Document:

EXHIBIT 10.1

 

MASTER
SETTLEMENT AGREEMENT

 

This
MASTER SETTLEMENT AGREEMENT (the “Agreement”) is made as of this ___ day of July, 2013 by and among Indigo-Energy, Inc.,
Richard W. Barry, the Court appointed Receiver for Indigo-Energy, Inc. (the “Indigo Receiver”), Carr Miller Capital,
LLC, Michael P. Pompeo, the Court appointed Receiver for Carr Miller Capital LLC (the “CMC Receiver”), the undersigned
shareholders of Indigo-Energy, Inc. (the “Shareholders”), and New Hope Partners LLC, a Nevada limited liability company
formed by the Shareholders (“Newco”).

 

BACKGROUND

 

A.          On
December 15, 2010 (the “Receivership Date”), Paula T. Dow, Attorney General of New Jersey on behalf of Marc B. Minor,
Chief of the New Jersey Bureau of Securities (the “Bureau”) filed a Verified Complaint and an Ex Parte Order
to Show Cause for Temporary Restraints, Ancillary Relief and Appointment of a Receiver in the Superior Court of New Jersey, County
of Essex (the “Court”) alleging that Everett Charles Ford Miller (“Miller”), Carr Miller Capital LLC (“Carr
Miller”), among other defendants, violated numerous New Jersey Uniform Securities Laws (the “Receivership Action”).
Indigo-Energy, Inc. (“Indigo”) was named as a Nominal Defendant in the Receivership Action.

 

B.          By
Consent Order dated February 4, 2011, and Order dated May 11, 2011 (the “Receivership Orders”), the Court appointed
Michael P. Pompeo as Receiver for Miller and Carr Miller.

 

C.          By
Consent Order dated February 4, 2011, the Court appointed Richard W. Barry as a third-party independent Fiscal Agent (the “Fiscal
Agent”) for Indigo.

 

    	 

    	 

    

 

D.          Between
2007 and 2010, Carr Miller loaned in excess of $7 million to Indigo at varying rates of interest (the “Loans”). On
March 25, 2010, Indigo and Carr Miller entered into that certain Modification and Consolidation Agreement (the “Modification
and Consolidation Agreement”), whereby the outstanding promissory notes evidencing the Loans were amended and replaced by
a revised promissory note in the principal amount of $8,376,169 (the “Consolidated Note”). With accrued and unpaid
interest, Indigo owes the sum of not less than $11.2 million to Carr Miller under the Modification and Consolidation Agreement
and Consolidated Note (the “Unsecured Debt”).

 

E.          Carr
Miller is the owner of 284,153,457 shares of common stock in Indigo. A list of Indigo stock certificates owned by Carr Miller (the
“Carr Miller Shares”) is annexed hereto as Schedule A.

 

F.          On
November 1, 2012, the Court in the Receivership Action entered an Order appointing the Fiscal Agent as Receiver for Indigo.

 

G.          Shareholders
are the owners of shares of Indigo common stock. Shareholders, through Newco, desire to purchase the Unsecured Debt and Carr Miller
Shares as compromised herein.

 

H.          The
CMC Receiver and Indigo Receiver intend that this Agreement will resolve all claims by and between Carr Miller and Indigo without
exposing either party to any further costs or uncertainty of the outcome, compromise and settle the Unsecured Debt and Carr Miller
Shares, and deliver and exchange mutual general releases upon the approval of this Agreement by the Court.

 

NOW,
THEREFORE, in consideration of the foregoing recitals, the mutual covenants, and agreements contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree, subject to Court approval, as follows:

 

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1.          Effectiveness.
The effectiveness of this Agreement is contingent upon the entry of an order by the Court as provided in Paragraph 9 below (the
“Approval Order”) on notice to creditors of Indigo and Carr Miller. The effective date of this Agreement shall be the
first business day following the entry of the Approval Order (the “Effective Date”).

 

2.          Payment
to CMC Receiver. Newco shall pay the sum of $225,000 in cash to the CMC Receiver (the “Newco Payment”) as follows:

 

		a.	$115,000 by wire transfer to an account designated by
the CMC Receiver on the later of (i) the Effective Date, or (ii) 30 days after the Execution Date subject to the occurrence of
the Effective Date (the “1st Payment Date”);

 

		b.	$50,000 by wire transfer to an account designated by
the CMC Receiver within 180 days of the 1st Payment Date (the “2nd Payment Date”); and

 

		c.	$60,000 by wire transfer to an account designated by
the CMC Receiver within 180 days of the 2nd Payment Date.

 

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3.          Unsecured
Debt. The Unsecured Debt due from Indigo to Carr Miller shall be reduced to the amount of $8,750,000 (the “Compromised
Debt”). On the Effective Date, Carr Miller shall be deemed to have transferred and assigned its right, title and interest
in and to the Compromised Debt to Newco. The CMC Receiver shall retain a twelve percent (12%) participation interest in the Compromised
Debt, as described below. Newco shall have the exclusive right to settle, compromise, exchange, convert or cancel or take any other
action as to the Compromised Debt in its sole discretion; provided, however, Newco agrees to pay over and deliver
to the CMC Receiver twelve percent (12%) of any cash proceeds or other assets or consideration that Newco realizes from any action
taken with respect to the Compromised Debt and twelve percent (12%) of any securities issued by Indigo resulting from conversion
of any of the Compromised Debt and Compromised Debt Notes to Indigo securities (of equal class and priority) (the “Receiver
Participation Interest”).

