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AGREEMENT AND PLAN OF MERGER

among

ARDENT CAPITAL PARTNERS III LP, a Delaware limited partnership,

CRFH ACQUISITION SUB, INC., a Delaware corporation and wholly owned subsidiary of Ardent Capital Partners III LP,

and

CORAL REEF HOSPITALITY GROUP, INC., a Delaware corporation

Dated as of April 25, 2022

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April 25, 2022, is entered into among ARDENT CAPITAL PARTNERS III LP, a Delaware limited partnership ("Parent"), CRFH ACQUISITION SUB, INC., a Delaware corporation and a direct, wholly owned subsidiary of Parent ("Merger Sub"), and CORAL REEF HOSPITALITY GROUP, INC., a Delaware corporation (the "Company"). Parent, Merger Sub, and the Company are each referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, Parent is a Delaware limited partnership with its principal offices at 590 Madison Avenue, 38th Floor, New York, NY 10022, and its general partner is Ardent Capital GP III LLC, a Delaware limited liability company. Parent is a private equity fund focused on middle-market buyouts in the consumer, hospitality, and leisure sectors, with a fund size of approximately $1.2 billion (Fund III, vintage 2020);

WHEREAS, Merger Sub is a Delaware corporation formed on March 4, 2022, solely for the purpose of effecting the Merger (as defined herein) contemplated hereby, and is a direct, wholly owned subsidiary of Parent. Merger Sub's registered agent is Capitol Registered Agents, Inc., 1209 Orange Street, Wilmington, DE 19801. Merger Sub has not conducted any business other than activities incidental to its formation and in connection with the transactions contemplated by this Agreement. Merger Sub's employer identification number is 13-6318877;

WHEREAS, the Company is a Delaware corporation with its principal offices at 2400 Bayshore Boulevard, Suite 300, Tampa, FL 33629. The Company's common stock, par value $0.001 per share (the "Company Common Stock"), is listed on the Nasdaq Capital Market under the ticker symbol "CRFH" (CUSIP: 21874R109; SEC File No. 001-38742). The Company owns and operates eleven (11) boutique resort and inn properties (with an aggregate of 742 keys) located in Florida (5 properties), Georgia (2 properties), South Carolina (2 properties), the U.S. Virgin Islands (1 property), and The Bahamas (1 property), and manages food and beverage, spa, and event services at each such property;

WHEREAS, the Board of Directors of the Company (the "Company Board"), acting upon the unanimous recommendation of the Special Committee of the Company Board (the "Special Committee"), comprised of independent directors Reginald Ashworth (Chair), Diane Kowalski, and Howard Tremaine, and having received the opinion of Lantern Hill Advisory LLC, dated April 22, 2022, to the effect that, as of the date of such opinion and subject to the assumptions, limitations, qualifications, and conditions set forth therein, the Merger Consideration (as defined herein) of $4.75 per share of Company Common Stock to be received by the holders of Company Common Stock (other than Parent, Merger Sub, and their respective Affiliates) in the Merger is fair, from a financial point of view, to such holders (the "Fairness Opinion"), has (i) determined that this Agreement, the Merger, and the other transactions contemplated hereby are fair to and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the Merger, and (iii) resolved to recommend that the stockholders of the Company adopt this Agreement;

WHEREAS, the respective boards of directors (or equivalent governing bodies) of Parent and Merger Sub have approved and declared advisable this Agreement and the Merger and the other transactions contemplated hereby;

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company's willingness to enter into this Agreement, (a) Ardent Capital GP III LLC has delivered to the Company a Limited Guarantee dated as of the date hereof (the "Limited Guarantee") guaranteeing Parent's payment obligations hereunder up to the Reverse Termination Fee amount of $1,200,000, (b) the Ellender Family Trust, a Florida irrevocable trust holding 1,155,789 shares of Company Common Stock (representing approximately 18.3% of the outstanding shares), has entered into a Voting and Support Agreement with Parent dated as of the date hereof (the "Voting and Support Agreement"), and (c) the Parties are entering into an Escrow Agreement (reference CTC-ESC-2022-1173) with Commonwealth Trust Company as escrow agent (the "Escrow Agreement");

WHEREAS, the Parties desire to make certain representations, warranties, covenants, and agreements in connection with the Merger and the other transactions contemplated by this Agreement and to prescribe certain conditions to the Merger; and

WHEREAS, it is intended that the Merger shall be treated as a merger governed by Section 251 of the Delaware General Corporation Law (the "DGCL") for purposes of Delaware law.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 — Definitions

As used in this Agreement, the following terms shall have the meanings set forth below:

"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Parent or Merger Sub or any of their respective Affiliates) relating to any (a) direct or indirect acquisition of assets of the Company or any of its Subsidiaries constituting twenty percent (20%) or more of the consolidated assets, revenues, or net income of the Company and its Subsidiaries, taken as a whole, (b) direct or indirect acquisition (whether by purchase, merger, consolidation, or otherwise) of twenty percent (20%) or more of any class of equity securities of the Company or any of its Subsidiaries whose assets constitute twenty percent (20%) or more of the consolidated assets of the Company, (c) tender offer or exchange offer that, if consummated, would result in any Person beneficially owning twenty percent (20%) or more of any class of equity securities of the Company, or (d) merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving the Company (or any Subsidiary of the Company whose assets constitute twenty percent (20%) or more of the consolidated assets of the Company), in each case other than the Merger and the transactions contemplated by this Agreement.

"Adverse Recommendation Change" means any action by the Company Board or the Special Committee to (a) withhold, withdraw, qualify, amend, or modify, in a manner adverse to Parent, the Company Board Recommendation, (b) fail to include the Company Board Recommendation in the Proxy Statement, (c) adopt, approve, or recommend, or publicly propose to adopt, approve, or recommend, an Acquisition Proposal, or (d) fail to publicly reaffirm the Company Board Recommendation within five (5) Business Days after Parent's written request to do so following the public announcement of an Acquisition Proposal (provided that Parent may make such request no more than once with respect to each Acquisition Proposal and each material amendment thereto).

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, as such term is defined in Rule 12b-2 under the Exchange Act.

"Aggregate Equity Value" means $30,000,000 (being 6,315,789 shares of Company Common Stock multiplied by the Merger Consideration of $4.75 per share).

"Business Day" means any day that is not a Saturday, Sunday, or other day on which banking institutions in New York, New York or Wilmington, Delaware are authorized or obligated by Law or executive order to close.

"Cancelled Shares" has the meaning set forth in Section 3.1(b).

"Certificate" means a physical certificate representing one or more outstanding shares of Company Common Stock.

"Certificate of Merger" means the Certificate of Merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit A.

"Closing" has the meaning set forth in Section 2.2.

"Closing Date" means the date on which the Closing occurs pursuant to Section 2.2.

"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

"Company Board" means the Board of Directors of the Company, consisting, as of the date hereof, of Reginald Ashworth (Chair, Independent), Marcus Ellender (CEO, Non-Independent), Diane Kowalski (Independent), Howard Tremaine (Independent), and Sandra Maldonado (Independent).

"Company Board Recommendation" has the meaning set forth in Section 4.4.

"Company Benefit Plan" means each "employee benefit plan" as defined in Section 3(3) of ERISA, and each other benefit or compensation plan, program, policy, practice, agreement, or arrangement, whether or not subject to ERISA, that is sponsored, maintained, contributed to, or required to be contributed to by the Company or any of its Subsidiaries for the benefit of any current or former employee, officer, director, or other individual service provider of the Company or any of its Subsidiaries, or under which the Company or any of its Subsidiaries has or may have any liability.

"Company Common Stock" means the common stock, par value $0.001 per share, of the Company. As of the date hereof, 6,315,789 shares of Company Common Stock are issued and outstanding.

"Company Disclosure Schedule" means the disclosure schedule delivered by the Company to Parent concurrently with the execution and delivery of this Agreement.

"Company Material Adverse Effect" (or "MAE") means any fact, event, change, effect, development, condition, or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, financial condition, assets, liabilities, or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to consummate the transactions contemplated hereby; provided, that, with respect to clause (a), none of the following, alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Company Material Adverse Effect:

(i) changes in general economic, financial, credit, or securities market conditions, including changes in prevailing interest rates, exchange rates, commodity prices, or equity prices;

(ii) changes in the hospitality, resort, or leisure industries generally, including changes in travel patterns, consumer preferences, or occupancy rates affecting the industry as a whole;

(iii) changes in applicable Law (including any public health order or directive) or changes in GAAP or other applicable accounting standards (or interpretations thereof);

(iv) acts of war (whether or not declared), military action, sabotage, terrorism, cyberattacks, natural disasters, epidemics, pandemics (including COVID-19 and its variants and mutations, and any actions taken by any Governmental Authority in response thereto), weather events, or other force majeure events;

(v) the public announcement or known pendency of the Merger or any of the other transactions contemplated by this Agreement, including any impact on relationships with customers, suppliers, employees, labor organizations, financing sources, or other business partners (provided that this exception shall not apply to any representation or warranty in Section 4.5 to the extent that the purpose of such representation or warranty is to address the consequences of the execution and delivery of this Agreement or the consummation of the Merger);

(vi) any failure by the Company to meet any published analyst estimates or expectations of the Company's revenue, earnings, or other financial performance or results of operations for any period, or any failure by the Company to meet its internal or published projections, budgets, plans, or forecasts of its revenues, earnings, or other financial performance or results of operations (provided that the underlying causes of any such failure may be considered in determining whether a Company Material Adverse Effect has occurred to the extent such underlying causes are not otherwise excluded by this definition); and

(vii) changes or effects resulting from compliance by the Company with the terms of, or the taking of any action required by, this Agreement;

provided, further, that any fact, event, change, effect, development, condition, or occurrence referred to in clauses (i) through (iv) above may be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such fact, event, change, effect, development, condition, or occurrence has had or would reasonably be expected to have a disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other companies of similar size operating in the hospitality, resort, and leisure industries in the jurisdictions in which the Company and its Subsidiaries operate. For the avoidance of doubt, a decline in the Company's trailing-twelve-month EBITDA exceeding twenty percent (20%) (i.e., exceeding $1,020,000 based on LTM EBITDA of $5,100,000 for the fiscal year ended December 31, 2021) shall constitute a Company Material Adverse Effect for purposes of this Agreement.

