Unassociated Document


    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (the
      “Agreement”)
      is
      entered into as of July 8, 2008, between Chanticleer Holdings, Inc., a Delaware
      corporation (the “Company”)
      and
      Michael Herrick (“Executive”).

    


    WHEREAS,
      Wise Acquisition Corp., a Delaware corporation, the Company, Hooters, Inc.,
      a
      Florida corporation (the “HI”),
      and
      certain other entities and selling stockholders have entered into that certain
      Stock Purchase Agreement (the “SPA”),
      dated
      March 7, 2008, pursuant to which the Company will acquire, directly or
      indirectly, all of the outstanding shares of capital stock of HI and certain
      of
      its affiliates; 

    


    WHEREAS,
      Owl Acquisition Holdings Corp., a Delaware corporation, the
      Company, certain related entities that have executed and delivered a
      joinder thereto, and Texas
      Wings Incorporated, a Texas corporation ("TW"), have
      entered into
      that
      certain Asset Purchase Agreement (the “APA”),
      dated
      as of the date hereof, pursuant to which the Company will indirectly
      acquire, certain Hooters restaurants or rights related thereto of TW and
      certain of its affiliates as set forth in the APA; 

    


    WHEREAS,
      it is contemplated that the closing of the transactions contemplated by the
      SPA will occur immediately prior to the closing of the transactions
      contemplated by the APA  (collectively, the “Closings”),
      and
      upon the Closings the Company and Executive desire that, immediately at the
      effective time of the Closings (the “Effective
      Time”),
      the
      Company shall employ Executive, and Executive shall accept such employment,
      on
      the terms and subject to the conditions set forth herein; and 

     

    WHEREAS,
      this Agreement will become effective only if the Closings occurs and only if
      Exhibit A has been agreed to by July 14, 2008;

    


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

    


    1. Employment
      Period.
      Subject
      to earlier termination as hereinafter provided, Executive’s employment hereunder
      shall be for a period (the “Employment
      Period”)
      commencing at the Effective Time and ending on the third anniversary of the
      date
      of the Closings (the “Initial
      Termination Date”).
      If
      not previously terminated, the Employment Period shall automatically be extended
      for one additional year on the Initial Termination Date and on each subsequent
      anniversary of the Initial Termination Date, unless either Executive or the
      Company elects not to so extend the Employment Period by notifying the other
      party, in writing, of such election not less than ninety (90) days prior to
      the
      last day of the then-current Employment Period. 

     

    
      
         

      

      
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      2. Position,
        Duties and Responsibilities.

    

     

    (a) Position.
      Effective at the Effective Time, the Company shall employ Executive, and
      Executive hereby agrees to serve the Company, as Co-Chief Operating Officer,
      West of the Company reporting to the Company’s Chief Executive Officer. In
      addition, during the Term, the Company shall use
      its best efforts to cause
      Executive to be nominated to serve on the Company’s Board of Directors (the
“Board”);
      provided,
      however,
      that the Company shall not be obligated to cause such nomination if
      circumstances constituting Cause for Executive’s termination of employment exist
      or Executive is no longer employed as Chief Executive Officer of HI. Provided
      that
      if
      Executive is so nominated and elected, Executive hereby agrees to serve as
      a
      member of the Board. Executive shall perform such employment duties as are
      usual
      and customary for such position. At the Company’s request, Executive shall serve
      the Company and/or its subsidiaries and affiliates in such other offices and
      capacities in addition to the foregoing (consistent with Executive’s position
      with the Company) as the Company shall designate. In the event that Executive
      serves in any one or more of such additional capacities, Executive’s
      compensation will not be increased on account of such additional service beyond
      that specified in this Agreement. 

    


    (b) Place
      of Employment.
      During
      the Employment Period, Executive shall perform the services required by this
      Agreement at the Company’s offices in Dallas, TX. Notwithstanding the foregoing,
      the Company may from time to time require Executive to travel temporarily to
      other locations for the Company’s business.

    


    (c) Exclusivity.
      Except
      with the prior written approval of the Board (which the Board may grant or
      withhold in its sole discretion), Executive, during the Employment Period,
      shall
      devote his entire working time, attention and energies to the business of the
      Company and will not (A) accept any other employment or consultancy,
      (B) serve on the board of directors or similar body of any other for-profit
      entity (other than the Company or any subsidiary of the Company), or
      (C) engage, directly or indirectly, in any other business activity (whether
      or not pursued for pecuniary advantage) that is or may be competitive with,
      or
      that might place him in a competing position to, that of the Company or any
      of
      its subsidiaries or affiliates.

    

      3. Cash
        Compensation.

    

     

    (a) Base
      Salary.
      During
      the Employment Period, the Company shall pay Executive an annual base salary
      of
      $325,000 per year, which shall be paid to Executive in accordance with the
      Company’s standard payroll practices, as in effect from time to time (such base
      salary, as may be increased pursuant to the following sentence, the
“Base
      Salary”).
      The
      Base Salary shall be reviewed annually for increase as determined by the Board
      or the Compensation Committee thereof in its sole discretion.

    
      


      (b) Bonuses.
        

       

    

    
      
         

      

      
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              i.

            	
              Quarterly
                Bonuses.
                During the Employment Period, Executive shall be eligible to participate
                in the Company’s incentive bonus plan applicable to the Company’s senior
                executives and to earn a target bonus of 58% of Base Salary paid
                during
                each quarter of a fiscal year (the “Target
                Bonus”),
                based on the attainment of Company budgeted EBITDA for each such
                quarter,
                as contained in the annual budget presented by executive management
                of the
                Company and approved by the Board or the Compensation Committee thereof
                (and for the remainder of 2008, to be agreed to and set forth on
                Exhibit
                A
                hereto no later than July 14, 2008). The amount of each Target Bonus
                will
                be increased or decreased by the same percentage that actual EBITDA
                is
                greater or less than budgeted EBITDA for a given fiscal quarter,
                provided
                that if actual EBITDA is less than 50% of budgeted EBITDA, no Target
                Bonus
                will be payable for such quarter. Any quarterly bonus shall be paid
                by the
                Company to Executive as soon as practicable following the quarter-end
                determination of such bonus, but in any event within thirty (30)
                days
                after the end of the fiscal quarter in which such bonus is earned,
                subject
                to and conditioned upon Executive’s continued employment with the Company
                through the date on which such bonus is paid (the “Bonus
                Payment Date”).

