Document:

AGREEMENT AND PLAN OF MERGER

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
I

DEFINITIONS

 

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

 

    	 

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
II

THE MERGERS

 

2.1             
The Mergers.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE
III

CONVERSION OF SHARES

 

3.1             
Effect on Membership Interests.

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE
IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANIES

 

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

 

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

 

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

 

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

 

4.4             
Capitalization.

 

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

 

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

 

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

 

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

 

4.7             
Approvals.

 

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

 

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

 

4.8             
Financial Statements; No Undisclosed Liabilities.

 

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

 

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

 

4.9             
Absence of Certain Changes.

 

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

 

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

 

    	11

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.11         
Intellectual Property Matters.

 

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

 

    	12

    	 

    

 

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

 

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

 

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

 

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

 

4.14         
Taxes.

 

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

 

    	13

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.16         
Employee Benefit Plans.

 

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

 

    	14

    	 

    

 

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

 

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

 

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

 

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

 

    	15

    	 

    

 

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

 

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

 

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

 

4.20         
Real Property.

 

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

 

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

 

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

 

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

 

    	16

    	 

    

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERs AND PARENT

 

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

 

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

 

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

  

    	17

    	 

    

 

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

 

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

 

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

 

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

 

    	18

    	 

    

 

5.7             
Parent’s Common Stock and NASDAQ Compliance.

 

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

 

5.8             
Issuance Valid; SEC Filings; Financial Statements.

 

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

 

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

 

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

 

ARTICLE
VI

COVENANTS

 

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

 

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

 

    	19

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	20

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	21

    	 

    

 

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

 

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

 

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

 

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

 

ARTICLE
VII

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

 

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

 

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

 

    	22

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	23

    	 

    

 

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

 

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

 

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

 

ARTICLE
VIII

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANIES

 

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

 

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

 

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

 

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

 

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

 

    	24

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	25

    	 

    

 

ARTICLE
IX

TERMINATION, AMENDMENT AND WAIVER

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	26

    	 

    

 

ARTICLE
X

INDEMNITY

 

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

 

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

 

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

 

    	27

    	 

    

 

10.4         
Matters Involving Third Parties.

 

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

 

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

 

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

 

10.5         
Limitations on Amount.

 

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

 

    	28

    	 

    

 

10.6         
Time Limitations.

 

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

 

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

 

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

 

ARTICLE
XI

OTHER AGREEMENTS

 

The parties hereto
agree that:

 

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

 

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

 

    	29

    	 

    

 

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

 

ARTICLE
XII

MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

    	30

    	 

    

 

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

 

 

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

 

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

 

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

 

[Signatures follow on Next Page]

 

    	31

    	 

    

 

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

 

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

 

    	32

    	 

    

 

COMPANIES:

 

DALLAS SPOON, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: Manager

 

DALLAS SPOON BEVERAGE, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: President

SELLER:

 

EXPRESS RESTAURANT HOLDINGS, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: President

 

EXPRESS RESTAURANT HOLDINGS BEVERAGE, L.L.C.

 

By: ________________________________

Print Name: Joe Womack

Title: Manager

 

    	33SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of October ____, 2013, by and between ARKADOS GROUP, INC.,
a Delaware corporation, with headquarters located at 211 Warren Street, Suite 320, Newark, NJ 07103 (the “Company”),
and Tai
Jee Pan, an individual with principal address at 15625 NW Perimeter Drive, Beaverton, OR 97006 (the “Buyer”).

 

WHEREAS:

 

A.           The
Company and the Buyer are executing and delivering this Agreement in reliance upon the Regulation S or Regulation D exemption from
securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission
(the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”), or under Section 4(2) of the
1933 Act;

 

B.           Buyer
desires to purchase, and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a convertible
note of the Company, in the form attached hereto, in the aggregate principal amount of Two Hundred Thousand Dollars (US$200,000),
which note bears interest at the rate of 6% compounded quarterly (together with any note(s) issued in replacement thereof or as
a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), and which note
is convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the
terms and subject to the limitations and conditions set forth in such Note.

