|
Nevada
|
| |
6770
|
| |
84-4052441
|
|
|
(State of Incorporation)
|
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(IRS Employer
Identification No.) |
|
|
Joel L. Rubinstein
Jonathan P. Rochwarger Elliott M. Smith Winston & Strawn LLP 200 Park Avenue New York, New York 10166 Tel: (212) 294-6700 |
| |
Scott D. Miller
Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 Tel: (212) 558-4000 |
| |
R. Stanton Dodge
DraftKings Inc. 222 Berkeley Street, 5th Floor Boston, Massachusetts 02116 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☒
|
|
| April , 2020 | | | By Order of the Board of Directors, | |
| | | |
Jeff Sagansky
Chief Executive Officer and Chairman |
|
| | |
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| | | | 322 | | | |
| | | | 323 | | | |
| | | | F-1 | | | |
| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | | |
| | | | D-1 | | | |
| | | | E-1 | | | |
| | | | F-1 | | | |
| | | | G-1 | | | |
| | | | H-1 | | | |
| | | | I-1 | | | |
| | | | J-1 | | |
| | |
Assuming No
Redemptions of Public Shares |
| |
Assuming
Maximum Redemptions of Public Shares(2) |
| ||||||
DK Equityholders
|
| | | | 59.7% | | | | | | 66.1% | | |
SBT Equityholders
|
| | | | 13.0% | | | | | | 14.5% | | |
DEAC Public Stockholders
|
| | | | 12.8% | | | | | | 3.3% | | |
Initial Stockholders
|
| | | | 1.2% | | | | | | 1.3% | | |
PIPE Investors(3)
|
| | | | 13.3% | | | | | | 14.8% | | |
(in millions)
|
| |
Assuming No
Redemption(1) |
| |
Assuming
Maximum Redemption(2) |
| ||||||
Sources | | | | ||||||||||
Proceeds from Trust Account(3)
|
| | | $ | 404 | | | | | $ | 95 | | |
Private Placement
|
| | | | 305 | | | | | | 305 | | |
Convertible Notes(4)
|
| | | | 109 | | | | | | 109 | | |
Sellers’ Equity
|
| | | | 2,700 | | | | | | 2,700 | | |
DEAC Upfront Founder Equity(5)
|
| | | | 37 | | | | | | 37 | | |
Total Sources
|
| | | $ | 3,555 | | | | | $ | 3,246 | | |
Uses | | | | | | | | | | | | | |
Cash to Balance Sheet(6)
|
| | | $ | 541 | | | | | $ | 242 | | |
Cash to SBT Shareholders(7)
|
| | | | 196 | | | | | | 196 | | |
Sellers’ Equity
|
| | | | 2,700 | | | | | | 2,700 | | |
DEAC Upfront Founder Equity(5)
|
| | | | 37 | | | | | | 37 | | |
Transaction costs(8)
|
| | | | 81 | | | | | | 71 | | |
Total Uses
|
| | | $ | 3,555 | | | | | $ | 3,246 | | |
Statement of Operations Data
|
| |
For the Period
from March 27, 2019 (inception) to December 31, 2019 |
| |||
| | |
(in actual dollars and shares)
|
| |||
Revenue
|
| | | $ | — | | |
General and administrative expenses
|
| | | | 1,857,305 | | |
Loss from operations
|
| | | | (1,857,305) | | |
Other income — interest on Trust Account
|
| | | | 5,111,208 | | |
Provision for income tax
|
| | | | (944,494) | | |
Net income
|
| | | $ | 2,309,409 | | |
Weighted average Class A common stock outstanding
|
| | | | 40,000,000 | | |
Basic and diluted net income per share, Class A
|
| | | $ | 0.09 | | |
Weighted average Class B common stock outstanding
|
| | | | 10,010,045 | | |
Basic and diluted net loss per share, Class B
|
| | | $ | (0.15) | | |
Balance Sheet Data
|
| |
December 31, 2019
|
| |||
| | |
(in actual dollars)
|
| |||
Total assets
|
| | | $ | 404,771,673 | | |
Total liabilities
|
| | | | 15,493,133 | | |
Total shareholders’ equity and Class A common shares subject to possible redemptions
|
| | | | 389,278,540 | | |
| | |
For the year ended December 31,
|
| |||||||||||||||
Statement of Operations Data
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Revenue
|
| | | | 323,410 | | | | | $ | 226,277 | | | | | $ | 191,844 | | |
Total costs and expenses
|
| | | | 469,955 | | | | | | 303,058 | | | | | | 265,042 | | |
Loss from operations
|
| | | | (146,545) | | | | | | (76,781) | | | | | | (73,198) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | |
Interest income (expense), net
|
| | | | 1,348 | | | | | | 666 | | | | | | (1,541) | | |
Gain on initial equity method investment
|
| | | | 3,000 | | | | | | — | | | | | | — | | |
Other expense, net
|
| | | | — | | | | | | — | | | | | | (607) | | |
Income Tax Provision
|
| | | | 58 | | | | | | 105 | | | | | | 210 | | |
Loss from equity method investment
|
| | | | 479 | | | | | | — | | | | | | — | | |
Net Loss
|
| | | $ | (142,734) | | | | | $ | (76,220) | | | | | $ | (75,556) | | |
Statement of Cash Flows Data | | | | | | | | | | | | | | | | | | | |
Net cash provided by (used in) operating activities
|
| | | | (78,880) | | | | | | (45,579) | | | | | | (88,437) | | |
Net cash provided by (used in) investing activities
|
| | | | (42,271) | | | | | | (26,672) | | | | | | (7,715) | | |
Net cash provided by (used in) financing activities
|
| | | | 79,776 | | | | | | 140,892 | | | | | | 118,531 | | |
| | |
As of December 31,
|
| |||||||||
Balance Sheet Data
|
| |
2019
|
| |
2018
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Total assets
|
| | | $ | 330,725 | | | | | $ | 299,393 | | |
Total liabilities
|
| | | | 380,305 | | | | | | 223,343 | | |
Total redeemable convertible preferred stock and stockholders’ deficit
|
| | | | (49,580) | | | | | | 76,050 | | |
| | |
Year ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Adjusted EBITDA (dollars in thousands)(1)
|
| | | $ | (98,640) | | | | | $ | (58,850) | | | | | $ | (48,884) | | |
Monthly Unique Payers (MUPs) (in thousands)(2)
|
| | | | 684 | | | | | | 601 | | | | | | 574 | | |
Average Revenue per MUP (ARPMUP) (in whole dollars)(2)
|
| | | $ | 39 | | | | | $ | 31 | | | | | $ | 28 | | |
| | |
For the year ended December 31,
|
| |||||||||||||||
Statement of Operations Data
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Revenue
|
| | | € | 96,857 | | | | | € | 94,147 | | | | | € | 66,087 | | |
Total costs and expenses
|
| | | | 90,820 | | | | | | 66,560 | | | | | | 49,393 | | |
Operating income
|
| | | € | 6,037 | | | | | € | 27,587 | | | | | € | 16,694 | | |
Other income: | | | | | | | | | | | | | | | | | | | |
Financial income
|
| | | | 23 | | | | | | 97 | | | | | | 37 | | |
Financial expenses
|
| | | | 846 | | | | | | 340 | | | | | | 177 | | |
Income tax expense
|
| | | | 638 | | | | | | 565 | | | | | | 264 | | |
Net profit
|
| | | € | 4,576 | | | | | € | 26,779 | | | | | € | 16,290 | | |
Statement of Cash Flows Data | | | | | | | | | | | | | | | | | | | |
Net cash provided by (used in) operating activities
|
| | | € | 19,525 | | | | | € | 30,949 | | | | | € | 18,260 | | |
Net cash provided by (used in) investing activities
|
| | | | (18,399) | | | | | | (17,384) | | | | | | (14,307) | | |
Net cash provided by (used in) financing activities
|
| | | | (13,537) | | | | | | (1,184) | | | | | | 190 | | |
| | |
As of December 31,
|
| |||||||||
Balance Sheet Data
|
| |
2019
|
| |
2018
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Total assets
|
| | | € | 98,853 | | | | | € | 72,656 | | |
Total liabilities
|
| | | | 45,976 | | | | | | 14,207 | | |
Total equity
|
| | | | 52,877 | | | | | | 58,449 | | |
| | |
Pro Forma
Combined (Assuming No Redemptions) |
| |
Pro Forma
Combined (Assuming Maximum Redemptions) |
| ||||||
| | |
(in thousands, except share and per share data)
|
| |||||||||
Summary Unaudited Pro Forma Condensed Combined
Statement of Operations Data Year Ended December 31, 2019 |
| | | | | | | | | | | | |
Revenue
|
| | | $ | 431,834 | | | | | $ | 431,834 | | |
Net loss per share – basic and diluted
|
| | | $ | (0.42) | | | | | $ | (0.46) | | |
Weighted-average Class A shares outstanding – basic and diluted
|
| | | | 336,589,275 | | | | | | 306,024,486 | | |
Summary Unaudited Pro Forma Condensed Combined
Balance Sheet Data as of December 31, 2019 |
| | | | | | | | | | | | |
Total assets
|
| | | $ | 1,622,021 | | | | | $ | 1,323,346 | | |
Total liabilities
|
| | | | 363,770 | | | | | | 363,770 | | |
Total equity
|
| | | | 1,258,251 | | | | | | 959,576 | | |
| | |
Combined Pro Forma
|
| |||||||||||||||
| | |
Diamond
Eagle (Historical) |
| |
Pro Forma
Combined (Assuming No Redemption) |
| |
Pro Forma
Combined (Assuming Maximum Redemption) |
| |||||||||
As of and for the Year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | |
Book Value per share(1)
|
| | | $ | 0.10 | | | | | $ | 3.74 | | | | | $ | 3.14 | | |
Weighted average shares outstanding of Class A common stock – basic and diluted
|
| | | | 40,000,000 | | | | | | 336,589,275 | | | | | | 306,024,486 | | |
Weighted average shares outstanding of Class B common stock – basic and diluted
|
| | | | 10,010,045 | | | | | | | | | | | | | | |
Net income per share of Class A common stock – basic and
diluted |
| | | $ | 0.09 | | | | | | | | | | | | | | |
Net loss per share of Class B common stock – basic and diluted
|
| | | $ | (0.15) | | | | | | | | | | | | | | |
Net loss per share of Class A common stock – basic and diluted
|
| | | | | | | | | $ | (0.42) | | | | | $ | (0.46) | | |
| | DEAC’S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE BUSINESS COMBINATION PROPOSAL AND THE OTHER PROPOSALS TO BE PRESENTED AT THE SPECIAL MEETING ARE IN THE BEST INTERESTS OF AND ADVISABLE TO THE DEAC STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE PROPOSALS DESCRIBED ABOVE. | | |
| | |
2019E
|
| |
2020E
|
| |
2021E
|
| |||||||||
DraftKings
|
| | | $ | 305 | | | | | $ | 400 | | | | | $ | 550 | | |
SBT
|
| | | $ | 110 | | | | | $ | 140 | | | | | $ | 150 | | |
| | |
DraftKings +
SBT |
| |
High-Growth
Consumer Internet |
| |
Interactive
Gaming |
| |
E.U.
Sportsbook Operators |
| ||||||||||||
Enterprise Value/2021E Revenue
|
| | | | 3.9x | | | | | | 5.6x | | | | | | 4.4x | | | | | | 2.4x | | |
2019E to 2021E Revenue CAGR
|
| | | | 30% | | | | | | 26% | | | | | | 9% | | | | | | 5% | | |
Enterprise Value / 2021E Revenue – Growth Adjusted(1)
|
| | | | 0.13x | | | | | | 0.25x | | | | | | 0.57x | | | | | | 0.51x | | |
Enterprise Value / 2020E EBITDA(2)
|
| | | | 9.9x | | | | | | 26.7x | | | | | | 16.6x | | | | | | 10.1x | | |
(in millions)
|
| |
Assuming No
Redemption(1) |
| |
Assuming Maximum
Redemption(2) |
| ||||||
Sources | | | | ||||||||||
Proceeds from Trust Account(3)
|
| | | $ | 404 | | | | | $ | 95 | | |
Private Placement
|
| | | | 305 | | | | | | 305 | | |
Convertible Notes(4)
|
| | | | 109 | | | | | | 109 | | |
Sellers’ Equity
|
| | | | 2,700 | | | | | | 2,700 | | |
DEAC Upfront Founder Equity(5)
|
| | | | 37 | | | | | | 37 | | |
Total Sources
|
| | | $ | 3,555 | | | | | $ | 3,246 | | |
Uses | | | | | | | | | | | | | |
Cash to Balance Sheet(6)
|
| | | $ | 541 | | | | | $ | 242 | | |
Cash to SBT Shareholders(7)
|
| | | | 196 | | | | | | 196 | | |
Sellers’ Equity
|
| | | | 2,700 | | | | | | 2,700 | | |
DEAC Upfront Founder Equity(5)
|
| | | | 37 | | | | | | 37 | | |
Transaction costs(8)
|
| | | | 81 | | | | | | 71 | | |
Total Uses
|
| | | $ | 3,555 | | | | | $ | 3,246 | | |
Advisory Charter Proposal
|
| |
Current Charter
|
| |
Proposed Charter
|
|
Advisory Proposal A –
Changes in Share Capital |
| | The Current Charter authorizes 401,000,000 shares, consisting of (a) 400,000,000 shares of common stock, including 380,000,000 shares of Class A common stock and 20,000,000 shares of Class B common stock, and (b) 1,000,000 shares of preferred stock. | | | The Proposed Charter would authorize 2,100,000,000 shares, consisting of (a) 1,800,000,000 shares of common stock, including 900,000,000 shares of Class A common stock and 900,000,000 shares of Class B common stock, and (b) 300,000,000 shares of preferred stock. | |
Advisory Proposal B –
Voting Rights of Common Stock |
| | The Current Charter provides that the holders of each share of common stock of DEAC is entitled to one vote for each share on each matter properly submitted to the stockholders entitled to vote. | | | The Proposed Charter provides holders of shares of New DraftKings Class A common stock will be entitled to cast one vote per Class A share, and holders of shares of Class B common stock will be entitled to cast 10 votes per Class B share on each matter properly submitted to the stockholders entitled to vote. | |
Advisory Proposal C –
Declassification of the New DraftKings Board |
| | The Current Charter provides that the DEAC Board is divided into three classes, with only one class of directors being elected in each year and each class serving a three-year term. | | | The Proposed Charter provides that the New DraftKings board of directors will consist of one class of directors only, whose term will continue to the next annual meeting of stockholders. | |
Advisory Proposal D –
Limiting the Ability to Act by Written Consent |
| | The Current Charter provides that any action required or permitted to be taken by the stockholders of DEAC must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the | | | The Proposed Charter provides that any action required or permitted to be taken by the stockholders of New DraftKings may be taken by written consent; provided that, from and after the time that Mr. Robins beneficially owns less than a majority of the voting power of the outstanding shares of stock entitled to | |
Advisory Charter Proposal
|
| |
Current Charter
|
| |
Proposed Charter
|
|
| | | stockholders, other than with respect to the Class B common stock, which action may be taken by written consent. | | | vote thereon, no such action may be taken by written consent of the stockholders. | |
Advisory Proposal E –
Forum Selection |
| | The Current Charter provides that the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware, will be the exclusive forum for certain actions and claims. | | | The Proposed Charter provides that the Eighth Judicial District Court of Clark County, Nevada, or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Nevada, will be the exclusive forum for certain actions and claims. | |
Advisory Proposal F –
Required Vote to Amend the Charter |
| | The Current Charter provides that the Current Charter may be amended in accordance with Delaware law; provided that, as long as any shares of Class B common stock are outstanding, any amendment to the Current Charter that would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock requires the vote or written consent of the holders of a majority of the shares of Class B common stock then outstanding, voting separately as a single class. | | | The Proposed Charter provides that amendments to certain provisions of the Proposed Charter will require the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings once Mr. Robins beneficially owns shares of New DraftKings stock representing less than a majority of the voting power of New DraftKings stock. Prior to that time, amendments to those provisions will require the affirmative vote of the holders of a majority of the voting power of the outstanding capital stock of New DraftKings. | |
Advisory Proposal G –
Required Vote to Amend the Bylaws |
| | The Current Charter provides that the bylaws may only be adopted, amended, altered or repealed with the approval of a majority of the DEAC Board or by the holders of a majority of DEAC’s outstanding shares. | | | The Proposed Charter provides that the bylaws may be amended, altered, rescinded or repealed or adopted by the New DraftKings board of directors or the affirmative vote of the holders of at least two-thirds of the voting power of the capital stock of New DraftKings once Mr. Robins beneficially owns shares of New DraftKings stock representing less than a majority of the voting power of the outstanding capital stock of New DraftKings. Prior to that time, amendments to those provisions through stockholder action will require the affirmative vote of the holders of a majority of the voting power of the outstanding capital stock of New DraftKings. | |
Advisory Charter Proposal
|
| |
Current Charter
|
| |
Proposed Charter
|
|
Advisory Proposal H –
Required Vote to Change Number of Directors |
| | The Current Charter provides that the number of directors is determined by the DEAC Board. | | | The Proposed Charter provides that the number of directors is fixed and may be modified by the New DraftKings board of directors and, from and after the time that Mr. Robins ceases to beneficially own shares of New DraftKings stock representing at least a majority of the voting power of the capital stock of New DraftKings, the number of directors may be modified by the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings. | |
Advisory Proposal I –
Redemption Rights and Transfer Restrictions with Respect to Capital Stock held by Unsuitable Persons and Their Affiliates |
| | The Current Charter does not contain provisions providing for redemption rights and transfer restrictions with respect to capital stock held by Unsuitable Persons or their affiliates. | | | The Proposed Charter provides that common stock or any other equity securities of New DraftKings, or securities exchangeable or exercisable for, or convertible into, such other equity securities of New DraftKings, owned or controlled by any stockholder who is an Unsuitable Person (as defined under “Description of New DraftKings Securities — Redemption Rights and Transfer Restrictions with Respect to Capital Stock Held by Unsuitable Persons and Their Affiliates”) or such person’s affiliate will be subject to mandatory sale and transfer on the terms and conditions set forth in the Proposed Charter. | |
Total Consideration (in 000s)
|
| |
Amounts
|
| |
Shares
|
| ||||||
Share consideration – DraftKings(2)
|
| | | $ | 2,537,279 | | | | | | 207,125 | | |
Cash consideration – SBTech(1)
|
| | | | 196,126 | | | | | | — | | |
Share consideration – SBTech(2)
|
| | | | 540,486 | | | | | | 44,121 | | |
Total Merger Consideration
|
| | | $ | 3,273,891 | | | | | | 251,246 | | |
Total Capitalization (in 000s)
|
| |
No
Redemptions |
| |
%
|
| |
Maximum
Redemptions |
| |
%
|
| ||||||||||||
DraftKings rollover equity – New DraftKings Class A
|
| | | | 207,125 | | | | | | 61.5 | | | | | | 207,125 | | | | | | 67.7 | | |
SBTech rollover equity
|
| | | | 44,121 | | | | | | 13.1 | | | | | | 44,121 | | | | | | 14.4 | | |
DEAC public shareholders
|
| | | | 40,000 | | | | | | 11.9 | | | | | | 9,435 | | | | | | 3.1 | | |
DEAC Founders Shares
|
| | | | 3,659 | | | | | | 1.1 | | | | | | 3,659 | | | | | | 1.2 | | |
DEAC shares issued upon conversion of Convertible
Notes |
| | | | 11,213 | | | | | | 3.3 | | | | | | 11,213 | | | | | | 3.7 | | |
DEAC shares issued in PIPE Offering
|
| | | | 30,471 | | | | | | 9.1 | | | | | | 30,471 | | | | | | 9.9 | | |
Total Class A Shares
|
| | | | 336,589 | | | | | | 100.0 | | | | | | 306,024 | | | | | | 100.0 | | |
New DraftKings Class B Shares*
|
| | | | 393,918 | | | | | | | | | | | | 366,410 | | | |
| | |
As of December 31, 2019
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2019
|
| | | | | | | | | | |
December 31, 2019
|
| |||||||||||||||||||||
| | |
DraftKings
(Historical) |
| |
DEAC
(Historical) |
| |
SBTech
(As Adjusted) (Note 3) |
| |
Accounting
Policies and Reclassification Adjustments (Note 2) |
| |
Pro Forma
Adjustments (Assuming No Redemptions) (Note 4 – PF) |
| | | | |
Purchase
Accounting Adjustments (Note 4 – PPA) |
| | | | |
Pro Forma
Combined (Assuming No Redemptions) |
| |
Additional
Pro Forma Adjustments (Assuming Maximum Redemptions) (Note 4 – PF) |
| | | | |
Pro Forma
Combined (Assuming Maximum Redemptions) |
| |||||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable
|
| | | | — | | | | | | 1,492 | | | | | | — | | | | | | (1,492) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Accounts payable and accrued expenses
|
| | | | 85,295 | | | | | | — | | | | | | — | | | | | | 22,364 | | | | | | (6,449) | | | |
C
|
| | | | — | | | | | | | | | 99,718 | | | | | | — | | | | | | | | | 99,718 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,492) | | | |
N
|
| | | | | | | ||||||||||||||||||||||||
Liabilities to customers
|
| | | | 163,035 | | | | | | — | | | | | | — | | | | | | 799 | | | | | | — | | | | | | | | | — | | | | | | | | | 163,834 | | | | | | — | | | | | | | | | 163,834 | | |
Term note, current portion
|
| | | | 6,750 | | | | | | — | | | | | | — | | | | | | — | | | | | | 44,500 | | | |
O
|
| | | | — | | | | | | | | | 51,250 | | | | | | — | | | | | | | | | 51,250 | | |
Settlement liability, current portion
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Trade payables
|
| | | | — | | | | | | — | | | | | | 9,124 | | | | | | (9,124) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Other accounts payable
|
| | | | — | | | | | | — | | | | | | 12,547 | | | | | | (12,547) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Total current liabilities
|
| | | | 255,080 | | | | | | 1,492 | | | | | | 21,671 | | | | | | — | | | | | | 36,559 | | | | | | | | | — | | | | | | | | | 314,802 | | | | | | — | | | | | | | | | 314,802 | | |
Deferred underwriting commissions
|
| | | | — | | | | | | 14,000 | | | | | | — | | | | | | — | | | | | | (14,000) | | | |
B
|
| | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Other long-term liabilities
|
| | | | 56,862 | | | | | | — | | | | | | — | | | | | | 458 | | | | | | (11,000) | | | |
P
|
| | | | 2,648 | | | |
C
|
| | | | 48,968 | | | | | | — | | | | | | | | | 48,968 | | |
Convertible promissory notes
|
| | | | 68,363 | | | | | | — | | | | | | — | | | | | | — | | | | | | (68,363) | | | |
D
|
| | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Accrued severance pay, net
|
| | | | — | | | | | | — | | | | | | 458 | | | | | | (458) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Total liabilities
|
| | | | 380,305 | | | | | | 15,492 | | | | | | 22,129 | | | | | | — | | | | | | (56,804) | | | | | | | | | 2,648 | | | | | | | | | 363,770 | | | | | | — | | | | | | | | | 363,770 | | |
Class A common stock subject to possible
redemption |
| | | | — | | | | | | 384,279 | | | | | | — | | | | | | — | | | | | | (384,279) | | | |
F
|
| | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Series E-1 Redeemable Convertible Preferred Stock
|
| | | | 119,752 | | | | | | — | | | | | | — | | | | | | — | | | | | | (119,752) | | | |
H
|
| | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Series F Redeemable Convertible Preferred Stock
|
| | | | 138,619 | | | | | | — | | | | | | — | | | | | | — | | | | | | (138,619) | | | |
H
|
| | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Stockholders’ Equity: | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class A common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | | |
D
|
| | | | 4 | | | |
A
|
| | | | 34 | | | | | | (3) | | | |
K
|
| | | | 31 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | |
E
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | |
F
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | |
G
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | |
M
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21 | | | |
H
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | |
P
|
| | | | | | | ||||||||||||||||||||||||
Class B common stock
|
| | | | — | | | | | | 1 | | | | | | — | | | | | | — | | | | | | (1) | | | |
G
|
| | | | — | | | | | | | | | 39 | | | | | | (2) | | | |
Q
|
| | | | 37 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | |
H
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 39 | | | |
Q
|
| | | | | | | ||||||||||||||||||||||||
Common stock
|
| | | | 390 | | | | | | — | | | | | | — | | | | | | — | | | | | | (390) | | | |
H
|
| | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Share capital
|
| | | | — | | | | | | — | | | | | | 3 | | | | | | — | | | | | | — | | | | | | | | | (3) | | | |
D
|
| | | | — | | | | | | — | | | | | | | | | — | | |
Actuarial reserve
|
| | | | — | | | | | | — | | | | | | (156) | | | | | | — | | | | | | — | | | | | | | | | 156 | | | |
D
|
| | | | — | | | | | | — | | | | | | | | | — | | |
| | |
As of December 31, 2019
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2019
|
| | | | | | | | | | |
December 31, 2019
|
| |||||||||||||||||||||
| | |
DraftKings
(Historical) |
| |
DEAC
(Historical) |
| |
SBTech
(As Adjusted) (Note 3) |
| |
Accounting
Policies and Reclassification Adjustments (Note 2) |
| |
Pro Forma
Adjustments (Assuming No Redemptions) (Note 4 – PF) |
| | | | |
Purchase
Accounting Adjustments (Note 4 – PPA) |
| | | | |
Pro Forma
Combined (Assuming No Redemptions) |
| |
Additional
Pro Forma Adjustments (Assuming Maximum Redemptions) (Note 4 – PF) |
| | | | |
Pro Forma
Combined (Assuming Maximum Redemptions) |
| |||||||||||||||||||||||||||
Additional paid-in capital
|
| | | | 690,443 | | | | | | 2,689 | | | | | | — | | | | | | — | | | | | | (6,000) | | | |
C
|
| | | | 545,582 | | | |
A
|
| | | | 2,310,823 | | | | | | (308,672) | | | |
K
|
| | | | 2,001,598 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 112,126 | | | |
D
|
| | | | | | | | | | | | | | | | | | | (553) | | | |
Q
|
| | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 304,711 | | | |
E
|
| | | | | | | | | | | | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 384,275 | | | |
F
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,310 | | | |
I
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 258,740 | | | |
H
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,042 | | | |
J
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (6,006) | | | |
M
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,000 | | | |
P
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,911 | | | |
Q
|
| | | | | | | ||||||||||||||||||||||||
Retained earnings
|
| | | | — | | | | | | 2,310 | | | | | | 58,795 | | | | | | (61,105) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
Accumulated deficit
|
| | | | (998,784) | | | | | | — | | | | | | — | | | | | | 61,105 | | | | | | (29,147) | | | |
C
|
| | | | (58,795) | | | |
D
|
| | | | (1,052,645) | | | | | | 10,000 | | | |
L
|
| | | | (1,042,090) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (3,722) | | | |
D
|
| | | | | | | | | | | | | | | | | | | 555 | | | |
Q
|
| | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,310) | | | |
I
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (3,042) | | | |
J
|
| | | | | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (10,000) | | | |
L
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (7,950) | | | |
Q
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total parent stockholders’ equity
|
| | | | (307,951) | | | | | | 5,000 | | | | | | 58,642 | | | | | | — | | | | | | 1,015,616 | | | | | | | | | 486,944 | | | | | | | | | 1,258,251 | | | | | | (298,675) | | | | | | | | | 959,576 | | |
Non-controlling interest
|
| | | | — | | | | | | — | | | | | | 1,187 | | | | | | — | | | | | | — | | | | | | | | | (1,187) | | | |
D
|
| | | | — | | | | | | — | | | | | | | | | — | | |
Total stockholders’ equity
|
| | | | (307,951) | | | | | | 5,000 | | | | | | 59,829 | | | | | | — | | | | | | 1,015,616 | | | | | | | | | 485,757 | | | | | | | | | 1,258,251 | | | | | | (298,675) | | | | | | | | | 959,576 | | |
Total Liabilities and Stockholders’ Equity
|
| | | | 330,725 | | | | | | 404,771 | | | | | | 81,958 | | | | | | — | | | | | | 316,162 | | | | | | | | | 488,405 | | | | | | | | | 1,622,021 | | | | | | (298,675) | | | | | | | | | 1,323,346 | | |
|
| | |
For the Year ended
December 31, 2019 |
| |
March 27, 2019
(inception) to December 31, 2019 |
| |
For the Year ended
December 31, 2019 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
For the Year ended
December 31, 2019 |
| ||||||||||||
| | |
DraftKings
(Historical) |
| |
DEAC
(Historical) |
| |
SBTech
(As Adjusted) (Note 3) |
| |
Accounting Policies
and Reclassification Adjustments (Note 2) |
| |
Pro Forma
Adjustments (Assuming No and Maximum Redemptions) (Note 4 – PF) |
| | | | |
Purchase
Accounting Adjustments (Note 4 – PPA) |
| | | | |
Pro Forma
Combined (Assuming No and Maximum Redemptions) |
| |||||||||||||||||||||
Revenue
|
| | | $ | 323,410 | | | | | $ | — | | | | | $ | 108,424 | | | | | $ | — | | | | | $ | — | | | | | | | | $ | — | | | | | | | | $ | 431,834 | | |
Cost of revenue
|
| | | | 103,889 | | | | | | — | | | | | | 60,649 | | | | | | — | | | | | | — | | | | | | | | | 14,692 | | | |
AA
|
| | | | 179,230 | | |
Gross Profit
|
| | | | 219,521 | | | | | | — | | | | | | 47,775 | | | | | | — | | | | | | — | | | | | | | | | (14,692) | | | | | | | | | 252,604 | | |
Operating Expenses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales and marketing
|
| | | | 185,269 | | | | | | — | | | | | | 7,592 | | | | | | — | | | | | | 48 | | | |
DD
|
| | | | — | | | | | | | | | 192,909 | | |
General and administrative
|
| | | | 124,868 | | | | | | 1,857 | | | | | | 13,230 | | | | | | — | | | | | | (10,548) | | | |
AA
|
| | | | 104 | | | |
BB
|
| | | | 131,024 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,513 | | | |
DD
|
| | | | ||||||||||||
Product and technology
|
| | | | 55,929 | | | | | | — | | | | | | — | | | | | | 20,408 | | | | | | 82 | | | |
DD
|
| | | | — | | | | | | | | | 76,419 | | |
Research and development expenses
|
| | | | | | | | | | | | | | | | 20,408 | | | | | | (20,408) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Operating Expenses
|
| | | | 366,066 | | | | | | 1,857 | | | | | | 41,230 | | | | | | — | | | | | | (8,905) | | | | | | | | | 104 | | | | | | | | | 400,352 | | |
(Loss) / Income from Operations
|
| | | | (146,545) | | | | | | (1,857) | | | | | | 6,545 | | | | | | — | | | | | | 8,905 | | | | | | | | | (14,796) | | | | | | | | | (147,748) | | |
Interest income (expense)
|
| | | | 1,348 | | | | | | — | | | | | | — | | | | | | (164) | | | | | | — | | | | | | | | | — | | | | | | | | | 1,184 | | |
Other income – interest on Trust Account
|
| | | | - | | | | | | 5,111 | | | | | | — | | | | | | — | | | | | | (5,111) | | | |
BB
|
| | | | — | | | | | | | | | — | | |
Gain on initial equity method investment
|
| | | | 3,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | | | | 3,000 | | |
Financial Income
|
| | | | - | | | | | | — | | | | | | 26 | | | | | | (26) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | |
Financial Expenses
|
| | | | - | | | | | | — | | | | | | (190) | | | | | | 190 | | | | | | — | | | | | | | | | — | | | | | | | | | — | | |
(Loss)/Income before Income Tax Expense
|
| | | | (142,197) | | | | | | 3,254 | | | | | | 6,381 | | | | | | — | | | | | | 3,794 | | | | | | | | | (14,796) | | | | | | | | | (143,564) | | |
Income Tax Expense/(Benefit)
|
| | | | 58 | | | | | | 944 | | | | | | 796 | | | | | | — | | | | | | (1,864) | | | |
CC
|
| | | | (4,084) | | | |
CC
|
| | | | (4,150) | | |
Loss from equity method investment
|
| | | | 479 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | | | | 479 | | |
Net (Loss)/Income
|
| | | | (142,734) | | | | | | 2,310 | | | | | | 5,585 | | | | | | — | | | | | | 5,658 | | | | | | | | | (10,712) | | | | | | | | | (139,893) | | |
No Redemption Scenario | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||
Weighted average Class A shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 336,589,275 | | |
Loss per share (Basic and Diluted) attributable to Class A common stockholders
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (0.42) | | |
Maximum Redemption Scenario | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||
Weighted average Class A shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 306,024,486 | | |
Loss per share (Basic and Diluted) attributable to Class A common stockholders
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (0.46) | | |
| | |
$ / €
|
| |||
Period end exchange rate as of December 31, 2019
|
| | | | 1.12 | | |
Average exchange rate for twelve months ended December 31, 2019
|
| | | | 1.12 | | |
| | |
As of
December 31, 2019 |
| | | | | | | | | | | | | |
As of
December 31, 2019 |
| |
As of
December 31, 2019 |
| |||||||||
| | |
IFRS
SBTech (in EUR) |
| |
Total
Adjustments (in EUR) |
| | | | | | | |
US GAAP
SBTech (in EUR) |
| |
US GAAP
SBTech (in USD) |
| ||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | € | 8,144 | | | | | € | — | | | | | | | | | | | € | 8,144 | | | | | $ | 9,143 | | |
Trade receivables, net
|
| | | | 24,745 | | | | | | — | | | | | | | | | | | | 24,745 | | | | | | 27,781 | | |
Other current assets
|
| | | | 3,258 | | | | | | 61 | | | | |
|
A
|
| | | | | 3,319 | | | | | | 3,726 | | |
Total current assets
|
| | | | 36,147 | | | | | | 61 | | | | | | | | | | | | 36,208 | | | | | | 40,650 | | |
NON-CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible assets, net
|
| | | | 26,094 | | | | | | — | | | | | | | | | | | | 26,094 | | | | | | 29,296 | | |
Right-of-use assets
|
| | | | 25,779 | | | | | | (25,779) | | | | |
|
B
|
| | | | | — | | | | | | — | | |
Property, plant and equipment, net
|
| | | | 9,930 | | | | | | — | | | | | | | | | | | | 9,930 | | | | | | 11,148 | | |
Deferred tax assets
|
| | | | 597 | | | | | | (134) | | | | |
|
A
|
| | | | | 463 | | | | | | 520 | | |
Other non-current assets
|
| | | | 306 | | | | | | — | | | | |
|
B
|
| | | | | 306 | | | | | | 344 | | |
Total assets
|
| | | | 98,853 | | | | | | (25,852) | | | | | | | | | | | | 73,001 | | | | | | 81,958 | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Trade payables
|
| | | | 8,127 | | | | | | — | | | | | | | | | | | | 8,127 | | | | | | 9,124 | | |
Lease liabilities
|
| | | | 3,516 | | | | | | (3,516) | | | | |
|
B
|
| | | | | — | | | | | | — | | |
Other accounts payable
|
| | | | 11,176 | | | | | | — | | | | | | | | | | | | 11,176 | | | | | | 12,547 | | |
Total current liabilities
|
| | | | 22,819 | | | | | | (3,516) | | | | | | | | | | | | 19,303 | | | | | | 21,671 | | |
NON-CURRENT LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lease liabilities
|
| | | | 22,749 | | | | | | (22,749) | | | | |
|
B
|
| | | | | — | | | | | | — | | |
Accrued severance pay, net
|
| | | | 408 | | | | | | — | | | | | | | | | | | | 408 | | | | | | 458 | | |
Total non-current liabilities
|
| | | | 23,157 | | | | | | (22,749) | | | | | | | | | | | | 408 | | | | | | 458 | | |
SHARHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share capital
|
| | | | 3 | | | | | | — | | | | | | | | | | | | 3 | | | | | | 3 | | |
Actuarial reserve
|
| | | | (139) | | | | | | — | | | | | | | | | | | | (139) | | | | | | (156) | | |
Retained earnings
|
| | | | 51,956 | | | | | | 413 | | | | |
|
B
|
| | | | | 52,369 | | | | | | 58,795 | | |
Equity attributable to owners of the parent
|
| | | | 51,820 | | | | | | 413 | | | | | | | | | | | | 52,233 | | | | | | 58,642 | | |
Non-controlling interest
|
| | | | 1,057 | | | | | | — | | | | | | | | | | | | 1,057 | | | | | | 1,187 | | |
Total equity
|
| | | | 52,877 | | | | | | 413 | | | | | | | | | | | | 53,290 | | | | | | 59,829 | | |
TOTAL LIABILITIES AND EQUITY
|
| | | | 98,853 | | | | | | (25,852) | | | | | | | | | | | | 73,001 | | | | | | 81,958 | | |
| | |
For the
Year ended December 31, 2019 |
| | | | | | | | | | | | | |
For the
Year ended December 31, 2019 |
| |
For the
Year ended December 31, 2019 |
| |||||||||
| | |
IFRS
SBTech (in EUR) |
| |
Total
Adjustments (in EUR) |
| | | | | | | |
US GAAP
SBTech (in EUR) |
| |
US GAAP
SBTech (in USD) |
| ||||||||||||
Revenue
|
| | | € | 96,857 | | | | | € | — | | | | | | | | | | | € | 96,857 | | | | | $ | 108,424 | | |
Cost of revenue
|
| | | | 54,173 | | | | | | 6 | | | | | | | | | | | | 54,179 | | | | | | 60,649 | | |
Gross Profit
|
| | | | 42,684 | | | | | | (6) | | | | | | | | | | | | 42,678 | | | | | | 47,775 | | |
Operating Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling and marketing expenses
|
| | | | 6,772 | | | | | | 10 | | | | | | | | | | | | 6,782 | | | | | | 7,592 | | |
General and administrative expenses
|
| | | | 11,772 | | | | | | 47 | | | | |
|
B
|
| | | | | 11,819 | | | | | | 13,230 | | |
Research and development expenses
|
| | | | 18,103 | | | | | | 128 | | | | | | | | | | | | 18,231 | | | | | | 20,408 | | |
Total operating costs and expenses
|
| | | | 36,647 | | | | | | 185 | | | | | | | | | | | | 36,832 | | | | | | 41,230 | | |
Operating income
|
| | | | 6,037 | | | | | | (191) | | | | | | | | | | | | 5,846 | | | | | | 6,545 | | |
Financial Income
|
| | | | 23 | | | | | | — | | | | | | | | | | | | 23 | | | | | | 26 | | |
Financial Expenses
|
| | | | 846 | | | | | | (676) | | | | |
|
B
|
| | | | | 170 | | | | | | 190 | | |
Profit before tax
|
| | | | 5,214 | | | | | | 485 | | | | | | | | | | | | 5,699 | | | | | | 6,381 | | |
Tax expenses
|
| | | | 638 | | | | | | 73 | | | | | | | | | | | | 711 | | | | | | 796 | | |
Net Profit
|
| | | | 4,576 | | | | | | 412 | | | | | | | | | | | | 4,988 | | | | | | 5,585 | | |
|
Cash consideration(1)
|
| | | $ | 209,516 | | |
|
Share consideration(2)
|
| | | | 545,586 | | |
|
Other consideration(3)
|
| | | | 3,331 | | |
|
Total estimated consideration
|
| | | | 758,433 | | |
|
Cash and cash equivalents
|
| | | $ | 9,143 | | |
|
Trade receivables, net
|
| | | | 27,781 | | |
|
Other current assets
|
| | | | 3,726 | | |
|
Property and equipment, net
|
| | | | 11,357 | | |
|
Intangible assets, net
|
| | | | 269,239 | | |
|
Deferred tax assets
|
| | | | 520 | | |
|
Other non-current assets
|
| | | | 344 | | |
|
Total Assets
|
| | | | 322,110 | | |
|
Trade payables
|
| | | | 9,124 | | |
|
Other accounts payable
|
| | | | 12,547 | | |
|
Other long-term liabilities
|
| | | | 2,648 | | |
|
Accrued severance pay, net
|
| | | | 458 | | |
|
Total liabilities
|
| | | | 24,777 | | |
|
Net assets acquired (a)
|
| | | | 297,333 | | |
|
Estimated purchase consideration (b)
|
| | | | 758,433 | | |
|
Estimated goodwill (b) — (a)
|
| | | | 461,100 | | |
Change in stock price
|
| |
Stock Price
|
| |
Estimated
Consideration |
| |
Goodwill
|
| |||||||||
Decrease of 10%
|
| | | $ | 11.03 | | | | | $ | 704,384 | | | | | $ | 407,051 | | |
Increase of 10%
|
| | | $ | 13.48 | | | | | $ | 812,482 | | | | | $ | 515,149 | | |
| | |
Preliminary
Estimated Asset Fair Value |
| |
Weighted Average
Useful Life (Years) |
| ||||||
| | |
(in thousands, except for useful life)
|
| |||||||||
Developed technology
|
| | | | 134,515 | | | | | | 10 | | |
Customer Relationships
|
| | | | 103,850 | | | | | | 15 | | |
Trademarks and Trade Names
|
| | | | 30,874 | | | | | | 15 | | |
Total
|
| | | | 269,239 | | | | | | | | |
Less: Net intangible assets reported on SBTech’s historical financial statements
|
| | | | (29,087) | | | | | | | | |
Pro forma adjustment
|
| | | | 240,152 | | | | | | | | |
| | |
For the Year ended December 31, 2019
|
| |||||||||
| | |
Assuming No
Redemptions |
| |
Assuming Maximum
Redemptions |
| ||||||
| | |
(in thousands except share and per share data)
|
| |||||||||
Pro forma net loss
|
| | | | (139,893) | | | | | | (139,893) | | |
Weighted average shares outstanding of Class A common stock
|
| | | | 336,589,275 | | | | | | 306,024,486 | | |
Net loss per share (Basic and Diluted) attributable to Class A common stockholders(1)
|
| | | $ | (0.42) | | | | | $ | (0.46) | | |
Name
|
| |
Age
|
| |
Position
|
|
Jeff Sagansky | | |
67
|
| | Chief Executive Officer and Chairman | |
Eli Baker | | |
45
|
| |
President, Chief Financial Officer and Secretary
|
|
Scott M. Delman | | |
60
|
| | Director | |
Joshua Kazam | | |
42
|
| | Director | |
Fredric D. Rosen | | |
76
|
| | Director | |
Scott I. Ross | | |
39
|
| | Director | |
| | | |
DraftKings
|
| |
SBTech
|
|
| 2007 | | | | | |
•
SBTech was founded and officially began its operations.