 

4.          Carr
Miller Shares. On the Effective Date, Carr Miller shall be deemed to have sold and transferred all of its right, title and
interest to 224,153,457 shares of the Carr Miller Shares to Newco (the “Newco Shares”). Indigo shall cause to be issued
a replacement stock certificate representing 60,000,000 shares of the Carr Miller Shares in the name of “Michael Pompeo,
Receiver for Carr Miller Capital, LLC.”

 

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5.          Security
for Newco’s Obligations. Newco’s obligations set forth in Paragraphs 2 and 3 above shall be secured by the Newco
Shares. Newco pledges and grants to the CMC Receiver a first priority, perfected security interest in and lien on the following
property: (a) all of Newco’s right, title and interest in and to all present and future cash proceeds or other assets or
consideration or issued securities as described in paragraph 3 above; and (b) all substitutions therefor, all interest earned,
and all proceeds thereof of any kind or character. The Newco Shares shall be held by the CMC Receiver pending satisfaction of Newco’s
obligations set forth in Paragraph 2 above, provided however, (a) upon payment of the initial $115,000 under paragraph 2,
the CMC Receiver shall release his security interest in and turnover one hundred million (100,000,000) of the Newco Shares to Newco
without any further action required by the parties, and Newco is free to take any action with respect to such released security;
(b) upon payment in full of the remaining $110,000 under Paragraph 2(b) and (c), the CMC Receiver’s security interest in
the remaining Newco Shares shall be deemed released and the Receiver shall turnover the remaining Newco Shares to Newco without
any further action required by the parties. So long as Newco has not defaulted on its obligations under Paragraphs 2 and 3, it
shall be entitled to exercise all voting rights with respect to the Newco Shares. In the event of a default by Newco under Paragraphs
2 or 3, the CMC Receiver shall be entitled to exercise all voting rights with respect to the Newco Shares in the CMC Receiver’s
possession. Indigo shall not issue any securities, or issue new debt or transfer any cash or other assets or consideration in exchange
for, or in satisfaction of, the Compromised Debt, in whole or in part, without first or simultaneously delivering the Receiver
Participation Interest to the CMC Receiver. In the event of a default by Newco under Paragraphs 2 or 3 and upon the written request
of the CMC Receiver, Indigo shall cause the Newco Shares in the CMC Receiver’s possession to be transferred back to the CMC
Receiver or his designee. The parties agree to execute such additional documents as may be necessary or advisable to effectuate
the intent of this paragraph.

 

6.          Assignment
of Claims and Causes of Action. On the Effective Date, the Indigo Receiver shall assign and transfer all statutory claims and
causes of action held by him as the Indigo Receiver and all claims and causes of action held by Indigo to the CMC Receiver (collectively,
the “Assigned Claims”), except for claims expressly released herein. For avoidance of doubt, claims against Indigo’s
former professionals and transferees of interests of Indigo or Carr Miller property including, without limitation, Reef LLC, Mary
Demetree, Robert Turnage, and Epicenter Oil and Gas, LLC, shall be and are transferred and assigned to the CMC Receiver.

 

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7.          Indigo
Receiver Fees. Within 30 days of the Effective Date and subject to the receipt of the Newco Payment as set forth in Paragraph
3.a, the CMC Receiver shall pay the sum of $25,000.00 to the Indigo Receiver as full and final compensation for services rendered
as the Receiver and Fiscal Monitor for Indigo.

 

8.          Motion
for Approval Order and Dismissal of Indigo Receivership. As soon as practical after the Execution Date, the Indigo Receiver
and CMC Receiver shall file a joint motion seeking the entry of the Approval Order, substantially in the form attached as Exhibit
C hereto, which shall provide as follows:

 

		a.	Approve the terms of this Agreement, including authorizing the Indigo Receiver and CMC Receiver to
exchange the Releases set forth in Paragraph 9;

 

		b.	Authorize and approve the transfer and assignment of Assigned Claims by the Indigo Receiver to the
CMC Receiver;

 

		c.	Authorize the CMC Receiver to prosecute the Assigned Claims;

 

		d.	Authorize and direct the transfer and/or reissuance of Carr Miller Shares as provided in Paragraph
4 without the need for posting of a bond by Indigo, the Indigo Receiver, the CMC Receiver or Newco;

 

		e.	Vacate the Order appointing a receiver for Indigo or otherwise dismiss the receivership over Indigo;

 

		f.	Discharge the Indigo Receiver; and

 

		g.	Approve and authorize the payment of final compensation and reimbursement of expenses to the Indigo
Receiver/Fiscal Monitor.

 

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9.          Releases.