 

C.           The
Buyer wishes to lend to the Company, upon the terms and conditions stated in this Agreement, such principal amount of Note as is
set forth immediately below its name on the signature pages hereto; and

 

D.          The Note is part of an authorized issue
of 6% Convertible Notes due October 28, 2015 by the Company in the aggregate principal amount of $200,000.

 

NOW THEREFORE,
the Company and the Buyer severally (and not jointly) hereby agree as follows:

 

1.          Loan
and Issuance of Note.

 

a.     Issuance
of Note. On the Closing Date (as defined below), the Company shall issue to the Buyer, and the Buyer agrees to loan to the
Company, such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

 

b.     Form
of Loan. On the Closing Date (as defined below), (i) the Buyer shall loan the principal amount (the “Purchase Price”)
at the Closing (as defined below) by wire transfer of immediately available funds to the Company, in accordance with the Company’s
written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately
below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on
behalf of the Company, to the Buyer, against delivery of such Purchase Price.

 

c.     Closing
Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00
noon, Eastern Standard Time on or about May 31, 2013, or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to
by the parties.

 

    	 

    	 

    

 

d.     Buyer’s
Representations and Warranties. The Buyer represents and warrants to the Company that:

 

e.     Investment
Purpose. As of the date hereof, the Buyer is being issued the Note and purchasing the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any,
as are issuable (i)on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g)
of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this
Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively
with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act

 

f.      Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an
“Accredited Investor”).

 

g.     Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.

 

h.     Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of
the Securities, which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for
so long as the Note remains outstanding will continue to be afforded the opportunity to ask questions of the Company and to promptly
receive answers to those questions. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic
information and will not disclose such information unless such information is disclosed to the public prior to or promptly following
such disclosure to the Buyer, or unless Buyer enters into a non-disclosure agreement with the Company agreeing to maintain the
confidentiality of the such information. Neither such inquiries nor any other due diligence investigation conducted by Buyer or
any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant
degree of risk.

 

i.      Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

 

    	2

    	 

    

 

j.     Transfer
or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under
the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities
are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company,
at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary
for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration, which opinion shall be reasonably acceptable to the Company, (c) the
Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor
rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities
are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have
delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary
for opinions of counsel in corporate transactions, which opinion shall be reasonably acceptable to the Company; (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale
is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under
any obligation to register such Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account
or other lending arrangement. 

 

k.    Legends.
The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act, may
be sold pursuant to Rule 144, or Regulation S without any restriction as to the number of securities as of a particular date that
can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

 

“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE OR CERTIFICATE, NOR SECURITIES INTO WHICH THIS NOTE MAY BE CONVERTED, HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The
legend set forth above shall be removed, and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933
Act, which opinion shall be reasonably acceptable to the Company so that the sale or transfer is effected. In the event that the
Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an
exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant
to Section 3.2 of the Note.

 

    	3

    	 

    

 

l.     Authorization;
Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf
of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

 

m.   Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

 

i.     Authorized
Shares. The Buyer hereby acknowledges that the number of shares of the Company’s Common Stock authorized and reserved
for issuance is below the number of Conversion Shares issued and issuable upon conversion of or otherwise pursuant to the Note
(based on the Conversion Price and any other shares of Common Stock issued or issuable pursuant to the terms of this Note). The
Buyer further acknowledges that they are aware, that their ability to convert the Note pursuant to its terms is conditioned upon
the Company taking all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation,
calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations under the Note,
using its best efforts to obtain stockholder approval of an increase in such authorized number of shares.

 

j.     Non-compliance
with Exchange Act. The Buyer hereby acknowledges that the Company is delinquent in its reporting requirements under the Exchange
Act. As a result, the Buyer understands that its ability to sell or transfer the Note or the shares of Common Stock underlying
the Note may be impaired and therefor may require the Buyer to the Securities indefinitely.

 

2.             Representations
and Warranties of the Company. The Company represents and warrants to the Buyer that:

 

a.    Organization
and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly
existing and in good standing under the laws of Delaware [or state jurisdiction], with full power and authority (corporate and
other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.