"Company SEC Documents" means all reports, schedules, forms, statements, and other documents (including exhibits and amendments thereto) filed or furnished by the Company with or to the SEC.

"Company Stockholder Meeting" has the meaning set forth in Section 6.3(b).

"Company Termination Fee" means $900,000 (being 3.0% of the Aggregate Equity Value of $30,000,000), as provided in Section 8.3(b).

"Confidentiality Agreement" means the Confidentiality Agreement dated February 22, 2022, between Parent and the Company, as the same may be amended from time to time.

"Consent" means any consent, approval, authorization, waiver, permit, grant, franchise, concession, license, exemption, order, registration, declaration, or filing with, or notice to, any Person, including any Governmental Authority.

"Contract" means any legally binding agreement, contract, subcontract, lease, sublease, license, sublicense, understanding, instrument, note, bond, mortgage, indenture, commitment, or undertaking, whether written or oral.

"D&O Tail" has the meaning set forth in Section 6.8(b).

"Data Room" means the virtual data room maintained on the Thackeray Solutions platform under the project name "Project Trident," as made available to Parent and its Representatives prior to the date hereof.

"Debt Financing" has the meaning set forth in Section 5.4(a).

"Deductible" has the meaning set forth in Section 9.5(a).

"DGCL" means the General Corporation Law of the State of Delaware, as amended.

"Dissenting Shares" has the meaning set forth in Section 3.7(a).

"Effective Time" has the meaning set forth in Section 2.3.

"Ellender Family Trust" means the Ellender Family Trust, a Florida irrevocable trust, which as of the date hereof is the record and beneficial holder of 1,155,789 shares of Company Common Stock, representing approximately 18.3% of the outstanding shares of Company Common Stock.

"Environmental Laws" means any and all federal, state, local, or foreign Laws (including common law), regulations, permits, and orders relating to pollution, the protection of the environment or natural resources, or the release, generation, treatment, storage, transport, handling, or disposal of Hazardous Substances, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, and analogous state and local statutes.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

"Escrow Agent" means Commonwealth Trust Company, 3711 Kennett Pike, Suite 120, Greenville, DE 19807.

"Escrow Agreement" means the Escrow Agreement dated as of the date hereof (Ref. CTC-ESC-2022-1173) among Parent, the Company (in its capacity as Stockholder Representative), and the Escrow Agent, substantially in the form attached hereto as Exhibit B.

"Escrow Amount" means $1,500,000 (being 5.0% of the Aggregate Equity Value), to be deposited into escrow at the Closing and held for a period of eighteen (18) months following the Closing Date, pursuant to the terms of the Escrow Agreement.

"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months after the Closing Date.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

"Exchange Fund" has the meaning set forth in Section 3.2.

"FCPA" means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder.

"Financing" means the Debt Financing and the equity capital commitments described in Section 5.4(b).

"Financing Commitment" means the commitment letter dated April 8, 2022 (Ref. PCL-2022-SF-0417) from Pinnacle Commercial Lending Corp. to Parent, as delivered to the Company, providing for a senior secured term loan facility in an aggregate principal amount of $10,000,000 on the terms and conditions set forth therein, including an interest rate of SOFR plus 425 basis points, a five-year maturity, an original issue discount of 1.0%, and a first-priority lien on all assets of the Company and its Subsidiaries following the Closing.

"Fraud" means actual and intentional fraud involving a knowing and deliberate misrepresentation of a material fact set forth in a representation or warranty in this Agreement, made with the intent to deceive and upon which the other party justifiably relied, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

"Fundamental Representations" means, with respect to the Company, the representations and warranties set forth in Section 4.1 (Organization, Good Standing, and Qualification), Section 4.3 (Capitalization), Section 4.4 (Authority; Binding Agreement), and Section 4.20 (Brokers and Finders), and, with respect to Parent and Merger Sub, the representations and warranties set forth in Section 5.1 (Organization, Good Standing, and Qualification), Section 5.2 (Authority; Binding Agreement), and Section 5.7 (Brokers and Finders).

"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied.

"Go-Shop Period" means the period beginning on the date of this Agreement (April 25, 2022) and ending at 11:59 p.m. Eastern Time on May 25, 2022 (being thirty (30) calendar days after the date hereof).

"Go-Shop Period End Date" means May 25, 2022, at 11:59 p.m. Eastern Time.

"Governmental Authority" means any federal, state, local, or foreign government or governmental, regulatory, or administrative authority, agency, bureau, board, commission, or instrumentality, or any court, tribunal, or judicial or arbitral body, including any self-regulatory organization.

"Hazardous Substances" means any substance, material, or waste that is regulated, classified, or otherwise characterized under any Environmental Law as "hazardous," "toxic," "pollutant," "contaminant," "radioactive," or words of similar meaning, including petroleum and petroleum by-products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead-based paint, radon, and per- and polyfluoroalkyl substances.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

"Indemnified Parties" has the meaning set forth in Section 6.8(a).

"Intervening Event" means a material event, change, circumstance, development, or condition that (a) was not known or reasonably foreseeable to the Company Board as of the date of this Agreement (or, if known or foreseeable, the material consequences of which were not known or reasonably foreseeable as of such date), (b) does not relate to or involve an Acquisition Proposal or a Superior Proposal, and (c) first occurs or arises after the date of this Agreement and before the Requisite Stockholder Approval is obtained.

"Knowledge of the Company" means the actual knowledge of Marcus Ellender (Chief Executive Officer), Patricia Sung (Chief Financial Officer), and each member of the Company Board, in each case after reasonable inquiry of their respective direct reports who would reasonably be expected to have knowledge of the relevant matter.

"Law" means any federal, state, local, or foreign statute, law, ordinance, regulation, rule, code, order, judgment, decree, or other requirement or rule of law enacted, promulgated, or imposed by any Governmental Authority.

"Lien" means any lien, pledge, hypothecation, mortgage, deed of trust, security interest, encumbrance, claim, restriction, option, right of first refusal, easement, servitude, transfer restriction, or charge of any kind or nature whatsoever.

"Limited Guarantee" means the Limited Guarantee dated as of the date hereof executed and delivered by Ardent Capital GP III LLC in favor of the Company, substantially in the form attached hereto as Exhibit D, guaranteeing Parent's payment obligations under this Agreement up to $1,200,000 (the amount of the Reverse Termination Fee).

"Losses" means all losses, liabilities, damages, claims, costs, expenses, interest, awards, judgments, penalties, and reasonable attorneys' fees and expenses, actually suffered or incurred by the applicable indemnified person.

"Material Contract" means any Contract to which the Company or any of its Subsidiaries is a party or by which any of their respective assets are bound that (a) involves aggregate consideration payable by or to the Company or any Subsidiary in excess of $250,000 in any twelve-month period, (b) is a management, franchise, or license agreement relating to any Company property, (c) is a revenue-sharing or joint venture arrangement, (d) contains non-competition or exclusivity provisions binding on the Company or any Subsidiary, (e) relates to Indebtedness in excess of $100,000, (f) is a collective bargaining agreement, (g) is a lease of real or personal property involving annual rental payments in excess of $100,000, or (h) is otherwise material to the business, assets, financial condition, or results of operations of the Company and its Subsidiaries, taken as a whole.

"Merger" has the meaning set forth in Section 2.1.

"Merger Consideration" means $4.75 per share of Company Common Stock, payable in cash, without interest.

"Merger Sub Shares" has the meaning set forth in Section 3.1(c).

"No-Shop Period" means the period beginning immediately after the Go-Shop Period End Date and continuing until the earlier of the Effective Time or the valid termination of this Agreement in accordance with Article VIII.

"Order" means any order, judgment, injunction, ruling, writ, decree, stipulation, determination, award, or assessment of any Governmental Authority.

"Outside Date" means October 25, 2022 (being one hundred eighty (180) days after the date of this Agreement), subject to extension pursuant to Section 8.1(b).

"Parent Disclosure Schedule" means the disclosure schedule delivered by Parent to the Company concurrently with the execution and delivery of this Agreement.

"Parent Material Adverse Effect" means any fact, event, change, effect, development, condition, or occurrence that, individually or in the aggregate, would prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger or to perform any of their respective material obligations under this Agreement.

"Paying Agent" means the bank or trust company designated by Parent pursuant to Section 3.2 to act as paying agent in connection with the Merger.

"Permitted Liens" means (a) statutory Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', materialmen's, warehousemen's, and other similar Liens arising or incurred in the ordinary course of business, (c) pledges or deposits to secure obligations under workers' compensation, unemployment insurance, and other social security legislation, (d) zoning, building, subdivision, and other land-use regulations imposed by any Governmental Authority having jurisdiction over real property which are not violated in any material respect by the current use or occupancy of such real property, (e) easements, covenants, conditions, restrictions, and other similar encumbrances of record affecting title to real property that do not materially impair the use or occupancy of such real property, and (f) Liens arising under this Agreement or any ancillary agreement hereto.

"Person" means any individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, joint venture, Governmental Authority, or other entity.

"Proxy Statement" means the proxy statement (including any amendments or supplements thereto) to be filed by the Company with the SEC and mailed to the Company's stockholders in connection with the Company Stockholder Meeting for the purpose of soliciting the Requisite Stockholder Approval.

"R&W Insurance Policy" has the meaning set forth in Section 5.11.

"Record Date" has the meaning set forth in Section 6.3(b).

"Reduced Termination Fee" has the meaning set forth in Section 8.3(b).

"Representatives" means, with respect to any Person, such Person's directors, officers, employees, agents, accountants (including, with respect to the Company, Hargrove & Liddell CPAs LLP), legal counsel, financial advisors (including, with respect to the Company, Lantern Hill Advisory LLC, and, with respect to Parent, Grayson Partners & Co.), and other advisors and representatives.

