Exhibit 10.1




 





SECURITIES PURCHASE AGREEMENT


 


THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated June 15, 2018, is entered into by and between ARC Group, Inc., a Nevada corporation
(“ARC Group”), and Seenu G. Kasturi (“Kasturi”).


 


Recitals


 


WHEREAS, Kasturi desires
to purchase, and ARC Group desires to sell, 449,581 shares (the “Preferred Shares”) of Series A convertible preferred
stock, par value $0.01 per share (“Preferred Stock”), of ARC Group, Inc. on the terms and conditions set forth herein.


 


NOW, THEREFORE, in
consideration of the foregoing premises and the representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:


 


1.                 
Purchase and Sale of Securities.


 


(a)              
Purchase and Sale of Securities. Subject to the terms and conditions hereof, Kasturi agrees to purchase, and ARC
Group agrees to sell, the Preferred Shares for aggregate consideration consisting of 449,581 shares (the “Common Shares”)
of common stock, par value $0.01 per share (“Common Stock”), of ARC Group (the “Transaction”). The Preferred
Stock shall have the rights and preferences set forth in the Series A Preferred Stock Designation substantially in the form attached
hereto as Exhibit A (the “Designation”).


 


(b)       Closing.
The closing of the Transaction (the “Closing”) shall take place concurrently with the execution of this Agreement at
such place as may be mutually agreed upon by the parties hereto. At the Closing: (i) ARC Group shall deliver or cause to be delivered
to Kasturi one or more certificates evidencing the Preferred Shares or other evidence of ownership of the Preferred Shares; (ii)
Kasturi shall deliver or cause to be delivered to ARC Group one or more certificates evidencing the Common Shares for retirement
by ARC Group; and (iii) each of the parties to this Agreement shall execute this Agreement and any and all additional documents
and agreements, provide any and all additional consents and approvals, and take all such other actions as are required under this
Agreement to complete the transactions contemplated hereby.


  


2.                 
Representations and Warranties of Kasturi. Kasturi represents and warrants to ARC Group as follows:


 


(a)              
Authority; Validity and Effect of Agreement. This Agreement has been duly and validly authorized, executed and delivered
by Kasturi and, assuming it has been duly and validly executed and delivered by ARC Group, constitutes a legal, valid and binding
obligation of Kasturi, in accordance with its terms.


 


(b)              
No Conflict; Required Filings and Consents. Neither the execution and delivery of this Agreement by Kasturi nor the
performance by Kasturi of his obligations hereunder will: (i) violate any statute, law, ordinance, rule or regulation, applicable
to Kasturi or any of the properties or assets of Kasturi; or (ii) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision
of, or result in the termination of, the acceleration of the maturity of or the acceleration of the performance of any obligation
of Kasturi under, or result in the creation or imposition of any lien upon any properties, assets or business of Kasturi under,
any material contract or any order, judgment or decree to which Kasturi is a party or by which he or any of his assets or properties
is bound or encumbered, except for such violations, breaches, conflicts, defaults or other occurrences which, individually or in
the aggregate, would not have a material adverse effect on his obligation to perform his covenants under this Agreement.


 






     

     


    

 


(c)              
Accredited Investor. Kasturi is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D under the Securities Act of 1933, as amended (the “Securities Act”).


 


(d)              
Investment Intent. The Preferred Shares are being acquired for Kasturi’s own account for investment purposes
only, not as a nominee or agent and not with a view to the resale or distribution of any part thereof, and Kasturi has no present
intention of selling, granting any participation in or otherwise distributing the same. Kasturi acknowledges that he is able to
bear the economic risks of an investment in the Preferred Shares for an indefinite period of time, and that his overall commitment
to investments that are not readily marketable is not disproportionate to his net worth. By executing this Agreement, Kasturi further
represents that he does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or third person with respect to any of the Preferred Shares.


