UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols(s) | Name of each exchange on which registered |
| The |
| Item 1.01. | Entry into a Material Definitive Agreement. |
The information set forth in Item 2.03 and 5.02 is incorporated by reference into this Item 1.01.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On November 29, 2021, EBET, Inc. (the “Company”) and the subsidiaries of the Company (the “Guarantors”) entered a credit agreement (the “Credit Agreement”) with CP BF Lending, LLC (the “Lender”), pursuant to which the Lender agreed to make a single loan to the Company in the original amount of $30,000,000 (the “Loan”). The Loan required the Company to maintain certain minimum liquidity and other financial and other covenants. As previously disclosed, the Company has received multiple waivers from the Lender in the past with respect to such covenants with the final waiver expiring on June 30, 2023.
On June 30, 2023, the Company, the subsidiaries of the Company and the Lender entered into a forbearance agreement (the “Forbearance Agreement”). Pursuant to the Forbearance Agreement, the Company acknowledged, among other items, that, as June 30, 2023, it was in default under the Credit Agreement, the Lender had the right to accelerate the Loan, and the Lender had the right to impose the default rate of interest under the Credit Agreement. Pursuant to the Forbearance Agreement, the Lender agreed to forbear from exercising its rights and remedies against the Company and the Guarantors under the Credit Documents until the earlier of September 15, 2023, which may be extended by the Lender, or until a termination event occurs pursuant to the Forbearance Agreement. A termination event under the Forbearance Agreement consists of the filing of a bankruptcy proceeding by the Company or any Guarantor, the occurrence of a new event of default under the Credit Agreement, or the failure by the Company or any Guarantor to perform any material requirement, covenant, or obligation under the Forbearance Agreement. During the forbearance period, the Lender agreed, among other items, not to accelerate the Loan, initiate any bankruptcy filings, or apply any default rates of interest. As partial consideration for the Lender agreeing to enter into the Forbearance Agreement, the Company paid a forbearance fee equal to 50 basis points of the outstanding principal amount of the Loan (or $130,425.16), which amount was added to the principal balance of the loan. In addition, on June 30, 2023, the Company made a prepayment of the Loan in the amount of $2.0 million, which in turn reduced the minimum cash balance requirement under the Credit Agreement to $0. Upon the execution of the Forbearance Agreement and after the receipt of the forbearance fee and loan repayment, the principal amount of the Loan is $26,215,457.61.
In connection with the Forbearance Agreement, the Lender agreed to provide the Company with a revolving line of credit in the amount of $2.0 million (the “Revolving Note”), with any advances under the Revolving Note to be made in the sole discretion of the Lender. The Revolving Note will have a maturity date of November 29, 2024 and carry an interest rate of 15.0% per annum, provided that upon an occurrence of default the interest rate will increase to the default rate under the Loan. The Revolving Note shall be an Obligation as defined in the Credit Agreement and as such shall be secured by the collateral in which the Company and the Guarantors have granted liens and security interests to the Lender in connection with the Loan. All discretionary advances shall terminate automatically and all outstanding principal together with accrued but unpaid interest and fees shall become immediately due and payable, without notice to or action by any party, on the earlier of the termination date of the Forbearance Agreement, or the maturity date of the Revolving Note, unless otherwise extended by the Lender.
| Item 3.02. | Unregistered Sales of Equity Securities. |
Reference is made to the disclosure set forth under Item 2.03 above, which disclosure is incorporated herein by reference.
The issuance of the Revolving Note was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506(b) of Regulation D promulgated thereunder, as transactions not involving a public offering.
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| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
During June 2023, the Compensation Committee of the Company’s Board of Directors (the “Board”), the recently formed Strategic Alternatives Committee of the Board (see Item 8.01 below), and the Board reviewed and considered, and discussed with the Company’s executive officers, a plan to retain the Company’s executives through the conclusion of the Company’s strategic process by providing these officers with appropriate financial incentives to do so. In that regard, the Board and the Committees considered advice provided by the Company’s compensation consultant, Frederick W. Cook & Co., Inc. (“FW Cook”) and used FW Cook’s recommendations as part of their decision-making process in arriving at what the Board and the Committees regard as appropriate to achieve the Company’s retention goals. On June 30, 2023, the Compensation Committee and the Strategic Alternatives Committee reviewed and approved an executive retention plan, the Strategic Alternatives Committee recommended that the full Board approve it, and the Board did so.
Following the approval of the executive retention plan by the Committees and the Board and in accordance with the executive retention plan, on June 30, 2023, the Company agreed to enter into a Retention Letter Agreement (each, a “Retention Letter”), with each of Aaron Speech, the Company’s Chief Executive Officer, and Matthew Lourie, the Company’s Chief Financial Officer.
Pursuant to the Retention Letters,
| (a) | Mr. Speach will be entitled to receive a cash retention bonus of $175,000 payable 20% upon execution of the Retention Letter, 40% after three months, and the remainder after six months, and |
| (b) | Mr. Lourie will be entitled to an increase in his base salary to $320,000 and to receive a cash retention bonus of $240,000 payable 20% upon execution of the Retention Letter, 30% after three months, 30% after six months, and the remainder after nine months. |
Any unpaid retention bonus will be paid earlier if the Company completes a strategic transaction (a “Transaction”), or if the executive is terminated without “cause”.
In addition, pursuant to the Retention Letters, each of Mr. Speach and Mr. Lourie will be eligible to receive a cash transaction bonus equal to 0.95% of the gross proceeds of any Transaction, provided that the net proceeds from the Transaction are at least $26.0 million; and further provided that the executive may receive an additional 0.25% of the gross proceeds if the net proceeds from the Transaction are not less than the amount that would result in (a) the Company repaying its outstanding debt and all trade creditors, and (b) the Series A preferred holders and common shareholders receiving consideration of not less than the value of their equity holdings as of June 30, 2023 (the “Deal Threshold”).
If Mr. Speach and Mr. Lourie are terminated without “cause” prior to June 30, 2024, the Company agreed to pay a cash severance payment of:
| (a) | with respect to Mr. Speach, the greater of 1.0 times Mr. Speach’s base salary or the severance payable pursuant to Mr. Speach’s current employment agreement; and |
| (b) | with respect to Mr. Lourie, 0.5 times Mr. Lourie’s base salary. |
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| Item 8.01 | Other Events. |
In addition to the amounts payable to Messrs. Speach and Lourie set forth above, the Company also agreed on June 30, 2023 to pay additional retention bonuses under the executive retention plan to two consultants and advisors of up to $310,000, in the aggregate, and additional cash transaction bonuses equal to 1.9% of the gross proceeds of any Transaction, provided that the net proceeds from the Transaction are at least $26.0 million; and provided further that an additional 0.50% of the gross proceeds will be payable if the net proceeds from the Transaction are not less than the Deal Threshold.
On June 7, 2023, the Board created a Strategic Alternatives Committee to review and evaluate potential strategic alternatives in its sole discretion and exercise related powers that are typical of such committees. The directors who are members of the Strategic Alternatives Committee are Christopher Downs (the Chairman), Dennis Neilander and Michael Nicklas. On June 30, 2023, the Compensation Committee and the Strategic Alternatives Committee reviewed and approved the payment of compensation to members of the Strategic Alternatives Committee in addition to the Company’s standard compensation arrangements for non-employee directors, the Strategic Alternatives Committee recommended that the full Board approve it, and the Board did so. Under this plan, the Chairman of the committee will receive a monthly retainer of $15,000 and the other two members of the committee will receive a monthly retainer of $12,000. These fee arrangements will be reevaluated if the committee remains in place after six months.
On June 28, 2023, based on the approval of the Strategic Alternatives Committee, that committee’s favorable recommendation to the Board, and the Board’s subsequent approval, the Company hired Houlihan Lokey Capital, Inc. (“Houlihan”) as the Company’s exclusive financial advisor to provide financial advisory and investment banking services in connection with one or more of a sale, recapitalization, restructuring or any other financial transactions involving the Company. The continued engagement of Houlihan is required by the Lender during the term of the Forbearance Agreement described in Item 2.03 above.
On November 29, 2021, the Company issued 37,700 shares of its Series A Convertible Preferred Stock (the “Preferred Stock”) for a purchase price of $1,000.00 per share. Pursuant to the terms of the Preferred Stock, on April 28, 2023, the conversion price of the Preferred Stock was reduced from $28.00 per share to $0.71 per share. To date, the Company has received conversion notices with respect to 5,333 shares of Preferred Stock, resulting in the issuance of 9,028,538 shares of common stock, and 32,367 shares of Preferred Stock remain outstanding that are convertible into 56,081,982 shares of common stock. As of June 30, 2023, the Company has 34,218,213 shares of common stock outstanding.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. | Description |
| 10.1 * | Forbearance Agreement dated June 30, 2023 between EBET, Inc., certain subsidiaries of EBET, Inc., and CP BF Lending, LLC |
| 10.2 | Form of Revolving Note issuable by EBET, Inc. to CP BF Lending, LLC |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish a copy of any omitted schedule or exhibit to the SEC upon request.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EBET, INC. | |
| Date: July 3, 2023 | |
| By: /s/ Matthew Lourie | |
| Matthew Lourie | |
| Chief Financial Officer |
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Exhibit 10.1
FORBEARANCE AGREEMENT
among
EBET, INC. F/K/A ESPORTS TECHNOLOGIES, INC.
as the Borrower,
the SUBSIDIARIES OF THE BORROWER,
as Guarantors
and
CP BF LENDING, LLC,
as Lender
Dated as of June 30, 2023
This FORBEARANCE AGREEMENT (this “Agreement”) is entered into as of June 30, 2023 by and between EBET, INC. f/k/a ESPORTS TECHNOLOGIES, INC., a Nevada corporation (the “Borrower”), the Guarantors, and CP BF LENDING, LLC, a Delaware limited liability company (the “Lender”).
WHEREAS, the Lender and the Borrower are parties to that certain Credit Agreement dated as of November 29, 2021, (the “Credit Agreement”) whereby the Lender advanced a term loan to the Borrower in the original principal amount of THIRTY MILLION DOLLARS and 00/100 CENTS (US$30,000,000.00) (the “Loan” as defined in the Credit Agreement) which Loan and other Obligations under the Credit Agreement have been unconditionally guaranteed by the Guarantors;
WHEREAS, the Lender, the Borrower and the Guarantors have entered into a First Amendment and Limited Waiver Agreement dated as of May 16, 2022 (the “First Amendment”), as modified by a Limited Waiver Extension Agreement dated as of May 31, 2022, a Second Limited Waiver Agreement dated as of June 15, 2022, a Third Limited Waiver Agreement dated as of July 15, 2022, a Fourth Limited Waiver Agreement dated as of August 2, 2022, a Fifth Limited Waiver Agreement dated as of August 15, 2022, a Sixth Limited Waiver Agreement dated as of September 2, 2022, a Seventh Limited Waiver Agreement dated as of September 30, 2022, an Eighth Limited Waiver Agreement dated as of October 6, 2022, a Ninth Limited Waiver Agreement dated as of October 31, 2022, a Tenth Limited Waiver Agreement dated as of November 30, 2022, an Eleventh Limited Waiver Agreement dated as of December 16, 2022, a Twelfth Limited Waiver Agreement dated as of January 9, 2023, a Thirteenth Limited Waiver Agreement dated as of January 31, 2023, a Fourteenth Limited Waiver Agreement dated as of February 1, 2023, a Fifteenth Limited Waiver Agreement dated as of April 28, 2023, a Sixteenth Limited Waiver Agreement dated as of May 12, 2023, a Seventeenth Limited Waiver Agreement dated as of May 26, 2023, an Eighteenth Limited Waiver Agreement dated as of June 9, 2023, and a Nineteenth Limited Waiver dated as of June 20, 2023 (collectively, together with the First Amendment, the “Limited Waiver Agreement”), whereby upon the satisfaction of certain conditions, the Lender would provide a limited waiver of certain Potential Events of Default through June 30, 2023;
WHEREAS, the Limited Waiver Agreement has expired and the Potential Events of Default identified in the Limited Waiver Agreement are now Events of Default, and together with any other Defaults which have occurred since June 20, 2023 all of which are set forth on Exhibit A attached hereto, are hereinafter the “Specified Events of Default”;
WHEREAS, on February 13, 2023, via electronic mail, a copy of which is attached hereto as Exhibit B and incorporated herein and as amended thereafter on April 28, 2023 in the Fifteenth Limited Waiver Agreement, on May 12, 2023 in the Sixteenth Limited Waiver Agreement, on May 26, 2023 in the Seventeenth Limited Waiver Agreement, on June 9, 2023 in the Eighteenth Limited Waiver Agreement, and on June 20 in the Nineteenth Limited Waiver Agreement (the “2/13 Email”), Lender agreed on a limited basis to defer the ongoing requirement to provide Aspire Excess Cash Flow Certificates for the period of time provided for therein and on the terms and conditions contained therein;
WHEREAS, on February 14, 2023, via electronic mail, a copy of which is attached hereto as Exhibit C and incorporated herein and as amended thereafter on April 28, 2023 in the Fifteenth Limited Waiver Agreement, on May 12, 2023 in the Sixteenth Limited Waiver Agreement, on May 26, 2023 in the Seventeenth Limited Waiver Agreement, on June 9, 2023 in the Eighteenth Limited Waiver Agreement, and on June 20 in the Nineteenth Limited Waiver Agreement (the “2/14 Email”), Borrower and Lender agreed that certain adjustments would be made to the Warrant on May 3, 2023 as provided for in the 2/14 Email in respect of June 2022 adjustments to the Preferred Stock Warrants and with respect to a Note Conversion Option Agreement that became effective following the February 2023 equity issuance;
WHEREAS, the Borrower is in default under the Credit Documents;
WHEREAS, the Borrower and the Guarantors have requested that the Lender forbear from exercising its rights and remedies under the Credit Agreement and the other Credit Documents;
WHEREAS, the Lender is willing to forbear from exercising such rights and remedies for a limited period of time, provided that Borrower and Guarantors comply with the terms and conditions of this Agreement;
WHEREAS, Lender and the Credit Parties further wish to set forth their mutual acknowledgements, confirmations and agreements in this Agreement subject to the understanding that except as modified in this Agreement, nothing in this Agreement constitutes or will constitute a modification, amendment or other change to the terms of the Credit Documents previously executed between the Lender and the Credit Parties, and that this Agreement may not, in any circumstance, be regarded as a moratorium or novation of any obligations of the Credit Parties.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Lender and the Credit Parties hereby agree as follows:
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1. Defined Terms. Capitalized terms used herein and not otherwise defined in the recitals shall have the meanings ascribed to them in the Credit Documents.
2. Borrower Acknowledgements.
a. Defaults. Borrower and Guarantors acknowledge that the Specified Events of Default hereto have occurred or will occur during the term of this Agreement and that the Specified Events of Default in existence as of the date of this Agreement are continuing.
b. Credit Documents. The Credit Documents and all other agreements, instruments and other documents executed in connection with or relating to the Obligations or the Collateral are legal, valid, binding and enforceable against Borrower and Guarantors in accordance with their terms. The terms of the Credit Documents as in effect immediately prior to the effectiveness of this Agreement remain unchanged, except as modified by this Agreement.
c. No Lending Obligations. As a result of the Specified Events of Default, the Lender has no obligation to make loans or otherwise extend credit to Borrower, except as expressly contemplated under this Agreement, and that any extensions of credit made during the Forbearance Period (as defined below) are to be made in the sole discretion of the Lender and shall not constitute a waiver of any of Lender’s rights under the Credit Documents.
d. Right to Accelerate Obligations. As a result of the Specified Events of Default, the Lender has the immediate right to accelerate the maturity and demand immediate payment of the Obligations.
e. Default Notice. To the extent a notice of default is required by the Credit Documents to be provided to the Borrower and the Guarantors, the Borrower and the Guarantors acknowledge that this Agreement shall constitute such notice under the Credit Documents. The Borrower and the Guarantors further acknowledge that such notice is received timely and properly, that the Lender reserves all rights and remedies available to it under the Credit Documents and at law. The Borrower and the Guarantors hereby waive any rights to receive further notice solely in connection with the Specified Events of Default. All applicable cure periods relating to the Specified Events of Default are waived by the Borrower and the Guarantors.
f. Default Interest Rate. By reason of the Specified Events of Default, the Lender has the right, as of the Effective Date (as defined below), to impose the default rate of interest under Section 2.4(c) of the Credit Agreement commencing from the date of the occurrence of the initial Specified Event of Default.
g. No Waiver of Defaults. Neither this Agreement, nor any actions taken in accordance with this Agreement or the Credit Documents, including the Lender’s willingness to extend credit to the Borrower pursuant to the terms of this Agreement, shall be construed as a waiver of or consent to the Specified Events of Default or any other existing or future defaults under the Credit Documents, as to which the Lender’s rights shall remain reserved.
h. Preservation of Rights and Remedies. Upon expiration of the Forbearance Period, all of the Lender’s rights and remedies under the Credit Documents and at law and in equity shall be available without restriction or modification, as if the forbearance had not occurred.
i. Lender Conduct. The Lender has fully and timely performed all of its obligations and duties in compliance with the Credit Documents and applicable law, and has acted in good faith under the circumstances.
j. Request to Forbear. The Borrower and the Guarantors have requested the Lender’s forbearance as provided herein, which shall inure to their direct and substantial benefit.
3. Forbearance Period. Subject to compliance by the Borrower and the Guarantors with the terms and conditions of this Agreement, the Lender hereby agrees to forbear from exercising its rights and remedies against the Borrower and the Guarantors under the Credit Documents (including but not limited to those rights identified in Section 2 (d) and (f) hereinabove) with respect to the Specified Events of Default during the period commencing on the Effective Date and ending on the earlier to occur of (i) August 31, 2023] and (ii) a Termination Event as defined in Section 4 (the "Forbearance Period"). The Lender’s forbearance, as provided herein, shall immediately and automatically cease without notice or further action on the earlier to occur of (i) or (ii) above (the “Termination Date”). On and from the Termination Date, the Lender may, in its sole discretion, exercise any and all remedies available to Lender under the Credit Documents by reason of the occurrence of any Events of Default thereunder or the continuation of any Specified Events of Default.
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4. Termination Events. The Forbearance Period shall immediately and automatically cease without notice or further action upon the occurrence of any of the following events (each a “Termination Event”):
a. the filing of insolvency, bankruptcy or liquidation proceedings by or against the Borrower or any Guarantor;
b. any Default or Event of Default occurs under the Credit Documents other than a Specified Event of Default; or
c. the Borrower or any Guarantor defaults or otherwise fails in the performance of any material requirement, covenant or other obligation under this Agreement.
5. Extension of Forbearance Period. In the sole discretion of the Lender and without obligation, after the Termination Date the Lender may renew or extend the Forbearance Period, or grant additional forbearance periods.
6. Scope of Forbearance. During the Forbearance Period, the Lender will not (i) accelerate the maturity of the Obligations or initiate proceedings to collect the Obligations; (ii) initiate or join in filing any involuntary bankruptcy petition with respect to the Borrower and the Guarantors under the Bankruptcy Code, or otherwise file or participate in any insolvency, reorganization, moratorium, receivership or other similar proceedings against the Borrower or the Guarantors under the laws of the US or under other Insolvency Laws; (iii) repossess or dispose of any of the Collateral, through judicial proceedings or otherwise; (iv) initiate proceedings to enforce the Guaranty; or (v) assess or apply Default Interest Rate under the Credit Agreement to the principal balance owed by Borrower.
7. Conditions Precedent. This Agreement shall not become effective unless and until the date (the "Effective Date") that each of the following conditions shall have been satisfied in the Lender’s sole discretion, unless waived in writing by the Lender:
a. Delivery of Documents. The Borrower and the Guarantors shall deliver or cause to be delivered the following documents, each in substance and form acceptable to the Lender:
i. a copy of this Agreement, duly executed by the Borrower and the Guarantors;
ii. a certificate dated the date hereof, signed by a duly authorized officer, director or manager of the Borrower and the Guarantors, containing certified copies of (i) resolutions duly adopted by the board of directors or other applicable authorizing body of the Borrower and the Guarantors, as applicable, authorizing the execution and delivery of this Agreement and all documents required to be delivered in connection herewith, and all transactions contemplated herein; (ii) a statement containing the true and correct names, titles and signatures of individuals or entities authorized to sign such documents and authorize such transactions; (iii) a statement that the Borrower and each Guarantor is in good standing (or the substantive equivalent in each relevant jurisdiction) in the Borrower’s and each Guarantors’ jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business; and (v) and a statement that there have been no modifications to the Borrower’s or any Guarantor’s formation or governance documents since November 29, 2021 except as contained in the documents attached to the certificate;
iii. a copy of the Revolving Note attached hereto as Exhibit D, duly executed by the Borrower;
iv. an updated Information Certificate reflecting any changes having occurred since December 31, 2022 duly executed by an Authorized Officer of the Borrower; and
v. on a best efforts basis, a copy of the Security by Title Transfer Agreement (Malta), acknowledged by Aspire Global plc.
b. Forbearance Fee. As partial consideration for the Lender’s agreement to forbear as set forth herein, the Borrower shall have paid a forbearance fee in the amount equal to fifty (50) basis points of the outstanding principal balance of the Loan on the date hereof after the application of the prepayment required pursuant to Section 7(c) of this Agreement. The Forbearance Fee shall be capitalized and shall be added to the outstanding principal balance of the Loan after the application of the prepayment required pursuant to Section 7(c) of this Agreement.
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c. Prepayment. Borrower shall have made a prepayment of the Loan in the amount of TWO MILLION DOLLARS (US$2,000,000.00) utilizing funds on deposit in the Aspire Business Account.
d. Professional Fees and other Expenses. As partial consideration for the Lender’s agreement to forbear as set forth herein, Borrower shall have paid or reimbursed Lender for all of all of Lender’s fees and expenses (including fees and expenses of counsel incurred in connection with the drafting and negotiation of this Agreement).
8. Discretionary Revolving Line of Credit. The Lender shall provide the Borrower with a discretionary revolving line of credit in the amount of TWO MILLION DOLLARS (US$2,000,000.00) which shall be available to the Borrower from time to time for general working capital purposes which revolving line of credit shall be evidenced by a Revolving Note in the form of Exhibit D attached hereto. All advances made under the Revolving Note shall be in the sole discretion of the Lender. The Revolving Note when executed shall be a Credit Document, advances made thereunder shall be an Obligation as defined in the Credit Agreement and as such shall be secured by Collateral in which the Borrower and the Guarantors have granted liens and security interests under the Collateral Documents. Borrower and each Guarantor hereby expressly reaffirms its grant and presently grants a security interest and Lien on the Collateral as security for the payment and performance of the obligations under the Revolving Note. Terms for discretionary advances, repayment of advances, and interest rate shall be set forth in the Revolving Note. All discretionary advances shall terminate automatically and all outstanding principal together with accrued but unpaid interest and fees shall become immediately due and payable, without notice to or action by any party, on the earlier of the Termination Date or the Maturity Date unless otherwise extended by the Lender.
9. Amendments to the Credit Agreement.
a. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Loan” and inserting the following in place thereof:
““Loan” means the term loan made pursuant to Section 2.1(a).”
b. Section 1.1 of the Credit Agreement is hereby amended by inserting the following definitions in alphabetical order:
““Forbearance Agreement” means the Forbearance Agreement dated as of June 20, 2023 by and between the Lender and the Credit Parties, as it may be amended, restated, supplemented or otherwise modified from time to time.”
““Revolving Loan” means the revolving loan made pursuant to Section 2.1(b).”
““Revolving Note” means a promissory note in the form of Exhibit D to the Forbearance Agreement.”
““Termination Event” has the meaning assigned to that term in the Forbearance Agreement.”
c. Section 2.1 of the Credit Agreement is deleted in its entirety and the following is substituted in place thereof:
“Section 2.1. Loan. (a) Subject to and upon the terms and conditions hereof and relying on the representations and warranties set forth herein, Lender agrees to make a single Loan to the Borrower on the Closing Date in the aggregate amount up to but not exceeding the Commitment. Lender shall not have any obligation to make a Loan in excess of the Commitment. Any principal amounts of the Loan subsequently repaid or prepaid may not be re-borrowed. The Commitment shall terminate immediately and without further action on the Closing Date.
(b) Subject to and upon the terms and conditions hereof and relying on the representations and warranties set forth herein, Lender agrees, in its sole and absolute discretion, to make the Revolving Loan advances from time to time to the Borrower in the aggregate amount up to but not exceeding TWO MILLION DOLLARS (US$2,000,000.00) outstanding at any time. Any principal amounts of the Revolving Loan subsequently repaid or prepaid may be re-borrowed pursuant to the terms of the Revolving Note. The Revolving Loan shall terminate immediately and without further action on the earlier of the occurrence of a Termination Event or the Maturity Date.
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(c) The Loan shall (i) bear interest as provided in Section 2.4 hereof and (ii) be entitled to the security interests, collateral and other rights and benefits provided pursuant to the other Credit Documents.
(d) The Revolving Loan shall (i) bear interest as provided for in the Revolving Note and (ii) be entitled to the security interests, collateral and other rights and benefits provided pursuant to the other Credit Documents.
(e) Revolving Loan advances shall not be available to the Borrower or made by the Lender until such time as the Lender has received fully executed documents which provide that advances made under the Revolving Loan will be secured by a Lien on all Collateral granted by Karamba Limited under the laws of Malta, which documents must be executed on or before July 25, 2023.”
d. Section 2.3 of the Credit Agreement is amended by adding a new subsection (d) as follows:
“(d) Revolving Note. The Borrower shall execute and deliver to the Lender the Revolving Note.”
e. Section 2.4(e) of the Credit Agreement is deleted in its entirety and the following is substituted in place thereof:
“(e) Servicing Fee. In addition to the monthly interest payments, the Borrower shall be responsible for the payment to the Lender of all third-party servicing costs for the life of the Loan and Revolving Loan (the “Servicing Fee”) in consideration of the time and cost incurred by the Lender in connection with the servicing of the Loan and the Revolving Loan. The Servicing Fee shall initially be in the amount of Nine Hundred and 00/100 Dollars ($900.00) per month per facility. The Servicing Fee is subject to change based on future contractual rate increases and/or additional costs and fees incurred during the life of the Loan and the Revolving Loan. The Borrower shall pay the monthly Servicing Fee to the Lender in advance on the tenth (10th) day of each calendar month until the Loan, the Revolving Loan and all other Obligations are indefeasibly paid in full and the Revolving Loan is terminated.
f. Section 2.8(d) of the Credit Agreement is deleted in its entirety and the following is substituted in place thereof:
“(d) Asset Sales. If any Credit Party effects any Asset Sale, the net cash proceeds thereof shall be immediately paid by such Credit Party to the Lender, to be applied as a mandatory prepayment on outstanding Obligations.”
g. Each reference to the word “Loan” in Section 2.8 is deleted and the phrase “outstanding Obligations” is substituted in place thereof.
h. Section 2.9(c) of the Credit Agreement is deleted in its entirety and the following is substituted in place thereof:
“(c) Application of Payments. Absent an Event of Default, all amounts collected or received by Lender on account of the Obligations or any other amounts outstanding under any of the Credit Documents or in respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of any protective advances made by Lender with respect to the Collateral under or pursuant to the terms of the Credit Documents or otherwise with respect to the Obligations owing to Lender;
SECOND, to payment of any accrued and unpaid fees owed to Lender;
THIRD, to the payment of all of the Obligations consisting of accrued and unpaid interest on the Revolving Loan and the Loan;
FOURTH, to the payment of all documented out-of-pocket costs and expenses (including without limitation attorneys’ fees) of Lender in connection with this Agreement or any other Credit Document, including the enforcement of Lender’s rights under this Agreement and the other Credit Documents;
FIFTH, to the payment of all of the Obligations consisting of the outstanding principal amount of the Revolving Loan;
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SIXTH, to the payment of all of the Obligations consisting of the outstanding principal amount of the Loan;
SEVENTH, to all other Obligations which have become due and payable under the Credit Documents or otherwise and not repaid pursuant to clauses “FIRST” through “SIXTH” above; and
EIGHTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category.
After the occurrence of an Event of Default (including Specified Events of Default as defined in the Forbearance Agreement) or upon a Termination Event under the Forbearance Agreement, at the election of the Lender, the Lender shall have the immediate right to (i) require or establish reserves for items including, but not limited to, taxes, insurance and lease payments and/or (ii) direct and to apply all funds received from the Controlled Accounts and any other scheduled or unscheduled payments, interest, principal, prepayments and other amounts received of every description payable to the Borrower with respect to the Collateral and by the Borrower to the Lender with respect to the Obligations in such order and in such manner as the Lender shall elect in its sole discretion.”
i. Section 5.18(c) of the Credit Agreement is hereby amended by deleting “$2,000,000” and by substituting “$0” in place thereof for purposes of the definition of the “Required Aspire Minimum Balance”.
j. Section 2.11 of the Credit Agreement is deleted in its entirety and the following is substituted in place thereof:
“Absent an Event of Default, on each date provided for under Section 2.4(b)(i) and on each Payment Date, the Borrower shall cause distributions to be made from the Aspire Business Account to the extent of available funds in the Aspire Business Account not otherwise previously distributed to the Lender pursuant to the Revolving Note. The Lender shall apply such distributions as follows:
FIRST, to the payment of any protective advances made by Lender with respect to the Collateral under or pursuant to the terms of the Credit Documents or otherwise with respect to the Obligations owing to Lender;
SECOND, to payment of any accrued and unpaid fees owed to Lender;
THIRD, to the payment of all of the Obligations consisting of accrued and unpaid interest on the Revolving Loan and the Loan;
FOURTH, to the payment of all documented out-of-pocket costs and expenses (including without limitation attorneys’ fees) of Lender in connection with this Agreement or any other Credit Document, including the enforcement of Lender’s rights under this Agreement and the other Credit Documents;
FIFTH, on a Payment Date, to prepay the Loan in an aggregate amount equal to the Aspire Excess Cash Flow Amount in accordance with Section 2.8(g).
In carrying out the foregoing, amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category.
After the occurrence of an Event of Default (including Specified Events of Default as defined in the Forbearance Agreement) or upon a Termination Event under the Forbearance Agreement, at the election of the Lender, the Lender shall have the immediate right to (i) require or establish reserves for items including, but not limited to, taxes, insurance and lease payments and/or (ii) direct and to apply all funds received from the Controlled Accounts and any other scheduled or unscheduled payments, interest, principal, prepayments and other amounts received of every description payable to the Borrower with respect to the Collateral and by the Borrower to the Lender with respect to the Obligations in such order and in such manner as the Lender shall elect in its sole discretion.”
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k. In each of the following definitions and sections, the Credit Agreement is hereby amended to insert the phrase “and the Revolving Loan” or “or the Revolving Loan” as the context so requires, after the word “Loan” in each place where such word appears therein: definition of “Aspire Business Interest Expense;” “Aspire Excess Cash Flow;” “Borrowing;” “Excluded Taxes;” “Maturity Date;” “Obligations;” Section 2.3(a); Section 2.3(b); Section 2.6; Section 2.7(a); Section 5.1(f); Section 7.3(a); Section 7.4; Section 8.1(a); Section 8.2(a); Section 8.2(b); Section 8.2(d); Section 9.3(c); Section 9.4(b); Section 9.4(c); Section 9.12; Section 9.13; and Section 9.16.
10. Other Amendments.
a. The 2/14 Email as amended is further amended to delete the date “June 30, 2023” and to substitute the date “August 31, 2023” in place thereof.
b. The 2/13 Email as amended is further amended to i) delete the date “June 30, 2023” and to substitute the date “August 31, 2023]” in place thereof, and ii) delete the date “July 3” and to substitute the date “September 1, 2023” in place thereof.
11. Covenants.
a. The Lender hereby defers the requirement of Section 5.1(e) of the Credit Agreement and of the 2/13 Email as amended with respect to the Borrower’s obligation to deliver the Aspire Excess Cash Flow Certificate which deferral shall be in effect only for the Forbearance Period. This is a limited deferral for the Forbearance Period only and shall not be construed as a deferral of future compliance with Section 5.1(e) of the Credit Agreement.
b. Cash Flow Forecasts.
(i) Commencing on the Effective Date, and continuing on each Tuesday thereafter up through and including Tuesday October 3, 2023], the Borrower and its Subsidiaries shall deliver to the Lender a consolidated rolling thirteen-week cash flow forecast together with a detailed, weekly cash budget setting forth the Borrower's projected weekly cash revenue and weekly cash expenses. Such forecast and budget shall provide worst case, best case and most likely case scenarios and shall provide detailed information of cash received and expenses anticipated to be paid in each scenario (the “Cash Forecast File”). For each week, the Borrower shall recommend for the approval of the Lender the budget the Borrower wishes to implement. Lender reserves to right to reject the Borrower’s recommended budget. Notwithstanding the budget approved, the Borrower shall have the option to expend up to an additional FIFTY THOUSAND DOLLARS and 00/100 CENTS (US$50,000.00) per week in its discretion for unanticipated expenses (for purposes herein the term “unanticipated expenses” shall not include fees auto-debited or auto-charged to the Borrower at any time by JP Morgan Chase Bank and ADP Inc. payroll services) which the Borrower in its good faith assessment deems reasonable to pay. Such additional payments shall be immediately reported to the Lender.
(ii) The covenants in this Section 11(b) are expressly intended to survive the occurrence of the Termination Date and the expiration of the Forbearance Period unless otherwise mutually agreed in writing by the Borrower and the Lender.
c. The Credit Parties shall at all times maintain the engagement of Houlihan Lokey (the “Advisor”), at their own expense to assist the Credit Parties with, among other things, the potential sale of all or substantially all of the assets of the Borrower and its Subsidiaries or a sale of the equity of the Borrower and its Subsidiaries (the “HL Engagement”). Such engagement shall continue to be on terms acceptable to the Lender. The Credit Parties shall not amend or modify the terms of the engagement without the consent of the Lender.
d. Upon the request of Lender, the Credit Parties shall engage and maintain such engagement, at their own expense, with a chief restructuring officer or similar advisor (“CRO”) within [10] business days after receipt of Lender’s request to assist the Credit Parties with financial restructuring and/or operational activities of the Borrower and its Subsidiaries. Such engagement shall be on terms acceptable to the Lender. The Credit Parties shall provide the Lender with a reasonable amount of time to review and comment on any such engagement letter prior to execution, which engagement letter shall include, among other things and not by way of limitation, authorization for the CRO to speak directly to the Lender without a Credit Party representative present, requirements for the CRO to provide the Lender with all material information prepared in the course of the CRO’s engagement immediately upon such information becoming available, requirements that the CRO participate in weekly status calls with Credit Parties’ management (including the Advisor retained by the Credit Parties, if applicable) and the Lender, and requirements that the CRO update the Lender on any other matters reasonably requested by the Lender with any such updates also to be provided to the Credit Parties by the CRO. The engagement letter of an CRO shall include a requirement that such Person be approved by and shall report directly to the Board of Directors or equivalent governing body of each Credit Party.
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e. If not previously provided to the Lender, the Borrower will use continuing best efforts to obtain the acknowledgement of Aspire Global plc to the Security by Title Transfer Agreement (Malta).
f. Senior Management of the Borrower shall participate in a telephonic meeting with the Lender at least once per calendar week at a time and date mutually agreed upon by the Borrower and the Lender, during which call the Borrower shall, among other things, update the Lender on all activities and progress toward execution one or more transactions contemplated by the HL Engagement.
12. Transfer of Assets. Each Credit Party agrees that it shall not, without the prior written consent of Lender, transfer an asset of any kind to any Person, including to an Affiliate.
13. Convera Payments. The Lender agrees to the Borrower’s continued use of Western Union or Convera Payment Solutions only for payment of non-U.S. vendors provided the amounts and the timing of such payments shall be substantially consistent with past practices and shall not create a breach of covenants regarding the amount of the Required Aspire Minimum Balance then in effect. Borrower agrees that the amount of funds to be transferred to Western Union or Convera Payment Solutions shall be reflected as an expense line item in the financial reporting provided to the Lender under Section 11(b) of this Agreement for the reporting period immediately prior to such anticipated transfer. To the extent necessary, at the Borrower’s option, a portion of transfers made pursuant to this Section 13 may be deemed to be an “unanticipated expense” for purposes of Section 11(b). The Lender reserves the right to withdraw this limited waiver upon reasonable written notice to the Borrower of no less than 14 days prior notice.
14. Reaffirmation of Loan Balance. The Borrower confirms that, as of the date hereof, upon giving effect to this Agreement and after having made the payment required in Section 7(c) and capitalizing the forbearance fee required in Section 7(b), it is indebted to the Lender in respect of the Loan in the principal amount of TWENTY-SIX MILLION TWO HUNDRED FIFTEEN THOUSAND FOUR HUNDRED FIFTY-SEVEN DOLLARS and 61/100 CENTS(US$26,215,457.61), together with interest accrued and unpaid thereon (including PIK interest), together with all fees, costs, expenses and other charges due and owing by the Borrower under the Credit Documents and that all such amounts are unconditionally owing by the Borrower to the Lender, without offset, defense or counterclaim of any kind, nature or description whatsoever.
15. Credit Documents. This Agreement, together with the Revolving Note, the 2/13 Email and the 2/14 Email each constitute a “Credit Document” as defined in the Credit Agreement, as the same may be amended from time to time. All references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the Credit Agreement, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall be deemed to refer to the Credit Agreement as modified by this Agreement. For the avoidance of doubt, any default by the Borrower or any Guarantor under the terms of this Agreement shall constitute an Event of Default under the Credit Agreement.
16. Governing Law, Jurisdiction, Counterparts, Jury Trial Waiver Confidentiality. This Agreement shall be governed by, and construed in accordance with, the law of New York without reference to its conflicts of law principles (other than Section 5-1401 of the New York General Obligations Law). The provisions of Sections 9.7, 9.8, 9.9 and 9.16 of the Credit Agreement are hereby incorporated by reference as if fully set forth herein and shall apply mutatis mutandis.
17. Effect on Credit Documents. The Credit Agreement and each of the other Credit Documents shall be and remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects. The execution, delivery, and performance of this Agreement shall not operate, except as expressly set forth herein, as a modification or waiver of any right, power, or remedy of the Lender under the Credit Agreement, or any other Credit Document. The amendments contained in this Agreement are limited to the specifics hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall not excuse future non-compliance by the Borrower or any Guarantor with respect to any Credit Document to which it is a party, and shall not operate as a waiver or forbearance to any further or other matter under the Credit Documents. Each Credit Party hereby ratifies and reaffirms (i) the validity, legality and enforceability of the Credit Documents; (ii) that its reaffirmation of the Credit Documents is a material inducement to the Lender to enter into this Agreement; and (iii) that its obligations under the Credit Documents shall remain in full force and effect until all the Obligations have been paid in full. Guarantors expressly agree that the Guaranty of each extends to all Obligations under the Credit Documents, including Obligations under the Revolving Note. The Borrower and each Credit Party represents and warrants that the representations and warranties contained in this Agreement, Credit Agreement and in the other Credit Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct on and as of such earlier date.
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18. Successors and Assigns. This Agreement binds and benefits the respective successors and assigns of the parties, except that neither the Borrower nor any Guarantor may assign or delegate any of its rights or obligations under this Agreement without the prior written consent of the Lender. The Lender may assign all or a portion of all of its rights and obligations under this Agreement.
19. No Amendment. Any amendment, or waiver of, or any consent given under, any provision of this Agreement shall be in writing and, in the case of any amendment, signed by the parties or their permitted successors and assigns.
20. Entire Agreement. This Agreement and the other Credit Documents represent the final and complete agreement of the parties hereto with respect to the subject matter herein, and all prior negotiations, representations, understandings, writings and statements of any nature with respect thereto are hereby superseded in their entirety by the terms of this Agreement and the other Credit Documents.
21. Further Assurances. The Borrower and each Guarantor shall execute and deliver any and all reasonable additional documents, agreements and instruments, and take such additional reasonable action (including the filing and recording of financing statements) as may be reasonably requested by the Lender, without payment of further consideration, to effectuate the intent and purpose of this Agreement and consistent with the provisions of, and limitations contained in, the Credit Documents. The Borrower and each Guarantor agree to cooperate with, and shall cause their Subsidiaries and their advisors to cooperate with, any financial advisors or appraisers that may from time to time be retained by or on behalf of the Lender, including, without limitation, providing reasonable access (upon reasonable advance notice) to their premises, personnel and books and records.
22. Advice of Counsel. Each Credit Party has freely and voluntarily entered into this Agreement with the advice of legal counsel of its choosing, or has knowingly waived the right to do so.
23. Reimbursement of Costs and Expenses. Each Credit Party agrees to pay all costs, fees and expenses of the Lender (including attorneys' fees), expended or incurred by the Lender in connection with the negotiation, preparation, administration and enforcement of this Agreement, the Credit Documents, the Obligations, any of the Collateral and all fees, costs and expenses incurred in connection with any bankruptcy or insolvency proceeding (including, without limitation, any adversary proceeding, contested matter or motion brought by the Lender or any other Person). Without in any way limiting the foregoing, each Credit Party hereby reaffirms its agreement under the applicable Credit Documents to pay or reimburse the Lender for certain costs and expenses incurred by the Lender. The Credit Parties are jointly and severally liable for their obligations under this Section 23.
24. Release. The Borrower and each Guarantor hereby release, waive, and forever relinquish all claims, demands, obligations, liabilities and causes of action of whatever kind or nature, whether known or unknown, which any of them have, may have, or might assert at the time of execution of the Agreement against the Lender and/or its parents, affiliates, participants, officers, directors, employees, agents, attorneys, accountants, consultants, successors and assigns, directly or indirectly, which occurred, existed, was taken, permitted or begun prior to the execution of this Agreement, arising out of, based upon, or in any manner connected with (i) any transaction, event, circumstance, action, failure to act or occurrence of any sort or type, whether known or unknown, with respect to the Credit Agreement, any other Credit Document and/or the administration thereof or the Obligations created thereby; (ii) any discussions, commitments, negotiations, conversations or communications with respect to the refinancing, restructuring or collection of any Obligations related to the Credit Agreement, any other Credit Document and/or the administration thereof or the Obligations created thereby, or (iii) any matter related to the foregoing, in each case, prior to the execution of this Agreement.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.
LENDER:
CP BF LENDING, LLC
By: CP Business Finance GP, LLC, its manager,
By: Columbia Pacific Advisors, LLC, its manager
By: /s/ Brad Shain
Name: Brad Shain
Title: Fund Manager
[signature page to Forbearance Agreement]
BORROWER:
EBET, INC. F/K/A ESPORTS TECHNOLOGIES, INC.
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
[signature page to Forbearance Agreement]
GUARANTORS:
GLOBAL E-SPORTS ENTERTAINMENT
GROUP LLC
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
ESPORTSBOOK TECHNOLOGIES LIMITED
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
ESEG LIMITED
By: GLOBAL E-SPORTS ENTERTAINMENT
GROUP LLC, its Director
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
ESPORTS PRODUCT TECHNOLOGIES MALTA LTD
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
ESPORTS MARKETING TECHNOLOGIES LIMITED
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
[signature page to Forbearance Agreement]
GOGAWI ENTERTAINMENT GROUP LIMITED
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
KARAMBA LIMITED
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
ESPORTS PRODUCT TRADING MALTA LIMITED
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
ESPORTS TECHNOLOGIES (ISRAEL) LTD
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
EBET CURACAO N.V.
By: /s/ Aaron Speach
Name: Aaron Speach
Title: CEO
[signature page to Forbearance Agreement]
Exhibit 10.2
REVOLVING NOTE
EBET, INC. F/K/A ESPORTS TECHNOLOGIES, INC.
| US$2,000,000.00 | dated as of June 30, 2023 |
FOR VALUE RECEIVED, the undersigned, EBET, Inc. f/k/a ESPORTS TECHNOLOGIES, INC., a Nevada corporation, as borrower under the Credit Agreement referenced below (the “Borrower”), promises to pay, on the earlier of the Termination Date (as defined in the Forbearance Agreement defined below) or the Maturity Date to the order of CP BF LENDING, LLC (hereinafter, together with its successors in title and assigns, called the “Lender”), the principal sum of TWO MILLION DOLLARS (US$2,000,000.00) (the “Revolving Loan Cap”), in immediately available funds or, if less, the aggregate unpaid principal amount of the Revolving Loan made by the Lender to the Borrower pursuant to the Credit Agreement to which reference is hereinafter made and to pay interest, in like money, on the unpaid principal amount owing hereunder from time to time from the date hereof until payment in full of such principal amount as provided in this Revolving Note (this “Revolving Note”) and in the Credit Agreement. Unless otherwise defined herein, all capitalized terms used herein which are defined in the Credit Agreement, the Forbearance Agreement or the Credit Documents (as defined in the Credit Agreement and amended from time to time) shall have the same meanings herein as therein.
1. Credit Agreement. This Revolving Note is made and delivered by the Borrower pursuant to Section 2.3(c) of the Credit Agreement, dated as of November 29, 2021, by and among the Borrower, the Guarantors party thereto and the Lender (as amended, restated, supplemented and otherwise modified from time to time, the “Credit Agreement”) and the Forbearance Agreement, dated as of June 30, 2023, by and among the Borrower, the Guarantors party thereto and the Lender (as amended, restated, supplemented and otherwise modified from time to time, the “Forbearance Agreement”) and is entitled to the benefits and is subject to the provisions of the Credit Agreement and the Forbearance Agreement.
2. Terms of this Revolving Note Generally.
2.1. Revolving Note. This Revolving Note is a revolving note and in accordance with, and subject to, the provisions hereof, the Credit Agreement and the Forbearance Agreement, the Borrower may, at its option, borrow, pay, prepay and reborrow hereunder at any time prior to the Maturity Date or such earlier date as the obligations of the Borrower to the Lender under this Revolving Note and any other agreements between the Lender and the Borrower related to this Revolving Note shall become due and payable; provided, however, that in no event shall the principal balance outstanding hereunder exceed the face amount of this Revolving Note. This Revolving Note shall continue in full force and effect until all obligations and liabilities evidenced by this Revolving Note are indefeasibly paid in full and this Revolving Note is terminated, even if, from time to time, there are no amounts outstanding in respect of this Revolving Note. Nothing contained in this Revolving Note or otherwise is intended, nor shall constitute, an obligation or a commitment of the Lender to make any loan or advance; any requested loan or advance shall remain subject to the Lender’s sole and absolute discretion to fund such loan or advance.
3. Payments.
3.1. Manner of Payments. All payments of principal and interest shall be payable pursuant to Section 2.9 of the Credit Agreement.
3.2. Payment of Interest. Interest on all amounts outstanding shall be payable in arrears (i) monthly on the tenth day of each month commencing the month following the date of this Revolving Note, and continuing thereafter on the same day of each succeeding month until the principal balance shall be paid in full, (ii) on the date of any repayment or prepayment, (iii) on the Maturity Date, and (iv) on the date payment is due after acceleration by the Lender. Payments of cash interest are earned in full and are non-refundable. PIK Interest is not applicable to payments of interest under this Revolving Note. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder.
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3.3. Application of Payments. Any payments received by the Lender on account of this Revolving Note shall be applied in accordance with Section 2.9(c) and 2.11(a) of the Credit Agreement. Notwithstanding the foregoing, any payments received by the Lender after the occurrence of an Event of Default (including Specified Events of Default as defined in the Forbearance Agreement) or a Termination Event under the Credit Documents shall be applied in such manner and order as the Lender may determine in its sole discretion.
4. Interest. Interest under this Note shall be as follows:
4.1. Interest Rate. Commencing on the date of this Revolving Note, interest shall accrue on the aggregate principal balance outstanding from time to time under this Revolving Note and shall bear interest equal, each day, to a rate per annum equal to fifteen (15.0%) percent. Interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the period during which it accrues.
4.2. Maximum Rate of Interest. If pursuant to the terms of this Revolving Note, the Borrower is at any time obligated to pay interest on the principal balance at a rate in excess of the maximum interest rate permitted by applicable law for any loan or advance evidenced by this Revolving Note, the applicable interest rate shall be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.
4.3. Default Rate. Upon the occurrence of an Event of Default, Termination Event or after the Maturity Date, the principal amount outstanding under this Revolving Note, and to the extent permitted by applicable law, any past due interest payments under this Revolving Note or any fees or other amounts owed hereunder, in each case, shall thereafter bear interest (including, without limitation, interest, as provided in this Revolving Note, accruing after the filing of a petition initiating any insolvency proceedings, whether or not such interest accrues or is recoverable against the Borrower after the filing of such petition for purposes of the Bankruptcy Code or is an allowed claim in such proceeding) payable in cash on demand at the Default Rate. The Default Rate shall also apply from acceleration until this Revolving Note or any judgment thereon is paid in full.
5. Discretionary Advances. All advances requested to be made under this Revolving Note are considered and made in the Lender’s sole and absolute discretion. The Lender is under no obligation to make discretionary loan advances. The proceeds of discretionary advances shall be used by the Borrower solely for the general working capital purposes of the Borrower and its Subsidiaries. No portion of the proceeds of the discretionary advances shall be used by the Borrower or any Subsidiary of the Borrower in any manner that may violate any Regulation or might cause the advance or the application of such discretionary advance proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act, in each case as in effect on the date of the discretionary advance and such use of proceeds. The Borrower will not, directly or indirectly, use the proceeds of any discretionary advance, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions, or (ii) in any other manner that would result in a violation of Sanctions by any Person.
6. Procedures for Revolving Advances. Requests for discretionary advances are made by the Borrower delivering to the Lender a Funding Notice in the form of Annex I attached hereto. The Funding Notice must be delivered to the Lender on a Business Day which is at least two (2) Business Days prior to the proposed Funding Date set forth in the Funding Notice. The Borrower may only request one discretionary advance per calendar week. A request for a discretionary advance may only be made in an amount that exceeds One Hundred Thousand Dollars (US$100,000.00). Under no circumstances shall the amount of discretionary advance requested, when added to the outstanding principal amount of all advances made, exceed the Revolving Loan Cap. All discretionary advances are to be used solely for the purposes set forth in this Revolving Note. All discretionary advances when made shall be funded by the Lender to the Aspire Business Account or such other Controlled Account acceptable to Lender in its sole and absolute discretion. Each Funding Notice must provide, among other things, the following: (i) the amount of the discretionary advance requested, (ii) the proposed use of the requested discretionary advance in detail satisfactory to the Lender in its sole and absolute discretion, and (iii) a statement that no Event of Default or Termination Event, other than the Specified Events of Defaults set forth in the Forbearance Agreement, has occurred. Any proceeds of a discretionary advance in excess of Fifty Thousand Dollars ($50,000.00) not utilized within five (5) Business Days after the advance has been made for the purposes set forth in the Funding Notice related to the discretionary advance made shall be returned to the Lender on the following Business Day and shall be applied by the Lender in accordance with Section 2.9(c) of the Credit Agreement.
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7. Representations and Warranties. The Borrower represents and warrants that the representations and warranties contained in this Revolving Note, Credit Agreement and in the other Credit Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct on and as of such earlier date.
8. Collateral. The payment and performance of obligations evidenced by this Revolving Note are secured and guaranteed as provided in the Credit Agreement and the other the Credit Documents. All of the terms, covenants and conditions of the Credit Agreement and the other Credit Documents are hereby made a part of this Revolving Note and are deemed incorporated in full.
9. Miscellaneous.
9.1 If a Termination Event shall have occurred or upon the Maturity Date, the entire unpaid principal amount of this Revolving Note and all of the unpaid interest accrued thereon may become or be declared due and payable in the manner and with the effect provided in the Credit Agreement.
9.2 The Borrower and all Guarantors and endorsers hereby waive presentment, demand, protest and notice of any kind in connection with the delivery, acceptance, performance and enforcement of this Revolving Note, and also hereby assent to extensions of time of payment or forbearance or other indulgences without notice.
9.3 THIS REVOLVING NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER, AND ALL CLAIMS, DISPUTES AND MATTERS ARISING HEREUNDER OR RELATED HERETO, SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS REVOLVING NOTE MAY BE BROUGHT ONLY IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR FEDERAL COURTS OF THE UNITED STATES OF AMERICA SITTING IN THE SOUTHERN DISTRICT OF NEW YORK AND NEW YORK COUNTY AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAS TO THE VENUE OF ANY SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
[Remainder of the page left intentionally blank]
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IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be signed in its corporate name by its duly authorized officer on the day and in the year first above written.
BORROWER
EBET, INC. f/k/a ESPORTS TECHNOLOGIES, INC.
By:
Name:
Title:
[signature page to Revolving Note]
| 4 |
ANNEX I
FORM OF
FUNDING NOTICE
Reference is made to that certain Revolving Note, dated as of June 30, 2023 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Revolving Note”; (the terms defined therein and not otherwise defined herein being used herein as therein defined)), by and between EBET, Inc. f/k/a ESPORTS TECHNOLOGIES, INC., a Nevada corporation, as borrower under the Credit Agreement referenced below (the “Borrower”), and CP BF LENDING, LLC (hereinafter, together with its successors in title and assigns, the “Lender”).
Pursuant to the Revolving Note, the Borrower requests that the Lender make the following discretionary advance to the Borrower on [______], 202[__] (the “Funding Date”) in accordance with the applicable terms and conditions of the Revolving Note, the Credit Agreement and the Forbearance Agreement:
1. Discretionary advance request in the amount of US$[_________].
2. [_____________], on behalf of the Borrower, hereby certifies, represents and warrants, solely in the undersigned’s capacity as an officer of the Borrower and not in an individual capacity, that:
(i) as of the Funding Date, the representations and warranties contained in the Revolving Note, Credit Agreement and in the other Credit Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct on and as of such earlier date;
(ii) as of the Funding Date, no Event of Default or Termination Event has occurred, other than the Specified Events Defaults set forth in the Forbearance Agreement, and is continuing or would result from the funding of the discretionary advance contemplated hereby; and
(iii) attached hereto as Schedule I is the information and all supporting documentation required to be submitted together with this Funding Notice to sufficiently describe the permitted uses and the amounts related to such uses of the requested discretionary advance.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
| 5 |
EBET, INC., a/k/a ESPORTS TECHNOLOGIES, INC.
By:
Name:
Title:
[Signature page to Funding Notice]
| 6 |
SCHEDULE I TO FUNDING NOTICE
FUNDING USE INFORMATION
| 7 |
Cover |
Jun. 28, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Jun. 28, 2023 |
| Entity File Number | 001-40334 |
| Entity Registrant Name | EBET, Inc. |
| Entity Central Index Key | 0001829966 |
| Entity Tax Identification Number | 85-3201309 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 3960 Howard Hughes Parkway |
| Entity Address, City or Town | Las Vegas |
| Entity Address, State or Province | NV |
| Entity Address, Postal Zip Code | 89169 |
| City Area Code | (888) |
| Local Phone Number | 411-2726 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common stock, par value $0.001 per share |
| Trading Symbol | EBET |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |
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