Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
As previously disclosed, Near
Intelligence, Inc. (the “Company”) is party to that certain Financing Agreement dated November 4, 2022 (as amended from
time to time, the “Financing Agreement”) with Near Intelligence LLC (a wholly owned subsidiary of the Company) as borrower,
certain of the Company’s other subsidiaries party thereto as guarantors, the lenders party thereto, and Blue Torch Finance LLC,
as administrative agent and collateral agent (“Blue Torch”). The Financing Agreement provides for senior secured term loans
in an initial principal amount of up to $100.0 million and with interest accruing at a floating rate per annum equal to the adjusted
Term SOFR plus 9.75% (subject to a floor set at 3.891% as of the effective date). Interest is payable quarterly and the borrowings under
the Financing Agreement are scheduled to mature on November 4, 2026.
Pursuant to the Financing Agreement,
(i) on or prior to March 31, 2023, the Company was required to (x) raise additional capital from the issuance of subordinated
indebtedness or equity securities (“Junior Capital”) in an amount that, together with net cash proceeds from the Trust Account
(as defined in the Financing Agreement), equaled or exceeded $8.0 million, and (y) secure commitments consisting of Junior Capital
(“Committed Junior Investments”) of at least $8.5 million in the aggregate, and (ii) on or prior to April 15,
2023, the Committed Junior Investments must have been funded with net cash proceeds of at least $8.5 million ((i) and (ii) together,
the “Junior Capital Financing Conditions”). The failure to meet the Junior Capital Financing Conditions before the applicable
date would result in a mandatory prepayment event of the Company’s outstanding obligations pursuant to the Financing Agreement.
If the mandatory prepayment was made within three business days following the date on which the applicable condition was not satisfied,
no event of default would have occurred.
On March 31, 2023, the
Company raised additional Junior Capital in an amount which, together with the net proceeds from the Trust Account, equaled or exceeded
$8.0 million. However, the Company did not fully satisfy the other Junior Capital Financing Conditions, and, as a result, the Company
was required to prepay all outstanding obligations under the Financing Agreement. The Company did not make such prepayment and its failure
to comply with such mandatory prepayment obligation constituted an event of default under the Financing Agreement.
In addition, pursuant to the
Financing Agreement, (i) from April 15, 2023 until April 30, 2023, the Company was required to not permit its Liquidity
(as defined in the Financing Agreement) to be less than the sum of (x) $15.0 million and (y) the DB/Harbert Deferred Payment
Amount (as defined in the Financing Agreement), and (ii) from May 1, 2023 forward, the Company is required to not permit its
Liquidity to be less than the sum of (x) $20.0 million and (y) the DB/Harbert Deferred Payment Amount. As of April 15,
2023 and May 1, 2023, the Company’s Liquidity was less than the minimums required under the Financing Agreement and, as a
result, the Company is in breach of the applicable covenants and such breaches constitute events of default under the Financing Agreement
(the “Liquidity Defaults”). Furthermore, the Liquidity Defaults constitute Specified Events of Default (as defined in the
Financing Agreement), resulting in a 2.00% increase in the interest rate per annum until the date the events of default are cured or
waived in writing and a $5.0 million deferred consent fee, which deferred consent fee will be added to the outstanding principal amount
of the loans under the Financing Agreement.
As of March 31, 2023, the
aggregate amount owed under the Financing Agreement, including accrued interest, was $104.2 million.
On May 5, 2023, the Company entered into
a Forbearance Agreement with Blue Torch (the “Initial Forbearance Agreement”), pursuant to which Blue Torch agreed to temporarily
forbear from exercising its default-related rights and remedies against the Company solely with respect to the events of default related
to the Junior Capital Financing Conditions and the Liquidity Defaults (collectively, the “Existing Defaults”) during the
period beginning on the date of the Initial Forbearance Agreement and ending on the earlier to occur of (i) certain bankruptcy-related
defaults under the Financing Agreement, (ii) the date on which Blue Torch delivers a notice terminating the forbearance period,
which notice may be delivered at any time upon or after the occurrence of any Forbearance Default (as defined therein), or (iii) May 10,
2023. On May 10, 2023, the Company entered into another Forbearance Agreement with Blue Torch (the “Extended Forbearance Agreement”,
and, together with the Initial Forbearance Agreement, the “Forbearance Agreements”), which is substantially similar to the
Initial Forbearance Agreement except that the forbearance period will end on the earlier to occur of (i) certain bankruptcy-related defaults
under the Financing Agreement, (ii) the date on which Blue Torch delivers a notice terminating the forbearance period, which notice may
be delivered at any time upon or after the occurrence of any Forbearance Default, or (iii) May 20, 2023. Although the Company is actively
negotiating with Blue Torch to address the Existing Defaults, and Blue Torch has not delivered any formal notice of default or event
of default with respect to the Existing Defaults, upon termination of the forbearance period under the Extended Forbearance Agreement,
Blue Torch may, among other rights and remedies under the Financing Agreement, declare all or any portion of the outstanding loans under
the Financing Agreement to be accelerated and due and payable. As of May 10, 2023, the aggregate amount owed under the Financing Agreement,
including accrued interest, was $102.1 million, excluding the $5.0 million deferred consent fee.
As previously disclosed,
the Company has issued certain convertible debentures pursuant to that certain Securities Purchase Agreement by and among the Company
and the investors listed therein, dated March 31, 2023 (the “Convertible Debentures”). The Convertible Debentures include
a cross-default provision such that, if any event of default under the Financing Agreement results in the indebtedness thereunder becoming
or being declared due and payable and such default is not remedied or waived, the holders of the Convertible Debentures may, upon notice
to the Company, elect to declare the full unpaid principal amount of the Convertible Debentures, together with any interest and other
amounts owed in respect thereof, immediately due and payable in cash. As of May 10, 2023, Convertible Debentures in an aggregate principal
amount of $5,969,325 were outstanding. In the event Blue Torch delivers a formal notice of default or event of default, which would also result in a cross-default
under the Convertible Debentures, the Company has determined that, in such scenario, there would be substantial doubt about the Company’s
ability to continue as a going concern.
The foregoing description
of the Forbearance Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Initial
Forbearance Agreement and the Extended Forbearance Agreement, copies of which are filed as Exhibit 10.1 and 10.2, respectively, and incorporated
herein by reference.