 


(e)              
Restricted Securities. Kasturi understands that the Preferred Shares: (i) are “restricted securities”
as such term is defined under Rule 144 of the Securities Act, (ii) have not been registered under the Securities Act or registered
or qualified under any state securities law, and (iii) may not be, directly or indirectly, sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the Securities Act and registration or qualification
under applicable state securities laws or the availability of an exemption therefrom. In any case where such an exemption is relied
upon by Kasturi from the registration requirements of the Securities Act and the registration or qualification requirements of
such state securities laws, Kasturi shall furnish ARC Group with an opinion of counsel stating that the proposed sale or other
disposition of such Preferred Shares may be effected without registration under the Securities Act and will not result in any violation
of any applicable state securities laws relating to the registration or qualification of securities for sale, such counsel and
opinion to be satisfactory to ARC Group in its sole and absolute discretion.


 


(f)               
Investment Experience. Kasturi has such knowledge, sophistication and experience in financial, legal, tax and business
matters in general, and investments in securities in particular, that he is capable of evaluating the merits and risks of this
investment in the Preferred Shares, and he has made such investigations in connection herewith as he has deemed necessary or desirable
so as to make an informed investment decision without relying upon ARC Group for financial, legal, tax, business or investment
advice related to this investment. To the extent necessary, Kasturi has retained, at his own expense, and relied upon, appropriate
professional advice regarding the investment, tax and legal merits and consequences of executing this Agreement and owning the
Preferred Shares, and Kasturi’s advisors and representatives have investigated Kasturi’s investment in ARC Group to
the extent he and they have deemed advisable.





 






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(g)              
Access to Information. Kasturi understands that ARC Group files reports and other information with the Securities
and Exchange Commission. Kasturi has had access to and has reviewed all documents, reports, records and other information relating
to ARC Group that Kasturi has deemed necessary for Kasturi to make an informed investment decision with respect to the Preferred
Shares. Kasturi acknowledges that he has had the opportunity to ask representatives of ARC Group questions and request additional
information regarding the finances, operations, business and prospects of ARC Group, that he has had any and all such questions
and requests answered to his satisfaction, and that he understands the risks and other considerations relating to his investment
in the Preferred Shares.


 


(h)              
No General Solicitation. Kasturi is not aware of, and in deciding to purchase the Preferred Shares is in no way relying
upon, and did not become aware of the opportunity to purchase the Preferred Shares through or as a result of, any form of general
solicitation or general advertising, including, without limitation, any article, notice, advertisement or other communication published
in any newspaper, magazine or similar media, or broadcast over television, radio or the internet.


 


(i)                
Title to Securities. Kasturi has good and marketable title to the Common Shares, and the Common Shares are owned
of record and beneficially by Kasturi, free and clear of any liens, pledges, charges, claims, security interests, purchase agreements,
options, title defects, restrictions on transfer or other encumbrances, or any agreements (other than this Agreement) to do any
of the foregoing, of any nature whatsoever, whether consensual, statutory or otherwise. Except for this Agreement: (i) there are
no outstanding options, warrants, agreements, conversion rights, preemptive rights, or other rights to subscribe for, purchase
or otherwise acquire any of the Common Shares; (ii) there are no voting trusts or other agreements or understandings to which Kasturi
is a party with respect to the voting of any of the Common Shares; and (iii) there is no indebtedness of Kasturi issued and outstanding
that has general voting rights with respect to any of the Common Shares. Except for this Agreement, there are no outstanding obligations
of any person to repurchase, redeem or otherwise acquire any of the Common Shares.


 


(j)       Broker’s
and Finder’s Fees. Kasturi has not employed any broker or finder or incurred any liability for any investment banking
fees, brokerage fees, commissions or finders fees in connection with the Transaction for which Kasturi or ARC Group has or could
have any liability.


 


3.                 
Representations and Warranties of ARC Group. ARC Group represents and warrants to Kasturi as follows:


 


(a)              
Authority; Validity and Effect of Agreement. This Agreement has been duly and validly authorized, executed and delivered
by ARC Group and, assuming it has been duly and validly executed and delivered by Kasturi, constitutes a legal, valid and binding
obligation of ARC Group, in accordance with its terms.


