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IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT - LAW DIVISION BOW & TRUSS LLC, an Illinois limited liability company, No. 17 L 1160 Plaintiff/Counter- Defendant, Judge James B. Snyder vs. Calendar Y MARCUS LEMONIS and ML FOOD GROUP, LLC, a Delaware limited liability company, Defendants/Counter- Plaintiffs. ML FOOD GROUP, LLC, a Delaware limited liability company, ‘Third-Party Plaintiff, vs. PHILIP TADROS Third-Party Defendant. ML FOOD GROUP, LLC’S COUNTERCLAIMS AND THIRD-PARTY CLAIMS Defendant/Counter-Plaintiff and Third-Party Plaintiff, ML Food Group, LLC, by and through its attorneys, and for its Counterclaims against Plaintiff/Counter-Defendant Bow & Truss, LLC, and its Third-Party Claims against Third-Party Defendant Philip Tadros alleges as follows: The Parties 1) ML Food Group, LLC (hereinafter, “ML Foods”) is a limited liability company organized under the laws of the State of Delaware. 2) Upon information and belief, Bow & Truss, LLC (hereinafter, “Bow & Truss”) is a limited liability company organized under the laws of the State of Illinois. 3) Philip Tadros (“Tadros”) is an individual who, upon information and belief, resides in Illinois. The Letter of Intent 4) In or around, early December 2016, the chairman and manager of ML Foods, Marcus Lemonis, on behalf of ML Foods, and Tadros, on behalf of Bow & Truss, discussed a potential acquisition of the operating assets of Bow & Truss by ML Foods. 5) During these discussions, Tadros individually and on behalf of Bow & Truss made the following representations to Marcus Lemonis and other representatives of ML Foods: a. that Tadros was the 100% owner of Bow & Truss; b. that Bow & Truss had approximately $2.3 million in debt; c. that Bow & Truss had a number of lease agreements with various property owners for the 2. locations where Bow & Truss operated its various coffee shops; d. that Bow & Truss was the owner of all of the assets and inventory used in connection with the operation of Bow & Truss coffee shops; and e. that Bow & Truss’ only need for an immediate influx of financing was $150,000 to cover leasehold improvements at three coffee shop locations ($50,000 per location). 6) The aforementioned representations were material to ML Foods’ decision to execute a letter of intent to purchase the assets of Bow & Truss and were made by Tadros and Bow & Truss for the express and intended purpose of inducing ML Foods to execute such a letter of intent. 7) Im reliance on these material representations, on December 14, 2016, ML Foods sent a “Letter of Intent” to Bow & Truss (hereinafter, the “LOI,” a true and correct copy of the executed LOI is attached hereto as Exhibit 1). 8) The purpose of the LOI was to set forth certain understandings relating to the acquisition by ML Foods of Bow & Truss’ assets and certain related transactions (the “Transaction’). The LOI provided, among other things, that ML Foods would loan $150,000 to Bow & Truss to cover leasehold improvements at the three locations and that the loan would be evidenced by a separate secured promissory note (See Ex. 1 at 94 of Exhibit A thereto) 9) On or about December 15, 2016, Tadros executed the LOI on behalf of Bow & Truss. Prior to signing the LOI, Tadros inserted “Owner” in the signature block of the LOI under “Bow & Truss, LLC,” representing that he was the owner of Bow & Truss and had the authority to execute the LOI on behalf of Bow & Truss. 10) On December 16, 2016, consistent with the provisions of the LOI, ML Foods caused the formation of Bow Truss America, LLC (“BTA”) as the operating entity to purchase the assets of Bow & Truss upon completion of the transaction contemplated by the LOI. ‘The Secured Promissory Note 11) Although the LOI only called for a loan of $150,000 to Bow & Truss for leasehold improvements at the three locations, shortly after the execution of the LOI, Tadros reached out to Marcus Lemonis, ML Foods and BTA and stated that Bow & Truss was in dire need of cash to continue to operate its business. 12) Specifically, Tadros, individually and on behalf of Bow & Truss, made the following representations to Marcus Lemonis, ML Foods and BTA: a. that Bow & Truss did not have sufficient cash to pay its employees and that if it did not receive an immediate loan from Marcus Lemonis, ML Foods or BTA, the payroll checks issued to Bow & Truss’ employees would bounce; b. that Bow and Truss did not have sufficient cash to pay monthly rent due and owing to its landlords; 4 13) increase the secured promissory note called for in the LOI from the original $150,000 to $250,000 to provide an additional $100,000 to Bow & Truss to that Bow & Truss needed funds to pay the contractors and/or landlords for leasehold improvements far above and beyond the original $150,000 provided for in the LOI. In order to keep the doors open at Bow & Truss, BTA agreed to cover its immediate cash needs. 