Document:

ex_160376.htm

Exhibit 10.1

 

 

UNSECURED SUBORDINATED PROMISSORY NOTE AGREEMENT

 

 

	
			$50,000

				
			October 16, 2019

			

 

 

For value received, CurAegis Technologies, Inc., a New York state corporation (“the Company”), promises to pay to RICHARD A. KAPLAN, the principal sum of Fifty Thousand Dollars ($50,000) (the “Principal Amount”). Simple interest shall accrue from the issuance date of this Note on the unpaid Principal Amount at a rate equal to six percent per annum (6%). This Note is subject to the following terms and conditions.

 

	
			 

				
			1.

				
			Maturity. This Note is callable at the election of the holder but in no instance, will the maturity date exceed 90 days from the date of issuance, and as such is due and payable no later than January 14, 2020 (the “Maturity Date”).

			

	
			 

				
			2.

				
			Interest. Interest shall accrue on this Note at the rate of six percent per annum (6%) and shall be payable upon repayment of the Principal.

			

	
			 

				
			3.

				
			Payment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be first credited to accrued interest then due and payable, and the remainder shall be applied to the outstanding Principal Amount. The Note may be prepaid in whole or in part from time to time by the Company.

			

	
			 

				
			4.

				
			Nature of Obligation. This Note is a general unsecured obligation of the Company.

			

	
			 

				
			5.

				
			Transfers: Successors and Assigns: The terms and conditions of this Note share inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge or otherwise transfer all or any part of the Note without prior written consent of the Company.

			

	
			 

				
			6.

				
			Governing Law: This Note and all acts and transactions pursuant to the rights and obligation of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of New York, without giving effect to principles of conflicts of law.

			

	
			 

				
			7.

				
			Subordination: The Holder acknowledges and agrees that the Company’s payment obligation under this Note may be subordinated to the obligations of the Company to its lenders under any other financing facility in the event that the Company is unable to meet its obligations. In such event, no payments under this Note shall be paid to the Holder and any payment received by the Holder shall be immediately returned to the Company until such time as the Company is able to satisfy such obligations to the Lenders in full. By accepting this agreement, the Holder agrees to execute a subordination agreement with any Lender evidencing such subordination. If the terms and conditions of any subordination agreement with any Lender shall change, the Holder shall execute and deliver such further documents or instruments as such Lender may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note.

			

  

CurAegis Technologies, Inc.

 

	/s/ Kathleen A. Browne	/s/ Richard A. Kaplan	 
	Chief Financial Officer	Lender	 

       

 

 

/s/ James Donnelly

Chief Operating OfficerEXECUTION
VERSION

 

PUT
AGREEMENT

 

This
PUT AGREEMENT (this “Agreement”) dated as of October 11, 2019 (the “Effective Date”), is
entered into by and among ARC Group, Inc., a Nevada corporation (the “Parent”), ARC WingHouse, LLC, a Florida
limited liability company (“Purchaser” and, together with Parent, “Company”) and Soaring
Wings, LLC, a Florida limited liability company (“Soaring Wings”). All capitalized terms used but not defined
in this Agreement have the meanings assigned to them in the Asset Purchase Agreement (as defined below).

 

Background

 

On
the Effective Date, Purchaser, a subsidiary of Parent, purchased the WingHouse Bar & Grill casual restaurant chain from Soaring
Wings and its subsidiaries pursuant to that certain Asset Purchase Agreement, dated as of October 11, 2019, by and among the Purchaser,
Parent, Soaring Wings, and the other parties listed therein (the “Asset Purchase Agreement”).

 

As
partial consideration for the Purchased Assets, Parent is required to deliver ARC Stock to Soaring Wings on each of the first
three anniversaries of the Effective Date, with the number of shares of ARC Stock delivered on each anniversary to be equal to
the quotient of $1,000,000 divided by the applicable per share price: (i) 1st anniversary, $1.40 per share;
(ii) 2nd anniversary, $2.00 per share; and (iii) 3rd anniversary, $3.00 per share (the “ARC Stock
Consideration”), subject to the terms and conditions in Section 1.2(c) of the Asset Purchase Agreement.