 

		a.	Release of Indigo and the Indigo Receiver. In further consideration for this Agreement, effective
upon the Effective Date, CMC Receiver, on behalf of Carr Miller and all Carr Miller entities for which the CMC Receiver has been
appointed receiver, hereby forever waives, releases and discharges Indigo, the Indigo Receiver, and their current professionals,
of and from any and all manner of action and actions, cause and causes of action, suits, debts, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever in law or in equity, now known or unknown, or hereafter becoming known, for, upon, or by reason of
any matter, cause or thing arising under and/or related to the Receivership Action and/or Indigo, from the beginning of time through
the Effective Date.

 

		b.	Release of Shareholders. In further consideration for this Agreement, effective upon the Effective
Date, CMC Receiver, on behalf of Carr Miller and all Carr Miller entities for which the CMC Receiver has been appointed receiver,
hereby forever waives, releases and discharges the Shareholders, and their successors, assigns, heirs, executors, and administrators,
of and from any and all manner of action and actions, cause and causes of action, suits, debts, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever in law or in equity, now known or unknown, or hereafter becoming known, for, upon, or by reason of
any matter, arising under and/or related to their equity and debt interests in Indigo, from the beginning of time through the Effective
Date. For avoidance of doubt, this release as to Shareholder Steven Durdin does not pertain to any Carr Miller matters unrelated
to Indigo with which he may have been involved.

 

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		c.	Release of Carr Miller. In further consideration for this Agreement, effective upon the Effective
Date, Indigo Receiver, on behalf of himself and Indigo, the Shareholders, and Newco, hereby forever waive, release and discharge
the CMC Receiver and Carr Miller and all Carr Miller entities for which the CMC Receiver has been appointed receiver, their estates
and their successors, assigns, affiliates, heirs, executors, administrators, of and from any and all manner of action and actions,
cause and causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, executions, claims and demands whatsoever in law or in equity,
now known or unknown, or hereafter becoming known, for, upon, or by reason of any matter, cause or thing arising under and/or related
to Indigo or Carr Miller, from the beginning of time through the Effective Date.

 

 

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		d.	Limitation on Releases. Nothing herein is intended to release any party’s obligations
arising under this Agreement and for avoidance of doubt, nothing herein is intended to release, impair or prejudice the Assigned
Claims.

 

10.         Access.
Indigo shall cooperate and assist the CMC Receiver in the commission of his duties in connection with the Assigned Claims, such
cooperation shall include providing the CMC Receiver with access to and copies of Indigo’s documents and records upon reasonable
notice.

 

11.         Non-disparagement.
The parties agree not to make any statement that disparages or is derogatory to any other party to this Agreement pertaining to
the subject matter of this Agreement or to make or issue, or authorize the making or issuing, of any press release pertaining to
this matter unless such press release is reviewed and approved in advance and in writing by Newco, Indigo, the Shareholders and
the CMC Receiver; provided, however, that in the event of any dispute, including, but no limited to, litigation between
the CMC Receiver, Indigo, Newco or the Shareholders arising out of any contractual obligation or relationship, under this Agreement
or any other agreement to which they are parties, such dispute shall not constitute violation of this paragraph 11.

 

12.         Attorney
Review. The Parties acknowledge that they have had time to consult with counsel of their own choice prior to entry into this
Agreement. The wording of this Agreement was reviewed and accepted by legal counsel for the Parties prior to it being signed.

 

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13.         Governing
Law, Choice of Forum, Costs and Fees. This Agreement shall be interpreted, construed, and enforced under and according to
the laws of the State of New Jersey, without regard to the choice of law rules of that or any other jurisdiction. The Parties
agree that any dispute, claim, or controversy to enforce or interpret this Agreement, or alleging the breach hereof, shall be
resolved exclusively in the State of New Jersey in the Receivership Action. IN ANY ACTION BROUGHT TO ENFORCE ANY BREACH OF
THIS AGREEMENT OR INTERPRET THIS AGREEMENT, OR ALLEGING THE BREACH HEREOF, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER ITS
REASONABLE EXPENSES AND COSTS, INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS’ FEES.

 

14.         Entire
Agreement.         This Agreement, including the documents incorporated herein
by reference, constitutes the entire agreement of the parties concerning the subject matter hereof, and shall not be amended,
modified or supplemented unless by written agreement executed by the parties hereto. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns. This Agreement supercedes all prior written and
oral agreements among the parties concerning the subject matter hereof.

 

15.         Counterparts.
This Agreement may be signed by facsimile copies, pdf, or otherwise in counterparts, each of which shall be deemed an original,
but all originals together shall constitute only one and the same instrument, and it shall be deemed fully executed when signed
by all Parties whether the signatures of all Parties appear on the original or one or more copies of this Agreement.

 

16.         No
Assignment.         The rights and obligations under this Agreement shall not
be assignable to any person except with the written consent of the non-assigning parties and except for the CMC Receiver, who
may assign his rights, interests and obligations under this Agreement pursuant to a plan of distribution approved by the Court
in the Receivership Action.