14) BTA entered into a Secured Promissory Note. Accordingly, on or about December 22, 2016, Bow & Truss and executed Secured Promissory Note is attached hereto as Exhibit 2. 15) Section 3 of the Secured Promissory Note provides as follows: (a) To induce Lender to make the loan to Borrower under this Note, Tadros, an individual and the sole beneficial and record owner of membership interests in or other equity ownership of Borrower (“Guarantor”), hereby absolutely, unconditionally and irrevocably guarantees to Lender the due and punctual payment, observance, performance and discharge of all of the Obligations of Borrower under this Note if and when due. Guarantor agrees that Lender may proceed against Guarantor separately or collectively with Borrower without prejudicing or waiving any of o A true and correct copy of the Lender’s rights under any other obligations or under this Note. In the event Borrower fails to perform, satisfy or observe the terms of this Note required to be performed, satisfied or observed by Borrower, Guarantor will promptly and fully perform, satisfy and observe such obligations in the place of Borrower. Guarantor shall pay, reimburse and indemnify Lender for any and-all reasonable attorneys’ fees arising or resulting from the failure of Borrower to perform, satisfy or observe any of the terms of this Note. The guarantee described in this Section 3(a) (the “Quarantee”) is binding upon Guarantor and the successors and assigns of Guarantor and inures to the benefit of Lender and it [sic] successors and assigns. (b) As. security for the Obligation and the Guarantee, each of Borrower and Guarantor hereby pledges to Lender, and grants to Lender, a security interest in and to the Collateral owned by it or him. Each of Borrower and Guarantor hereby agrees not to transfer or assign any of the Collateral as long as any Obligations remain unpaid. Lender shall have all of the rights, powers and privileges of a secured party under the Illinois Commercial Codes in force and effect from time to time with respect to the security interest granted hereunder. () Each of Borrower and Guarantor represents and warrants the he has good title to all of its or his Collateral, and none of such property is subject to any lien, claim, option or right of others, except for the security interest granted to Lender hereunder. This Section 3 is effective to create in favor of Lender, a legal, valid and enforceable security interest in the Collateral and the proceeds thereof. 16) The Secured Promissory Note defines “Collateral” as ‘all of Borrower's present and future right, title and interest in and to any and all of the personal property of Borrower whether such property is now existing or hereafter created, acquired or arising and wherever located from time to time, including without limitation: (1) accounts; (2) chattel paper; (3) goods; (4) inventory; (5) equipment; (6) fixtures; (7) farm products; (8) instruments; (9) investment property; (10) documents; (11) commercial tort claims; (12) deposit accounts; (13) letter-of-credit rights; (14) general intangibles; (15) supporting obligations; and (16) all proceeds and products of the foregoing; and, with respect to Guarantor, all of the membership interests in, and other equity ownership of, Borrower, and proceeds and products thereof, including, without limitation, all cash and other property of Borrower to be distributed to aT Borrower's members and other equity owners, including, without limitation, Guarantor.” 17) In addition, Section 8 of the Secured Promissory Note provides in pertinent part: 8. Confidentiality. Borrower and Guarantor shall, and shall cause its or his affiliates, employees, officers, directors, and other agents _—_ (the “Representatives”) to hold in confidence any and all information, whether written or oral, concerning the terms of this Notice (including the existence of this Note), the discussions and negotiations between the parties contemplating this Note,-or any information regarding the Lender obtained during the discussions and negotiations of this Note ... 18) On or about December 22, 2016, Tadros i) signed the Secured Promissory Note on behalf of Bow & Truss and ii) signed the Secured Promissory Note a second time personally as the Guarantor. 19) On or about December 23, 2016, BTA advanced $97,394.00 under the Secured Promissory by advancing funds to Bow & Truss and/or by making payments in specific amounts directly to entities identified by Bow & Truss as its creditors and vendors. Due Diligence 20) Subsequent to the LOI, Marcus Lemonis, ML Foods and BTA engaged in due diligence in connection with the acquisition of Bow & Truss. 21) In connection with the due diligence, Marcus Lemonis and ML Foods made a number of requests to Tadros and Bow & Truss for certain information regarding the operations of Bow & ‘Truss and the financial condition of Bow & Truss. 