EXHIBIT 10.6
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY (as amended, restated, supplemented, or otherwise
modified and in effect from time to time, this "Guaranty") is made as of
November __, 2018, jointly and severally, between Esports Entertainment Group,
Inc., a Nevada corporation ("Esports") and Esports Services Antigua Ltd., Vie
Esports Services B.V., Esports Services (Malta) Limited and Esports
Entertainment (Malta) Ltd., (collectively the "Subsidiary" and, together with
Esports, the "Companies") (the Subsidiary together with each other person or
entity who becomes a party to this Guaranty by execution of a joinder in the
form of Exhibit A attached hereto, which shall include all wholly-owned or
majority-owned subsidiaries of Esports acquired after the date hereof for so
long as this Guaranty remains in effect, shall each referred to individually as
a "Guarantor" and collectively as the "Guarantors"); in favor of the Purchasers
listed on the signature pages of that certain Securities Purchase Agreement
dated November __, 2018 (each, a "Purchaser", and together with its successors
and assigns and each other purchaser of a Note (as defined below) and their
respective successors and assigns, individually and collectively, the
"Purchasers"), and Cavalry Fund I LP, a Delaware limited partnership, as agent
for the Purchasers (the "Agent").
WHEREAS, the Purchasers have made (the "Loans") to Esports as evidenced by
those certain senior convertible notes dated November __, 2018 (the "Closing
Date") in an original aggregate principal amount of $_________ (such notes,
together with any promissory notes or other securities issued in exchange or
substitution therefor or replacement thereof, and as any of the same may be
amended, supplemented, restated or modified and in effect from time to time, the
"Notes"), all of which shall be issued at the Closing Date;
WHEREAS, the Notes are being acquired by the Purchasers pursuant to a
Securities Purchase Agreement dated as of the Closing Date hereof among the
Purchasers and Esports (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Purchase Agreement");
WHEREAS, pursuant to a Pledge Agreement dated as of the Closing Date,
Esports has granted to the Agent a lien on and security interest in all of the
issued and outstanding equity interests of the Subsidiary;
WHEREAS, pursuant to a Security Agreement dated as of the Closing Date (as
the same may be amended, restated, supplemented or otherwise modified and in
effect from time to time, the "Security Agreement") by the Debtors (as defined
therein) in favor of the Agent as Collateral Agent, such Debtors have granted
the Agent, for its benefit and the benefit of the Purchasers, a first priority
security interest in, lien upon and pledge of each of their rights in the
Collateral (as defined in the Security Agreement); and
WHEREAS, the Guarantor is a subsidiary of Esports and, as such, will derive
substantial benefit and advantage from the Loans, the Notes and the other
related agreements (together, the "Transaction Documents").
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NOW, THEREFORE, for and in consideration of the promises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby jointly and severally agrees as follows:
1. Definitions: Capitalized terms used herein without definition and
defined in the Purchase Agreement are used herein as defined therein. In
addition, as used herein:
"Bankruptcy Code" shall mean the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. ss.101, et seq.), as amended and in effect from time to time
thereunder.
"Obligations" shall mean (i) all obligations, liabilities and
indebtedness of every nature of each Company from time to time owed or
owing to the Purchasers and Agent arising under, out of or in connection
with the Purchase Agreement, the Notes, the Loans and the other Transaction
Documents, including, without limitation, the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all fees,
taxes, indemnities, costs and expenses, whether primary, secondary, direct,
contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable, whether before or after the filing of a
bankruptcy, insolvency or similar proceeding under applicable federal,
state, foreign or other law and whether or not an allowed claim in any such
proceeding, and (ii) all obligations, liabilities and indebtedness of every
nature of any subsequent Guarantor from time to time owed or owing to the
Purchasers and/or Agent, under or in respect of this Guaranty, the Pledge
Agreement, the Security Agreement, the Purchase Agreement, the Notes, the
Loans and the other Transaction Documents, as the case may be, including,
without limitation, the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, taxes, indemnities,
costs and expenses, whether primary, secondary, direct, contingent, fixed
or otherwise, heretofore, now and/or from time to time hereafter owing, due
or payable, whether before or after the filing of a bankruptcy, insolvency
or similar proceeding under applicable federal, state, foreign or other law
and whether or not an allowed claim in any such proceeding.