            


    

    


    
      	 	
              ii.

            	
              Discretionary
                Bonuses.
                In addition to the quarterly bonus, during the Employment Period,
                Executive shall be eligible to receive additional discretionary cash
                and/or equity incentive bonus awards based on significant acquisitions,
                significant corporate achievements and/or the attainment of other
                objectives. The award of any bonus under this Section 3(b)(ii) (if
                any)
                shall be made in the sole discretion of the Board and shall be paid,
                if at
                all, at such time or times and in such form as the Board
                determines.

            


    

    
      


      4. Equity
        Grants.
        

       

    

    (a) General.
      Subject
      to adoption by the Board and approval by Company’s shareholders of the Company’s
      2008 Equity Incentive Plan (the “Plan”)
      in
      substantially the form attached as Exhibit
      B
      hereto,
      the Company shall grant to Executive (i) an option (“Option”)
      to
      purchase shares of common stock, par value $0.0001 per share, of the Company
      (“Shares”),
      and
      (ii) restricted Shares (the “Restricted
      Stock”),
      each
      as provided below in this Section 4.
      To
      the
      greatest extent permitted under applicable law, the Option shall constitute
      an
“incentive stock option” within the meaning of Section 422 of the Internal
      Revenue Code of 1986, as amended (the “Code”).
      If
      approval of the Plan is not obtained by the time any portion of the Option
      or
      Restricted Stock are scheduled to vest, the Company will instead grant awards
      that substantially replicate the terms and economics of the Option and
      Restricted Stock award, payable in cash or other awards that do not require
      the
      approval of the Company’s shareholders.

     

    
      
         

      

      
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    (b)  Option.
      Subject
      to Section 4(a) above and Section 4(g) below, as soon as practicable following
      the Effective Time, the Company shall grant to Executive an Option to purchase
      195,546 Shares (subject to adjustment for stock splits and similar changes
      in
      share capital between the date hereof and the Effective Date). The Option shall,
      subject to Sections 4(d) and 7(a) hereof, vest and become exercisable as to
      one-third of the Shares subject thereto on the first anniversary of the date
      of
      grant (the “Grant
      Date”)
      of
      such Option and as to one-twelfth of the Shares subject thereto on each
      quarterly anniversary of the Grant Date thereafter, subject to Executive’s
      continued employment with the Company through each such vesting date. The Option
      shall be
      granted at
      an
      exercise price per share equal to the Fair Market Value (as defined in the
      Plan)
      of a Share on the Grant Date.
      Consistent
      with the applicable provisions of this Section 4, the
      terms
      and conditions of the Option, including without limitation any applicable
      vesting and forfeiture conditions, shall be set forth in a Stock Option
      Agreement to be entered into by the Company and Executive in substantially
      the
      form attached hereto as Exhibit
      C
      (the
“Option
      Agreement”).
      The
      Option shall be governed in all respects by the terms of the Plan and the Option
      Agreement. 

    

      (c) Restricted
        Stock.
        Subject
        to Section 4(a) above and Section 4(g) below, as soon as practicable following
        the Effective Time, the Company shall grant to Executive 48,886 Shares of
        Restricted Stock (the “Restricted
        Stock”)
        (subject to adjustment for stock splits and similar changes in share capital
        between the date hereof and the Effective Date).
        The Restricted Stock shall vest and the restrictions thereon shall lapse,
        subject
        to Sections 4(d) and 7(a) hereof,
        with
        respect to one-third of the Shares subject thereto on the first anniversary
        of
        the Grant Date of such Restricted Stock and as to one-twelfth of the Shares
        subject thereto on each quarterly anniversary of such Grant Date thereafter,
        subject to Executive’s continued employment with the Company through each such
        vesting date. Consistent with the applicable provisions of this Section 4,
        the
        terms and conditions of the Restricted Stock shall be set forth in a Restricted
        Stock Agreement to be entered into by the Company and Executive in substantially
        the form attached hereto as Exhibit
        D
        which
        shall evidence the grant of the Restricted Stock (the “Restricted
        Stock Agreement”).
        The
        Restricted Stock shall be governed in all respects by the terms of the Plan
        and
        the Restricted Stock Agreement.

    

     

    (d) Change
      in Control.
      Notwithstanding anything herein to the contrary, in the event that a Change
      in
      Control (as defined in the Plan) occurs and Executive remains employed until
      at
      least immediately prior to the closing of the Change in Control, then,
      immediately prior to such Change in Control, 50% of the then-unvested Shares
      subject to each of the Option and the Restricted Stock award shall
      vest.

    


    (e) Additional
      Terms.
      The
      Option shall terminate immediately upon Executive’s termination of employment
      for Cause (as defined below), without regard to the vested status of such Option
      at the time of such a termination. In the event of any other termination of
      employment, the Option, to the extent vested, shall remain outstanding and
      exercisable for a period of up to (i) 180 days following Executive’s termination
      of employment for any reason other than Cause or due to death or Disability
      (as
      defined below), and (ii) one year following Executive’s termination of
      employment due to death or Disability (but in no event beyond the stated
      expiration date of the Option). 

    


    (f) Additional
      Discretionary Equity Grants.
      During
      the Employment Period, Executive shall be eligible as a senior executive of
      the
      Company to receive future grants of equity-based awards, including, without
      limitation, upon authorization of additional Shares for grant under the Plan.
      The award of additional equity-based awards (if any) pursuant to this Section
      4(f) shall be made in the sole discretion of the Board or the Compensation
      Committee thereof and shall be subject to such terms and conditions as the
      Board
      or the Compensation Committee may determine.