22) Many of the requests for information made by Marcus Lemonis and ML Foods were ignored by Tadros and Bow & Truss. In addition, Tadros and/or Bow & Truss provided inaccurate and/or incomplete information in response to the requests made by Marcus Lemonis and/or ML Foods. 23) Eventually, ML Foods discovered that: a. Tadros did not personally have any ownership interest in Bow & Truss; b. Tadros lacked the ability to execute either the LOI or the Secured Promissory Note on behalf of Bow & Truss; c. Bow & Truss was in much worse financial condition than had been represented by Tadros and did not have the ability to pay its employees, vendors, landlords and other of its creditors, even after the additional advance of almost 2 $100,000 by BTA to Bow & Truss under the Secured Promissory Note; |. Not only had Bow & Truss failed to pay its employees, when it did pay them, it often underpaid them by utilizing a portion of their pay to cover expenses that Bow & Truss was obligated to cover; Many of the assets purportedly owned by Bow & Truss were not, in fact, owned by Bow & Truss. Instead, many of the assets that were represented to be owned by Bow & Truss were actually owned by DoeJo, LLC, an entity owned and/or controlled by Tadros, or other entities owned and/or controlled by Tadros and were subject to filed UCC Financing Statements naming DoeJo, LLC as the obligor and pledgor of the assets; Tadros and Bow & Truss had absconded with $50,000 that had been advanced by a landlord for tenant improvements and misapplied those funds for other purposes; . Many of the payments made by Bow & Truss— including some made with funds advanced by -10- BTA under the Secured Promissory Note—were not made to actual creditors of Bow & Truss, but were made to creditors of Tadros’ other entities; h, Tadros and Bow & ‘Truss _ significantly understated the liabilities of Bow & Truss prior to the execution of the LOI by failing to disclose certain liabilities of Bow é Truss, including, but not limited to, liabilities relating to property leases; i, The actual liabilities of Bow & Truss were many hundreds of thousands of dollars more than reported by Tadros and Bow & Truss prior to the execution of the LOT; and j. Bow & Truss and Tadros otherwise materially misrepresented the financial condition of Bow & Truss. 24) As set forth above, Tadros and Bow & Truss significantly overstated the assets and understated the liabilities of Bow & Truss. Additionally, BTA determined that Bow & Truss and Tadros were in violation of certain representations and warranties contained in the Secured Promissory Note. Specifically, Tadros and Bow & Truss were in violation of Sections 3(a) and 3(!) of the Secured Promissory Note, “1 25) Therefore, on or about December 29, 2016, BTA’s counsel sent notice to Tadros and Bow & Truss that the Secured Promissory Note needed to be amended to address the fact that Tadros did not have any ownership interest in Bow & Truss. Tadros and Bow & Truss refused to sign an amendment to the Secured Promissory Note. 26) As a result, Bow & Truss was in Default under the Secured Promissory Note pursuant to Section 6(c) of the Secured Promissory Note, which provides in pertinent part: . Upon the occurrence of any of the following events (cach, a “Default”) and at any time thereafter during the continuance of such Default, Lender may at its option, by written notice to Borrower (x) declare the entire principal amount of this Note, together with all accrued interest thereon and all other amounts payable hereunder, immediately due and payable and/or (y) exercise any or all of its rights powers or remedies under this Note or under applicable law; .. () Any representation or warranty made by Borrower or Guarantor in this Note is incorrect in any material respect on the date of which such representation or warranty was made and is not cured, to the extent curable, within ten (10) days from the delivery of notice thereof by Lender. “12. 27) Additionally, on or about January 12, 2017, Tadros and/or Bow & ‘Truss disclosed to Crain’s Chicago Business the existence of the Secured Promissory Note and that Bow @& Truss had received a loan from BTA. ‘Thereafter, Crain’s Chicago Business published an article online, titled “Bow ‘Truss Coffee Locations Close After Unpaid Employees Walk Out,” which identifies the existence of the Secured Promissory Note and that “[Bow & Truss] took a loan of nearly $100,000 from Lemonis to help make ends meet while the two sides entered into a due diligence phase on the proposed deal.” The Crain’s article was published and made available online at hitp: / /www.chicagobusiness.com/article/20170112/NEWS07/170119949/chi cago-coffee-chain-bow-truss-locations-close. 28) In response to Bow & Truss’ and Tadros’ numerous breaches of the Secured Promissory Note, counsel for Marcus Lemonis, ML Foods and BTA sent a “Notice of Default & Acceleration and Reservation of Rights” letter (“Default Letter’) to Tadros and Bow & Truss on January 13, 2017. A true and correct copy of the Default Letter is attached hereto as Exhibit 3. 