 


(b)              
No Conflict; Required Filings and Consents. Neither the execution and delivery of this Agreement by ARC Group nor
the performance by ARC Group of his obligations hereunder will: (i) violate any statute, law, ordinance, rule or regulation, applicable
to ARC Group or any of the properties or assets of ARC Group; or (ii) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision
of, or result in the termination of, the acceleration of the maturity of or the acceleration of the performance of any obligation
of ARC Group under, or result in the creation or imposition of any lien upon any properties, assets or business of ARC Group under,
any material contract or any order, judgment or decree to which ARC Group is a party or by which he or any of his assets or properties
is bound or encumbered except, in the case of clauses (i) and (ii), for such violations, breaches, conflicts, defaults or other
occurrences which, individually or in the aggregate, would not have a material adverse effect on his obligation to perform his
covenants under this Agreement.


 






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(c)              
Title to Securities. ARC Group has good and marketable title to the Preferred Shares, and the Preferred Shares are
owned of record and beneficially by ARC Group, free and clear of any liens, pledges, charges, claims, security interests, purchase
agreements, options, title defects, restrictions on transfer or other encumbrances, or any agreements (other than this Agreement)
to do any of the foregoing, of any nature whatsoever, whether consensual, statutory or otherwise. Except for this Agreement: (i)
there are no outstanding options, warrants, agreements, conversion rights, preemptive rights, or other rights to subscribe for,
purchase or otherwise acquire any of the Preferred Shares; (ii) there are no voting trusts or other agreements or understandings
to which ARC Group is a party with respect to the voting of any of the Preferred Shares; and (iii) there is no indebtedness of
ARC Group issued and outstanding that has general voting rights with respect to any of the Preferred Shares. Except for this Agreement,
there are no outstanding obligations of any person to repurchase, redeem or otherwise acquire any of the Preferred Shares.


 


(d)Broker’s
and Finder’s Fees. ARC Group has not employed any broker or finder or incurred any liability for any investment banking
fees, brokerage fees, commissions or finders’ fees in connection with the Transaction for which ARC Group or Kasturi has
or could have any liability.


 


4.                 
Indemnification. Each party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless
the other party and the other party’s respective affiliates, officers, directors, managers, employees, agents, successors,
assigns, heirs, successors, assigns, administrators and personal representatives, as applicable (collectively, the “Indemnified
Parties”) from and against any and all demands, claims, actions or causes of action, judgments, assessments, losses, liabilities,
damages or penalties and reasonable attorneys’ fees and related disbursements incurred by the Indemnified Parties that arise
out of or result from a breach of any representations or warranties made by the Indemnifying Party herein, and the Indemnifying
Party agrees that in the event of any breach of any representations or warranties made by the Indemnifying Party herein, the Indemnified
Parties may, at his option, forthwith rescind the sale of the Preferred Shares to Kasturi.


 


5.                 
Entire Agreement. This Agreement contains the entire agreement between the parties and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to the subject matter hereto, and no party shall be
liable or bound to any other party in any manner by any warranties, representations, guarantees or covenants except as specifically
set forth in this Agreement. Neither party relied upon any representation or warranty, whether written or oral, made by the other
party or any of his respective agents or representatives in making his decision to enter into this Agreement.


 


6.                 
Amendment and Modification. This Agreement may not be amended, modified or supplemented except by an instrument or
instruments in writing signed by both parties.


 






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7.                 
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither party hereto may assign his rights or delegate his obligations
under this Agreement without the express prior written consent of the other party hereto. Except as provided in Section 4, nothing
in this Agreement is intended to confer upon any person not a party hereto (and their successors and assigns) any rights, remedies,
obligations or liabilities under or by reason of this Agreement.


 


8.                 
Survival of Representations, Warranties and Covenants. The representations and warranties contained herein shall
survive the Closing and shall thereupon terminate 12 months from the Closing. All covenants and agreements contained herein which
by their terms contemplate actions following the Closing shall survive the Closing and remain in full force and effect in accordance
with their terms. All other covenants and agreements contained herein shall not survive the Closing and shall thereupon terminate.