     

    
      
         

      

      
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    (g) Equity
      Grant Allocation.
      Notwithstanding the provisions of Sections 4(b) and 4(c) above, if, on the
      Grant
      Date, the Fair Market Value of a Share is greater than $7 per Share, then the
      parties agree to cooperate and work together in good faith to adjust the number
      of Shares subject to the Option and/or Restricted Stock grants described in
      Sections 4(b) and 4(c) above to reflect the value intended to be provided to
      Executive under the Options and Restricted Stock had such awards been granted
      in
      the amounts stated in Sections 4(b) and 4(c) above with the Options having
      an
      exercise price equal to $7 per Share.

    


    5. Benefits
      and Vacation.
      During
      the Employment Period, Executive shall be eligible to participate in such group
      life, health, accident, disability and/or hospitalization insurance and
      retirement plans as the Company may make available generally to its senior
      executives as a group, which plans shall be no less favorable in the aggregate
      than those maintained for the benefit of Executive immediately prior to the
      Effective Time, subject to the terms and conditions of any such plans. In
      addition, Executive shall be eligible for such other benefits, perquisites,
      paid
      vacation and holidays, to the extent applicable generally to other senior
      executives of the Company, subject to the terms and conditions of the applicable
      policies. In addition, the Company agrees to consider the implementation of
      a
      nonqualified deferred compensation plan and an executive supplemental life
      insurance program. Nothing contained herein shall, or shall be construed so
      as
      to, obligate the Company to adopt, maintain or continue any particular plans,
      policies or programs at any time.

    


    6. Expenses.
      During
      the Employment Period, Executive shall be entitled to receive prompt
      reimbursement of all reasonable business expenses incurred by Executive
      in accordance with the expense reimbursement policy applicable to the Company’s
      senior executives, as in effect from time to time.
      

    

      7. Termination
        of Employment.
        

    

     

    (a) Termination
      Without Cause or for Good Reason.
      The
      Company may terminate Executive’s employment without Cause (as defined below) at
      any time during the Employment Period upon ten (10) days’ written notice
      provided to Executive in accordance with Section 8 below or, in the Company’s
      sole discretion, payment of Executive’s Base Salary for such period in lieu of
      notice. In addition, Executive may terminate his employment for Good Reason
      (as
      defined below) at any time during the Employment Period in accordance with
      the
      terms of Section 7(i)(ii) hereof. If Executive experiences
      a “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of
      the Code, and Treasury Regulation Section 1.409A-1(h)) (“Separation
      from Service”)
      due to a
      termination by the Company without Cause or by Executive for Good Reason, the
      Company shall promptly or, in the case of obligations described in clause (iv)
      below, as such obligations become due, pay or provide to Executive, (i)
      Executive’s earned but unpaid Base Salary accrued through the date of such
      Separation from Service (the “Termination
      Date”),
      (ii)
      accrued but unpaid vacation time through the Termination Date, (iii)
      reimbursement of any unreimbursed business expenses incurred by Executive prior
      to the Termination Date that are reimbursable under Section 6 above, (iv) any
      vested benefits and other amounts due to Executive under any plan, program
      or
      policy of the Company, (v) if the Termination Date occurs after the end of
      a
      fiscal quarter but before the Bonus Payment Date in respect of such quarter,
      the
      quarterly bonus that would have been paid pursuant to Section 3(b)(i) had
      Executive remained employed until the Bonus Payment Date, and (vi) any payment
      in lieu of notice of termination under this Section 7(a) (together, the
“Accrued
      Obligations”).
      In
      addition, subject to Section 7(f) below and Executive’s execution and
      non-revocation of a binding release in accordance with Section 7(g) below,
      in
      the event of a termination of Executive’s employment by the Company without
      Cause or by Executive for Good Reason, the Company shall pay or provide to
      Executive the following (the “Severance”):

     

    
      
         

      

      
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    (x)
      a
      lump-sum payment equal to the greater of (A) the Base Salary that would have
      been payable over the remainder of the Employment Period (without regard to
      any
      subsequent extensions thereof) had Executive not incurred a Separation from
      Service at the rate in effect as of the Termination Date, or (B) 200% of the
      Base Salary in effect as of the Termination Date;
      provided that
      200%
      shall be replaced by 250% if such termination occurs within the one year period
      after either of (I) a Change in Control or (II) the consummation of an Excluded
      Acquisition (as defined in the Plan) that, but for the Change in Control
      Exceptions (as defined in the Plan), would constitute a Change in Control;
      provided
      further,
      that if
      within the six month period following such termination, an event described
      in
      clause (I) or (II) occurs, Executive shall be entitled to an additional payment
      on the six month anniversary of such termination so that the total payments
      received pursuant to this Section 7(a)(x) equals 250% of the Base Salary in
      effect as of the Termination Date; and

    


    (y)
      50%
      of the then-unvested Shares subject to each of the Option and the Restricted
      Stock award shall vest immediately prior to such termination, provided,
      that
      if
      such termination occurs within the one year period after either of (A) a Change
      in Control or (B) the consummation of an Excluded Acquisition (as defined in
      the
      Plan) that, but for the Change in Control Exceptions (as defined in the Plan),
      would constitute a Change in Control, in either case, then all of the
      then-unvested Shares subject to each of the Option and the Restricted Stock
      award shall vest immediately prior to such termination; provided
      further,
      if the
      preceding proviso is not applicable, then the portion of the Option and
      Restricted Stock award that did not vest immediately prior to such termination
      shall conditionally remain outstanding and unvested, and if within the six
      month
      period following such termination, an event described in clause (A) or (B)
      occurs, such unvested portion shall vest upon such event, and as to the Option,
      shall remain exercisable for at least 30 days thereafter (unless canceled in
      connection with such Change in Control), and if within the six month period
      following such termination, an event described in clause (A) or (B) does not
      occur, such unvested portion shall be forfeited on the six-month anniversary
      of
      the Termination Date; notwithstanding the foregoing, in no event shall any
      portion of any such award remain outstanding beyond its stated expiration date;
      and

     

    
      
         

      

      
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    (z)
      at
      the Company’s expense, continuation of group healthcare coverage for Executive
      and his legal dependents until the earlier of (i) eighteen months after the
      Termination Date, or (ii) such time as Executive becomes eligible to receive
      comparable benefits under another employer’s group health plan, provided, in any
      case, that Executive properly elects continuation healthcare coverage under
      COBRA; following such continuation period, any further continuation of coverage
      under applicable law shall be at Executive’s sole expense.

