Item
1.01 Entry into a Material Definitive Agreement.
Amendment
to Share Sale and Purchase Agreement
As
previously disclosed in the Current Report on Form 8-K filed with the Securities and Exchange Commission (the
“SEC”) by Esports Entertainment Group, Inc (the “Company”) on May 28, 2021, the Company
entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”) with Gameday Group Plc, a limited
liability company incorporated in Malta (the “Seller”) whereby, upon meeting certain conditions as described
therein, the Company would purchase all of the outstanding share capital, 25,101,200 ordinary shares, of Seller (the “Shares”).
The Purchase Price for the Shares originally agreed to was to be an amount corresponding to the aggregate of (i) EUR 16,000,000 (the
“Closing Payment”); (ii) subject to certain conditions as outlined in the Purchase Agreement, an amount
corresponding to 12% of Net Gaming Revenue (as defined in the Purchase Agreement) for 24 months from the date of the closing of the
Purchase Agreement (the “Relevant Period”) and payable by the Purchaser to the Seller on a monthly basis (in
respect of Net Gaming Revenue generated during the relevant month during the Relevant Period) (the “Additional
Payment”); and (iii) subject to certain conditions as outlined in the Purchase Agreement, shares of the Company’s
common stock to be allotted and issued to the Seller by the second year anniversary of the Closing Date, representing an aggregate
value of the USD Currency Equivalent of EUR 7,600,000 or such lower amount as may be applicable in accordance with the Purchase
Agreement (the “Share Consideration”, and together with the Closing Payment and the Additional Payment, the
“Purchase Price”).
On
July 13, 2021, the Company and the Seller entered into an Amendment Agreement (the “Amendment”) with respect to the
Purchase Agreement, pursuant to which the Seller and the Company agreed to amended the Purchase Agreement, specifically the Purchase
Price, as follows: (i) the Company agreed to make a payment of EUR 12,000,000 (the “First Payment”) to the Seller
by no later than July 13, 2021 (the “First Payment Date”) and a payment of EUR 4,000,000 (the “Second Payment”)
to the Seller by no later than October 1, 2021 (the “Second Payment Date”); (ii) the Company agreed to pay Seller
an additional EUR 1,000,000 on the First Payment Date, representing a refund to the Seller of an equivalent amount that the Seller has
deposited with the Spanish Gaming Authority (DGOJ) as a guarantee for regulatory purposes (the “Spanish Deposit Amount”).
Further, the Additional Payment, shall be increased from 12% of the Net Gaming Revenue during Relevant Period, effective July 1 2021,
to 15% of Net Gaming Revenue until receipt of the Second Payment, following which it shall be reduced to 12% of Net Gaming Revenue for
the remainder of the Relevant Period.
The
Additional Payment shall be reduced to 10% of Net Gaming Revenue in respect of any relevant jurisdiction where the Company has not yet
acquired the relevant B2C online gambling license for a three month period beginning July 31, 2021 but shall increase to 12% for the
remainder of the Relevant Period once the relevant license has been acquired by the Company.
On
July 13, 2021, the Company and the Seller entered into that certain Pledge of Shares Agreement (the “Pledge Agreement”),
whereby the Company agreed to pledge the Shares in favor of the Seller (the “Pledge”) as security for the Company’s
obligation to make the Second Payment by no later than the Second Payment Date, including any and all fees and/or expenses which the
Seller may incur in the protection or enforcement of its respective rights under the Purchase Agreement (the “Secured Obligations”).
The Pledge will be released by the Seller upon receipt by the Seller of the Second Payment. The Pledge Agreement constitutes a
continuing security for the due and punctual performance of all the Secured Obligations.
The
Pledge Agreement contains customary representations, warranties and covenants, and other terms and conditions.
The
foregoing description of the Amendment and the Pledge Agreement and the transactions contemplated thereby does not purport to be complete
and is subject to and qualified in its entirety by reference to the Amendment and the Pledge Agreement, a copy of which is filed as Exhibits
10.1 and 10.2, respectively, to this Current Report on Form 8-K (this “8-K”) and are incorporated herein by reference.
Side
Letter
As
previously disclosed in the Current Report on Form 8-K filed with the SEC by the Company on June 1, 2021, the Company entered into that
certain Securities Purchase Agreement, dated as of May 27, 2021, with each purchaser identified on the signature pages thereto (each,
including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”) pursuant
to which the Purchaser was issued a Senior Convertible Note, in the initial principal amount of $35,000,000.00 (the “Note”).
On July 13, 2021, the Purchaser, consented to the Pledge, waived the provisions of Section 14(c) of the Note prohibiting the Pledge,
and agreed that the lien represented by the Pledge shall constitute a “Permitted Lien” for purposes of Section 31(uu) of
the Note.
The
foregoing description of the Side Letter and the transactions contemplated thereby does not purport to be complete and is subject to
and qualified in its entirety by reference to the Side Letter, a copy of which is filed as Exhibit 10.3 to this 8-K and is incorporated
herein by reference.