 

If
the ARC Stock is not listed on the NYSE, NASDAQ
Global Select Market, NASDAQ Global Market and NASDAQ Capital Market on any of the 1st,
2nd or 3rd anniversaries of the Closing (the first such anniversary referred to as a “Listing Failure
Anniversary”), then, unless Soaring Wings elects otherwise in accordance with Section 1.2(c) of the Asset Purchase
Agreement, Purchaser shall pay $1,000,000 cash to Soaring Wings on the Listing Failure Anniversary and each anniversary of the
Closing after a Listing Failure Anniversary (if any), ending on the 3rd anniversary of the Closing in full satisfaction
of Parent’s obligation to deliver ARC Stock to Soaring Wings on the Listing Failure Anniversary and each anniversary thereafter,
ending on the 3rd anniversary.

 

Notwithstanding
the existence of a Listing Failure Anniversary, Soaring Wings may, in its sole discretion, elect to receive ARC Stock on the Listing
Failure Anniversary and/or any anniversary after the Listing Failure Anniversary in lieu of a $1,000,000 cash payment as provided
in Section 1.2(c) of the Asset Purchase Agreement by providing Purchaser with written notice no less than thirty (30) days before
the Listing Failure Anniversary or subsequent anniversary, as applicable, with the amount and timing of ARC Stock to be delivered
following such election in accordance with the first sentence of such section.

 

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It
is expressly agreed and understood by the Company that Soaring Wings and its subsidiaries willingness to sell the WingHouse Bar
& Grill restaurant chain to Purchaser are conditioned on the Company’s execution and delivery of this Agreement and
that Soaring Wings and its subsidiaries would not have entered into the Asset Purchase Agreement or sell the WingHouse Bar &
Grill restaurant chain to Purchaser without this Agreement.

 

Operative
Terms

 

The
Company and Soaring Wings agree as follows:

 

1.
Soaring Wings’ Put Right.

 

(a)
Put Right. Subject to the terms and conditions of this Agreement, Soaring Wings shall have the right (but not the obligation),
upon written notice to Parent (the “Put Notice”) given at any time before the Put Deadline (as defined below),
to force Parent to purchase, for cash, at the Put Closing (as defined below), all or any portion of the shares of ARC Stock received
by Soaring Wings under Section 1.2(c) of the Asset Purchase Agreement or Section 15 of this Agreement. In the event Soaring Wings
receives ARC Stock pursuant to Section 1.2(c) of the Asset Purchase Agreement and puts all of such ARC Stock to Parent, then the
amount payable by Parent to Soaring Wings at the Put Closing shall be equal to the Put Price (as defined below). In the event
Soaring Wings elects to put only a portion of such shares to Purchaser, either because Soaring Wings received Contingent Cash
Consideration on one or more of such anniversaries, Soaring Wings sold some of the ARC Stock, Soaring Wings elected to retain
some of the ARC Stock and put only a portion of the ARC Stock to Parent, and/or for any other reason, then the amount payable
by Parent to Soaring Wings at the Put Closing will calculated in the following manner: (x) the Put Price, multiplied by
(y) a fraction, the numerator of which is the number of shares of ARC Stock put to Parent by Soaring Wings hereunder, and the
denominator of which is the number of shares of ARC Stock received by Soaring Wings under the Asset Purchase Agreement had Soaring
Wings received ARC Stock on each of the 1st, 2nd and 3rd anniversaries of the Closing Date. Upon
the mutual written agreement of Parent and Soaring Wings, the deadline for Soaring Wings delivering the Put Notice may be extended
beyond the Put Deadline, in which case the Put Closing will be a day selected by the Parent and Soaring Wings (but in no event
later than 14 days after the end of new Put Deadline). The amount payable by Parent to Soaring Wings at the Put Closing shall
be referred to herein as, the “Put Payment”.