29) ‘The Default Letter states in pertinent pat Under Section 6(c) of the Note, it is a Default if any representation or warranty made by Borrower or Guarantor “is incorrect in any material respect on the date as of which such representation or warranty was made and is not cured to the extent curable, within ten (10) days from the delivery of notice thereof by the “a3. Lender.” Moreover, upon the occurrence of any Default, “Lender may at its option, by written notice to Borrower (x) declare the entire principal amount of this Note, together with all accrued interest thereon and all other amounts payable hereunder, immediately due and payable and/or (y) exercise any or all of its rights, powers or remedies under this Note or under applicable law ...” Because a representation or warranty made by you and Guarantor in the Note was incorrect in a material respect on the date such representation or warranty was made, and because such default has not been cured, to the extent curable, within ten (10) days from the delivery of notice thereof by Lender, Lender hereby exercises its rights under Section 6 of the Note to declare the entire unpaid principal balance and all accrued interest and other charges immediately due and payable. This letter constitutes written notice of such acceleration pursuant to Section 6 of the Note. As of January 13, 2017, there is due and owing the following amounts (among other Obligations) under the Note: Principal Balance - __ $97,394.00 14. Default interest will accrue on a per diem basis for each day following the date hereof until payment in full at $1.56 per day. On behalf of Lender, demand is hereby made upon both you and Borrower for immediate payment of the foregoing sums. You should also be aware that the misrepresentations regarding the financial condition of Borrower vitiate Lender’s obligation to pay any break-up fee under the letter of intent dated December 14, 2016. Finally, Lender reserves the right to institute appropriate legal action against you and the Borrower as a result of your breach of confidentiality provisions set forth in Section 8 of the Note. Among other things, ‘a Crain’s Chicago Business article dated January 12, 2017, shows that you and Borrower have blatantly violated your respective duties to “hold in confidence any and all information, whether written or oral, concerning the terms of this Note (including the existence of this Note), the discussions and fis! negotiations between the parties contemplating this Note, or any information regarding the Lender obtained during the discussions and negotiations of this Note.” Lender hereby demands that you immediately cease and desist any further violations of your confidentiality obligations. 30) To date, neither Bow & Truss nor Tadros has paid any of the amounts due and owing under the Secured Promissory Note. COUNT I - FRAUDULENT INDUCEMENT - LOI AGAINST TADROS AND BOW & TRUSS 31) ML Foods incorporates by reference the allegations contained in Paragraphs 1 through 30 above as paragraph 31 of this Count I. 32) As set forth above, Tadros individually and on behalf of Bow & ‘Truss made multiple material misrepresentations to ML Foods prior to the execution of the LOI as set forth in greater detail in paragraph.5 above. At the time Tadros and Bow & ‘Truss made these material representations to ML Foods, Tadros and Bow & Truss knew that these misrepresentations were false and made the misrepresentations for the express and intended purpose of inducing ML Foods to execute the LOI. 33) At the time Tadros and Bow & Truss made these misrepresentations to ML Foods, ML Foods was not aware that these representations were false 34) ML Foods reasonably relied on these false representations in entering into the LOL “16: 35) ML Foods has suffered damages as a result of its reasonable reliance on the fraudulent misrepresentations made by Tadros and Bow & Truss. WHEREFORE, ML Food Group, LLC respectfully secks judgment against Philip Tadros and Bow & Truss, LLC for actual damages, together with punitive damages in an amount of three times its actual damages, its litigation expenses, court costs and attorneys’ fees, and such other and further relief as the Court deems just and proper. COUNT II - RESCISSION OF LOI 36) ML Foods incorporates by reference the allegations contained in Paragraphs 31 through 35 above as paragraph 36 of this Court I. 37) At the time Tadros executed the LOI, Tadros was not the owner of “Bow & Truss,” and Tadros did not have the power or authority to enter into the LOI on behalf of Bow & Truss. 