2. Guaranty of Payment
(a) Each Guarantor, jointly and severally, hereby unconditionally and
irrevocably guarantees the full and prompt payment and performance to Purchasers
and Agent, on behalf of itself and in its capacity as agent for the benefit of
Purchasers, when due, upon demand, at maturity or by reason of acceleration or
otherwise and at all times thereafter, of any and all of the Obligations.
(b) Each Guarantor acknowledges that valuable consideration supports this
Guaranty, including, without limitation, the consideration set forth in the
recitals above; any extension, renewal or replacement of any of the Obligations;
any forbearance with respect to any of the Obligations or otherwise; any
cancellation of an existing guaranty; any purchase of any Company's assets by
any Purchaser or Agent; or any other valuable consideration.
(c) Each Guarantor agrees that all payments under this Guaranty shall be
made in United States currency and in the same manner as provided for the
Obligations.
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(d) Notwithstanding any provision of this Guaranty to the contrary, it is
intended that this Guaranty, and any interests, liens and security interests
granted by Guarantors as security for this Guaranty, not constitute a
"Fraudulent Conveyance" (as defined below) in the event that this Guaranty or
such interest is subject to the Bankruptcy Code or any applicable fraudulent
conveyance or fraudulent transfer law or similar law of any state. Consequently,
Guarantors, Agent and Purchasers agree that if this Guaranty, or any such
interests, liens or security interests securing this Guaranty, would, but for
the application of this sentence, constitute a Fraudulent Conveyance, this
Guaranty and each such lien and security interest shall be valid and enforceable
only to the maximum extent that would not cause this Guaranty or such interest,
lien or security interest to constitute a Fraudulent Conveyance, and this
Guaranty shall automatically be deemed to have been amended accordingly at all
relevant times. For purposes hereof, "Fraudulent Conveyance" means a fraudulent
conveyance under Section 548 of the Bankruptcy Code or a fraudulent conveyance
or fraudulent transfer under the provisions of any applicable fraudulent
conveyance or fraudulent transfer law or similar law of any state, as in effect
from time to time.
3. Costs and Expenses. The Company and each Guarantor, jointly and
severally, agrees to pay on demand, all reasonable costs and expenses of every
kind incurred by any Purchaser or Agent: (a) in enforcing this Guaranty, (b) in
collecting any of the Obligations from any Company or any Guarantor, (c) in
realizing upon or protecting or preserving any collateral for this Guaranty or
for payment of any of the Obligations, and (d) in connection with any amendment
of, modification to, waiver or forbearance granted under, or enforcement or
administration of any Transaction Document or for any other purpose in
connection with any Transaction Document, in each case, to the extent Purchaser
or Agent may take such action pursuant to the terms and conditions of this
Agreement. "Costs and expenses" as used in the preceding sentence shall include,
without limitation, reasonable attorneys' fees incurred by any Purchaser or
Agent in retaining legal counsel for advice, suit, appeal, any insolvency or
other proceedings under the Bankruptcy Code or otherwise, or for any purpose
specified in the preceding sentence.
4. Nature of Guaranty: Continuing, Absolute and Unconditional.
(a) This Guaranty is and is intended to be a continuing guaranty of payment
of the Obligations, and not of collectability, and is intended to be independent
of and in addition to any other guaranty, endorsement, collateral or other
agreement held by Purchasers or Agent therefor or with respect thereto, whether
or not furnished by a Guarantor. None of Purchasers and Agent shall be required
to prosecute collection, enforcement or other remedies against any Company, any
other Guarantor or guarantor of the Obligations or any other person or entity,
or to enforce or resort to any of the Collateral or other rights or remedies
pertaining thereto, before calling on a Guarantor for payment. The obligations
of each Guarantor to repay the Obligations hereunder shall be unconditional.
Guarantor shall have no right to exercise any right of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which it
may now or hereafter have against any Company in connection with this Guaranty
until the termination of this Guaranty in accordance with Section 8 below, and
hereby waives any benefit of, and any right to participate in, any security or
collateral given to Purchasers to secure payment of the Obligations, and each
Guarantor agrees that it will not take any action to enforce any obligations of
any Company to such Guarantor prior to the Obligations being finally and
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irrevocably paid in full in cash, provided that, in the event of the bankruptcy
or insolvency of any Company, to the extent the Obligations have not been
finally and irrevocably paid in full in cash, Agent, for the benefit of itself
and Purchasers, and Purchasers shall be entitled notwithstanding the foregoing,
to file in the name of any Guarantor or in its own name a claim for any and all
indebtedness owing to a Guarantor by such Company (exclusive of this Guaranty),
vote such claim and to apply the proceeds of any such claim to the Obligations.