 

(b)
Certain Definitions. For the purposes of this Agreement, “Put Price” shall mean an amount equal to:
(i) $6,000,000.00, less (ii) the aggregate dividends (if any) received by Soaring Wings from the Parent attributable to
any shares of ARC Stock received by Soaring Wings under Section 1.2(c) of the Asset Purchase Agreement and not required to be
paid to Lender pursuant to the Subordination Agreement, less (iii) the aggregate Distributions (other than Tax Distributions)
made by Purchaser to Soaring Wings under that certain Amended and Restated Operating Agreement of Purchaser dated October 11,
2019 (the “Operating Agreement”) that are not required to be paid to Lender pursuant to the Subordination Agreement,
less (iv) the aggregate cash payments made by Purchaser to Soaring Wings following a Listing Failure Anniversary pursuant
to Section 1.2(c) of the Asset Purchase Agreement that are not required to be paid to Lender pursuant to the Subordination
Agreement (and for the avoidance of doubt, were not applied to satisfy Losses pursuant to Section 7.9(b) under the Asset Purchase
Agreement), less (v) the aggregate amount of Losses satisfied by Sellers to any ARC WingHouse Indemnified Party pursuant
to Sections 7.9(a), (b) and (c) under the Asset Purchase Agreement that are not required to be paid to Lender
pursuant to the Subordination Agreement. For the purposes of this Section 1(b), “Distributions”, “Tax
Distributions” and “Losses” shall have the meaning ascribed to such terms in the Operating Agreement.

 

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(c)
Put Deadline. For purposes hereof, “Put Deadline” shall mean the later of (y) the fifth anniversary
of the Effective Date and (z) twelve months (12) months following the date on which Company provides written notice to Soaring
Wings that: (i) it has indefeasibly paid and satisfied in full the Debt (as defined below), (ii) Soaring Wings is not restricted
from exercising its rights under this Agreement (in whole or in part) pursuant to that certain Subordination Agreement dated on
or around the Effective Date (the “Subordination Agreement”) by and among Soaring Wings, Purchaser, and City
National Bank of Florida (the “Lender”), or otherwise, and (iii) the Company has legally sufficient funds to
pay the Put Payment in full. Purchaser hereby agrees to provide prompt notice to Soaring Wings of any event of default or default
under and as defined in the loan documents governing the Debt (as defined below).

 

(d)
Put Closing.

 

(i)
The closing of the purchase and sale of the ARC Stock that may be put to Parent pursuant to Section 1(a) (the “Put
Closing”) shall take place at the offices of Parent such other location as may be mutually agreed upon by the Parent
and Soaring Wings on the date specified by Soaring Wings in the Put Notice; provided, however, the Put Closing shall not
occur at any time prior to the 5th anniversary of the Effective Date.

 

(ii)
Parent will pay Soaring Wings the Put Payment at the Put Closing by wire transfer of immediately available funds to a bank account
designated by Soaring Wings in the Put Notice. If for any reason Parent fails to pay the Put Payment at the Put Closing (or Soaring
Wings is prevented from sending a Put Notice or receiving the Put Payment pursuant to the Subordination Agreement (“Lender
Blockage”)), interest will accrue on a daily basis on the unpaid Put Payment (with such Put Payment being calculated
as of the 5th anniversary of the Effective Date, in the case of a Lender Blockage) beginning on the day of the Put
Closing (or, in the case of a Lender Blockage, the 5th anniversary of the Effective Date) at the lesser of: (1) 18%
per annum or (2) the maximum rate of interest permitted by applicable law, until such time as the Put Payment plus all accrued
interest thereon has been paid to Soaring Wings (as applicable, “Default Interest”). Notwithstanding anything
to the contrary, such Default Interest shall be payable in addition to the Put Payment as consideration for the ARC Stock that
is the subject of the Put Notice.

 

(iii)
At such time as Soaring Wings receives the Put Payment plus all additional amounts due to Soaring Wings under this Agreement,
Soaring Wings will assign and deliver to Parent the ARC Stock that was put to the Parent pursuant to Section 1(a), free
and clear of any lien or encumbrance, by executing and delivering a stock transfer power or other instrument of transfer in a
customary form.

