Item 1.01
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Entry into a Material Definitive Agreement.
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Secured Convertible Note Modification
and Conversion Agreement No. 2 between Allied Esports Entertainment, Inc. (the “Company”) and Knighted Pastures LLC
(“Knighted”)
As previously disclosed, the former owners
of certain of the Company’s subsidiaries issued a series of secured convertible promissory notes to several investors (the
“Bridge Note Holders”) on October 11, 2018 and May 15, 2019 in the aggregate original principal amount of $14,000,000
(collectively, the “Bridge Notes”). The Bride Notes were subsequently assumed by the Company, and payments were deferred
until August 23, 2020 (the “Bridge Maturity Date”).
On May 22, 2020, the Company and Knighted,
the holder of a Bridge Note in the original principal amount of $5,000,000 (the “Knighted Note”), entered into a Secured
Convertible Note Modification and Conversion Agreement No. 2 (the “Knighted Amendment”). Pursuant to the Knighted Amendment,
Knighted agreed to convert the remaining $3,000,000 of outstanding principal under the Knighted Note (the “Conversion Amount”)
into shares of the Company’s common stock at a conversion price of $1.40 per share, and the Company issued to Knighted 2,142,858
shares of common stock (the “Knighted Shares”).
The remaining provisions of the Knighted
Note remain unchanged and in effect. Interest on the Conversion Amount will continue to accrue, and all accrued and unpaid interest
under the Knighted Note (including interest accrued on the Conversion Amount) will be paid on the Bridge Maturity Date.
The Company previously registered for resale
an aggregate of 588,236 shares of common stock upon conversion of the Knighted Note at $8.50 per share, and is obligated to file
by June 1, 2020 an amendment to the registration statement on Form S-1 filed May 1, 2020 to register for resale the remaining shares
that have been issued to Knighted as a result of its conversion of the Knighted Note, including the shares issued pursuant to the
Knighted Amendment and a previous amendment to the Knighted Note.
The foregoing summary description of the
terms and conditions of the Knighted Amendment does not purport to be complete and is qualified in its entirety by reference to
the Knighted Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein
by reference.
Paycheck Protection Plan Loan
On May 18, 2020, the Company’s wholly-owned
subsidiary WPT Enterprises Inc. (“WPT”) received an unsecured loan (the “PPP Loan”) in the amount of $685,300,
pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act
and applicable regulations (the “CARES Act”). The Loan was made by CommerceWest Bank and is evidenced by a Business
Loan Agreement (the “PPP Loan Agreement”) and a Promissory Note (the “PPP Note”).
The PPP Note has a term of 2 years with
a 1.0% per annum interest rate. Payments are deferred for 6 months from the date of the PPP Note and WPT can apply for forgiveness
of the PPP Note after 60 days. Forgiveness of the PPP Note will be determined in accordance with the provisions of the CARES Act
and applicable regulations. Any principal and interest amounts outstanding after the determination of amounts forgiven will be
repaid on a monthly basis. WPT intends to use the entire loan amounts for designated qualifying
expenses. However, no assurance can be given that WPT will obtain forgiveness of the PPP Loan in whole or in part.
The PPP Loan Agreement contains other terms,
customary representations, warranties and covenants by WPT.
The foregoing summary description of the
terms and conditions of the PPP Loan Agreement and the PPP Note does not purport to be complete and is qualified in its entirety
by reference to the PPP Loan Agreement and the PPP Note, copies of which are filed as Exhibits 10.2 and 10.3, respectively, to
this Current Report on Form 8-K and are incorporated herein by reference.