(b) For the further security of Purchasers and without in any way
diminishing the liability of the Guarantors, following the occurrence and during
the continuance of an Event of Default, all debts and liabilities, present or
future, of the Companies to the Guarantors, and all monies received from any
Company or for its account by the Guarantors in respect thereof shall be
received in trust for Purchasers and Agent and promptly following receipt shall
be paid over to Agent, for its benefit and in its capacity as Agent for the
benefit of Purchasers, until all of the Obligations have been paid in full in
cash. This assignment and postponement is independent of and severable from this
Guaranty and shall remain in full effect whether or not any Guarantor is liable
for any amount under this Guaranty.
(c) This Guaranty is absolute and unconditional and shall not be changed or
affected by any representation, oral agreement, act or thing whatsoever, except
as herein provided. This Guaranty is intended by the Guarantors to be the final,
complete and exclusive expression of the guaranty agreement among the Companies
(as limited by the express terms of this Guaranty), the Guarantors, the Agent
and Purchasers. No modification or amendment of any provision of this Guaranty
shall be effective against any party hereto unless in writing and signed by a
duly authorized officer of such party. This Guaranty, together with the other
Transaction Documents, supersedes all other prior oral or written agreements
between each Purchaser, the Guarantors, the Agent, their Affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Guaranty, together with the other Transaction Documents and the other
instruments referenced herein and therein, contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither any Guarantor, the Agent
nor any Purchaser makes any representation, warranty, covenant or undertaking
with respect to such matters. As of the date of this Guaranty, there are no
unwritten agreements between the parties with respect to the matters discussed
herein. No provision of this Guaranty may be amended, modified or supplemented
other than by an instrument in writing signed by the parties hereto.
(d) Each Guarantor hereby releases each Company from all, and agrees not to
assert or enforce (whether by or in a legal or equitable proceeding or
otherwise) any, "claims" (as defined in Section 101(5) of the Bankruptcy Code),
whether arising under any law, ordinance, rule, regulation, order, policy or
other requirement of any domestic or foreign Governmental Authority or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or assets or otherwise, to which the Guarantors are or would at any
time be entitled by virtue of its obligations hereunder, any payment made
pursuant hereto or the exercise by any Purchaser or Agent of its rights with
respect to the Collateral, including any such claims to which such Guarantors
may be entitled as a result of any right of subrogation, exoneration or
reimbursement.
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5. Certain Rights and Obligations.
(a) Each Guarantor acknowledges and agrees that Purchasers and Agent, for
its benefit and as agent for the benefit of Purchasers, may, without notice,
demand or any reservation of rights against such Guarantor and without affecting
such Guarantor's obligations hereunder, from time to time:
(i) renew, extend, increase, accelerate or otherwise change the time
for payment of, the terms of or the interest on the Obligations or any part
thereof or grant other indulgences to any Company or others;
(ii) accept from any person or entity and hold collateral for the
payment of the Obligations or any part thereof, and modify, exchange,
enforce or refrain from enforcing, or release, compromise, settle, waive,
subordinate or surrender, with or without consideration, such collateral or
any part thereof;
(iii) accept and hold any endorsement or guaranty of payment of the
Obligations or any part thereof, and discharge, release or substitute any
such obligation of any such endorser or guarantor, or discharge, release or
compromise any Guarantor, or any other person or entity who has given any
security interest in any collateral as security for the payment of the
Obligations or any part thereof, or any other person or entity in any way
obligated to pay the Obligations or any part thereof, and enforce or
refrain from enforcing, or compromise or modify, the terms of any
obligation of any such endorser, guarantor, or person or entity;
(iv) dispose of any and all collateral securing the Obligations in its
reasonable discretion, as it may deem appropriate, and direct the order or
manner of such disposition and the enforcement of any and all endorsements
and guaranties relating to the Obligations or any part thereof as Agent in
its reasonable discretion may determine;
(v) subject to the terms of the Notes, determine the manner, amount
and time of application of payments and credits, if any, to be made on all
or any part of any component or components of the Obligations (whether
principal, interest, fees, costs, and expenses, or otherwise), including,
without limitation, the application of payments received from any source to
the payment of indebtedness other than the Obligations even though
Purchasers might lawfully have elected to apply such payments to the
Obligations or to amounts which are not covered by this Guaranty; and
(vi) take advantage or refrain from taking advantage of any security
or accept or make or refrain from accepting or making any compositions or
arrangements when and in such manner as Agent, in its sole discretion, may
deem appropriate;
and generally do or refrain from doing any act or thing which might
otherwise, at law or in equity, release the liability of such Guarantor as
a guarantor or surety in whole or in part, and in no case shall Purchasers
or Agent be responsible or shall any Guarantor be released either in whole
or in part for any act or omission in connection with Purchasers or Agent
having sold any security at less than its value.