 

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2.
Specific Performance. Soaring Wings, in addition to being entitled to exercise all rights and pursue all remedies granted
by law and equity, including recovery of damages and collection of the Put Payment and Default Interest thereon, shall be entitled
to specific performance of its rights provided under this Agreement, without the requirement of posting of any bond. The Company
agrees that monetary damages may not be adequate compensation for any loss incurred by reason of a breach by the Company of the
provisions of this Agreement and hereby agrees, in an action for specific performance, to waive the defense that a remedy at law
would be adequate.

 

3.
Guaranty. Purchaser unconditionally and irrevocably guarantees to Soaring Wings the full and prompt performance and payment
by Parent of all obligations of Parent to Soaring Wings under this Agreement. Soaring Wings may enforce the foregoing guaranty
against Purchaser without the necessity of any action or proceedings against Parent or any other party or against any collateral
held by Soaring Wings (if any). Purchaser’s guaranty is an absolute, unconditional and continuing guaranty without regard
to the validity or enforceability of any obligation of Parent to Soaring Wings under this Agreement. Further, Purchaser expressly
agrees that its obligations hereunder shall not in any way be terminated, affected or impaired by reason of (a) the granting by
Soaring Wings of any indulgences to Parent, (b) the assertion against Soaring Wings or any of its subsidiaries of any of the rights
and remedies reserved to Company (or either one of them) pursuant to the Asset Purchase Agreement or its limited liability company
agreement or (c) the release of Parent from any of Parent’s obligations, whether by operation of law or otherwise, Purchaser
hereby waiving all suretyship defenses and all other defenses other than strict payment and performance of all of Parent’s
obligations under this Agreement.

 

4.
Subordination. Soaring Wings acknowledges and agrees that Purchaser has obtained debt financing (the “Debt”)
from the Lender for the purpose of enabling Purchaser to complete the transactions contemplated by the Asset Purchase Agreement.
Soaring Wings hereby subordinates to Lender all consideration to which Soaring Wings may in the future be entitled under this
Put Agreement from Purchaser to the extent and in the manner set forth in the Subordination Agreement. Purchaser shall deliver
to Soaring Wings copies of any and all modifications, amendments, extensions, alterations, changes or revisions to the loan documents
evidencing the Debt and will provide Soaring Wings notice of any default thereunder and of the payment in full of the Debt. Notwithstanding
anything to the contrary in this Agreement or the Subordination Agreement, neither Purchaser nor Parent will extend the term of
the Debt or increase the principal amount of the Debt.

 

    	 	4	 

    	 

    

 

5.
Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be
deemed given or delivered (a) when delivered personally, (b) if sent by registered or certified mail, return receipt requested,
or by private courier when received; and shall be addressed as follows:

 

If
to the Purchaser or Parent, to:

 

ARC
Group, Inc.

1409
Kingsley Ave., Ste. 2

Orange
Park, Florida 32073

Attention:
Seenu G. Kasturi, Chief Executive Officer

 

If
to Soaring Wings, to:

 

Soaring
Wings, LLC

1600
E. 8th Avenue

Suite
A-208

Tampa,
Florida 33605

Attention:
Kenneth P. Jones

 

With
copy to:

 

Hill
Ward Henderson

3700
Bank of America Plaza

101
E. Kennedy Boulevard

Tampa,
Florida 33602

Attention:
John C. Connery, Jr.

 

6.
Delays, Omissions, Etc. No delay or omission to exercise any right, power or remedy accruing to Soaring Wings upon any
breach or default by the Company under this Agreement shall be deemed a further or continuing waiver or a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit, consent, or approval of any kind or character on the
part of Soaring Wings of any breach or default by the Company under this Agreement, or any waiver on the part of Soaring Wings
of any provision, term or condition of this Agreement must be in writing and shall be effective only to the extent specifically
set forth in such writing.

 

7.
Merger; Amendments. This Agreement represents the exclusive understanding of the parties with respect to the subject matter
hereof and supersedes any prior agreements and understandings with respect thereto. This Agreement may not be amended, modified,
supplemented or restated except pursuant to a written instruments signed by all of the parties hereto.