    


    Subject
      to Section 7(g) below and except as expressly provided in Section 7(a)(x) above,
      the Severance amounts described in Section 7(a)(x) above shall be paid to
      Executive no later than fifteen calendar days following the Termination Date.
      In
      no event shall an election not to extend the Employment Period in accordance
      with Section 1 hereof constitute a termination of employment without Cause
      or
      for Good Reason.

     

    (b) Resignation
      without Good Reason.
      Executive may terminate his employment at any time without Good Reason upon
      thirty (30) days’ written notice provided to the Company in accordance with
      Section 8 hereof, provided,
      that
      the Company may, in its sole discretion, waive such notice period without
      payment in lieu thereof. If Executive so resigns his employment, Executive
      shall
      be entitled to receive the Accrued Obligations promptly or, in the case of
      benefits described in Section 7(a)(iv) above, as such obligations become due,
      provided the Executive shall not be entitled to any payment described in Section
      7(a)(v) above.

    


    (c) Death;
      Disability.
      If
      Executive dies during the Employment Period or his employment is terminated
      due
      to his total and permanent disability (as determined by the Board), Executive
      or his estate, as applicable, shall be entitled to receive the Accrued
      Obligations promptly or, in the case of benefits described in Section 7(a)(iv)
      above, as such obligations become due. 

    


    (d) Cause.
      The
      Company may terminate Executive’s employment for Cause by providing notice to
      Executive in accordance with Section 8 hereof. If the Company terminates
      Executive’s employment for Cause, Executive shall be entitled to receive the
      Accrued Obligations promptly or, in the case of benefits described in Section
      7(a)(iv) above, as such obligations become due, provided the Executive shall
      not
      be entitled to any payment described in Section 7(a)(v) above. 

     

    
      
         

      

      
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    (e) Non-Renewal.
      Either
      party may terminate Executive’s employment by electing not to renew the
      Employment Period in accordance with Section 1 hereof. Upon Executive’s
      Separation from Service in connection with any such election, Executive shall
      be
      entitled to receive the Accrued Obligations promptly or, in the case of benefits
      described in Section 7(a)(iv) above, as such obligations become due. In
      addition, if the Company elects not to renew the Employment Period and (i)
      Executive is willing and able to renew the Employment Period on substantially
      similar terms to those in effect at the time of such Company non-renewal, and
      (ii) Executive remains employed through the last day of the Term (other than
      due
      to an involuntary termination without Cause, resignation by Executive for Good
      Reason, or due to Executive’s death or Disability), then subject to Section 7(f)
      below and Executive’s execution and non-revocation of a binding release in
      accordance with Section 7(g) below, the Company shall pay or provide to
      Executive (the “Non-Renewal
      Benefits”)
      (x) a
      lump-sum payment equal to 75% of the Base Salary in effect as of the Termination
      Date, and (y) at the Company’s expense, continuation of group healthcare
      coverage for Executive and his legal dependents until the earlier of (A) twelve
      months after the Termination Date, (B) such time as Executive becomes eligible
      to receive comparable benefits under another employer’s group health plan,
      provided, in any case, that Executive properly elects continuation healthcare
      coverage under COBRA; following such continuation period, any further
      continuation of coverage under applicable law shall be at Executive’s sole
      expense. Subject to Section 7(g) below, the lump-sum payments described in
      this
      Section 7(e) shall be paid (if payable) to Executive no later than fifteen
      calendar days following the Termination Date.

     

    (f) Potential
      Six-Month Delay.
      Notwithstanding anything to the contrary in this Agreement, no compensation
      or
      benefits, including without limitation any Severance or Non-Renewal Payment,
      shall be paid to Executive during the 6-month period following his Separation
      from Service to the extent that the Company determines that Executive is a
      “specified employee” at the time of such Separation from Service (within the
      meaning of Section 409A of the Code) and that that paying such amounts at the
      time or times indicated in this Agreement would be a prohibited distribution
      under Section 409A(a)(2)(b)(i) of the Code. If the payment of any such amounts
      is delayed as a result of the previous sentence, then on the first business
      day
      following the end of such 6-month period (or
      such earlier date upon which such amount can be paid under Section 409A of
      the
      Code without being subject to such additional taxes, including as a result
      of
Executive’s
      death),
      the
      Company shall pay to Executive a lump-sum amount equal to the cumulative amount
      that would have otherwise been payable to Executive during such 6-month
      period.

    


    (g) Release.
      Executive’s right to receive any of the Severance payments and benefits,
      accelerated vesting or Non-Renewal Benefits set forth in this Section 7 is
      conditioned on and subject to the execution and non-revocation by Executive
      of a
      general release of claims against the Company, substantially in the form
      attached hereto as Exhibit
      E,
      as may
      be amended to reflect changes in applicable law.

    


    (h) Termination
      of Offices and Directorships.
      Upon
      termination of Executive’s employment for any reason, Executive shall be deemed
      to have resigned from all offices and directorships, if any, then held with
      the
      Company or any affiliate, and shall take all actions reasonably requested by
      the
      Company to effectuate the foregoing.