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(b) Following the occurrence and during the continuance of an Event of
Default, and upon demand by Agent, each Guarantor, jointly and severally, hereby
agrees to pay the Obligations to the extent hereinafter provided and to the
extent unpaid:
(i) without deduction by reason of any setoff, defense (other than
payment) or counterclaim of any Company or any other Guarantor;
(ii) without requiring presentment, protest or notice of nonpayment or
notice of default to any Guarantor, to any Company or to any other person
or entity;
(iii) without demand for payment or proof of such demand or filing of
claims with a court in the event of receivership, bankruptcy or
reorganization of any Company or any other Guarantor;
(iv) without requiring Purchasers or Agent to resort first to any
Company (this being a guaranty of payment and not of collection), to any
other Guarantor, or to any other guaranty or any collateral which
Purchasers or Agent may hold;
(v) without requiring notice of acceptance hereof or assent hereto by
any Purchaser or Agent; and
(vi) without requiring notice that any of the Obligations has been
incurred, extended or continued or of the reliance by any Purchaser or
Agent upon this Guaranty;
all of which each Guarantor hereby waives.
(c) Each Guarantor's obligation hereunder shall not be affected by any of
the following, all of which such Guarantor hereby waives:
(i) any failure to perfect or continue the perfection of any security
interest in or other lien on any collateral securing payment of any of the
Obligations or any Guarantor's obligation hereunder;
(ii) the invalidity, unenforceability, propriety of manner of
enforcement of, or loss or change in priority of any document or any such
security interest or other lien or guaranty of the Obligations;
(iii) any failure to protect, preserve or insure any such collateral;
(iv) failure of a Guarantor to receive notice of any intended
disposition of such collateral;
(v) any defense arising by reason of the cessation from any cause
whatsoever of liability of any Company including, without limitation, any
failure, negligence or omission by any Purchaser or Agent in enforcing its
claims against any Company;
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(vi) any release, settlement or compromise of any obligation of any
Company, any other Guarantor or any other guarantor of the Obligations;
(vii) the invalidity or unenforceability of any of the Obligations;
(viii) any change of ownership of any Company, any other Guarantor or
any other guarantor of the Obligations or the insolvency, bankruptcy or any
other change in the legal status of any Company, any other Guarantor or any
other guarantor of the Obligations;
(ix) any change in, or the imposition of, any law, decree, regulation
or other governmental act which does or might impair, delay or in any way
affect the validity, enforceability or the payment when due of the
Obligations;
(x) the existence of any claim, setoff or other rights which the
Guarantor, any Company, any other Guarantor or guarantor of the Obligations
or any other person or entity may have at any time against any Purchaser,
Agent or any Company in connection herewith or any unrelated transaction;
(xi) any Purchaser's or Agent's election in any case instituted under
chapter 11 of the Bankruptcy Code, of the application of section 1111(b)(2)
of the Bankruptcy Code;
(xii) any use of cash collateral, or grant of a security interest by
any Company, as debtor in possession, under sections 363 or 364 of the
Bankruptcy Code;
(xiii) the disallowance of all or any portion of any of any
Purchaser's or Agent's claims for repayment of the Obligations under
sections 502 or 506 of the Bankruptcy Code;
(xiv) any stay or extension of time for payment by any Company or any
other Guarantor resulting from any proceeding under the Bankruptcy Code or
any similar law; or
(xv) any other fact or circumstance which might otherwise constitute
grounds at law or equity for the discharge or release of a Guarantor from
its obligations hereunder, all whether or not such Guarantor shall have had
notice or knowledge of any act or omission referred to in the foregoing
clauses (i) through (xiv) of this Section 5(c).
