SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (this “Agreement” or “Subscription Agreement”) dated as
of November 1, 2013 between JF RESTAURANTS, LLC (“JFR”) and JF FRANCHISING
SYSTEMS, LLC (“JFF”), each of which are North Carolina limited liability Company
having its principal offices at 6324 Fairview Road, Suite 550; Charlotte, NC
28210 (the “Companies”) the Companies’ existing Preferred Members (set out
below) (the “Preferred Members”) and CHANTICLEER HOLDINGS, INC., a Delaware
corporation having its principal offices at 11220 Elm Lane, Suite 203,
Charlotte, NC 28277 (the “Subscriber”).

 

WHEREAS, on the terms and subject to the conditions hereinafter set forth, the
Companies and the Preferred Members are offering (the “Offering”) with respect
to an investment of five hundred and sixty thousand dollars (USD$560,000), the
sale of a fifty one percent (51%) Preferred Membership Interest in the Companies
(the “Ownership Interest”).

 

This Offering shall close on or before November 4, 2013. The Companies may
extend the Offering upon approval of its Preferred Member Majority Approval.

 

WHEREAS, Subscriber desires to acquire the Ownership Interest in the Companies.

 

WHEREAS the existing Preferred Members consist of the following persons and
corresponding ownership interest of each of the Companies.

 

Preferred Members JFR-Preferred Membership Int JFF-Preferred Membership Int
Joseph H. Drury 30.15% 25% Ferguson Family Investments, LLC 27.01% 0% Darrell C.
Ferguson 0% 29% Cameron Harris 28.87% 31% Keith Stoneman 13.97% 15%

 

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

Section 1.                Subscription. On the terms and subject to the
conditions hereinafter set forth, Subscriber hereby subscribes for and agrees to
purchase from the Companies and/or the Preferred Members, fifty one percent
(51%) Ownership Interest in the Companies, for the purchase price indicated (the
“Purchase Price”). The Purchase Price is payable by check made payable to Fifth
Third Bank in the amount of $348,633.22 and New Dominion Bank in the amount of
$85,691.49, contemporaneously with the execution and delivery of this
Subscription Agreement to the Companies or by wire transfer to the following
coordinates:

 

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  RBK:       ABA:       BNF:       A/C:       Attn:       Ref:              
RBK:       ABA:       BNF:       A/C:       Attn:       Ref:    

 

Promptly following a closing at which all of Subscriber’s subscription is
accepted by the Companies and the Preferred Members (“Seller’s Acceptance”), all
evidence of such acceptance will be delivered by the Companies to Subscriber.

 

Payment shall be made in the following method: the entirety of the above bank
loans due as of November 1, 2013 to be paid upon execution and delivery of the
Seller’s Acceptance, the remainder of $125,675.29 to be paid as directed by
Preferred Member Majority Approval once confirmation received that Shareholders
have converted their interest as provided below, but no later than November 20,
2013 (“Final Closing”).

 

Section 2.                Representations, Warranties and Covenants of
Subscriber. Subscriber hereby represents, warrants and covenants to the
Companies that:

 

2.1              Subscriber has received and has carefully read and considered
the Term Sheet dated October 2013. In evaluating the suitability of an
investment in the Companies, Subscriber has not relied upon any representations
or other information (whether oral or written) received from the Companies, its
officers, directors, agents, employees or representatives, except information
set forth in this Agreement, the Term Sheet or information that is obtained from
the Companies in order to verify such information. Subscriber has been afforded
the opportunity to ask questions of and receive answers from management of the
Companies concerning the terms and conditions of the Offering and to obtain such
additional information as Subscriber deemed necessary in order to evaluate its
investment in the Units.

 

2.2              Subscriber understands that its purchase of the Ownership
Interest may have tax consequences and that Subscriber must retain its own
professional advisors to evaluate the tax and other consequences of an
investment in the Securities. Subscriber has independently evaluated the merits
of its decision to purchase pursuant to the transaction documents, and
Subscriber confirms that it has been afforded the opportunity to consult with
its business, tax and/or legal counsel in making such decision and has availed
itself of that opportunity to the extent deemed advisable by Subscriber.

 

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2.3              Subscriber’s address set forth on the signature page hereto is
its principal business address.

 

2.4              Subscriber has all requisite legal and other power and
authority to execute and deliver this Subscription Agreement and to carry out
and perform Subscriber’s obligations hereunder. This Subscription Agreement
constitutes a valid and legally binding obligation of Subscriber, enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other general principals of equity,
whether such enforcement is considered in a proceeding in equity or law. The
funds provided for this investment are either separate property of Subscriber,
community property over which Subscriber has the right of control or are
otherwise funds as to which Subscriber has the sole right of management.

 

2.5              The execution, delivery and performance of this Subscription
Agreement by Subscriber will not result in any violation of, or conflict with,
or constitute a default under, any of Subscriber’s articles of incorporation or
by-laws, if applicable, or any agreement to which Subscriber is a party or by
which it is bound, nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge against any of the assets or properties of Subscriber or
on the Ownership Interest.

