ARC GROUP, INC. (NASDAQ:ARCW) Files An 8-K Entry into a Material Definitive Agreement

ARC GROUP, INC. (NASDAQ:ARCW) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01

Entry into a Material Definitive Agreement.

On December 19, 2016, ARC Group, Inc. (the Company) entered into
a Membership Interest Purchase Agreement (the Purchase Agreement)
with Seenu G. Kasturi (Seller) to which the Company agreed to
acquire all of the issued and outstanding membership interests
(the Membership Interests) of Seediv, LLC, a Louisiana limited
liability company (Seediv), from Seller. Seediv is the owner and
operator of the Dicks Wings and Grill restaurant located at 100
Marketside Avenue, Suite 301, in the Nocatee development in Ponte
Vedra, Florida 32081 (the Nocatee Restaurant) and the Dicks Wings
and Grill restaurant located at 6055 Youngerman Circle in Argyle
Village in Jacksonville, Florida 32244 (the Youngerman Circle
Restaurant). The transactions contemplated by the Purchase
Agreement are sometimes referred to herein collectively as the
Acquisition. The closing of the Acquisition occurred
simultaneously with the execution of the Purchase Agreement by
the Company and Seller on December 19, 2016 (the Closing Date).

The Company agreed to pay Seller $600,000 for the Membership
Interests on the Closing Date, consisting of: (a) a cash payment
of $13,665, (b) the cancellation and termination of accounts
receivable originally owed to the Company by DWG Acquisitions,
LLC, a Louisiana limited liability company (DWG Acquisitions),
and subsequently transferred to Seediv, in the amount of
$259,123, and (c) the cancellation and termination of debt
originally owed to the Company by Raceland QSR, LLC, a Louisiana
limited liability company (Raceland QSR), and subsequently
transferred to Seediv, in the amount of $327,212. The Company
also agreed to pay Seller an earn-out payment (the Earn-Out
Payment) calculated as follows: (x) the amount equal to: (i) 5.5,
multiplied by (ii) the amount equal to the sum
of
: (A) earnings before interest, taxes, depreciation and
amortization (EBITDA) for the Nocatee Restaurant for the year
ended December 31, 2017 (the Earn-Out Period), plus (B)
EBITDA for the Youngerman Circle Restaurant for the Earn-Out
Period, less (y) $600,000; provided, however,
that in no event shall the Earn-Out Payment be less than zero.

At any time on or prior to April 16, 2018, Seller may elect to
receive all or part of the Earn-Out Payment in the form of shares
of the Companys Class A common stock, par value $0.01 per share
(Common Stock); provided, however, that Seller may only
make this election if, at the time of making such election: (a)
Seller 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), and (b) Seller executes a customary
investment representation letter in a form acceptable to the
Company. In the event Seller elects to receive shares of Common
Stock, the number of shares will be calculated based on the
average daily closing price of the shares of Common Stock on the
OTCQB market tier of the pink sheets maintained by the OTC
Markets Group, Inc.during the 30-day period immediately preceding
the Closing Date. The shares will be restricted securities as
such term is defined under Rule 144 of the Securities Act.
Notwithstanding the foregoing: (x) in no event shall the Company
be required to issue shares of Common Stock exceeding 20% of the
number of shares of Common Stock issued and outstanding on the
Closing Date, and (y) in no event shall the Company be required
to issue more shares of Common Stock to Seller than are then
authorized and available for issuance by the Company. In the
event Seller elects to receive all or part of the Earn-Out
Payment in the form of shares of Common Stock and the
restrictions set forth in clauses (x) and/or (y) of the
immediately preceding sentence are triggered, then,
notwithstanding Sellers election to receive all or part of the
Earn-Out Payment in the form of shares of Common Stock, the
Company shall issue the maximum number of shares of Common Stock
permitted under clauses (x) and (y) and shall settle any
liability to Seller created as a result thereof in cash.