 


9.                 
Headings; Definitions. The Section headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All references to Sections contained herein mean Sections
of this Agreement unless otherwise stated. All capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.


 


10.             
Severability. If any provision of this Agreement or the application thereof to any person or circumstance is held
to be invalid or unenforceable to any extent, the remainder of this Agreement shall remain in full force and effect and shall be
reformed to render the Agreement valid and enforceable while reflecting to the greatest extent permissible the intent of the parties.


 


11.              
Notices. All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number.


 


12.             
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana,
without regard to the laws that might otherwise govern under applicable principles of conflicts of laws thereof.


 


13.             
Arbitration.If a dispute arises as to the interpretation of this Agreement, it shall be decided in an arbitration
proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration then in effect
at the time of the dispute. The arbitration shall take place in Lafayette, Louisiana. The decision of the arbitrators shall be
conclusively binding upon the parties and final, and such decision shall be enforceable as a judgment in any court of competent
jurisdiction. The parties shall share equally the costs of the arbitration.


 


14.             
Counterparts. This Agreement may be executed and delivered by electronically or by facsimile in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.


 


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IN WITNESS WHEREOF,
intending to be legally bound, the parties hereto have caused this Agreement to be executed as of the date set forth above.


 





	 	ARC GROUP, INC.	 
	 	 	 	 
	 	By: 	/s/ Richard W. Akam	 
	 	 	Richard W. Akam	 
	 	 	Chief Executive
Officer	 
	 	 	 	 
	 	 	 	 
	 	SEENU G. KASTURI	 
	 	 	 	 
	 	 	 	 
	 	/s/ Seenu G. Kasturi	 
	 	Seenu G. Kasturi, an individual	 


 







 




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Exhibit A







 


ARC GROUP, INC.


 


CERTIFICATE
OF DESIGNATION OF


SERIES A CONVERTIBLE
PREFERRED STOCK


 


Pursuant
to Chapter 78.195 of the of the Nevada Revised Statutes (“NRS”), ARC Group, Inc., a Nevada corporation (the “Corporation”),
does hereby certify:


 


The
Articles of Incorporation of the Corporation (the “Charter”) confer upon the Board of Directors of the Corporation
(the “Board of Directors”) the authority to provide for the issuance, from time to time, in one or more series, of
shares of preferred stock and, in the resolution or resolutions providing for such issue, establish for each such series the number
of shares, the designations, powers, privileges, preferences and rights, if any, of the shares of such series, and the qualifications,
limitations and restrictions, if any, of such series, to the fullest extent permitted by the NRS as the same exists or may hereafter
be amended. On June 8, 2018, the Board of Directors duly adopted the following resolution creating a series of preferred stock
designated as the Series A Convertible Preferred Stock, comprised initially of 1,000,000 shares, and such resolution has not been
modified and is in full force and effect on the date hereof:


 


RESOLVED
that, pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Charter, a series of
the class of authorized preferred stock, par value $0.01 per share, of the Corporation is hereby created and that the designation
and number of shares thereof and the powers, preferences and rights of the shares of such series, and the qualifications, limitations
and restrictions thereof are as follows:


 


1. Designation,
Par Value and Number. The shares of such series shall be designated as Series A Convertible Preferred Stock (the “Series
A Convertible Preferred Stock”). The number of shares initially constituting the Series A Convertible Preferred Stock shall
be 1,000,000, which number may be increased or decreased by the Board of Directors without a vote of shareholders; provided, however,
that such number may not be decreased below the sum of the number of then outstanding shares of Series A Convertible Preferred
Stock. The Series A Convertible Preferred Stock shall have a par value of $0.01 per share. The shares of Series A Convertible Preferred
Stock may, but need not, be represented by certificates in such form as may be approved by the Board of Directors.