 

2.6              No consent from any other person is required in order for
Subscriber to execute this Agreement and perform its obligations hereunder, or
such consent has been obtained and a copy has been provided to the Companies.

 

2.7              Subscriber understands that the Companies may intend to pay
compensation in connection with the sale of the Units to the extent permitted by
law.

 

2.8              Subscriber has kept confidential the existence of the Offering
and the information contained therein or made available in connection with any
further investigation of the Companies.

 

2.9              Subscriber’s representations and warranties contained in this
Subscription Agreement accompanying this Subscription Agreement do not contain
any untrue statement of a material fact. Subscriber understands that the
Companies is relying upon the truth and accuracy of the representations,
warranties and agreements of Subscriber set forth herein in making its
determination to sell the Ownership Interest.

 

2.10          Upon Final Closing, the Subscribed will execute such documents as
are reasonably required to be bound by the Companies’ Operating Agreement and
admitted as a Preferred Member.

 

Section 3.                Representations, Warranties and Covenants of Companies
and Preferred Members. The Companies and Preferred Members hereby represents,
warrants and covenants to the Subscriber that:

 

3.1              To their best knowledge and as otherwise disclosed, the
Companies are not, with respect to their business operations, except as
disclosed in Attachment A hereto, (i) parties to any pending lawsuit or other
legal proceedings, reconciliation or arbitration proceedings or any other
governmental investigation or proceedings; (ii) likely to become parties to any
such legal proceedings; and (iii) no other such legal proceeding has been
instituted, pending, and/or threatened against the Companies.

 

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3.2              The existing Shareholders shall convert all outstanding Member
notes and loans to the Companies into Preferred Membership Interest prior to the
execution of Final Closing and documentation, or at the election of the
Preferred Member Majority Approval the Companies shall thereafter be released
from all obligations for payment.

 

3.3              At Final Closing upon the delivery of the remainder of the
Purchase Price of the Ownership Interest, the Subscriber, or its assignee shall
be admitted as a Preferred Member of the Companies, and all action necessary to
issue or transfer the Ownership Interest shall be delivered.

 

Section 4.                Miscellaneous.

 

4.1              Any notice or other communication required, permitted or
provided for hereunder (each, a “Notice”) shall be effective as between the
parties only if given in writing and sent by (a) personal delivery, (b)
registered or certified mail (return receipt requested); or (c) express delivery
service, to the Companies at 6324 Fairview Road, Suite 550; Charlotte, NC 28210
or to the Subscriber at: 11220 Elm Lane, Suite 203, Charlotte, NC 28277. Notice
shall be deemed to have been duly given and received (i) if personally
delivered, on the date of such delivery, (ii) if mailed, on the date set forth
on the return receipt, or (iii) if delivered by express delivery, on the date of
such delivery (as evidenced by the receipt provided to the express delivery
service). If Notice cannot be delivered because of a changed address of which no
Notice was given, or the refusal to accept delivery, the Notice shall be deemed
received on the date it is sent (as evidenced by the affidavit of the sender).

 

4.2              This Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.

 

4.3              Notwithstanding the place where this Subscription Agreement may
be executed by any of the parties hereto, the Companies and Subscriber hereby:
(a) agree that all questions concerning the construction, validity, enforcement
and interpretation of this Subscription Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof, and (b)
all legal proceedings concerning the interpretation, enforcement and defense of
this Subscription Agreement shall be commenced in the Courts of the State of
Delaware or the courts of the United States of America and appellate courts from
any thereof (the “Courts”), (c) irrevocably submit to the exclusive jurisdiction
of the Courts for the adjudication of any dispute hereunder (including with
respect to the enforcement of this Subscription Agreement); (d) irrevocably
waive and agree not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any of such Courts, or that
such suit, action or proceeding is improper; (e) irrevocably waive personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to the other at the address in
effect for notices to it under this Subscription Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof (nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law); and (f) irrevocably waive, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Subscription
Agreement or the transactions contemplated hereby.

 

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4.4              This Subscription Agreement may be executed in counterparts.
Upon the execution and delivery of this Subscription Agreement by the
Subscriber, this Subscription Agreement shall become a binding obligation of the
Subscriber with respect to the purchase of Units as herein provided; subject,
however, to the right hereby reserved to the Companies to enter into the same
agreements with other subscribers and to add and/or to delete other persons as
subscribers.

 

4.5              If any provision of this Subscription Agreement is declared by
a court of competent jurisdiction to be in any way invalid, illegal or
unenforceable, the balance of this Subscription Agreement shall remain in
effect, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.

 

4.6              No term or provision contained herein may be modified, amended
or waived except by written agreement or consent signed by the party or parties
to be bound thereby. It is agreed that a waiver by either party of a breach of
any provision of this Subscription Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.