"Requisite Stockholder Approval" means the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon (i.e., at least 3,157,895 shares out of 6,315,789 outstanding shares as of the date hereof), in accordance with the DGCL and the Company's certificate of incorporation and bylaws.

"Reverse Termination Fee" means $1,200,000 (being 4.0% of the Aggregate Equity Value of $30,000,000), as provided in Section 8.3(c).

"SEC" means the United States Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

"Solvent" means, with respect to any Person as of any date of determination, that as of such date (a) the fair value of the assets of such Person on a going concern basis is in excess of the total amount of the liabilities (including contingent liabilities) of such Person, (b) the present fair saleable value of the assets of such Person on a going concern basis is in excess of the total amount of the liabilities (including contingent liabilities) of such Person, (c) such Person does not have unreasonably small capital for the business in which it is engaged or will be engaged, and (d) such Person will be able to pay its debts and other liabilities as they become due in the ordinary course of business.

"Special Committee" means the special committee of the Company Board consisting of Reginald Ashworth (Chair), Diane Kowalski, and Howard Tremaine, each of whom is an independent and disinterested director of the Company.

"Stockholder Representative" means the Company, in its capacity as representative of the pre-Closing stockholders of the Company under the Escrow Agreement.

"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, association, or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a partnership, limited liability company, association, or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof. For purposes of this definition, a Person shall be deemed to own a partnership or other similar ownership interest in a partnership, limited liability company, association, or other business entity if such Person is allocated a majority of the gains or losses of such entity or is or controls the managing director, managing member, or general partner of such entity.

"Superior Proposal" means a bona fide, unsolicited, written Acquisition Proposal (with the references to "twenty percent (20%)" in the definition of Acquisition Proposal being replaced with "fifty percent (50%)" for purposes of this definition) made by a third party on terms that the Company Board (or the Special Committee) determines in good faith, after consultation with its financial advisor (Lantern Hill Advisory LLC) and outside legal counsel (Whitfield, Crane & Sato LLP), taking into account all relevant factors (including the legal, financial, regulatory, and other aspects of the proposal, the identity of the Person making the proposal, the conditions to and expected timing of consummation, the certainty of financing, and any amendments or modifications to this Agreement proposed by Parent), to be more favorable to the Company's stockholders from a financial point of view than the Merger and the transactions contemplated hereby (including any revisions to the terms of this Agreement proposed by Parent in response thereto) and that is reasonably likely to be consummated on the terms proposed.

"Surviving Corporation" means Coral Reef Hospitality Group, Inc., as the surviving corporation of the Merger.

"Tax" or "Taxes" means any and all federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, severance, stamp, occupation, premium, environmental, windfall profit, customs, duties, real property, special assessments, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, or other tax, including any interest, penalties, and additions thereto imposed by any Governmental Authority.

"Tax Return" means any return, declaration, report, claim for refund, information return, or statement relating to any Tax, including any schedule or attachment thereto and any amendment thereof.

"Voting and Support Agreement" means the Voting and Support Agreement dated as of the date hereof between Parent and the Ellender Family Trust, substantially in the form attached hereto as Exhibit C.

"Willful Breach" means a material breach of this Agreement that is a consequence of an act or omission by a Party with actual knowledge (or that should have been known by such Party using reasonable care) that the taking of such act or failure to take such act would, or would reasonably be expected to, result in or constitute a breach of this Agreement.

Section 1.2 — Other Defined Terms

The following terms are defined in the Sections of this Agreement indicated below:

Section 1.3 — Interpretation

Unless the context otherwise requires, the following rules of interpretation shall apply to this Agreement:

(a) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(b) Whenever the words "include," "includes," or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."

(c) The words "hereof," "herein," "hereby," "herewith," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(d) All references in this Agreement to Articles, Sections, Exhibits, and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context otherwise requires.

(e) The word "or" is not exclusive, and the word "extent" in the phrase "to the extent" means the degree to which a subject or other thing extends, and such phrase does not mean simply "if."

(f) All references to "dollars" or "$" shall mean United States dollars.

(g) Words in the singular form shall be construed to include the plural and vice versa, and words in one gender shall be construed to include each other gender, as the context requires.

(h) References to any statute or regulation are to the statute or regulation as amended, modified, supplemented, or replaced from time to time (and, in the case of any statute, include any rules and regulations promulgated under such statute), and references to any section of any statute or regulation include any successor to such section.

(i) References to any Person shall include such Person's successors and permitted assigns.

(j) References to "days" shall mean calendar days unless expressly stated to be "Business Days."

(k) Each Party and its counsel have reviewed and participated in the drafting of this Agreement, and accordingly, the rule of construction that any ambiguity shall be construed against the drafter shall not apply to this Agreement.

ARTICLE II

THE MERGER

Section 2.1 — The Merger

Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, CRFH Acquisition Sub, Inc. shall be merged with and into Coral Reef Hospitality Group, Inc. (the "Merger"), the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving corporation of the Merger (the "Surviving Corporation") and shall continue its corporate existence under the laws of the State of Delaware as a direct, wholly owned subsidiary of Parent. The Merger is a reverse triangular merger in which Merger Sub, the acquisition vehicle, merges with and into the Company, and the Company continues as the Surviving Corporation.

Section 2.2 — Closing

The closing of the Merger (the "Closing") shall take place at 10:00 a.m. Eastern Time on the third (3rd) Business Day following the satisfaction or waiver (to the extent permissible under applicable Law) of all of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), at the offices of Calderwood & Harkness LLP, 1301 Avenue of the Americas, 40th Floor, New York, NY 10019, or at such other place, date, and time as Parent and the Company may mutually agree in writing, including by remote electronic exchange of documents and signature pages via email, facsimile, or other means of electronic transmission reasonably acceptable to the Parties.

Section 2.3 — Effective Time

On the Closing Date, the Parties shall cause a Certificate of Merger to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL, substantially in the form attached hereto as Exhibit A. The Merger shall become effective at the time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or at such later date and time as the Parties may agree and specify in the Certificate of Merger (such time being referred to herein as the "Effective Time").

Section 2.4 — Effects of the Merger

The Merger shall have the effects set forth in Section 259 of the DGCL and the other applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, (a) all of the property, rights, privileges, powers, and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and (b) all debts, liabilities, obligations, restrictions, disabilities, and duties of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities, and duties of the Surviving Corporation.

Section 2.5 — Certificate of Incorporation of the Surviving Corporation

At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as set forth in the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be "Coral Reef Hospitality Group, Inc.," and such amended and restated certificate of incorporation shall be substantially in the form attached hereto as Exhibit E, until thereafter further amended in accordance with applicable Law and such certificate of incorporation; provided that such amended and restated certificate of incorporation shall include provisions relating to indemnification and exculpation of directors and officers at least as favorable as those set forth in the Company's certificate of incorporation as in effect immediately prior to the Effective Time, which provisions shall not be amended, repealed, or otherwise modified for a period of six (6) years following the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at the Effective Time were current or former directors, officers, employees, or agents of the Company, unless such modification is required by applicable Law.

Section 2.6 — Bylaws of the Surviving Corporation

At the Effective Time, the bylaws of the Surviving Corporation shall be amended and restated in their entirety to read as the bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that all references to the name of Merger Sub shall be replaced with references to "Coral Reef Hospitality Group, Inc.," until thereafter further amended in accordance with applicable Law, the certificate of incorporation of the Surviving Corporation, and such bylaws; provided that such amended and restated bylaws shall include provisions relating to indemnification and exculpation of directors and officers at least as favorable as those set forth in the Company's bylaws as in effect immediately prior to the Effective Time, which provisions shall not be amended, repealed, or otherwise modified for a period of six (6) years following the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at the Effective Time were current or former directors, officers, employees, or agents of the Company, unless such modification is required by applicable Law.

Section 2.7 — Directors and Officers of the Surviving Corporation

(a) The directors of Merger Sub immediately prior to the Effective Time shall become the initial directors of the Surviving Corporation at the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until his or her successor shall have been duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal.

(b) The officers of the Company immediately prior to the Effective Time shall become the initial officers of the Surviving Corporation at the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until his or her successor shall have been duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal.

ARTICLE III

MERGER CONSIDERATION; CONVERSION OF SHARES; EXCHANGE PROCEDURES

Section 3.1 — Effect on Capital Stock

At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or any holder of shares of Company Common Stock or shares of common stock of Merger Sub:

(a) Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be automatically converted into the right to receive $4.75 per share in cash, without interest (the "Merger Consideration"), subject to any applicable withholding pursuant to Section 3.6 and the escrow withholding provisions set forth in Section 3.5. As of the date hereof, there are 6,315,789 shares of Company Common Stock issued and outstanding, and the aggregate Merger Consideration equals $30,000,000 in the aggregate. No shares of preferred stock of the Company are issued or outstanding as of the date hereof. From and after the Effective Time, each such share of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a Certificate or Book-Entry Shares that immediately prior to the Effective Time represented any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon surrender of such Certificate (or transfer of such Book-Entry Shares) in accordance with Section 3.3, without interest.

(b) Cancelled Shares. Each share of Company Common Stock (i) held in the treasury of the Company or (ii) owned by Parent, Merger Sub, or any direct or indirect wholly owned Subsidiary of Parent or the Company, in each case, immediately prior to the Effective Time (collectively, "Cancelled Shares"), shall automatically be cancelled and retired and shall cease to exist, and no Merger Consideration or other consideration shall be delivered in exchange therefor.

(c) Merger Sub Shares. Each share of common stock, par value $0.001 per share, of Merger Sub ("Merger Sub Shares") issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid, and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation. From and after the Effective Time, each certificate representing Merger Sub Shares shall be deemed for all purposes to evidence ownership of shares of common stock of the Surviving Corporation. The shares of common stock of the Surviving Corporation issued in the Merger shall constitute the only outstanding shares of capital stock of the Surviving Corporation, which shall be wholly owned by Parent.