38) Accordingly, the LOI is void ab initio. WHEREFORE, ML Food Group, LLC respectfully seeks an Order from this Court finding that the December 14, 2016 Letter of Intent by and between ML Food Group, LLC and Bow & Truss, LLC is void ab initio and awarding such other and further relief as the Court deems just and proper. COUNT III - BREACH OF SECURED PROMISSORY NOTE AGAINST BOW & TRUSS, LLC 39) ML Foods incorporates by reference the allegations contained in Paragraphs 36 through 38 above as paragraph 39 of this Count III. “17 40) On February 7, 2017, BTA assigned to ML Foods all of its rights under the Secured Promissory Note in accordance with Section 11 of the Secured Promissory Note, Section 11 of the Secured Promissory Note provides that “{t)his Note may be assigned, transferred or negotiated by Lender at any time to any third party without notice to or consent by Borrower.” A true and correct copy of the February 7, 2017 Allonge effectuating the assignment is attached hereto as Exhibit 4. 41) The Secured Promissory Note is a valid and enforceable contract, and ML Foods is the valid owner and holder of the Secured Promissory Note and is entitled to enforce all rights thereunder. 42) Bow & Truss is in default under the Secured Promissory Note as set forth above. 43) Demand was made upon Bow & Truss to pay the amount outstanding under the Secured Promissory Note, but Bow & Truss failed and refused to tender payment. 44) ML Foods is due the unpaid principal balance under the Secured Promissory Note together with all accrued interest. 45) Section 1(d) of the Secured Promissory Note provides in pertinent part that: ‘The unpaid principal balance of this Note shall bear interest at the rate of four percent (4%) per annum. Interest shall accrue for each and every date on which any indebtedness remains outstanding hereunder and -18- shall be computed on the daily outstanding principal balance hereunder based on a three hundred sixty-five (365) day year. Interest shall be cumulative and any unpaid accrued interest will compound on each anniversary date of this Note. ... 46) Additionally, Section 1(f) of the Secured Promissory Note provides in pertinent part that: ; In the event payment of principal or interest due under this Note is not made when due, giving effect to any grace period which may be applicable, or in the event of any other Default (as hereinafter defined), the outstanding principal balance hereof shall from the date of Default immediately bear interest at the rate of three percent (3%) above the then applicable interest rate for so long as such Default continues. 47) ML Foods is also entitled to recover from Bow & Truss “all costs and expenses of collection, including without limitation, reasonable attorneys’ fees, court costs, and all costs and expenses in connection with the protection or realization of the Collateral and the payment and performance of each of the Obligations, whether or not suit is filed herein or thereon” as provided for in Section 4 of the Secured Promissory Note. 48) Bow & Truss has refused and continues to refuse to pay all amounts due and owing under the Secured Promissory Note. -19- 49) BTA and ML Foods have done and performed all things required of them to be done and performed under the Secured Promissory Note. 50) ML Foods has suffered and will continue to suffer damages as a direct and proximate result of Bow & Truss’ breach of the Secured Promissory Note. 51) As of February 17, 2017, there is due and owing ML Foods from Bow & Truss the principal sum of $97,394.00, with interest thereon at a rate equal to four percent (4%) per annum for the period December 23, 2016 through January 13, 2017, and with interest thereon at a rate equal. to seven percent (7%) per annum beginning January 14, 2017. WHEREFORE, ML Food Group, LLC respectfully requests judgment against Bow & Truss, LLC for $97,394.00, plus interest in accordance with the Secured Promissory Note, its litigation expenses, court costs and attorneys’ fees, and such other and further relief as the Court deems just and proper. COUNT IV - BREACH OF SECURED PROMISSORY NOTE - GUARANTY AGAINST TADROS 52) ML Foods incorporates by reference the allegations contained in Paragraphs 39 through 51 above as paragraph 52 of this Count IV. 53) Tadros personally guaranteed all of Bow & Truss’s duties and obligations under the Secured Promissory Note, including the obligation to make timely payment thereunder. 54) Tadros is in default under the Secured Promissory Note. -20- 55) Demand was made upon Tadros to pay the amount outstanding under the Secured Promissory Note, but Tadros failed and refused to tender payment. 56) Tadros has refused and continues to refuse to pay all amounts due and owing under the Secured Promissory Note and Tadros’ guarantee thereof. 