Notes to Consolidated Financial Statements

• (a) To finance restaurant acquisitions and provide additional working capital, Capriotti's Craig, LLC and Capriotti's Huntridge, LLC entered into financing transactions with Zeus Holdings, LLC. The agreements are in the form of convertible promissory notes that provide for the quarterly period-end (period-end defined as every four weeks from the fiscal year-end) payments of 50% of the borrower's EBITDA until such time as the instrument is fully repaid or redeemed (as more fully described below), or the borrower is liquidated. Beginning in the fifth year after issuance, the lender is also entitled to an additional 25% of the borrower's EBITDA as payment of the outstanding principal until such time as the lender recovers 50% of the original loan proceeds. On the ten-year anniversary of the note, a balloon payment is due in an amount sufficient to pay the outstanding principal down to 50% of the original note proceeds. The remaining 50% of the note proceeds is due on the 15-year anniversary of the note, and the anniversary dates are February 2025 and August 2033. At any time prior to maturity, the loan can be extended for additional one-year terms with the mutual consent of the parties. Also, at any time prior to maturity, 50% of the original note proceeds is convertible into a 50% nonvoting equity interest in the borrower.
• (b) To finance restaurant acquisitions and provide additional working capital, Capriotti's Sparks LLC, Capriotti's Meadows LLC, and Capriotti's Sierra, LLC entered into new financing transactions during 2019 with Zeus Holdings, LLC; Dream Big Holdings, LLC (a related-party lender);

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)