|
|
| 2012 | | |
•
DraftKings began its operations and offered its first DFS contest to the public for the Major League Baseball (“MLB”) season.
|
| |
•
SBTech’s operator base had grown to six.
|
|
| 2013 | | |
•
MLB became the first major sports organization to invest in, and establish a relationship, with DraftKings.
•
We launched the first mobile app in the DFS industry.
|
| |
•
SBTech’s operator base had grown to eight and just over 200 employees.
|
|
| 2014 | | |
•
We acquired DraftStreet, a DFS operator, increasing our user base by more than 50%, and acquired Starstreet, another DFS operator.
•
We signed a two-year deal to become the official DFS provider of the National Hockey League.
|
| |
•
SBTech’s operator base had grown to 11 and just over 400 employees.
|
|
| 2015 | | |
•
We were named the official DFS game of NASCAR, Ultimate Fighting Championship and Major League Soccer, and announced partnership deals with major sports teams including the New England Patriots, New York Knicks and Chicago Cubs.
•
21st Century Fox America, Inc. (“FOX”) became the first major media company to invest in us.
•
We obtained a license from the United Kingdom Gambling Commission to provide facilities to offer daily fantasy sports contests and other forms of pool betting, and to manufacture gambling software.
|
| |
•
SBTech obtained a license from the United Kingdom Gambling Commission to provide facilities for real event betting and to manufacture gambling software.
|
|
| | | |
DraftKings
|
| |
SBTech
|
|
| 2016 | | |
•
We acquired a leading provider of DFS Mixed Martial Arts contests, Kountermove, to bolster our user base in the burgeoning space of combat sports.
•
We explored a possible combination with a DFS competitor, but did not receive Federal Trade Commission approval.
|
| |
•
SBTech re-domiciled SBTech in the Isle of Man, and acquired a Maltese B2B license from the Malta Gaming Authority for hosting and management of remote gaming operators.
•
SBTech acquired two Romanian licenses from the National Gambling Office of Romania for the production of gambling software and the hosting of a gambling platform.
•
SBTech launched our Sportsbook into the newly regulated Romanian and Portuguese jurisdictions, opened an office in London and accepted our first retail sports bet in Mexico.
|
|
| 2017 | | |
•
We were granted a skill gaming license in Malta, allowing for further expansion in the European Union.
|
| |
•
SBTech launched a sportsbook for the Czech Republic National Lottery, marking SBTech’s first major lottery partner.
•
SBTech’s sportsbook launched in the Spanish regulated market.
|
|
| 2018 | | |
•
PASPA was struck down by the U.S. Supreme Court, opening the potential for state-by-state authorization of sports betting.
•
We launched the first online sportsbook in New Jersey.
•
We opened our first retail sportsbooks in Atlantic City, New Jersey (Resorts Casino and Hotel) and D’Iberville, Mississippi (Scarlet Pearl Casino Resort).
|
| |
•
SBTech entered the Danish sports betting and iGaming industry by partnering with the Danish National Lottery, Danske Spil, under the brand YOUBET.
•
SBTech was awarded a B2B remote gambling license in Gibraltar, where we opened an office.
•
SBTech became one of the first sportsbook providers to be licensed in the state of Mississippi as a manufacturer and distributor by the Mississippi Gaming Commission, and we debuted our retail sportsbook at the Golden Nugget’s Biloxi Casino as well as two Churchill Downs properties.
•
SBTech was awarded a Casino Service Industry Enterprise transactional waiver by the New Jersey Gaming Board and debuted a retail sportsbook at the Golden Nugget Atlantic City.
|
|
| | | |
DraftKings
|
| |
SBTech
|
|
| 2019 | | |
•
We officially launched iGaming in New Jersey with blackjack, roulette, video poker and slots.
•
We announced a landmark partnership with the National Football League (“NFL”) which made us the Official Daily Fantasy Partner of the NFL.
•
We were named the Official Daily Fantasy Game of the PGA Tour.
•
Our online sportsbook launched in Indiana, New Hampshire, Pennsylvania and West Virginia.
•
We launched retail sportsbooks in Iowa (Wild Rose) and New York (del Lago).
•
We were selected by the state of New Hampshire as its exclusive sportsbook partner.
•
DraftKings mobile/online Sportsbook launches in New Hampshire.
|
| |
•
SBTech launched our online sportsbook and iGaming offerings with Churchill Downs, and our online sportsbook with the Golden Nugget in New Jersey.
•
SBTech obtained conditional manufacturer and operator licenses from the Pennsylvania Gaming Commission, a manufacturer and Distributer license from the Arkansas Racing Commission and a temporary supplier’s license from the Indiana Gaming Commission, allowing us to launch our retail sportsbook in Pennsylvania, Indiana and Arkansas with Churchill Downs properties.
•
SBT Malta Limited signed a five-year agreement with the Oregon State Lottery to provide online and retail sportsbook offering, and successfully launched the first online sportsbook offering in the State of Oregon in October 2019. The retail sportsbook offering is expected to be rolled out mid-2020.
•
SBTech launched an online sportsbook for the State Lottery and Monopoly of Azerbaijan, and signed agreements to provide its online and retail sportsbook solution with the Finnish state lottery, Veikkaus, and the Swedish state lottery, Svenska Spel, in 2020.
|
|
| 2020 | | |
•
DraftKings and the XFL announced a new partnership that makes DraftKings an Official Daily Fantasy Sports Partner and an Authorized Gaming Operator of the league.
•
DraftKings launched mobile/online Sportsbook in Iowa.
|
| | | |
| | |
Year ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Revenue
|
| | | $ | 323,410 | | | | | $ | 226,227 | | | | | $ | 191,844 | | |
Net Loss
|
| | | | (142,734) | | | | | | (76,220) | | | | | | (75,556) | | |
Adjusted EBITDA (1)
|
| | | $ | (98,640) | | | | | $ | (58,850) | | | | | $ | (48,884) | | |
| | |
Year ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Net loss
|
| | | $ | (142,734) | | | | | $ | (76,220) | | | | | $ | (75,556) | | |
Adjusted for: | | | | | |||||||||||||||
Depreciation and amortization
|
| | | | 13,636 | | | | | | 7,499 | | | | | | 6,301 | | |
Interest (income) expense, net
|
| | | | (1,348) | | | | | | (666) | | | | | | 1,541 | | |
Income tax expense
|
| | | | 58 | | | | | | 105 | | | | | | 210 | | |
Stock-based compensation
|
| | | | 17,613 | | | | | | 7,210 | | | | | | 4,500 | | |
Transaction-related costs (1)
|
| | | | 10,472 | | | | | | — | | | | | | 10,697 | | |
Litigation, settlement and related costs (2)
|
| | | | 3,695 | | | | | | 3,222 | | | | | | 1,754 | | |
Other non-recurring and special project costs (3)
|
| | | | 2,489 | | | | | | — | | | | | | 1,062 | | |
Non-operating costs (4)
|
| | | | (2,521) | | | | | | — | | | | | | 607 | | |
Adjusted EBITDA
|
| | | $ | (98,640) | | | | | $ | (58,850) | | | | | $ | (48,884) | | |
| | |
Year ended December 31,
|
| |
2018 to 2019
% Change |
| |
2017 to 2018
% Change |
| |||||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||||||||
| | |
(in thousands)
|
| | | |||||||||||||||||||||||||
Revenue
|
| | | $ | 323,410 | | | | | $ | 226,277 | | | | | $ | 191,844 | | | | | | 42.9% | | | | | | 17.9% | | |
Cost of revenue
|
| | | | 103,889 | | | | | | 48,689 | | | | | | 31,750 | | | | | | 113.4% | | | | | | 53.4% | | |
Sales and marketing
|
| | | | 185,269 | | | | | | 145,580 | | | | | | 156,632 | | | | | | 27.3% | | | | | | -7.1% | | |
Product and technology
|
| | | | 55,929 | | | | | | 32,885 | | | | | | 20,212 | | | | | | 70.1% | | | | | | 62.7% | | |
General and administrative
|
| | | | 124,868 | | | | | | 75,904 | | | | | | 56,448 | | | | | | 64.5% | | | | | | 34.5% | | |
Loss from operations
|
| | | | (146,545) | | | | | | (76,781) | | | | | | (73,198) | | | | | | 90.9% | | | | | | 4.9% | | |
Interest income (expense), net
|
| | | | 1,348 | | | | | | 666 | | | | | | (1,541) | | | | | | 102.4% | | | | | | n.m. | | |
Gain on initial equity method investment
|
| | | | 3,000 | | | | | | — | | | | | | — | | | | | | n.m. | | | | | | n.m. | | |
Other income (expense), net
|
| | | | — | | | | | | — | | | | | | (607) | | | | | | n.m. | | | | | | n.m. | | |
Loss before income taxes expense
|
| | | | (142,197) | | | | | | (76,115) | | | | | | (75,346) | | | | | | 86.8% | | | | | | 1.0% | | |
Income tax expense
|
| | | | 58 | | | | | | 105 | | | | | | 210 | | | | | | -44.8% | | | | | | -50.0% | | |
Loss from equity method investment
|
| | | | 479 | | | | | | — | | | | | | — | | | | | | n.m. | | | | | | n.m. | | |
Net loss
|
| | | $ | (142,734) | | | | | $ | (76,220) | | | | | $ | (75,556) | | | | | | 87.3% | | | | | | 0.9% | | |
| | |
Year ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Net cash used by operating activities
|
| | | $ | (78,880) | | | | | $ | (45,579) | | | | | $ | (88,437) | | |
Net cash used in investing activities
|
| | | | (42,271) | | | | | | (26,672) | | | | | | (7,715) | | |
Net cash provided by financing activities
|
| | | | 79,776 | | | | | | 140,892 | | | | | | 118,531 | | |
Net increase (decrease) in cash
|
| | | | (41,375) | | | | | | 68,641 | | | | | | 22,379 | | |
Cash at beginning of period
|
| | | | 117,908 | | | | | | 49,267 | | | | | | 26,888 | | |
Cash at end of period
|
| | | $ | 76,533 | | | | | $ | 117,908 | | | | | $ | 49,267 | | |
| | |
Total
|
| |
Less than
1 year |
| |
1 – 3 Years
|
| |
3 – 5 Years
|
| |
More than
5 Years |
| |||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||
Operating lease obligations(1)
|
| | | $ | 66,028 | | | | | $ | 10,067 | | | | | $ | 16,674 | | | | | $ | 15,602 | | | | | $ | 23,685 | | |
Vendors and licenses(2)
|
| | | | 185,739 | | | | | | 74,390 | | | | | | 88,610 | | | | | | 18,639 | | | | | | 4,100 | | |
Debt obligations(3)
|
| | | | 86,873 | | | | | | 6,750 | | | | | | 80,123 | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 338,640 | | | | | $ | 91,207 | | | | | $ | 185,407 | | | | | $ | 34,241 | | | | | $ | 27,785 | | |
| | |
Year ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(€ in thousands)
|
| |||||||||||||||
Revenue | | | | € | 96,857 | | | | | € | 94,147 | | | | | € | 66,087 | | |
Gross profit
|
| | | | 42,684 | | | | | | 49,060 | | | | | | 34,243 | | |
Net profit after tax
|
| | | € | 4,576 | | | | | € | 26,779 | | | | | € | 16,290 | | |
| | |
Year ended December 31,
|
| |
2018 – 2019
% Change |
| |
2017 – 2018
% Change |
| |||||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||||||||
| | |
(€ in thousands)
|
| | | | | | | | | | | | | |||||||||||||||
Revenue
|
| | | € | 96,857 | | | | | € | 94,147 | | | | | € | 66,087 | | | | | | 2.9% | | | | | | 42.5% | | |
Cost of revenue
|
| | | | 54,173 | | | | | | 45,087 | | | | | | 31,844 | | | | | | 20.2% | | | | | | 41.6% | | |
Gross profit
|
| | | | 42,684 | | | | | | 49,060 | | | | | | 34,243 | | | | | | -13.0% | | | | | | 43.3% | | |
Operating expenses: | | | | | | | |||||||||||||||||||||||||
Research and development expenses
|
| | | | 18,103 | | | | | | 10,115 | | | | | | 8,693 | | | | | | 79.0% | | | | | | 16.4% | | |
Selling and marketing expenses
|
| | | | 6,772 | | | | | | 3,722 | | | | | | 2,964 | | | | | | 81.9% | | | | | | 25.6% | | |
General and administrative expenses
|
| | | | 11,772 | | | | | | 7,636 | | | | | | 5,892 | | | | | | 54.2% | | | | | | 29.6% | | |
Profit from operations
|
| | | | 6,037 | | | | | | 27,587 | | | | | | 16,694 | | | | | | -78.1% | | | | | | 65.3% | | |
Financial income
|
| | | | 23 | | | | | | 97 | | | | | | 37 | | | | | | -76.3% | | | | | | 162.2% | | |
Financial expense
|
| | | | 846 | | | | | | 340 | | | | | | 177 | | | | | | 148.8% | | | | | | 92.1% | | |
Profit before tax
|
| | | | 5,214 | | | | | | 27,344 | | | | | | 16,554 | | | | | | -80.9% | | | | | | 65.2% | | |
Tax expenses
|
| | | | 638 | | | | | | 565 | | | | | | 264 | | | | | | 12.9% | | | | | | 114.0% | | |
Net profit
|
| | | € | 4,576 | | | | | € | 26,779 | | | | | € | 16,290 | | | | | | -82.9% | | | | | | 64.4% | | |
| | |
Year ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
| | |
(€ in thousands)
|
| |||||||||||||||
Net cash provided by operating activities
|
| | | € | 19,525 | | | | | € | 30,949 | | | | | € | 18,260 | | |
Net cash used in investing activities
|
| | | | (18,399) | | | | | | (17,384) | | | | | | (14,307) | | |
Net cash provided by (used in) financing activities
|
| | | | (13,537) | | | | | | (1,184) | | | | | | 190 | | |
Effects of exchange rate changes
|
| | | | (176) | | | | | | (104) | | | | | | (6) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | (12,587) | | | | | | 12,277 | | | | | | 4,137 | | |
Cash, cash equivalents at beginning of period
|
| | | | 20,731 | | | | | | 8,454 | | | | | | 4,317 | | |
Cash, cash equivalents at end of period
|
| | | € | 8,144 | | | | | € | 20,731 | | | | | € | 8,454 | | |
| | |
Total
|
| |
Less than
1 year |
| |
1 – 3 Years
|
| |
3 – 5 Years
|
| |
More than
5 Years |
| |||||||||||||||
| | |
(€ in thousands)
|
| |||||||||||||||||||||||||||
Lease obligations(1)
|
| | | € | 26,265 | | | | | € | 3,516 | | | | | € | 7,103 | | | | | € | 5,813 | | | | | € | 9,833 | | |
| | |
Fair Market Value of New DraftKings Class A Common Stock
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption Date
(period to expiration of warrants) |
| |
$10.00
|
| |
$11.00
|
| |
$12.00
|
| |
$13.00
|
| |
$14.00
|
| |
$15.00
|
| |
$16.00
|
| |
$17.00
|
| |
$18.00
|
| |||||||||||||||||||||||||||
57 months
|
| | | | 0.257 | | | | | | 0.277 | | | | | | 0.294 | | | | | | 0.310 | | | | | | 0.324 | | | | | | 0.337 | | | | | | 0.348 | | | | | | 0.358 | | | | | | 0.365 | | |
54 months
|
| | | | 0.252 | | | | | | 0.272 | | | | | | 0.291 | | | | | | 0.307 | | | | | | 0.322 | | | | | | 0.335 | | | | | | 0.347 | | | | | | 0.357 | | | | | | 0.365 | | |
51 months
|
| | | | 0.246 | | | | | | 0.268 | | | | | | 0.287 | | | | | | 0.304 | | | | | | 0.320 | | | | | | 0.333 | | | | | | 0.346 | | | | | | 0.357 | | | | | | 0.365 | | |
48 months
|
| | | | 0.241 | | | | | | 0.263 | | | | | | 0.283 | | | | | | 0.301 | | | | | | 0.317 | | | | | | 0.332 | | | | | | 0.344 | | | | | | 0.356 | | | | | | 0.365 | | |
45 months
|
| | | | 0.235 | | | | | | 0.258 | | | | | | 0.279 | | | | | | 0.298 | | | | | | 0.315 | | | | | | 0.330 | | | | | | 0.343 | | | | | | 0.356 | | | | | | 0.365 | | |
42 months
|
| | | | 0.228 | | | | | | 0.252 | | | | | | 0.274 | | | | | | 0.294 | | | | | | 0.312 | | | | | | 0.328 | | | | | | 0.342 | | | | | | 0.355 | | | | | | 0.364 | | |
39 months
|
| | | | 0.221 | | | | | | 0.246 | | | | | | 0.269 | | | | | | 0.290 | | | | | | 0.309 | | | | | | 0.325 | | | | | | 0.340 | | | | | | 0.354 | | | | | | 0.364 | | |
36 months
|
| | | | 0.213 | | | | | | 0.239 | | | | | | 0.263 | | | | | | 0.285 | | | | | | 0.305 | | | | | | 0.323 | | | | | | 0.339 | | | | | | 0.353 | | | | | | 0.364 | | |
33 months
|
| | | | 0.205 | | | | | | 0.232 | | | | | | 0.257 | | | | | | 0.280 | | | | | | 0.301 | | | | | | 0.320 | | | | | | 0.337 | | | | | | 0.352 | | | | | | 0.364 | | |
30 months
|
| | | | 0.196 | | | | | | 0.224 | | | | | | 0.250 | | | | | | 0.274 | | | | | | 0.297 | | | | | | 0.316 | | | | | | 0.335 | | | | | | 0.351 | | | | | | 0.364 | | |
27 months
|
| | | | 0.185 | | | | | | 0.214 | | | | | | 0.242 | | | | | | 0.268 | | | | | | 0.291 | | | | | | 0.313 | | | | | | 0.332 | | | | | | 0.350 | | | | | | 0.364 | | |
24 months
|
| | | | 0.173 | | | | | | 0.204 | | | | | | 0.233 | | | | | | 0.260 | | | | | | 0.285 | | | | | | 0.308 | | | | | | 0.329 | | | | | | 0.348 | | | | | | 0.364 | | |
21 months
|
| | | | 0.161 | | | | | | 0.193 | | | | | | 0.223 | | | | | | 0.252 | | | | | | 0.279 | | | | | | 0.304 | | | | | | 0.326 | | | | | | 0.347 | | | | | | 0.364 | | |
18 months
|
| | | | 0.146 | | | | | | 0.179 | | | | | | 0.211 | | | | | | 0.242 | | | | | | 0.271 | | | | | | 0.298 | | | | | | 0.322 | | | | | | 0.345 | | | | | | 0.363 | | |
15 months
|
| | | | 0.130 | | | | | | 0.164 | | | | | | 0.197 | | | | | | 0.230 | | | | | | 0.262 | | | | | | 0.291 | | | | | | 0.317 | | | | | | 0.342 | | | | | | 0.363 | | |
12 months
|
| | | | 0.111 | | | | | | 0.146 | | | | | | 0.181 | | | | | | 0.216 | | | | | | 0.250 | | | | | | 0.282 | | | | | | 0.312 | | | | | | 0.339 | | | | | | 0.363 | | |
9 months
|
| | | | 0.090 | | | | | | 0.125 | | | | | | 0.162 | | | | | | 0.199 | | | | | | 0.237 | | | | | | 0.272 | | | | | | 0.305 | | | | | | 0.336 | | | | | | 0.362 | | |
6 months
|
| | | | 0.065 | | | | | | 0.099 | | | | | | 0.137 | | | | | | 0.178 | | | | | | 0.219 | | | | | | 0.259 | | | | | | 0.296 | | | | | | 0.331 | | | | | | 0.362 | | |
3 months
|
| | | | 0.034 | | | | | | 0.065 | | | | | | 0.104 | | | | | | 0.150 | | | | | | 0.197 | | | | | | 0.243 | | | | | | 0.286 | | | | | | 0.326 | | | | | | 0.361 | | |
0 months
|
| | | | — | | | | | | — | | | | | | 0.042 | | | | | | 0.115 | | | | | | 0.179 | | | | | | 0.233 | | | | | | 0.281 | | | | | | 0.323 | | | | | | 0.361 | | |
| | |
DEAC Stockholder Rights
|
| |
New DraftKings Stockholder Rights
|
|
Authorized Capital Stock
|
| | The Current Charter authorizes 401,000,000 shares of capital stock, consisting of (a) 400,000,000 shares of common stock, including 380,000,000 shares of Class A common stock and 20,000,000 shares of Class B common stock, and (b) 1,000,000 shares of preferred stock. | | |
New DraftKings will be authorized to issue 2,100,000,000 shares of capital stock, consisting of (i) 900,000,000 shares of Class A common stock, par value $0.0001 per share, (ii) 900,000,000 shares of Class B common stock, par value $0.0001 per share, and (iii) 300,000,000 shares of preferred stock, par value $0.0001 per share.
Upon consummation of the Business Combination, we expect there will be approximately 313 million shares of New DraftKings Class A common stock and approximately 394 million shares of New DraftKings Class B common stock (in each case, assuming no redemptions) outstanding. Following consummation of the Business Combination, New DraftKings is not expected to have any preferred stock outstanding.
|
|
Rights of Preferred Stock
|
| | The Current Charter permits DEAC’s board of directors to provide out of the unissued shares of preferred stock for one or more series of preferred stock and to establish from time to time the number of shares to be included in each such series | | | The Proposed Charter permits New DraftKings’ board of directors to fix for any class or series of preferred stock the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock, | |
| | |
DEAC Stockholder Rights
|
| |
New DraftKings Stockholder Rights
|
|
| | | and to fix the voting rights, if any, designations, powers, preference and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof. | | | including, without limitation, dividend rights, dividend rates, conversion rights, exchange rights, voting rights, rights and terms of redemption, dissolution preferences, and treatment in the case of a merger, business combination transaction, or sale of New DraftKings’ assets, which rights may be greater than the rights of the holders of the common stock. | |
Number and Qualification of Directors
|
| | The Current Charter provides that the number of directors of DEAC, other than those who may be elected by the holders of one or more series of preferred stock voting separately by class or series, will be fixed from time to time exclusively by DEAC’s board of directors pursuant to a resolution adopted by a majority of DEAC’s board of directors. | | | Subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time pursuant to a resolution adopted by the New DraftKings board of directors, or, from and after the time that Mr. Robins beneficially owns less than a majority of the voting power of the outstanding capital stock of New DraftKings, by the affirmative vote of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings. Directors need not be stockholders of New DraftKings. | |
Classification of the Board of Directors
|
| | Delaware law permits a corporation to classify its board of directors into as many as three classes with staggered terms of office. Under the Current Charter, the DEAC Board is classified into three classes of directors with staggered terms of office. | | | The NRS permits a corporation to classify its board of directors into as many as four classes with staggered terms of office, where at least one-fourth of the directors must be elected annually. However, the New DraftKings amended and restated articles of incorporation does not provide for a classified board of directors, and thus all directors will be elected each year for one-year terms. | |
Removal of Directors
|
| | Under the DGCL, holders of a majority of shares of each class entitled to vote at an election of directors may vote to remove any director or the entire board without cause unless (i) the board is a classified board, in which case directors may be removed only for cause, or (ii) the corporation has cumulative voting, in which case, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his or her removal would be sufficient to elect such director. Thus, under the DGCL, a director of a corporation that does not have a classified board or permit cumulative voting may be removed, without cause, by the affirmative vote of a majority of the outstanding | | |
The NRS requires the vote of the holders of at least two-thirds of voting power of the issued and outstanding stock entitled to vote at an election of directors in order to remove a director or all of the directors. Furthermore, the NRS does not make a distinction between removals for cause and removals without cause.
The New DraftKings amended and restated articles of incorporation provides that any or all of the directors may be removed from office at any time with or without cause by the affirmative vote of the holders representing not less than two-thirds of the voting power of the then-outstanding shares of capital stock of New DraftKings entitled to vote at an annual or special meeting duly noticed and called.
|
|
| | |
DEAC Stockholder Rights
|
| |
New DraftKings Stockholder Rights
|
|
| | |
shares entitled to vote at an election of directors.
The Current Charter provides that any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then-outstanding shares of capital stock of DEAC entitled to vote generally in the election of directors, voting together as a single class.
|
| | | |
Voting
|
| | The Current Charter provides that the holders of the Class A common stock and the Class B common stock exclusively possess all voting power with respect to DEAC. The holders of shares of DEAC common stock shall be entitled to one vote for each such share on each matter properly submitted to DEAC’s stockholders on which the holders of DEAC’s common stock are entitled to vote. | | | Holders of New DraftKings Class A common stock will be entitled to cast one vote per Class A share, while holders of New DraftKings Class B common stock will be entitled to cast 10 votes per Class B share. Generally, holders of all classes of New DraftKings common stock vote together as a single class, and an action is approved by New DraftKings stockholders if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, while directors are elected by a plurality of the votes cast. | |
Cumulative Voting
|
| | Delaware law provides that a corporation may grant stockholders cumulative voting rights for the election of directors in its certificate of incorporation; however, the Current Charter does not authorize cumulative voting. | | | Nevada law provides that a corporation may grant stockholders cumulative voting rights for the election of directors in its articles of incorporation as long as certain procedures are followed; however, the Proposed Charter does not authorize cumulative voting. | |
Vacancies on the Board of Directors
|
| | The Current Charter provides that vacancies in DEAC’s board of directors and newly created directorships resulting from any increase in the authorized number of directors or resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum or by a sole remaining director (and not by stockholders). | | | Subject to the rights of holders of any series of preferred stock and the terms and conditions of the Stockholders Agreement, vacancies in the New DraftKings’ board of directors and newly created directorships resulting from any increase in the authorized number of directors or from any other cause will be filled by, and only by, a majority of the directors then in office, even though less than a quorum. | |
Special Meeting of the Board of Directors
|
| | There is no such provision in the Current Charter. | | | Special meetings of the New DraftKings’ board of directors may be called by the Chairperson, the Chief Executive Officer, the President, or two or more Directors (or the sole Director, if applicable) of New DraftKings. | |
| | |
DEAC Stockholder Rights
|
| |
New DraftKings Stockholder Rights
|
|
Stockholder Action by Written Consent
|
| |
The DGCL provides that, unless the articles or certificate of incorporation provides otherwise, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if the holders of outstanding stock having at least the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders consent to the action in writing. In addition, the DGCL requires a corporation to give prompt notice of the taking of corporate action without a meeting by less than unanimous written consent to those stockholders who did not consent in writing.
Under the Current Charter, any action required or permitted to be taken by the stockholders of DEAC must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders, other than with respect to the Class B common stock with respect to which action may be taken by written consent.
|
| |
The NRS provides that, unless the articles of incorporation or bylaws provides otherwise, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the meeting, the holders of outstanding stock having at least a majority of the voting power of the capital stock of New DraftKings, or a different proportion of voting power if required for such action at the meeting, consent to the action in writing.