 

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17.         Further
Assurance.         Each of the Shareholders and Newco hereby agrees from time-to-time
upon request of the CMC Receiver, to take such additional actions and to execute and deliver such additional documents and instruments
as such other party may reasonably request to effect the transactions contemplated by and to carry out the intent of this Agreement.

 

18.         Construction.   Each
Party to this Agreement has participated in the drafting and preparation of this Agreement. Neither this Agreement nor any of
its terms hereof shall be construed under a doctrine of contract interpretation (including but not limited to, the doctrine of
contra proferentum) that construes the document against a Party or its representatives merely by reason of such Party having
responsibility for drafting or mutually proposing the Agreement or any portion of it.

 

19.         Headings.         The
headings set forth herein are for the convenienceof reference only and shall not be used in the interpretation or construction
of this Agreement.

 

20.         Signatures.         TheParties
understand and agree to the terms of this Agreement. The undersigned acknowledge that they have read this Agreement, and that
they understand all of its terms and execute it voluntarily and with full knowledge of its significance and consequences thereof.
Each Party represents and warrants that it has had the opportunity to receive independent legal advice from attorneys of their
choice with respect to the advisability of making the settlement and release provided herein and of executing this Agreement.
Before the execution of the Agreement, each Party and/or its attorneys have reviewed the Agreement and have had the opportunity
to negotiate revisions to the Agreement.

 

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21.      Authority.
    The signatories hereto represent and warrant that they have full authority to execute this Agreement.

 

IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the day and year first above written.

 

	WITNESS:	 	INDIGO-ENERGY, INC.
	 	 	 
	 	 	/s/ Richard Barry
	 	 	Richard Barry, Receiver
	 	 	 
	WITNESS:	 	CARR MILLER CAPITAL, LLC
	 	 	 
	 	 	 
	 	 	Michael Pompeo, Receiver
	 	 	 
	WITNESS:	 	New Hope Partners LLC
	 	 	 
	Diane Jacobs	 	/s/ James Dunn
	 	 	By:
	 	 	TItle:

 

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	WITNESS:	 	SHAREHOLDERS, as follows:
	 	 	 
	 	 	/s/ James Dunn
	 	 	Name: James Dunn
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ Jerry Braatz, Jr.	 	/s/ James Walter, Jr.
	 	 	Name: James Walter, Jr.
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ James Walter, Jr.	 	/s/
    James C. Walter, Sr.
	 	 	Name: James Walter, Sr.
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ James Walter, Jr.	 	/s/ Steven Durdin
	 	 	Name: Steven Durdin
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ James Walter, Jr.	 	/s/ Stan Teeple
	 	 	Name: Stan Teeple
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ James Walter, Jr.	 	/s/ Michael Foti
	 	 	Name: Michael Foti
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ James Walter, Jr.	 	/s/ Ken Goetz
	 	 	Name: Ken Goetz
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ Jerry Braatz, Jr.	 	/s/ Jerry Braatz, Sr.
	 	 	Name: Jerry Braatz, Sr.
	 	 	 
	WITNESS:	 	 
	 	 	 
	/s/ James Walter, Jr.	 	/s/ Jerry Braatz, Jr.
	 	 	Name: Jerry Braatz, Jr.

 

    	13NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

Original Issue Date: August 2, 2013

 

6% Secured
SUBORDINATE CONVERTIBLE NOTE

 

THIS 6% SECURED SUBORDINATE
CONVERTIBLE NOTE is a duly authorized and validly issued 6% Convertible Note of Chanticleer Holdings, Inc., a Delaware corporation,
having its principal place of business at 11220 Elm Lane, Suite 203, Charlotte, North Carolina 28277 (the “Company”),
designated as its 6% Convertible Note (this debenture, the “Debenture” and, collectively with the other such
series of debentures, the “Debentures”).

 

FOR VALUE RECEIVED,
the Company promises to pay to Holder, or Holder’s assigns, the principal sum of ________ dollars ($_______) by the
thirty six (36) month anniversary following the issuance of the Debenture (the “Maturity Date”) or such earlier
date as this Debenture is permitted to be repaid as provided hereunder, to pay interest to the Holders on the aggregate unconverted
and then outstanding principal amount of this Debenture at the non-compounded rate of six percent (6%) per annum, payable quarterly
beginning on the Original Issue Date and continuing thereafter until the Maturity Date. Further, the Company promises to pay the
Holders each ten percent (10%) of net income paid quarterly for the life of the locations acquired using Holders’ funds and/or
ten percent (10%), pro rata, of net proceeds upon sale of said locations, regardless of whether or not the Holder redeems or converts
his or her note,. For avoidance of doubt, the ten percent (10%) referenced in the previous sentence shall apply to the three million
dollars ($3,000,000.00) paid by Holders and Holder’s share shall be pro rata. Company shall acquire the Nottingham UK location
with Holder’s funds and other locations as Company may determine. Additionally, Holders shall receive three hundred thousand
(300,000) three (3) year warrants with a strike price of three dollars ($3) per share. Interest shall be calculated on the basis
of a 360-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the principal sum, together
with all accrued and unpaid interest, and other amounts, which may become due hereunder, has been made. Interest hereunder will
be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers
of this Debenture (the “Debenture Register”). Principal and/or interest may be converted into shares of Common
Stock pursuant to Section 2. Interest shall cease to accrue with respect to any principal amount converted. Holders’ investment
of $3,000,000.00 shall be contingent upon the consummation of the purchase of the Nottingham, England location. In the event the
purchase does not occur by September 30, 2013, Holder, at his election, in their sole and absolute discretion, may request to redeem
the Debenture or any portion thereof, for a period of sixty (60) days thereafter.