 

4.7              The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.

 

4.8              Subscriber acknowledges that the subscription made hereby is
not binding upon the Companies until the Companies accepts it. The Companies has
the right to accept or reject this subscription in whole or in part in its sole
and absolute discretion. If this subscription is rejected in whole, the
Companies shall return the Purchase Price to Subscriber, without interest, and
the Companies and Subscriber shall have no further obligation to each other by
reason of this Subscription Agreement or the subscription made hereby. In the
event of a partial rejection of this subscription, a proportionate amount of the
Purchase Price will be returned to Subscriber, without interest.

 

4.9              This Subscription Agreement and its acceptance may be executed
in any number of counterparts, each of which is an original for all purposes,
but all of which together constitute one agreement. Execution and delivery may
be effected by the transmission of electronic or facsimile signature pages.

 

[Remainder of Page Intentionally Blank, Signature Blank, Signature Page Follows]

 

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SIGNATURE PAGE FOR PARTNERSHIP, CORPORATION,
LIMITED LIABILITY COMPANY OR TRUST

 

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on
the date set forth below.

 

 

          Name of partnership, corporation, limited liability     Company or
trust                 By:     Federal Tax ID Number             Name:          
        Title:     State of Organization             Address:                  
                    Telephone:                   Fax:                   Email:  
                Date:        

 

 

Ownership Interest Subscribed For: __________

 

Purchase Price: __________________________

 

Exact Name in Which Securities are to be Registered:
________________________________________

 

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Subscription Accepted:     JF Restaurants, LLC                     By:        
Name: Joseph H. Drury       Title: Manager             Date:               JF
Franchising Systems, LLC                     By:         Name: Joseph H. Drury  
    Title: Manager             Date:               Consented and Agreed to by
the Preferred Members of     JF Restaurants, LLC and JF Franchising Systems,
LLC:                                   Joseph H. Drury             Ferguson
Family Investments, LLC                     By:             Darrell C. Ferguson,
as Manager                           Darrell C. Ferguson                        
  Cameron Harris                           Keith Stoneman    

 

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SPECIAL SUBSCRIPTION INSTRUCTIONS FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY
COMPANY, TRUST AND JOINT PURCHASERS

 

If Subscriber is a corporation, partnership, limited liability company, trust,
or other entity or joint purchaser, the following additional instructions must
be followed. INFORMATION ADDITIONAL TO THAT REQUESTED BELOW MAY ALSO BE REQUIRED
BY THE COMPANY IN SOME CASES.

 

1. Certificate. Subscriber must date and sign the Certificate below, and, if
requested by the Company, Subscriber may also be required to provide a copy of
(a) the corporation’s articles of incorporation, bylaws and authorizing
resolution, (b) the partnership agreement, (c) the limited liability company’s
certificate of formation or articles of organization, as applicable, and limited
liability company agreement, operating agreement or similar agreement governing
the rights and obligations of the members of the limited liability company, or
(d) the trust agreement, as applicable.

 

2. Subscription Agreement.

 

(a) Corporations. An authorized officer of the corporation must date, sign, and
complete the Subscription Agreement with information concerning the corporation.
The officer should print the name of the corporation above his signature, and
print his name and office below his signature.

 

(b) Partnerships. An authorized partner must date, sign, and complete the
Subscription Agreement with information concerning the partnership. The partner
should print the name of the partnership above his signature, and print his name
and the words “general partner” below his signature.

 

(c) Limited Liability Companies. An authorized member or manager must date,
sign, and complete the Subscription Agreement with information concerning the
limited liability company. The member or manager should print the name of the
limited liability company above his signature, and print his name and the word
“member” or “manager” below his signature.

 

(d) Trusts. In the case of a trust, the authorized trustee should date, sign,
and complete the Subscription Agreement with information concerning the trust.
The trustee should print the name of the trust above his signature, and print
his name and the word “trustee” below his signature. In addition, an authorized
trustee should also provide information requested in the Subscription Agreement
as it pertains to him as an individual.

 

(e) Joint Ownership. In all cases, each individual must date, sign, and complete
the Subscription Agreement. Joint investors must state if they are purchasing
the Shares as joint tenants with the right of survivorship, tenants in common,
or community property, and each must execute the Subscription Agreement
signature page.

 

 

 

  

CERTIFICATE FOR CORPORATE, PARTNERSHIP,

LIMITED LIABILITY COMPANY, TRUST, AND JOINT SUBSCRIBERS

 

If Subscriber is a corporation, partnership, limited liability company, trust,
joint purchaser, or other entity, an authorized officer, partner, member,
manager or trustee must complete, date and sign this Certificate.

 

 

 

CERTIFICATE

 

I hereby certify that:

 

1. Subscriber has been duly formed is validly and existing and has full power
and authority to purchase the Units and make an investment in Chanticleer
Holdings, Inc.

 

 

2. The Subscription Agreement has been duly and validly authorized, executed,
and delivered by Subscriber and constitutes the valid, binding, and enforceable
obligation of Subscriber.

 

 

Date:           Name of corporation, partnership, limited liability company,
trust or joint purchases     (please print)                              
Signature and title of authorized officer, partner, member, manager, trustee, or
joint purchaser

 

 

 

 

EXHIBIT A

 

Pending Action in Mecklenburg County Superior court by New Dominion Bank.

 

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