6. Representations and Warranties. Each Guarantor further represents and
warrants to Purchasers and Agent that: (a) such Guarantor is a corporation or
other entity duly incorporated or organized, as applicable, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
formation, as applicable, and has full power, authority and legal right to own
its property and assets and to transact the business in which it is presently
engaged; (b) such Guarantor has full power, authority and legal right to execute
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and deliver, and to perform its obligations under, this Guaranty, and has taken
all necessary action to authorize the guarantee hereunder on the terms and
conditions of this Guaranty and to authorize the execution, delivery and
performance of this Guaranty; (c) this Guaranty has been duly executed and
delivered by such Guarantor and constitutes a legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms, except to the extent that such enforceability is subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and
moratorium laws and other laws of general application affecting enforcement of
creditors' rights generally, or the availability of equitable remedies, which
are subject to the discretion of the court before which an action may be
brought; and (d) the execution, delivery and performance by each Guarantor of
this Guaranty do not require any action by or in respect of, or filing with, any
governmental body, agency or official and do not violate, conflict with or cause
a breach or a default under any provision of (i) applicable law or regulation,
(ii) the organizational documents of any Guarantor, (iii) any judgment,
injunction, order, decree or other instrument binding upon it, or (iv) any
agreement binding upon it.
7. Negative Covenants. Each Guarantor covenants with Purchasers and Agent
that such Guarantor shall not grant any security interest in or permit any lien,
claim or encumbrance upon any of its assets in favor of any person or entity
other than liens and security interests in favor of Purchasers and Agent and
Permitted Liens as defined in the Notes. Each Guarantor agrees that it shall not
take any action or engage in any transaction that such Guarantor is prohibited
from taking or engaging in pursuant to the terms of the Purchase Agreement. In
addition, each Guarantor agrees to comply with the terms of the Purchase
Agreement to the same extent that the Company is required to cause the
Guarantors to comply with such terms of the Purchase Agreement. Each Company, by
its signature hereto, hereby acknowledges and agrees that any breach by a
Guarantor of any term or provision of this Guaranty or the Security Agreement,
which is not cured to the Agent's reasonable satisfaction within any applicable
cure or grace period, shall constitute an "Event of Default" under the Note.
8. Termination. This Guaranty shall not terminate until such time, if any,
as (i) all Obligations shall be finally and irrevocably paid in full in cash,
(ii) no Notes shall remain outstanding, (iii) all commitments to lend under the
Purchase Agreement shall have terminated and (iv) there shall exist no other
outstanding payment or reimbursement obligations (other than contingent
indemnification obligations for which no claims shall have been asserted) of
Esports or the Guarantors to the Agent under any of the Transaction Documents.
Thereafter, but subject to the following, Agent, on its behalf and as agent for
Purchasers, shall take such action and execute such documents as the Guarantors
may request (and at the Guarantors' cost and expense) in order to evidence the
termination of this Guaranty. Payment of all of the Obligations owing from time
to time shall not operate as a discontinuance of this Guaranty. Each Guarantor
further agrees that, to the extent that any Company makes a payment or payments
to Purchasers or Agent on the Obligations, or Purchasers or Agent receive any
proceeds of collateral securing the Obligations or any other payments with
respect to the Obligations, which payment or receipt of proceeds or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be returned or repaid to any Company, its estate,
trustee, receiver, debtor in possession or any other person or entity,
including, without limitation, the Guarantors, under any insolvency or
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment, return or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the date when such initial payment,
reduction or satisfaction occurred, and this Guaranty shall continue in full
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force notwithstanding any contrary action which may have been taken by any
Purchaser or Agent in reliance upon such payment, and any such contrary action
so taken shall be without prejudice to any Purchaser's or Agent's rights under
this Guaranty and shall be deemed to have been conditioned upon such payment
having become final and irrevocable. Upon satisfaction of the Obligations the
Guarantors' obligations under this Agreement shall immediately terminate and the
Guaranty shall be void.