Section 3.2 — Paying Agent

(a) Prior to the Effective Time, Parent shall designate a bank or trust company that is reasonably acceptable to the Company to act as paying agent in connection with the Merger (the "Paying Agent"). At or immediately prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent cash in immediately available funds in an amount sufficient to pay the aggregate Merger Consideration payable to holders of Company Common Stock pursuant to Section 3.1(a), net of the Escrow Amount of $1,500,000 (which shall be deposited with the Escrow Agent in accordance with Section 3.5), for the benefit of the holders of shares of Company Common Stock (such cash, together with any interest or other income earned thereon, being hereinafter referred to as the "Exchange Fund").

(b) The Paying Agent shall invest the Exchange Fund as directed by Parent; provided that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Pelvoran Financial Services LLC, respectively, or in certificates of deposit, bank repurchase agreements, or money market deposit accounts of commercial banks with capital exceeding $1,000,000,000, and in each case, with maturities of no more than thirty (30) days, and no such investment or loss thereon shall affect the amounts payable to holders of shares of Company Common Stock. If, for any reason, the Exchange Fund is insufficient to pay the aggregate Merger Consideration required to be paid pursuant to Section 3.1(a), Parent shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount necessary to make the Exchange Fund sufficient for such purpose.

Section 3.3 — Exchange Procedures

(a) As promptly as practicable after the Effective Time (and in any event within five (5) Business Days thereafter), Parent shall cause the Paying Agent to mail or otherwise deliver to each holder of record of shares of Company Common Stock as of immediately prior to the Effective Time (other than holders of Cancelled Shares and holders of Dissenting Shares): (i) a letter of transmittal, substantially in the form attached hereto as Exhibit F, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or effective affidavits of loss in lieu thereof as contemplated by Section 3.4) to the Paying Agent, and which letter of transmittal shall be in such form and have such other provisions as Parent and the Company may reasonably agree, and (ii) instructions for use in effecting the surrender of the Certificates (or transfer of book-entry shares of Company Common Stock ("Book-Entry Shares")) in exchange for the Merger Consideration.

(b) Upon surrender of a Certificate (or transfer of Book-Entry Shares) for cancellation to the Paying Agent, together with a duly completed and validly executed letter of transmittal and such other documents as may be reasonably required pursuant to the instructions therein, the holder of such Certificate (or Book-Entry Shares) shall be entitled to receive in exchange therefor a cash payment in an amount equal to the product of (i) the number of shares of Company Common Stock represented by such Certificate (or Book-Entry Shares) and (ii) $4.75 (the Merger Consideration per share), less such holder's pro rata portion of the Escrow Amount withheld pursuant to Section 3.5, subject to any applicable withholding pursuant to Section 3.6. The Certificate (or Book-Entry Shares) so surrendered shall forthwith be cancelled. The Paying Agent shall make payment of the Merger Consideration by check or wire transfer (as elected by the holder in the letter of transmittal) as promptly as practicable after receipt of a properly completed letter of transmittal and such other documents as may be required.

(c) No interest shall be paid or shall accrue on the Merger Consideration upon the surrender of any Certificate (or transfer of any Book-Entry Shares).

(d) In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer records of the Company, a payment of the Merger Consideration may be made to a Person other than the Person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other Taxes required by reason of such payment to a Person other than the registered holder or shall establish to the reasonable satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable.

Section 3.4 — Lost Certificates

If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen, or destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation or the Paying Agent may direct, as indemnity against any claim that may be made against the Surviving Corporation or the Paying Agent with respect to such Certificate, the Paying Agent will pay in exchange for such lost, stolen, or destroyed Certificate the applicable Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate as contemplated by this Article III.

Section 3.5 — Escrow Withholding

At the Closing, the aggregate Escrow Amount of $1,500,000 (representing 5.0% of the Aggregate Equity Value of $30,000,000) shall be withheld from the aggregate Merger Consideration otherwise payable to the holders of Company Common Stock and shall be deposited by Parent (or the Paying Agent on Parent's behalf) with Commonwealth Trust Company, as Escrow Agent, pursuant to the Escrow Agreement (Ref. CTC-ESC-2022-1173), to be held for a period of eighteen (18) months following the Closing Date to secure the indemnification obligations of the pre-Closing stockholders of the Company as set forth in Article IX. Each holder of Company Common Stock shall be deemed to have contributed its pro rata share of the Escrow Amount (based on the number of shares of Company Common Stock held by such holder relative to the total number of shares outstanding immediately prior to the Effective Time) to the escrow fund established under the Escrow Agreement. The pro rata reduction in the Merger Consideration attributable to the Escrow Amount shall be approximately $0.2375 per share (calculated as $1,500,000 divided by 6,315,789 shares). The terms and conditions governing the escrow, including the release of funds and claims procedures, are set forth in the Escrow Agreement attached hereto as Exhibit B.

Section 3.6 — Withholding Rights

Each of Parent, Merger Sub, the Surviving Corporation, and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of shares of Company Common Stock pursuant to this Agreement such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of applicable state, local, or foreign Tax Law. To the extent that amounts are so deducted and withheld and paid over to the appropriate Governmental Authority, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of Company Common Stock in respect of which such deduction and withholding was made. Prior to making any such deduction or withholding (other than any deduction or withholding required under Section 1445 of the Code in the event the Company fails to deliver to Parent or Merger Sub a properly executed certification of non-foreign status in compliance with Treasury Regulations Section 1.1445-2(c)(3)), Parent shall provide reasonable advance notice to the Company (or, following the Closing, the Stockholder Representative) and shall cooperate in good faith with the Company (or the Stockholder Representative) to reduce or eliminate any such deduction or withholding.

Section 3.7 — Dissenting Shares

(a) Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by a holder who has not voted in favor of the adoption of this Agreement (or consented thereto in writing) and who has properly demanded and perfected appraisal rights with respect to such shares in accordance with, and who has not effectively withdrawn or lost such appraisal rights under, Section 262 of the DGCL ("Dissenting Shares") shall not be converted into the right to receive the Merger Consideration at or after the Effective Time, but instead the holders of such Dissenting Shares shall be entitled only to such rights as are granted under Section 262 of the DGCL; provided, however, that if any such holder shall fail to perfect or shall effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal under Section 262 of the DGCL, then, as of the later of the Effective Time or the occurrence of such event, such holder's shares of Company Common Stock shall automatically be converted into and represent only the right to receive the Merger Consideration, without interest thereon, upon surrender of the Certificate representing such shares (or transfer of such Book-Entry Shares) in accordance with Section 3.3.

(b) The Company shall give Parent prompt notice of any demands received by the Company for appraisal of shares of Company Common Stock, any attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company in connection therewith, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to, or settle or offer to settle, any such demands or approve any withdrawal of any such demands.

Section 3.8 — Termination of Exchange Fund

Any portion of the Exchange Fund (including any interest or other income earned thereon) that remains undistributed to holders of shares of Company Common Stock one hundred eighty (180) days after the Effective Time shall be delivered to the Surviving Corporation upon demand, and any holder of shares of Company Common Stock who has not theretofore complied with the exchange procedures set forth in Section 3.3 shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat, or other similar Laws) for payment of such holder's Merger Consideration, without any interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Paying Agent, or any other Person shall be liable to any former holder of shares of Company Common Stock for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat, or similar Law. Any amounts remaining unclaimed by holders of shares of Company Common Stock immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation free and clear of any claims or interest of any such holders or their successors, assigns, or personal representatives.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as (a) set forth in the Company Disclosure Schedule delivered by the Company to Parent and Merger Sub concurrently with the execution and delivery of this Agreement (it being understood that any information set forth in one section or subsection of the Company Disclosure Schedule shall be deemed to apply to and qualify any other section or subsection of this Agreement to which the relevance of such information is reasonably apparent on its face, regardless of whether a specific cross-reference is made) or (b) disclosed in the Company SEC Documents filed with or furnished to the SEC prior to the date hereof (excluding any disclosures contained under the captions "Risk Factors," "Forward-Looking Statements," or any similar precautionary, predictive, or forward-looking section or statements, to the extent they are predictive, cautionary, or forward-looking in nature), the Company hereby represents and warrants to Parent and Merger Sub as follows:

Section 4.1 — Organization, Good Standing, and Qualification

The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company's registered agent in the State of Delaware is Prestige Corporate Services LLC, 850 New Burton Road, Suite 201, Dover, DE 19904. The Company's employer identification number is 59-3847621. The Company has all requisite corporate power and corporate authority to own, lease, and operate its properties and assets and to carry on its business as now being conducted. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing (where such concept is recognized) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification or licensing necessary, including the States of Florida, Georgia, and South Carolina, the U.S. Virgin Islands, and the Commonwealth of The Bahamas, except where the failure to be so qualified or licensed or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has made available to Parent true and complete copies of the Company's certificate of incorporation and bylaws, each as currently in effect, and the Company is not in material violation of any provision thereof.

Section 4.2 — Subsidiaries

(a) Section 4.2 of the Company Disclosure Schedule sets forth a true and complete list of each Subsidiary of the Company, together with (i) the jurisdiction of incorporation or organization of each such Subsidiary, (ii) the authorized and outstanding capital stock or other equity interests of each such Subsidiary, and (iii) the percentage of outstanding capital stock or other equity interests of each such Subsidiary owned, directly or indirectly, by the Company. Each Subsidiary of the Company is duly organized, validly existing, and in good standing (where such concept is recognized) under the laws of its jurisdiction of incorporation or organization. Each Subsidiary of the Company has all requisite corporate, partnership, limited liability company, or similar power and authority to own, lease, and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed to do business as a foreign entity and is in good standing (where such concept is recognized) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(b) All of the outstanding shares of capital stock of, or other equity interests in, each Subsidiary of the Company are duly authorized, validly issued, fully paid, and nonassessable (to the extent such concepts are applicable) and are owned, directly or indirectly, by the Company, free and clear of all Liens other than Permitted Liens. There are no outstanding options, warrants, rights, or other agreements or commitments (contingent or otherwise) relating to the capital stock of, or other equity interests in, any Subsidiary of the Company.

(c) The Company does not own, directly or indirectly, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any Person other than its Subsidiaries.