 

8.
Severability. If any provision contained in this Agreement shall for any reason be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. Upon such
determination that any provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

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9.
Headings. The descriptive headings of the several sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

 

10.
Assignment; Heirs and Legal Representatives. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and permitted assigns. However, neither this Agreement
nor any of the rights or obligations hereunder are assignable by Parent or Purchaser unless such assignment is consented to in
writing by Soaring Wings. Soaring Wings may assign its rights and obligations hereunder to any Person who acquires any of the
ARC Stock Consideration.

 

11.
Governing Law; Jurisdiction and Venue. This Agreement and all actions arising out of or in connection with this Agreement
shall be governed by and construed in accordance with the laws of the State of Florida, without regard to the conflicts of law
provisions of the State of Florida or of any other state. The parties (a) consent to the personal jurisdiction of the state and
federal courts having jurisdiction in Jacksonville, Florida, (b) stipulate that the exclusive jurisdiction and venue for any legal
proceeding arising out of this Agreement is the state and federal courts having jurisdiction in Jacksonville, Florida, and (c)
waive any defense, whether asserted by motion or pleading, that any such venue is an improper or inconvenient venue.

 

12.
Counterparts; Signature by Facsimile and E-mail Transmission. This Agreement and any amendment, restatement, or termination
of any provision of this Agreement, may be executed by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart
may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. A party’s
transmission by facsimile or by e-mail transmission Portable Document Format (also known as a PDF file) of a copy of this Agreement
duly executed by that party shall constitute effective delivery by that party of an executed copy of this Agreement to the party
receiving the transmission.

 

13.
Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT.

 

14.
ARC Stock Consideration. All references to ARC Stock Consideration are deemed to mean: (a) all shares of ARC Stock held
or beneficially owned by Soaring Wings that were issued to Soaring Wings pursuant to Section 1.2(c) of the Asset Purchase
Agreement, and (b) any shares of common stock of Parent issued or issuable to Soaring Wings with respect to such ARC Stock by
way of a dividend or split or in exchange for or upon conversion of such shares or otherwise in connection with a combination
of shares, shares subdivision, distribution, recapitalization, merger, consolidation, other reorganization or other similar event.

 

15.
Re-Issuance. If Soaring Wings is required to remit any amount received under this Agreement to Lender pursuant to the Subordination
Agreement, Purchaser and Parent shall cause the number of shares of ARC Stock purchased by Parent pursuant hereto for which such
payment to Lender was made to be immediately transferred back or re-issued to Soaring Wings without any cost or expense to Soaring
Wings, which shares of ARC Stock shall be validly issued, fully paid and non-assessable.

 

[Signatures
appear on next page]

 

    	 	6	 

    	 

    

 

SIGNATURE
PAGE TO

PUT AGREEMENT

 

IN
WITNESS WHEREOF, the undersigned has caused this Put Agreement to be duly executed and delivered as of the date first written
above.

 

	 	PARENT:
	 	 
	 	ARC
    Group, Inc., a Nevada corporation 
	 	 	 
	 	By:	/s/
    Seenu Kasturi
	 	Name:	Seenu
    Kasturi
	 	Title:	CEO
	 	 	
	 	PURCHASER:
	 	 
	 	ARC
    Winghouse, llc, a Florida limited liability
    company
	 	 	 
	 	By:	/s/
    Seenu Kasturi
	 	Name:	Seenu
    Kasturi
	 	Title:	Manager
    
	 	 	 
	 	SOARING
    WINGS:
	 	 
	 	Soaring
    Wings, LLC, a Florida limited liability company
	 	 	 
	 	By:	Soaring
    Wings Manger, LLC,
	 	 	a
    Florida limited liability company,
	 	 	its
    Manager
	 	 	 
	 	By:	/s/
    Kenneth P. Jones
	 	Name:	Kenneth
    P. Jones
	 	Title:	Manager

 

    	 	7

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