As filed with the Securities and Exchange Commission on January 4,
2019
Registration
No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SUPER LEAGUE GAMING, INC.
(Exact name of registrant as specified in its
charter)
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Delaware
(State
or other jurisdiction of
incorporation or organization)
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7374
(Primary
Standard Industrial
Classification
Code Number)
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47-1990734
(I.R.S.
Employer
Identification
Number)
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2906 Colorado Ave.
Santa Monica, California 90404
(855) 248-7079
(Address, including zip code, and telephone number,
including
area code, of registrant's principal executive
offices)
Ann Hand
President and Chief Executive Officer
Super League Gaming, Inc.
2906 Colorado Ave.
Santa Monica, California 90404
(802) 294-2754
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
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Daniel W. Rumsey, Esq.
Jessica R. Sudweeks, Esq.
Disclosure Law Group,
A Professional Corporation
655 West Broadway, Suite 870
San Diego, California 92101
(619) 272-7050
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Jonathan R. Zimmerman, Esq.
Ben A. Stacke, Esq.
Ryan R. Woessner, Esq.
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402
(612) 766-7000
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Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the effective date of this
registration statement.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, as amended, check
the following
box. ☐
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same
offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration number of
the earlier effective registration statement for the same
offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of
"large accelerated filer," "accelerated filer," "smaller reporting
company," and "emerging growth company" in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer ☐
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Smaller
reporting company ☒
Emerging
growth company ☒
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If
an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the
Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title
of Each Class of
Securities
to be Registered
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Proposed
Maximum
Aggregate
Offering
Price
(1)
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Amount of
Registration
Fee (2)
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Common Stock, par
value $0.001 per share (3)
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$25,000,000
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$3,030.00
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(1)
In accordance with Rule 457(o) under the Securities Act of
1933, as amended (the “Securities
Act”), the number of shares being
registered and the proposed maximum offering price per share are
not included in this table.
(2)
Estimated solely
for purposes of computing the amount of the registration fee
pursuant to Rule 457(o) under the Securities Act. Includes the
offering price of additional shares that the underwriters have the
option to purchase to cover over-allotments, if
any.
(3)
Pursuant to
Rule 416 under the Securities Act, the shares registered
hereby also include an indeterminate number of additional shares as
may from time to time become issuable by reason of share splits,
share dividends, recapitalizations or other similar
transactions.
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment that
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration
Statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may
determine.
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The information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities nor does it seek an offer to buy
these securities in any jurisdiction where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED JANUARY 4, 2019
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PRELIMINARY PROSPECTUS
Shares
SUPER LEAGUE GAMING,
INC.
We are offering shares of
our common stock. This is our initial public offering and no public
market currently exists for our common stock. The initial public
offering price of our common stock is expected to be between
$ and
$ per
share. We have applied to list our common stock on the Nasdaq
Capital Market under the symbol
“SLGG.”
We are an “emerging growth company” as the term is used
in the Jumpstart Our Business Startups Act of 2012 and, as such,
have elected to comply with certain reduced public company
reporting requirements for this prospectus and future filings. See
“Prospectus
Summary – Implications of Being an Emerging Growth
Company.”
Investing in our common stock involves
risks. See “Risk
Factors” beginning on
page 9 of this prospectus for a discussion of the risks that you
should consider in connection with an investment in our
securities.
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Initial public
offering price
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$
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$
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Underwriting
discounts and commissions(1)
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$
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$
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Proceeds, before
expenses, to us
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$
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$
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(1)
In addition, we have agreed to issue a warrant to
purchase up
to shares
of our common stock to the underwriters, which equates
to %
of the number of shares of our common stock to be issued and sold
in this offering, and to reimburse the underwriters for certain
expenses. See “Underwriting”
for additional information regarding this warrant and underwriting
compensation generally.
We
have granted the underwriters an option to buy up to an
additional shares
of our common stock to cover over-allotments, if any. The
underwriters may exercise this option at any time during the 30-day
period from the date of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
Delivery of the shares will be made on or about
,
2019, subject to customary closing conditions.
Joint Book-Running Managers
Northland
Capital Markets
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Lake
Street
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Co-Manager
National
Securities Corporation
The date of this prospectus is
,
2019
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F-1
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You should rely only on the information contained in this
prospectus or in any free writing prospectus we or the underwriters
may authorize to be delivered or made available to you. Neither we
or the underwriters have authorized anyone to provide you with
different information. We are offering to sell, and seeking offers
to buy, shares of common stock only in jurisdictions where offers
and sales are permitted. The information in this prospectus is
accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of shares of our
common stock. Our business, financial condition, operating results
and prospects may have changed since that date.
For investors outside of the United States: No action is being
taken in any jurisdiction outside of the United States that would
permit a public offering of the shares of our common stock or
possession or distribution of this prospectus in any such
jurisdiction. Persons outside of the United States who come into
possession of this prospectus must inform themselves about, and
observe any restrictions relating to, the offering of the shares of
common stock and the distribution of this prospectus outside of the
United States.
In this prospectus, unless the context indicates otherwise,
references to “Super
League,”
“SLG,” “we,” the “Company,” “our” and “us” refer to Super League Gaming, Inc., a
Delaware corporation, and references to the
“Board” or the “Board of
Directors” means the
Board of Directors of the Company.
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This summary highlights information contained elsewhere in this
prospectus and does not contain all of the information you should
consider before investing in our common stock. You should read this
entire prospectus carefully, including the section entitled
“Risk Factors” and our financial statements and the
related notes thereto included elsewhere in this prospectus, before
making an investment decision.
We are
a leading amateur esports community and content platform offering a
personalized experience to the large and underserved global
audience of 2.3 billion gamers, as estimated by NewZoo. According to the Electronic Software
Association, the avid gamer, identified as individuals who are
considered the most frequent gamers, sees gameplay as central to
their social life with 55% playing video games to connect with
friends and 46% to spend time with family members. Through our
proprietary, cloud-based technology platform, we connect our
network of gamers, venues and brand partners to enable
local, social and competitive esports that can be uniquely
broadcast through our platform. We offer daily and season-focused
offerings for which amateur competitive gamers establish meaningful
connections with each other while improving their
skills.
As a
first-mover in defining the amateur esports category in 2015, we
believe we are one of the most recognizable brands for amateur
gamers. We have multi-year strategic partnerships with leading game
publishers such as Microsoft Corporation (“Microsoft”) and Riot Games, Inc.
(“Riot Games”)
with titles including Minecraft and League of Legends,
respectively, as well as relationships with Supercell and Epic
Games with respect to Clash Royale and Fortnite, respectively, to
drive use among our member base and
further penetrate our target market. We deliver enhanced gaming
experiences to our members with these titles through our platform,
and we provide our venue and brand partners access to our member
network and platform technology. We believe our members and
the organizations that use our platform are only beginning to
leverage the power of the consumer experience, commercial benefits,
and data analytics our technology enables. Targeting Generation Z
and Millennials, members join through accessible, free-to-play
experiences, allowing us to reach the expansive amateur gaming
market. We intend to convert members into subscribers by offering
two tiers of competitive gameplay engagement: (i) our monthly
subscription for the more casual competitive player, offering
access to exclusive online tournaments and member benefits; and
(ii) our semi-annual season pass for the more competitive player
offering access to our city leagues and advanced amateur esports
offers along with membership rewards.
Our Platform
Our
proprietary cloud-based platform provides amateur gamers a
modernized way to connect, play and view games in real-time. We
believe our platform will become central to the esports ecosystem and allow us to capture a
significant portion of our members’ gameplay hours and
share-of-wallet for greater lifetime value. Our platform
aggregates a diverse audience of gamers across multiple game titles
and provides our members with access to online, in-person and
hybrid competitive experiences and
broadcasts that are accessible to a broad range of ages and
demographics. Through our platform, we have three core components
that enable differentiated and immersive gameplay at scale: (i) our
matchmaking system allows members to create their public-facing
gamer persona and applies distinct criteria and filters around team
size, skill level and geography to intelligently match our members
for competitive gameplay and facilitate rich online and in-person
social connections; (ii) our tournament system supports all major components of tournament
operations and automation including, for example, ticketing, user
management, event management, event operations, Application Program
Interface (“API”) integrations that power direct
connectivity between our platform and the servers of each game
publisher, data services, leaderboards and prize fulfillment; and
(iii) our proprietary, cloud-based visualization and broadcast
system is capable of capturing and live streaming gameplay across
all digital distribution platforms and delivering separate streams
simultaneously to multiple locations and
channels.
The end broadcast result is our customizable Heads-up-Display
(“HUD”), which complements gameplay through
dynamic visualization of player and team statistics, competitive
status updates and contextual content that can also be uniquely
displayed on a hyper-local level with content specific to the
target markets, associated communities and players participating
across multiple venues. In addition, our proprietary SuperLeagueTV
digital network is the first esports media property principally
dedicated to amateur players and teams. Currently, live stream
gameplay and video-on-demand (“VOD”) content is broadcast through
SuperLeagueTV on Twitch and YouTube. We believe
SuperLeagueTV’s digital broadcast distribution is an
essential way to drive viewership and membership interest, along
with new game title expansion and additional online and
in-person experiences through our distributed venue partner
network.
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Our Vision and History
Our
vision is to make Super League Gaming the preeminent brand and
platform for amateur esports. We do this by providing a
proprietary, end-to-end platform that allows our members to
compete, socialize and spectate premium amateur esports
gameplay and enables a wide ecosystem
of partners to bring Super League experiences at scale to gamers
around the world.
After
securing strategic partnerships with the publishers of top-tier
game titles beginning in 2016, we became the first consumer of our
platform technology through the establishment of our city league
consisting of 16 teams based in various U.S. cities built around
Minecraft, League of Legends and, most recently, Clash Royale. In 2017, we further
differentiated our offering by migrating to a cloud-based
technology platform for scale while continuing to build and
establish the Super League Gaming brand. We also developed
intelligent technology that facilitates personalized experiences
and matchmaking for gamers, and audience-targeted gameplay
broadcasting content at scale. We are now positioned to unlock the
platform more extensively to new game titles and a distributed
network of venue operators and gameplay organizers in order to
further develop a self-organizing marketplace for online and
in-person gaming experiences.
Industry Overview - The Esports Ecosystem
The
consumer appetite for esports continues to grow at a rapid pace
with passionate fans across the globe. According to NewZoo, the
overall value of the global gaming
market could reach approximately $137.9 billion by the end of 2018,
representing an estimated year over year increase of 13.3%, or
$16.2 billion from 2017. The consumer appetite for esports
continues to grow at a rapid pace with passionate fans across the
globe. Key trends fueling this growth include the rise of live
streaming, real-time social networking within games, and
multi-generational and lifestyle gaming that integrates several
aspects of an individual gamer’s life with the core game,
including online play, downloadable content, achievements and item
collection.
In particular, the professional esports industry is growing
quickly, evidenced through new leagues, teams and broadcast
distribution channels, and this growth is attracting high-profile
esports investments from brands, media organizations and
traditional sports rights holders. As professional esports player
salaries and the value of broadcast media rights have risen
substantially, there is large unmet demand at the amateur level for
competitions and viewing content, which, for esports fans, is
predominantly consumed through live streaming and over-the-top
(“OTT”) channels. The following data points
illustrate the vast growth opportunity for global
esports:
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Recent reports show
a “$15 billion blue sky revenue opportunity” for
professional esports due to the highly engaged and untapped fanbase
(Merrill Lynch Interactive Report, 2018).
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In 2017, Twitch
live streamed 355 billion minutes of esports, an increase of 22%
year-over-year, and by 2022, esports is on track to reach
approximately 300 million global viewers (up from approximately 167
million global viewers currently), similar to the current audience
size of the National Football League (“NFL”) (Goldman Sachs Esports
Equity Research, 2018).
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Gaming video
content is estimated to be a $4.6 billion market with more viewers
than HBO, Netflix, ESPN and Hulu combined (SuperData Research,
2017).
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Just a few top-tier
game titles currently deliver hundreds of millions of gamers;
estimated monthly active users (“MAU”) for Fortnite, League of
Legends and Minecraft is 125 million, 100 million and 74 million,
respectively (Statista and Microsoft, 2018).
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The average U.S.
gaming household has 1.7 gamers with 70% of parents believing
gaming “has a positive influence on their children’s
lives” (Electronic Software Association, 2018).
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Esports enthusiasts
on average have higher college graduation rates and average
household incomes, with 43% earning greater than $75,000 per year,
relative to traditional sports fans (Mindshare, Esports Fans: What
Marketers Should Know, 2016).
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An average esports
viewer spends up to nine hours per week watching esports-related
content in addition to over eight hours of gameplay per week
(Nielsen Esports Playbook, 2017).
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Our Opportunity
We believe our esports community platform will transform the way
amateur gamers connect, interact, socialize and compete. Our
premium, competitive gameplay experiences and elite amateur
broadcasts, coupled with the expansion of our game title portfolio,
our retail venue partner network and our strategic brand
sponsorships, introduce new gamers into our customer funnel to
drive membership growth and subscription conversion. Esports is
still in its early stages and entering a new phase of growth.
Despite the significant growth potential outlined above, there are
several key challenges facing stakeholders in the esports landscape
for which we can offer solutions:
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Stakeholder
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Challenge
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Super
League’s Solution
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Amateur
Gamers
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As a
highly fragmented, often anonymous community, gamers have limited
ways to find gamers of similar skill-level for heightened
competitive play and new social connections.
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Through
our end-to-end platform, we connect players online and locally for
deeper competition and socialization along with providing a unique
lens on amateur gameplay.
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Game
Publishers
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With
significant capital investment in developing game titles and
increased competition, publishers need to grow and retain their
gamer base to extend the lifecycle and franchise value of their
intellectual property.
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Through
our offers and variety of alternative, premium experiences, we
introduce titles to new audiences while deepening engagement among
existing gamers for greater long-term retention.
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Venue
Operators (including restaurants and retailers)
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To
improve asset utilization and optimize weaker day-parts, venue
operators need to draw new foot-traffic to establishments, improve
overall customer satisfaction and retention.
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Through
our licensable technology, we provide access to our platform and
enable esports experiences that attract a new customer base of both
players and spectators to grow same-store sales.
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Sponsors and
Advertisers
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In a
world of increasing fragmentation of content distribution and
ad-blocking technology, sponsors need to identify channels to reach
gamers, particularly Generation Z and Millennials, with high
quality and non-invasive advertising.
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Through
a range of high-touch experiences and customizable content, we
deliver a highly targeted marketing channel that offers a relevant
path for brands to build affinity with the target
demographic.
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Professional
Esports Teams and Owners
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With
significant investments in esports teams, owners need to rapidly
develop a fanbase to achieve franchise values similar to
traditional sports teams as well as identify the next generation of
professionals.
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Through
amateur youth and young adult leagues, we cultivate the future
professional esports fanbase and provide a feeder system to the
professional level.
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Our Strengths
We
differentiate ourselves from potential competition through the
power of a pure horizontal platform and established partnerships
that enable experiences, community, content and commerce. Our core
strengths include the following:
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Game Publisher Agreements provide access
to existing user bases via strategic partnerships with
some of the largest game publishers. These partnerships draw
subscription interest and provide a line of defense against our
competitors. Our ability to interact with this highly attractive,
engaged user base draws brands and sponsors to us to reach this
otherwise hard-to-reach demographic.
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Proprietary and Curated Content provides
us with a unique perspective to amateur competitive gameplay
currently absent from the esports ecosystem and is highly
complementary and valuable to the needs of large video streaming
providers.
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Patent-Pending Technology
allows
for unique, intelligent content capture enabling us to display the
most relevant gameplay activity in real time and broad
visualization of active gameplay to facilitate maximum scale of
interactive, in-person gaming, broadcast experience, and content
monetization.
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Over Three Years of Brand and Technology
Development provides us a strong, distinctive lead on
followers with no obvious competitors in the holistic community,
league operations and media platform category.
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A Diverse Set of Enterprise and Commercial
Revenue Streams enabled by a pure platform play that
protects us from the risk of online-only offers subject to
commoditization and advertising revenue dependency.
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A Growing Member Base coupled with
highly customized gaming and viewing experiences allows us to
capture a global, highly engaged, yet somewhat elusive community
that we believe will provide many new ways to monetize over
time.
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Creation of Intangible Brand Value in
the quality of our offer, game titles, brand partners, and investor
base that validates our trusted, premium brand and distinctive
positioning to drive value in the fragmented, burgeoning esports
landscape.
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Our Growth Strategy
Our
core strategy is to pursue initiatives that promote the viral
growth of our member base, and in doing so drive subscription,
sponsorships and other new revenue streams utilizing the following
levers:
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Member Growth and Network Effect is
driven
organically through direct marketing, partner and influencer
promotion, and search engine optimization. We believe the most
efficient member acquisition, however, will come through organic
word of mouth and other customer-based
referrals.
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Mutually Beneficial Relationships with Game
Publishers, along with our game-agnostic platform interface,
allow us to access large, built-in customer bases from game titles
amassing access to hundreds of millions of MAU and offering enhanced competitive
gameplay experiences to deepen their connection to the game
titles.
●
Strategic Retail Venue Partnerships
allow us to reach domestic and international scale by leveraging
the infrastructure, operations and marketing efforts of our retail
venue partners to create daily, weekly and monthly in-person
experiences with amateur gamers to drive more membership and
competitive gameplay through our platform.
●
Brand and Media Partnerships,
which
often include commitments to promote our brand events and content
across their social channels outside of our events and platform,
have the potential to extend the utilization of
our platform by leveraging the reach of our
partners’ existing broadcast, social and customer
loyalty programs which, in turn, can extend our audience
reach and potentially drive more gamers and viewers to
our amateur esports gaming content and technology
platform.
●
International Expansion, as we continue
to prove the model domestically, will enable us to access the massive global scale of
gamers worldwide and unlock greater brand partnership and media
rights revenue opportunities through global audience
development.
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Selected Risks Related to our Business
Our
business is subject to numerous risks, including risks that may
prevent us from achieving our business objectives or may adversely
affect our business, financial condition, results of operations,
cash flows and prospects, that you should consider before making an
investment decision. Some of the more significant risks and
uncertainties relating to an investment in our company are listed
below. These risks are more fully described in the
“Risk Factors”
section of this prospectus immediately following this prospectus
summary:
●
overall strength
and stability of general economic conditions, and of the esports
industry, both in the United States and globally;
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changes in consumer
demand for, and acceptance of, the game titles that we license for
our tournaments and activities, as well as online multiplayer
competitive amateur gaming in general;
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changes in the
competitive environment, including new entrants in the market for
online amateur competitive gaming, tournaments and competitions
that compete with our own;
●
competition
from new entrants in the amateur esports space, and if we are
unable to compete effectively, we may not be able to achieve or
maintain significant market penetration or improve our results of
operations;
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our ability to
generate consistent revenue;
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our ability to
effectively execute our business plan;
●
changes in the
licensing fees charged by the publishers of the most popular online
video games;
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changes in laws or
regulations governing our business and operations;
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our ability to
maintain adequate liquidity and financing sources and an
appropriate level of debt on terms favorable to us;
●
our ability to
effectively market our amateur city leagues, tournaments and
competitions;
●
our ability to
obtain and protect our existing intellectual property protections,
including patents, trademarks and copyrights;
●
our ability to
obtain and enter into new licensing agreements with game publishers
and owners;
●
our ability to list
our shares on the Nasdaq Capital Market or any other national
exchange and maintain such listing; and
●
other risks
described from time to time in periodic and current reports that we
file with the Securities and Exchange Commission (the
“SEC”).
Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business
operations. You should be able to bear a complete loss of your
investment.
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Implications of Being an Emerging Growth Company
As a
company with less than $1.07 billion in revenue during our last
fiscal year, we qualify as an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act of 2012 (the
“JOBS Act”). An
emerging growth company may take advantage of specified reduced
reporting and other burdens that are otherwise applicable generally
to public companies. These provisions include:
●
A requirement to
have only two years of audited financial statements and only two
years of related Management’s Discussion and Analysis of
Financial Condition and Results of Operations;
●
An exemption from
the auditor attestation requirement on the effectiveness of our
internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley
Act”);
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An extended
transition period for complying with new or revised accounting
standards;
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Reduced disclosure
about our executive compensation arrangements; and
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No non-binding
advisory votes on executive compensation or golden parachute
arrangements.
We may take
advantage of these provisions from the JOBS Act until the end of
the fiscal year in which the fifth anniversary of this offering
occurs, or such earlier time when we no longer qualify as an
emerging growth company. We would cease to be an emerging growth
company on the earlier of (i) the last day of the fiscal year (a)
in which we have more than $1.07 billion in annual revenue or (b)
in which we have more than $700 million in market value of our
capital stock held by non-affiliates, or (ii) the date on which we
issue more than $1.0 billion of non-convertible debt over a
three-year period. We may choose to take advantage of some but not
all of these reduced burdens under the JOBS Act. We have
irrevocably taken advantage of other reduced reporting requirements
in this prospectus, and we may choose to do so in future filings.
To the extent we do, the information that we provide stockholders
may be different than you might get from other public companies in
which you hold equity interests.
Corporate Information
Super
League Gaming, Inc. was incorporated under the laws of the State of
Delaware on October 1, 2014 as Nth Games, Inc. On July 13, 2015, we
changed our corporate name from Nth Games, Inc. to Super League
Gaming, Inc. Our principal executive offices are located at 2906
Colorado Avenue, Santa Monica, California 90404, and our telephone
number is (855) 248-7079. Our corporate website address is
www.superleague.com. Information
contained in, or accessible through, our website is not a part of
this prospectus, and the inclusion of our website address in this
prospectus is an inactive textual reference
only.
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The Offering
The following summary is provided solely for your convenience and
is not intended to be complete. You should read the full text and
more specific details contained elsewhere in this
prospectus.
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Issuer
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Super
League Gaming, Inc.
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Common
stock offered by us
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shares.
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Over-allotment
option
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The
underwriters have an option for a period of 30 days from the date
of this prospectus to purchase up to additional shares of our
common stock to cover over-allotments, if any.
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Common
stock to be outstanding after this offering
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shares,
or
shares
if the underwriters exercise their option to purchase additional
shares in full.
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Use of
proceeds
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We estimate that
the net proceeds from this offering, after deducting underwriting
discounts and commissions and estimated offering expenses payable
by us, will be approximately $
million, or approximately
$
million if the underwriters exercise their option to purchase
additional shares from us in full, assuming an initial public
offering price of $ per share,
which is the midpoint of the price range set forth on the cover
page of this prospectus. We intend to use the net proceeds of this
offering for working capital and general corporate purposes,
including sales and marketing activities, product development and
capital expenditures. See “Use of Proceeds” for a more
complete description of the intended use of proceeds from this
offering.
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Risk
factors
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You
should read the “Risk
Factors” section of this prospectus and the other
information in this prospectus for a discussion of factors to
consider carefully before deciding to invest in shares of our
common stock.
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Proposed
listing
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We
have applied to have our common stock listed on the Nasdaq Capital
Market in connection with this offering. No assurance can be given
that such listing will be approved.
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Proposed Nasdaq
Capital Market symbol
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“SLGG”
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The number of shares of our common stock to be outstanding after
this offering is based on 13,830,489
shares of our common stock outstanding
as of January 1, 2019, and
excludes:
●
7,168,616 shares of common stock issuable upon exercise of warrants
to purchase our common stock, of which 3,626,717 warrants (subject
to adjustment as described below) are callable at the election of
the Company, at any time following the completion of this
offering;
●
4,583,320
shares of common stock issuable upon exercise of options held and
814,180 shares of common stock reserved for issuance pursuant to
our 2014 Plan (as defined herein); and
●
shares
of common stock issuable upon the exercise of the warrant to be issued to the underwriters, which
equates to %
of the number of shares of our common stock to be issued and sold
in this offering.
Except as otherwise indicated, all information in this prospectus
assumes the following:
●
automatic
conversion of our outstanding 9.00% secured convertible promissory
notes issued between May 2018 and August 2018
into shares of
our common stock;
●
a
one-for- reverse
stock split of our common stock to be effected prior to the
effectiveness of the registration statement of which this
prospectus is a part; and
●
no
exercise by the underwriters of their option to purchase up
to
additional shares of common stock from us in this offering to cover
over-allotments, if any.
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The following tables set forth a summary of our historical
financial data as of, and for the periods ended on, the dates
indicated. We have derived the statements of operations data for
the years ended December 31, 2017 and 2016 from our audited
financial statements included elsewhere in this prospectus. The
statements of operations data for the nine-months ended September
30, 2018 and 2017 and the balance sheet data as of September 30,
2018 have been derived from our unaudited financial statements
included elsewhere in this prospectus and have been prepared on the
same basis as the audited financial statements. In the opinion of
our management, the unaudited data reflects all adjustments,
consisting of normal and recurring adjustments, necessary for a
fair presentation of results as of and for these periods. You
should read this data together with our financial statements and
related notes included elsewhere in this prospectus and the
sections in this prospectus entitled “Selected Financial
Data” and
“Management’s Discussion
and Analysis of Financial Condition and Results of
Operations.” Our
historical results for any prior period are not indicative of our
future results, and our results for the nine-months ended September
30, 2018 may not be indicative of our results for the year ending
December 31, 2018.
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Nine
Months Ended
September
30,
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Statements
of Operations Data:
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Sales
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$201,182
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$269,892
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$639,744
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$73,256
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Cost of goods
sold
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1,487,905
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1,460,438
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375,177
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1,145,365
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Gross profit
(loss)
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(1,286,723)
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(1,190,546)
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264,567
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(1,072,109)
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Operating
expenses:
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Selling, marketing
and advertising
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1,155,506
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1,295,016
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995,747
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664,387
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Research and
development
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61,543
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142,380
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12,252
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53,904
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General and
administrative
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12,451,636
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9,737,460
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10,553,739
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9,218,455
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Total operating
expenses
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(13,668,685)
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11,174,856
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11,561,738
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9,936,746
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Income (loss) from
operations
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(14,955,408)
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(12,365,402)
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(11,297,171)
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(11,008,855)
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Other income
(expense), net
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-
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-
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(1,845,666)
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780
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$(14,955,408)
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$(12,365,402)
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$(13,142,837)
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$(11,008,075)
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Net income (loss)
per share attributable to common stockholders(1)
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Basic
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$(1.17)
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$(1.53)
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$(0.95)
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$(0.89)
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Diluted
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$(1.17)
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$(1.53)
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$(0.95)
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(0.89)
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Weighted average
shares outstanding used in computing net income (loss) per share
attributable to common stockholders(1)
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Basic
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12,740,023
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8,066,901
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13,817,886
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12,379,281
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Diluted
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12,740,023
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8,066,901
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13,817,886
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12,379,281
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(1)
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See
Note 1 to each of our audited and unaudited condensed financial
statements, respectively, included elsewhere in this prospectus for
an explanation of the methods used to calculate the historical net
income (loss) per share, basic and diluted, and the number of
shares used in the computation of the per share
amounts.
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Cash
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$5,990,645
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$
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Working
capital
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(2,870,618)
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Total
assets
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7,951,861
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9.00% Convertible
notes payable
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9,251,551
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Additional paid-in
capital
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45,902,128
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Accumulated
deficit
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(47,649,495)
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Total
stockholders’ deficit
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(1,733,512)
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(1)
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Pro forma as adjusted balance sheet data reflects the pro forma
items described immediately above plus our sale
of shares
of common stock in this offering at an assumed initial public
offering price of
$ per
share, the midpoint of the price range set forth on the cover page
of this prospectus, after deducting underwriting discounts and
commissions and estimated offering expenses payable by us. Pro
forma as adjusted balance sheet data is illustrative only and will
change based on the actual initial public offering price and other
terms of this offering determined at pricing. Each $1.00 increase
or decrease in the assumed initial public offering price of
$ per
share, the midpoint of the price range set forth on the cover page
of this prospectus, would increase or decrease pro forma as
adjusted cash, total assets and total stockholders' deficit by
approximately
$ million,
assuming that the number of shares offered by us, as set forth on
the cover page of this prospectus, remains the same, and after
deducting underwriting discounts and commissions and estimated
offering expenses payable by us. We may also increase or decrease
the number of shares we are offering. A 1,000,000 share increase or
decrease in the number of shares offered by us would increase or
decrease pro forma as adjusted cash, total assets and total
stockholders' deficit by approximately
$ million,
assuming that the assumed initial price to public remains the same,
and after deducting underwriting discounts and commissions and
estimated offering expenses payable by us. These unaudited pro
forma adjustments are based upon available information and certain
assumptions we believe are reasonable under the
circumstances.
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Investing in our common stock involves a high degree of risk. You
should carefully consider the risks described below, as well as the
other information in this prospectus, including our financial
statements and the related notes thereto and
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” before deciding whether
to invest in our common stock. The occurrence of any of the events
or developments described below could harm our business, financial
condition, operating results, and growth prospects. In such an
event, the market price of our common stock could decline, and you
may lose all or part of your investment. Additional risks and
uncertainties not presently known to us or that we currently deem
immaterial also may impair our business operations.
Risks Related to Our Business and Industry
We have incurred significant losses since our inception and we may
continue to experience losses in the future.
We incurred a net loss of approximately $13.1 million during the
nine months ended September 30, 2018, and net losses of $14.9
million and $12.4 million, during the years ended December 31, 2017
and 2016, respectively. As of September 30, 2018, we had an
accumulated deficit of $47.6 million. The report of our independent
registered public accounting firm to the financial statements for
our fiscal year ended December 31, 2017, included elsewhere in the
prospectus, contains an explanatory paragraph stating that our
recurring losses from operations, accumulated deficit and cash used
in operating activities raise substantial doubt about our ability
to continue as a going concern. We cannot predict if we will
achieve profitability soon or at all. We expect to continue to
expend substantial financial and other resources on, among other
things:
●
investments
to expand and enhance our esports technology platform and
technology infrastructure, make improvements to the scalability,
availability and security of our platform, and develop new
offerings;
●
sales
and marketing, including expanding our customer acquisition and
sales organization and marketing programs, and expanding our
programs directed at increasing our brand awareness among current
and new customers;
●
investments
in bandwidth to support our video streaming
functionality;
●
contract
labor costs and other expenses to host our leagues and
tournaments;
●
costs
to retain and attract gamers and license first tier game titles,
grow our online gamer community and generally expand our business
operations;
●
hiring
additional employees;
●
expansion
of our operations and infrastructure, both domestically and
internationally; and
●
general
administration, including legal, accounting and other expenses
related to being a public company.
We may not generate sufficient revenue to offset such costs to
achieve or sustain profitability in the future. We expect to
continue to invest heavily in our operations, our online and in
person experiences, business development related to game
publishers, advertisers, sponsors and gamer acquisition, to
accelerate as well as maintain our current market position, support
anticipated future growth and to meet our expanded reporting and
compliance obligations as a public company.
We expect operating losses to continue in the near term in order to
carry out our strategic objectives. We consider historical
operating results, capital resources and financial position, in
combination with current projections and estimates, as part of our
plan to fund operations over a reasonable period of
time.
Commencing in February through August 2018, we issued 9.00% secured
convertible promissory notes in the aggregate principal amount of
approximately $13,000,000. The notes (i) accrue simple interest at
the rate of 9.00% per annum, (ii) mature on the earlier of the
closing of an initial public offering (“IPO”) of our common stock on a national
securities exchange or April 30, 2019, and (iii) all outstanding
principal and accrued interest is automatically convertible into
shares of common stock upon the closing of an IPO, as described
elsewhere herein.
We intend to use the proceeds from the issuance of the notes for
business expansion, merger and/or acquisitions, game licensing, and
working capital. No assurance can be given that any future
financing will be available or, if available, that it will be on
terms that are deemed satisfactory.
We believe our current cash, net proceeds from debt issuances and
the amount available from future issuances of common stock,
including shares to be issued as a part of this offering, will be
sufficient to fund our working capital requirements beyond the next
12 months. This belief assumes, among other things, that we will be
able to raise additional equity financing, will continue to be
successful in implementing our business strategy and that there
will be no material adverse developments in the business, liquidity
or capital requirements. If one or more of these factors do not
occur as expected, it could have a material adverse impact on our
activities, including (i) reduction or delay of our business
activities, (ii) forced sales of material assets, (iii) defaults on
our obligations, or (iv) insolvency. Our planned investments may
not result in increased revenue or growth of our business. We
cannot assure you that we will be able to generate revenue
sufficient to offset our expected cost increases and planned
investments in our business and platform. As a result, we may incur
significant losses for the foreseeable future, and may not be able
to achieve and/or sustain profitability. If we fail to achieve and
sustain profitability, then we may not be able to achieve our
business plan, fund our business or continue as a going concern.
The financial statements included in this prospectus do not contain
any adjustments which might be necessary if we were unable to
continue as a going concern.
We are a relatively young company, and we may not be able to
sustain our rapid growth, effectively manage our anticipated future
growth or implement our business strategies.
We have a limited operating history. Although we have experienced
significant growth since our gaming platform for amateur online and
in person gaming experiences was launched, and we established our
amateur city leagues, tournaments and competitions, our historical
growth rate may not be indicative of our future performance due to
our limited operating history and the rapid evolution of our
business model, including a focus on subscription-based gaming. We
may not be able to achieve similar results or accelerate growth at
the same rate as we have historically. As our amateur city leagues,
tournaments and competitions continue to develop, we may adjust our
strategy and business model to adapt. These adjustments may not
achieve expected results and may have a material and adverse impact
on our financial condition and results of operations.
In addition, our rapid growth and expansion have placed, and continue to
place, significant strain on our management and resources. This
level of significant growth may not be sustainable or achievable at
all in the future. We believe that our continued growth will depend
on many factors, including our ability to develop new sources of
revenues, diversify monetization methods including our subscription
offerings, attract and retain competitive gamers, increase
engagement, continue developing innovative technologies,
tournaments and competitions in response to shifting demand in
esports and online gaming, increase brand awareness, and expand
into new markets. We cannot assure you that we will achieve any of
the above, and our failure to do so may materially and adversely
affect our business and results of operations.
We are subject to risks associated with operating in a rapidly
developing industry and a relatively new market.
Many elements of our business are unique, evolving and relatively
unproven. Our business and prospects depend on the continuing
development of live streaming of competitive esports gaming. The
market for esports and amateur online gaming competition is
relatively new and rapidly developing and are subject to
significant challenges. Our business relies upon our ability to
cultivate and grow an active gamer community, and our ability to
successfully monetize such community through tournament fees,
subscriptions for our esports gaming services, and advertising and
sponsorship opportunities. In addition, our continued growth
depends, in part, on our ability to respond to constant changes in
the esports gaming industry, including rapid technological
evolution, continued shifts in gamer trends and demands, frequent
introductions of new games and titles and the constant emergence of
new industry standards and practices. Developing and integrating
new games, titles, content, products, services or infrastructure
could be expensive and time-consuming, and these efforts may not
yield the benefits we expect to achieve at all. We cannot assure
you that we will succeed in any of these aspects or that the
esports gaming industry will continue to grow as rapidly as it has
in the past.
We generate a portion of our revenues from advertising and
sponsorship. If we fail to attract more advertisers and sponsors to
our gaming platform or tournaments or competitions, or if
advertisers or sponsors are less willing to advertise with or
sponsor us, our revenues may be adversely affected.
We generate a growing portion of our revenues from advertising and
sponsorship, which we expect to further develop and expand in the
near future as online viewership of our esports gaming offerings
expand. Our revenues from advertising and sponsorship partly depend
on the continual development of the online advertising industry and
advertisers’ willingness to allocate budgets to online
advertising in the esports gaming industry. In addition, companies
that decide to advertise or promote online may utilize more
established methods or channels, such as more established internet
portals or search engines, over advertising on our gaming platform.
If the online advertising and sponsorship market does not continue
to grow, or if we are unable to capture and retain a sufficient
share of that market, our ability to increase our current level of
advertising and sponsorship revenue and our profitability and
prospects may be materially and adversely affected.
Furthermore, our core and long-term priority of optimizing the
gamer experience and satisfaction may limit our gaming
platform’s ability to generate revenues from advertising and
sponsorship. For example, in order to provide our gamers with an
uninterrupted competitive gaming experience, we do not place
significant amounts of advertising on our streaming interface or
insert pop-up advertisements during streaming. While this
decision could adversely affect our operating results in the
short-term, we believe it enables us to provide a superior gamer
experience on our gaming platform, which will help us expand and
maintain our current base of gamers and enhance our monetization
potential in the long-term. However, this philosophy of putting our
gamers first may also negatively impact our relationships with
advertisers, sponsors or other third parties, and may not result in
the long-term benefits that we expect, in which case the success of
our business and operating results could be harmed.
Our revenue model may not remain effective and we cannot guarantee
that our future monetization strategies will be successfully
implemented or generate sustainable revenues and
profit.
We generate revenues from advertising and sponsorship of our league
tournaments, and through the operation of our live streaming gaming
platform using a revenue model whereby gamers can get free access
to certain live streaming of amateur tournaments, and gamers pay
fees to compete in league competition. We have generated, and
expect to continue to generate, a substantial portion of revenues
using this revenue model in the near term. We are, however,
particularly focused on implementing a subscription model for our
expanding gamer base. Although our business has experienced
significant growth in recent years, there is no guarantee that our
subscription packages will gain significant traction to maximize
our growth rate in the future, as the demand for our offerings may
change, decrease substantially or dissipate, or we may fail to
anticipate and serve gamer demands effectively.
Our marketing and advertising efforts may fail to resonate with
amateur gamers.
Our
amateur city league tournaments and competitions are marketed
through a diverse spectrum of advertising and promotional programs
such as online and mobile advertising, marketing through websites,
event sponsorship and direct communications with our gaming
community including via email, blogs and other electronic means. An
increasing portion of our marketing activity is taking place on
social media platforms that are either outside, or not totally
within, our direct control. Changes to gamer preferences,
marketing regulations, privacy and data protection laws, technology
changes or service disruptions may negatively impact our ability to
reach target gamers. Our ability to market our amateur city league
tournaments and competitions is dependent in part upon the success
of these programs. If the marketing for our amateur city league
tournaments and competitions fails to resonate and expand with the
gamer community, or if advertising rates or other media placement
costs increase, our business and operating results could be
harmed.
We have a unique community culture that is vital to our success.
Our operations may be materially and adversely affected if we fail
to maintain this community culture as we expand in our addressable
gamer communities.
We have cultivated an interactive and vibrant online social gamer
community centered around amateur online and in person gaming. We
ensure a superior gamer experience by continuously improving the
user interface and features of our gaming platform along with
offering a multitude of competitive and recreational gaming
experiences with first tier esports games. We believe that
maintaining and promoting a vibrant community culture is critical
to retaining and expanding our gamer community. We have taken
multiple initiatives to preserve our community culture and values.
Despite our efforts, we may be unable to maintain our community
culture and cease to be the preferred platform for our target
gamers as we expand our gamer footprint, which would be detrimental
to our business operations.
The amateur esports gaming industry is intensely competitive.
Gamers may prefer our competitors’ amateur leagues,
competitions or tournaments over our own.
Competition
in the amateur esports gaming industry generally is intense. Our
competitors range from established leagues and championships owned
directly, as well as leagues franchised by, well known and
capitalized game publishers and developers, interactive
entertainment companies and diversified media companies to emerging
start-ups, and we expect new competitors to continue to emerge
throughout the amateur esports gaming ecosystem. If our competitors
develop and launch competing amateur city leagues, tournaments or
competitions, or develop a more successful amateur online gaming
platform, our revenue, margins, and profitability will
decline.
The amateur esports gaming industry is very “hit”
driven. We may not have access to “hit” games or
titles.
Select
game titles dominate competitive amateur esports and online gaming,
including League of Legends, Minecraft, Fortnite and Overwatch, and
many new games titles are regularly introduced in each major
industry segment (console, mobile and PC free-to-download). Despite
the number of new entrants, only a very few “hit”
titles account for a significant portion of total revenue in each
segment.
The size and engagement level of our online and in
person
gamers are critical to our success and are closely linked to the
quality and popularity of the esports game publishers with which we
have licenses. Esports game publishers on our gaming platform,
including those who have entered into license agreements with us,
may leave us for other gaming platforms or amateur leagues which
may offer better competition, and terms and conditions than we do.
Furthermore, we may lose esports game publishers if we fail to
generate the number of gamers to our amateur tournaments and
competitions expected by such publishers. In addition, if popular
esports game publishers cease to license their games to us, or our
live streams fail to attract gamers, we may experience a decline in
gamer traffic, subscriptions and engagement, which may have a
material and adverse impact on our results of operations and
financial conditions.
Although we have entered into multi-year agreements with the
publishers of League of Legends and Minecraft, if we fail to
license multiple additional “hit” games or any of our
existing licensed esports game
publishers with which we currently have a license decide to breach
the license agreement or choose not to continue with us once the
term of the license agreement expires, the popularity of our
amateur city leagues, tournaments and competitions may decline and
the number of our gamers may decrease, which could materially and
adversely affect our results of operations and financial
condition.
In addition to the esports games we have licensed, we must continue
to attract and retain the most popular esports gaming titles in
order to maintain and increase the popularity of our amateur city
leagues, tournaments and competitions, and ensure the sustainable
growth of our gamer community. We must continue to identify and
enter into license agreements with esports gaming publishers
developing “hit’ games that resonate with our community
on an ongoing basis. We cannot assure you that we can continue to
attract and retain the same level of first-tier esports game
publishers and our ability to do so is critical to our future
success.
We have not entered into definitive license agreements with certain
game publishers that we currently have relationships with, and we
may never do so.
Although
we have relationships with Supercell and Epic Games for experiences
involving Clash Royale and Fortnite, respectively, we currently do
not have definitive license agreements in place with respect to
these relationships. We currently anticipate that we will enter
into license agreements with both parties in the future, however no
assurances can be given as to when we will be able to come to terms
agreeable to both parties, if ever. In the event that we are not
able to come to mutually agreeable terms and enter into definitive
license agreements with each of Supercell and Epic Games, they may
unilaterally choose to discontinue their relationship with the
Company, thereby preventing us from offering experiences on our
platform using Clash Royale or Fortnite, as the case may be. Should
either Supercell or Epic Games choose not to allow us to offer
experiences involving Clash Royale and Fortnite to our users,
the popularity of our amateur city
leagues, tournaments and competitions may decline and the number of
our gamers may decrease, which could materially and adversely
affect our results of operations and financial
condition.
If we fail to keep our existing gamers highly engaged, to acquire
new gamers, to successfully implement a subscription model for our
gaming community, our business, profitability and prospects may be
adversely affected.
Our success depends on our ability to maintain and grow the number
of amateur gamers attending our tournaments and competitions, and
using our gaming platform, and keeping our gamers highly engaged.
Of particular importance is the successful deployment and expansion
of our subscription model to our gaming community for purposes of
creating predictable recurring revenues.
In order to attract, retain and engage amateur gamers and remain
competitive, we must continue to develop and expand our city
leagues, including internationally, produce engaging tournaments
and competitions, successfully license the newest “hit”
esports games and titles, implement new technologies and
strategies, improve features of our gaming platform and stimulate
interactions in our gamer community.
A decline in the number of our amateur gamers in our ecosystem may
adversely affect the engagement level of our gamers, the vibrancy
of our gamer community, or the popularity of our amateur league
play, which may in turn reduce our monetization opportunities, and
have a material and adverse effect on our business, financial
condition and results of operations. If we are unable to attract
and retain, or convert gamers into subscription-based paying
gamers, our revenues may decline and our results of operations and
financial condition may suffer.
We cannot assure you that our online and in person
gaming platform will remain sufficiently popular with amateur
gamers to offset the costs incurred to operate and expand it. It is
vital to our operations that we remain sensitive and responsive to
evolving gamer preferences and offer first-tier esports game
content that attracts our amateur gamers. We must also keep
providing amateur gamers with new features and functions to enable
superior content viewing, and social interaction. Further, we will
need to continue to develop and improve our gaming platform and to
enhance our brand awareness, which may require us to incur
substantial costs and expenses. If such increased costs and
expenses do not effectively translate into an improved gamer
experience and subscription-based, long-term engagement, our
results of operations may be materially and adversely
affected.
The ability to grow our business is dependent in part on the
success and availability of mass media channels developed by third
parties, as well as our ability to develop commercially successful
content, and amateur tournaments and competitions.
The
success of our business is driven in part by the commercial success
and adequate supply of third-party mass media channels for which we
may distribute our content, amateur league tournaments and
competitions, including Twitch, YouTube and ESL.tv. Our success
also depends on our ability to accurately predict which channels
and platforms will be successful with the esports gaming community,
our ability to develop commercially successful content and
distribute via SuperLeagueTV, which is presently available on
Twitch, amateur tournaments and competition for these channels and
gaming platforms and our ability to effectively manage the
transition of our gamers from one generation or demographic to the
next. Additionally, we may enter into certain exclusive licensing
arrangements that affect our ability to deliver or market our
amateur gaming tournaments and competitions on certain channels and
platforms. A channel or platform may not succeed as expected or new
channels or platforms may take market share and gamers away from
platforms for which we have devoted significant resources. If
demand for the channels or platforms for which we are developing
amateur tournaments or competitions is lower than our expectations,
we may be unable to fully recover the investments we have made, and
our financial performance may be harmed. Alternatively, a channel
or platform for which we have not devoted significant resources
could be more successful than we initially anticipated, causing us
to not be able to take advantage of meaningful revenue
opportunities.
Our business is subject to risks generally associated with the
entertainment industry.
Our
business is subject to risks that are generally associated with the
entertainment industry, many of which are beyond our control. These
risks could negatively impact our operating results and include the
popularity, price to play, and timing of release of our esports
licensed games, economic conditions that adversely affect
discretionary consumer spending, changes in gamer demographics, the
availability and popularity of other forms of entertainment, and
critical reviews and public tastes and preferences, which may
change rapidly and cannot necessarily be predicted.
If we fail to maintain and enhance our brand or if we incur
excessive expenses in this effort, our business, results of
operations and prospects may be materially and adversely
affected.
We believe that maintaining and enhancing our brand is of
significant importance to the success of our business. A
well-recognized brand is important to increasing the number of
esports gamers and the level of engagement of our overall gaming
community which is critical in enhancing our attractiveness to
advertisers and sponsors. Since we operate in a highly competitive
market, brand maintenance and enhancement directly affect our
ability to maintain and enhance our market position.
Although we have developed our brand and amateur tournaments and
competitions through word of mouth referrals, key strategic
partners and our esports game publisher licensors, as we expand, we
may conduct various marketing and brand promotion activities using
various methods to continue promoting our brand. We cannot assure
you, however, that these activities will be successful or that we
will be able to achieve the brand promotion effect we
expect.
In addition, any negative publicity in relation to our league
tournaments or competitions, or operations, regardless of its
veracity, could harm our brands and reputation. Negative publicity
or public complaints from gamers may harm our reputation, and if
complaints against us are not addressed to their satisfaction, our
reputation and our market position could be significantly harmed,
which may materially and adversely affect our business, results of
operations and prospects.
Negative gamer perceptions about our brand, gaming platform,
amateur city leagues, tournaments or competitions and/or business
practices may damage our business and increase the costs incurred
in addressing gamer concerns.
Esports
gamer expectations regarding the quality, performance and integrity
of our amateur city league tournaments and competitions are high.
Esports gamers may be critical of our brand, gaming platform,
amateur city leagues, tournaments or competitions and/or business
practices for a wide variety of reasons. These negative gamer
reactions may not be foreseeable or within our control to manage
effectively, including perceptions about gameplay fairness,
negative gamer reactions to game content via social media or other
outlets, components and services, or objections to certain of our
business practices. Negative gamer sentiment about our business
practices also can lead to investigations from regulatory agencies
and consumer groups, as well as litigation, which, regardless of
their outcome, may be costly, damaging to our reputation and harm
our business.
Technology changes rapidly in our
business and if we fail to anticipate or successfully implement new technologies or
adopt new business strategies, technologies or methods, the
quality, timeliness and competitiveness of our amateur city
leagues, tournaments or competition may suffer.
Rapid
technology changes in the esports gaming market require us to
anticipate, sometimes years in advance, which technologies we must
develop, implement and take advantage of in order to be and remain
competitive in the esports gaming market. We have invested, and in
the future may invest, in new business strategies including a
subscription model, technologies, products, or games or first-tier
game titles to continue to persistently engage the amateur gamer
and deliver the best online and in person
gaming experience. Such endeavors may involve significant risks and
uncertainties, and no assurance can be given that the technology we
choose to adopt and the features that we pursue will be successful.
If we do not successfully implement these new technologies, our
reputation may be materially adversely affected and our financial
condition and operating results may be impacted. We also may miss
opportunities to adopt technology, or develop amateur city leagues,
tournaments or competitions that become popular with gamers, which
could adversely affect our financial results. It may take
significant time and resources to shift our focus to such
technologies, putting us at a competitive
disadvantage.
Our
development process usually starts with particular gamer
experiences in mind, and a range of technical development and
feature goals that we hope to be able to achieve. We may not be
able to achieve these goals, or our competitors may be able to
achieve them more quickly and effectively than we can based on
having greater operating capital and personnel resources. If we
cannot achieve our technology goals within the original development
schedule, then we may delay their release until these goals can be
achieved, which may delay or reduce revenue and increase our
development expenses. Alternatively, we may be required to
significantly increase the resources employed in research and
development in an attempt to accelerate our development of new
technologies, either to preserve our launch schedule or to keep up
with our competitors, which would increase our development
expenses.
We may experience security breaches and cyber threats.
We
continually face cyber risks and threats that seek to damage,
disrupt or gain access to our networks and our gaming platform,
supporting infrastructure, intellectual property and other assets.
In addition, we rely on technological infrastructure, including
third party cloud hosting and broadband, provided by third party
business partners to support the in person
and online functionality of our gaming platform. These business
partners are also subject to cyber risks and threats. Such
cyber risks and threats may be difficult to detect. Both our
partners and we have implemented certain systems and processes to
guard against cyber risks and to help protect our data and systems.
However, the techniques that may be used to obtain unauthorized
access or disable, degrade, exploit or sabotage our networks and
gaming platform change frequently and often are not detected. Our
systems and processes, and the systems and processes of our
third-party business partners, may not be adequate. Any failure to
prevent or mitigate security breaches or cyber risks, or respond
adequately to a security breach or cyber risk, could result in
interruptions to our gaming platform, degrade the gamer experience,
cause gamers to lose confidence in our gaming platform and cease
utilizing it, as well as significant legal and financial
exposure. This could harm our business and reputation, disrupt
our relationships with partners and diminish our competitive
position.
Successful
exploitation of our networks and gaming platform can have other
negative effects upon the gamer experience we offer. In particular,
the virtual economies that exist in certain of our licensed game
publishers’ games are subject to abuse, exploitation and
other forms of fraudulent activity that can negatively impact our
business. Virtual economies involve the use of virtual
currency and/or virtual assets that can be used or redeemed by a
player within a particular online game or service.
Our business could be adversely affected if our data privacy and
security practices are not adequate, or perceived as being
inadequate, to prevent data breaches, or by the application of data
privacy and security laws generally.
In the
course of our business, we may collect, process, store and use
gamer and other information, including personally identifiable
information, passwords and credit card information, the latter of
which is subject to PCI-DSS compliance. Although we take measures
to protect this information from unauthorized access, acquisition,
disclosure and misuse, our security controls, policies and
practices may not be able to prevent the improper or unauthorized
access, acquisition or disclosure of such information. The
unauthorized access, acquisition or disclosure of this information,
or a perception that we do not adequately secure this information
could result in legal liability, costly remedial measures,
governmental and regulatory investigations, harm our profitability
and reputation and cause our financial results to be materially
affected. In addition, third party vendors and business partners
receive access to information that we collect. These vendors and
business partners may not prevent data security breaches with
respect to the information we provide them or fully enforce our
policies, contractual obligations and disclosures regarding the
collection, use, storage, transfer and retention of personal data.
A data security breach of one of our vendors or business partners
could cause reputational harm to them and/or negatively impact our
ability to maintain the credibility of our gamer
community.
Data
privacy, data protection, localization, security and
consumer-protection laws are evolving, and the interpretation and
application of these laws in the United States, Europe (including
compliance with the General Data Protection Regulation), and
elsewhere often are uncertain, contradictory and changing. It is
possible that these laws may be interpreted or applied in a manner
that is averse to us or otherwise inconsistent with our practices,
which could result in litigation, regulatory investigations and
potential legal liability or require us to change our practices in
a manner adverse to our business. As a result, our reputation and
brand may be harmed, we could incur substantial costs, and we could
lose both gamers and revenue.
We depend on servers to operate our games with online features and
our proprietary online gaming service. If we were to lose server
functionality for any reason, our business may be negatively
impacted.
Our business relies on the continuous operation of servers, some of
which are owned and operated by third parties. Although we strive
to maintain more than sufficient server capacity, and provide for
active redundancy in the event of limited hardware failure, any
broad-based catastrophic server malfunction, a significant
service-disrupting attack or intrusion by hackers that circumvents
security measures, a failure of disaster recovery service or the
failure of a company on which we are relying for server capacity to
provide that capacity for whatever reason could degrade or
interrupt the functionality of our platform, and could prevent the
operation of our platform for both in-person and online gaming
experiences.
We also rely on networks operated by third parties to support
content on our platform, including networks owned and operated by
game publishers. An extended interruption to any of these services
could adversely affect the use of our platform, which would have a
negative impact on our business.
Further, insufficient server capacity could also negatively impact
our business. Conversely, if we overestimate the amount of server
capacity required by our business, we may incur additional
operating costs.
Our online gaming platform and games offered through our gaming
platform may contain defects.
Our
online gaming platform and the games offered through our gaming
platform are extremely complex, and are difficult to develop and
distribute. We have quality controls in place to detect defects in
our gaming platform before they are released. Nonetheless, these
quality controls are subject to human error, overriding, and
reasonable resource or technical constraints. Further, we have not
undertaken independent third-party testing, verification or
analysis of our gaming platform and associated systems and
controls. Therefore, our gaming platform and quality controls and
preventative measures we have implemented may not be effective in
detecting all defects in our gaming platform. In the event a
significant defect in our gaming platform and associated systems
and controls is realized, we could be required to offer refunds,
suspend the availability of our city league competitions and other
gameplay, or expend significant resources to cure the defect, each
of which could significantly harm our business and operating
results.
We may experience system failures, outages and/or disruptions of
the functionality of our platform. Such failures, delays and other
problems could harm our reputation and business, cause us to lose
customers and expose us to customer liability.
We may
experience system failures, outages and/or disruptions of our
infrastructure, including information technology system failures
and network disruptions, cloud hosting and broadband availability
at in person and online
experiences. Our operations could be interrupted or degraded by any
damage to or failure of:
●
our computer
software or hardware, or our customers’ or suppliers’
computer software or hardware;
●
our network, our
customers’ networks or our suppliers’ networks;
or
●
our connections and
outsourced service arrangements with third parties.
Our
systems and operations are also vulnerable to damage or
interruption from:
●
power loss,
transmission cable cuts and other telecommunications and utility
failures;
●
hurricanes, fires,
earthquakes, floods and other natural disasters;
●
a terrorist attack
in the U.S. or in another country in which we operate;
●
interruption of
service arising from facility migrations, resulting from changes in
business operations including acquisitions and planned data center
migrations;
●
computer viruses or
software defects;
●
loss or misuse of
proprietary information or customer data that compromises security,
confidentiality or integrity; or
●
errors by our
employees or third-party service providers.
From
time to time in the ordinary course of our business, our network
nodes and other systems experience temporary outages. As a means of
ensuring continuity in the services we provide to our members, we
have invested in system redundancies via partnerships with
industry leading cloud service providers, proactive alarm
monitoring and other back-up infrastructure, though we cannot
assure you that we will be able to re-route our services over our
back-up facilities and provide continuous service to customers in
all circumstances without material degradation. Because many of our
services play a critical role for our members, any damage to or
failure of the infrastructure we rely on could disrupt or degrade
the operation of our network, our platform and the provision of our
services and result in the loss of current and potential members
and harm our ability to conduct normal business
operations.
We use third-party services and technologies in connection with our
business, and any disruption to the provision of these services and
technologies to us could result in negative publicity and a
slowdown in the growth of our users, which could materially and
adversely affect our business, financial condition and results of
operations.
Our business partially depends on services provided by, and
relationships with, various third parties, including cloud hosting
and broadband providers, among others. To this end, when our cloud
hosting and broadband vendors experience outages, our esports
gaming services will be negatively impacted and alternative
resources will not be immediately available. In addition, certain
third-party software we use in our operations is currently publicly
available free of charge. If the owner of any such software decides
to charge users or no longer makes the software publicly available,
we may need to incur significant costs to obtain licensing, find
replacement software or develop it on our own. If we are unable to
obtain licensing, find or develop replacement software at a
reasonable cost, or at all, our business and operations may be
adversely affected.
We exercise no control over the third-party vendors that we rely
upon for cloud hosting, broadband and software service. If such
third parties increase their prices, fail to provide their services
effectively, terminate their service or agreements or discontinue
their relationships with us, we could suffer service interruptions,
reduced revenues or increased costs, any of which may have a
material adverse effect on our business, financial condition and
results of operations.
Growth and engagement of our gamer community depends upon effective
interoperability with mobile operating systems, networks, mobile
devices and standards that we do not control.
We make our services available across a variety of mobile operating
systems and devices. We are dependent on the interoperability of
our services with popular mobile devices and mobile operating
systems that we do not control, such as Android and iOS. Any
changes in such mobile operating systems or devices that degrade
the functionality of our services or give preferential treatment to
competitive services could adversely affect usage of our services.
In order to deliver high quality services, it is important that our
services work well across a range of mobile operating systems,
networks, mobile devices and standards that we do not control. We
may not be successful in developing relationships with key
participants in the mobile industry or in developing services that
operate effectively with these operating systems, networks, devices
and standards. In the event that it is difficult for our users to
access and use our services, particularly on their mobile devices,
our user growth and user engagement could be harmed, and our
business and operating results could be adversely
affected.
Our business depends substantially on the continuing efforts of our
executive officers, key employees and qualified personnel, and our
business operations may be severely disrupted if we lose their
services.
Our future success depends substantially on the continued efforts
of our executive officers and key employees. If one or more of our
executive officers or key employees were unable or unwilling to
continue their services with us, we might not be able to replace
them easily, in a timely manner, or at all. Since the esports
gaming industry is characterized by high demand and intense
competition for talents, we cannot assure you that we will be able
to attract or retain qualified staff or other highly skilled
employees. In addition, as the Company is relatively young, our
ability to train and integrate new employees into our operations
may not meet the growing demands of our business which may
materially and adversely affect our ability to grow our business
and hence our results of operations.
If any of our executive officers and key employees terminates their
services with us, our business may be severely disrupted, our
financial condition and results of operations may be materially and
adversely affected and we may incur additional expenses to recruit,
train and retain qualified personnel. If any of our executive
officers or key employees joins a competitor or forms a competing
company, we may lose gamers, know-how and key
professionals and staff members. Certain of our executive officers
and key employees have entered into a non-solicitation and
non-competition agreements with us. However, certain provisions
under the non-solicitation and non-competition agreement may
be deemed legally invalid or unenforceable. If any dispute arises
between our executive officers and us, we cannot assure you that we
would be able to enforce
these non-compete agreements.
Our business is subject to regulation, and changes in applicable
regulations may negatively impact our business.
We are
subject to a number of foreign and domestic laws and regulations
that affect companies conducting business on the Internet. In
addition, laws and regulations relating to user privacy, data
collection, retention, electronic commerce, virtual items and
currency, consumer protection, content, advertising, localization,
and information security have been adopted or are being considered
for adoption by many jurisdictions and countries throughout the
world. These laws could harm our business by limiting the products
and services we can offer consumers or the manner in which we offer
them. The costs of compliance with these laws may increase in the
future as a result of changes in interpretation. Furthermore, any
failure on our part to comply with these laws or the application of
these laws in an unanticipated manner may harm our business and
result in penalties or significant legal liability.
In
addition, we include modes in our gaming platform that allow
players to compete against each other. Although we structure and
operate these skill-based competitions with applicable laws in
mind, our skill-based competitions in the future could become
subject to evolving rules and regulations and expose us to
significant liability, penalties and reputational
harm.
Our online activities are subject to various laws and regulations
relating to privacy and child protection, which, if violated, could
subject us to an increased risk of litigation and regulatory
actions.
In addition to our gaming platform, we use third-party
applications, websites, and social media platforms to promote our
amateur tournaments and competitions and engage gamers, as well as
monitor and collect certain information about gamers in our online
forums. A variety of laws and regulations have been adopted in
recent years aimed at protecting children using the internet such
as the Children’s Online Privacy and Protection Act of 1998
(“COPPA”). COPPA sets forth, among other things, a
number of restrictions on what website operators can present to
children under the age of 13 and what information can be collected
from them. COPPA is of particular concern to us, and in an effort
to minimize our risk of potential exposure, we retained a COPPA
expert as a consultant and have posted a compliant privacy policy,
terms of use and various other policies on our website. We
undertake significant effort to implement certain precautions to
ensure that access to our gaming platform for competitive gameplay
is COPPA compliant. Despite our efforts, no assurances can be given
that such measures will be sufficient to completely avoid exposure
and COPPA violations, any of which could expose us to significant
liability, penalties, reputational harm and loss of revenue, among
other things.
The laws
and regulations concerning data privacy are continually evolving.
Failure to comply with these laws and regulations could harm our
business.
Consumers are able to play our licensed game titles online, using
our platform. We collect and store information about our consumers
both personally identifying and non-personally identifying
information. Numerous federal, state and international laws address
privacy, data protection and the collection, storing, sharing, use,
disclosure and protection of personally identifiable information
and other user data. Numerous states already have, and are looking
to expand, data protection legislation requiring companies like
ours to consider solutions to meet differing needs and expectations
of creators and attendees. Outside the United States, personally
identifiable information and other user data is increasingly
subject to legislation and regulations in numerous jurisdictions
around the world, the intent of which is to protect the privacy of
information that is collected, processed and transmitted in or from
the governing jurisdiction. Foreign data protection, privacy,
information security, user protection and other laws and
regulations are often more restrictive than those in the United
States. In particular, the European Union and its member states
traditionally have taken broader views as to types of data that are
subject to privacy and data protection laws and regulations, and
have imposed greater legal obligations on companies in this regard.
For example, in April 2016, European legislative bodies adopted the
General Data Protection Regulation (“GDPR”), which became effective on May 25,
2018. The GDPR applies to any company established in the
European Union as well as to those outside of the European Union if
they collect and use personal data in connection with the offering
of goods or services to individuals in the European Union or the
monitoring of their behavior. The GDPR enhances data
protection obligations for processors and controllers of personal
data, including, for example, expanded disclosures about how
personal information is to be used, limitations on retention of
information, mandatory data breach notification requirements and
onerous new obligations on service
providers. Non-compliance with the GDPR may
result in monetary penalties of up to €20 million or 4%
of annual worldwide revenue, whichever is higher. In addition, some
countries are considering or have passed legislation implementing
data protection requirements or requiring local storage and
processing of data or similar requirements that could increase the
cost and complexity of delivering our services.
The GDPR and other changes in laws or regulations
associated with the enhanced protection of certain types of
personal data could greatly increase our cost of providing our
products and services or even prevent us from offering certain
services in jurisdictions in which we operate. The European
Commission is also currently negotiating a new ePrivacy Regulation
that would address various matters, including provisions
specifically aimed at the use of cookies to identify an
individual’s online behavior, and any such ePrivacy
Regulation may provide for new compliance obligations and
significant penalties. Any of these changes to European Union data
protection law or its interpretation could disrupt and/or harm our
business.
Further, following a referendum in June 2016 in which voters in the
United Kingdom approved an exit from the European Union, the United
Kingdom government has initiated a process to leave the European
Union, which has created uncertainty with regard to the regulation
of data protection in the United Kingdom. In particular, although a
Data Protection Bill designed to be consistent with
the GDPR is pending in the United Kingdom’s
legislative process, it is unclear whether the United Kingdom will
enact data protection laws or regulations designed to be consistent
with the GDPR and how data transfers to and from the
United Kingdom will be regulated. The interpretation and
application of many privacy and data protection laws are, and will
likely remain, uncertain, and it is possible that these laws may be
interpreted and applied in a manner that is inconsistent with our
existing data management practices or product features. Although
player interaction on our platform is subject to our privacy
policies, end user license agreements (“EULAs”), and terms of service, if we fail to
comply with our posted privacy policies, EULAs, or terms of
service, or if we fail to comply with existing privacy-related or
data protection laws and regulations, it could result in
proceedings or litigation against us by governmental authorities or
others, which could result in fines or judgments against us, damage
our reputation, impact our financial condition and/or harm our
business.
In addition to government regulation, privacy advocacy and industry
groups may propose new and different self-regulatory standards that
either legally or contractually apply to us. Any inability to
adequately address privacy, data protection and data security
concerns or comply with applicable privacy, data protection or data
security laws, regulations, policies and other obligations could
result in additional cost and liability to us, damage our
reputation, inhibit sales and harm our business. Further, our
failure, and/or the failure by the various third-party service
providers and partners with which we do business, to comply with
applicable privacy policies or federal, state or similar
international laws and regulations or any other obligations
relating to privacy, data protection or information security, or
any compromise of security that results in the unauthorized release
of personally identifiable information or other user data, or the
perception that any such failure or compromise has occurred, could
damage our reputation, result in a loss of creators or attendees,
discourage potential creators and attendees from trying our
platform and/or result in fines and/or proceedings by governmental
agencies and/or users, any of which could have an adverse effect on
our business, results of operations and financial condition. In
addition, given the breadth and depth of changes in data protection
obligations, ongoing compliance with evolving interpretation of
the GDPR and other regulatory requirements requires time
and resources and a review of the technology and systems currently
in use against the requirements of GDPR and other
regulations.
The preparation of our financial statements involves the use of
good faith estimates, judgments and assumptions, and our financial
statements may be materially affected if such good faith estimates,
judgments or good faith assumptions prove to be
inaccurate.
Financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America
(“GAAP”)
typically require the use of good faith estimates, judgments and
assumptions that affect the reported amounts. Often, different
estimates, judgments and assumptions could reasonably be used that
would have a material effect on such financial statements, and
changes in these estimates, judgments and assumptions may occur
from period to period over time. Significant areas of accounting
requiring the application of management’s judgment include,
but are not limited to, determining the fair value of assets,
share-based compensation and the timing and amount of cash flows
from assets. These estimates, judgments and assumptions are
inherently uncertain and, if our estimates were to prove to be
wrong, we would face the risk that charges to income or other
financial statement changes or adjustments would be required. Any
such charges or changes would require a restatement of our
financial statements and could harm our business, including our
financial condition and results of operations and the price of our
securities. See “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for a
discussion of the accounting estimates, judgments and assumptions
that we believe are the most critical to an understanding of our
financial statements and our business.
We may be held liable for information or content displayed on,
retrieved from or linked to our gaming platform, or distributed to
our users.
Our interactive live streaming platform enables gamers to exchange
information and engage in various other online activities. Although
we require our gamers to register their real name, we do not
require user identifications used and displayed during gameplay to
contain any real-name information, and hence we are unable to
verify the sources of all the information posted by our gamers. In
addition, because a majority of the communications on our online
and in person
gaming platform is conducted in real time, we are unable to examine
the content generated by gamers before they are posted or streamed.
Therefore, it is possible that gamers may engage in illegal,
obscene or incendiary conversations or activities, including
publishing of inappropriate or illegal content that may be deemed
unlawful. If any content on our platform is deemed illegal, obscene
or incendiary, or if appropriate licenses and third-party consents
have not been obtained, claims may be brought against us for
defamation, libel, negligence, copyright, patent or trademark
infringement, other unlawful activities or other theories and
claims based on the nature and content of the information delivered
on or otherwise accessed through our platform. Moreover, the costs
of compliance may continue to increase when more content is made
available on our platform as a result of our growing base of
gamers, which may adversely affect our results of
operations.
Intensified government regulation of the Internet industry could
restrict our ability to maintain or increase the level of traffic
to our gaming platform as well as our ability to capture other
market opportunities.
The Internet industry is increasingly subject to strict scrutiny.
New laws and regulations may be adopted from time to time to
address new issues that come to the authorities’ attention.
We may not timely obtain or maintain all the required licenses or
approvals or make all the necessary filings in the future. We also
cannot assure you that we will be able to obtain the required
licenses or approvals if we plan to expand into other Internet
businesses. If we fail to obtain or maintain any of the required
licenses or approvals or make the necessary filings, we may be
subject to various penalties, which may disrupt our business
operations or derail our business strategy, and materially and
adversely affect our business, financial condition and results of
operations.
From time to time we may become involved in legal
proceedings.
From
time to time we may become subject to legal proceedings, claims,
litigation and government investigations or inquiries, which could
be expensive, lengthy, disruptive to normal business operations and
occupy a significant amount of our employees’ time and
attention. In addition, the outcome of any legal proceedings,
claims, litigation, investigations or inquiries may be difficult to
predict and could have a material adverse effect on our business,
operating results, or financial condition.
Our amended and restated bylaws designate a state or federal court
located within the State of Delaware as the exclusive forum for
certain litigation that may be initiated by our stockholders, which
could limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with us.
Pursuant
to our amended and restated bylaws, unless we consent in writing to
the selection of an alternative forum, the sole and exclusive forum
for (i) any derivative action or proceeding brought on our
behalf, (ii) any action asserting a claim of breach of a
fiduciary duty owed by any of our directors, officers or other
employees to us or our stockholders, (iii) any action
asserting a claim against us arising pursuant to any provision of
the Delaware General Corporation Law, or (iv) any action
asserting a claim against us that is governed by the internal
affairs doctrine shall be a state or federal court located within
the State of Delaware, in all cases subject to the court’s
having personal jurisdiction over indispensable parties named as
defendants. Any person or entity purchasing or otherwise acquiring
any interest in shares of our capital stock shall be deemed to have
notice of and consented to this provision. The forum
selection clause in our amended and restated bylaws may have
the effect of discouraging lawsuits against us or our directors and
officers and may limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us.
Risks Related to Intellectual Property
We may be subject to claims of infringement of third-party
intellectual property rights.
From
time to time, third parties may claim that we have infringed their
intellectual property rights. For example, patent holding companies
may assert patent claims against us in which they seek to monetize
patents they have purchased or otherwise obtained. Although we take
steps to avoid knowingly violating the intellectual property rights
of others, it is possible that third parties still may claim
infringement.
Existing
or future infringement claims against us, whether valid or not, may
be expensive to defend and divert the attention of our employees
from business operations. Such claims or litigation could require
us to pay damages, royalties, legal fees and other costs. We also
could be required to stop offering, distributing or supporting
esports games, our gaming platform or other features or services
which incorporate the affected intellectual property rights,
redesign products, features or services to avoid infringement, or
obtain a license, all of which could be costly and harm our
business.
In
addition, many patents have been issued that may apply to potential
new modes of delivering, playing or monetizing interactive
entertainment software products and services, such as those offered
on our gaming platform or that we would like to offer in the
future. We may discover that future opportunities to provide new
and innovative modes of game play and game delivery to gamers may
be precluded by existing patents that we are unable to license on
reasonable terms.
Our technology, content and brands are subject to the threat of
piracy, unauthorized copying and other forms of intellectual
property infringement.
We
regard our technology, content and brands as proprietary and take
measures to protect our technology, content and brands and other
confidential information from infringement. Piracy and other forms
of unauthorized copying and use of our technology, content and
brands are persistent, and policing is difficult. Further, the laws
of some countries in which our products are or may be distributed
either do not protect our intellectual property rights to the same
extent as the laws of the United States, or are poorly enforced.
Legal protection of our rights may be ineffective in such
countries. In addition, although we take steps to enforce and
police our rights, factors such as the proliferation of technology
designed to circumvent the protection measures used by our business
partners or by us, the availability of broadband access to the
Internet, the refusal of Internet service providers or platform
holders to remove infringing content in certain instances, and the
proliferation of online channels through which infringing product
is distributed all have contributed to an expansion in unauthorized
copying of our technology, content and brands.
Third parties may register trademarks or domain names or purchase
internet search engine keywords that are similar to our registered
trademark or pending trademarks, brands or websites, or
misappropriate our data and copy our gaming platform, all of which
could cause confusion, divert gamers away from our gaming platform
and league tournaments, or harm our reputation.
Competitors and other third parties may purchase
(i) trademarks that are similar to our trademarks and
(ii) keywords that are confusingly similar to our brands or
websites in internet search engine advertising programs and in the
header and text of the resulting sponsored links or advertisements
in order to divert gamers from us to their websites. Preventing
such unauthorized use is inherently difficult. If we are unable to
prevent such unauthorized use, competitors and other third parties
may continue to drive potential gamers away from our gaming
platform to competing, irrelevant or potentially offensive
platforms, which could harm our reputation and cause us to lose
revenue.
We may not be able to prevent others from unauthorized use of our
intellectual property, which could harm our business and
competitive position.
We regard our registered trademark and pending trademarks, service
marks, pending patents, domain names, trade secrets, proprietary
technologies and similar intellectual property as critical to our
success. We rely on trademark and patent law, trade secret
protection and confidentiality and license agreements with our
employees and others to protect our proprietary
rights.
We have invested significant resources to develop our own
intellectual property and acquire licenses to use and distribute
the intellectual property of others on our gaming platform. Failure
to maintain or protect these rights could harm our business. In
addition, any unauthorized use of our intellectual property by
third parties may adversely affect our current and future revenues
and our reputation.
Policing unauthorized use of proprietary technology is difficult
and expensive. We rely on a combination of patent, copyright,
trademark and trade secret laws and restrictions on disclosure to
protect our intellectual property rights. Further, we require every
employee and consultant to execute proprietary information and
invention agreements prior to commencing work. Despite our efforts
to protect our proprietary rights, third parties may attempt to
copy or otherwise obtain and use our intellectual property or seek
court declarations that they do not infringe upon our intellectual
property rights. Monitoring unauthorized use of our intellectual
property is difficult and costly, and we cannot assure you that the
steps we have taken will prevent misappropriation of our
intellectual property. From time to time, we may have to resort to
litigation to enforce our intellectual property rights, which could
result in substantial costs and diversion of our
resources.
Our patent and trademark applications may not be granted and our
patent and trademark rights, once patents are issued and trademarks
are registered, may be contested, circumvented, invalidated or
limited in scope, and our patent and trademark rights may not
protect us effectively once issued and registered, respectively. In
particular, we may not be able to prevent others from developing or
exploiting competing technologies and trademarks, which could have
a material and adverse effect on our business operations, financial
condition and results of operations.
Currently, we have three patent applications pending, one
registered trademark and eighteen pending trademark applications,
along with licenses from game publishers to utilize their
proprietary games. For our pending patent applications and we
cannot assure you that we will be granted patents pursuant to our
pending applications as well as future patent applications we
intend to file. Even if our patent applications succeed, it is
still uncertain whether these patents will be contested,
circumvented or invalidated in the future. In addition, the rights
granted under any issued patents may not provide us with sufficient
protection or competitive advantages. The claims under any patents
that issue from our patent applications may not be broad enough to
prevent others from developing technologies that are similar or
that achieve results similar to ours. It is also possible that the
intellectual property rights of others will bar us from licensing
and from exploiting any patents that issue from our pending
applications. Numerous U.S. and foreign issued patents and pending
patent applications owned by others exist in the fields in which we
have developed and are developing our technology. These patents and
patent applications might have priority over our patent
applications and could subject our patent applications to
invalidation. Finally, in addition to those who may claim priority,
any of our pending patent and trademark applications may also be
challenged by others on the basis that they are otherwise invalid
or unenforceable.
We may be held liable for information or content displayed on,
retrieved from or linked to our gaming platform, or distributed to
our users.
Our interactive live streaming platform enables gamers to exchange
information and engage in various other online activities. Although
we require our gamers to register their real name, we do not
require user identifications used and displayed during gameplay to
contain any real-name information, and hence we are unable to
verify the sources of all the information posted by our gamers. In
addition, because a majority of the communications on our online
and in person
gaming platform is conducted in real time, we are unable to examine
the content generated by gamers before they are posted or streamed.
Therefore, it is possible that gamers may engage in illegal,
obscene or incendiary conversations or activities, including
publishing of inappropriate or illegal content that may be deemed
unlawful. If any content on our platform is deemed illegal, obscene
or incendiary, or if appropriate licenses and third-party consents
have not been obtained, claims may be brought against us for
defamation, libel, negligence, copyright, patent or trademark
infringement, other unlawful activities or other theories and
claims based on the nature and content of the information delivered
on or otherwise accessed through our platform. Moreover, the costs
of compliance may continue to increase when more content is made
available on our platform as a result of our growing base of
gamers, which may adversely affect our results of
operations.
Intensified government regulation of the Internet industry could
restrict our ability to maintain or increase the level of traffic
to our gaming platform as well as our ability to capture other
market opportunities.
The Internet industry is increasingly subject to strict scrutiny.
New laws and regulations may be adopted from time to time to
address new issues that come to the authorities’ attention.
We may not timely obtain or maintain all the required licenses or
approvals or make all the necessary filings in the future. We also
cannot assure you that we will be able to obtain the required
licenses or approvals if we plan to expand into other Internet
businesses. If we fail to obtain or maintain any of the required
licenses or approvals or make the necessary filings, we may be
subject to various penalties, which may disrupt our business
operations or derail our business strategy, and materially and
adversely affect our business, financial condition and results of
operations.
From time to time we may become involved in legal
proceedings.
From
time to time we may become subject to legal proceedings, claims,
litigation and government investigations or inquiries, which could
be expensive, lengthy, disruptive to normal business operations and
occupy a significant amount of our employees’ time and
attention. In addition, the outcome of any legal proceedings,
claims, litigation, investigations or inquiries may be difficult to
predict and could have a material adverse effect on our business,
operating results, or financial condition.
Risks Related to our Common Stock and this Offering
There is currently no trading market for our common stock and we
cannot ensure that one will ever develop or be
sustained.
There
is no current market for any of our shares of common stock and a
market may not develop. We have applied to list our common stock on
the Nasdaq Capital Market and intend to list our common stock on
the Nasdaq Capital Market if we raise sufficient capital in this
offering, but there is no guarantee that we will be able to do so.
If we are not successful in listing our shares of common stock on
the Nasdaq Capital Market, our common stock may be traded on an
over-the-counter market to the extent any demand exists. Even if
listed on the Nasdaq Capital Market, a liquid trading market may
not develop. Investors should assume that they may not be able to
liquidate their investment for some time or be able to pledge their
shares as collateral.
If we successfully list on
Nasdaq Capital Market, our shares are likely to
be thinly traded for some time and an active market may never
develop.
If we
successfully list on the Nasdaq Capital Market, it is likely that
initially there will be a very limited trading market for our
common stock and we cannot ensure that a robust trading market will
ever develop or be sustained. Our shares of common stock may be
thinly traded, and the price, if traded, may not reflect our actual
or perceived value. There can be no assurance that there will be an
active market for our shares of common stock in the future. The
market liquidity will be dependent on the perception of our
operating business, competitive forces, state of the esports gaming
industry, growth rate and becoming cash flow profitable on a
sustainable basis, among other things. We may, in the future, take
certain steps, including utilizing investor awareness campaigns,
press releases, road shows, and conferences to increase awareness
of our business and any steps that we might take to bring us to the
awareness of investors may require we compensate financial public
relations firms with cash and/or stock. There can be no assurance
that there will be any awareness generated or the results of any
efforts will result in any impact on our trading volume.
Consequently, investors may not be able to liquidate their
investment or liquidate it at a price that reflects the value of
the business and trading may be at an inflated price relative to
the performance of our company due to, among other things,
availability of sellers of our shares. If a market should develop,
the price may be highly volatile. Because there may be a low price
for our shares of common stock, many brokerage firms or clearing
firms may not be willing to effect transactions in the securities
or accept our shares for deposit in an account. Even if an investor
finds a broker willing to effect a transaction in the shares of our
common stock, the combination of brokerage commissions, transfer
fees, taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit
the use of low priced shares of common stock as collateral for any
loans.
Our stock price may be volatile, and you could lose all or part of
your investment.
The
trading price of our common stock following this offering may
fluctuate substantially and may be higher or lower than the initial
public offering price. This may be especially true for companies
with a small public float. The trading price of our common stock
following this offering will depend on several factors, including
those described in this “Risk Factors” section, many of
which are beyond our control and may not be related to our
operating performance. These fluctuations could cause you to lose
all or part of your investment in our common stock since you might
be unable to sell your shares at or above the price you paid in
this offering. Factors that could cause fluctuations in the trading
price of our common stock include:
●
changes to our
industry, including demand and regulations;
●
we may not be able
to compete successfully against current and future
competitors;
●
competitive pricing
pressures;
●
our ability to
obtain working capital financing as required;
●
additions or
departures of key personnel;
●
sales of our common
stock;
●
our ability to
execute our business plan;
●
operating results
that fall below expectations;
●
loss of any
strategic relationship, sponsor or licensor;
●
any major change in
our management;
●
changes in
accounting standards, procedures, guidelines, interpretations or
principals; and
●
economic,
geo-political and other external factors.
In
addition, the stock market in general, and the market for
technology companies in particular, have experienced extreme price
and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of those companies.
Broad market and industry factors, as well as general economic,
political and market conditions such as recessions or interest rate
changes, may seriously affect the market price of our common stock,
regardless of our actual operating performance. These fluctuations
may be even more pronounced in the trading market for our stock
shortly following this offering. If the market price of our common
stock after this offering does not exceed the initial public
offering price, you may not realize any return on your investment
in us and may lose some or all of your investment.
In
addition, in the past, following periods of volatility in the
overall market and the market prices of particular companies’
securities, securities class action litigations have often been
instituted against these companies. Litigation of this type, if
instituted against us, could result in substantial costs and a
diversion of our management’s attention and resources. Any
adverse determination in any such litigation or any amounts paid to
settle any such actual or threatened litigation could require that
we make significant payments.
If securities industry analysts do not publish research reports on
us, or publish unfavorable reports on us, then the market price and
market trading volume of our common stock could be negatively
affected.
Any
trading market for our common stock will be influenced in part by
any research reports that securities industry analysts publish
about us. We may not obtain any future research coverage by
securities industry analysts. In the event we are covered by
research analysts, and one or more of such analysts downgrade our
securities, or otherwise reports on us unfavorably, or discontinues
coverage of us, the market price and market trading volume of our
common stock could be negatively affected.
You will experience dilution as a result of future equity
offerings.
We may
in the future offer additional shares of our common stock or other
securities convertible into or exchangeable for our common stock.
Although no assurances can be given that we will consummate a
future financing, in the event we do, or in the event we sell
shares of common stock or other securities convertible into shares
of our common stock in the future, additional and potentially
substantial dilution will occur. In addition, investors purchasing
shares or other securities in the future could have rights superior
to investors in this offering.
We have not paid cash dividends in the past and do not expect to
pay dividends in the future. Any return on investment will likely
be limited to the value of our common stock.
We have
never paid cash dividends on our common stock and do not anticipate
doing so in the foreseeable future. The payment of dividends on our
common stock will depend on earnings, financial condition and other
business and economic factors affecting us at such time as our
board of directors may consider relevant. If we do not pay
dividends, our common stock may be less valuable because a return
on your investment will only occur if our stock price
appreciates.
Since we do not anticipate paying any cash dividends on our capital
stock in the foreseeable future, stock price appreciation, if any,
will be your sole source of gain.
We currently intend to retain all of our future earnings, if any,
to finance the growth and development of our business. In addition,
the terms of any future debt agreements may preclude us from paying
dividends. As a result, appreciation, if any, in the market price
of our common stock will be your sole source of gain for the
foreseeable future.
Future issuances of debt securities, which would rank senior to our
common stock upon our bankruptcy or liquidation, and future
issuances of preferred stock, which would rank senior to our common
stock for the purposes of dividends and liquidating distributions,
may adversely affect the level of return you may be able to achieve
from an investment in our common stock.
In the
future, we may attempt to increase our capital resources by
offering debt securities. In the event of a bankruptcy or
liquidation, holders of our debt securities, and lenders with
respect to other borrowings we may make, would receive
distributions of our available assets prior to any distributions
being made to holders of our common stock. Moreover, if we issue
preferred stock in the future, the holders of such preferred stock
could be entitled to preferences over holders of common stock in
respect of the payment of dividends and the payment of liquidating
distributions. Because our decision to issue debt or preferred
securities in any future offering, or borrow money from lenders,
will depend in part on market conditions and other factors beyond
our control, we cannot predict or estimate the amount, timing or
nature of any such future offerings or borrowings. Holders of our
common stock must bear the risk that any such future offerings we
conduct or borrowings we make may adversely affect the level of
return they may be able to achieve from an investment in our common
stock.
We may need to implement additional
finance and accounting systems, procedures and controls as we grow
our business and organization and to satisfy new reporting
requirements.
Upon
becoming subject to reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), we will be
required to comply with a variety of extensive reporting,
accounting, and other rules and regulations. Compliance with each
of these requirements is expensive, time consuming and intricate.
Further requirements may increase our costs and require additional
management time and resources. We may need to implement additional
finance and accounting systems, procedures and controls to satisfy
our reporting requirements. If our internal controls over financial
reporting are determined to be ineffective, such failure could
cause investors to lose confidence in our reported financial
information, negatively affect the market price of our common
stock, subject us to regulatory investigations and penalties, cause
us to have to restate our financial statements, and adversely
impact our business and financial condition.
We are an emerging growth company, and any decision on our
part to comply only with certain reduced reporting and disclosure
requirements applicable to emerging growth companies could make our
common stock less attractive to investors.
We are an emerging growth company, and, for as long as we
continue to be an emerging growth company, we may choose to
take advantage of exemptions from various reporting requirements
applicable to other public companies that are not “emerging
growth companies,” including:
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●
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not
being required to have our independent registered public accounting
firm audit our internal control over financial reporting under
Section 404 of the Sarbanes-Oxley Act;
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●
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reduced
disclosure obligations regarding executive compensation in our
periodic reports and annual report on
Form 10-K; and
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●
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exemptions
from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved.
|
We could be an emerging growth company for up to five
years following the completion of this offering. Our status as
an emerging growth company will end as soon as any of the
following takes place:
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●
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the
last day of the fiscal year in which we have more than
$1.07 billion in annual revenue;
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●
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the
date we qualify as a “large accelerated filer,” with at
least $700 million of equity securities held
by non-affiliates;
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●
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the
date on which we have issued, in any three-year period, more than
$1.0 billion in non-convertible debt securities;
or
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●
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the
last day of the fiscal year ending after the fifth anniversary of
the completion of this offering.
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We cannot predict if investors will find our common stock less
attractive if we choose to rely on the exemptions afforded emerging
growth companies. If some investors find our common stock less
attractive because we rely on any of these exemptions, there may be
a less active trading market for our common stock and the market
price of our common stock may be more volatile.
Under the JOBS Act, emerging growth companies can also delay
adopting new or revised accounting standards until such time as
those standards apply to private companies. We have elected to use
this extended transition period for complying with new or revised
accounting standards that have different effective dates for public
and private companies until the earlier of the date we (i) are no
longer an emerging growth company or
(ii) affirmatively and irrevocably opt out of the extended
transition period provided in the JOBS Act. As a result, our
financial statements may not be comparable to companies that comply
with new or revised accounting pronouncements as of public company
effective dates.
We will incur increased costs as a result of being a public
company, particularly after we cease to qualify as an
“emerging growth company.”
Upon completion of this offering, we will become a
public company and expect to incur significant legal, accounting
and other expenses that we did not incur as a private company.
The Sarbanes-Oxley Act, as well
as rules subsequently implemented by the SEC and Nasdaq, impose
various requirements on the corporate governance practices of
public companies. We expect these rules and regulations to increase
our legal and financial compliance costs and to make some corporate
activities more time-consuming and costly. We expect to incur
significant expenses and devote substantial management effort
toward ensuring compliance with the requirements of
Section 404 of the Sarbanes-Oxley Act and the other rules and regulations of the SEC.
For example, as a result of becoming a public company, we will need
to adopt policies regarding internal controls and disclosure
controls and procedures. We also expect that operating as a public
company will make it more difficult and more expensive for us to
obtain director and officer liability insurance, and we may be
required to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage.
In addition, we will incur additional costs associated with our
public company reporting requirements. It may also be more
difficult for us to find qualified persons to serve on our board of
directors or as executive officers. We are currently evaluating and
monitoring developments with respect to these rules and
regulations, and we cannot predict or estimate with any degree of
certainty the amount of additional costs we may incur or the timing
of such costs.
In the past, stockholders of a public company often brought
securities class action suits against the company following periods
of instability in the market price of that company’s
securities. If we were involved in a class action suit, it could
divert a significant amount of our management’s attention and
other resources from our business and operations, which could harm
our results of operations and require us to incur significant
expenses to defend the suit. Any such class action suit, whether or
not successful, could harm our reputation and restrict our ability
to raise capital in the future. In addition, if a claim is
successfully made against us, we may be required to pay significant
damages, which could have a material adverse effect on our
financial condition and results of operations.
Because of our status as an emerging growth company, you will not
be able to depend on any attestation from our independent
registered public accounting firm as to our internal control over
financial reporting for the foreseeable future.
Our independent registered public
accounting firm will not be required to attest to the effectiveness
of our internal control over financial reporting pursuant to
Section 404 of the Sarbanes-Oxley Act until the later of the year
following our first annual report required to be filed with the SEC
or the date we are no longer an “emerging growth
company” as defined in the JOBS Act. Accordingly, you will
not be able to depend on any attestation concerning our internal
control over financial reporting from our independent registered
public accounting firm for the foreseeable future.
Subsequent to the
time frame above, our independent registered public accounting firm
will not be required to attest to the effectiveness of our internal
control over financial reporting pursuant to the
Sarbanes-Oxley Act
until such time that
the Company becomes an “accelerated filer,” as defined
by the SEC.
If our shares become subject to the penny stock rules, it would
become more difficult to trade our shares.
The SEC
has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges
or authorized for quotation on certain automated quotation systems,
provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or
system. If we do not obtain or retain a listing on the Nasdaq
Capital Market or if the price of our common stock falls below
$5.00, our common stock will be deemed a penny stock. The penny
stock rules require a broker-dealer, before a transaction in a
penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document containing specified
information. In addition, the penny stock rules require that before
effecting any transaction in a penny stock not otherwise exempt
from those rules, a broker-dealer must make a special written
determination that the penny stock is a suitable investment for the
purchaser and receive (i) the purchaser’s written
acknowledgment of the receipt of a risk disclosure statement; (ii)
a written agreement to transactions involving penny stocks; and
(iii) a signed and dated copy of a written suitability statement.
These disclosure requirements would likely have the effect of
reducing the trading activity in the secondary market for our
common stock, and therefore stockholders may have difficulty
selling their shares.
FINRA sales practice requirements may limit a stockholder’s
ability to buy and sell our stock.
In
addition to the “penny stock” rules described above,
the Financial Industry Regulatory Authority, Inc.
(“FINRA”), has
adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior
to recommending speculative, low-priced securities to their
non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information.
The FINRA requirements may make it more difficult for
broker-dealers to recommend that their customers buy our common
stock, which may have the effect of reducing the level of trading
activity in our common stock. As a result, fewer broker-dealers may
be willing to make a market in our common stock, reducing a
stockholder’s ability to resell shares, as well as overall
liquidity, of our common stock.
We will incur increased costs as a result of operating as a listed
public company and our management will be required to devote
substantial time to new compliance initiatives and corporate
governance practices.
If at some point in the future we are no longer an “emerging
growth company,” we will incur significant legal, accounting
and other expenses that we have not incurred in the past. The
Sarbanes-Oxley Act , the JOBS Act, the listing requirements of the
Nasdaq Capital Market and other applicable securities rules and
regulations impose various requirements on public companies beyond
what management has experienced in operating a privately held
company. Our management and other personnel will need to devote a
substantial amount of time to comply with these requirements.
Moreover, these rules and regulations will increase our legal and
financial compliance costs and will make some activities more
time-consuming and costly. For example, we expect that these rules
and regulations may make it more difficult and more expensive for
us to obtain directors’ and officers’ liability
insurance, which could make it more difficult for us to attract and
retain qualified members of our board of directors. We cannot
predict or estimate the amount of additional costs we will incur as
a listed public company, or the timing of such costs, but such
costs will be significant.
We are evaluating these rules and regulations, and cannot predict
or estimate the amount of additional costs we may incur or the
timing of such costs. These rules and regulations are often subject
to varying interpretations, in many cases due to their lack of
specificity, and, as a result, their application in practice may
evolve over time as new guidance is provided by regulatory and
governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by
ongoing revisions to disclosure and governance
practices.
We may be considered a smaller reporting company and will be exempt
from certain disclosure requirements, which could make our common
stock less attractive to potential investors.
Rule
12b-2 of the Exchange Act, defines a “smaller reporting
company” as an issuer that is not an investment company, an
asset-backed issuer, or a majority-owned subsidiary of a parent
that is not a smaller reporting company and that:
●
had a public float
of less than $75.0 million as of the last business day of its most
recently completed second fiscal quarter, computed by multiplying
the aggregate worldwide number of shares of its voting and
non-voting common equity held by non-affiliates by the price at
which the common equity was last sold, or the average of the bid
and asked prices of common equity, in the principal market for the
common equity; or
●
in the case of an
initial registration statement under the Securities Act of 1933, as
amended (“Securities
Act”), or the Exchange Act for shares of its common
equity, had a public float of less than $75.0 million as of a date
within 30 days of the date of the filing of the registration
statement, computed by multiplying the aggregate worldwide number
of such shares held by non-affiliates before the registration plus,
in the case of a Securities Act registration statement, the number
of such shares included in the registration statement by the
estimated public offering price of the shares; or
●
in the case of an
issuer whose public float was zero, had annual revenues of less
than $50.0 million during the most recently completed fiscal year
for which audited financial statements are available.
As a
smaller reporting company, we would not be required and may not
include a Compensation Discussion and Analysis section in our proxy
statements; we would provide only two years of financial
statements; and we would not need to provide the table of selected
financial data. We also would have other “scaled”
disclosure requirements that are less comprehensive than issuers
that are not smaller reporting companies which could make our
common stock less attractive to potential investors, and also could
make it more difficult for our stockholders to sell their
shares.
Changes in tax laws or regulations that are applied adversely to us
or our customers may have a material adverse effect on our
business, cash flow, financial condition or results of
operations.
New income, sales, use or other tax laws, statutes, rules,
regulations or ordinances could be enacted at any time, which could
affect the tax treatment of our earnings and adversely affect our
operations, and our business and financial performance. Further,
existing tax laws, statutes, rules, regulations or ordinances could
be interpreted, changed,
modified or applied adversely to us. For example, on
December 22, 2017, President Trump signed tax legislation into
law, commonly referred to as the Tax Cuts and Jobs Act of 2017,
that contains many significant changes to the U.S. tax laws.
The new legislation reduced the corporate income tax rate from 34%
to 21% effective January 1, 2018, causing all of our deferred
income tax assets and liabilities, including NOLs, to be measured
using the new rate and which value is reflected in the valuation of
these assets as of December 31, 2017. As a result, the value of our
deferred tax assets decreased by approximately $4.3 million and the
related valuation allowance has been reduced by the same amount.
Our analysis and interpretation of this legislation is ongoing.
Given the full valuation allowance provided for net deferred tax
assets for the periods presented herein, the change in tax law did
not have a material impact on our financial statements provided
herein. There may, however, be additional tax impacts identified in
subsequent periods throughout 2018 in accordance with subsequent
interpretive guidance issued by the SEC or the Internal Revenue
Service. Further, there may be other material adverse effects
resulting from the legislation that we have not yet identified. No
estimated tax provision has been recorded in the financial
statements included herein for tax attributes that are incomplete
or subject to change.
The foregoing items could have a
material adverse effect on our business, cash flow, financial
condition or results of operations. In addition, it is
unclear how these U.S. federal income tax changes will affect state
and local taxation, which often uses federal taxable income as a
starting point for computing state and local tax liabilities.
The impact of this tax legislation on
holders of our common stock is also uncertain and could be adverse.
We urge our stockholders and investors to consult with our legal
and tax advisors with respect to this legislation and the potential
tax consequences of investing in or holding our common
stock.
Our management has broad discretion as to the use of certain of the
net proceeds from this offering and may not use them
effectively.
We
currently intend to use the net proceeds of the offering for
working capital and general corporate purposes, including sales and
marketing activities, game licensing, product development, and
capital expenditures. Our management will have considerable
discretion in the application of the net proceeds from this
offering, and investors will be relying on the judgment of our
management regarding the application of those proceeds. Our
management may spend the proceeds in ways that do not improve our
operating results or enhance the value of our common stock, and you
will not have the opportunity to influence management’s
decisions on how to use the proceeds from this offering. The
failure by our management to apply these funds effectively could
harm our business. Pending their use, we may also invest the net
proceeds of this offering in a manner that does not produce income
or that loses value. See “Use of Proceeds” below for more
information.
If we fail to maintain an effective system of internal controls
over financial reporting, we may be unable to accurately report our
results of operations, meet our reporting obligations or prevent
fraud, and investor confidence and the market price of our common
stock may be materially and adversely affected.