 

    	 

    	 

    

 

This Debenture is subject
to the following additional provisions:

 

1. 
         Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture, the following terms shall have the following meanings:

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or
any Significant Subsidiary thereof; (b) there is commenced against the Company or any Significant Subsidiary thereof any such case
or proceeding that is not dismissed within 60 days after commencement; (c) the Company or any Significant Subsidiary thereof is
adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the
Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part
of its property that is not discharged or stayed within 60 calendar days after such appointment; or (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors.

 

“Business Day”
means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of Delaware are authorized or required by law or other governmental action to close.

 

“Common Stock”
means the common stock of the Company.

 

“Common Stock
Equivalent” means any securities of the Company entitling the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants 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.

 

“Indebtedness”
shall mean as to any person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated
or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such person for or in respect of: (i) borrowed
money, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement
obligations under any letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest
rate management device, (iv) any other transaction (including, without limitation, forward sale or purchase agreements, capitalized
leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such person to finance
its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of
business which are not represented by a promissory note), or (v) any guaranty of Indebtedness for borrowed money.

 

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“Notice of Conversion”
means a notice in the form of Attachment A.

 

“Original Issue
Date” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless
of the number of instruments which may be issued to evidence such Debentures.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“SEC”
means U.S. Securities and Exchange Commission.

 

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

 

”Senior Debt”
means all Indebtedness of the Company, created incurred or assumed at any time prior to the date of this Debenture that is (i)
by its terms, or the terms of the instrument creating or evidencing it, characterized as senior debt entered into for the purpose
of financing equipment purchases or leases, (ii) secured by any assets of the Company, or (iii) owed to any bank, insurance company
or other institutional lender, unless such Indebtedness, by its terms or the terms of the instrument creating or evidencing it
is subordinate in right of payment to or pari passu with this Debenture. Company acknowledges that the Paragon Bank credit
line is the only debt that is senior to this Debenture.

 

“Significant Subsidiary”
as used has the same meaning as defined in Rule 405 of the Securities Act: The term means a subsidiary which meets any of the following
conditions:

 

(a)          The
Company’s and its other subsidiaries' investments in and advances to the subsidiary exceed ten percent (10%) of the total
assets of the Company and its subsidiaries consolidated as of the end of the most recently completed fiscal year (for a proposed
business combination to be accounted for as a pooling of interests, this condition is also met when the number of common shares
exchanged or to be exchanged by the Company exceeds ten percent (10%) of its total common shares outstanding at the date the combination
is initiated); or

 

(b)          The
Company's and its other subsidiaries' proportionate share of the total assets (after intercompany eliminations) of the subsidiary
exceeds ten percent (10%) of the total assets of the Company and its subsidiaries consolidated as of the end of the most recently
completed fiscal year; or

 

(c)          The
Company's and its other subsidiaries' equity in the income from continuing operations before income taxes, extraordinary items
and cumulative effect of a change in accounting principle of the subsidiary exceeds 10 percent of such income of the Company and
its subsidiaries consolidated for the most recently completed fiscal year.

 

“Subscription
Agreement” means that certain subscription agreement entered into by the Company and the Holders with respect to the
Holders’ purchase of Debentures from the Company.

 

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“Trading Day”
means a day on which the principal market or exchange, on which the Common Stock is listed or quoted for trading, is open (e.g.
the Nasdaq Capital Market, the NYSE AMEX Equities Exchange, the New York Stock Exchange, the OTC Bulletin Board or the Pink Sheets
as operated by Pink OTC Markets, etc.).

 

“Voluntary Conversion
Price” means the conversion prior to maturity into the same securities or the same terms as the subsequent capital raised
in connection with a public offering of the Company’s securities. The conversion price shall be calculated as ninety percent
(90%) of the average closing price the ten (10) days prior to conversion, unless the Company has an offering pending. If there
is an offering pending, the conversion price would be the same price as the offering.