9. Guaranty of Performance. Each Guarantor also guarantees the full, prompt
and unconditional performance of all obligations and agreements of every kind
owed or hereafter to be owed by the Companies and the Guarantors to Purchasers
and Agent under the Purchase Agreement, the Notes, and the other Transaction
Documents. Every provision for the benefit of Purchasers and Agent contained in
this Guaranty shall apply to the guaranty of performance given in this
paragraph.
10. Assumption of Liens and Obligations. To the extent that a Guarantor has
received or shall hereafter receive distributions or transfers from any Company
of property or cash that are subject, at the time of such contribution, to liens
and security interests in favor of Purchasers and/or the Agent in accordance
with the Notes, the Security Agreements or any other Transaction Document, such
Guarantor hereby expressly agrees that (i) it shall hold such assets subject to
such liens and security interests, and (ii) it shall be liable for the payment
of the Obligations secured thereby. Each Guarantor's obligations under this
Section 10 shall be in addition to its obligations as set forth in other
sections of this Guaranty and not in substitution therefor or in lieu thereof.
11. Miscellaneous.
(a) The terms "Company" and "Guarantor" as used in this Guaranty shall
include: (i) any successor individual or individuals, association, partnership,
limited liability company or corporation to which all or substantially all of
the business or assets of such Company or such Guarantor shall have been
transferred and (ii) any other association, partnership, limited liability
company, corporation or entity into or with which such Company or such Guarantor
shall have been merged, consolidated, reorganized, or absorbed.
(b) Without limiting any other right of any Purchaser or Agent, whenever
any Purchaser or Agent has the right to declare any of the Obligations to be
immediately due and payable (whether or not it has been so declared), Agent, on
its behalf and in its capacity as agent for the benefit of Purchasers, at its
sole election without notice to the undersigned may appropriate and set off
against the Obligations:
(i) any and all indebtedness or other moneys due or to become due to
any Guarantor by any Purchaser or Agent in any capacity; and
(ii) any credits or other property belonging to any Guarantor
(including all account balances, whether provisional or final and whether
or not collected or available) at any time held by or coming into the
possession of any Purchaser or Agent, or any affiliate of any Purchaser or
Agent, whether for deposit or otherwise;
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whether or not the Obligations or the obligation to pay such moneys owed by
any Purchaser or Agent is then due, and the applicable Purchaser or Agent
shall be deemed to have exercised such right of set off immediately at the
time of such election even though any charge therefor is made or entered on
such Purchaser's or Agent's records subsequent thereto. Agent agrees to
notify such Guarantor in a reasonably practicable time of any such set-off;
however, failure to so notify such Guarantor shall not affect the validity
of any set-off.
(c) Each Guarantor's obligation hereunder is to pay the Obligations in
full in cash when due according to the Notes, the other Transaction
Documents, this Guaranty and the other agreements, documents and
instruments governing the Obligations to the extent provided herein, and
shall not be affected by any stay or extension of time for payment by any
Company or any other Guarantor resulting from any proceeding under the
Bankruptcy Code or any similar law.
(d) No course of dealing between any Company or any Guarantor and
Purchasers or Agent and no act, delay or omission by Purchasers or Agent in
exercising any right or remedy hereunder or with respect to any of the
Obligations shall operate as a waiver thereof or of any other right or
remedy, and no single or partial exercise thereof shall preclude any other
or further exercise thereof or the exercise of any other right or remedy.
Any Purchaser or Agent may remedy any default by any Company under any
agreement with any Company or with respect to any of the Obligations in any
reasonable manner without waiving the default remedied and without waiving
any other prior or subsequent default by any Company. All rights and
remedies of Purchasers and Agent hereunder are cumulative.
(e) This Guaranty shall inure to the benefit of the parties hereto and
their respective successors and assigns.
(f) Agent may assign its rights hereunder, with the consent of all of
the Purchasers, without the consent of Guarantors, in which event such
assignee shall be deemed to be Agent hereunder with respect to such
assigned rights.
(g) Captions of the sections of this Guaranty are solely for the
convenience of the parties hereto, and are not an aid in the interpretation
of this Guaranty and do not constitute part of the agreement of the parties
set forth herein.
(h) If any provision of this Guaranty is unenforceable in whole or in
part for any reason, the remaining provisions shall continue to be
effective.