The Purchase Agreement contains customary representations,
warranties and covenants of each of the parties thereto. The
Purchase Agreement also contains customary indemnification
provisions whereby each party will indemnify the other party for
losses arising out of inaccuracies in, or breaches of, the
representations, warranties and covenants made by such party
under the Purchase Agreement and certain other matters. Seller
shall be responsible for all income taxes related to the
operation of Seedivs business on or before the Closing Date, and
the Company will generally be responsible for all income taxes
related to the operation of Seedivs business after the Closing
Date. All transfer, sales, use and other non-income taxes shall
be borne equally by the Company and Seller.

Seller owns approximately 13.8% of the Companys issued and
outstanding shares of Common Stock. In addition, Seller serves as
the President, Treasurer and Secretary, and as the sole member of
the board of directors, of Blue Victory Holdings, Inc., a Nevada
corporation (Blue Victory), and owns 90% of the equity interests
in Blue Victory. Since September 2013, the Company has been a
party to a loan agreement with Blue Victory to which Blue Victory
agreed to extend a revolving line of credit facility to the
Company for up to $1 million. Fred D. Alexander serves as a
member of the Companys board of directors and as an executive
officer of Blue Victory. Seller also serves as the President,
Treasurer and Secretary of, and is the sole member of, DWG
Acquisitions and Raceland QSR, and owns all of the equity
interests in DWG Acquisitions and Raceland QSR. DWG Acquisitions
currently owns and operates six of the Companys 22 franchised
restaurants.

In reviewing the Acquisition, the Companys board of directors
considered all relevant facts and circumstances associated with
the Acquisition, including, without limitation,the commercial
reasonableness of the terms of the Acquisition,the benefits and
perceived benefits, or lack thereof, to the Company,the
opportunity costs of pursuing alternate transactions,the
materiality and character of Sellers interest, and the actual or
apparent conflict of interest of Seller. The Company believes
that the processes that its board of directors followed helped
ensure the appropriateness of its decision to complete the
Acquisition. Accordingly, the Company believes that the
Acquisition was completed on terms that are fair and reasonable
to the Company, and that such terms are consistent with those
that would have been obtained by the Company through arms-length
negotiations with unrelated third parties.

The Purchase Agreement has been included solely to provide
readers with information regarding its terms. It is not intended
to be a source of financial, business or operational information
about the parties thereto or their respective subsidiaries or
affiliates, if any. The representations, warranties and covenants
contained in the Purchase Agreement were made solely for purposes
of the agreement and as of specific dates, were made solely for
the benefit of the parties thereto, and may be subject to
qualifications and limitations agreed upon by the parties,
including being qualified by confidential disclosures. The
representations, warranties and covenants may have been made for
the purpose of allocating contractual risk between the parties to
the agreement instead of establishing matters as facts, and may
be subject to standards of materiality applicable to the parties
to the agreement that differ from those applicable to readers.
Readers should not rely on the representations, warranties and
covenants or any description thereof as characterizations of the
actual state of facts or condition of the parties to the Purchase
Agreement or their respective subsidiaries or affiliates, if any.
Moreover, information concerning the subject matter of the
representations, warranties and covenants may change after the
date of the Purchase Agreement, which subsequent information may
or may not be fully reflected in the Companys filings with the
Securities and Exchange Commission (SEC) or other public
disclosures.

The foregoing description of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by
reference to the Purchase Agreement, a copy of which is attached
hereto as Exhibit 2.1 and incorporated by reference herein.

Section 2 Financial Information

Item 2.01 Completion of Acquisition or Disposition of
Assets.

The information set forth in Item 1.01 above is incorporated by
reference herein.

Section 3 Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 above is incorporated by
reference herein.

To the extent that the potential number of shares of Common
Stock, if any, that may in the future be issued to the Seller to
the Purchase Agreement could exceed five percent (5%) of the
number of the Companys outstanding shares of Common Stock, such
shares will, if issued, be issued to an accredited investor, as
such term is defined in Rule 501(a) of Regulation D under the
Securities Act, in a private placement transaction exempt from
the registration requirements of the Securities Act to Section
4(2) of the Securities Act and/or Regulation D promulgated
thereunder as a transaction by an issuer not involving a public
offering, and will be issued directly by the Company without any
general solicitation or advertising of any kind and without
payment of any underwriting discounts or commissions to any
person.