The New DraftKings amended and restated articles of incorporation provide that any action required or permitted to be taken by the stockholders of New DraftKings may be effected by an action by written consent in lieu of a meeting with the approval of the holders of outstanding capital stock having not less than the minimum voting power that would be necessary to authorize or take such action at a meeting at which all shares of capital stock entitled to vote thereon were present and voted; however, from and after the time that Mr. Robins beneficially owns less than a majority of the voting power of the capital stock of New DraftKings, no action which is required to be taken or which may be taken at any annual or special meeting of stockholders of New DraftKings may be taken by written consent without a meeting.
|
|
Amendment of the Charter
|
| | Under Delaware law, an amendment to a charter generally requires the approval of DEAC’s board of directors and a majority of the combined voting power of the then-outstanding shares of voting stock, voting together as a single class. | | |
Nevada law provides generally that a resolution of the board of directors is required to propose an amendment to a corporation’s articles of incorporation and that the amendment must be approved by the affirmative vote of a majority of the voting power of all classes of New DraftKings capital stock entitled to vote, as well as a majority of any class adversely affected.
Amendments to the Proposed Charter must be approved by (1) a majority of the combined voting power of all shares entitled to vote, voting together as a single class, so long as shares representing a majority of the voting power of all of the then-outstanding shares of capital stock of New DraftKings entitled to vote are beneficially owned by Mr. Robins or (2) two-thirds of the combined voting
|
|
| | |
DEAC Stockholder Rights
|
| |
New DraftKings Stockholder Rights
|
|
| | | | | | power of all shares entitled to vote, voting together as a single class, thereafter. | |
Amendment of the Bylaws
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| | DEAC’s board of directors is expressly authorized to make, alter, amend or repeal the amended and restated bylaws. The bylaws may also be adopted, amended, altered or repealed by the DEAC stockholders representing a majority of the voting power of all of the then-outstanding shares of capital stock of DEAC entitled to vote generally in the election of directors. | | | The New DraftKings amended and restated bylaws may be amended or repealed by the affirmative vote of a majority of the New DraftKings board of directors or by stockholders representing either a majority of the voting power of all of the then-outstanding shares of capital stock of New DraftKings entitled to vote, so long as shares representing a majority of the voting power of all of the then-outstanding shares of capital stock of New DraftKings entitled to vote are beneficially owned by Mr. Robins, or thereafter, by at least two-thirds of the voting power of all of the then-outstanding shares of capital stock of New DraftKings entitled to vote. | |
Quorum
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Board of Directors. A majority of DEAC’s board of directors constitutes a quorum at any meeting of DEAC’s board of directors.
Stockholders. The presence, in person or by proxy, at a stockholders meeting of the holders of shares of outstanding capital stock representing a majority of the voting power of all outstanding shares of capital stock entitled to vote at such meeting constitutes a quorum.
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Board of Directors. At all meetings of the New DraftKings board of directors, a majority of the directors will constitute a quorum for the transaction of business.
Stockholders. The holders of a majority of the voting power of all shares of New DraftKings capital stock issued and outstanding and entitled to vote constitute a quorum at all meetings of New DraftKings stockholders for the transaction of business.
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Special Meetings of Stockholders
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Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized in the certificate of incorporation or bylaws to call a special stockholder meeting.
The DEAC bylaws provide that a special meeting of stockholders may be called by the Secretary of DEAC at the written request of the majority of the board of directors of DEAC, by the Chairman of the board, by the President of DEAC or by the stockholders owning a majority of the shares outstanding and entitled to vote.
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The NRS permits special meetings of stockholders to be called by the entire board of directors, any two directors or the President, unless the articles of incorporation or bylaws provide otherwise.
Subject to the rights, if any, of the holders of any class or series of preferred stock then outstanding of New DraftKings, special meetings of stockholders may be called at any time (a) by the Chairman of the New DraftKings board of directors or by the Chief Executive Officer upon direction of the Board pursuant to a resolution adopted by a majority of the entire New DraftKings board of directors or by the holders of a majority of the voting power of the capital stock of New DraftKings, so long as shares representing a majority of the voting power of all of the then-outstanding shares of capital stock of New DraftKings entitled to vote are
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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| | | | | | beneficially owned by Mr. Robins, and (b) thereafter, only by the Chairman of the Board of Directors or by the Chief Executive Officer of New DraftKings upon the direction of the New DraftKings board of directors pursuant to a resolution adopted by a majority of the entire Board, and may not be called by any other person or persons. | |
Notice of Stockholder Meetings
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| | Whenever notice is required to be given to any stockholder, such notice may be given (i) in writing and sent either by hand delivery, through the United States mail, or by a nationally recognized overnight delivery service for next day delivery, or (ii) by means of a form of electronic transmission consented to by the stockholder, to the extent permitted by, and subject to the conditions set forth in Section 232 of the DGCL. | | | Whenever stockholders are required or permitted to take any action at a meeting, a timely notice in writing or by electronic transmission, in the manner consistent with the NRS, of the meeting, which will state the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purposes for which the meeting is called, will be mailed to or transmitted electronically to each stockholder of record entitled to vote thereat as of the record date for determining the stockholders entitled to notice of the meeting. Unless otherwise provided by law, the charter or the bylaws, notice will be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. | |
Stockholder Proposals (Other than Nominations of Persons for Election as Directors)
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| | No business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in DEAC’s notice of meeting (or any supplement thereto) given by or at the direction of DEAC’s board of directors, (ii) otherwise properly brought before the annual meeting by or at the direction of DEAC’s board of directors or (iii) otherwise properly brought before the annual meeting by any DEAC stockholder (x) who is a stockholder of record entitled to vote at such annual meeting on the date of the giving of the required notice and on the record date for the determination of stockholders entitled to vote at such annual meeting and (y) who complies with applicable notice procedures. | | |
No business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in New DraftKings’ notice of meeting delivered pursuant to the bylaws, (ii) properly brought before the annual meeting by or at the direction of the board (or a committee thereof) or (iii) otherwise properly brought before the annual meeting by any stockholder of New DraftKings who is entitled to vote at the meeting, who complies with the notice procedures set forth in the bylaws and who is a stockholder of record at the time such notice is delivered to the Secretary of New DraftKings.
The stockholder must (i) give timely notice thereof in proper written form to the
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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| | | | | | Secretary of New DraftKings and (ii) the business must be a proper matter for stockholder action. To be timely, a stockholder’s notice must be received by the Secretary at the principal executive offices of New DraftKings not less than 90 or more than 120 days before the meeting. The public announcement of an adjournment or postponement of an annual meeting will not commence a new time period (or extend any time period) for the giving of a stockholder’s notice. Additionally, the stockholder must provide information pursuant to the advance notice provisions in the New DraftKings bylaws. | |
Stockholder Nominations of Persons for Election as Directors
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| | Nominations of persons for election to DEAC’s board of directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to DEAC’s notice of meeting only by giving notice to the secretary must be received by the secretary at the principal executive offices of DEAC (i) in the case of an annual meeting, not later than the close of business on the 90th day nor earlier than the close of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date (or if there has been no prior annual meeting), notice by the stockholder to be timely must be so received no earlier than the close of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting was first made by DEAC; and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by DEAC. | | |
Nominations of persons for election to the New DraftKings board of directors at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors as set forth in New DraftKings’ notice of such special meeting, may be made (i) by or at the direction of the board of directors or (ii) by any stockholder of New DraftKings (x) who is a stockholder of record entitled to vote in the election of directors on the date of the giving of the notice and on the record date for the determination of stockholders entitled to vote at such meeting and (y) who complies with the notice procedures set forth in the New DraftKings Bylaws.
For a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice to the Secretary must be received by the Secretary at the principal executive offices of New DraftKings (i) in the case of an annual meeting, not later than the close of business not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting or, if the number of directors to be elected to the board of directors is increased and the first public announcement naming all of the nominees for directors or specifying the size of the increased board of directors is less than 100 days prior to the meeting, the close of business on the 10th day following the day on which public announcement of the date
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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| | | | | | of such meeting is first made; and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by New DraftKings. In no event will the public announcement of an adjournment or postponement of an annual meeting or special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice. Additionally, the stockholder must provide information pursuant to the advance notice provisions in the New DraftKings bylaws. | |
Limitation of Liability of Directors and Officers
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The DGCL permits limiting or eliminating the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of the duty of loyalty, intentional misconduct, unlawful repurchases or dividends, or improper personal benefit.
The Current Charter provides that no director will be personally liable, except to the extent an exemption from liability or limitation is not permitted under the DGCL, unless a director violated his or her duty of loyalty to the DEAC or its stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal benefit from his or her actions as a director.
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The NRS has a similar, but somewhat broader provision limiting or eliminating the individual liability of both directors and officers unless the articles of incorporation provide for greater liability. Under the NRS, a director or officer is not liable unless the presumption that such person acted in good faith, on an informed basis and with a view to the interests of the corporation has been rebutted. In addition, there must be proof both that the act or failure to act constituted a breach of a fiduciary duty as a director or officer and that such breach involved intentional misconduct, fraud or a knowing violation of law, a more stringent burden than a breach of the duty of loyalty or deriving an improper personal benefit under the DGCL. In addition, the NRS provision permitting limitation of liability applies to both directors and officers and expressly applies to liabilities owed to creditors of the corporation. Furthermore, under the NRS, it is not necessary to adopt provisions in the articles of incorporation limiting personal liability of directors as this limitation is provided by statute. Thus, the NRS provides broader protection from personal liability for directors and officers than the DGCL.
Under the New DraftKings amended and restated articles of incorporation and bylaws, no director or officer will be personally liable to New DraftKings, or its stockholders or its creditors for any damages as a result of any act or failure to
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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act in his or her capacity as a director or officer to the fullest extent permitted by Nevada law.
In addition, New DraftKings renounces in its amended and restated articles of incorporation, any interest or expectancy to participate in specific or specified classes or categories of business opportunities, limiting certain types of claims against directors or officers for certain possible breaches of the duty of loyalty.
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Indemnification of Directors, Officers
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The DGCL generally permits a corporation to indemnify its directors and officers acting in good faith. Under the DGCL, the corporation through its stockholders, directors or independent legal counsel, will determine that the conduct of the person seeking indemnity conformed with the statutory provisions governing indemnity.
The Current Charter provides that DEAC will indemnify each director and officer to the fullest extent permitted by applicable law.
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The NRS generally permits a corporation to indemnify any director or officer who acted in good faith and in a manner in which he or she reasonably believed to be in or not opposed to the best interests of the corporation (and, in the case of a non-derivative action involving a criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful). Under the NRS, the person seeking indemnity may also be indemnified if he or she is not liable for his or her actions under Nevada law as described under “— Limitation of Liability of Directors and Officers” above.
The New DraftKings amended and restated articles of incorporation and bylaws provide that New DraftKings will indemnify each current, former or prospective director, officer, employee or agent to the fullest extent permitted by Nevada law.
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Dividends
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| | Unless further restricted in the certificate of incorporation, the DGCL permits a corporation to declare and pay dividends out of either (i) surplus, or (ii) if no surplus exists, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year (provided that the amount of capital of the corporation is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets). The DGCL defines surplus as the excess, at any time, of the net assets of a corporation over its stated capital. In addition, the DGCL provides that a corporation may redeem or repurchase its | | | The NRS provides that no distribution (including dividends on, or redemption or repurchases of, shares of capital stock) may be made if, after giving effect to such distribution, (i) the corporation would not be able to pay its debts as they become due in the usual course of business, or, (ii) except as otherwise specifically permitted by the articles of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed at the time of a dissolution to satisfy the preferential rights of preferred stockholders. In making those determinations, the board of directors may consider financial statements prepared on the basis of accounting practices that are reasonable in the | |
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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shares only when the capital of the corporation is not impaired and only if such redemption or repurchase would not cause any impairment of the capital of a corporation.
The Current Charter provides that, subject to applicable law, the rights, if any, of the holders of any outstanding series of preferred stock and the charter requirements relating to business combinations, holders of shares of common stock are entitled to receive such dividends and other distributions (payable in cash, property or capital stock of DEAC) when, as and if declared thereon by DEAC’s board of directors from time to time out of any assets or funds legally available therefor and will share equally on a per share basis in such dividends and distributions.
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circumstances, a fair valuation, including but not limited to unrealized appreciation and depreciation, or any other method that is reasonable in the circumstances.
The Proposed Charter provides that holders of Class A common stock are entitled, on a per share basis, to such dividends and other distributions of cash, property, shares of capital stock or rights to acquire shares of capital stock of New DraftKings as may be declared by the Board from time to time with respect to common stock out of assets or funds legally available therefor. Dividends will not be declared or paid on the Class B common stock and holders of Class B common stock will have no entitlement in respect of dividends thereon.
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Liquidation
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| | In the event of any voluntary or involuntary liquidation, dissolution or winding up of DEAC, after payment or provision for payment of the debts and other liabilities of DEAC, the holders of shares of common stock shall be entitled to receive all the remaining assets of DEAC available for distribution to its stockholders, ratably in proportion to the number of shares of common stock held by them. | | | On the liquidation, dissolution, distribution of assets or winding up of New DraftKings, each holder of New DraftKings Class A common stock will be entitled to a pro rata distribution of the net assets, if any, available for distribution to common stockholders. Holders of New DraftKings Class B common stock will not be entitled to receive any distribution of New DraftKings’ assets of whatever kind available until distribution has first been made to all holders of New DraftKings Class A common stock. | |
Supermajority Voting Provisions
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| | Amendments to Article VIII (Indemnification) of the Current Charter require the affirmative vote of DEAC’s stockholders holding at least two-thirds of the voting power of all outstanding shares of capital stock of DEAC. | | | Amendments to certain provisions of the Proposed Charter will require the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings once Mr. Robins beneficially owns shares of New DraftKings capital stock representing less than a majority of the voting power of New DraftKings capital stock. Prior to that time, amendments to those provisions will require the affirmative vote of the holders of a majority of the voting power of the outstanding voting stock of New DraftKings. See “Description of New DraftKings Securities — Anti-Takeover Effects of Provisions of the New DraftKings Amended and Restated Articles of | |
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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| | | | | | Incorporation, the New DraftKings Amended and Restated Bylaws and Applicable Law”. In addition, removal of directors and changes to the number of directors requires the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings in certain circumstances. | |
Anti-Takeover Provisions and Other Stockholder Protections
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| | The anti-takeover provisions and other stockholder protections in the Current Charter include the staggered board, blank check preferred stock, and an election to be subject to Section 203 of the DGCL, which regulates corporate takeovers, among others. | | |
See “Description of New DraftKings Securities — Anti-Takeover Effects of Provisions of the New DraftKings Amended and Restated Articles of Incorporation, the New DraftKings Amended and Restated Bylaws and Applicable Law” for further information regarding the anti-takeover provisions related thereto.
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Preemptive Rights
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| | There are no preemptive rights provisions in the Current Charter. | | | There are no preemptive rights relating to shares of New DraftKings Class A common stock. | |
Fiduciary Duties of Directors
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| | Under Delaware law, the standards of conduct for directors have developed through Delaware court case law. Generally, directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders. Members of the board of directors or any committee designated by the board of directors are similarly entitled to rely in good faith upon the records of the corporation and upon such information, opinions, reports and statements presented to the corporation by corporate officers, employees, committees of the board of directors or other persons as to matters such member reasonably believes are within such other person’s professional or expert competence, provided that such other person has been selected with reasonable care by or on behalf of the corporation. Such appropriate reliance on records and other information protects directors from liability related to decisions made based on such records and other information. | | | Nevada requires that directors and officers of Nevada corporations exercise their powers in good faith and with a view to the interests of the corporation. As a matter of law, under the NRS, directors and officers are presumed to act in good faith, on an informed basis and with a view to the interests of the corporation in making business decisions. In performing such duties, directors and officers may exercise their business judgment through reliance on information, opinions, reports, financial statements and other financial data prepared or presented by corporate directors, officers or employees who are reasonably believed to be reliable and competent. Professional reliance may also be extended to legal counsel, public accountants, advisers, bankers or other persons as to matters reasonably believed to be within their professional competence, and to the work of a committee (on which the particular director or officer does not serve) if the committee was established and empowered by the corporation’s board of directors, and if the committee’s work was within its designated authority and was about matters on which the committee was reasonably believed to merit confidence. However, directors and officers may not rely on such information, opinions, reports, | |
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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| | | | | | books of account or similar statements if they have knowledge concerning the matter in question that would make such reliance unwarranted. | |
Inspection of Books and Records
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| | Under the DGCL, any stockholder or beneficial owner has the right, upon written demand under oath stating the proper purpose thereof, either in person or by attorney or other agent, to inspect and make copies and extracts from the corporation’s stock ledger, list of stockholders and its other books and records for a proper purpose during the usual hours for business. | | |
Inspection rights under Nevada law are more limited. The NRS grants any person who has been a stockholder of record of a corporation for at least six months immediately preceding the demand, or any person holding, or thereunto authorized in writing by the holders of, at least 5% of all of its outstanding shares, upon at least five days’ written demand, the right to inspect in person or by agent or attorney, during usual business hours (i) the articles of incorporation and all amendments thereto, (ii) the bylaws and all amendments thereto and (iii) a stock ledger or a duplicate stock ledger, revised annually, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them respectively. A Nevada corporation may require a stockholder to furnish the corporation with an affidavit that such inspection is for a proper purpose related to his or her interest as a stockholder of the corporation.
In addition, the NRS grants certain stockholders the right to inspect the books of account and records of a corporation for any proper purpose. The right to inspect the books of account and all financial records of a corporation, to make copies of records and to conduct an audit of such records is granted only to a stockholder who owns at least 15% of the issued and outstanding shares of a Nevada corporation, or who has been authorized in writing by the holders of at least 15% of such shares. However, these requirements do not apply to any corporation that furnishes to its stockholders a detailed, annual financial statement or any corporation that has filed during the preceding 12 months all reports required to be filed pursuant to Section 13 or Section 15(d) of the Exchange Act.
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DEAC Stockholder Rights
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New DraftKings Stockholder Rights
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Choice of Forum
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| | The Current Charter generally designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of DEAC, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of DEAC to DEAC or DEAC’s stockholders, (iii) any action asserting a claim against DEAC, its directors, officers or employees arising pursuant to any provision of the DGCL or its charter or bylaws, or (iv) any action asserting a claim against DEAC, its directors, officers or employees governed by the internal affairs doctrine and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, subject to certain exceptions. | | | The Proposed Charter generally designates the Eighth Judicial District Court of Clark County, Nevada as the exclusive forum for any or all actions, suits, proceedings, whether civil, administrative or investigative or that asserts any claim or counterclaim, (a) brought in the name or right of New DraftKings or on its behalf; (b) asserting a claim for breach of any fiduciary duty owed by any director, officer, employee or agent of New DraftKings to New DraftKings or New DraftKings’ stockholders; (c) arising or asserting a claim pursuant to any provision of NRS Chapters 78 or 92A or any provision of the charter or bylaws; (d) to interpret, apply, enforce or determine the validity of the Proposed Charter or bylaws; or (e) asserting a claim governed by the internal affairs doctrine, subject to certain exceptions, to the fullest extent permitted by law. | |
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Before the Business
Combination |
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After the Business Combination
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Assuming No
Redemption |
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Assuming Maximum
Redemption |
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Name and Address of
Beneficial Owner |
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Number of
shares of DEAC common stock |
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%
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% of
Total Voting Power** |
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Number of
shares of New DraftKings Class A Common Stock |
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%
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Number of
shares of New DraftKings Class B Common Stock |
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%
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% of
Total Voting Power** |
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Number of
shares of New DraftKings Class A Common Stock |
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%
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Number of
shares of New DraftKings Class B Common Stock |
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%
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% of
Total Voting Power** |
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Eagle Equity Partners,
LLC(1)(2) |
| | | | 5,020,000 | | | | | | 10.0% | | | | | | 10.0% | | | | | | 2,718,529 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 2,718,529 | | | | | | 1.0% | | | | | | — | | | | | | — | | | | | | * | | |
Jeff Sagansky(1)(2)
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| | | | 5,020,000 | | | | | | 10.0% | | | | | | 10.0% | | | | | | 2,718,529 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 2,718,529 | | | | | | 1.0% | | | | | | — | | | | | | — | | | | | | * | | |
Eli Baker(1)(2)
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| | | | 5,020,000 | | | | | | 10.0% | | | | | | 10.0% | | | | | | 2,718,529 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 2,718,529 | | | | | | 1.0% | | | | | | — | | | | | | — | | | | | | * | | |
Harry E. Sloan(1)(3)
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| | | | 4,900,000 | | | | | | 9.8% | | | | | | 9.8% | | | | | | 2,718,528 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 2,718,528 | | | | | | 1.0% | | | | | | — | | | | | | — | | | | | | * | | |
Fredric Rosen(1)(4)
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| | | | 20,000 | | | | | | * | | | | | | * | | | | | | 153,333 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 153,333 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Joshua Kazam(1)(5)
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| | | | 20,000 | | | | | | * | | | | | | * | | | | | | 153,333 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 153,333 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Scott Ross(1)
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| | | | 20,000 | | | | | | * | | | | | | * | | | | | | 20,000 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 20,000 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Scott Delman(1)(6)
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| | | | 20,000 | | | | | | * | | | | | | * | | | | | | 86,666 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 86,666 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
All Directors and Executive
Officers of DEAC as a Group (Seven Individuals) |
| | | | 10,000,000 | | | | | | 20.0% | | | | | | 20.0% | | | | | | 5,850,389 | | | | | | 1.9% | | | | | | — | | | | | | — | | | | | | * | | | | | | 5,850,389 | | | | | | 2.1% | | | | | | — | | | | | | — | | | | | | * | | |
Directors and Executive Officers of New DraftKings After
Consummation of the Business Combination |
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Jason Robins(7)(8)(9)
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| | | | — | | | | | | — | | | | | | — | | | | | | 8,477,315 | | | | | | 2.6% | | | | | | 393,918,119 | | | | | | 100% | | | | | | 92.7% | | | | | | 8,477,315 | | | | | | 2.9% | | | | | | 366,409,809 | | | | | | 100% | | | | | | 92.9% | | |
Matthew Kalish(7)(9)(10)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 4,029,079 | | | | | | 1.3% | | | | | | — | | | | | | — | | | | | | * | | | | | | 4,029,079 | | | | | | 1.4% | | | | | | — | | | | | | — | | | | | | * | | |
Paul Liberman(7)(9)(11)
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| | | | — | | | | | | — | | | | | | — | | | | | | 4,675,128 | | | | | | 1.5% | | | | | | — | | | | | | — | | | | | | * | | | | | | 4,675,128 | | | | | | 1.6% | | | | | | — | | | | | | — | | | | | | * | | |
M. Gavin Isaacs(12)(13)
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| | | | — | | | | | | — | | | | | | — | | | | | | 480,729 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 480,729 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Woodrow Levin(7)(9)(14)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 413,440 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 413,440 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Shalom Meckenzie(12)(15)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 34,732,698 | | | | | | 11.1% | | | | | | — | | | | | | — | | | | | | * | | | | | | 34,732,698 | | | | | | 12.3% | | | | | | — | | | | | | — | | | | | | * | | |
Ryan R. Moore(7)(9)(16)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 10,445,725 | | | | | | 3.3% | | | | | | — | | | | | | — | | | | | | * | | | | | | 10,445,725 | | | | | | 3.7% | | | | | | — | | | | | | — | | | | | | * | | |
Steven J. Murray(7)(9)(17)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 7,789,727 | | | | | | 2.5% | | | | | | — | | | | | | — | | | | | | * | | | | | | 7,789,727 | | | | | | 2.8% | | | | | | — | | | | | | — | | | | | | * | | |
Hany M. Nada(7)(9)(18)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 7,231,567 | | | | | | 2.3% | | | | | | — | | | | | | — | | | | | | * | | | | | | 7,231,567 | | | | | | 2.6% | | | | | | — | | | | | | — | | | | | | * | | |
Richard Rosenblatt(7)(19)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 223,158 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 223,158 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
John S. Salter(7)(9)(20)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 22,824,930 | | | | | | 7.3% | | | | | | — | | | | | | — | | | | | | * | | | | | | 22,824,930 | | | | | | 8.1% | | | | | | — | | | | | | — | | | | | | * | | |