(i) All questions concerning the construction, validity, enforcement
and interpretation of this Guaranty shall be governed by the internal laws
of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Each Guarantor hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in New York County, New York, 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
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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. Each Guarantor hereby
irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing by
registered or certified mail a copy thereof to such party at the address
for such notices to it under this Guaranty and agrees that such service
shall constitute good and sufficient service of process and notice thereof
as of the date that is five (5) business days after the mailing thereof.
Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law.
12. Notices. All notices, approvals, requests, demands and other
communications hereunder shall be delivered or made in the manner set forth in,
and shall be effective in accordance with the terms of, the Purchase Agreement
or, in the case of communications to the Agent, directed to the notice address
set forth in the Security Agreement; provided, that any communication shall be
effective as to any Guarantor if made or sent to Esports in accordance with the
foregoing.
13. WAIVERS.
(a) EACH GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL AND
EXEMPTION LAWS.
(b) UPON THE OCCURRENCE OF A DEFAULT OR EVENT OF DEFAULT, EACH
GUARANTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR
TO THE EXERCISE BY ANY PURCHASER OR AGENT, ON ITS BEHALF AND IN ITS
CAPACITY AS AGENT FOR THE BENEFIT OF PURCHASERS, OF ITS RIGHTS TO REPOSSESS
THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON
THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. EACH GUARANTOR ACKNOWLEDGES
THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS
TRANSACTION AND THIS GUARANTY.
(c) EACH GUARANTOR WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
GUARANTY, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PURCHASER OR
AGENT. EACH GUARANTOR AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH
GUARANTOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS GUARANTY.
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14. Agent. The terms and provisions of the Purchase Agreement which set
forth the appointment of the Agent and the terms and provisions of the Security
Agreement which set for the indemnifications to which the Agent is entitled are
hereby incorporated by reference herein as if fully set forth therein.
15. Payments Free of Taxes.
(a) Definitions. In this Section 15:
(i) "Excluded Taxes" means, with respect to the Agent or the
Purchasers, or any other recipient of any payment to be made by or on
account of any obligations of any Guarantor under this Guaranty, or
under any other Security Document, income or franchise taxes imposed
on (or measured by) its net income by the United States of America or
such other jurisdiction under the laws of which such recipient is
organized or in which its principal office is located.
(ii) "Governmental Authority" means the government of the United
States of America or any other nation, or any political subdivision
thereof, whether state or local, or any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government over
any of the Companies, or any of their respective properties, assets or
undertakings.
(iii) "Indemnified Taxes" means Taxes other than Excluded Taxes.
(iv) "Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
(b) Any and all payments by or on account of the Obligations of any of
the Guarantors under this Guaranty or any other Transaction Document shall
be made without any set-off, counterclaim or deduction and free and clear
of and without deduction for any Indemnified Taxes; provided that if any
Guarantor shall be required to deduct any Indemnified Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 15(b)), the Agent or Purchasers,
as applicable, receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Guarantor shall make such
deductions and (iii) such Guarantor shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.
16. Indemnification by the Guarantors. Each Guarantor shall indemnify the
Agent and the Purchasers, within ten (10) days after written demand therefor,
for the full amount of any Indemnified Taxes paid by the Agent or Purchasers, as
applicable, on or with respect to any payment by or on account of any obligation
of such Guarantor under this Guaranty and the other Transaction Documents
(including Indemnified Taxes or imposed or asserted on or attributable to
amounts payable under this Section 16) and any penalties, interest and
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reasonable expenses including reasonable attorneys fees arising therefrom or
with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate of the Agent or any Purchaser as to the amount of such payment or
liability under this Section 16 shall be delivered to such Guarantor and shall
be conclusive absent manifest error.
17. Counterparts; Headings. This Guaranty may be executed in two or more
identical counterparts, all of which together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party; provided that a facsimile, .pdf or
similar electronically transmitted signature shall be considered due execution
and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original signature. The headings in this Guaranty
are for convenience of reference only and shall not alter or otherwise affect
the meaning hereof.