    


    (i) Definitions.
      For
      purposes of this Agreement:

     

    
      
         

      

      
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    (i)
       “Cause”
shall
      mean: (A) any willful and material failure by Executive to perform his duties
      and responsibilities under this Agreement (other than due to Executive’s
      disability); (B) any material act of fraud, embezzlement, theft or
      misappropriation by Executive relating to the Company or its business or assets,
      (C) Executive’s commission of a felony or a crime involving moral turpitude; (D)
      any gross negligence or willful misconduct on the part of Executive in the
      conduct of his duties and responsibilities with the Company or which has a
      materially adverse economic impact on the Company or its affiliates; or (E)
      any
      willful and material breach by Executive of this Agreement,
      provided,
      that no
      termination for Cause shall be effective unless and until (1) the Company
      has first provided Executive with written notice specifically identifying the
      acts or omissions constituting the grounds for “Cause” within thirty (30) days
      after the Company has knowledge of the occurrence thereof, and (2) if capable
      of
      cure, Executive has not cured such acts or omissions within fifteen (15) days
      of
      his actual receipt of such notice. For purposes of the foregoing, no act or
      failure to act shall be deemed willful unless done in bad faith, and a failure
      to meet performance expectations, after a good faith effort to do so, shall
      not
      in of itself constitute Cause.

    


    (ii)
       “Good
      Reason”
shall
      mean the Company’s material breach of this Agreement, including: (A) a material
      reduction in Executive’s Base Salary or Target Bonus, (B) a material reduction
      in Executive’s job duties and responsibilities or the assignment to Executive of
      any duties inconsistent in any material respect with Executive’s position with
      the Company, or (C) a relocation of Executive’s principal work location to a
      location that is more than 50 miles from Executive’s principal work location as
      of the date of the Closing, provided,
      that no
      resignation for Good Reason shall be effective unless and until
      (1) Executive has first provided the Company with written notice
      specifically identifying the acts or omissions constituting the grounds for
      “Good Reason” within thirty (30) days after Executive has or should reasonably
      be expected to have had knowledge of the occurrence thereof, (2) the Company
      has
      not cured such acts or omissions within thirty (30) days of its actual receipt
      of such notice, and (3) the
      effective date of Executive’s termination for Good Reason occurs no later than
      ninety (90) days after the initial existence of the facts or circumstances
      constituting Good Reason.
      

    


    8. Notice.
      Any
      notice or other communication required or permitted under this Agreement shall
      be effective only if it is in writing and delivered personally or sent by fax,
      email or registered or certified mail, postage prepaid, addressed as follows
      (or
      if it is sent through any other method agreed upon by the parties):

    


    If
      to the
      Company:

     

    Chanticleer
      Holdings, Inc.

    4201
      Congress Street, Suite 145 

    Charlotte,
      NC 28209 

    Fax:
      (704) 366-5122 

    Attention:
      Chief Executive Officer and General Counsel

     

    If
      to
      Executive: to Executive’s most current home address on file with the Company’s
      Human Resources Department, or to such other address as any party hereto may
      designate by notice to the other in accordance with this Section 8, and shall
      be
      deemed to have been given upon receipt.

     

    
      
         

      

      
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    9. Certain
      Additional Payments by the Company.
       

    


    (a) Gross-Up
      Payment.
      Anything in this Agreement to the contrary notwithstanding and except as set
      forth below, in the event it shall be determined that any Payment (as defined
      below) would be subject to the Excise Tax (as defined below), then Executive
      shall be entitled to receive an additional payment (the “Excise
      Tax Gross-Up Payment”)
      in an
      amount such that, after payment by Executive of all taxes (and any interest
      or
      penalties imposed with respect to such taxes), including, without limitation,
      any income taxes (and any interest and penalties imposed with respect thereto)
      and Excise Tax imposed upon the Excise Tax Gross-Up Payment, Executive retains
      an amount of the Excise Tax Gross-Up Payment equal to the Excise Tax imposed
      upon the Payments. Notwithstanding the foregoing provisions of this Section
      9(a), if it shall be determined that Executive is entitled to the Excise Tax
      Gross-Up Payment, but that the Parachute Value (as defined below) of all
      Payments does not exceed 110% of the Safe Harbor Amount (as defined below),
      then
      no Excise Tax Gross-Up Payment shall be made to Executive and the amounts
      payable under this Agreement shall instead be reduced so that the Parachute
      Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The
      reduction of the amounts payable hereunder, if applicable, shall be made by
      first reducing the payments under Section 7(a)(x) hereof, unless an alternative
      method of reduction is elected by Executive, and in any event shall be made
      in
      such a manner as to maximize the Value (as defined below) of all Payments
      actually made to Executive. The Company’s obligation to make Excise Tax Gross-Up
      Payments under this Section 9 shall not be conditioned upon Executive’s
      termination of employment or Executive’s Separation from Service. For purposes
      of determining the amount of any Excise Tax Gross-Up Payment, Executive shall
      be
      considered to pay federal income tax at Executive’s actual marginal rate of
      federal income taxation in the calendar year in which the Excise Tax Gross-Up
      Payment is to be made and state and local income taxes at Executive’s actual
      marginal rate of taxation in the state and locality of Executive’s residence on
      the date on which the Excise Tax Gross-Up Payment is calculated for purposes
      of
      this Section 9, net of Executive’s actual reduction in federal income taxes
      which could be obtained from deduction of such state and local taxes, and taking
      into consideration the phase-out of Executive’s itemized deductions under
      federal income tax law.

