FIRST
AMENDMENT TO THE WARRANT AGREEMENT


 


This
first amendment of the Warrant Agreement (as defined below) (this “First Amendment of Warrant Agreement”) dated
as of July 24, 2019 (the “First Amendment Effective Date”) entered into by and between FAT Brands Inc., a company
organized under the laws of State of Delaware (the “Company”), and the undersigned, (each, together with its
successors and assigns, a “Warrant Holder”).


 


WHEREAS,
the Warrant Holders, the Company and its subsidiaries and affiliates parties thereto have entered into that certain Loan Agreement
(the “Original Loan Agreement”), pursuant to which the Warrant Holders agreed to extend a senior secured term
loan facility to the Company in the amount of $20,000,000.


 


WHEREAS,
in connection with the Original Loan Agreement, the Warrant Holders and the Company entered into that certain warrant agreement
dated as of January 29, 2019 (the “Warrant Agreement”), pursuant to which the Company granted to the Warrant
Holders the right to acquire certain shares of the Company’s common stock on certain conditions.


 


WHEREAS,
the Company requested that The Lion Fund, L.P. extend an additional senior secured term loan to the Company in the amount of $3,500,000
and the Loan Agreement was amended as of June 19, 2019 to reflect such additional loan and certain other amendments (the “First
Amended Loan Agreement”).


 


WHEREAS,
the Company has requested certain amendments to this Warrant (attached as Exhibit A hereto) in exchange for payment of
$500,000 to the Warrant Holders on or before the date hereof in the form of an increase in the amount outstanding pursuant to
the First Amended Loan Agreement (as further amended on or about the date hereof to reflect such increase and as amended from
time to time, the “Loan Agreement”).


 


WHEREAS,
all capitalized terms not separately defined in this First Amendment of Warrant Agreement, shall have the same meanings as defined
in the Loan Agreement.


 


NOW,
THEREFORE, in consideration of the mutual covenants set forth in this First Amendment of Warrant Agreement, and for other good
and valuable consideration, the parties agree as follows:


 


1. Amendment
of Exercise Period and Transferability Restrictions. Each reference to October 1, 2019 contained in the Section 3
(Term and Termination of Warrant) and Section 12 (Transfer) is hereby amended to June 30, 2020.


 


2. Amendment
to Registration Rights. The reference to September 30, 2019 contained in Section 10 (Registration Rights) is hereby
amended to May 31, 2020.


 


3. Restatement
of Representations and Agreements. Each representation and agreement made by the Company pursuant to the Warrant Agreement
shall be restated and reaffirmed as of the First Amendment Effective Date.


 


4. Warrant
Terms Apply. The provisions of the Warrant Agreement set forth in Section 11 (Amendment and Waiver), Section
14 (Severability), Section 15 (Choice of Law and Jurisdiction), Section 16 (Miscellaneous) and Section 17
(Notices) shall apply to this First Amendment of Warrant Agreement as if set forth in full herein.


 


[signatures
on following page]


 




    	 



    	 



    

 


IN
WITNESS WHEREOF, the undersigned hereby execute this First Amendment of Warrant Agreement as of the day and year first above
written.


  


	COMPANY	 
	 	 
	FAT
    BRANDS INC.	 
	 	 	 
	By:	/s/
    Andrew A. Wiederhorn	 
	Name:
    	Andrew
    A. Wiederhorn	 
	Title:	Chief
    Executive Officer	 
	 	 	 
	THE
    LION FUND, L.P.	 
	 	 	 
	By:
    	/s/
    Sardar Biglari	 
	Name:	Sardar
    Biglari	 
	Title:	Authorized
    Signatory	 
	 	 	 
	THE
    LION FUND II, L.P.	 
	 	 	 
	By:	/s/
    Sardar Biglari	 
	Name:
    	Sardar
    Biglari	 
	Title:	Authorized
    Signatory	 


 




    	 



    	 



    

 


Exhibit
A


 




    	 



    	 



    

 


ExecutionExeuction
Version


 


THIS
WARRANT (AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE ISSUER, IS AVAILABLE.


