CHANTICLEER HOLDINGS, INC. (NASDAQ:HOTR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On May 4, 2017 (Closing Date), to a Securities Purchase Agreement
(Purchase Agreement), Chanticleer Holdings, Inc., a Delaware
corporation (Chanticleer or the Company) sold and issued 8%
non-convertible secured debentures in the principal amount of
$6,000,000 (Debentures) and warrants to purchase 12,000,000
shares of common stock (Warrant Shares) to accredited investors.
The Debentures bear interest at a rate of 8% per annum, payable
in cash quarterly in arrears. The Debentures mature on December
31, 2018. The Debentures contain customary negative covenants.
The Warrants will expire on the tenth anniversary of the Closing
Date and have an exercise price equal to $0.35, subject to
adjustment therein. The Warrants are not exercisable until six
months after the Closing Date. The Warrant Shares have
registration rights, and, if not registered, the holders will
have the right to cashless exercise.
Upon the occurrence of an event of default, in addition to
holders having acceleration repayment rights, the holders shall
have the right, on a pro-rata basis, to purchase the Companys
subsidiary, Little Big Burger, for $6,500,000. The purchasers
were granted a right of first refusal as to future financing
transactions of the Company for the term of the Debentures.
Further, the Company has agreed to appoint one person selected by
purchasers holding a majority of interest of the Debentures to
its board of directors.
to the Security Agreement dated May 4, 2017, the Debentures are
secured by a second priority lien on all of the Companys assets.
to the Subsidiary Guarantee dated May 4, 2017, all of the
Companys subsidiaries have guaranteed the Companys performance of
its obligations under the transaction documents.
In conjunction with the financing described above, the Company
entered into a Satisfaction, Settlement and Release Agreement
with Florida Mezzanine Fund LLLP, a Florida limited liability
partnership (Florida Mezz), to which Florida Mezz agreed to
release the Company from all claims and outstanding obligations
to that certain Assumption Agreement dated June 30, 2014, as
amended October 15, 2014 and October 22, 2016, and that certain
Agreement dated May 23, 2016, as amended January 30, 2017, in
exchange for payment of $5,000,000.
Five million of the net proceeds from the offering have been
remitted to Florida Mezz, $500,000 will be reserved to fund the
opening of new stores, and the balance of $206,746 will be used
for working capital and general corporate purposes. T.R. Winston
Company, LLC, the Companys placement agent, received a fee of
$260,153 for its services related to this transaction.
The above descriptions of the material terms of the Purchase
Agreement, the Debentures, the Warrants, the Security Agreement,
the Subsidiary Guarantee and the Satisfaction, Settlement and
Release Agreement are qualified in their entirety by reference to
the text of such documents, which are filed as Exhibits 10.1,
4.1, 4.2, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K,
respectively, and are incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 3.02.
Item 3.02 Unregistered Sales of Equity
Securities
The information set forth in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 3.02.
These securities issued in the financing transaction were not
registered under the Securities Act of 1933, as amended (the
Securities Act), but qualified for exemption under Section
4(a)(2) of the Securities Act. The securities were exempt from
registration under Section 4(a)(2) of the Securities Act because
the issuance of such securities did not involve a public
offering, as defined in Section 4(a)(2) of the Securities Act,
due to the insubstantial number of persons involved in the
transaction, size of the offering, manner of the offering and
number of securities offered. Based on an analysis of the above
factors, we have met the requirements to qualify for exemption
under Section 4(a)(2) of the Securities Act.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | |
| 4.1 | Form of 8% Non-convertible Secured Debenture | |
| 4.2 | Form of Warrant | |
| 10.1 | Securities Purchase Agreement dated May 4, 2017 | |
| 10.2 | Security Agreement dated May 4, 2017 | |
| 10.3 | Subsidiary Guarantee dated May 4, 4017 | |
| 10.4 |
Satisfaction, Settlement and Release Agreement dated May 2, 2017 |
About CHANTICLEER HOLDINGS, INC. (NASDAQ:HOTR)
Chanticleer Holdings, Inc. is engaged in the business of owning, operating and franchising fast casual dining concepts domestically and internationally. The Company’s brands include Hooters, American Burger Company (ABC), BGR: the Burger Joint (BGR), BT’s Burger Joint (BT), Little Big Burger (LBB) and Just Fresh. Hooters restaurants are casual beach-themed establishments featuring music, sports on large flat screens, and a menu that includes seafood, burgers, salads and Hooters original chicken wings. ABC is a fast casual dining chain located in North Carolina, South Carolina and New York. BGR consists of approximately 10 Company-owned locations in the United States and over 13 franchisee-operated locations in the United States and the Middle East. LBB consists of approximately eight locations in Oregon. Just Fresh consists of approximately seven Company owned locations in Charlotte, North Carolina. CHANTICLEER HOLDINGS, INC. (NASDAQ:HOTR) Recent Trading Information
CHANTICLEER HOLDINGS, INC. (NASDAQ:HOTR) closed its last trading session up +0.127 at 0.380 with 190,042 shares trading hands.