57) ML Foods has suffered and will continue to suffer damages as a direct and proximate result of Tadros’ breach of his guarantee of the Secured Promissory Note. 58) As of February 17, 2017, there is due and owing to ML Foods the principal sum of $97,394.00, with interest thereon at a rate equal to four percent (4%) per annum for the period December 23, 2016 through January 13, 2017, and with interest thereon at a rate equal to seven percent (7%) per annum beginning January 14, 2017. WHEREFORE, ML Food Group, LLC respectfully requests judgment against Philip Tadros for $97,394.00, plus interest.in accordance with the Secured Promissory Note, its litigation expenses, court costs and attorneys’ fees, and such other and further relief as the Court deems just and proper COUNT V -BREACH OF SECURED PROMISSORY NOTE - CONFIDENTIALITY AGAINST BOW & TRUSS, LLC AND TADROS 59) ML Foods incorporates by reference the allegations contained in Paragraphs 52 through 58 above as paragraph 59 of this Count V. 60) Bow & Truss and Tadros breached Section 8 of the Secured Promissory Note by disclosing to Crain’s Chicago Business and others the ae existence of the Secured Promissory Note and that Bow & Truss had borrowed $97,394.00 under the Secured Promissory Note. 61) BTA and ML Foods have done and performed all things required of them to be done and performed under the Secured Promissory Note. 62) ML Foods has suffered and will continue to suffer damages as a direct and proximate result of Bow & Truss.and Tadros’ breach of Section 8 of the Secured Promissory Note. WHEREFORE, ML Food Group, LLC respectfully requests judgment against Bow & Truss, LLC and Philip Tadros for an amount in excess of $50,000, its litigation expenses, court costs and attorneys’ fees, and such other and further relief as the Court deems just and proper. ‘One of Its Attorneys Robert Radasevich rradasevich@nge.com Athanasios Papadopoulos tpapadopoulos@nge.com. Jason A. Frye jfrye@nge.com NEAL, GERBER & EISENBERG LLP ‘Two North LaSalle Street Suite 1700 Chicago, IL 60602-3801 (312) 269-8000 FIRM ID: 13739 Dated: February 17, 2017 23. CERTIFICATE OF SERVICE I, Jason A. Frye, an attorney, hereby certify that I caused a true and correct copy of ML Food Group, LLC’s Counterclaims and Third-Party Claims to be served on this 17th day of February, 2017 upon the following by hand-delivery messenger service: Marty J. Schwartz, Tyler Manic Schain Banks Kenny & Schwartz ‘Three First National Plaza Suite $300 Tepon A. Frye EXHIBIT 1 ML FOOD GROUP, LLC 794 Penllyn Blue Bell Pike, Suite 219 Blue Bell, PA 19422 December 14, 2016 VIA EMAIL (phil@bowtruss.com) Philip Tadros Bow & Truss, LLC 2934N. Broadway Chicago, IL 60657 Re: Letter of Intent — Bow Truss Coffee Roasters Dear Mr. Tadros: This letter of intent sets forth certain understandings including binding agreements between Bow & Truss, LLC, an Illinois limited liability company d/b/a Bow Truss Coffee Roasters (“Seller”), and ML Food Group, LLC, a Delaware limited liability company (“Buyer”), relating to the acquisition by Buyer of Seller’s assets and certain related transactions (collectively, the “Transaction”). Seller and Buyer are referred to individually as a “Party” and collectively as the “Parties”. 1, Transaction Terms. Subject to the terms and conditions herein and as set out in Exhibit A, the Parties shall promptly proceed with the negotiation of a definitive purchase agreement with respect to the Transaction (together with all related agreements, documents and instruments, a “Definitive Agreement”) containing, among other things, the terms and conditions set forth in the outline of terms attached to this letter of intent as, 2. Binding Agreements. Upon the execution of a counterpart of this letter of intent by each of the Parties, the following paragraphs will constitute the legally binding and enforceable agreement of each of the Parties related to the following: (@) Access, From and after the date hereof and until the execution of a Definitive Agreement or the Termination Date (as defined herein), between Buyer and Seller, Seller will afford Buyer’s officers, employees, auditors, legal counsel and other authorized representatives all reasonable opportunity and complete access to inspect, investigate and audit the business, operations, assets, liabilities, obligations and contracts of Seller. (b) Conduct of Business. From the date hereof until the earlier to ‘occur of the execution of a Definitive Agreement or the Termination Date, without the prior written consent of Buyer (which will not be unreasonably withheld, conditioned or delayed), Seller will conduct its business only in the regular and ordinary course, consistent with past practices, provided that Seller may continue with its currently planned leasehold improvements at three new locations in Chicago (North and Damen, Halsted and Diversey, and Clark and Lawrence) aseo02704 Mr. Philip Tadros December 14, 2016 Page 2 2sooo070, (©) Costs _and Expenses. Whether or not a Definitive Agreement is executed, except as may be set forth in a Definitive Agreement, Buyer and Seller will each be solely responsible for and bear their own respective costs and expenses (including, without limitation, expenses of legal