Section 4.3 — Capitalization

(a) The authorized capital stock of the Company consists of 25,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share. As of the date hereof, (i) 6,315,789 shares of Company Common Stock are issued and outstanding, all of which ar

AGREEMENT AND PLAN OF MERGER
among
ARDENT CAPITAL PARTNERS III LP, a Delaware limited partnership,
CRFH ACQUISITION SUB, INC., a Delaware corporation and wholly owned subsidiary of Ardent Capital Partners III LP,
and
CORAL REEF HOSPITALITY GROUP, INC., a Delaware corporation
Dated as of April 25, 2022
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April 25, 2022, is entered into among ARDENT CAPITAL PARTNERS III LP, a Delaware limited partnership ("Parent"), CRFH ACQUISITION SUB, INC., a Delaware corporation and a direct, wholly owned subsidiary of Parent ("Merger Sub"), and CORAL REEF HOSPITALITY GROUP, INC., a Delaware corporation (the "Company"). Parent, Merger Sub, and the Company are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Parent is a Delaware limited partnership with its principal offices at 590 Madison Avenue, 38th Floor, New York, NY 10022, and its general partner is Ardent Capital GP III LLC, a Delaware limited liability company. Parent is a private equity fund focused on middle-market buyouts in the consumer, hospitality, and leisure sectors, with a fund size of approximately $1.2 billion (Fund III, vintage 2020);
WHEREAS, Merger Sub is a Delaware corporation formed on March 4, 2022, solely for the purpose of effecting the Merger (as defined herein) contemplated hereby, and is a direct, wholly owned subsidiary of Parent. Merger Sub's registered agent is Capitol Registered Agents, Inc., 1209 Orange Street, Wilmington, DE 19801. Merger Sub has not conducted any business other than activities incidental to its formation and in connection with the transactions contemplated by this Agreement. Merger Sub's employer identification number is 13-6318877;
WHEREAS, the Company is a Delaware corporation with its principal offices at 2400 Bayshore Boulevard, Suite 300, Tampa, FL 33629. The Company's common stock, par value $0.001 per share (the "Company Common Stock"), is listed on the Nasdaq Capital Market under the ticker symbol "CRFH" (CUSIP: 21874R109; SEC File No. 001-38742). The Company owns and operates eleven (11) boutique resort and inn properties (with an aggregate of 742 keys) located in Florida (5 properties), Georgia (2 properties), South Carolina (2 properties), the U.S. Virgin Islands (1 property), and The Bahamas (1 property), and manages food and beverage, spa, and event services at each such property;
WHEREAS, the Board of Directors of the Company (the "Company Board"), acting upon the unanimous recommendation of the Special Committee of the Company Board (the "Special Committee"), comprised of independent directors Reginald Ashworth (Chair), Diane Kowalski, and Howard Tremaine, and having received the opinion of Lantern Hill Advisory LLC, dated April 22, 2022, to the effect that, as of the date of such opinion and subject to the assumptions, limitations, qualifications, and conditions set forth therein, the Merger Consideration (as defined herein) of $4.75 per share of Company Common Stock to be received by the holders of Company Common Stock (other than Parent, Merger Sub, and their respective Affiliates) in the Merger is fair, from a financial point of view, to such holders (the "Fairness Opinion"), has (i) determined that this Agreement, the Merger, and the other transactions contemplated hereby are fair to and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the Merger, and (iii) resolved to recommend that the stockholders of the Company adopt this Agreement;
WHEREAS, the respective boards of directors (or equivalent governing bodies) of Parent and Merger Sub have approved and declared advisable this Agreement and the Merger and the other transactions contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company's willingness to enter into this Agreement, (a) Ardent Capital GP III LLC has delivered to the Company a Limited Guarantee dated as of the date hereof (the "Limited Guarantee") guaranteeing Parent's payment obligations hereunder up to the Reverse Termination Fee amount of $1,200,000, (b) the Ellender Family Trust, a Florida irrevocable trust holding 1,155,789 shares of Company Common Stock (representing approximately 18.3% of the outstanding shares), has entered into a Voting and Support Agreement with Parent dated as of the date hereof (the "Voting and Support Agreement"), and (c) the Parties are entering into an Escrow Agreement (reference CTC-ESC-2022-1173) with Commonwealth Trust Company as escrow agent (the "Escrow Agreement");
WHEREAS, the Parties desire to make certain representations, warranties, covenants, and agreements in connection with the Merger and the other transactions contemplated by this Agreement and to prescribe certain conditions to the Merger; and
WHEREAS, it is intended that the Merger shall be treated as a merger governed by Section 251 of the Delaware General Corporation Law (the "DGCL") for purposes of Delaware law.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Parent or Merger Sub or any of their respective Affiliates) relating to any (a) direct or indirect acquisition of assets of the Company or any of its Subsidiaries constituting twenty percent (20%) or more of the consolidated assets, revenues, or net income of the Company and its Subsidiaries, taken as a whole, (b) direct or indirect acquisition (whether by purchase, merger, consolidation, or otherwise) of twenty percent (20%) or more of any class of equity securities of the Company or any of its Subsidiaries whose assets constitute twenty percent (20%) or more of the consolidated assets of the Company, (c) tender offer or exchange offer that, if consummated, would result in any Person beneficially owning twenty percent (20%) or more of any class of equity securities of the Company, or (d) merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving the Company (or any Subsidiary of the Company whose assets constitute twenty percent (20%) or more of the consolidated assets of the Company), in each case other than the Merger and the transactions contemplated by this Agreement.
"Adverse Recommendation Change" means any action by the Company Board or the Special Committee to (a) withhold, withdraw, qualify, amend, or modify, in a manner adverse to Parent, the Company Board Recommendation, (b) fail to include the Company Board Recommendation in the Proxy Statement, (c) adopt, approve, or recommend, or publicly propose to adopt, approve, or recommend, an Acquisition Proposal, or (d) fail to publicly reaffirm the Company Board Recommendation within five (5) Business Days after Parent's written request to do so following the public announcement of an Acquisition Proposal (provided that Parent may make such request no more than once with respect to each Acquisition Proposal and each material amendment thereto).
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, as such term is defined in Rule 12b-2 under the Exchange Act.
"Aggregate Equity Value" means $30,000,000 (being 6,315,789 shares of Company Common Stock multiplied by the Merger Consideration of $4.75 per share).
"Business Day" means any day that is not a Saturday, Sunday, or other day on which banking institutions in New York, New York or Wilmington, Delaware are authorized or obligated by Law or executive order to close.
"Cancelled Shares" has the meaning set forth in Section 3.1(b).
"Certificate" means a physical certificate representing one or more outstanding shares of Company Common Stock.
"Certificate of Merger" means the Certificate of Merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit A.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" means the date on which the Closing occurs pursuant to Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
"Company Board" means the Board of Directors of the Company, consisting, as of the date hereof, of Reginald Ashworth (Chair, Independent), Marcus Ellender (CEO, Non-Independent), Diane Kowalski (Independent), Howard Tremaine (Independent), and Sandra Maldonado (Independent).
"Company Board Recommendation" has the meaning set forth in Section 4.4.
"Company Benefit Plan" means each "employee benefit plan" as defined in Section 3(3) of ERISA, and each other benefit or compensation plan, program, policy, practice, agreement, or arrangement, whether or not subject to ERISA, that is sponsored, maintained, contributed to, or required to be contributed to by the Company or any of its Subsidiaries for the benefit of any current or former employee, officer, director, or other individual service provider of the Company or any of its Subsidiaries, or under which the Company or any of its Subsidiaries has or may have any liability.
"Company Common Stock" means the common stock, par value $0.001 per share, of the Company. As of the date hereof, 6,315,789 shares of Company Common Stock are issued and outstanding.
"Company Disclosure Schedule" means the disclosure schedule delivered by the Company to Parent concurrently with the execution and delivery of this Agreement.
"Company Material Adverse Effect" (or "MAE") means any fact, event, change, effect, development, condition, or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, financial condition, assets, liabilities, or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to consummate the transactions contemplated hereby; provided, that, with respect to clause (a), none of the following, alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Company Material Adverse Effect:
(i) changes in general economic, financial, credit, or securities market conditions, including changes in prevailing interest rates, exchange rates, commodity prices, or equity prices;
(ii) changes in the hospitality, resort, or leisure industries generally, including changes in travel patterns, consumer preferences, or occupancy rates affecting the industry as a whole;
(iii) changes in applicable Law (including any public health order or directive) or changes in GAAP or other applicable accounting standards (or interpretations thereof);
(iv) acts of war (whether or not declared), military action, sabotage, terrorism, cyberattacks, natural disasters, epidemics, pandemics (including COVID-19 and its variants and mutations, and any actions taken by any Governmental Authority in response thereto), weather events, or other force majeure events;
(v) the public announcement or known pendency of the Merger or any of the other transactions contemplated by this Agreement, including any impact on relationships with customers, suppliers, employees, labor organizations, financing sources, or other business partners (provided that this exception shall not apply to any representation or warranty in Section 4.5 to the extent that the purpose of such representation or warranty is to address the consequences of the execution and delivery of this Agreement or the consummation of the Merger);
(vi) any failure by the Company to meet any published analyst estimates or expectations of the Company's revenue, earnings, or other financial performance or results of operations for any period, or any failure by the Company to meet its internal or published projections, budgets, plans, or forecasts of its revenues, earnings, or other financial performance or results of operations (provided that the underlying causes of any such failure may be considered in determining whether a Company Material Adverse Effect has occurred to the extent such underlying causes are not otherwise excluded by this definition); and
(vii) changes or effects resulting from compliance by the Company with the terms of, or the taking of any action required by, this Agreement;
provided, further, that any fact, event, change, effect, development, condition, or occurrence referred to in clauses (i) through (iv) above may be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such fact, event, change, effect, development, condition, or occurrence has had or would reasonably be expected to have a disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other companies of similar size operating in the hospitality, resort, and leisure industries in the jurisdictions in which the Company and its Subsidiaries operate. For the avoidance of doubt, a decline in the Company's trailing-twelve-month EBITDA exceeding twenty percent (20%) (i.e., exceeding $1,020,000 based on LTM EBITDA of $5,100,000 for the fiscal year ended December 31, 2021) shall constitute a Company Material Adverse Effect for purposes of this Agreement.
"Company SEC Documents" means all reports, schedules, forms, statements, and other documents (including exhibits and amendments thereto) filed or furnished by the Company with or to the SEC.
"Company Stockholder Meeting" has the meaning set forth in Section 6.3(b).
"Company Termination Fee" means $900,000 (being 3.0% of the Aggregate Equity Value of $30,000,000), as provided in Section 8.3(b).