Harry E. Sloan(1)(3)
|
| | | | 4,900,000 | | | | | | 9.8% | | | | | | 9.8% | | | | | | 2,718,528 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 2,718,528 | | | | | | 1.0% | | | | | | — | | | | | | — | | | | | | * | | |
Marni M. Walden(7)(21)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 90,136 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 90,136 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
R. Stanton Dodge(7)(22)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,739,208 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 1,739,208 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
Jason Park(7)(23)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 253,879 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | | | | | 253,879 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
All Directors and Executive
Officers of New DraftKings as a Group (15 Individuals) |
| | | | 4,900,000 | | | | | | 9.8% | | | | | | 9.8% | | | | | | 106,125,246 | | | | | | 32.1% | | | | | | 393,918,119 | | | | | | 100% | | | | | | 94.7% | | | | | | 106,125,246 | | | | | | 35.4% | | | | | | 366,409,809 | | | | | | 100% | | | | | | 95.1% | | |
Five Percent Holders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Shalom Meckenzie(12)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 34,732,698 | | | | | | 11.1% | | | | | | — | | | | | | — | | | | | | * | | | | | | 34,732,698 | | | | | | 12.3% | | | | | | — | | | | | | — | | | | | | * | | |
RPII DK LLC(7)(9)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 22,824,930 | | | | | | 7.3% | | | | | | — | | | | | | — | | | | | | * | | | | | | 22,824,930 | | | | | | 8.1% | | | | | | — | | | | | | — | | | | | | * | | |
TFCF Sports Enterprises,
LLC(7)(9) |
| | | | — | | | | | | — | | | | | | — | | | | | | 18,599,548 | | | | | | 5.9% | | | | | | — | | | | | | — | | | | | | * | | | | | | 18,599,548 | | | | | | 6.6% | | | | | | — | | | | | | — | | | | | | * | | |
Name
|
| |
Position with New
DraftKings |
| |
Age as of Special
Meeting |
| |
Nominated By
|
| |||
Jason D. Robins
|
| |
Chief Executive Officer and
Chairman of the Board |
| | | | 39 | | | |
DraftKings
|
|
Harry Evans Sloan
|
| |
Vice Chairman of the Board
|
| | | | 70 | | | |
DEAC
|
|
Michael Gavin Isaacs
|
| |
Director
|
| | | | 55 | | | |
SBTech
|
|
Matthew Kalish
|
| |
President, DraftKings
North America, Director |
| | | | 38 | | | |
DraftKings
|
|
Woodrow H. Levin
|
| |
Director
|
| | | | 41 | | | |
DraftKings
|
|
Paul Liberman
|
| |
President, Global Technology
and Product, Director |
| | | | 37 | | | |
DraftKings
|
|
Shalom Meckenzie
|
| |
Director
|
| | | | 43 | | | |
SBTech
|
|
Ryan R. Moore
|
| |
Director
|
| | | | 46 | | | |
DraftKings
|
|
Steven J. Murray
|
| |
Director
|
| | | | 51 | | | |
DraftKings
|
|
Hany M. Nada
|
| |
Director
|
| | | | 51 | | | |
DraftKings
|
|
Richard Rosenblatt
|
| |
Director
|
| | | | 51 | | | |
DraftKings
|
|
John S. Salter
|
| |
Director
|
| | | | 42 | | | |
DraftKings
|
|
Marni M. Walden
|
| |
Director
|
| | | | 53 | | | |
DraftKings
|
|
Name
|
| |
Position with New
DraftKings |
| |
Age as of
Special Meeting |
| |||
Jason D. Robins
|
| |
Chief Executive Officer and Chairman of the Board
|
| | | | 39 | | |
Matthew Kalish
|
| |
President, DraftKings North America, Director
|
| | | | 38 | | |
Paul Liberman
|
| |
President, Global Technology and Product, Director
|
| | | | 36 | | |
R. Stanton Dodge
|
| |
Chief Legal Officer and Secretary
|
| | | | 52 | | |
Jason K. Park
|
| |
Chief Financial Officer
|
| | | | 43 | | |
Name and Position
|
| |
Fiscal
Year |
| |
Salary
($) |
| |
Bonus
($) (1) |
| |
Option
Awards ($) (2) |
| |
Non-Equity
Incentive Plan Compensation ($) (3) |
| |
All Other
Compensation ($) (4) |
| |
Total
($) |
| |||||||||||||||||||||
Jason Robins
Chief Executive Officer |
| | | | 2019 | | | | | $ | 400,000 | | | | | $ | — | | | | | $ | 3,239,689 | | | | | $ | 800,000 | | | | | $ | — | | | | | $ | 4,439,689 | | |
| | | 2018 | | | | | $ | 400,000 | | | | | $ | — | | | | | $ | 12,847,259 | | | | | $ | 500,000 | | | | | $ | 9,250 | | | | | $ | 13,756,509 | | | ||
Jason Park
Chief Financial Officer |
| | | | 2019 | | | | | $ | 201,923 | | | | | $ | 250,000 | | | | | $ | 2,326,845 | | | | | $ | 325,260 | | | | | $ | 14,279 | | | | | $ | 3,118,307 | | |
Paul Liberman
President, Global Technology & Product |
| | | | 2019 | | | | | $ | 300,000 | | | | | $ | — | | | | | $ | 1,350,348 | | | | | $ | 480,000 | | | | | $ | 9,600 | | | | | $ | 2,139,948 | | |
| | | 2018 | | | | | $ | 300,000 | | | | | $ | — | | | | | $ | 2,817,791 | | | | | $ | 300,000 | | | | | $ | 10,588 | | | | | $ | 3,428,379 | | |
Name
|
| |
Time-Vested
Options ($) |
| |
PSP
Options ($) |
| |
LTIP
Performance Options ($) |
| |||||||||
Jason Robins
|
| | | $ | 2,242,186 | | | | | $ | 997,503 | | | | | $ | — | | |
Jason Park
|
| | | $ | 1,163,753 | | | | | $ | — | | | | | $ | 1,163,092 | | |
Paul Liberman
|
| | | $ | 601,848 | | | | | $ | 535,500 | | | | | $ | 213,000 | | |
Name
|
| |
Grant Date
|
| |
Number of
Securities Underlying Unexercised Options Exercisable (#) |
| |
Number of
Securities Underlying Unexercised Options Unexercisable (#) |
| |
Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| ||||||||||||||||||
Jason Robins
|
| | | | 7/12/2013(1) | | | | | | 2,000,000 | | | | | | ― | | | | | | ― | | | | | $ | 0.09 | | | | | | 7/12/2023 | | |
| | | 9/22/2014(1) | | | | | | 400,000 | | | | | | ― | | | | | | ― | | | | | $ | 0.22 | | | | | | 9/22/2024 | | | ||
| | | 2/18/2015(1) | | | | | | 1,671,032 | | | | | | ― | | | | | | ― | | | | | $ | 0.22 | | | | | | 2/18/2025 | | | ||
| | | 8/27/2015(1) | | | | | | 835,358 | | | | | | ― | | | | | | ― | | | | | $ | 0.22 | | | | | | 8/27/2025 | | | ||
| | | 3/24/2016(1) | | | | | | 4,446,707 | | | | | | 296,448 | | | | | | ― | | | | | $ | 0.22 | | | | | | 3/24/2026 | | | ||
| | | 5/3/2017(1) | | | | | | 1,734,554 | | | | | | 788,435 | | | | | | ― | | | | | $ | 1.35 | | | | | | 5/3/2027 | | | ||
| | | 4/18/2018(2) | | | | | | 963,713 | | | | | | 1,606,189 | | | | | | ― | | | | | $ | 1.16 | | | | | | 4/18/2028 | | | ||
| | | 4/18/2018(3) | | | | | | 1,307,645 | | | | | | ― | | | | | | ― | | | | | $ | 1.16 | | | | | | 4/18/2028 | | | ||
| | | 5/3/2018(4) | | | | | | ― | | | | | | ― | | | | | | 21,376,180 | | | | | $ | 1.16 | | | | | | 5/3/2028 | | | ||
| | | 6/4/2019(2) | | | | | | 395,834 | | | | | | 2,770,841 | | | | | | ― | | | | | $ | 1.66 | | | | | | 6/4/2029 | | | ||
| | | 6/4/2019(3) | | | | | | ― | | | | | | ― | | | | | | 1,583,338 | | | | | $ | 1.66 | | | | | | 6/4/2029 | | | ||
Jason Park
|
| | | | 6/4/2019(1) | | | | | | ― | | | | | | 1,500,000 | | | | | | ― | | | | | $ | 1.66 | | | | | | 6/4/2029 | | |
| | | 6/4/2019(4) | | | | | | ― | | | | | | ― | | | | | | 1,500,000 | | | | | $ | 1.66 | | | | | | 6/4/2029 | | | ||
| | | 8/15/2019(1) | | | | | | ― | | | | | | 138,158 | | | | | | ― | | | | | $ | 1.67 | | | | | | 8/15/2029 | | | ||
| | | 8/15/2019(4) | | | | | | ― | | | | | | ― | | | | | | 138,518 | | | | | $ | 1.67 | | | | | | 8/15/2029 | | | ||
Paul Liberman
|
| | | | | | | ||||||||||||||||||||||||||||||
| | | 7/12/2013(1) | | | | | | 2,415,000 | | | | | | ― | | | | | | ― | | | | | $ | 0.09 | | | | | | 7/12/2023 | | | ||
| | | 9/22/2014(1) | | | | | | 302,160 | | | | | | ― | | | | | | ― | | | | | $ | 0.22 | | | | | | 9/22/2024 | | | ||
| | | 2/18/2015(1) | | | | | | 835,516 | | | | | | ― | | | | | | ― | | | | | $ | 0.22 | | | | | | 2/18/2025 | | | ||
| | | 8/27/2015(1) | | | | | | 578,077 | | | | | | ― | | | | | | ― | | | | | $ | 0.22 | | | | | | 8/27/2025 | | | ||
| | | 3/24/2016(1) | | | | | | 2,223,353 | | | | | | 148,224 | | | | | | ― | | | | | $ | 0.22 | | | | | | 3/24/2026 | | | ||
| | | 5/3/2017(1) | | | | | | 722,730 | | | | | | 328,515 | | | | | | ― | | | | | $ | 1.35 | | | | | | 5/3/2027 | | | ||
| | | 4/18/2018(2) | | | | | | 392,294 | | | | | | 653,822 | | | | | | ― | | | | | $ | 1.16 | | | | | | 4/18/2028 | | | ||
| | | 4/18/2018(3) | | | | | | 256,298 | | | | | | ― | | | | | | ― | | | | | $ | 1.16 | | | | | | 4/18/2028 | | | ||
| | | 5/3/2018(4) | | | | | | ― | | | | | | ― | | | | | | 4,275,236 | | | | | $ | 1.16 | | | | | | 5/3/2028 | | | ||
| | | 6/4/2019(4) | | | | | | ― | | | | | | ― | | | | | | 300,000 | | | | | $ | 1.66 | | | | | | 6/4/2029 | | | ||
| | | 6/4/2019(3) | | | | | | ― | | | | | | ― | | | | | | 850,000 | | | | | $ | 1.66 | | | | | | 6/4/2029 | | | ||
| | | 6/4/2019(2) | | | | | | 106,250 | | | | | | 743,750 | | | | | | ― | | | | | $ | 1.66 | | | | | | 6/4/2029 | | |
Name
|
| |
Fees Earned or
Paid in Cash ($) |
| |
Stock Awards
($) |
| |
Option Awards
($)(1) |
| |
All Other
Compensation ($) |
| |
Total
($) |
| |||||||||||||||
Woodrow Levin
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 92,404 | | | | | $ | 0 | | | | | $ | 92,404 | | |
Ryan Moore(2)
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Steven Murray
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Hany Nada
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Richard Rosenblatt
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 90,205 | | | | | $ | 0 | | | | | $ | 90,205 | | |
Marni Walden
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 80,589 | | | | | $ | 0 | | | | | $ | 80,589 | | |
John Salter(2)
|
| | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Name
|
| |
Number of
Shares |
| |
Purchase Price
($) |
| ||||||
Revolution Growth III, LP(1)
|
| | | | 2,269,718 | | | | | | 4,999,998.10 | | |
RPII DK LLC(2)
|
| | | | 1,361,830 | | | | | | 2,999,997.10 | | |
Entities affiliated with Accomplice, LLC(3)
|
| | | | 453,943 | | | | | | 999,998.30 | | |
Entities affiliated with Redpoint Ventures(4)
|
| | | | 453,943 | | | | | | 999,998.30 | | |
Name
|
| |
Number of
Shares |
| |
Purchase Price
($) |
| ||||||
Revolution Growth III, LP(1)
|
| | | | 3,922,245 | | | | | | 9,999,998.97 | | |
Italianflare & Co., as nominee for Hadley Harbor Master Investors (Cayman) L.P.(2)
|
| | | | 980,561 | | | | | | 2,499,999.11 | | |
Accomplice Fund II, L.P.(3)
|
| | | | 784,449 | | | | | | 1,999,999.80 | | |
Jason Robins Revocable Trust u/d/t January 8, 2014(4)
|
| | | | 39,222 | | | | | | 99,998.85 | | |
Name
|
| |
Common
Units |
| |
Incentive
Units(1) |
| |
Cash
Consideration ($) |
| |
In-Kind
Consideration ($)(2) |
| ||||||||||||
DraftKings
|
| | | | 4,500,000 | | | | | | — | | | | | | — | | | | | | 3,000,000 | | |
Accomplice Fund II, L.P.(3)
|
| | | | 1,500,000 | | | | | | — | | | | | | 1,000,000 | | | | | | — | | |
Hany Nada(4)
|
| | | | 375,000 | | | | | | — | | | | | | 250,000 | | | | | | — | | |
Jason Robins(5)
|
| | | | — | | | | | | 126,603 | | | | | | — | | | | | | — | | |
Jason Park(6)
|
| | | | — | | | | | | 63,301 | | | | | | — | | | | | | — | | |
| | |
Page
|
| |||
Consolidated Financial Statements as of December 31, 2019 | | | |||||
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | | |
| | | | F-9 | | |
| ASSETS: | | | | | | | |
|
Current assets:
|
| | | | | | |
|
Cash and cash equivalents
|
| | | $ | 491,225 | | |
|
Prepaid expenses
|
| | | | 319,239 | | |
|
Total current assets
|
| | | | 810,464 | | |
|
Cash and investments held in Trust Account
|
| | | | 403,961,209 | | |
|
Total Assets
|
| | |
$
|
404,771,673
|
| |
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | | | | | | | |
|
Current liabilities:
|
| | | | | | |
|
Accounts payable
|
| | | $ | 1,493,133 | | |
|
Total current liabilities
|
| | | | 1,493,133 | | |
|
Deferred underwriting compensation
|
| | | | 14,000,000 | | |
|
Total Liabilities
|
| | | | 15,493,133 | | |
|
Class A common shares subject to possible redemptions; 38,427,853 shares at approximately $10.00 per share
|
| | | | 384,278,530 | | |
| Stockholders’ equity: | | | | | | | |
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
| | | | — | | |
|
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 1,572,147 shares
issued and outstanding, (excluding 38,427,853 shares subject to possible redemption) |
| | | | 157 | | |
|
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 10,000,000 shares
issued and outstanding |
| | | | 1,000 | | |
|
Additional paid-in capital
|
| | | | 2,689,444 | | |
|
Retained earnings
|
| | | | 2,309,409 | | |
|
Total stockholders’ equity, net
|
| | | | 5,000,010 | | |
|
Total liabilities and stockholders’ equity
|
| | |
$
|
404,771,673
|
| |
| | |
For the period from
March 27, 2019 (inception) to December 31, 2019 |
| |||
Revenue
|
| | | $ | — | | |
General and administrative expenses
|
| | | | 1,857,305 | | |
Loss from operations
|
| | | | (1,857,305) | | |
Other income – interest on Trust Account
|
| | | | 5,111,208 | | |
Income before provision for income tax
|
| | | | 3,253,903 | | |
Provision for income tax
|
| | | | (944,494) | | |
Net income
|
| | | $ | 2,309,409 | | |
Two Class Method: | | | | | | | |
Weighted average number of Class A common stock outstanding
|
| | | | 40,000,000 | | |
Net income per common stock, Class A – basic and diluted
|
| | | $ | 0.09 | | |
Weighted average number of Class B common stock outstanding
|
| | | | 10,010,045 | | |
Net loss per common stock, Class B — basic and diluted
|
| | | $ | (0.15) | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Retained
Earnings |
| |
Total
Stockholders’ Equity |
| | | | ||||||||||||||||||||||||||||||||||||
| | |
Class A
|
| |
Class B
|
| | | | | | | | | | ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| | | | ||||||||||||||||||||||||||||||||||||
Issuance of common stock to initial
shareholder at approximately $0.002 per share |
| | | | — | | | | | $ | — | | | | | | 10,062,500 | | | | | $ | 1,006 | | | | | $ | 23,994 | | | | | $ | — | | | | | $ | 25,000 | | | | | | ||||||
Sale of Units to the public at $10.00 per
unit |
| | | | 40,000,000 | | | | | | 4,000 | | | | | | — | | | | | | — | | | | | | 399,996,000 | | | | | | — | | | | | | 400,000,000 | | | | | | ||||||
Underwriters’ discount and offering expenses
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (22,555,869) | | | | | | — | | | | | | (22,555,869) | | | | | | ||||||
Sale of 6,333,334 Private Placement Warrants at $1.50 per warrant
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,500,000 | | | | | | — | | | | | | 9,500,000 | | | | | | ||||||
Forfeiture of Class B shares by initial shareholders
|
| | | | — | | | | | | — | | | | | | (62,500) | | | | | | (6) | | | | | | 6 | | | | | | — | | | | | | — | | | | | | ||||||
Proceeds subject to possible redemption
|
| | | | (38,427,853) | | | | | | (3,843) | | | | | | — | | | | | | — | | | | | | (384,274,687) | | | | | | — | | | | | | (384,278,530) | | | | | | ||||||
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,309,409 | | | | | | 2,309,409 | | | | | | ||||||
Balance, December 31, 2019
|
| | | | 1,572,147 | | | | | $ | 157 | | | | | | 10,000,000 | | | | | $ | 1,000 | | | | | $ | 2,689,444 | | | | | $ | 2,309,409 | | | | | $ | 5,000,010 | | | | | |
| | |
For the period from
March 27, 2019 (inception) to December 31, 2019 |
| |||
Cash flows from operating activities: | | | | | | | |
Net income
|
| | | $ | 2,309,409 | | |
Adjustments to reconcile net income to net cash used in operating activities:
|
| | | | | | |
Trust income reinvested in Trust Account
|
| | | | (5,111,208) | | |
Changes in operating assets and liabilities:
|
| | | | | | |
Prepaid expenses
|
| | | | (319,239) | | |
Accounts payable
|
| | | | 1,268,808 | | |
Net cash used in operating activities
|
| | | | (1,852,230) | | |
Cash flows from investing activities: | | | | | | | |
Principal deposited in Trust Account
|
| | | | (400,000,000) | | |
Cash withdrawn from Trust for income taxes
|
| | | | 1,149,999 | | |
Net cash used in investing activities
|
| | | | (398,850,001) | | |
Cash flows from financing activities: | | | | | | | |
Proceeds from promissory note – related party
|
| | | | 60,675 | | |
Repayment of promissory note – related party
|
| | | | (60,675) | | |
Proceeds from private placement of warrants
|
| | | | 9,500,000 | | |
Proceeds from sale of Class A ordinary shares
|
| | | | 400,000,000 | | |
Payment of underwriters’ discount
|
| | | | (8,000,000) | | |
Payment of offering costs
|
| | | | (306,544) | | |
Net cash provided by financing activities
|
| | | | 401,193,456 | | |
Increase in cash during period
|
| | | | 491,225 | | |
Cash and equivalents at beginning of period
|
| | | | — | | |
Cash and equivalents at end of period
|
| | | $ | 491,225 | | |
Supplemental disclosure of cash flow information: | | | | | | | |
Cash paid for taxes
|
| | | $ | 1,149,999 | | |
Supplemental disclosure of non-cash financing activities: | | | | | | | |
Deferred underwriting compensation
|
| | | $ | 14,000,000 | | |
Class A common stock subject to possible redemption
|
| | | $ | 384,278,530 | | |
Offering costs paid by sponsor in exchange for founder shares (Class B Common Stock)
|
| | | $ | 25,000 | | |
Deferred offering costs included in accounts payable
|
| | | $ | 224,325 | | |
| | |
Carrying Value at
December 31, 2019 |
| |
Gross unrealized
Holding Gain |
| |
Quoted prices in
Active Markets (Level 1) |
| |||||||||
Treasury Securities Held as of December 31, 2019(1)
|
| | | $ | 403,960,089 | | | | | $ | 31,347 | | | | | $ | 403,991,436 | | |
| | |
For the Period
Ended December 31, 2019 |
| |||
Federal | | | | | | | |
Current
|
| | | $ | 944,494 | | |
Deferred
|
| | | | (261,174) | | |
State | | | | | | | |
Current
|
| | | | — | | |
Deferred
|
| | | | — | | |
Change in valuation allowance
|
| | | | 261,174 | | |
Income tax provision
|
| | | $ | 944,494 | | |
| | |
For the Period
Ended December 31, 2019 |
| |||
Statutory federal income tax rate
|
| | | | 21.0% | | |
State taxes, net of federal tax benefit
|
| | | | 0.0% | | |
Deferred tax rate change
|
| | | | | | |
Change in valuation allowance
|
| | | | 8.0% | | |
Income tax provision
|
| | | | 29.0% | | |
|
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash
|
| | | $ | 76,533 | | | | | $ | 117,908 | | |
Cash reserved for users
|
| | | | 144,000 | | | | | | 111,698 | | |
Receivables reserved for users
|
| | | | 19,828 | | | | | | 21,334 | | |
Prepaid expenses and other current assets
|
| | | | 20,787 | | | | | | 11,233 | | |
Total current assets
|
| | | | 261,148 | | | | | | 262,173 | | |
Property and equipment, net
|
| | | | 25,945 | | | | | | 14,102 | | |
Intangible assets, net
|
| | | | 33,939 | | | | | | 16,876 | | |
Goodwill
|
| | | | 4,738 | | | | | | 4,738 | | |
Equity method investment
|
| | | | 2,521 | | | | | | — | | |
Deposits
|
| | | | 2,434 | | | | | | 1,504 | | |
Total assets
|
| | | $ | 330,725 | | | | | $ | 299,393 | | |
Liabilities, redeemable convertible preferred stock and stockholders’ deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued expenses
|
| | | $ | 85,295 | | | | | $ | 56,149 | | |
Liabilities to users
|
| | | | 163,035 | | | | | | 132,769 | | |
Term note
|
| | | | 6,750 | | | | | | 3,750 | | |
Settlement liability
|
| | | | — | | | | | | 3,272 | | |
Total current liabilities
|
| | | | 255,080 | | | | | | 195,940 | | |
Convertible promissory notes
|
| | | | 68,363 | | | | | | — | | |
Other long-term liabilities
|
| | | | 56,862 | | | | | | 27,403 | | |
Total liabilities
|
| | | $ | 380,305 | | | | | $ | 223,343 | | |
Commitments and contingencies (note 13)
|
| | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Redeemable convertible preferred stock: | | | | | | | | | | | | | |
Series E-1 redeemable convertible preferred stock, $0.001 par value; 54,901 shares
authorized, issued and outstanding at December 31, 2019 and 2018; liquidation preference of $120,943 as of December 31, 2019 |
| | | $ | 119,752 | | | | | $ | 119,427 | | |
Series F redeemable convertible preferred stock, $0.001 par value; 78,445 shares
authorized, 55,349 and 57,068 shares issued and outstanding at December 31, 2019 and 2018, respectively; liquidation preference of $141,117 and $145,499 as of December 31, 2019 and 2018, respectively |
| | | | 138,619 | | | | | | 141,850 | | |
Total redeemable convertible preferred stock
|
| | | | 258,371 | | | | | | 261,277 | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.001 par value; 735,000 shares authorized as at December 31,
2019 and 2018; 389,610 and 384,009 shares issued and outstanding at December 31, 2019 and 2018, respectively |
| | | | 390 | | | | | | 384 | | |
Additional paid-in capital
|
| | | | 690,443 | | | | | | 670,439 | | |
Accumulated deficit
|
| | | | (998,784) | | | | | | (856,050) | | |
Total stockholders’ deficit
|
| | | | (307,951) | | | | | | (185,227) | | |
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit
|
| | | $ | 330,725 | | | | | $ | 299,393 | | |
| | |
Years Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Revenue
|
| | | $ | 323,410 | | | | | $ | 226,277 | | | | | $ | 191,844 | | |
Cost of revenue
|
| | | | 103,889 | | | | | | 48,689 | | | | | | 31,750 | | |
Sales and marketing
|
| | | | 185,269 | | | | | | 145,580 | | | | | | 156,632 | | |
Product and technology
|
| | | | 55,929 | | | | | | 32,885 | | | | | | 20,212 | | |
General and administrative
|
| | | | 124,868 | | | | | | 75,904 | | | | | | 56,448 | | |
Loss from operations
|
| | | | (146,545) | | | | | | (76,781) | | | | | | (73,198) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | |
Interest income (expense), net
|
| | | | 1,348 | | | | | | 666 | | | | | | (1,541) | | |
Gain on initial equity method investment
|
| | | | 3,000 | | | | | | — | | | | | | — | | |
Other expense, net
|
| | | | — | | | | | | — | | | | | | (607) | | |
Loss before income tax provision
|
| | | | (142,197) | | | | | | (76,115) | | | | | | (75,346) | | |
Income tax provision
|
| | | | 58 | | | | | | 105 | | | | | | 210 | | |
Loss from equity method investment
|
| | | | 479 | | | | | | — | | | | | | — | | |
Net loss
|
| | | $ | (142,734) | | | | | $ | (76,220) | | | | | $ | (75,556) | | |
Loss per share attributable to common stockholders: | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | $ | (0.37) | | | | | $ | (0.20) | | | | | $ | (0.54) | | |
| | |
Redeemable Convertible
Preferred Stock |
| |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balances at December 31, 2016
|
| | | | 184,499 | | | | | $ | 490,971 | | | | | | 22,291 | | | | | $ | 22 | | | | | $ | 3,998 | | | | | $ | (704,274) | | | | | $ | (700,254) | | |
Conversion of Debt to Series E Preferred Stock
|
| | | | 103,077 | | | | | | 160,928 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of Series E-1 Redeemable Convertible Preferred Stock
|
| | | | 54,901 | | | | | | 118,623 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of Series D Redeemable Convertible Preferred Stock for In-kind Transfer
|
| | | | 714 | | | | | | 1,077 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Conversion of Preferred Stock to Common Stock
|
| | | | (288,290) | | | | | | (654,103) | | | | | | 353,850 | | | | | | 354 | | | | | | 653,749 | | | | | | — | | | | | | 654,103 | | |
Exercise of Stock Options
|
| | | | — | | | | | | — | | | | | | 1,233 | | | | | | 1 | | | | | | 179 | | | | | | — | | | | | | 180 | | |
Issuance of Common Stock for In-kind
Transfer |
| | | | — | | | | | | — | | | | | | 2,558 | | | | | | 3 | | | | | | 172 | | | | | | — | | | | | | 175 | | |
Accretion of Preferred Stock Issuance Cost
|
| | | | — | | | | | | 1,513 | | | | | | — | | | | | | — | | | | | | (1,513) | | | | | | — | | | | | | (1,513) | | |
Stock-Based Compensation Expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | — | | | | | | 4,500 | | |
Net Loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (75,556) | | | | | | (75,556) | | |
Balances at December 31, 2017
|
| | | | 54,901 | | | | | | 119,009 | | | | | | 379,932 | | | | | $ | 380 | | | | | | 661,085 | | | | | | (779,830) | | | | | | (118,365) | | |
Issuance of Series F Preferred Stock
|
| | | | 57,068 | | | | | | 141,590 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Exercise of Stock Options
|
| | | | — | | | | | | — | | | | | | 2,385 | | | | | | 2 | | | | | | 550 | | | | | | — | | | | | | 552 | | |
Common Stock Issued
|
| | | | — | | | | | | — | | | | | | 393 | | | | | | 1 | | | | | | 339 | | | | | | — | | | | | | 340 | | |
Issuance of Common Stock for In-kind
Transfer |
| | | | — | | | | | | — | | | | | | 1,299 | | | | | | 1 | | | | | | 1,933 | | | | | | — | | | | | | 1,934 | | |
Accretion of Preferred Stock Issuance Cost
|
| | | | — | | | | | | 678 | | | | | | — | | | | | | — | | | | | | (678) | | | | | | — | | | | | | (678) | | |
Stock-Based Compensation Expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,210 | | | | | | — | | | | | | 7,210 | | |
Net Loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (76,220) | | | | | | (76,220) | | |
Balances at December 31, 2018
|
| | | | 111,969 | | | | | $ | 261,277 | | | | | | 384,009 | | | | | $ | 384 | | | | | $ | 670,439 | | | | | $ | (856,050) | | | | | | (185,227) | | |
Issuance of Series F Preferred Stock
|
| | | | 2,879 | | | | | | 7,824 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Exercise of Stock Options
|
| | | | — | | | | | | — | | | | | | 2,873 | | | | | | 3 | | | | | | 1,145 | | | | | | — | | | | | | 1,148 | | |
Common Stock Issued
|
| | | | — | | | | | | — | | | | | | 1,906 | | | | | | 2 | | | | | | 437 | | | | | | — | | | | | | 439 | | |
Issuance of Common Stock for In-kind
Transfer |
| | | | — | | | | | | — | | | | | | 822 | | | | | | 1 | | | | | | 1,363 | | | | | | — | | | | | | 1,364 | | |
Repurchase of Preferred Stock and Issuance of Promissory Note
|
| | | | (4,598) | | | | | | (11,722) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Accretion of Preferred Stock Issuance Cost
|
| | | | — | | | | | | 992 | | | | | | — | | | | | | — | | | | | | (992) | | | | | | — | | | | | | (992) | | |
Stock-Based Compensation Expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 17,613 | | | | | | — | | | | | | 17,613 | | |
Issuance of warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 438 | | | | | | — | | | | | | 438 | | |
Net Loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (142,734) | | | | | | (142,734) | | |
Balances at December 31, 2019
|
| | | | 110,250 | | | | | $ | 258,371 | | | | | | 389,610 | | | | | $ | 390 | | | | | $ | 690,443 | | | | | $ | (998,784) | | | | | $ | (307,951) | | |
| | |
Years Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Cash Flows from Operating Activities:
|
| | | | | | | | | | | | | | | | | | |
Net loss
|
| | | | (142,734) | | | | | | (76,220) | | | | | | (75,556) | | |
Adjustments to reconcile net loss to cash used in operating activities:
|
| | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 13,636 | | | | | | 7,499 | | | | | | 6,301 | | |
Non-cash rent expense
|
| | | | 377 | | | | | | 37 | | | | | | (120) | | |
Non-cash interest expense
|
| | | | 424 | | | | | | 31 | | | | | | 1,487 | | |
Stock-based compensation expense
|
| | | | 17,613 | | | | | | 7,210 | | | | | | 4,500 | | |
Advertising expense paid through issuance of common stock and warrants
|
| | | | 1,802 | | | | | | 1,934 | | | | | | 1,252 | | |
Amortization of debt discount
|
| | | | — | | | | | | — | | | | | | 141 | | |
Gain on derivative fair value adjustment
|
| | | | — | | | | | | — | | | | | | (184) | | |
Loss on exit activities
|
| | | | 179 | | | | | | — | | | | | | 877 | | |
Loss on disposal of assets
|
| | | | 730 | | | | | | — | | | | | | 185 | | |
Loss on conversion of promissory notes
|
| | | | — | | | | | | — | | | | | | 650 | | |
Loss from equity method investment
|
| | | | 479 | | | | | | — | | | | | | — | | |
Gain on initial equity method investment
|
| | | | (3,000) | | | | | | — | | | | | | — | | |
Deferred income taxes
|
| | | | 54 | | | | | | 19 | | | | | | 145 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | | | | | | | |
Cash reserved for users
|
| | | | (32,302) | | | | | | (22,633) | | | | | | (17,346) | | |
Receivables reserved for users
|
| | | | 1,506 | | | | | | (4,087) | | | | | | 5,680 | | |
Prepaid expenses and other current assets
|
| | | | (9,554) | | | | | | (2,214) | | | | | | (4,175) | | |
Deposits
|
| | | | (930) | | | | | | 728 | | | | | | (133) | | |
Accounts payable and accrued expenses
|
| | | | 27,946 | | | | | | 5,699 | | | | | | (29,793) | | |
Other long-term liabilities
|
| | | | 18,028 | | | | | | 12,068 | | | | | | 5,307 | | |
Settlement liability
|
| | | | (3,400) | | | | | | (2,212) | | | | | | 783 | | |
Liabilities to users
|
| | | | 30,266 | | | | | | 26,562 | | | | | | 11,562 | | |
Net cash used in Operating Activities
|
| | | | (78,880) | | | | | | (45,579) | | | | | | (88,437) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | | | (16,703) | | | | | | (13,683) | | | | | | (599) | | |
Capitalization of internal-use software costs
|
| | | | (14,816) | | | | | | (12,738) | | | | | | (7,116) | | |
Acquisition of state licenses
|
| | | | (10,752) | | | | | | (251) | | | | | | — | | |
Net cash used in Investing Activities
|
| | | | (42,271) | | | | | | (26,672) | | | | | | (7,715) | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | | | | | | | |
Proceeds from term note
|
| | | | 3,000 | | | | | | — | | | | | | — | | |
Repayment of notes payable
|
| | | | — | | | | | | (1,250) | | | | | | — | | |
Net proceeds from issuance of common stock
|
| | | | 439 | | | | | | — | | | | | | — | | |
Net cost due to conversion of Series E Stock
|
| | | | — | | | | | | — | | | | | | (272) | | |
Net proceeds due to issuance of Series E-1 Redeemable Convertible Preferred Stock
|
| | | | — | | | | | | — | | | | | | 118,623 | | |
Net proceeds due to issuance of Series F Redeemable Convertible Preferred Stock
|
| | | | 7,824 | | | | | | 141,590 | | | | | | — | | |
Repurchase of Series F Redeemable Convertible Preferred Stock
|
| | | | (722) | | | | | | — | | | | | | — | | |
Net proceeds from issuance of convertible promissory notes
|
| | | | 68,087 | | | | | | — | | | | | | — | | |
Proceeds from exercise of stock options
|
| | | | 1,148 | | | | | | 552 | | | | | | 180 | | |
Net cash provided by Financing Activities
|
| | | | 79,776 | | | | | | 140,892 | | | | | | 118,531 | | |
Net (Decrease) Increase in Cash
|
| | | | (41,375) | | | | | | 68,641 | | | | | | 22,379 | | |
Cash at Beginning of Year
|
| | | | 117,908 | | | | | | 49,267 | | | | | | 26,888 | | |
Cash at End of Year
|
| | | | 76,533 | | | | | | 117,908 | | | | | | 49,267 | | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | | | | | | | | | | | | | | | | | | | |
Non-cash redemption of Series F redeemable convertible preferred to stock through issuance of promissory notes
|
| | | | 11,000 | | | | | | — | | | | | | — | | |
Accretion of Series E-1 and F Redeemable Convertible Preferred Stock
|
| | | | 992 | | | | | | 678 | | | | | | 1,513 | | |
Conversion of Series A through E of preferred stock to common stock
|
| | | | — | | | | | | — | | | | | | 654,103 | | |
Conversion of convertible notes into preferred stock
|
| | | | — | | | | | | — | | | | | | 160,928 | | |
Common stock issued
|
| | | | — | | | | | | 340 | | | | | | — | | |
Acquisition of state licenses included in accounts payable and accrued expenses
|
| | | | 1,000 | | | | | | — | | | | | | — | | |
Supplemental Disclosure of Cash Activities: | | | | | |||||||||||||||
Cash paid for interest
|
| | | | 260 | | | | | | 261 | | | | | | 285 | | |
| Computer equipment and software | | | 3 years | |
| Furniture and fixtures | | | 7 years | |
| Leasehold improvements | | | Lesser of the lease terms or the estimated useful lives of the improvements, generally 1 – 10 years | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Computer equipment and software
|
| | | $ | 9,685 | | | | | $ | 5,537 | | |
Furniture and fixtures
|
| | | | 5,891 | | | | | | 4,018 | | |
Leasehold improvements
|
| | | | 17,373 | | | | | | 7,924 | | |
Property and Equipment
|
| | | | 32,949 | | | | | | 17,479 | | |
Accumulated depreciation
|
| | | | (7,004) | | | | | | (3,377) | | |
Property and Equipment, net
|
| | | $ | 25,945 | | | | | $ | 14,102 | | |
| | |
Weighted-
Average Amortization Period |
| |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Net
|
| |||||||||
User relationships
|
| | — | | | | $ | 3,328 | | | | | $ | (3,328) | | | | | $ | — | | |
Internally developed software
|
| | 2.35 years | | | | | 43,753 | | | | | | (21,188) | | | | | | 22,565 | | |
State licenses
|
| | 4.86 years | | | | | 12,003 | | | | | | (629) | | | | | | 11,374 | | |
Intangible Assets, net
|
| | | | | | $ | 59,084 | | | | | $ | (25,145) | | | | | $ | 33,939 | | |
| | |
Weighted-
Average Amortization Period |
| |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Net
|
| |||||||||
User relationships
|
| | 0.5 years | | | | $ | 3,328 | | | | | $ | (3,013) | | | | | $ | 315 | | |
Internally developed software
|
| | 2.45 years | | | | | 28,937 | | | | | | (12,572) | | | | | | 16,365 | | |
State licenses
|
| | 0.75 years | | | | | 251 | | | | | | (55) | | | | | | 196 | | |
Intangible Assets, net
|
| | | | | | $ | 32,516 | | | | | $ | (15,640) | | | | | $ | 16,876 | | |
Year ending December 31,
|
| | | | | | |
2020
|
| | | $ | 13,048 | | |
2021
|
| | | | 10,250 | | |
2022
|
| | | | 6,241 | | |
2023
|
| | | | 2,200 | | |
2024 and thereafter
|
| | | | 2,200 | | |
Total | | | | $ | 33,939 | | |
|
Balance as of December 31, 2017
|
| | | $ | 4,399 | | |
|
Goodwill acquired
|
| | | | 339 | | |
|
Balance as of December 31, 2018
|
| | | $ | 4,738 | | |
|
Goodwill acquired
|
| | | | — | | |
|
Balance as of December 31, 2019
|
| | | $ | 4,738 | | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Accounts payable
|
| | | $ | 16,618 | | | | | $ | 11,626 | | |
Accrued payroll and related expenses
|
| | | | 17,770 | | | | | | 9,857 | | |
Accrued litigation, lobbying and compliance
|
| | | | 6,153 | | | | | | 5,566 | | |
Accrued loyalty points
|
| | | | 4,131 | | | | | | 7,272 | | |
Accrued marketing fees
|
| | | | 11,855 | | | | | | 3,237 | | |
Accrued operating taxes
|
| | | | 5,745 | | | | | | 2,741 | | |
Accrued partnership fees
|
| | | | 7,868 | | | | | | 4,340 | | |
Accrued professional fees
|
| | | | 4,191 | | | | | | 1,978 | | |
Accrued software and licenses
|
| | | | 1,589 | | | | | | 2,263 | | |
Accrued other
|
| | | | 9,375 | | | | | | 7,269 | | |
Total | | | | $ | 85,295 | | | | | $ | 56,149 | | |
| | |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued and Outstanding |
| |
Carrying Value
|
| |||||||||
Series E-1 redeemable convertible preferred stock
|
| | | | 54,901 | | | | | | 54,901 | | | | | $ | 119,752 | | |
Series F redeemable convertible preferred stock
|
| | | | 78,445 | | | | | | 55,349 | | | | | | 138,619 | | |
Total | | | | | 133,346 | | | | | | 110,250 | | | | | $ | 258,371 | | |
| | |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued and Outstanding |
| |
Carrying Value
|
| |||||||||
Series E-1 redeemable convertible preferred stock
|
| | | | 54,901 | | | | | | 54,901 | | | | | $ | 119,427 | | |
Series F redeemable convertible preferred stock
|
| | | | 78,445 | | | | | | 57,068 | | | | | | 141,850 | | |
Total | | | | | 133,346 | | | | | | 111,969 | | | | | $ | 261,277 | | |
| | |
Preferred
Shares Authorized |
| |
Preferred
Shares Issued and Outstanding |
| |
Carrying Value
|
| |||||||||
Series E-1 redeemable convertible preferred stock
|
| | | | 54,901 | | | | | | 54,901 | | | | | $ | 119,009 | | |
| | |
2019
|
| |
2018
|
| ||||||
Risk free interest rate
|
| | | | 1.95% | | | | | | 2.80% | | |
Expected term (in years)
|
| | | | 6.02 | | | | | | 6.11 | | |
Expected volatility
|
| | | | 41.48% | | | | | | 41.98% | | |