counsel, accountants, other representatives and advisors) of pursuing or consummating a Definitive Agreement and the transactions contemplated thereby. (@) Filming. Buyer hereby agrees not to audio or video record for television Philip Tadros without his prior written consent. (©) Exclusivity. From the date hereof until the earlier to occur of the execution of a Definitive Agreement or the Termination Date (the “Exclusivity Period”), Seller will not, directly or indirectly, (i) encourage, solicit, initiate or participate in any way in discussions or negotiations with, (ii) provide any information to, or Gif) permit access of the type contemplated by Seetion 2(a) hereof to any corporation, limited liability company, partnership, person or other entity or group (other than Buyer and its representatives) concerning any acquisition, merger, business combination, sale of all or substantially all the assets or equity securities of Seller or any similar disposition of Seller or any of its subsidiaries, Seller agrees that money damages may not be an adequate remedy for any breach of the provisions of this Seetion 2(¢) and that Buyer may in its sole discretion, and in addition to any other remedy that may be available to it, apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Section 2(e). If, during the Exclusivity Period, another person approaches Seller, Philip Tadros, or any of its or his affiliates, directly or indirectly, about any form of transaction described above, Seller will inform that third party solely of the existence of an Exclusivity Period, and Seller shall immediately notify Buyer of such proposal. © mination. This letter of intent and all obligations of each of the Parties hereunder shall terminate if the Definitive Agreement has not been entered into by 5:00 PM (Basten time) on February 28, 2017, or such other time if mutually agreed by the Parties (as such date may be extended as described below, the “Lermination Date”); provided, however, that if Buyer, as a result of its continuing due diligence or for any other reason, shall determine that it is not prepared to continue to negotiate a Definitive Agreement substantially on the terms outlined in this letter of intent (with the understanding that the Parties have agreed to defer the discussion of certain terms of the Transaction to a later date), Buyer shall promptly so inform Seller and Seller may, at any time thereafter, terminate this letter of intent by notice to Buyer. Notwithstanding anything to the contrary contained in this letter of intent, (i) the remedies of any Party at law or in equity shall survive with respect to any pre-termination breach of any obligation contained in Section 2 hereof and (ji) the provisions of Section 2(c), Section 2(d) and Section 2(g) hereof shall survive any termination of this letter of intent. Mr. Philip Tadros December 14, 2016 Page 3 (g) Break-up Fee. As additional consideration for Seller's agreement to be bound by the binding terms of this letter of intent, including but not limited to the exclusivity provisions set forth in Section 2(c) hereof, Buyer agrees to pay Seller a break-up fee in cash in an amount equal $162,500.00, which amount is, agreed to constitute a reasonable estimate of the costs and expenses (including legal fees and expenses) of Seller, in the event that Buyer discontinues good faith discussions with Seller prior to the Termination Date; provided, that, such termination of the discussions is not a result of Seller's fraud or any misrepresentations with respect to the financial condition or otherwise of the business subject to the Transaction. (®) Limited Binding Nature, Except for the provisions of Section 2 above (which are binding on Buyer and Seller), this letter of intent does not represent a binding legal agreement or commitment on behalf of Buyer or Seller. Except with respect to a breach of the binding provisions of this letter or as, otherwise may be provided in the Definitive Agreement, if any, relating to the Transaction, no past or future action, course of conduct, or failure to act relating to this letter of intent or the Transaction referred to herein will give rise to or serve as a basis for any obligation or other liability on the part of Buyer or any other person. Any binding obligation for a transaction would be created only by subsequent written documentation executed by Buyer and Seller. (i) Governing Law. This letter of intent shall be governed by and construed in accordance with the laws of the State of Delaware. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 256992704 Mr. Philip Tadros, December 14, 2016 Page 4 Please sign this letter of intent in the space indicated below to confirm our mutual understanding of the agreements as set forth herein and retum a signed copy to the undersigned. This letter of intent may be signed in counterparts. 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