Section 8 Other Events

Item 8.01 Other Events.

On December 20, 2016, the Company issued a press release
announcing the execution of the Purchase Agreement and completion
of the Acquisition. A copy of the press release is attached
hereto as Exhibit 99.1 and incorporated by reference herein.

Section 9 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.

The financial statements required by Item 9.01(a) of this Current
Report on Form 8-K (this Report) will be filed by amendment to
this Report no later than 71 calendar days after the date this
Report is required to be filed with the SEC.

(b) Pro Forma Financial Information.

The pro forma financial information required by Item 9.01(b) of
this Report will be filed by amendment to this Report no later
than 71 calendar days after the date this Report is required to
be filed with the SEC.

(d) Exhibits.
2.1 Membership Interest Purchase Agreement, dated December 19,
2016, by and between ARC Group, Inc. and Seenu G. Kasturi
99.1 Press Release of ARC Group, Inc. dated December 20, 2016

* * * * *

Cautionary Statement Regarding Forward-Looking
Statements

This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
as amended, and are intended to be covered by the safe harbor
created thereby. All statements other than statements of
historical fact contained herein, including, without limitation,
statements regarding the Companys future financial position,
business strategy, budgets, projected revenues and costs, and
plans and objectives of management for future operations, are
forward-looking statements. Forward-looking statements generally
can be identified by the use of forward-looking terminology such
as may, will, expects, intends, plans, projects, estimates,
anticipates, or believes or the negative thereof or any variation
thereon or similar terminology or expressions. Forward-looking
statements are subject to risks and uncertainties that could
cause actual results to differ materially from results proposed
in such statements. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, it can provide no assurance that such expectations
will prove to have been correct. Important factors that could
cause actual results to differ materially from the Companys
expectations include, but are not limited to: (i) the integration
of Seediv into the Companys business, which will require
significant time, attention and resources of the Companys senior
management and others within the Company, potentially diverting
their attention from other aspect of the Companys business, (ii)
the future results of operations and performance of Seediv, which
could differ significantly from managements expectations and
estimates, (iii) the potential adverse effects on the Companys
business, properties or operations caused by the Company
completing the Acquisition, (iv) the costs, fees, expenses and
charges related to or triggered by the Acquisition that may in
the future be incurred by the Company, (v) the initiation or
outcome of any legal or regulatory proceedings related to the
Acquisition that may be instituted against the Company, and (vi)
the effect that the Acquisition will have on the price of the
Companys shares of Common Stock. Additional factors that could
cause actual results to differ materially from the Companys
expectations are set forth in the Companys Annual Report on Form
10-K for the year ended December 31, 2015 and its other filings
and submissions with the SEC, which are available on the SECs
website at www.sec.gov. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date made. All information set forth in this
Report is accurate as of December 23, 2016. Except as required by
law, the Company does not intend, and assumes no obligation, to
update or revise this information to reflect subsequent events or
circumstances.


About ARC GROUP, INC. (NASDAQ:ARCW)

ARC Group Worldwide, Inc. is a manufacturing company. The Company has four segments: Precision Components Group, 3DMT Group, Flanges and Fittings Group, and Wireless Group. It provides a set of manufacturing solutions, from design and prototyping through production. Through the Company’s product offering, it provides its customers with a prototyping and production solution for both precision metal and plastic fabrication. The Precision Components Group companies provide fabricated metal components using processes, consisting of metal injection molding, precision metal stamping and hermetic sealing. The 3DMT Group focuses on rapid prototyping, short-run production and rapid tooling. The Flange and Fittings Group consists of General Flange and Forge. The Wireless Group focuses on wireless broadband technology related to propagation and optimization. The Wireless Group designs and develops hardware, including antennas, radios and related accessories.

ARC GROUP, INC. (NASDAQ:ARCW) Recent Trading Information

ARC GROUP, INC. (NASDAQ:ARCW) closed its last trading session up +0.15 at 4.45 with 35,395 shares trading hands.

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