"Confidentiality Agreement" means the Confidentiality Agreement dated February 22, 2022, between Parent and the Company, as the same may be amended from time to time.
"Consent" means any consent, approval, authorization, waiver, permit, grant, franchise, concession, license, exemption, order, registration, declaration, or filing with, or notice to, any Person, including any Governmental Authority.
"Contract" means any legally binding agreement, contract, subcontract, lease, sublease, license, sublicense, understanding, instrument, note, bond, mortgage, indenture, commitment, or undertaking, whether written or oral.
"D&O Tail" has the meaning set forth in Section 6.8(b).
"Data Room" means the virtual data room maintained on the Thackeray Solutions platform under the project name "Project Trident," as made available to Parent and its Representatives prior to the date hereof.
"Debt Financing" has the meaning set forth in Section 5.4(a).
"Deductible" has the meaning set forth in Section 9.5(a).
"DGCL" means the General Corporation Law of the State of Delaware, as amended.
"Dissenting Shares" has the meaning set forth in Section 3.7(a).
"Effective Time" has the meaning set forth in Section 2.3.
"Ellender Family Trust" means the Ellender Family Trust, a Florida irrevocable trust, which as of the date hereof is the record and beneficial holder of 1,155,789 shares of Company Common Stock, representing approximately 18.3% of the outstanding shares of Company Common Stock.
"Environmental Laws" means any and all federal, state, local, or foreign Laws (including common law), regulations, permits, and orders relating to pollution, the protection of the environment or natural resources, or the release, generation, treatment, storage, transport, handling, or disposal of Hazardous Substances, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, and analogous state and local statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
"Escrow Agent" means Commonwealth Trust Company, 3711 Kennett Pike, Suite 120, Greenville, DE 19807.
"Escrow Agreement" means the Escrow Agreement dated as of the date hereof (Ref. CTC-ESC-2022-1173) among Parent, the Company (in its capacity as Stockholder Representative), and the Escrow Agent, substantially in the form attached hereto as Exhibit B.
"Escrow Amount" means $1,500,000 (being 5.0% of the Aggregate Equity Value), to be deposited into escrow at the Closing and held for a period of eighteen (18) months following the Closing Date, pursuant to the terms of the Escrow Agreement.
"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months after the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Exchange Fund" has the meaning set forth in Section 3.2.
"FCPA" means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder.
"Financing" means the Debt Financing and the equity capital commitments described in Section 5.4(b).
"Financing Commitment" means the commitment letter dated April 8, 2022 (Ref. PCL-2022-SF-0417) from Pinnacle Commercial Lending Corp. to Parent, as delivered to the Company, providing for a senior secured term loan facility in an aggregate principal amount of $10,000,000 on the terms and conditions set forth therein, including an interest rate of SOFR plus 425 basis points, a five-year maturity, an original issue discount of 1.0%, and a first-priority lien on all assets of the Company and its Subsidiaries following the Closing.
"Fraud" means actual and intentional fraud involving a knowing and deliberate misrepresentation of a material fact set forth in a representation or warranty in this Agreement, made with the intent to deceive and upon which the other party justifiably relied, as determined by a final, non-appealable judgment of a court of competent jurisdiction.
"Fundamental Representations" means, with respect to the Company, the representations and warranties set forth in Section 4.1 (Organization, Good Standing, and Qualification), Section 4.3 (Capitalization), Section 4.4 (Authority; Binding Agreement), and Section 4.20 (Brokers and Finders), and, with respect to Parent and Merger Sub, the representations and warranties set forth in Section 5.1 (Organization, Good Standing, and Qualification), Section 5.2 (Authority; Binding Agreement), and Section 5.7 (Brokers and Finders).
"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied.
"Go-Shop Period" means the period beginning on the date of this Agreement (April 25, 2022) and ending at 11:59 p.m. Eastern Time on May 25, 2022 (being thirty (30) calendar days after the date hereof).
"Go-Shop Period End Date" means May 25, 2022, at 11:59 p.m. Eastern Time.
"Governmental Authority" means any federal, state, local, or foreign government or governmental, regulatory, or administrative authority, agency, bureau, board, commission, or instrumentality, or any court, tribunal, or judicial or arbitral body, including any self-regulatory organization.
"Hazardous Substances" means any substance, material, or waste that is regulated, classified, or otherwise characterized under any Environmental Law as "hazardous," "toxic," "pollutant," "contaminant," "radioactive," or words of similar meaning, including petroleum and petroleum by-products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead-based paint, radon, and per- and polyfluoroalkyl substances.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Parties" has the meaning set forth in Section 6.8(a).
"Intervening Event" means a material event, change, circumstance, development, or condition that (a) was not known or reasonably foreseeable to the Company Board as of the date of this Agreement (or, if known or foreseeable, the material consequences of which were not known or reasonably foreseeable as of such date), (b) does not relate to or involve an Acquisition Proposal or a Superior Proposal, and (c) first occurs or arises after the date of this Agreement and before the Requisite Stockholder Approval is obtained.
"Knowledge of the Company" means the actual knowledge of Marcus Ellender (Chief Executive Officer), Patricia Sung (Chief Financial Officer), and each member of the Company Board, in each case after reasonable inquiry of their respective direct reports who would reasonably be expected to have knowledge of the relevant matter.
"Law" means any federal, state, local, or foreign statute, law, ordinance, regulation, rule, code, order, judgment, decree, or other requirement or rule of law enacted, promulgated, or imposed by any Governmental Authority.
"Lien" means any lien, pledge, hypothecation, mortgage, deed of trust, security interest, encumbrance, claim, restriction, option, right of first refusal, easement, servitude, transfer restriction, or charge of any kind or nature whatsoever.
"Limited Guarantee" means the Limited Guarantee dated as of the date hereof executed and delivered by Ardent Capital GP III LLC in favor of the Company, substantially in the form attached hereto as Exhibit D, guaranteeing Parent's payment obligations under this Agreement up to $1,200,000 (the amount of the Reverse Termination Fee).
"Losses" means all losses, liabilities, damages, claims, costs, expenses, interest, awards, judgments, penalties, and reasonable attorneys' fees and expenses, actually suffered or incurred by the applicable indemnified person.
"Material Contract" means any Contract to which the Company or any of its Subsidiaries is a party or by which any of their respective assets are bound that (a) involves aggregate consideration payable by or to the Company or any Subsidiary in excess of $250,000 in any twelve-month period, (b) is a management, franchise, or license agreement relating to any Company property, (c) is a revenue-sharing or joint venture arrangement, (d) contains non-competition or exclusivity provisions binding on the Company or any Subsidiary, (e) relates to Indebtedness in excess of $100,000, (f) is a collective bargaining agreement, (g) is a lease of real or personal property involving annual rental payments in excess of $100,000, or (h) is otherwise material to the business, assets, financial condition, or results of operations of the Company and its Subsidiaries, taken as a whole.
"Merger" has the meaning set forth in Section 2.1.
"Merger Consideration" means $4.75 per share of Company Common Stock, payable in cash, without interest.
"Merger Sub Shares" has the meaning set forth in Section 3.1(c).
"No-Shop Period" means the period beginning immediately after the Go-Shop Period End Date and continuing until the earlier of the Effective Time or the valid termination of this Agreement in accordance with Article VIII.
"Order" means any order, judgment, injunction, ruling, writ, decree, stipulation, determination, award, or assessment of any Governmental Authority.
"Outside Date" means October 25, 2022 (being one hundred eighty (180) days after the date of this Agreement), subject to extension pursuant to Section 8.1(b).
"Parent Disclosure Schedule" means the disclosure schedule delivered by Parent to the Company concurrently with the execution and delivery of this Agreement.
"Parent Material Adverse Effect" means any fact, event, change, effect, development, condition, or occurrence that, individually or in the aggregate, would prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger or to perform any of their respective material obligations under this Agreement.
"Paying Agent" means the bank or trust company designated by Parent pursuant to Section 3.2 to act as paying agent in connection with the Merger.
"Permitted Liens" means (a) statutory Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', materialmen's, warehousemen's, and other similar Liens arising or incurred in the ordinary course of business, (c) pledges or deposits to secure obligations under workers' compensation, unemployment insurance, and other social security legislation, (d) zoning, building, subdivision, and other land-use regulations imposed by any Governmental Authority having jurisdiction over real property which are not violated in any material respect by the current use or occupancy of such real property, (e) easements, covenants, conditions, restrictions, and other similar encumbrances of record affecting title to real property that do not materially impair the use or occupancy of such real property, and (f) Liens arising under this Agreement or any ancillary agreement hereto.
"Person" means any individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, joint venture, Governmental Authority, or other entity.
"Proxy Statement" means the proxy statement (including any amendments or supplements thereto) to be filed by the Company with the SEC and mailed to the Company's stockholders in connection with the Company Stockholder Meeting for the purpose of soliciting the Requisite Stockholder Approval.
"R&W Insurance Policy" has the meaning set forth in Section 5.11.
"Record Date" has the meaning set forth in Section 6.3(b).
"Reduced Termination Fee" has the meaning set forth in Section 8.3(b).
"Representatives" means, with respect to any Person, such Person's directors, officers, employees, agents, accountants (including, with respect to the Company, Hargrove & Liddell CPAs LLP), legal counsel, financial advisors (including, with respect to the Company, Lantern Hill Advisory LLC, and, with respect to Parent, Grayson Partners & Co.), and other advisors and representatives.
"Requisite Stockholder Approval" means the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon (i.e., at least 3,157,895 shares out of 6,315,789 outstanding shares as of the date hereof), in accordance with the DGCL and the Company's certificate of incorporation and bylaws.
"Reverse Termination Fee" means $1,200,000 (being 4.0% of the Aggregate Equity Value of $30,000,000), as provided in Section 8.3(c).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Solvent" means, with respect to any Person as of any date of determination, that as of such date (a) the fair value of the assets of such Person on a going concern basis is in excess of the total amount of the liabilities (including contingent liabilities) of such Person, (b) the present fair saleable value of the assets of such Person on a going concern basis is in excess of the total amount of the liabilities (including contingent liabilities) of such Person, (c) such Person does not have unreasonably small capital for the business in which it is engaged or will be engaged, and (d) such Person will be able to pay its debts and other liabilities as they become due in the ordinary course of business.
"Special Committee" means the special committee of the Company Board consisting of Reginald Ashworth (Chair), Diane Kowalski, and Howard Tremaine, each of whom is an independent and disinterested director of the Company.
"Stockholder Representative" means the Company, in its capacity as representative of the pre-Closing stockholders of the Company under the Escrow Agreement.