Prior to this offering, we were a private company with limited
accounting personnel and other resources with which to address our
internal controls and procedures. Although management has reviewed
our current internal controls over financial reporting and
concluded that our internal controls are effective, our independent
registered public accounting firm has not conducted an audit of our
internal control over financial reporting. In addition, after we
become a public company, our reporting obligations may place a
significant strain on our management, operational and financial
resources and systems for the foreseeable future and we may be
unable to timely complete our evaluation testing and any required
remediation.
During the course of documenting and testing our internal control
procedures, we may identify weaknesses and deficiencies in our
internal control over financial reporting. In addition, if we fail
to maintain the adequacy of our internal control over financial
reporting, as these standards are modified supplemented or amended
from time to time, we may not be able to conclude on an ongoing
basis that we have effective internal control over financial
reporting. Generally, if we fail to achieve and maintain an
effective internal control environment, we could suffer material
misstatements in our financial statements and fail to meet our
reporting obligations, which would likely cause investors to lose
confidence in our reported financial information. This could in
turn limit our access to capital markets, harm our results of
operations, and lead to a decline in the trading price of our
common stock. Additionally, ineffective internal control over
financial reporting could expose us to increased risk of fraud or
misuse of corporate assets and subject us to potential delisting
from the stock exchange on which we list, regulatory investigations
and civil or criminal sanctions.
We may need additional capital, and we may be unable to obtain such
capital in a timely manner or on acceptable terms, or at all.
Furthermore, our future capital needs may require us to sell
additional equity or debt securities that may dilute our
stockholders or introduce covenants that may restrict our
operations or our ability to pay dividends.
To grow our business and remain competitive, we may require
additional capital from time to time for our daily operation. Our
ability to obtain additional capital is subject to a variety of
uncertainties, including:
●
our
market position and competitiveness in the esports and online
amateur gaming market;
●
our
future profitability, overall financial condition, results of
operations and cash flows; and
●
economic,
political and other conditions in the U.S. and
internationally.
We may be unable to obtain additional capital in a timely manner or
on acceptable terms or at all. In addition, our future capital
needs and other business reasons could require us to sell
additional equity or debt securities or obtain a credit facility.
The sale of additional equity or equity-linked securities could
dilute our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could result in
operating and financing covenants that would restrict our
operations or our ability to pay dividends to our
stockholders.
Our existing stockholders have substantial influence over our
company and their interests may not be aligned with the interests
of our other stockholders, which may discourage, delay or prevent a
change in control of our company, which could deprive our
stockholders of an opportunity to receive a premium for their
securities.
As of the date of this prospectus, certain stockholders control
approximately 34.1% of the voting power in us, including
management. As a result, these stockholders have substantial
influence over our business, including decisions regarding mergers,
consolidations and the sale of all or substantially all of our
assets, election of directors and other significant corporate
actions. This concentration of ownership may discourage, delay or
prevent a change in control of our company, which could deprive our
stockholders of an opportunity to receive a premium for their
shares as part of any contemplated sale of our company and may
reduce the price of our common stock.
Because our offering price is substantially higher than our net
tangible book value per share, you will experience immediate and
substantial dilution.
If you purchase common stock in this offering, you will pay more
for your common stock than the amount paid by our existing
stockholders for their common stock on a per share basis. As a
result, you will experience immediate and substantial dilution of
$
per share, representing the difference between the assumed initial
public offering price of
$
per share, which is the midpoint of the price range set forth on
the cover page of this prospectus, and our net tangible book value
per share as of September 30, 2018, after giving effect to the net
proceeds to us from this offering. In addition, you may experience
further dilution to the extent that our shares are issued upon the
exercise of any share options. See “Dilution” for a more complete description of how the
value of your investment in our common stock will be diluted upon
completion of this offering.
Because we do not expect to pay dividends in the foreseeable future
after this offering, you must rely on price appreciation of our
common stock for return on your investment.
We currently intend to retain most, if not all, of our available
funds and any future earnings after this offering to fund the
development and growth of our business. As a result, we do not
expect to pay any cash dividends in the foreseeable future.
Therefore, you should not rely on an investment in our common stock
as a source for any future dividend income.
Our board of directors has complete discretion as to whether to
distribute dividends, subject to certain requirements of Delaware
General Corporation Law. Even if our board of directors decides to
declare and pay dividends, the timing, amount and form of future
dividends, if any, will depend on, among other things, our future
results of operations and cash flow, our capital requirements and
surplus, the amount of distributions, if any, received by us from
our subsidiaries, our financial condition, contractual restrictions
and other factors deemed relevant by our board of directors.
Accordingly, the return on your investment in our common stock will
likely depend entirely upon any future price appreciation of our
common stock. There is no guarantee that our common stock will
appreciate in value after this offering or even maintain the price
at which you purchased the common stock. You may not realize a
return on your investment in our common stock and you may even lose
your entire investment in our common stock.
Substantial future sales or perceived potential sales of our common
stock in the public market could cause the price of our common
stock to decline.
Sales of our common stock in the public market after this offering,
or the perception that these sales could occur, could cause the
market price of our common stock to decline. Immediately after the
completion of this offering, we will
have shares
of common stock outstanding, assuming the underwriters do not
exercise their option to purchase additional shares of common stock
from us. All common stock sold in this offering will be freely
transferable without restriction or additional registration under
the Securities Act. The remaining shares outstanding after this
offering will be available for sale, upon the expiration of the
180-day lock-up period beginning from the date of this
prospectus, subject to volume and other restrictions as applicable
under Rules 144 and 701 under the Securities Act. Any or all of
these shares may be released prior to the expiration of
the lock-up period at the discretion of Northland
Securities, Inc. and Lake Street Capital Markets, LLC. To the
extent shares are released before the expiration of
the lock-up period and sold into the market, the market
price of our common stock could decline.
We have granted, and may continue to grant, share incentive awards,
which may result in increased share-based compensation
expenses.
We adopted our Amended and Restated
2014 Stock Option and Incentive Plan (the
“2014
Plan”) in October 2014,
for purposes of granting share-based compensation awards to
employees, directors and consultants to incentivize their
performance and align their interests with ours. We account for
compensation costs for all share-based awards issued under the 2014
Plan using a fair-value based method and recognize expenses in our
statements of comprehensive loss in accordance with GAAP. Under the
2014 Plan, we are authorized to grant options to purchase shares of
common stock of our Company, restricted share units to receive
shares of common stock and restricted shares of common stock.
Following the approval of an amendment to the 2014 Plan to increase
the number shares which may be issued pursuant to all awards under
the 2014 Plan by our Board of Directors and holders of a majority
of our outstanding voting securities, the number of shares of
common stock available for issuance under the 2014 Plan is now 5.5
million. As of the date of this prospectus, options to
purchase 4,583,320
shares of common stock have been granted and are outstanding,
70,000 shares of our common
stock have been issued pursuant to the
exercise of options, and 32,500 restricted share units have been
granted, and none of these restricted share units have vested. For
the nine months ended September 30, 2018, we recorded share-based
compensation expense of $1.7 million related to issuances under the
2014 Plan. For the years ended December 31, 2017 and 2016, we
recorded share-based compensation expense of $1.9 million and $1.2
million related to issuances under the 2014 Plan.
We believe the granting of share incentive awards is important to
our ability to attract and retain employees, and we will continue
to grant share incentive awards to employees in the future. As a
result, our expenses associated with share-based compensation may
increase, which may have an adverse effect on our results of
operations.
State securities laws may limit secondary trading of our common
stock if our common stock is not listed on a national securities
exchange, which may restrict the states in which and conditions
under which you can sell shares purchased in this
offering.
Secondary
trading of the shares sold in this offering will not be possible in
any state until the shares are qualified for sale
under the applicable securities laws of the state, or there is
confirmation that an exemption, such as resulting from the
potential listing of our common stock on the Nasdaq Capital Market
or another national securities exchange or listing in certain
recognized securities manuals, is available for secondary trading
in the state. If we fail to list our common stock on a national
securities exchange and otherwise fail to register, qualify, obtain
or verify an exemption for the secondary trading of our common
stock in any particular state, any shares purchased in this
offering may not be offered, sold to, or be purchased by a resident
of such state. In the event that a significant number of states
refuse to permit secondary trading in our common stock, the
liquidity for our common stock could be significantly impacted,
thus causing you to suffer a loss on your investment. While we
intend to seek to facilitate secondary trading in our common stock
in the event our common stock is not listed on a national
securities exchange, there can be no assurances that we will be
successful in qualifying or finding an exemption in each state or
other jurisdictions.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve
substantial risks and uncertainties. The forward-looking statements
are contained principally in the sections of this prospectus
entitled “Prospectus
Summary,” “Risk
Factors,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and
“Business,” but
are also contained elsewhere in this prospectus. In some cases, you
can identify forward-looking statements by the words
“anticipate,” “believe,”
“continue,” “could,”
“estimate,” “expect,” “intend,”
“may,” “might,” “objective,”
“ongoing,” “plan,” “predict,”
“project,” “potential,”
“should,” “will,” or “would,”
or the negative of these terms, or other comparable terminology
intended to identify statements about the future. These statements
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance
or achievements to be materially different from the information
expressed or implied by these forward-looking statements. Although
we believe that we have a reasonable basis for each forward-looking
statement contained in this prospectus, we caution you that these
statements are based on a combination of facts and factors
currently known by us and our expectations of the future, about
which we cannot be certain. Forward-looking statements include
statements about:
●
overall strength
and stability of general economic conditions and of the electronic
video game sports (“esports”) industry in the United
States and globally;
●
changes in consumer
demand for, and acceptance of, our services and the games that we
license for our tournaments and other experiences, as well as
online gaming in general;
●
changes in the
competitive environment, including adoption of technologies,
services and products that compete with our own;
●
our ability to
generate consistent revenue;
●
our ability to
effectively execute our business plan;
●
changes in the
price of streaming services, licensing fees, and network
infrastructure, hosting and maintenance;
●
changes in laws or
regulations governing our business and operations;
●
our ability to
maintain adequate liquidity and financing sources and an
appropriate level of debt on terms favorable to us;
●
our ability to
effectively market our services;
●
costs and risks
associated with litigation;
●
our ability to
obtain and protect our existing intellectual property protections,
including patents, trademarks and copyrights;
●
our ability to
obtain and enter into new licensing agreements with game publishers
and owners;
●
changes in
accounting principles, or their application or interpretation, and
our ability to make estimates and the assumptions underlying the
estimates, which could have an effect on earnings;
●
interest rates and
the credit markets;
●
our ability to list
our shares on the Nasdaq Capital Market or any other exchange and
maintain such listing; and
●
other risks
described from time to time in periodic and current reports that we
file with the SEC.
This
list of factors that may affect future performance and the accuracy
of forward-looking statements is illustrative, but not exhaustive.
New risk factors and uncertainties not described here or elsewhere
in this prospectus, including in the sections entitled
“Risk Factors,”
may emerge from time to time. Moreover, because we operate in a
competitive and rapidly changing environment, it is not possible
for our management to predict all risk factors and uncertainties,
nor can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements we may make. The forward-looking
statements are also subject to the risks and uncertainties specific
to our Company, including but not limited to the fact that we have
no operating history as a public company. In light of these risks,
uncertainties and assumptions, the future events and trends
discussed in this prospectus may not occur, and actual results
could differ materially and adversely from those anticipated or
implied in the forward-looking statements.
You
should not rely upon forward-looking statements as predictions of
future events. Although we believe the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee
that the future results, levels of activity, performance and events
and circumstances reflected in the forward-looking statements will
be achieved or occur. Moreover, neither we nor any other person
assume responsibility for the accuracy and completeness of the
forward-looking statements. Except as
required by applicable law, including the securities laws of the
United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
You
should read this prospectus, the documents referenced herein and
those documents filed as exhibits to the registration statement, of
which this prospectus is a part, with the understanding that our
actual future results, levels of activity, performance and
achievements may be materially different from what we
expect.
In addition to the industry, market and competitive position data
referenced in this prospectus from our own internal estimates and
research, some market data and other statistical information
included in this prospectus are based in part upon information
obtained from third-party industry publications, research, surveys
and studies, none of which we commissioned. Third-party industry
publications, research, surveys and studies generally indicate that
their information has been obtained from sources believed to be
reliable, although they do not guarantee the accuracy or
completeness of such information.
We are responsible for all of the disclosure in this prospectus and
while we believe that each of the publications, research, surveys
and studies included in this prospectus are prepared by reputable
sources, neither we, nor the underwriters have independently
verified market and industry data from third-party sources. In
addition, while we believe our internal company research and
estimates are reliable, such research and estimates have not been
verified by independent sources. Assumptions and estimates of our
and our industry’s future performance are necessarily subject
to a high degree of uncertainty and risk due to a variety of
factors, including those described in “Risk
Factors.” These and other
factors could cause our future performance to differ materially
from our assumptions and estimates. See “Special Note Regarding
Forward-Looking Statements.”
We estimate that the net proceeds to us from the sale of shares of
our common stock in this offering will be approximately
$
million (or approximately $
million if the underwriters exercise their option to purchase
additional shares of common stock from us in full), based on an
assumed initial public offering price of $
per share, which is the midpoint of the price range set forth on
the cover page of this prospectus, after deducting the estimated
underwriting discounts and commissions and estimated offering
expenses payable by us.
Each $1.00 increase (decrease) in the assumed initial public
offering price of $
per share would increase (decrease) the net proceeds to us from
this offering by approximately $
million, assuming the number of shares offered by us, as set forth
on the cover page of this prospectus, remains the same, and after
deducting underwriting discounts and commissions and estimated
offering expenses payable by us. We may also increase or decrease
the number of shares we are offering. Each increase (decrease) of
1,000,000 shares in the number of shares offered by us would
increase (decrease) the net proceeds to us from this offering by
approximately $
million, assuming the assumed initial public offering price stays
the same, and after deducting underwriting discounts and
commissions and estimated offering expenses payable by
us.
The principal purposes of this offering are to obtain additional
capital to support our operations, to create a public market for
our common stock and to facilitate our future access to the public
equity markets. We currently intend to use the net proceeds we
receive from this offering for working capital and general
corporate purposes, including sales and marketing activities,
product development and capital expenditures. We may also use a
portion of the net proceeds for the acquisition of, or investment
in, technologies, solutions or businesses. However, we have no
present commitments or agreements to enter into any acquisitions or
investments. Pending these uses, we may invest the net proceeds
from this offering in short-term, investment-grade interest-bearing
securities such as money market accounts, certificates of deposit,
commercial paper and guaranteed obligations of the U.S.
government.
The amounts and timing of our actual expenditure, including
expenditure related to sales and marketing and product development
will depend on numerous factors, including the status of our
product development efforts, our sales and marketing activities,
expansion internationally, the amount of cash generated or used by
our operations, competitive pressures and other factors described
under “Risk
Factors” in this prospectus. We therefore cannot
estimate the amount of net proceeds to be used for the purposes
described above. As a result, we may find it necessary or advisable
to use the net proceeds for other purposes. Our management will
have broad discretion in the application of the net proceeds, and
investors will be relying on our judgment regarding the application
of the net proceeds from this offering. Investors will not have an
opportunity to evaluate the economic, financial or other
information on which we base our decisions regarding the use of
these proceeds.
We have never declared or paid any dividends on our capital stock.
We currently intend to retain all available funds and any future
earnings for the operation and expansion of our business and,
therefore, we do not anticipate declaring or paying cash dividends
in the foreseeable future. The payment of dividends will be at the
discretion of our Board of Directors and will depend on our results
of operations, capital requirements, financial condition,
prospects, contractual arrangements, any limitations on payment of
dividends present in our current and future debt agreements, and
other factors that our board of directors may deem
relevant.
The following table sets forth our cash and capitalization as of
September 30, 2018:
●
on a pro forma basis, giving effect to the
automatic conversion of all outstanding
principal and accrued but unpaid interest on our outstanding 9.00%
secured convertible promissory notes, totaling $13.3 million at September 30, 2018, into
an aggregate of shares of
our common stock immediately prior to the closing of this offering
(assuming an initial public offering price of
$ , the
midpoint of the price range set forth on the cover page of this
prospectus);
and
●
on
a pro forma as adjusted basis to reflect the sale by us
of shares
of common stock in this offering at an assumed initial public
offering price of $
per share, the midpoint of the price range set
forth on the cover page of this prospectus, after deducting
underwriting discounts and commissions and estimated offering
expenses payable by us.
The pro forma and pro forma as adjusted information below is
illustrative only, and our capitalization following the closing of
this offering will be adjusted based on the actual initial public
offering price and other terms of this offering determined at
pricing as well as our actual expenses. You should read this table
together with “Selected Financial
Data” and
“Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” and our
financial statements and the related notes thereto appearing
elsewhere in this prospectus.
|
|
|
|
|
|
|
|
|
|
|
$ 5,990,645
|
$
|
$
|
|
|
|
|
Convertible notes
payable
|
9,251,551
|
|
|
Common stock, par
value $0.001 per share, 50,000,000 shares authorized, 13,830,489
shares issued and outstanding, actual;
shares
issued and outstanding, pro forma;
shares
issued and outstanding, pro forma as adjusted
|
13,831
|
|
|
Additional paid-in
capital
|
45,902,152
|
|
|
|
(47,649,495)
|
|
|
Total
stockholders’ deficit
|
(1,733,512)
|
|
|
|
$ 7,518,039
|
$
|
$
|
_______________
(1)
Each $1.00 increase
(decrease) in the assumed initial public offering price of $
per share, which is the midpoint of the
price range set forth on the cover page of this prospectus, would
increase (decrease) each of cash, total stockholders’
(deficit) equity and total capitalization by approximately $
million, assuming that the number
of shares offered by us, as set forth on the cover page of this
prospectus, remains the same, and after deducting underwriting
discounts and commissions and estimated offering expenses payable
by us. Similarly, each increase (decrease) of 1,000,000 shares in
the number of shares offered by us would increase (decrease)
each of cash, total stockholders’ (deficit) equity and total
capitalization by approximately $
million, assuming that the
assumed initial public offering price remains the same, and after
deducting underwriting discounts and commissions and estimated
offering expenses payable by us. The pro forma as adjusted information discussed
above is illustrative only and will adjust based on the actual
initial public offering price and other terms of this offering
determined at pricing.
The number of shares of common stock that will be outstanding after
this offering is based on 13,830,489 shares of common stock
outstanding as of September 30, 2018, and excludes as of such
date:
●
6,418,616
shares
of common stock issuable upon exercise of warrants to purchase our
common stock, including an estimated
3,626,717 warrants
(subject to adjustment as described below) that are callable, at
the election of the Company, at any time following the completion
of this offering;
●
3,671,736 shares of common stock issuable upon exercise of
options held and 1,733,264 shares of common stock reserved for issuance
pursuant to our 2014 Plan; and
●
shares
of common stock issuable upon the exercise of the warrant to be issued to the underwriters, which
equates
to %
of the number of shares of our common stock to be issued and sold
in this offering.
If you invest in our common stock in this offering, your interest
will be diluted to the extent of the difference between the assumed
initial public offering price per share of our common stock and the
pro forma as adjusted net tangible book value per share of our
common stock immediately after the completion of this
offering. Net tangible book value per share of our common
stock is determined at any date by subtracting our total
liabilities from the amount of our total tangible assets (total
assets, less intangible assets) and dividing the difference by the
number of shares of our common stock deemed to be outstanding at
that date.
Our historical net tangible book value (deficit) as of September
30, 2018 was approximately $(2,163,169), or $(0.16) per share of
common stock. Our historical net tangible book value per share
represents our total tangible assets less our total liabilities,
divided by the number of shares of common stock outstanding as of
September 30, 2018.
Our pro forma net tangible book value as of September 30, 2018 was
$ million,
or $ per
share of common stock. Pro forma net tangible book value per share
represents our total tangible assets less our total liabilities,
divided by the number of shares of common stock outstanding as of
September 30, 2018, after giving effect to the automatic conversion
of all principal and accrued but unpaid interest on our outstanding
9.00% convertible promissory notes, totaling $13.3 million at
September 30, 2018, into an aggregate of
shares of our common stock immediately prior to
the closing of this offering.
After further giving effect to (i) the pro forma adjustment
described above, and (ii) our receipt of approximately
$
million of estimated net proceeds, after deducting underwriting
discounts and commissions and estimated offering expenses payable
by us, from our sale of common stock in this offering at an assumed
initial public offering price of
$
per share, the midpoint of the price range set forth on the cover
page of this prospectus, our pro forma as adjusted net tangible
book value as of September 30, 2018, would have been approximately
$
million, or
$
per share. This amount represents an immediate increase in net
tangible book value of
$
per share of our common stock to existing stockholders and an
immediate dilution in net tangible book value of
$
per share of our common stock to new investors purchasing shares of
common stock in this offering.
The following table illustrates this dilution on a per share
basis to new investors:
|
|
|
|
|
|
|
|
Assumed initial
public offering price per share
|
|
|
|
|
$
|
|
|
Historical net
tangible book value (deficit) per share as of September 30, 2018
|
|
$
|
(0.16)
|
|
|
|
|
Pro forma increase in
net tangible book value per share attributable to the
transactions described above
|
|
$
|
|
|
|
|
|
Pro forma net
tangible book value per share as of September 30, 2018
|
|
$
|
|
|
|
|
|
Increase in pro
forma net tangible book value per share attributed to new investors
purchasing shares from us in this offering
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma as
adjusted net tangible book value per share after giving effect to
this offering
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Dilution in pro
forma as adjusted net tangible book value per share to new
investors in this offering
|
|
|
|
|
$
|
|
|
The dilution information discussed above is illustrative only and
will change based on the actual initial public offering price and
other terms of this offering to be determined at pricing. Each
$1.00 increase (decrease) in the assumed initial public offering
price of
$ per
share, the midpoint of the price range set forth on the cover page
of this prospectus, would increase (decrease) the pro forma as
adjusted net tangible book value per share by approximately
$ million,
or by approximately $ per share,
assuming the number of shares of common stock offered by us, as set
forth on the cover page of this prospectus, remains the same, after
deducting underwriting discounts and commissions and estimated
offering expenses payable by us. Similarly, each increase
(decrease) of 1,000,000 shares in the number of shares of common
stock offered by us would increase (decrease) the pro forma as
adjusted net tangible book value per share by approximately
$ million, or
approximately
$ per
share, assuming the assumed initial public offering price remains
the same, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us.
If the underwriters exercise their option to purchase additional
shares in full in this offering, the pro forma as adjusted net
tangible book value after this offering would be approximately
$ million, or approximately
$
per share, the increase in pro forma net tangible book value to
existing stockholders would be
$
per share, and the dilution per share to new investors would be
$
per share, in each case based on an assumed initial public offering
price of
$
per share, the midpoint of the price range set forth on the cover
page of this prospectus.
The
following table summarizes as of September 30, 2018, on the pro
forma as adjusted basis described above, the number of shares of
our common stock, the total consideration and the average price per
share (i) paid to us by our existing stockholders and
(ii) to be paid by investors purchasing our common stock in
this offering at an assumed initial public offering price of
$ per
share, the midpoint of the price range set forth on the cover page
of this prospectus, before deducting underwriting discounts and
commissions and estimated offering expenses payable by us.
|
|
|
|
|
|
|
|
|
|
Existing
Stockholders
|
|
%
|
$
|
%
|
$
|
New
Investors
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
%
|
$
|
%
|
$
|
The number of shares of common stock that will be outstanding after
this offering is based on 13,830,489 shares of common stock
outstanding as of September 30, 2018, and excludes as of such
date:
●
6,418,616 shares of
common stock issuable upon exercise of warrants to purchase our
common stock, including an estimated 3,626,717 warrants (subject to
adjustment as described below) that are callable, at the election
of the Company, at any time following the completion of this
offering;
●
3,671,736
shares of common stock issuable upon exercise of options held and
1,733,264 shares of common stock reserved for issuance pursuant to
our 2014 Plan; and
●
shares
of common stock issuable upon the exercise of the warrant to be issued to the underwriters, which
equates
to %
of the number of shares of our common stock to be issued and sold
in this offering.
If the underwriters exercise their option to purchase additional
shares in full, the percentage of shares of common stock held by
existing stockholders will decrease to
approximately % of the total
number of shares of our common stock outstanding after this
offering, and the number of shares held by new investors will
increase to , or
approximately % of the total
number of shares of common stock outstanding after the
offering.
To the extent that options or warrants are exercised, new options
or other securities are issued under our equity incentive plans, or
we issue additional shares of common stock in the future, there
will be further dilution to investors participating in this
offering. In addition, we may choose to raise additional capital
because of market conditions or strategic considerations, even if
we believe that we have sufficient funds for our current or future
operating plans. If we raise additional capital through the sale of
equity or convertible debt securities, the issuance of these
securities could result in further dilution to our
stockholders.
The following selected financial data should be read together with
our financial statements and related notes thereto, as well as the
information found under the sections titled
“Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” included
elsewhere in this prospectus. We derived the selected financial
data as of and for the years ended December 31, 2017 and 2016 from
our audited financial statements included elsewhere in this
prospectus. We have derived the unaudited financial data for the
nine months ended September 30, 2018 and 2017 and as of
September 30, 2018
from our unaudited condensed financial statements included
elsewhere in this prospectus. Our historical results are not
necessarily indicative of the results to be expected in the future
and our interim results are not necessarily indicative of results
to be expected for the full year ending December 31, 2018, or
any other period.
|
|
Nine
Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
Statements
of Operations Data:
|
|
Sales
|
$201,182
|
$269,892
|
$ 639,744
|
$ 73,256
|
Cost of sales
|
1,487,905
|
1,460,438
|
375,177
|
1,145,365
|
Gross profit
(loss)
|
(1,286,723)
|
(1,190,546)
|
264,567
|
(1,072,109)
|
|
|
|
|
|
Operating expense:
|
|
|
|
|
Sales, marketing and
advertising
|
1,155,506
|
1,295,016
|
995,747
|
664,387
|
Research and development
|
61,543
|
142,380
|
12,252
|
53,904
|
General and administrative
|
12,451,636
|
9,737,460
|
10,553,739
|
9,218,455
|
Total operating expense
|
13,668,685
|
11,174,856
|
11,561,738
|
9,936,746
|
Loss from operations
|
(14,955,408)
|
(12,365,402)
|
(11,297,171)
|
(11,008,855)
|
|
|
|
|
|
Other Income (expense), net:
|
|
|
|
|
Interest expense, net
|
-
|
-
|
(1,847,742)
|
|
Other
|
-
|
-
|
2,076
|
780
|
Other income (expense), net
|
-
|
-
|
(1,845,666)
|
780
|
Net loss
|
$(14,955,408)
|
$(12,365,402)
|
$ (13,142,837)
|
$ (11,008,075)
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
Basic and diluted
|
$(1.17)
|
$(1.53)
|
$ (0.95)
|
$ (0.89)
|
Weighted average common shares used to compute
net loss per share:
|
|
|
|
|
Basic and diluted
|
12,740,023
|
8,066,901
|
13,817,886
|
12,379,281
|
Pro forma net loss per share
(unaudited):
|
|
|
|
|
Basic and
diluted(1)
|
$
|
$
|
$
|
$
|
Pro forma weighted average common shares
outstanding (unaudited):
|
|
|
|
|
Basic and
diluted(1)
|
|
|
|
|
_______________
(1)
See Note 1 to each
of our audited and unaudited condensed financial statements,
respectively, included elsewhere in this prospectus for an
explanation of the method used to calculate the historical and pro
forma net loss per share, basic and diluted, and the number of
shares used in the computation of the per share
amounts.
|
|
|
|
|
|
|
Balance
Sheet Data:
|
|
|
|
|
|
|
|
Cash
|
$1,709,473
|
$2,870,546
|
$5,990,645
|
Accounts
receivable
|
113,702
|
-
|
110,000
|
Prepaid expenses
and other current assets
|
780,111
|
41,224
|
714,110
|
Property and
equipment, net
|
1,137,817
|
1,804,353
|
707,449
|
Intangible and
other assets, net
|
340,998
|
475,001
|
429,657
|
Accounts payable
and accrued expenses
|
383,814
|
449,221
|
433,822
|
|
-
|
-
|
9,251,551
|
Total
stockholders’ equity (deficit)
|
3,698,287
|
4,741,903
|
(1,733,512)
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion and analysis of our
financial condition and results of our operations together with our
financial statements and the notes thereto appearing elsewhere in
this prospectus. This discussion contains forward-looking
statements reflecting our current expectations, whose actual
outcomes involve risks and uncertainties. Actual results and the
timing of events may differ materially from those stated in or
implied by these forward-looking statements due to a number of
factors, including those discussed in the sections entitled
“Risk Factors,” “Cautionary Statement Regarding
Forward-Looking Statements” and elsewhere in this
prospectus.
Overview
We are
a leading amateur esports community and content platform offering a
personalized experience to the large and underserved global
audience of 2.3 billion gamers, as estimated by NewZoo. Through our proprietary, cloud-based technology
platform, we connect our network of gamers, venues and brand
partners to enable local, social and competitive esports that can
be uniquely broadcast through our platform. We offer daily and
season-focused offerings for which amateur competitive gamers
establish meaningful connections with each other while improving
their skills.
As a
first-mover in defining the amateur esports category in 2015, we
believe we are one of the most recognizable brands for amateur
gamers. We have multi-year strategic partnerships with leading game
publishers such as Microsoft and Riot Games with titles including
Minecraft and League of Legends, respectively, as well as
relationships with Supercell and Epic Games with respect to Clash
Royale and Fornite, respectively, to drive use among our member base and further
penetrate our target market. We deliver enhanced gaming experiences
to our members with these titles through our platform, and we
provide our venue and brand partners access to our member network
and platform technology. We believe that our members and the
organizations that use our platform are only beginning to leverage
the power of the consumer experience, commercial benefits, and data
analytics our technology enables. Primarily targeting Generation Z
and Millennials, members join through accessible, free-to-play
experiences allowing us to reach the expansive amateur gaming
market. We intend to convert members into subscribers through
offering two tiers of competitive gameplay engagement: (i) our
monthly subscription for the more casual competitive player,
offering access to exclusive online tournaments and member
benefits; and (ii) our semi-annual season pass for the more
competitive player, offering access to our city leagues and
advanced amateur esports offers along with membership
rewards.
Components of Results of Operations
Revenue
We
generate revenues and related cash flows from (i) the sale of
subscriptions to gamers for participation in our in-person and
online multiplayer gaming experiences, (ii) brand and media
partnerships and (iii) merchandise sales.
Subscription Revenue. To date, subscription revenues have
consisted of the sale of season passes to gamers for participation
in our in-person and or online multiplayer gaming experiences. For
the periods presented herein, season passes for gaming experiences
were primarily comprised of multi-week packages and also include
one-time, single experience admissions. The majority of the gaming
experiences we have offered to date have occurred in movie
theatres.
We intend to convert members into subscribers by offering our
members two tiers of competitive gameplay engagement: (i) a monthly
subscription for the more casual competitive player, offering
access to exclusive online tournaments and member benefits; and
(ii) a semi-annual season pass for the more competitive player,
offering access to our city leagues and advanced amateur esports
offers along with membership
rewards.
Brand and Media
Partnerships. We generate brand and media
partnership revenues primarily from sales of various forms of
sponsorships and promotional campaigns on our online platforms and
from sponsorship at our in-person esports experiences. We also
generate brand and media partnership revenues from the development
of content tailored specifically for our partners’
distribution channels. We actively pursue the sale of
sponsorships through our brand and media partnerships, including
arrangements that may include: exclusive or non-exclusive title
sponsorships, marketing benefits, official product status
exclusivity, product visibly and additional infrastructure
placement, social media rights (including rights to create and post
social content and clips), rights to on-screen activations and
promotions, display material rights, media rights, hospitality and
tickets and merchandising rights.
We
expect our brand and media partnerships revenues to
increase in the foreseeable future as we introduce new brand and
media partnership solutions and attract more sponsorship partners,
particularly as we license additional game titles, grow our
subscriber base, and generate a large volume of amateur gaming
content.
Cost of Sales
Cost of
sales includes direct costs incurred for the production of our
in-theatre and online gaming experiences, including theatre rental,
licenses and contract services.
Theatre rental. Theatre rental costs consists of net revenue
share payments to our contracted theatre groups, including
Cinemark, National Amusements, Studio Movie Grill and others, for
hosting our in-theatre experiences.
Licenses Fees. License agreements with game developers
generally include the grant to us of a license, during the
applicable term, to (i) reproduce, publicly display and publicly
perform the applicable game and approved game content to authorized
users of the game as part of our leagues, and (ii) display approved
advertising content in connection with game developer-approved
advertising, marketing and promotion of our leagues. License
agreements may also include a license to create derivative works
using game content and/or game publisher marks in connection with
the creation of merchandise. In consideration for the licenses
granted, we are typically obligated to pay a royalty to the
game-publisher. We are currently
parties to license agreements with Riot Games and Microsoft for the
use of League of Legends and Minecraft, respectively. Although we
have relationships with Supercell and Epic Games for experiences
involving Clash Royale and Fortnite, respectively, we currently do
not have definitive license agreements in place with respect to
these relationships.
License
fees for the 18-month period ended December 31, 2017 also include
amortized license fee expense related to a June 2016 gaming license
agreement whereby we issued restricted stock units to a third-party
upon the achievement of certain game related service conditions. As
we continue to become a more widely recognized brand in the esports
space, we expect we will be in a position to secure more favorable
terms in future license agreements with game
publishers.
Contract Services. Contract
services includes agency and contract labor costs incurred in
connection with the execution of our in-person experiences held in
theatres, including onsite staff to manage logistics and technical
support, assist participants and ensure and promote the quality of
the brand and overall gaming experience.
Materials / Giveaways and Prizing. Materials, giveaways and
prizing costs include the costs of apparel and other paraphernalia,
as well as the cost of scholarships, cash prizes and other awards
provided in connection with our amateur esports league
seasons.
Selling, Marketing and Advertising.
Selling,
marketing and advertising expenses include the cost of creating and
implementing marketing strategies, conducting market research,
building relationships with our target audience, and increasing the
overall exposure of our amateur esports brand to gamers. In-theatre
gaming experience and Super League brand related advertising costs
include the cost of producing advertisements, social media, print
media, marketing, promotions, and merchandising. We expense
advertising costs as incurred.
Research and Development
Research
and development costs represent costs incurred to develop and test
our technology platform and include outside consultants and
contractors.
General and Administrative
General and administrative expenses consist primarily of
personnel-related costs, including salaries and benefits, non-cash
stock compensation expenses, office and facilities costs, legal,
accounting and other professional fees, public relations costs and
other corporate and administrative costs.
Results of Operations
Comparison of the Nine Months ended September 30, 2018 and
2017
The
following table sets forth a summary of our statements of
operations for the nine months ended September 30, 2018 and
2017:
|
For the Nine Months Ended September 30,
|
|
|
|
|
|
|
|
SALES
|
$ 639,744
|
$ 73,256
|
COST OF SALES
|
375,177
|
1,145,365
|
GROSS PROFIT (LOSS)
|
264,567
|
(1,072,109)
|
|
|
|
OPERATING EXPENSES
|
|
|
Selling,
marketing and advertising
|
995,747
|
664,387
|
Research
and development
|
12,252
|
53,904
|
General
and administrative
|
10,553,739
|
9,218,455
|
Total
operating expenses
|
11,561,738
|
9,936,746
|
Net
operating loss
|
(11,297,171)
|
(11,008,855)
|
Total
other income (expense)
|
(1,845,666)
|
780
|
NET LOSS
|
$ (13,142,837)
|
$ (11,008,075)
|
Revenue
Revenue
for the nine months ended September 30, 2018 increased $566,488, or
over 300% when compared to the same period in 2017. Revenues for
the periods presented were comprised of the following:
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
Subscription
|
$ 92,344
|
$ 60,989
|
$ 31,355
|
51%
|
Brand
and Media Partnerships
|
547,400
|
12,267
|
535,133
|
+300%
|
|
$ 639,744
|
$ 73,256
|
$ 566,488
|
+300%
|
Subscriptions. Subscription revenue for the nine months
ended September 30, 2018 increased $31,355, or 51%, compared to the
same period in 2017. The increase was primarily due to higher
average attendance for our Spring Minecraft 2018 City Champs
experiences, which were held in 16 cities compared to 12 cities in
2017, and third quarter revenues recognized in connection with our
Minecraft related database asset acquisition in June 2018. In
addition, we held Minecon Earth party experiences in the third
quarter of 2018 that were previously held in the fourth quarter in
2017.
Brand and Media Partnerships. Brand and media partnerships
revenue for the nine months ended September 30, 2018 increased
$535,133, or over 300%, compared to the same period in 2017. This
period over period increase was primarily attributable to the
growing visibility of our brand and platform. Brand and media
partnerships revenue for the nine months ended September 30, 2018
included amounts from Logitech, Inc. (“Logitech”), Red Bull North
America, Inc., Tribeca Film Festival and Samsung, as compared to
brand and media partnerships revenue for the nine months ended
September 30, 2017 solely from our partnership with Viacom Media
Networks’ Nickelodeon (“Nickelodeon”).
Cost of Sales
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
Cost of
sales
|
$ 375,177
|
$ 1,145,365
|
$ (770,188)
|
(67)%)
|
|
|
|
|
|
Cost of
sales for the nine months ended September 30, 2018 decreased
$770,188, or 67%, compared to the same period in 2017. The change
in cost of sales was primarily due to the
following:
●
License Fees. License fees for the nine months
ended September 30, 2018 decreased $817,071, or 98%, compared to
the same period in 2017. In June 2016, we entered into a gaming
license agreement whereby we issued 550,000 restricted stock units
(“License
RSUs”) upon the achievement of certain game related
service conditions. Noncash license fee expense included in cost of
sales for the nine months ended September 30, 2017 related to
License RSUs, which was recognized over the contractual license
term of 18-months beginning June 2016 and ending December 31, 2017,
totaled $825,000.
●
Contract Services. Contract services
costs for the nine months ended September 30, 2018 increased
$18,447, or 12%, compared to the same period in 2017, primarily due
to an increase in contract labor costs in connection with our
roll-out of new esport tournament formats in 2018 and the
enhancement of our amateur gamer experiences, including increases
in the average length of gameplay and amateur esports community
interaction.
Operating Expenses
Selling, Marketing and Advertising
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
Marketing and Advertising
|
$995,747
|
$664,387
|
$331,360
|
50%
|
Selling,
marketing and advertising expenses for the nine months ended
September 30, 2018 increased $331,360, or 50%, compared to the same
period in 2017, primarily due to the amortization of noncash
in-kind advertising costs which were initially capitalized pursuant
to a June 2017 third-party investment agreement. The investment
agreement included in-kind advertising for use in future periods,
valued at $1.0 million, as a component of the consideration paid to
us in exchange for equity in the Company. This prepaid advertising
cost is being amortized over an 18-month period, ending in December
2018. In addition, selling, marketing and advertising costs for the
nine months ended September 30, 2018 included $86,341 of costs
incurred in connection with the development of a pilot program and
related facilities for use in the launch of SuperLeagueTV in April
2018.
Research and Development
|
Nine
Months Ended
September 30,
|
|
|
|
|
|
$
Change
|
%
Change
|
|
(Unaudited)
|
|
|
Research
and development
|
$ 12,252
|
$ 53,904
|
$ (41,652)
|
(77)%)
|
|
|
|
|
|
Research
and development expense for the nine months ended September 30,
2018 decreased $41,652 or 77%, compared to the same period in 2017,
primarily due to a reduction in game testing and related technology
development activities. Research and development related game
testing expenses vary period to period based on the timing of the
acquisition and installation of new game properties and
modifications to the functionalities and features of existing game
properties and the platform.
General and Administrative
General
and Administrative expenses for the interim periods presented were
comprised of the following:
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
Personnel
costs
|
$ 5,147,476
|
$ 3,752,080
|
$ 1,395,396
|
37%
|
Office and
facilities
|
368,790
|
335,087
|
33,703
|
10%
|
Professional
fees
|
501,598
|
289,097
|
212,501
|
74%
|
|
2,451,886
|
2,813,665
|
(361,779)
|
(13)
|
Depreciation
and amortization
|
791,140
|
926,439
|
(135,299)
|
(15)%
|
Other
|
1,292,810
|
1,102,060
|
190,750
|
17%
|
Total general
and administrative expense
|
$ 10,553,700
|
$ 9,218,428
|
$ 1,335,272
|
14%
|
General
and administrative expenses for the nine months ended September 30,
2018 increased $1,335,272, or 14%, compared to the same period in
2017. A summary of the main drivers of
the change in general and administrative expenses is as
follows:
●
Increase
in personnel costs totaling $1,395,396, due to an increase in
headcount since the end of the prior year period in connection with
the expansion of our platform and the increasing visibility of our
brand, requiring additional resources across our technology,
product, operations, and commercial departments. As of September
30, 2018 and 2017, we had 46 and 35 full time equivalent employees,
respectively.
●
Increase
in professional fees totaling $212,501, primarily due to an
increase in technical consulting expenses related to the launch of
SuperLeagueTV, the development of our subscription and game related
offerings and our content series, an increase in audit fees
incurred in connection with the completion of the fiscal year 2017
and 2016 audits during the 2018 period, and an increase in
placement fees incurred in connection with technology team contract
positions that were converted to full-time employee positions
during the period.
●
Increase
in other general and administrative expenses totaling $190,750,
primarily due to an increase in insurance, travel, broad-band,
software and subscription costs in connection with the expansion of
operations.
Other Income (expense)
Other
income (expense), net, was primarily comprised of interest expense,
as follows:
|
Nine Months Ended
September 30, 2018
|
|
|
Amortization
of convertible debt discount
|
$ 1,394,048
|
Accrued
interest expense on convertible debt
|
311,068
|
Amortization
of convertible debt issuance costs
|
142,626
|
|
$ 1,847,742
|
Interest Expense
Interest
expense for the nine months ended September 30, 2018, totaled
$1,847,742, relating to the issuance of 9.00% secured convertible
promissory notes, with an aggregate principal amount of
approximately $13,000,000, during the nine months ended September
30, 2018, as described below under Liquidity and Capital
Resources.
Comparisons of the Years Ended December 31, 2017 and
2016
The
following table sets forth a summary of our statements of
operations for the years ended December 31, 2017 and
2016:
|
|
|
|
|
SALES
|
$201,182
|
$269,892
|
COST OF SALES
|
1,487,905
|
1,460,438
|
GROSS LOSS
|
(1,286,723)
|
(1,190,546)
|
|
|
|
OPERATING EXPENSES
|
|
|
Selling,
marketing and advertising
|
1,155,506
|
1,295,016
|
Research
and development
|
61,543
|
142,380
|
General
and administrative
|
12,451,636
|
9,737,460
|
Total
operating expenses
|
13,668,685
|
11,174,856
|
|
|
|
NET LOSS
|
$(14,955,408)
|
$(12,365,402)
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
Subscription
|
$87,480
|
$269,892
|
$(182,412)
|
(68%)
|
Brand
& Media Partnerships
|
113,702
|
-
|
113,702
|
100%
|
|
$201,182
|
$269,892
|
$(68,710)
|
(25%)
|
Revenue
for the year ended December 31, 2017 (“Fiscal 2017”) decreased $68,710,
or 25%, compared to the year ended December 31, 2016 (“Fiscal
2016”). Revenues for the periods presented were
comprised of the following:
Subscription. Subscription revenue from season pass sales
for Fiscal 2017 decreased $182,412, or 68%, compared to Fiscal
2016. The decrease was primarily due to a decrease in the number of
season pass offers and number of participating venues per season
held during Fiscal 2017. Season pass offers for Fiscal 2017 and
Fiscal 2016 were three and five, respectively. Participating venues
per season for Fiscal 2017 and Fiscal 2016 were approximately 12
and 70, respectively. For Fiscal 2017, we completed three seasons
at 12 venues, which resulted in 250 unique experiences, compared to
almost 1,000 unique experiences during Fiscal 2016.
From our inception
in 2015 to mid-Fiscal 2016, our strategy was to establish and
promote our amateur esports brand via expansion into movie theatres
at scale to take advantage of the benefits of being a first mover
in the amateur esports ecosystem. Several factors led to our
strategy shift in mid-Fiscal 2016, including the addition of League
of Legends to our game line up which required broadband and
additional ongoing costs to theatre activation, along with higher
capital investment and operational expense associated with running
experiences across a widely distributed network of venues. We also
recognized an opportunity to establish an amateur esports league
based on geography and create intellectual property around our
city-based U.S. amateur esports league. By the second quarter of
Fiscal 2016, we had approximately 100 active theatres in
approximately 50 markets, but with the launch of our city teams in
November 2016, we decreased our active footprint of theatres to
four, with the intent of gradual expansion in Fiscal 2017 and
beyond. By the first quarter of Fiscal 2017, we expanded to 12
cities. The smaller footprint also allowed us to increase the
quality of our premium experiences and deepen player engagement,
which, in turn, facilitated the further building of our brand and
our ability to attract brand and media partners.
Brand and Media
Partnerships. Brand and media partnership revenues for the
year ended December 31, 2017 were $113,702, compared to $0 for the
year ended December 31, 2016. Brand and media partnerships revenues
for the year ended December 31, 2017 were primarily comprised of
revenues from partnerships with Advanced Micro Devices, Inc.,
Nickelodeon, Mattel, Inc. and DMG
Entertainment.
Cost of Sales
|
|
|
|
|
|
|
|
|
Cost
of sales
|
$1,487,905
|
$1,460,438
|
$27,467
|
2%
|
Cost of
sales for the year ended December 31, 2017 increased $27,467, or
2%, compared to the year ended December 31, 2016. The change was
primarily due to the following:
Contract Services. Contract services costs for the year
ended December 31, 2017 decreased $414,422, or 66%, compared to the
year ended December 31, 2016. The decrease was primarily due to the
reduction in the number of unique experiences held in 2017, as
compared to 2016, resulting from the establishment of our
city-based U.S. amateur gamer esports league as described
above, which focused on holding fewer but higher quality premium
experiences at the local level. The decrease also reflects a
strategic shift to contract directly with our on-site contract
labor workforce instead of using higher-cost staffing agencies,
which provided greater control over the quality of experiences
along with cost savings.
License Fees. License fees included in costs of sales for
the year ended December 31, 2017 increased $457,869, or 76%,
compared to the year ended December 31, 2016. In June 2016, we
entered into a gaming license agreement whereby we agreed to issue
550,000 restricted stock units (“License RSUs”) upon the
achievement of certain game related service conditions. Noncash
license fees included in cost of sales related to License RSUs,
which is recognized over the contractual license term of 18-months
beginning June 2016 and ending December 31, 2017, totaled
$1,054,167 and $595,833 for the years ended December 31, 2017 and
2016, respectively. License fees, excluding the License RSUs were
not material for the periods presented.
Operating Expenses
Selling, Marketing and Advertising
|
|
|
|
|
|
|
|
|
Selling,
Marketing and Advertising
|
$1,155,506
|
$1,295,016
|
$(139,510)
|
(11%)
|
Selling,
marketing and advertising expenses for the year ended December 31,
2017 decreased $139,510, or 11%, compared to the year ended
December 31, 2016. The decrease was primarily due to a reduction in
expense for third-party marketing agency costs totaling $350,377,
due to the transition of certain marketing functions from
third-party agencies to in-house resources. The decrease also
reflects a reduction in marketing expense totaling $79,521, due to
a decrease in influencer marketing costs and a decrease in theatre
promotion costs. This decrease was partially offset by $333,333 of
noncash amortized prepaid advertising costs, which were initially
capitalized pursuant to a June 2017 third-party investment
agreement, which included in-kind advertising for future use by us,
valued at $1.0 million, as a component of the consideration paid by
the third-party in exchange for equity in the Company. The noncash
prepaid advertising is being amortized over a period of 18-months,
ending in December 2018.
Research and Development
|
|
|
|
|
|
|
|
|
Research
and development
|
$61,543
|
$142,380
|
$(80,837)
|
(57%)
|
Research
and development expense for the year ended December 31, 2017
decreased, $80,837 or 57%, compared to the year ended December 31,
2016. Research and development expense decreased due to a reduction
in consulting costs associated with the development of in-theatre
gaming equipment and related technology utilized in connection with
our in-theatre experiences. Research and development expenses
related to game testing and related technology development
activities totaled $52,449 and $50,540, for the years ended
December 31, 2017 and 2016, respectively.
General and Administrative
General
and Administrative expense for the periods presented was comprised
of the following:
|
|
|
|
|
|
|
|
|
Personnel
costs
|
$5,184,986
|
$3,837,841
|
1,347,145
|
35%
|
Office
and facilities
|
267,290
|
194,440
|
72,850
|
37%
|
Professional
fees
|
469,965
|
664,989
|
(195,024)
|
(29%)
|
Stock-based
compensation
|
3,612,743
|
2,661,106
|
951,637
|
36%
|
Depreciation
and amortization
|
1,237,609
|
963,110
|
274,499
|
29%
|
Other
|
1,679,043
|
1,415,974
|
263,069
|
19%
|
Total
general and administrative expense
|
$12,451,636
|
$9,737,460
|
$2,714,176
|
28%
|
A summary of the main drivers of the change in general and
administrative expenses was as follows:
●
Increase
in personnel costs totaling $1,347,145, due to an increase in
headcount in connection with the expansion of our platform and
continued establishment of our brand, including additional
resources across our technology, product, operations, and
commercial departments. As of December 31, 2017 and 2016, we had 38
and 29 full-time equivalent employees, respectively.
●
Decrease
in professional fees totaling $195,024, due to a decrease in
consulting costs related to the development of the platform and
theatre related infrastructure and networking.
●
Increase
in office and facilities totaling $72,850, primarily due to the
increase in leased office space in June 2016 in connection with the
expansion of our operations.
●
Increase
in noncash stock compensation totaling $951,637, primarily due to
the increase in headcount described above.
●
Increase
in depreciation and amortization totaling $274,499, due to an
increase in furniture and fixtures and computer related hardware
associated with the expansion of operations.
●
Increase in other general and administrative
expense totaling $263,069, primarily due to an increase in
broadband costs totaling $200,726, primarily due to a full year of
expense for theatre installations occurring during the third and
fourth quarters of Fiscal 2017. The increase also reflects an increase in
AWS cloud-based computing service
costs in connection with the expansion of operations utilizing the
platform.
Liquidity and Capital Resources
General
Cash totaled $5,990,645 at September 30, 2018, compared to
$1,709,473 at December 31, 2017 and
$2,870,546 at December 31, 2016.
We have
experienced net losses and negative cash flows from operations
since our inception. As of September 30, 2018, we had cash of
approximately $5,990,645,
negative working capital of approximately $2,870,618, and sustained cumulative losses
attributable to common stockholders of approximately $47,649,495. During the nine months ended
September 30, 2018, the Company issued 9.00% secured convertible
promissory notes in an aggregate principal amount of approximately
$13,000,000.
We
believe that our cash on hand, including the approximately
$ in net
proceeds received from this
offering, will sustain operations until
,
20 . We are dependent on obtaining, and are
continuing to pursue, the necessary funding from outside sources,
including obtaining additional funding from the sale of securities
in order to continue our operations. Without adequate funding, we
may not be able to meet our obligations. We believe these
conditions raise substantial doubt about our ability to continue as
a going concern.
To date, our principal sources of capital used to fund our
operations have been the net proceeds we received from private
sales of equity securities and proceeds received from the issuance
of convertible debt, as described below.
We expect to continue to incur substantial expenditures in the
foreseeable future at rates consistent with expenditures incurred
during Fiscal 2017 and during the nine months ended September 30,
2018 for the development of our esports brand, community and
technology platform. We will require additional financing to
further develop and market our esports technology platform, fund
operations, and otherwise implement our business strategy at
amounts relatively consistent with Fiscal 2018 expenditure levels
disclosed above. Our current financial condition raises substantial
doubt about our ability to continue as a going concern. Our failure
to raise capital as and when needed would have a material adverse
impact on our financial condition, our ability to meet our
obligations, and our ability to pursue our business strategies. We
will seek funds through additional equity or debt financings,
collaborative or other arrangements with corporate sources, or
through other sources of financing.
We are
focused on expanding our service offering through internal
development, collaborations, and through strategic acquisitions. We
are continually evaluating potential asset acquisitions and
business combinations. To finance such acquisitions, we might raise
additional equity capital, incur additional debt, or
both.
Cash Flows for the Nine Months Ended September 30, 2018 and
2017
The following table summarizes changes in cash for the nine
months ended September 30, 2018 and 2017:
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
Net
cash used in operating activities
|
$ (7,880,085)
|
$ (6,443,945)
|
Net
cash used in investing activities
|
(449,431)
|
(348,204)
|
Net
cash provided by financing activities
|
12,610,688
|
8,244,882
|
Increase
in cash
|
4,281,172
|
1,452,733
|
Cash
at beginning of period
|
1,709,473
|
2,870,546
|
Cash
at end of period
|
$ 5,990,645
|
$ 4,323,279
|
Cash Flows from
Operating Activities. Net cash
used in operating activities for the nine months ended September
30, 2018 was $7,880,085, which primarily reflected our net loss of
$13,142,837, net of adjustments to reconcile net loss to net cash
used in operating activities of $5,262,752, which included
$2,451,886 of noncash stock compensation charges, amortization of
the discount on convertible notes issued by us during the 2018
period totaling $1,536,674, as described below, and $791,140 of
noncash depreciation and amortization charges. Changes in working
capital primarily reflected the impact of increases in receivables
and the settlement of payables in the ordinary course. Net cash
used in operating activities for the nine months ended September
30, 2017 was $6,443,945 which primarily reflected our net loss of
$11,008,075, net of adjustments to reconcile net loss to net cash
used in operating activities of $4,564,130, which included
$3,638,665 of noncash stock compensation and game royalty charges
and $926,439 of noncash depreciation and amortization charges.
Changes in working capital did not have a material impact during
the nine months ended September 30,
2017.
Cash Flows from Investing Activities. Cash flows from investing activities were
comprised of the following for the interim periods
presented:
|
Nine Months Ended September 30,
|
|
|
|
|
|
Purchase
of property and equipment
|
$ (189,986)
|
$ (281,273)
|
Capitalization
of software development costs
|
(192,380)
|
(66,931)
|
Acquisition
of other intangible and other assets
|
(67,065)
|
–
|
Net cash used in investing activities
|
$ (449,431)
|
$ (348,204)
|
Cash Flows from Financing Activities. Cash flows from financing activities were
comprised of the following for the interim periods
presented:
|
Nine Months Ended September 30,
|
|
|
|
|
(Unaudited)
|
Proceeds
from issuance of common stock, net of issuance costs
|
$ -
|
$ 8,244,882
|
Proceeds
from convertible note payable, net of issuance cost
|
12,610,688
|
-
|
Net cash provided by financing activities
|
$ 12,610,688
|
$ 8,244,882
|
During
the nine months ended September 30, 2017, the Company issued
2,364,857 shares of common stock at a price of $3.60 per share,
raising aggregate net proceeds of approximately $8.3
million.
In
February through April 2018, we issued 9.00% secured convertible
promissory notes with a collective face value of $3,000,000 (the
“Initial 2018
Notes”). The Initial 2018 Notes (i) accrued simple
interest at the rate of 9.00% per annum, (ii) matured on the
earlier of December 31, 2018 or the close of a $15,000,000 equity
financing (“Qualifying
Equity Financing”) by us, and (iii) all outstanding
principal and accrued interest was automatically convertible into
equity or equity-linked securities sold in a Qualifying Equity
Financing based upon a conversion rate equal to (x) a 10% discount
to the price per share of a Qualifying Equity Financing, with (y) a
floor of $3.60 per share. In addition, the holders of the Initial
2018 Notes were collectively issued warrants to purchase
approximately 166,670 shares of common stock, at an exercise price
of $3.60 per share and a term of five years (the
“Initial 2018
Warrants”).
In May
through August 2018, we issued additional 9.00% secured convertible
promissory notes with a collective face value of $10,000,000 (the
“Additional 2018
Notes”). In May 2018, all of the Initial 2018 Notes
and related accrued interest, totaling $3,056,182, were converted
into the Additional 2018 Notes, resulting in an aggregate principal
amount of $13,056,182 (hereinafter collectively, the
“2018 Notes”).
The holders of the converted Initial 2018 Notes retained their
respective Initial 2018 Warrants.
The
2018 Notes (i) accrue simple interest at the rate of 9.00% per
annum, (ii) mature on the earlier of the closing of an initial
public offering (“IPO”) of our common stock on a
national securities exchange or April 30, 2019, and (iii) all
outstanding principal and accrued interest is automatically
convertible into shares of common stock upon the closing of an IPO
at the lesser of (x) $3.60 per share or (y) a 15% discount to the
price per share of the IPO. In
addition, the holders of the 2018 Notes were collectively
issued 3,626,717 warrants to purchase common stock equal to
100% of the aggregate principal amount of the 2018 Notes divided by
$3.60 per share (the “2018
Warrants”). The number of 2018 Warrants ultimately
issued is subject to adjustment upon the closing of an IPO and will
be determined by dividing 100% of the face value of the 2018 Notes
by the lesser of (x) $3.60 per share or (y) a 15% discount to the
price per share of the IPO. The 2018 Warrants are exercisable for a
term of five years, commencing on the close of an IPO, at an
exercise price equal to the lesser of (x) $3.60 per share or (y) a
15% discount to the IPO price per share and are callable at our
election at any time following the closing of an IPO.
Cash Flows for the Years Ended December 31, 2017 and
2016
The following table summarizes changes in cash for the years
ended December 31, 2017 and 2016:
|
|
|
|
|
Net
cash used in operating activities
|
$(8,968,886)
|
$(8,314,450)
|
Net
cash used in investing activities
|
(437,069)
|
(1,591,950)
|
Net
cash provided by financing activities
|
8,244,882
|
10,413,645
|
(Decrease)
increase in cash
|
(1,161,073)
|
507,245
|
Cash
at beginning of period
|
2,870,546
|
2,363,301
|
Cash
at end of period
|
$1,709,473
|
$2,870,546
|
Cash Flows from Operating Activities. Net cash used in operating activities for the year
ended December 31, 2017 was $8,968,886, which primarily reflected
our net loss of $14,955,408, net of adjustments to reconcile net
loss to net cash used in operating activities of $5,986,522, which
included $4,666,910 of non-cash stock compensation charges and
$1,237,608 of non-cash depreciation and amortization charges.
Changes in working capital primarily reflected increases in
receivables and the settlement of payables in the ordinary course.
Net cash used in operating activities for the year ended December
31, 2016 was $8,314,450, which primarily reflected our net loss of
$12,365,402, net of adjustments to reconcile net loss to net cash
used in operating activities of $4,050,952, which included
$3,298,937 of noncash stock compensation charges and $963,049 of
non-cash depreciation and amortization charges. Changes in working
capital primary reflected the settlement of payables in the
ordinary course.
Cash Flows from Investing Activities. Cash flows from investing activities were
comprised of the following for the annual periods
presented:
|
|
|
|
|
Purchase of
property and equipment
|
$(327,351)
|
$(1,359,927)
|
Capitalization of
software development costs
|
(109,718)
|
(195,453)
|
Acquisition of
other intangible and other assets
|
–
|
(36,570)
|
Net
cash used in investing activities
|
$(437,069)
|
$(1,591,950)
|
Cash Flows from Financing Activities. Cash flows from financing activities were
comprised of the following for the annual periods
presented:
|
|
|
|
|
Proceeds from
issuance of common stock, net of issuance costs
|
$8,244,882
|
$5,356,645
|
Proceeds from
exercise of stock options
|
–
|
7,000
|
Proceeds from
convertible note payable
|
–
|
5,350,000
|
Repayment on
convertible note payable
|
–
|
(300,000)
|
Net
cash provided by financing activities
|
$8,244,882
|
$10,413,645
|
Issuance of Common stock. During the year ended December 31,
2017, the Company issued 2,364,857 shares of common stock at $3.60
per share in private placement transactions, raising net proceeds
of $8,244,882. During the year ended December 31, 2016, the Company
issued 1,517,089 shares of common stock at $3.60 per share in
private placement transactions, raising net proceeds of
$5,356,645.
Convertible Debt. In April 2016, the Company issued
non-interest bearing, unsecured convertible notes in the aggregate
principal amount of $5,350,000 to investors (the
“2016 Notes”),
$5,050,000 of which were automatically converted into 1,551,484
shares of common stock in October 2016 upon the closing by the
Company of a qualified equity offering pursuant to the note
purchase agreement executed in connection with the issuance of the
2016 Notes. The remaining principal amount of $300,000 outstanding
under the 2016 Notes was repaid in full during the Company’s
fiscal year ended December 31, 2016.
Contractual Obligations
As of December 31, 2017, we had no significant commitments for
capital expenditures, nor do we have any committed lines of credit,
noncancelable operating leases obligations, other committed funding
or long-term debt, and no guarantees.
The
operating lease for our corporate headquarters expired on May 31,
2017 and was subsequently amended to operate on a month-to-month
basis.
Rent
expense for the nine months ended September 30, 2018 and 2017
totaled approximately $230,00 and $177,000, respectively. Rent
expense for the years ended December 31, 2017 and 2016 totaled
approximately $238,000 and $184,000, respectively. Rent expense is
included in general and administrative expense in the accompanying
statements of operations included elsewhere in this
prospectus. Rental payments are expensed in the statements of
operations in the period to which they relate. Scheduled rent
increases, if any, are amortized on a straight-line basis over the
lease term.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any off-balance sheet financial
guarantees or other off-balance sheet commitments to
guarantee the payment obligations of any third parties. We have not
entered into any derivative contracts that are indexed to our
shares and classified as stockholder’s equity or that are not
reflected in our financial statements included elsewhere in this
prospectus. Furthermore, we do not have any retained or contingent
interest in assets transferred to an unconsolidated entity that
serves as credit, liquidity or market risk support to such entity.
We do not have any variable interest in any unconsolidated entity
that provides financing, liquidity, market risk or credit support
to us or engages in leasing, hedging or product development
services with us.
Quantitative and Qualitative Disclosures about Market
Risk
In the
ordinary course of our business, we are not currently exposed to
market risk of the sort that may arise from changes in interest
rates or foreign currency exchange rates, or that may otherwise
arise from transactions in derivatives.
The
preparation of financial statements in conformity with GAAP
requires our management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates. The Company’s significant estimates and
assumptions include the fair value of the Company’s common
stock, stock-based compensation, the recoverability and useful
lives of long-lived assets, and the valuation allowance relating to
the Company’s deferred tax assets.
Recent Accounting Pronouncements
In May
2014, the Financial Accounting Standards Board (“FASB”) issued an accounting
update requiring a company to recognize as revenue the amount of
consideration it expects to be entitled to in connection with the
transfer of promised goods or services to customers. The accounting
standard update will replace most of the exiting revenue
recognition guidance currently promulgated by GAAP. In August 2015,
the FASB decided to delay the effective date of new revenue
standard by one year. The new guidance is effective for emerging
growth companies for annual periods beginning after December 15,
2018, with early adoption permitted. We are in the process of
evaluating the impact, if any, of the update on our financial
position, results of operations and financial statement
disclosures.
In February 2016, the
FASB issued an accounting update that requires lessees to present
right-of-use assets and lease liabilities on the balance sheet. The
new guidance is to be applied using a modified retrospective
approach at the beginning of the earliest comparative periods in
the financial statements and is effective for fiscal years
beginning after December 15, 2019 and early adoption is permitted.
The Company is evaluating the impact that this guidance will have
on its financial position, results of operations and financial
statement disclosures.
Contingencies
Certain
conditions may exist as of the date the financial statements are
issued, which may result in a loss to the Company, but which will
only be resolved when one or more future events occur or fail to
occur. The Company’s management, in consultation with its
legal counsel as appropriate, assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related to legal proceedings that are
pending against the Company or unasserted claims that may result in
such proceedings, the Company, in consultation with legal counsel,
evaluates the perceived merits of any legal proceedings or
unasserted claims, as well as the perceived merits of the amount of
relief sought or expected to be sought therein. If the assessment
of a contingency indicates it is probable that a material loss has
been incurred and the amount of the liability can be estimated,
then the estimated liability would be accrued in the
Company’s financial statements. If the assessment indicates a
potentially material loss contingency is not probable, but is
reasonably possible, or is probable, but cannot be estimated, then
the nature of the contingent liability, together with an estimate
of the range of possible loss, if determinable and material, would
be disclosed. Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the
guarantees would be disclosed.
Relaxed Ongoing Reporting Requirements
Upon
the completion of this offering, we expect to become a public
reporting company under the Exchange Act, and will be required to
publicly report on an ongoing basis. We expect to elect to report
as an “emerging growth company” (as defined in the JOBS
Act) under the reporting rules set forth under the Exchange Act.
For so long as we remain an “emerging growth company,”
we may take advantage of certain exemptions from various reporting
requirements that are applicable to other Exchange Act reporting
companies that are not “emerging growth companies,”
including but not limited to:
●
not being required
to comply with the auditor attestation requirements of Section 404
of the
Sarbanes-Oxley Act;
●
taking advantage of
extensions of time to comply with certain new or revised financial
accounting standards;
●
being permitted to
comply with reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements;
and
●
being exempt from
the requirement to hold a non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute
payments not previously approved.
We will
be subject to ongoing public reporting requirements that are less
rigorous than Exchange Act rules for companies that are not
“emerging growth companies,” and our stockholders could
receive less information than they might expect to receive from
more mature public companies.
We
expect to take advantage of these reporting exemptions until we are
no longer an emerging growth company. We would remain an
“emerging growth company” for up to five years,
although if the market value of our Common Stock that is held by
non-affiliates exceeds $700 million as of any June 30 before that
time, we would cease to be an “emerging growth company”
as of the following December 31.
Overview
We are
a leading amateur esports community and content platform offering a
personalized experience to the large and underserved global
audience of 2.3 billion gamers, as estimated by NewZoo. According
to the Electronic Software Association, the avid gamer,
identified as individuals who are
considered the most frequent gamers, sees gameplay as
central to their social life with 55% playing video games to
connect with friends and 46% to spend time with family members.
Through our proprietary, cloud-based technology platform, we
connect our network of gamers, venues and brand partners to enable
local, social and competitive esports that can be uniquely
broadcast through our platform. We offer daily and season-focused
offerings for which amateur competitive gamers establish meaningful
connections with each other while improving their
skills.
As a first-mover in defining the amateur esports category in 2015,
we believe we are one of the most recognizable brands for amateur
gamers. We have multi-year strategic partnerships with leading game
publishers such as Microsoft and Riot Games with titles including
Minecraft and League of Legends, respectively, as well as
relationships with Supercell and Epic Games with respect to Clash
Royale and Fortnite, respectively, to drive use among our member
base and further penetrate our target market. We deliver enhanced
gaming experiences to our members with these titles through our
platform, and we provide our venue and brand partners access to our
member network and platform technology. We believe our members and
the organizations that use our platform are only beginning to
leverage the power of the consumer experience, commercial benefits,
and data analytics our technology enables. Targeting Generation Z
and Millennials, members join through accessible, free-to-play
experiences allowing us to reach the expansive amateur gaming
market. We intend to convert members into subscribers by offering
two tiers of competitive gameplay engagement: (i) our monthly
subscription for the more casual competitive player, offering
access to exclusive online tournaments and member benefits; and
(ii) our semi-annual season pass for the more competitive player
offering access to our city leagues and advanced amateur esports
offers along with membership rewards.
The
Esports Player Pyramid
______________________
* Based on the average esports viewer, Nielsen
Esports Playbook, 2017
Our Vision
Our
vision is to make Super League Gaming the preeminent brand and
platform for amateur esports. We do this by providing a
proprietary, end-to-end platform that allows our members to
compete, socialize and spectate premium amateur esports gameplay
and enabling a wide ecosystem of partners to bring Super League
experiences at scale to gamers around the world.
After
securing strategic partnerships with the publishers of top-tier
game titles beginning in 2016, we became the first consumer of our
platform technology through the establishment of our city leagues,
consisting of 16 teams based in various U.S. cities built around
Minecraft, League of Legends and, most recently, Clash Royale. In
2017, we further differentiated our offering by migrating to a
cloud-based technology platform for scale while continuing to build
and establish the Super League Gaming brand. We also developed
intelligent technology that facilitates personalized experiences
and matchmaking for gamers, and audience-targeted gameplay
broadcasting content at scale.
Strategy and Milestones
|
2015 to 2017
|
2018
|
Theme
|
Technology and
Brand Foundation
|
Community and
Network Foundation
|
Core
Objectives
|
● Establish the
brand
● Build technology
platform
● Establish amateur
leagues
|
● Cultivate audience
and user base
● Enhance technology
platform for scale
● Establish nodes of
distributed network
|
Technology and
Web
|
● Develop automated
tournament operations, including ticketing, team formation and
leaderboards
● Create local
visualization from local hardware devices
|
● Develop cloud-based
streaming infrastructure for scale of local, custom
gameplay
● Complete automation
of API integration on our platform
● Enhance
standardized ticketing and gameplay launcher to streamline
operation of Super League experiences
● Create robust game
statistics management
● Provide
“always-on” offers, allowing members to play
anytime
|
Brand
|
● Super League Gaming
(Master Brand)
● 12 City
Clubs
● National tournament
(City Champs)
|
● SuperLeagueTV
● Establish four
additional City Clubs
● Introduction of
additional gameplay offers
|
Game
Titles
|
Execute
Microsoft and Riot licensing agreements
|
Addition of two
new, top-tier game titles to our platform
|
Network
|
● Theatres
● Action Squad, our
local, city-by-city contract workforce
|
● Retailers:
Expanding array of venue types (e.g. LAN centers retail and
restaurants (food and
beverage)), now viable gameplay locations as a result of
centralized, cloud-based infrastructure and IP delivery, along with
ever-decreasing local hardware and bandwidth
requirements
● Pro Teams, local
organizers and ambassadors
● Brands: national
and local sponsors
|
Since
the launch of the Super League brand in 2015, we have continually
strengthened our brand and platform by:
●
developing our
proprietary, highly automated community, tournament and broadcast
system;
●
executing
multi-year agreements with top tier game titles;
●
creating a product
library of 10 unique game modes related to our licensed game titles
that are exclusive to Super League and utilized during our gaming
experiences;
●
launching our City
Club League consisting of 16 city-based teams across the U.S.
supported by a fleet of installed gaming auditoriums;
●
establishing a
flexible event-specific contract labor workforce, consisting of
over 150 trained and engaged individuals;
●
executing
multi-year, global brand sponsorship deals, such as Logitech and
Nickelodeon;
●
securing 38
protected logos and wordmarks domestically, collectively, and two
logos and wordmarks in China for our master brand and 16 of our
City Clubs; and
●
establishing three
patent families in the U.S. around multi-player gameplay and
visualization.
We are
now positioned to expand the utility of our platform for new game
titles and a distributed network of venue operators and gameplay
organizers to further develop a self-organizing marketplace for
online and in-person gaming experiences. This expansion of game
titles, across multiple hardware platforms, venue partners and
offerings will bring new audiences to Super League to increase the
breadth of our audience and depth of engagement through our
“always on” gameplay experiences.
Our Platform
Our
proprietary cloud-based platform provides amateur gamers a
modernized way to connect, play and view games in real-time. We
believe our platform will become central to the esports ecosystem
and allow us to capture a significant portion of our members’
gameplay hours and share-of-wallet for greater lifetime value. Our
platform aggregates a diverse audience of gamers across multiple
game titles and provides our members with access to online,
in-person and hybrid competitive experiences and broadcasts that
are accessible to a broad range of ages and demographics. Through
our platform, we have three core components that enable
differentiated and immersive gameplay at scale for both online and
in-person experiences:
(i)
Match-Making
allows members to create their
public-facing gamer persona and applies distinct criteria and
filters around team size, skill level and geography to
intelligently match our members for competitive gameplay and
facilitate rich online and in-person social
connections.
(ii)
Tournament Operations
supports all major components of
tournament operations and automation including, for example,
ticketing, user management, event management, event operations, API
integrations, data services, leaderboards and prize
fulfillment.
(iii)
Our Proprietary Visualization
and Broadcast System is capable
of capturing and live streaming gameplay across all digital
distribution platforms and delivering separate streams
simultaneously to multiple locations and channels, including
through our Player and Spectator Third-Person Experience and the
SuperLeagueTV digital network, as further described
below.
Our Player Interface, illustrated below, is the entry point of use for our
members that offers a user-friendly and engaging interaction from
profile creation to tournament operations, and provides our members
with real-time reporting of personal statistics, national
leaderboards and other individualized gaming
content.
Super League’s User Portal
Our
Player and Spectator Third-Person Experience, as illustrated below,
provides players and spectators with pre-gameplay content and a
unique “birds-eye” view during gameplay that is
captured by our platform and overlaid with additional interactive
content allowing us to introduce a new screen to the gameplay
experience beyond the traditional first-person and spectating
views. The end broadcast result is our customizable
Heads-up-Display (“HUD”), which complements gameplay
through dynamic visualization of player and team statistics,
competitive status updates and contextual content that can also be
uniquely displayed on a hyper-local level across venues. Before
gameplay begins, players entering our experiences are greeted with
a welcome screen that contains key information, including
experience start-time, team assignments, log-in status of
individual teams and players and other entertaining
content.
Super League’s HUD Pre-Gameplay View
Once
gameplay is launched, players and spectators enjoy a unique
third-person perspective of gameplay along with dynamic
leaderboards, statistics and other tournament-specific content
including brand sponsor integration, local team and player
statistics, instructional tips and other pertinent content, as
illustrated below. Dynamic leaderboards update in real-time during
gameplay and provide recaps of team and individual scoring
highlights at intermission and at the conclusion of
competition.
Super League’s HUD Gameplay
View
In
addition, our proprietary SuperLeagueTV digital network is the
first esports media property principally dedicated to amateur
players and teams. Currently, live stream gameplay and
video-on-demand (“VOD”) content is broadcast
through SuperLeagueTV on Twitch and YouTube. We believe that
SuperLeagueTV’s digital broadcast distribution is an
essential way to drive viewership and membership interest, along
with new game title expansion and additional online and in-person
experiences through our distributed venue partner
network.
Industry Overview
The
consumer appetite for esports continues to grow at a rapid pace
with passionate fans across the globe. According to NewZoo, the
overall value of the global gaming
market could reach approximately $137.9 billion by the end of 2018,
representing an estimated year over year increase of 13.3%, or
$16.2 billion from 2017. Key trends fueling this growth
include the rise of live streaming, real-time social networking
within games, and multi-generational and lifestyle gaming
that integrates several aspects of an
individual gamer’s life with the core game, including online
play, downloadable content, achievements and item
collection.
In
particular, the professional esports industry is growing quickly,
evidenced through new leagues, teams and broadcast distribution
channels, and this growth is attracting high-profile esports
investments from brands, media organizations and traditional sports
rights holders. As professional esports player salaries and the
value of broadcast media rights have risen substantially, there is
large unmet demand at the amateur level for competitions and
viewing content, which, for esports fans, is predominantly consumed
through live streaming and over-the-top (“OTT”) channels. The following
data points illustrate the vast growth opportunity for global
esports:
The esports audience is already comparable to leading entertainment
platforms, with gamers and viewer numbers in the hundreds of
millions.
Esports, a term
generally used to refer to competitive video game play by
professional and amateur players, have been around for as long as
the video game industry itself. However, recent growth in the
gaming audience and player engagement has elevated esports into
mainstream culture with a massive global following that, in some
instances, exceeds the monthly audience of large professional
sports leagues. For example:
●
The average global
monthly esports audience is estimated to reach 167 million people
in 2018, which is larger than estimates for the monthly average
audience of Major League Baseball (“MLB ”) and the National Hockey
League (“NHL”)
(Goldman Sachs Esports Equity Research, 2018).
●
The esports
audience is on track to reach approximately 300 million people by
2022, which is similar to the 2017 monthly average audience size of
the National Football League (“NFL ”) (Goldman Sachs Esports
Equity Research, 2018).
The following chart
reflects the monthly average audience size in 2017 for the four
largest professional sports leagues, as compared to the global
monthly esports audience in 2017:
Source: Goldman
Sachs: The World of Games- esports- From Wild West to Mainstream,
June 26, 2018. Figures reflect global monthly average audience
sizes in 2017.
The esports
audience is also young, digital and global. Is it estimated that
more than half of esports viewers are in Asia and 79% of viewers
are under the age of 35 (Goldman Sachs Esports Equity Research,
2018). In addition, online video sites like YouTube Gaming and
Twitch have larger audiences than HBO, Netflix and ESPN combined,
as shown below:
Source: Goldman
Sachs: The World of Games- esports- From Wild West to Mainstream,
June 26, 2018. Figures reflect total subscriber/user data as of the
end of 2016.
Moreover, there is
still vast opportunity for audience growth in esports with the
introduction of new game titles and increasing popularity of online
gaming content.
●
A portfolio
of just
a few top tier game titles can bring access to hundreds of millions
of gamers, as the estimated monthly active users
(“MAU ”) for
Fortnite, League of Legends and Minecraft is 125 million, 100
million and 74 million, respectively (Statista and Microsoft,
2018).
●
In 2017,
Twitch
live streamed 355 billion minutes of esports, an increase of 22%
year-over-year (Goldman Sachs Esports Equity Research,
2018).
Demographics centered on the
highly sought after, younger segments.
Video games have a positive social impact.
●
70% of parents
believing gaming “has a positive influence on their
children’s lives” (Electronic Software Association,
2018).
●
Esports
enthusiasts, on average, have higher college graduation rates and
average household incomes, with 43% earning greater than $75,000
per year, relative to traditional sports fans (Mindshare, Esports
Fans: What Marketers Should Now, 2016).
Revenue potential is valued at billions of dollars and broad
based.
●
Recent reports show
a “$15 billion blue sky revenue opportunity” for
professional esports due to the highly engaged and untapped fanbase
(Merrill Lynch Interactive Report, 2018).
●
Gaming video
content is estimated to be a $4.6 billion market with more viewers
than HBO, Netflix, ESPN and Hulu combined (SuperData Research,
2017).
●
Currently, an
estimated 40% of professional esports revenues come from brand and
media sponsorships (endemic and non-endemic) and 19% from media
rights, with the latter expected to grow to 40% by 2022 (BofA
Merrill Lynch Global Research, 2018).
Revenue potential is not only very large, but also growing
rapidly.
Source:
Goldman Sachs: The World of Games- esports- From Wild West to
Mainstream, June 26, 2018. Reflects an estimated 35% five-year
compound annual growth rate through 2022.
Our Opportunity
We
believe our esports community platform will transform the way
amateur gamers connect, interact, socialize and compete. Our
premium, competitive gameplay experiences and elite amateur
broadcasts, coupled with the expansion of our game title portfolio,
our retail venue partner network and our strategic brand
sponsorships introduce new gamers into our customer funnel to drive
membership growth and subscription conversion. Esports is still in
its early stages and entering a new phase of growth, but top game
titles attract large, global audiences and just a few titles
provide us access to hundreds of millions of players. Examples
include:
Game Title Sample Set
TITLE
|
PUBLISHER
|
GENRE
|
TARGET
DEMOGRAPHIC
(AGE)
|
ESTIMATED
MAU/PLAYERS
|
League
of Legends
|
Riot
Games
|
Multiplayer Online
Battle Arena (“MOBA”)
|
14
–
34
|
100MM1
|
Minecraft
|
Microsoft
(Mojang)
|
Sandbox
|
6
–
14
|
74MM2
|
Clash
Royale
|
Supercell
|
Collectible Card
Game (“CCG”);
Tower Defense; Real Time Strategy (“RTS”); “MOBA”
|
14
– 50
|
100MM3
|
Fortnite
|
Epic
Games
|
Battle
Royale
|
8
– 34
|
125MM1
|
______________________
(1)
statista.com.
(2) popsugar.com,
“Minecraft Boss Helen Chiang on Her New Role, Breaking
Records, and What's in Store For 2018,” May 8,
2018.
(3) 100MM MAU
across all four of Supercell’s games announced via
twitter.com, March 7, 2016.
With each game title we are able to offer on our platform, we
benefit from an established audience of MAUs or other players who
may be interested in different opportunities to play the game they
are already familiar with. We believe access to these audiences
provides us with opportunities to increase our revenue by bringing
new members to the platform, increasing enrollment for our
experiences, expanding viewership of our online content and
promoting additional merchandise sales. However, we are
currently unable to accurately calculate the estimated increase in
revenue associated with increasing our MAUs and/or the addition of
players of new game titles.
Despite
the significant growth potential outlined above, there are several
key challenges facing stakeholders in the esports
landscape:
●
Amateur Gamers are a highly fragmented,
often anonymous community with limited ways to find gamers of
similar skill-level and gaming interest online and locally. In
addition, the lack of amateur esports infrastructure results in few
experiences with no clear path to the professional esports level
for players who wish to develop and test their skills while forging
social connections.
●
Game Publishers must find alternative
methods to attract new gamer audiences to their game titles and
offer premium experiences that drive greater gamer retention. The
lack of diversity in gaming, along with increased competition
amongst titles, requires marketing partnerships to extend the
lifecycle and franchise value of their intellectual
property.
●
Venue Operators, including restaurants
and retailers, must grow same-store sales in order to capture new
sources of foot-traffic and deeper customer loyalty. Millennials
and Generation Z generally value experiences, but tend to purchase
more content and products online, making them an attractive
demographic to widen a venue’s customer base and improve
asset utilization.
●
Sponsors and Advertisers are limited in
their channels to reach the “cord cutting” Generation Z
and Millennials due to the increasing fragmentation of content
distribution and use of advertising-blocking technology. Given
these demographic groups consume most content online, brands are
challenged to target these audiences in an authentic way and
achieve efficient marketing spend.
●
Professional Esports Teams and Owners
have made significant investments in their teams and must rapidly
develop a fanbase to achieve franchise values similar to
traditional sports teams. However, there is no formal structure to
identify the next generation of esports professionals to build
their long-term rosters to support long-term fan
loyalty.
Super League’s Solution for Esports Ecosystem
Stakeholders
Our
platform offers the following solutions for these key
stakeholders:
●
For Amateur Gamers,
our platform enables online and
in-person player connections and a league-based structure that
provides participants and spectators with a unique lens on elite
and local amateur gameplay. Over time, we expect to have a volume
of broadcast content that allows us to build our own premium OTT
channel network on SuperLeagueTV and, ultimately, attract broadcast
rights revenue.
●
For Game Publishers,
our platform introduces their game
titles to new audiences and drives retention by providing an
immersive, premium way to play games, leading to deeper player
engagement. Through our data analytics, we believe we will become a
central component to new game development and launches, and will
have the ability to drive cross-game behavior across a wide
portfolio of game titles.
●
For Venue
Operators, we provide licenses to access our platform in
order to operate esports experiences that enable these enterprises
to attract new foot traffic, improve day-part utilization and drive
same store sales. In addition, we expect to provide venue operators
with predictive customer activity information for more targeted
offers to existing customers and our members.
●
For Sponsors and
Advertisers, our platform
provides a highly targeted marketing channel that offers a relevant
path for brands to build affinity with the hard to reach, yet
highly sought after, Generation Z and Millennial demographics.
Based on our member data, we will have the ability to target
audiences based on our members’ profile information for more
efficient marketing spend.
●
For Professional Esports Teams
and Owners, we cultivate the
future professional esports fanbase through amateur competitive
youth leagues, while providing an amateur feeder system as a path
to the professional leagues. Looking forward, we will have a
comprehensive set of data and tools to provide player analytics and
progress skill levels.
Our Amateur Esports Capabilities
Super
League is an “always-on” operation with scalable
technology and deep experiential capabilities to deliver premium
player experiences in the amateur esports space. Our value
propositions for all competitive amateur gamers, irrespective of
our game titles, are:
●
Public-facing gamer persona that connect our
members to their local community: Members can create a gamer
profile that provides key gamer information, such as their unique
game title identification, enabling us to manage player
matchmaking, tournament gameplay and statistics tracking. Member
results are dynamically updated on individual profile pages, along
with national and local leaderboards.
●
High-quality, immersive gameplay experiences
online and in-person: Members can initially join our
platform through accessible, free-to-play, online experiences and
then convert to our monthly subscription offers for a deeper
engagement through exclusive online competitions across all game
titles. More competitive members can subscribe to our semi-annual
season pass, which includes access to our city league for more
heightened, immersive gameplay. In addition, our distributed
network of retail venues, will augment our subscription offers and
allow for event-specific, in-person experiences to drive more
members and gameplay hours to our platform.
●
Broadcasts of elite amateur gameplay
competitions from a unique perspective: Our cloud-based
platform allows anyone, anywhere to view gameplay with a birds-eye
perspective that is interactive and contextualized. Spectators can
view live gameplay and original story-driven content either
in-venue or through live stream and VOD on a wide network of
digital distribution channels such as Twitch and
YouTube.
●
Exclusive member benefits and player status
program: Members earn rewards through gameplay participation
to enhance their individual gamer profile and gain exposure on
national and local leaderboards on an annual and lifetime basis. In
the future, members will be rewarded for the quality and length of
gameplay through our platform and have access to additional member
benefits in the form of exclusive experiences, content and offers
available from our top consumer brand and retail
partners.
●
New way to make social gaming
connections: Members enjoy an easier way to meet new friends
and experience the games they are passionate about through their
engagement with a new social community. In addition to socializing
in our competitions, our members can communicate through our media
channels, including Facebook, Discord and SuperLeagueTV, as part of
a positive, inclusive community.
Subscriptions
Core to
our business is moving to a subscription-based model that allows
gamers of varying levels of gameplay across multiple titles to
engage in premium competition on our platform. Members join through
accessible, free-to-play experiences that act as an introduction to
our platform, and over time, convert into two tiers of consumer
subscriptions. We also offer specialized commercial subscriptions
for venue operators to drive new membership. Each of these
offerings are further described below:
(i)
Monthly Subscriptions target the more
casual competitive gamer and is set at an affordable price-point
with a free trial and a discounted price if purchased annually. The
monthly pass provides competitive amateur gamers with access to
exclusive online tournaments across all active game titles and
member benefits. At the end of the trial period, members are
enrolled as paying subscribers and billed monthly thereafter.
Current pricing is set at $4.99 per month with the option to
purchase an annual subscription at the discounted price of $49.90,
in effect offering two months free, not inclusive of purchases of
one-off experience passes and merchandise from our website,
superleague.com.
(ii)
Semi-Annual Season Passes target the
more dedicated amateur gamer who has a greater share of gameplay
hours and share-of-wallet to commit to intensive competition. The
season pass provides access to our city leagues for a heightened
level of hybrid competition, both online and in-person, over an
extended number of weeks. Taking place each spring and fall, our
City Club League is a national tournament lasting between six to 12
weeks and can include pre-season qualifications and post-season
“All-Star” components. Current pricing for semi-annual
passes range from $40.00 to $60.00 per season, translating to
$80.00 to $120.00 of annual revenue for our recurring players, not
inclusive of one-off experience passes and merchandise from our
website, superleague.com.
(iii)
Commercial Subscriptions enable retail
venue partners to license our platform to host curated Super League
experiences for a monthly fee to introduce a wider reach of amateur
gamers to Super League experiences and drive more membership and
gameplay hours through our platform. This allows retail and
restaurant operators to attract new foot traffic and enhance
capacity utilization by creating interactive gaming experiences in
their locations, and we, in turn, benefit from their wide national
geographic reach and the leverage provided by their infrastructure,
marketing and operations, ultimately bringing Super League to a
wider community of amateur competitive gamers. We are exploring
monthly license subscription fees with our inaugural commercial
partners, with the understanding that the pilot period will provide
more data on increased foot traffic and same-store sales that could
lead to additional revenue sharing opportunities on food and
beverage, door entry fees, and merchandise.
A Sample of Super League Experiences on
superleague.com
City Club League
Our
City Club League is an integral part of our effort to connect
amateur gamers with one another. City Clubs not only enable our
seasonal competitions, but also allow us to aggregate our community
around our owned and operated clubs serving an unmet desire for
amateur players to connect on a local level and exhibit civic pride
for esports. Our City Clubs serve as a unifying umbrella across
game titles, age groups and skill levels in 16 major metropolitan
centers across
the U.S., including Chicago, Los Angeles and New York City, with an
intention to expand both domestically and internationally in the
foreseeable future.
Super League’s City Clubs
SuperLeagueTV
SuperLeagueTV content is a core component of our offer, as well as
a binding element connecting players within our local communities.
Whether promoting upcoming Super League experiences, engaging
players during an event, live streaming the competitive action,
producing original video series or recapping the results of a
tournament, SuperLeagueTV is dedicated to creating and showcasing
novel and intriguing stories that emerge during and in between the
over 175,000 hours of gameplay enjoyed by Super Leaguers this year.
As a primary distribution channel, SuperLeagueTV launched on Twitch
in April 2018, broadcasting from the Super League Gaming esports
desk. Following several months of additional testing and
development of creative concepts and production techniques enabled
by the Super League platform, SuperLeagueTV now features an average
of 50 hours of gameplay and entertainment programming across
multiple games titles per month and will grow programming in
2019. Additionally, over 1.4 million minutes of content was
viewed in December alone, and over 150,000 unique viewers tuned in
to our League of Legends City Champs
Finals.
Live Stream Remote Shout-Casting and Gameplay on
SuperLeagueTV
Brand and Media Partnerships
The
highly sought after Millennial and Generation Z audience is
increasingly difficult for brands to reach due to the proliferation
of new content distribution channels, ad-blocking technology and a
sentiment against overt marketing and promotion. This difficulty is
compounded by the limited ways to directly reach gamers, given game
publishers control of in-game content. Our ability to uniquely
aggregate a diverse membership base across age ranges, skill levels
and game titles can direct authentic brand integrations to our
players in a targeted way. We believe that our brand is at the
forefront in the mainstreaming of esports, and we stand for
inclusive, positive gameplay by providing a positive access point
for both endemic and non-endemic brands to enter the
category.
Currently,
our largest revenue stream comes by way of brand sponsorships and
includes multi-year strategic partnerships with several companies,
including Logitech and Nickelodeon. Over time, we expect to extract
additional revenue through the monetization of our large volume of
distributed content through advertising income. Our brand
sponsorship opportunities include:
●
Master brand
sponsorships covering all appropriate game titles and subscription
types, providing our brand partners with promotion opportunities
through our online and in-person offerings for targeted, deep
engagement along with member benefits specific to the
sponsors’ products and offers including discounts, free
trials, and exclusive content and experiences.
●
Tournament and game
specific sponsorships, allowing brands to more narrowly target
specific age ranges, game genres and other demographic
objectives.
●
City Club
sponsorships, allowing regional and local brands to participate in
geo-targeted promotion to cultivate unique gamer lifestyle brands
within our City Club metropolitan areas.
●
SuperLeagueTV
sponsorships enable brands to achieve wider reach through our
broadcast distribution channels, including Twitch, Facebook,
YouTube and in-venue channels, for both amateur esports players and
spectators.
●
Tailored
experience-specific sponsorships, providing brands with an
opportunity to design unique experiences and content for deeper
integration and wider media distribution.
It is
our intention to have brand and media partnerships across various
vertical categories, in order to attract both brands that are
already deeply committed to esports and brands just entering the
esports space and seeking a mainstream, safe brand partner and
entry point.
Marketing and Member Acquisition
Prospective
members and subscribers are introduced to Super League through
seven primary channels that feed our customer funnel, consisting
of:
(i)
top-tier games
titles that provide access to communities in the hundreds of
millions;
(ii)
continued press and
public relations that drives brand awareness;
(iii)
generation of
interest and audience development through
SuperLeagueTV;
(iv)
retail venue
partners that provide geographic coverage and access to built-in
customer bases;
(v)
brand sponsors who
amplify our sales and marketing through their own customer and
social reach;
(vi)
brand ambassadors
that drive local, organic word-of-mouth advertising for deeper
engagement and loyalty; and
(vii)
member referral
programs that round out the integral feedback loop for a network
effect.
Our Customer Funnel
In
addition to these channels, we also market our community and
platform through in-game promotion, search engine optimization,
online advertising, social influencers and e-mail
marketing.
Members typically begin their relationship with Super League by
viewing content on SuperLeagueTV, registering an email address,
and/or by participating in our free-to-play experiences. Members
become more engaged by creating a profile to join our network of
amateur gamers where they can find and connect with other players
by gaming interest, geographic location and other attributes.
Membership is free, but we do monetize members as activity grows
with one-off paid experiences, merchandise sales, and brand and
media sponsorship revenues.
We intend to drive deeper member engagement by offering a free
trial to join our monthly subscription program, which offers
frequent gaming experiences, leaderboards, and prizing across all
of our game titles along with benefits and discounts from our brand
partners. We estimate that our monthly subscribers can generate
between $50.00 and $60.00 in annual revenue per subscriber, and
content from these experiences is broadcast daily on SuperLeagueTV,
which drives deeper engagement among this player group and serves
as a channel to attract new members.
For our
most engaged players, we offer a semi-annual season pass
subscription for each game title. The format varies among game
titles, but our semi-annual season passes offer a combination of
online and in-person premium experiences organized around our City
Clubs. Due to the more formal team structure and length of season,
players often spend more time practicing and communicating with
each other, in addition to participating in our organized gaming
experiences. Our semi-annual season pass holders generate between
$80.00 and $120.00 per year per holder and produce our highest tier
of premium amateur gaming content which is featured on
SuperLeagueTV as well as brand partner channels. This content
attracts the largest viewership among our existing Super League
community and provides the greatest exposure to new audiences. In
addition, professional esports teams can gain visibility to this
pool of experienced amateur players for recruiting
purposes.
The key
performance indicators (“KPI”) driving our business model
are related to “always on,” scalable offers,
conversion, and engagement. Our significant growth in 2018 is a
function of the advancement of our technology platform, expansion
of our in-person and online offer catalogue, and select customer
acquisition accelerating our ability to reach and serve a larger
target audience with greater frequency.
Our Customer Key Performance
Indicators (“KPI”)
|
|
2015
|
2016
|
2017
|
2018
(Actual,
as of September 30)
|
2018
(Estimated)
|
Always
On
|
Venues
|
0
|
4
|
20
|
40
|
~
50
|
|
Experiences
|
330
|
900
|
250
|
450
|
~
900
|
Conversion
|
Registered
Accounts
|
13,000
|
30,000
|
43,000
|
230,000
|
~
300,000
|
Engagement
|
Participations
|
9,000
|
21,000
|
20,000
|
100,000
|
~
150,000
|
Gameplay
Hours
|
19,000
|
43,000
|
61,000
|
110,000
|
~
175,000
|
Our Strengths
We
differentiate ourselves from potential competition through the
power of a pure horizontal platform and established partnerships
that enable experiences, community, content and commerce. Our core
strengths include the following:
●
Game Publisher Agreements provide access
to existing user bases via strategic partnerships with
some of the largest game publishers. These partnerships draw
subscription interest and provide a line of defense against our
competitors. Our ability to interact with this highly attractive,
engaged user base draws brands and sponsors to us to reach this
otherwise hard-to-reach demographic.
●
Proprietary and Curated Content provides
us with a unique perspective to amateur competitive gameplay
currently absent from the esports ecosystem and is highly
complementary and valuable to the needs of large video streaming
providers.
●
Patent-Pending Technology allows for unique,
intelligent content capture enabling us to display the most
relevant gameplay activity in real time and broad visualization of
active gameplay to facilitate maximum scale of interactive,
in-person gaming, broadcast experience, and content
monetization.
●
Over Three Years of Brand and Technology
Development provides us a strong, distinctive lead on
followers with no obvious competitors in the holistic community,
league operations and media platform category.
●
A Diverse Set of Enterprise and Commercial
Revenue Streams enabled by a pure platform play that
protects us from the risk of online-only offers subject to
commoditization and advertising revenue dependency.
●
A Growing Member Base coupled with
highly customized gaming and viewing experiences allows us to
capture a global, highly engaged, yet somewhat elusive community
that will provide many new ways to monetize over time.
●
Creation of Intangible Brand Value in
the quality of our offer, game titles, brand partners and investor
base that validates our trusted, premium brand and distinctive
positioning to drive value in the fragmented, burgeoning esports
landscape.
Our Growth Strategy
Our
core strategy is to pursue initiatives that promote the viral
growth of our member base, and in doing so drive subscription,
sponsorships and other new revenue streams. Our customer
acquisition and retention funnel provide the primary lens for
community growth, engagement and long-term brand
equity.
●
Member Growth and Network Effect
is
driven organically through direct marketing, partner and influencer
promotion, and search engine optimization. We believe the most
efficient member acquisition, however, will come through organic
word of mouth and other customer-based
referrals.
●
Mutually Beneficial Relationships with Game
Publishers, along with our game-agnostic platform interface,
allow us to access large, built-in customer bases from game titles
amassing access to hundreds of millions of MAU and offering
enhanced competitive gameplay experiences to deepen their
connection to the game titles.
●
Strategic Retail Venue Partnerships
allow us to reach domestic and international scale by leveraging
the infrastructure, operations and marketing efforts of our retail
venue partners to create daily, weekly and monthly in-person
experiences with amateur gamers to drive more membership and
competitive gameplay through our platform.