Expected dividend yield
|
| | | | 0% | | | | | | 0% | | |
| | |
Number of Shares
|
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Term (years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||||||||||||||||||||
| | |
Time
Based |
| |
PSP
|
| |
LTIP
|
| |
Total
|
| | | | |||||||||||||||||||||||||||
Outstanding at December 31,
2016 |
| | | $ | 44,530 | | | | | | — | | | | | | — | | | | | | 44,530 | | | | | $ | 0.22 | | | | | | 8.24 | | | | | $ | 30,680 | | |
Granted
|
| | | | 14,165 | | | | | | — | | | | | | 5,131 | | | | | | 19,296 | | | | | | 1.17 | | | | | | | | | | | | | | |
Exercised
|
| | | | (1,306) | | | | | | — | | | | | | — | | | | | | (1,306) | | | | | | 0.15 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (958) | | | | | | — | | | | | | — | | | | | | (958) | | | | | | 0.61 | | | | | | | | | | | | | | |
Outstanding at December 31,
2017 |
| | | $ | 56,431 | | | | | | — | | | | | | 5,131 | | | | | | 61,562 | | | | | $ | 0.51 | | | | | | 8.00 | | | | | $ | 32,401 | | |
Granted
|
| | | | 13,564 | | | | | | 5,320 | | | | | | 35,058 | | | | | | 53,942 | | | | | | 1.18 | | | | | | | | | | | | | | |
Exercised
|
| | | | (2,297) | | | | | | — | | | | | | — | | | | | | (2,297) | | | | | | 0.25 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (1,171) | | | | | | (159) | | | | | | — | | | | | | (1,330) | | | | | | 0.88 | | | | | | | | | | | | | | |
Outstanding at December 31,
2018 |
| | | $ | 66,527 | | | | | | 5,161 | | | | | | 40,189 | | | | | | 111,877 | | | | | $ | 0.84 | | | | | | 8.15 | | | | | $ | 69,765 | | |
Granted
|
| | | | 16,278 | | | | | | 6,263 | | | | | | 5,628 | | | | | | 28,169 | | | | | | 1.65 | | | | | | | | | | | | | | |
Exercised
|
| | | | (2,837) | | | | | | (112) | | | | | | — | | | | | | (2,949) | | | | | | 0.41 | | | | | | | | | | | | | | |
Forfeited
|
| | | | (1,196) | | | | | | (79) | | | | | | — | | | | | | (1,275) | | | | | | 1.19 | | | | | | | | | | | | | | |
Outstanding at December 31,
2019 |
| | | $ | 78,772 | | | | | | 11,233 | | | | | | 45,817 | | | | | | 135,822 | | | | | $ | 1.01 | | | | | | 7.64 | | | | | $ | 203,431 | | |
Time Vesting*
|
| | | | | | | | | | | | | | | | | | | | | | 75,170 | | | | | $ | 0.84 | | | | | | 7.01 | | | | | $ | 125,849 | | |
PSP**
|
| | | | | | | | | | | | | | | | | | | | | | 10,719 | | | | | $ | 1.44 | | | | | | 8.92 | | | | | $ | 11,484 | | |
LTIP**
|
| | | | | | | | | | | | | | | | | | | | | | 8,568 | | | | | $ | 1.21 | | | | | | 8.42 | | | | | $ | 11,129 | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
United States
|
| | | $ | (142,198) | | | | | $ | (76,122) | | | | | $ | (75,445) | | |
Foreign
|
| | | | 1 | | | | | | 7 | | | | | | 99 | | |
Loss before provision for (benefit from) income taxes
|
| | | $ | (142,197) | | | | | $ | (76,115) | | | | | $ | (75,346) | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Current: | | | | | | | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
State
|
| | | | — | | | | | | — | | | | | | — | | |
Foreign
|
| | | | 4 | | | | | | 86 | | | | | | 65 | | |
Total current provision
|
| | | | 4 | | | | | | 86 | | | | | $ | 65 | | |
Deferred: | | | | | | | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | 9 | | | | | $ | 36 | | |
State
|
| | | | 54 | | | | | | 10 | | | | | | 109 | | |
Foreign
|
| | | | — | | | | | | — | | | | | | — | | |
Total deferred provision
|
| | | | 54 | | | | | | 19 | | | | | | 145 | | |
Total provision
|
| | | $ | 58 | | | | | $ | 105 | | | | | $ | 210 | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Provision for income taxes at statutory rate
|
| | | $ | (29,863) | | | | | $ | (15,984) | | | | | $ | (25,400) | | |
Prior year provision true-ups
|
| | | | 3,164 | | | | | | (157) | | | | | | 982 | | |
State taxes, net of federal benefit
|
| | | | (7,522) | | | | | | (7,525) | | | | | | (2,769) | | |
Certain stock-based compensation expenses
|
| | | | 2,412 | | | | | | 430 | | | | | | 536 | | |
Non-deductible lobbying expenses
|
| | | | 1,885 | | | | | | 1,352 | | | | | | 2,505 | | |
Non-deductible acquisition expenses
|
| | | | 2,068 | | | | | | — | | | | | | — | | |
Change in valuation allowance
|
| | | | 19,988 | | | | | | 21,584 | | | | | | (66,370) | | |
Impact of federal rate change on net deferred taxes
|
| | | | — | | | | | | — | | | | | | 90,889 | | |
Net operating loss write-off
|
| | | | 7,246 | | | | | | — | | | | | | — | | |
Other
|
| | | | 680 | | | | | | 405 | | | | | | (163) | | |
Provision for income taxes
|
| | | $ | 58 | | | | | $ | 105 | | | | | $ | 210 | | |
| | |
As of December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Stock-based compensation
|
| | | $ | 4,552 | | | | | $ | 3,472 | | |
Intangible assets
|
| | | | 123 | | | | | | 187 | | |
Fixed assets
|
| | | | — | | | | | | 365 | | |
Accrual and other temporary differences
|
| | | | 20,907 | | | | | | 12,273 | | |
Credit carryforwards
|
| | | | 15 | | | | | | 15 | | |
Net operating loss carryforwards
|
| | | | 217,836 | | | | | | 203,180 | | |
Total deferred tax assets:
|
| | | $ | 243,433 | | | | | $ | 219,492 | | |
Deferred tax liability: | | | | | | | | | | | | | |
Capitalized software costs
|
| | | | (6,335) | | | | | | (4,364) | | |
Fixed assets
|
| | | | (2,035) | | | | | | — | | |
Total Net Deferred Tax Assets
|
| | | | 235,063 | | | | | | 215,128 | | |
Valuation allowance
|
| | | | (235,280) | | | | | | (215,292) | | |
Net deferred tax liabilities
|
| | | $ | (217) | | | | | $ | (164) | | |
| | |
Years Ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018(a)
|
| |
2017(a)
|
| |||||||||
Online Gaming(b)
|
| | | $ | 308,177 | | | | | $ | 219,131 | | | | | $ | 189,779 | | |
Other
|
| | | | 15,233 | | | | | | 7,146 | | | | | | 2,065 | | |
Total revenue
|
| | | $ | 323,410 | | | | | $ | 226,277 | | | | | $ | 191,844 | | |
| | |
Years ended December 31,
|
| |||||||||||||||
(in thousands except per share data):
|
| |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Net loss
|
| | | $ | (142,734) | | | | | $ | (76,220) | | | | | $ | (75,556) | | |
Less: accretion of preferred share issuance costs
|
| | | | (992) | | | | | | (678) | | | | | | (1,513) | | |
Net loss attributable to common stockholders
|
| | | $ | (143,726) | | | | | $ | (76,898) | | | | | $ | (77,069) | | |
Basic and diluted weighted average common share outstanding
|
| | | | 386,793 | | | | | | 381,821 | | | | | | 142,451 | | |
Loss per share attributable to common shareholders: | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | $ | (0.37) | | | | | $ | (0.20) | | | | | $ | (0.54) | | |
| | |
Years ended December, 31
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Warrants
|
| | | | 515 | | | | | | 2,422 | | | | | | 2,080 | | |
Stock options
|
| | | | 135,823 | | | | | | 111,877 | | | | | | 61,562 | | |
Convertible Notes(a)
|
| | | | 20,952 | | | | | | — | | | | | | — | | |
Total | | | | | 157,290 | | | | | | 114,299 | | | | | | 63,642 | | |
| | |
Years ended December 31,
|
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
United States
|
| | | $ | 318,144 | | | | | $ | 219,415 | | | | | $ | 187,261 | | |
Other
|
| | | | 5,266 | | | | | | 6,862 | | | | | | 4,583 | | |
Total revenue
|
| | | $ | 323,410 | | | | | $ | 226,277 | | | | | $ | 191,844 | | |
|
Tel-Aviv, Israel
March 12, 2020, except for footnote 19 which is dated March 26, 2020 |
| |
/s/ Ziv haft
Certified Public Accountants (Isr.) BDO Member Firm |
|
| | |
Note
|
| |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||
ASSETS | | | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | | | | 8,144 | | | | | | 20,731 | | |
Trade receivables, net
|
| |
2
|
| | | | 24,745 | | | | | | 17,220 | | |
Other current assets
|
| |
4
|
| | | | 3,258 | | | | | | 2,876 | | |
Total current assets
|
| | | | | | | 36,147 | | | | | | 40,827 | | |
NON-CURRENT ASSETS: | | | | | | | | | | | | | | | | |
Intangible assets, net
|
| |
6
|
| | | | 26,094 | | | | | | 21,980 | | |
Right-of-use assets
|
| |
15
|
| | | | 25,779 | | | | | | — | | |
Property and equipment, net
|
| |
5
|
| | | | 9,930 | | | | | | 7,926 | | |
Deferred tax assets
|
| |
13
|
| | | | 597 | | | | | | 235 | | |
Other non-current assets
|
| |
7
|
| | | | 306 | | | | | | 1,688 | | |
Total non-current assets
|
| | | | | | | 62,706 | | | | | | 31,829 | | |
TOTAL ASSETS
|
| | | | | | | 98,853 | | | | | | 72,656 | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | |
Trade payables
|
| | | | | | | 8,127 | | | | | | 7,006 | | |
Lease liabilities
|
| |
15
|
| | | | 3,516 | | | | | | — | | |
Other accounts payable and accrued expenses
|
| |
8
|
| | | | 11,176 | | | | | | 6,923 | | |
Total current liabilities
|
| | | | | | | 22,819 | | | | | | 13,929 | | |
NON-CURRENT LIABILITIES: | | | | | | | | | | | | | | | | |
Lease liabilities
|
| |
15
|
| | | | 22,749 | | | | | | — | | |
Accrued severance pay, net
|
| | | | | | | 408 | | | | | | 278 | | |
Total non-current liabilities
|
| | | | | | | 23,157 | | | | | | 278 | | |
SHAREHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | |
Share capital
|
| |
9
|
| | | | 3 | | | | | | 3 | | |
Actuarial reserve
|
| | | | | | | (139) | | | | | | (65) | | |
Retained earnings
|
| | | | | | | 51,956 | | | | | | 57,928 | | |
Equity attributable to owners of the parent
|
| | | | | | | 51,820 | | | | | | 57,866 | | |
Non-controlling interest
|
| |
18
|
| | | | 1,057 | | | | | | 583 | | |
Total shareholders’ equity
|
| | | | | | | 52,877 | | | | | | 58,449 | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | | | | | 98,853 | | | | | | 72,656 | | |
|
|
/s/ Richard Carter
Richard Carter
Chief Executive Officer |
| |
/s/ Shay Berka
Shay Berka
Chief Financial Officer |
| |
March 26, 2020
Date of approval of the
Financial statements |
|
| | |
Note
|
| |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| ||||||||||||
Revenue
|
| | | | 10 | | | | | | 96,857 | | | | | | 94,147 | | | | | | 66,087 | | |
Cost of revenue
|
| | | | 11 | | | | | | 54,173 | | | | | | 45,087 | | | | | | 31,844 | | |
Gross profit
|
| | | | | | | | | | 42,684 | | | | | | 49,060 | | | | | | 34,243 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development expenses
|
| | | | | | | | | | 18,103 | | | | | | 10,115 | | | | | | 8,693 | | |
Selling and marketing expenses
|
| | | | | | | | | | 6,772 | | | | | | 3,722 | | | | | | 2,964 | | |
General and administrative expenses
|
| | | | | | | | | | 11,772 | | | | | | 7,636 | | | | | | 5,892 | | |
Total operating expenses
|
| | | | | | | | | | 36,647 | | | | | | 21,473 | | | | | | 17,549 | | |
Profit from operations
|
| | | | | | | | | | 6,037 | | | | | | 27,587 | | | | | | 16,694 | | |
Financial income
|
| | | | | | | | | | 23 | | | | | | 97 | | | | | | 37 | | |
Financial expense
|
| | | | | | | | | | 846 | | | | | | 340 | | | | | | 177 | | |
Profit before tax
|
| | | | | | | | | | 5,214 | | | | | | 27,344 | | | | | | 16,554 | | |
Tax expenses
|
| | | | 13 | | | | | | 638 | | | | | | 565 | | | | | | 264 | | |
Net profit
|
| | | | | | | | | | 4,576 | | | | | | 26,779 | | | | | | 16,290 | | |
Other comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | |
Items that will not be reclassified to profit or loss: | | | | | | | | | | | | | | | | | | | | | | | | | |
Re-measurements of accrued severance pay
|
| | | | | | | | | | 148 | | | | | | 40 | | | | | | 17 | | |
Total comprehensive income for the year
|
| | | | | | | | | | 4,428 | | | | | | 26,739 | | | | | | 16,273 | | |
Profit for the year attributed to: | | | | | | | | | | | | | | | | | | | | | | | | | |
Owners of the parent
|
| | | | | | | | | | 4,028 | | | | | | 26,509 | | | | | | 16,110 | | |
Non-controlling interest
|
| | | | | | | | | | 548 | | | | | | 270 | | | | | | 180 | | |
| | | | | | | | | | | 4,576 | | | | | | 26,779 | | | | | | 16,290 | | |
Total comprehensive income for the year attributed to: | | | | | | | | | | | | | | | | | | | | | | | | | |
Owners of the parent
|
| | | | | | | | | | 3,954 | | | | | | 26,489 | | | | | | 16,102 | | |
Non-controlling interest
|
| | | | | | | | | | 474 | | | | | | 250 | | | | | | 171 | | |
| | | | | | | | | | | 4,428 | | | | | | 26,739 | | | | | | 16,273 | | |
| | |
Owners of the parent
|
| |
Non-
controlling interest |
| |
Total
Shareholders’ equity |
| |||||||||||||||||||||||||||
| | |
Share
capital |
| |
Actuarial
reserve |
| |
Retained
earnings |
| |
Total
|
| ||||||||||||||||||||||||
Balance at December 31, 2016
|
| | | | 3 | | | | | | (37) | | | | | | 17,489 | | | | | | 17,455 | | | | | | 162 | | | | | | 17,617 | | |
Changes during 2017: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net profit
|
| | | | — | | | | | | — | | | | | | 16,110 | | | | | | 16,110 | | | | | | 180 | | | | | | 16,290 | | |
Other comprehensive loss
|
| | | | — | | | | | | (8) | | | | | | — | | | | | | (8) | | | | | | (9) | | | | | | (17) | | |
Total comprehensive income for the year
|
| | | | — | | | | | | (8) | | | | | | 16,110 | | | | | | 16,102 | | | | | | 171 | | | | | | 16,273 | | |
Dividend declared
|
| | | | — | | | | | | — | | | | | | (687) | | | | | | (687) | | | | | | — | | | | | | (687) | | |
Dividend declared and paid
|
| | | | — | | | | | | — | | | | | | (313) | | | | | | (313) | | | | | | — | | | | | | (313) | | |
Balance at December 31, 2017
|
| | | | 3 | | | | | | (45) | | | | | | 32,599 | | | | | | 32,557 | | | | | | 333 | | | | | | 32,890 | | |
Changes in accounting policy — IFRS 9 Financial Instruments
|
| | | | — | | | | | | — | | | | | | (1,180) | | | | | | (1,180) | | | | | | — | | | | | | (1,180) | | |
Balance at January 1, 2018 as restated
|
| | | | 3 | | | | | | (45) | | | | | | 31,419 | | | | | | 31,377 | | | | | | 333 | | | | | | 31,710 | | |
Changes during 2018: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net profit
|
| | | | — | | | | | | — | | | | | | 26,509 | | | | | | 26,509 | | | | | | 270 | | | | | | 26,779 | | |
Other comprehensive loss
|
| | | | — | | | | | | (20) | | | | | | — | | | | | | (20) | | | | | | (20) | | | | | | (40) | | |
Total comprehensive income for the year
|
| | | | — | | | | | | (20) | | | | | | 26,509 | | | | | | 26,489 | | | | | | 250 | | | | | | 26,739 | | |
Balance at December 31, 2018
|
| | | | 3 | | | | | | (65) | | | | | | 57,928 | | | | | | 57,866 | | | | | | 583 | | | | | | 58,449 | | |
Changes during 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net profit
|
| | | | — | | | | | | — | | | | | | 4,028 | | | | | | 4,028 | | | | | | 548 | | | | | | 4,576 | | |
Other comprehensive loss
|
| | | | — | | | | | | (74) | | | | | | — | | | | | | (74) | | | | | | (74) | | | | | | (148) | | |
Total comprehensive income for the year
|
| | | | — | | | | | | (74) | | | | | | 4,028 | | | | | | 3,954 | | | | | | 474 | | | | | | 4,428 | | |
Dividend paid
|
| | | | — | | | | | | — | | | | | | (10,000) | | | | | | (10,000) | | | | | | — | | | | | | (10,000) | | |
Balance at December 31, 2019
|
| | | | 3 | | | | | | (139) | | | | | | 51,956 | | | | | | 51,820 | | | | | | 1,057 | | | | | | 52,877 | | |
| | |
Note
|
| |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | |
Net profit for the year
|
| | | | | | | 4,576 | | | | | | 26,779 | | | | | | 16,290 | | |
Adjustments required to reflect the cash flows from operating activities:
|
| | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| |
5,6,15
|
| | | | 16,045 | | | | | | 8,325 | | | | | | 4,222 | | |
Interest charged on lease liabilities
|
| |
15
|
| | | | 677 | | | | | | — | | | | | | — | | |
Gain on sale of fixed assets
|
| |
5
|
| | | | — | | | | | | (14) | | | | | | — | | |
Increase in trade receivables
|
| | | | | | | (7,408) | | | | | | (6,706) | | | | | | (7,602) | | |
Decrease (increase) in other current assets
|
| |
4
|
| | | | 1,065 | | | | | | (1,833) | | | | | | (245) | | |
Increase in contract costs
|
| |
6
|
| | | | (443) | | | | | | — | | | | | | — | | |
Decrease (increase) in other non-current assets
|
| |
7
|
| | | | (40) | | | | | | 34 | | | | | | (46) | | |
Increase in deferred tax assets
|
| |
13
|
| | | | (362) | | | | | | (34) | | | | | | (56) | | |
Increase in trade payables
|
| | | | | | | 1,180 | | | | | | 2,402 | | | | | | 3,295 | | |
Increase (decrease) in accrued severance pay
|
| | | | | | | (18) | | | | | | (107) | | | | | | 13 | | |
Increase in other accounts payable and accrued expenses
|
| |
8
|
| | | | 4,050 | | | | | | 1,903 | | | | | | 2,255 | | |
Income tax expenses
|
| |
13
|
| | | | 1,000 | | | | | | 565 | | | | | | 264 | | |
Cash generated from operations
|
| | | | | | | 20,322 | | | | | | 31,314 | | | | | | 18,390 | | |
Income tax paid
|
| |
13
|
| | | | (797) | | | | | | (365) | | | | | | (130) | | |
Net cash provided by operating activities
|
| | | | | | | 19,525 | | | | | | 30,949 | | | | | | 18,260 | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | |
Purchase of property, plant and equipment
|
| |
5
|
| | | | (4,934) | | | | | | (5,865) | | | | | | (3,225) | | |
Disposal of fixed assets
|
| |
5
|
| | | | — | | | | | | 35 | | | | | | — | | |
Purchase of software and licenses
|
| |
6
|
| | | | (392) | | | | | | (388) | | | | | | (215) | | |
Proceeds from sale of fixed assets
|
| |
5
|
| | | | — | | | | | | 55 | | | | | | — | | |
Decrease (increase) in restricted deposits
|
| | | | | | | (25) | | | | | | 250 | | | | | | 467 | | |
Increase in deposits
|
| |
7
|
| | | | — | | | | | | (60) | | | | | | (72) | | |
Loans granted to related party
|
| |
14
|
| | | | — | | | | | | — | | | | | | (50) | | |
Repayment of loan from related party
|
| |
14
|
| | | | — | | | | | | 1,200 | | | | | | — | | |
Internally generated intangible assets
|
| |
6
|
| | | | (13,048) | | | | | | (12,611) | | | | | | (11,212) | | |
Net cash used in investing activities
|
| | | | | | | (18,399) | | | | | | (17,384) | | | | | | (14,307) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | |
Dividend paid
|
| |
9
|
| | | | (10,000) | | | | | | (687) | | | | | | (313) | | |
Principal paid on lease liabilities
|
| |
15
|
| | | | (3,537) | | | | | | — | | | | | | — | | |
Loans received from related party
|
| |
12
|
| | | | — | | | | | | 43 | | | | | | 503 | | |
Repayment of loan
|
| |
12
|
| | | | — | | | | | | (540) | | | | | | — | | |
Net cash provided by (used in) financing
activities |
| | | | | | | (13,537) | | | | | | (1,184) | | | | | | 190 | | |
Effects of exchange rate changes on cash and cash equivalents
|
| | | | | | | (176) | | | | | | (104) | | | | | | (6) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | | | | (12,587) | | | | | | 12,277 | | | | | | 4,137 | | |
Cash and cash equivalents at beginning of the year
|
| | | | | | | 20,731 | | | | | | 8,454 | | | | | | 4,317 | | |
Cash and cash equivalents at the end of the year
|
| | | | | | | 8,144 | | | | | | 20,731 | | | | | | 8,454 | | |
Non-cash activities
|
| | | | | | | | | | | | | | | | | | | | | |
Dividend declared
|
| | | | | | | — | | | | | | — | | | | | | 687 | | |
| | |
Under previous policy
|
| |
The change
|
| |
Under IFRS 16
|
| |||||||||
Non-current assets: | | | | | | | | | | | | | | | | | | | |
Right-of-use assets
|
| | | | — | | | | | | 20,769 | | | | | | 20,769 | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | |
Lease liabilities
|
| | | | — | | | | | | 2,440 | | | | | | 2,440 | | |
Non-current liabilities: | | | | | | | | | | | | | | | | | | | |
Lease liabilities
|
| | | | — | | | | | | 18,329 | | | | | | 18,329 | | |
| | |
€
|
| |||
Operating lease commitments as of December 31, 2018
|
| | | | 11,309 | | |
Less: short-term leases not recognized under IFRS 16
|
| | | | (298) | | |
Less: effect of termination options reasonably certain to be exercised
|
| | | | (190) | | |
Plus: effect of extension options reasonably certain to be exercised
|
| | | | 12,797 | | |
Undiscounted lease payments
|
| | | | 23,618 | | |
Less: effect of discounting using the weighted average incremental borrowing rate of 2.98% as of January 1, 2019
|
| | | | (2,849) | | |
Lease liabilities as of January 1, 2019
|
| | | | 20,769 | | |
Level 1
|
—
|
Quoted prices (unadjusted) in active markets for identical assets or liabilities. |
Level 2
|
—
|
Inputs other than quoted prices included within Level 1 that are observable either directly or indirectly. |
Level 3
|
—
|
Inputs that are not based on observable market data (valuation techniques that use inputs that are not based on observable market data). |
As of December 31, 2019
|
| |
Within
payment terms |
| |
0-90 days over
payment terms |
| |
90+ days over
payment terms |
| |
Total
|
| ||||||||||||
Payment option 1
|
| | | | 14,884 | | | | | | 4,574 | | | | | | 1,430 | | | | | | 20,888 | | |
Payment option 2
|
| | | | 544 | | | | | | 158 | | | | | | 3,323 | | | | | | 4,025 | | |
Total
|
| | | | 15,428 | | | | | | 4,732 | | | | | | 4,753 | | | | | | 24,913 | | |
|
As of December 31, 2018
|
| |
Within
payment terms |
| |
0-90 days over
payment terms |
| |
90+ days over
payment terms |
| |
Total
|
| ||||||||||||
Payment option 1
|
| | | | 8,890 | | | | | | 1,366 | | | | | | 3,226 | | | | | | 13,482 | | |
Payment option 2
|
| | | | 459 | | | | | | 275 | | | | | | 3,872 | | | | | | 4,606 | | |
Total
|
| | | | 9,349 | | | | | | 1,641 | | | | | | 7,098 | | | | | | 18,088 | | |
| | |
As of
December 31, 2019 |
| |
As of
December 31, 2018 |
| ||||||
Europe
|
| | | | 11,623 | | | | | | 9,018 | | |
Rest of the world
|
| | | | 13,290 | | | | | | 9,070 | | |
Total
|
| | | | 24,913 | | | | | | 18,088 | | |
| | |
As of
December 31, 2019 |
| |
As of
December 31, 2018 |
| ||||||
Payment option 1
|
| | | | 20,888 | | | | | | 13,482 | | |
Payment option 2
|
| | | | 4,025 | | | | | | 4,606 | | |
Total
|
| | | | 24,913 | | | | | | 18,088 | | |
| | |
Default rate
|
| |
As of
December 31, 2019 |
| |
ECL
|
| |||||||||
Payment option 1
|
| | | | 0.8% | | | | | | 20,888 | | | | | | 167 | | |
Payment option 2
|
| | | | 0.04% | | | | | | 4,025 | | | | | | 1 | | |
Total
|
| | | | | | | | | | 24,913 | | | | | | 168 | | |
|
| | |
Default rate
|
| |
As of
December 31, 2018 |
| |
ECL
|
| |||||||||
Payment option 1
|
| | | | 0.62% | | | | | | 13,482 | | | | | | 84 | | |
Payment option 2
|
| | | | 17.02% | | | | | | 4,606 | | | | | | 784 | | |
Total
|
| | | | | | | | | | 18,088 | | | | | | 868 | | |
|
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
At January 1 (under IAS 39)
|
| | | | — | | | | | | — | | | | | | — | | |
Restated through opening retained earnings
|
| | | | — | | | | | | 1,180 | | | | | | — | | |
At January 1 (under IFRS 9)
|
| | | | 868 | | | | | | 1,180 | | | | | | — | | |
Decrease during the year
|
| | | | (700) | | | | | | (312) | | | | | | — | | |
At December 31
|
| | | | 168 | | | | | | 868 | | | | | | — | | |
| | |
Annual depreciation rate (%)
|
| |
Main annual depreciation rate (%)
|
| |||
Motor vehicle
|
| |
15
|
| | | | 15 | | |
Computers
|
| |
15-50
|
| | | | 33 | | |
Furniture and office equipment
|
| |
7-15
|
| | | | 15 | | |
Leasehold improvements
|
| |
Over the shorter of the term of the
lease or useful life |
| | | | 10 | | |
| | |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||
Related parties (see Note 7)
|
| | | | 1,503 | | | | | | 86 | | |
Prepaid expenses
|
| | | | 1,352 | | | | | | 1,286 | | |
Institutions
|
| | | | 207 | | | | | | 567 | | |
Other receivables
|
| | | | 196 | | | | | | 937 | | |
Total
|
| | | | 3,258 | | | | | | 2,876 | | |
| | |
Leasehold
Improvements |
| |
Computers
|
| |
Furniture and
Office Equipment |
| |
Total
|
| ||||||||||||
Cost | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2019
|
| | | | 2,374 | | | | | | 7,800 | | | | | | 710 | | | | | | 10,884 | | |
Additions
|
| | | | 547 | | | | | | 4,196 | | | | | | 191 | | | | | | 4,934 | | |
At December 31, 2019
|
| | | | 2,921 | | | | | | 11,996 | | | | | | 901 | | | | | | 15,818 | | |
Accumulated depreciation | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2019
|
| | | | (393) | | | | | | (2,352) | | | | | | (213) | | | | | | (2,958) | | |
Depreciation
|
| | | | (220) | | | | | | (2,616) | | | | | | (94) | | | | | | (2,930) | | |
At December 31, 2019
|
| | | | (613) | | | | | | (4,968) | | | | | | (307) | | | | | | (5,888) | | |
Net book value
at December 31, 2019 |
| | | | 2,308 | | | | | | 7,028 | | | | | | 594 | | | | | | 9,930 | | |
|
| | |
Leasehold
Improvements |
| |
Motor
Vehicle |
| |
Computers
|
| |
Furniture and
Office Equipment |
| |
Total
|
| |||||||||||||||
Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2018
|
| | | | 783 | | | | | | 121 | | | | | | 4,263 | | | | | | 375 | | | | | | 5,542 | | |
Additions
|
| | | | 1,601 | | | | | | — | | | | | | 3,848 | | | | | | 416 | | | | | | 5,865 | | |
Disposals
|
| | | | (10) | | | | | | (121) | | | | | | (311) | | | | | | (81) | | | | | | (523) | | |
At December 31, 2018
|
| | | | 2,374 | | | | | | — | | | | | | 7,800 | | | | | | 710 | | | | | | 10,884 | | |
Accumulated depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2018
|
| | | | (79) | | | | | | (33) | | | | | | (1,338) | | | | | | (170) | | | | | | (1,620) | | |
Depreciation
|
| | | | (319) | | | | | | (18) | | | | | | (1,324) | | | | | | (124) | | | | | | (1,785) | | |
Disposals
|
| | | | 5 | | | | | | 51 | | | | | | 310 | | | | | | 81 | | | | | | 447 | | |
At December 31, 2018
|
| | | | (393) | | | | | | — | | | | | | (2,352) | | | | | | (213) | | | | | | (2,958) | | |
Net book value
at December 31, 2018 |
| | | | 1,981 | | | | | | — | | | | | | 5,448 | | | | | | 497 | | | | | | 7,926 | | |
|
| | |
Leasehold
Improvements |
| |
Motor
Vehicle |
| |
Computers
|
| |
Furniture and
Office Equipment |
| |
Total
|
| |||||||||||||||
Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2017
|
| | | | 313 | | | | | | 121 | | | | | | 1,591 | | | | | | 310 | | | | | | 2,335 | | |
Additions
|
| | | | 470 | | | | | | — | | | | | | 2,690 | | | | | | 65 | | | | | | 3,225 | | |
Disposals
|
| | | | — | | | | | | — | | | | | | (18) | | | | | | — | | | | | | (18) | | |
At December 31, 2017
|
| | | | 783 | | | | | | 121 | | | | | | 4,263 | | | | | | 375 | | | | | | 5,542 | | |
Accumulated depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2017
|
| | | | (46) | | | | | | (14) | | | | | | (650) | | | | | | (135) | | | | | | (845) | | |
Depreciation
|
| | | | (33) | | | | | | (19) | | | | | | (706) | | | | | | (35) | | | | | | (793) | | |
Disposals
|
| | | | — | | | | | | — | | | | | | 18 | | | | | | — | | | | | | 18 | | |
At December 31, 2017
|
| | | | (79) | | | | | | (33) | | | | | | (1,338) | | | | | | (170) | | | | | | (1,620) | | |
Net book value
at December 31, 2017 |
| | | | 704 | | | | | | 88 | | | | | | 2,925 | | | | | | 205 | | | | | | 3,922 | | |
| | |
Internally
generated intangible assets |
| |
Software
and licenses |
| |
Others
|
| |
Total
|
| ||||||||||||
Cost | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2019
|
| | | | 32,681 | | | | | | 603 | | | | | | — | | | | | | 33,284 | | |
Additions
|
| | | | 13,048 | | | | | | 392 | | | | | | 443 | | | | | | 13,883 | | |
At December 31, 2019
|
| | | | 45,729 | | | | | | 995 | | | | | | 443 | | | | | | 47,167 | | |
Accumulated Amortization | | | | | | | | | | | | | | | | | | | | | | | | | |
At January 1, 2019
|
| | | | (11,110) | | | | | | (194) | | | | | | — | | | | | | (11,304) | | |
Amortization
|
| | | | (9,601) | | | | | | (161) | | | | | | (7) | | | | | | (9,769) | | |
At December 31, 2019
|
| | | | (20,711) | | | | | | (355) | | | | | | (7) | | | | | | (21,073) | | |
Net book value at December 31, 2019
|
| | | | 25,018 | | | | | | 640 | | | | | | 436 | | | | | | 26,094 | | |
|
| | |
Internally
generated intangible assets |
| |
Software
and licenses |
| |
Total
|
| |||||||||
Cost | | | | | | | | | | | | | | | | | | | |
At January 1, 2018
|
| | | | 20,070 | | | | | | 215 | | | | | | 20,285 | | |
Additions
|
| | | | 12,611 | | | | | | 388 | | | | | | 12,999 | | |
At December 31, 2018
|
| | | | 32,681 | | | | | | 603 | | | | | | 33,284 | | |
Accumulated Amortization | | | | | | | | | | | | | | | | | | | |
At January 1, 2018
|
| | | | (4,705) | | | | | | (59) | | | | | | (4,764) | | |
Amortization
|
| | | | (6,405) | | | | | | (135) | | | | | | (6,540) | | |
At December 31, 2018
|
| | | | (11,110) | | | | | | (194) | | | | | | (11,304) | | |
Net book value at December 31, 2018
|
| | | | 21,571 | | | | | | 409 | | | | | | 21,980 | | |
|
| | |
Internally
generated intangible assets |
| |
Software
and licenses |
| |
Total
|
| |||||||||
Cost | | | | | | | | | | | | | | | | | | | |
At January 1, 2017
|
| | | | 8,858 | | | | | | — | | | | | | 8,858 | | |
Additions
|
| | | | 11,212 | | | | | | 215 | | | | | | 11,427 | | |
At December 31, 2017
|
| | | | 20,070 | | | | | | 215 | | | | | | 20,285 | | |
Accumulated Amortization | | | | | | | | | | | | | | | | | | | |
At January 1, 2017
|
| | | | (1,335) | | | | | | — | | | | | | (1,335) | | |
Amortization
|
| | | | (3,370) | | | | | | (59) | | | | | | (3,429) | | |
At December 31, 2017
|
| | | | (4,705) | | | | | | (59) | | | | | | (4,764) | | |
Net book value at December 31, 2017
|
| | | | 15,365 | | | | | | 156 | | | | | | 15,521 | | |
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||
Related parties (see also Note 14)*
|
| | | | — | | | | | | 1,407 | | |
Deposit
|
| | | | 306 | | | | | | 281 | | |
Total
|
| | | | 306 | | | | | | 1,688 | | |
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||
Employees, salaries and related liabilities
|
| | | | 5,657 | | | | | | 3,684 | | |
VAT and income tax payable
|
| | | | 1,859 | | | | | | 373 | | |
Accrued expenses
|
| | | | 1,772 | | | | | | 123 | | |
Provision for vacation
|
| | | | 1,177 | | | | | | 976 | | |
Advances and deposits from customers
|
| | | | 711 | | | | | | 1,767 | | |
Total
|
| | | | 11,176 | | | | | | 6,923 | | |
| | |
Authorized
|
| |
Issued and
outstanding |
| ||||||
| | |
Amount
|
| |||||||||
Ordinary shares of USD 0.1 per share
|
| | | | 72,000 | | | | | | 40,800 | | |
| | |
Authorized
|
| |
Issued and
outstanding |
| ||||||
| | |
Amount
|
| |||||||||
Ordinary shares of USD 0.1 per share
|
| | | | 72,000 | | | | | | 40,800 | | |
| | |
Share Option Plan: 2019
|
| |
Share Option Plan: 2018
|
| ||||||||||||||||||
| | |
Number of
Options |
| |
Weighted
Average Exercise Price |
| |
Number of
Options |
| |
Weighted
Average Exercise Price |
| ||||||||||||
| | | | | | | | |
€
|
| | | | | | | |
€
|
| ||||||
Options outstanding at beginning of year
|
| | | | 5,217 | | | | | | 927 | | | | | | 3,120 | | | | | | 130 | | |
Changes during the year:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Granted
|
| | | | 676 | | | | | | 10,720 | | | | | | 2,337 | | | | | | 1,998 | | |
Cancelled
|
| | | | — | | | | | | — | | | | | | 240 | | | | | | 997 | | |
Options outstanding at end of year
|
| | | | 5,893 | | | | | | 2,330 | | | | | | 5,217 | | | | | | 927 | | |
| | |
For the year ended
December 31, |
| |||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||
Europe
|
| | | | 37% | | | | | | 34% | | | | | | 48% | | |
Rest of the world
|
| | | | 63% | | | | | | 66% | | | | | | 52% | | |
| | | | | 100% | | | | | | 100% | | | | | | 100% | | |
| | |
Year ended December 31,
|
| |||||||||||||||||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2017
|
| |||||||||||||||||||||||||||
| | |
€
|
| |
%
|
| |
€
|
| |
%
|
| |
€
|
| |
%
|
| ||||||||||||||||||
Customer A
|
| | | | 44,445 | | | | | | 46% | | | | | | 35,510 | | | | | | 38% | | | | | | 26,840 | | | | | | 41% | | |
Customer B
|
| | | | 7,980 | | | | | | 8% | | | | | | 14,300 | | | | | | 15% | | | | | | 8,950 | | | | | | 14% | | |
Customer C
|
| | | | 6,265 | | | | | | 6% | | | | | | 6,870 | | | | | | 7% | | | | | | 8,765 | | | | | | 13% | | |
Customer D
|
| | | | 3,553 | | | | | | 4% | | | | | | 5,432 | | | | | | 6% | | | | | | 2,548 | | | | | | 4% | | |
Others
|
| | | | 34,614 | | | | | | 36% | | | | | | 32,035 | | | | | | 34% | | | | | | 18,984 | | | | | | 28% | | |
| | | | | 96,857 | | | | | | 100% | | | | | | 94,147 | | | | | | 100% | | | | | | 66,087 | | | | | | 100% | | |
| | |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| |||||||||
Payroll and related expenses
|
| | | | 21,448 | | | | | | 18,934 | | | | | | 15,683 | | |
Depreciation and amortization
|
| | | | 13,750 | | | | | | 7,962 | | | | | | 3,972 | | |
Games, data providers and related fees
|
| | | | 9,785 | | | | | | 10,936 | | | | | | 7,068 | | |
IT
|
| | | | 7,220 | | | | | | 3,917 | | | | | | 3,526 | | |
Others
|
| | | | 1,970 | | | | | | 3,338 | | | | | | 1,595 | | |
Total
|
| | | | 54,173 | | | | | | 45,087 | | | | | | 31,844 | | |
| | |
Loans from
related parties |
| |||
As of January 1, 2017
|
| | | | — | | |
Changes from financing cash flows: | | | | | | | |
Loan received from related party
|
| | | | (503) | | |
Exchange rate differences
|
| | | | 6 | | |
As of December 31, 2017
|
| | | | (497) | | |
Changes from financing cash flows: | | | | | | | |
Loan received from related party
|
| | | | (43) | | |
Exchange rate differences
|
| | | | (27) | | |
Interest
|
| | | | (28) | | |
Repayment of loan including interest
|
| | | | 595 | | |
As of December 31, 2018
|
| | | | — | | |
Changes from financing cash flows: | | | | | — | | |
As of December 31, 2019
|
| | | | — | | |
| | |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| ||||||
Other provisions and employee-related obligations
|
| | | | 300 | | | | | | 171 | | |
Property and equipment, net
|
| | | | 131 | | | | | | — | | |
Accrued severance pay, net
|
| | | | 93 | | | | | | 64 | | |
Other
|
| | | | 73 | | | | | | — | | |
Deferred tax assets
|
| | | | 597 | | | | | | 235 | | |
| | |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| |||||||||
At January 1
|
| | | | 235 | | | | | | 201 | | | | | | 145 | | |
Recognized in profit and loss — tax income
|
| | | | 362 | | | | | | 34 | | | | | | 56 | | |
At December 31
|
| | | | 597 | | | | | | 235 | | | | | | 201 | | |
| | |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| |||||||||
Current tax
|
| | | | 1,000 | | | | | | 599 | | | | | | 320 | | |
Change in deferred tax
|
| | | | (362) | | | | | | (34) | | | | | | (56) | | |
Total
|
| | | | 638 | | | | | | 565 | | | | | | 264 | | |
| | |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| |||||||||
Profit before taxation
|
| | | | 5,214 | | | | | | 27,344 | | | | | | 16,554 | | |
Theoretical tax credit at applicable statutory
0% |
| | | | — | | | | | | — | | | | | | — | | |
Tax Rate difference between Isle of Man and the Group’s subsidiaries
|
| | | | 891 | | | | | | 463 | | | | | | 188 | | |
Non-allowable expenses
|
| | | | 58 | | | | | | 21 | | | | | | 14 | | |
Recognition of deferred tax assets
|
| | | | (362) | | | | | | (34) | | | | | | (56) | | |
Miscellaneous
|
| | | | 51 | | | | | | 115 | | | | | | 118 | | |
Tax on income
|
| | | | 638 | | | | | | 565 | | | | | | 264 | | |
| | |
Year ended
December 31, 2019 |
| |
Year ended
December 31, 2018 |
| |
Year ended
December 31, 2017 |
| |||||||||
Revenue received from related party
|
| | | | 6,265 | | | | | | 6,870 | | | | | | 8,765 | | |
Lease paid to related party
|
| | | | 627 | | | | | | 480 | | | | | | 127 | | |
Salary to related parties
|
| | | | 126 | | | | | | 395 | | | | | | 331 | | |
Proceeds from sale of vehicle
|
| | | | — | | | | | | 55 | | | | | | — | | |
Interest income (expense) on loan to (from)
related party |
| | | | 23 | | | | | | (40) | | | | | | 113 | | |
Name
|
| |
Nature of transaction
|
| |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||
Related company
|
| |
Trade receivables, net
|
| | | | 4,025 | | | | | | 3,823 | | |
Related company
|
| | Loan granted* | | | | | 1,430 | | | | | | 1,407 | | |
Major shareholder
|
| |
Ongoing transaction
|
| | | | 73 | | | | | | 86 | | |
Name
|
| |
Nature of transaction
|
| |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||
Related company
|
| |
Ongoing transaction
|
| | | | 139 | | | | | | — | | |
| | |
December 31, 2019
|
| |
December 31, 2018
|
| |
December 31, 2017
|
| |||||||||
Salary, benefits and others
|
| | | | 1,907 | | | | | | 947 | | | | | | 814 | | |
| | |
Office facilities
|
| |
Motor
vehicles |
| |
Data
centers |
| |
Total
|
| ||||||||||||
As of January 1, 2019
|
| | | | 20,569 | | | | | | 200 | | | | | | — | | | | | | 20,769 | | |
Additions
|
| | | | 5,490 | | | | | | 16 | | | | | | 2,850 | | | | | | 8,356 | | |
Depreciation expense
|
| | | | (2,833) | | | | | | (98) | | | | | | (415) | | | | | | (3,346) | | |
As of December 31, 2019
|
| | | | 23,226 | | | | | | 118 | | | | | | 2,435 | | | | | | 25,779 | | |
| | |
2019
|
| |||
As of January 1, 2019
|
| | | | 20,769 | | |
Additions
|
| | | | 8,356 | | |
Accretion of interest
|
| | | | 677 | | |
Payments
|
| | | | (3,537) | | |
As of December 31, 2019
|
| | | | 26,265 | | |
Current
|
| | | | 3,516 | | |
Non-current
|
| | | | 22,749 | | |
| | |
2019
|
| |||
Depreciation expense of right-of-use assets
|
| | | | 3,346 | | |
Interest expense on lease liabilities
|
| | | | 677 | | |
Expense relating to short-term leases
|
| | | | 319 | | |
Total amount recognized in profit or loss
|
| | | | 4,342 | | |
| | |
Within five
years |
| |
More than
five years |
| |
Total
|
| |||||||||
Extension options expected not to be exercised
|
| | | | — | | | | | | — | | | | | | — | | |
Termination options expected to be exercised
|
| | | | 190 | | | | | | — | | | | | | 190 | | |
| | | | | 190 | | | | | | — | | | | | | 190 | | |
| | |
Fair value through
profit or loss |
| |
Amortized cost
|
| |
Fair value through other
comprehensive income |
| |||||||||||||||||||||||||||
| | |
December 31,
2019 |
| |
December 31,
2018 |
| |
December 31,
2019 |
| |
December 31,
2018 |
| |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||||||||||||||
Cash and cash equivalents
|
| | | | — | | | | | | — | | | | | | 8,144 | | | | | | 20,731 | | | | | | — | | | | | | — | | |
Trade receivables
|
| | | | — | | | | | | — | | | | | | 24,745 | | | | | | 17,220 | | | | | | — | | | | | | — | | |
Other current and non-current assets
|
| | | | — | | | | | | — | | | | | | 1,685 | | | | | | 2,713 | | | | | | — | | | | | | — | | |
Total
|
| | | | — | | | | | | — | | | | | | 34,574 | | | | | | 40,664 | | | | | | — | | | | | | — | | |
| | |
Fair value through
profit or loss |
| |
Amortized cost
|
| ||||||||||||||||||
| | |
December 31,
2019 |
| |
December 31,
2018 |
| |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||||||||
Trade payables
|
| | | | — | | | | | | — | | | | | | 8,127 | | | | | | 7,006 | | |
Other accounts payable and accrued expenses
|
| | | | — | | | | | | — | | | | | | 1,772 | | | | | | — | | |
Lease liabilities
|
| | | | — | | | | | | — | | | | | | 26,265 | | | | | | — | | |
Total
|
| | | | — | | | | | | — | | | | | | 36,164 | | | | | | 7,006 | | |
| | |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||
Cash and cash equivalents
|
| | | | 8,144 | | | | | | 20,731 | | |
Trade receivables
|
| | | | 24,745 | | | | | | 17,220 | | |
Other current and non-current assets
|
| | | | 1,685 | | | | | | 2,713 | | |
Total
|
| | | | 34,574 | | | | | | 40,664 | | |
|
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||||||||||||||||||||||||||
| | |
Assets
|
| |
Liabilities
|
| |
Total
|
| |
Assets
|
| |
Liabilities
|
| |
Total
|
| ||||||||||||||||||
NIS
|
| | | | 99 | | | | | | (346) | | | | | | (247) | | | | | | 631 | | | | | | (523) | | | | | | 108 | | |
USD
|
| | | | 2,743 | | | | | | (4,593) | | | | | | (1,850) | | | | | | 868 | | | | | | (2,304) | | | | | | (1,436) | | |
GBP
|
| | | | 6,053 | | | | | | (747) | | | | | | 5,306 | | | | | | 1,796 | | | | | | (1,688) | | | | | | 108 | | |
UAH
|
| | | | 117 | | | | | | (37) | | | | | | 80 | | | | | | 14 | | | | | | (58) | | | | | | (44) | | |
| | | | | 9,012 | | | | | | (5,723) | | | | | | 3,289 | | | | | | 3,309 | | | | | | (4,573) | | | | | | (1,264) | | |
| | |
December 31, 2017
|
| | | | |||||||||
| | |
Weaknesses
|
| |
Strengths
|
| | ||||||||
NIS
|
| | | | 21 | | | | | | (21) | | | | ||
USD
|
| | | | (116) | | | | | | 116 | | | | ||
GBP
|
| | | | (19) | | | | | | 19 | | | | ||
UAH
|
| | | | (1) | | | | | | 1 | | | | ||
Total
|
| | | | (115) | | | | | | 115 | | | |
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||
Current assets
|
| | | | 36,147 | | | | | | 40,827 | | |
Current liabilities
|
| | | | 22,819 | | | | | | 13,929 | | |
Working capital
|
| | | | 13,328 | | | | | | 26,898 | | |
| | |
Up to
3 months |
| |
Between 3 and
12 months |
| |
Between 1 and
2 years |
| |
Between 2 and
5 years |
| |
Over 5 years
|
| |||||||||||||||
At December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Trade payables
|
| | | | 8,127 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other accounts payable and accrued expenses
|
| | | | 27 | | | | | | 1,745 | | | | | | — | | | | | | — | | | | | | — | | |
Lease liabilities
|
| | | | 838 | | | | | | 2,678 | | | | | | 3,625 | | | | | | 9,291 | | | | | | 9,833 | | |
Total
|
| | | | 8,992 | | | | | | 4,423 | | | | | | 3,625 | | | | | | 9,291 | | | | | | 9,833 | | |
|
| | |
Up to
3 months |
| |
Between 3 and
12 months |
| |
Between 1 and
2 years |
| |
Between 2 and
5 years |
| |
Over 5 years
|
| |||||||||||||||
At December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Trade and other payables
|
| | | | 12,677 | | | | | | 839 | | | | | | 413 | | | | | | — | | | | | | — | | |
Total
|
| | | | 12,677 | | | | | | 839 | | | | | | 413 | | | | | | — | | | | | | — | | |
Name
|
| |
Country of
incorporation |
| |
Proportion of
voting rights and ordinary share capital held |
| |
Nature of business
|
| |
Held by
|
|
Gaming Tech Ltd* | | | Israel | | |
50%
|
| | General and administration, marketing support and research & development | | |
SBTech (Global) Limited
|
|
SBTech (Global) Limited — Subsidiary Bulgaria | | | Bulgaria | | |
100%
|
| | Research, development and marketing support | | |
SBTech (Global) Limited
|
|
SBTech Malta Limited | | | Malta | | |
100%
|
| | Holder of Maltase and U.S licenses | | |
SBTech (Global) Limited
|
|
Software Co-Work Cyprus Limited | | | Cyprus | | |
100%
|
| | Holding company | | |
SBTech (Global) Limited
|
|
Sky Star Eight Limited | | | UK | | |
100%
|
| | Business analytics and commercial support | | |
SBTech (Global) Limited
|
|
SBTech Gibraltar Limited | | | Gibraltar | | |
100%
|
| | Commercial support and holder of Gibraltar license | | |
SBTech (Global) Limited
|
|
LLC “Software Co-work” | | | Ukraine | | |
100%
|
| | Research and development | | | Software Co-Work Cyprus Limited | |
SBTech US Inc. | | |
United States
|
| |
100%
|
| | IT and Business support | | | SBTech Malta Limited | |
Lucrative Green Leaf Limited | | | Ireland | | |
100%
|
| | IT & Hosting services | | | SBTech Malta Limited | |
| | |
Gaming Tech Ltd
|
| |||||||||
| | |
December 31, 2019
|
| |
December 31, 2018
|
| ||||||
Current assets
|
| | | | 3,689 | | | | | | 1,891 | | |
Non — current assets
|
| | | | 1,723 | | | | | | 1,581 | | |
Current liabilities
|
| | | | (2,708) | | | | | | (1,981) | | |
Non — current liabilities
|
| | | | (589) | | | | | | (325) | | |
Total assets, net
|
| | | | 2,115 | | | | | | 1,166 | | |
NCI
|
| | | | 1,057 | | | | | | 583 | | |
| | |
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Term
|
| |
Section
|
|
Actual Adjustment Amount | | | 3.4(c) | |
Adverse Recommendation | | | 9.2 | |
Alternative Acquistion | | | 8.5(a) | |
Agreement | | | Preamble | |
Amended and Restated New DK Bylaws | | | 1.1(b) | |
Amended and Restated New DK Charter | | | 1.1(b) | |
Amended Plan | | | 3.3(d)(ii) | |
Appointment Notice | | | 3.5(d)(ii) | |
A&R DK Charter | | | 1.6(b) | |
Assumed DK Stock Plans | | | 2.3(d) | |
Basket Amount | | | 10.2(c)(ii) | |
Burdensome Condition | | | 9.4(c) | |
Cancelled Shares | | | 2.1(b) | |
Cap | | | 10.2(c)(i) | |
Cashed-Out SBT Options | | | 3.3(a) | |
Certificate of Merger | | | 1.2(a) | |
Chosen Courts | | | 14.8 | |
Claim Notice | | | 10.4(a) | |
Claimed Amount | | | 3.6(f) | |
Class A DEAC Shares | | | 7.2(a) | |
Class B DEAC Shares | | | 7.2(a) | |
Closing Date | | | 1.5 | |
Closing Date Lockup Shares | | | 3.6(c) | |
Closing | | | 1.5 | |
Collected Amount Purchase Price | | | 9.11(b) | |
Collected Amount | | | 9.11(b) | |
Continuing Employees | | | 9.10(b) | |
DEAC Audited Financial Statements | | | 7.9(a) | |
DEAC Balance Sheet Date | | | 7.9(a) | |
DEAC Board | | | Recital | |
DEAC Cap Expenses | | | 7.13 | |
DEAC Disclosure Letter | | | Article VII | |
DEAC Earnout Shares | | | 1.8(a) | |
DEAC Financial Statements | | | 7.9(a) | |
DEAC NewCo Common Stock | | | 7.2(c) | |
DEAC NewCo | | | Recital | |
DEAC Record Date | | | 9.1(a) | |
DEAC SEC Reports | | | 7.8 | |
DEAC Shares | | | 7.2(a) | |
DEAC Special Meeting | | | 9.2 | |
DEAC Stockholder Approvals | | | 7.3(a) | |
Term
|
| |
Section
|
|
DEAC Trustee | | | 8.6 | |
DEAC Unaudited Financial Statements | | | 7.9(a) | |
DEAC Warrant | | | 7.2(a) | |
DEAC | | | Preamble | |
DGCL | | | 1.1(a) | |
Disagreement Notice | | | 3.5(d)(i) | |
Disclosure Letters | | | 14.14 | |
DK | | | Preamble | |
DK Audited Financial Statements | | | 6.4(a) | |
DK Balance Sheet Date | | | 6.4(a) | |
DK Board | | | Recital | |
DK Book-Entry Shares | | | 2.2(a) | |
DK Class A Common Stock | | | 1.6(b) | |
DK Class B Common Stock | | | 1.6(b) | |
DK Charter | | | Recital | |
DK Certificates | | | 2.2(a) | |
DK Continuing Employees | | | 9.10(a) | |
DK Disclosure Letter | | | Article VI | |
DK Material Contracts | | | 6.10(a) | |
DK Merger Consideration | | | 2.1(c) | |
DK Merger Effective Time | | | 1.2(a) | |
DK Merger | | | Recital | |
DK Option | | | 2.3 | |
DK/SBT Earnout Group | | | 1.8(a) | |
DK Earnout Shares | | | 1.8(a) | |
DK/SBT Escrowed Earnout Shares | | | 1.8(a) | |
DK Securities | | | 6.2(a) | |
DK Share Exchange Ratio | | | 2.1(c) | |
DK Stockholder Consent | | | 9.16(a) | |
DK Stockholder Notice | | | 9.16(b) | |
Draft SBT Net Debt Statement | | | 3.5(a) | |
Draft SBT Working Capital Statement | | | 3.5(a) | |
Dual Class Structure | | | Recital | |
Earnout Escrow Account | | | 1.8(b)(i) | |
Earnout Escrow Agent | | | 1.8(b)(i) | |
Earnout Escrow Agreement | | | 1.8(b)(i) | |
Equity Investors | | | Recital | |
Escrow Agreement | | | Section 7.14(c) | |
Escrow Fund | | | 3.6(b) | |
Estimated Adjustment Amount | | | 3.4(c) | |
Exchange Agent | | | 2.2(a) | |
Exchange Fund | | | 2.2(a) | |
Exchanged DK Option | | | 2.3(a) | |
Term
|
| |
Section
|
|
Export and Sanctions Regulations | | | 4.22 | |
Final Release Date | | | 3.6(c) | |
Final Released Amount | | | 3.6(f) | |
Former Founder Shares | | | 1.8(a) | |
Indemnified Parties | | | 9.5(a) | |
Indemnified Party | | | 10.4(a) | |
Independent Accountant | | | 1.8(b)(ii) | |
Initial Release Date | | | 3.6(f) | |
Initial Released Amount | | | 3.6(f) | |
Initial SBT Cash Consideration | | | 3.2(a)(G) | |
Interim Option Ruling | | | 13.2(b) | |
Last Comments Date | | | 3.5(g)(ii) | |
Lockup End Date | | | 3.6(c) | |
Lockup Shares | | | 3.6(c) | |
Material Adverse Effect | | | 10.2(a)(i) | |
Material | | | 10.2(a)(i) | |
Merger Sub Common Stock | | | 7.2(b) | |
Merger Sub | | | Preamble | |
NASDAQ Listing Application | | | 9.9 | |
Nevada Articles of Merger | | | 1.1(a) | |
New DK Board of Directors | | | 1.7(a) | |
New DK Indemnified Parties | | | 10.2(a) | |
New DK | | | Recital | |
Nonparty | | | 10.8(b) | |
NRS | | | 1.1(a) | |
NV Merger | | | Recital | |
NV Merger Effective Time | | | 1.1(a) | |
Option Tax Ruling | | | 13.2(b) | |
Outside Date | | | 12.1(b)(i) | |
Owned IT Systems | | | 4.16 | |
Parties | | | Preamble | |
Party | | | Preamble | |
Paying Agent Agreement | | | 3.4(a) | |
Payor | | | 13.6 | |
Per Claim Amount | | | 10.2(c)(iii) | |
Permitted Transfer | | | 3.6(c) | |
Pre-Closing Tax Return | | | 13.4 | |
Promissory Notes | | | 9.15(c) | |
Proxy Statement/Prospectus | | | 9.1(a) | |
Release Date | | | 3.6(f) | |
Release Notice | | | 1.8(b)(ii) | |
Released Amount | | | 3.6(f) | |
Relevant SBT Contractor | | | 4.11(n) | |
Term
|
| |
Section
|
|
Relevant SBT Employee | | | 4.11(a) | |
Resolved | | | 3.6(i) | |
Restraints | | | 11.1(d) | |
Rolled-Over SBT Options | | | 3.3(b) | |
SBT | | | Preamble | |
SBT Audited Financial Statements | | | 4.4(a) | |
SBT Balance Sheet Date | | | 4.4(a) | |
SBT Board | | | Recital | |
SBT Cash Amount | | | 3.1(a)(i) | |
SBT Cash Consideration | | | 3.1(vi) | |
SBT Consideration Shares | | | 3.1(c) | |
SBT Continuing Employees | | | 9.10(a) | |
SBT Disclosure Letter | | | Article IV | |
SBT Employee | | | 4.11(b) | |
SBT Financial Documents | | | 4.19(a) | |
SBT Financial Facilities | | | 4.19(a) | |
SBT Grantees | | | Section 9.10(c) | |
SBT Group Lease Documents | | | 4.17(b) | |
SBT Group Properties | | | 4.17(a) | |
SBT Material Contracts | | | 4.10(a) | |
SBT Option Waiver Letter | | | 3.3(a) | |
SBT Pre-Closing Restructuring | | | 8.7 | |
SBT Policies | | | 4.20 | |
SBT Seller Representative Indemnitees | | | 9.12(f) | |
SBT Sellers | | | Preamble | |
SBT Sellers’ Representative | | | 9.12(a) | |
SBT Shares | | | 4.2(a) | |
SBT Unaudited Financial Statements | | | 4.4(c) | |
SBT Warrants Value | | | 9.15(b) | |
Schemes | | | 4.11(b) | |
Second Released Amount | | | 3.6(f) | |
Second Released Date | | | 3.6(f) | |
Seller Controlled Audit | | | 13.5 | |
Subscription Agreement | | | Section 7.14(c) | |
Surviving Company | | | 1.2(b) | |
Third Party Claim Expenses | | | 10.4(b)(iv) | |
Third Party Claim | | | 10.4(b) | |
Third Party Target | | | 7.17 | |
Third Released Amount | | | 3.6(f) | |
Third Released Date | | | 3.6(f) | |
Transaction Proposals | | | 9.2 | |
Transactions | | | Recital | |
Transferor | | | 3.6(c) | |
Term
|
| |
Section
|
|
Trust Account | | | 7.10 | |
Trust Agreement | | | 7.10 | |
U.S. GAAP | | | 6.4(a) | |
UKGC | | | 4.6(c) | |
Unclaimed Amount | | | 3.6(f) | |
104H Trustee | | | 1.8(a) | |
By:
|
Name: |
|
|
Print Name: |
|
|
Number of Subscribed Shares subscribed for:
|
| | | | | | |
| Price Per Subscribed Share: | | | | $ | 10.00 | | |
| Aggregate Purchase Price: | | | | $ | | | |
| DRAFTKINGS INC. | | ||||||
| By: | | | | | |||
| | | | Name: | | | ||
| | | | Title: | | |
| | | | DraftKings Inc. | | ||||||
| | | | By | | | /s/ Jason Robins | | |||
| | | | | | | Name: | | | Jason Robins | |
| | | | | | | Title: | | | Chief Executive Officer | |
| | | | SBTech (Global) Limited | | ||||||
| | | | By | | | /s/ Ella Pinnock | | |||
| | | | | | | Name: | | | Ella Pinnock | |
| | | | | | | Title: | | | Authorized Individual | |
| | | |
SBT Sellers:
Shalom Meckenzie, Randolph John Anderson and J. Gleek Properties Ltd. |
| ||||||
| | | | By | | | /s/ Shalom Meckenzie | | |||
| | | | | | | Name: | | | Shalom Meckenzie, in his capacity as the SBT Sellers’ Representative | |
| | | | | | | Title: | | | SBT Sellers’ Representative | |
| | | | Diamond Eagle Acquisition Corp. | | ||||||
| | | | By | | | /s/ Jeff Sagansky | | |||
| | | | | | | Name: | | | Jeff Sagansky | |
| | | | | | | Title: | | | Chief Executive Officer | |
| | | | DEAC NV Merger Corp. | | ||||||
| | | | By | | | /s/ Eli Baker | | |||
| | | | | | | Name: | | | Eli Baker | |
| | | | | | | Title: | | | Secretary | |
| | | | DEAC Merger Sub Inc. | | ||||||
| | | | By | | | /s/ Eli Baker | | |||
| | | | | | | Name: | | | Eli Baker | |
| | | | | | | Title: | | | Secretary | |
| | | | DEAC NV Merger Corp. | | |||
| | | | By: | | |
/s/ Jeff Sagansky
|
|
| | | | | | | Name: Jeff Sagansky | |
| | | | | | | Title: President and Chairman | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Jeff Sagansky
Jeff Sagansky
|
| |
President and Chairman
(Principal Executive Officer) |
| |
April 8, 2020
|
|
|
/s/ Eli Baker
Eli Baker
|
| |
Secretary and Vice Chairman
(Principal Financial and Accounting Officer) |
| |
April 8, 2020
|
|
Exhibit 10.7
DRAFTKINGS INC.
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of October 21, 2016, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and DRAFTKINGS INC., a Delaware corporation (“Borrower”), and amends and restates in its entirety that certain Loan and Security Agreement by and between Borrower and Bank, as successor in interest by merger with SQUARE 1 BANK, a North Carolina banking corporation, dated as of October 11, 2013 (the “Original Agreement”).
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. The parties hereto wish to amend and restate the terms of the Original Agreement in accordance with the terms hereof and this Agreement sets forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, all capitalized terms shall have the definitions set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning given to the term in the Code.
1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP (except for non-compliance with FAS 123R in monthly reporting). The term “financial statements” shall include the accompanying notes and schedules.
2. LOAN AND TERMS OF PAYMENT.
2.1 Credit Extensions.
(a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof.
(b) Term Loans.
(i) Subject to and upon the terms and conditions of this Agreement, on the Closing Date, or as soon thereafter as all conditions precedent thereto have been met, Bank shall make a term loan to Borrower in a principal amount of $5,000,000, which shall be used to refinance the Existing Indebtedness (the “Initial Term Loan”). Thereafter, subject to and upon the terms and conditions of this Agreement, Bank agrees to make 1 or more term loans to Borrower in an aggregate principal amount not to exceed an additional $15,000,000, which shall be used for general working capital purposes and for capital expenditures (each a “Term Loan” and, together with the Initial Term Loan, the “Term Loans”). Borrower may request Term Loans at any time from the Closing Date through the Availability End Date.
1
(ii) Interest shall accrue from the date of each Term Loan at the rate specified in Section 2.3(a), and prior to the Availability End Date for the applicable Term Loan shall be payable monthly beginning on the last day of the month next following such Term Loan, and continuing on the same day of each month thereafter. Any Term Loans that are outstanding on the Availability End Date shall be payable in 24 equal monthly installments of principal, plus all accrued interest, beginning on January 31, 2018, and continuing on the last day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Loans and any other amounts due under this Agreement shall be immediately due and payable. Term Loans, once repaid, may not be reborrowed. Borrower may prepay any Term Loan without penalty or premium.
(iii) When Borrower desires to obtain a Term Loan, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no later than 3:30 p.m. Eastern time on the day on which the Term Loan is to be made. Such notice shall be substantially in the form of Exhibit C. The notice shall be signed by an Authorized Officer.
2.2 Intentionally Left Blank.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in Section 2.3(b), the Term Loans shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 1.50% above the Prime Rate then in effect; or (B) 5.00%.
(b) Late Fee; Default Rate. If any payment is not made within 15 days after the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default.
(c) Payments. Bank shall charge all interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder.
(d) Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.
2
2.4 Crediting Payments. When no Event of Default has occurred and is continuing, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, Bank shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 5:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.
2.5 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. On or before the Closing Date, a fee equal to $15,000, which shall be nonrefundable;
(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, and, after the Closing Date, all Bank Expenses, as and when they become due.
(c) Success Fee. Upon the earlier of (i) an Acquisition, or (ii) the closing of Borrower’s initial public offering, in each case, an amount equal to (x) $150,000, plus (y) 3% of the highest principal amount of any Term Loans made hereunder in excess of the Initial Term Loan. Notwithstanding the foregoing, the closing of a transaction that Borrower and FanDuel Ltd. are parties to and in which, immediately following the closing of such transaction the current equity holders of Borrower own 50% of the outstanding voting securities of a new entity of which Borrower and FanDuel Ltd. become direct and wholly owned subsidiaries shall not be considered an Acquisition for purposes of this Section 2.5(c). Bank and Borrower both agree that, notwithstanding any provision in Section 2.6 hereof, Borrower’s obligation to pay the success fee described herein shall survive any termination of this Agreement.
2.6 Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Upon indefeasible payment in full in Cash of the Obligations (other than inchoate indemnity obligations) in their entirety, Borrower may terminate this Agreement upon three (3) Business Days written notice to Bank. Following such indefeasible payment in full in Cash of the Obligations (other than inchoate indemnity obligations) in their entirety, and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at Borrower’s sole cost and expense, and upon receipt of a written request from Borrower to do so, release its Liens in the Collateral, and all rights therein shall revert to Borrower.
3
3. CONDITIONS OF LOANS.
3.1 Conditions Precedent to Closing. The agreement of Bank to enter into this Agreement on the Closing Date is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, each of the following items and completed each of the following requirements:
(a) this Agreement, duly executed by Borrower;
(b) an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement;
(c) a financing statement (Form UCC-1);
(d) an amended and restated intellectual property security agreement, duly executed by Borrower;
(e) an amended and restated subordination agreement, duly executed by holders of Subordinated Debt holding not less than 84% of the aggregate principal amount of all Subordinated Debt outstanding;
(f) evidence that the documents evidencing the Subordinated Debt have been amended to reflect that all such Subordinated Debt is specifically subject to the terms of the Subordination Agreement referenced in Section 3.1(e) above and providing that Bank is an intended third party beneficiary thereof;
(g) an amended and restated pledge and security agreement, duly executed by Borrower;
(h) payment of the fees and Bank Expenses then due specified in Section 2.5, which may be debited from any of Borrower’s accounts with Bank;
(i) current SOS Reports indicating that except for Permitted Liens, there are no other security interests or Liens of record in the Collateral;
4
(j) current financial statements, including company prepared consolidated and consolidating balance sheets, income statements, and statements of cash flows for the most recently ended month in accordance with Section 6.2, and such other updated financial information as Bank may reasonably request;
(k) a current Compliance Certificate in accordance with Section 6.2;
(l) a Loan Advance Request Form delivered to Bank for the Initial Term Loan pursuant to Section 2.1(b) of the Agreement;
(m) evidence satisfactory to Bank that the insurance policies required by Section 6.5 hereof are in full force and effect, together with appropriate evidence showing loss payable and additional insured clauses or endorsements in favor of Bank
(n) a Borrower Information Certificate; and
(o) such other documents or certificates, and completion of such other matters, as Bank may reasonably request.
3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is contingent upon Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions:
(a) timely receipt by Bank of the Loan Advance/Paydown Request Form as provided in Section 2.1;
(b) Borrower shall have transferred substantially all Cash assets into operating accounts held with Bank and otherwise be in compliance with Section 6.6 hereof;
(c) in Bank’s sole discretion, there has not been a Material Adverse Effect; and
(d) the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations (other than inchoate indemnity obligations) and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except for Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral. Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property Collateral. Notwithstanding any termination of this Agreement or of any filings undertaken related to Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations (other than inchoate indemnity obligations) are outstanding.
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4.2 Perfection of Security Interest. Borrower authorizes Bank to file at any time financing statements, continuation statements, and amendments thereto that (i) either specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (ii) contain any other information required by the Code for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable. Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition to the filing of a financing statement. Where Collateral is in possession of a third party bailee, Borrower shall take such steps as Bank reasonably requests for Bank to (i) subject to Section 7.10 below, obtain an acknowledgment, in form and substance satisfactory to Bank, of the bailee that the bailee holds such Collateral for the benefit of Bank, and (ii) obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and substance reasonably satisfactory to Bank. Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper. Borrower from time to time may deposit with Bank specific cash collateral to secure specific Obligations; Borrower authorizes Bank to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the specific Obligations are outstanding. Borrower shall take such other actions as Bank requests to perfect its security interests granted under this Agreement.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each Subsidiary is a corporation duly existing under the laws of the state in which it is organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect.
5.3 Collateral. Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens. Other than movable items of personal property such as laptop computers, all Collateral having an aggregate book value in excess of $100,000, is located solely in the Collateral States, and such other locations as to which Borrower gives Bank prior written notice in accordance with this Agreement. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made. Except as set forth in the Schedule or as permitted by Section 6.6, none of Borrower’s Cash is maintained or invested with a Person other than Bank or Bank’s affiliates.
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5.4 Intellectual Property Collateral. Borrower is the sole owner of the Intellectual Property Collateral, except for licenses granted by Borrower to its customers in the ordinary course of business. To Borrower’s knowledge, each of the Copyrights, Trademarks and Patents that is Intellectual Property Collateral is valid and enforceable, and no part of the Intellectual Property Collateral has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the Intellectual Property Collateral violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Effect.
5.5 Name; Location of Chief Executive Office. Except as disclosed in the Schedule (and except for changes of which Borrower has given notice in accordance with Section 7.2 of this Agreement), Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement. The chief executive office of Borrower is located at the address indicated in Section 10 hereof, except for changes of which Borrower has given notice in accordance with Section 7.2 of this Agreement.
5.6 Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which a likely adverse decision would reasonably be expected to have a Material Adverse Effect.
5.7 No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower’s consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating results of operations for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank.
5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.
5.9 Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could reasonably be expected to have a Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect.
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5.10 Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments.
5.11 Government Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.
5.12 Inbound Licenses. Except as disclosed on the Schedule, Borrower is not a party to, nor is bound by, any material license or other agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property important for the conduct of Borrower’s business, other than this Agreement or the other Loan Documents.
5.13 Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank taken together with all such certificates and written statements furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading in light of the circumstances in which they were made, it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.
6. AFFIRMATIVE COVENANTS.
Borrower covenants that, until payment in full of all outstanding Obligations (other than inchoate indemnity obligations), and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following:
6.1 Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in their respective states of formation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect.
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6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank: (i) as soon as available, but in any event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating balance sheet, income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (ii) as soon as available, but in any event within 180 days after the end of Borrower’s fiscal year, audited (or such other level as is required by the Investment Agreement, if any) consolidated and consolidating financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an opinion, which is either unqualified or qualified only for going concern due to a projected inability to finance future operations, on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; (iii) an annual budget approved by Borrower’s Board of Directors as soon as available but not later than January 31 of each fiscal year of Borrower during the term of this Agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $1,000,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems; (vii) such budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as Bank may reasonably request from time to time; (viii) promptly upon request by Bank (which in any event shall be delivered within 3 Business Days) such updates on regulatory and litigation matters as Bank may reasonably request from time to time; and (ix) within 30 days of the last day of each fiscal quarter, a report signed by Borrower, in form reasonably acceptable to Bank, listing any applications or registrations that Borrower has made or filed in respect of any Patents, Copyrights or Trademarks and the status of any outstanding applications or registrations, as well as any material change in Borrower’s Intellectual Property Collateral, including but not limited to any subsequent ownership right of Borrower in or to any Trademark, Patent or Copyright not specified in Exhibits A, B, and C of any Intellectual Property Security Agreement delivered to Bank by Borrower in connection with this Agreement.
(a) Within 30 days after the last day of each month, Borrower shall deliver to Bank with the monthly financial statements (i) a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit D hereto, (ii) aged listings by invoice date of accounts receivable and accounts payable, if any and (iii) a cohort report, each in form and substance satisfactory to Bank.
(b) As soon as possible and in any event within 3 Business Days after becoming aware of the occurrence or existence of an Event of Default hereunder, Borrower shall deliver to Bank a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto.
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(c) Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the Collateral at Borrower’s expense in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.
Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and Bank shall be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the files were delivered by a Responsible Officer. Borrower shall include a submission date on any certificates and reports to be delivered electronically.
6.3 Inventory and Equipment; Returns. Borrower shall keep all Inventory and Equipment in good and merchantable condition, free from all material defects except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United States and such other locations as to which Borrower gives prior written notice. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist on the Closing Date. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving inventory having a book value of more than $1,000,000.
6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank, on demand, proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary.
6.5 Insurance. Borrower, at its expense, shall (i) keep the Collateral insured against loss or damage, and (ii) maintain liability and other insurance, in each case as ordinarily insured against by other owners in businesses similar to Borrower’s. All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee, and all liability insurance policies shall show Bank as an additional insured and specify that the insurer must give at least twenty (20) days notice to Bank before canceling its policy for any reason (other than non-payment of premium, which shall require ten (10) days notice to Bank). Within 30 days of the Closing Date, Borrower shall cause to be furnished to Bank a copy of its policies or certificate of insurance including any endorsements covering Bank or showing Bank as an additional insured. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments. Proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the claim, provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest, provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations.
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6.6 “Primary Depository”. Borrower shall maintain all its depository and operating accounts with Bank and its primary investment accounts with Bank or Bank’s affiliates. Notwithstanding anything to the contrary in the foregoing or herein, Borrower may also maintain outside operating accounts and/or PayPal account(s), or similar online payment system accounts, for purposes of online vendor payments in the ordinary course of business and with aggregate balances not exceeding $500,000, and in each case, no control agreements shall be required for such accounts. Prior to Borrower maintaining any investment accounts with Bank’s affiliates, Borrower, Bank, and any such affiliate shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance satisfactory to Bank.
6.7 Financial Covenants. Borrower shall at all times maintain the following ratios and covenants:
(a) Minimum Cumulative Revenue. Measured monthly and calculated on a cumulative basis with the measuring period beginning on October 1, 2016, Borrower shall achieve Revenue of at least the amounts shown in the table immediately below for the corresponding reporting periods.
Reporting Period Ending | Minimum Cumulative Revenue |
October 31, 2016 | $17,000,000 |
November 30, 2016 | $37,000,000 |
December 31, 2016 | $55,000,000 |
For subsequent reporting periods, Bank and Borrower hereby agree that, on or before January 31st of each year during the term of this Agreement, Borrower shall provide Bank with a budget for such year, which shall be approved by Borrower’s Board of Directors, and Bank shall use that budget to establish the minimum Revenue amounts (and calculation thereof) for such year, with such amounts being incorporated herein by an amendment, which Borrower hereby agrees to execute.
6.8 Registration of Intellectual Property Rights.
(a) Borrower shall promptly give Bank written notice of any applications or registrations of intellectual property rights filed with the United States Patent and Trademark Office, including the date of such filing and the registration or application numbers, if any.
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(b) Borrower shall (i) give Bank not less than 10 days prior written notice of the filing of any applications or registrations with the United States Copyright Office, including the title of such intellectual property rights to be registered, as such title will appear on such applications or registrations, and the date such applications or registrations will be filed; (ii) prior to the filing of any such applications or registrations, execute such documents as Bank may reasonably request for Bank to maintain its perfection in such intellectual property rights to be registered by Borrower; (iii) upon the request of Bank, either deliver to Bank or file such documents simultaneously with the filing of any such applications or registrations; and (iv) upon filing any such applications or registrations, promptly provide Bank with a copy of such applications or registrations together with any exhibits, evidence of the filing of any documents requested by Bank to be filed for Bank to maintain the perfection and priority of its security interest in such intellectual property rights, and the date of such filing.
(c) Borrower shall execute and deliver such additional instruments and documents from time to time as Bank shall reasonably request to perfect and maintain the perfection and priority of Bank’s security interest in the Intellectual Property Collateral.
(d) Borrower shall (i) protect, defend and maintain the validity and enforceability of the trade secrets, Trademarks, Patents and Copyrights, (ii) use commercially reasonable efforts to detect infringements of the Trademarks, Patents and Copyrights and promptly advise Bank in writing of material infringements detected, and (iii) not allow any material Trademarks, Patents or Copyrights to be abandoned, forfeited or dedicated to the public without the written consent of Bank, which shall not be unreasonably withheld.
(e) Bank shall have the right, but not the obligation, to take, at Borrower’s sole expense, any actions that Borrower is required under this Section 6.8 to take but which Borrower fails to take, after 15 days’ notice to Borrower. Borrower shall reimburse and indemnify Bank for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this Section 6.8.
6.9 Consent of Inbound Licensors. Prior to entering into or becoming bound by any material inbound license or agreement (other than ‘off-the-shelf’ or other non-custom, commercially available licenses), Borrower shall: (i) provide written notice to Bank of the material terms of such license or agreement with a description of its likely impact on Borrower’s business or financial condition; and (ii) in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for Borrower’s interest in such licenses or contract rights to be deemed Collateral and for Bank to have a security interest in it that might otherwise be restricted by the terms of the applicable license or agreement, whether now existing or entered into in the future, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.
6.10 Creation/Acquisition of Subsidiaries. In the event any Borrower or any Subsidiary of any Borrower creates or acquires any Subsidiary, Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such “New Subsidiary” (defined as a Subsidiary formed after the date hereof during the term of this Agreement): (i) to cause such New Subsidiary to become either a co-Borrower hereunder or a secured guarantor with respect to the Obligations, in each case, if such New Subsidiary is organized under the laws of the United States; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is organized under the laws of the United States, and 65% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is not organized under the laws of the United States.
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6.11 Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement.
6.12 Amended and Restated Subordination Agreement. No later than 30 days after the Closing Date, Borrower shall deliver to Bank an Amended and Restated Subordination Agreement duly executed by all holders of Subordinated Debt.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall be available and until the outstanding Obligations (other than inchoate indemnity obligations) are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Bank’s prior written consent, which shall not be unreasonably withheld:
7.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another financial institution (other than in accordance with Section 6.6 of this Agreement) other than Permitted Transfers and Permitted Investments.
7.2 Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer or chief financial officer without delivering written notification to Bank within 10 days; fail to appoint interim replacement or fill a vacancy in the position of CEO or CFO (or have someone who assumes, or a group of individuals who collectively assume, similar responsibilities to that of a CEO or CFO) for more than 90 consecutive days; suffer a change on its board of directors which results in the failure of at least one partner of The Raine Group or its Affiliates to serve as a voting member (unless such partner is replaced with a partner from a venture capital investor who is appointed to the board of directors in connection with a sale of Borrower’s equity securities with net Cash proceeds received by Borrower therefrom equal to or in excess of $50,000,000), without the prior written consent of Bank which may be withheld in Bank’s sole discretion; suffer a change on its board of directors which results in the failure of at least one partner of Redpoint or GGV Capital or their Affiliates to serve as a voting member (unless such partner is replaced with a partner from a venture capital investor who is appointed to the board of directors in connection with a sale of Borrower’s equity securities with net Cash proceeds received by Borrower therefrom equal to or in excess of $50,000,000), without the prior written consent of Bank, which may be withheld in Bank’s sole discretion; or suffer the resignation of one or more directors from its board of directors in anticipation of Borrower’s insolvency, without the prior written consent of Bank which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; have a Change in Control.
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7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where (a) each of the following conditions is applicable: (i) the consideration paid in connection with such transactions (including assumption of liabilities) does not in the aggregate exceed $1,000,000 during any fiscal year, (ii) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions, (iii) such transactions do not result in a Change in Control, and (iv) Borrower is the surviving entity; or (b) the Obligations are repaid in full concurrently with the closing of any merger or consolidation of Borrower in which Borrower is not the surviving entity; provided, however, that Borrower shall not, without Bank’s prior written consent, enter into any binding contractual arrangement with any Person to attempt to facilitate a merger or acquisition of Borrower; provided however, Borrower may enter into any such agreement without Bank’s prior written consent so long as (i) no Event of Default exists when such agreement is entered into by Borrower, (ii) such agreement does not give such Person the right to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s investors, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, Bank), foreclosure, bankruptcy or similar liquidation, and (iii) Borrower notifies Bank in advance of entering into such an agreement (provided, the failure to give such notification shall not be deemed a material breach of this Agreement).
7.4 Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness to Bank.
7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (i) the licensors of in-licensed property with respect to such property or (ii) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment) that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property.
7.6 Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that Borrower may (i) repurchase the stock of former employees, officers, directors and consultants pursuant to stock repurchase agreements in an aggregate amount not to exceed $1,000,000 in any fiscal year, so long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase;(ii) repurchase the stock of former employees, officers, directors and consultants pursuant to stock repurchase agreements in any amount where the consideration for the repurchase is the cancellation of indebtedness owed by such former employees, officers, directors and consultants to Borrower regardless of whether an Event of Default exists; (iii) convert any of its convertible securities into equity securities pursuant to the terms of such convertible securities and (iv) Borrower’s Subsidiaries may issue dividends to other Subsidiaries or to Borrower as part of tax planning.
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7.7 Investments. Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain or invest any of its investment property with a Person other than Bank or Bank’s Affiliates or permit any Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and substance satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.
7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for (i) transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, and (ii) bona-fide equity financings to existing investors provided there is no Change in Control.
7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the Subordinated Debt without Bank’s prior written consent, except in compliance with the terms of the applicable subordination agreement to which Bank is a party.
7.10 Inventory and Equipment. Store the Inventory or the Equipment of a book value in excess of $1,000,000 with a bailee, warehouseman, collocation facility or similar third party unless the third party has been notified of Bank’s security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Except for Inventory sold in the ordinary course of business and for movable items of personal property having an aggregate book value not in excess of $1,000,000, and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 and such other locations of which Borrower gives Bank prior written notice and as to which Bank is able to take such actions as may be necessary to perfect its security interest or to obtain a bailee’s acknowledgment of Bank’s rights in the Collateral.
7.11 No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.
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7.12 Capitalized Expenditures. Make Capitalized Expenditures in excess of $1,000,000 in the aggregate in any fiscal year of Borrower.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay any of the Obligations when due;
8.2 Covenant Default.
(a) If Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary accounts), 6.7 (financial covenants) or 6.12 (amended and restated subordination agreement) or violates any of the covenants contained in Article 7 of this Agreement; or
(b) If Borrower fails or neglects to perform or observe any other material term, provision, condition, or covenant contained in this Agreement (other than the sections enumerated in Section 8.2(a) above), in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 15 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 15 day period or cannot after diligent attempts by Borrower be cured within such 15 day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.
8.3 Material Adverse Change. If there occurs any circumstance or any circumstances which would reasonably be expected to have a Material Adverse Effect;
8.4 Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);
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8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 30 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);
8.6 Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party with a third party or parties (a) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $1,000,000, (b) in connection with any lease of real property material to the conduct of Borrower’s business, if such default or failure to perform results in the right of another party to terminate such lease, or (c) that would reasonably be expected to have a Material Adverse Effect;
8.7 Judgments. If a final, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $1,000,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or
8.8 Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document.
8.9 Legality of Online Fantasy Sports. If paid online daily fantasy sports becomes illegal, unlawful, or restricted by federal law such that the Borrower is prohibited from offering paid online daily fantasy sports contests to Borrower’s end users.
9. BANK’S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);
(b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;
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(c) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank;
(d) Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;
(e) Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;
(f) Place a “hold” on any account of Borrower maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral;
(g) Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;
(h) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit;
(i) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate. Bank may sell the Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;
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(j) Bank may credit bid and purchase at any public sale;
(k) Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and
(l) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.
Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.
9.2 Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; (g) enter into a short-form intellectual property security agreement consistent with the terms of this Agreement for recording purposes only or modify, in its sole discretion, any intellectual property security agreement entered into between Borrower and Bank without first obtaining Borrower’s approval of or signature to such modification by amending Exhibits A, B, and C, thereof, as appropriate, to include reference to any right, title or interest in any Copyrights, Patents or Trademarks acquired by Borrower after the execution hereof or to delete any reference to any right, title or interest in any Copyrights, Patents or Trademarks in which Borrower no longer has or claims to have any right, title or interest; and (h) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in clauses (g) and (h) above, regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations (other than inchoate indemnity obligations) have been fully repaid and performed and Bank’s obligation to provide advances hereunder is terminated.
9.3 Accounts Collection. At any time after the occurrence and during the continuation of an Event of Default, (i) Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account, and (ii) Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit.
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9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.
9.5 Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower, except for that which results from Bank’s gross negligence or willful misconduct.
9.6 No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations.
9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or otherwise.
9.8 Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid or provided in accordance with Section 6.2 of this Agreement) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below:
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If to Borrower: | DRAFTKINGS INC. | |
125 Summer Street | ||
Boston, MA 02110 | ||
Attn: Tim Dent, Chief Financial Officer | ||
FAX: | (617) 500-9915 |
with a copy to: | COOLEY LLP | |
1299 Pennsylvania Avenue, Suite 700 | ||
Washington, DC 20004-2400 | ||
Attn: Jonathan P. Bagg | ||
FAX: | (202) 842-7899 |
If to Bank: | PACIFIC WESTERN BANK | |
406 Blackwell Street, Suite 240 | ||
Durham, North Carolina 27701 | ||
Attn: Loan Operations Manager | ||
FAX: | (919) 314-3080 |
with a copy to: | PACIFIC WESTERN BANK | |
131 Oliver Street, 2nd Floor | ||
Boston, MA 02110 | ||
Attn: | Ben Pattison | |
FAX: | (781) 547-0848 |
The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of North Carolina, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of North Carolina. All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in the General Court of Justice of North Carolina sitting in Durham County, North Carolina or the United States District Court for the Middle District of North Carolina, except as provided below with respect to arbitration of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury waiver set forth in this Section 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held in Durham County, North Carolina in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules. The arbitrator shall apply North Carolina law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section. The costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.
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12. GENERAL PROVISIONS.
12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder.
12.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents (each, and “Indemnified Party”) against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement (each, a “Claim”); and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorney’s fees and expenses), except for losses, Claims or Bank Expenses caused by Bank’s or any Indemnified Party’s gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
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12.5 Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.
12.7 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.
12.8 Confidentiality. In handling any confidential information, Bank and Borrower and all employees and agents of such party shall exercise the same degree of care that such party exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) in the case of Bank, to the subsidiaries or Affiliates of Bank or Borrower in connection with their present or prospective business relations with Borrower, (ii) in the case of Bank, to prospective transferees or purchasers of any interest in the Credit Extensions, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) in the case of Bank, as may be required in connection with the examination, audit or similar investigation of Bank, and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided such receiving party does not have actual knowledge that such third party is prohibited from disclosing such information.
12.9 Effect of Amendment And Restatement. This Agreement is intended to and does completely amend and restate, without novation, the Original Agreement. All security interests granted by Borrower under the Original Agreement are hereby confirmed and ratified and shall continue to secure all Obligations under this Agreement. Any references to the Original Agreement in any other Loan Document shall be deemed to refer to this Agreement.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
DRAFTKINGS INC. | ||
By: | /s/ Jason Robins | |
Name: | Jason Robins | |
Title: | CEO | |
PACIFIC WESTERN BANK | ||
By: | /s/ Ben Puttison | |
Name: | Ben Puttison | |
Title: | SVP |
EXHIBIT A
DEFINITIONS
“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.
“Acquisition” means (a) any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Borrower, or (b) any reorganization, consolidation, merger or sale of the voting securities of the Borrower or any other transaction where the holders of the Borrower’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.
“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners.
“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank in which this Agreement and the transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the most recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.
“Availability End Date” means December 31, 2017.
“Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses, whether generated in-house or by outside counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.
“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.
“Capitalized Expenditures” means current period unfinanced cash expenditures that are capitalized and amortized over a period of time in accordance with GAAP, including but not limited to capitalized cash expenditures for capital equipment, capitalized manufacturing and labor costs as they relate to inventory, and capitalized cash expenditures for software development.
“Cash” means unrestricted cash and cash equivalents.
“Change in Control” means a transaction (other than a bona fide equity financing or series of financings) in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.
“Chargebacks” means amounts owed by Borrower to credit card processors for disputed transactions.
“Closing Date” means the date of this Agreement.
“Code” means the North Carolina Uniform Commercial Code as amended or supplemented from time to time.
“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral and Intellectual Property Collateral to the extent not described on Exhibit B, except to the extent any such property (i) is non-assignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §25-9-406 and §25-9-408 of the Code), (ii) is property for which the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (iii) constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, or (iv) is property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clause (c) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien.
“Collateral State” means the state or states where the Collateral is located, which is Massachusetts.
“Compliance Certificate” means a compliance certificate, in substantially the form of Exhibit D attached hereto, executed by a Responsible Officer of Borrower.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.
“Credit Extension” means each Term Loan, or any other extension of credit, by Bank to or for the benefit of Borrower hereunder.
“Entry Fees” means amounts paid by customers to enter daily fantasy contests.
“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.
“Event of Default” has the meaning assigned in Article 8.
“Existing Indebtedness” means Obligations existing as of the Closing Date other than certain cash secured credit card services and Letters of Credit.
“GAAP” means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States.
“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations, including but not limited to any sublimit contained herein.
“Initial Term Loan” is defined in Section 2.1(b)(i).
“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
“Intellectual Property Collateral” means all of Borrower’s right, title, and interest in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.
“Inventory” means all present and future inventory in which Borrower has any interest.
“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.
“Investment Agreement” means, collectively, Borrower’s stock purchase and other agreement(s) pursuant to which Borrower most recently issued its preferred stock.
“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank at Borrower’s request.
“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.
“Material Adverse Effect” means a material adverse effect on: (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole; (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents; or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral.
“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.
“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement (other than any warrants issued to Bank), whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise (other than any warrants issued to Bank).
“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
“Payouts” means amounts awarded by Borrower to players from daily fantasy contests.
“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.
“Permitted Indebtedness” means:
(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;
(c) Indebtedness not to exceed $1,000,000 in the aggregate at any time secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness;
(d) Subordinated Debt;
(e) Indebtedness to trade creditors incurred in the ordinary course of business; and
(f) Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.
“Permitted Investments” means:
(a) Investments existing on the Closing Date disclosed in the Schedule;
(b) (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, (iv) Bank’s money market accounts; (v) Investments in regular deposit or checking accounts held with Bank or as otherwise permitted by, and subject to the terms and conditions of, Section 6.6 of this Agreement and (vi) Investments consistent with any investment policy adopted by Borrower’s board of directors;
(c) Investments accepted in connection with Permitted Transfers;
(d) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed $1,000,000 in the aggregate in any fiscal year;
(e) Investments not to exceed $1,000,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;
(f) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;
(g) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subparagraph (i) shall not apply to Investments of Borrower in any Subsidiary;
(h) Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $1,000,000 in the aggregate in any fiscal year; and
(i) Investments permitted under Section 7.3.
“Permitted Liens” means the following:
(a) Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank;
(b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;
(c) Liens not to exceed $1,000,000 in the aggregate at any time (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;
(d) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;
(e) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments);
(f) Liens on the Collateral securing Subordinated Debt;
(g) Subject to Section 6.6 of this Agreement, Liens in favor of other financial institutions arising in connection with Borrower’s deposit accounts held at such institutions to secure standard fees for deposit services charged by, but not financing made available by, such institutions;
(h) Deposits in the ordinary course of business under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; and
(i) Liens of materialmen, mechanics, warehousemen, carriers, artisan's or other similar Liens arising in the ordinary course of Borrower's business or by operation of law, which are not past due or which are being contested in good faith by appropriate proceedings and for which reserves satisfactory to Bank have been established.
“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of:
(a) Inventory in the ordinary course of business;
(b) licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business;
(c) worn-out, surplus or obsolete Equipment;
(d) grants of security interests and other Liens that constitute Permitted Liens; and
(e) other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $150,000 during any fiscal year.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.
“Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “prime rate,” whether or not such announced rate is the lowest rate available from Bank.
“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Vice President of Finance and the Controller of Borrower, as well as any other officer or employee identified as an Authorized Officer in the corporate resolution delivered by Borrower to Bank in connection with this Agreement.
“Revenue” means Entry Fees minus Payouts minus Chargebacks.
“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.
“SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report.
“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank).
“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.
“Term Loan” and “Term Loans” is defined in Section 2.1(b)(i) hereof.
“Term Loan Maturity Date” means December 31, 2019.
“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
DEBTOR: | DRAFTKINGS INC. |
SECURED PARTY: | PACIFIC WESTERN BANK |
EXHIBIT B
COLLATERAL DESCRIPTION ATTACHMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names, and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;
(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the North Carolina Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions.
EXHIBIT C
LOAN ADVANCE/PAYDOWN REQUEST FORM
[Please refer to New Borrower Kit]
EXHIBIT D
COMPLIANCE CERTIFICATE
[Please refer to New Borrower Kit]
Exhibit 10.8
FIRST AMENDMENT AMENDED AND RESTATED TO LOAN AND SECURITY AGREEMENT
This First Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of July 28, 2017, by and between PACIFIC WESTERN BANK (“Bank”) and DRAFTKINGS INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of October 21, 2016 (as amended from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Section 6.7(a) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(a) Minimum Cumulative Revenue. Measured monthly and calculated on a cumulative basis with the measuring period beginning on July 1, 2017, Borrower shall achieve Revenue of at least the amounts shown in the table immediately below for the corresponding reporting periods.
For subsequent reporting periods, Bank and Borrower hereby agree that, on or before January 30th of each year during the term of this Agreement, Borrower shall provide Bank with a budget for such year, which shall be approved by Borrower’s Board of Directors, and Bank shall use that budget to establish the minimum Revenue amounts (and calculation thereof) for such year, in good faith consultation with Borrower, with such amounts being incorporated herein by an amendment, which Borrower hereby agrees to execute. No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure at any time to require strict performance by Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank.”
2. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
3. Borrower represents and warrants that the Representations and Warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
4. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by Borrower;
(b) all reasonable Bank Expenses incurred through the date of this Amendment, which may be debited from any of Borrower's accounts; and
(c) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
5. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
[Balance of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
DRAFTKINGS INC. | ||
By: | /s/ Tim Dent | |
Title: | CFO | |
PACIFIC WESTERN BANK | ||
By: | /s/ Ben Puttison | |
Title: | SVP |
[Signature Page to First Amendment to Amended and Restated Loan & Security Agreement]
Exhibit 10.9
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Second Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of December 28, 2017, by and between PACIFIC WESTERN BANK (“Bank”) and DRAFTKINGS INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of October 21, 2016 (as amended from time to time, including by that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of July 28, 2017, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following defined terms in Exhibit A of the Agreement hereby are added, amended or restated as follows:
“Aggregate Borrowing Limit” means $20,000,000.
“Ancillary Services” means any of the following products or services requested by Borrower and approved by Bank under the Non-Formula Revolving Line, including, without limitation, Automated Clearing House transactions, letters of credit, corporate credit card services, or other treasury management services.
“Ancillary Services Sublimit” means a sublimit for Ancillary Services under the Non-Formula Revolving Line not to exceed $5,000,000.
“Credit Extension” means each Term Loan, each Non-Formula Advance or any other extension of credit, by Bank to or for the benefit of Borrower hereunder.
“Second Amendment Effective Date” means December 28, 2017.
“Non-Formula Advance” or “Non-Formula Advances” means a cash advance or cash advances under the Non-Formula Revolving Line.
“Non-Formula Revolving Line” means a Credit Extension of up to $5,000,000 (inclusive of any amounts outstanding under the Ancillary Services Sublimit).
“Non-Formula Revolving Maturity Date” means December 27, 2018.
2. Section 2.1(b)(i) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(i) Subject to and upon the terms and conditions of this Agreement, on the Closing Date, or as soon thereafter as all conditions precedent thereto have been met, Bank shall make a term loan to Borrower in a principal amount of $5,000,000, which shall be used to refinance the Existing Indebtedness (the “Initial Term Loan”). Thereafter, subject to and upon the terms and conditions of this Agreement, Bank agrees to make 1 or more term loans to Borrower in an aggregate principal amount not to exceed an additional $15,000,000, less any amounts outstanding under the Non-Formula Revolving Line, which shall be used for general working capital purposes and for capital expenditures (each a “Term Loan” and, together with the Initial Term Loan, the “Term Loans”). Borrower may request Term Loans at any time from the Closing Date through the Availability End Date.”
3. New Section 2.1(c) hereby is added to the Agreement in its entirety to read as follows:
“(c) Advances Under Non-Formula Revolving Line.
(i) Amount. Subject to and upon the terms and conditions of this Agreement, including without limitation the Aggregate Borrowing Limit set forth in Section 2.2 hereof, after the Second Amendment Effective Date, Borrower may request, and Bank agrees to make, Non-Formula Advances, in an aggregate outstanding principal amount not to exceed the Non-Formula Revolving Line, which shall be used for Ancillary Services only. Amounts borrowed pursuant to this Section 2.1(c) may be repaid and reborrowed at any time prior to the Non-Formula Revolving Maturity Date, at which time all Non-Formula Advances under this Section 2.1(c) shall be immediately due and payable. Borrowers may prepay any Non-Formula Advances without penalty or premium.
(ii) Form of Request. Whenever Borrowers desire a Non-Formula Advance, Borrower will notify Bank by facsimile transmission, telephone or email no later than 3:30 p.m. Eastern time (2:30 p.m. Eastern time for wire transfers) on the Business Day that the Non-Formula Advance is to be made. Each such notification shall be promptly confirmed by a Loan Advance/Paydown Request Form in substantially the form of Exhibit C. Bank is authorized to make Non-Formula Advances under this Agreement, based upon instructions received from an Authorized Officer, or without instructions if in Bank’s discretion such Non-Formula Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any telephonic or email notice given by a person whom Bank reasonably believes to be an Authorized Officer or a designee thereof, and Borrowers shall indemnify and hold Bank harmless for any damages, loss, costs and expenses suffered by Bank as a result of such reliance.
(iii) Ancillary Services Sublimit. Subject to the availability under the Non-Formula Revolving Line, at any time and from time to time from the date hereof through the Business Day immediately prior to the Non-Formula Revolving Maturity Date, Borrower may request the provision of Ancillary Services from Bank. The aggregate limit of the Ancillary Services shall not exceed the Ancillary Services Sublimit, provided that availability under the Non-Formula Revolving Line shall be reduced by the aggregate limits of (i) any outstanding and undrawn amounts under all Letters of Credit issued hereunder , (ii) corporate credit card services provided to Borrower, (iii) the total amount of any Automated Clearing House processing reserves, and (iv) any other reserves taken by Bank in connection with other treasury management services requested by Borrower and approved by Bank. In addition, Bank may, in its sole discretion, charge as Non-Formula Advances any amounts for which Bank becomes liable to third parties in connection with the provision of the Ancillary Services. The terms and conditions (including repayment and fees) of such Ancillary Services shall be subject to the terms and conditions of the Bank’s standard forms of application and agreement for the applicable Ancillary Services, with any such standard forms of application and agreement to be provided to Borrower by Bank at the time of request of any Ancillary Services, and which Borrower hereby agrees to execute prior to the Bank providing provisions of any such Ancillary Services.
(iv) Collateralization of Obligations Extending Beyond Maturity. If Borrower has not secured to Bank’s satisfaction its obligations with respect to any Ancillary Services by the Non-Formula Revolving Maturity Date, then, effective as of such date, the balance in any deposit accounts held by Bank and the certificates of deposit or time deposit accounts issued by Bank in Borrower’s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates or accounts), shall automatically secure such obligations to the extent of the then continuing or outstanding Ancillary Services. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the applicable Ancillary Services are outstanding or continue.”
4. Section 2.2 of the Agreement hereby is amended and restated in its entirety to read as follows:
“2.2 Aggregate Borrowing Limit; Overadvances. The aggregate amount of outstanding Credit Extensions hereunder shall at no time exceed the Aggregate Borrowing Limit. If the aggregate amount of outstanding Credit Extensions hereunder exceeds the Aggregate Borrowing Limit at any time, Borrower shall immediately pay to Bank, in cash, the amount of such excess. If the aggregate amount of the outstanding Non-Formula Advances (including any amounts outstanding under the Ancillary Services Sublimit) exceeds the Non-Formula Revolving Line at any time, Borrower shall immediately pay to Bank, in cash, the amount of such excess.”
5. Section 2.3(a) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(a) Interest Rate.
(i) Term Loans. Except as set forth in Section 2.3(b), the Term Loans shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 1.50% above the Prime Rate then in effect; or (B) 5.00%.
(ii) Non-Formula Advances. Except as set forth in Section 2.3(b), the Non-Formula Advances shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 1.50% above the Prime Rate then in effect; or (B) 5.00%.”
6. Section 2.3(c) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(c) Payments. Interest under the Non-Formula Revolving Line shall be due and payable on the first calendar day of each month during the term hereof. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts or against the Non-Formula Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations and treated as a Credit Extension, and such interest shall thereafter accrue interest at the rate then applicable hereunder.”
7. Section 9.4 of the Agreement hereby is amended and restated in its entirety to read as follows:
“9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) set up such reserves under the Non-Formula Revolving Line as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.”
8. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
9. Borrower represents and warrants that the Representations and Warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
10. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by Borrower;
(b) all reasonable Bank Expenses incurred through the date of this Amendment, which may be debited from any of Borrower's accounts; and
(c) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
11. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
[Balance of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
DRAFTKINGS INC. | ||
By: | /s/ Tim Dent | |
Name: Tim Dent
Title: CFO |
||
PACIFIC WESTERN BANK | ||
By: | /s/ Mike Breaux | |
Name: Mike Breaux
Title: VP |
[Signature Page to Second Amendment to Amended and Restated Loan & Security Agreement]
Exhibit 10.10
THIRD AMENDMENT
AND JOINDER TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT
This Third Amendment and Joinder to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of July 3, 2018 (the “Third Amendment Effective Date”), by and between PACIFIC WESTERN BANK (“Bank”) and DRAFTKINGS INC. (“Existing Borrower”), CROWN GAMING INC. (“Crown Gaming”) and CROWN DFS INC. (“Crown DFS” and together with Crown Gaming, each a “New Borrower” and collectively “New Borrowers” and together with Existing Borrower, each a “Borrower” and collectively, “Borrowers”).
RECITALS
Existing Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of October 21, 2016 (as amended from time to time, including by that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of July 28, 2017 and that certain Second Amendment to Loan and Security Agreement dated as of December 28, 2017, the “Agreement”).
From and after the Third Amendment Effective Date, New Borrowers, Existing Borrower, and Bank desire to supplement the terms and provisions of the Agreement as provided herein.
Each New Borrower has read and approved the Loan Documents and has asked Bank to agree to allow each such New Borrower to become a party to the Loan Documents in order to facilitate its ability to continue to operate its business by achieving a stronger financial base for itself and its affiliated companies.
Bank desires that each New Borrower execute this Amendment for the purpose of acknowledging that it is and shall be a Borrower under the Agreement and the other Loan Documents.
Bank and Borrowers desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Joinder and Assumption. From and after the Third Amendment Effective Date, each New Borrower hereby absolutely and unconditionally:
(a) (i) joins as and becomes a party to the Agreement as a “Borrower” thereunder, (ii) assumes, as a joint and several obligor thereunder, all of the Obligations, liabilities and indemnities of a “Borrower” under the Agreement and all other Loan Documents, and (iii) covenants and agrees to be bound by and adhere to all of the terms, covenants, waivers, releases, agreements and conditions of or respecting a “Borrower” with respect to the Agreement and the other Loan Documents and all of the representations and warranties contained in the Agreement and the other Loan Documents with respect to such New Borrower; and
(b) collaterally assigns and transfers to Bank, and hereby grants to Bank, a continuing security interest in all of such New Borrower’s now owned and existing and hereafter acquired and arising assets and Collateral, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of all of the Obligations. Each New Borrower hereby authorizes Bank to file at any time Uniform Commercial Code financing statements in such jurisdictions and offices as Bank deems necessary in connection with the perfection of a security interest in all of such New Borrower’s now owned or hereafter arising or acquired assets and property, including, without limitation, accounts receivable, deposit accounts, equipment, general intangibles, inventory, and any and all other personal property of such New Borrower, and all products, substitutions, replacements, and proceeds of such property and assets. Each New Borrower has read the Agreement and affirmatively grants to Bank all rights to such New Borrower’s assets as set forth in said Agreement and the Loan Documents.
(c) From and after the Third Amendment Effective Date, any reference to the term “Borrower” in the Agreement shall also include each New Borrower and shall refer to “a Borrower”, “each Borrower”, “such Borrower” and/or “Borrowers” as applicable to the context thereof. Except as expressly provided herein, the Agreement remains in full force and effect and is hereby ratified and confirmed in all respects.
2. The following defined terms in Exhibit A of the Agreement hereby are added, amended or restated as follows:
“Aggregate Borrowing Limit” means $40,000,000.
“Applicable Outside Bank Balance” means an amount set forth pursuant to the chart below based on Borrowers’ Total Operating Cash:
Total Operating Cash | Total Operating Cash permitted to be held outside Bank |
Greater than $200,000,0000 | Greater of $40,000,000 or 20% of Total Operating Cash |
Less than or equal to $200,000,000 but
greater than $150,000,000 |
$30,000,000 |
Less than or equal to $150,000,000 but
greater than $75,000,000 |
$20,000,000 |
Less than or equal to $75,000,000 but
greater than $25,000,000 |
$10,000,000 |
Less than or equal to $25,000,000 | $2,000,000 |
“Applicable Success Fee Amount” means $550,000; provided however if the outstanding principal amount of the Obligations exceeds $35,000,000 at any time, the Applicable Success Fee Amount shall automatically be increased to $600,000.
“Credit Extension” means, each Non-Formula Advance, Refinancing Advance or any other extension of credit, by Bank to or for the benefit of Borrowers hereunder.
“Liquidity” means (i) Cash plus (ii) Unused Availability.
“Parent” means DRAFTKINGS INC.
“Player Deposits” means cash maintained by a Borrower or Subsidiary and held in trust for a Borrower’s or Subsidiary’s customers.
“Refinancing Advance” or “Refinancing Advances” means a cash advance or cash advances under the Refinancing Revolving Line.
“Refinancing Revolving Line” means a Credit Extension of up to $35,000,000.
“Refinancing Revolving Maturity Date” means June 30, 2019.
“Shares” means (i) sixty-five percent (65%) of the issued and outstanding capital stock, membership units or other securities owned or held of record by a Borrower in any Subsidiary of such Borrower which is not an entity organized under the laws of the United States or a territory thereof, and (ii) one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned or held of record by a Borrower in any Subsidiary of such Borrower which is an entity organized under the laws of the United States or any territory thereof.
“Total Operating Cash” means all unrestricted cash (excluding, for the avoidance of doubt, any Player Deposits) maintained in a Borrower’s account at Bank, or in a Borrower’s account subject to an account control agreement acceptable to Bank, that does not include Player Deposits.
“Third Amendment Effective Date” means July 3, 2018.
“Transition Period” means the period of time from the Third Amendment Effective Date to October 31, 2018.
“Unused Availability” means (i) $35,000,000 minus (ii) the outstanding principal amount of the Refinancing Advances.
3. Subsection (d) of the defined term “Permitted Investments” in Exhibit A of the Agreement hereby is amended and restated as follows:
“(d) Investments of Subsidiaries in or to other Subsidiaries or Borrowers and (ii) Investments by Borrowers in Subsidiaries not to exceed Fifteen Million Dollars ($15,000,000) in the aggregate in any fiscal year (other than Investments by a Borrower in or to another Borrower, which shall not in any way be limited under the terms of this Agreement); provided, however, that Investments by Borrowers in Subsidiaries of Borrowers which are not organized under the laws of the United States or a territory thereof shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate in any fiscal year;”
4. Section 2.1(b) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(b) Intentionally Omitted.”
5. New Section 2.1(d) hereby is added to the Agreement as follows:
“(d) Advances Under Refinancing Revolving Line.
(i) Amount. Subject to and upon the terms and conditions of this Agreement, including without limitation the Aggregate Borrowing Limit set forth in Section 2.2 hereof, (A) on the Third Amendment Effective Date, Bank shall make a Refinancing Advance to Borrowers in aggregate amount equal to $3,750,000.02 which shall refinance all Obligations owing from Parent to Bank with respect to the Term Loan and (ii) after the Third Amendment Effective Date, Parent may request, and Bank agrees to make additional Refinancing Advances provided that the aggregate outstanding principal amount of all Refinancing Advances shall not exceed the Refinancing Revolving Line. Amounts borrowed pursuant to this Section 2.1(d) may be repaid and reborrowed at any time prior to the Refinancing Revolving Maturity Date, at which time all Refinancing Advances under this Section 2.1(d) shall be immediately due and payable. Borrowers may prepay any Refinancing Advances without penalty or premium.
(ii) Form of Request. Whenever Borrowers desire a Refinancing Advance, Parent will notify Bank by facsimile transmission, telephone or email no later than 3:30 p.m. Eastern time (2:30 p.m. Eastern time for wire transfers) on the Business Day that the Refinancing Advance is to be made. Each such notification shall be promptly confirmed by a Loan Advance/Paydown Request Form in substantially the form of Exhibit C. Bank is authorized to make Refinancing Advances under this Agreement, based upon instructions received from an Authorized Officer, or without instructions if in Bank’s discretion such Refinancing Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any telephonic or email notice given by a person whom Bank reasonably believes to be an Authorized Officer or a designee thereof, and each Borrower shall indemnify and hold Bank harmless for any damages, loss, costs and expenses suffered by Bank as a result of such reliance.”
6. Section 2.2 of the Agreement hereby is amended and restated in its entirety to read as follows:
“2.2 Aggregate Borrowing Limit; Overadvances. The aggregate amount of outstanding Credit Extensions hereunder shall at no time exceed the Aggregate Borrowing Limit. If the aggregate amount of outstanding Credit Extensions hereunder exceeds the Aggregate Borrowing Limit at any time, Borrowers shall immediately pay to Bank, in cash, the amount of such excess. If the aggregate amount of the outstanding Non-Formula Advances (including any amounts outstanding under the Ancillary Services Sublimit) exceeds the Non-Formula Revolving Line at any time, Borrowers shall immediately pay to Bank, in cash, the amount of such excess. If the aggregate amount of the outstanding Refinancing Advances exceeds the Refinancing Revolving Line at any time, Borrowers shall immediately pay to Bank, in cash, the amount of such excess”
7. Section 2.3(a) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(a) Interest Rates.
(i) Non-Formula Advances. Except as set forth in Section 2.3(b), the Non-Formula Advances shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 1.50% above the Prime Rate then in effect; or (B) 5.00%.
(ii) Refinancing Advances. Except as set forth in Section 2.3(b), the Refinancing Advances shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 1.00% above the Prime Rate then in effect; or (B) 5.50%.”
8. Section 2.3(c) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(c) Payments. Interest under the Non-Formula Revolving Line and the Refinancing Revolving Line shall be due and payable on the first calendar day of each month during the term hereof. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any Borrower’s deposit accounts or against the Non-Formula Revolving Line or the Refinancing Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations and treated as a Credit Extension, and such interest shall thereafter accrue interest at the rate then applicable hereunder.”
9. Section 2.5(c) of the Agreement hereby is amended and restated in its entirety to read as follows:
“(c) Success Fee. Upon the earlier of (i) an Acquisition, or (ii) the closing of any Borrower’s initial public offering, in each case, an amount equal to the Applicable Success Fee Amount. Bank and Borrowers both agree that, notwithstanding any provision in Section 2.6 hereof, Borrowers’ obligation to pay the success fee described herein shall survive any termination of this Agreement.”
10. New Section 2.5(d) is hereby added to the Agreement as follows:
“(d) Unused Revolving Facility Fee. Payable quarterly in arrears, on the first day of each calendar quarter prior to the Refinancing Revolving Maturity Date, and on the Refinancing Revolving Maturity Date, a fee in an amount equal to 0.25% per annum of the average unused portion of the Refinancing Revolving Line, as determined by Bank. The unused portion of the Refinancing Revolving Line, for purposes of this calculation, shall be calculated on a calendar year basis and shall equal the difference between (i) the Refinancing Revolving Line, and (ii) the average for the period of the daily closing balance of the Refinancing Revolving Line.”
11. New Section 4.3 is hereby added to the Agreement as follows:
“4.3 Pledge of Collateral. Each Borrower hereby pledges, assigns and grants to Bank a security interest in all the Shares, together with all proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for securities declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing, as security for the performance of the Obligations. On the Closing Date, to the extent such Shares are certificated, the certificate or certificates for the Shares will be delivered to Bank, accompanied by an instrument of assignment duly governing the Shares, the relevant Borrower shall cause the books of each entity whose Shares are part of the Collateral and any transfer agent to reflect the pledge of the Shares. Upon the occurrence of an Event of Default hereunder, Bank may effect the transfer of any securities included in the Collateral (including but not limited to the Shares) into the name of Bank and cause new certificates representing such securities to be issued in the name of Bank or its transferee. Unless an Event of Default shall have occurred and be continuing, each Borrower shall be entitled to exercise any voting rights with respect to the Shares and to give consents, waivers and ratifications in respect thereof, provided that no vote shall be cast or consent, waiver or ratification given or action taken which would be inconsistent with any of the terms of this Agreement or which would constitute or create any violation of any of such terms. All such rights to vote and give consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event of Default.”
12. New Section 5.14 is hereby added to the Agreement as follows:
“5.14 Shares. Each Borrower has full power and authority to create a first lien on the Shares and no disability or contractual obligation exists that would prohibit such Borrower from pledging the Shares pursuant to this Agreement. To each Borrower’s knowledge, there are no subscriptions, warrants, rights of first refusal or other restrictions on transfer relative to, or options exercisable with respect to the Shares. The Shares have been and will remain duly authorized and validly issued, and are fully paid and non-assessable. To each Borrower’s knowledge, the Shares are not the subject of any present or threatened suit, action, arbitration, administrative or other proceeding, and such Borrower knows of no reasonable grounds for the institution of any such proceedings.”
13. Section 6.6 of the Agreement hereby is amended and restated in its entirety to read as follows:
6.6 Primary Depository. Each Borrower shall maintain all its depository and operating accounts with Bank (other than accounts containing Player Deposits) and its primary investment accounts with Bank or Bank’s affiliates. Notwithstanding anything to the contrary in the foregoing or herein, (i) Borrowers may maintain accounts outside Bank containing Total Operating Cash with aggregate balances not exceeding the Applicable Outside Bank Balance, (ii) Borrowers may maintain outside PayPal account(s) or similar online payment system accounts, for purposes of online vendor payments in the ordinary course of business and with aggregate balances not exceeding Five Hundred Thousand Dollars ($500,000) in the aggregate and (iii) no later than the last day of the Transition Period, all Player Deposits shall be maintained in accounts outside Bank, and in the case of (ii) and (iii) above, no control agreements shall be required for such accounts. For the avoidance of doubt, each Borrower agrees that no funds from Borrowers’ gaming business shall be maintained in any accounts at Bank at any time. Prior to any Borrower maintaining any investment accounts with Bank’s affiliates, such Borrower, Bank, and any such affiliate shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance satisfactory to Bank.”
14. Section 6.7 of the Agreement hereby is amended and restated in its entirety to read as follows:
“6.7 Financial Covenants. Borrowers shall at all times maintain the following ratios and covenants:
(a) Minimum Cumulative Revenue. Measured monthly and calculated on a cumulative basis with the measuring period beginning on January 1, 2018, Borrowers shall achieve Revenue of at least the amounts shown in the table immediately below for the corresponding reporting periods.
For subsequent reporting periods, Bank and Borrowers hereby agree that, on or before January 30th of each year during the term of this Agreement, Borrowers shall provide Bank with a budget for such year, which shall be approved by Parent’s Board of Directors, and Bank shall use that budget to establish the minimum Revenue amounts (and calculation thereof) for such year, in good faith consultation with Borrowers, with such amounts being incorporated herein by an amendment, which each Borrower hereby agrees to execute. No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure at any time to require strict performance by any Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank.
(b) Minimum Liquidity. Liquidity of not less than $5,000,000, measured on a daily basis.”
15. Section 7.12 of the Agreement hereby is amended and restated in its entirety to read as follows:
“7.12 Capitalized Expenditures. Make Capitalized Expenditures in excess of $20,000,000 in the aggregate during the period of time from April 1, 2018 through the Refinancing Revolving Maturity Date.”
16. Section 8.2 of the Agreement hereby is amended and restated in its entirety to read as follows:
“8.2 Covenant Default.
(a) If any Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary accounts), 6.7(a) (minimum cumulative revenue) or 6.12 (amended and restated subordination agreement) or violates any of the covenants contained in Article 7 of this Agreement; or
(b) If any Borrower fail to perform any obligation under Section 6.7(b) (Minimum Liquidity) and has failed to cure such default within 2 Business Days; or
(c) If any Borrower fails or neglects to perform or observe any other material term, provision, condition, or covenant contained in this Agreement (other than the sections enumerated in Sections 8.2(a) and 8.2(b) above), in any of the Loan Documents, or in any other present or future agreement between any Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 15 days after a Borrower receives notice thereof or any officer of a Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 15 day period or cannot after diligent attempts by Borrowers be cured within such 15 day period, and such default is likely to be cured within a reasonable time, then Borrowers shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.”
17. Section 9.4 of the Agreement hereby is amended and restated in its entirety to read as follows:
“9.4 Bank Expenses. If a Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrowers: (a) make payment of the same or any part thereof; and/or (b) set up such reserves under the Non-Formula Revolving Line or Refinancing Revolving Line as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.”
18. A new Article 13 is hereby added to the Agreement, as follows:
“13. CO-BORROWER PROVISIONS.
13.1 Primary Obligation. This Agreement is a primary and original obligation of each Borrower and shall remain in effect notwithstanding future changes in conditions, including any change of law or any invalidity or irregularity in the creation or acquisition of any Obligations or in the execution or delivery of any agreement between Bank and any Borrower. Each Borrower shall be liable for existing and future Obligations as fully as if all Credit Extensions were advanced to such Borrower. Bank may rely on any certificate or representation made by any Borrower as made on behalf of, and binding on, such Borrower and each other Borrower, including without limitation Loan Advance / Paydown Request Forms, Borrowing Base Certificates and Compliance Certificates.
13.2 Enforcement of Rights. Each Borrower is jointly and severally liable for the Obligations, and Bank may proceed against any Borrower to enforce the Obligations without waiving its right to proceed against any other Borrower.
13.3 Borrowers as Agents. Each Borrower appoints each other Borrower as its agent with all necessary power and authority to give and receive notices, certificates or demands for and on behalf of each Borrower, to act as disbursing agent for receipt of any Credit Extensions on behalf of each Borrower and to apply to Bank on behalf of each Borrower for Credit Extensions, any waivers and any consents. This authorization cannot be revoked, and Bank need not inquire as to each Borrower’s authority to act for or on behalf of a Borrower.
13.4 Subrogation and Similar Rights. Notwithstanding any other provision of this Agreement or any other Loan Document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating such Borrower to the rights of Bank under the Loan Documents) to seek contribution, indemnification, or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by such Borrower with respect to the Obligations in connection with the Loan Documents or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by such Borrower with respect to the Obligations in connection with the Loan Documents or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section 13.4 shall be null and void. If any payment is made to a Borrower in contravention of this Section 13.4, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.
13.5 Waivers of Notice. Except as otherwise provided in this Agreement, each Borrower waives notice of acceptance hereof; notice of the existence, creation or acquisition of any of the Obligations; notice of an Event of Default; notice of the amount of the Obligations outstanding at any time; notice of intent to accelerate; notice of acceleration; notice of any adverse change in the financial condition of any other Borrower or of any other fact that might increase the Borrower’s risk; presentment for payment; demand; protest and notice thereof as to any instrument; default; and all other notices and demands to which the Borrower would otherwise be entitled. Each Borrower waives any defense arising from any defense of any other Borrower, or by reason of the cessation from any cause whatsoever of the liability of any other Borrower. Bank’s failure at any time to require strict performance by any Borrower of any provision of the Loan Documents shall not waive, alter or diminish any right of Bank thereafter to demand strict compliance and performance therewith. Nothing contained herein shall prevent Bank from foreclosing on the Lien of any deed of trust, mortgage or other security instrument, or exercising any rights available thereunder, and the exercise of any such rights shall not constitute a legal or equitable discharge of any Borrower. Each Borrower also waives any defense arising from any act or omission of Bank that changes the scope of the Borrower’s risks hereunder.
13.6 Subrogation Defenses. Each Borrower hereby waives any defense based on impairment or destruction of its subrogation or other rights against any other Borrower and waives all benefits which might otherwise be available to it under any statutory or common law suretyship defenses or marshalling rights, now and hereafter in effect.
13.7 Right to Settle, Release.
(a) The liability of each Borrower hereunder shall not be diminished by (i) any agreement, understanding or representation that any of the Obligations is or was to be guaranteed by another Person or secured by other property, or (ii) any release or unenforceability, whether partial or total, of rights, if any, which Bank may now or hereafter have against any other Person, including another Borrower, or property with respect to any of the Obligations.
(b) Without affecting the liability of any Borrower hereunder, Bank may (i) compromise, settle, renew, extend the time for payment, change the manner or terms of payment, discharge the performance of, decline to enforce, or release all or any of the Obligations with respect to a Borrower, (ii) grant other indulgences to a Borrower in respect of the Obligations, (iii) modify in any manner any documents relating to the Obligations with respect to a Borrower, (iv) release, surrender or exchange any deposits or other property securing the Obligations, whether pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or extend the time for payment, discharge the performance of, decline to enforce, or release all or any obligations of any guarantor, endorser or other Person who is now or may hereafter be liable with respect to any of the Obligations.
13.8 Subordination. All indebtedness of a Borrower now or hereafter arising held by another Borrower is subordinated to the Obligations, and the Borrower holding the indebtedness shall take all actions reasonably requested by Bank to effect, to enforce and to give notice of such subordination.”
19. Exhibit B of the Agreement is hereby replaced with Exhibit B attached hereto.
20. The Schedule is hereby replaced with the Schedule attached hereto.
21. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
22. Each Borrower represents and warrants that the Representations and Warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
23. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by each Borrower;
(b) an officer’s certificate of each Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Amendment;
(c) an Intellectual Property Security Agreement, duly executed by each New Borrower;
(d) the certificate(s) for the Shares, together with Assignment(s) separate from Certificates, duly executed by the pledgor in blank;
(e) a financing statement (Form UCC-1) for each New Borrower;
(f) a Borrower Information Certificate for each Borrower;
(g) account control agreements with respect to any accounts maintained outside Bank (other than accounts described in subsections 6.6(ii) and (iii) of the Agreement);
(h) current SOS Reports indicating that, as to each Borrower, except for Permitted Liens, there are no other security interests or Liens of record in the Collateral;
(i) payment of a facility fee in the amount of $15,000;
(j) all reasonable Bank Expenses incurred through the date of this Amendment (which shall not exceed $25,000 as of the Third Amendment Effective), which may be debited from any Borrower's accounts; and
(k) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
24. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
DRAFTKINGS INC. | ||
By: | /s/ Jason Robins | |
Name: Jason Robins
Title: CEO |
||
CROWN GAMING INC. |
||
By: | /s/ Tim Dent | |
Name: Tim Dent
Title: CFO |
||
CROWN DFS INC. |
||
By: | /s/ Tim Dent | |
Name: Tim Dent
Title: CFO |
||
PACIFIC WESTERN BANK | ||
By: | /s/ Joel Marquis | |
Name: Joel Marquis
Title: VP |
[Signature Page to Third Amendment and Joinder to Amended and Restated Loan & Security Agreement]
DEBTORS: | DRAFTKINGS INC. |
CROWN GAMING INC. | |
CROWN DFS INC. | |
SECURED PARTY: | PACIFIC WESTERN BANK |
EXHIBIT B
COLLATERAL DESCRIPTION ATTACHMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
All personal property of each Borrower (each herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names, and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of each Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;
(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the North Carolina Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions.
Exhibit 10.11
FOURTH AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Fourth Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of December 19, 2018, by and among PACIFIC WESTERN BANK (“Bank”) and DRAFTKINGS INC., CROWN GAMING INC., and CROWN DFS INC. (individually, each a “Borrower” and collectively, “Borrowers”).
RECITALS
Borrowers and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of October 21, 2016 (as amended from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Bank hereby waives any and all of Borrowers’ violations of the Primary Depository covenant, as more particularly described in Section 6.6 of the Agreement, occurring on or before October 31, 2018 for maintaining Total Operating Cash outside Bank in excess of the Applicable Outside Bank Balance.
2. The following defined term in Exhibit A of the Agreement is hereby amended and restated, as follows:
“Non-Formula Revolving Maturity Date” means March 27, 2019.
3. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
4. Each Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
5. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
6. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by each Borrower;
(b) all reasonable Bank Expenses incurred through the date of this Amendment, which may be debited from any Borrower’s accounts; and
(c) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
DRAFTKINGS INC. |
By: /s/ Jason Robins |
Name: Jason Robins Title: CEO |
CROWN GAMING INC. |
By: /s/ Tim Dent |
Name: Tim Dent Title: CFO |
CROWN DFS INC. |
By: /s/ Tim Dent |
Name: Tim Dent Title: CFO |
PACIFIC WESTERN BANK |
By: /s/ Joel Marquis |
Name: Joel Marquis Title: VP |
[Signature Page to Fourth Amendment to Amended and Restated Loan and Security Agreement]
Exhibit 10.12
FIFTH AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Fifth Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of March 28, 2019, by and among PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and DRAFTKINGS INC., CROWN GAMING INC., and CROWN DFS INC. (individually, each a “Borrower” and collectively, “Borrowers”).
RECITALS
Borrowers and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of October 21, 2016 (as amended from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following defined terms in Exhibit A of the Agreement are hereby amended and restated, as follows:
“Non-Formula Revolving Maturity Date” means June 27, 2019.
“Payouts” means amounts awarded by Borrower to (a) players from daily fantasy contests, (b) sportsbook customers, and (c) casino wagerers.
“Revenue” means
(a) the sum of Entry Fees, sportsbook handle revenue, casino wager revenue, new media revenue, and risk management revenue; minus
(b) Payouts, Chargebacks, and amounts paid or allocated with respect to deposit bonuses, loyalty programs and promotions, retention credits, prize credits, and referrals.
2. Section 6.7(a) of the Agreement is hereby amended and restated, as follows:
(a) Minimum Cumulative Revenue. Measured monthly and calculated on a cumulative basis with the measuring period beginning January 1, 2019, Borrowers shall achieve Revenue of at least the amounts shown in the table immediately below for the corresponding reporting periods.
For subsequent reporting periods, Bank and Borrowers hereby agree that, on or before January 30th of each year during the term of this Agreement, Borrowers shall provide Bank with a budget for such year, which shall be approved by Parent’s Board of Directors, and Bank shall use that budget to establish the minimum Revenue amounts (and calculation thereof) for such year, in good faith consultation with Borrowers, with such amounts being incorporated herein by an amendment, which each Borrower hereby agrees to execute. No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure at any time to require strict performance by any Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank.
3. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
4. Each Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
5. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
6. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by each Borrower;
(b) payment of all Bank Expenses, including Bank’s expenses for the documentation of this Amendment and any related documents, and any UCC, good standing, intellectual property search or filing fees, which may be debited from any Borrower’s accounts; and
(c) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
DRAFTKINGS INC. |
By: /s/ Jason Robins |
Name: Jason Robins Title: CEO |
CROWN GAMING INC. |
By: /s/ Tim Dent |
Name: Tim Dent Title: CFO |
CROWN DFS INC. |
By: /s/ Tim Dent |
Name: Tim Dent Title: CFO |
PACIFIC WESTERN BANK |
By: /s/ Joel Marquis |
Name: Joel Marquis Title: VP |
[Signature Page to Fifth Amendment to Amended and Restated Loan and Security Agreement]
Exhibit 10.13
SIXTH AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Sixth Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of August 15, 2019, by and among PACIFIC WESTERN BANK, a California state chartered bank (“Bank”), and DRAFTKINGS INC., CROWN GAMING INC., and CROWN DFS INC. (individually, each a “Borrower” and collectively, “Borrowers”).
RECITALS
Borrowers and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of October 21, 2016 (as amended from time to time, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Bank and Borrowers hereby agree that, effective as of the date of this Amendment, all Refinancing Advances outstanding on the date of this Amendment shall be deemed Non-Formula Advances, and all Ancillary Services issued under the Non-Formula Revolving Line shall be deemed issued under the Ancillary Services Line.
2. Bank hereby waives any and all of Borrowers’ violations of the Primary Depository covenant, as more particularly described in Section 6.6 of the Agreement, occurring on or before the date hereof for maintaining Total Operating Cash outside Bank in excess of the Applicable Outside Bank Balance.
3. Bank hereby waives any and all of Borrowers’ violations of Section 6.2(a)(iii) of the Agreement occurring on or before the date hereof for failing to deliver to Bank the cohort report required thereby. Furthermore, Bank and Borrower hereby agree that, from and after the date of this Amendment, Borrower need not provide a cohort report monthly, as required by Section 6.2(a)(iii), but need only provide a cohort report upon Bank’s reasonable request (which shall be no more frequently than monthly).
4. Bank and Borrowers hereby agree that, notwithstanding anything to the contrary in Section 6.10 of the Agreement, if a Borrower creates or acquires a Subsidiary but does not allow that Subsidiary to hold net assets greater than $1,000,000, then Borrowers need not notify Bank “promptly” after its creation or acquisition. Instead, Borrowers must notify Bank (a) promptly after the date on which such Subsidiary first holds net assets greater than $1,000,000 and (b) in any event, no later than thirty days after the last day of the calendar quarter in which such Subsidiary was created or acquired. In addition, Bank hereby waives any violation of Section 6.10 of the Agreement occurring on or before the date of this Amendment due to Borrowers’ failure to notify Bank of the creation of any Subsidiary. Each of Borrower’s Subsidiaries existing as of June 30, 2019 is identified on Appendix A to this Amendment.
5. Bank hereby (a) waives Borrowers’ violation of Section 6.2(ii) of the Agreement for failing to provide to Bank Borrower’s audited financial statements for its 2018 fiscal year on or before June 29, 2019 and (b) extends the date by which Borrower’s must provide their 2018 audited financial statements to Bank to October 1, 2019.
6. Section 2.1(b) of the Agreement is hereby amended and restated, as follows:
(b) Advances Under Non-Formula Revolving Line.
(i) Amount. Subject to and upon the terms and conditions of this Agreement, including without limitation the Aggregate Borrowing Limit set forth in Section 2.2 hereof, Parent may request Non-Formula Advances in an aggregate outstanding principal amount not to exceed the Non-Formula Revolving Line. Amounts borrowed pursuant to this Section 2.1(b) may be repaid and reborrowed at any time prior to the Non-Formula Revolving Maturity Date, at which time all Non-Formula Advances under this Section 2.1(b) shall be immediately due and payable. Borrowers may prepay any Non-Formula Advances without penalty or premium.
(ii) Form of Request. Whenever Borrowers desire a Non-Formula Advance, Parent will notify Bank (which notice shall be irrevocable) by email no later than 3:30 p.m. Eastern time (2:30 p.m. Eastern time for wire transfers) on the Business Day that the Non-Formula Advance is to be made. Each such notification shall be given by a Loan Advance/Paydown Request Form in substantially the form of Exhibit C. Bank is authorized to make Non-Formula Advances under this Agreement, based upon instructions received from an Authorized Officer, or without instructions if in Bank’s discretion such Non-Formula Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any notice given by a person whom Bank reasonably believes to be an Authorized Officer, and each Borrower shall indemnify and hold Bank harmless for any damages, loss, costs and expenses suffered by Bank as a result of such reliance. Bank will credit the amount of Non-Formula Advances made under this Section 2.1(b) to Parent’s deposit account.
7. Section 2.1(c) of the Agreement is hereby amended and restated, as follows:
(c) Usage of Ancillary Services Under the Ancillary Services Line.
(i) Usage Period. Subject to and upon the terms and conditions of this Agreement, at any time through the Non-Formula Revolving Maturity Date, Borrowers may use Ancillary Services in amounts and upon terms as provided in Section 2.1(c)(ii) below.
(ii) Ancillary Services. Subject to and upon the terms and conditions of this Agreement, Borrowers may request Ancillary Services from Bank. The aggregate limit of the Ancillary Services shall not exceed the Ancillary Services Line. Availability under the Ancillary Services Line shall be reduced by (i) the Letter of Credit Exposure, (ii) the aggregate limits of corporate credit card services provided to a Borrower, (iii) the total amount of any Automated Clearing House processing reserves, (iv) the applicable Foreign Exchange Reserve Percentage, and (v) any other reserves taken by Bank in connection with other treasury management services requested by a Borrower and approved by Bank. In addition, Bank may, in its sole discretion, charge as Non-Formula Advances any amounts for which Bank becomes liable in connection with the provision of Ancillary Services. The terms and conditions (including repayment and fees) of such Ancillary Services shall be subject to the terms and conditions of Bank’s standard forms of application and agreement for the applicable Ancillary Services, with any such standard forms of application and agreement to be provided to Borrowers by Bank at the time of request of any Ancillary Services, and which Borrowers hereby agree to execute prior to Bank providing any such Ancillary Services.
(iii) Collateralization of Obligations Extending Beyond Maturity. Each Borrower shall take such actions as Bank may request to cause any Borrower’s obligations with respect to any Ancillary Services to be secured to Bank’s satisfaction as of the Non-Formula Revolving Maturity Date. If Borrowers have not cash secured their obligations with respect to any Ancillary Services by the Non-Formula Revolving Maturity Date, then, effective as of such date, the balance in any of Borrowers’ deposit accounts held by Bank and the certificates of deposit or time deposit accounts issued by Bank in a Borrower’s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates or accounts) shall automatically secure such obligations to the extent of the then continuing or outstanding Ancillary Services. Borrowers authorize Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by a Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the applicable Ancillary Services are outstanding or continue.
8. Section 2.1(d) of the Agreement is hereby deleted.
9. Section 2.2 of the Agreement is hereby amended and restated, as follows:
2.2 Aggregate Borrowing Limit; Overadvances. The aggregate amount of outstanding Credit Extensions hereunder shall at no time exceed the Aggregate Borrowing Limit. If the aggregate amount of the outstanding Non-Formula Advances exceeds the Non-Formula Revolving Line at any time, Borrowers shall immediately pay to Bank, in cash, the amount of such excess. If the aggregate amount of outstanding Credit Extensions hereunder exceeds the Aggregate Borrowing Limit at any time, Borrowers shall immediately pay to Bank, in cash, the amount of such excess.
10. Section 2.3(a) of the Agreement hereby is amended and restated, as follows:
(a) Interest Rates.
(i) Non-Formula Advances. Except as set forth in Section 2.3(b), the Non-Formula Advances shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of: (A) 1.00% above the Prime Rate then in effect; or (B) 6.50%.
11. Section 2.3(c) of the Agreement is hereby amended and restated, as follows:
(c) Payments. Interest under the Non-Formula Revolving Line shall be due and payable on the first calendar day of each month during the term hereof. Borrowers authorize Bank, at Bank’s option, to charge such interest, all Bank Expenses, all Periodic Payments, and any other amounts due and owing in accordance with the terms of this Agreement against any Borrower’s deposit accounts or against the Non-Formula Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations and treated as a Credit Extension, and such interest shall thereafter accrue interest at the rate then applicable hereunder.
12. Section 2.5(d) of the Agreement is hereby amended and restated, as follows:
(d) Unused Revolving Facility Fee. Payable quarterly in arrears, on the first day of each calendar quarter prior to the Non-Formula Revolving Maturity Date, and on the Non-Formula Revolving Maturity Date, a fee in an amount equal to 0.25% per annum of the unused portion of the Non-Formula Revolving Line, as determined by Bank. The unused portion of the Non-Formula Revolving Line, for purposes of this calculation, shall equal the difference between (i) the Non-Formula Revolving Line, and (ii) the average daily closing balance of outstanding Non-Formula Advances during the applicable period.
13. Section 6.2(v) of the Agreement is hereby amended and restated, as follows:
(v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against a Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrowers or any Subsidiary of $5,000,000 or more;
14. Section 6.6 of the Agreement is hereby amended and restated, as follows:
6.6 Primary Depository. Each Borrower shall maintain all its depository and operating accounts with Bank and its primary investment accounts with Bank or Bank’s affiliates. Notwithstanding anything to the contrary in the foregoing or herein, (i) Borrowers may maintain accounts outside Bank containing Total Operating Cash with aggregate balances up to but not exceeding 20% of all operating account balances, and (ii) all Player Deposits pertaining to Borrowers’ Gaming business shall be maintained in accounts outside Bank, and in the case of (i) and (ii) above, no control agreements shall be required for such accounts. For the avoidance of doubt, each Borrower agrees that no funds from Borrowers’ Gaming business shall be maintained in any accounts at Bank at any time. Prior to any Borrower maintaining any investment accounts with Bank’s affiliates, such Borrower, Bank, and any such affiliate shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance satisfactory to Bank.
15. Section 7.12 of the Agreement is hereby amended and restated, as follows:
7.12 Capitalized Expenditures. Make Capitalized Expenditures in excess of $30,000,000 in the aggregate during any fiscal year of Parent. For the avoidance of doubt, Capitalized Expenditures are net of cash received from the disposition of a capital asset and exclude “expenditures” resulting from a business combination.
16. Section 9.4 of the Agreement is hereby amended and restated, as follows:
9.4 Bank Expenses. If a Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrowers: (a) make payment of the same or any part thereof; and/or (b) set up such reserves under the Non-Formula Revolving Line as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.
17. Article 10 of the Agreement is hereby amended and restated, as follows:
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other reporting required pursuant to Section 6.2 of this Agreement, which shall be sent as directed in the monthly reporting forms provided by Bank) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by electronic mail to Borrowers or to Bank, as the case may be, at its addresses set forth below:
If to Borrowers: | DraftKings Inc. | |
222 Berkeley Street, Floor 5 | ||
Boston, MA 02116 | ||
Attn: Tim Dent, Chief Financial Officer | ||
E-Mail: tdent@draftkings.com | ||
If to Bank: | Pacific Western Bank | |
406 Blackwell Street, Suite 240 | ||
Durham, North Carolina 27701 | ||
Attn: Loan Operations Manager | ||
E-Mail: loannotices@pacwest.com | ||
with a copy to: | Pacific Western Bank | |
131 Oliver Street, 2nd Floor | ||
Boston, MA 02110 | ||
Attn: Joel Marquis | ||
E-Mail: jmarquis@pacwest.com |
18. The following defined terms are hereby added in Exhibit A to the Agreement, as follows:
“FX Contracts” means contracts between a Borrower and Bank for foreign exchange transactions.
“Foreign Exchange Reserve Percentage” means a percentage of reserves for FX Contracts as determined by Bank, in its sole discretion from time to time.
“Gaming” means sportsbook, casino, or other gambling activities. Gaming activity excludes fantasy sports activity.
“Letter of Credit Exposure” means, as of any date of determination, the sum, without duplication, of (i) the aggregate undrawn amount of all outstanding Letters of Credit and any obligations of Bank related to purchased participations or indemnity or reimbursement obligations with respect to Letters of Credit, plus (ii) the aggregate unreimbursed amount of all drawn Letters of Credit until such amount becomes a Non-Formula Advance under the terms of this Agreement.
19. The following defined terms in Exhibit A of the Agreement are hereby amended and restated, as follows:
“Aggregate Borrowing Limit” means $50,000,000.
“Ancillary Services” means any products or services requested by a Borrower and approved by Bank under the Ancillary Services Line, including, without limitation, Automated Clearing House transactions, corporate credit card services, FX Contracts, Letters of Credit, or other treasury management services.
“Ancillary Services Line” means a Credit Extension of up to $6,000,000, to be used exclusively for the provision of Ancillary Services.
“Applicable Success Fee Amount” means $600,000; provided, however, that, if the sum of (a) the outstanding principal amount of Non-Formula Advances plus (b) the aggregate limits of Ancillary Services requested by a Borrower and approved by Bank exceeds $45,000,000 at any time, then the Applicable Success Fee Amount shall automatically increase to $650,000.
“Credit Extension” means each Non-Formula Advance, the Ancillary Services provided under the Ancillary Services Line, or any other extension of credit, by Bank to or for the benefit of a Borrower hereunder.
“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank (or any of its correspondent banks) at a Borrower’s request.
“Non-Formula Revolving Line” means a Credit Extension of up to $45,000,000.
“Non-Formula Revolving Maturity Date” means September 15, 2020.
“Total Operating Cash” means all of Borrowers’ unrestricted cash (excluding, for the avoidance of doubt, any Player Deposits), but excluding (a) cash generated by Borrowers’ Gaming businesses and (b) cash maintained in a segregated account to comply with legal or regulatory requirements applicable to a Borrower due to Borrowers’ Gaming businesses.
“Unused Availability” means (i) $45,000,000 minus (ii) the outstanding principal amount of the Non-Formula Advances.
20. The defined terms “Refinancing Advance”, “Refinancing Advances”, “Refinancing Revolving Line”, “Refinancing Revolving Maturity Date”, and “Transition Period” and their respective definitions in Exhibit A to the Agreement are hereby deleted.
21. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
22. Each Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment, and that after giving effect to this Amendment and the waivers contained herein, no Event of Default has occurred and is continuing.
23. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
24. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by each Borrower;
(b) an officer’s certificate of each Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Amendment;
(c) payment of a $10,000 facility fee, which may be debited from any Borrower’s accounts;
(d) payment of all Bank Expenses, including Bank’s expenses for the documentation of this Amendment and any related documents, and any UCC, good standing, intellectual property search or filing fees, which may be debited from any Borrower’s accounts; and
(e) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
DRAFTKINGS INC. |
By: /s/ Jason Robins |
Name: Jason Robins Title: CEO |
CROWN GAMING INC. |
By: /s/ Paul Liberman |
Name: Paul Liberman Title: President + CEO |
CROWN DFS INC. |
By: /s/ Paul Liberman |
Name: Paul Liberman Title: President + CEO |
PACIFIC WESTERN BANK |
By: /s/ Joel Marquis |
Name: Joel Marquis Title: SVP |
[Signature Page to Sixth Amendment to Amended and Restated Loan and Security Agreement]
APPENDIX A
List of Subsidiaries
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-4, Amendment No. 4, of our report dated March 11, 2020, relating to the consolidated balance sheet of Diamond Eagle Acquisition Corp. as of December 31, 2019, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the period from March 27, 2019 (inception) through December 31, 2019, and to the reference to our Firm under the caption “Experts” in the Registration Statement.
/s/ WithumSmith+Brown, PC | |
New York, New York | |
April 7, 2020 |
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-4, Amendment No. 4, of our report dated March 12, 2020, except for note 1 and 18 which are dated March 26, 2020, relating to the consolidated financial statements of DraftKings Inc., which is contained in that Prospectus. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern and the impact of the novel coronavirus.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ BDO USA, LLP
Boston, Massachusetts
April 8, 2020
Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-4, Amendment No. 4, of our report dated March 12, 2020, except for note 19 which is dated March 26, 2020, relating to the consolidated financial statements of SBTech (Global) Limited LTD., which is contained in that Prospectus. Our report contains an explanatory paragraph regarding the the impact of the novel coronavirus.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ Ziv Haft | |
Ziv Haft Certified Public Accountants (Isr.) BDO Member Firm |
Tel Aviv, Israel
April 8, 2020