 

Conversion of Outstanding
Balance. Beginning six (6) months after the Original Issue Date and until this Debenture is no longer outstanding, this Debenture
shall be convertible, in whole or in part, into fully paid and nonassessable shares of Common Stock at the option of the Holder,
upon thirty (30) days’ written notice to the Company, at the Voluntary Conversion Price, or at a subsequent offering. The
number of shares of Common Stock into which the Debenture may be converted shall be determined by dividing the aggregate principal
amount together with all accrued interest to the date of conversion by the Voluntary Conversion Price. The conversion price is
subject to a floor of one dollar ($1 USD) per share. The Company stock is subject to a nineteen and
nine tenths percent (19.9%) beneficial ownership limitation; any ownership by one individual investor of more than nineteen and
nine tenths percent (19.9%) of the Company stock requires approval by the Company’s shareholders. Additionally, the Company
is subject to a nineteen and nine tenths percent (19.9%) issuance limitation for the 300,000 warrant issuance and $3,000,000 Secured
Subordinate Convertible Note both referred to in the Subscription Agreement dated August 2, 2013 Any issuance of Company common
stock from this particular transaction above nineteen and nine tenths percent (19.9%) of the total outstanding shares as of June
26, 2013 requires Shareholder approval. The Company intends to seek required Shareholder approval if necessary. 

 

(a)          Mechanism
to Effect Conversions. The Holders shall effect any conversions under this section by delivering to the Company a fully completed
Notice of Conversion. To effect conversions hereunder, the Holders shall not be required to physically surrender this Debenture
to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so
converted. Conversions hereunder shall have the effect of lowering the outstanding amount of this Debenture in an amount equal
to the applicable conversion. The Holders and the Company shall maintain records showing the amount(s) converted and the date of
such conversion(s). The Holders, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted amount of this Debenture
may be less than the amount stated on the face hereof.

 

    	4

    	 

    

 

(b)          Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance under this Section 2, free from preemptive rights or any other
actual contingent purchase rights of Persons other than the Holders, not less than such aggregate number of shares of the Common
Stock as shall be issuable under this Section 2 (taking into account the adjustments and restrictions of Section 3). The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully
paid and nonassessable. The Company also covenants that the underlying shares of Common Stock that will be issued upon conversion
of the Debenture and the common stock underlying warrants (the "Warrants") to be issued upon conversion will
be fully registered as part of the anticipated firm commitment stock offering the Company intends to conduct to raise three million
dollars ($3,000,000) (the "Offering").  Further, we acknowledge that if the Offering either is not filed
within four weeks from the Original Issue Date or if the Offering is not declared effective by the Securities and Exchange Commission
(the "SEC") within 2 months from the date of filing the registration statement, then the Company will immediately
offer registration and piggy-back rights to our potential investors (the "Investors") for any subsequent offering if
the Offering is not consummated.

 

(c)          Fractional
Shares. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of
shares of Common Stock, but may if otherwise permitted, issue, in lieu of the final fraction of a share, one (1) whole share of
Common Stock.

 

(d)          Transfer
Taxes. The Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance
and delivery of any certificate(s) upon conversion in a name other than that of the Holders of this Debenture converted and the
Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that
such tax has been paid. All transfers to be made under this Agreement shall be made in cleared funds, without any deduction or
set-off and free and clear of and without deduction for or on account of any taxes, levies, imports, duties, charges, fees and
withholdings of any nature now or hereafter imposed by any governmental, fiscal or other authority save as required by law. If
Company is compelled to make any such deduction, it will pay to Holders such additional amounts as are necessary to ensure receipt
by Holder of the full amount which that party would have received but for the deduction. For example, in the event Holder incurs
tax liability for self-employment taxes as a result of the grant of the shares herein, Company shall pay such tax liability.

 

(e)          Board
Seat. The Company provides that Wes Trombley shall have one seat on the Company’s Board of Directors, subject to The
NASDAQ Stock Market and SEC requirements and Board of Directors approval, so long as the Holders hold debt equal in value to at
least 25% of the amount invested as of the date of this Debenture or have an equity interest in the Company representing no less
than 10% of the number of shares originally issued to the Holders upon conversion. By way of example only, if Holders convert the
Debenture into equity and are issued 100 shares, Wes Trombley will have one seat on the Company’s Board of Directors as long
as Holders hold at least 10 shares of the Company’s stock. Subject to the conditions set forth in this paragraph, the Company
shall agree to nominate such board nominee. It is further agreed that the Company’s initial nomination, of such nominee,
shall be no later than its 2013 Annual Meeting.

 

    	5

    	 

    

 

2.           Certain
Adjustments.

 

(a)          Stock
Dividend; Reclassifications; Recapitalizations; Etc. While this Debenture is outstanding, in the event the Company: (i) pays
a dividend in Common Stock or makes a distribution in Common Stock, (ii) subdivides its outstanding Common Stock into a greater
number of shares, (iii) combines its outstanding Common Stock into a smaller number of shares or (iv) increases or decreases the
number of shares of Common Stock outstanding by reclassification of its Common Stock, then the Voluntary Conversion Price on the
record date of such division or distribution or the effective date of such action shall be adjusted by multiplying such Voluntary
Conversion Price by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately before such
event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event.  