    


    (b) Determinations.
      Subject
      to the provisions of Section 9(c) below, all determinations required to be
      made under this Section 9, including whether and when an Excise Tax Gross-Up
      Payment is required, the amount of such Excise Tax Gross-Up Payment and the
      assumptions to be utilized in arriving at such determination, shall be made
      by
      such nationally recognized accounting firm as may be selected by the Company
      (the “Accounting
      Firm”);
      provided,
      that
      the Accounting Firm’s determination shall be made based upon “substantial
      authority” within the meaning of Section 6662 of the Code. The Accounting Firm
      shall provide detailed supporting calculations both to the Company and Executive
      within fifteen business days of the receipt of notice from Executive that there
      has been a Payment or such earlier time as is requested by the Company. All
      fees
      and expenses of the Accounting Firm shall be borne solely by the Company. Any
      Excise Tax Gross-Up Payment, as determined pursuant to this Section 9, shall
      be
      paid by the Company to Executive within five days of the receipt of the
      Accounting Firm’s determination. Any determination by the Accounting Firm shall
      be binding upon the Company and Executive, unless the Company obtains an opinion
      of outside legal counsel, based upon at least “substantial authority” within the
      meaning of Section 6662 of the Code, reaching a different determination, in
      which event such legal opinion shall be binding upon the Company and Executive.
      Notwithstanding anything herein to the contrary, in no event shall any Excise
      Tax Gross-Up Payment or any payment of any income or other taxes to be paid
      by
      the Company under this Section 9 be made later than the end of Executive’s
      taxable year next following Executive’s taxable year in which Executive remits
      the related taxes. Any costs and expenses incurred by the Company on behalf
      of
      Executive under this Section 9 due to any tax contest, audit or litigation
      will
      be paid by the Company promptly upon the date the Excise Tax (or any related
      penalties and interest) is due, and in no event later than by the end of
      Executive’s taxable year following Executive’s taxable year in which the taxes
      that are the subject of the tax contest, audit or litigation are remitted to
      the
      taxing authority, or where as a result of such tax contest, audit or litigation
      no taxes are remitted, the end of Executive’s taxable year following Executive’s
      taxable year in which the audit is completed or there is a final and
      non-appealable settlement or other resolution of the contest or
      litigation.

     

    
      
         

      

      
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    (c) Notification;
      Contest.
      Executive shall notify the Company in writing of any claim by the Internal
      Revenue Service that, if successful, would require the payment by the Company
      of
      the Excise Tax Gross-Up Payment. Such notification shall be given as soon as
      practicable, but no later than 15 business days after Executive is informed
      in
      writing of such claim. Executive shall apprise the Company of the nature of
      such
      claim and the date on which such claim is requested to be paid. Executive shall
      not pay such claim prior to the expiration of the 30-day period following the
      date on which Executive gives such notice to the Company (or such shorter period
      ending on the date that any payment of taxes with respect to such claim is
      due).
      If the Company notifies Executive in writing prior to the expiration of such
      period that the Company desires to contest such claim, Executive
      shall:

     

    (i)
      give
      the Company any information reasonably requested by the Company relating to
      such
      claim,

     

    (ii)
      take
      such action in connection with contesting such claim as the Company shall
      reasonably request in writing from time to time, including, without limitation,
      accepting legal representation with respect to such claim by an attorney
      reasonably selected by the Company,

     

    (iii)
      cooperate with the Company in good faith in order effectively to contest such
      claim, and 

     

    (iv)
      permit the Company to participate in any proceedings relating to such
      claim;

     

    provided,
      that
      the Company shall bear and pay directly all costs and expenses (including
      additional interest and penalties) incurred in connection with such contest,
      and
      shall indemnify and hold Executive harmless, on an after-tax basis, for any
      Excise Tax or income tax (including interest and penalties) imposed as a result
      of such representation and payment of costs and expenses. Without limitation
      on
      the foregoing provisions of this Section 9(c), the Company shall control all
      proceedings taken in connection with such contest, and, at its sole discretion,
      may pursue or forgo any and all administrative appeals, proceedings, hearings
      and conferences with the applicable taxing authority in respect of such claim
      and may, at its sole discretion, either direct Executive to pay the tax claimed
      and sue for a refund or contest the claim in any permissible manner, and
      Executive agrees to prosecute such contest to a determination before any
      administrative tribunal, in a court of initial jurisdiction and in one or more
      appellate courts, as the Company shall determine; provided,
      that any
      extension of the statute of limitations relating to payment of taxes for the
      taxable year of Executive with respect to which such contested amount is claimed
      to be due is limited solely to such contested amount. Furthermore, the Company’s
      control of the contest shall be limited to issues with respect to which the
      Excise Tax Gross-Up Payment would be payable hereunder, and Executive shall
      be
      entitled to settle or contest, as the case may be, any other issue raised by
      the
      Internal Revenue Service or any other taxing authority.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (d) Refund.
      If,
      after the receipt by Executive of an Excise Tax Gross-Up Payment, Executive
      becomes entitled to receive any refund with respect to the Excise Tax to which
      such Excise Tax Gross-Up Payment relates, Executive shall (subject to the
      Company’s complying with the requirements of Section 9(c) hereof, if
      applicable) promptly pay to the Company the amount of such refund (together
      with
      any interest paid or credited thereon after taxes applicable thereto).


     

    (e) Excise
      Tax Withholding.
      Notwithstanding any other provision of this Section 9, the Company may, in
      its
      sole discretion, withhold and pay over to the Internal Revenue Service or any
      other applicable taxing authority, for the benefit of Executive, all or any
      portion of any Excise Tax Gross-Up Payment, and Executive hereby consents to
      such withholding. Any other liability for unpaid or unwithheld Excise Taxes
      shall be borne exclusively by the Company, in accordance with Section 3403
      of
      the Code. The foregoing sentence shall not in any manner relieve the Company
      of
      any of its obligations under this Employment Agreement.

     

    (f) Definitions.
      The
      following terms shall have the following meanings for purposes of this Section
      9:

     

    (i) “Excise
      Tax”
shall
      mean the excise tax imposed by Section 4999 of the Code, together with any
      interest or penalties imposed with respect to such excise tax.

    


    (ii) “Parachute
      Value”
of
      a
      Payment shall mean the present value as of the date of the change of control
      for
      purposes of Section 280G of the Code of the portion of such Payment that
      constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as
      determined by the Accounting Firm for purposes of determining whether and to
      what extent the Excise Tax will apply to such Payment.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (iii) “Payment”
shall
      mean any payment or distribution in the nature of compensation (within the
      meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive,
      whether paid or payable pursuant to this Agreement or otherwise.

    


    (iv) “Safe
      Harbor Amount”
shall
      mean 2.99 times Executive’s “base amount,” within the meaning of Section
      280G(b)(3) of the Code.

