Holdings, Inc., a
Delaware corporation         By: /s/ Michael D. Pruitt     Name:  Michael D.
Pruitt     Title:    Chief Executive Officer       SELLER:       BT’s
Burgerjoint Management, LLC, a North Carolina limited liability company, for and
on behalf of BT’s Burgerjoint Rivergate, LLC, a North Carolina limited liability
company, BT’s Burgerjoint Promenade, a North Carolina limited liability company,
BT’s Burgerjoint Biltmore, LLC, a North Carolina limited liability company, BT’s
Burgerjoint Sun Valley, LLC, a North Carolina limited liability company, BT’s
Burgerjoint Charlotte Premium Outlets, LLC, a North Carolina limited liability
company, in its capacity as Manager         By: /s/ Thomas A. Hager     Name:
Thomas A. Hager     Title:   Executive Manager

 

  For the limited purposes set forth in Section 6.2:         By: /s/ Thomas A.
Hager     Thomas A. Hager, Individually

 

29

 

 

  By: /s/ Brad E. Smith     Brad E. Smith, Individually         By: /s/ Dennis
L. Thompson     Dennis L. Thompson, Individually         By: /s/ David Lawwill  
  David Lawwill, Individually

 

30