●
Brand and Media Partnerships,
which
often include commitments to promote our brand events and content
across their social channels outside of our events and platform,
have the potential to extend the utilization of
our platform by leveraging the reach of our
partners’ existing broadcast, social and customer
loyalty programs which, in turn, can extend our audience
reach and potentially drive more gamers and viewers to
our amateur esports gaming content and technology
platform.
●
International Expansion, as we continue
to prove the model domestically, will enable us to access the massive global scale of
gamers worldwide and unlock greater brand partnership and media
rights revenue opportunities through global audience
development.
●
Key Stakeholder Tools including a game
publisher software development kit (“SDK”) and customer
marketplace portals for players, tournament organizers and venue
operators will scale and distribute Super League experiences in a
highly automated way with low marketing and operating
costs.
●
Opportunistic Acquisitions allow us to
add complementary users, revenues, and/or technology components to
accelerate our amateur esports member adoption and further enhance
our competitive gameplay experiences.
Technology Infrastructure
Early
in our inception, we utilized a local hardware solution to create
interactive physical spaces, allowing amateur competitive gamers a
new way to interact with their games, fellow players and our
distinctive and proprietary HUD for a unique entertainment and
spectating experience. We have since moved our platform to the
cloud for scale, and now offer a wide use of our platform to
operate Super League experiences, both online and in-person, by
leveraging the infrastructure, operations and marketing of an
established retail venue network. The following illustrates the
evolution of our platform and current cloud-based
state:
Our
technology platform represents an important intellectual property
asset for our Company. It consists of various custom
developed components that come together in uniquely configured ways
to deliver scalable competitions, experiences and content
opportunities.
The
components of our platform include, among other things, user
management, event management, event operations, data services,
streaming, ecommerce, and user statistics and leaderboards.
These components share several data sources and enables us to offer
a wide variety of gameplay experiences across multiple
environments, often simultaneously, with a vast array of resulting
content publishing opportunities. Our platform also provides
tools to distribute and leverage content, as well as tools around
platform administration. The following illustrates our
comprehensive cloud-based tournament and broadcast
toolset:
Our proprietary visualization and broadcast system, which provides
compelling live stream content delivery, automates and scales
various gameplay processes and functions that would otherwise need
to be accomplished manually. These processes and functions
primarily include ways to ensure that visualizations of gameplay
and other value-added data and graphics are both captured and
delivered efficiently and timely. For example, our
proprietary software is used during our experiences ensures that we
are showing the most interesting aspects of gameplay, as well as
switching to matches that are most relevant to the
competition. Further, we use computer vision to glean key
events, graphics or data from the game screen, especially when the
game publisher might not make such information available via an
application programming interface (“API”). We intend to
continue to invest in and improve upon our use of computer vision
in our technology platform, so that we can mitigate our dependency
on game publishers providing certain APIs and toolsets, and
continue to provide differentiated gameplay and spectating
experiences.
As we
evolve our technology, we will launch simultaneous gameplay that
will allow players and spectators to watch multiple live streams at
once, as illustrated below:
Intellectual Property and Patents
Similar
to other interactive entertainment and esports companies, our
business depends heavily on the creation, acquisition, licensing,
use and protection of intellectual property. We have developed and
own various intellectual properties, including pending and issued
trademarks, patents and copyrights. For example, each of our
City Clubs have pending trademarks related to naming and logo. We
also have obtained licenses to valuable intellectual property with
game publishers. We leverage these licenses and service
agreements to operate online and location-based competitions, and
in parallel, use them to generate a wide array of
content.
To
protect our intellectual property, we rely on a combination of
patent applications, copyrights, pending and issued trademarks,
confidentiality provisions and procedures, other contractual
provisions, trade secret laws and restrictions on disclosure. We
intend to vigorously protect our technology and proprietary rights;
however, no assurances can be given that our efforts will be
successful. Even if our efforts are successful, we may incur
significant costs in defending our rights. From time to time, third
parties may initiate litigation against us alleging infringement of
their proprietary rights or claiming they have not infringed our
intellectual property rights. See the section entitled
“Risk Factors”
for additional information regarding the risks we face with respect
to litigation related to intellectual property claims. As of
the date hereof, we have filed three patent applications, all of
which are currently pending, and various trademark applications,
some granted and most of which are currently pending, covering our
technologies and brands, as more specifically set forth below. We
intend to file additional applications for the grant of patents and
registration of our trademarks in the United States and foreign
jurisdictions as our business expands.
Our
patent applications relate to creating unique, place-based, visual
experiences. These experiences manifest via display by web
stream of gameplay in combination with related textual, graphical
and video content targeted for consumption by players and
spectators alike. In order to achieve visualization of
certain games, specifically Minecraft and Clash Royale, we have
developed technology that places a “managed” character
into these games solely for the purpose of sharing the first-person
perspective that is created. We also filed a provisional
patent protecting bleeding edge virtualization technologies that
allow us to heedlessly visualize from the cloud. Instead of
requiring complex and expensive local installation of hardware to
enable the place-based experience, we use this technology to create
web streams of all gameplay and supplementary content. The
effect of this capability is to dramatically reduce the barrier to
entry for venues of all types to participate in Super League
experiences.
Operations
With
over 2,000 experiences completed since 2015, we have a broad
understanding of the requirements to deliver online and in-person
competitions from an operations, technology and customer support
perspective. With our national venue fleet and contractor
network, we established training and protocols for new brand
ambassadors and venue operators for scale. Our operations
network includes the following:
●
Action Squad serves
as an extension of Super League’s experience team and is
responsible for managing logistics at local venues and facilitating
an engaging and fair player experience. The team, comprised of
approximately 150 contract-based members, has been interviewed and
trained by Super League. In addition, we manage staffing and
ongoing communication with Microsoft’s StaffHub, and have
developed a proprietary mobile app to manage logistics (including
player check-in) and communication to our Network Operations Center
(“NOC”) during
in-person experiences.
●
Our Customer Service
Team uses Zendesk to manage customer inquiries that come
from various channels including email, web forms, and Facebook. We
run a 24-hour email and ticketing escalation system and support
live chat during normal business hours and experiences. Our
customer service team includes on-site staff and remote contractors
that can scale based on the number of simultaneous gameplay
experiences.
●
The NOC is equipped
with tools to streamline issue resolution while accommodating a
large volume of simultaneous gameplay experiences. All locations
are set up with remote monitoring of the LAN and player device
performance alerting for real-time customer service and technical
escalations. The technicians are scaled on demand depending on the
number of experiences run simultaneously using remote, real-time
network and tournament monitoring.
Our Values and Company Culture
Super
League is a player-first company, a credo embraced by every
employee. We are committed to enhancing and celebrating the player
experience by providing gameplay formats, competitive frameworks,
technical stability, content, information and customer support that
exceed player expectations.
Having
produced more than 2,000 experiences over more than two years in
locations ranging from movie theatres to restaurants, and retail
stores to LAN centers to esports arenas, Super League specializes
in delivering positive experiences to a wide range of demographic
audiences that bring players and their families and friends a sense
of genuine belonging to a peer group that understands them and
shares their passions.
Employees and Labor Relations
As of
September 30, 2018, we had 46 full-time and full-time equivalent
employees. Additionally, we occasionally enter into agreements with
contractors, on an as-needed basis, to perform certain services. As
of September 30, 2018, two of our full-time employees were subject
to fixed-term employment agreements with us, and all other
employees served at-will pursuant to the terms set forth in their
offer letters.
We
believe that we maintain a good working relationship with our
employees, and we have not experienced any labor disputes. None of
our employees are represented by labor unions.
Governmental Regulation
Our
online gaming platforms, which target individuals ranging from
elementary school age children to adults, are subject to laws and
regulations relating to privacy and child protection. Through our
website, online platforms and in person gaming activities we may
monitor and collect certain information about child users of these
forums. A variety of laws and regulations have been adopted in
recent years aimed at protecting children using the internet, such
as COPPA. COPPA sets forth, among other things, a number of
restrictions related to what information may be collected with
respect to children under the age of 13, as the kinds of content
that website operators may present to children under such age.
There are also a variety of laws and regulations governing
individual privacy and the protection and use of information
collected from individuals, particularly in relation to an
individual’s personally identifiable information (e.g.,
credit card numbers). We employ a kick-out procedure during member
registration whereby anyone identifying themselves as being under
the age of 13 during the process is not allowed to register for a
player account on our website or participate in any of our online
experiences or tournaments without linking their account to that of
a parent or guardian.
In
addition, as a part of our experiences, we offer prizes and/or gifts as incentives to play. The
federal Deceptive Mail Prevention and Enforcement Act and
certain state prize, gift or sweepstakes statutes may apply to
certain experiences we run from time to time, and other federal and
state consumer protection laws applicable to online collection, use
and dissemination of data, and the presentation of website or other
electronic content, may require us to comply with certain standards
for notice, choice, security and access. We believe that we are in
compliance with any applicable law or regulation when we run these
experiences.
Cost of Compliance with Environmental Laws
We have
not incurred any costs associated with compliance with
environmental regulations, nor do we anticipate any future costs
associated with environmental compliance; however, no assurances
can be given that we will not incur such costs in the
future.
Facilities
Our executive offices are located in approximately 4,965 square
feet of office space at 2906 Colorado Avenue, Santa Monica,
California 90404, which we occupy under a month-to-month lease
agreement at $19,734 per month. In addition, we have recently
leased an additional 1,650 square feet on a month-to-month basis in
the same complex to serve as a content studio at $5,197 per
month.
We
anticipate no difficulty in extending the leases of our facilities
or obtaining comparable facilities in suitable locations, as
needed, and we consider our facilities to be adequate for our
current needs.
Legal Proceedings
As of
the date hereof, we are not a party to any material legal or
administrative proceedings. There are no proceedings in which any
of our directors, executive officers or affiliates, or any
registered or beneficial stockholder, is an adverse party or has a
material interest adverse to our interest. We may from time to time
be subject to various legal or administrative claims and
proceedings arising in the ordinary course of business. Litigation
or any other legal or administrative proceeding, regardless of the
outcome, is likely to result in substantial cost and diversion of
our resources, including our management’s time and
attention.
Executive Officers and Directors
The following table sets forth the names, ages, and positions of
our executive officers, directors and significant employees as of
the date of this prospectus.
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
Ann
Hand
|
|
49
|
|
Chief
Executive Officer, President, Chair of the Board
|
|
David
Steigelfest
|
|
51
|
|
Chief
Product and Technology Officer, Director
|
|
Clayton
Haynes
|
|
49
|
|
Chief
Financial Officer
|
|
Matt
Edelman
|
|
48
|
|
Chief
Commercial Officer
|
|
John
Miller (1)
|
|
39
|
|
Director
|
|
Jeff
Gehl
|
|
50
|
|
Director
|
|
Robert Stewart
|
|
51
|
|
Director
|
|
Peter Levin
|
|
48
|
|
Director |
|
Kristin Patrick |
|
48
|
|
Director |
|
Michael Keller |
|
48
|
|
Director |
|
|
|
|
|
|
|
Significant Employees:
|
|
|
|
|
|
|
|
|
|
|
|
Andy
Babb
|
|
49
|
|
Executive
Vice President of Game Partnerships
|
|
Anne
Gailliot
|
|
41
|
|
Chief
of Staff, Vice President of Special Projects
|
|
(1)
Mr. Miller intends
to resign from our Board contingent upon and effective immediately
prior to the effectiveness of the registration statement to which
this prospectus forms a part.
There are no arrangements or understandings between our Company and
any other person pursuant to which he or she was or is to be
selected as a director, executive officer or nominee. Ms. Hand, our
President and Chief Executive Officer, is a first cousin of Mr.
Gehl, a member of our Board. There are no other family
relationships among any of our directors or executive officers. To
the best of our knowledge, none of our directors or executive
officers have, during the past ten years, been involved in any
legal proceedings described in subparagraph (f) of Item 401 of
Regulation S-K.
Executive Officers
Ann Hand
Chief Executive Officer, President, Chair of the Board
Ms.
Hand has served as our Chief Executive Officer, President and Chair
of our Board since June 2015. Over the past 20 years, Ms. Hand has
served as a market-facing executive with a track record in brand
creation and turn- around with notable delivery at the intersection
of social impact with consumer trends and technology to create bold
offers, drive consumer preference and deliver bottom line results.
Prior to joining the Company, from 2009 to 2015, Ms. Hand served as
Chief Executive Officer and as a director of Project Frog, a
venture-backed firm with a mission to democratize healthy, inspired
buildings that are better, faster, greener, and more affordable
than traditional construction. From 1998 through 2008, Ms. Hand
served in various senior executive positions with BP plc, including
Senior Vice President, Global Brand Marketing & Innovation from
2005 to 2008, during which time she led many award-winning
integrated marketing campaigns and oversaw the entire brand
portfolio of B2C and B2B brands, including BP, Castrol, Arco, am/pm
and Aral. Additionally, she served as Chief Executive, Global
Liquefied Gas Business Unit with full P&L accountability across
15 countries and 3,000 staff, covering operations, logistics, sales
and marketing with over $3 billion in annual revenue. Ms. Hand was
recognized by Goldman Sachs - “100 Most Intriguing
Entrepreneurs” in 2014, by Fortune - “Top 10 Most
Powerful Women Entrepreneurs” in 2013, and Fast Company
– “100 Most Creative People” in 2011. Ms. Hand
earned a Bachelor of Arts in Economics from DePauw University, an
MBA from Northwestern’s Kellogg School of Management, and
completed executive education at Cambridge, Harvard and Stanford
Universities.
David Steigelfest
Chief Product and Technology Officer, Director
Mr.
Steigelfest co-founded the Company in 2014 and has served as a
director on our Board since that time. In addition, Mr. Steigelfest
served has our Chief Product and Technology Officer since May 2018.
An attorney by education, David has served as an executive and
entrepreneur in the digital and technology space for more than 20
years. Prior to co-founding the Company in 2014, Mr. Steigelfest
founded rbidr LLC, a media and technology startup and a pioneer in
yield management and price optimization software, where he served
as Chief Executive Officer from 2008 to 2013. From 2013 to 2014,
Mr. Steigelfest worked for Cosi Consulting, where he provided
management consulting services ranging from complex project
management, PMO, software design, 3rd party software
integration and migration, enterprise content management, data
management and system-based regulatory compliance to various
Fortune 500 companies. From 2001 to 2008, Mr. Steigelfest worked on
Wall Street at Deutsche Bank, where he oversaw various
multi-million-dollar change management projects. In addition, Mr.
Steigelfest previously served as Vice President of eCommerce at
Starguide Digital Networks, where he had responsibility over the
streaming media portal, CoolCast. CoolCast utilized satellite
technology to distribute high quality streaming content into
multi-cast enabled networks bypassing Internet bottlenecks. Prior
to Starguide, Mr. Steigelfest served as the Director of Product
Management at Gateway Computers, where he oversaw Gateway.com and
Gateway’s business-to-business extranet system, eSource. In
addition, Mr. Steigelfest has consulted for companies of all sizes
throughout his career addressing a wide variety of IT and business
challenges, including complex business process change, software
implementation and e-commerce. Mr. Steigelfest received a
Bachelor of Arts in International Relations and Psychology from
Syracuse University, and a JD with an emphasis in business
transactions and business law from Widener University School of
Law.
Clayton Haynes
Chief Financial Officer
Mr. Haynes was appointed as our Chief Financial Officer in August
2018. From 2001 to August 2018, Mr. Haynes served as Chief
Financial Officer, Senior Vice President of Finance and Treasurer
of Acacia Research Corporation (NASDAQ: ACTG), an industry-leading intellectual
property licensing and enforcement and technology investment
company. Mr. Haynes is a party to a transition related consulting
agreement with Acacia Research Corporation that expires on January
31, 2019. From 1992 to March 2001, Mr. Haynes was employed by
PricewaterhouseCoopers LLP, ultimately serving as a Manager in the
Audit and Business Advisory Services practice, where he provided
and managed full scope financial statement audit and business
advisory services for public and private company clients with
annual revenues up to $1 billion in a variety of sectors, including
manufacturing, distribution, oil and gas, engineering, aerospace
and retail. Mr. Haynes received a Bachelor of Arts in
Economics and Business/Accounting from the University of California
at Los Angeles, an MBA from the University of California at Irvine
Paul Merage School of Business and is a Certified Public Accountant
(Inactive).
Matt Edelman
Chief Commercial Officer
Mr.
Edelman oversees the Company’s revenue, marketing, content,
creative services and business development activities, and has
served as our Chief Commercial Officer since July 2017. Mr. Edelman
is the owner of PickTheBrain, a leading digital self-improvement
business, a board member and marketing committee member of the
Epilepsy Foundation of Greater Los Angeles and has over 20 years of
experience working in the digital and traditional media and
entertainment industries. Since 2001, he has served as an advisor
and consultant to numerous digital and media companies, including,
amongst others, Nike, Marvel, MTV, Sony Pictures, 20th Century Fox and TV
Guide. Prior to joining the Company, from 2014 to 2017, Mr. Edelman
served as the Head of Digital Operations and Marketing Solutions at
WME-IMG (now Endeavor), where he was responsible for several areas,
including digital audience and revenue growth through content,
social media and paid customer acquisition across the
company’s global live events business within sports, fashion
culinary and entertainment verticals; digital marketing services
for consumer brands, college athletics programs and talent; and
management of direct-to-consumer digital content businesses,
including both eSports and Fashion OTT properties. From 2010 to
2013, Mr. Edelman served as the Chief Executive Officer of Glossi
(previously ThisNext), an authoring platform enabling individuals
to create their own digital magazines. Previously, Mr. Edelman also
founded and/or served in executive positions at multiple early
stage digital media companies. Mr. Edelman earned a Bachelor of
Arts in Politics from Princeton University.
Board of Directors
Ann Hand
Chief Executive Officer, President, Chair of the Board
Please
see Ms. Hand’s biography in the preceding section under the
heading “Executive
Officers.”
Ms. Hand’s extensive background in corporate leadership and
her practical experience in brand creation and turn- around
directly align with the Company’s focus, and ideally position
her to make substantial contributions to the Board, both as Chair
of the Board and as the leader of the Company’s executive
team.
David Steigelfest
Chief Product and Technology Officer, Director
Please
see Mr. Steigelfest’s biography in the preceding section
under the heading “Executive
Officers.”
As a co-founder of the Company and a lead developer of the
Company’s platform, Mr. Steigelfest provides the Board with
critical insight into the technological aspects of the
Company’s operations and the ongoing development of the
platform, attributes that make Mr. Steigelfest a particularly
valued member of the Board.
John Miller
Director
Mr. Miller co-founded the Company in 2014 and has served as a
director on our Board since its inception. In addition, Mr. Miller
founded and has served as Chief Executive Officer and Chairman of
Cali Group, a holding company with ownership positions in various
companies focused on the development of new technologies for the
restaurant and retail industries and a significant investor in the
Company, since 2011. Prior to founding Cali Group, Mr. Miller
worked for Arrowhead Pharmaceuticals, Inc. (NASDAQ: ARWR), where he
was responsible for the formation, growth and the ultimate sale of
Arrowhead’s electronics business unit. From 2005 to 2010, Mr.
Miller served as Vice President of Intellectual Property at Undiym,
Inc. (formerly, Nanopolaris, Inc.), which he also founded. Mr.
Miller is an author of The Handbook of Nanotechnology Business,
Policy, and Intellectual Property Law, as well as various other
publications related to nanomaterials and nanoscale electronics. He
obtained an undergraduate degree from University of
Redlands and graduated Order of the Coif from Stanford Law
School.
Mr.
Miller’s focus on the development of new technologies and his
involvement with the Company since inception has significantly
supported the Board’s perspective during the early stages of
the development of the Company’s platform and are key assets
to the Board as the Company looks to scale the utilization of its
technology. In addition, as Director of CaliBurger, one of the
Company’s largest stockholders, also provides the perspective
of a significant investor in the Company. Mr. Miller serves as
chairman of the Nominating and Governance Committee, and a member
of the Compensation Committee.
Jeff Gehl
Independent Director
Mr.
Gehl has served as a director on our Board since 2015. Mr. Gehl is
a Co-Owner at VLOC LLC. Since 2001, Mr. Gehl has been a Managing
Partner of RCP Advisors. Mr. Gehl is responsible for leading RCP's
client relations function and covering private equity fund managers
in the Western United States. He is a General Partner of BKM
Capital Partners, L.P. Previously, Mr. Gehl was an Advisor at
Troy Capital Partners until 2018. In addition, Mr.
Gehl founded and served as Chairman and Chief Executive Officer of
MMI, a technical staffing company, and acquired Big Ballot, Inc., a
sports marketing firm. He currently serves as a Director of P10
Industries, Inc., a Director of Veritone, Inc. (NASDAQ: VERI) and
an Advisory Board member of several of RCP’s underlying
funds, as well as Accel-KKR and Seidler Equity Partners. Mr. Gehl
was the Manager of VLOC. Mr. Gehl received the 1989
“Entrepreneur of the Year” award from University of
Southern California’s Entrepreneur Program. He obtained a
Bachelor of Science in Business Administration from the University
of Southern California's Entrepreneur Program.
Mr. Gehl’s wide range of
experience in financing, developing
and managing high-growth technology companies, as well as his
entrepreneurial experience, has
considerably broadened the Board’s perspective, particularly
as the Company engaged in capital raising activities to fund the
early stages of its development. Mr. Gehl also serves as our
Board-designated “audit committee financial expert” as
chairman of the Audit Committee. Mr. Gehl also serves as a member
of the Nominating and Governance
Committee.
Robert Stewart
Independent Director
Mr. Stewart has served as a director on our Board since October
2014. From 1997 to August 2018, Mr. Stewart served in various
executive officer roles with Acacia, including as Vice-President of
Corporate Finance and Senior Vice-President, Corporate Finance and
Investor Relations. Prior to joining Acacia, Mr. Stewart served as
President of Macallan, Dunhill & Associates, a private
investment fund. Mr. Stewart received a Bachelor of Science in
Economics from the University of Colorado at Boulder.
Mr. Stewart’s
11 years in various executive officer roles of a public company
brings extensive leadership experience and public company expertise
to our Board, experience that will be invaluable to the Board
following the Company becomes a public company following the
completion of its initial public offering.
Mr.
Stewart also serves as a member of our Audit Committee, chairman of
our Compensation Committee, and a member of our Nominating and
Governance Committee.
Peter Levin
Independent Director
Mr.
Levin has served as a director on our Board since November 2018,
and currently serves as President of Interactive Ventures and Games
at Lions Gate Entertainment Corp., a position he has held since May
2014. Mr. Levin is responsible for expanding Lionsgate's content
creation into video games and other interactive ventures, including
incubation of new properties, investment in existing games and
digital media vehicles and leveraging Lionsgate's franchises and
other branded properties into the gaming space. Mr. Levin also
currently serves as the President of Bellrock Media, Inc., a
company engaged in the development and distribution of content for
mobile and broadband platforms in North America and Japan, is a
co-owner of the Chicago Rush of the Arena Football League and has
been Partner of Palisades Baseball since 2000, which owns and
operates three Minor League Baseball franchises. Mr. Levin serves
as the Managing Director of Sedona Capital, Inc., where he steers
the fund's investments and partnerships in the new media and mobile
content industries. In addition, Mr. Levin has served as a director
at Razz, Inc. since September 2005 and as a director of Next Games
Oyj since June 2014. He also serves as Member of the Board of
Advisors of Global Streams, Mofactor , MESoft, Inc. and
Auctionhelper. Mr. Levin earned his Bachelor of Arts degree from
the University of Southern California.
We
believe Mr. Levin’s extensive experience in digital media,
particularly in the gaming space, and as an owner of multiple
professional sports teams enables him to provide the Board with
invaluable insight in to matters involving both gaming and the
organization and management of sports teams.
Kristin Patrick
Independent Director
Ms.
Patrick has served as a director on our Board since November 2018,
and currently serves as Global Chief Marketing Officer of Soda
Brand at Pepsico, Inc., a position she has held since June 2013.
Prior to her time with Pepsico, Inc., Ms. Patrick served as Chief
Marketing Officer of Playboy Enterprises, Inc. from November 2011
to June 2013, and as Executive Vice President of Marketing Strategy
for William Morris Endeavor from January 2010 to November 2011. Ms.
Patrick has also held senior marketing positions at Liz
Claiborne's Lucky Brand, Walt Disney Company, Calvin Klein, Revlon
and NBC Universal and Gap, Inc. A Brandweek "Next Gen Marketer" and
Reggie Award recipient, Ms. Patrick received her Bachelor of Arts
from Emerson College and J.D. from Southwestern
University.
As we
continue to expand the visibility of our Brand, we believe Ms.
Patrick will provide instrumental input on our marketing efforts,
and will assist the Board and management with initiating marketing
programs to enable us to meet our short-term and long-term growth
objectives.
Michael Keller
Independent Director
Mr. Keller has served as a director on our Board since November
2018. From July 2014 to February 2018, Mr. Keller served as an
advisor and board member for Cake Entertainment, an independent
entertainment company specializing in the production, distribution,
development, financing and brand development of kids’ and
family properties, as managing director of Tiedemann Wealth
Management from March 2008 to December 2013, as co-founder and
principal of Natrica USA, LLC from August 2006 to March 2008 and as
Senior Vice President of Brown Brothers Harriman Financial Services
from July 1996 to June 2006. Mr. Keller earned his Bachelors of
Arts in History from Colby College.
With
over 15 years of experience in asset and portfolio management, and
experience in helping companies gain exposure for their products
and services, including in the entertainment industry, we believe
Mr. Keller provides our Board with useful insight that will help us
as we allocate resources to expand the utility of our platform and
other technologies.
Significant Employees
Andy Babb
Executive Vice President of Game Partnerships
Mr.
Babb overseas the Company’s game strategy and publisher and
developer relationships and has served as our Executive Vice
President of Game Partnerships since September 2015. Prior to
joining the Company, from 2007 to 2015, Mr. Babb served as
President of Brandissimo, Inc., the company that created and
developed NFL RUSH, including NFL RUSH Zone, a multiplayer online
virtual game world, and over 100 NFL video games and apps. From
2006 to 2007, Mr. Babb served as the President of Infusio-NA, a
French mobile video game publisher, and for ten years prior to
that, he managed business development for Take Two Interactive, 2K
Games and SegaSoft. Throughout his career, Mr. Babb has published
over 200 video games across console, handheld, PC, online and
mobile platforms. He earned a Bachelor of Arts in Communications
Studies from the University of California Los Angeles and an MBA
from Stanford University.
Anne Gailliot
Chief of Staff, Vice President of Special
Projects
Ms. Gailliot has served as our Chief of Staff since July 2015, as
well as our Vice President of Special Projects since 2016. She
provides oversight to strategic programs and partnerships, ranging
from theatre relationships, the development of a national
contracted workforce, our after-school programs, and
end-to-end live event execution. Prior to joining the Company, Ms.
Gailliot served as Chief of Staff of Project Frog from 2007 to
2015, where she led strategic and financial planning and supported
supply chain optimization. Before pursuing a graduate degree, Anne
spent several years at the National Trust for Historic Preservation
managing grant programs, community advocacy efforts, and local
leadership development initiatives for the western region. Ms.
Gailliot earned a Bachelor of Arts in Art History from Princeton
University and an MBA from University of Pennsylvania – the
Wharton School.
Board Composition and Election of Directors
Board Composition
Our
Board currently consists of eight members, but will be reduced to
seven members upon Mr. Miller's resignation immediately prior to
the effectiveness of the registration statement to which this
prospectus forms a part.
Each of
our continuing directors will serve until our next annual meeting
of stockholders or until his or her successor is elected and duly
qualified. Our Board is authorized to appoint persons to the
offices of Chair of the Board of Directors, Vice Chair of the Board
of Directors, Chief Executive Officer, President, one or more Vice
Presidents, Chief Financial Officer, Treasurer, one or more
Assistant Treasurers, Secretary, one or more Assistant Secretaries,
and such other officers as may be determined by the Board. The
Board may also empower the Chief Executive Officer, or in absence
of a Chief Executive Officer, the President, to appoint such other
officers and agents as our business may require. Any number of
offices can be held by the same person.
Director Independence
Our
Board has determined that five of its directors qualify as
independent directors, as determined in accordance with the rules
of the Nasdaq Stock Market. Under the applicable listing
requirements of the Nasdaq Capital Market, we are permitted to
phase in our compliance with the majority independent board
requirement of the Nasdaq Stock Market rules within one year of our
listing on Nasdaq. The director independence definition under the
Nasdaq Stock Market rule includes a series of objective tests,
including that the director is not, and has not been for at least
three years, one of our employees and that neither the director nor
any of his family members has engaged in various types of business
dealings with us. In addition, as required by Nasdaq Stock Market
rules, our Board has made a subjective determination as to each
independent director that no relationships exist, which, in the
opinion of our Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director. In making these determinations, our Board reviewed and
discussed information provided by the directors and us with regard
to each director’s business and personal activities and
relationships as they may relate to us and our
management.
Ms. Hand, our President and Chief Executive Officer, is a first
cousin of Mr. Gehl, a member of our Board. There are no other
family relationships among any of our directors or executive
officers.
Role of Board in Risk Oversight Process
Our
Board has responsibility for the oversight of the Company’s
risk management processes and, either as a whole or through its
committees, regularly discusses with management our major risk
exposures, their potential impact on our business, and the steps we
take to manage them. The risk oversight process includes receiving
regular reports from Board committees and members of senior
management to enable our Board to understand our risk
identification, risk management and risk mitigation strategies with
respect to areas of potential material risk, including operations,
finance, legal, regulatory, strategic and reputational risk.
Cybersecurity risk is a key consideration in our operational risk
management capabilities. We are in the process of instituting a
formal information security management program, which will be
subject to oversight by, and reporting to, our Board. Given the
nature of our operations and business, cybersecurity risk may
manifest itself through various business activities and channels
and is thus considered an enterprise-wide risk which is subject to
control and monitoring at various levels of management throughout
the business. Our Board will oversee and review reports on
significant matters of corporate security, including cybersecurity.
In addition, we maintain specific cyber insurance through our
corporate insurance program, the adequacy of which is subject to
review and oversight by our Board.
Our
audit committee reviews information regarding liquidity and
operations and oversees our management of financial risks.
Periodically, our audit committee reviews our policies with respect
to risk assessment, risk management, loss prevention and regulatory
compliance. Oversight by the audit committee includes direct
communication with our external auditors, and discussions with
management regarding significant risk exposures and the actions
management has taken to limit, monitor or control such exposures.
Our compensation committee is responsible for assessing whether any
of our compensation policies or programs has the potential to
encourage excessive risk-taking. Matters of significant strategic
risk are considered by our Board as a whole.
Board Committees and Independence
Our
Board has established the following three standing committees:
audit committee, compensation committee, and nominating and
governance committee. Our Board has adopted written charters for
each of these committees. Upon completion of this offering, we
intend to make each committee’s charter available under the
Corporate Governance section of our website at
www.superleague.com/corporategovernance. The reference to our
website address does not constitute incorporation by reference of
the information contained at or available through our website, and
you should not consider it to be a part of this
prospectus.
Audit Committee
Our
audit committee is currently comprised of Jeff Gehl, who serves as
the committee chair, and Robert Stewart. The audit
committee’s main function is to oversee our accounting and
financial reporting processes and the audits of our financial
statements. Pursuant to its charter, the audit committee’s
responsibilities include, among other things:
●
appointing,
compensating, retaining, evaluating, terminating, and overseeing
our independent registered public accounting
firm;
●
reviewing with our independent registered public accounting firm
the scope and results of their audit;
●
approving the audit
and non-audit services to be performed by our independent
registered public accounting firm;
●
evaluating the
qualifications, independence and performance of our independent
registered public accounting firm;
●
reviewing the
design, implementation, adequacy and effectiveness of our internal
accounting controls and our critical accounting
policies;
●
reviewing and
discussing our annual audited financial statements and quarterly
financial statements with management and the independent auditor,
including our disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” prior to the release of such
information;
●
reviewing and
reassessing the adequacy of the audit committee’s charter, at
least annually;
●
reviewing,
overseeing and monitoring the integrity of our financial statements
and our compliance with legal and regulatory requirements as they
relate to financial statements or accounting matters;
●
reviewing on a
periodic basis, or as appropriate, our policies with respect to
risk assessment and management, and our plan to monitor, control
and minimize such risks and exposures, with the independent public
accountants, internal auditors, and management;
●
reviewing any
earnings announcements and other public announcements regarding our
results of operations;
●
preparing the
report that the SEC requires in our annual proxy statement, upon
becoming subject to the Exchange Act;
●
complying with all
preapproval requirements of Section 10A(i) of the Exchange Act and
all SEC rules relating to the administration by the audit committee
of the auditor engagement to the extent necessary to maintain the
independence of the auditor as set forth in 17 CFR Part
210.2-01(c)(7);
●
administering the
policies and procedures for the review, approval and/or
ratification of related party transactions involving the Company or
any of its subsidiaries; and
●
making such other
recommendations to the Board on such matters, within the scope of
its function, as may come to its attention and which in its
discretion warrant consideration by the Board.
Our
Board has affirmatively determined that all members of our audit
committee meet the requirements for independence and financial
literacy under the applicable rules and regulations of the SEC and
the Nasdaq. Our Board has determined that Mr. Gehl qualifies as an
“audit committee financial expert” as defined by
applicable SEC rules and has the requisite financial sophistication
as defined under the applicable Nasdaq rules and regulations. The
audit committee operates under a written charter that satisfies the
applicable standards of the SEC and Nasdaq.
Compensation Committee
Our compensation committee is currently comprised of Robert
Stewart, who serves as the committee chair, and John Miller.
The compensation committee’s main function is to assist our
Board in the discharge of its responsibilities related to the
compensation of our executive officers. Pursuant to its charter, the compensation
committee is primarily responsible for, among other
things:
●
reviewing
our compensation programs and arrangements applicable to our
executive officers, including all employment-related agreements or
arrangements under which compensatory benefits are awarded or paid
to, or earned or received by, our executive officers, and advising
management and the Board regarding such programs and
arrangements;
●
reviewing and recommending to the Board the goals
and objectives relevant to CEO compensation, evaluating CEO
performance in light of such goals and objectives, and determining
CEO compensation based on the evaluation;
●
retaining,
reviewing and assessing the independence of compensation
advisers;
●
monitoring issues
associated with CEO succession and management
development;
●
overseeing and
administering our equity incentive plans;
●
reviewing and
making recommendations to our Board with respect to compensation of
our executive officers and senior management;
●
reviewing and
making recommendations to our Board with respect to director
compensation;
●
endeavoring to ensure that our executive
compensation programs are reasonable and appropriate, meet their
stated purpose (which, among other things, includes rewarding and
creating incentives for individuals and Company performance), and
effectively serve the interests of the Company and our
stockholders; and
●
upon becoming
subject to the Exchange Act, preparing and approving an annual
report on executive compensation and such other statements to
stockholders which are required by the SEC and other governmental
bodies.
Nominating and Governance Committee
Our nominating and governance committee is currently comprised of
John Miller, who serves as the committee chair, Jeff Gehl and
Robert Stewart.
Pursuant to its charter, the
nominating and governance committee is primarily responsible for,
among other things:
●
assisting the Board
in identifying qualified candidates to become directors, and
recommending to our Board nominees for election at the next annual
meeting of stockholders;
●
leading the Board
in its annual review of the Board’s performance;
●
recommending to the
Board nominees for each Board committee and each committee
chair;
●
reviewing and
overseeing matters related to the independence of Board and
committee members, in light of independence requirement of Nasdaq
and the rules and regulations of the SEC;
●
overseeing the
process of succession planning of our CEO and other executive
officers; and
●
developing and
recommending to the Board corporate governance guidelines,
including our Code of Business Conduct, applicable to the
Company.
Board Diversity
Upon the closing of this offering, our nominating and governance
committee will be responsible for reviewing with the Board, on an
annual basis, the appropriate characteristics, skills and
experience required for the Board as a whole and its individual
members. In evaluating the suitability of individual candidates
(both new candidates and current members), the nominating and
governance committee, in recommending candidates for election, and
the Board, in approving (and, in the case of vacancies, appointing)
such candidates, will take into account many factors, including the
following:
●
personal
and professional integrity, ethics and values;
●
experience
in corporate management, such as serving as an officer or former
officer of a publicly-held company;
●
experience
as a board member or executive officer of another publicly-held
company;
●
strong
finance experience;
●
diversity
of expertise and experience in substantive matters pertaining to
our business relative to other board members;
●
diversity
of background and perspective, including, but not limited to, with
respect to age, gender, race, place of residence and specialized
experience;
●
experience
relevant to our business industry and with relevant social policy
concerns; and
●
relevant
academic expertise or other proficiency in an area of our business
operations.
Currently, our Board evaluates, and following the closing of this
offering will evaluate, each individual in the context of the Board
as a whole, with the objective of assembling a group that can best
maximize the success of the business and represent stockholder
interests through the exercise of sound judgment using its
diversity of experience in these various areas.
Compensation Committee Interlocks and Insider
Participation
None of
the members of our compensation committee, at any time, have been
one of our officers or employees. None of our executive officers
currently serves, or in the past year has served, as a member of
the board of directors or compensation committee of any other
entity that has one or more executive officers on our Board of
Directors or compensation committee.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics applicable to
our employees, officers and directors. Upon completion
of this offering, we intend to make our Code of Business Conduct and Ethics
available under the Corporate Governance section of our website at
www.superleague.com/corporategovernance/. The
reference to our website address does not constitute incorporation
by reference of the information contained at or available through
our website, and you should not consider it to be a part of this
prospectus. We intend to
disclose any future amendments to certain provisions of our Code of
Business Conduct and Ethics, or waivers of these provisions, on our
website or in our filings with the SEC under the Exchange
Act.
Limitation of Liability and Indemnification
Our certificate of incorporation, as amended and restated
(“Charter”), and our amended and restated bylaws
(“Bylaws”) provide the indemnification of our
directors and officers to the fullest extent permitted under the
Delaware General Corporation Law (“DGCL”). In addition, the Charter
provides that our directors shall not be personally liable to us or
our shareholders for monetary damages for breach of fiduciary duty
as a director and that if the DGCL is amended to authorize
corporate action further eliminating or limiting the personal
liability of directors, then the liability of our directors shall
be eliminated or limited to the fullest extent permitted by the
DGCL, as so amended.
As
permitted by the DGCL, we have entered into or plan to enter into
separate indemnification agreements with
each of our directors and certain of our officers that require us,
among other things, to indemnify them
against certain liabilities which may arise by reason of their
status as directors, officers or certain other
employees. We expect to obtain and maintain insurance policies
under which our directors and officers are insured, within the
limits and subject to the limitations of those policies, against
certain expenses in connection with the defense of, and certain
liabilities that might be imposed as a result of, actions, suits or
proceedings to which they are parties by reason of being or having
been directors or officers. The coverage provided by these policies
may apply whether or not we would have the power to indemnify such
person against such liability under the provisions of the
DGCL.
We
believe that these provisions and agreements are necessary to
attract and retain qualified persons as our officers and
directors. At present, there is no pending litigation or proceeding
involving our directors or officers for whom indemnification is
required or permitted, and we are not aware of any threatened
litigation or proceeding that may result in a claim for
indemnification.
We are
an emerging growth company for purposes of the SEC’s
executive compensation disclosure rules. In accordance with such
rules, we are required to provide a Summary Compensation Table and
an Outstanding Equity Awards at Fiscal Year End Table, as well as
limited narrative disclosures regarding executive compensation for
our last two completed fiscal years. Further, our reporting
obligations extend only to our “named executive
officers,” who are those individuals serving as our principal
executive officer and our two other most highly compensated
executive officers who were serving as executive officers at the
end of the last completed fiscal year (the “Named Executive
Officers”).
We have
identified Ann Hand, David Steigelfest and Matt Edelman as our
Named Executive Officers. Our Named Executive Officers for our
fiscal year ending December 31, 2018 could change, as we may hire
or appoint new executive officers.
For the
fiscal years ended December 31, 2017 and 2016, compensation for our three highest-paid executive
officers was as follows:
Name
and principal position
|
|
Year
|
|
|
|
|
All
Other Compensation ($)
|
|
Ann
Hand
Chief Executive Officer, President
|
|
2017
|
$400,000
|
-
|
-
|
$1,571,000
|
-
|
$1,971,000
|
|
|
2016
|
$300,000
|
-
|
-
|
-
|
-
|
$300,000
|
David
Steigelfest
Chief Products and Technology
Officer
|
|
2017
|
$300,000
|
$20,000
|
-
|
$567,000
|
-
|
$887,000
|
|
|
2016
|
$270,000
|
-
|
-
|
-
|
-
|
$270,000
|
Matt
Edelman
Chief Commercial Officer (2)
|
|
2017
|
$300,000
|
-
|
-
|
$574,000
|
|
$874,000
|
|
|
|
|
|
|
|
|
(1)
This column represents the
grant date fair value calculated in accordance with the
Financial Accounting Standards
Board’s Accounting Standards Codification Topic 718,
Compensation – Stock Compensation (“ASC 718”). These amounts do not
represent the actual value, if any, that may be realized by the
Named Executive Officers.
(2)
No compensation is
reported for Mr. Edelman in 2016, as he was appointed to serve as
the Company’s Chief Commercial Officer in July 2017 and did
not receive any compensation from the Company prior to that
time.
Elements of Compensation
Our
executive compensation program consisted of the following
components of compensation in 2017 and 2016:
Base Salary
Each of
our executive officers receives a base salary for the expertise,
skills, knowledge and experience he or she offers to our management
team. The base salary of each of our executive officers is
re-evaluated annually, and may be adjusted to reflect:
●
the nature,
responsibilities, and duties of the officer’s
position;
●
the officer’s
expertise, demonstrated leadership ability, and prior
performance;
●
the officer’s
salary history and total compensation, including annual equity
incentive awards; and
●
the competitiveness
of the officer’s base salary.
Equity Incentive Awards
We believe that to attract and retain management, key employees and
non-management directors, the compensation paid to these persons
should include, in addition to base salary, annual equity
incentives. Our compensation committee determines the amount
and terms of equity-based compensation granted to each individual.
In determining whether to grant certain equity awards to our
executive officers, the compensation committee assesses the level
of the executive officer’s achievement of meeting individual
goals, as well as the executive officer’s contribution
towards goals of the Company. Whenever possible, equity incentive
awards are granted under our stock option plan. However, due to a
prior lack of shares available for issuances under the 2014 Plan,
we have granted certain awards in the form of warrants to key
executive officers in the past.
Employment Agreements and Potential Payments upon Termination or
Change of Control
Ann Hand
On June
16, 2017, we entered into an employment agreement with Ms. Hand to
serve as our Chief Executive Officer, President and Chair of the
Board. The initial term of the agreement is three years (the
“Hand Initial
Term”), and provided that neither party provides 30
days’ notice prior to the expiration of the Hand Initial Term
or a Renewal Term (defined below) of their intent to allow the
agreement to expire and thereby terminate, the agreement shall
continue in effect for successive periods of one year (each, a
“Hand Renewal
Term”). The employment agreement with Ms. Hand
provides for a base annual salary of $400,000, which amount may be increased annually, at the
sole discretion of the Board. Additionally, Ms. Hand shall be
entitled to (i) an annual cash bonus, the amount of which shall be
determined by our compensation committee, (ii) health insurance for
herself and her dependents, for which the Company shall pay 90% of
the premiums, (iii) reimbursement for all reasonable business
expenses, and (iv) participate in the Company’s 401(k) Plan
upon the Board electing to institute it. As additional
compensation, Ms. Hand was issued a warrant to purchase 300,000
shares of Company Common Stock at an exercise price of $3.60 per
share (the “Hand
Warrant”). The warrant has a ten-year term, and shall
vest at a rate of 1/36th per month, subject
to the acceleration of all unvested shares upon a Change of
Control, as defined in the employment agreement.
Ms.
Hand’s employment agreement is terminable by either party at
any time. In the event of termination by us without Cause or by Ms.
Hand for Good Reason, as those terms are defined in the agreement,
she shall receive a severance package consisting of the following:
(i) all accrued obligations as of the termination date; (ii) a cash
payment equal to the greater of (A) her base annual salary for 18
months, payable 50% upon termination, 25% 90 days after the
termination date and 25% 180 days after the termination date, or
(B) the remaining payments due for the term of the agreement; and
(iii) an additional 18 months’ vesting on the Hand Warrant.
In the event of termination by us with Cause or by Ms. Hand without
Good Reason, Ms. Hand shall be entitled to all salary and benefits
accrued prior to the termination date, and nothing else;
provided, however, that Ms.
Hand shall be entitled to exercise that portion of the Hand Warrant
that has vested as of the effective date of the termination until
the Hand Warrant’s expiration.
Ms. Hand’s employment agreement was amended and restated on
November 15, 2018, pursuant to which the Hand Initial Term of the
agreement was extended through December 31, 2021, with the terms of
the Hand Renewal Term remaining the same. In addition, under the
terms of the amended and restated employment agreement, Ms. Hand
shall be entitled to the following compensation: (i) a base annual
salary of $400,000, which amount may
be increased annually, at the sole discretion of the Board; (ii)
cash bonuses as follows: (a) $100,000 upon the close of a fully
subscribed $10.0 million private placement of 9.00% secured
convertible promissory notes, (b) $250,000 upon the consummation of
the Company’s IPO or a private financing of not less than
$15.0 million (a “Qualified
Financing”), (c)
$150,000, payable in three increments of $50,000 upon achievement
of certain milestones, as determined by the compensation committee;
(iii) health insurance for herself and her dependents, for which
the Company shall pay 90% of the premiums; (iv) reimbursement for
all reasonable business expenses; and (v) participate in the
Company’s 401(k) Plan upon the Board electing to institute
it. As additional compensation, Ms. Hand was also granted (i) a
ten-year common stock purchase warrant to purchase up to 750,000
shares of the Company’s common stock, exercisable at $3.60
per share, which vests as follows: (a) 25% immediately upon
issuance, (b) 50% upon the consummation of the Company’s IPO
or a Qualified Financing, and (c) 25% on the one-year anniversary
of the IPO or a Qualified Financing; and (ii) ten-year stock
options to purchase 500,000 shares of Common Stock, exercisable at
$3.60 per share, which shall vest as follows: (a) 50% upon
consummation of the Company’s IPO or a Qualified Financing,
(b) 25% upon achievement of 300,000 registered members, and (c) 24%
upon achievement of 400,000 registered members. Further, pursuant
to the terms of the amended and restated employment agreement, in
the event that Ms. Hand is terminated other than for Cause, Ms.
Hand shall be entitled to receive all of her severance benefits on
the effective date of termination.
David Steigelfest
Effective
October 31, 2016, we entered into an employment agreement with Mr.
Steigelfest to serve as our Chief Technology Officer. The initial
term of the agreement is two years (the “Steigelfest Initial Term”), and
provided that neither party provides 30 days' notice prior to the
expiration of the Steigelfest Initial Term or a Steigelfest Renewal
Term of their intent to allow the agreement to expire and thereby
terminate, the agreement shall continue in effect for successive
periods of one year (each, a “Steigelfest Renewal Term”). The
employment agreement with Mr. Steigelfest provides for a base
annual salary of $270,000, which
amount may be increased annually, at the sole discretion of the
Board and was increased to $300,000 by the Board in the fourth
quarter of 2017. Additionally, Mr. Steigelfest
shall be entitled to (i) health
insurance for himself and his dependents, for which the Company
shall pay 50% of the premiums, (ii) reimbursement for all
reasonable business expenses, and (iv) participate in the
Company’s 401(k) Plan upon the Board electing to institute
it.
Mr.
Steigelfest’s employment agreement is terminable by either
party at any time. In the event of termination by us without Cause,
as defined in the agreement, he shall be entitled to all salary and
benefits accrued prior to the date of termination, as well as six
months of accelerated vesting of the Option from the date of
termination. In the event of termination by us with Cause, Mr.
Steigelfest shall be entitled to all salary accrued prior to the
termination date, and nothing else; provided, however, that Mr. Steigelfest
shall be entitled to exercise any stock options that have vested
prior to the date of termination.
Mr. Steigelfest’s employment agreement was amended and
restated on November 1, 2018, pursuant to which the Steigelfest
Initial Term of the agreement was extended to two years from
November 1, 2018 and Mr. Steigelfest shall serve as both the
Company’s Chief Technology Officer and Chief Product Officer.
In addition, under the terms of the amended and restated employment
agreement, Mr. Steigelfest shall be entitled to the following
compensation: (i) a base annual salary of $300,000, which amount may be increased annually, at the
sole discretion of the Board; (ii) cash bonuses as follows: (a)
$50,000 upon the consummation of the Company’s IPO or a
Qualified Financing, (b) $75,000, payable in five separate
increments of $15,000 upon achievement of certain milestones, as
determined by the compensation committee, and (c) $100,000, payable
in four separate increments of $25,000 upon achievement of certain
milestones on or before June 30, 2019; (iii) health insurance for
himself and his dependents, for which the Company shall pay 90% of
the premiums; (iv) reimbursement for all reasonable business
expenses; and (v) participate in the Company’s 401(k) Plan
upon the Board electing to institute it. As additional
compensation, Mr. Steigelfest was also granted ten-year stock
options to purchase 300,000 shares of Common Stock, exercisable at
the same price per share of the Company’s IPO, which shall
vest in accordance with the Company’s traditional vesting
schedule. Further, pursuant to the terms of the amended and
restated employment agreement, in the event that Mr. Steigelfest is
terminated other than for Cause, Mr. Steigelfest shall be entitled
to receive cash equal to his annual base salary for one year on the
effective date of termination.
Matt Edelman
Effective
November 1, 2018, we entered into an employment agreement with Mr.
Edelman to serve as our Chief Commercial Officer. The initial term
of Mr. Edelman’s employment agreement is two years (the
“Edelman Initial
Term”), and provided that neither party provides 30
days’ notice prior to the expiration of the Edelman Initial
Term or a an Edelman Renewal Term (defined below) of their intent
to allow the agreement to expire and thereby terminate, the
agreement shall continue in effect for successive periods of one
year (each, a “an Edelman
Renewal Term”). The employment agreement with Mr.
Edelman provides for a base annual salary of $300,000, which amount may be increased annually, at the
sole discretion of the Board. Additionally, Mr. Edelman
shall be entitled to (i) health
insurance for himself and his dependents, for which the Company
shall pay 90% of the premiums, (ii) reimbursement for all
reasonable business expenses, and (iii) participate in the
Company’s 401(k) Plan upon the Board electing to institute
it.
Mr.
Edelman’s employment agreement is terminable by either party
at any time. In the event of termination by us without Cause, as
defined in the agreement, he shall be entitled to the following
severance payment based upon his length of employment with the
Company and his existing annual salary, which he shall receive 30
days after the final day of his employment: (i) from six to nine
months of employment, one month of severance pay; (ii) from nine
months to one year of employment, two months of severance pay;
(iii) from one year to two years of employment, three months of
severance pay; and (iv) for each additional year of employment
beyond one year, one additional month of severance pay;
provided, however, that in
the event of a change of control transaction involving the Company,
Mr. Edelman shall be entitled to six months of severance pay. In
the event of such termination, and in order to receive the
foregoing severance benefits, Mr. Edelman shall be required to
execute a mutually agreed upon Mutual Release agreement. In the
event of termination by us with Cause, Mr. Edelman shall be
entitled to all salary accrued prior to the termination date, and
nothing else; provided,
however, that Mr. Edelman shall be entitled to exercise any
stock options that have vested prior to the date of
termination.
Clayton Haynes
Effective
November 1, 2018, we entered into an employment agreement with Mr.
Haynes to serve as our Chief Financial Officer. The initial term of
Mr. Haynes’ employment agreement is two years (the
“Haynes Initial
Term”), and provided that neither party provides 30
days’ notice prior to the expiration of the Haynes Initial
Term or a Haynes Renewal Term (defined below) of their intent to
allow the agreement to expire and thereby terminate, the agreement
shall continue in effect for successive periods of one year (each,
a “Haynes Renewal
Term”). The employment agreement with Mr. Haynes
provides for a base annual salary of $300,000, which amount may be increased annually, at the
sole discretion of the Board. Additionally, Mr. Haynes
shall be entitled to (i) health
insurance for himself and his dependents, for which the Company
shall pay 90% of the premiums, (ii) reimbursement for all
reasonable business expenses, and (ii) participate in the
Company’s 401(k) Plan upon the Board electing to institute
it.
Mr.
Haynes’ employment agreement is terminable by either party at
any time. In the event of termination by us without Cause, as
defined in the agreement, he shall be entitled to the following
severance payment based upon his length of employment with the
Company and his existing annual salary, which he shall receive 30
days after the final day of his employment: (i) from six to nine
months of employment, one month of severance pay; (ii) from nine
months to one year of employment, two months of severance pay;
(iii) from one year to two years of employment, three months of
severance pay; and (iv) for each additional year of employment
beyond one year, one additional month of severance pay;
provided, however, that in
the event of a change of control transaction involving the Company,
Mr. Haynes shall be entitled to six months of severance pay. In the
event of such termination, and in order to receive the foregoing
severance benefits, Mr. Haynes shall be required to execute a
mutually agreed upon Mutual Release agreement. In the event of
termination by us with Cause, Mr. Haynes shall be entitled to all
salary accrued prior to the termination date, and nothing else;
provided, however, that Mr.
Haynes shall be entitled to exercise any stock options that have
vested prior to the date of termination.
Outstanding Equity Awards at Fiscal Year-End
The following table discloses outstanding stock option awards held
by each of the Named Executive Officers as of December 31,
2017:
|
|
Name
|
|
Number of
securities
underlying unexercised options/
warrants (#) exercisable
|
Number of
securities
underlying unexercised options/
warrants (#) unexercisable
|
|
Option/
warrant
exercise
price ($)
|
Option/
warrant
expiration
date
|
Ann
Hand
|
6/5/15
|
312,500
|
187,500
|
(1)
|
$2.00
|
6/5/25
|
|
6/16/17
|
115,500
|
38,500
|
(2)
|
$3.00
|
6/15/27
|
|
6/16/17
|
72,000
|
24,000
|
(3)
|
$3.60
|
6/15/27
|
|
6/16/17
|
50,00
|
250,000
|
(4)
|
$3.60
|
6/6/27
|
David
Steigelfest
|
10/16/14
|
316,667
|
33,333
|
(5)
|
$0.10
|
10/15/24
|
|
6/16/17
|
78,000
|
26,000
|
(6)
|
$3.00
|
6/15/27
|
|
6/16/17
|
72,000
|
24,000
|
(7)
|
$3.60
|
6/15/27
|
Matt
Edelman
|
7/24/17
|
-
|
196,320
|
(8)
|
$3.60
|
7/24/27
|
(1)
Represents
a warrant to purchase shares of our Common Stock, which warrant
vests at a rate of 10,417 shares per month, and becomes fully
vested on June 5, 2019. The warrant was issued in lieu of options
due to the lack of sufficient available shares authorized for
issuance under the 2014 Plan.
(2)
Represents an option to purchase shares of our
Common Stock, which option vests, 50% immediately upon grant, and
thereafter, at a rate of 6,417 shares per month, and becomes fully
vested on June 16, 2019.
(3)
Represents an option to purchase shares of our
Common Stock, which option vests, 50% immediately upon grant, and
thereafter, at a rate of 4,000 shares per month, and
becomes fully vested on June 16, 2019.
(4)
Represents
a warrant to purchase shares of our Common Stock, which warrant
vests 8,333 shares per month, and becomes fully vested on June 6,
2020. The warrant was issued in lieu of options due to the lack of
sufficient available shares authorized for issuance under the 2014
Plan.
(5)
Represents
an option to purchase shares of our Common Stock, which option
vests at a rate of 8,333 shares per month, and becomes fully vested
on April 16, 2018.
(6)
Represents an option to purchase shares of our
Common Stock, which option vests, 50% immediately upon grant, and
thereafter, at a rate of 4,333 shares per month, and
becomes fully vested on June 16, 2019.
(7)
Represents an option to purchase shares of our
Common Stock, which option vests, 50% immediately upon grant, and
thereafter, at a rate of 4,000 shares per month, and
becomes fully vested on June 16, 2019.
(8)
Represents an option to purchase shares of our
Common Stock, which option vested with respect to 49,080 shares on
July 24, 2018, and then at a rate of 4,090 shares per month, and
becomes fully vested on July 24, 2021.
Securities Authorized for Issuance under Equity Compensation
Plans
The following table provides a summary of the securities authorized
for issuance under our equity compensation plans as of September
30, 2018.
|
Number
of securities to be issued upon exercise of outstanding options,
warrants and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|
|
|
|
Equity compensation
plans approved by security holders
|
|
|
|
2014
Plan
|
3,671,736
|
$2.92
|
1,733,264
|
Equity compensation
plans not approved by security holders
|
|
|
|
Total
|
3,671,736
|
$2.92
|
1,733,264
|
Stock Option and Incentive Plan
2014 Stock Option and Incentive Plan
Our Board unanimously approved the 2014 Plan on October 13, 2014. The 2014 Plan was
subsequently amended in May 2015, May 2016, July 2017 and August
2018. The maximum number of shares of Common Stock issuable under
the 2014 Plan is currently 5.5 million shares, subject to
adjustments for stock, stock dividends or other similar changes in
our common stock or our capital structure.
Our 2014 Plan provides for the grant of (a) Incentive Stock Options
(within the meaning of Section 422 of the Code) to our
full-time employees (“Employees”), subject to the requirements of Section
422(c)(6) where an Employee owns 10% or more of our voting stock
outstanding; (b) Non-Qualified Options (together with Incentive
Stock Options, “Options”); (c) stock awards; and (d) performance
shares to any individual who is (i) an Employee, (ii) a member of
our Board, or (iii) an independent contractor who provides services
for the Company.
Plan Administration
Pursuant to the 2014 Plan, our Board has delegated the authority to
administer the 2014 Plan to the Board’s compensation
committee (the “Committee”). Subject to the provisions of our 2014
Plan, the Committee has the power to determine the terms of the
awards, including the exercise price, the number of shares subject
to each award, the exercisability of the awards, and the form of
consideration, if any, payable upon exercise. The Committee also
has the authority to amend, modify, extend renew or terminate
outstanding Options, or may accept the cancellation of outstanding
Options, whether or not granted under the 2014 Plan, in return for
the grant of new Options at the same or a different price.
Additionally, the Committee may shorten the vesting period, extend
the exercise period, remove any or all restrictions or convert an
Incentive Option to a Non-Qualified Option, if, at its sole
discretion, it determines that such action is in the best interest
of the Company; provided, however,
that any modification made to
outstanding Options requires the prior consent of the holder(s) of
such Options, unless the Committee determines that the action would
not materially and adversely affect such
holder(s).
Incentive Stock Options
The exercise price of Incentive Stock Options granted under our
2014 Plan must at least be equal to 100% of the fair market value
of our common stock on the date of grant. The term of an Incentive
Stock Option may not exceed ten years, except that with respect to
any participant who owns more than 10% of the voting power of all
classes of our outstanding stock, the term must not exceed five
years and the exercise price must equal at least 110% of the fair
market value on the grant date.
Non-Qualified Stock Options
The exercise price of Non-Qualified Options granted under our 2014
Plan must at least be equal to 85% of the fair market value of our
common stock on the date of grant. The term of a Non-Qualified
Stock Option may not exceed ten years.
Stock Awards or Sales
Eligible individuals may be issued shares of common stock directly,
upon the attainment of performance milestones or the completion of
a specified period of service or as a bonus for past services. The
purchase price for the shares shall not be less than 100% of the
fair market value of the shares on the date of issuance, and
payment may be in the form of cash or past services rendered.
Eligible individuals shall have no stockholder rights with respect
to any unvested restricted shares or restricted share units issued
to them under the stock award or sales program, however, eligible
individuals shall have the right to receive any regular cash
dividends paid on such shares.
Termination of Relationship
Except as the Committee may otherwise determine with respect to a
Non-Qualified Stock Option, if the holder of an Option ceases to
have a Relationship (as defined in the 2014 Plan) with the Company
for any reason other than death or permanent disability, any
Options granted to him shall terminate 90 days from the date on
which such Relationship terminates; provided,
however, that no Option may be
exercised or claimed by the holder of an Option following the
termination of his Relationship for Cause (as defined in the 2014
Plan). In the event that the Relationship terminates as a result of
the death or permanent disability of the Option holder, any Options
granted to him shall terminate one year from the date of his death
or termination due to permanent disability. In no event may an
option be exercised later than the expiration of its
term.
Certain Adjustments
In the event of certain changes in our capitalization, to prevent
diminution or enlargement of the benefits or potential benefits
available under the 2014 Plan, the administrator will adjust the
number and class of shares available for future grants under the
2014 Plan, the exercise price of outstanding Options, the number of
shares covered by each outstanding award, or the purchase price of
each outstanding award.
Reorganization
In the event we are a party to a merger or other corporate
reorganization, all outstanding Options shall be subject to the
agreement of merger or reorganization. Such agreement may provide
for the assumption of the outstanding Options by the surviving
corporation or its parent or for their continuation by the Company
(if the Company is a surviving corporation); provided,
however, that if the assumption
or continuation is not provided by such agreement, then the
Committee, in its sole discretion, shall have the option of
offering the payment of a cash settlement equal to the difference
between the amount to be paid for one share under the agreement and
the exercise price.
Change of Control
Under the 2014 Plan, a Change of Control is generally defined as:
(i) the sale of all or substantially all of the assets of the
Company, or (ii) any merger, consolidation or acquisition of the
Company with, by or into another corporation, entity or third
party, the result of which is a change in the ownership of more
than 50% of the voting capital stock of the Company.
In the event of a Change of Control, all restrictions on all awards
or sales of shares will accelerate and vesting on all unexercised
and unvested Options will occur on the Change of Control
date.
Director Compensation
We have not yet adopted a formal compensation policy for our
non-employee directors.
The following table sets forth the compensation awarded to, earned
by, or paid to each person who served as a non-employee director
during the fiscal year ended December 31, 2017:
Name
|
Fees Earned
or
Paid
in Cash (1)
($)
|
Option/Warrant
Awards
(2) ($)
|
|
|
|
|
|
|
|
John
Miller (3)
|
-
|
-
|
$75,000(4)
|
$75,000
|
Robert Stewart (5)
|
-
|
$224,000(5)(8)
|
-
|
$224,000
|
Jeff Gehl (6)
|
-
|
$421,500(6)(8)
|
-
|
$421,500
|
Marc Cummins (7)
|
-
|
-
|
-
|
-
|
(1)
|
Our non-employee directors did not receive any cash payments as
compensation for their service on our Board for the year ended
December 31, 2017.
|
(2)
|
The amounts in this column represent the aggregate grant date fair
value of options or warrants to purchase shares of our Common Stock
awarded during our fiscal year ended December 31, 2017, computed in
accordance ASC 718. The amounts in this column do not represent any
cash payments actually received with respect to any of such options
or warrant to purchase shares of our Common Stock. To date,
the recipients have not exercised such options or warrants to
purchase common stock, and there can be no assurance that any of
them will ever realize any of the ASC 718 grant date fair value
amounts presented in this column.
|
(3)
|
Mr.
Miller intends to resign from the Board contingent upon and
effective immediately prior to the effectiveness of the
registration statement to which this prospectus forms a
part.
|
(4)
|
Represents $75,000 paid to Mr. Miller in consideration for
providing strategic advisory services to the Company during the
year ended December 31, 2017. Such payments were unrelated to those
services he provided to us as a director on our Board.
|
(5)
|
Represents warrants granted to Mr. Stewart, the material terms of
which are set forth below in footnote 7, during the year ended December 31,
2017.
|
(6)
|
Represents warrants granted to Mr. Gehl, the material terms of
which are set forth below in footnote 7, during the year ended December 31,
2017.
|
(7)
|
Mr. Cummins was appointed to our Board effective August 22, 2017
and did not receive any compensation from the Company in the year
ended December 31, 2017.Mr. Cummins resigned from our Board
effective as of October 17, 2018.
|
(8)
|
The table below provides information regarding outstanding option
and warrant awards held by each of our non-employee directors as of
December 31, 2017.
|
Name
|
|
|
|
Number of
Options/Warrants
(#)
|
|
|
|
|
|
Robert
Stewart
|
10/16/14
|
10/15/24
|
$0.10
|
100,000
|
|
7/01/17
|
6/31/21
|
$3.60
|
4,000
|
|
7/01/17
|
6/31/21
|
$3.60
|
96,000
|
Jeff
Gehl
|
1/16/15
|
1/15/25
|
$2.00
|
25,000
|
|
5/12/15
|
5/11/25
|
$2.00
|
50,000
|
|
6/16/17
|
6/15/22
|
$3.00
|
29,000
|
|
6/16/17
|
6/15/22
|
$3.60
|
96,000
|
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
On August 3, 2018, CaliBurger entered into a Note Purchase
Agreement for the purchase of a 2018 Note in the principal amount
of $1.0 million, as well as corresponding 2018 Warrants. Subsequent
to August 3, 2018, $200,000 of the 2018 Notes and related 2018
Warrants were transferred to unrelated third-parties. John Miller,
one of our co-founders and members of our Board, and is also the
founder and serves on the board of directors of
Caliburger.
On
February 21, 2018, the Company issued a 9.00% Senior Secured
Convertible Promissory Note with common stock purchase warrants in
the original principal amount of $1.0 million, which note was
converted (including all original principal and accrued interest)
on May 28, 2018 into a new 9.00% Senior Secured Convertible
Promissory Note with common stock purchase warrants. Subsequently,
on August 2, 2018, Caliburger purchased an additional 9.00% Senior
Secured Convertible Promissory Note in the original principal
amount of $1,000,000 with common stock purchase
warrants.
On June
30, 2017, Caliburger purchased 666,667 shares of our common stock
at a price of $3.60 per share, resulting in total aggregate
proceeds to the Company of $2.4 million.
In
October 2014, we entered into an asset purchase agreement (the
“APA”) with
Caliburger, pursuant to which the Company purchased certain assets
from Caliburger in exchange for 1,000,000 shares of our common
stock, then valued at $100,000 in the aggregate.
In May
2015, we entered into a consulting agreement with Mr. Miller,
pursuant to which Mr. Miller provides consulting services including
assistance with business and corporate strategies, for which Mr.
Miller receives a monthly consulting fee of $6,250. The term of the
consulting agreement ended as of December 31, 2018.
Related Party Transaction Policy
Our
Board recognizes the fact that transactions with related persons
present a heightened risk of conflicts of interests and/or improper
valuation (or the perception thereof). Accordingly, our Board has
adopted a written policy addressing the approval of transactions
with related persons, in conformity with the requirements for
issuers having publicly held common stock listed on the Nasdaq
Capital Market. Pursuant to our Related Persons Transactions Policy
(the “Policy”),
any related-person transaction, and any material amendment or
modification of a related-person transaction, is required to be
reviewed and approved or ratified by the Board’s audit
committee, which shall be composed solely of independent directors
who are disinterested, or in the event that a member of the audit
committee is a Related Person, as defined below, then by the
disinterested members of the audit committee; provided, however, that in the event
that management determines that it is impractical or undesirable to
delay the consummation of a related person transaction until a
meeting of the audit committee, then the Chair of the audit
committee may approve such transaction in accordance with this
policy; such approval must be reported to the audit committee at
its next regularly scheduled meeting. In determining whether to
approve or ratify any related person transaction, the audit
committee must consider all of the relevant facts and circumstances
and shall approve only those transactions that are deemed to be in
the best interests of the Company.
Pursuant to our Policy and SEC rules, a “related person
transaction” includes any transaction, arrangement or
relationship which: (i) the Company is a participant; (ii) the
amount involved exceeds $120,000; and (iii) an executive officer,
director or director nominee, or any person who is known to be the
beneficial owner of more than 5% of our common stock, or any person
who is an immediate family member of an executive officer, director
or director nominee or beneficial owner of more than 5% of our
common stock, had or will have a direct or indirect material
interest (each a “Related
Person”).
In
connection with the review and approval or ratification of a
related person transaction:
●
Management shall be
responsible for determining whether a transaction constitutes a
related person transaction subject to the Policy, including whether
the Related Person has a material interest in the transaction,
based on a review of all of the facts and circumstances;
and
●
Should management
determine that a transaction is a related person transaction
subject to the Policy, it must disclose to the audit committee all
material facts concerning the transaction and the Related
Person’s interest in the transaction.
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The
following table sets forth certain information known to us
regarding beneficial ownership of our common stock as of January 1,
2019 for (i) each of our executive officers and directors
individually, (ii) all of our executive officers and directors as a
group, and (iii) each person, or group of affiliated persons, known
by us to be the beneficial owner of more than 5% of our capital
stock. The percentage of beneficial ownership in the table below is
based on 13,830,489
shares of common stock deemed to be outstanding as of January 1,
2019.
Name, address and
title of beneficial owner (1)
|
|
Total Number of
Shares Subject to Exercisable Options and Warrants
|
Total Number of
Shares Issuable Upon Conversion of Outstanding Promissory Notes
(2)
|
Total Number of
Shares Beneficially Owned
|
Percentage of Voting
Common Stock Outstanding (3)
|
|
Ann
Hand
Chief Executive
Officer, President and Chair
|
220,124
|
1,408,333
|
-
|
1,628,457
|
11.8%
|
David
Steigelfest
Chief Products
and Technology Officer
|
150,000
|
533,340
|
-
|
683,340
|
4.9%
|
Clayton
Haynes
Chief Financial
Officer
|
-
|
60,000
|
-
|
60,000
|
*
|
Matt
Edelman
Chief
Commercial Officer
|
-
|
73,620
|
-
|
73,620
|
*
|
John Miller (4)
Director
|
1,373,612
|
560,077
|
504,521
|
2,438,210
|
17.6%
|
Jeff Gehl (5)
Director
|
193,597
|
319,859
|
105,970
|
619,426
|
4.5%
|
Robert Stewart, Jr. (6)
Director
|
677,778
|
233,717
|
28,161
|
939,656
|
6.8%
|
Peter
Levin
Director
|
-
|
89,583
|
-
|
89,583
|
*
|
Kristin
Patrick
Director
|
-
|
-
|
-
|
-
|
-
|
Michael
Keller (7)
Director
|
|
265,624
|
237,846
|
503,470
|
3.46%
|
Executive Officers and Directors as a
Group (10
persons)
|
2,615,111
|
3,544,153
|
876,498
|
7,035,762
|
50.9%
|
|
|
|
|
|
|
Greater than 5%
Stockholders
|
CaliBurger (8)
Floor 4, Willow House, Cricket
Square
Grand Cayman, Cayman
Islands
KY1-1104
|
1,373,612
|
560,077
|
504,521
|
2,438,210
|
17.6%
|
Pu Luo Chung VC
Private Limited (9)
37 Jalan
Pemimpin
# 06-12
Singapore
577177
|
1,413,387
|
-
|
-
|
1,413,387
|
9.7%
|
_______________________
* Less
than 1.0%
(1)
|
Unless
otherwise indicated, the business address for each of the executive
officers and directors is c/o Super League Gaming, Inc., 2906
Colorado Ave., Santa Monica, CA 90404.
|
(2)
|
Includes
shares issuable upon conversion of outstanding 2018 Notes issued by
the Company in connection with the 2018 Bridge Financing. Upon
closing of the offering described in this prospectus, all
outstanding principal and accrued interest will automatically
convert into shares of common stock at the lesser of (x) $3.60 per
share or (y) a 15% discount to the public offering price per share.
For purposes of this table, we have assumed the 2018 Notes held by
Mr. Gehl, the Robert B. Stewart, Jr. Sole and Separate Property
Trust and Caliburger will convert into shares of common stock at a
price of $3.60 per share and have excluded any accrued but unpaid
interest.
For
additional information regarding the 2018 Notes held by Mr. Gehl,
the Robert B. Stewart, Jr. Sole and Separate Property Trust and
Caliburger, as well as the 2018 Warrants issued in connection with
the issuance of the 2018 Notes, see footnotes 5, 6 and 8, hereto,
respectively.
|
(3)
|
Beneficial
ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a person and
the percentage of ownership by that person, shares of voting common
stock subject to outstanding rights to acquire shares of voting
common stock held by that person that are currently exercisable or
exercisable within 60 days are deemed outstanding. Such shares are
not deemed outstanding for the purpose of computing the percentage
of ownership by any other person.
|
(4)
|
Consists
of securities held by CaliBurger, as described in footnote 8 below;
and 6,945 shares held by the Miller-Lomelino
Partnership.
As a
Director of CaliBurger and a partner of the Miller-Lomelino
Partnership, Mr. Miller may be deemed to beneficially own the
securities held directly by each entity.
|
(5)
|
Includes
shares issuable upon conversion of 2018 Notes held by BigBoy, LLC
and BigBoy Investment Partnership, entities controlled by Mr. Gehl,
in the collective principal amount of $381,494, as well as shares
of common stock issuable upon exercise of the 2018 Warrants issued
to Mr. Gehl’s entities in connection with his purchase of the
2018 Notes. As noted in footnote 2 above, for purposes of this
table, we have assumed the 2018 Notes held by Mr. Gehl’s
entities will convert into shares of common stock at a price of
$3.60 per share, and accordingly will result in the issuance of
105,970 shares of common stock, and the 2018 Warrants issued to Mr.
Gehl’s entities will be exercisable for up to 119,860 shares
of common stock. A portion of the 2018 Warrants, exercisable for
105,970 shares of common stock, are callable, at the option of the
Company, at any time following the completion of the offering
described in this prospectus.
Also
includes 20,000 shares held by Jeff Gehl, 100,000 shares held by
BigBoy Investment Partnership, LLC and 73,597 shares held by
BigBoy, LLC. Mr. Gehl is the Managing Member of BigBoy Investment
Partnership and BigBoy, LLC, and, therefore, may be deemed to
beneficially own these shares.
The
business address for BigBoy Investment Partnership and BigBoy, LLC
is 111 Bayside Dr., Suite 270, Newport Beach, CA
92625.
|
(6)
|
Includes
shares issuable upon conversion of 2018 Notes held by the Robert B.
Stewart, Jr. Sole and Separate Property Trust (the
“Stewart
Trust”) in the principal amount of $101,380, as well
as shares of common stock issuable upon exercise of the 2018
Warrant issued to the Stewart Trust in connection with its purchase
of the 2018 Notes. As noted in footnote 2 above, for purposes of
this table, we have assumed the 2018 Notes held by the Stewart
Trust will convert into shares of common stock at a price of $3.60
per share, and accordingly will result in the issuance of 28,161
shares of common stock, and the 2018 Warrants held by the Stewart
Trust will be exercisable for up to 28,161 shares of common stock.
A portion of the 2018 Warrants, exercisable for 28,161 shares of
common stock, are callable, at the option of the Company, at any
time following the completion of the offering described in this
prospectus.
Also
includes 277,778 shares held by the Stewart Trust, additional 2018
Warrants (non-callable) to purchase up to 5,556 shares of common
stock held by the Stewart Trust, and an option to purchase 100,000
shares of common stock.
Mr.
Stewart is the trustee for the Stewart Trust, and, therefore, may
be deemed to beneficially own these shares.
|
(7)
|
Includes shares issuable upon conversion of 2018 Notes held by
Michael Keller in the principal amount of $856,245, as well as
shares of common stock issuable upon exercise of the 2018 Warrants
issued to Michael Keller in connection with the purchase of the
2018 Notes. As noted in footnote 2 above, for purposes of this
table, we have assumed the 2018 Notes held by Michael Keller will
convert into shares of common stock at a price of $3.60 per share,
and accordingly will result in the issuance of 237,846 shares of
common stock, and the 2018 Warrants held by Michael Keller will be
exercisable for up to 265,624 shares of common stock. A portion of
the 2018 Warrants, exercisable for 237,846 shares of common stock,
are callable, at the option of the Company, at any time following
the completion of the offering described in this
prospectus.
|
(8)
|
Includes
shares issuable upon conversion of 2018 Notes held by CaliBurger in
the principal amount of $2,016,270, as well as shares of common
stock issuable upon exercise of the 2018 Warrant issued to
CaliBurger in connection with its purchase of the 2018 Notes. As
noted in footnote 2 above, for purposes of this table, we have
assumed the 2018 Notes held by CaliBurger will convert into shares
of common stock at a price of $3.60 per share, and accordingly will
result in the issuance of 504,521 shares of common stock, and the
2018 Warrants held by CaliBurger will be exercisable for up to
560,077 shares of common stock. A portion of the 2018 Warrants,
exercisable for 504,521 shares of common stock, are callable, at
the option of the Company, at any time following the completion of
the offering described in this prospectus.
As
noted in footnote 4 above, Mr. Miller, a member of our Board of
Directors, is a Director of CaliBurger, and may be deemed to
beneficially own these securities.
|
(9)
|
Stuart Hills, partner of Pu Luo Chung VC
Private Limited has sole voting and dispositive power over these
shares and may be deemed to beneficially own these
securities.
|
DESCRIPTION
OF SECURITIES
The following is a summary of the rights of our capital stock as
provided in our Charter and our Bylaws. For more detailed
information, please see our Charter and Bylaws that will be in
effect upon the completion of this offering, which have been filed
as exhibits to the Registration Statement of which this prospectus
is a part.
Summary of Securities
The
following description summarizes certain terms of our capital
stock, as in effect upon the completion of this offering. Our Board
of Directors and holders of a majority of our outstanding voting
securities approved of a second amendment and restatement of our
Charter (the “Amended and
Restated Charter”), which was subsequently approved by
our stockholders and filed with the State of Delaware on November
19, 2018. The following description summarizes the provisions of
the Amended and Restated Charter, including the number of shares of
common stock that are authorized for issuance under the Amended and
Restated Charter, and the authorization of shares of preferred
stock. Because the foregoing is only a summary, it does not contain
all the information that may be important to you. For a complete
description of the matters set forth in this section you should
refer to our Charter and Bylaws, which are included as exhibits to
this prospectus, and to the
applicable provisions of Delaware law.
Common Stock
Our Amended and Restated Charter currently authorizes 100.0 million
shares of common stock for issuance. As of January 1, 2019, there
were 13,830,489 shares of our common stock issued and outstanding,
which were held by approximately 120 stockholders of record,
approximately 3,626,717 shares of common stock issuable pursuant to
outstanding convertible promissory notes (assuming the 2018 Notes
are convertible into shares of common stock at a price of $3.60 per
share), approximately 7,168,616 shares of common stock issuable
upon exercise of warrants to purchase our common stock (assuming
the 2018 Notes are convertible into shares of common stock at a
price of $3.60 per share, resulting in the same number of 2018
Warrants), 4,583,320 shares of common stock issuable upon exercise
of options held, 32,500 shares of our common stock issuable upon
the vesting of restricted stock units held and 814,180
shares of common stock authorized and
available for issuance pursuant to our 2014 Plan. Each holder of
common stock is entitled to one vote for each share of common stock
held on all matters submitted to a vote of the stockholders,
including the election of directors. Neither our Bylaws or the
Amended and Restated Charter do not and will not provide for
cumulative voting rights.
In addition to the Amended and Restated Charter, in August 2018
holders of a majority of our issued and outstanding securities
authorized our Board of Directors, acting in its sole discretion
without further approval of our stockholders, to effect a reverse
split of our issued and outstanding common stock, at a ratio of not
less than one-for-two, but not more than one-for-five, at any time
on or before August 10, 2019 (the “Reverse
Split”). We expect our
Board of Directors will implement the Reverse Split before the
completion of this offering.
Holders of our common stock have no preemptive, conversion or
subscription rights, and there are no redemption or sinking fund
provisions applicable to the common stock. The rights, preferences
and privileges of the holders of common stock are subject to, and
may be adversely affected by, the rights of the holders of shares
of any series of our preferred stock that we may designate and
issue in the future.
Preferred Stock
Under our Amended and Restated Charter, our Board of Directors has
the authority, without further action by our stockholders, to issue
up to 10.0 million shares of preferred stock in one or more series
and to fix the voting powers, designations, preferences and the
relative participating, optional or other special rights and
qualifications, limitations and restrictions of each series,
including, without limitation, dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, liquidation
preferences and the number of shares constituting any
series.
As of January 1, 2019, no shares of our authorized preferred stock
are outstanding. Because our Board of Directors has the power to
establish the preferences and rights of the shares of any
additional series of preferred stock, it may afford holders of any
preferred stock preferences, powers and rights, including voting
and dividend rights, senior to the rights of holders of our common
stock, which could adversely affect the holders of the common stock
and could delay, discourage or prevent a takeover of us even if a
change of control of our company would be beneficial to the
interests of our stockholders.
Registration Rights
In connection with the 2018 Bridge Financing, we provided each
holder of a 2018 Note with registration rights to register the
shares of common stock issuable upon conversion of the 2018 Notes
and upon exercise of the 2018 Warrants, subject to certain
limitations. In addition, the holders of the 2018 Notes and the
2018 Warrants agreed to certain lock-up restrictions on the shares
of common stock underlying the 2018 Notes and the 2018 Warrants
that limit the ability of each holder to freely trade such shares
during the 180-day period following the completion of the offering
described in this prospectus.
In
addition, we granted certain registration rights to Riot Games with
respect to shares of common stock and shares of common stock
issuable upon exercise of certain warrants issued to Riot Games
pursuant to the Riot Licensing Agreement.
We have agreed to pay all of the expenses associated with each of
such registrations.
Anti-Takeover Matters
Charter and Bylaw Provisions
The
provisions of Delaware law, our Amended and Restated Charter, and
our Bylaws include a number of provisions that may have the effect
of delaying, deferring, or discouraging another person from
acquiring control of our company and discouraging takeover bids.
These provisions may also have the effect of encouraging persons
considering unsolicited tender offers or other unilateral takeover
proposals to negotiate with our Board rather than pursue non
negotiated takeover attempts. These provisions include the items
described below.
Board Composition and Filling Vacancies
Our
Bylaws provide that any vacancy on our Board may only be filled by
the affirmative vote of a majority of our directors then in office,
even if less than a quorum. Further, any directorship vacancy
resulting from an increase in the size of our Board of Directors,
may be filled by election of the Board of Directors, but only for a
term continuing until the next election of directors by our
stockholders.
No Cumulative Voting
The
DGCL provides that stockholders are not entitled to the right to
cumulate votes in the election of directors unless certificate of
incorporation of the Company in which they own stock provides
otherwise. Neither our Amended and
Restated Charter nor our Bylaws provide that our
stockholders shall be entitled to cumulative voting.
Delaware Anti-Takeover Statute
Upon
completion of this offering, we will be subject to the provisions
of Section 203 of the DGCL. In general, Section 203 prohibits
persons deemed to be “interested
stockholders” from engaging in a “business
combination” with a publicly held Delaware corporation for
three years following the date these persons become interested
stockholders unless the business combination is, or the transaction
in which the person became an interested stockholder was, approved
in a prescribed manner or another prescribed exception applies.
Generally, an “interested stockholder” is a person who,
together with affiliates and associates, owns, or within three
years prior to the determination of interested stockholder status
did own, 15% or more of a corporation’s voting stock.
Generally, a “business combination” includes a merger,
asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. The existence of this
provision may have an anti-takeover effect with respect to
transactions not approved in advance by the Board. A Delaware
corporation may “opt out” of these provisions with an
express provision in its original certificate of incorporation or
an express provision in its certificate of incorporation or bylaws
resulting from an amendment approved by at least a majority of the
outstanding voting shares. We have not opted out of these
provisions. As a result, mergers or other takeover or change in
control attempts of us may be discouraged or
prevented.
Choice of Forum
Our
Bylaws provide that Delaware will be the exclusive forum for any
derivative action or proceeding brought on our behalf; any action
asserting a breach of fiduciary duty; any action asserting a claim
against us arising pursuant to the DGCL, our Amended and
Restated Charter or our
Bylaws; or any action asserting a claim against us that is governed
by the internal affairs doctrine. The enforceability of similar
choice of forum provisions in other companies’ certificates
of incorporation has been challenged in legal proceedings, and it
is possible that a court could find these types of provisions to be
inapplicable or unenforceable.
MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES TO NON-U.S. HOLDERS
This section summarizes the material U.S. federal income tax
considerations relating to the acquisition, ownership and
disposition of our common stock acquired by “non-U.S.
holders” (as defined below) pursuant to this offering. This
summary does not provide a complete analysis of all potential U.S.
federal income tax considerations relating thereto. The information
provided below is based upon provisions of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated
thereunder, administrative rulings and judicial decisions currently
in effect. These authorities may change at any time, possibly
retroactively, or the Internal Revenue Service (the
“IRS”), might interpret the existing authorities
differently. In either case, the tax considerations of owning or
disposing of our common stock could differ from those described
below. As a result, we cannot assure you that the tax consequences
described in this discussion will not be challenged by the IRS or
will be sustained by a court if challenged by the
IRS.
This summary does not address the tax considerations arising under
the laws of any non-U.S., state or local jurisdiction, or under
U.S. federal gift and estate tax laws, except to the limited extent
provided below. In addition, this discussion does not address tax
considerations applicable to an investor’s particular
circumstances or to investors that may be subject to special tax
rules, including, without limitation:
●
banks,
insurance companies or other financial institutions;
●
partnerships
or entities or arrangements treated as partnerships or other
pass-through entities for U.S. federal tax purposes (or investors
in such entities);
●
corporations
that accumulate earnings to avoid U.S. federal income tax;
●
persons
subject to the alternative minimum tax or Medicare contribution tax
on net investment income;
●
tax-exempt
organizations or tax-qualified retirement plans;
●
controlled
foreign corporations or passive foreign investment
companies;
●
dealers
in securities or currencies;
●
traders
in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
●
persons
that own, or are deemed to own, more than 5% of our capital stock
(except to the extent specifically set forth below);
●
certain
former citizens or former long-term residents of the United
States;
●
persons
who hold our common stock as a position in a hedging transaction,
“straddle,” “conversion transaction” or
other risk reduction transaction;
●
persons
who do not hold our common stock as a capital asset within the
meaning of Section 1221 of the Code (generally, for investment
purposes); or
●
persons
deemed to sell our common stock under the constructive sale
provisions of the Code.
In
addition, if a partnership or entity classified as a partnership
for U.S. federal income tax purposes is a beneficial owner of our
common stock, the tax treatment of a partner in the partnership or
an owner of the entity will depend upon the status of the partner
or other owner and the activities of the partnership or other
entity. Accordingly, this summary does not address tax
considerations applicable to partnerships that hold our common
stock, and partners in such partnerships should consult their tax
advisors.
INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK SHOULD
CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE
U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR
SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE OR LOCAL LAWS,
AND TAX TREATIES.
Non-U.S. Holder Defined
For purposes of this summary, a “non-U.S. holder” is
any beneficial owner of our common stock, other than a partnership,
that is not:
●
an
individual who is a citizen or resident of the United
States;
●
a
corporation, or other entity taxable as a corporation for U.S.
federal income tax purposes, created or organized under the laws of
the United States,
●
any
state therein or the District of Columbia;
●
a
trust if it (i) is subject to the primary supervision of a U.S.
court and one of more U.S. persons have authority to control all
substantial decisions of the trust or (ii) has a valid election in
effect under applicable U.S. Treasury regulations to be treated as
a U.S. person; or
●
an
estate whose income is subject to U.S. income tax regardless of
source.
If
you are a non-U.S. citizen that is an individual, you may, in many
cases, be treated as a resident alien, as opposed to a nonresident
alien, by virtue of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183
days during a three-year period ending in the current calendar
year. For these purposes, all the days present in the current year,
one-third of the days present in the immediately preceding year,
and one-sixth of the days present in the second preceding year are
counted. Resident aliens are subject to U.S. federal income tax as
if they were U.S. citizens. Such an individual is urged to consult
his or her own tax advisor regarding the U.S. federal income tax
consequences of the ownership or disposition of our common
stock.
Dividends
We do not expect to declare or make any distributions on our common
stock in the foreseeable future. If we do make distributions on
shares of our common stock, however, such distributions will
constitute dividends for U.S. federal income tax purposes to the
extent paid from our current or accumulated earnings and profits,
as determined under U.S. federal income tax principles.
Distributions in excess of our current and accumulated earnings and
profits will constitute a return of capital that is applied against
and reduces, but not below zero, a non-U.S. holder’s adjusted
tax basis in shares of our common stock. Any remaining excess will
be treated as gain realized on the sale or other disposition of our
common stock. See “Sale of Common
Stock”
below.
Any dividend paid to a non-U.S. holder of our common stock that is
not effectively connected with the non-U.S. holder’s conduct
of a trade or business in the United States will generally be
subject to U.S. withholding tax at a 30% rate. The withholding tax
might apply at a reduced rate, however, under the terms of an
applicable income tax treaty between the United States and the
non-U.S. holder’s country of residence. You should consult
your tax advisors regarding your entitlement to benefits under a
relevant income tax treaty. Generally, in order for us or our
paying agent to withhold tax at a lower treaty rate, a non-U.S.
holder must certify its entitlement to treaty benefits. A non-U.S.
holder generally can meet this certification requirement by
providing an IRS Form W-8BEN or Form W-8BEN-E (or any successor of
such forms) or appropriate substitute form to us or our paying
agent. If the non-U.S. holder holds the stock through a financial
institution or other agent acting on the holder’s behalf, the
holder will be required to provide appropriate documentation to the
agent. The holder’s agent will then be required to provide
certification to us or our paying agent, either directly or through
other intermediaries. If you are eligible for a reduced rate of
U.S. federal withholding tax under an income tax treaty, you may
obtain a refund or credit of any excess amounts withheld by filing
an appropriate claim for a refund with the IRS in a timely
manner.
Dividends received by a non-U.S. holder that are effectively
connected with a U.S. trade or business conducted by the non-U.S.
holder, and if required by an applicable income tax treaty between
the United States and the non-U.S. holder’s country of
residence, are attributable to a permanent establishment maintained
by the non-U.S. holder in the United States, are not subject to
U.S. withholding tax. To obtain this exemption, a non-U.S. holder
must provide us or our paying agent with an IRS Form W-8ECI
properly certifying such exemption. Such effectively connected
dividends, although not subject to withholding tax, are taxed at
the same graduated income tax rates applicable to U.S. persons, net
of certain deductions and credits. In addition to being taxed at
graduated tax rates, dividends received by corporate non-U.S.
holders that are effectively connected with a U.S. trade or
business of the corporate non-U.S. holder may also be subject to a
branch profits tax at a rate of 30% or such lower rate as may be
specified by an applicable tax treaty.
Sale of Common Stock
Subject to the discussions below regarding backup withholding and
the Foreign Account Tax Compliance Act, non-U.S. holders will
generally not be subject to U.S. federal income tax on any gains
realized on the sale, exchange or other disposition of our common
stock unless:
●
the
gain (i) is effectively connected with the conduct by the non-U.S.
holder of a U.S. trade or business and (ii) if required by an
applicable income tax treaty between the United States and the
non-U.S. holder’s country of residence, is attributable to a
permanent establishment maintained by the non-U.S. holder in the
United States (in which case the special rules described below
apply);
●
the
non-U.S. holder is an individual who is present in the United
States for 183 days or more in the taxable year of the sale,
exchange or other disposition of our common stock, and certain
other requirements are met (in which case the gain would be subject
to a flat 30% tax, or such reduced rate as may be specified by an
applicable income tax treaty, which may be offset by certain U.S.
source capital losses, even though the individual is not considered
a resident of the United States); or
●
the rules of the Foreign Investment in Real
Property Tax Act (“FIRPTA”), treat the stock as a “U.S. real
property interest” as defined in Section 897 of the
Code.
The FIRPTA rules may apply to a sale, exchange or
other disposition of our common stock if we are, or were within the
shorter of the five-year period preceding the disposition and the
non-U.S. holder’s holding period, a “U.S. real property
holding corporation” (as defined in Section 897 of the Code)
(“USRPHC”). In general, we would be a USRPHC if
interests in U.S. real estate comprised at least half of the value
of our business assets. We do not believe that we are a USRPHC and
we do not anticipate becoming one in the future. Even if we become
a USRPHC, as long as our common stock is regularly traded on an
established securities market, such common stock will be treated as
U.S. real property interests only if beneficially owned by a
non-U.S. holder that actually or constructively owned more than 5%
of our outstanding common stock at sometime within the five-year
period preceding the disposition.
If any gain from the sale, exchange or other disposition of our
common stock, (1) is effectively connected with a U.S. trade or
business conducted by a non-U.S. holder and (2) if required by an
applicable income tax treaty between the United States and the
non-U.S. holder’s country of residence, is attributable to a
permanent establishment maintained by such non-U.S. holder in the
United States, then the gain generally will be subject to U.S.
federal income tax at the same graduated rates applicable to U.S.
persons, net of certain deductions and credits. If the non-U.S.
holder is a corporation, under certain circumstances, that portion
of its earnings and profits that is effectively connected with its
U.S. trade or business, subject to certain adjustments, generally
would be subject also to a “branch profits tax.” The
branch profits tax rate is 30% unless reduced by applicable income
tax treaty.
U.S. Federal Estate Tax
The estates of nonresident alien individuals generally are subject
to U.S. federal estate tax on property with a U.S. situs. Because
we are a U.S. corporation, our common stock will be U.S. situs
property and therefore will be included in the taxable estate of a
nonresident alien decedent, unless an applicable estate tax treaty
between the United States and the decedent’s country of
residence provides otherwise.
Backup Withholding and Information Reporting
The Code and the Treasury regulations require those who make
specified payments to report the payments to the IRS. Among the
specified payments are dividends and proceeds paid by brokers to
their customers. The required information returns enable the IRS to
determine whether the recipient properly included the payments in
income. This reporting regime is reinforced by “backup
withholding” rules. These rules require the payors to
withhold tax from payments subject to information reporting if the
recipient fails to cooperate with the reporting regime by failing
to provide his taxpayer identification number to the payor,
furnishing an incorrect identification number, or failing to report
interest or dividends on his returns. The backup withholding tax
rate is currently 28%. The backup withholding rules do not apply to
payments to corporations, whether domestic or foreign, provided
they establish such exemption.
Payments to non-U.S. holders of dividends on common stock generally
will not be subject to backup withholding, and payments of proceeds
made to non-U.S. holders by a broker upon a sale of common stock
will not be subject to information reporting or backup withholding,
in each case so long as the non-U.S. holder certifies its status as
a non-U.S. holder (and we or our paying agent do not have actual
knowledge or reason to know the holder is a U.S. person or that the
conditions of any other exemption are not, in fact, satisfied) or
otherwise establishes an exemption. The certification procedures to
claim treaty benefits described under “Dividends” will
generally satisfy the certification requirements necessary to avoid
the backup withholding tax. We must report annually to the IRS any
dividends paid to each non-U.S. holder and the tax withheld, if
any, with respect to these dividends. Copies of these reports may
be made available to tax authorities in the country where the
non-U.S. holder resides.
Under the Treasury regulations, the payment of proceeds from the
disposition of shares of our common stock by a non-U.S. holder made
to or through a U.S. office of a broker generally will be subject
to information reporting and backup withholding unless the
beneficial owner certifies, under penalties of perjury, among other
things, its status as a non-U.S. holder (and the broker does not
have actual knowledge or reason to know the holder is a U.S.
person) or otherwise establishes an exemption. The payment of
proceeds from the disposition of shares of our common stock by a
non-U.S. holder made to or through a non-U.S. office of a broker
generally will not be subject to backup withholding and information
reporting, except as noted below. Information reporting, but not
backup withholding, will apply to a payment of proceeds, even if
that payment is made outside of the United States, if you sell our
common stock through a non-U.S. office of a broker that
is:
●
a
U.S. person (including a foreign branch or office of such
person);
●
a
“controlled foreign corporation” for U.S. federal
income tax purposes;
●
a
foreign person 50% or more of whose gross income from certain
periods is effectively connected with a U.S. trade or business;
or
●
a
foreign partnership if at any time during its tax year (a) one or
more of its partners are U.S. persons who, in the aggregate, hold
more than 50% of the income or capital interests of the partnership
or (b) the foreign partnership is engaged in a U.S. trade or
business, unless the broker has documentary evidence that the
beneficial owner is a non-U.S. holder and certain other conditions
are satisfied, or the beneficial owner otherwise establishes an
exemption (and the broker has no actual knowledge or reason to know
to the contrary).
Backup withholding is not an additional tax. Any amounts withheld
from a payment to a holder of common stock under the backup
withholding rules can be credited against any U.S. federal income
tax liability of the holder and may entitle the holder to a refund,
provided that the required information is furnished to the IRS in a
timely manner.
Foreign Account Tax Compliance Act
A U.S. federal withholding tax of 30% may apply to dividends and
the gross proceeds of a disposition of our common stock paid to a
foreign financial institution (as specifically defined by the
applicable rules) unless such institution enters into an agreement
with the U.S. government to withhold on certain payments and to
collect and provide to the U.S. tax authorities substantial
information regarding U.S. account holders of such institution
(which includes certain equity holders of such institution, as well
as certain account holders that are foreign entities with U.S.
owners). This U.S. federal withholding tax of 30% will also apply
to dividends and the gross proceeds of a disposition of our common
stock paid to a non-financial foreign entity unless such entity
provides the withholding agent with either a certification that it
does not have any substantial direct or indirect U.S. owners or
provides information regarding direct and indirect U.S. owners of
the entity. The 30% federal withholding tax described in this
paragraph cannot be reduced under an income tax treaty with the
United States or by providing an IRS Form W-8BEN or similar
documentation. The withholding tax described above will not apply
if the foreign financial institution or non-financial foreign
entity otherwise qualifies for an exemption from the rules and
certifies as such on a Form W-8BEN-E (or any successor of such
form). Under certain circumstances, a non-U.S. holder might be
eligible for refunds or credits of such taxes. Holders should
consult with their own tax advisors regarding the possible
implications of the withholding described herein.