 

(b)          Combination;
Liquidation. While this Debenture is outstanding, in the event of a Combination (as defined below), each Holder shall have
the right to receive upon conversion of the Debenture the kind and amount of shares of capital stock or other securities or property
which such Holder would have been entitled to receive upon or as a result of such Combination had such Debenture been converted
immediately prior to such event (subject to further adjustment in accordance with the terms hereof). The Company shall provide
that the surviving or acquiring Person (the "Successor Company") in such Combination will assume by written instrument
the obligations under this Section 2 and the obligations to deliver to the Holder such shares of stock, securities or assets as,
in accordance with the foregoing provisions, the Holder may be entitled to acquire. "Combination" means an event
in which the Company consolidates with, merges with or into, or any other corporate reorganization in which the Company shall not
be the continuing or surviving entity of such consolidation, merger or reorganization, or sells all or substantially all of its
assets to another Person. In the event Company remains a surviving entity after the sale of all or substantially all of its assets
to another Person, Company shall remain secondarily liable to Holders in the event of non-payment by the other Person upon a request
for redemption by Holders. In the occurrence of an event combination where consideration to the Holders of Common Stock in exchange
for their shares is payable solely in cash or the dissolution, liquidation or winding-up of the Company, the Holders shall be entitled
to receive, at their election upon surrender of their Debenture, distributions on an equal basis with the holders of Common Stock
or other securities issuable upon conversion of the Debenture, as if the Debenture had been converted immediately prior to such
event. Notwithstanding anything to the contrary contained herein, in the event of a Combination, Holders shall have the right to
request redemption of the Debenture or any portion thereof.

 

(c)          Notice
of Adjustment. While this Debenture is outstanding, should the Company propose to take any action set forth in Section 2(a)
or 2(b), the Company shall send to each Holder a notice of such proposed action or offer. Such notice shall be mailed to the Holders
at their addresses as they appear in the Debenture Register, and shall specify the record date for the proposed event, shall briefly
indicate the effect of the proposed event on the securities or property issuable upon the conversion of the Debenture, and shall
indicate the effect of the proposed event, if any, on the Voluntary Conversion Price (after giving effect to any adjustment pursuant
to Section 2).

 

3.           Events
of Default.

 

(a)          “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body):

 

    	6

    	 

    

 

(i)          any
failure to pay the principal amount of the Debenture or interest and other amounts owing to a Holder of the Debenture, as and when
the same shall become due and payable or when the Debenture is not paid upon request for redemption as provided for under the terms
and conditions of this Agreement, which default is not cured within ten (10) Business Days;

 

(ii)         the
Company shall materially fail to observe or perform any other covenant or agreement contained in the Debenture which failure is
not cured, within 10 Business Days after notice of such failure sent by the Holder;

 

(iii)        any
representation or warranty made in this Debenture, the Subscription Agreement, or the Warrant shall be untrue or incorrect in any
material respect as of the date when made and shall not have been cured within ten (10) Business Days after written notice of such
breach; or

 

(iv)        the
Company shall be subject to a Bankruptcy Event.

 

(b)          Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture plus accrued but
unpaid interest, shall become, at the Holders’ election, immediately due and payable in cash. Upon the occurrence and during
the continuation of an Event of Default (after the tolling of all applicable cure periods), the interest rate on this Debenture
shall increase to the lesser of twenty one percent (21%) per annum or the maximum rate permitted under applicable law. In connection
with any acceleration described herein, the Holders need not provide, and the Company hereby waives, any presentment, demand, protest
or other notice of any kind, and the Holders may immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under applicable law. The Holders shall have all rights
as a holder of the Debenture until such time, if any, as the Holders receive full pro rata payment according to the original investment
pursuant to this Section.

 

4.           Security.
The Company has granted a security interest, subordinate only to the senior security interest held by Paragon Bank, in all of the
company’s right, title and interest in, to and under all assets held by the Company, as provided in the Security Agreement.
As to the locations purchased by the Holder’s funds, the Company grants a senior lien to the Holders.

 

(a)          Subordination.
The Company hereby covenants and agrees, and the Holders of this Debenture, by such Holders’ acceptance hereof, hereby consents,
covenants, and agrees that, to the extent and in the manner hereinafter set forth in this Section 4, the Indebtedness of the Company
for or on account of principal and interest in this Debenture, is hereby expressly made subordinate and subject in right of payment
to the prior indefeasible payment in full in cash of all Senior Debt. Specifically, in regards to all of Company’s assets
other than that purchased by the Holder’s funding, the Indebtedness of the Company is subordinate only to the Company’s
seven hundred and fifty thousand dollar ($750,000) line of credit with Paragon Bank (“Senior Creditor”).