"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, association, or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a partnership, limited liability company, association, or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof. For purposes of this definition, a Person shall be deemed to own a partnership or other similar ownership interest in a partnership, limited liability company, association, or other business entity if such Person is allocated a majority of the gains or losses of such entity or is or controls the managing director, managing member, or general partner of such entity.
"Superior Proposal" means a bona fide, unsolicited, written Acquisition Proposal (with the references to "twenty percent (20%)" in the definition of Acquisition Proposal being replaced with "fifty percent (50%)" for purposes of this definition) made by a third party on terms that the Company Board (or the Special Committee) determines in good faith, after consultation with its financial advisor (Lantern Hill Advisory LLC) and outside legal counsel (Whitfield, Crane & Sato LLP), taking into account all relevant factors (including the legal, financial, regulatory, and other aspects of the proposal, the identity of the Person making the proposal, the conditions to and expected timing of consummation, the certainty of financing, and any amendments or modifications to this Agreement proposed by Parent), to be more favorable to the Company's stockholders from a financial point of view than the Merger and the transactions contemplated hereby (including any revisions to the terms of this Agreement proposed by Parent in response thereto) and that is reasonably likely to be consummated on the terms proposed.
"Surviving Corporation" means Coral Reef Hospitality Group, Inc., as the surviving corporation of the Merger.
"Tax" or "Taxes" means any and all federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, severance, stamp, occupation, premium, environmental, windfall profit, customs, duties, real property, special assessments, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, or other tax, including any interest, penalties, and additions thereto imposed by any Governmental Authority.
"Tax Return" means any return, declaration, report, claim for refund, information return, or statement relating to any Tax, including any schedule or attachment thereto and any amendment thereof.
"Voting and Support Agreement" means the Voting and Support Agreement dated as of the date hereof between Parent and the Ellender Family Trust, substantially in the form attached hereto as Exhibit C.
"Willful Breach" means a material breach of this Agreement that is a consequence of an act or omission by a Party with actual knowledge (or that should have been known by such Party using reasonable care) that the taking of such act or failure to take such act would, or would reasonably be expected to, result in or constitute a breach of this Agreement.
Section 1.2 — Other Defined Terms
The following terms are defined in the Sections of this Agreement indicated below:
Section 1.3 — Interpretation
Unless the context otherwise requires, the following rules of interpretation shall apply to this Agreement:
(a) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(b) Whenever the words "include," "includes," or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."
(c) The words "hereof," "herein," "hereby," "herewith," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) All references in this Agreement to Articles, Sections, Exhibits, and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context otherwise requires.
(e) The word "or" is not exclusive, and the word "extent" in the phrase "to the extent" means the degree to which a subject or other thing extends, and such phrase does not mean simply "if."
(f) All references to "dollars" or "$" shall mean United States dollars.
(g) Words in the singular form shall be construed to include the plural and vice versa, and words in one gender shall be construed to include each other gender, as the context requires.
(h) References to any statute or regulation are to the statute or regulation as amended, modified, supplemented, or replaced from time to time (and, in the case of any statute, include any rules and regulations promulgated under such statute), and references to any section of any statute or regulation include any successor to such section.
(i) References to any Person shall include such Person's successors and permitted assigns.
(j) References to "days" shall mean calendar days unless expressly stated to be "Business Days."
(k) Each Party and its counsel have reviewed and participated in the drafting of this Agreement, and accordingly, the rule of construction that any ambiguity shall be construed against the drafter shall not apply to this Agreement.
ARTICLE II
THE MERGER
Section 2.1 — The Merger
Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, CRFH Acquisition Sub, Inc. shall be merged with and into Coral Reef Hospitality Group, Inc. (the "Merger"), the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving corporation of the Merger (the "Surviving Corporation") and shall continue its corporate existence under the laws of the State of Delaware as a direct, wholly owned subsidiary of Parent. The Merger is a reverse triangular merger in which Merger Sub, the acquisition vehicle, merges with and into the Company, and the Company continues as the Surviving Corporation.
Section 2.2 — Closing
The closing of the Merger (the "Closing") shall take place at 10:00 a.m. Eastern Time on the third (3rd) Business Day following the satisfaction or waiver (to the extent permissible under applicable Law) of all of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), at the offices of Calderwood & Harkness LLP, 1301 Avenue of the Americas, 40th Floor, New York, NY 10019, or at such other place, date, and time as Parent and the Company may mutually agree in writing, including by remote electronic exchange of documents and signature pages via email, facsimile, or other means of electronic transmission reasonably acceptable to the Parties.
Section 2.3 — Effective Time
On the Closing Date, the Parties shall cause a Certificate of Merger to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL, substantially in the form attached hereto as Exhibit A. The Merger shall become effective at the time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or at such later date and time as the Parties may agree and specify in the Certificate of Merger (such time being referred to herein as the "Effective Time").
Section 2.4 — Effects of the Merger
The Merger shall have the effects set forth in Section 259 of the DGCL and the other applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, (a) all of the property, rights, privileges, powers, and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and (b) all debts, liabilities, obligations, restrictions, disabilities, and duties of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities, and duties of the Surviving Corporation.
Section 2.5 — Certificate of Incorporation of the Surviving Corporation
At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as set forth in the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be "Coral Reef Hospitality Group, Inc.," and such amended and restated certificate of incorporation shall be substantially in the form attached hereto as Exhibit E, until thereafter further amended in accordance with applicable Law and such certificate of incorporation; provided that such amended and restated certificate of incorporation shall include provisions relating to indemnification and exculpation of directors and officers at least as favorable as those set forth in the Company's certificate of incorporation as in effect immediately prior to the Effective Time, which provisions shall not be amended, repealed, or otherwise modified for a period of six (6) years following the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at the Effective Time were current or former directors, officers, employees, or agents of the Company, unless such modification is required by applicable Law.
Section 2.6 — Bylaws of the Surviving Corporation
At the Effective Time, the bylaws of the Surviving Corporation shall be amended and restated in their entirety to read as the bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that all references to the name of Merger Sub shall be replaced with references to "Coral Reef Hospitality Group, Inc.," until thereafter further amended in accordance with applicable Law, the certificate of incorporation of the Surviving Corporation, and such bylaws; provided that such amended and restated bylaws shall include provisions relating to indemnification and exculpation of directors and officers at least as favorable as those set forth in the Company's bylaws as in effect immediately prior to the Effective Time, which provisions shall not be amended, repealed, or otherwise modified for a period of six (6) years following the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at the Effective Time were current or former directors, officers, employees, or agents of the Company, unless such modification is required by applicable Law.
Section 2.7 — Directors and Officers of the Surviving Corporation
(a) The directors of Merger Sub immediately prior to the Effective Time shall become the initial directors of the Surviving Corporation at the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until his or her successor shall have been duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal.
(b) The officers of the Company immediately prior to the Effective Time shall become the initial officers of the Surviving Corporation at the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until his or her successor shall have been duly elected or appointed and qualified, or until his or her earlier death, resignation, or removal.
ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SHARES; EXCHANGE PROCEDURES
Section 3.1 — Effect on Capital Stock
At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or any holder of shares of Company Common Stock or shares of common stock of Merger Sub:
(a) Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be automatically converted into the right to receive $4.75 per share in cash, without interest (the "Merger Consideration"), subject to any applicable withholding pursuant to Section 3.6 and the escrow withholding provisions set forth in Section 3.5. As of the date hereof, there are 6,315,789 shares of Company Common Stock issued and outstanding, and the aggregate Merger Consideration equals $30,000,000 in the aggregate. No shares of preferred stock of the Company are issued or outstanding as of the date hereof. From and after the Effective Time, each such share of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a Certificate or Book-Entry Shares that immediately prior to the Effective Time represented any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon surrender of such Certificate (or transfer of such Book-Entry Shares) in accordance with Section 3.3, without interest.
(b) Cancelled Shares. Each share of Company Common Stock (i) held in the treasury of the Company or (ii) owned by Parent, Merger Sub, or any direct or indirect wholly owned Subsidiary of Parent or the Company, in each case, immediately prior to the Effective Time (collectively, "Cancelled Shares"), shall automatically be cancelled and retired and shall cease to exist, and no Merger Consideration or other consideration shall be delivered in exchange therefor.
(c) Merger Sub Shares. Each share of common stock, par value $0.001 per share, of Merger Sub ("Merger Sub Shares") issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid, and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation. From and after the Effective Time, each certificate representing Merger Sub Shares shall be deemed for all purposes to evidence ownership of shares of common stock of the Surviving Corporation. The shares of common stock of the Surviving Corporation issued in the Merger shall constitute the only outstanding shares of capital stock of the Surviving Corporation, which shall be wholly owned by Parent.
Section 3.2 — Paying Agent
(a) Prior to the Effective Time, Parent shall designate a bank or trust company that is reasonably acceptable to the Company to act as paying agent in connection with the Merger (the "Paying Agent"). At or immediately prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent cash in immediately available funds in an amount sufficient to pay the aggregate Merger Consideration payable to holders of Company Common Stock pursuant to Section 3.1(a), net of the Escrow Amount of $1,500,000 (which shall be deposited with the Escrow Agent in accordance with Section 3.5), for the benefit of the holders of shares of Company Common Stock (such cash, together with any interest or other income earned thereon, being hereinafter referred to as the "Exchange Fund").