The withholding provisions described above generally apply to
proceeds from a sale or other disposition of common stock if such
sale or other disposition occurs on or after January 1, 2019
and to payments of dividends on our common stock.
THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR
GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE
INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE
PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING
THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE
LAWS.
We are offering the shares of common stock described in this
prospectus through the underwriters listed below. Subject to the
terms of the underwriting agreement, the underwriters named below
have agreed to buy, severally and not jointly, the number of shares
of common stock listed opposite their names below. The underwriters
are committed to purchase and pay for all of the shares if any are
purchased, other than those shares covered by the over-allotment
option described below. Northland Securities, Inc. and Lake
Street Capital Markets, LLC are acting as the joint book-running
managers of this offering and representatives of the
underwriters.
Underwriter
|
|
Number
of Shares
|
|
Northland
Securities, Inc.
|
|
|
|
Lake
Street Capital Markets, LLC
|
|
|
|
National Securities
Corporation
|
|
|
|
|
|
|
|
Total
|
|
|
|
The
underwriters have advised us that they propose to initially offer
the shares of common stock to the public at a price of
$ per share. The
underwriters propose to offer the shares of common stock to certain
dealers at the same price less a concession of not more than
$ per share. After
the initial offering, these figures may be changed by the
underwriters.
The shares sold in this offering are expected to be ready for
delivery against payment in immediately available funds on or about
,
2019, subject to customary closing conditions. The underwriters may
reject all or part of any order.
We have granted to the underwriters an option to purchase up to an
additional
shares of common stock from us at the same price to the public, and
with the same underwriting discount, as set forth in the table
below. The underwriters may exercise this option any time during
the 30-day period after the date of this prospectus, but only to
cover over-allotments, if any. To the extent the underwriters
exercise the option, the underwriters will become obligated,
subject to certain conditions, to purchase the shares for which
they exercise the option.
Commissions and Discounts
The table below summarizes the underwriting discounts that we will
pay to the underwriters. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option. In
addition to the underwriting discount, we have agreed to pay (i) up
to $275,000 of the fees and expenses of the underwriters, which may
include the fees and expenses of counsel to the underwriters, and
(ii), at the sole discretion of Northland Securities, Inc., an
additional fee equal to 1% of the gross proceeds from this offering
to the underwriters.
In connection with the successful completion of this
offering, for the price of $
, the underwriters may purchase a warrant to purchase
shares of our common stock equal to
% of the shares sold in this offering at an exercise price
that is
% of the public offering price per share in this offering; provided
further, that the underwriters will only receive such warrants
relating to the over-allotment option upon the closing (if any) of
the over-allotment option. The underwriters’ warrants are
exercisable during the period commencing from the date of the
prospectus and ending years from the date of this prospectus. The
underwriters’ warrants may not be sold during this offering,
or sold, transferred, assigned, pledged or hypothecated, or be the
subject of any hedging, short sale, derivative, put, or call
transaction that would result in the effective economic disposition
of the underwriters’ warrants, or the shares acquirable upon
exercise thereof, by any person for a period of 180 days
immediately following the effective date of this registration
statement, except as provided in paragraph (g)(2) of Rule 5110 of
FINRA. The fees and expenses of the underwriters that we have
agreed to reimburse are not included in the underwriting discounts
set forth in the table below.
We granted Northland Securities, Inc. a right of first refusal to
serve as exclusive placement agent (in the case of a private
offering), lead-managing underwriter (in the case of a public
offering) or exclusive financial advisor (in the case of a merger,
acquisition or sale transaction) in the event that we determine to
undertake such transaction within one year following the effective
date of this offering. In accordance with applicable rules of
FINRA, Northland Securities, Inc. does not have more than one
opportunity to waive or terminate the right of first refusal in
consideration of any payment or fee, and any payment or fee to
waive or terminate the right of first refusal must be paid in cash
and have a value not in excess of the greater of 1% of the proceeds
in this offering (or, if greater, the maximum amount permitted by
FINRA rules for compensation in connection with this offering) or
5% of the underwriting discount or commission paid in connection
with any future financing subject to right of first refusal
(including any overallotment option that may be exercised). This
right of first refusal is not reflected in the table
below.
Except as disclosed in this prospectus, the underwriters have not
received and will not receive from us any other item of
compensation or expense in connection with this offering considered
by FINRA to be underwriting compensation under FINRA Rule 5110. The
underwriting discount was determined through an arms’ length
negotiation between us and the underwriters.
|
|
Total with No
Over-Allotment
|
Total with
Over-Allotment
|
Underwriting
discount to be paid by us
|
$
|
$
|
$
|
We estimate that the total expenses of this offering, excluding
underwriting discounts, will be
$ .
This includes $275,000 of fees and expenses of the underwriters.
These expenses are payable by us.
Indemnification
We also have agreed to indemnify the underwriters against certain
liabilities, including civil liabilities under the Securities Act
of 1933, as amended, or to contribute to payments that the
underwriters may be required to make in respect of those
liabilities.
No Sales of Common Stock
We, each of our directors and officers and certain of our
significant stockholders have agreed not to offer, sell, agree to
sell, directly or indirectly, or otherwise dispose of any shares of
common stock or any securities convertible into or exchangeable for
shares of common stock without the prior written consent of
Northland Securities, Inc. and Lake Street Capital Markets, LLC for
a period of 180 days after the date of this prospectus. These
lock-up agreements provide limited exceptions and their
restrictions may be waived at any time by Northland Securities,
Inc. and Lake Street Capital Markets, LLC.
Determination of Offering Price
The underwriters have advised us that they propose to offer the
shares of common stock directly to the public at the estimated
initial public offering price range set forth on the cover page of
this prospectus. That price range and the initial public offering
price are subject to change as a result of market conditions and
other factors. Prior to this offering, no public market exists for
our common stock. The initial public offering price of the shares
was determined by negotiation between us and the underwriters. The
principal factors considered in determining the initial public
offering price of the shares included:
●
the
information in this prospectus and otherwise available to the
underwriters, including our financial information;
●
the
history and the prospects for the industry in which we
compete;
●
the
ability and experience of our management;
●
the
prospects for our future earnings;
●
the
present state of our development and our current financial
condition;
●
the
general condition of the economy and the securities markets in the
United States at the time of this initial public
offering;
●
the
recent market prices of, and the demand for, publicly-traded
securities of generally comparable companies; and
●
other
factors as were deemed relevant.
We cannot be sure that the initial public offering price will
correspond to the price at which the shares of common stock will
trade in the public market following this offering or that an
active trading market for the shares of common stock will develop
or continue after this offering.
Price Stabilization, Short Positions and Penalty Bids
To facilitate this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price
of our common stock during and after the offering. Specifically,
the underwriters may create a short position in our common stock
for their own accounts by selling more shares of common stock than
we have sold to the underwriters. The underwriters may close out
any short position by purchasing shares in the open
market.
In addition, the underwriters may stabilize or maintain the price
of our common stock by bidding for or purchasing shares in the open
market and may impose penalty bids. If penalty bids are imposed,
selling concessions allowed to broker-dealers participating in this
offering are reclaimed if shares previously distributed in this
offering are repurchased, whether in connection with stabilization
transactions or otherwise. The effect of these transactions may be
to stabilize or maintain the market price of our common stock at a
level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of our
common stock to the extent that it discourages resales of our
common stock. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on
the Nasdaq Capital Market or
otherwise and, if commenced, may be discontinued at any
time.
In connection with this offering, the underwriters and selling
group members may also engage in passive market making transactions
in our common stock on the Nasdaq Capital Market. Passive market making consists of
displaying bids on the Nasdaq Capital Market limited by the prices of
independent market makers and effecting purchases limited by those
prices in response to order flow. Rule 103 of Regulation M
promulgated by the SEC limits the amount of net purchases that each
passive market maker may make and the displayed size of each bid.
Passive market making may stabilize the market price of our common
stock at a level above that which might otherwise prevail in the
open market and, if commenced, may be discontinued at any
time.
Neither we nor the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of our common
stock. In addition, neither we nor the underwriters make any
representation that the underwriters will engage in these
transactions or that any transaction, if commenced, will not be
discontinued without notice.
Electronic Offer, Sale and Distribution of Shares
The underwriters or syndicate members may facilitate the marketing
of this offering online directly or through one of their respective
affiliates. In those cases, prospective investors may view offering
terms and a prospectus online and place orders online or through
their financial advisors. Such websites and the information
contained on such websites, or connected to such sites, are not
incorporated into and are not a part of this
prospectus.
Other Relationships
The underwriters and their affiliates are full service financial
institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial
advisory, investment management, investment research, principal
investment, hedging, financing and brokerage activities. The
underwriters have in the past, and may in the future, engage in
investment banking and other commercial dealings in the ordinary
course of business with us or our affiliates. The underwriters have
in the past, and may in the future, receive customary fees and
commissions for these transactions.
In the ordinary course of their various business activities, the
underwriters and their affiliates may make or hold a broad array of
investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments (including
bank loans) for their own account and for the accounts of their
customers, and such investment and securities activities may
involve securities and/or instruments of the issuer. The
underwriters and their affiliates may also make investment
recommendations and/or publish or express independent research
views in respect of such securities or instruments and may at any
time hold, or recommend to clients that it acquires, long and/or
short positions in such securities and instruments.
Listing
In connection with this offering, we have applied to have our
common stock listed on the Nasdaq Capital Market under the symbol
“SLGG.” There is no assurance, however, that our common
stock will ever be listed on the Nasdaq Capital Market or any other
national securities exchange.
Transfer Agent and Registrar
Our transfer agent is Issuer Direct whose address is 1981 E. Murray Holladay Rd
#100, Salt Lake City, Utah 84117 and its telephone number is (801)
272-9294.
Additional Information
Northland
Capital Markets is the trade name for certain capital markets and
investment banking services of Northland Securities, Inc., member
FINRA/SIPC.
Selling Restrictions
No action has been taken in any jurisdiction except the United
States that would permit a public offering of our common stock, or
the possession, circulation or distribution of this prospectus or
any other material relating to us or our common stock in any
jurisdiction where action for that purpose is required.
Accordingly, the shares may not be offered or sold, directly or
indirectly, and neither this prospectus nor any other offering
material or advertisements in connection with the shares may be
distributed or published, in or from any country or jurisdiction
except in compliance with any applicable rules and regulations of
any such country or jurisdiction.
Canada
The securities may be sold in Canada only to purchasers purchasing,
or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45
106 Prospectus
Exemptions or subsection
73.3(1) of the Securities Act (Ontario), and are permitted clients,
as defined in National Instrument 31 103 Registration Requirements,
Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in
accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities
laws.
Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or
damages if this prospectus (including any amendment thereto)
contains a misrepresentation, provided that the remedies for
rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the
purchaser’s province or territory. The purchaser should refer
to any applicable provisions of the securities legislation of the
purchaser’s province or territory for particulars of these
rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33
105 Underwriting
Conflicts (NI 33 105), the
underwriters are not required to comply with the disclosure
requirements of NI 33 105 regarding underwriter conflicts of
interest in connection with this offering.
United Kingdom
Each
of the underwriters has, separately and not jointly, represented
and agreed that:
●
it has
not made or will not make an offer of the securities to the public
in the United Kingdom within the meaning of section 102B of the
Financial Services and Markets Act 2000 (as amended), or the FSMA,
except to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities or otherwise in circumstances which do not require the
publication by us of a prospectus pursuant to the Prospectus Rules
of the Financial Services Authority, or FSA;
●
it has
only communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or inducement
to engage in investment activity (within the meaning of section 21
of FSMA) to persons who have professional experience in matters
relating to investments falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 or in circumstances in which section 21 of FSMA
does not apply to us; and
●
it has
complied with and will comply with all applicable provisions of
FSMA with respect to anything done by it in relation to the
securities in, from or otherwise involving the United
Kingdom.
Switzerland
The securities will not be offered, directly or indirectly, to the
public in Switzerland and this prospectus does not constitute a
public offering prospectus as that term is understood pursuant to
article 652a or 1156 of the Swiss Federal Code of
Obligations.
Israel
In the State of Israel this prospectus shall not be regarded as an
offer to the public to purchase shares of common stock under the
Israeli Securities Law, 5728—1968, which requires a
prospectus to be published and authorized by the Israel Securities
Authority, if it complies with certain provisions of
Section 15 of the Israeli Securities Law, 5728—1968,
including, inter alia, if: (i) the offer is made, distributed or
directed to not more than 35 investors, subject to certain
conditions (the “Addressed
Investors”); or (ii) the offer is made,
distributed or directed to certain qualified investors defined in
the First Addendum of the Israeli Securities Law, 5728—1968,
subject to certain conditions (the “Qualified Investors”). The
Qualified Investors shall not be taken into account in the count of
the Addressed Investors and may be offered to purchase securities
in addition to the 35 Addressed Investors. The company has not and
will not take any action that would require it to publish a
prospectus in accordance with and subject to the Israeli Securities
Law, 5728—1968. We have not and will not distribute this
prospectus or make, distribute or direct an offer to subscribe for
our common stock to any person within the State of Israel, other
than to Qualified Investors and up to 35 Addressed
Investors.
Qualified Investors may have to submit written evidence that they
meet the definitions set out in of the First Addendum to the
Israeli Securities Law, 5728—1968. In particular, we may
request, as a condition to be offered common stock, that Qualified
Investors will each represent, warrant and certify to us and/or to
anyone acting on our behalf: (i) that it is an investor
falling within one of the categories listed in the First Addendum
to the Israeli Securities Law, 5728—1968; (ii) which of
the categories listed in the First Addendum to the Israeli
Securities Law, 5728—1968 regarding Qualified Investors is
applicable to it; (iii) that it will abide by all provisions
set forth in the Israeli Securities Law, 5728—1968 and the
regulations promulgated thereunder in connection with the offer to
be issued common stock; (iv) that the shares of common stock
that it will be issued are, subject to exemptions available under
the Israeli Securities Law, 5728—1968: (a) for its own
account; (b) for investment purposes only; and (c) not
issued with a view to resale within the State of Israel, other than
in accordance with the provisions of the Israeli Securities Law,
5728—1968; and (v) that it is willing to provide further
evidence of its Qualified Investor status. Addressed Investors may
have to submit written evidence in respect of their identity and
may have to sign and submit a declaration
containing, inter alia, the Addressed Investor’s name, address and
passport number or Israeli identification
number.
European Economic Area
In
relation to each Member State of the European Economic Area (each,
a “Relevant Member
State”), no offer of shares of common stock may be
made to the public in that Relevant Member State other
than:
(a)
to any legal entity
which is a “qualified investor” as defined in the
Prospectus Directive;
(b)
to fewer than 150
natural or legal persons (other than qualified investors as defined
in the Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the
representatives; or
(c)
in any other
circumstances falling within Article 3(2) of the Prospectus
Directive, provided that no such offer of shares shall require the
Company or the representatives to publish a prospectus pursuant to
Article 3 of the Prospectus Directive or supplement a prospectus
pursuant to Article 16 of the Prospectus Directive,
Each
person in a Relevant Member State who initially acquires any shares
or to whom any offer is made will be deemed to have represented,
acknowledged and agreed to and with each of the representatives and
the Company that it is a “qualified investor” within
the meaning of the law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive. In the case of any
shares being offered to a financial intermediary as that term is
used in Article 3(2) of the Prospectus Directive, each such
financial intermediary will be deemed to have represented,
acknowledged and agreed that the shares acquired by it in the offer
have not been acquired on a non-discretionary basis on behalf of,
nor have they been acquired with a view to their offer or resale
to, persons in circumstances which may give rise to an offer of any
shares to the public other than their offer or resale in a Relevant
Member State to qualified investors as so defined or in
circumstances in which the prior consent of the representatives has
been obtained to each such proposed offer or resale.
For the
purposes of this provision, the expression an “offer of
shares to the public” in relation to any shares in any
Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and
the shares to be offered so as to enable an investor to decide to
purchase or subscribe the shares, as the same may be varied in the
Relevant Member State by any measure implementing the Prospectus
Directive in the Relevant Member State and the expression
“Prospectus Directive” means Directive 2003/71/EC (as
amended by Directive 2010/73/EU), and includes any relevant
implementing measure in the Relevant Member State.
Hong Kong
The contents of this document have not been reviewed or approved by
any regulatory authority in Hong Kong. This document does not
constitute an offer or invitation to the public in Hong Kong to
acquire shares. Accordingly, unless permitted by the securities
laws of Hong Kong, no person may issue or have in its possession
for the purposes of issue, this document or any advertisement,
invitation or document relating to the shares, whether in Hong Kong
or elsewhere, which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong other
than in relation to shares which are intended to be disposed of
only to persons outside Hong Kong or only to “professional
investors” (as such term is defined in the Securities and
Futures Ordinance (Cap. 571, Laws of Hong Kong)
(“SFO”) and the
subsidiary legislation made thereunder); or in circumstances which
do not result in this document being a “prospectus” as
defined in the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Cap. 32, Laws of Hong Kong) (“CO”); or which do not constitute
an offer or an invitation to the public for the purposes of the SFO
or the CO. The offer of the shares is personal to the person
to whom this document has been delivered, and a subscription for
shares will only be accepted from such person. No person to whom a
copy of this document is issued may issue, circulate or distribute
this document in Hong Kong, or make or give a copy of this document
to any other person. You are advised to exercise caution in
relation to the offer. If you are in any doubt about any of the
contents of this document, you should obtain independent
professional advice.
Singapore
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus and
any other document or material in connection with the offer or
sale, or invitation for subscription or purchase, of the shares may
not be circulated or distributed, nor may the shares be offered or
sold, or be made the subject of an invitation for subscription or
purchase, whether directly or indirectly, to persons in Singapore
other than (i) to an institutional investor pursuant to
Section 274 of the Securities and Futures Act,
Chapter 289 of Singapore (“SFA”), (ii) to a relevant
person (as defined in Section 275(2) of the SFA), or any
person pursuant to Section 275(1A), and in accordance with the
conditions, specified in Section 275 of the SFA, or
(iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the
SFA.
Where the shares are subscribed or purchased pursuant to an offer
made in reliance on Section 275 of the SFA by a relevant
person which is:
(a)
a corporation
(which is not an accredited investor) the sole business of which is
to hold investments and the entire share capital of which is owned
by one or more individuals, each of whom is an accredited investor;
or
(b)
a trust
(where the trustee is not an accredited investor) whose sole
purpose is to hold investments and each beneficiary is an
accredited investor;
shares, debentures and units of shares, and debentures of that
corporation, or the beneficiaries’ rights and interest
(howsoever described) in that trust shall not be transferable for
six months after that corporation or that trust has acquired the
shares under Section 275 except:
(1)
to an
institutional investor or to a relevant person (as defined in
Section 275(2) of the SFA), or any person pursuant to Section
275(1A) of the SFA (in the case of that corporation) or
Section 276(4)(i)(B) of the SFA (in the case of that
trust);
(2)
where
no consideration is or will be given for the transfer;
or
(3)
where
the transfer is by operation of law.
SHARES ELIGIBLE
FOR FUTURE SALE
The shares of our common stock sold in this offering will be freely
tradable in the public market, except to the extent they are
acquired by an “affiliate” of ours, as such term is
defined in Rule 405 under the Securities Act. Under Rule 405, an
affiliate of a specified person is a person that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified
person. Any affiliate of ours that acquires our common stock can
only further transact in such common stock in compliance with Rule
144 under the Securities Act, which imposes sales volume
limitations and other restrictions on such further transactions.
See “Rule 144,” below.
Rule 144
In general, a person who has beneficially owned restricted shares
of our common stock for at least twelve months, at least six
months, in the event we have been a reporting company under the
Exchange Act for at least 90 days before the sale, would be
entitled to sell such securities, provided that such person is not
deemed to be an affiliate of ours at the time of sale or to have
been an affiliate of ours at any time during the 90 days preceding
the sale. A person who is an affiliate of ours at such time would
be subject to additional restrictions, by which such person would
be entitled to sell within any three-month period only a number of
shares that does not exceed the greater of the
following:
●
1% of
the number of shares of our common stock then outstanding;
or
●
the
average weekly trading volume of our common stock during the four
calendar weeks preceding the filing by such person of a notice on
Form 144 with respect to the sale;
provided that, in each case, we are subject to the periodic
reporting requirements of the Exchange Act for at least 90 days
before the sale. Rule 144 trades must also comply with the manner
of sale, notice and other provisions of Rule 144, to the extent
applicable.
Lock-Up Agreements
We and our officers, directors, and current stockholders have
agreed, or will agree, with the underwriters, subject to certain
exceptions, that, without the prior written consent of the
underwriters, we and they will not, directly or indirectly, during
the period ending 180 days after the date of the
prospectus:
●
offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of
or transfer any shares of the common stock or any securities
convertible into or exchangeable or exercisable for the common
stock, whether now owned or hereafter acquired by the
aforementioned or with respect to which any of the aforementioned
has or hereafter acquires the power of disposition; or
●
enter
into any swap or any other agreement or any transaction that
transfers, in whole or in part, the economic consequence of
ownership of the common stock, whether any such swap or transaction
is to be settled by delivery of the common stock or other
securities, in cash or otherwise.
The
validity of our shares of our common stock offered by this
prospectus will be passed upon for us by Disclosure Law Group, a
Professional Corporation of San Diego, California. The underwriters
are being represented by Faegre Baker Daniels LLP, Minneapolis,
Minnesota, in connection with the offering.
EXPERTS
Our financial statements as of and for the years ended December 31,
2017 and 2016, have been included herein in reliance upon the
report of Squar Milner LLP, an independent registered public
accounting firm, appearing elsewhere herein, and given upon the
authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have
filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to this offering of our common stock.
This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement, some items of which are contained in
exhibits to the registration statement as permitted by the rules
and regulations of the SEC. For further information with respect to
us and our common stock, we refer you to the registration
statement, including the exhibits and the financial statements and
notes filed as a part of the registration statement. Statements
contained in this prospectus concerning the contents of any
contract, or any other document, are not necessarily complete. If a
contract or document has been filed as an exhibit to the
registration statement, please see the copy of the contract or
document that has been filed. Each statement is this prospectus
relating to a contract or document filed as an exhibit is qualified
in all respects by the filed exhibit. The exhibits to the
registration statement should be referenced for the complete
contents of these contracts and documents. You may obtain copies of
this information by mail from the Public Reference Section of the
SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at
prescribed rates. You may obtain information on the operation of
the public reference rooms by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an internet website that contains reports,
proxy statements and other information about issuers, like us, that
file electronically with the SEC. The address of the SEC’s
website is www.sec.gov.
In
connection with this offering and before this registration
statement becomes effective, we will register our common stock with
the SEC under Section 12 of the Exchange Act and, upon such
registration, we will become subject to the information and
periodic reporting requirements of the Exchange Act, and we will
file periodic reports, proxy statements and other information with
the SEC. These periodic reports, proxy statements and other
information will be available for inspection and copying at the
public reference room and website of the SEC referred to above. We
maintain a website at http://www.superleague.com. You may access
our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports, proxy
statements and other information filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act with the SEC free of
charge at our website as soon as reasonably practicable after such
material is electronically filed with, or furnished to, the SEC.
The information contained in, or that can be accessed through, our
website is not part of this prospectus.
INDEX TO FINANCIAL
STATEMENTS
SUPER LEAGUE GAMING, INC.
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|
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|
|
Page
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|
Report
of Independent Registered Public Accounting Firm
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F-2
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|
|
Financial Statements for the Years Ended December 31, 2017 and
2016
|
|
|
|
|
|
Balance
Sheets as of December 31, 2017 and 2016
|
|
F-3
|
Statements
of Operations for the years ended December 31, 2017 and
2016
|
|
F-4
|
Statements
of Stockholders’ Equity for the years ended December 31, 2017
and 2016
|
|
F-5
|
Statements
of Cash Flows for the years ended December 31, 2017 and
2016
|
|
F-6
|
Notes
to Financial Statements
|
|
F-7
|
|
|
Unaudited Interim Condensed Financial Statements for the Nine
Months Ended September 30, 2018 and 2017
|
|
|
|
|
|
Interim
Condensed Balance Sheet as of September 30, 2018
(unaudited)
|
|
F-22
|
Interim
Condensed Statements of Operations for the nine months ended
September 30, 2018 and 2017 (unaudited)
|
|
F-23
|
Interim
Condensed Statements of Cash Flows for the nine months ended
September 30, 2018 and 2017 (unaudited)
|
|
F-24
|
Notes
to Interim Condensed Financial Statements (unaudited)
|
|
F-25
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Stockholders and Board of Directors
Super League Gaming, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Super League
Gaming, Inc. (the “Company”) as of December 31, 2017
and 2016, the related statements of operations, stockholders'
equity and cash flows for the years then ended, and the related
notes to the financial statements (collectively, the financial
statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2017 and 2016, and the results of its
operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the
United States of America.
Other Matter
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has suffered
recurring losses from operations, has negative operating cash flows
from operations, and has a significant accumulated deficit that
raise substantial doubt about its ability to continue as a going
concern. Management’s plans regarding those matters are also
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Our opinion is not modified with respect to that
matter.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with
U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ SQUAR MILNER LLP
We have served as the Company’s auditor since
2016.
Newport
Beach, California
September 14, 2018
SUPER LEAGUE GAMING, INC.
BALANCE SHEETS
DECEMBER 31, 2017 AND 2016
|
|
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ASSETS
|
|
|
|
Current
Assets
|
|
|
Cash
|
$1,709,473
|
$2,870,546
|
Accounts
receivable
|
113,702
|
–
|
Prepaid expenses
and other current assets
|
780,111
|
41,224
|
Total current
assets
|
2,603,286
|
2,911,770
|
|
|
|
Property
and Equipment, net
|
1,137,817
|
1,804,353
|
Intangible
and Other Assets, net
|
340,998
|
475,001
|
|
|
|
Total
assets
|
$4,082,101
|
$5,191,124
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current
Liabilities
|
|
|
Accounts payable
and accrued expenses
|
$383,814
|
$449,221
|
Total current
liabilities
|
383,814
|
449,221
|
|
|
|
Commitments
and Contingencies (Note 10)
|
|
|
|
|
|
Stockholders’
Equity
|
|
|
Common stock, par
value $0.001 per share; 50,000,000 shares authorized; 13,810,487
and 11,167,852 shares issued and outstanding as of December 31,
2017 and 2016, respectively.
|
13,811
|
11,168
|
Additional paid-in
capital
|
38,191,133
|
24,281,984
|
Accumulated
deficit
|
(34,506,657)
|
(19,551,249)
|
Total
stockholders’ equity
|
3,698,287
|
4,741,903
|
|
|
|
Total liabilities
and stockholders’ equity
|
$4,082,101
|
$5,191,124
|
The accompanying notes are an integral part of these financial
statements.
SUPER LEAGUE GAMING, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
|
|
|
|
|
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SALES
|
$201,182
|
$269,892
|
|
|
|
COST
OF SALES
|
1,487,905
|
1,460,438
|
|
|
|
GROSS
LOSS
|
(1,286,723)
|
(1,190,546)
|
|
|
|
OPERATING
EXPENSES
|
|
|
Selling, marketing
and advertising
|
1,155,506
|
1,295,016
|
Research and
development
|
61,543
|
142,380
|
General and
administrative
|
12,451,636
|
9,737,460
|
Total operating
expenses
|
13,668,685
|
11,174,856
|
|
|
|
NET
LOSS
|
$(14,955,408)
|
$(12,365,402)
|
|
|
|
Net
loss attributable to common stockholders - basic and
diluted
|
|
|
Basic and diluted
loss per common share
|
$(1.17)
|
$(1.53)
|
Weighted-average
number of shares outstanding, basic and diluted
|
12,740,023
|
8,066,901
|
The accompanying notes are an integral part of these financial
statements.
SUPER LEAGUE GAMING, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
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|
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|
|
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BALANCE
– December 31, 2015
|
5,685,892
|
$5,686
|
$7,324,884
|
$(7,185,847)
|
$144,723
|
|
|
|
|
|
|
Conversion of notes
payable
|
2,714,871
|
2,715
|
8,297,285
|
–
|
8,300,000
|
Issuance of common
stock for cash at $3.60 per share, net of issuance
costs
|
1,517,089
|
1,517
|
5,355,128
|
–
|
5,356,645
|
Stock options
exercised
|
70,000
|
70
|
6,930
|
–
|
7,000
|
Stock-based
compensation
|
1,180,000
|
1,180
|
3,297,757
|
–
|
3,298,937
|
Net
loss
|
–
|
–
|
–
|
(12,365,402)
|
(12,365,402)
|
|
|
|
|
|
|
BALANCE
– December 31, 2016
|
11,167,852
|
11,168
|
24,281,984
|
(19,551,249)
|
4,741,903
|
|
|
|
|
|
|
Issuance of common
stock for cash at $3.60 per share, net of issuance
costs
|
2,364,857
|
2,365
|
8,242,517
|
–
|
8,244,882
|
Stock-based
compensation
|
–
|
–
|
4,666,910
|
–
|
4,666,910
|
In-kind
contribution of services (Note 7)
|
277,778
|
278
|
999,722
|
–
|
1,000,000
|
Net
loss
|
–
|
–
|
–
|
(14,955,408)
|
(14,955,408)
|
|
|
|
|
|
|
BALANCE
– December 31, 2017
|
13,810,487
|
$13,811
|
$38,191,133
|
$(34,506,657)
|
$3,698,287
|
The accompanying notes are an integral part of these financial
statements.
SUPER LEAGUE GAMING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
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|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
loss
|
$(14,955,408)
|
$(12,365,402)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and
amortization
|
1,237,608
|
963,049
|
Stock-based
compensation
|
4,666,910
|
3,298,937
|
In-kind
contribution of services
|
333,333
|
–
|
Changes in assets
and liabilities:
|
|
|
Accounts
receivable
|
(113,702)
|
–
|
Prepaid expenses
and other current assets
|
(72,220)
|
(4,692)
|
Accounts payable
and accrued expenses
|
(65,407)
|
(206,342)
|
Net
cash used in operating activities
|
(8,968,886)
|
(8,314,450)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchase of
property and equipment
|
(327,351)
|
(1,359,927)
|
Capitalization of
software development costs
|
(109,718)
|
(195,453)
|
Acquisition of
other intangible and other assets
|
–
|
(36,570)
|
Net
cash used in investing activities
|
(437,069)
|
(1,591,950)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds from issuance of common
stock
|
8,513,480
|
5,431,520
|
Common stock issuance
costs
|
(268,598)
|
(74,875)
|
Proceeds from exercise of stock
options
|
–
|
7,000
|
Proceeds from
convertible note payable
|
–
|
5,350,000
|
Repayment on
convertible note payable
|
–
|
(300,000)
|
Net
cash provided by financing activities
|
8,244,882
|
10,413,645
|
|
|
|
(DECREASE)
INCREASE IN CASH
|
(1,161,073)
|
507,245
|
|
|
|
CASH – beginning of
year
|
2,870,546
|
2,363,301
|
|
|
|
CASH – end of year
|
$1,709,473
|
$2,870,546
|
|
|
|
SUPPLEMENTAL
NONCASH FINANCING ACTIVITIES
|
|
|
Conversion of note
payable to common stock
|
$–
|
$8,300,000
|
In-kind
contributions (Note 7)
|
$1,000,000
|
$–
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
|
|
Income taxes
paid
|
$800
|
$800
|
The accompanying notes are an integral part of these financial
statements.
SUPER LEAGUE GAMING, INC.
NOTES TO FINANCIAL
STATEMENTS
1.
DESCRIPTION
OF BUSINESS
Super
League Gaming, Inc. (“Super League,” the
“Company,” “we” or “our”) is a
leading amateur esports community and content platform offering a
personalized experience to gamers. Through our proprietary,
cloud-based technology platform, we connect our network of gamers,
venues and brand partners to enable local, social and competitive
esports that can be uniquely broadcast through our platform. We
offer daily and season-focused offerings for which amateur
competitive gamers establish meaningful connections with each other
while improving their skills. We have multi-year strategic
partnerships with leading game publishers such as Microsoft and
Riot Games with titles including Minecraft and League of Legends,
respectively, to drive use among our member base and further
penetrate our target market. We deliver enhanced gaming experiences
to our members with these titles through our platform, and we
provide our venue and brand partners access to our member network
and platform technology.
Super
League was incorporated on October 1, 2014 as Nth Games, Inc. under
the laws of the State of Delaware and changed its name to Super
League Gaming, Inc. on June 15, 2015.
2.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The
financial statements and accompanying notes are prepared on the
accrual basis of accounting in accordance with generally accepted
accounting principles in the United States of America (“U.S.
GAAP”).
Use of Estimates
The
preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these
estimates.
Going Concern
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. As presented in the financial statements, the
Company has incurred a net loss of $14.9 million and $12.4 million
during the years ended December 31, 2017 and 2016, respectively,
and had an accumulated deficit of $34.5 million as of December 31,
2017. Noncash expenses and allowances were significant during the
years ended December 31, 2017 and December 31, 2016, and the net
cash used in operating activities were $8.9 million and $8.3
million, respectively.
The
Company has and will continue to use significant capital for the
growth and development of its business. The Company’s
management expects operating losses to continue in the near term in
order to carry out its strategic objectives. The Company considers
historical operating results, capital resources and financial
position, in combination with current projections and estimates, as
part of its plan to fund operations over a reasonable period of
time.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Going Concern (continued)
The
Company intends to use the proceeds from the issuance of the debt
instruments for business expansion, merger and/or acquisitions,
game licensing, and working capital. In addition, the Company
remains in active discussions for additional funds primarily
through the issuance of additional common stock. No assurance can
be given that any future financing will be available or, if
available, that it will be on terms that are satisfactory to the
Company.
The
Company’s management believes its current cash, net proceeds
from debt issuances and the amount available from the issuance of
common stock will be sufficient to fund working capital
requirements beyond the next 12 months. This belief assumes, among
other things, that the Company will be able to raise additional
equity financing, will continue to be successful implementing its
business strategy and that there will be no material adverse
development in the business, liquidity or capital requirements. If
one or more of these factors do not occur as expected, it could
cause reduction or delay of its business activities, sales of
material assets, default on its obligations, or forced into
insolvency. The accompanying financial statements do not contain
any adjustments which might be necessary if the Company were unable
to continue as a going concern.
Revenue Recognition
The
Company recognizes revenue when (i) persuasive evidence of an
arrangement exists, (ii) delivery of the products and/or services
has occurred, (iii) the selling price is fixed or determinable, and
(iv) the collectability of amounts is reasonably
assured.
Super
League generates revenues and related cash flows
from (i) the sale of season passes to
gamers for participation in Super League’s
in-person and online multiplayer
gaming experiences, (ii) brand and media
partnerships and (iii) sales
of merchandise. Sponsorship and season pass sales
revenues are recognized as the events occur. Revenue collected in
advance is recorded as deferred revenue until the event occurs.
Deferred revenues were not material for the periods presented
herein.
Cost of Sales
Cost of
sales includes direct costs incurred in connection with the
production of Super League’s in-theater and online gaming
events, including theater rental, theater entertainment, licenses,
and contract services.
Advertising
Gaming
experience and Super League brand related advertising costs include
the cost of ad production, social media, print media, marketing,
promotions, and merchandising. The Company expenses advertising
costs as incurred. Total advertising expenses for the years ended
December 31, 2017 and 2016 were $493,536 and $477,744,
respectively, and are included in selling, marketing and
advertising expenses in the accompanying statements of
operations.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Cash and Cash Equivalents
Super
League considers all highly liquid, short-term investments with
original maturities of three months or less when purchased to be
cash equivalents. As of December 31, 2017 and 2016, the Company did
not have any cash equivalents.
Accounts Receivable
Accounts
receivable are recorded at the original invoice amount, less an
estimate made for doubtful accounts, if any. The Company provides
an allowance for potential credit losses based on its evaluation of
the collectability and the customers’ creditworthiness.
Accounts receivable are written off when they are determined to be
uncollectible. As of December 31, 2017 and 2016, no allowance for
doubtful accounts was considered necessary.
Fair Value Measurements
The
Company did not have any assets or liabilities that were measured
at fair value on a recurring basis or non-recurring basis as of
December 31, 2017 and 2016.
Concentration of Credit Risks
The
Company maintains its cash on deposit with a bank that is insured
by the Federal Deposit Insurance Corporation. At various times, the
Company maintained balances in excess of insured amounts. The
Company has not experienced any significant losses on its cash held
in banks.
Property and Equipment
Property
and equipment are recorded at cost. Major additions and
improvements that materially extend useful lives of property and
equipment are capitalized. Maintenance and repairs are charged
against the results of operations as incurred. When these assets
are sold or otherwise disposed of, the asset and related
depreciation are relieved, and any gain or loss is included in the
statements of operations for the period of sale or disposal.
Depreciation and amortization is computed on a straight-line basis
over the estimated useful lives of the assets, typically over a
three to five-year period.
Intangible Assets
Intangible assets
primarily consist of software development costs, domain names,
copyrights and other intangible assets which are recorded at cost
and amortized using the straight-line method over the estimated
useful lives of the assets, ranging from three to ten years.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Intangible Assets (continued)
Software
development costs incurred to develop internal-use software during
the application development stage are capitalized and amortized on
a straight-line basis over the software’s estimated useful
life, which is generally three years. Software development costs
incurred during the preliminary stages of development are charged
to expense as incurred. Maintenance and training costs are charged
to expense as incurred. Upgrades or enhancements to existing
internal-use software that result in additional functionality are
capitalized.
Research and Development Costs
Research and development costs represent costs incurred to develop
the Company’s technology and primarily include payments to outside consultants and
contractors. Research and development costs are expensed as
incurred.
Impairment of Long-Lived Assets
The
Company assesses the recoverability of long-lived assets whenever
events or changes in circumstances indicate that their carrying
value may not be recoverable. If the cost basis of a long-lived
asset is greater than the projected future undiscounted net cash
flows from such asset, an impairment loss is recognized. Impairment
losses are calculated as the difference between the cost basis of
an asset and its estimated fair value. Management believes that
there was no impairment of long-lived assets as of and for the
years ended December 31, 2017 and 2016. There can be no assurance,
however, that market conditions or demand for the Company’s
products or services will not change, which could result in
long-lived asset impairment charges in the future.
Stock-Based Compensation
The
compensation cost for all stock-based awards is measured at the
grant date, based on the estimated fair value of the award, and is
recognized as an expense, generally on a straight-line basis over
the employee’s requisite service period (generally the
vesting period of the equity award) which is typically two to four
years. The fair value of restricted stock and restricted stock unit
awards is determined by the product of the number of shares or
units granted and the grant date market price of the underlying
common stock. The fair value of option awards and common stock
purchase warrants is estimated on the date of grant using the
Black-Scholes-Merton option pricing model. Stock-based compensation
expense is recorded only for those awards expected to vest using an
estimated forfeiture rate.
Grants of equity-based awards (including warrants) to non-employees
in exchange for consulting or other services are accounted for
using the fair value of the consideration received (i.e., the value
of the goods or services) or the fair value of the equity
instruments issued, whichever is more reliably
measurable.
Segment Information
The
Company operates in one segment.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Earnings (Loss) Per Share
Basic
earnings (loss) per share is computed by dividing the income or
loss by the weighted-average number of outstanding shares of common
stock for the applicable period. Diluted earnings per share is
computed by dividing the income or loss by the weighted-average
number of outstanding shares of common stock for the applicable
period, including the dilutive effect of common stock equivalents.
Potentially dilutive common stock equivalents primarily consist of
employee stock options, common stock purchase warrants issued to
employee and non-employees in exchange for services and common
stock purchase warrants issued in connection with financings. All
outstanding stock options, and common stock purchase warrants for
the periods presented have been excluded from the computation of
diluted loss per share because the effect of inclusion would have
been anti-dilutive.
Income Taxes
Income
taxes are accounted for using an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been
recognized in the Company’s financial statements or income
tax returns. A valuation allowance is established to reduce
deferred tax assets if all, or some portion, of such assets will
more than likely not be realized, or if it is determined that there
is uncertainty regarding future realizability of such
assets.
Under
U.S. GAAP, a tax position is a position in a previously filed tax
return or a position expected to be taken in a future tax filing
that is reflected in measuring current or deferred income tax
assets and liabilities. Tax positions are recognized only when it
is more likely than not, based on technical merits, that the
position will be sustained upon examination. Tax positions that
meet the more likely than not thresholds are measured using a
probability weighted approach as the largest amount of tax benefit
being realized upon settlement. The Company considers many factors
when evaluating and estimating its tax positions and tax benefits,
which may require periodic adjustments, and which may not
accurately forecast actual outcomes. Management believes the
Company has no uncertain tax positions for the years ended December
31, 2017 and 2016.
The
Company has elected to include interest and penalties related to
its tax contingences as a component of income tax expense. There
were no accruals for interest and penalties related to uncertain
tax positions for the periods presented. Income tax returns remain
open for examination by applicable authorities, generally three
years from filing for federal and four years for state. The Company
is not currently under examination by any taxing authority nor has
it been notified of an impending examination.
Recent Accounting Guidance
In May
2014, the Financial Accounting Standards Board (“FASB”)
issued an accounting update requiring a company to recognize as
revenue the amount of consideration it expects to be entitled to in
connection with the transfer of promised goods or services to
customers. The accounting standard update will replace the existing
revenue recognition guidance currently promulgated by U.S. GAAP.
The new guidance is effective for annual periods beginning after
December 15, 2018, with early adoption permitted. The Company is in
the process of evaluating the impact, if any, of the update on its
financial position, results of operations and financial statement
disclosures.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent Accounting Guidance (continued)
In
February 2016, the FASB issued an accounting update that requires
lessees to present right-of-use assets and lease liabilities on the
balance sheet. The new guidance is to be applied using a modified
retrospective approach at the beginning of the earliest comparative
periods in the financial statements and is effective for fiscal
years beginning after December 15, 2019 and early adoption is
permitted. The Company is evaluating the impact that this guidance
will have on its financial position, results of operations and
financial statement disclosures.
3.
PROPERTY
AND EQUIPMENT
Property
and equipment consisted of the following at December 31, 2017 and
2016:
|
|
|
|
|
|
Furniture
and fixtures
|
$76,156
|
$48,793
|
Computer
hardware
|
3,073,319
|
2,773,331
|
|
3,149,475
|
2,822,124
|
Less:
accumulated depreciation and amortization
|
(2,011,658)
|
(1,017,771)
|
|
$1,137,817
|
$1,804,353
|
Depreciation
and amortization expense was $993,887 and $769,045 for the years
ended December 31, 2017 and 2016, respectively.
4.
INTANGIBLE
AND OTHER ASSETS
Intangible
and other assets consisted of the following as of December 31, 2017
and 2016:
|
|
|
|
|
|
Capitalized
software development costs
|
$762,572
|
$652,854
|
Domain
|
65,579
|
65,579
|
Copyrights and
other
|
36,570
|
36,570
|
|
864,721
|
755,003
|
Less:
accumulated amortization
|
(523,723)
|
(280,002)
|
|
$340,998
|
$475,001
|
Amortization
expense totaled $243,721 and $194,004 for the years ended December
31, 2017 and 2016, respectively.
4.
INTANGIBLE AND OTHER ASSETS
(continued)
Future
amortization expense of intangible and other assets is expected as
follows:
For the years
ending December 31:
|
|
2018
|
$196,126
|
2019
|
76,630
|
2020
|
35,887
|
2021
|
11,003
|
2022
|
6,558
|
Thereafter
|
14,794
|
|
$340,998
|
5.
GAMING
LICENSE AGREEMENT
In June
2016, the Company entered into a gaming license agreement whereby
the Company agreed to issue 500,000 shares of common stock purchase
warrants (“License Warrants”) and 550,000 shares of
restricted stock units (“License RSUs”) when the
following performance or service conditions are met:
Vesting Conditions for License Warrant
|
|
Number of License Warrants
|
Achievement
of:
|
|
|
Greater
than $5.0 million game related net revenues
|
Performance
|
125,000
|
Greater
than $15.0 million game related net revenues
|
Performance
|
175,000
|
Greater
than $35.0 million game related net revenues
|
Performance
|
200,000
|
|
500,000
|
Vesting Conditions for License RSUs
|
|
|
|
|
|
Execution
of the gaming license agreement
|
Service
|
137,500
|
9-month
anniversary
|
Service
|
137,500
|
18-month
anniversary
|
Service
|
275,000
|
|
550,000
|
The License Warrants have a five-year contractual term with an
exercise price of $3.00 per share, with vesting upon satisfactory
performance under the gaming license agreement. The value of the
License Warrants would be measured when any of vesting conditions
are satisfied. As of December 31, 2017, it was not probable that
the vesting conditions would be met. Accordingly, no expense for
the License Warrants was recognized during the years ended December
31, 2017 and 2016.
5.
GAMING LICENSE AGREEMENT
(continued)
The
License RSUs were expensed on a straight-line basis over the
contractual license term of 18-months beginning June
2016 and ending December 31, 2017. Total expense
included in cost of sales related to License RSUs for the years
ended December 31, 2017 and 2016 totaled $1,054,167 and $595,833,
respectively.
6.
CONVERTIBLE
NOTE PAYABLE TO A RELATED PARTY
In
October 2015, the Company entered into a non-interest bearing,
unsecured convertible note in the principal amount of $3,250,000
(the “2015 Note”) with a stockholder of the Company. In
April 2016, the 2015 Note automatically converted into 1,163,387
shares of common stock pursuant to the terms of the 2015
Note.
In
April 2016, the Company entered into non-interest bearing,
unsecured convertible notes with an aggregate principal amount of
$5,350,000 (the “2016 Notes”) with certain stockholders
of the Company, $5,050,000 of such principal amount was
automatically converted into 1,551,484 shares of common stock in
October 2016 upon closing of a “qualified equity
offering” (as such term is defined in the 2016 Notes)
pursuant to the terms of the 2016 Notes. The remaining principal
amount of $300,000 was fully repaid by the Company during the year
ended December 31, 2016.
Preferred Stock
The
Company’s initial certificate of incorporation authorized
5,000,000 shares of preferred stock, par value $0.001 per share. No
preferred stock had been issued and outstanding since inception of
the Company. In October 2016, the Company’s Board of
Directors and a majority of the holders of the Company’s
common stock approved an amendment and restatement of the
certificate of incorporation which, in part, eliminated the
authorized preferred stock. All references in the accompanying
financial statements to preferred stock have been restated to
reflect the amended and restated certificate of
incorporation.
Common Stock
Each
holder of common stock is entitled to one vote for each share of
common stock held at all meetings of stockholders.
7.
STOCKHOLDERS’ EQUITY
(continued)
Common Stock Purchase Warrants
The Company issued common stock purchase warrants to certain employees and non-employees in exchange
for services performed, subject to certain vesting conditions. The
warrants have expiration dates ranging from five to 10 years from
the date of grant and exercise prices ranging from $0.10 to $3.60
per share. A summary of warrant activity for the year ended
December 31, 2017 is as follows:
|
|
|
|
|
|
Exercise
Price Per Share ($)
|
Remaining
Contractual Term (Years)
|
Aggregate
Intrinsic Value ($)
|
|
|
|
|
|
Outstanding
at December 31, 2016
|
1,778,125
|
$2.63
|
3.85
|
$1,725,000
|
Granted
|
1,016,750
|
$3.57
|
|
|
Forfeited
or cancelled
|
(250,000)
|
$3.17
|
|
|
Outstanding
at December 31, 2017
|
2,544,875
|
$2.97
|
5.76
|
$1,609,800
|
Vested
and exercisable as of December 31, 2017
|
1,191,375
|
$2.70
|
|
$1,077,300
|
Compensation
expense related to common stock purchase warrants was $1,664,563
and $1,188,046 for the years ended December 31, 2017 and 2016,
respectively. The weighted-average grant date fair value of
warrants granted during the years ended December 31, 2017 and 2016
was $2.59 and $2.43, respectively. The aggregate fair value of
warrants that vested during the years ended December 31, 2017 and
2016 was $1,651,891 and $1,146,046, respectively.
As of
December 31, 2017, the total unrecognized compensation expense
related to warrants was $3,599,282, which is expected to be
recognized over a weighted-average term of approximately 2.94
years.
In-Kind Contribution of Services
For the
year ended December 31, 2017, the Company recorded $1,000,000 as
in-kind contributions of media services provided by a major media
network, in
exchange for 277,778 shares of common stock, of which
$333,333 was expensed for usage and the remaining $666,667 was
included in prepaid expenses and other current assets in the
accompanying balance sheet as of December 31, 2017.
8.
STOCK-BASED
INCENTIVE PLANS
The
Super League 2014 Stock Option and Incentive Plan (the
“Plan” or “SOP”) was approved by the Board
of Directors and the stockholders of Super League in October 2014.
The Plan allows grants of stock options, stock awards and
performance shares with respect to common stock of the Company to
eligible individuals, which generally includes directors, officers,
employees, advisors and consultants. The Plan provides for both the
direct award and sale of shares of common stock and for the grant
of options to purchase shares of common stock. Options granted
under the Plan include non-statutory options as well as incentive
options intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended.
The
Board of Directors administers the Plan and determines which
eligible individuals are to receive option grants or stock
issuances under the Plan, the times when the grants or issuances
are to be made, the number of shares of common stock subject to
each grant or issuance, the status of any granted option as either
an incentive stock option or a non-statutory stock option under the
federal tax laws, the vesting schedule to be in effect for the
option grant or stock issuance and the maximum term for which any
granted option is to remain outstanding. The exercise price of
options is generally equal to the fair market value of common stock
of the Company on the date of grant. Options generally begin
to be exercisable six months to one year after grant and typically
expire 10 years after grant. Stock options and restricted
shares generally vest over two to four years (generally
representing the requisite service period). The Plan terminates no
later than the tenth anniversary of the approval of the Plan by
stockholders of the Company (October 2024). The Plan provides for
the following programs:
Option Grants
Under
the discretionary option grant program, Super League’s
compensation committee may grant (1) non-statutory options to
purchase shares of common stock to eligible individuals in the
employ or service of Super League or its affiliates (including
employees, non-employee members of the Board of Directors and
consultants) at
an
exercise price not less than 85% of the fair market value of such
shares on the grant date, and (2) incentive stock options to
purchase shares of common stock to eligible employees at an
exercise price not less than 100% of the fair market value of such
shares on the grant date (not less than 110% of fair market value
if such employee actually or constructively owns more than 10% of
Super League’s voting stock or the voting stock of any of its
subsidiaries).
Stock Awards or Sales
Under
the stock award or sales program, eligible individuals may be
issued shares of common stock of the Company directly, upon the
attainment of performance milestones or the completion of a
specified period of service or as a bonus for past services. Under
this program, the purchase price for the shares will not be less
than 100% of the fair market value of the shares on the date of
issuance, and payment may be in the form of cash or past services
rendered. Eligible individuals will have no stockholder rights with
respect to any unvested restricted shares or restricted stock units
issued to them under the stock award or sales program; however,
eligible individuals will have the right to receive any regular
cash dividends paid on such shares.
8.
STOCK-BASED INCENTIVE PLANS
(continued)
Stock Awards or Sales (continued)
The
initial reserve under the Plan was 1,750,000 shares of common stock
and subsequently increased to 3,000,000 shares upon
stockholders’ approval in May 2016. In July 2017, the Company
amended and restated the SOP to increase the number of shares of
common stock reserved thereunder from 3,000,000 shares to 4,500,000
shares.
Super
League issues new shares of common stock upon the exercise of stock
options, the grant of restricted stock, or the delivery of shares
pursuant to vested restricted stock units. The Board of Directors
may amend or modify the Plan at any time, subject to any required
approval by the stockholders of the Company, pursuant to the terms
therein.
Stock Options
The
fair value of stock options granted were estimated on their
respective grant dates using the Black-Scholes-Merton option
pricing model and the following assumptions for the years ended
December 31, 2017 and 2016:
|
2017
|
|
2016
|
|
Volatility
|
104%
|
|
122%
|
|
Risk–free
interest rate
|
1.75% to
2.24%
|
|
1.43% to
2.45%
|
|
Dividend
yield
|
0%
|
|
0%
|
|
Expected life of
options (in years)
|
5.00 to
6.81
|
|
5.50 to
6.25
|
|
Weighted-average
fair value of common stock
|
$3.60
|
|
$3.10
|
|
A
summary of stock option activity for the year ended December 31,
2017 as follows:
|
|
|
|
|
|
Exercise
Price Per Share ($)
|
Remaining
Contractual Term (Years)
|
Aggregate
Intrinsic Value ($)
|
|
|
|
|
|
Outstanding
at December 31, 2016
|
2,414,500
|
$2.38
|
7.86
|
$2,942,700
|
Granted
|
1,914,320
|
$3.49
|
9.52
|
$217,200
|
Exercised
|
|
|
|
|
Canceled
/ forfeited
|
(1,003,646)
|
$2.98
|
8.36
|
$619,000
|
Outstanding
at December 31, 2017
|
3,325,174
|
$2.84
|
8.66
|
$2,540,900
|
Vested
and exercisable at December 31, 2017
|
1,603,385
|
$2.30
|
8.17
|
$2,088,456
|
Compensation
expense related to stock options was $1,948,179 and $915,058 for
the years ended December 31, 2017 and 2016, respectively. The
weighted-average grant date fair value of stock options granted
during the years ended December 31, 2017 and 2016 was $2.87 and
$2.66, respectively. The aggregate fair value of stock options that
vested during the years ended December 31, 2017 and 2016 was
$2,601,477 and $915,058, respectively.
8.
STOCK-BASED INCENTIVE PLANS
(continued)
Stock Options (continued)
As of
December 31, 2017, the total unrecognized compensation expense
related to non-vested stock option awards was $5,442,097, which is
expected to be recognized over a weighted-average term of
approximately 2.66 years.
Restricted Stock Units
The
following table summarizes non-vested restricted stock unit
activity for the year ended December 31, 2017:
|
Restricted Stock Units (#)
|
Weighted Average Grant Date Fair Value ($)
|
Non-vested
restricted stock units at December 31, 2016
|
437,500
|
$2.91
|
Granted
|
–
|
|
Vested
|
(412,500)
|
|
Canceled
|
–
|
|
Non-vested
restricted stock units at December 31, 2017
|
25,000
|
$2.00
|
Compensation
expense related to restricted stock units, including the License
RSUs described in Note 5, was $1,054,167 and $1,195,833 during the
years ended December 31, 2017 and 2016, respectively. As of
December 31, 2017, the total unrecognized compensation expenses
related to non-vested restricted stock units was $16,040, which
will be recognized during the Company’s fiscal year ending
December 31, 2018
Super
League’s provision for income taxes consisted of the
following for the years ended December 31, 2017 and
2016:
|
|
|
Current:
|
|
|
Federal
taxes
|
$–
|
$–
|
State
taxes
|
800
|
800
|
Total
current
|
800
|
800
|
|
|
|
9.
INCOME TAXES (continued)
|
|
|
Deferred:
|
|
|
Federal
taxes
|
675,668
|
3,830,923
|
State
taxes
|
1,390,658
|
995,873
|
Subtotal
|
2,066,326
|
4,826,796
|
Change
in valuation allowance
|
(2,066,326)
|
(4,826,796)
|
Total
deferred
|
–
|
–
|
|
|
|
Provision
for income taxes
|
$800
|
$800
|
The tax
effects of temporary differences and carryforwards that give rise
to significant portions of deferred tax assets and liabilities
consist of the following as of December 31, 2017 and 2016.
|
|
|
Deferred
tax assets (liabilities):
|
|
|
Net
operating loss and credits
|
$8,400,379
|
$6,904,131
|
Stock
compensation
|
1,807,452
|
1,188,748
|
Fixed
assets and intangibles
|
(257,538)
|
(288,201)
|
Accrued
liabilities and other
|
(26,730)
|
52,392
|
Total
deferred tax assets
|
9,923,563
|
7,857,070
|
Valuation
allowance
|
(9,923,563)
|
(7,857,070)
|
Total
deferred tax assets, net of valuation allowance
|
$-
|
$-
|
|
|
|
A
reconciliation of the federal statutory income tax rate and the
effective income tax rate is as follows:
|
|
|
|
|
|
Statutory
federal tax rate - (benefit) expense
|
35%
|
35%
|
Non-deductible
permanent items
|
(1)
|
(1)
|
Change
in tax rate
|
(29)
|
-
|
Valuation
allowance
|
(5)
|
(34)
|
|
-%
|
-%
|
|
|
|
For the
years ended December 31, 2017 and 2016, the Company recorded full
valuation allowances against its net deferred tax assets due to
uncertainty regarding future realizability pursuant to guidance set
forth in the FASB’s Accounting Standards Codification Topic
No. 740, Income Taxes. In
future periods, if the Company determines it will more likely than
not be able to realize these amounts, the applicable portion of the
benefit from the release of the valuation allowance will generally
be recognized in the statements of operations in the period the
determination is made.
At
December 31, 2017, the Company had U.S. federal and state
income tax net operating loss carryforwards approximating
$27,800,000, expiring through 2037. Utilization of the net
operating loss carryforwards may be subject to a substantial annual
limitation due to ownership change limitations that may have
occurred or that could occur in the future, as required by
Section 382 of the Internal Revenue Code of 1986, as amended,
as well as similar state provisions. The Company has not completed
a study to assess whether an ownership change has occurred or
whether there have been multiple ownership changes since the
Company’s formation due to the complexity and cost associated
with such a study, and the fact that there may be additional such
ownership changes in the future.
On December 22, 2017, new U.S. federal tax legislation was enacted
that significantly changed the U.S. federal income taxation of U.S.
corporations, including by reducing the U.S. corporate income tax
rate from 35% to 21%, revising the rules governing net operating
losses and foreign tax credits, and introducing new anti-base
erosion provisions. Many of the changes were effective immediately,
without any transition periods or grandfathering for existing
transactions. The legislation is unclear in many respects and could
be subject to potential amendments and technical corrections, as
well as interpretations and implementing regulations by the U.S.
Department of the Treasury and the Internal Revenue Service
(“IRS”), any of which could decrease or increase
certain adverse impacts of the legislation. In addition, it is
unclear how these U.S. federal income tax changes will affect state
and local taxation, which often uses federal taxable income as a
starting point for computing state and local tax
liabilities.
9.
INCOME TAXES (continued)
The new legislation reduced the corporate income tax rate from 35%
to 21% effective January 1, 2018. As a result, all deferred income
tax assets and liabilities, including NOL’s, have been
measured using the new rate under and are reflected in the
valuation of these assets as of December 31, 2017. The value of our
deferred tax assets has decreased by $4,278,626 and the related
valuation allowance has been reduced by the same amount. Our
analysis and interpretation of this legislation is ongoing. Given
the full valuation allowance provided for net deferred tax assets
for the periods presented herein, the change in tax law did not
have a material impact on the Company’s financial statements
provided herein. There may be additional tax impacts identified in
subsequent periods throughout the Company’s fiscal year
ending December 31,2018 in accordance with subsequent interpretive
guidance issued by the SEC or the IRS. Further, there may be other
material adverse effects resulting from the legislation that we
have not yet identified. No estimated tax provision has been
recorded for tax attributes that are incomplete or subject to
change.
10.
COMMITMENTS
AND CONTINGENCIES
Operating Leases
The
Company leases office space under an operating lease agreement
which expired on May 31, 2017 and was amended to a month-to-month
lease.
Rent
expense for the years ended December 31, 2017 and 2016 were
approximately $238,000 and $184,000, respectively, and is included
in general and administrative expenses in the accompanying
statements of operations. Rental payments are expensed in the
statements of operations in the period to which they relate.
Scheduled rent increases, if any, are amortized on a straight-line
basis over the lease term.
The
Company evaluated subsequent events for their potential impact on
the financial statements and disclosures through the date the
annual audited financial statements were available to be
issued.
In
February through April 2018, the Company issued 9.00% secured
convertible promissory notes with a collective face value of
$3,000,000 (the “Initial 2018 Notes”). The Initial 2018
Notes (i) accrued simple interest at the rate of 9.00% per annum,
(ii) matured on the earlier of December 31, 2018 or the close of a
$15,000,000 equity financing (“Qualifying Equity
Financing”) by the Company, and (iii) all outstanding
principal and accrued interest was automatically convertible into
equity or equity-linked securities sold in a Qualifying Equity
Financing based upon a conversion rate equal to (x) a 10% discount
to the price per share of a Qualifying Equity Financing, with (y) a
floor of $3.60 per share. In addition, the holders of the Initial
2018 Notes were collectively issued warrants to purchase
approximately 166,670 shares of common stock, at an exercise price
of $3.60 per share and a term of five years (the “Initial
2018 Warrants”).
In May
through August 2018, the Company issued additional 9.00% secured
convertible promissory notes with a collective face value of
$10,000,000 (the “Additional 2018 Notes”). In May 2018,
all of the Initial 2018 Notes and related accrued interest,
totaling $3,056,182, were converted into the Additional 2018 Notes,
resulting in an aggregate principal amount of $13,056,182
(hereinafter collectively, the “2018 Notes”). The
holders of the converted Initial 2018 Notes retained their
respective Initial 2018 Warrants.
The
2018 Notes (i) accrue simple interest at the rate of 9.00% per
annum, (ii) mature on the earlier of the closing of an initial
public offering (“IPO”) of the Company’s common
stock on a national securities exchange or April 30, 2019, and
(iii) all outstanding principal and accrued interest is
automatically convertible into shares of common stock upon the
closing of an IPO at the lesser of (x) $3.60 per share or (y) a 15%
discount to the price per share of the IPO. In addition, the holders of the 2018 Notes were
collectively issued 3,626,717 warrants to purchase common
stock equal to 100% of the aggregate principal amount of the 2018
Notes divided by $3.60 per share (the “2018 Warrants”).
The number of 2018 Warrants ultimately issued is subject to
adjustment upon the closing of an IPO and will be determined by
dividing 100% of the face value of the 2018 Notes by the lesser of
(x) $3.60 per share or (y) a 15% discount to the price per share of
the IPO. The 2018 Warrants are exercisable for a term of five
years, commencing on the close of an IPO, at an exercise price
equal to the lesser of (x) $3.60 per share or (y) a 15% discount to
the IPO price per share and are callable at the election of the
Company at any time following the closing of an IPO.
In
August 2018, the Company’s Board of Directors approved a
second amendment and restatement of the Company’s amended and
restated certificate of incorporation (the “Amended and
Restated Charter”) to (i) increase the Company’s
authorized capital to a total of 110.0 million shares, consisting
of 100.0 million shares of common stock and 10.0 million shares of
newly created preferred stock, par value $0.001 per share
(“Preferred Stock”); (ii) authorize the Company’s
Board of Directors to fix the designation and number of each series
of Preferred Stock, and to determine or change the designation,
relative rights, preferences, and limitations of any series of
Preferred Stock; and (iii) remove the deemed liquidation provision,
as such term is defined in the Amended and Restated Charter. The
Amended and Restated Charter was approved by a majority of the
Company’s stockholders in September 2018, and will become
effective upon filing with the State of
Delaware.
In August 2018, the Company amended and restated the SOP to
increase the number of shares of common stock reserved thereunder
from 4,500,000 shares to 5,500,000 shares.
SUPER LEAGUE GAMING, INC.
INTERIM CONDENSED BALANCE SHEET
SEPTEMBER 30, 2018
(UNAUDITED)
ASSETS
|
|
|
|
Current Assets
|
|
Cash
|
$ 5,990,645
|
Accounts
receivable
|
110,000
|
Prepaid
expenses and other current assets
|
714,110
|
Total
current assets
|
6,814,755
|
|
|
Property and Equipment, net
|
707,449
|
Intangible and Other Assets, net
|
429,657
|
|
|
Total
assets
|
$ 7,951,861
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
Current Liabilities
|
|
Accounts
payable and accrued expenses
|
$ 433,822
|
Convertible
debt and accrued interest, net
|
9,251,551
|
Total
current liabilities
|
9,685,373
|
|
|
Commitments and Contingencies (Note 8)
|
|
|
|
Stockholders’ deficit
|
|
Preferred
stock, par value $0.001 per share; 10,000,000 shares
authorized; no
shares
|
|
issued
or outstanding
|
-
|
Common
stock, par value $0.001 per share;100,000,000 shares authorized;
13,830,489
shares issued and outstanding
|
13,831
|
Additional
paid-in capital
|
45,902,152
|
Accumulated
deficit
|
(47,649,495)
|
Total
stockholders’ deficit
|
(1,733,512)
|
|
|
Total
liabilities and stockholders’ deficit
|
$ 7,951,861
|
The accompanying notes are an integral part of these interim
condensed financial statements.
SUPER LEAGUE GAMING, INC.
INTERIM CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
For
the Nine Months Ended
|
|
|
|
|
|
|
SALES
|
$639,744
|
$73,256
|
|
|
|
COST
OF SALES
|
375,177
|
1,145,365
|
|
|
|
GROSS
PROFIT (LOSS)
|
264,567
|
(1,072,109)
|
|
|
|
OPERATING
EXPENSES
|
|
|
Selling, marketing
and advertising
|
995,747
|
664,387
|
Research and
development
|
12,252
|
53,904
|
General and
administrative
|
10,553,739
|
9,218,455
|
Total operating
expenses
|
11,561,738
|
9,936,746
|
|
|
|
Net operating
loss
|
(11,297,171)
|
(11,008,855)
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
Interest
expense
|
(1,847,742)
|
-
|
Other
|
2,076
|
780
|
Total other income
(expense)
|
(1,845,666)
|
780
|
|
|
|
NET
LOSS
|
$(13,142,837)
|
$(11,008,075)
|
|
|
|
Net
loss attributable to common stockholders - basic and
diluted
|
|
|
Basic and diluted
loss per common share
|
$(0.95)
|
$(0.89)
|
Weighted-average
number of shares outstanding, basic and diluted
|
13,817,886
|
12,379,281
|
The accompanying notes are an integral part of these interim
condensed financial statements.
SUPER LEAGUE GAMING, INC.
INTERIM CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
Nine
Months Ended September 30,
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
loss
|
$ (13,142,837)
|
$ (11,008,075)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and
amortization
|
791,140
|
926,439
|
Stock-based
compensation
|
2,451,886
|
2,813,665
|
Amortized license
fees – restricted stock units (Note 5)
|
-
|
825,000
|
Amortization of
discount on convertible notes (Note 6)
|
1,536,674
|
–
|
In-kind
contribution of services (Note 7)
|
480,667
|
37,666
|
Changes in assets
and liabilities:
|
|
|
Accounts
receivable
|
3,701
|
–
|
Prepaid expenses
and other current assets
|
(362,392)
|
(83,884)
|
Accounts payable
and accrued expenses
|
50,008
|
45,244
|
Accrued interest on
convertible notes
|
311,068
|
–
|
Net
cash used in operating activities
|
(7,880,085)
|
(6,443,945)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchase of
property and equipment
|
(189,986)
|
(281,273)
|
Capitalization of
software development costs
|
(192,380)
|
(66,931)
|
Acquisition of
other intangible and other assets
|
(67,065)
|
–
|
Net
cash used in investing activities
|
(449,431)
|
(348,204)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds from
issuance of common stock, net of issuance costs
|
-
|
8,244,882
|
Proceeds from
convertible note payable, net of issuance costs
|
12,610,688
|
-
|
Net
cash provided by financing activities
|
12,610,688
|
8,244,882
|
|
|
|
INCREASE
IN CASH
|
4,281,172
|
1,452,733
|
|
|
|
CASH – beginning of
period
|
1,709,473
|
2,870,546
|
|
|
|
CASH – end of period
|
$ 5,990,645
|
$ 4,323,279
|
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES
|
|
|
Conversion
of convertible debt (Note 6)
|
$ 3,000,000
|
$ –
|
In-kind
contributions (Note 7)
|
$ –
|
$ 1,000,000
|
Common stock
purchase warrants – discount on convertible debt
|
$ 5,206,879
|
$ –
|
Common stock issued
for prepaid services
|
$ 72,000
|
–
|
The accompanying notes are an integral part of these interim
condensed
financial statements.
SUPER LEAGUE GAMING, INC.
NOTES TO INTERIM
CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1.
DESCRIPTION
OF BUSINESS
Super
League Gaming, Inc. (“Super League,” the
“Company,” “we” or “our”) is a
leading amateur esports community and content platform offering a
personalized experience to gamers. Through our proprietary,
cloud-based technology platform, we connect our network of gamers,
venues and brand partners to enable local, social and competitive
esports that can be uniquely broadcast through our platform. We
offer daily and season-focused offerings for which amateur
competitive gamers establish meaningful connections with each other
while improving their skills. We have multi-year strategic
partnerships with leading game publishers such as Microsoft and
Riot Games, with titles including Minecraft and League of Legends,
respectively, to drive use among our member base and further
penetrate our target market. We deliver enhanced gaming experiences
to our members with these titles through our platform, and we
provide our venue and brand partners access to our member network
and platform technology.
Super
League was incorporated on October 1, 2014 as Nth Games, Inc. under
the laws of the State of Delaware and changed its name to Super
League Gaming, Inc. on June 15, 2015. We are an “emerging
growth company” as defined by the Jumpstart Our Business
Startups Act of 2012, as amended.
2.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The
accompanying interim condensed financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“US GAAP”)
for interim financial information. Accordingly, certain
information and footnotes required by U.S. GAAP in annual financial
statements have been omitted or condensed in accordance with
quarterly reporting requirements of the Securities and Exchange
Commission (“SEC”). These interim condensed
financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended
December 31, 2017.
The
interim condensed financial statements of the Company include all
adjustments of a normal recurring nature which, in the opinion of
management, are necessary for a fair statement of the
Company’s financial position as of September 30, 2018, and
results of its operations and its cash flows for the interim
periods presented. The results of operations for the
nine months ended September 30, 2018 are not necessarily indicative
of the results to be expected for the fiscal year ending December
31, 2018.
Segment Information
The
Company operates in one segment.
Use of Estimates
The
preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these
estimates.
Going Concern
The
accompanying interim condensed financial statements have been
prepared assuming the Company will continue as a going concern,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. As presented in the
interim condensed financial statements, the Company incurred net
losses of $13.1 million and $11.0 million during the nine months
ended September 30, 2018 and 2017, respectively, and had an
accumulated deficit of $47.6 million as of September 30, 2018.
Noncash expenses (excluding depreciation and amortization of fixed
and intangible assets, respectively) totaled $4,469,227 and
$3,676,331 for the nine months ended September 30, 2018 and
September 30, 2017, respectively. Net cash used in operating
activities totaled $7.9 million and $6.4 million, for the nine
months ended September 30, 2018 and September 30, 2017,
respectively.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
The
Company has and will continue to use significant capital for the
growth and development of its business.
The
Company’s management expects operating losses to continue in
the near term in connection with the pursuit of its strategic
objectives. The Company considers historical operating results,
capital resources and financial position, in combination with
current projections and estimates, as part of its plan to fund
operations over a reasonable period.
The
Company completed a convertible debt financing round in August
2018, raising gross proceeds totaling $13,000,000. The Company
intends to use the proceeds from the sale of the notes for business
expansion, merger and/or acquisitions, game licensing, and working
capital. In addition, the Company remains in active discussions for
additional funds primarily through the issuance of additional
common stock. No assurance can be given that any future financing
will be available or, if available, that it will be on terms that
are satisfactory to the Company.
The
Company’s management believes its current cash, net proceeds
from debt issuances and the amount available from the issuance of
common stock will be sufficient to fund working capital
requirements beyond the next 12 months. This belief assumes, among
other things, that the Company will be able to raise additional
equity financing, will continue to be successful implementing its
business strategy and that there will be no material adverse
development in the business, liquidity or capital requirements. If
one or more of these factors do not occur as expected, it could
cause reduction or delay of its business activities, sales of
material assets, default on its obligations, or forced into
insolvency. The accompanying financial statements do not contain
any adjustments which might be necessary if the Company were unable
to continue as a going concern.
Revenue Recognition
The
Company recognizes revenue when (i) persuasive evidence of an
arrangement exists, (ii) delivery of the products and/or services
has occurred, (iii) the selling price is fixed or determinable, and
(iv) the collectability of amounts is reasonably
assured.
Super
League generates revenues and related cash flows
from (i) the sale of subscriptions to gamers
for participation in Super League’s
in-person and online multiplayer
gaming experiences, (ii) brand and media
partnerships and (iii) sales
of merchandise.
To
date, subscription revenues have consisted of the sale of season
passes to gamers for participation in our in-person and or online
multiplayer gaming experiences. For the periods presented herein,
season passes for gaming experiences were primarily comprised of
multi-week packages and include one-time, single experience
admissions.
Subscription
and sponsorship revenues are recognized as the events occur.
Revenue collected in advance is recorded as deferred revenue until
the event occurs. Deferred revenues were not material for the
periods presented herein.
Cost of Sales
Cost of
sales includes direct costs incurred in connection with the
production of Super League’s in-person and online gaming
events, including theater rental, theater entertainment, licenses,
and contract services.
Advertising
Gaming
experience and Super League brand related advertising costs include
the cost of ad production, social media, print media, marketing,
promotions, and merchandising. The Company expenses advertising
costs as incurred. Advertising expenses for the nine months ended
September 30, 2018 and 2017 were $362,443 and $368,100,
respectively, and are included in selling, marketing and
advertising expenses in the accompanying statements of
operations.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Cash and Cash Equivalents
Super
League considers all highly liquid, short-term investments with
original maturities of three months or less when purchased to be
cash equivalents. As of September 30, 2018, the Company did not
have any cash equivalents.
Accounts Receivable
Accounts
receivable are carried at the original invoice amount, less an
estimate made for doubtful accounts, if any. The Company provides
an allowance for doubtful account for potential credit losses based
on its evaluation of collectability and the customers’
creditworthiness. Accounts receivable are written off when they are
determined to be uncollectible. As of September 30, 2018, no
allowance for doubtful account was provided.
Fair Value Measurements
The
Company did not have any assets or liabilities that were measured
at fair value on a recurring basis or non-recurring basis as of
September 30, 2018.
Concentration of Credit Risks
The
Company maintains its cash on deposit with a bank that is insured
by the Federal Deposit Insurance Corporation. At various times, the
Company maintained balances in excess of insured amounts. The
Company has not experienced any significant losses on its cash held
in banks.
Deferred Equity Financing Costs
Specific
incremental costs directly attributable to a
proposed or actual offering of securities are deferred and charged
against the gross proceeds of the offering. In the event that the
proposed or actual offering is not completed, or is deemed not
likely to be completed, such costs are expensed in the period that
such determination is made.
Property and Equipment
Property
and equipment are recorded at cost. Major additions and
improvements that materially extend useful lives of property and
equipment are capitalized. Maintenance and repairs are charged
against the results of operations as incurred. When these assets
are sold or otherwise disposed of, the asset and related
depreciation are relieved, and any gain or loss is included in the
statements of operations for the period of sale or disposal.
Depreciation and amortization are computed on a straight-line basis
over the estimated useful lives of the assets, typically over a
three to five-year period.
Intangible Assets
Intangible
assets primarily consist of software development costs, domain
names, copyrights and other intangible assets which are recorded at
cost and amortized using the straight-line method over the
estimated useful lives of the assets, ranging from three to ten
years.
Software
development costs incurred to develop internal-use software during
the application development stage are capitalized and amortized on
a straight-line basis over the software’s estimated useful
life, which is generally three years. Software development costs
incurred during the preliminary stages of development are charged
to expense as incurred. Maintenance and training costs are charged
to expense as incurred. Upgrades or enhancements to existing
internal-use software that result in additional functionality are
capitalized.
Research and Development Costs
Research
and development costs represent costs incurred to develop the
Company’s technology and primarily include payments to
outside consultants and contractors. Research and development costs
are expensed as incurred.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Impairment of Long-Lived Assets
The
Company assesses the recoverability of long-lived assets whenever
events or changes in circumstances indicate that their carrying
value may not be recoverable. If the cost basis of a long-lived
asset is greater than the projected future undiscounted net cash
flows from such asset, an impairment loss is recognized. Impairment
losses are calculated as the difference between the cost basis of
an asset and its estimated fair value. Management believes that
there was no impairment of long-lived assets for the periods
presented herein. There can be no assurance, however, that market
conditions or demand for the Company’s products or services
will not change, which could result in long-lived asset impairment
charges in the future.
Stock-Based Compensation
The compensation cost for all stock-based awards is measured at the
grant date, based on the estimated fair value of the award, and is
recognized as an expense, typically on a straight-line basis over
the employee’s requisite service period (generally the
vesting period of the equity award) which is generally two to four
years. The fair value of restricted stock and restricted stock unit
awards is determined by the product of the number of shares or
units granted and the grant date market price of the underlying
common stock. The fair value of stock options and common stock
purchase warrants is estimated on the date of grant utilizing the
Black-Scholes-Merton option pricing model. The fair values of stock
options and common stock purchase warrants granted (excluding
common stock purchase warrants issued in connection with the
issuance of convertible debt described below) during the periods
presented were estimated using the following weighted-average
assumptions:
|
Nine Months Ended September 30,
|
|
2018
|
|
2017
|
Volatility
|
99%
|
|
104%
|
Risk–free
interest rate
|
2.86
|
|
1.91%
|
Dividend
yield
|
0%
|
|
0%
|
Expected
life of options (in years)
|
6.68
|
|
5.84
|
Weighted-average
fair value of common stock
|
$3.60
|
|
$3.60
|
The Company accounts for forfeitures of awards as they
occur.
Grants
of equity-based awards (including warrants) to non-employees in
exchange for consulting or other services are accounted for using
the fair value of the consideration received (i.e., the value of
the goods or services) or the fair value of the equity instruments
issued, whichever is more reliably measurable.
Compensation
expense related to stock options was $1,741,242 and $1,379,032 for
the nine months ended September 30, 2018 and 2017, respectively.
Compensation expense related to restricted stock was $8,624 and $0
for the nine months ended September 30, 2018 and 2017,
respectively. Refer to Note 7 for common stock purchase warrant
expense for the interim periods presented.
Earnings (Loss) Per Share
Basic
earnings (loss) per share is computed by dividing the income or
loss by the weighted-average number of outstanding shares of common
stock for the applicable period. Diluted earnings per share is
computed by dividing the income or loss by the weighted-average
number of outstanding shares of common stock for the applicable
period, including the dilutive effect of common stock equivalents.
Potentially dilutive common stock equivalents primarily consist of
employee stock options, common stock purchase warrants issued to
employee and non-employees in exchange for services and common
stock purchase warrants issued in connection with financings. All
outstanding stock options, and common stock purchase warrants for
the periods presented have been excluded from the computation of
diluted loss per share because the effect of inclusion would have
been anti-dilutive.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Income Taxes
Income
taxes are accounted for using an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been
recognized in the Company’s interim condensed financial
statements or income tax returns. A valuation allowance is
established to reduce deferred tax assets if all, or some portion,
of such assets will more than likely not be realized, or if it is
determined that there is uncertainty regarding future realization
of such assets.
The
provision for income taxes for interim periods is determined using
an estimate of the Company’s annual effective tax rate,
adjusted for discrete items in the applicable period, if any. Each
interim period, the Company updates the estimate of the annual
effective tax rate, and if the estimated tax rate changes, a
cumulative adjustment is recorded.
On
December 22, 2017, new U.S. federal tax legislation was enacted
that significantly changed the U.S. federal income taxation of U.S.
corporations, including by reducing the U.S. corporate income tax
rate from 35% to 21%, revising the rules governing net operating
losses and foreign tax credits, and introducing new anti-base
erosion provisions. Many of the changes were effective immediately,
without any transition periods or grandfathering for existing
transactions. The legislation is unclear in many respects and could
be subject to potential amendments and technical corrections, as
well as interpretations and implementing regulations by the U.S.
Department of the Treasury and the Internal Revenue Service
(“IRS”), any of which could decrease or increase
certain adverse impacts of the legislation. In addition, it is
unclear how these U.S. federal income tax changes will affect state
and local taxation, which often uses federal taxable income as a
starting point for computing state and local tax
liabilities.
The new
legislation reduced the corporate income tax rate from 35% to 21%
effective January 1, 2018. As a result, all deferred income tax
assets and liabilities, including NOL’s, have been measured
using the new rate under and are reflected in the valuation of
these assets as of December 31, 2017. As a result, the value of our
deferred tax assets were reduced by approximately $4.3 million and
the related valuation allowance has been reduced by the same
amount. Our analysis and interpretation of this legislation is
ongoing. Given the full valuation allowance provided for net
deferred tax assets for the periods presented herein, the change in
tax law did not have a material impact on the Company’s
financial statements provided herein. There may be additional tax
impacts identified in subsequent periods throughout the
Company’s fiscal year ending December 31, 2018 in accordance
with subsequent interpretive guidance issued by the SEC or the IRS.
Further, there may be other material adverse effects resulting from
the legislation that we have not yet identified. No estimated tax
provision has been recorded for tax attributes that are incomplete
or subject to change.
Recent Accounting Guidance
In May
2014, the Financial Accounting Standards Board (“FASB”)
issued an accounting update requiring a company to recognize as
revenue the amount of consideration it expects to be entitled to in
connection with the transfer of promised goods or services to
customers. The accounting standard update will replace most of the
exiting revenue recognition guidance currently promulgated by U.S.
GAAP. In August 2015, the FASB decided to delay the effective date
of new revenue standard by one year. The new guidance is effective
for emerging growth companies for annual periods beginning after
December 15, 2018, with certain early adoption variations
permitted. The Company is in the process of evaluating the impact,
if any, of the update on its financial position, results of
operations and financial statement disclosures.
In
February 2016, the FASB issued an accounting update that requires
lessees to present right-of-use assets and lease liabilities on the
balance sheet. The new guidance is to be applied using a modified
retrospective approach at the beginning of the earliest comparative
periods in the financial statements and is effective for fiscal
years beginning after December 15, 2019 and early adoption is
permitted. The Company is evaluating the impact that this guidance
will have on its financial position, results of operations and
financial statement disclosures.
3.
PROPERTY
AND EQUIPMENT
Property
and equipment consisted of the following at September 30,
2018:
Furniture and
fixtures
|
$149,652
|
Computer
hardware
|
3,187,890
|
|
3,337,542
|
Less: accumulated
depreciation and amortization
|
(2,630,093)
|
|
$707,449
|
Depreciation
and amortization expense for property and equipment was $620,354
and $745,416 for the nine months ended September 30, 2018 and 2017,
respectively.
4.
INTANGIBLE
AND OTHER ASSETS
Intangible
and other assets consisted of the following as of September 30,
2018:
Capitalized
software development costs
|
$954,952
|
Domain
|
67,644
|
Copyrights and
other
|
101,570
|
|
1,124,166
|
Less: accumulated
amortization
|
(694,509)
|
|
$429,657
|
Intangible
and other asset related amortization expense totaled $170,786 and
$181,023 for the nine months ended September 30, 2018 and 2017,
respectively.
Future
amortization expense of intangible and other assets is expected as
follows:
For the years
ending December 31:
|
|
2018
Remaining
|
$52,151
|
2019
|
158,338
|
2020
|
110,918
|
2021
|
54,302
|
2022
|
16,907
|
Thereafter
|
37,041
|
|
$429,657
|
5.
GAMING
LICENSE AGREEMENT
In June
2016, the Company entered into a gaming license agreement whereby
the Company agreed to issue 500,000 shares of common stock purchase
warrants (“License Warrants”) and 550,000 shares of
restricted stock units (“License RSUs”) when the
following performance or service conditions are met by the
Company:
Vesting
Conditions for License Warrant
|
Category
|
Number
of License Warrants
|
Achievement
of:
|
|
|
Greater than $5.0
million game related net revenues
|
Performance
|
125,000
|
Greater than $15.0
million game related net revenues
|
Performance
|
175,000
|
Greater than $35.0
million game related net revenues
|
Performance
|
200,000
|
|
500,000
|
Vesting
Conditions for License RSUs
|
Category
|
|
Execution of the
gaming license agreement
|
Service
|
137,500
|
9-month
anniversary
|
Service
|
137,500
|
18-month
anniversary
|
Service
|
275,000
|
|
550,000
|
The
License Warrants have a five-year contractual term with an exercise
price of $3.00 per share, with vesting upon satisfactory
performance under the gaming license agreement. The value of the
License Warrants would be measured when any of vesting conditions
are satisfied. As of September 30, 2018, it was not probable that
the vesting conditions would be met. Accordingly, no expense for
the License Warrants was recognized during the periods
presented.
The
License RSUs were expensed on a straight-line basis over the
contractual license term of 18-months beginning June
2016 and ending December 31, 2017. Total expense
included in cost of sales related to License RSUs for the nine
months ended September 30, 2017 totaled $825,000.
6.
CONVERTIBLE
NOTES PAYABLE
In
February through April 2018, the Company issued 9.00% secured
convertible promissory notes with a collective face value of
$3,000,000 (the “Initial 2018 Notes”). The Initial 2018
Notes (i) accrued simple interest at the rate of 9.00% per annum,
(ii) matured on the earlier of December 31, 2018 or the close of a
$15,000,000 equity financing (“Qualifying Equity
Financing”) by the Company, and (iii) all outstanding
principal and accrued interest was automatically convertible into
equity or equity-linked securities sold in a Qualifying Equity
Financing based upon a conversion rate equal to (x) a 10% discount
to the price per share of a Qualifying Equity Financing, with (y) a
floor of $3.60 per share. In addition, the holders of the Initial
2018 Notes were collectively issued warrants to purchase
approximately 166,670 shares of common stock, at an exercise price
of $3.60 per share and a term of five years (the “Initial
2018 Warrants”).
In May
through August 2018, the Company issued additional 9.00% secured
convertible promissory notes with a collective face value of
$10,000,000 (the “Additional 2018 Notes”). In May 2018,
all of the Initial 2018 Notes and related accrued interest,
totaling $3,056,182, were converted into the Additional 2018 Notes,
resulting in an aggregate principal amount of $13,056,182
(hereinafter collectively, the “2018 Notes”). The
holders of the converted Initial 2018 Notes retained their
respective Initial 2018 Warrants.
The
2018 Notes (i) accrue simple interest at the rate of 9.00% per
annum, (ii) mature on the earlier of the closing of an initial
public offering (“IPO”) of the Company’s common
stock on a national securities exchange or April 30, 2019, and
(iii) all outstanding principal and accrued interest is
automatically convertible into shares of common stock upon the
closing of an IPO at the lesser of (x) $3.60 per share or (y) a 15%
discount to the price per share of the IPO. In addition, the holders of the 2018 Notes were
collectively issued 3,626,717 warrants to purchase common
stock equal to 100% of the aggregate principal amount of the 2018
Notes divided by $3.60 per share (the “2018 Warrants”).
The number of 2018 Warrants ultimately issued is subject to
adjustment upon the closing of an IPO and will be determined by
dividing 100% of the face value of the 2018 Notes by the lesser of
(x) $3.60 per share or (y) a 15% discount to the price per share of
the IPO. The 2018 Warrants are exercisable for a term of five
years, commencing on the close of an IPO, at an exercise price
equal to the lesser of (x) $3.60 per share or (y) a 15% discount to
the IPO price per share and are callable at the election of the
Company at any time following the closing of an IPO.
6.
CONVERTIBLE NOTES
PAYABLE (continued)
The proceeds from the sale of the 2018 Notes, the 2018 Warrants and
the Initial 2018 Warrants, were allocated to the instruments based
on the relative fair values of the convertible debt instrument
without the warrants and of the warrants themselves at the time of
issuance. The number of warrants to be issued was determined based
on an estimated per share price of $3.60. The portion of the
proceeds, totaling $5,043,412 allocated to the 2018
Warrants, was accounted for as
a discount to the debt, with the offsetting credit to additional
paid-in capital. The remainder of the proceeds were allocated to
the convertible debt instrument portion of the transaction. The
resulting debt discount is being amortized over the period from
issuance to April 30, 2019, the stated maturity date of the
debt.
The non-detachable conversion feature embedded in the 2018 Notes
provides for a conversion rate that is below market value at the
commitment date, and therefore, represents a beneficial conversion
feature (“BCF”). The BCF is generally
recognized separately at issuance by allocating a portion of the
debt proceeds equal to the intrinsic value of the BCF to additional
paid-in capital. The resulting convertible debt discount is
recognized as interest expense using the effective yield method.
The BCF is measured using the commitment date stock price. However,
the conversion feature associated with the 2018 Notes is not
exercisable until the consummation of an initial public offering by
the Company of its common stock. As such, the BCF is not recognized
in earnings until the contingency is resolved in future periods.
The intrinsic value of the BCF at the commitment date, which was
limited to the net proceeds allocated to the debt on a relative
fair value basis, was approximately $7,337,525.
Debt issuance costs, were
comprised of $389,312 of cash commission and common stock purchase
warrants with a fair value of $163,430, paid and issued,
respectively, to third-parties, and are reflected as a discount to
the debt instrument in the accompanying balance sheet. Debt
issuance costs are amortized over the term of the debt as interest
expense.
Amounts
related to the convertible notes as of and for the nine months
ended September 30, 2018 were as follows:
|
|
|
|
Nine
Months Ended September 30, 2018
|
2018
Notes
|
$13,000,000
|
|
Amortization of
debt discount
|
$1,394,048
|
Accrued
interest
|
311,068
|
|
Amortization of
debt issuance costs
|
142,626
|
Unamortized debt
discount
|
(3,649,401)
|
|
Accrued interest
expense
|
311,068
|
Unamortized debt
issuance costs
|
(410,116)
|
|
Total interest
expense
|
$1,847,742
|
|
$9,251,551
|
|
|
|
7.
STOCKHOLDERS’
EQUITY
Equity Financings
During
the nine months ended September 30, 2017, the Company issued
2,364,857 shares of common stock at a price of $3.60 per share,
raising net proceeds of approximately $8,244,882.
Common Stock and Common Stock Purchase Warrants Issued in Exchange
for Services
During
the nine months ended September 30, 2018, the Company issued 20,000
shares of common stock, with a fair value of $3.60 per share, to a
non-employee in exchange for services to be performed over a
one-year contractual term. The initial fair value of the common
stock granted for services was recorded as prepaid services in the
accompanying balance sheet and is being amortized over the
contractual term. Compensation expense related to the common stock
issued for the nine months ended September 30, 2018 totaled
$19,726.
Common Stock and Common Stock Purchase Warrants Issued in Exchange
for Services
The
Company issued 20,000 shares of common stock, with a fair value of
$3.60 per share, to a non-employee in exchange for services to be
performed over a one-year contractual term. The initial fair value
of the common stock granted for services was recorded as prepaid
services in the accompany balance sheet and is being amortized over
the performance period. Compensation expense related to the common
stock issued for the nine months ended September 30, 2018 totaled
$19,726.
The
Company issued common stock purchase warrants to certain employees
and non-employees in exchange for services performed, subject to
certain vesting conditions. The warrants issued for services have
expiration dates ranging from five to 10 years from the date of
grant and exercise prices ranging from $0.10 to $3.60 per
share.
Compensation
expense related to common stock purchase warrants issued for
services was $682,294 and $1,434,633 for the nine months ended
September 30, 2018 and 2017, respectively. No common stock purchase
warrants were issued in exchange for services during the nine
months ended September 30, 2018.
In-Kind Contribution of Services
In June 2017, the Company recorded $1,000,000 as in-kind
contributions of media services provided by a major media network,
of which $480,667 and $37,666 was expensed during the nine months
ended September 30, 2018 and 2017, respectively. The contributed
media services are being amortized based on estimates of usage
over the 18-month contractual term ending on December 31, 2018
and are included in selling, marketing and advertising expense in
the statement of operations.
In
August 2018, the Company’s Board of Directors approved a
second amendment and restatement to the of the Company’s
amended and restated certificate of incorporation (the
“Amended and Restated
Charter”) to (i) increase the Company’s
authorized capital to a total of 110.0 million shares, consisting
of 100.0 million shares of common stock and 10.0 million shares of
newly created preferred stock, par value $0.001 per share
(“Preferred
Stock”); (ii) authorize the Company’s Board of
Directors to fix the designation and number of each series of
Preferred Stock, and to determine or change the designation,
relative rights, preferences, and limitations of any series of
Preferred Stock; and (iii) remove the deemed liquidation provision,
as such term is defined in the Amended and Restated Charter. The
Amended and Restated Charter was approved by a majority of the
Company’s stockholders in September 2018, and became
effective upon filing with the State of Delaware in November
2018.
In August 2018, the Company amended and restated the Super League
2014 Stock Option and Incentive Plan to increase the number of
shares of common stock reserved thereunder from 4,500,000 shares to
5,500,000 shares.
8.
COMMITMENTS
AND CONTINGENCIES
The
Company leases office space under an operating lease agreement
which expired on May 31, 2017 and was amended to a month-to-month
lease. Rent expense for the nine months ended September 30, 2018
and 2017 was $230,139 and $177,418, respectively, and is included
in general and administrative expenses in the accompanying interim
condensed statements of operations. Rental payments are
expensed in the statements of operations in the period to which
they relate. Scheduled rent increases, if any, are amortized on a
straight-line basis over the lease term.
9.
SUBSEQUENT
EVENTS
The Company evaluated subsequent events for their potential impact
on the financial statements and disclosures through the date the
annual audited financial statements were available to be
issued.
Shares
Super League Gaming, Inc.
PROSPECTUS
Joint Book-Running Managers
Northland
Capital Markets
|
Lake
Street
|
Co-Manager
National
Securities Corporation
The date of this prospectus is ,
2019
Until
,
2019 (25 days after the date of this prospectus), all dealers that
buy, sell or trade shares of our common stock, whether or not
participating in this offering, may be required to deliver a
prospectus. This delivery requirement is in addition to the
obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
Part II - INFORMATION NOT
REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and
Distribution.
The
following table indicates the expenses to be incurred in connection
with the offering described in this registration statement, other
than underwriting discounts and commissions, all of which will be
paid by us. All amounts are estimated except the Securities and
Exchange Commission (the “SEC”) registration fee, the
Financial Industry Regulatory Authority, Inc. (“FINRA”) filing fee and the Nasdaq
Capital Market listing fee.
|
|
SEC registration
fee
|
$3,030
|
FINRA filing
fee
|
4,250
|
Nasdaq Capital
Stock Market listing fee
|
*
|
Accountants’
fees and expenses
|
*
|
Legal fees and
expenses
|
*
|
Blue Sky fees and
expenses
|
*
|
Transfer
Agent’s fees and expenses
|
*
|
Printing and
engraving expenses
|
*
|
Miscellaneous
|
*
|
|
|
Total
expenses
|
$*
|
*
|
To be
provided by amendment.
|
Item 14. Indemnification of Directors and
Officers.
Section
145(a) of the Delaware General Corporation Law
(“DGCL”)
provides, in general, that a Delaware corporation may indemnify any
person who was or is a party, or is threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) because that
person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or
other enterprise. The indemnity may include expenses (including
attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in
connection with such action, so long as the person acted in good
faith and in a manner he or she reasonably believed was in or not
opposed to the corporation’s best interests, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was
unlawful.
Section 145(b) of the DGCL provides, in general, that a Delaware
corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the corporation to
obtain a judgment in its favor because the person is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation or other
enterprise. The indemnity may include expenses (including
attorneys’ fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action,
so long as the person acted in good faith and in a manner the
person reasonably believed was in or not opposed to the
corporation’s best interests, except that no indemnification
shall be permitted without judicial approval if a court has
determined that the person is to be liable to the corporation with
respect to such claim. Section 145(c) of the DGCL provides that, if
a present or former director or officer has been successful in
defense of any action referred to in Sections 145(a) and (b) of the
DGCL, the corporation must indemnify such officer or director
against the expenses (including attorneys’ fees) he or she
actually and reasonably incurred in connection with such
action.
Section 145(g) of the DGCL provides, in general, that a corporation
may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or
other enterprise against any liability asserted against and
incurred by such person, in any such capacity, or arising out of
his or her status as such, whether or not the corporation could
indemnify the person against such liability under Section 145 of
the DGCL.
Our certificate of incorporation, as amended and restated
(“Charter”), and our amended and restated bylaws
(“Bylaws”) provide for the indemnification of our
directors and officers to the fullest extent permitted under the
DGCL.
We also expect to enter into separate indemnification agreements
with our directors and officers in addition to the indemnification
provided for in our Amended and
Restated Charter and Bylaws. These indemnification
agreements will provide, among other things, that we will indemnify
our directors and officers for certain expenses, including damages,
judgments, fines, penalties, settlements and costs and
attorneys’ fees and disbursements, incurred by a director or
officer in any claim, action or proceeding arising in his or her
capacity as a director or officer of the company or in connection
with service at our request for another corporation or entity. The
indemnification agreements also provide for procedures that will
apply in the event that a director or officer makes a claim for
indemnification.