 


2.        Liquidation,
Dissolution and Winding Up. The Series A Convertible Preferred Stock shall
be treated pari passu with the Common Stock except that the payment on each share of Series A Convertible Preferred Stock
shall be equal to the amount of the payment on each share of Common Stock multiplied by the Conversion Rate.


 


3. Dividends
and Distributions. The Series A Convertible Preferred Stock shall be treated pari
passu with the Common Stock except that the dividend on each share of Series A Convertible Preferred Stock shall be equal to
the amount of the dividend declared and paid on each share of Common Stock multiplied by the Conversion Rate.


 


4.       Voting.
The shares of Series A Convertible Preferred Stock shall vote on all matters as a class with
the holders of Common Stock and each share of Series A Convertible Preferred Stock shall be entitled to 100 votes per share. Holders
of shares of Series A Convertible Preferred Stock shall be entitled to notice of any stockholders’ meeting in accordance
with the Bylaws of the Corporation.


 






     

     


    

 


5.        Conversion
Right.


 


(a)       General.
Each holder of shares of Series A Convertible Preferred Stock may convert any or all of the such shares at any time after the date
such shares were issued to such holder into shares of Common Stock (the “Conversion Right”).


 


(b)       Conversion
Rate. The conversion rate shall be one (1) share of Common Stock (as adjusted pursuant to Sections 5(f) & (g)) for each
share of Series A Convertible Preferred Stock (the “Conversion Rate”).


 


(c)       Conversion
Price. The purchase price shall be seventy-five cents ($0.75) for each share of Common Stock (the “Conversion Price”).


 


(d)       Method
of Conversion. In order to convert shares of Series A Convertible Preferred Stock, a
holder of such shares shall send to the Corporation by any form of electronic transmission, at any time prior to 5:00 p.m. Eastern
Standard Time on the business day on which such holder wishes to effect such Conversion (the “Conversion Date”), a
notice of conversion in substantially the form attached hereto as Annex I (a “Conversion Notice”), stating the
number of shares to be converted and the number of shares of Common Stock issuable upon such conversion in accordance with the
formula set forth in Section 5(b) above. Except as otherwise provided herein, upon delivery of a Conversion Notice by a holder
in accordance with the terms hereof and payment in full of the applicable Conversion Price, such holder shall, as of the applicable
Conversion Date, be deemed for all purposes to be the record owner of the Common Stock to which such Conversion Notice relates.
No fractional shares of Common Stock shall be issued upon conversion of the Series A Convertible Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, fractional share shall be rounded up to a whole share.
Upon conversion of any shares of Series A Convertible Preferred Stock, such shares shall be retired by the Corporation and restored
to the status of authorized and unissued shares of Series A Convertible Preferred Stock.


 


(e)       Methods
of Payment. The Conversion Price for shares of Common Stock issued upon the conversion of shares of Series A Convertible Preferred
Stock may be paid for as follows:


 


		(i)	in cash or by check, payable to the order of the Corporation;



 


(ii)
       by reducing the number of shares of Common Stock otherwise issuable to the holder upon
the exercise of the Conversion Right by a number of shares of Common Stock having a Fair Market Value (as defined below) equal
to such aggregated Conversion Price; provided, however, that such method of payment is then permitted under applicable law;



 


(iii)       to
the extent permitted by applicable law and by the Board of Directors, in its sole and absolute discretion, by: (A) delivery of
a promissory note by the holder to the Corporation on terms determined by the Board of Directors, or (B) payment of such other
lawful consideration as the Board of Directors may determine; or


 






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(iv)       by
any combination of the above permitted forms of payment.


 


For the purpose of
this Designation, “Fair Market Value” shall mean, as of any date, the value of a share of Common Stock, determined
as follows:


 


(x)        if
the shares of Common Stock are listed on any established stock exchange or national market system, the fair market value shall
be the closing sales price for the shares of Common Stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system on the Trading Day immediately preceding the Conversion Date;


 


(y)        if
the shares of Common Stock are not listed on any established stock exchange or national market system, but are regularly quoted
by a recognized securities dealer but selling prices are not reported, the fair market value shall be the mean between the high
bid and low asked prices for the shares of Common Stock on the Trading Day immediately preceding the Conversion Date (or, if no
bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported); or


 


(z) in the absence
of an established market for the shares of Common Stock, the fair market value shall be as determined in good faith by the Board
of Directors.


