Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
On September 18, 2020, ARC Fat Patty's, LLC ("Borrower"), a wholly-owned
subsidiary of ARC Group, Inc. (the "Company"), executed a Loan and Security
Agreement (the "Loan Agreement"), a Promissory Note (the "Note"), and related
documents for a loan (the "Loan") in the aggregate amount of $4,369,860 for
which City National Bank of Florida ("City National Bank") served as lender
pursuant to the Main Street Priority Loan Facility as established by the Board
of Governors of the Federal Reserve System Section 13(3) of the Federal Reserve
Act. On September 24, 2020, the Company learned that the Loans had been funded
and closed.
The Note has a term of five years and bears interest at a rate per annum equal
to: (i) the London Interbank Offered Rate for 30-day U.S. dollar deposits as
published in the "Money Rates" column of the local edition of The Wall Street
Journal, plus (ii) three percent (3%). Commencing on October 18, 2021 and
continuing on the eighteenth (18th) day of each month thereafter, Borrower shall
make consecutive monthly payments of accrued interest. On September 18, 2023 and
September 18, 2024, Borrower must make an annual payment of principal plus
accrued but unpaid interest in an amount equal to fifteen percent (15%) of the
outstanding principal balance of the Note (inclusive of accrued but unpaid
interest). The entire outstanding principal balance of the note together with
all accrued and unpaid interest is due and payable in full on September 18,
2025. Borrower may prepay the Loan at any time without incurring any prepayment
penalties. The Note provides for customary events of default, including, among
others, those relating to a failure to make payment, bankruptcy, breaches of
representations and covenants, and the occurrence of certain events. As security
for the Note, Borrower granted City National Bank a security interest in and to
any and all of its property.
The foregoing description of the Loan Agreement and Note does not purport to be
complete and is qualified in its entirety by reference to the Loan Agreement and
Note, copies of which are attached hereto as Exhibits 10.1 and 10.2,
respectively, and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 Loan and Security Agreement, dated September 18, 2020, by and between ARC
Fat Patty's, LLC and City National Bank of Florida
10.2 Promissory Note, dated September 18, 2020, issued by ARC Fat Patty's, LLC
in favor of City National Bank of Florida
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