We also maintain a directors’ and officers’ insurance
policy pursuant to which our directors and officers are insured
against liability for actions taken in their capacities as
directors and officers.
We have entered into an underwriting agreement in connection with
this offering, which provides for indemnification by the
underwriter of us, our officers and directors, for certain
liabilities, including liabilities arising under the Securities
Act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions or otherwise, the registrant has been advised that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 15. Recent Sales of Unregistered Securities.
Set
forth below is information regarding all securities sold by us
within the last three years which were not registered under the
Securities Act. Also included is the consideration received by us
for such securities and information relating to the section of the
Securities Act, or rule of the SEC, under which exemption from
registration was claimed.
(a)
Issuances of Capital Stock:
During
the year ended December 31, 2016, we issued 1,517,089 shares of
common stock at a price of $3.60 per share to certain accredited
investors in private placement transactions, resulting in aggregate
net proceeds of $5,356,645.
During
the year ended December 31, 2017, we issued 2,364,857 shares of
common stock at a price of $3.60 per share to certain accredited
investors in private placement transactions, resulting in aggregate
net proceeds of $8,244,883.
In
connection with these issuances of common stock, we granted the
investors certain demand and piggyback registration rights for the
shares purchased in these transactions. In addition, the investors
were provided with the right to participate on a pro-rata basis in
any future financings, subject to certain exceptions including the
issuance of securities in connection with the closing of our
initial public offering, to maintain their respective ownership
interest in the Company.
In June
2016, we entered into a gaming license agreement whereby we agreed
to issue 550,000 shares of restricted stock upon the achievement of
certain game related service conditions.
Issuances of Warrants to Purchase Common Stock
On June
22, 2016, we granted a ten-year warrant to purchase 500,000 shares
of common stock with an exercise price of $3.00 per share to a
third-party as partial consideration for the execution of a license
agreement. Pursuant to its terms, the warrant will vest in
increments of 25%, 35% and 40%, respectively, upon the occurrence
of certain performance-based achievements.
From
January 1, 2016 to September 30, 208, we granted five and ten year
warrants to purchase an aggregate of 1,066,750 shares of our common
stock at an average exercise price of $3.39 per share, to certain
employees, consultants and directors of the Company, including our
Chief Executive Officer Ann Hand, and Robert Stewart and Jeff Gehl,
each of whom serve as a member of our Board of Directors, as
consideration for their previous and future services to the
Company.
On November 15, 2018, we granted an employee a ten-year common
stock purchase warrant to purchase up to 750,000 shares of the
Company’s common stock, at an exercise price of $3.60,
pursuant to an amended employment agreement, subject to the
following vesting schedule: (i) 25% upon issuance; (ii) 50% upon
close of an IPO or an additional private financing (occurring
subsequent to September 1, 2018) of not less than $15,000,000; and
(iii) 25% on the one-year anniversary of an IPO or the one-year
anniversary of an additional private equity financing of not less
than $15,000,000 (occurring subsequent to September 1,
2018).
Sale of Convertible Promissory Notes in Private
Placements
In
October 2015, we entered into a non-interest bearing, unsecured
convertible note in the principal amount of $3,250,000 (the
“2015 Note”)
with a stockholder of the Company. In April 2016, the 2015 Note
automatically converted into 1,163,387 shares of common stock
pursuant to the terms of the 2015 Note.
In
April 2016, we entered into non-interest bearing, unsecured
convertible notes with an aggregate principal amount of $5,350,000
(the “2016
Notes”) with certain stockholders of the Company,
$5,050,000 of such principal amount was automatically converted
into 1,551,484 shares of common stock in October 2016 upon closing
of a “qualified equity offering” (as such term is
defined in the 2016 Notes) pursuant to the terms of the 2016 Notes.
The remaining principal amount of $300,000 was fully repaid by us
during the year ended December 31, 2016.
In
February through April 2018, we issued 9.00% secured convertible
promissory notes with a collective face value of $3,000,000 (the
“Initial 2018 Notes”). The Initial 2018 Notes (i)
accrued simple interest at the rate of 9.00% per annum, (ii)
matured on the earlier of December 31, 2018 or the close of a
$15,000,000 equity financing (“Qualifying Equity
Financing”) by us, and (iii) all outstanding principal and
accrued interest was automatically convertible into equity or
equity-linked securities sold in a Qualifying Equity Financing
based upon a conversion rate equal to (x) a 10% discount to the
price per share of a Qualifying Equity Financing, with (y) a floor
of $3.60 per share. In addition, the holders of the Initial 2018
Notes were collectively issued warrants to purchase approximately
166,670 shares of common stock, at an exercise price of $3.60 per
share and a term of five years (the “Initial 2018
Warrants”).
In May
through August 2018, we issued additional 9.00% secured convertible
promissory notes with a collective face value of $10,000,000 (the
“Additional 2018 Notes”). In May 2018, all of the
Initial 2018 Notes and related accrued interest, totaling
$3,056,182, were converted into the Additional 2018 Notes,
resulting in an aggregate principal amount of $13,056,182
(hereinafter collectively, the “2018 Notes”). The
holders of the converted Initial 2018 Notes retained their
respective Initial 2018 Warrants.
The
2018 Notes (i) accrue simple interest at the rate of 9.00% per
annum, (ii) mature on the earlier of the closing of an initial
public offering (“IPO”) of our common stock on a
national securities exchange or April 30, 2019, and (iii) all
outstanding principal and accrued interest is automatically
convertible into shares of common stock upon the closing of an IPO
at the lesser of (x) $3.60 per share or (y) a 15% discount to the
price per share of the IPO. In
addition, the holders of the 2018 Notes were collectively
issued 3,626,717 warrants to purchase common stock equal to
100% of the aggregate principal amount of the 2018 Notes divided by
$3.60 per share (the “2018 Warrants”). The number of
2018 Warrants ultimately issued is subject to adjustment upon the
closing of an IPO and will be determined by dividing 100% of the
face value of the 2018 Notes by the lesser of (x) $3.60 per share
or (y) a 15% discount to the price per share of the IPO. The 2018
Warrants are exercisable for a term of five years, commencing on
the close of an IPO, at an exercise price equal to the lesser of
(x) $3.60 per share or (y) a 15% discount to the IPO price per
share and are callable at our election at any time following the
closing of an IPO.
Grants of Restricted Common Stock
On
January 15, 2016, we issued 420,000 shares of our common stock to
an employee upon the exercise of certain previously issued warrants
at an exercise price of $0.10 per share.
The
offers, sales and issuances of the securities described in
Item 15 were deemed to be exempt from registration under the
Securities Act under either (i) Rule 701 promulgated
under the Securities Act as offers and sale of securities pursuant
to certain compensatory benefit plans and contracts relating to
compensation in compliance with Rule 701 or
(ii) Section 4(a)(2) of the Securities Act as
transactions by an issuer not involving any public offering. The
recipients of securities in each of these transactions represented
their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution
thereof and appropriate legends were affixed to the stock
certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationships with
us, to information about us.
Item 16. Exhibits and Financial Statement
Schedules.
(a) Exhibits. The list of exhibits is set forth below and is
incorporated by reference herein.
1.1*
|
Form of Underwriting
Agreement.
|
|
Second Amended and Restated
Certificate of Incorporation of Super League Gaming, Inc. dated
November 19, 2018, filed herewith.
|
|
Second Amended and Restated Bylaws
of Super League Gaming, Inc., filed
herewith.
|
4.1*
|
Form of Common Stock
Certificate.
|
|
Form of Registration Rights
Agreement, among Super League Gaming, Inc. and certain accredited
investors, filed
herewith.
|
|
Common Stock Purchase Warrant dated
June 16, 2017 issued to Ann Hand, filed
herewith.
|
|
Form of 9.00%
Secured Convertible Promissory Note, filed
herewith. |
|
Form of Callable Common Stock
Purchase Warrant, issued to certain accredited
investors, filed
herewith.
|
4.6*
|
Form of Underwriter
Warrant.
|
5.1*
|
Opinion of Disclosure Law Group, a
Professional Corporation.
|
|
Super League Gaming, Inc. Amended
and Restated 2014 Stock Option and Incentive Plan, filed
herewith.
|
|
Form of Stock Option Agreement
under 2014 Stock Option and Incentive Plan, filed
herewith.
|
|
Subscription Agreement, among Nth
Games, Inc. and certain accredited investors, filed
herewith.
|
|
Subscription Agreement, among Super
League Gaming, Inc. and certain accredited investors, filed
herewith.
|
|
Form of Theater
Agreement, filed
herewith.
|
|
Lease between Super League Gaming,
Inc. and Roberts Business Park Santa Monica LLC, dated June 1,
2016, filed
herewith.
|
|
License Agreement between Super
League Gaming, Inc. and Riot Games, Inc., dated June 22, 2016,
filed herewith.
|
|
Amended and Restated License
Agreement between Super League Gaming, Inc. and Mojang AB, dated
August 1, 2016, filed herewith.
|
|
Master Agreement between Super
League Gaming, Inc. and Viacom Media Networks, dated June 9,
2017, filed
herewith.
|
|
Form of Common Stock Purchase
Agreement, among Super League Gaming, Inc. and certain accredited
investors, filed
herewith.
|
|
Form of Investors’ Rights
Agreement, among Super League Gaming, Inc. and certain accredited
investors, filed
herewith.
|
|
Employment Agreement, between Super
League Gaming, Inc. and Ann Hand, dated June 16, 2017, filed
herewith.
|
|
Employment Agreement, between Super
League Gaming, Inc. and David Steigelfest, dated October 31,
2017, filed
herewith.
|
|
Riot Games, Inc. Extension Letter,
dated November 21, 2017, filed
herewith.
|
|
Form of Note Purchase Agreement,
among Super League Gaming, Inc. and certain accredited
investors, filed
herewith.
|
|
Form of Security Agreement, between
Super League Gaming, Inc. and certain accredited
investors, filed
herewith.
|
|
Form of Intercreditor and
Collateral Agent Agreement, among Super League Gaming, Inc. and
certain accredited investors, filed
herewith.
|
|
Form of Investors’ Rights
Agreement (9% Secured
Convertible Promissory Notes), among Super League Gaming,
Inc. and certain accredited investors, filed
herewith.
|
|
Master Service Agreement and
Initial Statement of Work between Super League Gaming, Inc. and
Logitech Inc., dated March 1, 2018, filed
herewith.
|
|
Asset Purchase Agreement, between
Super League Gaming, Inc. and Minehut, dated June 22, 2018
, filed
herewith.
|
|
Amended and Restated
Employment Agreement, between Super League Gaming, Inc. and Ann
Hand, dated November 15, 2018, filed
herewith.
|
|
Amended and Restated
Employment Agreement, between Super League Gaming, Inc. and David
Steigelfest, dated November 1, 2018, filed
herewith.
|
|
Employment Agreement, between Super
League Gaming, Inc. and Matt Edelman, dated November 1,
2018, filed
herewith.
|
|
Employment Agreement, between Super
League Gaming, Inc. and Clayton Haynes, dated November 1,
2018, filed
herewith.
|
|
Super League Gaming, Inc. Code of
Business Conduct and Ethics, filed
herewith.
|
|
Consents of Squar Milner LLP, filed
herewith.
|
23.2*
|
Consent of Disclosure Law Group, a
Professional Corporation (included in Exhibit
5.1).
|
|
Power of attorney (included on
signature page to this Registration Statement).
|
*
|
To be
filed by amendment.
|
†
|
Identifies
exhibits that consist of a management contract or compensatory plan
or arrangement.
|
+
|
Confidential treatment has been requested for certain confidential
portions of this exhibit pursuant to Rule 406 under the Securities
Act of 1933, as amended, and Rule 24b-2 under the Securities
Exchange Act of 1934, as amended (together, the “
Rules”). In accordance with the Rules, these
confidential portions have been omitted from this exhibit and filed
separately with the Securities and Exchange
Commission.
|
(b)
Financial Statement Schedules. Schedules not listed above
have been omitted because the information required to be set forth
therein is not applicable or is shown in the financial statements
or notes thereto.
Item 17. Undertakings.
The
undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as
required by the underwriters to permit prompt delivery to each
purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The
registrant hereby further undertakes that:
(1) For
purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
(2) For
purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Santa
Monica, State of California, on this 4th day of January,
2019.
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Super League Gaming, Inc.
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By:
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/s/ Ann
Hand
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Ann
Hand
Chief Executive Officer, President and
Chair of the Board
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SIGNATURES AND POWER OF
ATTORNEY
We, the
undersigned officers and directors of Super League Gaming, Inc.,
hereby severally constitute and appoint Ann Hand and Clayton
Haynes, and each of them singly (with full power to each of them to
act alone), our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution in each of them for
him or her and in his or her name, place and stead, and in any and
all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement (or any
other registration statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933), and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite or necessary to be
done in and about the premises, as full to all intents and purposes
as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or
their, or his or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities held on the dates indicated.
Signature
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Title
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Date
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/s/ Ann
Hand
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Chief
Executive Officer,
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January 4, 2019
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Ann
Hand
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President,
Chair of the Board
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(Principal
Executive Officer)
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/s/ Clayton
Haynes
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Chief
Financial Officer
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January 4, 2019
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Clayton
Haynes
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(Principal
Financial and Accounting Officer)
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/s/ David
Steigelfest
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Director
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January 4,
2019
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David
Steigelfest
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/s/ John
Miller
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Director
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January 4, 2019
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John
Miller
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/s/ Jeff
Gehl
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Director
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January 4, 2019
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Jeff
Gehl
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/s/ Robert
Stewart
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Director
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January 4, 2019
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Robert
Stewart
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/s/ Peter
Levin
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Director
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January
4, 2019
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Peter Levin
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/s/ Kristin
Patrick
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Director
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January
4,
2019
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Kristin Patrick |
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/s/ Michael Keller
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Director
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January 4, 2019
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Michael Keller
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Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SUPER LEAGUE GAMING, INC.
(Pursuant to Sections 242 and 245 of
the
General
Corporation Law of the State of Delaware)
Super
League Gaming, Inc. (“Corporation”),
a corporation organized and existing under and by virtue of the
provisions of the General Corporation Law of the State of Delaware
(the “General Corporation
Law”),
DOES
HEREBY CERTIFY:
1. That the name of
this Corporation is Super League Gaming, Inc., and that this
Corporation was originally incorporated pursuant to the General
Corporation Law on October 1, 2014 under the name Nth Games,
Inc.
2. The
Corporation’s Board of Directors and holders of a majority of
the Corporation’s voting stock previously adopted resolutions
to amend and restate the Certificate of Incorporation of this
Corporation on October 7, 2016, which amended and restated
Certificate of Incorporation was filed with the State of Delaware
on the same date.
3. That the Board of
Directors duly adopted resolutions on August 15, 2018 proposing to
again amend and restate the Certificate of Incorporation of this
Corporation, declaring this Second Amended and Restated Certificate
of Incorporation to be advisable and in the best interests of this
Corporation and its stockholders, and authorizing the appropriate
officers of this Corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed
Second Amended and Restated Certificate of Incorporation is as
follows:
RESOLVED, that the Certificate of
Incorporation of this Corporation be amended and restated in its
entirety to read as follows:
FIRST. The
name of this corporation is Super League Gaming, Inc. (the
“Corporation”).
SECOND. The
address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, Wilmington, DE 19801, New Castle
County. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The
nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law.
FOURTH. The
total number of shares which the Corporation shall have authority
to issue is one hundred and ten million (110,000,000) shares, of
which one hundred million (100,000,000) shares shall be common
stock, par value $0.001 per share (“Common
Stock”), and ten million (10,000,000) shares shall be
preferred stock, par value $0.001 per share (“Preferred
Stock”). The Board of Directors of the Corporation may
divide the Preferred Stock into any number of series, fix the
designation and number of each such series, and determine or change
the designation, relative rights, preferences, and limitations of
any series of Preferred Stock. The Board of Directors (within the
limits and restrictions of the adopting resolutions) may also
increase or decrease the number of shares of Preferred Stock
initially fixed for any series, but no decrease may reduce the
number below the shares of Preferred Stock then outstanding and
duly reserved for issuance.
The
following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or
restrictions thereof in respect of the Common Stock of the
Corporation.
A. COMMON
STOCK
1. Voting. The holders of the
Common Stock are entitled to one vote for each share of Common
Stock held at all meetings of stockholders (and written actions in
lieu of meetings). There shall be no cumulative
voting.
2. Dividends.
2.1 Dividends Generally. Any
dividends declared or paid in any fiscal year shall be declared or
paid among the holders of the Common Stock then outstanding, pro
rata and pari passu based on the number of shares held by each such
holder. The right to receive dividends on shares of Common Stock
shall not be cumulative.
2.2 Non-Cash Distributions.
Whenever a dividend provided for in this Section 2 shall be payable in
property other than cash, the value of such dividend shall be
deemed to be the fair market value of such property as determined
in good faith by the Board of Directors.
3. Payments to Holders of Common
Stock. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation available for distribution to its holders
of Common Stock shall be distributed among the holders of shares of
Common Stock, pro rata and pari passu based on the number of shares
held by each such holder.
FIFTH: Subject to any additional vote
required by this Amended and Restated Certificate of Incorporation
or the Bylaws of the Corporation, in furtherance and not in
limitation of the powers conferred by statute, the Board of
Directors is expressly authorized to make, repeal, alter, amend and
rescind any or all of the Bylaws of the Corporation.
SIXTH: The number of directors of the
Corporation shall be determined in the manner set forth in the
Bylaws of the Corporation.
SEVENTH: Elections of directors need not
be by written ballot unless the Bylaws of the Corporation shall so
provide.
EIGHTH: Meetings of stockholders may be
held within or without the State of Delaware, as the Bylaws of the
Corporation may provide. The books of the Corporation may be kept
outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the
Bylaws of the Corporation.
NINTH: To the fullest extent permitted
by law, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director. If the General
Corporation Law or any other law of the State of Delaware is
amended after approval by the stockholders of this Article Ninth to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law as so
amended.
Any
repeal or modification of the foregoing provisions of this Article
Ninth by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation
existing at the time of, or increase the liability of any director
of the Corporation with respect to any acts or omissions of such
director occurring prior to, such repeal or
modification.
TENTH: To the fullest extent permitted
by applicable law, the Corporation is authorized to provide
indemnification of (and advancement of expenses to) directors,
officers and agents of the Corporation (and any other persons to
which General Corporation Law permits the Corporation to provide
indemnification) through Bylaw provisions, agreements with such
agents or other persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the General
Corporation Law.
Any
amendment, repeal or modification of the foregoing provisions of
this Article Tenth shall not adversely affect any right or
protection of any director, officer or other agent of the
Corporation existing at the time of such amendment, repeal or
modification.
ELEVENTH: For purposes of Section 500 of
the California Corporations Code (to the extent applicable), in
connection with any repurchase of shares of capital stock permitted
under the Certificate of Incorporation from employees, officers,
directors or consultants of the Corporation in connection with a
termination of employment or services pursuant to agreements or
arrangements approved by the Board (in addition to any other
consent required under the Certificate of Incorporation), such
repurchase may be made without regard to any “preferential
dividends arrears amount” or “preferential rights
amount” (as those terms are defined in Section 500 of the
California Corporations Code). Accordingly, for purposes of making
any calculation under California Corporations Code Section 500 in
connection with such repurchase, the amount of any
“preferential dividends arrears amount” or
“preferential rights amount” (as those terms are
defined therein) shall be deemed to be zero (0).
* * * * *
4. That this Second
Amended and Restated Certificate of Incorporation was approved by
the holders of the requisite number of shares of this Corporation
in accordance with Section 228 of the General Corporation
Law.
5. That this Second
Amended and Restated Certificate of Incorporation, which restates
and integrates and further amends the provisions of this
Corporation’s Amended and Restated Certificate of
Incorporation, has been duly adopted in accordance with Sections
242 and 245 of the General Corporation Law.
IN WITNESS WHEREOF, this Second Amended
and Restated Certificate of Incorporation has been executed by a
duly authorized officer of this Corporation on November 19,
2018.
Ann
Hand
Chief
Executive Officer
Exhibit 3.2
BYLAWS OF
SUPER LEAGUE GAMING, INC.
Adopted October
2, 2014
Amended & Restated June 15, 2015
Amended & Restated August 15, 2018
TABLE OF CONTENTS
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Page
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Article I — MEETINGS OF STOCKHOLDERS
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1
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1.1
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Place of Meetings
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1
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1.2
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Annual Meeting
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1
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1.3
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Special Meeting
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1
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1.4
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Notice of Stockholders’ Meetings
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2
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1.5
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Quorum
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2
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1.6
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Adjourned Meeting; Notice
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2
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1.7
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Conduct of Business
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2
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1.8
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Voting
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3
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1.9
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Stockholder Action by Written Consent Without a
Meeting
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3
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1.1
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Record Date for Stockholder Notice; Voting; Giving
Consents
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4
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1.11
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Proxies
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5
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1.12
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List of Stockholders Entitled to Vote .
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5
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1.13
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Advance Notice of Business
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6
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Article II — DIRECTORS
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8
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2.1
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Powers
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8
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2.2
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Number of Directors
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8
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2.3
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Election, Qualification and Term of Office of
Directors
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8
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2.4
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Resignation and Vacancies
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8
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2.5
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Place of Meetings; Meetings by Telephone
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9
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2.6
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Conduct of Business
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10
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2.7
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Regular Meetings
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10
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2.8
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Special Meetings; Notice
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10
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2.9
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Quorum; Voting
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10
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2.1
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Board Action by Written Consent Without a Meeting
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11
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2.11
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Fees and Compensation of Directors
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11
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2.12
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Removal of Director
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11
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Article III — COMMITTEES
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11
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3.1
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Committees of Directors
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11
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3.2
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Committee Minutes
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12
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3.3
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Meetings and Actions of Committees
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12
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3.4
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Subcommittees
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12
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Article IV — OFFICERS
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13
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4.1
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Officers
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13
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4.2
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Appointment of Officers
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13
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4.3
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Subordinate Officers
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13
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4.4
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Removal and Resignation of Officers
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13
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4.5
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Vacancies in Offices
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13
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4.6
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Representation of Shares of Other Corporations
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13
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4.7
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Authority and Duties of Officers
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13
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Article V — INDEMNIFICATION
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14
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5.1
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Indemnification of Directors and Officers in Third Party
Proceedings
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14
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5.2
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Indemnification of Directors and Officers in Actions by or in the
Right of the Company
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14
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5.3
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Successful Defense
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14
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5.4
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Indemnification of Others
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15
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5.5
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Advanced Payment of Expenses
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15
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5.6
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Limitation on Indemnification
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15
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5.7
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Determination; Claim
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16
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5.8
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Non-Exclusivity of Rights
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16
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5.9
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Insurance
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16
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5.1
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Survival
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16
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5.11
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Effect of Repeal or Modification
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16
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5.12
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Certain Definitions
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17
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Article VI — STOCK
|
17
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6.1
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Stock Certificates; Partly Paid Shares
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17
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6.2
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Special Designation on Certificates
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18
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6.3
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Lost Certificates
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18
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6.4
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Dividends
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18
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6.5
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Stock Transfer Agreements
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19
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6.6
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Registered Stockholders
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19
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6.7
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Transfers
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19
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Article VII — MANNER OF GIVING NOTICE AND WAIVER
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19
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7.1
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Notice of Stockholder Meetings
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19
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7.2
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Notice by Electronic Transmission
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19
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7.3
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Notice to Stockholders Sharing an Address
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20
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7.4
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Notice to Person with Whom Communication is Unlawful
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21
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7.5
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Waiver of Notice
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21
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Article VIII — EXCLUSIVE FORUM FOR LITIGATION
|
21
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Article IX — GENERAL MATTERS
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21
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9.1
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Fiscal Year
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21
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9.2
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Seal
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22
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9.3
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Annual Report
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22
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9.4
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Construction; Definitions
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22
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Article X — AMENDMENTS
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22
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BYLAWS
Article I — MEETINGS OF
STOCKHOLDERS
1.1 Place of Meetings
.
Meetings of stockholders of Super League Gaming, Inc. (the
“Company”) shall
be held at any place, within or outside the State of Delaware, determined by the
Company’s board of directors (the “Board”). The Board may, in its sole discretion,
determine that a meeting of stockholders shall not be held at any
place, but may instead be held solely by means of remote
communication as authorized by Section 211(a)(2) of the Delaware
General Corporation Law (the “DGCL”). In the
absence of any such designation or determination,
stockholders’ meetings shall be held at the Company’s
principal executive office.
1.2 Annual
Meeting. An annual meeting of stockholders shall be
held for the election of directors at such date and time as may be
designated by resolution of the Board from time to time. Any other
proper business may be transacted at the annual meeting. The
Company shall not be required to hold an annual meeting of
stockholders, provided that
(i) the stockholders are permitted to act by written consent
under the Company’s certificate of incorporation and these
bylaws, (ii) the stockholders take action by written consent
to elect directors and (iii) the stockholders unanimously
consent to such action or, if such consent is less than unanimous,
all of the directorships to which directors could be elected at an
annual meeting held at the effective time of such action are vacant
and are filled by such action.
1.3 Special
Meeting. A special meeting of the stockholders may be
called at any time by the Board, Chairperson of the Board, Chief
Executive Officer or President (in the absence of a Chief Executive
Officer) or by one or more stockholders holding shares in the
aggregate entitled to cast not less than 10% of the votes at that
meeting.
If any
person(s) other than the Board calls a special meeting, the request
shall:
(i)
be in
writing;
(ii)
specify the
time of such meeting and the general nature of the business
proposed to be transacted; and
(iii)
be delivered
personally or sent by registered mail or by facsimile transmission
to the Chairperson of the Board, the Chief Executive Officer, the
President (in the absence of a Chief Executive Officer) or the
Secretary of the Company.
The
officer(s) receiving the request shall cause notice to be promptly
given to the stockholders entitled to vote at such meeting, in
accordance with these bylaws, that a meeting will be held at the
time requested by the person or persons calling the meeting. No
business may be transacted at such special meeting other than the
business specified in such notice to stockholders. Nothing
contained in this paragraph of this Section 1.3
shall be construed as limiting, fixing, or affecting the time when
a meeting of stockholders called by action of the Board may be
held.
1.4 Notice
of Stockholders’ Meetings. Whenever stockholders
are required or permitted to take any action at a meeting, a
written notice of the meeting shall be given which shall state the
place, if any, date and hour of the meeting, the means of remote
communication, if any, by which stockholders and proxy holders may
be deemed to be present in person and vote at such meeting, and, in
the case of a special meeting, the purpose or purposes for which
the meeting is called. Except as otherwise provided in the DGCL,
the certificate of incorporation or these bylaws, the written
notice of any meeting of stockholders shall 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.
1.5 Quorum. Except
as otherwise provided by law, the certificate of incorporation or
these bylaws, at each meeting of stockholders the presence in
person or by proxy of the holders of shares of stock having a
majority of the votes which could be cast by the holders of all
outstanding shares of stock entitled to vote at the meeting shall
be necessary and sufficient to constitute a quorum. Where a
separate vote by a class or series or classes or series is
required, a majority of the outstanding shares of such class or
series or classes or series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with
respect to that vote on that matter, except as otherwise provided
by law, the certificate of incorporation or these
bylaws.
If,
however, such quorum is not present or represented at any meeting
of the stockholders, then either (i) the chairperson of the
meeting, or (ii) the stockholders entitled to vote at the
meeting, present in person or represented by proxy, shall have the
power to adjourn the meeting from time to time, in the manner
provided in Section 1.6,
until a quorum is present or represented.
1.6 Adjourned Meeting;
Notice. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or
some other place, and notice need not be given of the adjourned
meeting if the time, place, if any, thereof, and the means of
remote communications, if any, by which stockholders and proxy
holders may be deemed to be present in person and vote at such
adjourned meeting are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Company may
transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or
if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the
meeting.
1.7 Conduct of
Business. Meetings of stockholders shall be presided
over by the Chairperson of the Board, if any, or in his or her
absence by the Vice Chairperson of the Board, if any, or in the
absence of the foregoing persons by the Chief Executive Officer, or
in the absence of the foregoing persons by the President, or in the
absence of the foregoing persons by a Vice President, or in the
absence of the foregoing persons by a chairperson designated by the
Board, or in the absence of such designation by a chairperson
chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairperson of the meeting
may appoint any person to act as secretary of the meeting. The
chairperson of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of
business.
1.8 Voting.
The stockholders entitled to vote at any meeting of stockholders
shall be determined in accordance with the provisions of
Section 1.10 of
these bylaws, subject to Section 217 (relating to voting
rights of fiduciaries, pledgors and joint owners of stock) and
Section 218 (relating to voting trusts and other voting
agreements) of the DGCL.
Except
as may be otherwise provided in the certificate of incorporation,
each stockholder entitled to vote at any meeting of stockholders
shall be entitled to one vote for each share of capital stock held
by such stockholder which has voting power upon the matter in
question. Voting at meetings of stockholders need not be by written
ballot and, unless otherwise required by law, need not be conducted
by inspectors of election unless so determined by the holders of
shares of stock having a majority of the votes which could be cast
by the holders of all outstanding shares of stock entitled to vote
thereon which are present in person or by proxy at such meeting. If
authorized by the Board, such requirement of a written ballot shall
be satisfied by a ballot submitted by electronic transmission (as
defined in Section 7.2 of
these bylaws), provided
that any such electronic transmission must either set forth or be
submitted with information from which it can be determined that the
electronic transmission was authorized by the stockholder or proxy
holder.
Except
as otherwise required by law, the certificate of incorporation or
these bylaws, in all matters other than the election of directors,
the affirmative vote of a majority of the voting power of the
shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the
stockholders. Except as otherwise required by law, the certificate
of incorporation or these bylaws, directors shall be elected by a
plurality of the voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors. Where a separate vote by a class or series
or classes or series is required, in all matters other than the
election of directors, the affirmative vote of the majority of
shares of such class or series or classes or series present in
person or represented by proxy at the meeting shall be the act of
such class or series or classes or series, except as otherwise
provided by law, the certificate of incorporation or these
bylaws.
1.9 Stockholder Action by
Written Consent Without a Meeting. Unless otherwise
provided in the certificate of incorporation, any action required
by the DGCL to be taken at any annual or special meeting of
stockholders of a corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
An
electronic transmission (as defined in Section 7.2)
consenting to an action to be taken and transmitted by a
stockholder or proxy holder, or by a person or persons authorized
to act for a stockholder or proxy holder, shall be deemed to be
written, signed and dated for purposes of this section,
provided that any such
electronic transmission sets forth or is delivered with information
from which the Company can determine (i) that the electronic
transmission was transmitted by the stockholder or proxy holder or
by a person or persons authorized to act for the stockholder or
proxy holder and (ii) the date on which such stockholder or
proxy holder or authorized person or persons transmitted such
electronic transmission.
In the
event that the Board shall have instructed the officers of the
Company to solicit the vote or written consent of the stockholders
of the Company, an electronic transmission of a stockholder written
consent given pursuant to such solicitation may be delivered to the
Secretary or the President of the Company or to a person designated
by the Secretary or the President. The Secretary or the President
of the Company or a designee of the Secretary or the President
shall cause any such written consent by electronic transmission to
be reproduced in paper form and inserted into the corporate
records.
Prompt
notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had been
the date that written consents signed by a sufficient number of
holders to take the action were delivered to the Company as
provided in Section 228 of the DGCL. In the event that the
action which is consented to is such as would have required the
filing of a certificate under any provision of the DGCL, if such
action had been voted on by stockholders at a meeting thereof, the
certificate filed under such provision shall state, in lieu of any
statement required by such provision concerning any vote of
stockholders, that written consent has been given in accordance
with Section 228 of the DGCL.
1.10 Record Date for Stockholder
Notice; Voting; Giving Consents. In order that the
Company may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or
entitled to express consent to corporate action in writing without
a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board may
fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the
Board and which record date:
(i) in the case of
determination of stockholders entitled to notice of or to vote at
any meeting of stockholders or adjournment thereof, shall, unless
otherwise required by law, not be more than sixty nor less than ten
days before the date of such meeting;
(ii) in
the case of determination of stockholders entitled to express
consent to corporate action in writing without a meeting, shall not
be more than ten days after the date upon which the resolution
fixing the record date is adopted by the Board; and
(iii) in
the case of determination of stockholders for any other action,
shall not be more than 60 days prior to such other
action.
If no
record date is fixed by the Board:
(i)
the record date for
determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice
is waived, at the close of business on the day next preceding the
day on which the meeting is held;
(ii)
the record date for
determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the
Board is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be
taken is delivered to the Company in accordance with applicable
law, or, if prior action by the Board is required by law, shall be
at the close of business on the day on which the Board adopts the
resolution taking such prior action; and
(iii)
the record date for
determining stockholders for any other purpose shall be at the
close of business on the day on which the Board adopts the
resolution relating thereto.
A
determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of
the meeting, provided that
the Board may fix a new record date for the adjourned
meeting.
1.11 Proxies. Each
stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a
meeting may authorize another person or persons to act for such
stockholder by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the
procedure established for the meeting, but no such proxy shall be
voted or acted upon after three years from its date, unless the
proxy provides for a longer period. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by
the provisions of Section 212 of the DGCL.
1.12 List of Stockholders
Entitled to Vote. The officer who has charge of the
stock ledger of the Company shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
The Company shall not be required to include electronic mail
addresses or other electronic contact information on such list.
Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting for a period
of at
least ten days prior to the meeting: (i) on a reasonably
accessible electronic network, provided that the information required
to gain access to such list is provided with the notice of the
meeting, or (ii) during ordinary business hours, at the
Company’s principal place of business. In the event that the
Company determines to make the list available on an electronic
network, the Company may take reasonable steps to ensure that such
information is available only to stockholders of the Company. If
the meeting is to be held at a place, then the list shall be
produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is
present. If the meeting is to be held solely by means of remote
communication, then the list shall also be open to the examination
of any stockholder during the whole time of the meeting on a
reasonably accessible electronic network, and the information
required to access such list shall be provided with the notice of
the meeting.
1.13 Advance Notice of
Business. No business may be transacted at an annual meeting
of stockholders, other than business that is either (i) specified
in the Company’s’s notice of meeting (or any supplement
thereto) given by or at the direction of the Board, (ii) otherwise
properly brought before the annual meeting by or at the direction
of the Board, or (iii) otherwise properly brought before the annual
meeting by any stockholder of the Company (x) who is a stockholder
of record on the date of the giving of the notice provided for in
this Section 1.13
and on the record date for the determination of stockholders
entitled to vote at such annual meeting, and (y) who complies with
the notice procedures set forth in this Section
1.13. Notwithstanding anything in this Section 1.13
to the contrary, only persons nominated for election as a director
to fill any directorship the term of which expires on the date of
the annual meeting (or which ended before such date but as to which
the Board did not fill the vacancy) pursuant to Section 2.4
will be considered for election at such meeting.
(i) In addition to any
other applicable requirements, for business (other than
nominations) to be properly brought before an annual meeting by a
stockholder, such stockholder must have given timely notice thereof
in proper written form to the Secretary and such business must
otherwise be a proper matter for stockholder action. Subject to
Section
1.13(iii), a stockholder’s notice to the Secretary
with respect to such business, to be timely, must be received by
the Secretary at the principal executive offices of the Company not
later than the close of business on the 90th day, and not
earlier than the opening of business on the 120th day, before the
anniversary date of the immediately preceding annual meeting of
stockholders; provided,
however, that if the annual
meeting is called for a date that is not within 45 days before or
after such anniversary date, notice by the stockholder to be timely
must be so received not earlier than the opening 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 tenth day following the
day on which public announcement of the date of the annual meeting
is first made by the Company.
(ii) To
be in proper written form, a stockholder’s notice to the
Secretary with respect to any business (other than nominations)
must set forth as to each such matter such stockholder proposes to
bring before the annual meeting (A) a brief description of the
business desired to be brought before the annual meeting, the text
of the proposal or business (including the text of any resolutions
proposed for consideration and in the event such business includes
a proposal to amend these Bylaws, the language of the proposed
amendment) and the reasons for conducting such business at the
annual meeting, (B) the name and record address of such stockholder
and the name and address of the beneficial owner, if any, on whose
behalf the proposal is made, (C) the class or series and number of
shares of capital stock of the Company that are owned beneficially
and of record by such stockholder and by the beneficial owner, if
any, on whose behalf the proposal is made, (D) a description of all
arrangements or understandings between such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made and
any other person or persons (including their names) in connection
with the proposal of such business by such stockholder, (E) any
material interest of such stockholder and the beneficial owner, if
any, on whose behalf the proposal is made in such business and (F)
a representation that such stockholder intends to appear in person
or by proxy at the annual meeting to bring such business before the
meeting. All references in these Bylaws to “beneficial” ownership of stock,
or stock “beneficially” owned, or words of
similar import, incorporate by reference the standards for
determining beneficial ownership as set forth in Rule 13d-3 (or any
successor rule or regulation) under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”).
(iii) The
foregoing notice requirements of this Section 1.13
shall be deemed satisfied by a stockholder as to any proposal
(other than nominations) if the stockholder has notified the
Company of such stockholder’s intention to present such
proposal at an annual meeting in compliance with Rule 14a-8 (or any
successor rule or regulation) under the Exchange Act, and such
stockholder has complied with the requirements of such Rule for
inclusion of such proposal in a proxy statement prepared by the
Company to solicit proxies for such annual meeting. No business
shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the
procedures set forth in this Section
1.13; provided,
however, that once business
has been properly brought before the annual meeting in accordance
with such procedures, nothing in this Section 1.13
shall preclude discussion by any stockholder of any such business.
If the Board or the chairman of the annual meeting determines that
any stockholder proposal was not made in accordance with the
provisions of this Section 1.13
or that the information provided in a stockholder’s notice
does not satisfy the information requirements of this Section
1.13, such proposal shall not be presented for action at the
annual meeting. Notwithstanding the foregoing provisions of this
Section
1.13, if the stockholder (or a qualified representative of
the stockholder) does not appear at the annual meeting of
stockholders of the Company to present the proposed business, such
proposed business shall not be transacted, notwithstanding that
proxies in respect of such matter may have been received by the
Company.
(iv) In
addition to the provisions of this Section
1.13, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth herein. Nothing in
this Section 1.13
shall affect any rights of stockholders to request inclusion of
proposals in the Company’s proxy statement pursuant to Rule
14a-8 under the Exchange Act.
For
purposes of these Bylaws, “public announcement” means
disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in
a document publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Exchange Act.
Article II — DIRECTORS
2.1 Powers. The
business and affairs of the Company shall be managed by or under
the direction of the Board, except as may be otherwise provided in
the DGCL or the certificate of incorporation.
2.2 Number of
Directors. The Board shall consist of one or more
members, each of whom shall be a natural person. Unless the
certificate of incorporation fixes the number of directors, the
number of directors shall be determined from time to time by
resolution of the Board. No reduction of the authorized number of
directors shall have the effect of removing any director before
that director’s term of office expires.
2.3 Election, Qualification and
Term of Office of Directors. Except as provided in
Section 2.4 of these bylaws, and subject to
Sections 1.2 and 1.9 of
these bylaws, directors shall be elected at each annual meeting of
stockholders. Directors need not be stockholders unless so required
by the certificate of incorporation or these bylaws. The
certificate of incorporation or these bylaws may prescribe other
qualifications for directors. Each director shall hold office until
such director’s successor is elected and qualified or until
such director’s earlier death, resignation or
removal.
2.4
Resignation and
Vacancies. Any director may resign at any time upon
notice given in writing or by electronic transmission to the
Company. A resignation is effective when the resignation is
delivered unless the resignation specifies a later effective date
or an effective date determined upon the happening of an event or
events. A resignation which is conditioned upon the director
failing to receive a specified vote for reelection as a director
may provide that it is irrevocable. Unless otherwise provided in
the certificate of incorporation or these bylaws, when one or more
directors resign from the Board, effective at a future date, a
majority of the directors then in office, including those who have
so resigned, shall have power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or
resignations shall become effective.
Unless
otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly
created directorships resulting from any increase in the authorized
number of directors elected by all of the stockholders having the
right to vote as a single class may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole
remaining director.
(ii) Whenever
the holders of any class or classes of stock or series thereof are
entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by a
majority of the directors elected by such class or classes or
series thereof then in office, or by a sole remaining director so
elected.
If at
any time, by reason of death or resignation or other cause, the
Company should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility
for the person or estate of a stockholder, may call a special
meeting of stockholders in accordance with the provisions of the
certificate of incorporation or these bylaws, or may apply to the
Court of Chancery for a decree summarily ordering an election as
provided in Section 211 of the DGCL.
If, at
the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the
whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the voting
stock at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of
Section 211 of the DGCL as far as applicable.
A
director elected to fill a vacancy shall be elected for the
unexpired term of his or her predecessor in office and until such
director’s successor is elected and qualified, or until such
director’s earlier death, resignation or
removal.
2.5 Place of Meetings; Meetings
by Telephone. The Board may hold meetings, both
regular and special, either within or outside the State of
Louisiana or Delaware.
Unless
otherwise restricted by the certificate of incorporation or these
bylaws, members of the Board, or any committee designated by the
Board, may participate in a meeting of the Board, or any committee,
by means of conference telephone or other communications equipment
by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute
presence in person at the meeting.
2.6 Conduct
of Business. Meetings of the Board shall be presided
over by the Chairperson of the Board, if any, or in his or her
absence by the Vice Chairperson of the Board, if any, or in the
absence of the foregoing persons by a chairperson designated by the
Board, or in the absence of such designation by a chairperson
chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairperson of the meeting
may appoint any person to act as secretary of the
meeting.
2.7 Regular
Meetings. Regular meetings of the Board may be held
without notice at such time and at such place as shall from time to
time be determined by the Board.
2.8 Special Meetings;
Notice. Special meetings of the Board for any purpose
or purposes may be called at any time by the Chairperson of the
Board, the Chief Executive Officer, the President, the Secretary or
any two directors.
Notice
of the time and place of special meetings shall be:
(i) delivered
personally by hand, by courier or by telephone;
(ii) sent
by United States first-class mail, postage prepaid;
(iii) sent
by facsimile; or
(iv) sent
by electronic mail,
directed
to each director at that director’s address, telephone
number, facsimile number or electronic mail address, as the case
may be, as shown on the Company’s records.
If the
notice is (i) delivered personally by hand, by courier or by
telephone, (ii) sent by facsimile or (iii) sent by electronic
mail, it shall be delivered or sent at least 24 hours before the
time of the holding of the meeting. If the notice is sent by United
States mail, it shall be deposited in the United States mail at
least four days before the time of the holding of the meeting. Any
oral notice may be communicated to the director. The notice need
not specify the place of the meeting (if the meeting is to be held
at the Company’s principal executive office) nor the purpose
of the meeting.
2.9 Quorum;
Voting. At all meetings of the Board, a majority of
the total authorized number of directors shall constitute a quorum
for the transaction of business. If a quorum is not present at any
meeting of the Board, then the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present. A meeting
at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for
that meeting.
The
vote of a majority of the directors present at any meeting at which
a quorum is present shall be the act of the Board, except as may be
otherwise specifically provided by statute, the certificate of
incorporation or these bylaws.
If the
certificate of incorporation provides that one or more directors
shall have more or less than one vote per director on any matter,
every reference in these bylaws to a majority or other proportion
of directors shall refer to a majority or other proportion of the
votes of the directors.
2.10 Board Action by Written
Consent Without a Meeting. Unless otherwise restricted
by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board, or
of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent
thereto in writing or by electronic transmission and the writing or
writings or electronic transmission or transmissions are filed with
the minutes of proceedings of the Board or committee. Such filing
shall be in paper form if the minutes are maintained in paper form
and shall be in electronic form if the minutes are maintained in
electronic form.
211 Fees and Compensation of
Directors. Unless otherwise restricted by the
certificate of incorporation or these bylaws, the Board shall have
the authority to fix the compensation of directors.
2.12 Removal of
Directors. Unless otherwise restricted by statute, the
certificate of incorporation or these bylaws, any director or the
entire Board may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of
directors.
No
reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such
director’s term of office.
Article III — COMMITTEES
3.1 Committees of
Directors. The Board may designate one or more
committees, each committee to consist of one or more of the
directors of the Company. The Board may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in
the resolution of the Board or in these bylaws, shall have and may
exercise all the powers and authority of the Board in the
management of the business and affairs of the Company, and may
authorize the seal of the Company to be affixed to all papers that
may require it; but no such committee shall have the power or
authority to (i) approve or adopt, or recommend to the
stockholders, any action or matter (other than the election or
removal of directors) expressly required by the DGCL to be
submitted to stockholders for approval, or (ii) adopt, amend
or repeal any bylaw of the Company.
3.2 Committee
Minutes. Each committee shall keep regular minutes of
its meetings and report the same to the Board when
required.
3.3 Meetings and Actions of
Committees. Meetings and actions of committees shall
be governed by, and held and taken in accordance with, the
provisions of:
(i)
Section 2.5
(Place of Meetings; Meetings by Telephone);
(ii)
Section 2.7 (Regular Meetings);
(iii)
Section 2.8
(Special Meetings; Notice);
(iv)
Section 2.9
(Quorum; Voting);
(v)
Section 2.10
(Board Action by Written Consent Without a Meeting);
and
(vi)
Section 7.5
(Waiver of Notice) with such changes
in the context of those bylaws as are necessary to substitute the
committee and its members for the Board and its members.
However:
(i)
the
time of regular meetings of committees may be determined either by
resolution of the Board or by resolution of the
committee;
(ii)
special
meetings of committees may also be called by resolution of the
Board; and
(iii)
notice
of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings
of the committee. The Board may adopt rules for the government of
any committee not inconsistent with the provisions of these
bylaws.
Any
provision in the certificate of incorporation providing that one or
more directors shall have more or less than one vote per director
on any matter shall apply to voting in any committee or
subcommittee, unless otherwise provided in the certificate of
incorporation or these bylaws.
3.4 Subcommittees.
Unless otherwise provided in the certificate of incorporation,
these bylaws or the resolutions of the Board designating the
committee, a committee may create one or more subcommittees, each
subcommittee to consist of one or more members of the committee,
and delegate to a subcommittee any or all of the powers and
authority of the committee.
Article
IV — OFFICERS
4.1 Officers. The
officers of the Company shall be a President and a Secretary. The
Company may also have, at the discretion of the Board, a
Chairperson of the Board, a Vice Chairperson of the Board, a Chief
Executive Officer, one or more Vice Presidents, a Chief Financial
Officer, a Treasurer, one or more Assistant Treasurers, one or more
Assistant Secretaries, and any such other officers as may be
appointed in accordance with the provisions of these bylaws. Any
number of offices may be held by the same person.
4.2 Appointment of
Officers. The Board shall appoint the officers of the
Company, except such officers as may be appointed in accordance
with the provisions of Section 4.3 of
these bylaws.
4.3 Subordinate
Officers. The Board may appoint, or empower the Chief
Executive Officer or, in the absence of a Chief Executive Officer,
the President, to appoint, such other officers and agents as the
business of the Company may require. Each of such officers and
agents shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws or as the Board
may from time to time determine.
4.4 Removal and Resignation of
Officers. Any officer may be removed, either with or
without cause, by an affirmative vote of the majority of the Board
at any regular or special meeting of the Board or, except in the
case of an officer chosen by the Board, by any officer upon whom
such power of removal may be conferred by the Board.
Any
officer may resign at any time by giving written notice to the
Company. Any resignation shall take effect at the date of the
receipt of that notice or at any later time specified in that
notice. Unless otherwise specified in the notice of resignation,
the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if
any, of the Company under any contract to which the officer is a
party.
4.5 Vacancies in
Offices. Any vacancy occurring in any office of the
Company shall be filled by the Board or as provided in Section 4.3.
4.6 Representation of Shares of
Other Corporations. Unless otherwise directed by the
Board, the President or any other person authorized by the Board or
the President is authorized to vote, represent and exercise on
behalf of the Company all rights incident to any and all shares of
any other corporation or corporations standing in the name of the
Company. The authority granted herein may be exercised either by
such person directly or by any other person authorized to do so by
proxy or power of attorney duly executed by such person having the
authority.
4.7 Authority and Duties of
Officers. Except as otherwise provided in these
bylaws, the officers of the Company shall have such powers and
duties in the management of the Company as may be designated from
time to time by the Board and, to the extent not so provided, as
generally pertain to their respective offices, subject to the
control of the Board.
Article V — INDEMNIFICATION
5.1 Indemnification of
Directors and Officers in Third Party Proceedings.
Subject to the other provisions of this Article V, the Company shall
indemnify, to the fullest extent permitted by the DGCL, as now or
hereinafter in effect, any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”) (other than an action
by or in the right of the Company) by reason of the fact that such
person is or was a director or officer of the Company, or is or was
a director or officer of the Company serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such Proceeding if such
person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe such person’s conduct was
unlawful. The termination of any Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that such person’s conduct
was unlawful.
5.2 Indemnification of
Directors and Officers in Actions by or in the Right of the
Company. Subject to the other provisions of this
Article V, the Company
shall indemnify, to the fullest extent permitted by the DGCL, as
now or hereinafter in effect, any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to
procure a judgment in its favor by reason of the fact that such
person is or was a director or officer of the Company, or is or was
a director or officer of the Company serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good
faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Company; except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the Company unless and only to the extent that the Court
of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem
proper.
5.3 Successful
Defense. To the extent that a present or former
director or officer of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding
described in Section 5.1 or
Section 5.2, or
in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys’ fees)
actually and reasonably incurred by such person in connection
therewith.
5.4 Indemnification
of Others. Subject to the other provisions of this
Article V, the Company
shall have power to indemnify its employees and agents to the
extent not prohibited by the DGCL or other applicable law. The
Board shall have the power to delegate to such person or persons
the determination of whether employees or agents shall be
indemnified.
5.5 Advanced Payment of
Expenses. Expenses (including attorneys’ fees)
incurred by an officer or director of the Company in defending any
Proceeding shall be paid by the Company in advance of the final
disposition of such Proceeding upon receipt of a written request
therefor (together with documentation reasonably evidencing such
expenses) and an undertaking by or on behalf of the person to repay
such amounts if it shall ultimately be determined that the person
is not entitled to be indemnified under this Article V or the DGCL. Such
expenses (including attorneys’ fees) incurred by former
directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the Company deems
appropriate. The right to advancement of expenses shall not apply
to any claim for which indemnity is excluded pursuant to these
bylaws.
5.6 Limitation on
Indemnification. Subject to the requirements in
Section 5.3 and
the DGCL, the Company shall not be obligated to indemnify any
person pursuant to this Article V in connection with any
Proceeding (or any part of any Proceeding):
(i)
for which payment
has actually been made to or on behalf of such person under any
statute, insurance policy, indemnity provision, vote or otherwise,
except with respect to any excess beyond the amount
paid;
(ii)
for an accounting or disgorgement of profits pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provisions of federal, state or local statutory
law or common law, if such person is held liable therefor
(including pursuant to any settlement arrangements);
(iii)
for any
reimbursement of the Company by such person of any bonus or other
incentive-based or equity-based compensation or of any profits
realized by such person from the sale of securities of the Company,
as required in each case under the Securities Exchange Act of 1934,
as amended (including any such reimbursements that arise from an
accounting restatement of the Company pursuant to Section 304
of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the
payment to the Company of profits arising from the purchase and
sale by such person of securities in violation of Section 306
of the Sarbanes-Oxley Act), if such person is held liable therefor
(including pursuant to any settlement arrangements);
(iv)
initiated by such
person, including any Proceeding (or any part of any Proceeding)
initiated by such person against the Company or its directors,
officers, employees, agents or other indemnitees, unless
(a) the Board authorized the Proceeding (or the relevant part
of the Proceeding) prior to its initiation, (b) the Company
provides the indemnification, in its sole discretion, pursuant to
the powers vested in the Company under applicable law,
(c) otherwise required to be made under Section 5.7 or
(d) otherwise required by applicable law; or
(v) if prohibited by
applicable law.
5.7 Determination;
Claim. If a claim for indemnification or advancement
of expenses under this Article V is not paid in full
within 90 days after receipt by the Company of the written request
therefor, the claimant shall be entitled to an adjudication by a
court of competent jurisdiction of his or her entitlement to such
indemnification or advancement of expenses. The Company shall
indemnify such person against any and all expenses that are
incurred by such person in connection with any action for
indemnification or advancement of expenses from the Company under
this Article V, to the
extent such person is successful in such action, and to the extent
not prohibited by law. In any such suit, the Company shall, to the
fullest extent not prohibited by law, have the burden of proving
that the claimant is not entitled to the requested indemnification
or advancement of expenses.
5.8 Non-Exclusivity of
Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article V shall not be deemed
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
the certificate of incorporation or any statute, bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both
as to action in such person’s official capacity and as to
action in another capacity while holding such office. The Company
is specifically authorized to enter into individual contracts with
any or all of its directors, officers, employees or agents
respecting indemnification and advancement of expenses, to the
fullest extent not prohibited by the DGCL or other applicable
law.
5.9 Insurance. The
Company may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person’s status
as such, whether or not the Company would have the power to
indemnify such person against such liability under the provisions
of the DGCL.
5.10 Survival. The
rights to indemnification and advancement of expenses conferred by
this Article V shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
5.11 Effect of Repeal or
Modification. Any amendment, alteration or repeal of
this Article V shall
not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to such
amendment, alteration or repeal.
5.12 Certain
Definitions. For purposes of this Article V, references to the
“Company” shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is
or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions
of this Article V with
respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article V, references to
“other
enterprises” shall include employee benefit plans;
references to “fines” shall include any excise
taxes assessed on a person with respect to an employee benefit
plan; and references to “serving at the request of the
Company” shall include any service as a director,
officer, employee or agent of the Company which imposes duties on,
or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner
such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner “not opposed to the best interests of the
Company” as referred to in this Article V.
Article
VI — STOCK
6.1 Stock Certificates; Partly
Paid Shares. The shares of the Company shall be
represented by certificates, provided that the Board may provide by
resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate
until such certificate is surrendered to the Company. Every holder
of stock represented by certificates shall be entitled to have a
certificate signed by, or in the name of the Company by the
Chairperson of the Board or Vice-Chairperson of the Board, or the
President or a Vice-President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the
Company representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by
the Company with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue. The
Company shall not have power to issue a certificate in bearer
form.
The
Company may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to
be paid therefor. Upon the face or back of each stock certificate
issued to represent any such partly paid shares, or upon the books
and records of the Company in the case of uncertificated partly
paid shares, the total amount of the consideration to be paid
therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid shares, the Company shall
declare a dividend upon partly paid shares of the same class, but
only upon the basis of the percentage of the consideration actually
paid thereon.
6.2 Special
Designation on Certificates. If the Company is
authorized to issue more than one class of stock or more than one
series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other
special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face
or back of the certificate that the Company shall issue to
represent such class or series of stock; provided that, except as otherwise
provided in Section 202 of the DGCL, in lieu of the foregoing
requirements there may be set forth on the face or back of the
certificate that the Company shall issue to represent such class or
series of stock, a statement that the Company will furnish without
charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences
and/or rights. Within a reasonable time after the issuance or
transfer of uncertificated stock, the Company shall send to the
registered owner thereof a written notice containing the
information required to be set forth or stated on certificates
pursuant to this Section 6.2 or Sections 156,
202(a) or 218(a) of the DGCL or with respect to this Section 6.2 a statement that the Company will
furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such
preferences and/or rights. Except as otherwise expressly provided
by law, the rights and obligations of the holders of uncertificated
stock and the rights and obligations of the holders of certificates
representing stock of the same class and series shall be
identical.
6.3 Lost
Certificates. Except as provided in this Section 6.3, no
new certificates for shares shall be issued to replace a previously
issued certificate unless the latter is surrendered to the Company
and cancelled at the same time. The Company may issue a new
certificate of stock or uncertificated shares in the place of any
certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Company may require the owner of the
lost, stolen or destroyed certificate, or such owner’s legal
representative, to give the Company a bond sufficient to indemnify
it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated
shares.
6.4 Dividends. The
Board, subject to any restrictions contained in the certificate of
incorporation or applicable law, may declare and pay dividends upon
the shares of the Company’s capital stock. Dividends may be
paid in cash, in property, or in shares of the Company’s
capital stock, subject to the provisions of the certificate of
incorporation.
The
Board may set apart out of any of the funds of the Company
available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.
6.5 Stock
Transfer Agreements. The Company shall have power to
enter into and perform any agreement with any number of
stockholders of any one or more classes of stock of the Company to
restrict the transfer of shares of stock of the Company of any one
or more classes owned by such stockholders in any manner not
prohibited by the DGCL.
6.6 Registered
Stockholders. The Company:
(i) shall be
entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends and to vote
as such owner;
(ii) shall
be entitled to hold liable for calls and assessments the person
registered on its books as the owner of shares; and
(iii) shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of another person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Louisiana.
6.7 Transfers.
Transfers of record of shares of stock of the Company shall be made
only upon its books by the holders thereof, in person or by an
attorney duly authorized, and, if such stock is certificated, upon
the surrender of a certificate or certificates for a like number of
shares, properly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer.
Article VII — MANNER OF GIVING NOTICE AND
WAIVER
7.1 Notice of Stockholder
Meetings. Notice of any meeting of stockholders, if
mailed, is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at such stockholder’s
address as it appears on the Company’s records. An affidavit
of the Secretary or an Assistant Secretary of the Company or of the
transfer agent or other agent of the Company that the notice has
been given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
7.2 Notice by Electronic
Transmission. Without limiting the manner by which
notice otherwise may be given effectively to stockholders pursuant
to the DGCL, the certificate of incorporation or these bylaws, any
notice to stockholders given by the Company under any provision of
the DGCL, the certificate of incorporation or these bylaws shall be
effective if given by a form of electronic transmission consented
to by the stockholder to whom the notice is given. Any such consent
shall be revocable by the stockholder by written notice to the
Company. Any such consent shall be deemed revoked if:
(i) the Company is
unable to deliver by electronic transmission two consecutive
notices given by the Company in accordance with such consent;
and
(ii) such
inability becomes known to the Secretary or an Assistant Secretary
of the Company or to the transfer agent, or other person
responsible for the giving of notice.
However, the
inadvertent failure to treat such inability as a revocation shall
not invalidate any meeting or other action.
Any
notice given pursuant to the preceding paragraph shall be deemed
given:
(iii) if
by facsimile telecommunication, when directed to a number at which
the stockholder has consented to receive notice;
(iv) if
by electronic mail, when directed to an electronic mail address at
which the stockholder has consented to receive notice;
(v) if by a posting on
an electronic network together with separate notice to the
stockholder of such specific posting, upon the later of
(A) such posting and (B) the giving of such separate
notice; and
(vi) if
by any other form of electronic transmission, when directed to the
stockholder.
An
affidavit of the Secretary or an Assistant Secretary or of the
transfer agent or other agent of the Company that the notice has
been given by a form of electronic transmission shall, in the
absence of fraud, be prima
facie evidence of the facts stated therein.
An
“electronic
transmission” means any form of communication, not
directly involving the physical transmission of paper, that creates
a record that may be retained, retrieved, and reviewed by a
recipient thereof, and that may be directly reproduced in paper
form by such a recipient through an automated process.
Notice
by a form of electronic transmission shall not apply to
Sections 164, 296, 311, 312 or 324 of the DGCL.
7.3 Notice to Stockholders
Sharing an Address. Except as otherwise prohibited
under the DGCL, without limiting the manner by which notice
otherwise may be given effectively to stockholders, any notice to
stockholders given by the Company under the provisions of the DGCL,
the certificate of incorporation or these bylaws shall be effective
if given by a single written notice to stockholders who share an
address if consented to by the stockholders at that address to whom
such notice is given. Any such consent shall be revocable by the
stockholder by written notice to the Company. Any stockholder who
fails to object in writing to the Company, within 60 days of having
been given written notice by the Company of its intention to send
the single notice, shall be deemed to have consented to receiving
such single written notice.
7.4 Notice
to Person with Whom Communication is Unlawful.
Whenever notice is required to be given, under the DGCL, the
certificate of incorporation or these bylaws, to any person with
whom communication is unlawful, the giving of such notice to such
person shall not be required and there shall be no duty to apply to
any governmental authority or agency for a license or permit to
give such notice to such person. Any action or meeting which shall
be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as
if such notice had been duly given. In the event that the action
taken by the Company is such as to require the filing of a
certificate under the DGCL, the certificate shall state, if such is
the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom
communication is unlawful.
7.5 Waiver of
Notice. Whenever notice is required to be given under
any provision of the DGCL, the certificate of incorporation or
these bylaws, a written waiver, signed by the person entitled to
notice, or a waiver by electronic transmission by the person
entitled to notice, whether before or after the time of the event
for which notice is to be given, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of
the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of
notice or any waiver by electronic transmission unless so required
by the certificate of incorporation or these bylaws.
Article
VIII —
EXCLUSIVE FORUM FOR LITIGATION
Unless
the corporation consents in writing to the selection of an
alternative forum, the sole and exclusive forum for (i) any
derivative action or proceeding brought on behalf of the
corporation, (ii) any action asserting a claim of breach of a
fiduciary duty owed by any director or officer or other employee of
the corporation to the corporation or the corporation’s
stockholders, (iii) any action asserting a claim against the
corporation or any director or officer or other employee of the
corporation arising pursuant to any provision of the Delaware
General Corporation Law or the Certificate of Incorporation or
these Bylaws (in each case, as they may be amended from time to
time), or (iv) any action asserting a claim against the corporation
or any director or officer or other employee of the corporation
governed by the internal affairs doctrine shall be a state court
located within the State of Delaware (or, if no state court located
within the State of Delaware has jurisdiction, the federal district
court for the District of Delaware).
Article IX — GENERAL MATTERS
9.1 Fiscal Year.
The fiscal year of the Company shall be fixed by resolution of the
Board and may be changed by the Board.
9.2 Seal.
The Company may adopt a corporate seal, which shall be in such form
as may be approved from time to time by the Board. The Company may
use the corporate seal by causing it or a facsimile thereof to be
impressed or affixed or in any other manner
reproduced.
9.3 Annual Report.
The Company shall cause an annual report to be sent to the
stockholders of the Company to the extent required by applicable
law. If and so long as there are fewer than 100 holders of record
of the Company’s shares, the requirement of sending an annual
report to the stockholders of the Company is expressly waived (to
the extent permitted under applicable law).
9.4 Construction;
Definitions. Unless the context requires otherwise,
the general provisions, rules of construction, and definitions in
the DGCL shall govern the construction of these bylaws. Without
limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and
the term “person” includes both a corporation and a
natural person.
Article X — AMENDMENTS
These
bylaws may be adopted, amended or repealed by the stockholders
entitled to vote. However, the Company may, in its certificate of
incorporation, confer the power to adopt, amend or repeal bylaws
upon the directors. The fact that such power has been so conferred
upon the directors shall not divest the stockholders of the power,
nor limit their power to adopt, amend or repeal
bylaws.
A bylaw
amendment adopted by stockholders which specifies the votes that
shall be necessary for the election of directors shall not be
further amended or repealed by the Board.
Exhibit
4.2
REGISTRATION
RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is
dated _______________, 2015 by and between Super League Gaming,
Inc., a Delaware corporation (the “Company”), and each
of the signatories hereto (collectively, the
“Investor”).
RECITALS
WHEREAS, the
Company is offering (the “Offering”) for sale up to One
Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six
(1,666,666) shares of common stock, $0.001 par value, at a price of
$3.00 per share (the “Shares”), for total offering
amount of up to Five Million Dollars ($5,000,000 USD)(the
“Offering”); and
WHEREAS, to induce the Investor to invest in
the Offering, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities Act”), and
applicable state securities laws.
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Investor hereby agree as
follows:
AGREEMENT
1. DEFINITIONS.
As used
in this Agreement, the following terms shall have the following
meanings:
a. “Person”
means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental
agency.
b. “Register,”
“registered,” and “registration” refer to a
registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or
any successor rule providing for offering securities on a
continuous or delayed basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange
Commission (the “SEC”).
c. “Registrable
Securities” means the Shares issued to Investor pursuant to
the Offering.
d. “Registration
Statement” means a registration statement filed with the SEC,
pursuant to the Securities Act, that covers the Registrable
Securities.
2. REGISTRATION.
a. Piggyback
Registration Rights. Investor shall be afforded unlimited piggyback
registration rights with respect to the Securities. The Company
shall notify the Investor in writing no less than fifteen (15)
calendar days prior to the filing of any Registration Statement on
Form S-1 or S-3 of its intention to file such registration
statement with the Securities and Exchange Commission. The Investor
shall have a period of ten (10) calendar days to notify the Company
of its intention to have its Registrable Securities included in
such Registration Statement.
b. Sufficient
Number of Shares Registered. The number of shares of common stock
available under the Registration Statement filed pursuant to
Section 2(a) shall be sufficient to cover all of the Registrable
Securities that the Investor has been issued pursuant to the
Offering.
3. RELATED
OBLIGATIONS.
a. The
Company shall keep the Registration Statement effective pursuant to
Rule 415 at all times until the date on which the Investor shall
have sold all the Registrable Securities covered by such
Registration Statement (the “Registration Period”),
which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to a
material fact required to be stated therein, or necessary to make
the statements therein, in light of the circumstances in which they
were made, not misleading.
b. The
Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with
such Registration Statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep such Registration Statement effective at all
times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company
covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration Statement. In
the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the
Company’s filing a report on Form 10-K, Form 10-Q or Form 8-K
or any analogous report under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), the Company shall have
incorporated such report by reference into the Registration
Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the Exchange Act
report is filed which created the requirement for the Company to
amend or supplement the Registration Statement.
c. The
Company shall furnish to the Investor without charge, (i) at least
one (1) copy of such Registration Statement as declared effective
by the SEC and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by
reference, all exhibits and each preliminary prospectus, (ii) one
(1) copy of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii)
such other documents as such Investor may reasonably request from
time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
d. The
Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of such
jurisdictions in the United States as the Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to (w) make any change to its certificate of incorporation
or by-laws, (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section
3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify the
Investor of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of
any of the Registrable Securities for sale under the securities or
“blue sky” laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
e. As
promptly as practicable after becoming aware of such event or
development, the Company shall notify the Investor in writing of
the happening of any event as a result of which the prospectus
included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading (provided that in no event shall
such notice contain any material, nonpublic information), and
promptly prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission, and deliver
one (1) copy of such supplement or amendment to each Investor. The
Company shall also promptly notify the Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by facsimile on
the same day of such effectiveness), (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the
Company’s reasonable determination that a post-effective
amendment to a Registration Statement would be
appropriate.
f. The
Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction within the
United States of America and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the
earliest possible moment and to notify the Investor of the issuance
of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such
purpose.
g. At
the reasonable request of the Investor, the Company shall furnish
to the Investor, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such
dates as the Investor may reasonably request (i) a letter, dated
such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, if any, and (ii) an opinion, dated as
of such date, of counsel representing the Company for purposes of
such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering (if
applicable), addressed to the Investor.
h. The
Company shall hold in confidence and not make any disclosure of
information concerning the Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of
this Agreement or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such information concerning
the Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written
notice to the Investor and allow the Investor, at the
Investor’s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
i. The
Company shall use its best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to
be listed on each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any,
if the listing of such Registrable Securities is then permitted
under the rules of such exchange or to secure the inclusion for
quotation on a national securities exchange for such Registrable
Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section
3(i).
j. The
Company shall cooperate with the Investor to the extent applicable,
to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as
the case may be, as the Investor may reasonably request and
registered in such names as the Investor may request; provided,
however, delivery of such certificates shall not be made until such
Registration Statement is declared effective by the SEC and all
applicable state securities regulatory agencies.
k. The
Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of
such Registrable Securities.
l. The
Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.
m. Within
two (2) business days after a Registration Statement which covers
Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities
(with copies to the Investor) confirmation that such Registration
Statement has been declared effective by the SEC in the form
attached hereto as Exhibit 1.
n. The
Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.
4. OBLIGATIONS
OF THE INVESTOR.
The
Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f)
or the first sentence of 3(e), the Investor will immediately
discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities
until the Investor’s receipt of a copy of the supplemented or
amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required. Notwithstanding
anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended certificates for shares of Common Stock
to a transferee of the Investor in accordance with the terms of the
Offering in connection with any sale of Registrable Securities with
respect to which the Investor has entered into a contract for sale
prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(f)
or the first sentence of 3(e) and for which the Investor has not
yet settled. All selling expenses relating to the Registrable
Securities shall be borne exclusively by the Investor.
5. EXPENSES
OF REGISTRATION.
All
expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees,
printers, legal and accounting fees shall be paid by the
Company.
6. INDEMNIFICATION.
With
respect to Registrable Securities which are included in a
Registration Statement under this Agreement:
a. To
the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend the Investor, the
directors, officers, partners, employees, agents, representatives
of, and each Person, if any, who controls the Investor within the
meaning of the Securities Act or the Exchange Act (each, an
“Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky
Filings”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained
in any final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not
misleading; or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any
rule or regulation there under relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”). The Company shall
reimburse the Investor and each such controlling person promptly as
such expenses are incurred and are due and payable, for any legal
fees or disbursements or other reasonable expenses incurred by them
in connection with investigating or defending any such Claims.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (x) shall
not apply to a Claim by an Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
thereof or supplement thereto; (y) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver
or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the
Company pursuant to Section 3(e); and (z) shall not apply to
amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any
investigation
made by
or on behalf of the Indemnified Person. In connection with a
Registration Statement, the Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as
is set forth in this Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act (each an
“Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or is based upon any
Violation, in each case to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by the Investor
expressly for use in connection with such Registration Statement;
and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that
the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to the Investor as a
result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of
such Indemnified Party. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6 with respect to any prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected
and such new prospectus was delivered to the Investor prior to the
Investor’s use of the prospectus to which the Claim
relates.
b. Promptly
after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with
any other indemnifying party similarly noticed, to assume control
of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified
Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for
such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection
with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or
Indemnified Person that relates to such action or claim. The
indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written
consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action.
c. The
indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
d. The
indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. CONTRIBUTION.
To the
extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted
by law; provided, however, that: (i) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any seller of Registrable Securities who was
not guilty of fraudulent misrepresentation; and (ii) contribution
by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS
UNDER THE EXCHANGE ACT.
With a
view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act or any similar rule or
regulation of the SEC that may at any time permit the Investors to
sell securities of the Company to the public without registration
(“Rule 144”) the Company agrees, upon becoming a
publicly reporting company under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), to:
a. make
and keep public information available (from the date the Company
becomes subject to the periodic reporting requirements of the
Exchange Act), as those terms are understood and defined in Rule
144;
b. file
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the
Company’s obligations under Section 6 hereof) and the filing
of such reports and other documents is required for the applicable
provisions of Rule 144; and
c. furnish
to the Investor, so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
Investor to sell such securities pursuant to Rule 144 without
registration.
9. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the Investor. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon the Investor
and the Company. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration
also is offered to all of the parties to this
Agreement.
10. MISCELLANEOUS.
a. A
Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered
owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to
the Company, to:
|
Super
League Gaming, Inc.
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|
2912
Colorado Ave., Suite 200
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Santa
Monica, CA 90404
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|
Attn:
General Counsel
|
|
|
If to
the Investor, to:
|
___________________________________
|
|
___________________________________
|
|
___________________________________
|
|
___________________________________
|
|
___________________________________
|
|
___________________________________
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Any
party may change its address by providing written notice to the
other parties hereto at least five (5) days prior to the effective
date of such change. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the
sender’s facsimile machine containing the time, date,
recipient facsimile number and an image of the first page of such
transmission, or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii)
above, respectively.
c. Failure
of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This
Agreement shall be governed by and construed under the law of the
State of California, disregarding any principles of conflicts of
law that would otherwise provide for the application of the
substantive law of another jurisdiction. The Company and the
Investor each: (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement shall be
instituted exclusively in California, or in the United States
District Court, Los Angeles, California; (b) waives any
objection to the venue of any such suit, action or proceeding and
the right to assert that such forum is not a convenient forum; and
(c) irrevocably consents to the jurisdiction of the California
State Court, or the United States District Court, Los Angeles,
California in any such suit, action or proceeding. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
e. The
Agreement, the Subscription Agreement, and the Stockholders
Agreement constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. The
foregoing agreements supersede all prior agreements and
understandings among the parties hereto with respect to the subject
matter hereof and thereof.
f. This
Agreement shall inure to the benefit of and be binding upon the
permitted heirs, personal representatives, successors and assigns
of each of the parties hereto.
g. The
headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning
hereof.
h. This
Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of
the party so delivering this Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
j. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any
party.
k. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted heirs, personal representatives,
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by any other Person.
IN
WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written
above.
SUPER
LEAGUE GAMING, INC.,
A
Delaware Corporation
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|
By:
|
Name:
Ann Hand
|
Title:
Chief Executive Officer
|
|
INVESTOR
|
|
|
By:
________________________
|
Name:
______________________
|
Title
(if applicable):
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EXHIBIT 1
FORM OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
[TRANSFER
AGENT]
Re:
SUPER LEAGUE
GAMING, INC.
Ladies
and Gentlemen:
We are
counsel to Super League Gaming, Inc., a Delaware corporation (the
“Company”), and have represented the Company in
connection with that certain private placement of shares of common
stock (the “Offering”), pursuant to which the Company
issued to (the “Investor”) shares of its common
stock, $0.001 par value (the “Common Stock”). Pursuant
to the Offering, the Company also has entered into a Registration
Rights Agreement with the Investors (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the
Registration Rights Agreement) under the Securities Act of 1933, as
amended (the “Securities Act”). In connection with the
Company’s obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration
Statement on Form ________ (File No. 333-_____________) (the
“Registration Statement”) with the Securities and
Exchange Commission (the “SEC”) relating to the
Registrable Securities which names the Investor as a selling
stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the
SEC’s staff has advised us by telephone that the SEC has
entered an order declaring the Registration Statement effective
under the Securities Act at [ENTER
TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we
have no knowledge, after telephonic inquiry of a member of the
SEC’s staff, that any stop order suspending its effectiveness
has been issued or that any proceedings for that purpose are
pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
|
Very
truly yours,
SUPER
LEAGUE GAMING, INC.
|
cc:
Investor
Exhibit 4.3
THE
SECURITIES REPRESENTED BY THIS COMMON STOCK PURCHASE WARRANT HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY
SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
COMMON
STOCK PURCHASE WARRANT
For the
Purchase of 300,000 Shares of Common Stock, $0.001 par value
of
SUPER LEAGUE GAMING, INC.
A
Delaware Corporation
For
value received, ANN HAND
(the “Holder”), or its assigns, is entitled to, on or
before the date specified below on which this Common Stock Purchase
Warrant (the “Warrant”) expires, but not thereafter, to
subscribe for, purchase and receive the number of fully paid and
non-assessable shares of the common stock, $0.001 par value (the
“Common Stock”), of Super League Gaming, Inc., a
Delaware corporation (the “Company”) set forth above,
at a price of $3.60 per share (the “Exercise Price”),
upon presentation and surrender of this Warrant and upon payment by
wire transfer or bank check of the Exercise Price for such shares
of Common Stock to the Company at its principal office. The Warrant
will vest at the rate of 1/36th per month in arrears, subject to
acceleration of all unvested shares upon a change of control of the
Company consisting of a sale of all
or substantially all of the assets of the Company, or a merger,
sale of shares or other transaction whereby the voting shareholders
of the Company, collectively, prior to the close of such
transaction do not hold a majority voting interest in the Company
on a post-transaction basis.
1. Exercise of Warrant. This
Warrant may be exercised in whole or in part, from time to time and
expressly subject to satisfaction of vesting conditions, commencing
on the date hereof (the “Issue Date”) and expiring on
the tenth (10th) anniversary
date hereof, by presentation and surrender hereof to the Company,
with the Exercise Form annexed hereto duly executed and accompanied
by payment by wire transfer or bank check of the Exercise Price for
the number of shares specified in such form, together with all
federal and state taxes applicable upon such exercise, if any. If
this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to
purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant and
the Exercise Price at the office of the Company, in proper form for
exercise, the Holder shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise,
notwithstanding that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. If
the subscription rights represented hereby shall not be exercised
at or before 5:00 P.M., Pacific Time, on the expiration date
specified above, this Warrant shall become void and without further
force or effect, and all rights represented hereby shall cease and
expire.
2. Rights of the Holder. Prior to
exercise of this Warrant, the Holder shall not, by virtue hereof,
be entitled to any rights of a shareholder in the Company, either
at law or equity, and the rights of the Holder are limited to those
expressed in this Warrant and are not enforceable against the
Company except to the extent set forth herein.
3. Adjustment in Number of
Shares.
(A) Adjustment for
Reclassifications. In case at any time, or from time to
time, after the Issue Date the holders of the Common Stock of the
Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received,
or, on or after the record date fixed for the determination of
eligible stockholders, shall have become entitled to receive,
without payment therefore, other or additional stock or other
securities or property (including cash) by way of stock-split,
spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or
any subsidiary’s capital stock), then and in each such case
the Holder(s) of this Warrant, upon the exercise hereof as provided
in Section 1, shall be entitled to receive the amount of stock and
other securities and property which such Holder(s) would hold on
the date of such exercise if on the Issue Date they had been the
holder of record of the number of shares of Common Stock of the
Company called for on the face of this Warrant and had thereafter,
during the period from the Issue Date, to and including the date of
such exercise, retained such shares and/or all other or additional
stock and other securities and property receivable by them as
aforesaid during such period, giving effect to all adjustments
called for during such period. In the event of a declaration of a
dividend payable in shares of any equity security of a subsidiary
of the Company, then the Company may cause to be issued a warrant
to purchase shares of the subsidiary (“Springing
Warrant”) in an amount equal to such number of shares of the
subsidiary’s securities to which the Holders would have been
entitled, but conditioned upon the exercise of this Warrant as a
prerequisite to receiving the shares issuable pursuant to the
Springing Warrant.
(B) Adjustment for Reorganization,
Consolidation, Merger. In case of any reorganization of the
Company (or any other corporation the stock or other securities of
which are at the time receivable on the exercise of this Warrant)
after the Issue Date, or in case, after such date, the Company (or
any such other corporation) shall consolidate with or merge into
another corporation or convey all or substantially all of its
assets to another corporation, then and in each such case the
Holder(s) of this Warrant, upon the exercise hereof as provided in
Section 1, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be
entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this
Warrant prior to such consummation, the stock or other securities
or property to which such Holder(s) would be entitled had the
Holders exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares
of stock or other securities or property receivable upon the
exercise of this Warrant after such consummation.
4. Officer’s Certificate.
Whenever the number of shares of Common Stock issuable upon
exercise of this Warrant or the Exercise Price shall be adjusted as
required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary at its principal office, an
officer’s certificate showing the adjusted number of shares
of Common Stock or Exercise Price determined as herein provided and
setting forth in reasonable detail the facts requiring such
adjustment. Each such officer’s certificate shall be made
available at all reasonable times for inspection by the Holder(s)
and the Company shall, forthwith after each such adjustment,
deliver a copy of such certificate to the Holder(s). Such
certificate shall be conclusive as to the correctness of such
adjustment.
5. Restrictions on Transfer.
Certificates for the shares of Common Stock to be issued upon
exercise of this Warrant shall bear the following
legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY
SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
The
Holder, by acceptance hereof, agrees that, absent an effective
registration statement under the Securities Act of 1933, as amended
(the “Act”), covering the disposition of this Warrant
or the Common Stock issued or issuable upon exercise hereof, such
Holder(s) will not sell or transfer any or all of this Warrant or
such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the
effect that such sale or transfer will be exempt from the
registration and prospectus delivery requirements of the Act. The
Holder agrees that the certificates evidencing the Warrant and
Common Stock which will be delivered to the Holder by the Company
shall bear substantially the following legend: The Holder of this
Warrant, at the time all or a portion of such Warrant is exercised,
agrees to make such written representations to the Company as
counsel for the Company may reasonably request, in order that the
Company may be reasonably satisfied that such exercise of
the Warrant and
consequent issuance of Common Shares will not violate the
registration and prospectus delivery requirements of the Act, or
other applicable state securities laws.
6. Loss or Mutilation. Upon
receipt by the Company of evidence satisfactory to it (in the
exercise of reasonable discretion) of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it
(in the exercise of reasonable discretion), and (in the case of
mutilation) upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant of like
tenor.
7. Reservation of Common Stock.
The Company shall at all times reserve and keep available for issue
upon the exercise of the Warrants such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants.
8. Notices. All notices and other
communications from the Company to the Holder of this Warrant shall
be mailed by first class registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the
Holder.
9. Change; Waiver. Neither this
Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver,
discharge or termination is sought.
10.
Law Governing. This Warrant
shall be construed and enforced in accordance with and governed by
the laws of Delaware.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer on June 16, 2017.
|
SUPER LEAGUE GAMING,
INC.
By: David
Steigelfest
David Steigelfest
Co-Founder & CTO
|
NOTICE
OF EXERCISE
TO:
|
SUPER LEAGUE
GAMING, INC.
|
DATE:
|
|
The
undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase ___________________ shares of the Common
Stock of the Company called for thereby, and hereby makes payment
by bank check or wire transfer in the amount of $______________ (at
the rate of $3.60 per share of the Common Stock) in payment of the
Exercise Price pursuant thereto. Please issue the shares of the
Common Stock as to which this Warrant is exercised to:
______________________________
______________________________
______________________________
and if
said number of Warrants shall not be all the Warrants evidenced by
the Common Stock Purchase Warrant surrendered in connection with
this exercise, then the Company shall issue a new Warrant
Certificate for the balance remaining of such Warrants to
_____________________ at the address stated
above.
|
By:
__________________________________
Print Name:
____________________________
|
Exhibit
4.4
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
SUPER
LEAGUE GAMING, INC.
9%
SECURED CONVERTIBLE PROMISSORY NOTE
$
__________________
Issuance Date: ________________________
This 9%
Secured Convertible Promissory Note (the "Note")
is issued by SUPER LEAGUE GAMING,
INC., a Delaware corporation (the "Company"),
in favor of ________________________________ (the
"Holder")
pursuant to the terms set forth herein, and in the Note Purchase
Agreement attached herewith between the Company, the Holder and the
other parties named as “Purchasers” therein (the
“Note
Purchase Agreement”).
FOR VALUE RECEIVED, the Company hereby
promises to pay to the Holder the principal amount set forth
hereinabove (the “Loan”),
together with accrued but unpaid interest, on the Maturity Date in
accordance with the provisions hereof, expressly subject to the
conversion provisions set forth in Section
hereinbelow.
In
addition to the terms defined elsewhere in this Note, the following
terms shall have the meanings ascribed below:
(a)
“Automatic
Conversion Rate” means all outstanding principal and
accrued interest under the Notes shall be automatically converted
into shares of common stock at the lesser of (i) $3.60 per share or
(ii) a fifteen percent (15.0%) discount to the initial public
offering price per share (”IPO”)
of the Company
(b)
"Bankruptcy
Event" means any of the following events: (i) the Company
commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction relating to the Company; (ii) there is commenced
against the Company any such case or proceeding that is not
dismissed within 60 calendar days after commencement; (iii) the
Company is adjudicated insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered;
(iv) the Company suffers any appointment of any custodian or the
like for it or any substantial part of its property that is
not
discharged or
stayed within 60 calendar days; (v) the Company makes a general
assignment for the benefit of creditors.
(c)
"Business
Day" means any day except Saturday, Sunday, and any day
which shall be a federal legal holiday or a day on which banking
institutions in the State of Delaware are authorized or required by
law or other governmental action to close.
(d)
"Event
of Default" has the meaning ascribed thereto in Section
4(a).
(e)
“IPO”
shall mean the initial public offering of the Company’s
common stock on a national securities exchange.
(f)
"Maturity
Date" means the earlier of (i) the closing of the IPO or
(ii) April 30, 2019.
(g)
"Person"
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
2.
Principal and Interest; Security
Interest.
(a)
Principal. Unless
converted pursuant to Section 3 hereinbelow, all outstanding
principal shall be due and payable on the Maturity Date in United
States Dollars.
(b)
Interest. The Notes
shall bear simple interest at the rate of nine percent (9.0%) per
annum ("Interest")
and shall accrue until the earlier of (i) the closing of the IPO,
(ii) or (ii) the Maturity Date. All accrued interest on the Notes
shall be converted at the Conversion Rate into common stock issued
in the IPO. The default interest rate shall be fifteen percent
(15.0%) per annum.
(c)
Application of
Payments. Except as otherwise expressly provided herein, each
payment under this Note shall be applied (i) first to the repayment
of any reasonable sums incurred by the Holder for the payment of
any expenses incurred in enforcing the terms of this Note, (ii)
then to the payment of all accrued but unpaid Interest, and (iii)
then to the reduction of the principal amount.
(d)
Security Interest.
This Note is secured by a security interest in all of the assets,
tangible and intangible (collectively, the “Assets”),
of the Company, as specifically detailed in Exhibit 1 hereto and in the
Security Agreement (defined below). The security interest is being
granted to the Holder pursuant to the terms of the security
agreement (“Security
Agreement”) between the Holder, the Company and other
purchasers of Notes. As of the closing of this offering. there
shall be no liens or encumbrances of any kind on the Assets.
Lender’s security interest in the Assets shall also be
evidenced by a financing statement on Form UCC-1 to filed with the
California secretary of state office. In addition, Holder, and
other purchasers of the Notes, shall enter into an intercreditor
and collateral agent agreement (“Intercreditor
Agreement”) which shall define the rights
and
remedies of Holder
and other parties to the Intercreditor Agreement should the Company
default hereunder. The Holder and the other parties to the
Intercreditor Agreement shall have a pari passu interest in the
Assets.
(a)
Automatic
Conversion. At the closing of the IPO, all of the outstanding
principal and accrued but unpaid Interest hereunder shall be
automatically converted into the common stock sold in the IPO at
the Automatic Conversion Rate (the “Automatic
Conversion”).
(a)
An "Event of
Default" shall mean any one of the following events:
(i)
any default in the
payment of the principal of, Interest on or other charges in
respect of this Note, as and when the same shall become due and
payable (whether on the Maturity Date or by acceleration or
otherwise);
(ii)
the occurrence of a
Bankruptcy Event; or
(iii)
the Company shall
commit any material breach or default of any material provision of
this Note, which is not cured within twenty (20) Business Days
following written notice to the Company from the Holder specifying
in reasonable detail such breach or default.
(b)
Upon and during the
continuance of an Event of Default, the default interest rate of
fifteen percent (15.0%) per annum shall apply.
4.
Acceleration Upon Event of Default or
Certain Other Events.
(a)
Upon the occurrence
of (i) an Event of Default as specified in Section 3 above,
or (ii) a Change in
Control (as defined below), all outstanding principal and accrued
interest on the Note shall, at the option of Holder, evidenced by a
written notice to Company, become immediately due and payable,
without further presentment, notice or demand for payment. For
purposes of this Note, a “Change in Control” shall mean
the occurrence of any of the following events: (A) a sale of all or
substantially all of the assets of the Company; (B) a liquidation
or dissolution of the Company; (C) a merger or consolidation in
which the Company is not the surviving corporation, unless the
stockholders of the Company immediately prior to such
consolidation, merger or reorganization, own more than 50% of the
Company’s voting power immediately after such merger or
consolidation; or (D) any consolidation or merger of the Company,
or any other corporate reorganization, in which the stockholders of
the Company immediately prior to such consolidation, merger or
reorganization, own less than 50% of the Company’s voting
power immediately after such consolidation, merger or
reorganization.
(a)
Security Interests.
Without the prior written consent of Holder, under no circumstance
shall the Company grant a security interest in any of the Company's
assets (other than capital leases and purchase money security
interests incurred in the ordinary course of business), including,
without limitation, all personal or other property, intellectual
property, patents, or any other property owned by the Company,
unless and until this Note has been repaid in full or converted
pursuant to Section 3 hereinabove; provided, however, it is
expressly understood and agreed by Holder that a pari passu
security interest is being granted to other investors in the Notes
relating to the Assets.
(b)
Distributions. The
Company shall not, without the prior written consent of the Holder,
make any distributions to its stockholders while amounts remain
payable to Holder pursuant to this Note.
Any
notice, demand or request which may be permitted, required or
desired to be given in connection with herewith shall be given in
writing and directed to the parties hereto as follows:
If to
the Company:
If to
the Holder:
|
Super
League Gaming, Inc.
2906
Colorado Ave.
Santa
Monica, CA 90404
Attention: General
Counsel
To
Holder’s address listed in Exhibit A to the Note Purchase
Agreement
|
Notices
shall be deemed properly delivered and received when delivered to
the primary notice party (without regard to the copied parties) (i)
if personally delivered, upon receipt or refusal to accept
delivery, (ii) if sent via facsimile, upon mechanical confirmation
of successful transmission thereof generated by the sending
telecopy machine, (iii) if sent by a commercial overnight courier
for delivery on the next business day, on the first business day
after deposit with such courier service (or the third business day
if sent to an address not in the United States), or (iv) if sent by
registered or certified mail, five (5) Business Days after deposit
thereof in the U.S. mail. Any party may change its address for
delivery of notices by properly notifying the others pursuant to
this Section 6.
(a)
Amendments;
Waivers. No provision of this Note may be waived or amended except
in a written instrument signed, in the case of an amendment, by the
Company and the Holder or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement
of this Note shall be deemed to be a
continuing waiver
in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right.
(b)
Construction. The
headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
(c)
Successors and
Assigns. This Note shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns. Neither
the Company nor the Holder may assign this Note or any rights or
obligations hereunder without the prior written consent of the
other party; provided, that notwithstanding the foregoing, the
Holder may assign this Note, and the related securities, to the
following permitted transferees: if Holder is a partnership,
limited liability company, corporation or other entity to (i) a
partner or former partner of such partnership, a member or former
member of such limited liability company or a shareholder of such
corporation, (ii) the estate of any such partner, member or
shareholder, or (iii) any other Affiliate (as defined below) of
such Holder. As used herein, “Affiliate” means any
person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a person as such terms are used in and construed under
Rule 144 under the Securities Act; and with respect to a Holder,
any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Holder
will be deemed to be an Affiliate of such Holder. Any instrument
purporting to make an assignment in violation of this Section 8(c)
shall be void.
(d)
Severability. If
any provision of this Note is held to be invalid or unenforceable
in any respect, the validity and enforceability of the remaining
terms and provisions of this Note shall not in any way be affected
or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision that is a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute
provision in this Note.
(e)
Replacement of the
Note. If any certificate or instrument evidencing this Note is
mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.
The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Note.
(f)
Usury. To the
extent it may lawfully do so, the Company hereby agrees not to
insist upon or plead or in any manner whatsoever claim, and will
resist any and all
efforts
to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought
by the Holder in order to enforce any right or remedy under this
Note. Notwithstanding any provision to the contrary contained in
this Note, it is expressly agreed and provided that the total
liability of the Company under this Note for payments in the nature
of interest shall not exceed the maximum lawful rate authorized
under applicable law (the "Maximum
Rate"), and, without
limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to
pay under this Note exceed such Maximum Rate. It is agreed that if
the maximum contract rate of interest allowed by law and applicable
to this Note is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate
of interest applicable to this Note from the effective date
forward, unless such application is precluded by applicable
law.
(g)
Governing Law. All
questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and
enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law
thereof.
IN
WITNESS WHEREOF, the Company has caused this Note to be executed by
a duly authorized officer as of the date set forth
above.
SUPER LEAGUE GAMING, INC.
By:____________________________
Ann
Hand
Chief
Executive Officer & President
EXHIBIT 1
LIST
OF COLLATERAL
All
cash and cash equivalents, bank and Deposit accounts (including any
control account, disbursement account and any other bank accounts),
commercial tort claims, insurance claims, rights and policies,
letter of credit rights, investment property, Accounts, Goods,
Fixtures, Securities, Documents of Title, Inventory, General
Intangibles, Equipment and Records now owned or acquired at any
time hereafter by Debtor, wherever located or situated, and the
products and proceeds (including condemnation proceeds) of the
foregoing.
The
capitalized terms used hereinabove shall have the meanings set
forth below. All other terms used herein are used as defined in the
UCC.
"Accounts" means
any and all rights to payment for goods, including Inventory, sold
or leased or to be sold or leased or for services rendered or to be
rendered, whether or not evidenced by an instrument or chattel
paper, and no matter how evidenced, including such rights in the
form of accounts (as that term is defined in the UCC), accounts
receivable, exchange Receivables, contract rights, Instruments,
Documents, Chattel Paper, purchase orders, notes drafts,
acceptances and all other forms of obligations and receivables,
including all right, title and interest of the Debtor in the
Inventory which gave rise to any of the foregoing, including the
right of stoppage in transit and all returned, rejected, rerouted
or repossessed Inventory.
"Chattel paper"
means "chattel paper" as that term is defined in the
UCC.
"Deposit Account"
means a demand, time, savings, passbook or like account maintained
with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a certificate of
deposit.
"Documents" means
"documents" as that term is defined in the UCC, "Documents of
Title" means "documents of title" as defined in the
UCC.
"Equipment" means
"equipment" as defined in the UCC, and also all motor vehicles,
rolling stock,
machinery, office
equipment, plant equipment, tools, dies, molds, store fixtures,
furniture, and other goods, property, and assets which are used
and/or were purchased for use in the operation of furtherance of
the Debtor's business, and any and all accessions, additions
thereto, and substitutions therefore.
"Fixtures" means
"fixtures" as that term is defined in the UCC.
"General
Intangibles" means "general intangibles" as defined in the UCC and
also all books and records; customer lists; goodwill; causes of
action; judgments; literary rights; rights to performance;
licenses, permits, certificates of convenience and necessity, and
similar rights granted by any governmental authority; copyrights,
trademarks, patents, patent applications, proprietary processes,
blueprints, drawings, designs, diagrams, plans, reports, charts,
catalogs, manuals, literature, technical data, proposals, cost
estimates, source codes, object codes, computer
programs, computer
program flow diagrams, and tangible property embodying or
incorporating any of the foregoing, and all other reproductions on
paper, or otherwise, of any and all the design, development,
manufacture, sale, marketing, lease or use of any or all goods
produced or sold or leased or credit extended, or service performed
by the Debtor, whether intended for an individual customer or the
general business of Debtor.
"Goods"
means "goods" as that term is defined in the UCC. "Instruments"
means "instruments" as that term is defined in the
UCC.
"Inventory" means
any and all raw materials, supplies, work in process, finished
goods, goods returned by customers, and inventory (as that term is
defined in the UCC), including goods in transit, wherever located,
which are-held for sale (but excluding goods subject to leases and
goods not manufactured by the Debtor or an affiliate and which were
purchased for resale directly or indirectly by the Debtor from a
non-affiliate pursuant to a then existing agreement or arrangement
with a non-affiliate customer), including the right of stoppage in
transit, or goods which are or might be used in connection with the
manufacturing or packing of such goods, and all such goods, the
sale or disposition of which has given rise to an Account, which
are returned to and/or repossessed and/or stopped in transit by the
Debtor or by the Secured Party, or at any time hereafter in the
possession or under the control of the Debtor or the Secured Party
or any agent or bailee of the Debtor or the Secured Party, and any
documents of title representing any of the above.
"Records" means all
books, records, customer lists, ledger cards, computer programs,
computer tapes, disks, printouts and records and other property and
general intangibles at any time evidencing or relating to any of
the types (or items) of property covered by this financing
statement, whether now in existence or hereafter
created.
"Securities" means
"securities" as that term is defined in the UCC.
"UCC"
means the Uniform Commercial Code as in effect in the State of
California.
Exhibit 4.4
THE
SECURITIES REPRESENTED BY THIS COMMON STOCK PURCHASE WARRANT HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY
SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
CALLABLE
COMMON STOCK PURCHASE WARRANT
For the
purchase of the number of shares of
common
stock determined by the formula
set
forth in the paragraph immediately below, $0.001 par value
of
SUPER LEAGUE GAMING, INC.
A
Delaware Corporation
For value received,
__________________________________________ (the “Holder”),
or its assigns, is entitled to, on or before the date specified
below on which this Callable Common Stock Purchase Warrant (the
“Warrant”)
expires, but not thereafter, to subscribe for, purchase and receive
the number of fully paid and non-assessable shares of the common
stock, $0.001 par value
(the “Common
Stock”), of Super League Gaming, Inc., a Delaware
corporation (the “Company”)
set forth above, at an exercise price (“Exercise
Price”) equal to the lesser of (a)
$3.60
per share, or (b) a fifteen percent (15.0%) discount to the price
per share of the Company’s initial public offering
(“IPO”).
For the avoidance of doubt, the actual number of shares of common
stock shall be set upon the final determination of the IPO price
per share.
1.
Exercise of Warrant. This
Warrant is being issued as of the date of investment in the
Company’s 9% Secured Convertible Promissory Notes (the
“Issue
Date”). The Warrant may be exercised in whole or in
part, from time to time, commencing on the close of the IPO. The
Warrant shall expire on the fifth (5th) anniversary of the Issue
Date, by presentation and surrender hereof to the Company, with the
Exercise Form annexed hereto duly executed and accompanied by
payment by wire transfer or bank check of the Exercise Price for
the number of shares specified in such form, together with all
federal and state taxes applicable upon such exercise, if any. If
this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to
purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant and the Exercise Price at
the office of the Company, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that
certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. If the subscription
rights represented hereby shall not be exercised at or before 5:00
P.M., Pacific Time, on the expiration date specified above, this
Warrant shall become void and
without further force or effect, and all rights represented hereby
shall cease and expire.
2.
Call Feature. The Callable
Warrant may be called at the written election of the Company at any
time following the close of the IPO. Holders shall have 30 calendar
days to exercise the Callable Warrant.
3.
Rights of the Holder. Prior to
exercise of this Warrant, the Holder shall not, by virtue hereof,
be entitled to any rights of a shareholder in the Company, either
at law or equity, and the rights of the Holder are limited to those
expressed in this Warrant and are not enforceable against the
Company except to the extent set forth herein.
4.
Adjustment in Number of
Shares.
(A) Adjustment
for Reclassifications. In case at any time, or from time to time,
after the Issue Date the holders of the Common Stock of the Company
(or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive, without
payment therefore, other or additional stock or other securities or
property (including cash) by way of stock-split, spinoff,
reclassification, combination of shares or similar corporate
rearrangement (exclusive of any stock dividend of its or any
subsidiary’s capital stock), then and in each such case the
Holder(s) of this Warrant, upon the exercise hereof as provided in
Section 1, shall be entitled to receive the amount of stock and
other securities and property which such Holder(s) would hold on
the date of such exercise if on the Issue Date they had been the
holder of record of the number of shares of Common Stock of the
Company called for on the face of this Warrant and had thereafter,
during the period from the Issue Date, to and including the date of
such exercise, retained such shares and/or all other or additional
stock and other securities and property receivable by them as
aforesaid during such period, giving effect to all adjustments
called for during such period. In the event of a declaration of a
dividend payable in shares of any equity security of a subsidiary
of the Company, then the Company may cause to be issued a warrant
to purchase shares of the subsidiary (“Springing
Warrant”) in an amount equal to such number of shares of the
subsidiary’s securities to which the Holders would have been
entitled, but conditioned upon the exercise of this Warrant as a
prerequisite to receiving the shares issuable pursuant to the
Springing Warrant.
(B) Adjustment
for Reorganization, Consolidation, Merger. In case of any
reorganization of the Company (or any other corporation the stock
or other securities of which are at the time receivable on the
exercise of this Warrant) after the Issue Date, or in case, after
such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in
each such case the Holder(s) of this Warrant, upon the exercise
hereof as provided in Section 1, at any time after the consummation
of such reorganization, consolidation, merger or conveyance, shall
be entitled to receive, in lieu of the stock or other securities
and property receivable upon the exercise of this Warrant prior to
such consummation, the stock or other securities or property to
which such Holder(s) would be entitled had the Holders exercised
this Warrant immediately prior thereto, all subject to further
adjustment as provided herein; in each such case, the terms of
this Warrant shall be
applicable to the shares of stock or other securities or property
receivable upon the exercise of this Warrant after such
consummation.
5.
Officer’s Certificate.
Whenever the number of shares of Common Stock issuable upon
exercise of this Warrant or the Exercise Price shall be adjusted as
required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary at its principal office, an
officer’s certificate showing the adjusted number of shares
of Common Stock or Exercise Price determined as herein provided and
setting forth in reasonable detail the facts requiring such
adjustment. Each such officer’s certificate shall be made
available at all reasonable times for inspection by the Holder(s)
and the Company shall, forthwith after each such adjustment,
deliver a copy of such certificate to the Holder(s). Such
certificate shall be conclusive as to the correctness of such
adjustment.
6.
Restrictions on
Transfer. Certificates for the shares of Common Stock to be
issued upon exercise of this Warrant shall bear the following
legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY
SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
The
Holder, by acceptance hereof, agrees that, absent an effective
registration statement under the Securities Act of 1933, as amended
(the “Act”), covering the disposition of this Warrant
or the Common Stock issued or issuable upon exercise hereof, such
Holder(s) will not sell or transfer any or all of this Warrant or
such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the
effect that such sale or transfer will be exempt from the
registration and prospectus delivery requirements of the Act. The
Holder agrees that the certificates evidencing the Warrant and
Common Stock which will be delivered to the Holder by the Company
shall bear substantially the following legend: The Holder of this
Warrant, at the time all or a portion of such Warrant is exercised,
agrees to make such written representations to the Company as
counsel for the Company may reasonably request, in order that the
Company may be reasonably satisfied that such exercise of the
Warrant and consequent issuance of Common Shares will not violate
the registration and prospectus delivery requirements of the Act,
or other applicable state securities laws.
7.
Loss or Mutilation. Upon
receipt by the Company of evidence satisfactory to it (in the
exercise of reasonable discretion) of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it
(in the exercise of reasonable discretion), and (in the case of
mutilation) upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant of like
tenor.
8.
Reservation of Common
Stock. The Company shall at all times reserve and
keep available for issue
upon the exercise of the Warrants such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants.
9.
Notices. All notices and other
communications from the Company to the Holder of this Warrant shall
be mailed by first class registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the
Holder.
10.
Change; Waiver. Neither this
Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver,
discharge or termination is sought.
11.
Law Governing. This Warrant
shall be construed and enforced in accordance with and governed by
the laws of Delaware.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer on
______________________________.
|
SUPER LEAGUE
GAMING, INC.
By: Ann
Hand
Chief Executive
Officer & President
|
NOTICE
OF EXERCISE
TO:
SUPER LEAGUE GAMING, INC.
|
DATE:
________________
|
The
undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase
___________________________ shares of
the Common Stock of the Company called for thereby, and hereby
makes payment by bank check or wire transfer in the amount of
$_____________________ (at an exercise price equal to the lesser of
(a) $3.60 per share, or (b) a fifteen percent (15.0%) discount to
the price per share of the Company’s initial public offering
of common stock. Please issue the shares of the Common Stock as to
which this Warrant is exercised to:
_______________________________
_______________________________
_______________________________
and if
said number of Warrants shall not be all the Warrants evidenced by
the Common Stock Purchase Warrant surrendered in connection with
this exercise, then the Company shall issue a new Warrant
Certificate for the balance remaining of such Warrants in the name
of _____________________ at the
address stated above.
Exhibit
10.1
SUPER LEAGUE GAMING, INC.
2014 STOCK OPTION AND INCENTIVE PLAN
As adopted by the Board of Directors on October 13,
2014
As amended and approved by the Board of Directors and stockholders
effective May 26, 2015
As amended and approved by the Board of Directors and stockholders
effective May 26, 2016
As
amended and approved by the Board of Directors on June 16, 2017 and
stockholders on July 10, 2017
As
amended and approved by the Board of Directors and stockholders on
October 31, 2018
1. Purpose
The
purpose of this 2014 Stock Option and Incentive Plan
(“Plan”) is to further the interests of Super League
Gaming, Inc., a Delaware corporation (“Company”) by
providing selected employees, directors, independent contractors
and advisors, upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its
business, the opportunity to participate in a stock option and
incentive plan designed to reward them for their services and to
encourage them to continue in the employ or service of the Company.
This Plan provides for both the direct award and sale of Shares and
for the grant of Options to purchase Shares. Options granted under
this Plan may include Non-Qualified Options as well as Incentive
Options intended to qualify under Section 422 of the
Code.
For all
purposes of this Plan, the following definitions shall
apply:
2.1. “Board”
shall mean the Board of Directors of the Company, as constituted
from time to time.
2.2. “Change
of Control” shall mean (i) the sale of all or
substantially all of the assets of the Company, or (ii) any merger,
consolidation or acquisition of the Company with, by or into
another corporation, entity or third party, the result of which is
a change in the ownership of more than fifty percent (50%) of the
voting capital stock of the Company.
2.3. “Code”
shall mean the Internal Revenue Code of 1986, as amended, together
with the regulations promulgated thereunder.
2.4. “Committee”
shall mean the committee designated by the Board, which is
authorized to administer this Plan in accordance with
Section 3 hereof. The Committee
shall be composed solely of two or more Non-Employee Directors and
otherwise have such membership composition which enables the
Options or other rights granted under this Plan to qualify for
exemption under Rule 16b-3 with respect to persons who are subject
to Section 16 of the Exchange Act. Each member of the Committee
shall serve at the pleasure of the Board. If no Committee is
designated by the Board, the Board collectively shall act as the
Committee and administer this Plan.
2.5. “Common
Stock” shall mean the Company’s common stock,
$0.001 par value.
2.6. “Company”
shall mean Super League Gaming, Inc., a Delaware
corporation.
2.7. “Employee”
shall mean any individual who is a full-time employee of the
Company or a Subsidiary.
2.8. “Exchange
Act” shall mean the Securities Exchange Act of 1934,
as amended, or any successor rule.
2.9. “Exercise
Price” shall mean the amount for which one Share may
be purchased upon exercise of an Option, as specified by the
Committee in the Option Grant.
2.10. “Fair
Market Value” shall mean (i) the closing price of
a Share on the principal exchange (including the Nasdaq Stock
Market or a successor quotation system) on which Common Stock is
trading or quoted, on the date on which the Fair Market Value is
determined (if Fair Market Value is determined on a date which the
principal exchange is closed, Fair Market Value shall be determined
on the last immediately preceding trading day), or (ii) if
Common Stock is not traded on an exchange or quoted on the Nasdaq
Stock Market or a successor quotation system, the fair market value
of a Share shall equal the immediately preceding private placement
price per share being utilized. Notwithstanding any provision of
this Plan to the contrary, no determination made with respect to
the Fair Market Value of a Share subject to an Incentive Option
shall be inconsistent with Section 422 of the
Code.
2.11. “Immediate
Family” shall mean, with respect to a particular
Optionee, the Optionee’s spouse, children or grandchildren
(including adopted and step children and
grandchildren).
2.12. “Incentive
Option” shall mean an option granted under this Plan
which is designated and qualified as an incentive stock option
within the meaning of Section 422 of the Code. Neither the
Committee, the Board nor the Company shall have any liability if an
Option or any part thereof that is intended to be an Incentive
Option does not qualify as such. An Option or any part thereof that
does not qualify as an Incentive Option is referred to herein as a
Non-Qualified Option.
2.13. “Non-Employee
Director” shall have the meaning set forth in Rule
16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Exchange Act.
2.14. “Non-Qualified
Option” shall mean an option (or warrant for any
person other than an Employee or Non-Employee Director) granted
under this Plan which is designated as a non-qualified stock option
and which does not qualify as an incentive stock option within the
meaning of Section 422 of the Code.
2.15. “Offeree”
shall mean any person who has been offered the right to acquire
Shares under this Plan (other than upon exercise of an
Option).
2.16. “Option”
shall mean an Incentive Option or a Non-Qualified
Option.
2.17. “Option
Grant” shall mean the written instrument which
contains the terms, conditions and restrictions pertaining to each
Option granted to an Optionee.
2.18. “Optionee”
shall mean any person who has been granted an Option under this
Plan.
2.19. “Permanent
Disability” shall mean a permanent and total
disability within the meaning of Section 22(e)(3) of the
Code.
2.20. “Plan”
shall mean this Super League Gaming, Inc. 2014 Stock Option and
Incentive Plan, as amended from time to time.
2.21. “Purchase
Price” shall mean the consideration for which one
Share may be acquired under this Plan (other than upon exercise of
an Option), as specified by the Committee in the Shane
Award.
2.22. “Relationship”
shall mean any individual who is (i) an Employee of the
Company or a Subsidiary, (ii) a member or a member designee of
the Board or of the board of directors of a Subsidiary, or
(iii) an independent contractor or advisor who performs
services for the Company or a Subsidiary.
2.23. “Share”
shall mean one share of Common Stock, as adjusted in accordance
with Section 9 (if
applicable).
2.24. “Share
Award” shall mean the written instrument which
contains the terms, conditions and restrictions pertaining to each
award or sale of Shares to an Offeree.
2.25. “Subsidiary”
shall mean any company or entity of which the Company owns,
directly or indirectly, the majority of the combined voting power
of all classes of stock.
2.26. “Termination
for Cause” shall mean the termination of the
employment or service of an individual with the Company, whether
voluntary or involuntary, that is determined by the Committee, in
its sole discretion, to have resulted from (i) the
unauthorized use or disclosure of the confidential information or
trade secrets of the Company, which use or disclosure causes harm
to the Company, (ii) the conviction of, or plea of
“guilty” or “no contest” to, a felony under
the laws of the United States or any state thereof,
(iii) willful misconduct, or (iv) continued failure to
perform assigned duties after receiving written notification from
the Board. The foregoing, however, shall not be deemed to be an
exclusive list of all acts or omissions that the Committee may
consider as grounds for Termination for Cause.
3.1. Committee Procedures. The Board shall
designate one of the members of the Committee as chairman. The
Committee may hold meetings at such times and places as it shall
determine. The acts of a majority of the Committee members present
at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts
of the Committee.
3.2. Committee
Responsibilities. Subject to the provisions of this Plan,
the Committee shall have full authority and discretion to take the
following actions:
3.2.1. To
interpret this Plan and to apply its provisions;
3.2.2. To
adopt, amend or rescind rules, procedures and forms relating to
this Plan;
3.2.3. To
authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of this
Plan;
3.2.4. To
determine when Shares are to be awarded or offered for sale and
when Options are to be granted under this Plan;
3.2.5. To
select the Offerees and Optionees;
3.2.6. To
determine the number of Shares to be offered to each Offeree or to
be made subject to each Option;
3.2.7. To
prescribe the terms, restrictions and conditions of each award or
sale of Shares, including, without limitation, the Purchase Price
and the vesting of the award (including accelerating the vesting of
awards);
3.2.8. To
prescribe the terms, restrictions and conditions of each Option,
including, without limitation, the Exercise Price and the vesting
or duration of the Option (including accelerating the vesting of
the Option), and to determine whether such Option is to be
classified as an Incentive Option or as a Non-Qualified
Option;
3.2.9. To
amend any outstanding Share Award or Option Grant, subject to the
limitations of this Plan;
3.2.10. To
correct any defect, supply any omission, or reconcile any
inconsistency in this Plan or any Option or other right granted
under this Plan; and
3.2.11. To
take any other actions or make any other determinations or
interpretations deemed necessary or advisable for the
administration of this Plan.
3.3. Indemnification.
No member of the Committee shall be liable for any action that he
has taken or has failed to take in good faith with respect to this
Plan, any Option, or any right to acquire Shares under this Plan.
Service on the Committee shall constitute service as a director of
the Company so that a member of the Committee shall be entitled to
indemnification and reimbursement as a director of the Company to
the full extent allowable under its governing instruments and
applicable law.
3.4. Other.
Subject to the requirements of applicable law, the Committee may
designate persons other than members of the Committee to carry out
its responsibilities and may prescribe such conditions and
limitations as it may deem appropriate, except that the Committee
may not delegate its authority with regard to the selection for
participation of or the granting of Options or other rights under
this Plan to persons subject to Section 16 of the Exchange Act. All
decisions, interpretations and other actions of the Committee shall
be final and binding on all Offerees, all Optionees, and all
persons deriving their rights from an Offeree or
Optionee.
4. Eligibility
4.1. General Rule. Non-Qualified Options may
be granted to any individual who has a Relationship with the
Company or a Subsidiary. Incentive Options may be granted to any
Employee of the Company or a Subsidiary.
4.2. Non-Employee Directors. Notwithstanding
any provision of this Plan to the contrary, Non-Employee Directors
shall only be eligible for the grant of Non-Qualified Options as
described in this Section 4.2.
4.3. Ten-Percent
Stockholders. An Employee who owns more than 10% of the
total combined voting power of all classes of outstanding stock of
the Company or any of its Subsidiaries shall not be eligible for
the grant of an Incentive Option unless such grant satisfies the
requirements of Section 422(c)(6) of the Code.
4.4. Attribution
Rules. For purposes of Section 4.3 above, in determining
stock ownership, an Employee shall be deemed to own the stock
owned, directly or indirectly, by or for his brothers, sisters,
spouse, ancestors and lineal descendants. Stock owned, directly or
indirectly, by or for a company, corporation, partnership, estate
or trust shall be deemed to be owned proportionately by or for its
members, shareholders, partners or beneficiaries.
4.5. Outstanding
Stock. For purposes of Section 4.3 above, “outstanding
stock” shall include all stock actually issued and
outstanding immediately after the grant. “Outstanding
stock” shall not include shares authorized for issuance under
outstanding options or similar rights held by the Employee or by
any other person.
5. Stock Subject to this
Plan
5.1. Basic Limitation. Shares offered under
this Plan shall be authorized but unissued shares, or treasury
shares. Five Million Five Hundred Thousand (5,500,000) shares have
been reserved for issuance under this Plan (upon exercise of
Options or other rights to acquire Shares). The aggregate number of
Shares which may be issued under this Plan shall at all times be
subject to adjustment pursuant to Section 9. The number of Shares which are subject to
Options or other rights outstanding at any time under this Plan
shall not exceed the number of Shares which then remain available
for issuance under this Plan. The Company, during the term of this
Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of this Plan.
5.2. Additional
Shares. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise
terminated, the Shares allocable to the unexercised portion of such
Option or other right shall again be available for the purposes of
this Plan. If Shares are forfeited before any dividends have been
paid with respect to the Shares, then such Shares shall again be
available for award or sale under this Plan.
6. Terms
and Conditions of Options
6.1. Option Grant. Each grant of an Option
under this Plan shall be evidenced by an Option Grant approved by
the Committee. Such Option shall be subject to all applicable terms
and conditions of this Plan and may be subject to any other terms
and conditions which are not inconsistent with this Plan and which
the Committee deems appropriate for inclusion in an Option Grant.
The provisions of the various Option Grants entered into under this
Plan need not be identical. In no event shall the aggregate fair
market value (determined as of the time the Incentive Option is
granted) of the Shares with respect to which Incentive Options
(granted under this Plan or any other plans of the Company) are
exercisable for the first time by an Optionee in any calendar year
exceed $100,000. No Incentive Option shall be granted pursuant to
this Plan after ten years from the earlier of the date of adoption
of this Plan by the Board or the date of approval of this Plan by
the Company’s stockholders.
6.2. Number
of Shares. Each Option Grant shall specify the number of
Shares that are subject to the Option. The Option Grant shall also
specify whether the Option is a Non-Qualified Option or an
Incentive Option.
6.3. Exercise
Price. Each Option Grant shall specify the Exercise Price.
The Exercise Price of an Incentive Option shall not be less than
100% of the Fair Market Value of a Share on the date of grant. The
Exercise Price of a Non-Qualified Option shall not be less than 85%
of the Fair Market Value of a Share on the date of grant. Subject
to the preceding two sentences, the Exercise Price under any Option
shall be determined by the Committee at its sole discretion. The
Exercise Price shall be payable in one of the forms described in
Sections 8.1 and 8.2.
6.4. Withholding Taxes. As a condition to
the exercise of an Option, the Optionee shall make such
arrangements as the Committee may require for the satisfaction of
any federal, state or local withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also
make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax
obligations that may arise in connection with the disposition of
Shares acquired by exercising an Option.
6.5. Exercisability and Term. Each Option
Grant shall specify the date when all or any installment of the
Option is to become exercisable. An Option may be exercised only by
delivery to the Company of a written notice of exercise signed by
the proper person together with payment in full for the number of
Shares which the Option is exercised. The Option Grant shall also
specify the term of the Option. The term shall not exceed ten years
from the date of grant. Subject to the preceding three sentences,
the Committee at its sole discretion shall determine when all or
any installment of an Option is to become exercisable and when an
Option is to expire. Notwithstanding anything to the contrary
herein, no Option will be exercisable (and any attempted exercise
will be deemed null and void) if such exercise would create a right
of recovery for “short-swing profits” under Section
16(b) of the Exchange Act. This Section 6.5 is intended to protect persons subject to
Section 16(b) against inadvertent violations of Section 16(b) and
shall not apply with respect to any particular exercise of an
Option if the limitation in the preceding sentence of this
Section 6.5 is expressly waived
in writing by the Optionee at the time of such
exercise.
6.6. Termination of Relationship. Except as
the Committee may otherwise determine at any time with respect to
any particular Non-Qualified Option granted hereunder:
6.6.1. If
an Optionee ceases to have a Relationship for any reason other than
his death or Permanent Disability, any Options granted to him shall
terminate 90 days from the date on which such Relationship
terminates. During the ninety day period, the Optionee may exercise
any Option granted to him but only to the extent such Option was
exercisable on the date of termination of his Relationship and
provided that such Option has not previously expired by its own
terms or otherwise terminated as provided herein. A leave of
absence approved in writing by the Committee shall not be deemed a
termination of Relationship for purposes of this
Section 6.6, but no Option may be
exercised during any such leave of absence, except during the first
90 days thereof.
6.6.2. For
purposes hereof, termination of an Optionee’s Relationship
for reasons other than death or Permanent Disability shall be
deemed to take place upon the earliest to occur of the following:
(i) the date of the Optionee’s retirement from
employment under the normal retirement policies of the Company;
(ii) the date of the Optionee’s retirement from
employment with the approval of the Committee because of disability
(other than Permanent Disability); (iii) the date the Optionee
receives notice or advice that his employment or other Relationship
is terminated; or (iv) the date the Optionee ceases to render
the services which he was employed, engaged or retained to render
to the Company (absences for temporary illness, emergencies and
vacations or leaves of absence approved in writing by the Committee
excepted). The fact that the Optionee may receive payment from the
Company after termination for vacation pay, for services rendered
prior to termination, for salary in lieu of notice or for other
benefits shall not affect the termination date.
6.6.3. Notwithstanding
anything in this Plan to the contrary, no Option may be exercised
or claimed by Optionee following the termination of his
Relationship as a result of a Termination for Cause, and no Option
may be exercised or claimed while the Optionee is being
investigated for a Termination for Cause.
6.7. Death
or Permanent Disability of Optionee. Except as the Committee
may otherwise determine at any time with respect to any particular
Non-Qualified Option granted hereunder, if an Optionee shall die at
a time when he is in a Relationship or if the Optionee shall cease
to have a Relationship by reason of Permanent Disability, any
Options granted to him shall terminate one year after the date of
his death or termination of Relationship due to Permanent
Disability unless by its terms it shall expire before such date or
otherwise terminate earlier as provided herein, and shall only be
exercisable to the extent that it would have been exercisable on
the date of his death or his termination of Relationship due to
Permanent Disability. In the case of death, the Option may be
exercised by the person or persons to whom the Optionee’s
rights under the Option shall pass by will or by the laws of
descent and distribution.
6.8. Privileges
of Stock Ownership. No person entitled to exercise any
Option granted under this Plan shall have any of the rights or
privileges of a stockholder of the Company with respect to any
Shares issuable upon exercise of such Option until such person has
become the holder of record of such Shares. No adjustment shall be
made for dividends or distributions of rights in respect of such
Shares if the record date is prior to the date on which such person
becomes the holder of record, except as provided in Section
9 hereof.
6.9. Amendment
of Options. The Committee may amend, modify, extend, renew
or terminate outstanding Options or may accept the cancellation of
outstanding Options (to the extent not previously exercised),
whether or not granted hereunder, in return for the grant of new
Options at the same or a different price. The Committee may shorten
the vesting period, extend the exercise period, remove any or all
restrictions or convert an Incentive Option to a Non-Qualified
Option, if, in its sole discretion, the Committee determines that
such action is in the best interests of the Company. The foregoing
notwithstanding, the Optionee’s consent to any such action
shall be required unless the Board determines that the action,
taking into account any related action, would not materially and
adversely affect the Optionee.
6.10. Restrictions
on Transfer of Shares. Any Shares issued upon exercise of an
Option shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions
shall be set forth in the applicable Option Grant and shall apply
in addition to any general restrictions that may apply to all
holders of Shares. Each certificate representing any Shares issued
upon exercise of an Option shall bear a legend making appropriate
reference to the restrictions imposed on the Shares.
7. Terms
and Conditions of Awards or Sales
7.1. Share Award. Each award or sale of
Shares under this Plan (other than upon exercise of an Option)
shall be evidenced by a Share Award approved by the Committee. Such
award or sale shall be subject to all applicable terms and
conditions of this Plan and may be subject to any other terms and
conditions which are not inconsistent with this Plan and which the
Committee deems appropriate for inclusion in a Share Award. The
provisions of the various Share Awards entered into under this Plan
need not be identical.
7.2. Duration
of Offers and Nontransferability of Rights. Any right to
acquire Shares under this Plan (other than an Option) shall
automatically expire if not exercised by the Offeree within thirty
days after the grant of such right was communicated to the Offeree
by the Committee. Such right shall not be transferable and shall be
exercisable only by the Offeree to whom such right was
granted.
7.3. Purchase
Price. The Purchase Price shall be determined by the
Committee at its sole discretion. The Purchase Price shall be
payable in one of the forms described in Sections 8.1, 8.2 or
8.3.
7.4. Withholding Taxes. As a condition to
the receipt or purchase of Shares, the Offeree shall make such
arrangements as the Committee may require for the satisfaction of
any federal, state or local withholding tax obligations that may
arise in connection with a recognition of income from such Shares
(either on the date of grant or the date the restrictions
lapse).
7.5. Amendment
of Share Awards. The Committee may amend, modify or
terminate any outstanding Share Awards. The Committee may shorten
the vesting period or remove any or all restrictions if, in its
sole discretion, the Committee determines that such action is in
the best interests of the Company. The foregoing notwithstanding,
the Offeree’s consent to any such action shall be required
unless the Board determines that the action, taking into account
any related action, would not materially and adversely affect the
Offeree.
7.6. Restrictions
on Transfer of Shares. Any Shares awarded or sold under this
Plan shall be subject to such special forfeiture conditions, rights
of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions
shall be set forth in the applicable Stock Purchase Agreement and
shall apply in addition to any general restrictions that may apply
to all holders of Shares. Each certificate representing any Shares
awarded or sole under this Plan will bear a legend making
appropriate reference to the restrictions imposed on the
Shares.
8. Payment
for Shares
8.1. General Rule. The entire Purchase Price
or Exercise Price for the number of Shares being purchased and, if
applicable, any federal, state or local withholding taxes required
to be paid in accordance with Section 6.4 or 7.4
hereof, shall be payable in full, by cash or by certified or
cashier’s check payable to the order of the Company or
equivalent thereof acceptable to the Company, at the time when such
Shares are purchased, except as provided in Sections 8.2 and
8.3 below. Notwithstanding the foregoing, the Company shall have
the right to postpone the time of delivery of the Shares for such
period as may be required for it to comply, with reasonable
diligence, with any applicable listing requirements of any national
securities exchange (including the Nasdaq Stock Market) or any
federal, state or local law. If an Optionee or Offeree fails to
accept delivery of or fails to pay for all or any portion of the
Shares requested, the Committee shall have the right to terminate
his Option (or other right to acquire Shares) with respect to the
number of such Shares requested.
8.2. Surrender of Stock; Cashless Exercise.
At the discretion of the Committee, payment may be made in whole or
in part with Shares which were acquired by the Optionee in the open
market or which have already been owned by the Optionee or his
representative for more than six months, and which certificate(s)
representing the Shares is surrendered to the Company duly endorsed
and in good form for transfer. Such Shares shall be valued at their
Fair Market Value on the date when the new Shares are purchased
under this Plan.
8.3. Services
Rendered. At the discretion of the Committee, Shares may be
awarded under this Plan in consideration of services rendered to
the Company or a Subsidiary prior to the award. If Shares are
awarded without the payment of a Purchase Price in cash, the
Committee shall make a determination (at the time of the award) of
the value of the services rendered by the Offeree and the
sufficiency of the consideration to meet the requirements of this
Section 8.3.
9.1. General. In the event of a subdivision
of the outstanding Common Stock, a declaration of a dividend
payable in Shares, a declaration of a dividend payable in a form
other than Shares in an amount that has a material effect on the
value of Shares, a combination or consolidation of the outstanding
Common Stock (by reclassification or otherwise) into a lesser
number of Shares, a recapitalization or a similar occurrence, the
Committee shall make at its sole discretion appropriate adjustments
in one or more of: (i) the number of Shares available for
future grants under Section 5;
(ii) the number of Shares covered by each outstanding Option;
(iii) the Exercise Price under each outstanding Option;
(iv) the number of Shares covered by each outstanding award;
or (v) the Purchase Price of each outstanding
award.
9.2. Reorganization.
In the event that the Company is a party to a merger or other
reorganization, outstanding Options shall be subject to the
agreement of merger or reorganization. Such agreement may provide
for the assumption of outstanding Options by the surviving
corporation or its parent or for their continuation by the Company
(if the Company is a surviving corporation); provided, however, that if assumption
or continuation of the outstanding Options is not provided by such
agreement then the Committee shall have the option of offering the
payment of a cash settlement equal to the difference between the
amount to be paid for one Share under such agreement and the
Exercise Price, in all cases without the Optionees’
consent.
9.3. Reservation
of Rights. Except as provided in this Section 9, an Optionee or Offeree shall have no rights
by reason of any subdivision or consolidation of shares of stock of
any class, the payment of any dividend or any other increase or
decrease in the number of shares of stock of any class. Any issue
by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to,
the number or Exercise Price of Shares subject to an Option. The
grant of an Option pursuant to this Plan shall not affect in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or
assets.
10. Change
of Control
In the
event of a Change of Control, all restrictions on all awards or
sales of Shares will accelerate and vesting on all
unexercised and unvested Options will occur on the Change of
Control Date.
11. Legal
and Regulatory Requirements
Shares
shall not be issued under this Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all
applicable requirements of law, including (without limitation) the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, state securities laws and regulations and
the regulations of any stock exchange on which the Company’s
securities may then be listed.
12. No
Employment Rights
Nothing
contained in this Plan or in any right or Option granted under this
Plan shall confer upon any Offeree or Optionee any right with
respect to the continuation of his employment by or other
Relationship with the Company or a Subsidiary. The Company and its
Subsidiaries reserve the right to terminate any person’s
employment and/or Relationship at any time and for any reason, with
or without notice.
13. Duration
and Amendments
13.1. Term of this Plan. This Plan shall
terminate automatically on July 1, 2027 and may be terminated on
any earlier date pursuant to Section 13.2 below.
13.2. Right
to Amend, Suspend or Terminate this Plan. The Board of
Directors may amend, suspend or terminate this Plan at any time and
from time to time. An amendment of this Plan shall be subject to
the approval of the Company’s stockholders only to the extent
required by applicable laws, regulations or rules.
13.3. Effect
of Termination. No Shares shall be issued or sold under this
Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of this
Plan shall not affect any Share previously issued or any Option
previously granted under this Plan.
14. Plan
not a Trust
Nothing
contained in this Plan and no action taken pursuant to this Plan
shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and any Offeree or
Optionee, the executor, administrator or other personal
representative, or designated beneficiary of such Offeree or
Optionee, or any other persons. If and to the extent that any
Offeree or Optionee or such Offeree’s or Optionee’s
executor, administrator or other personal representative, as the
case may be, acquires a right to receive any payment from the
Company pursuant to this Plan, such right shall be no greater than
the right of an unsecured general creditor of the
Company.
15. Notices
Each
Offeree or Optionee shall be responsible for furnishing the
Committee with the current and proper address for the mailing of
notices and delivery of agreements, Common Stock and cash pursuant
to this Plan. Any notices required or permitted to be given shall
be deemed given if directed to the person to whom addressed at such
address and mailed by regular United States mail, first-class and
prepaid. If any item mailed to such address is returned as
undeliverable to the addressee, mailing will be suspended until the
Offeree or Optionee furnishes the proper address. This provision
shall not be construed as requiring the mailing of any notice or
notification if such notice is not required under the terms of this
Plan or any applicable law.
16. Severability
of Provisions
If any
provision of this Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other
provisions hereof, and this Plan shall be construed and enforced as
if such provisions had not been included.
17. Payment
to Minors, etc.
Any
benefit payable to or for the benefit of a minor, an incompetent
person or other person incapable of receipting therefor shall be
deemed paid when paid to such person’s guardian or to the
party providing or reasonably appearing to provide for the care of
such person, and such payment shall fully discharge the Committee,
the Company and other parties with respect thereto.
18. Headings
and Captions
The
headings and captions herein are provided for reference and
convenience only, shall not be considered part of this Plan, and
shall not be employed in the construction of this
Plan.
19. Controlling
Law
This
Plan shall be construed and enforced according to the laws of the
State of Delaware to the extent not preempted by federal law, which
shall otherwise control.
20. Stockholder
Approval
The
grant of Options under this Plan shall be subject to approval of
this Plan by the stockholders of the Company within twelve months
after the date this Plan was adopted by the Board. Such stockholder
approval shall be obtained in the degree and manner required under
applicable law. The Committee may grant Options under this Plan
prior to approval by the stockholders, but until such approval is
obtained, no such Option shall be exercisable.
21. Execution
To
record the adoption of this amended Plan by the Board, and
unanimously approved by the stockholders of the Company, has caused
its authorized officer to execute the same.
SUPER
LEAGUE GAMING, INC.
By:
/s/ Ann
Hand
Ann
Hand
Chief Executive
Officer & President
Exhibit
10.2
2014 STOCK OPTION AND INCENTIVE PLAN
OPTION
GRANT
Optionee:
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Date of
Grant:
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Grant
No:
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Exercise
Price:
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Type of
Option:
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Number
of Shares:
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Term of
Option:
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Commencing
on the Date of Grant and expiring
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Subject
to the terms, conditions and restrictions of the 2014 Stock Option
and Incentive Plan (the “Plan”) and this Option Grant,
Super League Gaming, Inc. (the “Company”) hereby grants
an option (the “Option”) to purchase the
above-referenced number of shares of common stock, $0.001 par value
(“Common Stock”), of the Company exercisable at the
exercise price stated above. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them
in the Plan.
The
Option granted hereunder shall be exercisable only to the extent it
has vested. The Option shall vest per the vesting schedule set
forth below so long as Optionee continues to have an uninterrupted
Relationship with the Company or a Subsidiary up to, and including,
each scheduled vesting date. Optionee will only have the right to
exercise any vested portion(s) of the Option. If Optionee ceases to
have a Relationship with the Company or a Subsidiary up to, and
including, the date upon which all or any installment of the option
vest(s), the Optionee shall have no right, nor be entitled, to
exercise the unvested portion of the Option. The vesting schedule
for the Option under this Option Grant is as follows:
[Insert vesting conditions]
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The
Option shall not be assigned, pledged, sold, encumbered,
transferred or otherwise disposed of by Optionee, either
voluntarily or by operation of law, other than by will or the laws
of descent and distribution, and during the lifetime of Optionee
the Option shall be exercisable only by such Optionee. Any
attempted assignment, pledge, sale, encumbrance, transfer or other
disposition of the Option, other than in accordance with the terms
set forth herein, shall be null and void, and of no
effect.
________________
1
In
order to qualify as an Incentive Option, numerous conditions must
be met, including the approval of the Plan by the stockholders of
the Company within twelve months after the date of adoption of the
Plan by the Board. Neither the Committee, the Board nor the Company
shall have any liability if the Option does not qualify as an
Incentive Option. Any portion of the Option that does not qualify
as an Incentive Option shall be deemed to be a Nonstatutory
Option.
2
The Option shall terminate in accordance with the
Plan.
NOTE:
A copy of the Plan is attached. The Plan details the terms,
conditions and restrictions of the Option and the underlying shares
of Common Stock, and should be carefully read in its entirety. In
addition, this Option Grant may contain additional terms,
conditions and restrictions of the Option and the underlying shares
of Common Stock. If there is any question, ambiguity or
contradiction in this Option Grant, the language of the Plan shall
govern.
In Witness Whereof, the
undersigned executes this Option Grant as of the date first set
forth above:
Super League Gaming, Inc.,
a Delaware Corporation
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By:
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Ann Hand
Chief Executive Officer
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Accepted and Agree to as of the Date of Grant:
Signature:
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Passport or Other
Government Issued Identification Number:
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Residence
Address:
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(street
address)
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(city,
state, zip code)
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Telephone:
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E-Mail:
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Social Security
Number:
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SUBSCRIBER'S NAME:
__________________________________________
NTH GAMES, INC.
SUBSCRIPTION BOOKLET
THE
PRIVATE PLACEMENT OF SECURITIES DESCRIBED HEREIN HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
THIS PRIVATE PLACEMENT IS MADE PURSUANT TO SECTION 4(2) OF SAID
ACT, WHICH EXEMPTS FROM SUCH REGISTRATION TRANSACTIONS NOT
INVOLVING A PUBLIC OFFERING. FOR THIS REASON, THESE SECURITIES WILL
BE SOLD ONLY TO INVESTORS WHO MEET CERTAIN MINIMUM SUITABILITY
QUALIFICATIONS DESCRIBED HEREIN.
IN
MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE SECURITIES OFFERED, INCLUDING
THE MERITS AND RISKS INVOLVED. AN INVESTOR SHOULD BE PREPARED TO
BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE COMPANY FOR AN
INDEFINITE PERIOD OF TIME BECAUSE THE SECURITIES DESCRIBED HEREIN
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE LAWS OF
ANY OTHER JURISDICTION, AND, THEREFORE, CANNOT BE SOLD UNLESS THEY
ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THERE IS NO OBLIGATION OF THE ISSUER TO REGISTER THE
SECURITIES UNDER THE SECURITIES ACT OR THE LAWS OF ANY OTHER
JURISDICTION.
SUBSCRIPTION AGREEMENT
This
Subscription Agreement (the “Agreement”) relates to a private
placement of 500,000 shares of common stock, $0.0001 par value,
priced at $2.00 per share (the Shares”), for a total offering
amount of $1,000,000 (the “Offering”) by Nth Games, Inc., a
Delaware corporation with a place of business located at 2912
Colorado Ave., Suite 200, Santa Monica, CA 90404 (the "Company").
The
undersigned purchaser (“Purchaser” or “Investor”) hereby subscribes to
purchase the number of Shares set forth in Section 1(a)
below.
(a)
Shares Subscription. Subject to the
acceptance hereof by an authorized representative of the Company,
the Purchaser hereby subscribes for ______________ (________)
Shares at a price of $2.00 per share, for an investment amount of
____________________________ ($___________) (the
“Cash
Consideration”).
(b)
Cash Consideration. The Purchaser
agrees that payment of the Cash Consideration shall be made on the
date of acceptance of this Subscription Agreement by an authorized
representative or a member of the Company either (i) via check made
payable to “Nth Games, Inc.”, or (ii) preferably via
wire transfer as follows:
Wells
Fargo Bank, N.A.
11836
San Vicente Blvd.
Los
Angeles, CA 90049
Routing
Number: 121000248
Account
Number: 6158312352
Account
Name: Nth Games, Inc.
2.
Representations and
Warranties. The Purchaser hereby represents and warrants
that:
(a)
Information. The Purchaser has received
and reviewed a copy of the Certificate of Incorporation and
powerpoint presentation of the Company. In making the decision to
purchase the Shares, the Purchaser has relied on an independent
investigation made by the Purchaser and/or on the advice given to
the Purchaser by the Purchaser's own counsel, accountant or other
advisers and HAS NOT RELIED
upon any projections or other information, oral or written (other
than contained in the Certificate of Incorporation and powerpoint
presentation) that may have been provided to the Purchaser by
anyone. The Purchaser further represents that the Purchaser and
his, her or its advisors have had the opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering of the Shares and to obtain any additional information
necessary to evaluate this investment and to verify the accuracy of
the information otherwise furnished to the Purchaser and his or her
advisers.
(b)
Distribution. The Purchaser has not
reproduced or distributed this Agreement or the Certificate of
Incorporation to any person other than the Purchaser's counsel,
accountant or other adviser.
(c)
Registration or Qualification. The
Purchaser is aware that the Shares have not been registered under
the Securities Act of 1933, as amended (the "Act"), or qualified under any other
securities law or regulation.
(d)
Own Account. The Purchaser is
acquiring the Shares solely for the Purchaser's own account and not
for the account of any other person, for investment only, and not
with a view to resale, assignment or distribution.
(e)
Economic Risk. The Purchaser is able to
bear the economic risk of this investment, can afford to hold the
Shares for an indefinite period and can afford a complete loss of
the investment.
(f)
Appropriate Risks. The Purchaser has
evaluated the risks of investing in the Company in light of the
foregoing and is satisfied that the investment is appropriate for
the Purchaser.
(g)
Information True. All information which
the Purchaser has provided to the Company concerning the Purchaser,
his, her or its financial position, his, her or its status as an
accredited investor, his, her or its knowledge of financial and
business matters, all statements and representations as contained
herein are correct and complete and if there should be any material
change in such information prior to this subscription being
accepted, the Purchaser will immediately provide the Company with
such information.
(h)
Restricted Securities. The Purchaser
understands that the Shares are characterized as "restricted
securities" under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and
that under such laws and applicable regulations the Shares may be
resold without registration under the Act only in certain limited
circumstances and that otherwise the Shares must be held
indefinitely. In this connection, the Purchaser represents that
he/she is familiar with Securities and Exchange Commission Rule
144, as presently in effect, and the conditions which must be met
in order for that Rule to be available for resale of "restricted
securities", and understands that resale limitations are imposed by
the Act.
(i)
Disposition. Without in any way
limiting the representations set forth above, the Purchaser agrees
not to make any disposition of all or any portion of the Shares
unless and until:
(x)
there is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement and any applicable
requirements of state securities laws; or
(y) (1)
the Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed
disposition; and (2) the Purchaser shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such Shares
under the Act or the consent of or permission from appropriate
authorities under any applicable state securities law.
(j)
Legends. It is understood that the
certificate evidencing the Shares may bear the following
legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE
AGREEMENT, IF ANY, COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY..
(k)
Accredited Investor. The undersigned
purchaser is an accredited investor as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act. The Purchaser is
an investor in securities of companies in the development stage and
acknowledges that he, she or it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge
and experience in financial or business matters that it is capable
of evaluating the merits and risks of the investment in the Shares.
If other than an individual, the Purchaser also represents it has
not been organized for the purpose of acquiring the
Shares.
(x)
Purchaser Suitability. The
Purchaser represents and warrants that the Purchaser comes within
one or more of the categories marked below, and that for any
category marked the Purchaser has truthfully set forth the factual
basis or reason the Investor comes within that category. ALL
INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY
CONFIDENTIAL, EXCEPT FOR DISCLOSURES TO FEDERAL OR STATE REGULATORY
AUTHORITIES. The Purchaser agrees to furnish any additional
information that the Company deems necessary in order to verify the
answers set forth below.
Category
I
The Purchaser is an
individual (not a partnership, corporation, etc.) whose individual
net worth, or joint net worth with the Purchaser’s spouse,
presently exceeds $1,000,000, exclusive of the
Purchaser’s primary residence. In the calculation of net
worth (the amount of assets in excess of liabilities):
●
The Purchaser may
include equity in personal property and real estate, expressly
excluding the
Investor’s principal residence, cash, short-term investments,
stocks and securities. Equity in personal property and real estate
should be based on the fair market value of such property less debt
secured by such property.
●
The amount of debt
secured by the primary residence, up to its estimated fair market
value, is not included as a liability, unless the person incurred
debt within 60 days before buying securities in the unregistered
offering for the purpose of buying those securities and not for
buying the residence. In that situation, the amount of debt
borrowed during that 60-day period must be included as a
liability.
●
Any debt secured by
the primary residence in excess of the estimated fair market value
of the home is included as a liability.
Category
II
The Purchaser is an
individual (not a partnership, corporation, etc.) who had an
individual income in excess of $200,000 in 2012 and 2013, or joint
income with his/her spouse in excess of $300,000 in 2012 and 2013,
and has a reasonable expectation of reaching that income level in
2014.
Category
III
The Purchaser is a
bank, savings and loan, insurance company; registered broker or
dealer, registered investment company; registered business
development company; licensed small business investment company; or
employee benefit plan within the meaning of Title I of ERISA whose
plan fiduciary is either a bank, savings and loan, insurance
company or registered investment advisor or whose total assets
exceed $5,000,000.
_________________________________________________________
(describe
entity)
Category
IV
The Purchaser is a
private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
_________________________________________________________
(describe
entity)
Category
V
The Purchaser is a
non-profit organization within the meaning of Section 501(c)(3) of
the Internal Revenue Code, corporation, business trust, or
partnership, not formed for the purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
_________________________________________________________
(describe
entity)
Category
VI
The Purchaser is a
trustee for a trust that is revocable by the grantor at any time
(including an IRA) and the grantor qualified under either Category
I or Category II above. A copy of the declaration of trust or trust
agreement and a representation as to the net worth or income of the
grantor is enclosed.
Category
VII
The Purchaser is an
entity all the equity owners of which are “accredited
investors” within one or more of the above categories, other
than Category IV or Category V. If
relying upon this category alone, each equity owner must complete a
separate copy of this Agreement.
The Purchaser should check the Office of Foreign Assets Control
(“OFAC”) website at www.treas.gov/ofac before making
the following representations in subsections (l), (m) and (n)
below:
(l)
The Purchaser
represents that the amount invested in the Company is not directly
or indirectly derived from activities that contravene federal,
state or international laws and regulations, including anti-money
laundering laws and regulations. Federal regulations and Executive
Orders administered by OFAC prohibit, among other things, the
engagement in transactions with, and the provision of services to,
certain foreign countries, territories, entities and individuals.
The lists of OFAC prohibited countries, territories, persons and
entities can be found on the OFAC website at www.treas.gov/ofac. In
addition, the programs administered by OFAC (the
“OFAC Programs”)
prohibit dealing with individuals or entities in certain countries
regardless of whether such individuals or entities appear on the
OFAC lists;
(m)
To the best of the
Purchaser’s knowledge, neither the Purchaser nor any person
controlled by the Purchaser is an individual or entity named on an
OFAC list, or a person or entity prohibited under the OFAC
Programs. Please be advised that the Company may not accept any
amounts from a prospective investor if such prospective investor
cannot make the representation set forth in the preceding sentence.
The Purchaser agrees to promptly notify the Company should the
Purchaser become aware of any change in the information set forth
in these representations. The Purchaser understands and
acknowledges that, by law, the Company may be obligated to
“freeze the account” of the Purchaser, by declining any
redemption requests and/or segregating the assets in the account in
compliance with governmental regulations. The Purchaser further
acknowledges that the Company may, by written notice to the
Purchaser, suspend the redemption rights, if any, of the Purchaser
if the Company reasonably deems it necessary to do so to comply
with anti-money laundering regulations applicable to the Company or
any of the Company’s service providers; and
(n)
To the
best of the Purchaser’s knowledge, neither the Purchaser nor
any person controlling the Purchaser is a senior foreign political
figure, or any immediate family member or close associate of a
senior foreign political figure, as such terms are defined in the
footnotes hereto.
(o)
Disqualification. The Purchaser
represents that neither such Purchaser, nor any person or entity
with whom such Purchaser shares beneficial ownership of any
Securities, is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act of 1933, as amended.
3.
Indemnification. The
undersigned Purchaser agrees to indemnify, defend and hold harmless
members of the Board of Directors, the Company and each of its
officers, members, employees, affiliates, anyone acting on behalf
of the Company or the Board of Directors and any person who
controls any of them (each an “Indemnified Party"), from and against
all damages, losses, costs and expenses (including without
limitation any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever), including without
limitation reasonable attorneys' fees and expenses, which an
Indemnified Party may incur arising out of or based upon any false
representation or warranty of the undersigned or breach by the
undersigned or the failure of the undersigned to fulfill any of the
terms and conditions of this Subscription Agreement or any other
document furnished by the undersigned to any Indemnified Party in
connection with the undersigned's purchase of the
Shares.
4.
Independence of
Obligations. The undersigned agrees that its, his or her
obligations hereunder shall not be contingent upon or affected by
the similar undertakings of any other investor under its
subscription agreement and that the Company may proceed to enforce
this Agreement without also proceeding to enforce any other
investor's subscription agreement.
5.
Notice. All notices
and other communications given or made pursuant to this Agreement
shall be in writing and shall be deemed effectively given upon the
earlier of actual receipt or: (a) personal delivery to the party to
be notified, (b) when sent, if sent by facsimile or email during
normal business hours of the recipient, and if not sent during
normal business hours, then on the recipient’s next business
day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d)
one (1) business day after deposit with a nationally recognized
overnight courier, freight prepaid, specifying next business day
delivery, with written verification of receipt. All communications
shall be sent to the respective parties at their address as set
forth on the signature page, or to such address or facsimile number
as subsequently modified by written notice given in accordance with
this Agreement. If notice is given to the Company, it shall be sent
to the address listed in the preamble hereto.
With respect to any notice given by the Company under any provision
of the Delaware General Corporation Law or the Company’s
certificate of incorporation or bylaws (as they may be amended),
Purchaser agrees that such notice may be given by facsimile or by
electronic mail or by any other electronic transmission authorized
under the Delaware General Corporate Law.
6. Residency. My state of
residence, the state I received the offer to invest, and the state
I made the decision
to invest in the Shares is: _________________.
7. Ownership of Securities. The
Shares shall be issued in the following manner: Place an
“X” in one space below:
(a) ____
Individual Ownership
(b) ____
Community
Property
(c) ____
Joint Tenant with Right of Survivorship (both parties must
sign)
(e)
____ Corporation
(f)
____ Limited Liability Company
(g)
____ Other
8. Registration of the Securities.
The Shares subscribed for herein should be registered as
follows: ___________________________
Please
print above the exact name(s) in which the Securities are to be
held.
[SIGNATURE
PAGE FOLLOWS]
SIGNATURE
The
Purchaser hereby represents that he/she/it has read the entire
Subscription Agreement and by their signature below agrees to the
terms hereof.
Date:
____________________________
By:
_____________________________
Name:
___________________________
Title
(if applicable): ________________
|
Address to Which
Correspondence Should Be Directed:
____________________________________
Street
Address
____________________________________
City,
State and Zip Code
____________________________________
Social
Security Number
____________________________________
Telephone
Number
____________________________________
Email
Address
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ACCEPTANCE
The
subscription for the Shares is hereby accepted by Nth Games, Inc.,
a Delaware corporation, as of the date set forth
below.
NTH
GAMES, INC.
David
Steigelfest
President
Exhibit 10.4
SUBSCRIPTION AGREEMENT
This
Subscription Agreement (the “Agreement”) relates to the Series
B round private placement of Super League Gaming, Inc., a Delaware
corporation, with a principal place of business located at 2912
Colorado Ave., Suite 200, Santa Monica, CA 90404 (the "Company"), consisting of up to One
Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six
(1,666,666) shares of common stock, at a price of $3.00 USD per
share (the “Shares”), for a total offering of
Five Million Dollars ($5,000,000 USD)(the “Offering”).
The
undersigned purchaser (“Purchaser” or “Investor”) hereby subscribes to
purchase the number of Shares set forth in Section 1(a)
below.
1.
Subscription.
(a)
Shares Subscription.
Subject to the acceptance hereof by an authorized representative of
the Company, the Purchaser hereby subscribes for ______________
(________) Shares at a price of $3.00 USD per share, for an
investment of ____________________________ ($___________) (the
“Cash
Consideration”).
(b)
Cash Consideration. The
Purchaser agrees that payment of the Cash Consideration shall be
made on the date of acceptance of this Subscription Agreement by an
authorized representative or a member of the Company either (i) via
check made payable to “Super League Gaming, Inc.”, or
(ii) preferably via wire transfer as follows:
Wells
Fargo Bank, N.A.
11836
San Vicente Blvd.
Los
Angeles, CA 90049
Routing
Number: 121000248
Account
Number: 6158312352
Account
Name: Super League Gaming, Inc.
2.
Representations
and Warranties. The Purchaser hereby represents and warrants
that:
(a)
Information. In making the
decision to purchase the Shares, the Purchaser has relied on an
independent investigation made by the Purchaser and/or on the
advice given to the Purchaser by the Purchaser's own counsel,
accountant or other advisers. The Purchaser further represents that
the Purchaser and his, her or its advisors have had the opportunity
to ask questions and receive answers concerning the terms and
conditions of the offering of the Shares and to obtain any
additional information necessary to evaluate this investment and to
verify the accuracy of the information otherwise furnished to the
Purchaser and his or her advisers.
(b)
Distribution. The Purchaser
has not reproduced or distributed this Agreement to any person
other than the Purchaser's counsel, accountant or other
adviser.
(c)
Registration or
Qualification. The Purchaser is aware that the Shares have
not been registered under the Securities Act of 1933, as amended
(the "Act"), or qualified
under any other securities law or regulation.
(d)
Own Account. The Purchaser
is acquiring the Shares solely for the Purchaser's own account and
not for the account of any other person, for investment only, and
not with a view to resale, assignment or distribution.
(e)
Economic Risk. The
Purchaser is able to bear the economic risk of this investment, can
afford to hold the Shares for an indefinite period and can afford a
complete loss of the investment.
(f)
Appropriate Risks. The
Purchaser has evaluated the risks of investing in the Company in
light of the foregoing and is satisfied that the investment is
appropriate for the Purchaser.
(g)
Information True. All
information which the Purchaser has provided to the Company
concerning the Purchaser, his, her or its financial position, his,
her or its status as an accredited investor, his, her or its
knowledge of financial and business matters, all statements and
representations as contained herein are correct and complete and if
there should be any material change in such information prior to
this subscription being accepted, the Purchaser will immediately
provide the Company with such information.
(h)
Restricted Securities. The
Purchaser understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch
as they are being acquired in a transaction not involving a public
offering and that under such laws and applicable regulations the
Shares may be resold without registration under the Act only in
certain limited circumstances and that otherwise the Shares must be
held indefinitely. In this connection, the Purchaser represents
that he/she is familiar with Securities and Exchange Commission
Rule 144, as presently in effect, and the conditions which must be
met in order for that Rule to be available for resale of
"restricted securities", and understands that resale limitations
are imposed by the Act.
(i)
Disposition. Without in any
way limiting the representations set forth above, the Purchaser
agrees not to make any disposition of all or any portion of the
Shares unless and until:
(x)
there is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement and any applicable
requirements of state securities laws; or
(y) (1)
the Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed
disposition; and (2) the Purchaser shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such Shares
under the Act or the consent of or permission from appropriate
authorities under any applicable state securities law.
(j)
Legends. It is understood
that the certificate evidencing the Shares may bear the following
legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE
AGREEMENT, IF ANY, COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.
(k)
Accredited Investor. The
undersigned purchaser is an accredited investor as defined in Rule
501(a) of Regulation D promulgated under the Securities Act. The
Purchaser is an investor in securities of companies in the
development stage and acknowledges that he, she or it is able to
fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the
investment in the Shares. If other than an individual, the
Purchaser also represents it has not been organized for the purpose
of acquiring the Shares.
(x) Purchaser Suitability. The
Purchaser represents and warrants that the Purchaser comes within
one or more of the categories marked below, and that for any
category marked the Purchaser has truthfully set forth the factual
basis or reason the Investor comes within that category. ALL
INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY
CONFIDENTIAL, EXCEPT FOR DISCLOSURES TO FEDERAL OR STATE REGULATORY
AUTHORITIES. The Purchaser agrees to furnish any additional
information that the Company deems necessary in order to verify the
answers set forth below.
Category
I
The Purchaser is an
individual (not a partnership, corporation, etc.) whose individual
net worth, or joint net worth with the Purchaser’s spouse,
presently exceeds $1,000,000, exclusive of the
Purchaser’s primary residence. In the calculation of net
worth (the amount of assets in excess of liabilities):
●
The Purchaser may
include equity in personal property and real estate, expressly
excluding the
Investor’s principal residence, cash, short-term investments,
stocks and securities. Equity in personal property and real estate
should be based on the fair market value of such property less debt
secured by such property.
●
The amount of debt
secured by the primary residence, up to its estimated fair market
value, is not included as a liability, unless the person incurred
debt within 60 days before buying securities in the unregistered
offering for the purpose of buying those securities and not for
buying the residence. In that situation, the amount of debt
borrowed during that 60-day period must be included as a
liability.
●
Any debt secured by
the primary residence in excess of the estimated fair market value
of the home is included as a liability.
Category
II
The Purchaser is an
individual (not a partnership, corporation, etc.) who had an
individual income in excess of $200,000 in 2013 and 2014, or joint
income with his/her spouse in excess of $300,000 in 2013 and 2014,
and has a reasonable expectation of reaching that income level in
2015.
Category
III
The Purchaser is a
bank, savings and loan, insurance company; registered broker or
dealer, registered investment company; registered business
development company; licensed small business investment company; or
employee benefit plan within the meaning of Title I of ERISA whose
plan fiduciary is either a bank, savings and loan, insurance
company or registered investment advisor or whose total assets
exceed $5,000,000.
________________________________________________________________________________
(describe
entity)
Category
IV
The Purchaser is a
private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
________________________________________________________________________________
(describe
entity)
Category
V
The Purchaser is a
non-profit organization within the meaning of Section 501(c)(3) of
the Internal Revenue Code, corporation, business trust, or
partnership, not formed for the purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
________________________________________________________________________________
(describe
entity)
Category
VI
The Purchaser is a
trustee for a trust that is revocable by the grantor at any time
(including an IRA) and the grantor qualified under either Category
I or Category II above. A copy of the declaration of trust or trust
agreement and a representation as to the net worth or income of the
grantor is enclosed.
Category
VII
The Purchaser is an
entity all the equity owners of which are “accredited
investors” within one or more of the above categories, other
than Category IV or Category V. If
relying upon this category alone, each equity owner must complete a
separate copy of this Agreement.
The Purchaser should check the Office of Foreign Assets Control
(“OFAC”) website at www.treas.gov/ofac before making
the following representations in subsections (l), (m) and (n)
below:
(l)
The Purchaser represents that the amount invested in the Company is
not directly or indirectly derived from activities that contravene
federal, state or international laws and regulations, including
anti-money laundering laws and regulations. Federal regulations and
Executive Orders administered by OFAC prohibit, among other things,
the engagement in transactions with, and the provision of services
to, certain foreign countries, territories, entities and
individuals. The lists of OFAC prohibited countries, territories,
persons and entities can be found on the OFAC website at
www.treas.gov/ofac. In addition, the programs administered by OFAC
(the “OFAC
Programs”) prohibit dealing with individuals or
entities in certain countries regardless of whether such
individuals or entities appear on the OFAC lists;
(m)
To the best of the Purchaser’s knowledge, neither the
Purchaser nor any person controlled by the Purchaser is an
individual or entity named on an OFAC list, or a person or entity
prohibited under the OFAC Programs. Please be advised that the
Company may not accept any amounts from a prospective investor if
such prospective investor cannot make the representation set forth
in the preceding sentence. The Purchaser agrees to promptly notify
the Company should the Purchaser become aware of any change in the
information set forth in these representations. The Purchaser
understands and acknowledges that, by law, the Company may be
obligated to “freeze the account” of the Purchaser, by
declining any redemption requests and/or segregating the assets in
the account in compliance with governmental regulations. The
Purchaser further acknowledges that the Company may, by written
notice to the Purchaser, suspend the redemption rights, if any, of
the Purchaser if the Company reasonably deems it necessary to do so
to comply with anti-money laundering regulations applicable to the
Company or any of the Company’s service providers;
and
(n)
To the best of the Purchaser’s knowledge, neither the
Purchaser nor any person controlling the Purchaser is a senior
foreign political figure, or any immediate family member or close
associate of a senior foreign political figure, as such terms are
defined in the footnotes hereto.
(o)
Disqualification. The
Purchaser represents that neither such Purchaser, nor any person or
entity with whom such Purchaser shares beneficial ownership of any
Securities, is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act of 1933, as amended.
3.
Indemnification. The
undersigned Purchaser agrees to indemnify, defend and hold harmless
members of the Board of Directors, the Company and each of its
officers, members, employees, affiliates, anyone acting on behalf
of the Company or the Board of Directors and any person who
controls any of them (each an “Indemnified Party"), from and against
all damages, losses, costs and expenses (including without
limitation any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever), including without
limitation reasonable attorneys' fees and expenses, which an
Indemnified Party may incur arising out of or based upon any false
representation or warranty of the undersigned or breach by the
undersigned or the failure of the undersigned to fulfill any of the
terms and conditions of this Subscription Agreement or any other
document furnished by the undersigned to any Indemnified Party in
connection with the undersigned's purchase of the
Shares.
4.
Independence of
Obligations. The undersigned agrees that its, his or her
obligations hereunder shall not be contingent upon or affected by
the similar undertakings of any other investor under its
subscription agreement and that the Company may proceed to enforce
this Agreement without also proceeding to enforce any other
investor's subscription agreement.
5.
Notice.
All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given
upon the earlier of actual receipt or: (a) personal delivery to the
party to be notified, (b) when sent, if sent by facsimile or email
during normal business hours of the recipient, and if not sent
during normal business hours, then on the recipient’s next
business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) business day after deposit with a
nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of
receipt. All communications shall be sent to the respective parties
at their address as set forth on the signature page, or to such
address or facsimile number as subsequently modified by written
notice given in accordance with this Agreement. If notice is given
to the Company, it shall be sent to the address listed in the
preamble hereto.
With respect to any notice given by the Company under any provision
of the Delaware General Corporation Law or the Company’s
certificate of incorporation or bylaws (as they may be amended),
Purchaser agrees that such notice may be given by facsimile or by
electronic mail or by any other electronic transmission authorized
under the Delaware General Corporate Law.
6. Pro-Rata Rights in Future
Financings. Investors shall have the right to participate in
future equity financings of the Company to maintain their
respective ownership in the Company that exists upon the close of
the Offering (“Pro-Rata Rights”). The Pro-Rata Rights
shall conclude immediately prior to an initial public offering of
the Company.
7. Residency; Domicile. The state
of residence or domiciliary in the case of an entity, and the state
in which the decision to invest was made:
________________________________________________________________________________
8. Registration of the Securities.
The Shares subscribed for herein should be registered as
follows:
________________________________________________________________________________
Please
print above the exact name(s) in which the Securities are to be
held.
[SIGNATURE
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SIGNATURE
The
Purchaser hereby represents that he/she/it has read the entire
Subscription Agreement and by their signature below agrees to the
terms hereof.
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ACCEPTANCE
The
subscription for the Shares is hereby accepted by Super League
Gaming, Inc., a Delaware corporation, as of the date set forth
below.
SUPER
LEAGUE GAMING, INC.
By:
____________________________
Ann Hand
Chief Executive
Officer
Date:
____________________________
THEATER AGREEMENT
This
Agreement (“Agreement”) is entered into is effective as
of the final date of execution hereof (the “Effective
Date”), by and between _________________, on the one hand,
and Super League Gaming, Inc., a Delaware corporation
(“SLG”), on the other hand. _______________ and SLG are
collectively referred to herein as the
“Parties”.
RECITALS
WHEREAS, Super
League Gaming (“SLG”), has developed a revolutionary
social gaming league experience that utilizes a proprietary
technology platform enabling gamers and spectators to experience
League of Legends in a multi-player format, Minecraft in a
single-player and multi-player format, as well as other esports
games (in single player and multi-player format) added by SLG in
the future;
WHEREAS, _________
desires to retain SLG on the terms outlined hereinbelow;
and
WHEREAS, SLG
desires to provide _________ on the terms outlined
hereinbelow.
NOW,
THEREFORE, in consideration of the mutual covenants and promises
set forth hereinabove, the receipt and sufficiency of which is
hereby mutually acknowledged, the Parties hereby agree as
follows:
1. SLG
Events. _______________ and SLG agree that SLG events will
commence on the dates, times, and at the locations mutually agreed
upon in a separate writing (all SLG events are collectively
referred to herein as the “SLG Events”). All scheduling
of SLG Events shall be set forth in separate addendums hereto and
mutually agreed upon by the Parties.
2. Obligations
of _______________. _______________ shall have the following
obligations:
(a) Theater Seating
Requirement. The selection of the auditoriums in which SLG
Events are held shall be made collaboratively by the Parties to
ensure a first-class experience for the gaming
participants.
(b) In-Theater
Marketing. _______________ shall market the SLG Events to
its customers at least fourteen (14) days prior to each event,
consisting of the following: (i) _______________ shall send at
least one SLG-dedicated email to its customer and loyalty program
email list, geo-targeted to participating theaters; (ii)
_______________ shall exhibit at least two (2) SLG or
_______________ designed (subject to SLG approval to maintain
compliance with game publisher requirements) posters in each of its
participating theater lobbies; and (iii)
_______________ shall
promote SLG on its social platforms (e.g., Facebook, Twitter,
Instagram and others) that reference the participating
theaters.
(c) Installation and
Set-Up. _______________ shall provide all personnel required
for the installation and testing of the SLG software and hardware
in each auditorium in which SLG Events will be held. SLG personnel
and/or contractors will orchestrate the installation in
collaboration with _______________ management as well as the
applicable staff at the participating theaters. Further,
_______________ shall schedule an appropriate time for the
foregoing to occur with theater-level contacts at least ten (10)
days prior to the initial SLG Event.
(d) Dedicated Theater
Staff. For all SLG Events, _______________ agrees to provide
one (1) dedicated staff member during SLG Events. SLG will provide
a brief training manual for the dedicated staff member(s) to review
in advance of the initial SLG Event.
(e) Technical
Operations Support Availability. For all SLG Events,
_______________ agrees to provide a specific technical operations
support personnel (on-site and remotely) to address any
_______________ technology issues which arise prior to or during
SLG Events (e.g., power, projector or other issues).
_______________ shall provide contact information for the remote
(high level manager) and on-site technical support individuals
(i.e., phone and email) for rapid intervention to address all
issues.
3. Obligations of
SLG.
a. Ticket Sales;
Reporting. All SLG Event ticket sales shall be made via the
SLG ticketing website and will be the sole responsibility of SLG.
SLG shall provide _______________ with daily ticket reports
(provided for the prior business day) during each period when
ticket sales are ongoing for SLG Events at
_______________.
b. Software and
Hardware. SLG shall be solely responsible for providing all
technology to be utilized for SLG Events at participating theaters,
including, among other things, all web systems, player profiles,
leaderboards, and in-theater experience, all of which shall utilize
SLG’s hardware and proprietary software.
c. Installation &
Testing. SLG shall provide written documentation to
_______________ to be utilized by its staff relating to the
installation of SLG’s software and hardware in the
auditoriums in which SLG Events will be held. Prior to the initial
event in each of the applicable auditoriums, SLG shall confirm with
_______________ that all software and hardware is in good working
order.
d. Maintenance.
SLG shall be solely responsible for any maintenance that may be
required on the SLG hardware, as well as any software upgrades,
patches or otherwise, that may be required.
e. Marketing.
SLG will generate market demand for SLG Events through a
combination of means, including its game publisher partners, emails
to its existing registered player database, and social media
channels, among others.
f. Dedicated On-Site
SLG Personnel. SLG shall provide at least one (1) dedicated
SLG personnel at participating theaters during each SLG Event to
assist participants as well as _______________ staff.
g. Operations
Manual. SLG shall provide _______________ with an Operations
Manual that addresses installation procedures as well as event
operations, among other things. The Operations Manual shall be used
by _______________ staff at all times to ensure a best-in-class
experience for gaming participants and efficient operations at SLG
Events.
4. Revenue Split;
Payment Terms. Ticket sales from SLG Events will be
allocated as follows: (i) Adjusted Gross Revenue (as defined below)
will be split ___% in favor of SLG and ___% in favor of
_______________. Adjusted Gross Revenue is defined as (a) gross
ticket sales, less discounts comps and promotions, from SLG Events,
less (b) sales tax, less (c) ___% of gross ticket sales consisting
of a stripe, technology, intellectual property license, bandwidth
and maintenance fee. SLG shall be solely responsible for payment of
all game publisher license fees which consist of up to ___% of
SLG’s portion of Adjusted Gross Revenue.
a. Payment
Terms. During the Term, SLG shall pay _______________
net
30 from (i) the final day of each calendar month for all SLG
Event revenue realized by SLG for the prior month at
_______________ pursuant to U.S. generally accepted accounting
principles (“GAAP”). For clarity purposes, SLG
recognizes revenues from multi-week leagues on the following basis:
(i) ticket revenues for each SLG multi-week league are divided by
the number of weeks of league play, the product of which is
recognized in the month that the event occurs. Thus, multi-week
leagues that occur over a two-month period will be paid in two (2)
monthly tranches. Payments shall be made to _______________ via
electronic transfer to the bank account designated by
_______________ in writing or via check. SLG shall include a
written report with each monthly payment.
5. Ownership of
Software & Hardware. For the avoidance of doubt, all SLG
software and hardware utilized in conjunction with the SLG Events
shall be the exclusive property of SLG. No ownership to the
foregoing is provided under this Agreement. The SLG software and
hardware may only be utilized in connection with the SLG Events or
as otherwise mutually agreed upon in writing. Further,
_______________ staff shall not unplug the HDMI or other cabling
connecting the SLG hardware to the projectors located in the
auditoriums holding SLG events without the express prior written
consent of SLG.
6. Bandwidth
Installation Rights.
SLG shall have the right to install, in at least one (1) theater
location per city where SLG Events are offered at _______________
(which cities shall be mutually agreed upon by the Parties),
broadband Internet access which may consist of fiber, DSL, cable or
any other broadband Internet alternative of SLG’s choosing
(collectively, the “Bandwidth”). SLG shall be solely
responsible for all bandwidth costs. In consideration thereof, SLG
shall have the exclusive right to share access of the Bandwidth
with _______________ for SLG Events as well as “League of
Legends watch events” and other content as mutually agreed
upon by the Parties.
7. Trademark
Usage. SLG shall have the right hereunder to utilize the
trademark(s) of _______________ during the Term in conformity with
_______________’s trademark usage guidelines. The
_______________ trademark(s) will be utilized solely by SLG in
conjunction with the promotion of Super League Gaming, including
all SLG Events.
8. Term;
Exclusivity. The Agreement shall have a term of ____ (__)
years (“Term”), and shall automatically renew for
successive one (1) year periods unless terminated in writing no
less than ninety (90) days prior to the conclusion of the then
existing term.
a. Exclusivity.
SLG will incur hardware and installation expenses in excess of
$_______ USD for each _______________ auditorium which hosts SLG
Events. The foregoing costs will be the sole responsibility of SLG
in exchange for SLG being the exclusive provider of any and all
multi-player, participatory gaming at _______________ during the
Term.
9. Representation and
Warranties; Indemnification. SLG represents, warrants and
covenants that (i) the software to be utilized with respect to the
SLG Events is of original development by SLG, (ii) SLG is the owner
of the software and hardware, (iii) SLG has the unfettered right to
utilize it in connection with the SLG Events, (iv) the SLG software
and hardware is free and clear of any liens, claims and
encumbrances, and (v) the SLG software and hardware shall not
damage any of _______________’s software or hardware or
result in a loss of information. SLG will indemnify, defend and
hold _______________ and its affiliates, employees, agents,
officers, and directors (collectively, “_______________
Indemnified Parties”) harmless, at SLG’s expense, from
any claims, demands, actions, suits, damages, losses, liabilities,
costs or expenses of any nature, including, without limitation,
reasonable attorneys’ fees, incurred by _______________
Indemnified Parties as a result of any breach of this Agreement by
SLG or any of the representations or warranties contained in this
Section 9, including but not limited to claims of infringement or
misappropriation. In the event of an infringement claim, SLG shall
have no obligation pursuant to this Section 9 to the extent the
claim is caused by the modification of the software or hardware by
_______________, its employees, contractors or agents. If the
unmodified software or hardware becomes, or in SLG’s opinion
is likely to become, the subject of a claim of infringement or
misappropriation, SLG shall, at its option and expense, promptly
either: (i) modify or replace the software and/or hardware, as the
case may be, to be non-infringing while giving equivalent
performance and functionality, or (ii) obtain for _______________
the right to continue using the software and/or hardware, as the
case may be, under terms substantially similar to those then in
effect under this Agreement.
a. Conditions.
In the event a party seeks indemnity as provided in this Section 9,
the indemnified party will: (i) notify the indemnifying party in
writing promptly of a claim (provided that failure to provide such
notice will not relieve the indemnifying party of its obligations
under this Section 9 except to the extent such failure materially
prejudices the indemnifying party’s ability to defend or
settle such claim); and, (ii) grant the indemnifying party the sole
control of the settlement, compromise, negotiation, and defense of
any such action, except that the indemnifying party shall not enter
into any settlement that affects the indemnified party’s
rights or interests without the indemnified party’s prior
written consent; and (iii) provide the indemnifying party with all
reasonably available information relating to the action that is
reasonably requested by the indemnifying party. The Parties agree
to cooperate in good faith in the defense of any legal action or
suit that causes one party to invoke its indemnification rights
under this Section 9.
10. Disclaimer of
Warranties.
EXCEPT AS OTHERWISE EXPRESSLY
WARRANTED IN THIS AGREEMENT, SLG DISCLAIMS ALL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
OR ANY WARRANTIES ARISING FROM COURSE OF DEALING, COURSE OF
PERFORMANCE, OR USAGE OF TRADE. _______________ HEREBY ACKNOWLEDGES
AND AGREES THAT IN EACH JURISDICTION IN WHICH ANY SUCH DISCLAIMER
IS UNENFORCEABLE, THE DURATION OF ANY SUCH IMPLIED SOFTWARE
PERFORMANCE WARRANTIES IS LIMITED TO THIRTY (30) DAYS FROM THE
DELIVERY DATE OF THE SOFTWARE AND HARDWARE; PROVIDED, HOWEVER, THAT
THE SOLE REMEDY OF _______________ FOR BREACH OF ANY SUCH IMPLIED
SOFTWARE AND HARDWARE PERFORMANCE WARRANTY SHALL BE THAT SLG WILL,
AT ITS OPTION, REPAIR OR REPLACE THE SOFTWARE AND HARDWARE TO BE
UTILIZED IN CONJUNCTION WITH THE SLG EVENTS.
11. Limitation
of Liability. EXCEPT
FOR ANY CLAIMS ARISING UNDER SECTIONS 9 (INDEMNIFICATION), OR 12(d)
(CONFIDENTIAL INFORMATION), OR WHICH ARE BASED UPON GROSS
NEGLIGENCE OR INTENTIONAL MISCONDUCT, REGARDLESS OF WHETHER ANY
REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE OR
OTHERWISE, TO THE EXTENT PERMITTED BY THE LAW OF THE JURSIDICTION
IN WHICH THIS AGREEMENT IS ENTERED INTO: (A) THE PARTIES WILL NOT
BE LIABLE TO ONE ANOTHER FOR ANY INDIRECT, EXEMPLARY, SPECIAL,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES OF ANY CHARACTER, INCLUDING,
BUT NOT LIMITED TO, DAMAGES FOR COMPUTER MALFUNCTION, LOSS OF
INFORMATION, LOST PROFITS AND BUSINESS INTERRUPTION, AND THE COST
TO OBTAIN SUBSTITUTE SOFTWARE OR HARDWARE, ARISING IN ANY WAY OUT
OF THIS AGREEMENT OR THE USE OF (OR INABILITY TO USE) THE SOFTWARE
OR HARDWARE FOR SLG EVENTS, HOWEVER CAUSED, AND WHETHER ARISING
UNDER A THEORY OF CONTRACT, TORT OR ANY OTHER LEGAL THEORY, EVEN IF
ONE OF THE PARTIES WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
AND (B) IN NO EVENT WILL EITHER PARTY’S LIABILITY TO THE
OTHER EXCEED THE COLLECTIVE SUM OF THE ADJUSTED GROSS REVENUE. SOME
STATES OR JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF
INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, SO THE ABOVE
LIMITATIONS MAY NOT APPLY; PROVIDED, HOWEVER, THE PARTIES ARE
ENTERING INTO THIS AGREEMENT ON THE EXPRESS CONDITION THAT EACH OF
THEM AGREES TO THE "DISCLAIMER OF WARRANTIES" AND "LIMITATION OF
LIABILITY" PROVISIONS HEREIN.
12. General
Provisions.
(a) Assignment.
Neither party may assign this Agreement, in whole or in part,
without prior written notice to the other, which consent shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing,
either party may assign this Agreement in the event of a merger,
sale of substantially all of the stock, assets or business, or
other reorganization involving the assigning party in which the
assigning party is not the surviving entity, and the other
party’s prior written consent shall not be required in such
instance. Without limiting the foregoing, this Agreement will bind
and inure to the benefit of each party’s permitted successors
and assigns.
(b) Waiver,
Amendment, Modification. No
waiver, amendment or modification, including by custom, usage of
trade, or course of dealing, of any provision of this Agreement
will be effective unless it is in writing and signed by the party
against whom such waiver, amendment or modification is sought to be
enforced. No waiver by any party of any default in performance on
the part of the other party under this Agreement or of any breach
or series of breaches by the other party of any of the terms or
conditions of this Agreement will constitute a waiver of any
subsequent default in performance under this Agreement or any
subsequent breach of any terms or conditions within. Performance of
any obligation required of a party under this Agreement may be
waived only by a written waiver signed by a duly authorized officer
of the other party; such waiver will be effective only with respect
to the specific obligation described therein.
(c) Force
Majeure. Neither party will be deemed in default of this
Agreement to the extent that performance of its obligations, or
attempts to cure any breach, are delayed or prevented by reason of
circumstance beyond its reasonable control, including without
limitation fire, natural disaster, earthquake, accidents or other
acts of God and which renders their performance impossible ("Force
Majeure"), provided that the party seeking to delay its performance
gives the other written notice of any such Force Majeure within
five (5) days after the discovery, and further provided that such
party uses its good faith efforts to cure the Force Majeure. This
Section 12(c) will not be applicable to any payment obligations of
either party.
(d) Confidential
Information. Each party
acknowledges that it may be furnished with or may otherwise receive
or have access to information or material of the other party that
the disclosing party deems to be confidential, including, without
limitation, the terms and existence of this Agreement, information
that relates to past, present or future products, software,
hardware, research development, inventions, processes, techniques,
designs or technical information, data, and marketing plans
(collectively, the "Confidential Information"). Each party agrees
to preserve and protect the confidentiality of the other
party’s Confidential Information and all physical and
electronic forms thereof from unauthorized or accidental loss,
alteration, destruction or damage, whether disclosed to the other
party before this Agreement is signed or afterward. In addition,
neither party will use or disclose the Confidential Information of
the other party except as specifically required to perform its
obligations under this Agreement. The receiving party will disclose
Confidential Information of the disclosing party only to those of
the receiving party’s employees or agents with a “need
to know” in connection with the receiving party’s
performance of its obligations under this Agreement. However, the
receiving party may disclose the Confidential Information of the
disclosing party to the extent such disclosure is required to
comply with applicable law or the valid order or requirement of a
governmental or regulatory agency or court of competent
jurisdiction, provided that the receiving party (a) first notifies
in writing the disclosing party (unless prohibited by law or such
order) in such time as to permit the disclosing party to
participate in the disclosure response, and reasonably cooperates
with the disclosing party to prevent or otherwise restrict such
disclosure; (b) restricts such disclosure to the maximum extent
legally permissible. The receiving party will promptly notify the
disclosing party in writing of any actual or suspected misuse,
misappropriation or unauthorized disclosure of Confidential
Information by the receiving party which may come to the receiving
party’s attention. The obligations of each party to protect
Confidential Information shall not apply to information which the
recipient can demonstrate that: (a) became publicly known through
no act or failure of the recipient; (b) was rightfully in the
recipient’s possession prior to disclosure by the disclosing
party without any obligation to hold it in confidence; (c) became
rightfully known to the recipient from a third party free to
disclose such information without restriction; (d) is approved in
writing by the disclosing party for disclosure without restriction;
or (e) is disclosed after the termination of the recipient’s
duty of confidentiality as specified herein.
(e) Insurance
Coverage. SLG will maintain the following insurance coverage
and will name _______________ as an additional insured on its
General Liability Insurance policy:
(1) Workers’
Compensation Insurance. Workers’ compensation insurance
as required by law or regulation; and
(2) General
Liability Insurance.
Commercial general liability coverage with limits of not less than
$1,000,000 combined single limit for bodily injury and property
damage, including personal injury and death, and contractor’s
protective liability, and products and completed operations
coverage in an amount not less than $2,000,000 in the
aggregate.
(f) Independent
Contractor. Nothing contained in this Agreement will be deemed
to place the parties in the relationship of an employer/employee,
partners, or joint venturers. Neither party will have any right to
obligate or bind the other in any manner except as specifically
provided for in this Agreement. Each party agrees and acknowledges
that it will not hold itself out as an authorized agent with the
power to bind the other party in any manner. Each party will be
responsible for any withholding taxes, payroll taxes, disability
insurance payments, unemployment taxes, and other similar taxes or
charges with respect to its activities in relation to performance
of its obligations under this Agreement.
(g) Cumulative
Rights. Any specific right or remedy provided in this
Agreement will not be exclusive, but will be cumulative upon all
other rights and remedies set forth in this Agreement and allowed
under applicable law.
(h) Governing
Law. This Agreement will be
governed by the laws of the State of California, without regard to
its conflicts of law principles.
(i) Entire
Agreement. The Parties acknowledge that this Agreement
expresses their entire understanding and agreement, and that there
have been no warranties, representations, covenants or
understandings made by either party to the other except such as are
expressly set forth in this Agreement. The parties further
acknowledge that this Agreement supersedes any and all prior
agreements, written or oral, between the parties with respect to
the matters set forth herein.
(j) Counterparts.
This Agreement may be executed in
multiple counterparts, any of which will be deemed an original, but
all of which will constitute one and the same
instrument.
(k) Severability.
In the event that any provision of
this Agreement is found invalid or unenforceable pursuant to
judicial decree or decision, the remainder will remain valid and
enforceable according to its terms. Without limiting the foregoing,
it is expressly understood and agreed that each and every provision
of this Agreement that provides for a limitation of liability,
disclaimer of warranties, or exclusion of damages is intended by
the parties to be severable and independent of any other provision
and to be enforced as such. Further, it is expressly understood and
agreed that in the event any remedy in this Agreement is determined
to have failed of its essential purpose, all other limitations of
liability and exclusion of damages set forth herein will remain in
full force and effect.
(l) Notices.
All notices, demands or consents required or permitted in this
Agreement will be in writing and will be hand delivered, sent by
overnight courier, or mailed certified first-class mail (postage
prepaid), return receipt requested to the respective parties at
their respective principal business address. Any notice required or
permitted to be given by the provisions of this Agreement will be
conclusively deemed to have been received on the day it is
delivered to that party by U.S. Mail with acknowledgment of receipt
or by any commercial courier providing equivalent acknowledgment of
receipt.
To
SLG:
Super
League Gaming, Inc.
2906
Colorado Blvd.
Santa
Monica, CA 90404
Attn:
General Counsel
To
_______________:
[Signature page follows]
IN WITNESS WHEREOF, the Parties have
entered into this Agreement as of the Effective Date.
SUPER LEAGUE GAMING, INC.
By:
Date:
Ann
Hand
CEO
& President
By:
Date:
[Signature page to Agreement]
LICENSE
AGREEMENT
1.1.
The parties to this
license agreement (the “Agreement”) made as of June 22,
2016 (“Effective
Date”) are:
1.1.1.
Riot Games, Inc., a
Delaware corporation located at 12333 W. Olympic Blvd, Los Angeles,
CA 90064 (“Riot”); and
1.1.2.
Super League
Gaming, Inc., a Delaware corporation located at 2912 Colorado Ave.,
Suite 200, Santa Monica, CA 90404 (“SLG”).
1.2.
SLG and Riot shall
each be a “Party” and collectively shall be
the “Parties” to
this Agreement.
2.1.
Riot develops and
publishes video games, including League of Legends, a popular
multiplayer online battle arena computer game.
2.2.
SLG operates
recreational leagues for gamers of all ages to compete, socialize
and play video games in movie theatres worldwide.
2.3.
SLG wants to make
Riot’s popular League of
Legends game available for use in SLG’s operations
within the Territory.
3.1.
“Approved Movie Theatres” means any
of the physical movie theatres identified in Appendix A hereto and any other
physical movie theatres that the Parties mutually agree to in
writing during the performance of this Agreement.
3.2.
“Game” means the multiplayer online
battle arena game, League of
Legends.
3.3.
“Game Content” means the
Game’s audio-visual content, including the visual appearances
of its characters, and corresponding in-game data that is rendered
and made available to users or viewers of the Game
Content.
3.4.
“Game League Business” means
SLG’s business of operating Leagues featuring Participatory
Gaming in Approved Movie Theatres that utilizes the Game
Content.
3.5.
“Merchandise” means any merchandise
derived from, based on, using and/or featuring Game
Content.
3.6.
“Participatory Gaming” means
actively playing or consuming digital video game content in a
manner that requires a combination of real-time inputs,
communication and coordination either alone or in tandem with other
players. For the avoidance of doubt, Participatory Gaming does not
include: (i) video game viewing parties (e.g.,
theaters
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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showing
organized/competitive video game events for customers to watch);
(ii) eSports events (e.g., competitive video game tournaments being
held in theaters for customers to watch); or (iii) any other
activities not reasonably contemplated within the scope of the Game
League Business as of the Effective Date, unless approved by
Riot.
3.7.
“Riot Marks” means the Riot
trademarks, logos and/or symbols identified in Appendix B, attached
hereto.
3.8.
“SLG Marks” means the SLG
trademarks, logos and/or symbols identified in Appendix B, attached
hereto.
4.1.
Advertising and Merchandise.
During the Term and within the Territory, Riot grants SLG a
limited, non-exclusive, non-sublicenseable, non-transferable
license, subject to the terms of this Agreement and, in particular,
the approval process described in Section 7 below, to: (i)
display Game Content solely in connection with advertising,
marketing and promoting the Game League Business; and (ii) create
derivative works using Game Content and/or Riot Marks solely in
connection with the creation of Merchandise in strict accordance
with the terms of the Merchandise provision in Section 8 below.
4.2.
Operation of Game League.
During the Term and within the Territory, Riot grants SLG a
limited, non-sublicenseable, non-transferable license, subject to
the terms of this Agreement and, in particular, the approval
process described in Section 7 below, to use,
reproduce, distribute, display, and publicly perform the Game and
Game Content for operation of the Game League
Business.
4.3.
SLG Marks. During the Term and
within the Territory, SLG grants Riot a limited, non- exclusive,
non-sublicenseable, non-transferable license to: (i) use the SLG
Marks solely as needed to fulfill Riot’s obligations to
promote, market, advertise and support the Game League Business;
and (ii) subject to SLG’s approval, which shall not be
unreasonably withheld, use the SLG Marks solely as needed to
manufacture, distribute and/or sell any Riot-approved
Merchandise.
The
territory for this Agreement shall be [*****].
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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6.4.
One-Time Extension. Any further
extensions of the Term beyond the Extension Term must be agreed to
in writing by the Parties.
7.1.
Process for approving the Game
League. SLG shall submit the following key milestone
documents (the “Key Milestone
Documents”) to Riot for approval:
7.1.1.
Preliminary Product Plan and Roadmap:
At least sixty (60) days prior to the commercial launch of the Game
League Business, high-level concept documentation, audience
segmentation/targeting and a twelve (12) month product/Game League
Business roll-out plan.
7.1.2.
Final Product Plan: At least thirty
(30) days prior to the commercial launch of the Game League
Business, a detailed product plan and go-to-market strategy
including, but not limited to: (i) a Game League Business
description, format and structure; (ii) Game League Business
pricing and a marketing/communications strategy and spend (the
“Marketing
Plan”); (iii) a staffing plan describing, in detail,
how the Game League Business will be staffed; and (iv) a roll-out
plan for each market. The Marketing Plan shall describe, in detail,
the marketing efforts that both Parties shall undertake during the
Initial Term.
7.1.2.1.1. If Riot
does not approve any of the Key Milestone Documents, Riot shall
provide feedback to SLG within ten (10) business days explaining
the reason for disapproval. For the avoidance of doubt, SLG may not
commercially launch the Game League Business without first
obtaining Riot’s approval on each of the Key Milestone
Documents.
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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7.2.
Process for approving promotional
material. Prior to displaying any Game Content in connection
with any advertising, marketing and/or promotions of the Game
League Business (“Promotional
Material”), SLG shall submit a sample of any
Promotional Material to Riot for approval, at least five (5)
business days prior to distributing, displaying, and/or otherwise
using such Promotional Material. SLG shall not distribute, display,
and/or otherwise use such Promotional Material without receiving
Riot’s prior written approval. Riot may withhold its approval
in its sole and absolute discretion. If Riot fails to respond to
SLG’s request for approval within five (5) business days,
SLG’s request for approval shall be deemed denied by Riot. If
Riot fails to respond within five
(5)
business days, SLG shall send a reminder email to Riot within
forty-eight (48) hours thereafter. SLG shall not be required to
re-submit any previously approved Promotional Material for
subsequent use.
7.3.
Process for approving
Merchandise. Prior to manufacturing, distributing or selling
any Merchandise, SLG shall submit a sample to Riot for approval.
Riot may withhold its approval in its sole and absolute discretion.
For the avoidance of doubt, Riot has no obligation whatsoever to
approve any Merchandise. If Riot fails to respond to SLG’s
request for approval, SLG’s request for approval shall be
deemed denied by Riot.
7.4.
Revocation of Riot’s
approval. Notwithstanding anything herein to the contrary,
Riot may revoke any previously granted approval, in its sole an
absolute discretion; provided, however, that Riot shall use good
faith efforts to provide context for such revocation, suggestions
for alternatives, and provide a reasonable time period for SLG to
come into compliance with the revocation.
8.1.
Co-branding requirement. Any
Merchandise submitted by SLG to Riot for approval must be
co-branded.
8.2.
Distribution Channels. SLG may
only sell Riot-approved Merchandise on its website
(https://superleague.com/) and in Approved Movie
Theatres.
8.3.
Sell-off. After the expiration
or termination of this Agreement, unless earlier terminated, SLG
shall have a one (1) month sell-off period for any Riot-approved
Merchandise. At the expiration of the sell-off period, SLG shall
destroy any remaining Merchandise and provide verification to
Riot.
9.2.
SLG shall hire a
dedicated, full-time employee who is deeply knowledgeable about the
Game and the gaming industry to manage Game League operations and
ensure an authentic, player-focused experience.
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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9.4.
SLG will operate
the Game League in a manner that maximizes the performance of the
Game League on a standalone basis and not take any actions
materially adverse to Riot.
9.6.
SLG Change of
Control. In the event of a SLG Change of Control (as defined
below), and without prejudice to any other obligations of SLG under
this License Agreement, SLG shall reasonably maintain the same
level of commitment and employee engagement, including the ongoing
involvement of not less than a majority of SLG senior management in
existence of a SLG Change of Control, with respect to the Game
League operations, in all material respects, after the SLG Change
of Control, in comparison to that level prior to the SLG Change of
Control, for no less than one year.
9.6.1.
“SLG Change of Control” means any
(i) transaction, or series of related transactions, in which a
person, or a group of related persons, acquires from stockholders
of SLG, shares representing more than fifty percent (50%) of the
out- standing voting power of SLG, or (ii) sale of all or
substantially all assets of SLG.
10.1.
Riot shall assign a
Game product owner to interface with SLG on all Game League
matters.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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10.3.
Riot shall work in
good faith with SLG to provide the following technical and
operational assistance:
[*****]
11.
MARKETING
RESTRICTIONS
11.1.
Neither Party shall
place, display or post any materials depicting the other
Party’s intellectual property which contains any material
which is unlawful, libelous, obscene, indecent, threatening,
intimidating, or harassing. Additionally, SLG shall not feature, or
permit any third-party to feature, any of the following in its
advertising or promotions relating to the Game or the Game
League:
[*****]
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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12.3.
GAAP. All amounts calculated
under this Agreement must be calculated in accordance with U.S.
generally accepted accounting principles (“GAAP”).
13.1.
No later than
thirty (30) days after the end of each quarterly period during the
Term, SLG shall send Riot a detailed report to
sharan@riotgames.com, which shall include detailed information for:
[*****]. If reasonably requested by Riot, SLG shall use
commercially reasonable efforts to provide reports on a monthly
basis.
13.2.
Riot will send SLG
invoices reflecting amounts due to Riot based on SLG’s
reports. SLG shall pay the invoiced amounts within seven (7)
calendar days of receipt of Riot’s invoices. All payments
will be made in U.S. Dollars by wire transfer into Riot’s
bank account specified below or such other bank account of Riot in
the U.S. as Riot may specify in writing. SLG will bear any wire
transfer fees charged by the transferred bank, and Riot will bear
any wire transfer fees charged by the receiving bank.
[*****]
SLG
shall maintain and keep (at SLG’s principal place of business
and at its sole expense), during the Term and for at least three
(3) years after expiration or earlier termination of this
Agreement, accurate books of accounting and records covering all
matters and transactions related to this Agreement. Riot and its
duly authorized representative(s) shall have the right, upon
reasonable notice and at all reasonable hours
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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of the
day, to examine and copy and otherwise audit said books of
accounting, records and all other documents and materials in the
possession or under the control of SLG with respect to all
transactions related to this Agreement. [*****]
15.1.
Capitalization
Representations and Warranties. SLG represents and warrants to Riot
the following:
15.1.1.
Authorized Shares.
The authorized capital of SLG consists, immediately prior to the
Effective Date, of: (i) 45,000,000 shares of common stock, par
value $0.001 per share (“Common Stock”), of which
7,549,279 shares are issued and outstanding and (ii) 5,000,000
shares of preferred stock, of which 0 shares are issued and
outstanding, immediately prior to the Effective Date. The Company
holds no Common Stock in its treasury. The rights, privileges and
preferences of the Common Stock will be as stated in the
Certificate of Incorporation which has been provided to
Riot.
15.1.2.
Company Plan. SLG
has reserved 3,000,000 shares of Common Stock for issuance to
officers, directors, employees and consultants of SLG pursuant to
the 2014 Stock Option and Incentive Plan (the “Company Plan”) duly adopted by the
Board of Directors and approved by SLG stockholders. Of such
reserved shares of Common Stock, 2,483,493 shares of Common Stock
have been issued pursuant to options to purchase Common Stock, a
stock option to purchase 70,000 shares of Common Stock has been
exercised pursuant to the Company Plan, and 446,507 shares of
Common Stock remain available for issuance to officers, directors,
employees and consultants pursuant to the Company Plan. SLG has
furnished to Riot complete and accurate copies of the Company Plan
and forms of agreements used thereunder.
15.1.3.
Rights. Except for
(i) options outstanding to purchase 2,463,493 shares of Common
Stock, all of which have been issued pursuant to the Company Plan,
with a weighted average exercise price of $2.36 per share, (ii)
warrants outstanding to purchase 1,450,000 shares of Common Stock,
with a weighted average exercise price of $2.43 per share, (iii)
restricted stock units underlying 25,000 shares of Common Stock,
(iv) the conversion privileges of the zero coupon unsecured
convertible promissory notes outstanding in the original principal
amount of
$5,050,000 relating
to the May 2016 financing of SLG; (v) the pro rata rights provided
in Section 6 of the Series B Subscription Agreement entered into by
and between SLG and each of the investors in the Series B round
which closed in 2015;
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
and
(vi) the pro rata rights provided for in Section 15.4 of this
Agreement; there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first
refusal or similar rights) or agreements, orally or in writing, to
purchase or acquire from the Company any shares of Common Stock, or
any securities convertible into or exchangeable for shares of
Common Stock.
15.1.4.
Lock-Up. All
outstanding shares of the SLG’s Common Stock and all shares
of the SLG Common Stock underlying outstanding options or other
award agreements are subject to a lock-up or market standoff
agreement (applicable only as may be required by an underwriter of
SLG’s equity securities) following a public offering pursuant
to a registration statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 (the
“Securities
Act”).
15.1.5.
Repurchase,
Redemption, Acceleration. Except for the SLG 2014 Stock Option and
Incentive Plan, and certain existing executive employment
agreements, which provide for acceleration upon a change of
control, no stock plan, stock purchase, stock option or other
agreement or understanding between SLG and any holder of any
securities or rights exercisable or convertible for securities
provides for acceleration or other changes in the vesting
provisions or other terms of such agreement or understanding as the
result of the occurrence of any event. SLG has no obligation
(contingent or otherwise) to purchase or redeem any of its capital
stock.
15.1.6.
Securities Laws.
That all outstanding securities of Company were duly and validly
authorized and issued, fully paid and non-assessable, in accordance
with the Securities Act, as amended, and relevant state
(“Blue Sky”)
securities laws, and issued pursuant to valid exemptions from
securities registration under Federal and Blue Sky
laws.
15.1.7.
Documentation. SLG
has provided Riot with all relevant and material documentation with
respect to the securities issued by SLG to Riot and all rights
pertaining thereto. No securities-related agreements entered into
between SLG and any other shareholder or party in respect of its
capital stock provides for any rights or preferences that are
materially different or preferential in any material respect from
the rights or preferences of Riot as described in this Agreement
(and exhibits hereto).
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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15.7.
Information
Rights.
15.7.1.
SLG shall provide
the following to Riot upon request:
15.7.1.1.
As soon as
practicable, but in any event within ninety (90) days after the end
of each fiscal year of SLG, an income statement for such fiscal
year, a balance sheet of SLG and statement of stockholders’
equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with GAAP, except that such
financial statements may (i) be subject to normal year-end audit
adjustments and (ii) not contain all notes thereto that may be
required in accordance with GAAP).
15.7.1.2.
As soon as
practicable, but in any event within forty-five (45) days after the
end of each of the first three (3) quarters of each fiscal year of
SLG, an unaudited income statement, statement of cash flows for
such fiscal quarter and an unaudited balance sheet and statement of
stockholders’ equity as of the end of such fiscal quarter,
all prepared in accordance with GAAP (except that such financial
statements may (i) be subject to normal year-end audit adjustments
and (ii) not contain all notes thereto that may be required in
accordance with GAAP);
15.7.1.3.
If, for any period,
SLG has any subsidiary whose accounts are consolidated with those
of SLG, then in respect of such period the financial statements
delivered pursuant to the foregoing sections shall be the
consolidated and consolidating financial statements of the SLG and
all such consolidated subsidiaries.
15.7.2.
Notwithstanding
anything else in this Section 15.7 to the contrary, SLG may cease
providing the information set forth in this Section 15.7 during the
period starting with the date thirty (30) days before SLG’s
good-faith estimate of the date
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
of
filing of a registration statement as mandated by “quiet
period” regulations; provided that SLG’s covenants
under this Section 15.7 shall be reinstated at such time as SLG is
no longer actively employing its commercially reasonable efforts to
cause such registration statement to become effective.
15.7.3.
The covenants set
forth in this Section 15.7 shall terminate and be of no further
force or effect upon the earlier to occur of (a) the consummation
of an IPO, (b) when SLG first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the 1934 Act,
whichever event shall first occur or (c) the consummation of a
change of control.
Unless
otherwise set forth in this Agreement, each Party will bear its own
costs and expenses that are incurred in the performance of their
obligations under this Agreement.
17.1.
Termination by Riot. Riot shall
have the right to terminate this Agreement by providing written
notice to SLG as follows:
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
17.2.
Effect of Termination. If Riot
terminates this Agreement, each Party shall promptly destroy or
return the other party’s Confidential Information in its
possession, custody or control, unless retention of such
information is required by law (e.g., by tax regulations); all sums
due to Riot hereunder shall become immediately due and payable in
full without set-off of any kind; SLG shall immediately cease
exploitation of the rights granted herein, including without
limitation, its operation of the Game League (unless Riot advises
SLG in the notice of termination that SLG should instead wind- down
the Game League over a prescribed period of time), advertising and
promotion of the Game League, and its production and sale of
Merchandise; SLG shall, within one (1) month after termination,
deliver to Riot a complete and accurate inventory of all
Merchandise on hand and/or in the process of manufacture, as of
both the date of termination and the date of such statement and
Riot shall have the right, upon fifteen
(15)
days prior notice, to enter onto SLG’s premises during normal
business hours to conduct physical inventories to verify the
accuracy of such statement; and Riot shall have the opportunity, in
its sole discretion, to purchase all existing Merchandise at
SLG’s cost of manufacture in its sole or demand that such
Merchandise be destroyed.
18.1.
Confidential Information. Each
Party acknowledges that by reason of its relationship to the other
Party under this Agreement it will have access to and acquire
knowledge, material, data, systems and other information concerning
the operation, business, financial affairs and intellectual
property of the other Party that may not be accessible or known to
the general public, including the terms of this Agreement (referred
to as “Confidential
Information”).
18.2.
No Disclosure/Use. Each Party
agrees that it will: (i) maintain and preserve the confidentiality
of all Confidential Information received from the other Party (the
“Disclosing
Party”), both orally and in writing, including taking
such steps to protect the confidentiality of the Disclosing
Party’s Confidential Information as the Party receiving such
Confidential Information (the “Receiving Party”) takes to protect
the confidentiality of its own confidential or proprietary
information; provided, however, that in no instance shall the
Receiving Party use less than a reasonable standard of care to
protect the Disclosing Party’s Confidential Information; (ii)
disclose such Confidential Information only to its own employees on
a “need-to-know” basis, and only to those employees who
have agreed to maintain the confidentiality thereof pursuant to a
written agreement containing terms least as stringent as those set
forth in this Agreement; (iii) not disassemble, “reverse
engineer” or “reverse compile” such software for
any purpose in the event that software is involved; and (iv) not
disclose such Confidential Information to any third party without
the prior written consent of the Disclosing Party; provided,
however, that each Party may disclose the financial terms of this
Agreement to its legal and business advisors and to potential
investors so long as such third parties agree to maintain the
confidentiality of such Confidential Information.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Each
Receiving Party further agrees to use the Confidential Information
of the Disclosing Party only for the purpose of performing its
obligations under this Agreement. The Receiving Party’s
obligation of confidentiality shall survive this Agreement for a
period of five (5) years from the date of its termination or
expiration and thereafter shall terminate and be of no further
force or effect; provided, however, that with respect to
Confidential Information which constitutes a trade secret, such
information shall remain confidential so long as such information
continues to remain a trade secret. The Parties also mutually agree
to (1) not alter or remove any identification or notice of any
copyright, trademark, or other proprietary rights which indicates
the ownership of any part of the Disclosing Party’s
Confidential Information; and (2) notify the Disclosing Party of
the circumstances surrounding any possession or use of the
Confidential Information by any person or entity other than those
authorized under this Agreement.
18.3.
Exclusions. The confidentiality
obligations of the Parties described18.1 above shall not apply to
Confidential Information which the Receiving Party can prove: (i)
has become a matter of public knowledge through no fault, action or
omission of or by the Receiving Party; (ii) was rightfully in the
Receiving Party’s possession prior to disclosure by the
Disclosing Party; (iii) subsequent to disclosure by the Disclosing
Party, was rightfully obtained by the Receiving Party from a third
party who was lawfully in possession of such Confidential
Information without restriction; (iv) was independently developed
by the Receiving Party without resort to the Disclosing
Party’s Confidential Information; or (v) must be disclosed by
the Receiving Party pursuant to law, judicial order or any
applicable regulation (including any applicable stock exchange
rules and regulations); provided, however, that in the case of
disclosures made in accordance with the foregoing clause (v), the
Receiving Party must provide prior written notice to the Disclosing
Party of any such legally required disclosure of the Disclosing
Party’s Confidential Information as soon as practicable in
order to afford the Disclosing Party an opportunity to seek a
protective order, or, in the event that such order cannot be
obtained, disclosure may be made in a manner intended to minimize
or eliminate any potential liability.
18.4.
Terms of this Agreement
Confidential. Subject to the exception provided by Section
18.2(iv), for the avoidance of doubt, the terms of this Agreement
shall be considered Confidential Information, and SLG shall not
disclose or make reference thereto without the prior written
consent of Riot for any purpose. For the avoidance of doubt,
disclosure of Appendix
C by SLG shall be deemed an uncurable material breach of
this Agreement.
19.
PRIVACY
AND DATA SECURITY
19.1.
Privacy Laws. SLG shall at all
times perform its obligations hereunder in accordance with
SLG’s privacy policies, the requirements of any contracts or
codes of conduct to which SLG is a party and any applicable laws or
regulations related to the processing of Personal Data (as defined
below) and/or the privacy of individual data subjects
(collectively, “Privacy
Laws”), including obtaining and at all times
maintaining any appropriate registrations or certifications under
such Privacy Laws.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
19.2.
Data Processing. For the
purposes of this Agreement, “Personal Data” has the meaning set
forth in applicable Privacy Laws, specifically including without
limitation any and all personally identifiable information of Riot
customers or employees, as well any copies or corresponding
reference files kept or made by SLG thereof in any format. To the
extent the Services require SLG to process Personal Data, SLG
expressly acknowledges and agrees that it will only process such
Personal Data in accordance with terms and conditions of this
Agreement and Riot’s instructions, and only as necessary to
perform its obligations hereunder. Without limiting the generality
of the foregoing, under no circumstances shall SLG (i) sell, rent,
share with or otherwise distribute or disclose Personal Data to any
third parties without Riot’s express prior written
consent;
(ii)
use Personal Data for directed marketing or advertising; or (iii)
otherwise process Personal Data for any purposes whatsoever except
as necessary to provide the Services.
19.3.
Information Security. SLG shall
establish, employ and at all times maintain physical, technical and
administrative security safeguards and procedures sufficient to
prevent any unauthorized processing of Personal Data and/or use,
access, copying, exhibition, transmission or removal of
Riot’s Confidential Information from SLG’s facilities.
SLG shall promptly provide Riot with written descriptions of such
procedures and policies upon request. Riot shall have the right,
upon reasonable prior written notice to SLG and during normal
business hours, to conduct on-site security audits or otherwise
inspect SLG’s facilities to confirm compliance with such
security requirements.
19.4.1.
Informing Riot. In the event of
any actual or potential unauthorized processing of Personal Data in
SLG’s possession or control (each, a “Security Breach”), SLG shall
notify Riot as soon as practicable (but in no event later than
twenty-four (24) hours after SLG becomes aware of such a Security
Breach) and immediately start coordinating with Riot to investigate
the Security Breach.
19.4.2.
Investigation and Costs. SLG
agrees to fully cooperate with Riot in Riot’s handling of any
Security Breach, including: (1) assisting with any investigation;
(2) providing Riot and/or its authorized representatives with
physical access to the facilities and operations affected; (3)
facilitating interviews with SLG’s employees and others
involved in the matter; (4) making available all relevant records,
logs, files, data reporting and other materials required to comply
with applicable law; and
(5) at
Riot’s request and expense, making available all relevant
records, logs, files, data reporting and other materials required
to comply with any regulation, industry standards or as otherwise
required by Riot. Additionally, SLG agrees to reimburse Riot for
actual costs incurred by Riot in responding to, and mitigating
damages caused by, any Security Breach, including all costs of
notice and/or remediation pursuant to this Section 19.
19.4.3.
Breach Notification. SLG shall
not inform any third party of any Security Breach without
Riot’s prior written consent, other than to inform a
complainant that the matter has been forwarded to Riot. Further,
SLG agrees that Riot shall have the sole right to determine: (1)
whether notice of the Security Breach is to be provided
to
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
any
individual data subjects, regulators, law enforcement agencies,
consumer reporting agencies or others as required by Privacy Laws
or otherwise in Riot’s discretion; and (2) the contents of
such notice, whether any type of remediation may be offered to
affected persons and the nature and extent of any such
remediation.
19.4.4.
Termination. In the event of a
Security Breach, Riot shall have the option to immediately
terminate this Agreement without penalty upon written notice to SLG
(notwithstanding any other termination rights set forth herein, and
without limiting any other remedies that may be available to Riot
at law, in equity or otherwise).
20.
REPRESENTATIONS
AND WARRANTIES
20.1.
Standing; Due Authorization.
SLG represents, warrants and covenants that it: (i) is an entity
duly formed and/or organized and validly subsisting pursuant to the
laws of its jurisdiction of formation and/or organization; (ii) is
qualified to do business in the jurisdictions in which it operates
the Game League; and (iii) has due authorization and authority to
enter into this Agreement and to fully perform its obligations
hereunder.
20.2.
Performance. SLG represents and
warrants that in performing its obligations hereunder and operating
the Game Leagues, it shall at all times: (i) conduct itself in a
professional manner in reasonable accordance with industry
standards; and (ii) comply with all applicable laws, statutes,
ordinances, rules, regulations and requirements of all governmental
agencies and regulatory bodies.
21.1.
Each Party will
indemnify the other Party and any of its affiliates, subsidiaries,
directors, officers, agents, employees, successors and assigns from
and against any and all third party claims, actions, losses,
damages and expenses (including reasonable, outside attorney fees)
arising out of or caused by: (i) any material failure by the other
Party to perform its obligations under this Agreement; and (ii) the
material breach of any representation, warranty, and/or covenant
made by the other Party under this Agreement.
21.2.
If any action is
brought against a Party being indemnified hereunder and/or its
affiliates, subsidiaries, directors, officers, agents, employees,
successors and assigns (the “Indemnified Party”) with respect
to any allegation for which indemnity may be sought from the other
Party (the “Indemnifying
Party”), the Indemnified Party shall promptly notify
the Indemnifying Party in writing. The Indemnified Party shall
cooperate with the Indemnifying Party, at the Indemnifying
Party’s expense and in all reasonable respects, in connection
with the defense of any such action. The Indemnifying Party shall
conduct all proceedings or negotiations in connection therewith,
assume the defense thereof, and all other required steps or
proceedings to settle or defend any such action, including the
employment of counsel and payment of all expenses. The Indemnified
Party shall have the right to employ separate counsel and
participate in the defense at the Indemnified Party’s sole
expense. The Indemnifying Party shall not enter into any settlement
that obligates the Indemnified Party to take any action or incur
any expense without such
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Indemnified
Party’s prior written consent, which consent shall not be
unreasonably withheld or delayed.
SLG
shall secure and maintain, at its sole cost and expense, in
connection with its obligations hereunder and operation of the Game
League, all customary and necessary insurance policies, including
comprehensive general liability insurance with limits of not less
than One Million USD ($1,000,000) per occurrence / Two Million USD
($2,000,000) in the aggregate, employer’s liability insurance
in a minimum amount of One Million USD ($1,000,000) per occurrence,
automobile liability insurance in a minimum amount of One Million
USD ($1,000,000) per occurrence, statutory worker’s
compensation insurance and professional liability or cyber
liability insurance (which shall include errors and omissions,
media liability, privacy and network security insurance) with
limits of not less than Two Million USD ($2,000,000) per occurrence
/ Two Million USD ($2,000,000) in the aggregate, which policies
shall list Riot as additional insureds (collectively, the
“Insurance”).
SLG shall deliver to Riot a certificate evidencing the Insurance
required by this Section 22. SLG shall use an Insurance provider
with an AM BEST ratings of at least A-VII and shall be pre-
approved by Riot in writing.
[*****]
24.
LIMITATION
OF LIABILITY
TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO CIRCUMSTANCES
SHALL RIOT BE LIABLE TO SLG FOR ANY CLAIM (REGARDLESS OF THEORY OF
LIABILITY, WHETHER BASED UPON PRINCIPLES OF CONTRACT, WARRANTY,
NEGLIGENCE OR OTHER TORT, BREACH OF ANY STATUTORY DUTY, PRINCIPLES
OF INDEMNITY, THE FAILURE OF ANY LIMITED REMEDY TO ACHIEVE ITS
ESSENTIAL PURPOSE OR OTHERWISE) FOR ANY SPECIAL, CONSEQUENTIAL,
RELIANCE, INDIRECT, INCIDENTAL, PUNITIVE OR EXEMPLARY DAMAGES,
WHETHER FORESEEABLE OR NOT, INCLUDING LOST PROFITS, REVENUE OR
GOODWILL. IN NO EVENT SHALL RIOT’S LIABILITY TO SLG ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT EXCEED THE TOTAL
AMOUNTS PAID BY SLG TO RIOT HEREUNDER.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
25.1.
Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of
the State of California.
25.2.
Injunctive Relief. SLG agrees
that in the event of any breach or alleged breach by SLG of any
covenant or agreement in this Agreement, Riot would encounter
extreme difficulty in attempting to prove the actual amount of
damages suffered by it as a result of such breach and would not
have adequate remedy at law in such event. SLG therefore agrees
that, in addition to any other remedy available at law or in
equity, in the event of such breach, Riot shall be entitled to seek
and receive specific performance and temporary, preliminary and
permanent injunctive relief from violation of any of said covenants
and agreements without the requirement of proving the amount of any
actual damage to Riot resulting or expected from such
breach.
25.3.
Attorney Fees. In any action
arising out of or related to this Agreement, the prevailing Party
shall be entitled to recover its costs and attorney fees reasonably
incurred in connection with the dispute.
26.1.
Assignment and Change of
Control. Neither Party may assign this Agreement, in whole
or in part, by operation of law or otherwise, without the other
Party’s prior written consent.
26.2.
Notices. All notices or other
communications required or permitted hereunder shall be in writing
and shall be deemed to have been duly given (a) on the date
delivered in person or by courier, (b) on the date a Party responds
via e-mail that it has received the other Party’s notice via
e-mail, (c) on the date indicated on the return receipt if mailed
postage prepaid, by certified or registered U.S. Mail, with return
receipt requested; or (d) if sent or mailed by Federal Express or
other nationally recognized overnight delivery service, then as of
the next business day. In each case, such notices and other
communications shall be sent to a Party at the following
addresses:
If to
SLG:
Super
League Gaming, Inc.
2912
Colorado Ave., Suite 200
Santa
Monica, CA 90404
Attn:
General Counsel
Email:
gregg@superleague.com
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
If to
Riot:
[*****]
26.3.
Severability. If any provision
of this Agreement is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, such provision shall be deemed
amended to conform to the applicable laws of such jurisdiction so
as to be valid and enforceable, or, if it cannot be so amended
without materially altering the intention of the Parties, it will
be stricken, but the validity, legality and enforceability of such
provision shall not in any way be affected or impaired thereby in
any other jurisdiction and the remainder of this Agreement shall
remain in full force and effect.
26.4.
Waiver. Waiver by either of the
Parties of any breach of any provision of this Agreement shall not
operate or be construed as a waiver of any prior or subsequent
breach of the same or any other provision hereof.
26.5.
Entire Agreement. This
Agreement (including all exhibits attached hereto, which are
incorporated herein by reference) constitutes the entire agreement
between the Parties with respect to the subject matter hereto and
all prior agreements and negotiations are merged herein. This
Agreement may not be changed, modified, amended or supplemented,
except in writing signed by both Parties.
26.6.
Interpretation. The headings
contained herein are for convenience and reference only, do not
form a substantive part of this Agreement and in no way modify,
interpret or construe the intentions of the Parties. No provision
of this Agreement shall be interpreted for or against any Party
because that Party or its legal representative drafted such
provision. The words “including” and/or
“include” shall be interpreted without limitation when
used in this Agreement. If this Agreement is translated into any
language other than English, the English language version of this
Agreement shall prevail. A reference to a statute or statutory
provision herein is a reference to such statute or statutory
provision as amended, extended or re-enacted from time to
time.
26.7.
Counterparts. This Agreement
may be executed in multiple counterparts, each of which shall be
deemed to be an original, and all such counterparts shall
constitute one instrument, and signatures transmitted by facsimile
or electronic scan shall be effective.
26.8.
Not Effective Until Execution.
This Agreement shall have no force or effect, and nothing in this
Agreement shall be binding upon Riot and SLG, unless and until such
time, if any, as this Agreement has been executed by an authorized
signatory of Riot and SLG, respectively.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
IN WITNESS
WHEREOF, this Agreement has
been executed and is effective as of the Grant
Date.
SUPER LEAGUE GAMING, INC.
By: /s/ Ann
Hand
Ann Hand
CEO
RIOT GAMES, INC.
By:
/s/ A. Dylan
Jadeja
Name:
A. Dylan Jadeja
Its:
Financial Officer
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Appendix
A
Approved Movie Theatres
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Appendix
B
Riot Marks
1. To
be provided by Riot.
SLG Marks
3.
Netname –
www.superleague.com
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Appendix
C
[*****]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
EXHIBIT
A
[*****]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
EXHIBIT
B
[*****]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
EXHIBIT
C
[*****]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
AMENDED
AND RESTATED LICENSE AGREEMENT
This
Amended and Restated License Agreement (“Agreement”)
between Mojang AB and Super League Gaming, Inc. is made and entered
into as of September 12, 2017
RECITALS
WHEREAS, Mojang and
SLG entered into, and now wish to amend and restate that certain
License Agreement made as of August 1, 2016 (“Original
Agreement”);
NOW
THEREFORE, in consideration of the mutual promises contained in
this Agreement and for other good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, the
parties agree as follows:
AMENDMENT AND RESTATEMENT
OF THE LICENSE AGREEMENT DATED AUGUST 1, 2016
1.1
The parties to this
Amended and Restated License Agreement (the “Agreement”) made as of September
12, 2017 (“Amended
Effective Date”)
are:
1.1.0
Mojang AB, a
company with its principal place of business at Maria Skolgata 83
BV SE-118 53, Stockholm, Sweden (“Mojang”); and
1.1.1
Super League
Gaming, Inc. (“SLG”) a Delaware corporation
located at 2906 Colorado Ave., Santa Monica, CA 90404.
1.2
SLG and Mojang
shall each be a “Party” and collectively shall be
the “Parties” to
this Agreement.
2.1
Mojang owns and
publishes Minecraft, a
globally popular sandbox game that among other things enables
players to build constructions out of textured cubes in a 3D
procedurally generated world.
2.2
SLG operates
recreational leagues for gamers of all ages to compete, socialize
and play video games in movie theatres.
2.3
SLG desires a
license from Mojang with respect to the use of Minecraft IP in a game league played
within the Territory.
3.1
“Game” means Minecraft.
3.2
“Approved Advertising Content”
means advertising, artwork and other content related to the Game
that are approved in writing by Mojang to be used solely by SLG in
Mojang-approved advertising, marketing and promotion of the
Game.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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3.3
“Approved Game Content” means the
Minecraft mods created by
SLG for Game Leagues that are approved in writing by
Mojang.
3.4
“Authorized Users” means end users
that have a valid and current end user license (including PC-based,
mobile and other licenses) from Mojang to use and play the
Game.
3.5
“Game League” means the practice,
play and watch events that SLG operates in Gaming Venues with
Authorized Users using Approved Game Content in the manner
described in this Agreement.
3.6
“License” means the limited license
provided by Mojang to SLG in Section 4.1.
3.7
“Minecraft IP” means the
intellectual property owned by Mojang covering the Game, including
the Minecraft Marks.
3.8
“Minecraft Marks” means the
Minecraft trademarks, logos and/or symbols identified in
Exhibit A, attached
hereto.
3.9
“Gaming Venues” means movie
theatres and, subject to Mojang’s prior written approval,
other locations such as schools, arenas, and other physical
locations in the Territory that enable SLG to perform Game
Leagues.
3.10
“Term” means the period commencing
with the Effective Date and ending upon the earlier of three (3)
years from the Effective Date or the termination of this
Agreement.
3.11
“Territory” means the fifty (50)
States (including the Federal District of Columbia (DC)), within
the United States, but specifically excluding any other territories
or regions outside the fifty (50) States, plus Canada. The
Territory may be modified by the parties by mutual agreement in
writing.
4.1
Subject to the
terms and conditions of this Agreement, including SLG making timely
payments pursuant to Sections 10 and 11, and SLG complying with
Mojang’s trademark use guidelines at https://www.microsoft.com/en-
us/legal/intellectualproperty/trademarks/usage/general.aspx (the
“Trademark
Guidelines”), Mojang grants SLG a non-exclusive,
non-sublicensable, non- transferable, personal, limited license
during the Term under the Minecraft IP solely to (i) reproduce,
publicly display and publicly perform the Game and Approved Game
Content to Authorized Users of the Game as part of a Game League,
and (ii) display Approved Advertising Content solely in connection
with Mojang-approved advertising, marketing and promotion of the
Game League (collectively (i) and (ii) “Licensed
Activities”).
4.2
The License is
non-extendible, non-sublicensable, non-exclusive, non-
transferable, and personal to SLG and shall not provide any
enforcement rights to
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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any
third parties. Mojang reserves all rights (and no one receives any
rights) not expressly granted by the License. No additional rights
(including any implied patent licenses, covenants, releases,
immunities or other rights) are granted by the License, through
implication, exhaustion, estoppel or otherwise. Without limiting
the generality of the foregoing, the License does not include, and
is conditioned upon no one, including SLG and the Authorized Users,
receiving, any license, right, release or covenant to (a) sell,
lease, license or distribute the Game or licenses to use the Game,
(b) any intellectual property, products, services, technology,
software, features or functionality not included in the Minecraft
IP (e.g. related or enabling technologies or rights), or (c)
encumber, license or sublicense the Minecraft IP.
5.1
SLG acknowledges
and agrees that Mojang owns the Minecraft Marks and all associated
goodwill, and retains all right, title, and interest in and to the
Minecraft Marks, and that all goodwill arising from use of the
Minecraft Marks will inure to the benefit of Mojang. When using the
Minecraft Marks as permitted herein, the activities, service or
product to which Mojang’s goodwill is being associated by
virtue of the Minecraft Mark usage will meet or exceed standards of
quality and performance generally accepted in the industry for such
activities, service or product. In the event Mojang reasonably
believes such quality standards are not being met, or does not
otherwise agree with SLG’s use of the Minecraft Marks, SLG
will, as promptly as is commercially reasonable, correct any such
deficiencies in its use of the Minecraft Marks and conformance to
the quality standards. SLG will not use the Minecraft Marks in any
manner that could
diminish or
otherwise damage Mojang’s goodwill. SLG will not adopt, use
or register any corporate name, trade name, domain name, trademark,
service mark or certification mark, or other designation
confusingly similar to the Minecraft Marks. SLG will take
reasonable steps to notify Mojang of any suspected infringement of
or challenge to the Minecraft Marks of which it becomes
aware.
6.1
Process for Approving Materials and
new Game League Activities. Prior to displaying any
advertising, artwork or other content in connection with any
advertising, marketing, promotion and/or sponsorships of the Game
League and prior to using any Minecraft mods as part of the
Licensed Activities (collectively, all of the foregoing,
“Material”), SLG
shall submit a sample of any Material to Mojang and seek approval
of such Material as Approved Advertising Content or Approved Game
Content, respectively, at least ten (10) business days prior to
distributing, displaying, and/or otherwise using such Material. SLG
shall not distribute, display, and/or otherwise use such Material
without receiving Mojang’s prior written approval. Mojang may
withhold its approval in its sole and absolute discretion. Prior to
beginning any new Game League program (other than movie theater
play and practice events), watch event, or other activity, SLG
shall submit to Mojang a description of the program for
Mojang’s written approval. If
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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Mojang
fails to respond to SLG’s request for approval within ten
(10) business days, SLG’s request for approval shall be
deemed denied by Mojang. If Mojang fails to respond within ten (10)
business days, SLG may send a reminder email to Mojang within
forty-eight (48) hours thereafter. SLG shall not be required to re-
submit any previously approved Material for subsequent
use.
7.1
SLG will use the
Minecraft Marks only in accordance with the Trademark Guidelines
and only in connection with the Licensed Activities as approved by
Mojang.
7.2
SLG will maintain a
dedicated, full-time employee who has deep experience in the Game
and the gaming industry to manage Game League operations, liaise
with Mojang on technology, marketing and other strategic matters,
and ensure the Games Leagues are an authentic, player-focused
experience.
7.3
SLG will operate
the Game League and perform Licensed Activities in a manner that
provides a beneficial user experience for Authorized Users at all
times.
Mojang will respond to a reasonable number
of requests for approval of Material in a commercially reasonable
manner.
9.1
SLG will not place,
display or post any materials depicting or using the Minecraft IP
which contain or include any material which is unlawful, libelous,
obscene, indecent, threatening, intimidating, or harassing.
Additionally, SLG shall not feature, or permit any third-party to
feature, any of the following in its advertising or promotions
relating to the Game or the Game League:
9.1.1
Prescription or
non-“over-the-counter” drugs.
9.1.2
Firearms, handguns,
ammunition, or peripherals.
9.1.3
Pornography or
pornographic products.
9.1.4
Tobacco, tobacco
products, or paraphernalia.
9.1.5
Alcohol products or
other intoxicants the sale or use of which is regulated by
law.
9.1.6
Sellers or
marketplaces of virtual items known to be counterfeit or illegal
sellers thereof, or who are otherwise in breach of the Game’s
terms of use.
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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9.1.7
Businesses engaged
in gambling, wagering, bookmaking, or sports or esports betting,
including fantasy sports or esports.
9.1.8
Specific sponsors
or entities identified in writing by Mojang (email
sufficient).
9.2 SLG shall strictly
comply with the Children’s Online Privacy Policy Act of 1988
(“COPPA”) at all
times.
10.1
Game League Operations.
[*****]
10.2
Advertising.
[*****]
10.3
Sponsorship.
[*****]
10.4
GAAP. All amounts calculated
under this Agreement must be calculated in accordance with U.S.
generally accepted accounting principles (“GAAP”).
11.1
No later than
thirty (30) days after the end of each month during the Term, SLG
shall send Mojang a detailed report to karin@mojang.com which shall
include detailed information for: [*****].
11.2
Mojang will send
SLG invoices reflecting amounts due to Mojang based on SLG’s
reports. SLG shall pay the invoiced amounts within seven (7)
calendar days of receipt of Mojang’s invoices. All payments
will be made in U.S. Dollars by wire transfer into Mojang’s
bank account specified below or such other bank account of Mojang
in the U.S. as Mojang may specify in the invoice. SLG will bear any
wire transfer fees charged by the transferred bank, and Mojang will
bear any wire transfer fees charged by the receiving
bank.
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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Wiring
Instructions:
[*****]
12.1
SLG shall maintain
and keep (at SLG’s principal place of business and at its
sole expense), during the Term and for at least three (3) years
after expiration or earlier termination of this Agreement, accurate
books of accounting and records covering all matters and
transactions related to this Agreement. Mojang and its duly
authorized representative(s) shall have the right, upon reasonable
notice and at all reasonable hours of the day, to examine and copy
and otherwise audit said books of accounting, records and all other
documents and materials in the possession or under the control of
SLG with respect to all transactions related to this Agreement. In
the event such inspection or audit discloses or reflects
underpayment or other discrepancies totaling at least five percent
(5%) of the amount due and payable to Mojang by SLG, then, without
limiting any other rights or remedies that may be available to
Mojang as a result of the same, SLG shall reimburse Mojang for all
costs and expenses of such inspection or audit and shall pay Mojang
such underpayment or other discrepancy within fifteen (15) days of
the end of the inspection or audit.
Unless
otherwise set forth in this Agreement, each Party will bear its own
costs and expenses that are incurred in the performance of their
obligations under this Agreement.
14.1
Termination by Mojang. Mojang
shall have the right to terminate this Agreement by providing
written notice to SLG as follows:
14.1.1
For material breach
by SLG upon expiration of a thirty (30) day cure period commencing
from the date of notice of material breach, provided that such
material breach is curable.
14.1.2
Immediately for any
material breach by SLG if such material breach is
uncurable.
14.1.3
Immediately in the
event that SLG (i) files or has filed against it a petition in
bankruptcy; (ii) is adjudged bankrupt; (iii) becomes insolvent;
(iv)
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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makes
an assignment for the benefit of creditors; (v) discontinues its
business; or (vi) has a receiver appointed for it or its business
who is not discharged within thirty (30) days.
14.1.4
For Mojang’s
convenience at Mojang’s discretion by providing
ninety
(90)
days’ written notice to SLG.
14.2
The Term of this
Agreement may only be extended upon consent of Mojang in writing at
its discretion.
14.3
Upon expiration or
termination of this Agreement, the License will terminate, SLG will
immediately cease all use of the Minecraft IP and only the
following Sections shall survive: Sections 1, 2, 3, 4.2, 5.1 (but
only the first and penultimate sentences), 10 (but only with
respect to payments for activities occurring during the Term), 11
(but only with respect to reporting and payments for activities
occurring during the Term), 12 (but only for 3 years after the
Term), 13, 14.3, 15, 16, 17, 18, 20, 21, and 22.
15.1
Confidential Information. Each
Party acknowledges that by reason of its relationship to the other
Party under this Agreement it will have access to and acquire
knowledge, material, data, systems and other information concerning
the operation, business, financial affairs and intellectual
property of the other Party that may not be accessible or known to
the general public (referred to as “Confidential
Information”).
15.2
No Disclosure/Use. Each Party
agrees that it will: (i) maintain and preserve the confidentiality
of all Confidential Information received from the other Party (the
“Disclosing
Party”), both orally and in writing, including taking
such steps to protect the confidentiality of the Disclosing
Party’s Confidential Information as the Party receiving such
Confidential Information (the “Receiving Party”) takes to protect
the confidentiality of its own confidential or proprietary
information; provided, however, that in no instance shall the
Receiving Party use less than a reasonable standard of care to
protect the Disclosing Party’s Confidential Information; (ii)
disclose such Confidential Information only to its own
employees on a
“need-to-know” basis, and only to those employees who
have agreed to maintain the confidentiality thereof pursuant to a
written agreement containing terms least as stringent as those set
forth in this Agreement; (iii) not disclose such Confidential
Information to any third party without the prior written consent of
the Disclosing Party; provided, however, that each Party may
disclose the financial terms of this Agreement to its legal and
business advisors and to potential investors so long as such third
parties agree to maintain the confidentiality of such Confidential
Information. Each Receiving Party further agrees to use the
Confidential Information of the Disclosing Party only for the
purpose of performing its obligations under this Agreement. The
Receiving Party’s obligation of confidentiality shall survive
this Agreement for a period of
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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five
(5) years from the date of its termination or expiration and
thereafter shall terminate and be of no further force or effect;
provided, however, that with respect to Confidential Information
which constitutes a trade secret, such information shall remain
confidential so long as such information continues to remain a
trade secret. The Parties also mutually agree to (1) not alter or
remove any identification or notice of any copyright, trademark, or
other proprietary rights which indicates the ownership of any part
of the Disclosing Party’s Confidential Information; and (2)
notify the Disclosing Party of the circumstances surrounding any
possession or use of the Confidential Information by any person or
entity other than those authorized under this
Agreement.
15.3
Exclusions. The confidentiality
obligations of the Parties described above shall not apply to
Confidential Information which the Receiving Party can prove: (i)
has become a matter of public knowledge through no fault, action or
omission of or by the Receiving Party; (ii) was rightfully in the
Receiving Party’s possession prior to disclosure by the
Disclosing Party; (iii) subsequent to disclosure by the Disclosing
Party, was rightfully obtained by the Receiving Party from a third
party who was lawfully in possession of such Confidential
Information without restriction; (iv) was independently developed
by the Receiving Party without resort to the Disclosing
Party’s Confidential Information; or (v) must be disclosed by
the Receiving Party pursuant to law, judicial order or any
applicable regulation (including any applicable stock exchange
rules and regulations); provided, however, that in the case of
disclosures made in accordance with the foregoing clause (v), the
Receiving Party must (unless prohibited by law) provide prior
written notice to the Disclosing Party of any such legally required
disclosure of
the
Disclosing Party’s Confidential Information as soon as
practicable in order to afford the Disclosing Party an opportunity
to seek a protective order, or, in the event that such order cannot
be obtained, disclosure may be made in a manner intended to
minimize or eliminate the disclosure of Confidential
Information.
16.
PRIVACY
AND DATA SECURITY
16.1
Privacy Laws. SLG shall at all
times perform its obligations hereunder in accordance with
SLG’s privacy policies, the requirements of any contracts or
codes of conduct to which SLG is a party and any applicable laws or
regulations related to the processing of Personal Data (as defined
below) and/or the privacy of individual data subjects
(collectively, “Privacy
Laws”), including obtaining and at all times
maintaining any appropriate registrations or certifications under
such Privacy Laws.
16.2
Data Processing. For the
purposes of this Agreement, “Personal Data” has the meaning set
forth in applicable Privacy Laws, specifically including without
limitation any and all personally identifiable information of
Mojang customers or employees, as well any copies or corresponding
reference files kept or made by SLG thereof in any format. To the
extent SLG is required to process Personal Data, SLG expressly
acknowledges and agrees that it will only process such
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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Personal Data in
accordance with terms and conditions of this Agreement and as
necessary to perform its obligations hereunder.
16.3
Information Security. SLG shall
establish, employ and at all times maintain physical, technical and
administrative security safeguards and procedures sufficient to
prevent any unauthorized processing of Personal Data and/or use,
access, copying, exhibition, transmission or removal of
Mojang’s Confidential Information from SLG’s
facilities. SLG shall promptly provide Mojang with written
descriptions of such procedures and policies upon request. Mojang
shall have the right, upon reasonable prior written notice to SLG
and during normal business hours, to conduct on-site security
audits or otherwise inspect SLG’s facilities to confirm
compliance with such security requirements.
17.
REPRESENTATIONS
AND WARRANTIES
17.1
Standing; Due Authorization.
SLG represents, warrants and covenants that it: (i) is an entity
duly formed and/or organized and validly subsisting pursuant to the
laws of its jurisdiction of formation and/or organization; (ii) is
qualified to do business in the jurisdictions in which it operates
the Game League; and (iii) has due authorization and authority to
enter into this Agreement and to fully perform its obligations
hereunder.
17.2
Performance. SLG represents and
warrants that in performing its obligations hereunder, it shall at
all times: (i) conduct itself in a professional manner in
reasonable accordance with industry standards; and (ii) comply with
all applicable laws, statutes, ordinances, rules, regulations and
requirements of all governmental agencies and regulatory
bodies.
18.1
SLG will indemnify
and hold harmless Mojang and any of its affiliates, subsidiaries,
directors, officers, agents, employees, successors and assigns from
and against any and all third party claims, actions, losses,
damages and expenses (including reasonable, outside attorney fees)
arising out of or caused by: (i) any failure by SLG to perform its
obligations under this Agreement; (ii) the breach of any
representation, warranty, and/or covenant made by SLG under this
Agreement, and (iii) SLG performing Licensed
Activities.
18.2
If any action is
brought against Microsoft and/or its affiliates, subsidiaries,
directors, officers, agents, employees, successors and assigns (the
“Indemnified
Party”) with respect to any allegation for which
Microsoft seeks indemnity from SLG (the “Indemnifying Party”), Microsoft
shall promptly notify the Indemnifying Party in writing. The
Indemnified Party shall cooperate with the Indemnifying Party, at
the Indemnifying Party’s expense and in all reasonable
respects, in connection with the defense of any such action. The
Indemnifying Party shall conduct all proceedings or negotiations in
connection therewith, assume the defense thereof, and all other
required steps or proceedings to settle or
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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defend
any such action, including the employment of counsel and payment of
all expenses; provided, however, the Indemnified Party shall have
the right to employ separate counsel and jointly participate in the
defense at the Indemnified Party’s sole expense. The
Indemnifying Party shall not enter into any settlement that
obligates the Indemnified Party to take any action or incur any
expense without such Indemnified Party’s prior written
consent, which consent shall not be unreasonably withheld or
delayed.
19.1
SLG shall secure
and maintain, at its sole cost and expense, in connection with its
obligations hereunder and operation of the Game League, all
customary and necessary insurance policies, including comprehensive
general liability insurance with limits of not less than One
Million USD ($1,000,000) per occurrence / Two Million USD
($2,000,000) in the aggregate, employer’s liability insurance
in a minimum amount of One Million USD ($1,000,000) per occurrence,
automobile liability insurance in a minimum amount of One Million
USD ($1,000,000) per occurrence, statutory worker’s
compensation insurance and professional liability or cyber
liability insurance (which shall include errors and omissions,
media liability, privacy and network security insurance) with
limits of not less than Two Million USD ($2,000,000) per occurrence
/ Two Million USD ($2,000,000) in the aggregate, which policies
shall list Mojang as an additional insured (collectively, the
“Insurance”).
SLG shall deliver to Mojang a certificate evidencing the Insurance
required by this section. SLG shall use an Insurance provider with
an AM BEST ratings of at least A-VII.
20.
LIMITATION
OF LIABILITY; DISCLAIMER
20.1
TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL
MOJANG OR ITS AFFILIATES BE LIABLE TO SLG FOR (1) ANY CLAIMS OR
DAMAGES UNDER THIS AGREEMENT REGARDLESS OF THEORY OF LIABILITY,
WHETHER BASED UPON PRINCIPLES OF CONTRACT, WARRANTY, NEGLIGENCE OR
OTHER TORT, BREACH OF ANY STATUTORY DUTY, PRINCIPLES OF INDEMNITY,
THE FAILURE OF ANY LIMITED REMEDY TO ACHIEVE ITS ESSENTIAL PURPOSE
OR OTHERWISE, OR (2) FOR ANY SPECIAL, CONSEQUENTIAL, RELIANCE,
INDIRECT, INCIDENTAL, PUNITIVE OR EXEMPLARY DAMAGES, WHETHER
FORESEEABLE OR NOT, INCLUDING LOST PROFITS, REVENUE OR GOODWILL. IN
NO EVENT SHALL MOJANG’S LIABILITY TO SLG ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT EXCEED THE TOTAL AMOUNTS PAID BY SLG
TO MOJANG HEREUNDER.
20.2
TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, MOJANG DISCLAIMS ANY AND ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED OR STATUTORY WITH
RESPECT TO THE LICENSE, THE LICENSED ACTIVITES, AND THE MINECRAFT
IP,
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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INCLUDING WITH
RESPECT TO VALIDITY, NONINFRINGEMENT, MERCHANTABILITY AND FITNESS
FOR ANY PARTICULAR PURPOSE.
21.1
Governing Law; Venue. This
Agreement shall be interpreted and controlled first in accordance
with the federal laws of the United States to the extent federal
subject matter jurisdiction exists and second in accordance with
the laws of the State of Washington without regard to its conflict
of law rules. With respect to all civil actions or other legal or
equitable proceedings directly arising between the Parties under
this Agreement, the Parties consent to exclusive jurisdiction and
venue in the United States District Court for the Western District
of Washington (the “Forum”), unless no federal
jurisdiction exists, in which case the Parties consent to exclusive
jurisdiction and venue in the Washington state courts (the
“Alternate
Forum”). Each Party irrevocably consents to personal
jurisdiction and waives the defense of forum non conveniens in the
Forum, or Alternate Forum as applicable. Process may be served on
the Parties in the manner authorized by applicable law or court
rule.
21.2
Injunctive Relief. SLG agrees
that in the event of any breach or alleged breach by SLG of any
covenant or agreement in this Agreement, Mojang would encounter
extreme difficulty in attempting to prove the actual amount of
damages suffered by it as a result of such breach and may not have
adequate remedy at law in such event. SLG therefore agrees that, in
addition to any other remedy available at law or in equity, in the
event of such breach, Mojang shall be entitled to seek and receive
specific performance and temporary, preliminary and permanent
injunctive relief from violation of any of said covenants and
agreements without the requirement of proving the amount of any
actual damage to Mojang resulting or expected from such
breach.
21.3
Attorney Fees. In any action
arising out of or related to this Agreement, the prevailing Party
shall be entitled to recover its costs and attorney fees reasonably
incurred in connection with the dispute.
22.1
Assignment. SLG may not assign
this Agreement, in whole or in part, by operation of law or
otherwise, without the prior written consent of Mojang, which may
be withheld in Mojang’s sole discretion. Mojang may assign
this Agreement to an affiliate of Mojang upon notice to
SLG.
22.2
Notices. All notices or other
communications required or permitted hereunder shall be in writing
and shall be deemed to have been duly given (a) on the date
delivered in person or by courier, (b) on the date a Party responds
via e-mail that it has received the other Party’s notice via
e-mail, (c) on the date indicated on the return receipt if mailed
postage prepaid, by certified or registered U.S. Mail, with return
receipt requested; or (d) if sent or mailed by Federal Express (or
other
*****
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SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
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nationally
recognized) overnight delivery service, then as of the next
business day. In each case, such notices and other communications
shall be sent to a Party at the following addresses:
If to
SLG:
Super
League Gaming, Inc. 2906 Colorado Ave
Santa
Monica, CA 90404 Attn: Ann Hand, CEO
Email:
ann@superleague.com If to Mojang:
Mojang
AB
Maria
Skolgata 83 BV SE-118 53, Stockholm, Sweden Attn: Jonas
Martennson
Email:
jonas@mojang.com
With a
copy to: Microsoft Corporation One Microsoft Way Redmond, WA 98052
Attn: Jeremy Snook
Email:
jesnook@microsoft.com
22.3
Severability. If any provision
of this Agreement is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, such provision shall be deemed
amended to conform to the applicable laws of such jurisdiction so
as to be valid and enforceable only if it can be so amended without
materially altering the intention of the Parties. If the intent of
the Parties cannot be preserved, or if Section 4.2 or Section 20,
in whole or in part, are found to be unenforceable, this Agreement
shall terminate and become be null and void.
22.4
Waiver. Waiver by either of the
Parties of any breach of any provision of this Agreement shall not
operate or be construed as a waiver of any prior or subsequent
breach of the same or any other provision hereof.
22.5
Entire Agreement. This
Agreement (including all exhibits attached hereto, which are
incorporated herein by reference) constitutes the entire agreement
between the Parties with respect to the subject matter hereto and
all prior agreements and negotiations are merged herein. This
Agreement may not be changed, modified, amended or supplemented,
except in writing signed by both Parties.
22.6
Interpretation. The headings
contained herein are for convenience and reference only, do not
form a substantive part of this Agreement and in no way
modify,
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
interpret or
construe the intentions of the Parties. No provision of this
Agreement shall be interpreted for or against any Party because
that Party or its legal representative drafted such provision. The
words “including” and/or “include” shall be
interpreted without limitation when used in this Agreement. If this
Agreement is translated into any language other than English, the
English language version of this Agreement shall prevail. A
reference to a statute or statutory provision herein is a reference
to such statute or statutory provision as amended, extended or
re-enacted from time to time.
22.7
Counterparts. This Agreement
may be executed in multiple counterparts, each of which shall be
deemed to be an original, and all such counterparts shall
constitute one instrument. Authorized signatures transmitted by
facsimile, email or electronic scan shall be
effective.
22.8
Not Effective Until Execution.
This Agreement shall have no force or effect, and nothing in this
Agreement shall be binding upon Mojang and SLG, unless and until
such time, if any, as this Agreement has been executed by an
authorized signatory of Mojang and SLG, respectively.
22.9
Relationship. This Agreement
does not create any worker or employer-employee relationship,
partnership, joint venture, franchise or agency relationship
between Mojang and SLG. Neither party nor any of its
representatives may make any statement, representation, warranty or
promise to the contrary or on behalf of the other
party.
IN WITNESS WHEREOF, the Parties have
executed and delivered this Agreement as of the Effective
Date.
MOJANG
AB
/s/ Jonas
Martensson
Signature
Jonas Martensson
Print
Name
Managing Director
Title
|
SUPER
LEAGUE GAMING, INC.
/s/ Ann
Hand
Signature
Ann Hand
Print
Name
CEO
Title
|
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
EXHIBIT A
Minecraft Marks
1.
MINECRAFT
2.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
MASTER
AGREEMENT
1.1.
The parties to this
Master Agreement (this “Agreement”) made as of June 9,
2017 (“Effective
Date”) are:
1.1.1.
Viacom Media
Networks, a division of Viacom International Inc., a Delaware
corporation located at 1515 Broadway, New York, NY 10036
(“VMN”);
and
1.1.2.
Super League
Gaming, Inc., a Delaware corporation located at 2906 Colorado Ave.,
Santa Monica, CA 90404 (“SLG”).
1.2.
SLG and VMN shall
each be a “Party” and collectively shall be
the “Parties” to
this Agreement.
2.1.
VMN owns and
operates a basic cable children’s programming service known
as Nickelodeon.
2.2.
SLG operates
recreational leagues for gamers of all ages to compete, socialize
and play video games in public spaces worldwide.
2.3.
Concurrently
herewith, VMN is purchasing 277,778 shares of the common stock,
$0.001 par value per share (“Common Stock”), of SLG, pursuant
to a Common Stock Purchase Agreement, dated as of the date hereof,
by and among SLG, VMN and the other parties thereto in connection
with a financing of Common Stock (the “Purchase Agreement”).
2.4.
As a condition and
inducement to VMN entering into the Purchase Agreement, VMN and SLG
desire to enter into this Agreement and agree to certain matters as
set forth herein.
[*****]
4.1.
Common Stock Grant. As
consideration for [*****], SLG hereby issues to VMN 277,778 shares
of Common Stock (the “VMN Shares”).
4.2.
Shareholder Rights. SLG and VMN
hereby agree that the VMN Shares are deemed to be
“Shares” for all purposes under the Purchase Agreement,
and the respective rights and obligations of SLG and VMN with
respect to the Shares thereunder shall apply to
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
the VMN Shares as if the VMN
Shares were purchased by, and issued to, VMN pursuant to the terms
and conditions thereof. For the avoidance of doubt, the VMN Shares
are also deemed to be “Registrable Securities” for all
purposes under the Investors’ Rights Agreement, dated as of
the date hereof, to be entered into by SLG, VMN and the other
parties thereto in connection with the Purchase Agreement (the
“IRA” and
together with the Purchase Agreement, the “Financing Documents”), and the
respective rights and obligations of SLG and VMN with respect to
Registrable Securities thereunder shall apply to the VMN
Shares.
4.3.1.
For so long as VMN
and/or any of its Affiliates beneficially own any shares of Common
Stock, SLG shall invite a representative of VMN to attend all
meetings of the Board of Directors of SLG (the “Board”) in a non-voting observer
capacity and, in this respect, shall give such representative
copies of all notices, minutes, consents and other materials that
it provides to its directors at the same time and in the same
manner as provided to such directors; provided, that such
representative shall agree to hold in strict confidence and trust
all information so provided; and provided, further, that SLG reserves the
right to withhold any information and to exclude such
representative from any meeting or portion thereof if SLG
reasonably determines in good faith, upon advice of counsel, that
access to such information or attendance at such meeting could
adversely affect the attorney-client privilege between SLG and its
counsel or result in disclosure of trade secrets or a conflict of
interest.
4.3.2.
For purposes of
this Agreement, “Affiliate” means, with respect to
either Party, any other individual or entity that directly, or
through one or more intermediaries, controls or is controlled by or
is under common control with such Party; provided, however, that, for all purposes
hereunder, the Affiliates of VMN shall consist solely of Viacom
Inc. and each other individual or entity that Viacom Inc.,
directly, or through one or more intermediaries, controls. For
purposes of this definition, the term “control” (including the terms
“controlled by”
and “under common control
with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of management and
policies, whether through ownership of voting securities, by
contract or otherwise.
4.4.
Nothing in this
Agreement shall preclude or in any way restrict VMN or any of its
Affiliates from investing or participating in any particular
enterprise whether or not such enterprise has products or services
that compete with those of SLG.
The
Parties shall execute and deliver the Master Joint Promotion
Agreement, in the form
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
attached hereto as
Appendix B, concurrently
with the execution and delivery of this Agreement.
[*****]
Unless
otherwise set forth in this Agreement, each Party shall bear its
own costs and expenses that are incurred in the performance of its
obligations under this Agreement.
10.1.
Confidential Information. Each
Party acknowledges that by reason of its relationship to the other
Party under this Agreement it shall have access to and acquire
knowledge, material, data, systems and other information concerning
the operation, business and financial affairs of the other Party
that may not be accessible or known to the general public,
including the terms of this Agreement (referred to as
“Confidential
Information”).
10.2.1.
Each Party (the
“Receiving
Party”) agrees that it shall (a) maintain and preserve
the confidentiality of all Confidential Information received from
the other Party (the “Disclosing Party”), both orally
and in writing; (b) disclose Confidential Information only to
the directors, officers, employees and representatives, including
auditors, legal advisors, financial advisors and consultants, of
the Receiving Party and its subsidiaries (and, with respect to VMN,
the directors, officers, employees and representatives of Viacom
Inc. and its subsidiaries) (collectively, “Representatives”), on a
“need-to-know” basis, and advise its Representatives
that Confidential Information is confidential and that by receiving
Confidential Information they are agreeing to be bound by the
confidentiality provisions contained herein and use the
Confidential Information only for the purposes described herein;
and (c) not disclose Confidential Information to any third party
without the prior written consent of the Disclosing
Party.
10.2.2.
Each Receiving
Party further agrees to use the Confidential Information of the
Disclosing Party only for the purpose of performing its obligations
under this Agreement and the Financing Documents. The Receiving
Party’s
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
obligation of
confidentiality shall survive this Agreement for a period of two
(2) years from the date of its termination or expiration and
thereafter shall terminate and be of no further force or
effect.
10.2.3.
Exclusions. The confidentiality
obligations of the Parties described above shall not apply to
Confidential Information which (a) has become a matter of public
knowledge through no fault, action or omission of or by the
Receiving Party; (b) was in the Receiving Party’s possession
prior to disclosure by the Disclosing Party; (c) subsequent to
disclosure by the Disclosing Party, was obtained by the Receiving
Party from a third party who, to the knowledge of the Receiving
Party, was entitled to disclose the Confidential Information to the
Receiving Party; (d) was independently developed by the Receiving
Party without reference to or use of the Disclosing Party’s
Confidential Information; or (e) must be disclosed by the Receiving
Party pursuant to law, judicial order or any applicable regulation
(including any applicable stock exchange rules and regulations);
provided,
however, that in
the case of disclosures made in accordance with the foregoing
clause (e), the Receiving Party must provide prior written notice
to the Disclosing Party (if permitted by law) of any such legally
required disclosure of the Disclosing Party’s Confidential
Information as soon as practicable in order to afford the
Disclosing Party an opportunity to seek, at its expense, a
protective order, or, in the event that such order cannot be
obtained, disclosure may be made in a manner intended to minimize
or eliminate any potential liability.
11.1.
Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Delaware.
11.2.
Dispute Resolution. The Parties
(a) hereby irrevocably and unconditionally submit to the
jurisdiction of the federal and state courts located in Los Angeles
County, California for the purpose of any suit, action or other
proceeding arising out of or based upon this Agreement, (b) agree
not to commence any suit, action or other proceeding arising out of
or based upon this Agreement except in the federal and state courts
located in Los Angeles County, California, and (c) hereby waive,
and agree not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that
it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court.
EACH
PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
AGREEMENT, THE
FINANCING DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR
THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE),
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE
PARTIES HERETO AND THESE PROVISIONS SHALL NOT BE SUBJECT TO ANY
EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL
11.3.
Assignment. Neither Party may
assign this Agreement, in whole or in part, by operation of law or
otherwise, without the other Party’s prior written consent;
provided,
however, that VMN
may assign this Agreement to any of its Affiliates without
obtaining SLG’s prior written consent.
11.4.
Notices. All notices and other
communications hereunder shall be in writing and given by
nationally recognized overnight delivery service, such as Federal
Express, or delivery against receipt to the Party to whom it is
given, in each case, at such Party’s address set forth below
or such other address as such Party may hereafter specify by notice
to the other Party given in accordance herewith, together with a
copy thereof by email transmitted to the recipient’s email
address below (or such other email address as such Party may
hereafter specify by notice to the other Party given in accordance
herewith) which copy shall not constitute notice hereunder;
provided, that the
failure to deliver a copy of a notice or other communication to a
recipient via email shall in no way affect or limit the validity of
such notice or other communication. Any such notice or other
communication shall be deemed to have been given as of the date so
delivered (or, if so delivered after normal business hours at the
location of the recipient, on the next business day).
If to
SLG:
Super
League Gaming, Inc.
2906
Colorado Ave.
Santa
Monica, CA 90404
Attn:
General Counsel
Email:
gregg@superleague.com
If to
VMN:
Viacom
International Inc.
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
1515
Broadway
New
York, NY 10036
Attn: General
Counsel
[*****]
11.5.
Severability. If any provision
of this Agreement is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, such provision shall be deemed
amended to conform to the applicable laws of such jurisdiction so
as to be valid and enforceable, or, if it cannot be so amended
without materially altering the intention of the Parties, it shall
be stricken, but the validity, legality and enforceability of such
provision shall not in any way be affected or impaired thereby in
any other jurisdiction and the remainder of this Agreement shall
remain in full force and effect.
11.6.
Waiver. Waiver by either of the
Parties of any breach of any provision of this Agreement shall not
operate or be construed as a waiver of any prior or subsequent
breach of the same or any other provision hereof.
11.7.
Entire Agreement. This
Agreement (including all exhibits attached hereto, which are
incorporated herein by reference) and the Financing Documents
constitute the entire agreement between the Parties with respect to
the subject matter hereof and any other written or oral agreement
relating to the subject matter hereof existing between the Parties
is expressly canceled. This Agreement may not be changed, modified,
amended or supplemented, except in writing signed by both
Parties.
11.8.
Interpretation. The headings
contained herein are for convenience and reference only, do not
form a substantive part of this Agreement and in no way modify,
interpret or construe the intentions of the Parties. No provision
of this Agreement shall be interpreted for or against any Party
because that Party or its legal representative drafted such
provision. The words “including” and/or
“include” shall be interpreted without limitation when
used in this Agreement. If this Agreement is translated into any
language other than English, the English language version of this
Agreement shall prevail. A reference to a statute or statutory
provision herein is a reference to such statute or statutory
provision as amended, extended or re-enacted from time to
time.
11.9.
Counterparts. This Agreement
may be executed in multiple counterparts, each of which shall be
deemed to be an original, and all such counterparts shall
constitute one instrument, and signatures transmitted by facsimile
or electronic scan shall be effective.
[Signature Pages Follow]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
IN WITNESS WHEREOF, this Agreement has
been duly executed and is effective as of the Effective
Date.
SLG:
SUPER LEAGUE GAMING, INC.
By:
/s/ Ann
Hand
Title:
CEO
Name:
Ann Hand
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
VMN:
VIACOM
MEDIA NETWORKS, a division of VIACOM INTERNATIONAL
INC.
By: /s/ Alexander J.
Berkett
Title:
Senior Vice President, Corporate
Development
Name:
Alexander J. Berkett
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Appendix A
[*****]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Appendix B
Form of Master Joint Promotion Agreement
[attached]
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
MASTER JOINT PROMOTION AGREEMENT
This
Joint Promotion agreement (the “Agreement”), effective as of June
9, 2017 (the “Effective
Date”), by and between Super League Gaming, Inc.
(“Partner”), a
Delaware corporation, having its principal place of business at
2906 Colorado Ave., Santa Monica, CA 90404 and Viacom Media
Networks, a division of Viacom International Inc.
(“VMN”), a
Delaware corporation, having its principal place of business at
1515 Broadway, New York, NY 10036.
WHEREAS, Partner
operates recreational leagues for gamers of all ages to compete,
socialize and play video games in public spaces worldwide
(“Partner
Services”) and VMN owns and operates a basic cable
children’s programming service known as Nickelodeon
(“Nickelodeon”);
and
WHEREAS, Partner
desires to enter into a master joint promotion agreement with VMN
whereby VMN’s Nickelodeon Group business shall be the Anchor
Sponsor (as defined below) of all of Partner’s child directed
products and services that are available for sponsorship (the
“Promotion(s)”),
including without limitation all live and online recreational
league competitions conducted by Partner for kids under the age of
16 (the “Events”).
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
b. Statements
of Work. Upon mutual execution by the parties, each
Statement of Work shall be effective, incorporated into this
Agreement and subject to all the terms and conditions hereof. Each
Statement of Work shall be dated and consecutively numbered for
identification, and at a minimum, contain the following: (a) a
description of any Services to be performed and any Deliverables to
be provided; (b) the specifications for any Services and/or
Deliverables (“Specifications”); (c) milestone
schedules for performance and delivery of any Services and/or
Deliverables; (d) Fees payable by either party with respect to the
Services and/or Deliverables; (e) the term of the Statement of Work
and (f) any additional information, terms and conditions that may
be agreed between the parties, including, without limitation, any
terms necessary to perform the Services, provide the Deliverables
and/or evaluate Partner’s compliance with the terms of any
Statement of Work. In the event of a dispute between the terms of
this Agreement and any Statement of Work, the terms of this
Agreement shall prevail, except to the extent that such provision
in a Statement of Work makes express reference to the specific
provision of the Agreement to which it supersedes. Any
modifications to a Statement of Work shall be set forth in a
written amendment, duly executed by the parties, setting forth such
modifications and any impact such modifications may have on
performance of Services, provision of Deliverables, Fees payable
thereunder and/or any other terms and conditions of the Statement
of Work.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
c.
Territory and Promotion
Elements. Unless otherwise specified in a Statement of Work,
each Promotion shall be conducted within the United States, its
territories and possessions, including Puerto Rico (the
“Licensed
Territory”) during the Term (as defined below), and
shall consist of the elements specified in each such Statement of
Work. As Anchor Sponsor for any given Event, VMN shall be
responsible for the cost of any giveaways, prizing and marketing
materials that it chooses to provide at its sole
discretion.
a.
VMN hereby grants
Partner the non-exclusive, royalty-free, non-transferable, limited,
revocable right to use the Nickelodeon name and logos
(collectively, the “VMN
Marks”) during the Term in the Licensed Territory
solely in connection with the Promotions on the terms and
conditions set forth herein, including without limitation,
VMN’s approval rights set forth in Section 7(a) below and the
marks usage guidelines as set forth in Exhibit B.
b.
Partner hereby
grants VMN the non-exclusive, royalty-free, non-transferable,
limited, revocable right to use Partner’s name and logo and
the names and images of the Partner Services, including without
limitation, any third party names, logos and trademarks associated
therewith, which must be provided to VMN free and clear for use as
contemplated herein (which third party content shall include the
Minecraft name, logo and trademarks associated with the Partner
Services) (collectively, the “Partner Marks”) during the Term in
the Licensed Territory solely in connection with the Promotions, on
the terms and conditions set forth herein, including, without
limitation, Partner’s approval rights set forth in
Section 7(b) below
and the marks usage guidelines as set forth in Exhibit B.
c.
The VMN Marks
together with the Partner Marks may collectively be referenced
herein as the “Marks.”
d.
Each party may
exercise the rights granted above directly or through its
affiliates, contractors or agents, subject to the terms and
conditions of this Agreement.
e.
Neither party may
register an internet domain name that includes a Mark of the other
party or the other party’s affiliates without the prior
written consent of such other party.
f.
Notwithstanding the
foregoing, neither party may manufacture, produce or distribute a
tangible product, item or article of consumption that is branded or
co-branded with a Mark of the other party (collectively, the
“Promotional
Products”) except with the express written approval of
the other party and subject to the review and approval rights as
set forth herein.
g.
Each party
recognizes the great value of the publicity and goodwill associated
with the Marks of the other, and acknowledges that such goodwill is
exclusively that of the other party and inures solely to the
benefit of the other party.
a.
Term. [*****] Any obligations
hereunder which remain following such period shall survive the
expiration of this Agreement. The parties' representations,
warranties and indemnification obligations shall survive the
termination of this Agreement. Notwithstanding
the
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
expiration or
termination of this Agreement or any provision hereof to the
contrary, unless otherwise requested by VMN in writing, the terms
and conditions of this Agreement shall continue in full force and
effect with respect to each Statement of Work that has not been
completed, terminated or expired, until such time that all of the
Services to be performed and the parties’ obligations related
thereto as set forth in the Statement of Work involved have been
fully completed, delivered or performed in accordance with the
applicable terms and conditions contained therein and/or such
Statement of Work has been terminated.
b.
Termination for Material
Breach. Either party shall have the right to terminate this
Agreement or any Statement of Work, in whole or in part, if the
other party is in material breach of this Agreement or Statement of
Work, as applicable, and fails to cure such material breach within
30 days following written notice of such material
breach.
c. Termination
for Convenience, Change of Control or Purported Assignment.
VMN shall have the right to terminate this Agreement and/or any
Statement of Work, in whole or in part, hereunder: (a) for any
reason without further obligation or liability of any kind and (b)
immediately upon notice to Partner in the event Partner undergoes
or effectuates (i) a change in control where control is (y)
acquired, directly or indirectly, in a single transaction or series
of related transactions, or all or substantially all of
Partner’s assets are acquired, by any entity, or Partner is
merged with or into another entity to form a new entity and (z) the
successor in interest that results from the change of control (A)
[*****], (B) is not, in VMN’s reasonable judgment, as
creditworthy as Partner or (C) does not have capitalization and/or
funding sources at least as equal to or greater than that of
Partner immediately prior to the effective date of any such change
of control or (ii) a purported assignment by Partner of
Partner’s rights and obligations under this Agreement in
breach of Section
17(e).
d. Termination
for Insolvency. Either party shall have the right to
terminate this Agreement and/or any Statement of Work immediately
upon written notice in the event the other party: (i) admits in
writing its inability to pay its debts as they become due, fails to
satisfy any judgment against it, or otherwise ceases operations of
its business in the ordinary course, (ii) is adjudicated bankrupt
or becomes insolvent, (iii) winds up or liquidates its business
voluntarily or otherwise, (iv) applies for, consents to or suffers
the appointment of, or the taking of possession of by, a receiver,
custodian, assignee, trustee, liquidator or similar fiduciary of
itself or of all or any substantial portion of its assets, (v)
makes a general assignment for the benefit of creditors, (vi)
commences a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (vii) files a petition
seeking to take advantage of any other law providing for the relief
of debtors, (viii) acquiesces to, or fails to have dismissed,
within 30 days, any petition filed against it in any involuntary
case pursuant to such bankruptcy laws, and/or (ix) takes any action
for the purpose of effecting any of the foregoing.
e. Effect
of Termination. Upon expiration or termination of this
Agreement or any Statement of Work for any reason or at any earlier
time upon VMN’s request: (a) Partner shall return to VMN (or
destroy at VMN’s request) all copies of VMN’s
Confidential Information in Partner’s possession or control,
and (b) except as otherwise set forth herein, the rights and
obligations of both parties shall cease and any licenses granted by
either party to the other herein shall terminate and be of no
further force or effect.
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
[*****]
5.
Partner’s Responsibilities
Partner
shall be responsible for the following in connection with the
Promotions at Partner’s sole cost and expense:
a.
Supplying VMN with
all Promotion-related creative, Promotional Products and any other
materials in connection with the Promotions which shall bear the
VMN Marks in order to allow VMN to exercise its approval rights as
set forth herein;
b.
Provide VMN with
input and feedback regarding VMN’s usage of the Partner Marks
in accordance with the terms set forth herein;
c.
Providing VMN with
any Promotion elements which incorporate the VMN Marks in order to
allow VMN to exercise its approval rights as set forth
herein.
6.
VMN's Responsibilities
VMN
shall be responsible for the following in connection with the
Promotions at VMN’s sole cost and expense:
a.
Supplying Partner
with all Promotion-related creative and any other materials in
connection with the Promotions which shall bear the Partner Marks
in order to allow Partner to exercise its approval rights as set
forth herein;
b.
Provide Partner
with input and feedback regarding Partner’s usage of the VMN
Marks in accordance with the terms set forth herein;
a.
The manner in which
the VMN Marks may appear, if at all, on the Promotional Products
and any and all promotional, advertising, marketing, publicity and
display materials or content created by Partner (or by a third
party on behalf of Partner) to be used in connection with the
Promotions (each a “Partner
Use”, collectively the “Partner Uses”) shall be subject to
VMN's prior written approval in each case and for each proposed
use. Prior to the manufacture or production of any of the
foregoing, Partner shall provide VMN with not fewer than three (3)
samples of each such proposed Partner Use. Within five (5) business
days after its receipt of the foregoing, VMN (or its designee)
shall advise Partner, in writing, of its approval or disapproval,
along with corrective comments, of such proposed Partner Use and no
item shall be deemed approved by VMN unless such approval is given
in writing by VMN. Failure to approve within the timeframe set
forth above shall be deemed disapproval. If any such proposed
Partner Use is disapproved by VMN, Partner shall correct and
resubmit such material or item for VMN’s subsequent review
and approval. Once a sample has been approved pursuant to this
paragraph, Partner shall not depart therefrom in any material
respect without the prior written approval of VMN. In addition,
approval by VMN and/or by any other parties designated by VMN shall
not
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
relieve Partner of
any of its obligations or warranties hereunder.
b.
The manner in which
the Partner Marks may appear, if at all, on the Promotional
Products and any and all promotional, advertising, marketing,
publicity and display materials or content created by VMN (or a
third party on behalf of VMN) to be used in connection with the
Promotions (each a “VMN
Use”, collectively the “VMN Uses”) shall be subject to
Partner’s prior written approval in each case and for each
proposed use. Prior to the manufacture or production of any of the
foregoing, VMN shall provide Partner with not fewer than three (3)
samples of each such proposed VMN Use. Within five (5) business
days after its receipt of the foregoing, Partner (or its designee)
shall advise VMN, in writing, of its approval or disapproval, along
with corrective comments, of such proposed VMN Use and no item
shall be deemed approved by Partner unless such approval is given
in writing by Partner. Failure to approve within the timeframe set
forth above shall be deemed a disapproval. If any such proposed VMN
Use is disapproved by Partner, VMN shall correct and resubmit such
material or item for Partner’s subsequent review and
approval. Once a sample has been approved pursuant to this
paragraph, VMN shall not depart therefrom in any material respect
without the prior written approval of Partner. In addition,
approval by Partner and/or by any other parties designated by
Partner shall not relieve VMN of any of its obligations or
warranties hereunder.
8.
Intellectual Property Notices
a.
Partner shall
display or print the copyright notices set forth in Exhibit C attached hereto and
made a part hereof, on any and all advertisement, publicity and
promotional releases concerning the Promotions, as well as any
Promotional Product or other material produced in connection with
the Promotions. No advertisement, publicity or promotional release,
Promotional Product, or other material produced in connection with
the Promotions upon which such copyright notices are printed shall
contain any other copyright notice relating to the VMN Marks unless
VMN has given Partner prior written consent thereto.
b.
Partner shall
display or print in a legible manner the trademark and service mark
notices set forth in Exhibit C in proximity to the
VMN Marks wherever used, including without limitation, on
advertisement, publicity and promotional releases concerning the
Promotions.
c.
VMN shall display
or print in a legible manner the trademark and service mark notices
set forth in Exhibit
C in proximity to the Partner Marks wherever used,
including, without limitation, on advertisements, publicity, and
promotional releases concerning the Promotions.
a.
Partner
acknowledges and agrees that: (i) all copyrights, trademarks,
service marks and other intellectual property rights relating to
the VMN Marks (including with respect to uses approved under
Section 7 and
referred to in Section
8 above) in the name of and/or owned by VMN shall be and
remain the sole and exclusive property of VMN; (ii) Partner shall
not at any time acquire or claim any right, title or interest of
any nature whatsoever in any such copyright, trademark, service
mark or other intellectual property right relating to the VMN Marks
by virtue of this Agreement, any Statement of Work, or
Partner’s use thereof in connection with the Promotions, and
shall not seek to obtain any registration therefor anywhere; and
(iii) any right, title or interest in or relating to any copyright,
trademark, service mark or other intellectual
property
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
right relating to
the VMN Marks which comes into existence during the Term hereof as
a result of the exercise by Partner of any right granted to it
hereunder shall immediately and automatically vest in VMN, and for
that purpose Partner hereby irrevocably assigns and transfers any
such right, title and interest to VMN without reservation of
rights. To the fullest extent permitted by law, Partner agrees
never to contest or assist others to contest the validity or
enforceability of any VMN Marks and third party copyrights,
trademarks and service marks relating to the VMN
Marks.
Partner
further acknowledges and agrees that: (i) all Materials (as defined
in this subsection) including, without limitation, art work,
animations, graphics, designs, ideas, plans, creative concepts and
elements conceived, prepared, created or furnished or caused to be
conceived, prepared, created or furnished in connection with the
Promotions, excluding Partner’s Marks, that come into
existence during the Term (all of the foregoing collectively, the
“Materials”, and
one of them the “Material”), shall be owned solely,
exclusively and in perpetuity by VMN from the moment such Materials
come into existence and that VMN therefore owns all of the rights,
title and interest comprised in the copyright and other
intellectual property rights in and to the Materials; (ii) Partner
shall not at any time acquire or claim any right, title or interest
of any nature whatsoever in the Materials by virtue of this
Agreement, any Statement of Work, or Partner’s creation or
use thereof in connection with the Promotions; and (iii) Partner
shall not seek any copyright, trademark or other intellectual
property right registration for the Materials. Partner, for itself,
its affiliates and any third party participating in the creation or
development of Materials, hereby irrevocably assigns and transfers
to VMN all right, title and interest in and to the Materials,
without reservation of rights. To the fullest extent permitted by
law, Partner agrees never to contest or assist others to contest
VMN’s rights or interests in the Materials.
b.
VMN acknowledges
and agrees that: (i) all copyrights, trademarks, service marks and
other intellectual property rights relating to the Partner Marks
(including with respect to uses approved under Section 7 and referred to in
Section 8 above) in
the name of and/or owned by Partner shall be and remain the sole
and exclusive property of Partner; (ii) VMN shall not at any time
acquire or claim any right, title or interest of any nature
whatsoever in any such copyright, trademark, service mark or other
intellectual property right relating to the Partner Marks by virtue
of this Agreement, any Statement of Work, or of VMN’s use
thereof in connection with the Promotions, and shall not seek to
obtain any registration therefor anywhere; and (iii) any right,
title or interest in or relating to any copyright, trademark,
service mark or other intellectual property right relating to the
Partner Marks which comes into existence during the Term hereof as
a result of the exercise by VMN of any right granted to it
hereunder shall immediately and automatically vest in Partner, and
for that purpose VMN hereby irrevocably assigns and transfers any
such right, title and interest to Partner without reservation of
rights. To the fullest extent permitted by law, VMN agrees never to
contest or assist others to contest the validity or enforceability
of any Partner Marks and third party copyrights, trademarks and
service marks relating to the Partner Marks.
10.
Representations and Warranties
a.
Each party hereto
represents and warrants to the other party as follows: (i) it is
authorized to enter into this Agreement; (ii) the execution and
performance of this Agreement will not conflict with or result in a
material breach of the terms of any other agreement to which it is
a party; (iii) all obligations undertaken by it hereunder and all
materials provided, produced or supplied by it or on its behalf in
connection with the Promotions will comply with all federal,
state
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
and local laws and
regulations including, without limitation, the FTC Endorsement and
Testimonial Guidelines, the FTC .com Disclosure Guidelines and
COPPA (as defined in Section 11(a)below) and any
applicable laws of other countries, and will not violate or
infringe upon the rights of any person, estate and/or entity; and
(iv) each of its products (including Promotional Products),
services (including Partner Services), redemptions and/or
fulfillments relating to the Promotions, this Agreement, and/or any
Statement of Work, if any, shall comply in all respects with this
Agreement, such Statement of Work, and all applicable federal,
state and local laws and regulations and any applicable laws of
other countries.
b.
VMN further
represents and warrants that it owns the VMN Marks and has sole,
exclusive and full power to license and grant to Partner the rights
and interests provided herein.
c.
Partner further
represents and warrants that: (i) it owns or otherwise has the
rights to exploit the Partner Marks as contemplated herein and has
sole, exclusive and full power to license and grant to VMN the
rights and interests provided herein; and (ii) in the event that
Partner employs, invites or otherwise engages any individual(s) to
attend and/or participate in any Promotion-related event or
activity including, without limitation, production shoots or
on-ground activations, Partner will have conducted a criminal
record check (covering the seven [7] year period prior to hire or
the date such background check is conducted, as applicable) on such
individual(s) and confirm that such report did not state that such
individual(s) had been convicted of a criminal offense involving a
minor or required to report or register pursuant to Cal. Penal
Code §§290-294, N.Y. Correction Law §168, or
any similar statute, for a crime related to a sexual offense
against a minor.
a. The parties
acknowledge that the Promotions may entail Partner advertising on,
or referring potential users to, VMN’s Nickelodeon-branded
digital properties, websites, games and/or mobile applications
(each a “Nick
Property”, collectively, the “Nick Properties”). In such
situations, Partner may have provided to VMN certain software and
other intellectual property (including, without limitation, in-game
advertising, hyperlinks, plug-ins, software development kits,
application programming interfaces and the like) for use in
connection with the Nick Properties in support of the Promotions
(the “Embedded
IP”). As the functionality of the Embedded IP may
permit Partner and other third parties to collect personal
information (as defined the Children’s Online Privacy
Protection Act (and the rules promulgated by the Federal Trade
Commission thereunder) (“COPPA”)) (such information,
“User
Information”) from or about users of the Nick
Properties, Partner acknowledges and understands that: (i) the Nick
Properties may be targeted towards or accessed by children below
the age of thirteen (13) years old; (ii) the Embedded IP, as used
in connection with the Nick Properties, may be used to collect User
Information from or about children below the age of thirteen (13)
years old; and, (iii) the collection, storage, maintenance,
transmission, dissemination, disclosure and use of User Information
from or about children below the age of thirteen (13) years old are
subject to strict legal and regulatory protection and
scrutiny.
b. Partner represents,
warrants and covenants, as applicable, to or with VMN that: (i) the
collection, storage, maintenance, transmission, dissemination,
disclosure and use of User Information which is obtained from or
about users of any Nick Property and/or the attendees of any Events
(including, in particular, such User Information relating to
children under the age of
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
thirteen [13]) do
and will continue to comply strictly with all applicable laws,
rules and regulations and the highest industry standards,
including, without limitation, the CAN-SPAM Act of 2003, COPPA, the
standards and guideline of the Children’s Advertising Review
Unit of the National Advertising Division of the Better Business
Bureau (“CARU”),
and any other reasonable standards and guidelines communicated by
VMN to the Partner from time to time; (ii) Partner will provide all
legally required notices (with such notices being clearly and
understandably written, complete and containing no unrelated,
confusing, or contradictory matter) and obtain verifiable parental
consent (as defined in COPPA), to the extent required pursuant to
COPPA, prior to the collection, storage, maintenance, transmission,
dissemination, disclosure or use of User Information from or about
children under the age of thirteen (13) years old obtained during
or in connection with the Events, through the Embedded IP used in
connection with any Nick Property or otherwise collected by Partner
or third parties authorized by Partner from or about attendees of
the Events and/or users of any Nick Property; (iii) Partner will
only collect, store, maintain, transmit, disseminate, disclose
and/or use User Information as required for it to fulfill the
Partner’s obligations to VMN pursuant to its commercial
relationship with VMN or as permitted pursuant to its written
agreement with a handwritten signature by authorized
representatives of VMN and Partner; (iv) Partner has established
protocols for ensuring and will maintain, in accordance with all
applicable laws, rules and regulations and the highest industry
standards, the confidentiality, security, and integrity of all User
Information obtained at and in connection with all Events and via
the Embedded IP used in connection with any Nick
Property or otherwise
collected by Partner or third parties authorized by Partner from or
about users of any Nick Property; and, (v) without derogating from
the generality of the foregoing, Partner does not and will not
engage in any unfair or deceptive acts or practices in connection
with the collection, storage, maintenance, transmission,
dissemination, use and/or disclosure of User Information obtained
at or in connection with the Events, through the Embedded IP or
otherwise relating to attendees of the Events or users of any Nick
Property.
c. Partner will,
immediately upon VMN’s request: (i) suspend any and all
direct or indirect collection of User Information by the Embedded
IP used in connection with the Nick Properties or otherwise
relating to users of the Nick Properties; (ii) disable any
functionality of the Embedded IP that VMN identifies as being in
violation of any applicable law, rule, regulation or industry
standard, including, without limitation, the CAN-SPAM Act of 2003,
COPPA, the standards and guidelines of CARU, and/or any other
reasonable standards and guidelines communicated by VMN to Partner
from time to time; (iii) provide to VMN all User Information
collected via the Embedded IP used in connection with the Nick
Properties or otherwise collected by Partner or third parties
authorized by Partner from or about users of the Nick Properties;
(iv) delete or destroy all User Information collected via the
Embedded IP used in connection with the Nick Properties or
otherwise collected by Partner or third parties authorized by
Partner from or about users of the Nick Properties; and, (v)
otherwise cooperate with all reasonable requests by VMN relating to
the Embedded IP used in connection with the Nick Properties, the
User Information collected thereby and the User Information
relating to users of the Nick Properties otherwise collected by
Partner or third parties authorized by Partner.
a.
VMN shall at all
times defend, indemnify and hold Partner, its parent, subsidiaries,
affiliated entities, and the respective officers, directors,
agencies and employees of each of the foregoing harmless from and
against any and all liability, costs, loss or expense it or they
may incur or be subjected to by reason of any claim or suit arising
out of or relating to: (i) any breach
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
of its
representations, warranties and/or undertakings hereunder; (ii)
VMN's performance of its obligations as set forth in this Agreement
and/or any Statement of Work; (iii) any actual or alleged failure
by VMN to conform to or comply with the respective laws and
regulations applicable to its obligations herein; (iv) any other
agreement made by VMN to fulfill its obligations herein; (v) the
operation of any of its websites with respect to the Promotions; or
(vi) the use of the VMN Marks in accordance with this Agreement
and/or any Statement of Work, provided that Partner shall give
prompt written notice, cooperation and assistance to VMN with
respect to any such claim or suit, and provided further that VMN
shall have the option to undertake and conduct the defense of any
suit so brought against VMN. Partner’s review and approval of
any elements of the Promotions furnished by VMN shall not
constitute a waiver by Partner of VMN’s indemnity
hereunder.
b.
Partner shall at
all times defend, indemnify and hold VMN, its parent, subsidiaries,
affiliated entities, and the respective officers, directors,
agencies and employees of each of the foregoing harmless from and
against any and all liability, costs, loss or expense it or they
may incur or be subjected to by reason of any claim or suit arising
out of or relating to: (i) any breach of its representations,
warranties and/or undertakings hereunder; (ii) Partner’s
performance of its obligations as set forth in this Agreement
and/or any Statement of Work; (iii) any actual or alleged failure
by Partner to conform to or comply with the respective laws and
regulations applicable to its obligations herein; (iv) any other
agreement made by Partner to fulfill its obligations herein; (v)
any product liability claim relating to the design, manufacture and
distribution of the products manufactured and distributed by
Partner; (vi) any defective or dangerous materials produced,
manufactured or distributed by Partner that may in any way present
an unreasonable risk to users or consumers; (vii) any collection,
storage, maintenance, transmission, dissemination, disclosure or
use of User Information collected by Partner, but specifically
excluding any such claim or action to the extent based upon any
unauthorized act or omission of VMN, its employees, contractors,
representatives or agents; (viii) the negligence or willful
misconduct of any of Partner’s employees, agents and/or
invitees who attend or participate in any Promotion-related event
or activity; or (ix) the use of the Partner Marks in accordance
with this Agreement and/or any Statement of Work, provided that VMN
shall give prompt written notice, cooperation and assistance to
Partner with respect to any such claim or suit, and provided
further that Partner shall have the option to undertake and conduct
the defense of any suit brought against Partner. VMN’s review
and approval of any elements of the Promotions furnished by Partner
shall not constitute a waiver by VMN of Partner’s indemnity
hereunder.
c.
EXCEPT FOR EACH
PARTY’S INDEMNIFICATION OBLIGATIONS HEREIN, ANY DAMAGES
RESULTING FROM ANY BREACH OF EITHER PARTY’S CONFIDENTIALITY
OBLIGATIONS HEREIN, PARTNER’S BREACH OF SECTION 11, ANY
DAMAGES RESULTING FROM A PARTY’S FRAUD, WILLFUL ACTS, OR
INTENTIONAL MISCONDUCT, AND/OR ANY DAMAGES RESULTING FROM PERSONAL
INJURY OR PROPERTY DAMAGE (COLLECTIVELY, THE “CARVE-OUT CLAIMS”), IN NO EVENT
SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (WHICH FOR
THE PURPOSES OF CLARITY DOES NOT INCLUDE AD REVENUES) IN ANY MANNER
IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, REGARDLESS OF
THE FORM OF ACTION OR THE BASIS OF THE CLAIM OR WHETHER OR NOT SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT
FOR AMOUNTS PAYABLE DUE TO CARVE-OUT CLAIMS, EACH PARTY’S
AGGREGATE, CUMULATIVE LIABILITY ARISING OUT OF OR RELATED TO THIS
AGREEMENT SHALL NOT EXCEED TWO MILLION DOLLARS.
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
a.
VMN agrees to carry
and maintain at its own expense in full force and effect at all
times during the Term comprehensive general liability insurance
with a limit of liability of not less than [*****] per occurrence
and [*****] in the aggregate. At Partner’s request, VMN shall
provide Partner with a certificate of insurance attesting to such
coverage.
b.
Partner agrees to
carry and maintain at its own expense in full force and effect at
all times during the Term comprehensive general liability insurance
with a limit of liability of not less than [*****] per occurrence
and [*****] in the aggregate. At VMN's request, Partner shall
provide VMN with a certificate of insurance attesting to such
coverage.
c. Partner shall
procure and maintain at its own expense in full force and effect
standard producer's liability (errors and omissions) insurance
issued by a nationally recognized insurance carrier acceptable to
VMN covering the Promotions with minimum limits of [*****] for any
claim arising out of a single occurrence and [*****] for all claims
in the aggregate. Such errors and omissions insurance:
(i)
shall be written on
either (x) an occurrence basis, remaining in full force and effect
for three (3) years from commencement of the Promotions
(“E&O
Term”), or (y) a claims-made basis, covering any
claims made at any time during the E & O Term;
(ii)
shall provide
coverage for the title (including supplying the insurance company
with the title search report);
(iii)
may not be canceled
without thirty (30) days’ prior written notice to
VMN;
(iv)
shall carry a
deductible in an amount subject to VMN’s prior written
approval;
(v)
shall contain the
customary coverage and shall not contain any unusual exclusions,
exceptions or endorsements; and
(vi)
shall name, as
additional insureds, Viacom Media Networks, Viacom and their
respective subsidiaries and related companies, its and their
licensees and affiliated entities, any officers, directors, agents
and employees of each of the foregoing.
c.
The insurance
coverage required pursuant to this paragraph shall include
contractual liability coverage which specifically insures the hold
harmless and indemnification provisions set forth in this
Agreement; will be secured and maintained under an occurrence form
policy; will be placed with an insurer of recognized responsibility
with an “A-“ rating or better by A.M. best Company or
Standard & Poor’s; will name the other party and its
parent, subsidiary and affiliated entities, its and their licensees
and the respective officers, directors, employees and agents of
each of the foregoing as additional insureds; and will provide for
at least thirty (30) days advance written notice to the other party
in the event of cancellation or modification thereof.
No
failure or omission by a party hereto in the performance of any
obligation of this Agreement shall be deemed a breach of this
Agreement nor shall it create any liability, to the extent the same
arises from any cause or causes beyond the reasonable control of
the party, including but not limited to the following, which, for
the purpose of this Agreement, shall be regarded as beyond the
control of the party in question: acts of God, acts or omissions of
any government, any rules, regulations, or orders issued by any
governmental authority or any officer,
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
department, agency,
or instrumentality thereof, fire, storm, flood, earthquake,
accident, war, rebellion, insurrection, riot, invasion, terrorism,
strikes and lockouts.
If any
party anticipates that any circumstances beyond its reasonable
control may occur or is affected by any such circumstances, then
that party shall promptly furnish written notice of such
circumstances to the other party, and shall take all reasonable
steps to carry out the terms of the Agreement as soon as reasonably
possible, subject to delays as may be caused by such an event. In
the event that these circumstances take place, and shall continue
for a period of fifteen (15) or more days, the other party shall
have the right to terminate that portion of the Agreement that has
not been performed and appropriate settlements and adjustments will
be made.
Any notices required to be given under the provisions of this
Agreement shall be in writing and shall be deemed to have been duly
served if hand delivered (including, without limitation, via
messenger or overnight delivery service) or sent by facsimile, or
within the United States and Canada by prepaid first-class
registered mail, or outside the United States and Canada by prepaid
registered airmail, correctly addressed to the relevant
party’s address as specified in this Agreement or at such
other address as either party may hereafter designate from time to
time in accordance with this paragraph, and any notice so given
shall be deemed to have been served:
(a)
If
hand delivered, at the time of delivery (subject in the case of
messenger or overnight delivery service to prove by the sender that
it holds a proof of receipt signed by addressee indicating
delivery).
(b)
If
sent by facsimile or other print-out communication mechanisms,
within eight (8) hours of transmission if during business hours at
its destination, or within the first eight (8) hours of the next
business day following the transmission if such transmission is not
within business hours but subject, in the case of facsimile and
other print-out communication mechanisms, to prove by the sender
that it holds a transmission report indicating uninterrupted
transmission to the addressee, and to dispatch of the notice by
prepaid mail as herein provided on the same day as such
transmission (or the next day if notice is transmitted outside post
office hours).
(c)
If
sent by prepaid mail as aforesaid, within three (3) business days
of mailing (exclusive of the hours of Sunday) if mailed to an
address within the country of mailing, or within seven (7) days of
mailing if mailed to an address outside the country of
mailing.
All notices hereunder shall be sent in the same manner
to:
i. To
Partner:
Super League
Gaming, Inc.
2906
Colorado Ave
Santa
Monica, CA 90404
Attn:
Anne Gailliot, Chief of Staff
415-378-0223
anneg@superleague.com
ii. To
VMN:
*****
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SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
203
W Olive Ave., Floor 5
Burbank,
CA 91502
[*****]
a.
Except as may be
required by any applicable law, government order or regulation, or
by order or decree of any court of competent jurisdiction, no party
shall, without the prior written consent of the other party,
publicly divulge or announce, or in any manner disclose to any
unrelated third party, or use for any purpose not relating to this
Agreement, any information revealed to it by the other party or the
affiliates of the other party pursuant hereto, or any of the
specific terms and conditions of this Agreement, and each party
shall safeguard such information from unauthorized use or disclose
using at least the same level of efforts that it uses to protect
its own confidential information (provided such efforts are
reasonable and based on accepted industry practices). Each party
may disclose confidential information of the other party to
affiliates, contractors, advisors and agents for purposes relating
to this Agreement, and to auditors, provided such recipients are
bound to obligations or duties of confidentiality that apply to
such information.
b.
Notwithstanding the
foregoing, with regard to obligations of nondisclosure or
limitations as to use, each party shall have no liability with
respect to the disclosure and/or use of any information of the
other which such party can establish: (i) is or becomes publicly
known without breach of this Agreement; (ii) is known to such
party, without any obligation of confidentiality, prior to
disclosure of such information by the other party; (iii) was
received by such party from a third party source having the right
to disclose such information; or (iv) was independently developed
by such party without reference to the confidential information of
the other party.
17.
Additional Provisions
a.
Consumer Complaints
- VMN and Partner shall cooperate with each other in a reasonable
manner to appropriately resolve any consumer complaints that may
arise from the Promotions. Each party shall, when necessary or
appropriate or when reasonably requested by the other party,
undertake a factual investigation of consumer complaints arising
out of its products or services. Any consumer complaints that are
principally directed to any other party’s products or
services shall be immediately forwarded to such other party for
response. Each party shall be responsible for responding to
consumer complaints directed at its respective product or
service.
b.
Adverse Publicity -
If any product or service of a party to this Agreement which is
included in a Promotion shall be the subject of adverse publicity,
including but without limitation, contamination of the product,
criminal or otherwise, or market withdrawal or a recall, which in
the reasonable judgment of the other party is or may be detrimental
to the intended purpose of this joint promotion or to such other
party’s reputation or goodwill, then such other party may
elect to terminate those aspects of the Promotion which it is
reasonably feasible to terminate, and thereafter no party shall
have any further obligation to the other party with respect to
those aspects of the Promotion under this Agreement.
Notwithstanding the foregoing, it is agreed that the party causing
the termination shall remain financially liable for its share of
all costs committed to
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
pursuant to this
Agreement as of the date that said party’s participation is
wholly or partially eliminated.
c.
Waiver - No waiver
by any party, whether express or implied, of any provision of this
Agreement shall constitute a continuing waiver of such provision or
a waiver of any other provision of this Agreement. No waiver by any
party, whether express or implied, of any breach or default by the
other parties shall constitute a waiver of any other breach or
default of the same or any other provision of this
Agreement.
d.
Relationship of the
Parties - Nothing herein contained shall be so construed as to
constitute the parties as principal or agent, employer and
employee, partners, or joint venturers nor shall any similar
relationship be deemed to exist among the parties. No party shall
have any power to obligate or bind the other parties, except as
specifically provided herein.
e.
Assignability -
This Agreement may not be assigned by any party, by operation of
the law or otherwise, without the prior written consent of the
other parties; provided, however, any party may assign this
Agreement to any parent, subsidiary or affiliated company or to any
entity acquiring all or substantially all of the assets of such
party (including by merger) without the prior written consent of
the other parties.
f.
Construction/Headings
- The headings contained herein are for convenient reference only.
They shall not be used in any way to govern, limit, modify or
construe this Agreement and shall not be given any legal effect.
This Agreement shall be construed as if it were drafted jointly by
the parties. The word “including” shall be construed to
mean “including without limitation.”
g.
Governing Law -
This Agreement and all matters or issues collateral thereto shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed and performed
entirely therein. Each of the parties hereby consents to the
exclusive jurisdiction of the courts of the State of New York in
the City and County of New York or the federal courts of the United
States for the Southern District of New York located in the City
and County of New York in connection with any lawsuit, action or
proceeding arising out of or related to this Agreement. Each party
hereby irrevocably and unconditionally: (i) waives any objection
which it might have now or hereafter to the jurisdiction and venue
of such courts in any such litigation, action or proceeding, (ii)
submits to the personal jurisdiction of any such court in any such
litigation, action or proceeding, and (iii) waives any claim or
defense of inconvenient forum with respect thereto. Partner hereby
consents to service of process by registered mail, return receipt
requested, at Partner’s address stated herein and expressly
waives the benefit of any contrary provision of foreign
law.
h.
Severability
– If any term of this Agreement is held to be invalid or
unenforceable, such holding will not affect the validity or
enforceability of any other term hereto.
i. Survival
- Notwithstanding termination or expiration of this Agreement, for
any reason whatsoever, the conditions and provisions of this
Agreement that are intended to continue to survive, shall continue
and survive, including, but not limited to, Sections 9, 10, 12, 15, 16, and
17.
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
j.
No Third Party
Beneficiaries – Except for express references to Affiliates,
no person other than the parties shall be considered a third party
beneficiary of this Agreement or otherwise entitled to any rights
or remedies under this Agreement.
k.
Entire Agreement -
This Agreement, including its attachments and exhibits, constitutes
the whole and complete agreement between the parties with respect
to the subject matters hereof and no prior oral or written
agreement with respect to the subject matter hereof (including any
letters of intent and similar documents) shall be deemed a part of
or a modification of this Agreement. This Agreement can only be
modified by a written agreement between the parties executed after
the effective date hereof.
l.
Counterparts
– This Agreement may be executed in counterparts (which may
be transmitted via facsimile, email or other electronic
transmission method), each of which shall be deemed an original,
and all of which shall constitute the same instrument.
[Signature Pages to Follow]
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
By
their execution below, the parties hereto have agreed to all the
terms and conditions of this Agreement.
PARTNER
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VMN
|
|
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Super League Gaming,
Inc.
|
Viacom Media Networks, a division
of
|
|
Viacom
International Inc.
|
|
|
By: /s/ Ann Hand
|
By: /s/ Mathew Evans
|
Name:
Ann
Hand
|
Name:
Mathew Evans
|
Title:
CEO
|
Title:
EVP Digital Kids & Family Group
|
|
|
|
|
|
|
|
|
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Exhibit A
FORM STATEMENT OF WORK
This
Statement of Work (this “SOW”) is effective as of the date
above (the “SOW Effective
Date”) and is issued in accordance with the Master
Joint Promotion Agreement dated May 23, 2017 (the
“Agreement”) by
and between Viacom Media Networks, a division of Viacom
International Inc. (“VMN”) and Super League Gaming,
Inc. (“Partner”). Any capitalized term
not otherwise defined herein shall have the meaning ascribed in the
Agreement.
[TO BE
FILLED IN]
2.
Promotion Description. The
parties shall perform the following Services in connection with
this SOW (the “SOW
Services”):
VMN’s
Nickelodeon Group shall be the Anchor Sponsor for the following
Partner Event: [ ].
The
Promotion shall consist of the following elements:
3.
Deliverables and Milestone
Schedule.
The
parties will design, create, develop, produce and deliver each of
the following deliverables (“SOW Deliverables”) for the
Promotion in accordance with the specifications and delivery dates
set forth herein (which dates may change from time to time pursuant
to mutual written consent (email is sufficient)):
Deliverable
|
Responsible Party
|
Description
|
Due Date
|
|
|
|
|
|
|
|
|
The
term of this SOW shall commence as of the SOW Effective Date and
expire [on ______________][upon acceptance by VMN of all
Deliverables hereunder], unless earlier terminated in accordance
with the Agreement.
*****
|
SUPER
LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF THIS
DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED CONFIDENTIAL
TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY FILED THE
OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION.
|
[TO BE
FILLED IN]
IN
WITNESS WHEREOF, the parties have executed this Statement of Work
as of the SOW Effective Date listed above.
VIACOM
MEDIA NETWORKS, a division of
VIACOM
INTERNATIONAL INC.
|
|
SUPER LEAGUE GAMING, INC.
|
|
|
|
|
|
By:
|
|
|
By:
|
|
Name:
|
[___]
|
|
Name:
|
[___]
|
|
[Type
or Print]
|
|
|
[Type
or Print]
|
Title:
|
[___]
|
|
Title:
|
[___]
|
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Exhibit B
VMN Marks Guidelines:
Partner agrees that: (a) it shall use the VMN Marks solely in
connection with the Promotions and in accordance with all of the
terms and conditions set forth herein; (b) the VMN Marks shall be
used in the exact form provided by VMN; (c) it shall not make or
permit the making of any copies of the VMN Marks, in whole or in
part except as reasonably required for the purposes herein
specified; (d) it shall not have the right to authorize others to
use the VMN Marks; (e) its use of the VMN Marks shall include all
standard proprietary notices prescribed by VMN; (f) its use of the
VMN Marks shall conform to quality standards which are consistent
with the high level of past practices for the use of the VMN Marks;
and, (g) all use of any materials incorporating the VMN Marks by
Partner shall be subject to VMN’s prior approval. All right,
title and interest in and to the VMN Marks, including all
associated goodwill, or in any copyright or other proprietary right
now existing or hereafter created pursuant to this Agreement, shall
remain vested in VMN subject to the rights of use granted in this
Agreement.