 


For the purposes of
this Designation, “Trading Day” means a day on which the securities exchange, association, or quotation system on which
shares of Common Stock are listed for trading shall be open for business or, if the shares of Common Stock shall not be listed
on such exchange, association, or quotation system for such day, a day with respect to which trades in the United States domestic
over-the-counter market shall be reported.


 


(f) Adjustment
for Stock Splits, Stock Dividends and Combinations. If the Corporation shall at any time or from time to time after
the issuance of the Series A Convertible Preferred Stock effect a subdivision of the outstanding Common Stock or pay a stock dividend
on the outstanding Common Stock, the Conversion Rate then in effect immediately before that subdivision shall be proportionately
increased. If the Corporation shall at any time or from time to time after the issuance of the Series A Convertible Preferred Stock
combine the outstanding shares of Common Stock, the Conversion Rate then in effect immediately before the combination shall be
proportionately decreased. Any adjustment under this paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.


 


(g) Adjustment
for Mergers, Reorganization or Related Transactions. If there shall occur any reorganization, recapitalization,
reclassification, consolidation, or merger involving the Corporation in which the Common Stock (but not the Series A Convertible
Preferred Stock) is converted into or exchanged for securities, cash, or other property, then, following any such reorganization,
recapitalization, reclassification, consolidation, or merger, each share of Series A Convertible Preferred Stock shall thereafter
be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities,
cash or other property that a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one
share of Series A Convertible Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation,
or merger would have been entitled to receive pursuant to such transaction.


 






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(h)       Transfers.
Each share of Series A Convertible Preferred Stock shall automatically, without further action
by the holder thereof, be converted into one (1) fully paid and nonassessable share of Common Stock upon the occurrence of
a Transfer (as defined below) of such share of Series A Convertible Preferred Stock. Each outstanding stock certificate (if any)
that, immediately prior to such Transfer, represents one or more shares of Series A Convertible Preferred Stock subject to such
Transfer shall, upon and after such Transfer, be deemed to represent an equal number of shares of Common Stock, without the need
for surrender or exchange thereof. The Corporation shall, upon the request of each such holder and upon receipt of such holder’s
outstanding certificate (if any), issue and deliver to such holder new certificates representing such holder’s shares of
Common Stock. Each share of Series A Convertible Preferred Stock that is converted pursuant to this Section 5(h) shall be retired
by the Corporation and restored to the status of authorized and unissued shares of Series A Convertible Preferred Stock.
In the event a Transfer of shares of Series A Convertible Preferred Stock occurs, the Conversion Price shall be paid by the recipient
of such shares in the manner described in Section 5(e)(ii) of this Designation. 


 


For
the purposes of Section 5(h) of this Designation, “Transfer” of a share of Series A Convertible Preferred Stock means
any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial
interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law, including, without
limitation, a transfer of a share of Series A Convertible Preferred Stock to a broker or other nominee (regardless of whether there
is a corresponding change in beneficial ownership) or the transfer of, or entering into a binding agreement with respect to, Voting
Control (as defined below) over such share by proxy or otherwise; provided, however, that the following shall
not be considered a “Transfer” within the meaning of this Section 5(h):


 


(i)
       the granting of a revocable proxy to officers or directors of the Corporation at the
request of the Board of Directors in connection with actions to be taken at an annual or special meeting of stockholders;


 


(ii)
       entering into a voting trust, agreement or arrangement (with or without granting a proxy)
solely with stockholders who are holders of Series A Convertible Preferred Stock that: (A) is disclosed either in a Schedule
13D filed with the Securities and Exchange Commission or in writing to the Secretary of the Corporation, (B) either has a
term not exceeding one (1) year or is terminable by the holder of the shares subject thereto at any time; and (C) does
not involve any payment of cash, securities, property or other consideration to the holder of the shares subject thereto other
than the mutual promise to vote shares in a designated manner; or


 


(iii)
       the pledge of shares of Series A Convertible Preferred Stock by a stockholder that creates
a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction for so long as such stockholder
continues to exercise Voting Control over such pledged shares; provided, however, that a foreclosure on such shares or other
similar action by the pledgee shall constitute a “Transfer”.