(b) The Paying Agent shall invest the Exchange Fund as directed by Parent; provided that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Pelvoran Financial Services LLC, respectively, or in certificates of deposit, bank repurchase agreements, or money market deposit accounts of commercial banks with capital exceeding $1,000,000,000, and in each case, with maturities of no more than thirty (30) days, and no such investment or loss thereon shall affect the amounts payable to holders of shares of Company Common Stock. If, for any reason, the Exchange Fund is insufficient to pay the aggregate Merger Consideration required to be paid pursuant to Section 3.1(a), Parent shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount necessary to make the Exchange Fund sufficient for such purpose.
Section 3.3 — Exchange Procedures
(a) As promptly as practicable after the Effective Time (and in any event within five (5) Business Days thereafter), Parent shall cause the Paying Agent to mail or otherwise deliver to each holder of record of shares of Company Common Stock as of immediately prior to the Effective Time (other than holders of Cancelled Shares and holders of Dissenting Shares): (i) a letter of transmittal, substantially in the form attached hereto as Exhibit F, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or effective affidavits of loss in lieu thereof as contemplated by Section 3.4) to the Paying Agent, and which letter of transmittal shall be in such form and have such other provisions as Parent and the Company may reasonably agree, and (ii) instructions for use in effecting the surrender of the Certificates (or transfer of book-entry shares of Company Common Stock ("Book-Entry Shares")) in exchange for the Merger Consideration.
(b) Upon surrender of a Certificate (or transfer of Book-Entry Shares) for cancellation to the Paying Agent, together with a duly completed and validly executed letter of transmittal and such other documents as may be reasonably required pursuant to the instructions therein, the holder of such Certificate (or Book-Entry Shares) shall be entitled to receive in exchange therefor a cash payment in an amount equal to the product of (i) the number of shares of Company Common Stock represented by such Certificate (or Book-Entry Shares) and (ii) $4.75 (the Merger Consideration per share), less such holder's pro rata portion of the Escrow Amount withheld pursuant to Section 3.5, subject to any applicable withholding pursuant to Section 3.6. The Certificate (or Book-Entry Shares) so surrendered shall forthwith be cancelled. The Paying Agent shall make payment of the Merger Consideration by check or wire transfer (as elected by the holder in the letter of transmittal) as promptly as practicable after receipt of a properly completed letter of transmittal and such other documents as may be required.
(c) No interest shall be paid or shall accrue on the Merger Consideration upon the surrender of any Certificate (or transfer of any Book-Entry Shares).
(d) In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer records of the Company, a payment of the Merger Consideration may be made to a Person other than the Person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other Taxes required by reason of such payment to a Person other than the registered holder or shall establish to the reasonable satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable.
Section 3.4 — Lost Certificates
If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen, or destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation or the Paying Agent may direct, as indemnity against any claim that may be made against the Surviving Corporation or the Paying Agent with respect to such Certificate, the Paying Agent will pay in exchange for such lost, stolen, or destroyed Certificate the applicable Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate as contemplated by this Article III.
Section 3.5 — Escrow Withholding
At the Closing, the aggregate Escrow Amount of $1,500,000 (representing 5.0% of the Aggregate Equity Value of $30,000,000) shall be withheld from the aggregate Merger Consideration otherwise payable to the holders of Company Common Stock and shall be deposited by Parent (or the Paying Agent on Parent's behalf) with Commonwealth Trust Company, as Escrow Agent, pursuant to the Escrow Agreement (Ref. CTC-ESC-2022-1173), to be held for a period of eighteen (18) months following the Closing Date to secure the indemnification obligations of the pre-Closing stockholders of the Company as set forth in Article IX. Each holder of Company Common Stock shall be deemed to have contributed its pro rata share of the Escrow Amount (based on the number of shares of Company Common Stock held by such holder relative to the total number of shares outstanding immediately prior to the Effective Time) to the escrow fund established under the Escrow Agreement. The pro rata reduction in the Merger Consideration attributable to the Escrow Amount shall be approximately $0.2375 per share (calculated as $1,500,000 divided by 6,315,789 shares). The terms and conditions governing the escrow, including the release of funds and claims procedures, are set forth in the Escrow Agreement attached hereto as Exhibit B.
Section 3.6 — Withholding Rights
Each of Parent, Merger Sub, the Surviving Corporation, and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of shares of Company Common Stock pursuant to this Agreement such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of applicable state, local, or foreign Tax Law. To the extent that amounts are so deducted and withheld and paid over to the appropriate Governmental Authority, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of Company Common Stock in respect of which such deduction and withholding was made. Prior to making any such deduction or withholding (other than any deduction or withholding required under Section 1445 of the Code in the event the Company fails to deliver to Parent or Merger Sub a properly executed certification of non-foreign status in compliance with Treasury Regulations Section 1.1445-2(c)(3)), Parent shall provide reasonable advance notice to the Company (or, following the Closing, the Stockholder Representative) and shall cooperate in good faith with the Company (or the Stockholder Representative) to reduce or eliminate any such deduction or withholding.
Section 3.7 — Dissenting Shares
(a) Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by a holder who has not voted in favor of the adoption of this Agreement (or consented thereto in writing) and who has properly demanded and perfected appraisal rights with respect to such shares in accordance with, and who has not effectively withdrawn or lost such appraisal rights under, Section 262 of the DGCL ("Dissenting Shares") shall not be converted into the right to receive the Merger Consideration at or after the Effective Time, but instead the holders of such Dissenting Shares shall be entitled only to such rights as are granted under Section 262 of the DGCL; provided, however, that if any such holder shall fail to perfect or shall effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal under Section 262 of the DGCL, then, as of the later of the Effective Time or the occurrence of such event, such holder's shares of Company Common Stock shall automatically be converted into and represent only the right to receive the Merger Consideration, without interest thereon, upon surrender of the Certificate representing such shares (or transfer of such Book-Entry Shares) in accordance with Section 3.3.
(b) The Company shall give Parent prompt notice of any demands received by the Company for appraisal of shares of Company Common Stock, any attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company in connection therewith, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to, or settle or offer to settle, any such demands or approve any withdrawal of any such demands.
Section 3.8 — Termination of Exchange Fund
Any portion of the Exchange Fund (including any interest or other income earned thereon) that remains undistributed to holders of shares of Company Common Stock one hundred eighty (180) days after the Effective Time shall be delivered to the Surviving Corporation upon demand, and any holder of shares of Company Common Stock who has not theretofore complied with the exchange procedures set forth in Section 3.3 shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat, or other similar Laws) for payment of such holder's Merger Consideration, without any interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Paying Agent, or any other Person shall be liable to any former holder of shares of Company Common Stock for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat, or similar Law. Any amounts remaining unclaimed by holders of shares of Company Common Stock immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation free and clear of any claims or interest of any such holders or their successors, assigns, or personal representatives.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as (a) set forth in the Company Disclosure Schedule delivered by the Company to Parent and Merger Sub concurrently with the execution and delivery of this Agreement (it being understood that any information set forth in one section or subsection of the Company Disclosure Schedule shall be deemed to apply to and qualify any other section or subsection of this Agreement to which the relevance of such information is reasonably apparent on its face, regardless of whether a specific cross-reference is made) or (b) disclosed in the Company SEC Documents filed with or furnished to the SEC prior to the date hereof (excluding any disclosures contained under the captions "Risk Factors," "Forward-Looking Statements," or any similar precautionary, predictive, or forward-looking section or statements, to the extent they are predictive, cautionary, or forward-looking in nature), the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 4.1 — Organization, Good Standing, and Qualification
The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company's registered agent in the State of Delaware is Prestige Corporate Services LLC, 850 New Burton Road, Suite 201, Dover, DE 19904. The Company's employer identification number is 59-3847621. The Company has all requisite corporate power and corporate authority to own, lease, and operate its properties and assets and to carry on its business as now being conducted. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing (where such concept is recognized) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification or licensing necessary, including the States of Florida, Georgia, and South Carolina, the U.S. Virgin Islands, and the Commonwealth of The Bahamas, except where the failure to be so qualified or licensed or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has made available to Parent true and complete copies of the Company's certificate of incorporation and bylaws, each as currently in effect, and the Company is not in material violation of any provision thereof.
Section 4.2 — Subsidiaries
(a) Section 4.2 of the Company Disclosure Schedule sets forth a true and complete list of each Subsidiary of the Company, together with (i) the jurisdiction of incorporation or organization of each such Subsidiary, (ii) the authorized and outstanding capital stock or other equity interests of each such Subsidiary, and (iii) the percentage of outstanding capital stock or other equity interests of each such Subsidiary owned, directly or indirectly, by the Company. Each Subsidiary of the Company is duly organized, validly existing, and in good standing (where such concept is recognized) under the laws of its jurisdiction of incorporation or organization. Each Subsidiary of the Company has all requisite corporate, partnership, limited liability company, or similar power and authority to own, lease, and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed to do business as a foreign entity and is in good standing (where such concept is recognized) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b) All of the outstanding shares of capital stock of, or other equity interests in, each Subsidiary of the Company are duly authorized, validly issued, fully paid, and nonassessable (to the extent such concepts are applicable) and are owned, directly or indirectly, by the Company, free and clear of all Liens other than Permitted Liens. There are no outstanding options, warrants, rights, or other agreements or commitments (contingent or otherwise) relating to the capital stock of, or other equity interests in, any Subsidiary of the Company.
(c) The Company does not own, directly or indirectly, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any Person other than its Subsidiaries.
Section 4.3 — Capitalization
(a) The authorized capital stock of the Company consists of 25,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share. As of the date hereof, (i) 6,315,789 shares of Company Common Stock are issued and outstanding, all of which ar

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

RECITALS

ARTICLE I

DEFINITIONS

ARTICLE II

THE MERGER

ARTICLE III

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Record

Parties

Dates

Amounts