    


    (v)
       “Value”
of
      a
      Payment shall mean the economic present value of a Payment as of the date of
      the
      change of control for purposes of Section 280G of the Code, as determined by
      the
      Accounting Firm using the discount rate required by Section 280G(d)(4) of the
      Code.

    


    10. Restrictive
      Covenants.

    (a)  Non-Competition.
      During
      the Restricted Period, Executive will not (except as an officer, director,
      stockholder, member, manager, employee, agent or consultant of the Company)
      directly or indirectly, own, manage, operate, join, or have a financial interest
      in, control or participate in the ownership, management, operation or control
      of, or be employed as an employee, agent or consultant, or in any other
      individual or representative capacity whatsoever, or use or permit his name
      to
      be used in connection with, or be otherwise connected in any manner with any
      Competitive Enterprise; provided
      that the
      foregoing restriction shall not be construed to prohibit the ownership by
      Executive together with his affiliates and associates, as the case may be,
      of
      not more than five percent (5%) of any class of securities of any corporation
      which is engaged in any Competitive Business, provided further,
      that
      such ownership represents a passive investment and that Executive together
      with
      his affiliates and associates, either directly or indirectly, do not manage
      or
      exercise control of any such corporation, guarantee any of its financial
      obligations, otherwise take part in its business other than exercising
      Executive’s rights as a shareholder, or seek to do any of the foregoing.


    


    (b)  Non-Solicitation.
      During
      the Restricted Period, Executive shall not, directly or indirectly, solicit
      or
      influence any individual who is an employee or consultant of the Company to
      terminate his or her employment or consulting relationship with the Company
      or
      to apply for or accept employment with a Competitive Enterprise.

    


    (c)  Trade
      Secrets and Confidential Information.
      Executive recognizes that it is in the legitimate business interest of the
      Company to restrict his disclosure or use of Trade Secrets or other Confidential
      Information relating to the Company for any purpose other than in connection
      with Executive’s performance of his duties to the Company, and to limit any
      potential appropriation of such Trade Secrets or other Confidential Information.
      Executive therefore agrees that all Trade Secrets or other Confidential
      Information relating to the Company heretofore or in the future obtained by
      Executive shall be considered confidential and the proprietary information
      of
      the Company. Executive shall not use or disclose, or authorize any other person
      or entity to use or disclose, any Trade Secrets or other Confidential
      Information. 

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (d)  Remedies.
      Executive agrees that the Company’s remedies at law for any breach or threat of
      breach by Executive of any of the provisions of this Section 10 will be
      inadequate, and that, in addition to any other remedy to which the Company
      may
      be entitled at law or in equity, the Company shall be entitled to a temporary
      or
      permanent injunction or injunctions or temporary restraining order or orders
      to
      prevent breaches of the provisions of this Section 10 and to enforce
      specifically the terms and provisions hereof, in each case without the need
      to
      post any security or bond and without the requirement to prove that monetary
      damages would be difficult to calculate and that remedies at law would be
      inadequate. Nothing herein contained shall be construed as prohibiting the
      Company from pursuing, in addition, any other remedies available to the Company
      for such breach or threatened breach.

    


    (e)  Enforceability.
      It is
      expressly understood and agreed that although the parties consider the
      restrictions contained in this Section 10 hereof to be reasonable for the
      purpose of preserving the goodwill, proprietary rights and going concern value
      of the Company, if a final determination is made by an arbitrator or court,
      as
      the case may be, having jurisdiction that the time or territory or any other
      restriction contained in this Section 10 is an unenforceable restriction on
      Executive’s activities, the provisions of this Section 10 shall not be rendered
      void but shall be deemed amended to apply as to such maximum time and territory
      and to such other extent as such arbitrator or court, as the case may be, may
      determine or indicate to be reasonable. Alternatively, if the arbitrator or
      court, as the case may be, referred to above finds that any restriction
      contained in this Section 10 or any remedy provided herein is unenforceable,
      and
      such restriction or remedy cannot be amended so as to make it enforceable,
      such
      finding shall not affect the enforceability of any of the other restrictions
      contained therein or the availability of any other remedy. 

    


    (f)  Definitions.
      For
      purposes of this Section 10:

    


    (i) “Competitive
      Enterprise”
means
      any business that owns or operates a restaurant chain with at least 10 stores,
      and either (A) operates under the Hooters brand name, (B) derived more than
      25%
      of total food revenue in the preceding 12 month period from sales of chicken
      wings or related buffalo style chicken items and more than 15% of total food
      and
      beverage revenue in the preceding 12 month period from the sale of alcoholic
      beverages, or (C) features female sex appeal in a casual dining
      setting. 

     

    (ii) “Restricted
      Period”
      shall mean the period commencing on the Effective Date and ending on the first
      anniversary following the termination of Executive’s employment, provided that
      if such termination occurs by reason of a nonrenewal of the Employment Period,
      Restricted Period shall end nine months following such termination.

     

    (iii) “Trade
      Secrets or other Confidential Information”
by
      way
      of example and without limitation, and in whatever medium, includes the whole
      or
      any portion or phase of any scientific or technical information, design,
      process, procedure, formula, machine, invention, improvement, manufacturing
      or
      sales technique, manufacturing, sales or test data, reimbursement information,
      business or financial information, listing of names, addresses, or telephone
      numbers, or other information relating to any business or profession which
      is of
      value.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    11. Indemnification.
      Concurrently
      with the execution of this Agreement, Executive and the Company shall enter
      into
      an Indemnification Agreement substantially in the form attached hereto as
Exhibit
      F.