18. Rights of Contribution. The Guarantors hereby agree as among themselves
that, if any Guarantor shall make an Excess Payment (as defined below), such
Guarantor shall have a right of contribution from each other Guarantor in an
amount equal to such other Guarantor's Contribution Share (as defined below) of
such Excess Payment. The payment obligations of any Guarantor under this Section
18 shall be subordinate and subject in right of payment to the Obligations until
such time as the Obligations have been paid in full in cash, and none of the
Guarantors shall exercise any right or remedy under this Section 18 against any
other Guarantor until such Obligations have been paid in full in cash. For
purposes of this Section 18, (a) "Excess Payment" shall mean the amount paid by
any Guarantor in excess of its Ratable Share of any Obligations; (b) "Ratable
Share" shall mean, for any Guarantor in respect of any payment of Obligations,
the ratio (expressed as a percentage) as of the date of such payment of
Obligations of (i) the amount by which the aggregate present fair salable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of the Companies and the Guarantors exceeds
the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Guarantors hereunder) of the Companies and the Guarantors,
provided, however, that, for purposes of calculating the Ratable Shares of the
Guarantors in respect of any payment of Obligations, any Guarantor that became a
Guarantor subsequent to the date of any such payment shall be deemed to have
been a Guarantor on the date of such payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor shall be
utilized for such Guarantor in connection with such payment; and (c)
"Contribution Share" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the Obligations) of the
Companies and the Guarantors other than the maker of such Excess Payment;
provided, however, that, for purposes of calculating the Contribution Shares of
the Guarantors in respect of any Excess Payment, any Guarantor that became a
Guarantor subsequent to the date of any such Excess Payment shall be deemed to
have been a Guarantor on the date of such Excess Payment and the financial
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information for such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such Excess Payment.
This Section 18 shall not be deemed to affect any right of subrogation,
indemnity, reimbursement or contribution that any Guarantor may have under law
against any Company in respect of any payment of Obligations.
[Signature page follows]
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IN WITNESS WHEREOF, each Company and the Guarantors have executed this
Guaranty as of the date first written above.
ESPORTS ENTERTAINMENT GROUP, INC.,
a Nevada corporation
By:___________________
Name:
Title:
ESPORTS SERVICES ANTIGUA, LTD., an Antigua corporation
By: ____________________________
Name: Grant Johnson
Title: President and Chief Executive Officer
VIE ESPORTS SERVICES B.V., a Curacao corporation
By: ____________________________
Name: Grant Johnson
Title: President and Chief Executive Officer
ESPORTS SERVICES (MALTA) LIMITED, a Malta corporation
By: ____________________________
Name: Grant Johnson
Title: President and Chief Executive Officer
ESPORTS ENTERTAINMENT (MALTA) LTD., a Malta corporation
By: ____________________________
Name: Grant Johnson
Title: President and Chief Executive Officer
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EXHIBIT A
Form of Joinder to
Subsidiary Guaranty
This Joinder Agreement is made between the undersigned, __________ a
__________ __________, (the "New Subsidiary") and Cavalry Fund I LP, a Delaware
limited partnership, as agent under that certain Guaranty dated as of November
___, 2018 by and between Esports Entertainment Group, Inc., a Nevada
corporation, and ____________, a ________ _______; together with each other
person or entity that becomes a Guarantor thereunder after the date and pursuant
to the terms thereof, to and in favor of the Purchasers (as amended, restated,
supplemented or otherwise modified from time to time, the "Guaranty").
Capitalized terms herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Guaranty.
1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the New Subsidiary will be deemed to be a party to
the Guaranty and a "Guarantor" for all purposes of the Guaranty, and shall have
all of the obligations of a Guarantor thereunder as if it had executed the
Guaranty. The New Subsidiary hereby ratifies, as of the date hereof, and agrees
to be bound by, all of the terms, provisions and conditions applicable to the
Guarantors contained in the Guaranty. Without limiting the generality of the
foregoing terms of this paragraph 1, the New Subsidiary hereby jointly and
severally together with the other Guarantors, guarantees to Purchasers and
Agent, as provided in the Guaranty, the prompt payment and performance of the
Obligations (as defined in the Guaranty) in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in
accordance with the terms thereof.
2. The New Subsidiary represents and warrants that the representations and
warranties set forth in Section 6 of the Guaranty are, with respect to the
undersigned, true and correct as of the date hereof.
3. From and after the date hereof, each reference to a Guarantor in the
Guaranty shall be deemed to include the undersigned.
4. This Agreement may be executed in multiple counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute one contract.
5. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned has executed this Joinder this ___ day
of ___________, 201___.
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