EXCHANGE AGREEMENT

 

This Exchange Agreement (the “Agreement”) is entered into as of the 10th of
March, 2017, by and among Chanticleer Holdings, Inc., a Delaware corporation
with offices located at 7621 Little Avenue, Suite 414, Charlotte, North Carolina
28226 (the “Company”), and the investor signatory hereto (the “Investor”), with
reference to the following facts:

 

A. On or about December 31, 2014, pursuant to that Subscription Agreement, dated
as of December 31, 2014, by and among the Company and the Investor (the
“December 2014 Subscription Purchase Agreement”), the Company issued a 8%
Convertible Note to Purchase Common Stock to the Investor, certain of which are
currently held by the Investor in such aggregate amounts as set forth below the
signature of the Investor hereto (without regard to any limitations on exercise
set forth therein) (collectively, the “Investor Note”, as exercised, the
“Investor Note Shares”);

 

B. The Company has duly authorized the issuance to the Investor of new note in
the form attached hereto as Exhibit A in the principal face amount of $[ ] to be
exchanged for the Investor Note (the “Exchanged Note”, as exercised, the
“Exchanged Note Shares”, and together with the Exchanged Note, the “Exchanged
Securities”);

 

C. Each of the Company and the Investor desire to effectuate such exchanges on
the basis and subject to the terms and conditions set forth in this Agreement;

 

D. The exchange of the Investor Note for the Exchanged Note is being made in
reliance upon the exemption from registration provided by Section 3(a)(9) of the
Securities Act of 1933, as amended (the “Securities Act”);

 

E. Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the December 2014 Subscription Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:

 

1. Exchange of Securities. On the Effective Date (as defined below), pursuant to
Section 3(a)(9) of the Securities Act, the Investor hereby agrees to convey,
assign and transfer the Investor Note to the Company in exchange for which the
Company agrees to issue the Exchanged Note to the Investor as follows (such
transactions in this Section 1, the “Exchange”).

 

(a) In exchange for the Investor Note, on the date hereof the Company shall
deliver or cause to be delivered to the Investor (or its designee) the Exchanged
Note at the address for delivery set forth on the signature page of the
Investor. The Exchanged Note shall be issued without any restrictive legend.

 

(b) The Investor shall deliver or cause to be delivered to the Company (or its
designee) the Investor Note as soon as commercially practicable following the
date hereof. Immediately following the delivery of the Exchanged Note to the
Investor (or its designee) (such time, the “Effective Date”), the Investor Note
shall be cancelled.

 

   

  

 

(c) The Company and the Investor shall execute and/or deliver such other
documents and agreements as are customary and reasonably necessary to effectuate
the Exchange.

 

2. Representations and Warranties of the Company. The Company represents and
warrants to the Investor, as of the date hereof, and as of the time of
consummation of the Exchange, that:

 

(a) Organization and Qualification. The Company and each Subsidiary are duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents except, with respect to the Subsidiaries,
for violations which would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company and
each Subsidiary are duly qualified to conduct its respective businesses and are
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.

 

(b) Authorization and Binding Obligation. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
each of the other agreements and certificates entered into by the parties hereto
in connection with the transactions contemplated by this Agreement
(collectively, the “Exchange Documents”) and to issue the Exchanged Securities
in accordance with the terms hereof and thereof. The execution and delivery of
the Exchange Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Exchanged Securities, have been duly authorized by the Board of
Directors of the Company and, other than (i) such filings required under
applicable securities or “Blue Sky” laws of the states of the United States,
(ii) no further filing, consent, or authorization is required by the Company or
of its Board of Directors or its shareholders. This Agreement and the other
Exchange Documents have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

(c) No Conflict; Required Filings and Consents.

 

(i) The execution, delivery and performance of the Exchange Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby will not (A) result in a violation of the Certificate of
Incorporation, the terms of any share capital of the Company or any of its
Subsidiaries, the Bylaws or any of the organizational documents of the Company
or any of its Subsidiaries or (B) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (C) result in a violation of any law,
rule, regulation, order, judgment or decree (including U.S. federal and state
securities laws, rules, and regulations, and the rules and regulations of the
NASDAQ Capital Market (the “Principal Market”) applicable to the Company or any
of its Subsidiaries or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected.

 

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(ii) Neither the Company nor any of its Subsidiaries is required to obtain any
consent, authorization or order of, or, make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory agency or
any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Exchange Documents, in each case in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations (which the Company is required to obtain
pursuant to the preceding sentence) have been obtained or effected, or will have
been obtained or effected, on or prior to the date hereof, and the Company and
its Subsidiaries are unaware of any facts or circumstances that might prevent
the Company from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence.

 

(d) No Integration. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of any of
Exchanged Securities under the Securities Act or cause this offering of the
Exchanged Securities to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated. None of the Company, its Subsidiaries, their
affiliates or any Person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of any of
Exchanged Securities under the Securities Act or cause the offering of the
Exchanged Securities to be integrated with other offerings.

 

(e) Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Investor contained herein, the offer and issuance by the
Company of the Exchanged Securities is exempt from registration under the
Securities Act and all applicable state securities laws. The offer and issuance
of the Exchanged Securities is exempt from registration under the Securities Act
pursuant to the exemption provided by Section 3(a)(9) thereof.