    


    12. Arbitration.
      Any
      dispute, controversy, or claim arising out of or relating to this Agreement
      or
      the breach of this Agreement shall be resolved by binding arbitration in
      Clearwater, Florida administered by the American Arbitration Association
      (“AAA”)
      or, if
      administration by AAA is unavailable for any reason, then by J.A.M.S. and,
      in
      any case, judgment on the award rendered by the arbitrator may be entered in
      and
      fully enforced by any court having jurisdiction thereof. All
      fees
      and expenses of the arbitrators and all other expenses of the arbitration,
      except for attorneys’ fees and witness expenses, which shall be borne by each
      party as incurred by such party, shall be shared equally by Executive and the
      Company. However, if in any arbitration proceeding or injunctive action,
      Executive is the prevailing party on any material claim, the Company shall
      reimburse Executive for reasonable attorneys’ fees actually incurred by
      Executive in connection with such proceeding or action.

    


    13. Effectiveness.
      This
      Agreement shall become effective at the Effective Time. Notwithstanding anything
      contained herein, in the event that the SPA or APA is terminated in accordance
      with its terms or that either Closing otherwise does not occur for any reason,
      or if Exhibit A is not agreed to by July 14, 2008, this Agreement shall
      automatically, and without notice, terminate without any obligation due to
      the
      other party and the provisions of this Agreement shall be of no force or
      effect.

    


    14. Representations.
      Executive hereby represents and warrants to the Company that (a) Executive
      is
      entering into this Agreement voluntarily and that the performance of his
      obligations hereunder will not violate any agreement between Executive and
      any
      other person, firm, organization or other entity, and (b) Executive is not
      bound
      by the terms of any agreement with any previous employer or other party to
      refrain from competing, directly or indirectly, with the business of such
      previous employer or other party that would be violated by his entering into
      this Agreement and/or providing services to the Company pursuant to the terms
      of
      this Agreement.

    


    15. Section
      409A.
      To the
      extent applicable, this Agreement shall be interpreted in accordance with
      Section 409A of the Code and any applicable exemptions therefrom.
      Notwithstanding any provision of this Agreement to the contrary, if at any
      time
      the Company determines that any payments or benefits payable hereunder may
      be
      subject to Section 409A of the Code or may not comply with Section 409A of
      the
      Code, the Company may adopt such amendments to this Agreement or take such
      other
      actions that the Company determines are necessary or appropriate to (i) exempt
      such payments and benefits from Section 409A of the Code and/or preserve the
      intended tax treatment of such payments or benefits, or (ii) comply with the
      requirements of Section 409A of the Code. To the extent that any reimbursable
      expenses are deemed to constitute compensation to Executive, such expenses
      shall
      be reimbursed by December 31 of the year following the year in which the expense
      was incurred, provided that the foregoing shall not be construed so as to extend
      the time by which reimbursements are to be made under Section 6 above. The
      amount of any expense reimbursements that constitute compensation in one year
      shall not affect the amount of expense reimbursements constituting compensation
      that are eligible for reimbursement in any subsequent year, and Executive’s
      right to reimbursement of any such expenses shall not be subject to liquidation
      or exchange for any other benefit.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    16. Withholding.
      The
      Company may withhold from any amounts payable under this Agreement such federal,
      state, local or foreign taxes as shall be required to be withheld pursuant
      to
      any applicable law or regulation.

    


    17. Entire
      Agreement.
      As of
      the Effective Date, this Agreement, together with the agreements contained
      in
      the exhibits hereto, constitutes the final, complete and exclusive agreement
      between Executive and the Company with respect to the subject matter hereof
      and
      replaces and supersedes any and all other agreements, offers or promises,
      whether oral or written, made to Executive by the Company or any representative
      thereof. Executive agrees that any such agreement, offer or promise is hereby
      terminated and will be of no further force or effect, and that upon his
      execution of this Agreement, Executive will have no right or interest in or
      with
      respect to any such agreement, offer or promise.

    


    18. Amendment.
      The
      terms of this Agreement may not be amended or modified other than by a written
      instrument executed by the parties hereto or their respective
      successors.

    


    19. Acknowledgement.
      Executive
      hereby acknowledges (a) that Executive has consulted with or has had the
      opportunity to consult with independent counsel of his own choice concerning
      this Agreement, and has been advised to do so by the Company, and (b) that
      Executive has read and understands this Agreement, is fully aware of its legal
      effect, and has entered into it freely based on his own judgment.

    


    20. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York, without regard to conflicts of laws principles
      thereof.

    


    21. No
      Waiver.
      Failure
      by either party hereto to insist upon strict compliance with any provision
      of
      this Agreement or to assert any right such party may have hereunder shall not
      be
      deemed to be a waiver of such provision or right or any other provision or
      right
      of this Agreement.

    


    22. Assignment.
      This
      Agreement is binding on and for the benefit of the parties hereto and their
      respective successors, heirs, executors, administrators and other legal
      representatives. Neither this Agreement nor any right or obligation hereunder
      may be assigned by Executive.

    


    23. Severability.
      The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this
      Agreement.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    24. Construction.
      The
      parties hereto acknowledge and agree that each party has reviewed and negotiated
      the terms and provisions of this Agreement and has had the opportunity to
      contribute to its revision. Accordingly, the rule of construction to the effect
      that ambiguities are resolved against the drafting party shall not be employed
      in the interpretation of this Agreement. Rather, the terms of this Agreement
      shall be construed fairly as to all parties hereto and not in favor or against
      any party by the rule of construction abovementioned.

    


    25. Counterparts.
      This
      Agreement may be executed in several counterparts, each of which shall be deemed
      an original, but all of which shall constitute one and the same
      instrument.

    


    26. Captions.
      The
      captions of this Agreement are not part of the provisions hereof, rather they
      are included for convenience only and shall have no force or effect.


    


    


    


    [Signature
      page follows]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date and
      year first above written.

    


    
      	 	 	 
	 	
              CHANTICLEER
                HOLDINGS, INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Michael Pruitt 
	 	
              
Name:
              Michael Pruitt 
	 	
              Title:
                Chairman, Chief Executive Office and

              President

            


    

    
      	 	 	 
	 	EXECUTIVE
	 
 	 
 	 
 
	
            	By:  	/s/
              Michael Herrick
	 	
              

            
	 	 


    

    


    
      
         

      

      
        18