 

b.    Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement and the
Note, and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation
for issuance of the Conversion Shares issuable upon conversion) have been duly authorized by the Company’s Board of Directors,
subject to the Amendment to the Company’s Certificate of Incorporation, which upon the effective date of such Amendment will
increase the authorized shares of Common Stock the Company, which Amendment is subject to the Company receiving the required consent
of a majority of the Company’s shareholders to such Amendment, (iii) this Agreement has been duly executed and delivered
by the Company by its authorized representative, and such authorized representative is the true and official representative with
authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and
(iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute,
a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

    	4

    	 

    

  

c.     Capitalization.
As of the date hereof, the authorized capital stock of the Company consists of: (i) 100,000,000 shares of Common Stock, $0.001
par value per share, of which 48,898,474 shares are issued and outstanding; and (ii) 5,000,000 shares of Preferred Stock, $0.001
par value per share, of which no shares are issued and outstanding; An additional 161,083,614 shares shall be issued pursuant to
the Company’s stock option plans, reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable
for shares of Common Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly
issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of
the Company. As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe
for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of
its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its Subsidiaries that are not mentioned here, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the
1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares
that are not contained here. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate
of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as
in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common
Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with
a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing
Date.

 

d.     Issuance
of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance
with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the holder thereof.

 

e.     Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance
of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion
Shares upon conversion of the Note in accordance with this Agreement and that the Note is absolute and unconditional regardless
of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

 

    	5

    	 

    

 

f.     No
Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of
the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation
or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which
with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries
is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries
is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries
is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any
of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or
any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to
take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company
or any of its Subsidiaries is bound or affected. The businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of
any governmental entity. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any
of the foregoing. Schedule 3 (f) sets forth any required consents, authorizations or orders of, or filings or registrations with,
any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for
it to execute, deliver or perform any of its obligations under this Agreement, to issue the Note, or to issue the Conversion Shares
upon conversion of the Note. All consents, authorizations, orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is in violation of
the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that
the Common Stock will be listed by the OTCBB in the foreseeable future.

 

g.    SEC
Documents; Financial Statements. The Company has not filed its reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred
to herein as the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC, 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. None of the statements made in any such SEC Documents is, or has been, required to
be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior
the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC
with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent
or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2012, and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting
principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

    	6

    	 

    

 

h.     Absence
of Certain Changes. Since February 28, 2012, there has been no material adverse change and no material adverse development
in the assets, liabilities, business, properties, operations, financial condition, results of operations, of the Company or any
of its Subsidiaries.

 

i.      Absence
of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to
the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard
to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.

 

j.      Patents,
Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents,
patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect
to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to
be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current
and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual
Property.

 

k.     No
Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse
Effect.

 

    	7

    	 

    

 

l.     Tax
Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company
and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to
be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating
to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s tax returns is presently
being audited by any taxing authority, nor is the Company subject to any tax investigation by any governmental agency.

 

m.   Certain
Transactions. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments
in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third
parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of
the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director
or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

n.    Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the
Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct
in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred
or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under
the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

 

o.    Acknowledgment
Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives
or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Buyer’ purchase of the Securities. The Company further represents to the Buyer that the Company’s
decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

 

    	8

    	 

    

 

p.     No
Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would
require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer
will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its securities.

 

q.     No
Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction
fees or similar payments relating to this Agreement or the transactions contemplated hereby.

 

r.      Permits;
Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company
Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company
Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since March 31, 2012, neither the Company nor any of its Subsidiaries has received
any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to
possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

s.     Environmental
Matters.

 

(i)          There
are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing.
The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

(ii)         Other
than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials
were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the
period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.

 

    	9

    	 

    

 

(iii)        There
are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.

 

t.     Title
to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would
not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

 

u.    Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the
Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability
coverage, errors and omissions coverage, and commercial general liability coverage.

 

v.    Internal
Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient,
in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences.

 

w.   Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

x.    Solvency.
The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute
and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not,
after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action
that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company
did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect
to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue
a qualified opinion in respect of its current fiscal year.

 

    	10

    	 

    

 

y.     No
Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment
Company”). The Company is not controlled by an Investment Company.

 

z.      Breach
of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth
in this Section 2, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of default under Section 3.4 of the Note.

 

3.          COVENANTS.

 

a.      Best
Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of
this Agreement.

 

b.      Form
D; Blue Sky Laws. Unless it believes it is exempt from any such filings, the Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities
for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or “blue sky”
laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any
such action so taken to the Buyer on or prior to the Closing Date.

 

c.      Use
of Proceeds. The Company shall use the proceeds for general working capital purposes, including legal and accounting expenses
related to SEC filings.

 

d.      Financial
Information. Upon written request the Company agrees to send or make available the following reports to the Buyer until the
Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of
its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1)
day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously
with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company
makes available or gives to such shareholders.

 

f. Stockholder Approval.
The Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations
under this Section 4 (f), in the case of an insufficient number of authorized shares, and using its best efforts to obtain stockholder
approval of an increase in such authorized number of shares.

 

    	11

    	 

    

 

g. Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the
Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement exchange,
the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock
Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”)
and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB
and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the
Common Stock for listing on such exchanges and quotation systems.

 

h.
Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale
of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes
the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii)
is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

 

i.
No Integration. The Company shall not knowingly make any offers or sales of any security (other than the Securities) under
circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the
offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

 

j.
Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the
Note.

 

k.
Failure to Comply with the 1934 Act. Within 60 days of Closing and thereafter so long as the Buyer beneficially owns the Note,
the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting
requirements of the 1934 Act.

 

4.          RESERVED

 

5.          Conditions
to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue the Note to the Buyer at the Closing
is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

 

a.     The
Buyer shall have executed this Agreement and delivered the same to the Company.

 

b.     The
Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

c.     The
representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as
of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.

 

    	12

    	 

    

 

d.     No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

6.          Conditions
to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to loan the Purchase Price to the Company
at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that
these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion: 

 

a.     The
Company shall have executed this Agreement and delivered the same to the Buyer.

 

b.     The
Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance
with Section 1(b) above.

 

c.     RESERVED

 

d.     The
representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as
of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date), and
the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited
to certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions
relating to the transactions contemplated hereby.

 

e.     No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

f.      No
event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not
limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act
reporting obligations.

 

g.     The
Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not
have been suspended by the SEC or the OTCBB.

 

    	13

    	 

    

 

7.          Governing
Law; Miscellaneous.

 

a.     Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey without regard
to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New Jersey or in the federal courts located in the state. The parties
to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer
waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

b.     Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party.

 

c.     Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of,
this Agreement.

 

d.     Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.

 

e.     Entire
Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

 

f.      Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

 

    	14

    	 

    

 

If to the
Company, to:

Arkados
Group, Inc.

Attn: Terrence
DeFranco

211 Warren
Street, Suite 320

Newark,
NJ 07103

 

With a copy
by fax only to (which copy shall not constitute notice):

 

Kenneth
R. Vennera

General
Counsel

211 Warren
Street, Suite 320

Newark,
NJ 07103

Fax: 610-272-1562

 

If to
the Buyer:

 

With a copy
by fax only to (which copy shall not constitute notice):

Tai Jee Pan

15625 NW Perimeter
Drive

Beaverton, Oregon 97006

Fax: 503-645-7999

 

Each
party shall provide notice to the other party of any change in address.

 

g.     Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder to
any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that
term is defined under the 1934 Act, without the consent of the Company.

 

h.     Third
Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

i.      Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to
indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth
in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

    	15

    	 

    

 

j.     Publicity.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC,
OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other
applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall
be provided with a copy thereof and be given an opportunity to comment thereon).

 

k.    Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

l.     No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

m.   Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

[SIGNATURE PAGE FOLLOWS]

 

    	16

    	 

    

 

IN WITNESS WHEREOF, the undersigned
Buyer and the Company have caused this Agreement to be duly executed as of the date first written above.

 

COMPANY:

ARKADOS GROUP, INC.

 

	By:	/s/ Terrence DeFranco	 
	 	Terrence DeFranco	 
	 	President and Chief Executive Officer	 

 

BUYER:

 

	By:	 /s/ Tai Jee Pan	 
	Name:	 Tai Jee Pan	 

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

	Aggregate Principal Amount of Note:	$200,000
	 	 
	Aggregate Purchase Price:	$200,000

 

    	17

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