 

(f) Issuance of Exchanged Securities. The issuance of the Exchanged Securities
is duly authorized and upon issuance in accordance with the terms of the
Exchange Documents shall be validly issued, fully paid and non-assessable and
free from all taxes, liens, charges and other encumbrances with respect to the
issue thereof. Upon conversion, the Exchange Note Shares shall be (i) issued in
electronic form, (ii) freely tradable and transferable and without restriction
on resale, and (iii) timely credited by the Company to the Investor’s or its
designee’s specified Deposit/Withdrawal at Custodian account with DTC under its
Fast Automated Securities Transfer Program, or any similar program hereafter
adopted by the Depository Trust Company (“DTC”) performing substantially the
same function (“DWAC Shares”). The Company shall take all action necessary to
ensure that its Common Stock can be transferred electronically as DWAC Shares.

 

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(g) Disclosure. Other than as set forth in the Press Release (as defined below),
the Company confirms that neither it nor any other Person acting on its behalf
has provided the Investor or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic
information. The Company understands and confirms that the Investor will rely on
the foregoing representations in effecting transactions in the Exchanged
Securities. All disclosure provided to the Investor regarding the Company and
its Subsidiaries, their business and the transactions contemplated hereby,
including the schedules to this Agreement, furnished by or on behalf of the
Company is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.

 

(h) Shell Company Status. The Company is not currently, and has never been, an
issuer identified in Rule 144(i)(1) under the Securities Act.

 

(i) SEC Documents. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act of 1934, as amended (the “Exchange Act”),
including pursuant to Section 13(a) or 15(d) thereof, for the 24 months
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable. None of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

 

3. Representations and Warranties of Investors. The Investor represents and
warrants to the Company , as of the date hereof, as follows:

 

(a) Organization and Authority. The Investor has the requisite power and
authority to enter into and perform its obligations under this Agreement. The
execution and delivery of this Agreement by the Investor and the consummation by
Investor of the transactions contemplated hereby has been duly authorized by
Investor’s board of directors or other governing body. This Agreement has been
duly executed and delivered by Investor and constitutes the legal, valid and
binding obligation of Investor, enforceable against Investor in accordance with
its terms.

 

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(b) Ownership of Investor Note . The Investor owns the Investor Note free and
clear of any liens (other than the obligations pursuant to this Agreement, the
Transaction Documents and applicable securities laws).

 

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

 

(d) Validity; Enforcement. This Agreement and the Exchange Documents to which
the Investor is a party have been duly and validly authorized, executed and
delivered on behalf of the Investor and shall constitute the legal, valid and
binding obligations of the Investor enforceable against the Investor in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(e) No Conflicts. The execution, delivery and performance by the Investor of
this Agreement and the Exchange Documents to which the Investor is a party, and
the consummation by the Investor of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
the Investor or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Investor is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to the Investor,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of the Investor to perform its obligations hereunder.

 

4. Disclosure of Transaction. The Company shall, on or before 8:30 a.m., New
York City Time, on the first business day after the date of this Agreement,
issue a press release and/or Current Report on Form 8-K (collectively, the
“Press Release”) disclosing all material terms of the transactions contemplated
hereby. From and after the issuance of the Press Release, the Investor shall not
be in possession of any material, nonpublic information received from the
Company or any of its respective officers, directors, employees or agents, that
is not disclosed in the Press Release. The Company shall not, and shall cause
its officers, directors, employees and agents, not to, provide the Investor with
any material, nonpublic information regarding the Company from and after the
filing of the Press Release without the express written consent of the Investor.
The Company shall not disclose the name of the Investor in any filing,
announcement, release or otherwise, unless such disclosure is required by law or
regulation.

 

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5. No Integration. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf shall, directly or indirectly,
make any offers or sales of any security (as defined in the Securities Act) or
solicit any offers to buy any security or take any other actions, under
circumstances that would require registration of any of the Exchanged Securities
under the Securities Act or cause this offering of the Exchanged Securities to
be integrated with such offering or any prior offerings by the Company for
purposes of the Securities Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
the Principal Market and/or any exchange or automated quotation system on which
any of the securities of the Company are listed or designated.

 

6. Listing. The Company shall maintain the Common Stock’s authorization for
quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 6.

 

7. Holding Period. For the purposes of Rule 144, the Company acknowledges that
the holding period of the Exchanged Note may be tacked onto the holding period
of the Investor Note, and the Company agrees not to take a position contrary to
this Section 7. The Company agrees to take all actions, including, without
limitation, the issuance by its legal counsel of any necessary legal opinions,
necessary to issue the Exchanged Note that are freely tradable on the Principal
Market without restriction and not containing any restrictive legend without the
need for any action by the Investor.

 

8. Regulatory Filings. The Company shall make all filings and reports relating
to the Exchange required under applicable securities or “Blue Sky” laws of the
states of the United States following the date hereof, if any.

 

9. No Commissions. Neither the Company nor the Investor has paid or given, or
will pay or give, to any person, any commission, fee or other remuneration,
directly or indirectly, in connection with the transactions contemplated by this
Agreement.

 

10. Termination. Notwithstanding anything contained in this Agreement to the
contrary, if the Effective Date has not occurred and the Company does not
deliver the Exchanged Note to the Investor in accordance with Section 1 hereof,
then, at the election of the Investor delivered in writing to the Company at any
time after the fifth (5th) business day immediately following the date of this
Agreement, this Agreement shall be terminated and be null and void ab initio and
the Investor Note shall not be terminated hereunder and shall remain outstanding
as if this Agreement never existed.

 

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IN WITNESS WHEREOF, Investor and the Company have executed this Agreement as of
the date set forth on the first page of this Agreement.

 

  INVESTOR:                 By:     Name:  

 

  Amount of principal of the Investor Note*:     $[  ] in Principal       Amount
of principal of the Exchanged Note in the Exchange*:       $[  ] in Principal  
    Delivery Information:                       * Without regard to any
limitations on exercise set forth therein

 

  THE COMPANY:                  Chanticleer Holdings, Inc.         By:     Name:
    Title: