Form 8-K Esports Technologies, For: Oct 01

October 1, 2021 8:54 AM EDT

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Exhibit 2.1

 

 

SHARE PURCHASE AGREEMENT

 

between

 

Aspire Global International Limited;

 

AG Communications Limited;

 

Aspire Global 7 Limited; and

 

Aspire Global plc, on the first part;

 

Esports Product Technologies Malta Ltd

and

 

Esports Technologies, Inc., on the second part;

 

and

 

Karamba Limited, on the third part.

 

 

 

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SHARE PURCHASE AGREEMENT

 

This Share Purchase Agreement (hereinafter also referred to as the “Agreement”) is being executed on this the 1st day of October, 2021 by and between

 

On the first part:-

 

Aspire Global International Limited, a company incorporated under the laws of Malta, bearing company registration number C 42296, and having its registered office situated at 135, High Street, Sliema, Malta (hereinafter called the "Seller 1");

 

AG Communications Limited, a company incorporated under the laws of Malta, bearing company registration number C 48328, and having its registered office situated at 135, High Street, Sliema, Malta (hereinafter called the "Seller 2");

 

Aspire Global 7 Limited, a company incorporated under the laws of Malta, bearing company registration number C 89966, and having its registered office situated at 135, High Street, Sliema, Malta (hereinafter called the "Seller 3");

 

Aspire Global plc, a company incorporated under the laws of Malta, bearing company registration number C 80711, and having its registered office situated at LEVEL G, OFFICE1/5086, QUANTUM HOUSE, 75, ABATE RIGORD STREET, TA' XBIEX XBX 1120, MALTA (hereinafter called the "Seller 4" and together with Sellers 1, 2 and 3, the "Seller");

 

 

On the second part:-

 

ESPORTS PRODUCT TECHNOLOGIES MALTA LTD., a company incorporated under the laws of Malta, bearing company registration number C 99697 and having its registered office situated at Level 3 (Suite No.2873) Tower Business Centre, Tower Street, Swatar, Birkirkara, BKR4013, Malta (hereinafter referred to as the "Purchaser");

 

ESPORTS TECHNOLOGIES, INC., company incorporated under the laws of the State of Nevada, U.S.A. and having its registered office situated at 197 E. California Ave., Ste. 302, Las Vegas, Nevada 89104 (hereinafter referred to as the "EBET")

 

and

 

On the third Part:-

 

Karamba Limited, a limited liability company incorporated and existing under the laws of Malta bearing registration number C99777 with registered office at 135 High Street, Sliema, Malta (hereinafter referred to as the "Company");

 

(The Seller, the Purchaser and the Company shall hereinafter be individually each referred to as a “party” and collectively referred to as the “parties”).

 

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PREAMBLES:

 

WHEREAS the Seller 4 and the EBET have entered into a Term Sheet and Letter of Intent dated 27 May 2021 and subsequent amendment thereof, effective August 16, 2021 (collectively “Term Sheet”), whereby among other non-binding commitments, each of EBET and Seller 4 expressed their intention in writing in connection with the purchase by EBET of the Assets (as defined hereinbelow) of the Seller on a debt-free or cash-free basis and free of any claims, encumbrances, security interests or restrictions (other than as identified therein);

 

WHEREAS, the Seller 4 and EBET have undertaken to execute on the Term Sheet terms and as a result have caused this Agreement to be presented including all parties (as defined hereinabove) required so as to allow for the appropriate form, structure and parties necessary to effectuate the transaction presented in the Term Sheet;

 

WHEREAS each of the Sellers 1, 2, 3 and 4 is at the date hereof, the registered owner of 300 Ordinary Shares having a nominal value of one Euro (€1) each, fully paid-up, in the Company;

 

WHEREAS on or about the Closing Date, the Sellers 1, 2, 3 and 4 will enter into an Asset Purchase Agreement with the Company (the "APA"), such that as of the Closing Date, the Company shall hold and own full, good, and valid title free of all liens, encumbrances, security interests, claims and third-party rights, to all the business to consumer (B2C) assets, liabilities, and operations, as further defined in Schedule A to this Agreement and collectively referred to as the “Assets”;

 

WHEREAS the Seller or its Affiliates (as that term is defined herein below) are parties to a number of material contracts for services that are necessary for the operation of the Assets as conducted as of the Closing Date, which are listed in Schedule 6.5 to this Agreement (hereinafter referred to as “Assigned Contracts”);

 

WHEREAS the Company, in terms of its latest Memorandum & Articles Association, has an authorised share capital of one thousand and two hundred Euro (€1,200) divided into one thousand and two hundred (1,200) Ordinary Shares of one Euro (€1) each and an issued share capital of one thousand and two hundred Euro (€1,200) divided into one thousand and two hundred (1,200) Ordinary Shares of one Euro (€1) each;

 

WHEREAS the Seller is desirous of transferring the entire share capital of the Company as exists at the Closing Date (hereinafter referred to as the “Shares”) to the Purchaser, who is desirous of acquiring the said Shares on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS simultaneously to the Closing and as a material condition to Closing, the Seller, and the Purchaser and/or the Company as then fully owned by the Purchaser, shall enter into an agreement whereby the Seller, or any of its Affiliate shall provide continuation of services related to the Assets for all enterprise agreements listed in Schedule A, which are required in order to operate the Assets and which are in force at the Closing Date, between the Seller and any third-party (hereinafter referred to as the “Transition Services Agreement”). The Transition Services Agreement that shall be entered into by and between the Seller, the Purchaser and/or the Company shall contain standard business provisions and shall materially include the terms and conditions contemplated in the above-mentioned Term Sheet and Letter of Intent.

 

WHEREAS simultaneously to the Closing and as a material condition to Closing, the Seller, the Purchaser and/or the Company as then fully owned by the Purchaser, shall enter into a business to consumer white label operator services agreement, based upon a migration plan in accordance with applicable laws hereinafter respectively referred to as (the “Operator Services Agreement” and the “Migration Plan”, respectively, and together with the Transition Services Agreement, the "Ancillary Agreements"). The Operator Services Agreement shall include a term duration of four (4) years and will otherwise contain standard business provisions and shall materially include the terms and conditions contemplated in the above-mentioned Term Sheet and Letter of Intent (where applicable).

 

WHEREAS, on or about September 16, 2021, Seller submitted for approval with the Malta Gaming Authority (“MGA”) the form and substance of a Migration Plan (the “MGA Approval”). The intention of the MGA Approval is to effectively enable the Sellers 1, 2, 3 and 4 to sell and otherwise transfer to the Company the Assets (as defined herein) and receive confirmation of MGA Approval of the Migration Plan.

 

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NOW THEREFOR IT IS HEREBY AGREED AS FOLLOWS:

 

  1. SUBJECT MATTER

 

1.1As of the Closing Date, the Company shall be the sole beneficial owner/holder of the Assets and Assigned Contracts, and shall have full title over the said Assets, which is good and valid, free of all liens, encumbrances, security interests, claims and third-party rights.

 

1.2The Seller hereby transfers and sells the Shares in the Company to the Purchaser (together with all rights attaching thereto at the Closing Date and subject to the terms and conditions herein below mentioned), and the Purchaser hereby accepts and acquires the Shares in the Company.

 

1.3The Seller hereby agrees to waive any pre-emption rights they may have in relation to the Shares and the share transfer contemplated in this Agreement.

 

1.4In instances where the termination of the said Assigned Contracts is necessary and/or required the Seller shall be solely responsible to handle any such termination. Except as set out in Schedule 6.5(ii) of the Disclosure Schedules, no Key Contract which includes a change of control provision requiring the written consent of a third party due to the transfer of the Shares to Purchaser, and, to the extent required, the Seller shall provide Purchaser with such required written consent fully executed no later than the Closing Date.

 

2.EXECUTION AND CLOSING

 

2.1On the date of execution of this Agreement by all the parties thereto (hereinafter referred to as the “Execution Date”), the parties shall exchange and deliver the Execution Documentation, with copies of same to be exchanged via email between the parties at least three days prior the Execution Date and this as further contemplated in Schedule B to this Agreement.

 

2.2Unless extended by the Parties in writing, no later than sixty (60) calendar days following the Execution Date (which day shall be referred to as the “Closing Date”), the parties shall meet, satisfy and otherwise deliver each of the Closing Deliverables indicated in Schedule C to this Agreement and the payment of the Price as defined hereunder shall be made in accordance with Clause 3.2 below.

 

3.PRICE

 

3.1The Shares are being transferred by the Seller for the total price of Sixty-Five Million Euro (€65,000,000) (hereinafter referred to as the "Price"), payable by the Purchaser to the Sellers (the allocation of said Price to be determined mutually in good faith at the Closing), as follows:

 

a.Cash Amount. An amount of Fifty Million Euro (€50,000,000) in cash;

 

b.Loan Amount. An amount of Ten Million Euro (€10,000,000), materially on the terms set out in Schedule 3.1(i) and materially in accordance with the terms of the form of promissory note attached hereto as Schedule 4.1(ii); and

 

c.Exchange Shares. Such number of newly-issued common stock of the Purchaser having an aggregate market value equal to Five Million Euro (€5,000,000), based on the weighted-average per-share price of the ten (10) days prior to the Execution Date (the "Exchange Shares").

 

Any and all tax consequences resulting from the payment of the purchase Price including but not limited to the Exchange Shares shall be borne solely by the Seller.

 

3.2Within forty-five (45) days as of the Closing Date, the Purchaser will file with the Securities and Exchange Commission any applicable registration statement required in order to register the Exchange Shares for trading such that the Exchange Shares shall not to be restricted from trading under applicable laws and will be fully tradeable without any trading limitations upon effectiveness of such registration, and (b) shall make all efforts to make the registration statement declared effective, and maintain it in effect until the Seller have sold all its Exchange Shares.

 

 

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3.3The Price in full, including all cash, Exchange Shares and Note due pursuant to Sections 3.1 (a),(b) and (c) shall be paid, issued and otherwise delivered on the Closing Date upon satisfaction of the Closing Deliverables detailed in Schedule C, by parties, and this in full and final settlement of the cash portion of the Price, by wire transfer of immediately available funds to be provided in writing by Seller to Purchaser prior to Closing (the "Aspire Account").

 

4.GENERAL REPRESENTATIONS AND WARRANTIES

 

Each of the parties hereby represents and warrants, severally and not jointly, solely with respect to itself, the following:

 

4.1The persons signing this Agreement and the Ancillary Agreements are authorized signatories of each party and are duly empowered to sign the said Agreement and that there are no further consents or approvals required for the execution or performance of said Agreement that have not been duly obtained.

 

4.2The representations and warranties of the parties contained in this Agreement shall survive and continue in full force and effect for a period of twenty four (24) months following, and calculated from, the Execution Date provided, however, that the Representations and Warranties indicated in clauses 5.2, 6.7 and 6.12 hereunder, shall survive until the expiration of the statute of limitations (after taking into account any waiver, extension, or mitigation thereof, in each case, in accordance with applicable law), if any, applicable to the subject matters set forth therein (respectively, the "Survival Period").

 

4.3The covenants contained herein shall become effective upon the Execution Date and, subject to the terms and conditions hereunder, survive the Execution Date for purposes of any claim of nonfulfillment, non-performance, or breach thereof, unless the covenant or agreement specifies a term, in which case such covenant or agreement shall survive for such specified term, and in each case until such claim has been finally resolved.

 

4.4Each party hereto shall be entitled to rely upon, and shall be deemed to have relied upon, all representations, warranties and covenants of each other party set out in this Agreement which have been or are made in favour of such party, and the rights of each of the parties shall not be affected notwithstanding (i) the waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant, agreement, undertaking or obligation, (ii) any investigation or examination conducted with respect to, or any knowledge acquired (or capable of being acquired) about the accuracy or inaccuracy of or compliance with, any representation, warranty, covenant, agreement, undertaking or obligation made by or on behalf of the parties hereto, (iii) the waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant, agreement, undertaking or obligation, or (iv) the execution of this Agreement.

 

  5. REPRESENTATION AND WARRANTIES OF THE PURCHASER

 

Each of the Purchaser and EBET, hereby represents and warrants to the Seller and the Company as follows:

 

5.1Organisation and Standing. The Purchaser is duly organized, validly existing and in good standing under the laws of Malta, and has requisite power and authority to own, lease and operate its properties and to carry on its business as presently conducted.

 

5.2Authorisation and Binding Effect. The Purchaser has the full right, power, and authority to enter into and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by Purchaser or its Affiliate and is a valid and binding agreement of the Purchaser. The execution and delivery of this Agreement by the Purchaser and the performance by the Purchaser of its obligations hereunder have been duly authorised by all necessary action on behalf of the Purchaser or its Affiliate, and this Agreement constitutes a legal, valid and binding agreement of the Purchaser or its Affiliate, enforceable against the Purchaser or its Affiliate in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity, regardless of whether enforcement is sought in a proceeding at law or in equity.

 

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5.3Compliance with Laws and Other Instruments. The Purchaser is in compliance in all material respects with all applicable laws, ordinances, regulations and orders of all governmental entities or authorities. The execution and delivery by the Purchaser, the consummation of the transfer of shares contemplated hereby and the performance by the Purchaser of its obligations hereunder, will not conflict with, or result in any violation of or default under any provision of any governing instrument applicable to the Purchaser, or any agreement or instrument to which the Purchaser is a party or by which the Purchaser or any of its properties is bound, or any license, permit, franchise, judgment, order, writ, decree, statute, rule or regulation applicable to the Purchaser or any of its businesses or properties.

 

5.4No Other Contracts. The Purchaser represents and warrants that neither the execution and delivery of this Agreement by the Purchaser nor the performance of the Purchaser’s duties and obligations hereunder, shall constitute a default under or a breach of the terms of any other agreement, indenture or contract to which the Purchaser is a party or by which the Purchaser is bound, nor shall the execution and delivery of this Agreement by the Purchaser or the performance of the Purchaser’s duties and obligations hereunder give rise to any claim or charge against either the Purchaser, the Seller or the Company based upon any other contract, indenture or agreement to which the Purchaser is a party or by which the Purchaser is bound.

 

5.5Examination of documentation. The Purchaser has received, read, understood and is fully familiar with the documents and financial information related to the Company accompanying this Agreement. The Purchaser and the Purchaser’s representatives, including its partners, the Purchaser’s financial, tax, legal and other advisers (collectively, “Purchaser’s Advisors”), have carefully reviewed all documents furnished to them in connection with the acquisition/assignment of the Shares, the Assets, Licences, and Assigned Contracts, and understand and have taken cognizance of all the risk factors delivered herewith and related to such a transaction.

 

5.6Information furnished. Any information which the Purchaser has heretofore furnished or is furnishing herewith to the Company about the Purchaser, and any and all information filed by the Purchaser with the relevant authorities, is complete and accurate. Additionally, any information furnished by the Purchaser in connection with its financial situation accurately lists and fairly presents, in all material respects, its financial condition and operating results.

 

5.7Purchaser Bears Economic Risk. Purchaser has substantial experience in evaluating and investing in public placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its purchase of the Shares from the Seller and has the capacity to protect its own interests.

 

5.8Non-Contravention. Neither the execution and the delivery of this Agreement and each Ancillary Agreement, document, instrument or certificate contemplated hereby to which Purchaser or its Affiliate is a party, nor any of the transactions contemplated hereby or thereby, shall (i) violate any law or other restriction to which Purchaser or its affiliate is subject or any provision of its certificate of incorporation or its bylaws or (ii) result in a breach or acceleration of, or create in any party the right to accelerate, terminate, modify, or require any notice under any agreement, or other arrangement by which it is bound or to which any of its assets are subject. Neither the Purchaser nor its Affiliate is required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any governmental entity in order for the parties to consummate the transactions contemplated by this Agreement and the Ancillary Agreements. There are no actions pending or threatened against or affecting Purchaser or its Affiliate at law or in equity, or before any governmental entity, which would adversely affect Purchaser's performance under this Agreement or the Ancillary Agreements, or the consummation of the transactions contemplated hereby or thereby.

 

5.9Acknowledgment by the Purchaser. The Purchaser acknowledges that, other than as set forth in this Agreement and any certificate or other document Disclosed by the Seller, the Seller neither makes nor has made any representation or warranty, either express or implied, (i) with respect to any projections, forecasts, estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of the business heretofore delivered to or made available to Purchaser or any of its respective agents, representatives, or affiliates.

 

 

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5.10Ownership of the Exchange Shares. The Exchange Shares to be issued and delivered in accordance with Section ‎3.1 (c) to Seller 4, shall be, upon issuance and delivery of such shares: (i) fully paid and non-assessable, (ii) rank equally in all respects with EBET’s issued and outstanding common stock at that time, (iii) be validly issued in accordance with EBET's organizational documents, (iv) be issued without contravention of any applicable laws and regulations, listing rules or any other securities laws, regulations or rules to which EBET is subject or any order of any governmental authority that is binding on EBET, and (v) be free and clear of any and all encumbrances, including any pledge, charge, mortgage, security interest, lien, joint ownership, guarantee, restriction, option, preemption right, right of first refusal, promise, option, claim, third-party right, easement, lease, sublease, right of way or any other in-rem or personal security of any kind relating to underlying properties or assets or any person or any other undertaking or obligation or duty which has the purpose or effect of restricting the ownership or the transferability or use of the Exchange Shares or any right therein.

 

5.11Restricted Securities. Seller understands that, until their registration in accordance with Section 3.2 herein, the Exchange Shares will be characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Exchange Shares may be resold without registration under the Securities Act of 1933, as amended, only in certain limited circumstances. It is understood that the book-entry notice evidencing the Exchange Shares shall bear substantially the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, APPLICABLE STATE SECURITIES LAWS (PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM). THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

 

6.REPRESENTATION AND WARRANTIES OF THE COMPANY AND SELLER

 

Other than what has been disclosed in Schedule D attached hereto or the Data Room ("Disclosed"), the Company and Seller (and each of them) hereby represent and warrant to the Purchaser as follows:

 

6.1Organisation and Standing. The Company and the Seller are each duly incorporated/organized, validly existing and in good standing under the laws of Malta and have the requisite power and authority to own, lease and operate their properties and to carry on their business as presently conducted.

 

6.2Authorisation and Binding Effect. The Seller and the Company have all requisite powers and authority to execute and deliver, and to perform their obligations under this Agreement. This Agreement has been duly executed and delivered by the Seller and the Company and is a valid and binding agreement of the Seller and the Company. The execution and delivery of this Agreement by the Seller and the Company and the performance by the Seller and the Company of their obligations hereunder have been duly authorized by all necessary action on behalf of the Seller and the Company, and this Agreement constitutes a legal, valid and binding agreement of the Seller and the Company, enforceable against the Seller and the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity, regardless of whether enforcement is sought in a proceeding at law or in equity.

 

6.3Absence of Restrictions and Conflicts. Schedule 6.3(i) of the Disclosure Schedule contains the Company's organisational documents effective as of the Closing Date (the "Company's Organizational Documents"). The execution and delivery of this Agreement, the consummation of the transfer of shares contemplated hereby and the performance by the Seller and the Company of their obligations hereunder will not conflict with or result in the violation of or default under any provision of the Company’s Organisational Documents. Except as set out in Schedule 6.3(ii) of the Disclosure Schedules, no consent, approval, authorization or order of any court or governmental agency is required in connection with the consummation of the transaction contemplated in this Agreement.

 

 

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6.4Compliance with Laws and Other Instruments. Except as set out in Schedule 6.4 of the Disclosure Schedules, to the knowledge of the Seller, the Company and the Seller are in compliance in all material respects with all laws, ordinances, regulations and orders of all governmental entities or authorities, which are applicable to the Assets, in territories in which the Seller has been licensed. Except as set out in Schedule 6.4 of the Disclosure Schedules, the execution and delivery by the Company and the Seller, the consummation of the transfer of shares contemplated hereby and the performance by the Company and the Seller of their obligations hereunder with regard to the Assets, will not conflict with, or result in any violation of or default under any provision of any governing instrument in jurisdictions in which the Seller is licensed and are applicable to the Company and the Assets. Additionally, except as set out in Schedule 6.4 of the Disclosure Schedules, since its incorporation, to the knowledge of the Seller, the Company has: (i) not in any manner been charged with and, to the knowledge of the Company and/or the Seller, the Company is not under investigation with respect to any actual or alleged violation of any applicable law, regulation, ordinance, order or other requirement of a governmental entity or authority, (ii) not been a party to or bound by any order, judgment, decree or aware of any governmental entity or authority that would reasonably have a material adverse effect on the Company; and (iii) filed all material reports required to be filed with any governmental entity or authority and, all such reports are accurate and complete in all material respects and in compliance in all material respects with all applicable laws.

 

6.5Assigned Contracts; Key Contracts; No Other Contracts. The Assigned Contracts and the Assigned Contracts that are key and material contracts (the "Key Contracts") are the contracts listed in Schedule 6.5(i) of the Disclosure Schedules. The Seller and the Company represent and warrant that, except as set out in Schedule 6.5(ii) of the Disclosure Schedules, neither the execution and delivery of this Agreement by any of them, nor the performance of the their duties and obligations hereunder, shall constitute a default under or a breach of the terms of any Key Contract or any other agreement, indenture or contract to which the Company is a party or by which the Company is bound, nor, to the knowledge of the Seller, shall the execution and delivery of this Agreement by the Seller and/or the Company or the performance of the their duties and obligations hereunder give rise to any claim or charge against either the Purchaser, the Seller or the Company based upon any other contract, indenture or agreement to which the Seller and/or the Company are a party or by which the Seller and/or the Company are bound.

 

6.6Shareholding. The Seller warrants that the Shares represent one hundred percent (100%) of the shareholdings in the Company, and that the Shares are being transferred to the Purchaser free from all pledges, charges, encumbrances, liability pledge or other indebtedness and third-party rights and together with all rights attaching thereto.

 

6.7Title to Assets and Assigned Contracts. The Company warrants that, as of Closing Date, it is the sole beneficial owner of the Assigned Contracts and has good, full, and valid title to all of the Assets, free and clear of all liens, encumbrances, security interests, claims, and third-party rights .

 

6.8No Infringement. With respect to the Assets and/or Assigned Contracts, the Company and the Seller warrant that, to the knowledge of the Seller, the operation and use of the Assets, as conducted as of the Closing Date, have not and do not violate, misappropriate or infringe upon any rights, including any intellectual property rights, of any third party, except as set out in Schedule 6.8 of the Disclosure Schedules.

 

 

 

 

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6.9Financial Statements. The Company and the Seller hereby warrant that as of Closing the Seller will provide the Purchaser with true and complete copies of (i) the audited combined carve-out balance sheet of the Seller that relate to the Assets as of September 30, 2020 and related audited combined carve-out statements of comprehensive income, net parent investment, and cash flow for the year then ended, together with the notes thereto and the report there on of the independent registered public accounting firm (collectively, the “2020 Combined Carve-out Financial Statements”) as they relate to the Assets, and (ii) of the unaudited combined carve-out balance sheet of the Seller as it relates to the Assets (the “Latest Balance Sheet”) as of June 30, 2021, and the related unaudited combined carve-out statements of comprehensive income, net parent investment, and cash flows for the nine-month period then ended solely as they relate to the Assets (collectively the “Interim Combined Carve-out Financial Statements”, and together with the Audited Financial Statements, the “2020 Combined Carve-out Financial Statements”). Seller will provide the Purchaser with true and complete copies of (i) the audited combined carve-out balance sheet of the Seller that relate to the Assets as of September 30, 2021 and related audited combined carve-out statements of comprehensive income, net parent investment, and cash flow for the year then ended, together with the notes thereto and the report there on of the independent registered public accounting firm (collectively, the “2021 Combined Carve-out Financial Statements”) if required in any SEC filing. The form and content of the 2020 Combined Carve-out Financial Statements and the 2021 Combined Carve-out Financial Statements (collectively “the Combined Carve-out Financial Statements”) comply with the general financial statement requirements in SEC Regulation S-X, Rules 3-01 through 3-04 and fairly present in all material respects the financial condition and the results of operations, changes in net parent investment and cash flow of the acquired assets as of the respective dates of and for the periods referred to in the Combined Carve-out Financial Statements. The Combined Carve-out Financial Statements are directly derived from the books and records of the Seller, as they relate to the Assets during the respective periods. The Company and the Seller have maintained materially accurate books and records reflecting the assets and liabilities of the Assets and have utilized the same internal controls over financial reporting when completing the Combined Carve-out Financial Statements. Additionally, there has been no material change in any of the accounting (or tax accounting) policies, practices or procedures of the Company or the Seller, such that all information furnished in the Combined Carve-out Financial Statements accurately lists and fairly presents, in all material respects, the financial condition and operating results of the Assets.

 

6.10Information furnished. Any information which the Seller and the Company is furnishing herewith to the Purchaser pursuant to this Agreement, and any and all notices filed by the Seller and the Company with the relevant authorities, is complete and accurate in all material respects.

 

6.11Legal Disputes and Proceedings. Except as set out in Schedule 6.11 of the Disclosure Schedules, the Company and the Seller warrant that they have used and operated their business relating to the Assets and Assigned Contracts in the jurisdictions where the said use and operation was authorised and that any pending, threatened, existing or future issues, claims, disputes, proceedings, penalties, orders, and/or fines arising from any unlawful use or operation of the Assets and Assigned Contracts prior to the Execution Date shall be the sole responsibility of the Seller and the Seller shall assume any and all liability relating thereto. Additionally, except as set out in Schedule 6.11 of the Disclosure Schedules, the Company and the Seller warrant that, to their knowledge, there are no pending or threatened proceedings, claims, warrants, judgments, sanctions or orders, whether in writing or otherwise, against the Company and the Seller, or any of their subsidiary or related companies ("Affiliates"), or any of their respective involved parties including any officers, directors, shareholders, legal and judicial representatives, company secretaries, and/or employees in their capacities as such, in any manner relating to or effecting the Assets, Assigned Contracts and/or the transfer of Shares contemplated in this Agreement.

 

 

 

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6.12Taxes. The Company, and the Seller have complied in all material respects with all applicable laws and regulations relating to taxes, has paid all taxes, and has made all withholdings required to be paid or made relating to or effecting the sale of the Assets, and/or the transfer of Shares contemplated in this Agreement. The Company and the Seller have or will have timely filed (or caused to be filed) all tax Returns, forms, and declarations required to be filed by it that to the knowledge of the Seller are required to be filed on or prior to the date of this Agreement and all such tax returns, forms, and declarations, are true, complete and correct in all material respects relating to or effecting the sale of the Assets, and/or the transfer of Shares contemplated in this Agreement. Additionally, to the best of their knowledge, the Company and the Seller have or will have timely paid (or caused to be timely paid) all taxes (whether or not shown on any tax Return) that are due and payable on or prior to the date of this Agreement except taxes which have not yet accrued or otherwise become due and has duly made provisions for the payment of the applicable taxes relating to or effecting the Assets, and/or the transfer of Shares contemplated in this Agreement. Except as set out in Schedule 6.12(i) of the Disclosure Schedule, no audits, examinations, investigations, claims, or other proceedings are in progress or, to the knowledge of the Company and the Seller, pending or threatened with regard to any taxes or tax returns of the Company and/or the Seller. To the knowledge of the Company and the Seller, except as set out in Schedule 6.12(ii), no tax authority is asserting against the Company and/or the Seller, or threatening to assert against the Company and/or the Seller any deficiency or claim for reduction of tax credits, additional taxes, or interest thereon or penalties in connection therewith. The Company and Seller represent and warrant to its knowledge that all determinations of taxes due in any country or jurisdiction where the Assets are operated, and including but not limited to Germany, have been made in compliance with all applicable tax laws and neither Company nor Seller or any of them have received any notification of deficiency or need for increase of payments due.

 

6.13IT Systems and Data. Except as set out in Schedule 6.13 of the Disclosure Schedules, the Company and the Seller, solely as it relates to the Assets, warrant that, to the knowledge of the Company and the Seller, there has been no material security breach or other material compromise of any of the Seller’s, the Company’s or their Affiliates’ information technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of them), equipment or technology, that would reasonably have a material adverse effect on the Company, and all as it relates to and effect the Assets (hereinafter collectively referred to as “IT Systems and Data”) and the Company and/or the Seller have not been notified of, and have no knowledge of any event or condition that would reasonably be expected to result in, any material security breach or other material security compromise to the IT Systems and Data. The Company and the Seller are presently in material compliance with all applicable Data Protection Laws. The term "Data Protection Laws" shall mean the EU General Data Protection Regulation 2016/679 ("GDPR"), the Electronic Communications Directive 2002/58/EC (and respective local implementing laws), and any and/or all applicable domestic and foreign laws, rules, directives and regulations pertaining to data privacy, data security and/or the protection of Personal Information and the term “Personal Information” shall mean individually-identifiable information from or about an individual.

 

6.14Virtual Data Room. All Information provided in the virtual data room Project-Fuse (hereinafter the “Data Room”), which Data Room is provided and operated by iDeals Solutions group of companies (which group includes iDeals Solutions Group Limited a company registered in the United Kingdom with company registration number 08910705, Ideals Holding Limited (a company incorporated in Malta bearing company registration number C 87598) and iDeals Solutions Operations Limited a company incorporated in Malta bearing company registration number C87600 and their affiliates), (which information shall hereinafter be referred to as the “Data Room Information”) by the Seller to the Purchaser is, to the knowledge of the Seller, accurate in all material respects as at its respective date as stated therein, or, if any such Data Room Information is undated, as of the date of its delivery to the Purchaser’s Data Room Information website. Additionally, all information provided to the Purchaser in relation to the Purchaser’s due diligence requests, including information not provided in the Data Room, is, to the knowledge of the Seller, accurate and complete in all material respects as at its respective date as stated therein. There has been no change to the Data Room Information or any other information provided to the Purchaser, that would reasonably have a material adverse effect on the Company, since the date posted to the Data Room website or provided to the Purchaser, as the case may be that is material, except as has been disclosed by the Seller and/or the Company, or in a more recently posted document in the Data Room or other information provided to the Purchaser.

 

 

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6.15The Company and Seller further represent to the best of their knowledge that:

 

a.there are no arrangements or undertakings under which the Company (a) is borrowing any money, (b) is lending or has committed to lend any money, or (c) is a guarantor with respect to the obligations of any person;

 

b.as it relates to the Assets, no other document or information exists, in relation to the Company, the Seller, the Shares, the Assets which has not been Disclosed to the Purchaser, all to the extent that the failure to disclose would reasonably expect to have a material adverse effect on the Company and the contents of which can in any way contradict the documents or information disclosed.

 

7.ADDITIONAL COVENANTS – SERVICES PROVIDED DURING TRANSITIONAL PERIOD, BRAND OPERATIONS AND LICENSING

 

7.1On or immediately prior to Closing, the Seller, the Purchaser, the Company or any affiliated entity required to facilitate the purposes hereof shall hereby bind themselves to enter into a Transition Services Agreement whereby the Seller, or any of its Affiliates shall provide continuation of services related to the Assets for all enterprise agreements, including content and data provider agreements, in force at the date of this Agreement, between the Seller and any third-party business serviced by the Seller, provided however, such services shall be contingent upon the consummation of the Closing contemplated hereunder. The Transition Services Agreement that shall be entered into by and between the Seller and the Company or any affiliated entity required to facilitate the purposes hereof and shall contain standard business provisions and shall materially include the terms and conditions contemplated in the above-mentioned Term Sheet and Letter of Intent.

 

7.2Upon Closing, the Company, or any affiliated entity required to facilitate the purposes hereof may, at its sole election, retain and re-hire all the relevant marketing personnel employed by the Seller and/or the Company as of the Closing Date for which the Purchaser determines in its sole discretion is required to support the Transition Services Agreement as well as any and all related resources as solely determined by the Purchaser. Should the Purchaser or any affiliated entity required to facilitate the purposes hereof determine to re-hire such Seller's employees, it shall do so, at least according to their previously existing terms and conditions with the Seller. The Purchaser (or affiliate of Purchaser as hiring entity) will abide by any applicable laws and regulations relating to the retainment of such employees. Neither the Purchaser nor the Company nor any affiliate of Purchaser as hiring entity) shall maintain any liability in connection with any Seller employees and/or consultants which are not retained or re-hired by the Purchaser (or its affiliate hiring entity), and the Seller shall indemnify and hold the Purchaser, Company and any affiliated hiring entity harmless from same. As of the date of this Agreement, the Seller and/or the Company shall maintain no liability in connection with any Seller and/or the Company employees and/or consultants which are retained or re-hired by the Purchaser (or its affiliate hiring entity) and the Purchaser (or its affiliate hiring entity) shall indemnify and hold the Seller harmless from same.

 

7.3On or immediately prior to Closing, the Seller and the Company shall enter into an Operator Services Agreement and the Migration Plan (as exhibited in Schedule G to this Agreement) as approved by the MGA.

 

7.4The Transition Services Agreement and/or the Operator Services Agreement and/or the Migration Plan that shall be entered into by and between the Seller, the Purchaser and/or the Company or any of their affiliates as applicable, shall as a minimum include:

 

a.Support of Seller, at the expense of the Purchaser as mutually agreed by the Parties, in furtherance of any business to consumer licence applications obtained or negotiated by the Purchaser, and/or the Company as then fully owned by the Purchaser and/or any of their affiliates as applicable and as further stated in the said agreements respectively

 

b.A commitment by the Seller and/or any of their affiliates as applicable, at the expense of the Purchaser, to share office space as further specified in the said agreement respectively; and

 

c.A commitment on the part of the Seller and/or any of their affiliates as applicable, to form a dedicated development team to execute and operate on any needed priorities of the Purchaser, and/or the Company as then fully owned by the Purchaser, and/or their affiliates as applicable and as further specified in the said agreements respectively, and all at the expense of the Purchaser.

 

 

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7.5As of the Closing Date, within the terms and conditions of the Operator Services Agreement, the Seller shall commit for a period of four (4) years to operate on behalf of the Company, in addition to the Assets, two (2) additional ‘Purchaser-branded websites’ (Esportsbook.com and other URL brands to be determined solely by the Purchaser) pursuant to the Seller's operating license in any and all territories in which the Seller is licensed and operational as of the Closing Date as well as any additional territories in which the Seller may become licensed following the Closing Date and/or during the term of the Operator Services Agreement, subject to the commercial terms set-out therein and in the Term Sheet and Letter of Intent, specifically under section 3.1.

 

7.6Within the terms and conditions of the Transition Services Agreement, the Seller and/or their Affiliates as may be applicable, also hereby commit to support with utmost good faith in negotiating and obtaining any business to business, and/or technology licences and in expanding its operations; in any and all territories in which the Purchaser and/or the Company or its affiliates are licensed and operational as of the Closing Date of this Agreement as well as any additional territories in which the Purchaser and/or the Company or their affiliates may become licensed and operational following the Closing Date, subject to good faith commercial negotiations and mutual written agreement of the Seller and Purchaser.

 

8.EXCLUSIVITY

 

8.1During the period commencing on the date of execution of the Term Sheet and Letter of Intent and terminating on the Closing Date such period shall be referred to as the “Exclusivity Period”), the Seller, the Company and any of their Affiliates, shall not, and shall cause their respective affiliates, financial advisors, consultants, accountants, attorneys, and other agents and representatives (the “Representatives”) not to (a) solicit or initiate the submission of any Acquisition Proposal (as defined hereunder); (b) initiate or participate in any discussions or negotiations regarding, or supply information in an effort to solicit, initiate or encourage, any Acquisition Proposal; or (c) enter into any agreement with respect to an Acquisition Proposal.

 

8.2For the purposes of this clause the term “Acquisition Proposal” shall mean, except with regard to any recapitalization, merger, business combination, consolidation with or acquisition of or by the Seller, of all or substantially all of the Seller's shares or assets, any proposal, inquiry or offer from any person other than the Purchaser or any of its affiliates (i) to acquire, directly or indirectly, any portion of the Assets and/or Assigned Contracts or (ii) with respect to any recapitalisation, merger, business, combination, consolidation with or acquisition of or by the Company and/or Seller, related to the Assets and/or Assigned Contracts. The Seller, the Company and/or any of their shareholders, involved parties, Affiliates will immediately cease and cause to be terminated any existing activities, discussions, or negotiations with any parties other than the Purchaser and its Representatives with respect to any Acquisition Proposal.

 

8.3Finally, during the Exclusivity Period (or its extension as applicable), neither the Seller nor the Purchaser, and their affiliates not, directly or indirectly: (i) hold or participate in discussions or enter into any transaction for the sale, transfer, licensing (not in the ordinary course of business) or other disposition of the Assets and/or Assigned Contracts that a result of which will be to frustrate the parties’ ability to consummate the transfer of the shares and consequently the Assets and/or Assigned Contracts as anticipated herein; or (ii) disclose any information related to the transfer/assignment of the Shares, Assets and/or Assigned Contracts not customarily disclosed to any person concerning the Seller and/or the Company or their business or afford to any person or entity access to the properties, books, records of the Company and/or the Seller or any Affiliate, other than in the ordinary course of business.

  

  9. INDEMNIFICATION; LIMITATION OF LIABILITY

 

9.1In the event that any representation or warranty given by the Company and/or the Seller in this Agreement is shown to be incorrect the Seller agrees to indemnify the Purchaser against and hold the Purchaser harmless from any and all losses, damages, liabilities, out-of-pocket expenses, taxes, costs, fees and/or fines incurred or suffered by the Purchaser or any of its affiliates relating to or arising out of or in connection with a claim brought by a third party during the Survival Period (each, a "Claim"), in relation to any breach of any representation or warranty set out in clauses 6.7 and 6.12 ("Losses").

 

 

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9.2De Minimis Threshold and Indemnity Basket - Any of the parties to this Agreement entitled to indemnification shall not have the right to:

 

a.recover any Losses relating to any individual Claim or series of related Claims based on a similar set of operative facts unless such claim or series of related claims is greater than €100,000 (defined as the “De Minimis Amount”), in which case the party seeking to recover any Losses shall be entitled to recover for all such Losses in connection with such claim or series of related claims (including the De Minimis Amount); and

 

b.be indemnified pursuant to this clause unless and until the party seeking indemnification, shall have incurred on a cumulative basis aggregate Losses in an amount exceeding €1,000,000 (the “Indemnity Threshold”), in which case the said party shall be entitled to seek indemnification for all such Losses, including the initial €100,000, but subject to the De Minimis Amount limitations; provided, however, that the Indemnity Threshold shall not apply to Losses to the extent arising from, in connection with, or as a result of:

 

i.any breach of Clause 1.5, Clause 2.3, and Clause 4 here above;
ii.any fraudulent breach by either party of any representation or warranty; and
iii.any fraudulent or knowing and intentional breach by either party of any covenant contained in this Agreement; provided further, however, that Losses in connection with any individual claim or series of related claims based on a similar set of operative facts that do not exceed the De Minimis Amount shall be disregarded for the purposes of determining whether the Indemnity Threshold is exceeded.

 

9.3Cap Amount. Other than for any Losses resulting directly from any fraudulent or intentionally wrongful conduct or action of a party hereto, the sum of all Losses pursuant to which indemnification is payable by, or overall liability imposed on, any of the parties pursuant to this Agreement, shall not exceed, in the aggregate, the amount of: (i) €12,000,000 with regard to breach of the Representations and Warranties indicated in Sections 5 and 6 (except for Sections 5.2, 6.2, 6.6, 6.7, and 6.12), and (ii) €60,000,000 with regard to breach of the Representations and Warranties indicated in clauses 5.2, 6.2, 6.6, 6.7, and 6.12 (the “Cap Amount”).

 

9.4Recovery of up to the Cap Amount shall be the sole and exclusive remedy for all losses incurred or suffered as a result of breach of any representation, warranty, covenant or agreement of the Seller contained in this Agreement or an Ancillary Agreement.

 

9.5The Seller shall not be liable for a Claim unless notice in writing summarizing the nature of the Claim and the amount claimed, has been given by or on behalf of the Purchaser to the Seller on or before the expiration of the Survival Period.

 

9.6As soon as practical after receipt by the Purchaser of notice of the commencement or threatened commencement of any Claim which the Purchaser may seek indemnification from the Seller, the Purchaser shall give written notice of sufficient detail to the Seller of the assertion of such Claim, and the following shall apply:

 

a.If any Claim is brought against the Purchaser, the Seller shall be entitled to assume the defence of such Claim with counsel reasonably satisfactory to the Purchaser.

 

b.Should the Seller assume the defence of a Claim, the Purchaser shall have the right to participate in the defence thereof, including attending meetings, conferences, teleconferences, settlement negotiations and other related events (and to employ counsel at its own expense in connection therewith). If the Seller promptly assumes and diligently conducts the defence of any such Claim, the Purchaser shall reasonably cooperate with the Seller in the defence of such Claim, provided that no compromise or settlement of such claim may be effected by the Seller without the Purchaser's consent, unless (a) there is no finding or admission of any violation of any legal requirements or any violation of the rights of any person or (b) the sole relief provided is monetary damages that are paid in full by the Seller.

 

c.Without the Seller's prior written consent, which shall not be unreasonably withheld or delayed, the Purchaser may not settle or compromise any Claim or consent to the entry of any judgment for which the Purchaser is seeking indemnification.

 

 

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d.In the event that either the Seller or the Purchaser is required, pursuant to any disclosure requirements under applicable stock exchange rules or other applicable regulations or otherwise required by applicable law, to make any public announcement or press release in relation to a Claim and that public announcement or press release names another Party, or otherwise includes information from which another Party can be identified, the Party that is required to make such public announcement or press release shall not be permitted to do so without the prior written consent of the Purchaser (where the public announcement or press release is to be issued by the Seller or any of its affiliates) or the Seller (where the public announcement or press release is to be issued by the Purchaser or any of its affiliates), such consent not to be unreasonably withheld or delayed, unless such name or other identifiable information is deleted.

 

9.7Any Claim notified in accordance with clause 9.5 shall (if not previously satisfied, settled or withdrawn) be deemed to have been withdrawn three (3) months after the date on which notice of the relevant Claim was given (and no new Claim may be made in respect of the same facts) unless on or before that date, legal proceedings have been issued, filed or otherwise served on the Seller in respect of the relevant Claim.

 

9.8The Seller shall have no liability in respect of a Claim if and to the extent that such Claim is based upon a contingent liability unless and until such liability becomes an actual liability, and provided this occurs before the expiry of the Survival Period.

 

9.9The Seller shall not be liable for a Claim to the extent that the Claim relates to (i) matters Disclosed, (ii) matters specifically and fully provided for in the Disclosure Schedules and/or (iii) events or circumstances of which the Purchaser and/or any of its Affiliates or any of their respective agents or advisers had actual knowledge prior to or at the Closing.

 

9.10The Seller shall not be liable in respect of a Claim where the Purchaser is entitled to make a claim under a policy of insurance in respect of any matter or circumstance giving rise to the Claim unless the Purchaser first makes a claim against its insurers pursuant to the relevant policy. The Seller's liability in respect of any Claim shall be reduced by the amount recovered under any policy of insurance, or extinguished if the amount so recovered exceeds the amount of the Claim.

 

9.11If the Purchaser is at any time entitled to recover or otherwise claim reimbursement from a third party in respect of any matter or circumstance giving rise to a Claim the following provisions shall apply:

 

a.the Purchaser shall take all necessary steps to enforce such recovery or seek such reimbursement from the relevant third party; and shall do so before making a Claim against the Seller;

 

b.the liability of the Seller in respect of the related Claim shall be reduced by the amount (if any) actually recovered from the relevant third party, or extinguished if the amount recovered exceeds the amount of the relevant Claim; and

 

c.if the Seller makes a payment to the Purchaser in respect of a Claim and the Purchaser subsequently recovers from a third party a sum which is related to that Claim, the Purchaser shall promptly repay to the Seller the lower of (i) the amount recovered from such third party and (ii) the amount paid to the Purchaser by the Seller in respect of the relevant Claim.

 

9.12The Seller shall not be liable in respect of any Claim if and to the extent that it arises, or its value is increased, as a result of a change in any law, legislation, rule or regulation (including any new law, legislation, rule or regulation) that comes into force or otherwise takes effect after the Closing Date of this Agreement.

 

9.13The Purchaser shall not be entitled to recover damages, or obtain payment, reimbursement, restitution or indemnity more than once in respect of the same loss, shortfall, damage, deficiency, breach or other event or circumstance related to any Claim.

 

9.14The Purchaser agrees that, subsequent to the Execution Date, its ability to terminate this Agreement shall not be a remedy due to breach hereof unless Seller and/or Company is rendered incapable of performing at any time or has failed to perform at Closing Date its delivery to Purchaser of: (a) Key Contracts to be mutually identified by the Parties under Section 6.5, or (b) all or substantially all of the Assets (as defined in Schedule A Section II), taken as a whole. Seller and Company, and each of them, agrees that, subsequent to the Execution Date, its ability to terminate this Agreement shall not be a remedy due to breach hereof unless Purchaser or EBET is rendered incapable of performing at any time or has failed to perform at Closing Date its delivery: (a) under any of Sections 3, or (b) of any those deliverables referenced under Schedule C Section II.

 

 

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9.15The Purchaser shall take all reasonable steps to avoid or mitigate any loss or liability that may give rise to a Claim.

 

9.16Notwithstanding anything to the contrary in this Agreement, the Seller shall be liable solely for direct damages.

 

9.17EBET hereby absolutely, unconditionally and irrevocably agrees to indemnify and keep indemnified each of the Sellers (including any of their shareholders, directors or employees) in full and on written demand against all and any losses, damages, liabilities, out-of-pocket expenses, taxes, costs, fees and/or fines incurred or suffered by them, arising out of or in connection with any failure by the Purchaser to discharge or perform any of its or its Affiliate's obligations pursuant to this Agreement or an Ancillary Agreement.

 

9.18Effect of Insurance and Other Sources of Reimbursement. The amount of any claim for which indemnification shall be reduced by (i) the insurance proceeds received by the Indemnified Party with respect to any such claim net of any fees, costs and expenses or increased premiums incurred by such Indemnified Party in collecting such amount and (ii) any other amount recovered from third parties (as a result of indemnification, contribution, guarantee or otherwise) by the Indemnified Party (or its affiliates) with respect to any claim. If any Indemnified Party shall have received any payment with respect to any claim and has or shall subsequently have received insurance proceeds or other amounts with respect to such claim, then such Indemnified Party shall promptly pay over to the Indemnifying Party the amount so recovered (after deducting the amount of the expenses reasonably incurred by it in procuring such recovery and any increase in premiums resulting solely from such recovery), but not in excess of the amount previously so paid by the Indemnifying Party.

 

9.19Procedures. A Person seeking indemnification hereunder (an “Indemnified Party”) shall give a written notice (a “Notice of Claim”) specifying the facts constituting the basis for its claim and a good faith estimate of the amount of the claim (to the extent reasonably ascertainable), to the Person(s) from whom indemnification is sought hereunder (an “Indemnifying Party”); provided, however, that the right of a Person to be indemnified hereunder shall not be adversely affected by a failure to give such notice unless, and then only to the extent that, an Indemnifying Party is materially prejudiced thereby.

 

9.20If an Indemnified Party is seeking indemnification because of a claim asserted by any claimant other than an Indemnified Party (a “Third Party Claim”), the Indemnifying Party shall have the right, upon written notice to the Indemnified Party, to assume and conduct the defense of the Third Party Claim with counsel reasonably acceptable to the Indemnified Party; provided that (i) the defense of such Third Party Claim by the Indemnifying Party will not have a material adverse effect on the Indemnified Party or any business thereof; (ii) the Indemnifying Party has sufficient financial resources to satisfy the amount of any adverse monetary judgment that is reasonably likely to result, and (iii) no conflict of interest arises that, under applicable principles of legal ethics, would prohibit a single counsel from representing both the Indemnifying Party and the Indemnified Party in connection with the defense of such Third Party Claim. The Indemnified Party may thereafter participate in (but not control) the defense of any such Third Party Claim with its own counsel at its own expense; provided, however, that if (A) any of the conditions described in clauses (i) - (ii) above fails to occur or ceases to be satisfied, or (B) the Indemnifying Party fails to take reasonable steps necessary to defend such Third Party Claim, then the Indemnified Party may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or expenses paid or incurred in connection with such defense. If the Indemnifying Party elects not to defend the Indemnified Party with respect to such Third Party Claim, or fails to notify the Indemnified Party of such election within fifteen (15) days from the date the Indemnified Party delivers its Notice of Claim to the Indemnifying Party, the Indemnified Party shall have the right, at its option, to assume and control the defense of the matter at the expense of the Indemnifying Party, in such manner as it may deem reasonably appropriate.

 

9.21Either Party assuming the defense of the Third Party Claim will keep the other Party reasonably informed of the progress of any such defense, compromise or settlement, provided, however, that the Party that has assumed the defense of any Third Party Claim as provided in this Agreement, may not, without the prior written consent of the other Party, which consent will not be unreasonably withheld, consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim that (1) does not include the giving by the claimant or the plaintiff of a complete release from all Liability in respect of such Third Party Claim, (2) grants any injunctive or equitable relief or (3) may reasonably be expected to have a material adverse effect on either Party or any business thereof. The Indemnified Party has the right to settle any Third Party Claim at the Indemnifying Party’s sole cost and expense, the defense of which has not been assumed by the Indemnifying Party or which is otherwise being defended by the Indemnified Party in accordance with the terms of this clause 9, provided that the Indemnified Party obtains the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld, delayed or conditioned.

 

 

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9.22Cooperation. Each of the Parties shall, and shall cause their respective affiliates (and their respective officers, directors, employees, consultants and agents) to, as may reasonably be related to any claim or action for which an Indemnified Party is seeking indemnification hereunder, make available to the other(s) all relevant information in his or its possession relating to any such claim as may be reasonably requested, provide access to the counsel, accountants and other representatives of each Party during normal business hours to all relevant properties, personnel, books, tax records, contracts, commitments and all other relevant business records of such other Party and furnish to such other Party copies of all such documents as may reasonably be requested (certified, if requested), and otherwise reasonably cooperate in the defense thereof, subject always to applicable laws, including the rules and regulations of any applicable regulator including but not limited to the Securities and Exchange Commission.

 

10.CONFIDENTIALITY

 

10.1Each party hereto shall keep confidential any non-public, proprietary information relating to the other party and its affiliates that was disclosed in the due diligence process or otherwise in connection with this Agreement, and shall not disclose it to others without the prior written consent of the other party, except to its professional advisers, directors, employees, or consultants who need to know the same in relation to the subject matter of this Agreement. The parties shall use such information solely for the purposes of evaluating the subject matter of this Agreement and any subsequent discussions between the parties in relation thereto. Subject to disclosure obligations under applicable laws and regulations, including stock exchange regulations (whereupon the party bound to make any disclosure shall give the other party, to the extent possible, prior notice of such disclosure and coordinate with such other party, to the extent possible, prior notice of such disclosure and coordinate such disclosure, to the extent possible, with such party), this Agreement and the parties’ interest in the transfer of Shares and subject-matter of this Agreement shall be deemed confidential information of all parties and shall not be disclosed in the absence of prior written consent of all parties.

 

10.2The parties understand and acknowledge that the other party and/or its Affiliates have been engaged in technology, gaming, Internet, and mobile business for many years and have extensive experience, expertise, and knowledge of such industries. The parties also understand and acknowledge that the other party and/or its Affiliates engaged in, are invest and may further invest in other companies operating businesses similar to those of the other party or in the same field as the other party at any time. The parties agree that all such activities shall not impose on the other party any liability hereunder, provided that the receiving party does not use for such purposes any confidential information of the disclosing party in violation of the provisions hereof.

 

10.3It is further understood and agreed that the parties may issue a press release (joint or otherwise) announcing the execution of the Agreement and/or the transaction and agree that each party may desire or be required to issue subsequent press releases relating to this Agreement or activities thereunder. The parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof, provided that a party may not unreasonably withhold consent to such releases, and that either party may issue such press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure. Each party agrees to review each press release reasonably within twenty-four hours and no greater than forty-eight hours , unless a shorter period is required by any applicable laws, after receiving the press release from the other party. In addition, following the initial press release announcing this Agreement and/or the transaction, either party shall be free to disclose, without the other party’s prior written consent, the existence of this Agreement, the identity of the other party and those terms of this Agreement that have already been publicly disclosed in accordance herewith. Additionally, both parties shall have the right to disclose and file any and all public filings or regulatory filings in any applicable jurisdiction, as may be necessary in order to abide by any laws and regulations including but not limited to securities laws.

  

  11.  COSTS

 

11.1Each party shall bear its own fees, costs and expenses in connection with this Agreement and any and all actions resulting herefrom including but not limited to the preparation, execution and carrying into effect of this Agreement and of all other documents referred to in it.

 

11.2Any capital gains taxes or other tax consequence, if any, resulting herefrom or due by the Seller in connection with this Agreement in any applicable country or jurisdiction worldwide shall be borne by solely by the Seller

 

 

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11.3Any taxes due by the Purchaser in Malta or any other applicable jurisdiction in respect of this transaction shall be borne by the Purchaser in terms of Maltese law or any other applicable jurisdiction, respectively.

 

11.4Any expenses or payment liability incurred by any party or its subsidiaries, including change-of-control payments and bonuses, brokerage fees, and any fees paid to third parties for consents, waivers, and the like, will be borne by each relevant party as each such relevant party may have lawful commitments to same.

 

  12.  MISCELLANEOUS

 

12.1This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersedes all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the subject matter hereof including that certain Term Sheet as amended.

 

12.2If any term or provision in this Agreement (or any part of such a term or provision) shall be held by any Court or Tribunal of competent jurisdiction to be unenforceable, under any enactment or rule of law, such term or provision or part shall to that extent be deemed severable and not to form part of the Agreement, but the validity and enforceability of the remainder of the Agreement shall not be affected.

 

12.3This Agreement may be amended only by a written agreement executed by each of the parties hereto. No amendment of or waiver of, or modification of any obligation under this Agreement will be enforceable unless set forth in writing signed by the party against which enforcement is sought. Any amendment effected in accordance with this section will be binding upon all parties hereto and each of their respective successors and assigns.

 

12.4The headings contained herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of any of the terms of this Agreement for the exchange of shares contemplated herein.

 

12.5This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall constitute an original of this Agreement, but all the counterparts shall together constitute the same Agreement. No counterpart shall be effective until each party has executed at least one counterpart.

 

  13.  GOVERNING LAW AND JURISDICTION

 

13.1The parties agree that the validity, interpretation, and enforcement of this Agreement, shall be governed exclusively by the laws applicable in the Republic of Malta.

 

13.2In the event of any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination, interpretation, or validity thereof, the parties to this Agreement shall make every reasonable effort to resolve the dispute through good faith negotiation, and if the dispute cannot be resolved through good faith negotiation it shall be decided exclusively by arbitration in Malta in accordance with Part V (International Arbitration) of the Malta Arbitration Act and the Arbitration Rules of the Malta Arbitration Centre as at present in force. The appointing authority, if the Parties do not agree, and administrator shall be the Malta Arbitration Centre. The number of arbitrators shall be one as agreed by the Parties, and if they fail to agree within ten (10) days, then the arbitrator shall be appointed by the Malta Arbitration Centre. The place of arbitration shall be Malta. The language to be used in the arbitral proceedings shall be English. All information relating to the Arbitration proceedings shall be kept confidential between the parties and their representatives.

 

 

 

 17 

 

 

14.NOTICES

 

14.1All notices to be given pursuant to the provisions of this Agreement shall be sent by hand delivery, registered mail, or reputable overnight courier service to the parties using the contact details indicated below:

 

For the Company and the Seller:

 

Name: Isaac (Tsachi) Maimon

Designation: CEO

Address: 135, High Street, Sliema, Malta

 

Mobile Number: [***]

 

For the Company:

 

Name: David Magri

Designation: Director

Address: 135, High Street, Sliema, Malta

 

Mobile Number: [***]

 

For the Purchaser:

 

Name: Aaron Nicholas Speach

Designation: Director

Address: Level 3 (Suite no. 2873), Tower Business Centre, Tower Street, Swatar, Birkirkara BKR4013, Malta

 

Via Fax at [***]

 

For EBET:

 

Name: Aaron Nicholas Speach

Designation: Director

Address: 197 E. California Ave., Ste. 302, Las Vegas, Nevada 89104, United States of America

  

Via Fax at [***]

 

14.2Service of any notices shall be deemed to be completed upon delivery to the appropriate party at its address stated above under clause 14.1, or to a new address if the other has been notified in writing of any change thereto.

 

14.3Any other urgent communication shall be communicated between the parties using the above contact details, unless otherwise agreed upon between the parties.

 

 

 18 

 

 

 

IN WITNESS WHEREOF the parties hereto have executed this Share Purchase Agreement on the date set forth hereinabove.

 

 

/s/ Isaac Maimon                                  /s/ Isaac Maimon                          
Isaac Maimon   Isaac Maimon  
f/obo Aspire Global International Limited    f/obo Aspire Global International Limited  
Seller 1     Seller 1  
       
       
/s/ Isaac Maimon                                  /s/ Isaac Maimon                          
Isaac Maimon   Isaac Maimon  
f/obo AG Communications Limited   f/obo AG Communications Limited  
Seller 2   Seller 2  

 

 

/s/ Isaac Maimon                               

Isaac Maimon

f/obo Aspire Global 7 Limited

Seller 3

 

 

/s/ Isaac Maimon                              

Isaac Maimon

f/obo Aspire Global plc

Seller 4

 

 

/s/ Aaron Nicholas Speach            

Aaron Nicholas Speach

f/obo ESPORTS PRODUCT TECHNOLOGIES MALTA LTD.

Purchaser

 

 

/s/ Aaron Nicholas Speach            

Aaron Nicholas Speach

f/obo ESPORTS TECHNOLOGIES, INC.

 

 

/s/ Isaac Maimon                             

Isaac Maimon

f/obo Karamba Limited

Company

 

 

 19 

 

Exhibit 3.1

 

ESPORTS TECHNOLOGIES, INC.

 

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES A CONVERTIBLE PREFERRED STOCK

 

PURSUANT TO NRS 78.1955

 

The undersigned, Aaron Speach and Jim Purcell, do hereby certify that:

 

1. They are the Chief Executive Officer and Secretary, respectively, of Esports Technologies, Inc., a Nevada corporation (the “Corporation”).

 

2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, par value $0.001 per share, none of which have been issued.

 

3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

 

WHEREAS, the articles of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;

 

WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and

 

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement, up to 37,000 shares of the preferred stock which the Corporation has the authority to issue, as follows:

 

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:

 

TERMS OF PREFERRED STOCK

 

Section 1.  Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

 

Adjustment Date” shall have the meaning set forth in Section 7(f).

 

Alternate Consideration” shall have the meaning set forth in Section 7(e).

 

Attribution Parties” shall have the meaning set forth in Section 6(d).

 

 

 

 1 

 

 

Base Conversion Price” shall have the meaning set forth in Section 7(b).

 

Beneficial Ownership Limitation” shall have the meaning set forth in Section 6(d).

 

Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

California Courts” shall have the meaning set forth in Section 8(d).

 

Closing” means the closing of the purchase and sale of the Securities pursuant to the Purchase Agreement.

 

Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Purchase Price and (ii) the Corporation’s obligations to deliver the Securities have been satisfied or waived.

 

Commission” means the United States Securities and Exchange Commission.

 

Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.

 

Common Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

Conversion Amount” means the sum of the Stated Value at issue.

 

Conversion Date” shall have the meaning set forth in Section 6(a).

 

Conversion Price” shall have the meaning set forth in Section 6(b).

 

Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

 

Dilutive Issuance” shall have the meaning set forth in Section 7(b).

 

Dilutive Issuance Notice” shall have the meaning set forth in Section 7(b).

 

Distribution” shall have the meaning set forth in Section 7(d).

 

Dividend Rate” means 14.00% per annum; provided that on the 18-month anniversary of the Original Issue Date, if the Shareholder Approval has been received, the rate shall decrease to 0%.

 

Effective Date” means the earliest of the date that (a) the Registration Statement has been declared effective by the Commission, (b) all of the Conversion Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Corporation to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, or (c) following the one year anniversary of the Closing Date provided that a holder of Underlying Shares is not an Affiliate of the Corporation.

 

 

 

 2 

 

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

Exempt Issuance” means the issuance of (a) Common Stock or Common Stock Equivalents to employees, officers or directors of the Corporation pursuant to any equity plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Corporation; (b) securities upon the exercise or exchange of or conversion of any securities issued in the Purchase Agreement and/or other securities exercisable or exchangeable for or convertible into Common Stock issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Corporation at such time and shall provide to the Corporation additional benefits in addition to the investment of funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) securities issued in connection with any financings to be completed to fund the Acquisition (as defined in the Purchase Agreement).

 

Fundamental Transaction” shall have the meaning set forth in Section 7(e).

 

GAAP” means United States generally accepted accounting principles.

 

Holder” shall have the meaning given such term in Section 2.

 

Liquidation” shall have the meaning set forth in Section 5.

 

Notice of Conversion” shall have the meaning set forth in Section 6(a).

 

Original Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock.

 

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

Preferred Stock” shall have the meaning set forth in Section 2.

 

Purchase Agreement” means the Subscription Agreement, dated as October 1, 2021, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

Purchase Rights” shall have the meaning set forth in Section 7(c).

 

Registration Statement” means a registration statement meeting the requirements set forth in the Purchase Agreement and covering the resale of the Underlying Shares by each Holder as provided for in the Purchase Agreement.

 

Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

 

 

 3 

 

 

Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

Securities” means the Preferred Stock, the Warrants, the Warrant Shares and the Underlying Shares.

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Share Delivery Date” shall have the meaning set forth in Section 6(c).

 

Shareholder Approval” means (i) the approval by the shareholders of the Corporation, as required pursuant to applicable rules and regulations of NASDAQ, of the issuance of shares of Common Stock issuable upon conversion of the Preferred Stock; and (ii) such other matters as may be required to be approved by the shareholders pursuant to the rules and regulations of NASDAQ or the SEC in order to allow for the conversion of the Preferred Stock into Common Stock pursuant to the terms hereof.

 

Stated Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.

 

Subscription Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock purchased pursuant to the Purchase Agreement as specified on the signature page of the Purchase Agreement and next to the heading “Investor Commitment Amount,” in United States dollars and in immediately available funds.

 

Subsidiary” means any subsidiary of the Corporation and shall, where applicable, also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.

 

Successor Entity” shall have the meaning set forth in Section 7(e).

 

Trading Day” means a day on which the principal Trading Market is open for business.

 

Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQB or the OTCQX (or any successors to any of the foregoing).

 

Transaction Documents” means this Certificate of Designation, the Purchase Agreement, the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated pursuant to the Purchase Agreement.

 

Transfer Agent” means Continental Stock Transfer & Trust Company and any successor transfer agent of the Corporation.

 

Underlying Shares” means the shares of Common Stock issued and issuable upon conversion of the Preferred Stock and upon exercise of the Warrants.

 

Warrants” means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with the Purchase Agreement, in the form of Exhibit A attached to the Purchase Agreement.

 

Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

 

 

 

 4 

 

 

Section 2.  Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series A Convertible Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 35,000 (which shall not be subject to increase without the written consent of the holders of a majority of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)). Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1,000, subject to increase set forth in Section 3 below (the “Stated Value”).

  

Section 3.  Dividends.

 

(a) Participating Dividends. Except for stock dividends or distributions for which adjustments are to be made pursuant to Section 7, Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of Preferred Stock).

 

(b) Dividends in Cash or in Kind. In addition to participation in cash dividends on, or distributions to, Common Stock as set forth in Section 3(a), Holders shall be entitled to receive, and the Corporation shall pay, cumulative dividends per share (as a percentage of the Stated Value per share) at the Dividend Rate, payable quarterly in arrears on January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date (each such date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Trading Day, the applicable payment, if paid in cash, shall be due on the next succeeding Business Day, and no interest or dividends on such payment shall accrue or accumulate in respect of such delay), in (i) cash out of funds legally available therefor (to the extent permitted by the Corporation’s existing or future financing agreements), (ii) by an increase in the Stated Value of the Preferred Stock, or (iii) any combination of clause (i) and (ii), in each case, in an amount equal to the accrued but unpaid dividends due to a Holder in respect of each share of Preferred Stock on the Dividend Payment Date. For the avoidance of doubt, any dividends paid by an increase in the Stated Value pursuant to this Section 3(b) shall be deemed to have been paid in full for all purposes. The default method of payment shall be an increase in the Stated Value unless, at least two Business Days prior to a Dividend Payment Date, the Corporation provides written notice to the Holders of its election to pay in cash and such cash payment is actually and timely made. Dividends shall be paid pro rata for any partial quarter.

 

(c) Dividend Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, shall accrue daily commencing on the Original Issue Date and shall be deemed to accrue from such date whether or not declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends.

 

Section 4.  Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (c) increase the number of authorized shares of Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

 

Section 5.  Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation available to shareholders, an amount equal to the greater of: (i) the Stated Value for each share of Preferred Stock then held by Holders, or (ii) the amount the Holders would have received had such Holders fully converted the Preferred Stock (disregarding for such purpose any conversion limitations hereunder) to Common Stock, in each case, before any distribution or payment shall be made to the holders of the Common Stock. If the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed, pari passu among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The Corporation shall mail written notice of any such Liquidation, not less than 30 days prior to the payment date stated therein, to each Holder.

 

 

 

 5 

 

 

Section 6.  Conversion.

 

a) Conversions at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the date of Shareholder Approval at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by email such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue.

 

b) Conversion Price. The conversion price for the Preferred Stock shall equal $28.00, subject to adjustment herein (the “Conversion Price”).

 

c)       Mechanics of Conversion

 

i. Delivery of Conversion Shares Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) Conversion Shares which, on or after the Effective Date, shall be free of restrictive legends and trading restrictions representing the number of Conversion Shares being acquired upon the conversion of the Preferred Stock, and (B) a bank check in the amount of accrued and unpaid dividends, if any. On or after the Effective Date, the Corporation shall use its best efforts to deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions.

 

ii. Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Notice of Conversion.

 

iii. Obligation Absolute. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder.

 

iv. Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Registration Statement (subject to such Holder’s compliance with its obligations under the Purchase Agreement).

 

 

 

 6 

 

 

v. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share. Notwithstanding anything to the contrary contained herein, but consistent with the provisions of this subsection with respect to fractional Conversion Shares, nothing shall prevent any Holder from converting fractional shares of Preferred Stock.

 

vi. Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

 

d) Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the Warrants) beneficially owned by such Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates and Attribution Parties) and of how many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates and Attribution Parties) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request (which may be via email) of a Holder, the Corporation shall within one Trading Day confirm orally and in writing (which may be via email) to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any shares of Preferred Stock, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder. A Holder, upon notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.

  

 

 

 7 

 

 

Section 7.  Certain Adjustments.

 

a) Stock Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Subsequent Equity Sales. If, at any time while this Preferred Stock is outstanding, the Corporation or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance. The Corporation shall notify the Holders in writing (by facsimile or e-mail), promptly following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

 

c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

 

 8 

 

 

d) Pro Rata Distributions. During such time as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Preferred Stock (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

e) Fundamental Transaction. If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of this Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(e) pursuant to written agreements in form and substance reasonably satisfactory to a majority of the Holders of the Preferred Stock then outstanding and approved by such Holders (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to a majority of the Holders of the Preferred Stock then outstanding. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

 

 

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f) One-time Conversion Price Adjustment. Nine months from the Original Issue Date (the “Adjustment Date”), the Conversion Price shall be adjusted to the lesser of: (i) the Conversion Price in effect on the Adjustment Date, or (ii) 85% of the average closing price of the Common Stock on the Trading Market for the fifteen (15) Trading Days prior to the Adjustment Date. If the Corporation’s EBITDA is equal to or greater than $2.0 million for the quarter ending March 31, 2022, then no adjustment pursuant to this Section 7(f) shall cause the Conversion Price to be less than $20.00 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date of the Purchase Agreement).

 

g) Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

h) Notice to the Holders.

 

i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

Section 8Miscellaneous.

 

a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention: Jim Purcell, e-mail address jpurcell@esportstechnologies.com or such other e-mail address or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 8. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, by email, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address, or address of such Holder appearing on the books of the Corporation, or if no such facsimile number, email address, or address appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

b) Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay accrued dividends on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

c) Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

  

 

 

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d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof. All legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in Los Angeles County, California (the “California Courts”). The Corporation and each Holder hereby irrevocably submits to the exclusive jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such California Courts, or such California Courts are improper or inconvenient venue for such proceeding. The Corporation and each Holder hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. The Corporation and each Holder hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby. If the Corporation or any Holder shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

e) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

f) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

  

g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

 

i) Status of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A Convertible Preferred Stock.

 

*********************

 

 

 

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RESOLVED, FURTHER, that the chief executive officer, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Nevada law.

 

IN WITNESS WHEREOF, the undersigned have executed this Certificate this _____ day of _______ 2021.

 

 

By: /s/ Aaron Speach                                      By: Jim Purcell                                   

Name:  Aaron Speach

  Name:   Jim Purcell
Title:  Chief Executive Officer   Title:  Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ANNEX A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert Shares of Preferred Stock)

 

The undersigned hereby elects to convert the number of shares of Series A Convertible Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the “Common Stock”), of Esports Technologies, Inc., a Nevada corporation (the “Corporation”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.

 

Conversion calculations:

 

Date to Effect Conversion: _____________________________________________

 

Number of shares of Preferred Stock owned prior to Conversion: _______________

 

Number of shares of Preferred Stock to be Converted: ________________________

 

Stated Value of shares of Preferred Stock to be Converted: ____________________

 

Number of shares of Common Stock to be Issued: ___________________________

 

Applicable Conversion Price:____________________________________________

 

Number of shares of Preferred Stock subsequent to Conversion: ________________

 

Address for Delivery: ______________________

or

DWAC Instructions:

Broker no: _________

Account no: ___________

 

 

  [HOLDER]
       
  By:  
    Name:   
    Title:  

 

 

 

 

 

 

 13 

Exhibit 4.1

 

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

COMMON STOCK PURCHASE WARRANT

 

Esports Technologies, Inc.

 

Warrant Shares: [●]

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Shareholder Approval Date (as defined in the Purchase Agreement) (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on the fifth anniversary of the Initial Exercise Date, (the “Termination Date”) but not thereafter, to subscribe for and purchase from Esports Technologies, Inc., a Nevada corporation (the “Company”), up to [●] of shares of Company common stock, par value $0.001 per share (the “Common Stock”) (the Common Stock issuable hereunder, as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.               Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement (the “Purchase Agreement”), dated October 1, 2021, among the Company and the investors signatory thereto. In addition, the following terms have the meanings indicated in this Section 1:

 

Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 3(b)) of Common Stock (other than rights of the type described in Section 3(d) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).

 

Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Trading Market, as reported by Bloomberg L.P., or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg L.P., or, if the Trading Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg L.P., or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg L.P., or, if no last trade price is reported for such security by Bloomberg L.P., the average of the ask prices of any market makers for such security as reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations shall be appropriately adjusted for any share dividend, share split, share combination or other similar transaction during such period.

 

Convertible Securities” means any shares or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Common Stock.

 

 

 

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Exempt Issuance” means the issuance of (a) Common Stock or Options to employees, officers or directors of the Company pursuant to any equity plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company; (b) securities upon the exercise or exchange of or conversion of any Securities issued in the Purchase Agreement and/or other securities exercisable or exchangeable for or convertible into Common Stock issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Company at such time and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) securities issued in connection with any financings to be completed to fund the Acquisition.

 

Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  the Common Stock is then listed or quoted on OTCQB or OTCQX, the volume weighted average price of the shares of Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the shares of Common Stock are not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the shares of Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date), or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Section 2.               Exercise.

 

a)             Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”, and each such date, an “Exercise Date”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)             Exercise Price. The exercise price per Warrant Share under this Warrant shall be $30.00, subject to adjustment hereunder (the “Exercise Price”).

 

 

 

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c)             Cashless Exercise. If on the later of (i) the Shareholder Approval Date, or (ii) six months from the dates hereof, at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = as applicable: (i) the Closing Sale Price on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the Closing Sale Price on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the Closing Sale Price on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

d)             Mechanics of Exercise.

 

i.Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

ii.            Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.            Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

 

 

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iv.            No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

v.            Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vi.            Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e)             Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

 

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Section 3.               Certain Adjustments.

 

a)             Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its Common Stock or any other equity or equity equivalent securities payable in Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Stock into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any share capital of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)            Adjustment Upon Issuance of Common Stock. If and whenever on or after the date hereof and prior to the one-year anniversary of the date this Warrant is issued, the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 3(b) is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of Common Stock owned or held by or for the account of the Company, but excluding any Exempt Issuances issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 3(b)), the following shall be applicable:

 

i.               Issuance of Options. If the Company in any manner grants, issues or sells any Options and the lowest price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of such Options or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

ii.              Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.

 

iii.             Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Initial Exercise Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

 

 

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iv.            Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Company, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lowest of (x) the purchase price of such Unit, and (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(b)(i) or 3(b)(ii) above. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined in good faith by the Company.

 

v.             Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

c)             Voluntary Adjustment by Company. The Company may at any time during the term of this Warrant, but after receipt of Shareholder Approval and subject to the approval of the principal Trading Market, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

d)             Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of Common Stock (“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

 

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e)             Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

f)              Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company (or any Subsidiary), directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of shares of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding shares of Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of share capital of such Successor Entity (or its parent entity) equivalent to the Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such share capital (but taking into account the relative value of the Common Stock pursuant to such Fundamental Transaction and the value of such share capital, such number of shares in such share capital and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

 

 

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g)             Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

h)             Notice to Holder.

 

i.              Adjustment to Exercise Price. Whenever the Exercise Price or the number Warrant Shares subject to the Warrant is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.             Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any share capital of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided pursuant to this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to Form 8-K report. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 4.               Transfer of Warrant.

 

a)             Transferability. Subject to compliance with any applicable securities laws, the conditions set forth in Section 4(d) hereof and the provisions of Section 7 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

 

 

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b)             New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)              Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)             Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144.

 

e)              Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 6.               Miscellaneous.

 

a)             Currency. Unless otherwise indicated, all dollar amounts referred to in this Warrant are in United States Dollars (“U.S. Dollars”). All amounts owing under this Warrant shall be paid in U.S. Dollars. All amounts denominated in other currencies shall be converted in the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Warrant, the U.S. Dollar exchange rate as published in the Wall Street Journal (New York edition) on the relevant date of calculation.

 

b)             No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

c)              Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or certificate.

 

d)             Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

 

 

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e)             Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued shares of Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (the “Required Reserve Amount”). The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

f)              Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of California. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth on the signature page of the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Los Angeles County, California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

 

g)             Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, may have restrictions upon resale imposed by state and federal or foreign securities laws.

 

h)             Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

 

 

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i)              Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

j)              Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any shares of Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

k)            Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

l)              Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

m)            Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

n)            Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

o)             Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

 

Esports Technologies, Inc.

 

 

 

By:__________________________________________

Name:

Title:

 

 

 

 

 11 

 

 

NOTICE OF EXERCISE

 

To:          Esports Technologies, Inc.

 

 

(1)   The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)   Payment shall take the form of (check applicable box):

 

[_] in lawful money of the United States; or

 

[_] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)   Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

_______________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

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EXHIBIT B

 

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name: ______________________________________
  (Please Print)
   
Address: ______________________________________

 

(Please Print)

   
Phone Number: ______________________________________
   
Email Address: ______________________________________
   
Dated: _______________ __, ______  
   
Holder’s Signature:___________________________  
   
Holder’s Address:____________________________  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 13 

 

Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

SUBSCRIPTION AGREEMENT

 

by and among

 

ESPORTS TECHNOLOGIES, INC.,

 

and

 

THE INVESTORS NAMED HEREIN

 

Dated as of October 1, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 1 

 

 

This SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of October 1, 2021, is entered into by and among Esports Technologies, Inc., a Nevada corporation (the “Company”), and the Persons named on the signature pages hereto (the “Investors”). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 9 hereof.

 

The Company and the Investors have agreed that, pursuant to the terms of this Agreement, the Investors will purchase (i) shares of the Series A Convertible Preferred Stock (the “Shares”), and (ii) a warrant to purchase shares of Common Stock in the form set forth as Exhibit A (the “Warrants”), concurrently with the consummation of the closing of the Acquisition. The Shares and Warrants to be sold to the Investors pursuant to this Agreement are referred to herein as the “Securities”.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto, intending to be bound, hereby agree as follows:

 

1.      Sale and Purchase of the Securities; Additional Investors.

 

1.1. Sale and Purchase of Securities. Upon the terms and subject to the conditions herein contained, the Company shall sell to each Investor, and each Investor, severally and not jointly, shall purchase from the Company, at the Closing, the number of Shares (rounded up to the nearest whole share) equal to the amount determined by dividing the “Investor Commitment Amount” on the signature page to this Agreement as set forth on Schedule I (which Schedule I may be amended to reflect (a) subsequent commitments to purchase Shares by Additional Investors (as defined below) who execute a joinder to this Agreement in the form attached hereto as Exhibit A (each, a “Joinder”) after the date hereof or (b) assignments permitted under Section 13.4) attached hereto), divided by a price per share of $1,000.00 (the “Purchase Price”), in exchange for a cash payment equal to the Investor Commitment Amount delivered in accordance with Section 2. At the Closing, the Company shall deliver or cause to be delivered to each Investor a Warrant registered in the name of such Investor to purchase up to a number of shares of Common Stock equal to 150% of the Common Stock underlying the Shares (as of the Closing Date), with an initial exercise price of $30.00.

 

1.2. Additional Investors. During the period beginning on the date hereof and ending on the Closing Date, the Company may join, in its sole discretion, on substantially the same terms and conditions as those contained in this Agreement, additional parties as Investors hereto (each, an “Additional Investor”). Any such Additional Investor shall become a party to this Agreement as an “Investor” hereunder by signing a Joinder, and the name, address, and Investor Commitment Amount of such Additional Investor provided in such Joinder shall be added to Schedule I. The Investors represent that they do not intend to form a “group” under the Securities Act or the Exchange Act, and, to the knowledge of the Investors, no such “group” has been formed.

 

2.      Closing.

 

2.1. Closing Date. Upon the closing of the transactions contemplated in Section 1 hereof following the satisfaction or waiver of the conditions specified in Section 5 (the “Closing”), the Company shall issue to each Investor the number of Shares and Warrants determined pursuant to the provisions of Section 1, against payment of the Investor Commitment Amount for such Securities. The Closing shall take place on the same date as the Acquisition, remotely at 9:00 a.m. on the closing date set forth in the Acquisition Agreement (the “Closing Date”) and after the satisfaction or waiver of the other conditions specified in Section 5, other than conditions that by their nature must be satisfied on the Closing Date. Upon the request of any Investor, the Company shall deliver to such Investor, at least three (3) business days prior to the Closing Date, a duly completed and executed Internal Revenue Service Form W-9 or W8-BenE, as applicable.

 

2.2 Closing Mechanics. Each Investor agrees to deposit its Investor Commitment Amount into an escrow account designated by the Company (“Escrow Account) prior to the Closing Date. Not less than ten (10) Business Days prior to the expected Closing Date, the Company will provide each Investor that has not previously deposited funds in the Escrow Account with notice (“Closing Notice”) of the Closing Date and wire transfer information to an Escrow Account. Each such Investor agrees to deposits its Investor Commitment Amount into the Escrow Account within seven (7) Business Days of receipt of the Closing Notice.

 

 

 

 2 

 

 

3.     Representations and Warranties of the Investors. Each Investor, severally and not jointly, hereby represents and warrants to the Company as follows:

 

3.1. Organization. If such Investor is an entity, such Investor is duly formed or organized, validly existing and in good standing under the laws of its jurisdiction of organization or formation, and has all requisite corporate, limited liability company, partnership or trust (as the case may be) power and authority to enter into the Transaction Documents to which it is a party and perform its obligations thereunder.

 

3.2. Authorization; Enforceability. If such Investor is an entity, such Investor has full right, power, authority and capacity to enter into each of the Transaction Documents to which it is a party and to consummate the transactions contemplated by each such Transaction Document. If such Investor is an entity, the execution, delivery and performance of each of the Transaction Documents to which it is a party has been duly authorized by all necessary action on the part of such Investor and its equityholders. This Agreement has been duly executed and delivered by such Investor, and the other Transaction Documents and instruments referred to herein to which he, she, they or it is a party will be duly executed and delivered by such Investor at Closing, and each such agreement constitutes or at Closing will constitute a valid and binding obligation of such Investor enforceable against he, she, they or it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and to general equitable principles.

 

3.3. Brokers. There is no investment banker, broker, finder, financial advisor or other person that has been retained by or is authorized to act on behalf of such Investor and who is entitled to any fees or commissions in connection with the transactions contemplated by this Agreement other than such fees or commissions for which the Investor is solely responsible.

 

3.4. Investment Representations and Warranties. Such Investor understands that the offer and sale of Securities by the Company to the Investors as contemplated hereby has not been, nor (except pursuant to the provisions of Section 8) will be, registered under the Securities Act and is being made in reliance upon federal and state exemptions for transactions not involving a public offering which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of such Investor’s representations as expressed herein.

 

3.5. Acquisition for Own Account. Such Investor is acquiring the Securities for his, her, their or its own account for investment and not with a view toward distribution in a manner which would violate the Securities Act; it being understood that by making the representation contained in this Section 3.5, such Investor is not contractually agreeing to hold any of Securities for any minimum period of time.

 

3.6. Ability to Protect Its Own Interests and Bear Economic Risks. Such Investor acknowledges that he, she, they or it can bear the economic risk and complete loss of his, her, their or its investment in the Securities and has such knowledge and experience in financial or business matters that he, she, they or it is capable of evaluating the merits and risks of the investment contemplated hereby.

 

3.7. Investor Status. Such Investor is an “accredited investor” within the meaning of Rule 501(a) under the United States Securities Act of 1933, as amended, and is a sophisticated investor, experienced in investing in private equity transactions and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, including your participation in the Transaction. Such Investor has determined based on its own independent review and such professional advice as it deems appropriate that its purchase of the Securities and participation in the Transaction (i) are fully consistent with its financial needs, objectives and condition, (ii) comply and are fully consistent with all investment policies, guidelines and other restrictions applicable to it, and (iii) are a fit, proper and suitable investment for it, notwithstanding the substantial risks inherent in investing in or holding the Securities. Such Investor is able to bear the substantial risks associated with its purchase of the Securities, including but not limited to loss of its entire investment therein. Such Investor is not party to any voting agreements or similar arrangements with respect to the Securities. With regard to acquiring, holding, voting, or disposing of any stock of the Company, including the Shares, such Investor (a) has not acted in concert with any Person; (b) other than any Investors that are Affiliates of such Investor, is not, and has never been, a member or beneficiary of a trust, partnership, limited partnership, syndicate, or other group with any agreement, understanding, or arrangement, whether formal or informal (for the avoidance of doubt, the fact that an Investor is a trust or partnership or limited partnership or a passive investor in a private equity fund in and of itself shall not breach this clause (b)); and (c) has no plan or intention to enter into an arrangement described in clause (a) or clause (b). As of the date of this Agreement, each Investor represents and warrants to the Company that it has provided to the Company a duly executed IRS Form W 9 or applicable IRS Form W 8, and after the date of this Agreement each Investor will provide updated forms, statements or tax related documentation that the Company may reasonably request in connection with the offering and sale of the Securities pursuant to an exemption from registration under the Securities Act.

 

 

 

 3 

 

 

3.8. Foreign Investors. If such Investor is not a United States person (as defined by Section 7701(a)(30) of the Code), such Investor hereby represents that he, she, they or it has satisfied itself as to the full observance of the laws of his, her, their or its jurisdiction in connection with any invitation to subscribe for the Securities, including (i) the legal requirements within his, her, their or its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities.

 

3.9. Consents. The execution, delivery and performance by such Investor of the Transaction Documents require no consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, except such as may be required under the Securities Act and the approval for listing on the Trading Market and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase of the Securities by such Investor.

 

3.10. No Violations. The execution, delivery and performance by such Investor of, and compliance with, each of the Transaction Documents, and the consummation by such Investor of the transactions contemplated by each of the Transaction Documents (including, without limitation, the issuance and sale of the Securities) will not (a) result in a violation of the organizational documents of such Investor, (b) violate or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any agreement, lease, mortgage, license, indenture, instrument or other contract to which such Investor is a party, (c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations) applicable to such Investor or by which any property or asset of such Investor is bound or affected, or (d) result in a violation of any rule or regulation of FINRA or any Trading Markets, in each case (other than with respect to foregoing clause (a)) except for such violations, defaults, or rights of termination, acceleration or cancellation that would not have a material adverse effect on such Investor’s ability to perform his, her, their or its obligation under the Transaction Documents. If such Investor is an entity, such Investor is not in violation of its organizational documents.

 

3.11. Access to Information. Such investor has (i) received, reviewed and understood the offering materials made available to it in connection with its purchase of the Securities, (ii) had the opportunity to ask questions of and receive answers from the Company directly and (iii) conducted and completed its own independent due diligence with respect to the purchase of the Securities. Based on such information as it has deemed appropriate and without reliance upon Needham & Company, LLC (“Needham”), such Investor has independently made its own analysis and decision to enter into the Transaction Documents. Except for the representations, warranties and agreements of the Company expressly set forth in this Agreement, you are relying exclusively on your own sources of information, investment analysis and due diligence (including professional advice you deem appropriate) with respect to the Transaction, the Securities and the business, condition (financial and otherwise), management, operations, properties and prospects of the Company, including but not limited to all business, legal, regulatory, accounting, credit and tax matters. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or his, her, their or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth and accuracy of the Company’s representations and warranties contained in this Agreement.

 

3.12. Restricted Securities. Such Investor understands that the Shares, Warrants, and Common Stock underlying the Shares and Warrants, will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances, and such Investor further understands that the Shares and Common Stock underlying the Shares and Warrants will be subject to the transfer restrictions and legending requirements specified in Section 7.

 

3.13. Sufficient Funds. Such Investor has sufficient funds available to him, her, them or it to pay his, her, their or its full Investor Commitment Amount at Closing.

 

3.14. Bad Actor Disqualifications. Such Investor represents on its behalf and the behalf of its officers, directors and principal stockholders, that he, she, they or it is not subject to any “Bad Actor” disqualifications described in Rule 506(d)(1) (subject to Rule 506(d)(2) and 506(d)(3)) with respect to the Company.

 

 

 

 4 

 

 

3.15. OFAC. Neither such Investor nor, as of the date hereof to the knowledge of the Investor, any director, officer, agent, employee or person acting on behalf of the Investor is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

 

3.16 Placement Agent. Such Investor hereby acknowledges and agrees that (a) Needham is acting solely as the Company’s placement agent in connection with the purchase and sale of the Securities and is not acting as an underwriter or in any other capacity and is not and shall not be construed as a fiduciary for such Investor, the Company or any other person or entity in connection with the purchase and sale of the Securities, (b) Needham has not made and will not make any representation or warranty, whether express or implied, of any kind or character and has not provided any advice or recommendation in connection with the purchase and sale of the Securities, (c) Needham will have no responsibility with respect to (i) any representations, warranties or agreements made by any person or entity under or in connection with the purchase and sale of the Securities or any of the documents furnished pursuant thereto or in connection therewith, or the execution, legality, validity or enforceability (with respect to any person) or any thereof, or (ii) the business, affairs, financial condition, operations, properties or prospects of, or any other matter concerning the Company, or the purchase and sale of the Securities, and (d) Needham shall have no liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by such Investor, the Company or any other person or entity), whether in contract, tort or otherwise, to such Investor, or to any person claiming through such Investor, in respect of the purchase and sale of the Securities.

 

4.     Representations and Warranties by the Company. The Company represents and warrants to the Investors as follows:

 

4.1. Organization and Good Standing. The Company (i) has been duly incorporated and is validly existing and in good standing under the laws of the state of Nevada, with power and authority (corporate and other) to own its properties and assets, conduct its business as described in the Company’s Form S-1 and enter into this Agreement and perform its obligations hereunder, and (ii) is duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or assets or conducts any business so as to require such qualification, except, in the case of this clause (ii), where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company’s subsidiaries has been duly organized and is validly existing as a corporation or other entity, as applicable, and in good standing (or the foreign equivalent) under the laws of its jurisdiction of organization, with power and authority (corporate and otherwise) to own its properties and conduct its business as described in the Company’s Form S-1, except where the failure to be in good standing (or the foreign equivalent) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.2. Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company under this Agreement, and for the authorization, issuance, sale and delivery of the Securities being sold hereunder has been taken, and this Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

4.3. Valid Issuance of Securities. The Shares being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, (a) will be duly and validly issued, fully paid and nonassessable, free and clear of any liens, will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws and (b) will not have been issued in violation of any preemptive or similar rights created under the Company’s organizational documents (as adopted on or prior to the Closing Date), the Acquisition Agreement or the laws of the State of Nevada. The Common Stock issuable upon conversion of the Shares, when issued in accordance with the terms of the Shares, will be validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company. The Warrants are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company, and the Common Stock issuable upon exercise of the Warrants, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company.

 

 

 

 5 

 

 

4.4. Compliance with Other Instruments. Neither the Company nor any of its subsidiaries is (i) in violation of its certificate of incorporation or by laws (or other applicable organizational document), (ii) in violation of any law, statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties or assets may be bound, except, in the case of the foregoing clauses (ii) and (iii) for such violations or defaults related to matters disclosed in the Company’s Form S-1 or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.5 No Conflicts. The execution, delivery and performance by the Company of this Agreement, and the compliance by the Company with this Agreement and the consummation of the transactions contemplated in this Agreement will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (A) any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (B) the certificate of incorporation or by-laws (or other applicable organizational document) of (1) the Company or (2) any of its subsidiaries, (C) any law, statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (D) any rule or regulation of FINRA or any Trading Markets, except in the case of (A), (C) and (D) for such violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization, exemption, filing or notice order, registration or qualification of or with is required by any court or Governmental Entity or any other Person, except such as may be required under the Securities Act and the approval for listing on the Trading Market and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase of the Securities by the Investors.

 

4.6. Description of Capital Stock. Other than with respect to information permitted to be excluded at the time the Form S-1 was declared effective by the Commission, the statements set forth in the Form S-1 under the caption “Description of Securities”, insofar as they purport to constitute a summary of the terms of the Common Stock are accurate, complete and fair in all material respects

 

4.7. Registration Statement. Other than with respect to information permitted to be excluded at the time the Form S-1was declared effective by the SEC, as of the date it was declared effective by the SEC, the Form S-1 complied in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission promulgated thereunder, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

4.8. Brokers or Finders. Neither the Company nor any of its subsidiaries have engaged any brokers, finders or agents such that the Investors will incur, directly as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the sale of the Securities contemplated by this Agreement.

 

4.9. Private Placement. Assuming the accuracy of the representations, warranties and covenants of the Investors set forth in Section 3 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investors under this Agreement.

 

4.10. No Bad Actors. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Company or any person listed in the first paragraph of Rule 506(d)(i) with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under the Securities Act, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3) is applicable.

 

4.11. Tax Classification of the Company. The Company is classified as a Subchapter C corporation for U.S. federal income tax purposes.

 

 

 

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4.12. Absence of Changes. Since June 30, 2021, and except as disclosed in the Quarterly Report on Form 10-Q filed with the Commission on August 13, 2021and except as it relates to the Acquisition (including any financing arrangements related to the Acquisition), there has not been any change in the assets, liabilities, financial condition or operating results of the Company, except changes in the ordinary course of business that have not had, in the aggregate, a Material Adverse Effect.

 

4.13. Litigation. There is no claim, action, suit or legal proceeding pending or, to the knowledge of the Company, threatened in writing against the Company, before any Governmental Entity that seeks to prevent the Company from consummating the transactions contemplated by this Agreement or the Acquisition Agreement. As of the date hereof, and except with respect to matters disclosed in the Form S-1, (i) there are no, claims, actions, suits or legal proceedings pending, or, to the knowledge of the Company, threatened in writing against the Company or its subsidiaries before any Governmental Entity against the Company and its subsidiaries, that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) to the knowledge of the Company, there are no pending investigations or disciplinary proceedings reasonably likely to lead to any claim, action, suit or legal proceeding before any Governmental Entity that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As of the date hereof, none of the Company or its subsidiaries are subject to any unsatisfied order, judgment, injunction, ruling, decision, award or decree of any Governmental Entity.

 

4.14. Compliance with Laws; OFAC. The business of the Company and its subsidiaries; taken as a whole, is not currently being conducted in violation of, and each of the Company and its subsidiaries are and have been since September 30, 2019 (or, if later than such date, the date of incorporation of such entity) in compliance with any federal, state, provisional, county, municipal or local laws, ordinances and regulations applicable to the Company and its subsidiaries, except with respect to matters disclosed in the Form S-1 or such non-compliance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company or its subsidiaries nor, to the Company’s knowledge, any director, officer, agent, employee or person acting on behalf of the Company or its subsidiaries (a) is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), or (b) has violated any law relating to bribery, corruption, money laundering, or sanctions.

 

4.15. Data Privacy. Each of the Company and its subsidiaries are and have been since December 31, 2019 (or, if later than such date, the date of incorporation of such entity), in material compliance with (a) all applicable laws governing the collection, storage or any other use of information that identifies or could be used to identify an individual person (“Personal Information”) and governing data security and cyber security; (b) all of the Company’s policies and notices regarding Personal Information, and (c) all of the Company’s and its subsidiaries’ contractual obligations with respect to Personal Information, data security and cyber security (together, the “Data Protection Requirements”). The Company has implemented and continues to implement and maintain commercially reasonable technical and organizational safeguards which the Company believes to be sufficient to protect Personal Information and other confidential data in its possession or under its control. Except with respect to matters disclosed in the Form S-1, there have been no breaches or security incidents, and there has been no unauthorized access to or disclosure of any Personal Information in the possession or control of the Company or its subsidiaries, except for such breaches or security incidents, unauthorized access to or disclosure of any Personal Information that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except with respect to matters disclosed in the Form S-1 or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company has not received any written notice of any claims of or investigations or regulatory inquiries related to, or been charged with, the violation of any Data Protection Requirements, and (b) to the knowledge of the Company, there are no facts or circumstances that could reasonably form the basis of any such notice or claim.

 

4.16. Intellectual Property. To the knowledge of the Company, (i) all patents, registered copyrights, and applications for any of the foregoing related to the business of the Company and its subsidiaries that are owned or purported to be owned by the Company or its subsidiaries were created, developed or authored by: (a) employees acting within the scope of their employment, or (b) consultants or contractors, and (ii) each such employee, consultant or contractor engaged in such activities within the last five years executed and delivered to the Company or the relevant subsidiary written agreements pursuant to which each such Person assigned to the Company or the relevant subsidiary the intellectual property rights created by such Persons in their performance of such services for the Company or the relevant subsidiary, except where failure to do so would not be material and other than non-assignable rights (such as moral rights). To the knowledge of the Company, no trade secret or other proprietary confidential information material to the business of the Company has been actually disclosed to any former or current employee or any third party other than pursuant to a written agreement restricting the disclosure and use of such information except where failure to do so would not be material.

 

 

 

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4.17. Financial Statements. The audited financial statements as of, and for the period ended, September 30, 2020 of the Company set forth in the Form S-1 and the unaudited interim financial statements as of, and for the period ended June 30, 2021 of the Company set forth on the Quarterly Report on Form 10-Q filed with the Commission on August 13, 2021, (the “Financial Statements”), together with the notes thereto, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. The Financial Statements fairly present in all material respects the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein.

 

4.18. Affiliate Transactions. Other than (w) as disclosed in the Form S-1 (x) standard employee benefits generally made available to all employees, (y) standard director and officer indemnification agreements approved by the Board of Directors of the Company (the “Board of Directors”), and (z) the purchase of shares of the Company’s capital stock and the issuance of equity awards, none of the Company or its subsidiaries is a party to any agreement that is currently in effect with any equityholder, officer, member, partner or director of the Company or its subsidiaries or their respective affiliates (other than the Company or its subsidiaries).

 

4.19. Labor Relations. Since September 30, 2019 (or, if later than such date, the date of incorporation of such entity), (a) there has not been nor is there pending or, to the knowledge of the Company, threatened any labor strike, walk-out, slowdown, work stoppage or lockout with respect to the Company or its subsidiaries, (b) none of the Company or its subsidiaries have received written notice of any unfair labor practice charges against the Company or its subsidiaries that are pending before the National Labor Relations Board or any similar state, local or foreign Governmental Entity and (c) none of the Company or its subsidiaries have received written notice of any pending or in progress and, to the knowledge of the Company, there are no threatened, suits, actions or other proceedings against the Company or its subsidiaries before the Equal Employment Opportunity Commission or any similar state, local or foreign Governmental Entity responsible for the prevention of unlawful employment practices, except, in the case of each of clauses (i), (ii) and (iii) above, for any such matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.20. Investment Company Act. The Company is not and, after giving effect to the transactions contemplated by this Agreement, will not be, required to register as an “investment company” under the Investment Company Act of 1940, as amended.

 

4.21. No Other Company Representations and Warranties. Except for the representations and warranties made by the Company in this Section 4, neither the Company, any of its Affiliates nor any other Person acting on its behalf makes any other express or implied representation or warranty in connection with or related to this Agreement or the transactions contemplated hereby, including with respect to its capital stock, the Company or any of its subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, and each Investor acknowledges and agrees to the foregoing. In entering into this Agreement, each Investor has relied solely on its own investigation and analysis and the representations of the Company expressly set forth in this Section 4 and no other representations or warranties of the Company, any of their respective Affiliates or any other Person, whether express or implied.

 

5.      Conditions of Parties’ Obligations.

 

5.1. Conditions of the Investors’ Obligations at the Closing. The obligations of the Investors to purchase the Securities at the Closing (except where otherwise specified) are subject to the fulfillment prior to the Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Required Investors in their sole discretion.

 

(a) Representations and Warranties. The (a) representations set forth in Sections 4.1, 4.2, 4.3(a) and 4.11 shall be true and correct as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing; (b) the representations and warranties set forth in Sections 4.3(b), 4.5, 4.6, 4.7, 4.9, and 4.10 shall be true and correct in all material respects as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and warranties and other than with respect to Section 4.7, without giving effect to any qualifications or limitations as to “materiality” or “Material Adverse Effect” contained therein); and (c) the remaining representations and warranties of the Company contained in Section 4 of this Agreement shall be true and correct as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and warranties and without giving effect to any qualifications or limitations as to “materiality” or “Material Adverse Effect” contained therein), except where the failure of such representations and warranties to be so true and correct does not constitute, individually or in the aggregate, a Material Adverse Effect.

 

 

 

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(b) Performance. The Company shall have performed in all material respects all covenants and agreements contained in this Agreement required to be performed by the Company on or prior to the Closing.

 

(c) No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred a Material Adverse Effect.

 

(d) Compliance Certificate. The Company shall have delivered to the Investors a Compliance Certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date to the effect that the conditions specified in subsections (a) and (b) of this Section 5.1 have been satisfied.

 

(e) Listing. The Company’s Common Stock shall have been listed for trading on the Nasdaq Capital Market from the date hereof until the Closing Date.

 

5.2. Conditions of the Company’s Obligations. The obligations of the Company under Section 1 hereof with respect to each Investor (on a several, and not joint, Investor-by-Investor basis) are subject to the fulfillment prior to or on the Closing Date of all of the following conditions with respect to such Investor, any of which may be waived in whole or in part by the Company in its sole discretion.

 

(a) Covenants; Representations and Warranties. (i) The Investors shall have performed in all material respects all covenants and agreements contained in this Agreement required to be performed by the Investors on or prior to the Closing, (ii) the representations and warranties of the Investors contained in Section 3.7 shall be true and correct in all material respects as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and warranties), and (iii) the representations and warranties of the Investors contained in Section 3 of this Agreement shall be true and correct as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and warranties), except where the failure of such representations and warranties to be so true and correct does not constitute, individually or in the aggregate, material adverse effect on (y) the eligibility of the Company to issue the Securities in reliance on the exemption from registration provided by Regulation D under the Securities Act, or (z) such Investor’s ability to perform its obligation under the Transaction Documents.

 

5.3. Conditions of Each Party’s Obligations.

 

(a) Obligations under this Agreement. The respective obligations of each party to consummate the transactions at the Closing contemplated hereunder are subject to the absence of any statute, rule, regulation, injunction, order or decree, enacted, enforced, promulgated, entered, issued or deemed applicable to this Agreement or the transactions contemplated hereby by any court, government or governmental authority or agency or legislative body, domestic, foreign or supranational, in each case of the foregoing authorities, agencies or bodies, of competent jurisdiction, prohibiting or enjoining the transactions contemplated by this Agreement.

 

(b) Acquisition. All of the conditions to the consummation of the Acquisition, as set forth in the Acquisition Agreement have been satisfied, or to the extent permitted by applicable law, waived by the Company.

 

6.      Covenants.

 

6.1. Furnishing of Information and Legend Removal. In order to enable the Investors to sell the Securities under Rule 144, for a period of twenty-four (24) months from the consummation of the Closing, the Company shall use its commercially reasonable efforts to (i) timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the consummation of the Closing pursuant to the Exchange Act and (ii) following an Investor’s request, promptly cause the removal of all restrictive legends from any Shares held by such Investor that may be sold by Investor (x) pursuant to the Resale Restriction Statement or (y) without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions.

 

 

 

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6.2. Integration. The Company shall use its commercially reasonable efforts such that neither it nor any of its Affiliates shall sell, offer for sale or solicit offers to buy any security that will be integrated with the offer or sale of the Securities hereunder that would require the registration under the Securities Act of the sale of Securities hereunder to the Investors.

 

6.3. Delivery of Shares After Closing. The Company shall deliver or cause to be delivered to each Investor evidence of the book-entry issuance of the Shares and physical delivery of the Warrants purchased by such Investor within five (5) Trading Days of the Closing Date.

 

6.4. No Volume Limitations. Any Investor, or any Affiliates of any Investor, that purchase Shares hereunder shall not be subject to any volume restrictions related to any securities of the Company that are purchased hereunder or were held prior to the date hereof. Notwithstanding the foregoing, Investors shall continue to be required to comply with all federal securities laws with respect to any sales of securities.

 

6.5. Tax Matters.

 

(a) The Company shall not withhold any U.S. withholding tax in respect of payments or distributions made to Investor except for U.S. withholding tax that the Company is required to withhold due to (i) a failure of Investor to furnish a valid IRS Form as described above in Section 3.7 of this Agreement, (ii) any change in law or (iii) any change in fact. In the event that the Company has determined that withholding is required with respect to any payment or distribution by the Company to the Investor, the Company shall (i) notify Investor promptly but at least ten (10) Business Days prior to any such withholding and (ii) reasonably consult and cooperate with the Investor in good faith to attempt to reduce or eliminate any amounts that would otherwise be deducted or withheld. The Company is entitled to withhold if the Company, after consulting and cooperating with the Investor as described in the prior sentence, determines in good faith that such withholding is required due to the circumstances above under the applicable law. The Company shall provide Investor with any information or documentation reasonably requested by Investor for a refund of any tax and shall otherwise assist and reasonably cooperate in any such application by Investor.

 

(b) The Company agrees to provide promptly, upon the reasonable request of Investor, (i) a determination as to whether the Company is a “United States real property holding corporation” for U.S. federal income tax purposes (a “USRPHC”) and (ii) provided that the Company determines that it is not a USRPHC, a statement issued pursuant to Treasury Regulations §1.897-2(g)(1)(ii) that the Shares are not a U.S. real property interest for U.S. federal income tax purposes, as defined for purposes of that Regulation.

 

(c) The Company shall provide notice to the Investor no less than 30 days prior to taking any actions to alter its entity classification as a Subchapter C corporation for U.S. Federal income tax purposes. Further, the Company shall cooperate with Investor to mitigate or eliminate the tax effect on such Investor of any such change in entity classification.

 

7.      Transfer Restrictions; Restrictive Legend.

 

7.1. Transfer Restrictions. Each Investor understands that the Company (or its transfer agent) may, as a condition to the transfer of the Securities, require that the request for transfer be accompanied by an opinion of Company counsel to be delivered within two Business Days after receipt of all required documentation, to the effect that the proposed transfer does not result in a violation of the Securities Act or Rule 144 under the Securities Act, unless such transfer is covered by an effective registration statement. It is understood that the certificates evidencing the Securities shall bear substantially the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, APPLICABLE STATE SECURITIES LAWS (PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM). INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

 

 

 

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7.2. Unlegended Certificates. Subject to the receipt of standard written documentation provided by the holder pursuant to Rule 144 and a representation that the holder is not an Affiliate of the Company, the Company shall as soon as practicable reissue unlegended certificates upon the request of any holder thereof (x) at such time as the holding period under Rule 144 or another applicable exemption from the registration requirements of the Securities Act for a transfer of such Shares to the public has been satisfied or (y) at such time as a registration statement is available for the transfer of such Shares.

 

8.     Registration Rights.

 

8.1. Registration Statements. The Company shall use commercially reasonable efforts to file as soon as reasonably practicable, but in any event no later than 45 calendar days after the Closing (the “Filing Deadline”), and use commercially reasonable efforts to cause to be declared effective as soon as reasonably practicable thereafter, a registration statement filed with the Commission (the “Resale Registration Statement”) registering the resale of all of the Common Stock underlying the Shares and Warrants (the “Registrable Securities”) issued to the Investors pursuant to this Agreement (the “Effectiveness Deadline”); provided, that the Company’s obligations to include an Investor’s Registrable Securities in the Resale Registration Statement are contingent upon such Investor furnishing in writing to the Company such information regarding such Investor, the securities of the Company held by such Investor and the intended method of disposition of the Registrable Securities held by such Investor (which shall be limited to non-underwritten public offerings) to the extent required as shall be reasonably requested by the Company to effect the registration of the Registrable Securities held by such Investor, and Investor shall execute such documents in connection with such registration as the Company may reasonably request to the extent required. The Company agrees to use commercially reasonable efforts to keep such Resale Registration Statement, or another shelf registration statement that includes the Registrable Securities, effective with respect to each Investor until the earliest of (x) the date on which such Investor ceases to hold any Registrable Securities issued pursuant to this Agreement, (y) the first date on which such Investor is able to sell all of its Registrable Securities in a 90-day period without registration under Rule 144 of the Securities Act or any successor rule (but with no volume or other restrictions or limitations including as to manner or timing of sale) and (z) if the Registrable Securities purchased hereunder by such Investor represent greater than five percent (5%) of the outstanding Common Stock of the Company, the date upon which the Registrable Securities purchased hereunder by such Investor no longer represent greater than five percent (5%) of the outstanding Common Stock of the Company; provided, that the Company shall be entitled to delay or postpone the effectiveness of the Resale Registration Statement, and from time to time require the Investors not to sell under the Resale Registration Statement or suspend effectiveness thereof, if it reasonably determines in good faith that in order for the Resale Registration Statement not to contain a material misstatement or omission, (i) the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or another event has occurred, which negotiation, consummation or (ii) other event the Company’s Board of Directors reasonably and in good faith believes would require additional disclosure by the Company in the Resale Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Resale Registration Statement would be expected, in the reasonable determination of the Company’s board of directors, to cause the Resale Registration Statement to fail to comply with applicable disclosure requirements (such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend the Resale Registration Statement on more than two occasions or for more than 60 consecutive calendar days, or more than 90 calendar days in the aggregate, in each case during any 12-month period. Upon receipt of written notice from the Company (which notice shall not contain any material non-public information regarding the Company) of the happening of any Suspension Event during the period that the Resale Registration Statement is effective or if as a result of a Suspension Event the Resale Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, each Investor hereby agrees that (i) it will immediately discontinue offers and sales of the Registrable Securities under the Resale Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until such Investor receives copies of a supplemental or amended prospectus (which the Company agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Company unless otherwise required by law or subpoena. If so directed by the Company, each Investor will deliver to the Company or, in such Investor’s sole discretion destroy, all copies of the prospectus covering the Registrable Securities in such Investor’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Registrable Securities shall not apply (A) to the extent such Investor is required to retain a copy of such prospectus (I) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (II) in accordance with a bona fide pre-existing document retention policy or (B) to copies stored electronically on archival servers as a result of automatic data back up. The Investors shall not in connection with the foregoing be required to execute any lock up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Registrable Securities. Any failure by Company to file the Resale Registration Statement by the Filing Deadline or to effect such Resale Registration Statement by the Effectiveness Deadline shall not otherwise relieve the Company of its obligations to file or effect the Resale Registration Statement as set forth in this Section 8.1(a).

 

 

 

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8.2. Company Obligations.

 

(a) The Company shall advise the Investors as expeditiously as possible and within five business days after:

 

(i)             a Resale Registration Statement or any amendment thereto has been filed with the Commission and when such Resale Registration Statement or any post-effective amendment thereto has become effective;

 

(ii)            any request by the Commission for amendments or supplements to any Resale Registration Statement or the prospectus included therein or for additional information;

 

(iii)           the issuance by the Commission of any stop order suspending the effectiveness of any Resale Registration Statement or the initiation of any proceedings for such purpose;

 

(iv)           the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

 

(v)            subject to the provisions in this Agreement, the occurrence of any event that requires the making of any changes in any Resale Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.

 

Notwithstanding anything to the contrary set forth herein, when so advising the Investors of such events, the Company shall not be obligated, to provide any Investor with any material, nonpublic information regarding the Company, nor shall the Company provide any Investor with any such material, nonpublic information regarding the Company without such Investor’s prior written consent (e-mail being sufficient), in each case other than to the extent that providing notice to such Investor of the occurrence of the events listed in (i) through (v) above constitutes material, nonpublic information regarding the Company.

 

(b) The Company shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Resale Registration Statement as soon as reasonably practicable.

 

(c) Upon the occurrence of any Suspension Event, except for such times as the Company is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Resale Registration Statement as contemplated by this Agreement, the Company shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Resale Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(d) The Company shall provide the Investor the ability to review disclosure regarding such Investor in the Resale Registration Statement prior to the filing or submission of such Resale Registration Statement and consider in good faith any reasonable comments of such Investor.

 

(e) The Company shall otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Investor, consistent with the terms of this Agreement, in connection with the registration of the Shares

 

 

 

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8.3. Indemnification.

 

(a) Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the extent permitted by law, each Investor, their respective directors, and officers, employees, and agents, and each person who controls such Investors (within the meaning of the Securities Act or the Exchange Act) and each Affiliate of such Investor from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, any reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) caused by any untrue or alleged untrue statement of material fact contained in any Resale Registration Statement, prospectus included in any Resale Registration Statement or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances in which they were made) not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by or on behalf of any Investor expressly for use therein.

 

(b) Indemnification by the Investors. Each Investor agrees, severally and not jointly with any other Investor, to indemnify and hold harmless the Company, its directors, officers, employees and agents, and each person who controls the Company (within the meaning of the Securities Act or the Exchange Act) and each Affiliate of the Company against any losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) resulting from any untrue statement of material fact contained in the Resale Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances in which they were made) not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Investor expressly for use therein. In no event shall the liability of any Investor pursuant to this Section 8.3(b) or Section 8.3(d) be greater in amount than the dollar amount of the net proceeds received by such Investor upon the sale of the Securities giving rise to such indemnification obligation.

 

(c) Indemnification Procedures. Any person entitled to indemnification herein shall (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (b) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

(d) Contribution. If the indemnification provided under this Section 8 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by or on behalf of, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 8 from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything to the contrary herein, in no event will any party be liable for consequential (including enterprise value, business value or market value damages), special, exemplary or punitive damages in connection with this Agreement.

 

(e) Survival. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, employee, agent, Affiliate or controlling person of such indemnified party and shall survive the transfer of the Securities purchased pursuant to this Agreement.

 

 

 

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9.     Definitions. Unless the context otherwise requires, the terms defined in this Section 9 shall have the meanings specified for all purposes of this Agreement.

 

Except as otherwise expressly provided, all accounting terms used in this Agreement, whether or not defined in this Section 9, shall be construed in accordance with GAAP.

 

Acquisition” means the closing of the share purchase described in the Acquisition Agreement.

 

Acquisition Agreement” means that certain Share Purchase Agreement dated on or about the date hereof, pursuant to which ESPORTS PRODUCT TECHNOLOGIES MALTA LTD., a company incorporated under the laws of Malta shall acquire from each of Aspire Global International Limited, a company incorporated under the laws of Malta, AG Communications Limited, a company incorporated under the laws of Malta, Aspire Global 7 Limited, a company incorporated under the laws of Malta, Aspire Global plc, a company incorporated under the laws of Malta (collectively the “Selling Shareholders”) 100% of the shares owned by said Selling Shareholder in Karamba Limited, a limited liability company incorporated under the laws of Malta.

 

Additional Investor” has the meaning assigned to it in Section 1.2 hereof.

 

Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act.

 

Agreement” has the meaning assigned to it in the introductory paragraphs hereof.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.

 

Closing” has the meaning assigned to it in Section 2 hereof.

 

Closing Date” has the meaning assigned to it in Section 2 hereof.

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Commission” means the Securities and Exchange Commission.

 

Common Stock” has the meaning assigned to it in the recitals hereof.

 

Company” has the meaning assigned to it in the introductory paragraph hereof.

 

control,” “controlled,” “controlled by” and “under common control with” means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of a majority of such Person’s outstanding voting equity or by contract, and with respect to “controlled Affiliates” includes Affiliates controlled by such Person.

 

Disclosure Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the date hereof, unless otherwise instructed as to an earlier time by Needham, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York City time) on the date hereof, unless otherwise instructed as to an earlier time by Needham.

 

Effectiveness Deadline” has the meaning assigned to it in Section 8.1 hereof.

 

 

 

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Encumbrances” means any lien, claim, judgment, charge, mortgage, security interest, pledge, escrow, equity or other encumbrance.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Filing Deadline” has the meaning assigned to it in Section 8.1 hereof.

 

FINRA” means the Financial Industry Regulatory Authority, Inc.

 

Form S-1” means that certain Registration Statement on Form S-1 (File No. 333-254068), initially filed by the Company with the Commission on March 10, 2021, as amended thereafter, including the exhibits thereto.

 

GAAP” means U.S. generally accepted accounting principles consistently applied.

 

Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

 

Investor Commitment Amount” has the meaning assigned to it in Section 1.1 hereof.

 

Investors” has the meaning assigned to it in the introductory paragraph of this Agreement and shall include any Affiliates of the Investors and any transferees of Investors who are obligated to execute and deliver this Agreement in connection with such transfer.

 

Joinder” has the meaning assigned to it in Section 1.1 hereof.

 

knowledge” or any similar phrase means (a) with respect to the Company, the actual knowledge, after reasonable inquiry, of each of the chief executive officer, chief financial officer and the chief technology officer and (b) with respect to an Investor, the actual knowledge of such person or entity.

 

Material Adverse Effect” means any event, circumstance, change, development, effect or occurrence (collectively “Effect”) that, individually or in the aggregate with all other Effects, (a) has or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or operations of the Company or (b) would prevent, materially delay or materially impede the performance by the Company of its obligations under this Agreement or the consummation of the Acquisition; provided, however, that none of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether there has been or will be, a Material Adverse Effect: (i) any change or proposed change in or change in the interpretation of any law (including any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, workplace safety or similar law promulgated by any Governmental Entity in connection with or in response to the COVID 19 pandemic) or accounting principles; (ii) events or conditions generally affecting the industries or geographies in which the Company operates; (iii) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (iv) acts of war, sabotage, civil unrest, terrorism, cyberattack, epidemics, pandemics or disease outbreaks (including the COVID 19 pandemic), or any escalation or worsening of any such acts of war, sabotage, civil unrest, terrorism epidemics, pandemics or disease outbreaks, or changes in global, national, regional, state or local political or social conditions; (v) any hurricane, tornado, flood, earthquake, natural disaster, or other acts of God; (vi) any failure in and of itself to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flow or cash position, provided that this clause (vi) shall not prevent a determination that any Effect underlying such failure has resulted in a Material Adverse Effect, or (vii) the completion of the Acquisition or the completion of any additional financing related to the Acquisition, except in the cases of clauses (i) through (v), to the extent that the Company is disproportionately affected thereby as compared with other participants in the industries or geographies in which the Company operates.

 

 

 

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Person” means and includes all natural persons, corporations, business and other trusts, associations, companies, partnerships, joint ventures, limited liability companies and other entities and governments and agencies and political subdivisions.

 

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

Purchase Price” has the meaning assigned to it in Section 1 hereof.

 

Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such Registration Statement or document.

 

Required Investors” means, prior to the Closing, Investors entitled to acquire at least a majority of the Shares to be issued hereunder based on the total Investor Commitment Amounts at such time, and following the Closing, Investors holding at least a majority of the Shares then beneficially owned by all Investors.

 

Resale Registration Statement” has the meaning assigned to it in Section 8.1 hereof.

 

Securities Act” or “Act” means the Securities Act of 1933, as amended.

 

Shares” has the meaning assigned to such term in the recitals hereto.

 

Subsidiary” means any corporation, association trust, limited liability company, partnership, joint venture or other business association or entity (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled directly or indirectly by the Company or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such Person.

 

Suspension Event” has the meaning assigned to it in Section 8.1 hereof.

 

Trading Day” means a day on which the principal Trading Market is open for trading.

 

Trading Market” means the Nasdaq Capital Market and or any other exchanges on which the Common Stock is listed or quoted for trading on the date in question.

 

Transaction Documents” means this Agreement, any Joinders and any other agreement between the Company and an Investor that expressly identifies itself as a Transaction Document.

 

10.    Survival. The representations, warranties, covenants, indemnities and agreements contained in this Agreement and in the other Transaction Documents shall survive the Closing of the transactions contemplated by this Agreement.

 

 

 

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11.   Enforcement; Specific Performance. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investors and the Company will be entitled to specific performance, injunctive and other equitable relief under the Transaction Documents. The parties agree that monetary damages will not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation (i) security or the posting of any bond in connection with such relief, or (ii) the defense that a remedy at law would be adequate. Each Investor acknowledges and agrees that notwithstanding anything contained in this Agreement or any Transaction Document, the Company may, in its sole discretion, abandon the Acquisition prior to the Closing without any liability to the Investors party hereto or party to any Transaction Document.

 

12.   Miscellaneous.

 

12.1. Waivers and Amendments. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only in a writing executed by the Company and the Required Investors; provided, that (i) such written consent must also be executed by any Investor that is materially, disproportionately and adversely affected, and (ii) no amendment or waiver may increase the obligations of any Investor without the prior written consent of such Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Shares purchased under this Agreement at the time outstanding, each future holder of all such Shares, and the Company. Neither this Agreement, nor any provision hereof, may be changed, waived, discharged or terminated orally or by course of dealing, but only by an instrument in writing.

 

12.2. Notices. Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by e-mail or (iii) delivered by overnight courier, in each case, addressed as follows:

 

If to the Company to:

 

Esports Technologies, Inc.

197 E. California Ave., Ste. 302

Las Vegas, Nevada 89104

Attn: Aaron Speech

Email: aspeach@esportstechnologies.com

 

If to any Investor:

 

To the address set forth on the signature page hereto;

 

or at such other address as the Company or such Investor each may specify by written notice to the other parties hereto. Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section 12.2. Any such notice or other communication shall be deemed to have been given as of the date so personally delivered or transmitted by e-mail (or, if delivered or transmitted after normal business hours at the location of recipient, on the next Business Day), one Business Day after the date when sent by overnight delivery services or seven days after the date so mailed if by certified or registered mail.

 

12.3. Cumulative Rights. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

 

 

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12.4. Successors and Assigns; Syndication. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of the Investors and the successors of the Company, whether so expressed or not. Except for the representations and warranties set forth in Sections 3.2, 3.5, 3.7, 3.10 through 3.16, 10 and this Section 12.4, for which Needham and its affiliates are beneficiaries, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and assigns, and the parties hereto acknowledge Needham and its affiliates are third party beneficiaries of this Agreement for the purposes of, and to the extent of, the rights granted to them, if any, pursuant to the sections referenced in this Section 12.4. Prior to the Closing Date, the Investors may transfer and assign any portion of their rights and obligations to acquire Shares at the Closing under this Agreement to a Person or Persons only with the prior written consent of the Company (unless such assignment is made to an Affiliate, in which case, only prior written notice to the Company shall be required); provided that each such transferee shall become a party to this Agreement as an “Investor” hereunder, and Schedule I shall be updated accordingly to include such transferee and reflect applicable Investor Commitment Amount. Following the Closing Date, an Investor may transfer and assign all of its rights and obligations under this Agreement to its Affiliate in connection with a legally permissible transfer of all or a portion of the Shares purchased under this Agreement by such Investor to such Affiliate. Any attempt to assign or transfer any right hereunder in violation of this Section 12.4 shall be void ab initio.

 

12.5. Headings. The headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

 

12.6. Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California, without regard to principles of conflicts of law.

 

12.7. Fees and Expenses. Each party shall bear and be responsible for his, her, their or its own fees and expenses incurred in connection with entering into this Agreement and the transactions contemplated hereby.

 

12.8. Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal or state court located in the State of California, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 12.2 shall be deemed effective service of process on such party.

 

12.9. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE INVESTORS AND THE COMPANY HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE INVESTORS WILL ASSERT, ANY RIGHT TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY OTHER AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE INVESTORS AND THE COMPANY HEREUNDER OR THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN TORT OR CONTRACT OR OTHERWISE. The Company and each Investor acknowledge that it has been informed by the other that the provisions of this Section 12.9 constitute a material inducement upon which the Company and the Investors are relying and will rely in entering into this Agreement and consummating the transactions contemplated hereby. Any Investor or the Company may file an original counterpart or a copy of this Section 12.9 with any court as written evidence of the consent of the Investors and the Company to the waiver of the right to trial by jury.

 

12.10. Termination. This Agreement shall terminate (a) upon the termination of the Acquisition Agreement, (b) at any time upon the written consent of the Company and the Required Investors, or (c) on November 30, 2021 if the Closing has not occurred.

 

 

 

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12.11. Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

 

12.12. Entire Agreement. The Transaction Documents contain the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and such agreements supersede and replace all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and thereof.

 

12.13. No Presumption. With regard to each and every term and condition of this Agreement and the other Transaction Documents, the parties understand and agree that the same has been mutually negotiated, prepared and drafted, and if at any time the parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which party actually prepared, drafted or requested any term or condition of this Agreement.

 

12.14. Non-Reliance and Exculpation. Each Investor acknowledges and agrees that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, any placement agent, any of its affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the statements, representations and warranties of the Company expressly contained in Section 4 of this Agreement, in making its investment or decision to invest in the Company. Each Investor acknowledges and agrees that none of (i) any other Investor pursuant to this Agreement or any other agreement related to the private placement of the Shares (including any other Investor’s respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), (ii) any placement agent, its affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing, (iii) any other party to the Transaction Documents (other than the Company), or (iv) any affiliates, or any control persons, officers, directors, employees, partners, agents or representatives of the Company or any other party to the Transaction Documents shall be liable to the Investor, or to any other Investor, pursuant to this Agreement or any other agreement related to the private placement of the Shares, the negotiation hereof or thereof or the subject matter hereof or thereof, or the transactions contemplated hereby or thereby, for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Shares.

 

12.15. Severability. If any provision of this Agreement shall be found by any court of competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable. Such provision shall, to the maximum extent allowable by law, be modified by such court so that it becomes enforceable, and, as modified, shall be enforced as any other provision hereof, all the other provisions hereof continuing in full force and effect.

 

12.16. Waiver of Conflicts. Each party to this Agreement acknowledges that Schiff Hardin LLP, counsel for the Company, may have in the past performed and may continue to perform legal services for certain of the Investors in matters unrelated to the transactions described in this Agreement. Accordingly, each party to this Agreement hereby (a) acknowledges that they have had an opportunity to ask for information relevant to this disclosure; and (b) gives his, her, their or its informed consent to Schiff Hardin LLP’s representation of certain of the Investors in such unrelated matters and to Schiff Hardin LLP’s representation of the Company in connection with this Agreement and the transactions contemplated hereby.

 

 

 

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12.17. Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Investors that it shall have publicly disclosed all material, non-public information delivered to any of the Investors by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Investors or any of their Affiliates on the other hand, shall terminate. The Company and each Investors shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Investors shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Investor, or without the prior consent of each Investors, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Investor, or include the name of any Investor in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Investor, except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Investors with prior notice of such disclosure permitted under this clause (b).

 

12.18. Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section 12.17, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Investor or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Investor shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that each Investor shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates delivers any material, non-public information to an Investor without such Investor’s consent, the Company hereby covenants and agrees that such Investor shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Investor shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms that each Investor shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

12.19. Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance or non-performance of the obligations of any other Investor under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose. Each Investor has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Investor and its respective counsel have chosen to communicate with the Company through Schiff. Schiff does not represent any of the Investors and only represents the Company. The Company has elected to provide all Investors with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Investors. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and an Investor, solely, and not between the Company and the Investors collectively and not between and among the Investors.

 

 

 

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12.20 Indemnification of Investors. Subject to the provisions of this Section 12.20, the Company will indemnify and hold each Investor and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Investor Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Investor Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Investor Party may have with any such stockholder or any violations by such Investor Party of state or federal securities laws or any conduct by such Investor Party which is finally judicially determined to constitute fraud, gross negligence, willful misconduct or malfeasance) or (c) in connection with any registration statement of the Company providing for the resale by the Investors of the Warrant Shares (as defined in the Warrants) issued and issuable upon exercise of the Warrants, the Company will indemnify each Investor Party, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Investor furnished in writing to the Company by such Investor expressly for use therein, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in connection therewith. If any action shall be brought against any Investor Party in respect of which indemnity may be sought pursuant to this Agreement, such Investor Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Investor Party. Any Investor Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Investor Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Investor Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Investor Party under this Agreement (y) for any settlement by an Investor Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 12.20 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Investor Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

12.21 Stockholder Approval. The Company shall provide each shareholder entitled to vote at a special meeting of shareholders of the Company (the “Shareholder Meeting”), which shall be promptly called and held not later than 120 days after the Closing (the “Shareholder Meeting Deadline”), a proxy statement soliciting each such shareholder’s affirmative vote at the Shareholder Meeting for approval of resolutions (“Shareholder Resolutions”) providing for the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Trading Market (without regard to any limitations on conversion or exercise, as applicable, with respect thereto) (the “Shareholder Approval”, and the date the Shareholder Approval is obtained, the “Shareholder Approval Date”), and the Company shall use its reasonable best efforts to solicit its shareholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the shareholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Shareholder Approval by the Shareholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Shareholder Approval is not obtained on or prior to the Shareholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held on or prior to the six month-anniversary of the Closing. If, despite the Company’s reasonable best efforts the Shareholder Approval is not obtained after such subsequent shareholder meetings, the Company shall cause an additional Shareholder Meeting to be held each quarter thereafter until such Shareholder Approval is obtained.

 

12.22 Subsequent Equity Sales. From the date hereof until Shareholder Approval Date, without the approval of the holders of 60% of the Preferred Stock issued pursuant to this Agreement, other than Exempt Issuances (as defined in the Warrant) the Company shall not (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock equivalents or (ii) file any registration statement or any amendment or supplement thereto, other than as contemplated pursuant to Section 8 herein.

 

Signature pages follow.

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Subscription Agreement to be duly executed as of the day and year first above written.

 

 

  THE COMPANY
   
  ESPORTS TECHNOLOGIES, INC.
   
     
  By:  
  Name: Aaron Speach
  Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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[PURCHASER SIGNATURE PAGES TO SuBSCRIPTION AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Investor: _______________________________________________________

 

Signature of Authorized Signatory of Investor: _________________________________

 

Name of Authorized Signatory: _____________________________________________

 

Title of Authorized Signatory: ______________________________________________

 

Email Address of Authorized Signatory: ______________________________________

 

Address for Notice to Investor:

 

 

 

 

Address for Delivery of Warrant to Investor (if not same as address for notice):

 

 

 

 

 

Investor Commitment Amount: $_________________

 

Shares: _________________

 

Warrant Shares: __________________

 

EIN Number: _______________________

 

 

 

[SIGNATURE PAGES CONTINUE]

 

 

 

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Form of Joinder Agreement

 

JOINDER AGREEMENT

 

The undersigned is executing and delivering this Joinder Agreement pursuant to that certain Common Stock Subscription Agreement, dated as of _____, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”) by and among Esports Technologies, Inc., a Nevada corporation (the “Company”) and the Investors party thereto. Capitalized terms used but not defined in this Joinder Agreement shall have the respective meanings ascribed to them in the Agreement.

 

By executing and delivering this Joinder Agreement to the Agreement, the undersigned hereby agrees to (i) subject to and in accordance with the terms of the Agreement, purchase from the applicable Seller the number of Shares set forth below in exchange for a cash payment equal to the aggregate price set forth below at a price per share equal to the Purchase Price, subject to, and in accordance with, the terms and conditions set forth in the Agreement and (ii) become a party to, to be bound by, and to comply with the provisions of the Agreement in the same manner as if the undersigned were an original signatory to such agreement as an Investor.]

 

Accordingly, the undersigned has executed and delivered this Joinder Agreement as of the ___ day of ____________, 2021.

 

 

  [INVESTOR]
   
  By:
  Name: _______________________
  Title: _______________________
   
  _________________________
  Address of [Investor]

 


 

 

Shares Warrants Purchase Price
______ ______ $_____

 

 

 

 

 24 

 

 

Schedule I

 

INVESTORS

 

Investor

Investor Commitment Amount

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 25 

 

 

Exhibit A

 

Form of Warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 26 

Exhibit 99.1

 

 

Esports Technologies Announces Definitive Agreement for the Acquisition of Aspire Global’s B2C Business that Recorded $1.8 Billion in Wagering and $73.9 Million in Revenue in the Previous 12 Months

Upon Closing, Esports Technologies Will Acquire Karamba, Dansk777, Hopa, Griffon Casino, GenerationVIP, BetTarget and 1.25 Million Deposited Customers

 

LAS VEGAS, October 1, 2021 – Esports Technologies, Inc. (Nasdaq: EBET), a leading global provider of advanced esports wagering products and technology, announced today the execution of a definitive agreement for the acquisition of Aspire Global’s (STO: ASPIRE) B2C business in a $75.9 million transaction, including $58.3 million in cash, $11.7 million in a promissory note and approximately $5.9 million worth of common stock. The closing of the acquisition is subject to Esports Technologies’ receipt of financing, as well as other closing requirements. The transaction is expected to close by November 30, 2021.

 

Under the terms of the deal, Esports Technologies will acquire Aspire’s portfolio of B2C proprietary online casino and sportsbook brands, including Karamba, Hopa, Griffon Casino, BetTarget, Dansk777, and GenerationVIP. Strategically, Esports Technologies intends to utilize the multiple-brand acquisition to cross-sell esports wagering opportunities to increase its esports revenue, player bet transactions, and customers.

 

In the most recent 12-month period ending June 2021, Aspire Global’s B2C revenue was $73.9 million and its EBITDA was $8.2 million. During the same period, the B2C business recorded wagering of $1.8 billion and over 1.3 billion bets.

 

Upon completion of the acquisition, Aspire and Esports Technologies will enter into an agreement where Aspire will provide four years of managed services for the acquired brands, ensuring operational continuity while allowing Esports Technologies to scale its operations in key markets.

 

Aaron Speach, CEO, Esports Technologies, said, “The acquisition of Aspire’s B2C business will be transformative opportunity to accelerate growth by offering esports wagering to 1.25 million new deposited customers. Our company is in a strong position to benefit from the heightened popularity and growing interest in esports.”

 

Tsachi Maimon, CEO of Aspire Global, said: “Esports Technologies is a strong company with high growth ambitions and is a perfect match for our B2C brands. With Aspire Global’s B2C brands, Esports Technologies gains leading, well-established brands, an excellent base for further growth and a very talented team that contributed to the B2C’s growth. We are confident that Esports Technologies will take our B2C brands to the next level, and we welcome Karamba and the other B2C brands as our new partners.”

 

Esports Technologies has entered into binding agreements with certain investors for a private placement of $36.2 million consisting of convertible preferred stock at an initial conversion of $28.00 per share, subject to future adjustments and warrants to purchase common stock. The conversion of the preferred stock and exercise of the warrants is subject to the receipt of shareholder approval.

 

 1 
 



Needham & Company acted as sole placement agent for the private placement.

 

A conference call is set for Monday, October 4 at 4:00pm EDT, reviewing details of the planned acquisition. The link to listen to the call is: http://public.viavid.com/index.php?id=146720

 

A replay of the call will be available on Esports Technologies’ Investor Relations page at https://esportstechnologies.com/investor-overview.

 

 

About Esports Technologies

Esports Technologies is developing groundbreaking and engaging wagering products for esports fans and bettors around the world. Esports Technologies is one of the leading global providers of esports product, platform and marketing solutions. The company operates a licensed online gambling platform, gogawi.com, that offers real money betting on esports events and professional sports from around the world in a secure environment. The company is developing esports predictive gaming technologies that allow distribution to both customers and business partners.

 

For more information, visit: https://esportstechnologies.com.

 

Note: Aspire Global’s B2C gross gaming revenue and net gaming revenue figures for 2020 and 2021 are based on an exchange rate of 1.17 U.S. dollars per euro. Net gaming revenues include EU VAT and are net of distribution expenses, gaming duties and administrative expenses.

 

About Non-GAAP Financial Measures

 

This press release includes EBITDA, a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). EBITDA is defined as net income (loss), before interest expense, income tax expense (benefit), depreciation and amortization expense. EBITDA is not a measurement of a company’s financial performance under GAAP, and should not be considered in isolation or as an alternative to net income (loss) as a measure of financial performance, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The Company believes that EBITDA is an important supplemental measure of the operating performance of the assets to be acquired because it eliminates the impact of expenses that do not relate to business performance. The Company also believes that this non-GAAP measure is useful to investors because it and similar measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry and provide additional information regarding growth rates on a more comparable basis than would be provided without such adjustments.

 

Forward-Looking Statements: This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements involve risks and uncertainties. Forward-looking statement include, without limitation, the ability of the Company to obtain financing and to satisfy the closing conditions in the acquisition agreement. These statements relate to future events, future expectations, plans and prospects. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, actual results or outcomes may prove to be materially different from the expectations expressed or implied by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed in the Company’s filings with the Securities and Exchange Commission, including as set forth in the “Risk Factors” section of the Company’s final prospectus, which was filed with the Securities and Exchange Commission on April 16, 2021, as updated by the Company’s subsequent Quarterly Reports on Form 10-Q. The Company does not undertake any obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

 

 

Contacts:

For Investors:

ICR, Inc.

Ryan Lawrence

Ryan.Lawrence@icrinc.com   

 

Ashley DeSimone

Ashley.desimone@icrinc.com

 

For Media:

ICR, Inc.

Dan McDermott

Dan.McDermott@icrinc.com

 

 

 

 2 

 

Exhibit 99.2

Investor Presentation September 2021 Go. Game. Win. Esports Technologies

 
 

LEGAL D I S CLA I M ER This presentation (the “presentation”) has been prepared for use by Esports Technologies, Inc . (“Esports Tech”) in connection with their proposed offering . This presentation is for information purposes only and is being provided to assist interested parties in making their own evaluation with respect to a potential investment, and for no other purpose . This presentation may not be reproduced or redistributed, in whole or in part, without the prior written consent of Esports Tech . Esports Tech does not makes any representation or warranty as to the accuracy or completeness of the information contained in this presentation . This presentation is not intended to be all - inclusive or to contain all the information that a person may desire in considering an investment in connection with the proposed offering and is not intended to form the basis of any investment decision . You should consult your own legal, regulatory, tax, business, financial and accounting advisors to the extent you deem necessary, and must make your own investment decision and perform your own independent investigation and analysis of an investment in the transactions contemplated in this presentation . NEITHER THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE OR TERRITORIAL SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS PRESENTATION IS TRUTHFUL OR COMPLETE. FORWARD - LOOKING STATEMENTS This presentation includes “forward - looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 . Forward - looking statements may be identified by the use of words such as “estimate”, “project”, “forecast”, “intend”, “will”, “expect”, “anticipate”, “believe”, “seek” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters . These forward - looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics, projections of market opportunity and market share, potential benefits of the transaction and the potential success of Esports Tech’s strategy, and expectations related to the terms and timing of the proposed acquisition and related transactions . These statements are based on various assumptions, whether or not identified in this presentation, and on the current expectations of Esports Tech’s management and are not predictions of the actual performance . These forward - looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability . Actual events and circumstances are difficult or impossible to predict and will differ from assumptions . Many actual events and circumstances are beyond the control of Esports Tech . These forward - looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, legal and regulatory conditions ; the inability of the parties to successfully or timely consummate the proposed acquisition ; failure to realize the anticipated benefits of the proposed acquisition ; risks relating to the uncertainty of the projected financial information with respect to Esports Tech ; and the effects of competition and regulation on Esports Tech’s business . If any of these risks materialize or the assumptions prove incorrect, actual results could differ materially from the results implied by these forward - looking statements . There may be additional risks that Esports Tech presently does not know or that Esports Tech currently believes are immaterial that could also cause actual results to differ from those contained in the forward - looking statements . Forward - looking statements speak only as of the date they are made . Readers are cautioned not to put undue reliance on forward - looking statements, and Esports Tech assumes no obligation and does not intend to update or revise these forward - looking statements, whether as a result of new information, future events, or otherwise . Esports Tech gives no assurance that it will achieve its expectations . USE OF DATA The data contained herein is derived from various internal and external sources . No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any projections or modeling or any other information contained herein . Any data on past performance or modeling contained herein is not an indication as to future performance . Esports Tech assumes no obligation to update the information in this presentation . 2 Legal Disclaimer

 
 

Introduction

 
 

5 EBET’s Experienced, Expert Management Team Jim Purcell CFO 25 years of financial experience Bart Barden COO 25 years of industry experience Dennis Neilander Board Member Former Chairman of Nevada State Gaming Control Board Accolades: - Named to the Best Lawyers in America in Gaming Law for 2015 – 2022 - Named Gaming Regulator of the Year by the International Masters of Gaming Law in 2007 Mark Thorne CMO 20 years of industry experience Aaron Speach CEO Fo und er of E s p or ts Technologies ESEG Limited

 
 

6 Esports Technologies Overview Founded 2016 Headquarters Las Vegas, NV Employees 46 Nasdaq IPO April 2021 EBET Stock Price $31.59 Shares Outstanding 13.4 million Market Capitalization $423.6 million Innovative Real Money Esports Wagering Platform Operates an online esports/sportsbook focused on gamers located in Asia. 60,000+ signups from over a dozen countries Shutdown of traditional sports drove high registration growth with less marketing spend. Growth Roadmap Continued investment in technology platform to meet growing demand for esports betting. Strategic M&A in order to expand scale, product offering and market access. EBET Mission: To define, shape and drive growth of the current and future esports wagering ecosystem by providing advanced product, platform and marketing solutions directly to service providers and customers. Source: Company filings and FactSet as of August 27, 2021

 
 

7 Target: Aspire Global B2C iGaming Division B2B Products Casino S po r ts Aspire Global is a leading B2B and B2C provider of iGaming solutions. Aspire is divesting its B2C assets in order to focus on and invest in its B2B platform offering. Founded 2005 Headquarters Sliema, Malta Employees ~500 Ticker / Exchange ASPIRE.ST / Stockholm LTM Revenue Distribution B2B Platform Enables customers with everything they need to operate a successful iGaming brand, covering casino and sports B2C Platform Includes leading brand Karamba, consisting of online casino and sports betting capabilities B2C Products B2C 33% €188.3M B2B 67% Source: Company filings H1 YOY Growth: B2B 29.4% B2C 44.5%

 
 

8 A s pi r e B 2C GN OG A s pi r e B 2C R S I A s pi r e B 2C R S I Transaction Terms Acquisition Rationale and Terms ▪ Opportunity to acquire highly respected B2C platform for ~1x revenue, a discount to trading peers ▪ Access to a 1.2M+ player database across 145+ countries ▪ Properties producing ~$2B in gross annual wagers ▪ Acquisition includes $177M+ in customer deposits ▪ Broaden product portfolio into online casino and sports betting, further penetrating the $30B+ rapidly growing iGaming industry ▪ Access to large number of regulated markets globally and unique access to future markets A s pi r e B 2C GN OG Transaction Rationale (1) USD purchase price determined using a EUR to USD exchange rate of 1 - for - 1.2 Note: Additional partnership relationships include managed service fees for Aspire iGaming revenue of 30%, 28% , 26% for each of the first three contract years respectively, and 30% of EBET Esports revenue Aspire managed services fee represents Aspire platform and managed services fee EBET Acquiring: Aspire’s B2C assets: • Brands • Domain Names • Customer Database • Front End Code P urc h as e Price: • €60,000,000 ($72,000,000) in cash (1) M ar k e t A ccess : • Acquiring licenses and/or sublicenses in the UK, Germany, Malta, Ireland, and Denmark Highly Attractive Valuation EV / LTM Revenue EV / LTM EBITDA 8. 0 x 7.0x 10 . 0x 8.8x 7. 0 x 8. 0 x 6. 0 x 7. 0 x 5. 0 x 4. 0 x 5. 0 x EBITDA 3. 0 x 4. 0 x Negative 2. 0 x 1.0x 2. 0 x 1. 0 x 1. 0 x - - 16 . 0x 14 . 0x 14.4x 25 0 .0x 219.1x 12 . 0x 20 0 .0x 10 . 0x 15 0 .0x 8. 0 x 4. 0 x 2. 0 x 1.0x 50 . 0x 8.8x - Sources: Edgar and Factset as of August 27, 2021 GNOG based on acquisition value announced on August 9, 2021 Assumes Aspire acquisition price of $72 million USD

 
 

9 Synergies Drive Immediate Scale and Expansion Combination provides unique profile: Globally scaled, B2C platform with diversified product offering experiencing high growth and profitability + Geographic Presence: Asia Europe, North America Global Platform Focus: B2C B2C Pure Play B2C Core Product: Esports Betting Online Casino and Sports Betting Broad Product Portfolio Revenue Profile: Early Stage Scaled and Steady Growth Scaled and High Growth Profitability: Modest Loss Profile Strong EBITDA Margin Attractive Margin Profile

 
 

Gaming Market Overview

 
 

11 Market Opportunity Market Opportunity Implied Esports Betting TAM Analysis Source: Wall Street Research, Newzoo $64 Billion A nnu al Le g al Wagers E SPOR TS 5% to 8% Take Rate at $3.2 - $5.1B Market Opportunity i m p lies 160 Million with 80 Million implies Regular Viewers Hardcore Viewers $20 - $32 Per Regular Viewer Per Hardcore Viewer or $40 - $64 550 Million Regular Viewers 250 Million Hardcore Viewers w i th at $20 - $32 Per Regular Viewer $40 - $64 Per Hardcore Viewer or i m p lies $10.0 - $17.6B Market Opportunity Viewership

 
 

12 Select Tournaments Esports Competitions Select Teams Select Games

 
 

13 Target Audience Avid Esports Bettor Russell Age 35 Management Level Professional $100k Income ”I have been playing in Fantasy Sports Leagues and DFS for several years and love watching the NBA and NFL. I own a PS5 console and like to play games with my kids and to be social. I would be interested in potentially betting on esports games focused on sports, during real sport downtime” Games Liked: Games Liked: Avid Esports Bettor Geoff Age 30 IT Finance $75k Income “I am an avid bettor and frequently bet on live sports. I have been watching esports lately. I see an opportunity, since betting in esports is relatively new. I am looking for a trusted platform and I am ready to win big.” Secondary Persona Games Liked: New to Betting - Esports Viewer Johnny Age 25 Tech Lead at Media Co. $55k Income “I have been into video games since I was a kid. I still play, but I really like watching world tournaments. I don’t know much about esports betting but would like to give it a try to see if my knowledge can translate into good choices.” T a rge t P e r s ona Tertiary Persona

 
 

14 30 - 39, 23% 40 - 49, 21% 50 - 59, 17% Global iGaming Demographic by Age 60+, <30, 20% 20% iGaming and Sports Betting Market The iGaming Industry represents the betting on casino games or events over the internet, which includes online sports betting (“OSB”), online casino gambling and other skill - based games, like poker and blackjack Large and Rapidly Expanding Global TAM Dynamic Expansion of the Existing Target Consumer Base • Several U.S. states are close to legalization with measures debated across state legislatures; 65% of the U.S. population will be exposed to OSB by 2025 (30% online casino) • By 2025, 98% of the US market will have access to OSB • For iGaming, the global market will have a population penetration rate of 37% by 2030 Source: H2 Gambling Capital, Wall Street Research, American Gaming Association, Research and Markets • Of the world's 15 largest regulated online gaming markets, 12 are currently in Europe • Fastest growing markets & regulatory expansion scope: U.S. (2 nd ), Australia (6 th ), Canada (8 th ) • Online growth accelerated during 2020, as the pandemic accentuated the need to shift to digital Global iGaming Market GGR (in billions) $65.5 In 2026 $37.0 In 2021 $31.0 In 2020 Aggressive Industry Growth & Diversified Demographic • Online growth accelerated during 2020 as the pandemic accentuated the need to shift to digital fueling the industry to generate $31.0B of GGR • European iGaming is projected to grow 15% while the U.S. is projected to grow 33% • By 2026, the global iGaming and OSB market will reach $65.5B of GGR, a 13.3% CAGR 20% OSB U.S. Population Penetration 98% 0% 20% 40% 60% 80% 12 0 % 10 0 % 2020 2025E

 
 

Netherlands Market: Similar to Germany with NL branding being slightly stronger; great land grab opportunity as first group of regulated operators UK Market: Competitive market but immediate growth opportunities based on new brands already exhibiting strong growth + affiliate strength and cross selling 15 Sports Betting TAM by Country Size of Circle = Total Market Opportunity German Market: Large opportunity to grow German SB revenue, once license granted given migration out of market ROW: Large opportunity to leverage cross marketing across ROW markets targeted by esports business Note: Due to TAM penetration there is more upside opportunity to the current SB business than downside due to regulatory changes Aspire Asset Brand Strength Source: H2 Gambling Capital, Management Estimates G e r m a n y Market $1.5B H i gh L ow H i gh Licensing or Regulatory Unknown L ow Digital UK Market $3.3B ROW Ma r k e t ~$20B Aspire = $5M (0.1%) of Market Aspire =$1M ( 0.06%) N e th e rl a nds Market $286M Aspire =$0.5M (0.4%) Aspire Ma r k e t S h a r e = 0 . 001 % Overall Sports Betting is Growing: Global regulated sports betting market will generate $106 billion in gross win from $767 billion by 2025

 
 

Esports Technologies Overview

 
 

17 Esports Technologies Overview LEADERSHIP AND EXPERIENCE Our executives have decades of experience leading businesses and have assembled an extended team with experience at the top iGaming, Fortune 500 companies and marketing agencies. PRODUCT Our current product platform and services provide more innovative features from both the depth of wagering services as well as the breath of wagering options for esports customers. We have secured exclusive licenses for IP for additional relevant features as we expand our offerings. PASSION We are a group of gamers, previous esports professionals and sports fans who truly love what this entertainment vertical has to offer and how we can make it more exciting for new and experienced consumers. PARTNERSHIPS We have forged strategic and exclusive relationships with business partners and providers in the industry and we intend to use this to create a nimble team and expanding our capabilities through our networks.

 
 

18 Company Timeline 2020 2021 - H1 2021 - H2 2022 2017 • Esports T e chno lo g ie s • O p t i m i z e GoGawi • Product and Platform Investment • IPO • Scaling GoGawi • Liquidity for M&A • E S G / B r o w se r Bet/Odds • M&A • Aspire Global Platform • Regulated Market Access • MGA License • Esportsbook.com • Further IP and Licensing Expansion • B2B Product Launches • GoGawi • Southeast Asia • First Mover in Esports

 
 

19 Next Gen Esports - Focused Product Platform E x c h a n g e Software • Real - time Exchange • API - Supported Sportsbook betting platform • Allows for large volume betters and wager operators E s p o rt s G a m es (Free to Play) • Fun and Free to Play Prediction Game • Educational Esports Match and Competitive Content • 100,000 downloads by 8/16/21 Browser E x t e n s i on • Live Betting • Easy to Engage • No Login Required • In Game Betting • Great User Experience • Reduces Betting Friction Esports, Sportsbook and Casino Service • Esports • Traditional Sports • I - Gaming and Casino • Esports Jackpots

 
 

Aspire Global B2C Synergies

 
 

21 Aspire’s Complementary B2C Product Overview B r a nds : Products / Platform: Combination Results in Unprecedented Diversified Product Offering Esports Betting O n li n e C asi no Traditional Sports Betting NGR % 62% 19% 13% 3% 2% 2% (D K)

 
 

22 Synergies Drive Immediate Scale and Expansion Geographic Presence: Southeast Asia Brazil North America Europe Africa Countries: 4 Countries 26 Countries (1) Player Database: 68,000+ Verified Depositors 1,200,000+ Verified Depositors Aspire Adds Regulated Market Access in Key Geographies with an Existing Installed Base (1) Combined B2C and Future B2B Market Access

 
 

23 Innovative, Leading Edge Product Team Ideal Combination of Technology, Scale and Operations Excellence Revenue Scale with Lean Overhead Operational Expertise and Market Access of Aspire B2B Headcount Synergies Pro Forma Senior Management 6 1 7 Sales & Marketing 17 8 25 Research & Development 17 1 18 General & Administrative 6 4 10 Total Headcount 46 14 60 Total Combined Entity Resources

 
 

24 Roadmap to Acquisition Integration Staffing • Full search engine optimization capable team and leadership • Full affiliate team and leadership • Expanded pay per click, design and partnerships team Optimised Affiliate Performance • Eaffiliates.com • Optimization of existing affiliate database • New affiliate onboarding Search Engine Optimization (“SEO”) • Huge potential to invest in SEO • Current Google rank of the Aspire brands needs be improved • SEO driven acquisition will prove fruitful in 5 - 8 months CRM – Aspire Managed Services • Aspires CRM team are vastly experienced • Customer retention is healthy • Conversion from non - revenue customers to first time depositors is above 30% for 2021 Casino Management • Aspire currently manage the casino lobbies efficiently • Optimised revenues and increased volumes • Retain customers via content decisions Bonus Costs • Bonus costs are below 25% of Net Gaming Revenue • Bonus costs are less than 10% of deposits Existing Successes – To Be Continued Easy Wins – Changes in First 6 months

 
 

Growth Strategy

 
 

26 Growth Strategy Worldwide growth through product development, brand recognition and acquisitions I nt e g r at e Aspi r e ’ s ass e ts and utilize synergies to expand offerings Continue to build innovative first mover esports betting platform

 
 

27 Aspire Transaction Value 1.2M Paying Customers Accelerated E spo rt s P a y ing Customer Growth via Cross - Selling Regulated Market Access for B2C Improved Funnels f or Gogawi.com Accele r a t ing Launch for Esportsbook.com Distribution for Esports IP via Aspire Platform Accelerated Licensing and Esports Product Proof of Distribution Innovation Concept and Revenue Legitimizes Tech Stream E B I T D A and Cash M&A Currency EBET will utilize Aspire’s assets to drive, expand and promote its business

 
 

28 Regional Growth Strategies NORTH AMERICA Partner quickly to secure licenses and/or skins before esports is officially regulated and begin growing user base Build up engaged, convertible audience with superior free to play experience WESTERN EUROPE & AUS Grow and expand in regions via acquisitions or strategic partnerships . Supply best pricing and innovative betting services/products Obtain and grow regulated licenses ASIA + LATIN AM + ROW Establish brand and optimize marketing via key USP of best value and experience. Push into unregulated markets Grow esports wallet share K e y s T o S u cc e s s Primary Strategy Execution

 
 

Aspire B2C Financial Overview

 
 

30 $ 3.6 $ 4.5 1 H '20 1 H '21 $ 1.9 $ 2.5 5 Q2' 2 0 Q2' 2 1 $ 1.7 $ 2.0 Q1' 2 0 Q1' 2 1 2021 H1 YOY Growth Aspire Contributes Significant Growth and Profitability ($ in millions) Q2'20 Q2'21 Aspire’s Historical B2C Quarterly EBITDA Aspire’s Historical B2C Gross Quarterly Revenue 2021 Q1 YOY Growth 2021 Q2 YOY Growth $ 13.2 $ 18.9 Q1' 2 0 Q1' 2 1 $ 16.1 $ 23.4 Operating Leverage Drives Strong YOY EBITDA Growth Strong Sequential and YOY Revenue Growth $ 29.2 $ 42.3 1 H '20 1 H '21 2021 Q1 YOY Growth 2021 Q2 YOY Growth 2021 H1 YOY Growth Figures based on fiscal year end December 31 st Aspire B2C business carveout financials, in USD Aspire USD financials use a EUR to USD rate of 1 - for - 1.2

 
 

31 10.8% % 8.8x 219.4x - Aspire is Attractively Valued Against Comparable Companies EBITDA Negative 2Q 2021 YoY R e v en u e Growth 2Q 2021 EBITDA Margin EV / LTM Revenue EV / LTM EBITDA EBITDA Negative EBITDA Negative 1.0x 7.0x 14.4x - 45.5% 92.8% 27.7% % 10.7x (2 ) (3 ) (1 ) Sources: Edgar and Factset as of August 27, 2021 (2) GNOG based on acquisition value announced on August 9, 2021 (1) Assumes Aspire acquisition price of $72 million USD (3) Dotted line represents GNOG and RSI average

 
 

Appendix A: Company Income Statements

 
 

33 Esports Technologies – Income Statement (1) Figures based on reported fiscal year end September 30 st Represents unaudited financials 1Q 2020 2Q 2020 3Q 2020 4Q 2020 2020 FY $ 37 , 128 25,166 $ 40 , 750 27,003 $ 63 , 740 27,971 $ 54 , 160 34,427 $ 195 , 778 114,566 $ 11,962 $ 13,747 $ 35,769 $ 19,734 $ 81,212 $ - $ - $ - $ - $ - - - - 192,161 192,161 15,635 - - (15,635) - 19,755 8,675 17,269 (45,699) - $ 35,390 $ 8,675 $ 17,269 $ 130,827 $ 192,161 $ (23,428) $ 5,072 $ 18,501 $ (111,093) $ (110,949) $ 67,622 $ (21,468) $ - $ 416,155 $ 462,309 - (0) 0 - - $ 67,622 $ (21,468) $ 0 $ 416,155 $ 462,309 $ (91,050) $ 26,541 $ 18,501 $ (527,248) $ (573,258) - - - - - $ (23,428) $ 5,072 $ 18,501 $ (111,093) $ (110,949) 1Q 2021 2Q 2021 3Q 2021 Revenue Cost of Revenue Gross Profit Operating Expenses Acquisitions Costs Sales & Marketing Product & Technology General & Administrative Total Operating Expenses Core Operating Profit Other Expenses Interest Expense F o r eig n C u rr en c y Lo s s Total Other Expenses Net income (loss) Depreciation EBITDA $ 10 , 794 12,260 $ 33 , 833 12,465 $ 41,356 0 $ ( 1 , 466) $ 21 , 368 $ 41 , 356 $ - 39 , 253 505,935 1 , 593 , 712 $ - 234 , 691 603,445 1 , 189 , 409 $ 139 , 235 964,837 1 , 176 , 848 1 , 340 , 042 $ 2 , 138 , 899 $ 2 , 027 , 545 $ 3 , 620 , 961 $ ( 2 , 140 , 365) $ ( 2 , 006 , 177) $ ( 3 , 579 , 606) $ 600 , 406 9,961 $ 367 , 215 2,269 $ 368 , 001 10,005 $ 610,367 $ 369,483 $ 378,006 $ ( 2 , 750 , 732) - $ ( 2 , 375 , 660) 12,346 $ ( 3 , 957 , 611) 178,339 $ ( 2 , 140 , 365) $ ( 1 , 993 , 831) $ ( 3 , 401 , 267) Income Statement (1)

 
 

34 Aspire B2C Business Unit – Income Statement (1) Figures based on reported fiscal year end December 31 st ; represents unaudited B2C business carveout financials Note: Aspire USD financials use a EUR to USD rate of 1 - for - 1.2 1Q'20 2Q'20 3Q'20 4Q'20 202 0 F Y $ 13 , 182 (952) $ 16 , 066 (1,268) $ 14 , 814 (900) $ 17 , 107 (1,097) $ 61 , 169 (4,217) $ 12 , 230 $ 14 , 797 $ 13 , 914 $ 16 , 010 $ 56 , 952 $ 4 , 124 $ 5 , 117 $ 4 , 946 $ 5 , 308 $ 19 , 495 2,834 3,384 3,509 3,589 13,316 1,936 2,340 2,183 2,495 8,953 1,774 2,185 2,117 2,324 8,400 $ 10 , 668 $ 13 , 026 $ 12 , 755 $ 13 , 716 $ 50 , 165 $ 1 , 562 $ 1 , 771 $ 1 , 159 $ 2 , 294 $ 6 , 787 145 160 150 149 604 $ 1 , 708 $ 1 , 931 $ 1 , 309 $ 2 , 443 $ 7 , 391 1Q'21 2Q'21 $ 18 , 89 2 $ 23 , 374 ( 1 , 342 ) ( 1 , 273) $ 17 , 55 0 $ 22 , 100 Gross Revenue E U VAT Total Revenue Costs and Expenses Customer acquisition costs G a m in g t a x e s an d c on t en t c ha r ges Inter - segment charge Operations Total Costs and Expenses Operating Income Depreciation E B I T DA $ 6 , 779 4,218 2,707 $ 8 , 772 5,452 3,412 2,059 2,082 $ 15 , 76 3 $ 19 , 71 7 $ 1 , 787 167 $ 2 , 383 138 $ 1 , 954 $ 2 , 521 Income Statement (1) $ In thousands

 
 

Appendix B: Esports Industry Information

 
 

36 Viewership Age Demographic Sports L e a gues Esports Under 55 yrs. 50% - 75% 92% Esports Market Overview Esports describes the world of competitive, organized video gaming. Competitors from different leagues or teams face off in the same games that are popular with at - home gamers such as Fortnite, League of Legends, Counter - Strike, Call of Duty, Overwatch and Madden NFL Massive Audience with Attractive Demographics Enormous Number of Events / Wagering O pp ort un iti es Rapidly Increasing Regulation and Revenue • Esports reaches a younger and more attractive demographic of ages between 18 – 44 • Streaming services such as Twitch and YouTube allow users to watch live streams of their favorite professional players and enables streamers to communicate in real - time with fans • Esports viewership had grown more than fivefold since 2015, from ~100M viewers to ~550M+ viewers, 250M+ are considered hardcore Note: The Global Games Market includes sales of hardware and software as well as esports industry revenue Source: Wall Street Research, Newzoo • Esports events in 2021: 500+ tournaments and 14,000+ games, streamed in 50+ markets • Increasing number of events with large prize pools and investments in more franchise style leagues: Doda 2 prize pool of $40M vs. Masters (golf) prize pool of $12M • The NFL generates $16B in revenue from its fan base while $64B in legal wagers are made on the NFL in an immature U.S. betting market • Established betting sites not catering to the younger bettor • Global esports revenue was $947M in 2020, and is expected to grow 14.5% to $1.1B in 2021 • 2020 esports revenue equates to under $2.00 per fan, which is estimated to be less than ~10% of what the NHL, NBA, MLB, and NFL generate in aggregate • Over 75% of 2021 revenue is forecasted to come from sponsorship and media rights deals with the balance from ticketing, merchandise, and promoter and game publisher fees 2 0 20 2 0 21E 2 0 24E 300 250 550 0 100 200 300 400 500 600 160 80 80 NFL Esports R eg u l ar V ie w er s Ha rd c o r e V i e w er s In millions of people eSports Market Revenue In millions of dollars $ 1,617 . 7 $ 1,084 . 1 $ 947.1

 
 

37 Comparable Companies Analysis Market Enterprise EV / Revenue EV / EBITDA Revenue Growth 2021E Margins 2022E Margins Company Value Value 2021E 2022E 2021E 2022E '20 - '21 21 - '22 Gross EBITDA Gross EBITDA DraftKings Inc Class A $ 24,062.8 $ 22,569.2 17.7x 12.8x NEG NEG 98.6% 37.8% 45.8% NEG 49.1% NEG Genius Sports Limited 3,855.1 3,695.6 14.5x 10.9x NM 82.8x 70.4% 32.6% 27.9% 7.8% 37.3% 13.2% fuboTV Inc. 3,832.1 3,667.1 6.4x 4.0x NEG NEG 112.2% 59.8% 8.5% NEG 10.8% NEG Rush Street Interactive, Inc. Class A 3,283.0 2,908.9 6.0x 4.9x NEG NEG 72.8% 23.0% 30.9% NEG 32.9% NEG S c o r e M ed i a an d G a m i n g I n c . C l a s s A (1) 2,000.0 1,827.7 39.7x 12.8x NEG NEG 158.4% 210.5% NM NEG NM NEG G o l de n N ugge t O n li n e G a m i ng , I n c . C l a s s A (2) 1,560.0 1,546.0 11.4x 7.6x NEG NEG 48.5% 49.6% NM NEG NM NEG Mean $ 6,432.2 $ 6,035.8 16.0x 8.8x NM 82.8x 93.5% 68.9% 28.3% 7.8% 32.5% 13.2% Median $ 3,557.5 $ 3,288.0 12.9x 9.3x NM 82.8x 85.7% 43.7% 29.4% 7.8% 35.1% 13.2% Source: Edgar and FactSet as of August 27, 2021 “NM” denotes multiples greater than 100.0x or not available 1) SCR values based on acquisition by PENN, announced August 5, 2021 2) GNOG values based on acquisition by DKNG, announced August 9, 2021 ($ in millions)

 

 



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