 


FAT
BRANDS INC.


 


WARRANT
AGREEMENT


(Common
Stock)


 


Warrant
No. 1


 


This
Warrant Agreement (this “Warrant”) is dated as of January
29, 2019 (the “Issue Date”) as amended by the First Amendment of Warrant Agreement,
dated as of July 24, 2019 (the “First Amendment Effective Date”) and entered into by and between FAT
Brands Inc., a company organized under the laws of State of Delaware (the “Company”), and the undersigned,
(each, together with its successors and assigns, a “Warrant Holder”).


 


WHEREAS,
the Warrant Holders, the Company and its subsidiaries and affiliates parties thereto have entered into that certain Loan Agreement
(the “Original Loan Agreement”), pursuant to which the Warrant
Holders agreed to extend a senior secured term loan facility to the Company in the amount of $20,000,000.


 


WHEREAS,
the Company requested that The Lion Fund, L.P. extend an additional senior secured term loan to the Company in the amount of $3,500,000
and the Loan Agreement was amended as of June 19, 2019 to reflect such additional
loan and certain other amendments (the “First Amended Loan Agreement”).


 


WHEREAS,
the Company has requested certain amendments to this Warrant in exchange for payment of $500,000 to the Warrant Holders on or
before the date hereof in the form of an increase in the amount outstanding
pursuant to the First Amended Loan Agreement (as further amended on or about the date
hereof to reflect such increase and as amended from time to time, the “Loan Agreement”).


 


WHEREAS,
all capitalized terms not separately defined in this Warrant, shall have the same meanings as defined in the Loan Agreement.


 


NOW,
THEREFORE, in consideration of the mutual covenants set forth in this Warrant, and for other good and valuable consideration,
the parties agree as follows:


 


1. Grant
of Warrant. This Warrant entitles the Warrant Holders, upon the terms and subject to the conditions set forth herein,
to purchase from the Company up to 1,143,112 (allocated 285,779 to The Lion Fund, L.P. and 857,333 to The Lion Fund II, L.P.)
shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), subject to adjustment
as provided in Section 6 (the “Warrant Shares”).


 


2. Term
and Termination of Warrant. The Warrant shall be exercisable at any time or times beginning on October
1June 30, 20192020
(provided that, as of such date, any amount was outstanding under the Loan Agreement and without regard to whether
any such amount was subsequently repaid) and ending on the five (5) year anniversary of the Issue Date (such five-year period,
the “Exercise Period”). On the final day of the Exercise Period or if all amounts outstanding under the Loan
Agreement were repaid in full prior to October 1June
30, 20192020,
this Warrant shall terminate.


 




    	 



    	 



    

 


3. Exercise
of the Warrant.




 


(a) Exercise
Price. For the purposes of this Warrant, the exercise price shall be $0.01 per share of Common Stock (the “Exercise
Price”), subject to adjustment as provided in Section 6.


 


(b) Exercise
and Payment. The purchase rights represented by the Warrant may be exercised in round lots only by the Warrant Holders, in
whole or in part, by the surrender of the Warrant (or an indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction), together with a duly executed notice of exercise in the form attached hereto as Exhibit
A (the “Exercise Notice”) at the principal office of the Company and by the payment to the Company by check
or wire transfer of immediately available funds of an amount equal to (i) the number of shares of Common Stock being purchased
upon exercise of the Warrant multiplied by (ii) the Exercise Price (the “Warrant Price”). For purposes of this
Warrant, “Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such
exercise as set forth in this Section 3 shall have been satisfied at or prior to 5:00 p.m., Eastern time, on a Business
Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Warrant Price. No ink-original
Exercise Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Exercise
Notice form be required.


 


(c) Cashless
Exercise. If at any time after the date hereof, there is no effective registration or offering statement effective or qualified
in connection with, or no current prospectus or offering circular available for, the public resale of the Warrant Shares by the
Warrant Holders, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”
by instructing the Company to issue Warrant Shares then issuable upon exercise of all or any part of this Warrant on a net basis
such that, without payment of any cash consideration or other immediately available funds, the Warrant Holders shall surrender
this Warrant in exchange for the number of Warrant Shares as is computed using the following formula X = Y(A - B) ÷ A:


 


Where:


 


X
= the number of Warrant Shares to be issued to the Warrant Holder.


 


Y
= the total number of Warrant Shares for which the Warrant Holder has elected to exercise this Warrant


 


A
= the Fair Market Value of one Warrant Share as of the applicable Exercise Date.


 


B
= the Exercise Price in effect under this Warrant as of the applicable Exercise Date.


 


For
purposes of this Warrant, “Fair Market Value” of a Warrant Share shall mean the arithmetic average of the last
trade price of the Common Stock (as reported by Bloomberg Financial Markets) for the five (5) consecutive days on which the Nasdaq
Stock Market is open for trading, ending on the date immediately preceding the Exercise Date, on the principal trading market
on which the Common Stock is quoted or listed for trading. If the Fair Market Value cannot be calculated on a particular date
on the foregoing basis, the Fair Market Value shall be the average of the highest bid and lowest asked prices for the Common Stock
on the principal trading market at the end of such day. If at any time the Common Stock is not listed on a domestic securities
exchange or quoted on the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system,
the OTC Markets Group Inc. electronic inter-dealer quotation system or similar quotation system or association, the Fair Market
Value of the Common Stock shall be the fair market value determined jointly in good faith by the Board of Directors of the Company
and the Warrant Holders; provided, that if the Board of Directors and the Warrant Holders are unable to agree on the Fair
Market Value of a Warrant Share within a reasonable period of time (not to exceed five (5) days from the Company’s receipt
of the Exercise Notice), Fair Market Value shall be determined by a nationally recognized investment banking, accounting or valuation
firm jointly selected by the Warrant Holders and the Company and engaged by the Company. The determination of such firm shall
be final and conclusive, and the fees and expenses of such valuation firm shall be borne by the Company. The investment bank so
engaged shall determine the Fair Market Value of the Common Stock assuming an orderly sale transaction between a willing buyer
and a willing seller, using valuation techniques then prevailing in the securities industry without regard to the lack of liquidity
of the Common Stock due to any restrictions (contractual or otherwise) applicable thereto or any discount for minority interests
and assuming full disclosure of all relevant information and a reasonable period of time for effectuating such sale and assuming
the sale of all of the issued and outstanding Common Stock (including fractional interests) calculated on a fully diluted basis
(except those securities, rights and warrants (a) owned or held by or for the account of the Company or any of its subsidiaries,
or (b) convertible or exchangeable into Common Stock where the conversion, exchange or exercise price per share is greater than
the Fair Market Value). All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.


 




    	 



    	 



    

 


(d) Conditional
Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection
with a public offering or a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the
election of the Warrant Holders be conditioned upon the consummation of such transaction, in which case such exercise shall not
be deemed to be effective until immediately prior to the consummation of such transaction.


 


(e)
Warrant Shares. Subject to the other provisions of this Warrant, on or before the second (2nd) day following
the date on which the Company has received an Exercise Notice, so long as the Warrant Holder(s) delivers the Warrant Price (such
2nd day, the “Warrant Share Delivery Date”), the Company shall issue and deliver to the Warrant
Holder(s) or, at the Warrant Holder’s instruction pursuant to the Exercise Notice, the Warrant Holder’s agent or designee,
in each case, via DTC for the number of shares of Common Stock to which the Warrant Holder(s) is entitled pursuant to such exercise.
The Company shall be responsible for all fees and expenses of the transfer agent and all fees and expenses with respect to the
issuance of shares of Common Stock. Upon delivery of an Exercise Notice, the Warrant Holder(s) shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective
of the date such Warrant Shares are credited to the Warrant Holder’s DTC account. If this Warrant is submitted in connection
with any exercise pursuant to this Section 3 and the number of Warrant Shares represented by this Warrant submitted for
exercise is for a greater number of Warrant Shares than the number of Warrant Shares being acquired upon an exercise, then, at
the request of the Warrant Holder(s), the Company shall as soon as practicable and in no event later than two (2) business days
after any exercise and at its own expense, issue and deliver to the Warrant Holder(s) (or its designee) a new Warrant (in accordance
with Section 9(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares to be issued
shall be rounded up to the nearest whole number. If the Company fails to cause its transfer agent to transmit to the Warrant Holder(s)
the Warrant Shares by the Warrant Share Delivery Date, then the Warrant Holder(s) will have the right to rescind such exercise.


 




    	 



    	 



    

 


(f) Legends.
The Warrant Shares to be acquired by the Warrant Holder(s) pursuant hereto, may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration or offering statement under the Act, or (ii) the Company or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions and from an attorney who regularly practices securities law) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration. The Company shall
ensure that the Warrant Shares issuable upon exercise of this Warrant have been registered for sale under an effective registration
statement filed under the Act no later than September 1, 2019 and such registration statement remains effective. In the event
of any Warrant Shares not registered for sale under an effective registration statement and except as otherwise provided in this
Warrant (and subject to the removal provisions set forth below), until such time as such Warrant Shares issuable upon exercise
of the Warrant have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to
the number of securities as of a particular date that can then be immediately sold, each certificate for such Warrant Shares that
has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration
statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:


 


THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
ANY STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH TRANSFER MAY BE EFFECTED UNLESS (1) A REGISTRATION STATEMENT COVERING SUCH SECURITIES IS EFFECTIVE UNDER THE
ACT AND IS QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR (2) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS
UNDER THE ACT AND, IF THE COMPANY REQUESTS, AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE ACT HAS BEEN RENDERED BY COUNSEL.


 


The
legend set forth above shall be removed and the Company shall issue to the Warrant Holder(s) a new certificate therefor free of
any transfer legend if (i) the Company shall have received an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that a public sale or transfer of such Warrant Shares may be made without
registration under the Act and the shares are so sold or transferred, or (ii) such security is registered for sale under an effective
registration statement filed under the Act.


 


(g)
 Limitation on Exercise.




 


(i)      The
Company shall not affect any exercise of this Warrant, and the Warrant Holder(s) shall not have the right to exercise any portion
of this Warrant, pursuant to Section 3 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Exercise Notice, the Warrant Holder(s) (together with its Affiliates, and any other Persons acting
as a group together with the Warrant Holder(s) or any of its Affiliates), would beneficially own in excess of 9.99% of the number
of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant (the “Beneficial Ownership Limitation”). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Warrant Holder(s) and its Affiliates shall include the number of shares
of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this
Warrant beneficially owned by the Warrant Holder(s) or any of its Affiliates and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company (including, without limitation, any other securities of the Company
which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred
stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock (collectively, “Common Stock Equivalents”))
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Warrant
Holder(s) or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(g), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section
3(g)(i) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Warrant
Holder(s) together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Warrant Holder(s), and the submission of an Exercise Notice shall be deemed to be the Warrant Holder’s determination
of whether, and representation and certification to the Company that, this Warrant is exercisable (in relation to other securities
owned by the Warrant Holder(s) together with any Affiliates) and of which portion of this Warrant is exercisable, in each case
subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of
such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(g),
in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common
Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Securities and Exchange Commission,
as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or
its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder,
the Company shall within two (2)trading days confirm orally and in writing to the Warrant Holder(s) the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including this Warrant, by the Warrant Holder(s) or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was reported.


 




    	 



    	 



    

 


(ii) Notwithstanding
anything contained herein, this Warrant shall not be exercisable to the extent that (A) the aggregate shares of Common Stock issued
after giving effect to the exercise of this Warrant as set forth on the applicable Exercise Notice, plus (B) the aggregate shares
of Common Stock issued or issuable by the Company to holders of Common Stock Equivalents upon conversion or exchange thereof (excluding
from this calculation any Common Stock and Common Stock Equivalents beneficially owned by Fog Cutter Capital Group Inc. or its
Affiliates) would exceed 19.99% of all shares of Common Stock issued and outstanding on the Issue Date, subject to pro rata adjustment
in connection with any stock splits, stock dividends, or similar changes to the Company’s capitalization occurring after
the Issue Date (the “20% Cap”), unless the Company receives stockholder approval to exceed the 20% Cap. To
the extent that the limitation contained in this Section 3(g)(ii) applies, the determination of whether this Warrant is
exercisable, and of which portion of this Warrant is exercisable, shall be in the sole discretion of the Company. If applicable,
the restrictions and redemption obligations set forth in this Section 3(g)(ii) shall cease to apply if (1) the Company
obtains stockholder approval to issue Common Stock in excess of the 20% Cap pursuant to the rules and regulations of The Nasdaq
Stock Market (or such other principal trading market on which the Common Stock is quoted or listed for trading), or (2) the Company
provides the Warrant Holders with irrevocable written notice, based upon the written advice of its counsel, that any such issuance
of Common Stock is not subject to the 20% Cap pursuant to the rules and regulations of The Nasdaq Stock Market LLC. The Company
will use its best efforts promptly to obtain either the stockholder approval or the irrevocable notice described in the preceding
sentence and to provide the Warrant Holders with a copy of same. Without limiting the foregoing, in the event at any time the
number of Common Stock described in (A) and (B) above is 85% of the 20% Cap (assuming full exercise without regard to any beneficial
ownership limitations set forth herein or therein), then the Company shall within 60 days hold a stockholder meeting and solicit
the aforementioned stockholder approval by soliciting proxies in favor of issuing Common Stock in excess of the 20% Cap and will
use its best efforts to have all affiliates of the Company which own or control shares of Common Stock to vote their shares in
favor of such resolution.


 


(iii) Notwithstanding
anything contained herein, this Warrant shall not be exercisable to the extent that the exercise thereof would have the effect
of causing Fog Cutter Capital Group Inc. to hold less than 80.0% of the issued and outstanding shares of Common Stock of the Company;
provided, that such restriction shall terminate immediately upon any consolidation, merger or other similar business combination
between Fog Cutter Capital Group Inc. and the Company.


 


(iv) Upon
any attempted exercise of this Warrant, the Warrant Holders shall have the right to receive cash payments from the Company for
all shares of Common Stock that Section 3(g)(i), 3(g)(ii) or 3(g)(iii) renders the Company incapable of issuing
to the Warrant Holders (“Deficiency Shares”) at a price equal to the value determined by the Black-Scholes
pricing model for such portion of the Warrants which would otherwise be exercisable for Deficiency Shares, and the number of Warrant
Shares corresponding to such payment shall be cancelled upon delivery of such payment to the Warrant Holders.


 


4.
 Stock Fully Paid; Reservation of Warrant Shares.




 


(a) Stock
Fully Paid. All of the Warrant Shares issuable upon the exercise of the Warrant (and any Warrant issued in substitution for
or replacement of this Warrant) will, upon issuance and receipt of the Warrant Price for such Warrant Shares, be duly authorized,
validly issued, fully paid and nonassessable, and will issued without violation of any preemptive or similar rights of any stockholder
of the Company and be free and clear of all taxes, liens, encumbrances and charges with respect to the issue.


 


(b) Reservation.
For so long as this Warrant is outstanding, the Company shall take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of
shares of Common Stock as shall from time to time be necessary to effect such exercise (the “Required Reserve Amount”).


 


(c) Insufficient
Authorized Shares. If at any time the Company does not have a sufficient number of authorized and unreserved shares of Common
Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant at least a number of shares of Common Stock
equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall use its reasonable
best efforts immediately to take all action necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount for this Warrant. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall use its reasonable best efforts
to either (x) obtain the written consent of its stockholders for the approval of an increase in the number of authorized shares
of Common Stock or (y) hold a special meeting of its stockholders for the approval of an increase in the number of authorized
shares of Common Stock; provided, that if the Company is then subject to review of any such related documents by the Securities
and Exchange Commission, the time frame above shall be extended by an additional thirty (30) days. In connection with such meeting,
the Company shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common
Stock, to cause its Board of Directors to recommend to the stockholders that they approve such proposal and to cause its management
to vote in favor of such proposal.


 




    	 



    	 



    

 


5. Rights
of the Warrant Holders. The Warrant Holders shall have no voting rights as a stockholder or rights to dividends or other
distributions with respect to Warrant Shares subject to this Warrant until payment in full of the Warrant Price for Warrant Shares
being issued.


 


6. Adjustment
of Exercise Price and Number of Warrant Shares. In order to prevent dilution of the purchase rights granted under this
Warrant, the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment
from time to time as provided in this Section 6 (in each case, after taking into consideration any prior adjustments pursuant
to this Section 6).


 


(a) Stock
Dividend, Subdivision or Combination. If the Company shall, at any time or from time to time after the Issue Date, (i) pay
a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of
Common Stock, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall
be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased.
If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased
and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under
this Section 6(a) shall become effective at the close of business on the date the dividend, subdivision or combination
becomes effective.


 


(b) Reorganization,
Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification
of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value
or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company
with or into another Person, (iv) sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of the Company’s assets to another Person; (v) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock; (vi) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another person or group of persons whereby such other person or group acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to,
or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business
combination); or (vii) other similar transaction, in each case which entitles the holders of Common Stock to receive (either directly
or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall,
immediately after each such transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may
be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock
or other securities or assets of the Company or of the successor person (and if holders of Common Stock are given any choice as
to the shares of stock or other securities or assets, then the Warrant Holder(s) shall be given the same choice) resulting from
such transaction to which the Warrant Holder(s) would have been entitled upon consummation of such transaction if the Warrant
Holder(s) had exercised this Warrant in full immediately prior to the time of such transaction and acquired the applicable number
of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions
on the exercisability of this Warrant); and, in such case, appropriate adjustment shall be made with respect to the Warrant Holder’s
rights under this Warrant to insure that the provisions of this Section 6 hereof shall thereafter be applicable, as nearly
as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this
Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing
person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock reflected
by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number
of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the
value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar
transaction). The provisions of this Section 6(b) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification,
consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor person (if other than
the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume,
by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Warrant Holders, the
obligation to deliver to the Warrant Holders such shares of stock, securities or assets which, in accordance with the foregoing
provisions, such Warrant Holders shall be entitled to receive upon exercise of this Warrant.


 




    	 



    	 



    

 


(c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Sections 6(a)-(b) above, if at any time during which this
Warrant is outstanding the Company grants, issues or sells any Common Stock Equivalents or other rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Warrant Holders will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase
Rights which the Warrant Holders could have acquired if the Warrant Holders had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the
limits imposed by Section 3(g)) immediately before the date on which a record is taken for the grant, issuance or sale
of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Warrant Holder’s
right to participate in any such Purchase Right would result in the Warrant Holders exceeding the Beneficial Ownership Limitation,
then the Warrant Holder(s) shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership
of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Warrant Holder(s) until such time, if ever, as its right thereto would not result in the Warrant Holder(s)
exceeding the Beneficial Ownership Limitation). The provisions of this Section 6(c) will not apply to any grant, issuance
or sale of Common Stock Equivalents or other rights to purchase stock, warrants, securities or other property of the Company which
is not made pro rata to the record holders of any class of shares of Common Stock.


 


(d) Certificate
as to Adjustment.




 


(i) As
promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later ten (10) days thereafter,
the Company shall furnish to the Warrant Holders a certificate of an executive officer setting forth in reasonable detail such
adjustment and the facts upon which it is based and certifying the calculation thereof.


 


(ii) As
promptly as reasonably practicable following the receipt by the Company of a written request by the Warrant Holder(s), but in
any event not later than ten (10) days thereafter, the Company shall furnish to the Warrant Holder(s) a certificate of an executive
officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of
stock, securities or assets then issuable upon exercise of the Warrant.


 


(iii) All
calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may
be. No adjustment shall be made to the Exercise Price unless such adjustment would require a change of at least 1% in the Exercise
Price. Any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent
adjustment or in connection with any exercise of the Warrant.


 




    	 



    	 



    

 


 (e)       Notices. In the event:




 


(i) that
the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable
upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to
vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any
class or any other securities, or to receive any other security; or


 


(ii) of
any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger
of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person;
or


 


(iii) of
the voluntary or involuntary dissolution, liquidation or winding-up of the Company;


 


then,
and in each such case, the Company shall send or cause to be sent to the Warrant Holders at least 30 days prior to the applicable
record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the
case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description
of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective
date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed
to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken
with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon
exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities)
for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.


 


7.
 Representations, Warranties and Covenants.




 


(a)
 Obligations of the Company. The Company hereby covenants and agrees:




 


(i) The
Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by
the Company of its Certificate of Incorporation or Bylaws, any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed
at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon
each such issuance).


 


(ii) The
Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect
to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required
to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery
of the Warrant Shares to any Person other than the Warrant Holders, and no such issuance or delivery shall be made unless and
until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction
of the Company that such tax has been paid.


 




    	 



    	 



    

 


(b) Representation
and Warranties of the Warrant Holders. The Warrant Holders represent and warrant that each Warrant Holder is an “accredited
investor” as defined in Rule 501(a) of Regulation D promulgated under the Act. The Warrant Holder is acquiring this Warrant
and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered
or exempted under the Act.


 


8. Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or Bylaws,
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect
the rights of the Warrant Holders. Without limiting the generality of the foregoing, the Company (i) shall not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect and (ii)
shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.


 


9.
Reissuance Of Warrants.




 


(a) Transfer
of Warrant. If this Warrant is to be transferred or divided or reallocated among the Warrant Holders, the Warrant Holders
shall surrender this Warrant to the Company, together with an assignment form in the form attached as Exhibit B, whereupon
the Company will forthwith issue and deliver upon the order of the Warrant Holders one or more new Warrants (in accordance with
Section 9(d)), registered as the Warrant Holder(s) may request, representing the right to purchase the number of Warrant
Shares being transferred, divided or reallocated by the Warrant Holder and, if less than the total number of Warrant Shares then
underlying this Warrant is being transferred, a new Warrant (in accordance with Section 9(d)) to the Warrant Holder(s)
representing the right to purchase the number of Warrant Shares not being transferred.


 


(b) Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification and payment
of any required bond undertaking by the Warrant Holder(s) to the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and deliver to the Warrant Holder(s) a new Warrant (in accordance
with Section 9(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.


 


(c) Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder(s) at the principal office
of the Company, for a new Warrant or Warrants (in accordance with Section 9(d)) representing in the aggregate the right
to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Warrant Holder(s) at the time of such surrender; provided, however,
that no Warrants for fractional shares of Common Stock shall be given.


 


(d) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section
9(a) or Section 9(c), the Warrant Shares designated by the Warrant Holder(s) which, when added
to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed
the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issue Date, and (iv) shall have the same rights and conditions as this Warrant.


 




    	 



    	 



    

 


10. Registration
Rights. The Company grants to the Warrant Holders all rights and benefits of an “Investor” set forth in the
Company’s Registration Rights Agreement, dated as of July 3, 2018, as amended (the “Rights Agreement”), including
without limitation registration rights and information rights, and agrees to use its reasonable best efforts to amend the Rights
Agreement so that (i) the Warrant Shares issuable upon exercise of this Warrant shall be considered “Registrable Shares”
(as defined in the Rights Agreement) under the Rights Agreement and (ii) each Warrant Holder shall be considered an “Investor”
for all purposes of Section 2 of the Rights Agreement, provided that in all cases the Company shall ensure that a registration
statement for the Warrant Shares shall be effective no later than September 30, 2019May
31, 2020 and shall remain effective.


 


11. Amendment
And Waiver. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained
the written consent of Warrant Holders entitled to receive on exercise a majority the Warrant Shares.


 


12. Transfer.




 


(a) Subject
to Section 16(a), this Warrant may not be transferred to a person that is not an Affiliate of a Warrant Holder without
consent of the Company prior to October 1June
30, 20192020;
and


 


(b) if
any amounts under the Loan Agreement were outstanding as of October 1June
30, 20192020,
then, on and subsequent to October 1, 2019June
30, 2020 and without regard to whether such amounts were later repaid, subject to compliance with applicable securities
laws, this Warrant and all rights hereunder are transferable, in whole or in part, by the Warrant Holder(s) without charge to
the Warrant Holder(s), upon surrender of this Warrant to the Company at its then principal executive offices with a duly executed
assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described
in Section 7(a)(ii) in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in
the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.


 


13. Remedies.
The Warrant Holder(s), in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages alone would
not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.


 


14. Severability.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 




    	 



    	 



    

 


15. Choice
of Law and Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant
shall be determined in accordance with the provisions of the Loan Agreement.


 


16. Miscellaneous.




 


(a) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of the Warrant Holder. The provisions of this Warrant are intended to be for the benefit of any Warrant Holder from time to time
of this Warrant and shall be enforceable by the Warrant Holder or holder of Warrant Shares.


 


(b) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Warrant Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Warrant Holder, shall give rise to any
liability of the Warrant Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.


 


(c) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of a Warrant Holder
shall operate as a waiver of such right or otherwise prejudice the Warrant Holder’s rights, powers or remedies. Without
limiting any other provision of this Warrant or the Loan Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to a Warrant Holder, the Company shall pay to a Warrant Holder
such amounts as shall be sufficient to cover any and all costs and expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by a Warrant Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.


 


17. Notices.
Any notice, request or other document required or permitted to be given or delivered to the Warrant Holder by the Company shall
be delivered in accordance with the notice provisions of the Loan Agreement.


 


[signatures
on following page]


 




    	 



    	 



    

 


IN
WITNESS WHEREOF, the undersigned hereby execute this Warrant Agreement as of the day and year first above written.


 


	COMPANY	 
	 	 
	FAT
    BRANDS INC.	 
	 	 	 
	By:	 	 
	Name:	Andrew
    A. Wiederhorn	 
	Title:	Chief
    Executive Officer	 
	 	 	 
	THE
    LION FUND, L.P.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	Authorized
    Signatory	 
	 	 	 
	THE
    LION FUND II, L.P.	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 


 


Authorized
Signatory


 


Signature
Page


 










    	 



    	 



    

 


EXHIBIT
A


 


NOTICE
OF EXERCISE


 


The
undersigned holder hereby exercises the right to purchase __________________ shares of Common Stock (“Warrant
Shares”) of FAT Brands Inc., a Delaware corporation (the “Company”), evidenced by the attached
Warrant No. [  ] (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.


 


	 	1.	 ____ Check
if Applicable. The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to purchase
_________ shares of Common Stock covered by such Warrant, and makes payment herewith in full therefore at the price per
share provided by such Warrant in cash or by certified or official bank check or by wired funds in the amount of $_______.
	 	 	 
	 	2.	 ____
    Check if Applicable. The undersigned,
    pursuant to the provisions set forth in the within Warrant, hereby elects to exercise the cashless exercise provisions of
    the within warrant with respect to ______ shares of Common Stock covered by such Warrant, and requests that the Company issue
    to the undersigned an aggregate of ________ Warrant Shares based on the application of the formula set forth in Section
    3(c) of such Warrant.


 


[Delivery
instructions via DTC to be included]


 


Date:_____________________,
______


 


 


___________________________ 


Name
of Registered Holder


 


	By:		 
	Name:
    	 	 
	Title:	 	 


 




    	 



    	 



    

 


EXHIBIT
B


 


ASSIGNMENT
FORM


 


(To
assign the foregoing Warrant, execute this form and supply required information.


Do
not use this form to exercise the Warrant.)


 


FOR
VALUE RECEIVED,     ________ all
of or _________ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to


 


	 	whose
    address is:


  


	 



 


	 



 


Date:
___________________, _________


 


	Holder’s
    Signature:	 
	 	 
	Holder’s
    Address:	 
	 	 
	 	 


 


	Signature
    Guaranteed:	 


 


NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.