 


For
the purposes of this Section 5(h) of this Designation, “Voting Control” shall mean, with respect to a share of Series
A Convertible Preferred Stock, the power (whether exclusive or shared) to vote or direct the voting of such share by proxy, voting
agreement or otherwise.


 






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6. Modification;
Amendment or Waiver. The terms of this Certificate of Designation shall not, by merger, consolidation or otherwise, be amended,
waived, altered or repealed without the affirmative vote of the holders of a majority of the voting power of the Series A Convertible
Preferred Stock, voting
as a separate class. Any right or preference of the Series A Convertible Preferred Stock set forth in this Certificate of Designation
may be waived pursuant to a written instrument signed by the holders of a majority of the voting power of the outstanding shares
of Series A Convertible Preferred Stock, voting as a separate class, which written instrument shall specifically set forth the
right or preference being waived and the extent of such waiver. For the purposes of this Section 6, each share of Series
A Convertible Preferred Stock shall have one (1) vote per share.


 


7. Severability.
If any term of this Certificate of Designation is invalid, unlawful, or incapable of being enforced by reason of any rule of law
or public policy, all other terms of this Certificate of Designation as set forth herein which can be given effect without the
invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term of this Certificate of
Designation will be deemed dependent upon any other such term unless so expressed in this Certificate of Designation.


 


IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed in its corporate name on this 14th
day of June, 2018.


                


	 	ARC GROUP, INC.
	 	 	 
	 	By: 	 
	 	 	Richard W. Akam
	 	 	Chief Executive Officer







 




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ANNEX I


NOTICE OF CONVERSION


 


The undersigned hereby elects to exercise
the Conversion Right and convert shares of Series A Convertible Preferred Stock into shares of Common Stock pursuant to the terms
and conditions of the Certificate of Designation relating to the Series A Convertible Preferred Stock of ARC Group, Inc., a Nevada
corporation (the “Certificate of Designation”). Capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to such terms in the Certificate of Designation.


 


Conversion Date: ____________________________________


 


Number of Shares of Preferred Stock to be
Converted: ____________________________________


 


Aggregate Conversion Price: ____________________________________


 


Number of Shares of Common Stock to be Issued:
____________________________________


 


Name of Holder: ________________________________________


 


Address of Holder:_______________________________________


 


____________________________________


 


____________________________________


 


Form of Payment: The undersigned tenders herewith
payment of the aggregate Conversion Price in full in accordance with the terms of the Certificate of Designation in the following
manner:


 


		 ̈	in cash or by check;



 


		 ̈	a reduction of the number of shares of Common Stock otherwise
issuable under the Certificate of Designation by a number of shares of Common Stock having a Fair Market Value equal to the aggregate
Conversion Price;



 


		 ̈	a promissory note; or



 


		 ̈	the following consideration: ____________________________________.



 


In exercising the Conversion Right, the undersigned
hereby confirms and acknowledges that the shares of Common Stock to be issued upon conversion thereof are being acquired solely
for the account of the undersigned for investment purposes only (unless such shares are subject to resale pursuant to an effective
registration statement or an exemption from registration under applicable federal and state securities laws), and that the undersigned
will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in
a violation of the Securities Act of 1933, as amended, or any state securities laws.


 





	IF HOLDER IS AN INDIVIDUAL:	 	IF HOLDER IS AN ENTITY:
	 	 	 	 
	 	 	 	 
	 	 	By: 	 
	Name:	 	 	Name:
	 	 	 	Title:







 


 



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