 

    	7

    	 

    

 

5.           Indemnification.

 

(a)          Company
(the "Indemnifying Party") shall indemnify Holders ("Indemnified Party") from and against any and all third
party suits and claims, as well as any resulting damages, attorneys’ fees, and other expenses (collectively, the "Claims")
for actions related to this agreement or arising out of the breach of any representation, warranty, covenant or obligation made
or incurred by the Indemnifying Party under this Agreement and/or the operation of any of Company’s businesses or the businesses
of any of its subsidiaries. The Indemnifying Party will not be liable to the indemnified party should a final non-appealable judgment
by a court of competent jurisdiction determine that the Claims resulted from the gross negligence or willful misconduct of the
party seeking indemnification. The obligations to indemnify and defend set forth in this section will not apply unless the indemnified
party (i) promptly notifies the indemnifying party of any matters in respect to which the indemnity may apply and of which the
indemnified party has knowledge; (ii) gives the indemnifying party full opportunity to control the response and the defense, including
any settlement, but the indemnifying party shall not settle any such claim or action without the prior written consent of the indemnified
party (which consent may not be unreasonably withheld or delayed); and (iii) reasonably cooperates with the indemnifying party,
at the indemnifying party’s expense, in the defense or settlement thereof. The indemnified party may participate, at its
own expense, in the defense and in any settlement discussions directly or through counsel of its choice on a monitoring and non-controlling
basis.

 

6. 
         Miscellaneous.

 

(a)          Order
of Payment. The Company’s obligation to pay interest to the Holders shall take first priority and must be paid to Holders
the interest due out of the net monthly income from the locations acquired using Holders’ funds. and specifically from the
Nottingham UK location.

 

(b)          Prepayment.
The Company may prepay any amount outstanding under this Debenture without penalty.

 

(c)          Capital
Raise Notice. In the event that the Company conducts a capital raise while the notes are outstanding, the Company must provide
Holders with sixty (60) days’ notice and ability to request redemption of the Debenture or any portion thereof. In the event
no capital raise is conducted for a period of eighteen (18) months after the issuance of the Debenture, Holders shall have the
right to request redemption of the Debenture or any portion thereof for a period of sixty (60) days following the eighteen (18)
month anniversary of the issuance of the Debenture.

 

(d)          
No Less Favorable Terms than Ostrich Investment LLC or Its Affiliate. In the event Ostrich Investment, LLC or its affiliate makes
an investment, the terms herein shall be no less favorable than the terms provide to Ostrich Investment LLC and/or its affiliates.

 

(e)          Fee-Shifting
Provision. In the event of litigation concerning this Debenture, the prevailing party’s legal fees will be paid by the
other party. If both parties receive a judgment in any monetary amount, the court will determine the prevailing party, taking into
consideration the merits of the claims asserted by each party, the amount of the judgment received by each party, and the relative
equities between the parties.

 

    	8

    	 

    

 

(f)          Assignability. Neither party may assign its interest in this Debenture without first securing the prior
express written permission of the other party, which permission shall not be unreasonably withheld.

 

(g)          Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above, facsimile number (704) 366-2463, Attn: Chief
Executive Officer or such other facsimile number or address as the Company may specify for such purpose by notice to the
Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by
the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Company,
or if no such facsimile number or address appears, at the principal place of business of the Holder. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date immediately following the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number specified in this Section or by electronic mail,
receipt confirmed in each case, (ii) the second Business Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iii) upon actual receipt by the party to whom such notice is required to be given.

 

(h)          Lost
or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver,
in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen
or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but
only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory
to the Company.

 

(i)          Governing
Law; Venue. This Debenture shall be governed by and construed in accordance with the domestic laws of the State of Delaware,
without giving effect to any choice or conflict of law provision or rule. The parties further: (i) agree that any legal suit, action
or proceeding arising out of or relating to this Debenture shall be instituted exclusively in any Federal or State court of competent
jurisdiction within the State of Delaware, (ii) waive any objection that they may have now or hereafter to the venue of any such
suit, action or proceeding, and (iii) irrevocably consent to the in personam jurisdiction of any Federal or State court of
competent jurisdiction within the State of Delaware in any such suit, action or proceeding. The parties each further agree to accept
and acknowledge service of any and all process which may be served in any such suit, action or proceeding in a Federal or State
court of competent jurisdiction within the State of Delaware, and that service of process upon the parties mailed by certified
mail to their respective addresses shall be deemed in every respect effective service of process upon the parties, in any action
or proceeding.

 

    	9

    	 

    

 

(j)          Waiver.
Any waiver by the Company or the Holders of a breach of any provision of this Debenture shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the
Company or the Holders to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture.
Any waiver by the Company or the Holders must be in writing.

 

(k)         Severability.
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons
and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law.

 

(l)          Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.

 

(m)         Headings.
The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit
or affect any of the provisions hereof.

 

    	10

    	 

    

 

IN WITNESS WHEREOF, the
Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.

 

	CHANTICLEER HOLDINGS, INC.
	 
	Signature:	 
	Name:  Michael Pruitt
	Title:  Chief Executive Officer

 

    	11

    	 

    

 

ATTACHMENT
A

 

NOTICE OF
CONVERSION

 

The undersigned hereby
elects to convert amounts outstanding under the 6% Convertible Note of Chanticleer Holdings, Inc., a Delaware corporation (the
“Company”), into shares of common stock (the “Common Stock”), of the Company according to
the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates
and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the Holders for any conversion,
except for such transfer taxes, if any.

 

Date to Effect Conversion:            _________________________

(if not date is set, conversion date
shall be the date this notice is received)

 

Amount of
Debenture to be Converted:          $________________________

 

	 	Signature:	 
	 	Name:	 
	 	Address:

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