Partner shall promptly notify VMN of any apparently unauthorized
use or infringement by third parties of any rights granted to
Partner herein, and will cooperate fully in any action at law or in
equity undertaken by VMN with respect to such unauthorized use or
infringement.
Partner shall not institute any suit or take any action in
connection with any apparently unauthorized use or infringement
without first obtaining VMN’s prior written consent to do so,
and VMN shall have the sole right and discretion to determine
whether or not any action shall be taken on account of any such
unauthorized uses or infringements.
Partner Marks Guidelines:
VMN agrees that: (a) it shall use the Partner Marks solely in
connection with the Promotions and in accordance with all of the
terms and conditions set forth herein; (b) the Partner Marks shall
be used in the exact form provided by Partner; (c) it shall not
make or permit the making of any copies of the Partner Marks, in
whole or in part except as reasonably required for the purposes
herein specified; (d) it shall not have the right to authorize
others to use the Partner Marks; (e) its use of the Partner Marks
shall include all standard proprietary notices prescribed by
Partner; (f) its use of the Partner Marks shall conform to quality
standards which are consistent with the high level of past
practices for the use of the Partner Marks; and, (g) all use of any
materials incorporating the Partner Marks by VMN shall be subject
to Partner’s, prior approval. All right, title and interest
in and to the Partner Marks, including all associated goodwill, or
in any copyright or other proprietary right now existing or
hereafter created pursuant to this Agreement, shall remain vested
in Partner subject to the rights of use granted in this
Agreement.
VMN shall promptly notify Partner of any apparently unauthorized
use or infringement by third parties of any rights granted to VMN
herein, and will cooperate fully in any action at law or in equity
undertaken by Partner with respect to such unauthorized use or
infringement.
VMN shall not institute any suit or take any action in connection
with any apparently unauthorized use or infringement without first
obtaining Partner’s prior written consent to do so, and
Partner shall have the sole right and discretion to determine
whether or not any action shall be taken on account of any such
unauthorized uses or infringements.
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Exhibit C
VMN Copyright
Notice:
© 2017 VIACOM
INTERNATIONAL INC. All Rights Reserved.
VMN Trademark
Notices:
Partner shall
include the following trademark symbol on all uses of the
Nickelodeon name and logo:
“Nickelodeon®”.
Partner
shall include the following trademark notice in proximity to all
uses of the Nickelodeon name and logo:
“Nickelodeon
and all related titles, characters and logos are trademarks of
Viacom International Inc.”
Partner Copyright
Notice:
SLG® is a
registered trademark of Super League Gaming, Inc.
Mojang
© 2009-2017. “Minecraft” is a trademark of Mojang
Synergies AB
*****
|
SUPER LEAGUE GAMING, INC. HAS REQUESTED THAT THE OMITTED PORTIONS
OF THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. SUPER LEAGUE GAMING, INC. HAS SEPARATELY
FILED THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.
|
Exhibit 10.10
SUPER LEAGUE GAMING, INC.
COMMON STOCK PURCHASE AGREEMENT
This
Common Stock Purchase Agreement (this “Agreement”) is
made as of __________________________ by and among Super League
Gaming, Inc., a Delaware corporation (the “Company”), and
the investors listed on Exhibit A attached to this
Agreement (each a “Purchaser” and
together the “Purchasers”).
The
parties hereby agree as follows:
1.
Purchase and Sale of
Common Stock.
1.1 Sale
and Issuance of Common Stock.
(a) The
Company shall adopt and file with the Secretary of State of the
State of Delaware on or before the Initial Closing (as defined
below) the Amended and Restated Certificate of Incorporation in the
form of Exhibit B
attached to this Agreement (the
“Restated
Certificate”).
(b) Subject
to the terms and conditions of this Agreement, each Purchaser
agrees, severally and not jointly, to purchase at the Closing (as
defined below), and the Company agrees to sell and issue to such
Purchaser at such Closing, that number of shares of Common Stock,
$0.001 par value per share (the “Common
Stock”), set forth
opposite such Purchaser’s name on Exhibit A
with respect to such Closing, at a
purchase price of $3.60 per share (as adjusted for any stock
dividend, stock split, combination or similar recapitalization, the
“Original
Issue Price”). The shares
of Common Stock issued to the Purchasers pursuant to this Agreement
(including any shares issued at the Initial Closing and any
Additional Shares (as defined below) issued at Subsequent Closings
(as defined below)) shall be referred to in this Agreement as the
“Shares.”
The Company is authorized to sell and issue up to 4,166,667 Shares
pursuant to this Agreement.
1.2 Closings;
Delivery.
(a) The
purchase, sale and issuance of the Shares shall take place at one
or more closings (each of which is referred to in this Agreement as
a “Closing”).
The initial Closing (the “Initial
Closing”) shall take
place remotely via the exchange of documents and signatures on the
date hereof, or at such other time and place as the Company and the
Purchasers representing a majority of the Shares to be sold in the
Initial Closing mutually agree upon, orally or in
writing.
(b) If
less than all of the Shares are sold and issued at the Initial
Closing, then the Company may sell and issue at one or more
subsequent Closings (each a “Subsequent
Closing”), on the same
terms and conditions as those contained in this Agreement, up to
the balance of the unissued Shares (the “Additional
Shares”) to one or more
Persons (as defined below) as may be approved by the Company in its
sole discretion (the “Additional
Purchasers”), provided
that (i) such Subsequent Closing is consummated within ninety (90)
days after the Initial Closing and (ii) each Additional Purchaser
shall become a party to, and bound by, each of the Transaction
Agreements (as defined below), in each case as of the date of such
Subsequent Closing, by executing and delivering a counterpart
signature page to each of the Transaction Agreements.
Exhibit
A to this Agreement shall be
updated to reflect each Additional Purchaser and the number of
Additional Shares purchased, or to be purchased, by each Additional
Purchaser at each applicable Subsequent Closing, and each such
Additional Purchaser shall be deemed a Purchaser for all purposes
under this Agreement as of the date of such Subsequent
Closing.
(c) At
each Closing, the Company shall deliver to each Purchaser
participating in such Closing a certificate representing the Shares
being purchased by such Purchaser at such Closing against payment
of the purchase price therefor by wire transfer to a bank account
designated by the Company, by check payable to the Company, or by
any combination of such methods.
1.3 Use
of Proceeds.In accordance with
the directions of the Board (as defined below), the Company will
use the proceeds from the sale of the Shares for working capital
and other general corporate purposes. None of the proceeds will be
used to reduce any indebtedness outstanding as of the date of this
Agreement (other than regularly scheduled payments pursuant to
agreements in effect as of the date hereof, if any) or to make any
dividend or distributions to any stockholders or Affiliates of the
Company.
1.4 Defined
Terms Used in this Agreement. In addition to
the terms defined elsewhere in this Agreement, the following terms
used in this Agreement shall be construed to have the meanings set
forth or referenced below.
(a) “Affiliate”
means, with respect to any specified Person, any other Person who,
directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation, any
general partner, managing member, officer or director of such
Person, or such Person’s principal, or any venture capital
fund, financial investment firm or collective investment vehicle
now or hereafter existing that is controlled by one or more general
partners or managing members (or any affiliates thereof, which
shall include any series or cell of a general partner or managing
member that is structured as a series limited liability company)
of, or shares the same management company with, such Person. For
purposes of this definition, the terms “controlling,”
“controlled by,” or “under common control
with” shall mean the possession, directly or indirectly, of
(i) the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise, or (ii) the power to elect
or appoint at least 50% of the directors, managers, general
partners, or Persons exercising similar authority with respect to
such Person. For the avoidance of doubt, an “Affiliate”
of a specified Person shall include (x) such Person’s
partners, members, stockholders, other equity owners, officers,
directors, managers, former or retired partners, former or retired
members, former or retired stockholders, former or retired other
equity owners, and the estate of any of the foregoing and (y) a
parent or subsidiary of a Person that is an
entity
(b) “Board”
means the board of directors of the Company.
(c) “Code”
means the Internal Revenue Code of 1986, as
amended.
(d) “Company Covered
Person” means, with respect to the Company as an
“issuer” for purposes of Rule 506 promulgated under the
Securities Act, any Person listed in the first paragraph of Rule
506(d)(1).
(e) “Company Intellectual
Property” means all patents, patent applications,
trademarks, trademark applications, service marks, service mark
applications, tradenames, copyrights, trade secrets, domain names,
mask works, information and proprietary rights and processes,
similar or other intellectual property rights, subject matter of
any of the foregoing, tangible embodiments of any of the foregoing,
licenses in, to and under any of the foregoing, and any and all
such cases as are necessary to the Company in the conduct of the
Company’s business as now conducted and as presently proposed
to be conducted.
(f) “Investors’
Rights Agreement” means
the agreement among the Company and the Purchasers dated as of the
date of the Initial Closing, in the form of Exhibit
D attached to this
Agreement.
(g) “Key
Employee” means
any executive-level employee
(including division director and vice president-level positions) as
well as any employee or consultant who either alone or in concert
with others develops, invents, programs or designs any Company
Intellectual Property.
(h) “Knowledge”
including the phrase “to the
Company’s knowledge” shall mean the actual knowledge, after
reasonable investigation, of Ann Hand and David
Steigelfest.
(i) “Material
Adverse Effect” means a
material adverse effect on the business, assets (including
intangible assets), liabilities, financial condition, property,
prospects, or results of operations of the
Company.
(j) “Person”
means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
(k) “Securities
Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
(l) “Toba”
means Toba Capital Ventures Series, a series of Toba Capital LLC, a
Delaware limited liability company.
(m) “Transaction
Agreements” means this
Agreement and the Investors’ Rights
Agreement.
2.
Representations and
Warranties of the Company. A Disclosure
Schedule, attached as Exhibit C to this
Agreement (each a “Disclosure
Schedule”), shall be delivered to the Purchasers in
connection with each Closing. Except as set forth on the Disclosure
Schedule delivered to the Purchasers at the applicable Closing,
which exceptions shall be deemed to be part of the representations
and warranties made hereunder, the Company hereby represents and
warrants to the Purchasers that the following representations are
true and complete. The Disclosure Schedule shall be arranged in
sections corresponding to the numbered and lettered sections
contained in this Section 2, and the disclosures in
any section of the Disclosure Schedule shall qualify other sections
in this Section
2 only to the extent it is
readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections.
2.1 Organization,
Good Standing, Corporate Power and Qualification. . The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as presently
conducted and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
Material Adverse Effect.
(a) The
authorized capital of the Company consists, immediately prior to
the Initial Closing, of 50,000,000 shares of Common Stock, $0.001
par value. Immediately prior to the Initial Closing, there are
8,099,279 shares of Common Stock issued and outstanding. All of the
outstanding shares of Common Stock have been duly authorized, are
fully paid and nonassessable and were issued in compliance with all
applicable federal and state securities laws. Simultaneous with the
Initial Closing, 1,551,485 shares of Common Stock will be issued
upon the automatic conversion of certain zero coupon unsecured
convertible promissory notes previously issued by the Company in
the collective original principal amount of $5,050,000. The Company
holds no Common Stock in its treasury.
(b) The
Company has reserved 3,000,000 shares of Common Stock for issuance
to officers, directors, employees, consultants and other service
providers of the Company pursuant to its 2014 Stock Option and
Incentive Plan (the “2014
Plan”), duly adopted by
the Board and approved by the Company stockholders.
Of such reserved shares of Common
Stock under the 2014 Plan, (i) zero shares have been issued
pursuant to restricted stock purchase agreements, options to
purchase 2,658,493 shares have been granted and are currently
outstanding, 70,000 shares have been issued pursuant to stock
option exercises, and 271,507 shares of Common Stock remain
available for issuance to officers, directors, employees,
consultants and other service providers of the Company pursuant to
the 2014 Plan. The Company has furnished to the Purchasers complete
and accurate copies of the 2014 Plan and forms of agreements used
thereunder.
(c) Section 2.2(c)
of the Disclosure Schedule sets forth
the capitalization of the Company immediately following the Initial
Closing including the number of shares of the following:
(i) issued and outstanding Common Stock, including, with
respect to restricted Common Stock, vesting schedule and repurchase
price; (ii) granted stock options, including vesting schedule
and exercise price; (iii) shares of Common Stock reserved for
future award grants under the Stock Plans; and (iv) warrants
or other rights to purchase any of the Company’s authorized
and unissued capital stock. Except for (A) the rights provided
in Section 4
of the Investors’ Rights
Agreement, and (B) the securities and rights described
in Section
2.2,
of this Agreement and Section 2.2(c)
of the Disclosure Schedule, there are
no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or
agreements, orally or in writing, to purchase or acquire from the
Company any shares of Common Stock, or any securities convertible
into or exchangeable for shares of Common
Stock.
(d) The
Company has never adjusted or amended the exercise price of any
stock options previously awarded, whether through amendment,
cancellation, replacement grant, repricing, or any other
means.
2.3 Subsidiaries. .
The Company does not currently own or control, directly or
indirectly, any interest in any other corporation, partnership,
trust, joint venture, limited liability company, association, or
other business entity. The Company is not a participant in any
joint venture, partnership or similar arrangement, other than
license agreements with third parties in the ordinary course and
scope of the Company’s business.
2.4 Authorization. .
All corporate action required to be taken by the Board and
stockholders in order to authorize the Company to enter into the
Transaction Agreements, and to issue the Shares at each Closing,
has been taken or will be taken prior to the Initial Closing. All
action on the part of the officers of the Company necessary for the
execution and delivery of the Transaction Agreements, the
performance of all obligations of the Company under the Transaction
Agreements to be performed as of the Closing has been taken or will
be taken prior to such Closing. The Transaction Agreements, when
executed and delivered by the Company, shall constitute valid and
legally binding obligations of the Company, enforceable against the
Company in accordance with their respective terms except
(i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or
other equitable remedies, or (iii) to the extent the
indemnification provisions contained in the Investors’ Rights
Agreement may be limited by applicable federal or state securities
laws.
2.5 Valid
Issuance of Shares.
(a) The
Shares, when issued, sold and delivered in accordance with the
terms and for the consideration set forth in this Agreement, will
be validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under
the Transaction Agreements, applicable state and federal securities
laws and liens or encumbrances created by or imposed by a
Purchaser. Assuming the accuracy of the representations of the
Purchasers in Section 3
of this Agreement and subject to the
filings described in Section 2.6
below, the Shares will be issued in
compliance with all applicable federal and state securities
laws.
(b) No
“bad actor” disqualifying event described in Rule
506(d)(1)(i)-(viii) of the Securities Act (a
“Disqualification
Event”) is applicable to
the Company or, to the Company’s knowledge, any Company
Covered Person, except for a Disqualification Event as to which
Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.
The Company has exercised reasonable
care, in accordance with SEC rules and guidance, to determine
whether any Company Covered Person is subject to any
Disqualification Event. The Company has complied, to the extent
applicable, with any disclosure obligations under Rule 506(e) under
the Securities Act.
2.6 Governmental Consents
and Filings. Assuming the
accuracy of the representations made by the Purchasers in
Section 3 of this Agreement, no
consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the
part of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except for (i) the
filing of the Restated Certificate, which will have been filed as
of the Initial Closing, and (ii) filings pursuant to
Regulation D of the Securities Act, and applicable state
securities laws, which will be made in a timely
manner.
2.7 Litigation.
There is no claim, action, suit, proceeding, arbitration,
complaint, charge or investigation pending or, to the
Company’s knowledge, currently threatened (i) against the
Company or any officer, director or Key Employee of the Company; or
(ii) that questions the validity of the Transaction Agreements or
the right of the Company to enter into them, or to consummate the
transactions contemplated by the Transaction Agreements; or (iii)
to the Company’s knowledge, that would reasonably be expected
to have, either individually or in the aggregate, a Material
Adverse Effect. Neither the Company nor, to the Company’s
knowledge, any of its officers, directors or Key Employees is a
party or is named as subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality (in the case of officers, directors or Key
Employees, such as would affect the Company). There is no action,
suit, proceeding or investigation by the Company pending or which
the Company intends to initiate. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending
or threatened in writing (or any basis therefor known to the
Company) involving the prior employment of any of the
Company’s employees, their services provided in connection
with the Company’s business, any information or techniques
allegedly proprietary to any of their former employers or their
obligations under any agreements with prior employers.
2.8 Intellectual
Property. The Company owns
or possesses sufficient legal rights to all Company Intellectual
Property without (i) any conflict with, or infringement of, the
rights of others, other than the rights of third parties in, to and
under third-party patents and patent applications
(“Third-Party Patent
Rights”), and (ii) to the knowledge of the Company,
any conflict with, or infringement of, any Third-Party Patent
Rights. No product or service marketed or sold (or proposed to be
marketed or sold) by the Company violates or will violate any
license or infringes or will infringe (x) any intellectual property
rights of any other party other than Third-Party Patent Rights and
(y) to the knowledge of the Company, any Third-Party Patent Rights.
Other than with respect to commercially available software products
under standard end-user object code license agreements, there are
no outstanding options, licenses, agreements, claims, encumbrances
or shared ownership interests of any kind relating to the Company
Intellectual Property, nor is the Company bound by or a party to
any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights and processes of
any other Person. The Company is not aware of any violation by a
third party of any Company Intellectual Property, and the Company
has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade
secrets, mask works or other proprietary rights or processes of any
other Person. The Company has obtained and possesses valid licenses
to use all of the software programs present on the computers and
other software-enabled electronic devices that it owns or leases or
that it has otherwise provided to its employees for their use in
connection with the Company’s business. It will not be
necessary to use any inventions of any of its employees or
consultants (or Persons it currently intends to hire) made prior to
their employment by the Company. Each employee and consultant has
assigned to the Company all intellectual property rights he or she
owns that are related to the Company’s business as now
conducted and as presently proposed to be conducted. Section 2.8 of the Disclosure
Schedule lists all Company patents, patent applications,
trademarks, trademark applications, service marks, service mark
applications, tradenames, domain names, copyrights, and licenses to
and under any of the foregoing. The Company has not embedded, used
or distributed any open source, copyleft or community source code
(including, but not limited to, any libraries or code, software,
technologies or other materials that are licensed or distributed
under any General Public License, Lesser General Public License or
similar license arrangement or other distribution model described
by the Open Source Initiative at www.opensource.org)
(collectively “Open Source
Software”) in, or in connection with, any of its
products or services that are generally available or in development
in any manner that would materially restrict the ability of the
Company to protect its proprietary interests in any such product or
service or in any manner that would (i) require, or purport to
require, any Company Intellectual Property (other than the Open
Source Software itself) to be disclosed or distributed in source
code form, or to be licensed for the purpose of making derivative
works; (ii) restrict, or purport to restrict, the consideration
that could be charged for the distribution or use of any Company
Intellectual Property, or otherwise limit, or purport to limit, the
use of any Company Intellectual Property for commercial purposes;
(iii) create, or purport to create, any obligation on the Company
with respect to any Company Intellectual Property owned by the
Company, or otherwise grant, or purport to grant, to any third
party any rights in or to, or immunities under, Company
Intellectual Property owned by the Company; or (iv) impose, or
purport to impose, any other limitation, restriction or condition
on the right of the Company with respect to its use or distribution
of any Company Intellectual Property. For purposes of this
Section 2.8, the Company shall be
deemed to have knowledge of a patent right if the Company has
actual knowledge of the patent right or would be found to be on
notice of such patent right as determined by reference to United
States patent laws.
2.9 Compliance
with Other Instruments. . The Company is
not in violation or default (i) of any provisions of its Restated
Certificate or Bylaws, (ii) of any instrument, judgment, order,
writ or decree, (iii) under any note, indenture or mortgage, or
(iv) under any lease, agreement, contract or purchase order to
which it is a party or by which it is bound that is required to be
listed on the Disclosure Schedule, or (v) to its knowledge, of
any provision of federal or state statute, rule or regulation
applicable to the Company, the violation of which would have a
Material Adverse Effect. The execution, delivery and performance of
the Transaction Agreements and the consummation of the transactions
contemplated by the Transaction Agreements will not result in any
such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either (i) a
default under any such provision, instrument, judgment, order,
writ, decree, contract or agreement; or (ii) an event which results
in the creation of any lien, charge or encumbrance upon any assets
of the Company or the suspension, revocation, forfeiture, or
nonrenewal of any material permit or license applicable to the
Company.
2.10 Agreements;
Actions.
(a) Except
for the Transaction Agreements, issued and outstanding employment
agreements with executives of the Company, the existing real
property lease agreement for the Company’s headquarters
located at 2906 Colorado Ave., Santa Monica, CA 90404, there are no
agreements, understandings, instruments, contracts or proposed
transactions to which the Company is a party or by which it is
bound that involve (i) obligations (contingent or otherwise)
of, or payments to, the Company in excess of $100,000,
(ii) the license of any patent, copyright, trademark, trade
secret or other proprietary right to or from the Company,
(iii) the grant of rights to manufacture, produce, assemble,
license, market, or sell its products to any other Person that
limit the Company’s exclusive right to develop, manufacture,
assemble, distribute, market or sell its products, or (iv)
indemnification by the Company with respect to infringements of
proprietary rights.
(b) The
Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any
class or series of its capital stock, or (ii) sold, exchanged or
otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of
business.
(c) The
Company is not a guarantor or indemnitor of any indebtedness of any
other Person.
2.11 Certain
Transactions.
(a) Other
than (i) standard employee benefits generally made available to all
employees, (ii) executive employment agreements for Ann Hand and
David Steigelfest, (iii) standard director and officer
indemnification agreements approved by the Board, and (iv) the
purchase of shares of the Company’s capital stock and the
issuance of options and warrants to purchase shares of the
Company’s Common Stock, in each instance, approved in the
written minutes of the Board (previously provided to the Purchasers
or their counsel), there are no agreements, understandings or
proposed transactions between the Company and any of its officers,
directors, consultants or Key Employees, or any Affiliate
thereof.
(b) The
Company is not indebted, directly or indirectly, to any of its
directors, officers or employees or to their respective spouses or
children or to any Affiliate of any of the foregoing, other than in
connection with expenses or advances of expenses incurred in the
ordinary course of business or employee relocation expenses and for
other customary employee benefits made generally available to all
employees. None of the Company’s directors, officers or
employees, or any members of their immediate families, or any
Affiliate of the foregoing are, directly or indirectly, indebted to
the Company or, to the Company’s knowledge, have any (i)
material commercial, industrial, banking, consulting, legal,
accounting, charitable or familial relationship with any of the
Company’s customers, suppliers, service providers, joint
venture partners, licensees and competitors, (ii) direct or
indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the
Company except that directors, officers or employees or
stockholders of the Company may own stock in (but not exceeding two
percent (2%) of the outstanding capital stock of) publicly traded
companies that may compete with the Company or (iii) financial
interest in any material contract with the
Company.
2.12 Rights
of Registration and Voting Rights. . Except as
provided in the Investors’ Rights Agreement, and in Section
2.12 of the Disclosure Schedule, the Company is not under any
obligation to register under the Securities Act any of its
currently outstanding securities or any securities issuable upon
exercise or conversion of its currently outstanding securities. To
the Company’s knowledge, no stockholder of the Company has
entered into any agreements with respect to the voting of capital
shares of the Company.
2.13 Property.The
property and assets that the Company owns are free and clear of all
mortgages, deeds of trust, liens, loans and encumbrances, except
for statutory liens for the payment of current taxes that are not
yet delinquent and encumbrances and liens that arise in the
ordinary course of business and do not materially impair
the Company’s ownership or use of such property or
assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims or
encumbrances other than those of the lessors of such property or
assets. The Company does not own any real property.
2.14 Financial
Statements. The Company has delivered to each Purchaser its
audited financial statements for the fiscal years ended December
31, 2014 and December 31, 2015 and its unaudited financial
statements (including balance sheet, income statement and statement
of stockholders equity) for the six months ended June 30, 2016
(collectively, the “Financial
Statements”). The Financial Statements have been
prepared in accordance with generally accepted accounting
principles (“GAAP”) applied
on a consistent basis throughout the periods indicated, except that
the Financial Statements may not contain all footnotes required by
GAAP. The Financial Statements fairly present in all material
respects the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein,
subject to normal year-end audit adjustments. Except as set forth
in the Financial Statements, the Company has no material
liabilities or obligations, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent
to June 30, 2016; (ii) obligations under contracts and commitments
incurred in the ordinary course of business; and (iii) liabilities
and obligations of a type or nature not required under GAAP to be
reflected in the Financial Statements, which, in all such cases,
individually and in the aggregate would not have a Material Adverse
Effect. The Company maintains and will continue to maintain a
standard system of accounting established and administered in
accordance with GAAP.
2.15 Changes. Since June 30,
2016, there has not been:
(a) any change in the
assets, liabilities, financial condition or operating results of
the Company, except changes in the ordinary course of business that
have not caused, in the aggregate, a Material Adverse
Effect;
(b) any damage,
destruction or loss, whether or not covered by insurance, that
would have a Material Adverse Effect;
(c) any waiver or
compromise by the Company of a valuable right or of a material debt
owed to it;
(d) any satisfaction or
discharge of any lien, claim, or encumbrance or payment of any
obligation by the Company, except in the ordinary course of
business and the satisfaction or discharge of which would not have
a Material Adverse Effect;
(e) any material change
to a material contract or agreement by which the Company or any of
its assets is bound or subject;
(f) any material change
in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(g) any resignation or
termination of employment of any officer or Key Employee of the
Company, other than the voluntary resignation of Brett
Morris;
(h) any mortgage,
pledge, transfer of a security interest in, or lien, created by the
Company, with respect to any of its material properties or assets,
except liens for taxes not yet due or payable and liens that arise
in the ordinary course of business and do not materially impair the
Company’s ownership or use of such property or
assets;
(i) any loans or
guarantees made by the Company to or for the benefit of its
employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the
ordinary course of its business;
(j) any declaration,
setting aside or payment or other distribution in respect of any of
the Company’s capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by
the Company;
(k) any sale,
assignment or transfer of any Company Intellectual Property that
could reasonably be expected to result in a Material Adverse
Effect;
(l) receipt of notice
that there has been a loss of, or material order cancellation by,
any major customer of the Company;
(m) to the
Company’s knowledge, any other event or condition of any
character, other than events affecting the economy or the
Company’s industry generally, that could reasonably be
expected to result in a Material Adverse Effect; or
(n) any arrangement or
commitment by the Company to do any of the things described in this
Subsection 2.15.
(a) As
of the date hereof, the Company employs more than 20 full-time
employees and less than five part-time employees and engages
consultants or independent contractors. There are no current officers, employees,
consultants or independent contractors of the Company who receive
an annual salary of more than $300,000.
(b) To
the Company’s knowledge, none of its employees is obligated
under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree
or order of any court or administrative agency, that would
materially interfere with such employee’s ability to promote
the interest of the Company or that would conflict with the
Company’s business. Neither the execution or delivery of the
Transaction Agreements, nor the carrying on of the Company’s
business by the employees of the Company, nor the conduct of the
Company’s business as now conducted and as presently proposed
to be conducted, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions, or provisions
of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now
obligated.
(c) The
Company is not delinquent in payments to any of its employees,
consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service
performed for it to the date hereof or amounts required to be
reimbursed to such employees, consultants or independent
contractors. The Company has complied in all material respects with
all applicable state and federal equal employment opportunity laws
and with other laws related to employment, including those related
to wages, hours, worker classification and collective bargaining.
The Company has withheld and paid to the appropriate governmental
entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the
Company and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the
foregoing.
(d) To
the Company’s knowledge, no Key Employee intends to terminate
employment with the Company or is otherwise likely to become
unavailable to continue as a Key Employee, nor does the Company
have a present intention to terminate the employment of any of the
foregoing. The employment of each employee of the Company is
terminable at the will of the Company, other than executives who
have employment agreements with the Company.
(e) The
Company has not made any representations regarding equity
incentives to any officer, employee, director or consultant that
are inconsistent with the share amounts and terms set forth in the
minutes of meetings of the Board.
(f) Each
former Key Employee whose employment was terminated by the Company
has entered into an agreement with the Company providing for the
full release of any claims against the Company or any related party
arising out of such employment.
(g) Section 2.166(g)
of the Disclosure Schedule sets forth each employee
benefit plan maintained, established or sponsored by the Company,
or which the Company participates in or contributes to, which is
subject to the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).
The Company has made all required contributions and has no
liability to any such employee benefit plan, other than liability
for health plan continuation coverage described in Part 6 of Title
I(B) of ERISA, and has complied in all material respects with all
applicable laws for any such employee benefit
plan.
(h) The Company is not
bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no
labor union has requested or, to the knowledge of the Company, has
sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving
the Company pending, or to the Company’s knowledge,
threatened, which could have a Material Adverse Effect, nor is the
Company aware of any labor organization activity involving its
employees.
(i) None
of the Key Employees or officers or directors of the Company has
been (i) subject to voluntary or involuntary petition under the
federal bankruptcy laws or any state insolvency law or the
appointment of a receiver, fiscal agent or similar officer by a
court for his business or property; (ii) convicted in a criminal
proceeding or named as a subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses); (iii)
subject to any order, judgment or decree (not subsequently
reversed, suspended, or vacated) of any court of competent
jurisdiction permanently or temporarily enjoining him from
engaging, or otherwise imposing limits or conditions on his
engagement in any securities, investment advisory, banking,
insurance, or other type of business or acting as an officer or
director of a public company; or (iv) found by a court of competent
jurisdiction in a civil action or by the Securities and Exchange
Commission or the Commodity Futures Trading Commission to have
violated any federal or state securities, commodities, or unfair
trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated.
2.17 Tax
Returns and Payments. There are no
federal, state, county, local or foreign taxes due and payable by
the Company which have not been timely paid. There are no accrued
and unpaid federal, state, country, local or foreign taxes of the
Company which are due, whether or not assessed or disputed. There
have been no examinations or audits of any tax returns or reports
by any applicable federal, state, local or foreign governmental
agency. The Company has duly and timely filed all federal, state,
county, local and foreign tax returns required to have been filed
by it and there are in effect no waivers of applicable statutes of
limitations with respect to taxes for any year.
2.18 Insurance. The Company has
in full force and effect fire and casualty insurance policies with
extended coverage, sufficient in amount (subject to reasonable
deductions) to allow it to replace any of its properties that might
be damaged or destroyed.
2.19 Employee
Agreements. Each current and
former employee, consultant and officer of the Company has executed
an agreement with the Company regarding confidentiality and
proprietary information substantially in the form or forms
delivered to VLP Law Group LLP (“VLP”), counsel
for Toba (the “Confidential Information
Agreements”). No current or former Key Employee has
excluded works or inventions from his or her assignment of
inventions pursuant to such Key Employee’s Confidential
Information Agreement. Each current and former Key Employee has
executed a non-solicitation agreement substantially in the form or
forms delivered to VLP. The Company is not aware that any of its
Key Employees is in violation of any agreement covered by this
Section 2.199.
2.20 Permits. The Company has
all franchises, permits, licenses and any similar authority
necessary for the conduct of its business, the lack of which could
reasonably be expected to have a Material Adverse Effect. The
Company is not in default in any material respect under any of such
franchises, permits, licenses or other similar
authority.
2.21 Corporate
Documents. The Restated
Certificate and Bylaws of the Company are in the form provided to
the Purchasers and VLP. The copy of the minute books of the Company
provided to the Purchasers and VLP contains minutes of all meetings
of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date
of incorporation and accurately reflects in all material respects
all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such
minutes.
2.22 Environmental
and Safety Laws. (a) The
Company is and has been in compliance with all Environmental Laws;
(b) there has been no release or threatened release of any
pollutant, contaminant or toxic or hazardous material, substance or
waste or petroleum or any fraction thereof (each a
“Hazardous
Substance”), on, upon, into or from any site currently
or heretofore owned, leased or otherwise used by the Company;
(c) there have been no Hazardous Substances generated by the
Company that have been disposed of or come to rest at any site that
has been included in any published U.S. federal, state or local
“superfund” site list or any other similar list of
hazardous or toxic waste sites published by any governmental
authority in the United States; and (d) there are no
underground storage tanks located on, no polychlorinated biphenyls
(“PCBs”) or
PCB-containing equipment used or stored on, and no hazardous waste
as defined by the Resource Conservation and Recovery Act, as
amended, stored on, any site owned or operated by the Company,
except for the storage of hazardous waste in compliance with
Environmental Laws. The Company has made available to the
Purchasers true and complete copies of all material environmental
records, reports, notifications, certificates of need, permits,
pending permit applications, correspondence, engineering studies
and environmental studies or assessments.
For
purposes of this Section
2.22, “Environmental
Laws” means any law, regulation, or other applicable
requirement relating to (a) releases or threatened release of
Hazardous Substance; (b) pollution or protection of employee health
or safety, public health or the environment; or (c) the
manufacture, handling, transport, use, treatment, storage, or
disposal of Hazardous Substances.
2.23 Qualified
Small Business Stock. As of and immediately following each
Closing: (i) the Company will be an eligible corporation as defined
in Section 1202(e)(4) of the Code, (ii) the Company will not have
made purchases of its own stock described in Code Section
1202(c)(3)(B) during the one-year period preceding the Initial
Closing, except for purchases that are disregarded for such
purposes under Treasury Regulation Section 1.1202-2 and (iii) the
Company’s aggregate gross assets, as defined by Code Section
1202(d)(2), at no time between its incorporation and through the
Initial Closing have exceeded $50 million, taking into account the
assets of any corporations required to be aggregated with the
Company in accordance with Code Section 1202(d)(3); provided, however, that in no event
shall the Company be liable to the Purchasers or any other party
for any damages arising from any subsequently proven or identified
error in the Company’s determination with respect to the
applicability or interpretation of Code Section 1202, unless such
determination shall have been given by the Company in a manner
either grossly negligent or fraudulent.
2.24 Data
Privacy. In connection with its collection, storage,
transfer (including without limitation, any transfer across
national borders) and/or use of any personally identifiable
information from any individuals, including, without limitation,
any customers, prospective customers, employees and/or other third
parties (collectively, “Personal
Information”), the Company is and has been in
compliance with all applicable laws in all relevant jurisdictions,
the Company’s privacy policies, and the requirements of any
contract or codes of conduct to which the Company is a party. The
Company has commercially reasonable physical, technical,
organizational and administrative security measures and policies in
place to protect all Personal Information collected by it or on its
behalf from and against unauthorized access, use and/or disclosure.
The Company is and has been in compliance in all material respects
with all laws relating to data loss, theft and breach of security
notification obligations.
2.25 Disclosure.
The Company has made available to the Purchasers all the
information reasonably available to the Company that the Purchasers
have requested for deciding whether to acquire the Shares,
including certain of the Company’s projections describing its
proposed business plan (the “Business
Plan”). No representation or warranty of the Company
contained in this Agreement, as qualified by the Disclosure
Schedule, and no certificate furnished or to be furnished to
Purchasers at any Closing contains any untrue statement of a
material fact or, to the Company’s knowledge, omits to state
a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances
under which they were made. The Business Plan was prepared in good
faith; however, the Company does not warrant that it will achieve
any results projected in the Business Plan. It is understood that
this representation is qualified by the fact that the Company has
not delivered to the Purchasers, and has not been requested to
deliver, a private placement or similar memorandum or any written
disclosure of the types of information customarily furnished to
purchasers of securities.
3.
Representations and
Warranties of the Purchasers. Each Purchaser
hereby represents and warrants to the Company, severally and not
jointly, that:
3.1 Authorization.
The Purchaser has full power and authority to enter into the
Transaction Agreements. The Transaction Agreements to which the
Purchaser is a party, when executed and delivered by the Purchaser,
will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except
(a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and any other
laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies, or (b) to the extent the
indemnification provisions contained in the Investors’ Rights
Agreement may be limited by applicable federal or state securities
laws.
3.2 Purchase
Entirely for Own Account. This Agreement is
made with the Purchaser in reliance upon the Purchaser’s
representation to the Company, which by the Purchaser’s
execution of this Agreement, the Purchaser hereby confirms, that
the Shares to be acquired by the Purchaser will be acquired for
investment for the Purchaser’s own account, not as a nominee
or agent, and not with a view to the resale or distribution of any
part thereof, and that the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing
the same in violation of applicable securities laws. By executing
this Agreement, the Purchaser further represents that the Purchaser
does not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect
to any of the Shares. The Purchaser has not been formed for the
specific purpose of acquiring the Shares.
3.3 Disclosure
of Information. The Purchaser has
had an opportunity to discuss the Company’s business,
management, financial affairs and the terms and conditions of the
offering of the Shares with the Company’s management and has
had an opportunity to review the Company’s facilities. The
foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the
right of the Purchasers to rely thereon.
3.4 Restricted
Securities. The Purchaser
understands that the Shares have not been, and will not be,
registered under the Securities Act, by reason of a specific
exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the Purchaser’s
representations as expressed herein. The Purchaser understands that
the Shares are “restricted securities” under applicable
U.S. federal and state securities laws and that, pursuant to these
laws, the Purchaser must hold the Shares indefinitely unless they
are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The
Purchaser acknowledges that the Company has no obligation to
register or qualify the Shares for resale except as set forth in
the Investors’ Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of
sale, the holding period for the Shares, and on requirements
relating to the Company which are outside of the Purchaser’s
control, and which the Company is under no obligation and may not be able to
satisfy.
3.5 No
Public Market. The Purchaser
understands that no public market now exists for the Shares, and
that the Company has made no assurances that a public market will
ever exist for the Shares.
3.6 Legends.
The Purchaser understands that the Shares and any securities issued
in respect of or exchange for the Shares, may be notated with one
or all of the following legends:
“THE SHARES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.”
(a) Any
legend set forth in, or required by, the other Transaction
Agreements.
(b) Any
legend required by the securities laws of any state to the extent
such laws are applicable to the Shares represented by the
certificate, instrument, or book entry so legended.
3.7 Accredited
Investor. The Purchaser is
an accredited investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.8 No
General Solicitation. Neither the
Purchaser, nor any of its officers, directors, employees, agents,
stockholders or partners has either directly or indirectly,
including, through a broker or finder (a) engaged in any
general solicitation, or (b) published any advertisement in
connection with the offer and sale of the Shares.
3.9 Exculpation
Among Purchasers. The Purchaser
acknowledges that it is not relying upon any Person, other than the
Company and its officers and directors, in making its investment or
decision to invest in the Company. The Purchaser agrees that
neither any Purchaser nor the respective controlling Persons,
officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action
heretofore taken or omitted to be taken by any of them in
connection with the purchase of the Shares.
3.10 Residence.
If the Purchaser is an individual, then the Purchaser resides in
the state or province identified in the address of the Purchaser
set forth on Exhibit
A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of
the Purchaser in which its principal place of business is
identified in the address or addresses of the Purchaser set forth
on Exhibit
A.
4.
Conditions to
the Purchasers’
Obligations at Closing. The obligations
of each Purchaser to purchase Shares at any Closing are subject to
the fulfillment, on or before such Closing, of each of the
following conditions, unless otherwise waived by such
Purchaser:
4.1 Representations
and Warranties .
(a) With respect to the
Initial Closing, except as set forth in or modified by the
Disclosure Schedule delivered to the Purchasers at the Initial
Closing, the representations and warranties of the Company
contained in Section 2 shall be true and correct in all
respects as of the date of the Initial Closing.
(b) With respect to any
Subsequent Closing, except as set forth in or modified by the
Disclosure Schedule delivered to the Purchasers at the Initial
Closing (or, if necessary, an updated version of the Disclosure
Schedule delivered to the Purchasers participating in such
Subsequent Closing along with the certificate described in
Section 4.3(b)),
the representations and warranties made by the Company in
Section 2 shall be
true and correct in all material respects (without giving effect to
any limitation as to “materiality” or Material Adverse
Effect set forth therein) on and as of the date of such Subsequent
Closing as though such representations and warranties were made on
and as of such date (other than those representations and
warranties of the Company contained in Section 2 made as of a
specified date or made only with respect to a specified period of
time, which need only be true and correct in all material respects
(without giving effect to any limitation as to
“materiality” or Material Adverse Effect set forth
therein) as of such specified date or with respect to such
specified period of time).
4.2 Performance.
The Company shall have performed and complied with all covenants,
agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by the Company
on or before such Closing.
4.3 Compliance
Certificate.
(a) With respect to the
Initial Closing, the President of the Company shall deliver to the
Purchasers participating in the Initial Closing a certificate
certifying that the conditions specified in Sections 4.1(a) and
4.2 have been
fulfilled.
(b) With respect to any
Subsequent Closing, the President of the Company shall deliver to
the Purchasers participating in such Subsequent Closing a
certificate certifying that the conditions specified in
Sections 4.1(b) and
4.2 have been
fulfilled.
4.4 Qualifications.
All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of such Closing.
4.5 Board
of Directors. As of the Initial
Closing, the authorized size of the Board shall be five (5), and
the Board shall be comprised of Ann Hand, David Steigelfest, Jeff
Gehl, Robert Stewart and John Miller.
4.6 Investors’
Rights Agreement. The Company
and each Purchaser
shall have executed and delivered the Investors’ Rights
Agreement.
4.7 Restated
Certificate. The Company shall
have filed the Restated Certificate with the Secretary of State of
Delaware on or prior to the Initial Closing, which shall continue
to be in full force and effect as of each Closing.
4.8 Secretary’s
Certificate. The Secretary of
the Company shall have delivered to the Purchasers at the Initial
Closing a certificate certifying (i) the Bylaws of the Company,
(ii) resolutions of the Board approving the Transaction Agreements
and the transactions contemplated under the Transaction Agreements,
and (iii) resolutions of the stockholders of the Company approving
the Restated Certificate.
4.9 Proceedings
and Documents. All corporate and
other proceedings in connection with the transactions contemplated
at such Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to each Purchaser,
and each Purchaser (or its counsel) shall have received all such
counterpart original and certified or other copies of such
documents as reasonably requested. Such documents may include good
standing certificates.
5. Conditions of the Company’s
Obligations at Closing. The obligations
of the Company to sell Shares to the Purchasers at any Closing are
subject to the fulfillment, on or before such Closing, of each of
the following conditions, unless otherwise waived:
5.1 Representations
and Warranties. The
representations and warranties of each Purchaser contained in
Section 3 shall be true and correct
in all respects as of such Closing.
5.2 Performance.
The Purchasers shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by
them on or before such Closing.
5.3 Qualifications.
All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of such Closing.
5.4 Investors’
Rights Agreement. Each Purchaser
shall have executed and delivered the Investors’ Rights
Agreement.
6.1 Survival
of Warranties. Unless otherwise
set forth in this Agreement, the representations and warranties of
the Company and the Purchasers contained in or made pursuant to
this Agreement shall survive the execution and delivery of this
Agreement and each Closing and shall in no way be affected by any
investigation or knowledge of the subject matter thereof made by or
on behalf of the Purchasers or the Company.
6.2 Successors
and Assigns. The terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
6.3 Governing
Law. This Agreement
shall be governed by and construed under the internal laws of the
State of Delaware, irrespective of conflict of law
principles.
6.4 Counterparts.
This Agreement may be executed and delivered by facsimile signature
and in two (2) or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the
same instrument. Counterparts may be delivered via facsimile,
electronic mail (including pdf or any electronic signature
complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com)
or other transmission method and any counterpart so delivered shall
be deemed to have been duly and validly delivered and be valid and
effective for all purposes.
6.5 Titles
and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
6.6 Notices.
All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given
upon the earlier of actual receipt, or (a) personal delivery to the
party to be notified, (b) when sent, if sent by electronic mail or
facsimile during normal business hours of the recipient, and if not
sent during normal business hours, then on the recipient’s
next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) business day after deposit with a
nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of
receipt. All communications shall be sent to the respective parties
at their address as set forth on the signature page or Exhibit A, or to such
e-mail address, facsimile number or address as subsequently
modified by written notice given in accordance with this
Section 6.6. If notice is given to
the Company, a copy shall also be sent to Gregory L Hrncir, Esq.,
General Counsel, Super League Gaming, Inc., 2906 Colorado Ave.,
Santa Monica, CA 90404, gregg@superleague.com,
and if notice is given to Toba, a copy (which shall not constitute
notice) shall also be given to Christopher E. La Chance, VLP Law
Group LLP, 3126 Scott Street, Suite 1, San Francisco, CA 94123,
clachance@vlplawgroup.com.
6.7 No
Finder’s Fees. Each party
represents that it neither is nor will be obligated for any
finder’s fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold
harmless the Company from any liability for any commission or
compensation in the nature of a finder’s or broker’s
fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability)
for which each Purchaser or any of its officers, employees or
representatives is responsible. The Company agrees to indemnify and
hold harmless each Purchaser from any liability for any commission
or compensation in the nature of a finder’s or
broker’s fee arising out of this transaction (and the costs
and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees
or representatives is responsible.
6.8 Fees
and Expenses. At the Initial
Closing, the Company shall be obligated to pay the documented fees
and expenses of VLP in an amount not to exceed, in the aggregate,
$30,000 (such amount, the “Reimbursable
Fees”; such obligation, the “Reimbursement
Obligation”). In full satisfaction of the
Company’s Reimbursement Obligation, an amount equal to the
Reimbursable Fees shall be deducted from, and set off against, the
aggregate purchase price otherwise payable by Toba for the Shares
purchased by Toba at the Initial Closing, and such deducted/set-off
amount shall be treated for all purposes of this Agreement as
having been paid to the Company for the Shares purchased by Toba at
the Initial Closing. At the Initial Closing, the Company shall be
furnished with a statement of the Reimbursable Fees.
6.9 Attorneys’
Fees. If any action at
law or in equity (including, arbitration) is necessary to enforce
or interpret the terms of any of the Transaction Agreements, the
prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
6.10 Amendments and
Waivers. Any term of this
Agreement may be amended, terminated or waived only with the
written consent of the Company and (a)
the holders of at least a majority of the then-outstanding Shares or (b) for an
amendment, termination or waiver effected prior to the Initial
Closing, Purchasers obligated to purchase at least a
majority of the Shares to be issued at
the Initial Closing. Notwithstanding the foregoing,
Purchasers purchasing Additional Shares in a Subsequent Closing may
become parties to this Agreement in accordance with Section 1.2(b)
without any amendment of this Agreement pursuant to this paragraph
or any consent or approval of any other Purchaser (other than any
consent or approval explicitly required pursuant to Section
1.2(b)). Any amendment or waiver effected in accordance with this
Section 6.10 shall be binding upon
each Purchaser and each transferee of the Shares, each future
holder of the Shares, and the Company.
6.11 Severability.
The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other
provision.
6.12 Delays
or Omissions. No delay or
omission to exercise any right, power or remedy accruing to any
party under this Agreement, upon any breach or default of any other
party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it
be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall
be cumulative and not alternative.
6.13 Entire
Agreement. This Agreement
(including the Exhibits hereto), the Restated Certificate and the
other Transaction Agreements constitute the full and entire
understanding and agreement between the parties with respect to the
subject matter hereof, and any other written or oral agreement
relating to the subject matter hereof existing between the parties
are expressly canceled.
6.14 Corporate
Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING
OBTAINED UNLESS THE SALE IS SO EXEMPT.
6.15 Dispute
Resolution. The parties (a)
hereby irrevocably and unconditionally submit to the jurisdiction
of the federal and state courts located in Los Angeles County,
California for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement, (b) agree not to
commence any suit, action or other proceeding arising out of or
based upon this Agreement except in the federal and state courts
located in Los Angeles County, California, and (c) hereby waive,
and agree not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that
it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court.
WAIVER
OF JURY TRIAL: EACH
PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER
HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS
(INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY
EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT
TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL
6.16 No
Commitment for Additional Financing. The Company
acknowledges and agrees that no Purchaser has made any
representation, undertaking, commitment or agreement to provide or
assist the Company in obtaining any financing, investment or other
assistance, other than the purchase of the Shares as set forth
herein and subject to the conditions set forth herein. In addition,
the Company acknowledges and agrees that (a) no statements,
whether written or oral, made by any Purchaser or its
representatives on or after the date of this Agreement shall create
an obligation, commitment or agreement to provide or assist the
Company in obtaining any financing or investment, (b) the
Company shall not rely on any such statement by any Purchaser or
its representatives, and (c) an obligation, commitment or agreement
to provide or assist the Company in obtaining any financing or
investment may only be created by a written agreement, signed by
such Purchaser and the Company, setting forth the terms and
conditions of such financing or investment and stating that the
parties intend for such writing to be a binding obligation or
agreement. Each Purchaser shall have the right, in its sole and
absolute discretion, to refuse or decline to participate in any
other financing of or investment in the Company, and shall have no
obligation to assist or cooperate with the Company in obtaining any
financing, investment or other assistance.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties have executed this Common Stock
Purchase Agreement as of the date first written above.
COMPANY:
SUPER
LEAGUE GAMING, INC.
Ann Hand, CEO &
President
Address:
2906 Colorado
Ave.
Santa Monica, CA 90404
Signature Page to Common Stock Purchase Agreement
Super League Gaming, Inc.
IN
WITNESS WHEREOF, the parties have executed this Common Stock
Purchase Agreement as of the date first written above.
PURCHASER:
By:
Name:
Title:
Signature Page to Common Stock Purchase Agreement
Super League Gaming, Inc.
EXHIBIT A
SCHEDULE OF PURCHASERS
Subsequent Closing
Date: ________________, 2017
Name/Address/Phone/Email of Purchaser
|
|
Shares of
Common Stock
|
|
Purchase
Price
|
|
|
|
|
|
|
|
|
|
|
_______________________________
|
|
___________
|
|
$___________
|
_______________________________
_______________________________
_______________________________
|
|
|
|
|
Exhibit A to Common Stock Purchase Agreement
Super League Gaming, Inc.
EXHIBIT B
FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Exhibit B to Common Stock Purchase Agreement
Super League Gaming, Inc.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SUPER LEAGUE GAMING, INC.
(Pursuant to Sections 242 and 245 of the
General
Corporation Law of the State of Delaware)
Super
League Gaming, Inc., a corporation organized and existing under and
by virtue of the provisions of the General Corporation Law of the
State of Delaware (the “General Corporation
Law”),
DOES HEREBY CERTIFY:
1. That the name of
this corporation is Super League Gaming, Inc., and that this
corporation was originally incorporated pursuant to the General
Corporation Law on October 1, 2014 under the name Nth Games,
Inc.
2. That
the Board of Directors duly adopted resolutions proposing to amend
and restate the Certificate of Incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the
best interests of this corporation and its stockholders, and
authorizing the appropriate officers of this corporation to solicit
the consent of the stockholders therefor, which resolution setting
forth the proposed amendment and restatement is as
follows:
RESOLVED, that the Certificate of
Incorporation of this corporation be amended and restated in its
entirety to read as follows:
FIRST: The name of this corporation is
Super League Gaming, Inc. (the “Corporation”).
SECOND: The address of the registered
office of the Corporation in the State of Delaware is 2140 S.
Dupont Highway, in the City of Camden, County of Kent, 19934. The
name of its registered agent at such address is Corporation Service
Company.
THIRD: The nature of the business or
purposes to be conducted or promoted is to engage in any lawful act
or activity for which corporations may be organized under the
General Corporation Law.
FOURTH: The total number of shares of
all classes of stock which the Corporation shall have authority to
issue is 50,000,000 shares of Common Stock, $0.001 par value per
share (“Common
Stock”).
Exhibit B to Common Stock Purchase Agreement
Super League Gaming, Inc.
The
following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or
restrictions thereof in respect of each class of capital stock of
the Corporation.
A. COMMON
STOCK
1.
Voting. The holders of the
Common Stock are entitled to one vote for each share of Common
Stock held at all meetings of stockholders (and written actions in
lieu of meetings). There shall be no cumulative
voting.
2.
Dividends.
2.1
Dividends Generally. Any
dividends declared or paid in any fiscal year shall be declared or
paid among the holders of the Common Stock then outstanding, pro
rata and pari passu based on the number of shares held by each such
holder. The right to receive dividends on shares of Common Stock
shall not be cumulative.
2.2
Non-Cash Distributions.
Whenever a dividend provided for in this Section 2 shall be payable in
property other than cash, the value of such dividend shall be
deemed to be the fair market value of such property as determined
in good faith by the Board of Directors.
3.
Liquidation,
Dissolution or Winding Up; Certain Mergers, Consolidations and
Asset Sales.
3.1
Payments to Holders of Common
Stock. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation or Deemed
Liquidation Event (as defined in Subsection 3.2.1), the assets
of the Corporation available for distribution to its stockholders
shall be distributed among the holders of shares of Common Stock,
pro rata and pari passu based on the number of shares held by each
such holder (the amount payable per share of Common Stock pursuant
to the foregoing sentence is hereinafter referred to as the
“Liquidation Amount”).
3.2
Deemed Liquidation
Events.
3.2.1
Definition. Each of the following
events shall be considered a “Deemed Liquidation
Event”:
(a)
a merger or
consolidation in which (i) the Corporation is a constituent
party or (ii) a subsidiary of the Corporation is a constituent
party and the Corporation issues shares of its capital stock
pursuant to such merger or consolidation,except any such merger or
consolidation involving the Corporation or a subsidiary in which
the shares of capital stock of the Corporation outstanding
immediately prior to such merger or consolidation continue to
represent, or are converted into or exchanged for equity securities
that represent, immediately following such merger or consolidation,
at least a majority, by voting power, of the equity securities of
(1) the surviving or resulting entity or (2) if the surviving or
resulting entity is a wholly owned subsidiary of another entity
immediately following such merger or consolidation, the parent
entity of such surviving or resulting entity; or
(b)
the sale, lease,
conveyance, transfer, exclusive license or other disposition, in a
single transaction or series of related transactions, by the
Corporation or any subsidiary of the Corporation of all or
substantially all the assets of the Corporation and its
subsidiaries taken as a whole, or the sale or disposition (whether
by merger, consolidation or otherwise) of one or more subsidiaries
of the Corporation if substantially all of the assets of the
Corporation and its subsidiaries taken as a whole are held by such
subsidiary or subsidiaries, except where such sale, lease,
conveyance, transfer, exclusive license or other disposition is to
a wholly owned subsidiary of the Corporation (an
“Asset
Sale”).
3.2.2
Effecting a Deemed Liquidation Event.
(a)
The Corporation
shall not have the power to effect a Deemed Liquidation Event
referred to in Subsection
3.2.1(a)(i) unless the agreement or plan of merger or
consolidation for such transaction provides that the consideration
payable to the stockholders of the Corporation shall be allocated
among the holders of capital stock of the Corporation in accordance
with Subsection
3.1.
(b)
In the event of a
Deemed Liquidation Event referred to in Subsection 3.2.1(a)(ii) or
3.2.1(b), if the
Corporation does not effect a dissolution of the Corporation under
the General Corporation Law within ninety (90) days after such
Deemed Liquidation Event, then (i) the Corporation shall send a
written notice to each holder of Common Stock no later than the
ninetieth (90th) day after the
Deemed Liquidation Event advising such holders of their right (and
the requirements to be met to secure such right) pursuant to the
terms of the following clause (ii) to require the redemption of
such shares of Common Stock, and (ii) if the holders of at least a
majority of the then outstanding shares of Common Stock so request
in a written instrument delivered to the Corporation not later than
one hundred twenty (120) days after such Deemed Liquidation Event,
the Corporation shall use the consideration received by the
Corporation for such Deemed Liquidation Event (net of any retained
liabilities associated with the assets sold or technology licensed,
as determined in good faith by the Board of Directors of the
Corporation), together
with any other assets of the Corporation available for distribution
to its stockholders, all to the extent permitted by Delaware law
governing distributions to stockholders (the “Available Proceeds”), on the one hundred
fiftieth (150th) day after such
Deemed Liquidation Event, to redeem all outstanding shares of
Common Stock at a price per share equal to the Liquidation Amount.
Notwithstanding the foregoing, in the event of a redemption
pursuant to the preceding sentence, if the Available Proceeds are
not sufficient to redeem all outstanding shares of Common Stock,the
Corporation shall ratably redeem each holder’s shares of
Common Stock to the fullest extent of such Available Proceeds, and
shall redeem the remaining shares as soon as it may lawfully do so
under Delaware law governing distributions to stockholders. Upon
any such redemption, each holder shall surrender the certificates
being redeemed upon receipt of payment therefor. Prior to the
distribution or redemption provided for in this Section 3.2.2(b), the
Corporation shall not expend or dissipate the consideration
received for such Deemed Liquidation Event, except to discharge
expenses incurred in connection with such Deemed Liquidation
Event.
3.2.3
Amount Deemed Paid or
Distributed. The amount deemed paid or distributed to the
holders of capital stock of the Corporation upon any such merger,
consolidation, sale, transfer, exclusive license, other disposition
or redemption shall be the cash or the value of the property,
rights or securities paid or distributed to such holders by the
Corporation or the acquiring person, firm or other entity. The
value of such property, rights or securities shall be determined in
good faith by the Board of Directors of the
Corporation.
4.
Election of
Directors. The holders of record of the shares of Common
Stock shall be entitled to elect the directors of the Corporation.
At any meeting held for the purpose of electing a director, the
presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock shall constitute a quorum for
the purpose of electing such director.
5.
Notice of Record
Date. In the event (i) the Corporation shall take a record
of the holders of Common Stock for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to
receive any right to subscribe for or purchase any shares of
capital stock of any class or any other securities, or to receive
any other security, (ii) of any capital reorganization of the
Corporation, any reclassification of the Common Stock, or any
Deemed Liquidation Event or (iii) of the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, then,
and in each such case, the Corporation will send or cause to be
sent to the holders of the Common Stock a notice specifying, as the
case may be, (x) the record date for such dividend, distribution or
right, and the amount and character of such dividend, distribution
or right, or (y) the effective date on which such capital
reorganization, reclassification, Deemed Liquidation Event,
dissolution, liquidation or winding up is proposed to take place,
and the
time,
if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such capital
reorganization, reclassification, Deemed Liquidation Event,
dissolution, liquidation or winding up, and the amount per share
and character of such exchange applicable to the Common Stock. Such
notice shall be sent at least ten (10) days prior to the record
date or effective date for the event specified in such
notice.
6.
Notices. Any
notice required or permitted by the provisions of this Article
Fourth to be given to a holder of shares of Common Stock shall be
mailed, postage prepaid, to the post office address last shown on
the records of the Corporation for such holder, given by the holder
to the Corporation for the purpose of notice, or given by
electronic communication in compliance with the provisions of the
General Corporation Law, and shall be deemed sent upon such mailing
or electronic transmission.
FIFTH: Subject to any additional vote required by this
Amended and Restated Certificate of Incorporation or the Bylaws of
the Corporation, in furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized to make, repeal, alter, amend and rescind any or all of
the Bylaws of the Corporation.
SIXTH: The number of directors of the Corporation shall be
determined in the manner set forth in the Bylaws of the
Corporation.
SEVENTH: Elections of directors need not be by written
ballot unless the Bylaws of the Corporation shall so
provide.
EIGHTH: Meetings of stockholders may be held within or
without the State of Delaware, as the Bylaws of the Corporation may
provide. The books of the Corporation may be kept outside the State
of Delaware at such place or places as may be designated from time
to time by the Board of Directors or in the Bylaws of the
Corporation.
NINTH: To the fullest extent permitted by law, a director of
the Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary
duty as a director. If the General Corporation Law or any other law
of the State of Delaware is amended after approval by the
stockholders of this Article Ninth to authorize corporate action
further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law as so amended.
Any
repeal or modification of the foregoing provisions of this Article
Ninth by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation
existing at the time of, or increase the liability of any director
of the Corporation with respect to any acts or omissions of such
director occurring prior to, such repeal or
modification.
TENTH: To the fullest extent permitted by applicable law,
the Corporation is authorized to provide indemnification of (and
advancement of expenses to) directors, officers and agents of the
Corporation (and any other persons to which General Corporation Law
permits the Corporation to provide indemnification) through Bylaw
provisions, agreements with such agents or other persons, vote of
stockholders or disinterested directors or otherwise, in excess of
the indemnification and advancement otherwise permitted by
Section 145 of the General Corporation Law.
Any amendment, repeal or modification of the foregoing provisions
of this Article Tenth shall not adversely affect any right or
protection of any director, officer or other agent of the
Corporation existing at the time of such amendment, repeal or
modification.
Exhibit B to Common Stock Purchase Agreement
Super League Gaming, Inc.
ELEVENTH: For purposes of Section 500 of the California
Corporations Code (to the extent applicable), in connection with
any repurchase of shares of Common Stock permitted under the
Certificate of Incorporation from employees, officers, directors or
consultants of the Corporation in connection with a termination of
employment or services pursuant to agreements or arrangements
approved by the Board (in addition to any other consent required
under the Certificate of Incorporation), such repurchase may be
made without regard to any “preferential dividends arrears
amount” or “preferential rights amount” (as those
terms are defined in Section 500 of the California Corporations
Code). Accordingly, for purposes of making any calculation under
California Corporations Code Section 500 in connection with such
repurchase, the amount of any “preferential dividends arrears
amount” or “preferential rights amount” (as those
terms are defined therein) shall be deemed to be zero
(0).
* * * * *
Exhibit B to Common Stock Purchase Agreement
Super League Gaming, Inc.
3. That
the foregoing amendment and restatement was approved by the holders
of the requisite number of shares of this corporation in accordance
with Section 228 of the General Corporation Law.
4. That
this Amended and Restated Certificate of Incorporation, which
restates and integrates and further amends the provisions of this
Corporation’s Certificate of Incorporation, has been duly
adopted in accordance with Sections 242 and 245 of the General
Corporation Law.
IN WITNESS WHEREOF, this Amended and
Restated Certificate of Incorporation has been executed by a duly
authorized officer of this corporation on October 7,
2016.
By: /s/ Ann Hand
Ann
Hand, CEO & President
Exhibit B to Common Stock Purchase Agreement
Super League Gaming, Inc.
EXHIBIT C
DISCLOSURE SCHEDULE
This
Disclosure Schedule is made and given pursuant to Section 2 of the Common Stock
Purchase Agreement (the “Agreement”),
between Super League Gaming, Inc. (the “Company”) and
the Purchasers listed on Exhibit A thereto. All
capitalized terms used but not defined herein shall have the
meanings as defined in the Agreement, unless otherwise provided.
The section numbers below correspond to the section numbers of the
representations and warranties in the Agreement; provided, however, that any information
disclosed herein under any section number shall be deemed to be
disclosed and incorporated into any other section number under the
Agreement where such disclosure would be appropriate and such
appropriateness is reasonably apparent from the face of such
disclosure. Nothing in this Disclosure Schedule is intended to
broaden the scope of any representation or warranty contained in
the Agreement or to create any covenant. Inclusion of any item in
this Disclosure Schedule (1) does not represent a determination
that such item is material or establish a standard of materiality,
(2) does not represent a determination that such item did not arise
in the ordinary course of business, (3) does not represent a
determination that the transactions contemplated by the Agreement
require the consent of third parties, and (4) shall not constitute,
or be deemed to be, an admission to any third party concerning such
item. This Disclosure Schedule includes brief descriptions or
summaries of certain agreements and instruments, copies of which
are available upon reasonable request. Such descriptions do not
purport to be comprehensive, and are qualified in their entirety by
reference to the text of the documents described, true and complete
copies of which have been provided to the Purchasers or their
respective counsel.
Exhibit C to Common Stock Purchase Agreement
Super League Gaming, Inc.
SECTION 2.2(c)
Capitalization
Following
the Initial Closing, and assuming such closing is in the amount of
$10,000,000 and consisting of the sale of 2,777,778 shares of
common stock, the capitalization of the Company will be as
follows:
Form of Security
|
|
Amount
|
|
Percentage
|
Common
Stock (1)
|
|
12,428,542
|
|
72.84%
|
Options
to Purchase Common Stock (2)
|
|
2,658,493
|
|
15.58%
|
Warrants
to Purchase Common Stock (3)
|
|
1,950,000
|
|
11.43%
|
Restricted
Stock Units
|
|
25,000
|
|
0.15%
|
TOTAL
|
|
17,062,035
|
|
100.00%
|
______________________
(1)
Consists of (a)
8,099,279 shares of common stock outstanding prior to the Initial
Closing, (b) 1,551,485 shares of common stock issued at the Initial
Closing relating to the automatic conversion of $5,050,000 of zero
coupon unsecured convertible notes, and (c) 2,777,778 shares of
common stock issued in connection with the collective investment of
$10,000,000. Excludes the exercise of any portion of the
over-allotment of up to 5,000,000, consisting of up to 1,388,889
shares.
(2)
The weighted
average exercise price of the options to purchase 2,658,493 shares
of common stock is $2.41 per share, with a collective exercise
value of $6,410,479.
(3)
The weighted
average exercise price of the warrants to purchase 1,950,000 shares
of common stock is $2.57 per share, with a collective exercise
value of $5,020,000.
SECTION 2.8
Patents & Trademarks
Patents Pending
|
Matter Name/Description
|
Status
|
Application No
|
Filing Date
|
Priority Claim
|
Inventors
|
001WO
(PCT
– International)
|
Game
System – Generating Game Projection Views
|
PENDING:
1. Entered National
Phase in the U.S. with 001C1 & 001C2
2. Case Expires May 5,
2017
|
PCT/US2015/029532
|
05/06/2015
|
001PR
(Provisional) filed 11/5/14
|
1. John
Miller
2.
David Steigelfest
|
001C1
(U.S.
Non-Provisional)
|
Multi-User Game
System with Trigger-Based Generation of Projection
View
|
PENDING
1. Filed
with Prioritized Examination Request
2. Awaiting
Examination by Patent Office
|
15/179,868
|
06/10/2016
|
Continuation of
001WO
|
1. John
Miller
2.
David Steigelfest
|
001C2
(U.S.
Non-Provisional)
|
Multi-User Game
System with Character-Based Generation of Projection
View
|
PENDING
1. Filed
with Prioritized Examination Request
2. Awaiting
Examination by Patent Office
|
15/179,878
|
06/10/2016
|
Continuation of
001WO
|
1. John
Miller
2.
David Steigelfest
|
Registered
Trademarks:
i.
International Class
9 – Serial No. 86725324
ii.
International Class
28 – Serial No. 86725331
iii.
International Class
41 – Serial No. 86725326
2.
Super League Gaming
(Stylized)
a.
Registered with
European Registration Community Mark No. 14945976
3.
Super League Gaming
(logo)
a.
Registered with
European Registration Community Mark No. 14945976
Exhibit C to Common Stock Purchase Agreement
Super League Gaming, Inc.
SECTION 2.12
Registration Rights
1.
The investors in
the Company’s Series A Round common stock round hold
unlimited piggyback registration rights.
Exhibit C to Common Stock Purchase Agreement
Super League Gaming, Inc.
SECTION 2.16(g)
Employee Benefit Plan
None.
Exhibit C to Common Stock Purchase Agreement
Super League Gaming, Inc.
EXHIBIT D
FORM OF INVESTORS’ RIGHTS AGREEMENT
Exhibit D to Common Stock Purchase Agreement
Super League Gaming, Inc.
SUPER LEAGUE GAMING, INC.
INVESTORS’ RIGHTS AGREEMENT
THIS
INVESTORS’ RIGHTS AGREEMENT (this “Agreement”),
is made as of ___________________________, by and among Super League Gaming, Inc., a Delaware
corporation (the “Company”), and
the purchasers of the Company’s Common Stock listed on
Schedule 1
hereto (the “Investors”).
RECITALS
WHEREAS, the Company and the Investors
are parties to that certain Common Stock Purchase Agreement of even
date herewith (the “Purchase
Agreement”).
WHEREAS, in order to induce the Company
to enter into the Purchase Agreement and to induce the Investors to
invest funds in the Company pursuant to the Purchase Agreement, the
Investors and the Company hereby agree that this Agreement shall
govern the rights of the Investors to cause the Company to register
shares of Common Stock issuable to the Investors, to receive
certain information from the Company, and to participate in future
equity offerings by the Company, and shall govern certain other
matters as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, the parties to this
Agreement agree as follows:
1. Definitions
. For
purposes of this Agreement:
1.1 “Affiliate”
means, with respect to any specified Person, any other Person who,
directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation, any
general partner, managing member, officer or director of such
Person, or such Person’s principal, or any venture capital
fund, financial investment firm or collective investment vehicle
now or hereafter existing that is controlled by one or more general
partners or managing members (or any affiliates thereof, which
shall include any series or cell of a general partner or managing
member that is structured as a series limited liability company)
of, or shares the same management company with, such Person. For
purposes of this definition, the terms “controlling,”
“controlled by,” or “under common control
with” shall mean the possession, directly or indirectly, of
(a) the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise, or (b) the power to elect or
appoint at least 50% of the directors, managers, general partners,
or Persons exercising similar authority with respect to such
Person. For the avoidance of doubt, an “Affiliate” of a
specified Person shall include (x) such Person’s partners,
members, stockholders, other equity owners, officers, directors,
managers, former or retired partners, former or retired members,
former or retired stockholders, former or retired other equity
owners, and the estate of any of the foregoing and (y) a parent or
subsidiary of a Person that is an entity.
1.2 “Board”
means the board of directors of the Company.
1.3 “Common
Stock” means shares of
the Company’s common stock, par value $0.001 per
share.
1.4 “Damages”
means any loss, damage, claim or liability (joint or several) to
which a party hereto may become subject under the Securities Act,
the Exchange Act, or other federal or state law, insofar as such
loss, damage, claim or liability (or any action in respect thereof)
arises out of or is based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement of the Company, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements
thereto, and any free-writing prospectus and any issuer information
(as defined in Rule 433 of the Securities Act) filed or required to
be filed pursuant to Rule 433(d) under the Securities Act or any
other document incident to such registration prepared by or on
behalf of the Company or used or referred to by the Company; (ii)
an omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation
by the indemnifying party (or any of its agents or
Affiliates) of the Securities Act, the Exchange Act, any state
securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act, or any state securities
law.
1.5 “Deemed
Liquidation Event” has
the meaning given to such term in the Restated Certificate in
effect on the date hereof.
1.6 “Derivative
Securities” means any
securities or rights convertible into, or exercisable or
exchangeable for (in each case, directly or indirectly), Common
Stock, including options and warrants.
1.7 “Exchange
Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
1.8 “Excluded
Registration” means (i) a
registration relating to the sale of securities to employees of the
Company or a subsidiary pursuant to a stock option, stock purchase,
or similar plan; (ii) a registration relating to an SEC Rule 145
transaction; (iii) a registration on any form that does not include
substantially the same information as would be required to be
included in a registration statement covering the sale of the
Registrable Securities; or (iv) a registration in which the only
Common Stock being registered is Common Stock issuable upon
conversion of debt securities that are also being
registered.
1.9 “Exempted
Securities” means: (i)
securities issued pursuant to a Recapitalization; (ii) securities
issued to employees, consultants, officers or directors for bona
fide compensatory purposes pursuant to the Company’s existing
equity incentive plan(s), such issuances to be approved by a
majority of the Board; (iii) securities issued upon exercise or
conversion of options, warrants or other exercisable or convertible
securities outstanding as of the date hereof; (iv) securities
issued in connection with the closing of the IPO; (v) securities
issued in connection with a bona fide acquisition of another entity
by the Company by merger, purchase of substantially all of the
assets or other reorganization or a joint venture agreement
approved by a majority of the Board; (vi) securities issued to
banks, equipment lessors or other financial institutions pursuant
to a debt financing or commercial leasing transaction approved by a
majority of the Board; (vii) securities issued in connection with
sponsored research, collaboration, technology license, development,
marketing or other similar agreements or strategic partnerships
approved by a majority of the Board; and (viii) securities issued
to suppliers or third party service providers in connection with
the provision of goods or services pursuant to transactions
approved by a majority of the Board.
1.10 “Form
S-1” means such form
under the Securities Act as in effect on the date hereof or any
successor registration form under the Securities Act subsequently
adopted by the SEC.
1.11 “Form
S-3” means such form
under the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by
the SEC that permits incorporation of substantial information by
reference to other documents filed by the Company with the
SEC.
1.12 “GAAP”
means generally accepted accounting principles in the United
States, consistently applied.
1.13 “Holder”
means any holder of Registrable Securities who is a party to this
Agreement.
1.14 “Immediate
Family Member” means a
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships,
of a natural person referred to herein.
1.15 “Initiating
Holders” means,
collectively, Holders who properly initiate a registration request
under this Agreement.
1.16 “IPO”
means the Company’s first underwritten public offering of its
Common Stock under the Securities Act.
1.17 “New
Securities” means,
collectively, equity securities of the Company, whether or not
currently authorized, as well as any rights, options, or warrants
to purchase such equity securities, or securities of any type
whatsoever that are, or may become, convertible or exchangeable
into or exercisable (in each case, directly or indirectly) for such
equity securities.
1.18 “Original
Issue Price” has the
meaning given to such term in the Purchase
Agreement.
1.19 “Person”
means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
1.20 “Qualified
Public Offering” means
the closing of the sale of shares of Common Stock to the public at
a price of at least $10.80 per share (subject to appropriate
adjustment in the event of any Recapitalization with respect to the Common Stock), in a
firm-commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act resulting
in at least $25,000,000 of gross proceeds, net of the underwriting
discount and commissions, to the Company.
1.21 “Recapitalization”
means any stock dividend, stock split, combination of shares,
reorganization, recapitalization, reclassification or other similar
event.
1.22 “Registrable
Securities” means (i) any
Common Stock issued pursuant to the Purchase Agreement, (ii) any
Common Stock, or any Common Stock issued or issuable (directly or
indirectly) upon conversion and/or exercise of any other securities
of the Company, currently owned, or acquired after the date hereof,
by any Investor or its Affiliate(s); (iii) any Common Stock issued
or issuable upon conversion of those certain Zero Coupon Unsecured
Convertible Promissory Notes by the Company; and (iv) any Common
Stock issued as (or issuable upon the conversion or exercise of any
warrant, right, or other security that is issued as) a dividend or
other distribution with respect to, or in exchange for or in
replacement of, the shares referenced in clauses (i)-(iii) above
held by an Investor; excluding in all cases, however, any
Registrable Securities sold by a Person in a transaction in which
the applicable rights under this Agreement are not assigned
pursuant to Section
6.1,
and excluding for purposes of Section
2
any shares for which registration
rights have terminated pursuant to Section
2.12
of this Agreement.
1.23 “Registrable
Securities then outstanding” means the number of shares determined by
adding the number of shares of outstanding Common Stock that are
Registrable Securities and the number of shares
of Common Stock issuable (directly or indirectly)
pursuant to then exercisable and/or convertible securities that are
Registrable Securities.
1.24 “Restated
Certificate” means the
Company’s Amended and Restated Certificate of Incorporation,
as amended from time to time.
1.25 “Restricted
Securities” means the
securities of the Company required to be notated with the legend
set forth in Section 2.11(b)
hereof.
1.26 “SEC”
means the Securities and Exchange Commission.
1.27 “SEC
Rule 144” means Rule 144
promulgated by the SEC under the Securities
Act.
1.28 “SEC
Rule 145” means Rule 145
promulgated by the SEC under the Securities
Act.
1.29 “Securities
Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
1.30 “Selling
Expenses” means all
underwriting discounts, selling commissions, and stock transfer
taxes applicable to the sale of Registrable Securities, and fees
and disbursements of counsel for any Holder, all of which shall be
borne and paid for by the Holder(s) as described in this Agreement,
except for the fees and disbursements of the Selling Holder Counsel
(as defined herein) borne and paid by the Company as provided
in Section 2.6.
1.31 “Toba”
means Toba Capital Ventures Series, a series of Toba Capital LLC, a
Delaware limited liability company.
2. Registration
Rights. The Company
covenants and agrees as follows:
(a) Form S-1
Demand. If at any time after
the earlier of (i) three (3) years after the date of this Agreement
or (ii) one (1) year after the
effective date of the registration statement for the IPO, the
Company receives a request from Holders of at least fifty percent
(50%) of the Registrable Securities then outstanding that the
Company file a Form S-1 registration statement with respect to Registrable Securities then
outstanding with an anticipated aggregate offering price, net of
Selling Expenses, in excess of $10,000,000, then the Company shall
(x) within ten (10) days after the date such request is given, give
notice thereof (the “Demand
Notice”) to all Holders
other than the Initiating Holders; and (y) as soon as practicable,
and in any event within one hundred twenty (120) days after the
date such request is given by the Initiating Holders, file such
Form S-1 registration statement under the Securities Act covering
all Registrable Securities that the Initiating Holders
requested to be registered and any additional Registrable
Securities requested to be included in such registration by any
other Holders, as specified by notice given by each such Holder to
the Company within twenty (20) days of the date the Demand Notice
is given, and in each case, subject to the limitations of
Subsections
2.1(c)
and 2.3.
(b) Form S-3
Demand. If at any time when it
is eligible to use a Form S-3 registration statement, the Company
receives a request from Holders of at least fifty percent (50%) of
the Registrable Securities then outstanding that the Company file a
Form S-3 registration statement with respect to outstanding
Registrable Securities of such Holders having an anticipated
aggregate offering price, net of Selling Expenses, of at least
$5,000,000, then the Company shall (i) within ten (10) days after
the date such request is given, give a Demand Notice to all Holders
other than the Initiating Holders; and (ii) as soon as practicable,
and in any event within sixty (60) days after the date such request
is given by the Initiating Holders, file such Form S-3 registration
statement under the Securities Act covering all Registrable
Securities requested to be included in such registration by any
other Holders, as specified by notice given by each such Holder to
the Company within twenty (20) days of the date the Demand Notice
is given, and in each case, subject to the limitations of
Subsections
2.1(c)
and 2.3.
(c) Notwithstanding the foregoing obligations, if the
Company furnishes to Holders requesting a registration pursuant to
this Subsection
2.1
a certificate signed by the
Company’s chief executive officer stating that in the good
faith judgment of the Board it would be materially detrimental to
the Company and its stockholders for such registration statement to
either become effective or remain effective for as long as such
registration statement otherwise would be required to remain
effective, because such action would (i) materially interfere with
a significant acquisition, corporate reorganization, or other
similar transaction involving the Company; (ii) require premature
disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential; or (iii) render
the Company unable to comply with requirements under the Securities
Act or Exchange Act, then the
Company shall have the right to defer taking action with respect to
such filing for a period of not more than one hundred eighty (180)
days after the request of the Initiating Holders is given;
provided,
however,
that the Company may not invoke this right more than once in any
twelve (12) month period;
and provided further
that the Company shall not register
any securities for its own account or that of any other stockholder
during such ninety (90) day period other than an Excluded
Registration.
(d) The
Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to Subsection
2.1(a):
(i) during the period that is ninety (90) days before the
Company’s good faith estimate of the date of filing of, and
ending on a date that is one hundred eighty (180) days after the
effective date of, a Company-initiated registration,
provided
that the Company is actively employing
in good faith commercially reasonable efforts to cause such
registration statement to become effective; (ii) after the Company
has effected two registrations pursuant to Subsection
2.1(a);
or (iii) if the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Subsection
2.1(b).
The Company shall not be obligated to effect, or to take any action
to effect, any registration pursuant to Subsection
2.1(b):
(i) during the period that is forty-five (45) days before the
Company’s good faith estimate of the date of filing of, and
ending on a date that is ninety (90) days after the effective date
of, a Company-initiated registration, provided
that the Company is actively employing
in good faith commercially reasonable efforts to cause such
registration statement to become effective; or (ii) if the Company
has effected two registrations pursuant to Subsection
2.1(b)
within the twelve (12) month period
immediately preceding the date of such request. A registration
shall not be counted as “effected” for purposes of
this Subsection
2.1(d)
until such time as the applicable
registration statement has been declared effective by the SEC,
unless the Initiating Holders withdraw their request for such
registration, elect not to pay the registration expenses therefor,
and forfeit their right to one (1) demand registration statement
pursuant to Subsection
2.6,
in which case such withdrawn registration statement shall be
counted as “effected” for purposes of this
Subsection
2.1(d).
2.2 Company
Registration. If the Company
proposes to register (including, for this purpose, a registration
effected by the Company for stockholders other than the Holders)
any of its securities under the Securities Act in connection with
the public offering of such securities solely for cash (other than
in an Excluded Registration), the Company shall, at such time,
promptly (and in any event no less than twenty (20) calendar days
prior to the filing of the registration statement with respect to
such Company securities) give each Holder notice of such
registration. Upon the request of each Holder given within ten (10)
days after such notice is given by the Company, the Company shall,
expressly subject to the provisions of Section 2.3, cause to be registered all
of the Registrable Securities that each such Holder has requested
to be included in such registration. The Company shall have the
right to terminate or withdraw any registration initiated by it
under this Section 2.2 before the effective
date of such registration, whether or not any Holder has elected to
include Registrable Securities in such registration. The expenses
(other than Selling Expenses) of such withdrawn registration shall
be borne by the Company in accordance with Section 2.6.
2.3 Underwriting
Requirements
(a) If,
pursuant to Section 2.1,
the Initiating Holders intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant
to Section 2.1,
and the Company shall include such information in the Demand
Notice. The underwriter(s) will be selected by the Company and
shall be reasonably acceptable to a majority in interest of the
Initiating Holders. In such event, the right of any Holder to
include such Holder’s Registrable Securities in such
registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the
Company as provided in Section 2.4(e))
enter into an underwriting agreement in customary form with the
underwriter(s) selected for such underwriting. Notwithstanding any
other provision of this Section 2.3,
if the managing underwriter(s) advise(s) the Initiating Holders in
writing that marketing or other factors, in its reasonable
discretion, require a limitation on the number of shares to be
underwritten, or the elimination thereof, then the Initiating
Holders shall so advise all Holders of Registrable Securities that
otherwise would be underwritten pursuant hereto, and the number of
Registrable Securities that may be included in the underwriting
shall be allocated among such Holders of Registrable Securities,
including the Initiating Holders, in proportion (as nearly as
practicable) to the number of Registrable Securities owned by each
Holder or in such other proportion as shall unanimously be agreed
to by all such selling Holders; provided,
however, that the number of
Registrable Securities held by the Holders, to be included in such
underwriting, shall only be reduced in proportion to the percentage
reduction of other registrable securities of the Company included
in such underwriting and not part of the Registrable Securities
defined herein. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder
to the nearest one hundred (100) shares.
(b) In
connection with any offering involving an underwriting of shares of
the Company’s capital stock pursuant to Section 2.2,
the Company shall not be required to include any of the
Holders’ Registrable Securities in such underwriting unless
the Holders accept the terms of the underwriting as agreed upon
between the Company and its underwriters, and then only in such
quantity, if any, as the underwriters in their sole discretion
determine will not jeopardize the success of the offering by the
Company. If the total number of securities, including Registrable
Securities, requested by stockholders to be included in such
offering exceeds the number of securities to be sold (other than by
the Company), that the underwriters in their reasonable discretion
determine is compatible with the success of the offering, then the
Company shall be required to include in the offering only that
number of such securities, including Registrable Securities, which
the underwriters and the Company in their sole discretion determine
will not jeopardize the success of the offering. If the
underwriters determine that less than all of the Registrable
Securities requested to be registered can be included in such
offering, then the Registrable Securities that are included in such
offering shall be allocated among the selling Holders in proportion
(as nearly as practicable) to the number of Registrable Securities
owned by each selling Holder or in such other proportions as shall
mutually be agreed to by all such selling Holders. To facilitate
the allocation of shares in accordance with the above provisions,
the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100) shares.
Notwithstanding the foregoing, in no event shall (i) the number of
Registrable Securities included in the offering be reduced unless
all other securities (expressly excluding securities to be sold by
the Company) are proportionally reduced, or (ii) the number of
Registrable Securities included in the offering be reduced below
fifty percent (50%) of the total number of securities included in
such offering, unless such offering is the IPO, in which case the
selling Holders may be excluded in full if the underwriters make
the determination described above and no other stockholder’s
securities are included in such offering. For purposes of the provision in this
Section 2.3(b)
concerning apportionment, for any
selling Holder that is a partnership, limited liability company, or
corporation, the partners, members, retired partners, retired
members, stockholders, and Affiliates of such Holder, or the
estates and Immediate Family Members of any such partners, retired
partners, members, and retired members and any trusts for the
benefit of any of the foregoing Persons, shall be deemed to be a
single “selling Holder,” and any pro rata reduction
with respect to such “selling Holder” shall be based
upon the aggregate number of Registrable Securities owned by all
Persons included in such “selling Holder,” as defined
in this sentence.
(c) For
purposes of Section
2.1, a registration shall not
be counted as “effected” if, as a result of an exercise
of the underwriter’s cutback provisions in
Section
2.3(a), fewer than twenty-five
percent (25%) of the total number of Registrable Securities that
Holders have requested to be included in such registration
statement are actually included.
2.4 Obligations
of the Company. Whenever required
under this Section 2 to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as
reasonably possible:
(a) prepare
and file with the SEC a registration statement with respect to such
Registrable Securities and use its commercially reasonable
efforts to cause such
registration statement to become effective and, upon the request of
the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period
of up to one hundred twenty (120) days or, if earlier, until the
distribution contemplated in the registration statement has been
completed; provided,
however, that such one hundred
twenty (120) day period shall be extended for a period of time
equal to the period the Holder refrains, at the request of an
underwriter of Common Stock (or other securities) of the Company,
from selling any securities included in such
registration;
(b) prepare
and file with the SEC such amendments and supplements to such
registration statement, and the prospectus used in connection with
such registration statement, as may be necessary to comply with the
Securities Act in order to enable the disposition of all securities
covered by such registration statement;
(c) furnish
to the selling Holders such numbers of copies of a prospectus,
including a preliminary prospectus, as required by the Securities
Act, and such other documents as the Holders may reasonably request
in order to facilitate their disposition of their Registrable
Securities;
(d) use
its commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue-sky laws of such jurisdictions as shall be
reasonably requested by the selling Holders; provided that the Company shall not be required to qualify
to do business or to file a general consent to service of process
in any such states or jurisdictions, unless the Company is already subject to service
in such jurisdiction and except as may be required by the
Securities Act;
(e) in
the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the underwriter(s) of such
offering;
(f) use
its commercially reasonable efforts to cause all such Registrable
Securities covered by such registration statement to be listed on a
national securities exchange or trading system and each securities
exchange and trading system (if any) on which similar securities
issued by the Company are then listed;
(g) provide
a transfer agent and registrar for all Registrable Securities
registered pursuant to this Agreement and provide a CUSIP number
for all such Registrable Securities, in each case not later than
the effective date of such registration;
(h) promptly
make available for inspection by the selling Holders, any
underwriter(s) participating in any disposition pursuant to such
registration statement, and any attorney or accountant or other
agent retained by any such underwriter or selected by the selling
Holders, all financial and other records, pertinent corporate
documents, and properties of the Company, and cause the
Company’s officers, directors, employees, and independent
accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant, or agent, in each
case, as necessary or advisable to verify the accuracy of the
information in such registration statement and to conduct
appropriate due diligence in connection therewith;
(i) notify
each selling Holder, promptly after the Company receives notice
thereof, of the time when such registration statement has been
declared effective or a supplement to any prospectus forming a part
of such registration statement has been filed; and
(j) after
such registration statement becomes effective, notify each selling
Holder of any request by the SEC that the Company amend or
supplement such registration statement or prospectus.
In
addition, the Company shall ensure that, at all times after any
registration statement covering a public offering of securities of
the Company under the Securities Act shall have become effective,
its insider trading policy shall provide that the Company’s
directors may implement a trading program under Rule 10b5-1 of the
Exchange Act.
2.5 Furnish
Information. It shall be a
condition precedent to the obligations of the Company to take any
action pursuant to this Section 2 with respect to the
Registrable Securities of any selling Holder that such Holder shall
furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of
disposition of such securities as is reasonably required to effect
the registration of such Holder’s Registrable
Securities.
2.6 Expenses of
Registration. All expenses
(other than Selling Expenses) incurred in connection with
registrations, filings, or qualifications pursuant to
Section 2, including all registration, filing, and
qualification fees; printers’ and accounting fees; fees and
disbursements of counsel for the Company; and the reasonable fees
and disbursements, not to exceed $25,000, of one counsel for the
selling Holders (“Selling Holder
Counsel”), shall be borne and paid by the Company;
provided, however, that the
Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2.1 if the registration request
is subsequently withdrawn at the request of the Holders of a
majority of the Registrable Securities to be registered (in which
case all selling Holders shall bear such expenses pro rata based
upon the number of Registrable Securities that were to be included
in the withdrawn registration), unless the Holders of a majority of
the Registrable Securities agree to forfeit their right to one
registration pursuant to Sections 2.1(a) or 2.1(b), as the case may be, in
which case the Holders shall not be required to pay any of such
expenses and shall not forfeit their right to one registration
pursuant to Sections 2.1(a) or 2.1(b). All Selling Expenses
relating to Registrable Securities registered pursuant to this
Section 2 shall be borne and paid by
the Holders pro rata on the basis of the number of Registrable
Securities registered on their behalf.
2.7 Delay
of Registration. No Holder shall
have any right to obtain or seek an injunction restraining or
otherwise delaying any registration pursuant to this Agreement as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.
2.8 Indemnification.
If any Registrable Securities are included in a registration
statement under this Section 2:
(a) To
the extent permitted by law, the Company will indemnify and hold
harmless each selling Holder, and the partners, members, officers,
directors, and stockholders of each such Holder; legal counsel and
accountants for each such Holder; any underwriter (as defined in
the Securities Act) for each such Holder; and each Person, if any,
who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any Damages, and the
Company will pay to each such Holder, underwriter, controlling
Person, or other aforementioned Person any legal or other expenses
reasonably incurred thereby in connection with investigating or
defending any claim or proceeding from which Damages may result, as
such expenses are incurred; provided,
however, that the indemnity
agreement contained in this Section 2.8(a)
shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable for
any Damages to the extent that they arise out of or are based upon
actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of any such Holder,
underwriter, controlling Person, or other aforementioned Person
expressly for use in connection with such
registration.
(b) To
the extent permitted by law, each selling Holder, severally and not
jointly, will indemnify and hold harmless the Company, and each of
its directors, each of its officers who has signed the registration
statement, each Person (if any), who controls the Company within
the meaning of the Securities Act, legal counsel and accountants
for the Company, any underwriter (as defined in the Securities
Act), any other Holder selling securities in such registration
statement, and any controlling Person of any such underwriter or
other Holder, against any Damages, in each case only to the extent
that such Damages arise out of or are based upon actions or
omissions made in reliance upon and in conformity with written
information furnished by or on behalf of such selling Holder
expressly for use in connection with such registration; and each
such selling Holder will pay to the Company and each other
aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating or defending any
claim or proceeding from which Damages may result, as such expenses
are incurred; provided,
however, that the indemnity
agreement contained in this Section 2.8(b)
shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is
effected without the consent of the Holder, which consent shall not
be unreasonably withheld; and provided further
that in no event shall the aggregate
amounts payable by any Holder by way of indemnity or contribution
under Sections 2.8(b)
and 2.8(d)
exceed the proceeds from the offering
received by such Holder (net of any Selling Expenses paid by such
Holder), except in the case of fraud or willful misconduct by such
Holder.
(c) Promptly
after receipt by an indemnified party under this
Section 2.8 of
notice of the commencement of any action (including any
governmental action) for which a party may be entitled to
indemnification hereunder, such indemnified party will, if a claim
in respect thereof is to be made against any indemnifying party
under this Section 2.8,
give the indemnifying party notice of the commencement thereof. The
indemnifying party shall have the right to participate in such
action and, to the extent the indemnifying party so desires,
participate jointly with any other indemnifying party to which
notice has been given, and to assume the defense thereof with
counsel mutually satisfactory to the parties; provided,
however, that an indemnified
party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such action. The failure to give
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying
party of any liability to the indemnified party under this
Section 2.8,
to the extent that such failure materially prejudices the
indemnifying party’s ability to defend such action. The
failure to give notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party
otherwise than under this Section 2.8.
(d) To
provide for just and equitable contribution to joint liability
under the Securities Act in any case in which either: (i) any party
otherwise entitled to indemnification hereunder makes a claim for
indemnification pursuant to this Section 2.8
but it is judicially determined (by
the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this
Section 2.8
provides for indemnification in such
case, or (ii) contribution under the Securities Act may be required
on the part of any party hereto for which indemnification is
provided under this Section 2.8,
then, and in each such case, such parties will contribute to the
aggregate losses, claims, damages, liabilities, or expenses to
which they may be subject (after contribution from others) in such
proportion as is appropriate to reflect the relative fault of each
of the indemnifying party and the indemnified party in connection
with the statements, omissions, or other actions that resulted in
such loss, claim, damage, liability, or expense, as well as to
reflect any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall
be determined by reference to, among other things, whether the
untrue or allegedly untrue statement of a material fact, or the
omission or alleged omission of a material fact, relates to
information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided,
however, that, in any such case
(x) no Holder will be required to contribute any amount in excess
of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration
statement, and (y) no Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation; and provided further
that in no event shall a
Holder’s liability pursuant to this Section 2.8(d),
when combined with the amounts paid or payable by such Holder
pursuant to Section 2.8(b),
exceed the proceeds from the offering received by such Holder (net
of any Selling Expenses paid by
such Holder), except in the case of willful misconduct or fraud by
such Holder.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification
and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) Unless
otherwise superseded by an underwriting agreement entered into in
connection with the underwritten public offering, the obligations
of the Company and Holders under this Section 2.8
shall survive the completion of any
offering of Registrable Securities in a registration under
this Section 2,
and otherwise shall survive the termination of this
Agreement.
2.9 Reports
Under Exchange Act. With a view to
making available to the Holders the benefits of SEC Rule 144 and
any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company
shall:
(a) make
and keep available adequate current public information, as those
terms are understood and defined in SEC Rule 144, at all times
after the effective date of the registration statement filed by the
Company for the IPO;
(b) use
commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act (at any time after
the Company has become subject to such reporting requirements);
and
(c) furnish
to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request to the extent accurate, a
written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144 (at any time after ninety
(90) days after the effective date of the registration statement
filed by the Company for the IPO), the Securities Act, and the
Exchange Act (at any time after the Company has become subject to
such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time
after the Company so qualifies); and (ii) such other information as
may be reasonably requested in availing any Holder of any rule or
regulation of the SEC that permits the selling of any such
securities without registration (at any time after the Company has
become subject to the reporting requirements under the Exchange
Act) or pursuant to Form S-3 (at any time after the Company so
qualifies to use such form).
2.10 “Market
Stand-off” Agreement. Each Holder hereby agrees
that it will not, without the prior written consent of the managing
underwriter, during the period commencing on the date of the final
prospectus relating to the registration by the Company of shares of
its Common Stock or any other equity securities under the
Securities Act on a registration statement on Form S-1
or Form S-3, and ending on the date specified by the Company and
the managing underwriter (such period not to exceed one hundred
eighty (180) days in the case of the IPO, or such other period as
may be requested by the Company or an underwriter to accommodate
regulatory restrictions on (1) the publication or other
distribution of research reports, and (2) analyst recommendations
and opinions, including, but not limited to, the restrictions
contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any
successor provisions or amendments thereto), (i) lend; offer;
pledge; sell; contract to sell; sell any option or contract to
purchase; purchase any option or contract to sell; grant any
option, right, or warrant to purchase; or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable
(directly or indirectly) for Common Stock held
immediately before the
effective date of the registration statement for such
offering or (ii) enter
into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
such securities, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or
other securities, in cash, or otherwise. The foregoing provisions
of this Section 2.100 shall apply only to the IPO,
shall not apply to the sale of any shares to an underwriter
pursuant to an underwriting agreement, or the transfer of any
shares to any trust for the direct or indirect benefit of the
Holder or the immediate family of the Holder, provided that the
trustee of the trust agrees to be bound in writing by the
restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. The
underwriters in connection with such registration are intended
third-party beneficiaries of this Section 2.10 and shall have the right,
power and authority to enforce the provisions hereof as though they
were a party hereto. Each Holder further agrees to execute such
agreements as may be reasonably requested by the underwriters in
connection with such registration that are consistent with this
Section 2.10 or that are necessary to
give further effect thereto, and the Company shall cause all future
stockholders of the Company to execute a document containing a
market stand-off agreement comparable to this Section 2.10. Any discretionary
waiver or termination of the restrictions of any or all of such
agreements by the Company or the underwriters shall apply pro rata
to all Holders subject to such agreements, based on the number of
shares subject to such agreements.
2.11 Restrictions on
Transfer
(a) The
Registrable Securities shall not be sold, pledged, or otherwise
transferred other than in conformity with the Securities Act, and
the Company shall not recognize and shall issue stop-transfer
instructions to its transfer agent (when a transfer agent has been
engaged by the Company) with respect to any such sale, pledge, or
transfer, except upon the conditions specified in this Agreement,
which conditions are intended to ensure compliance with the
provisions of the Securities Act. A transferring Holder will cause
any proposed purchaser, pledgee, or transferee of the Registrable
Securities held by such Holder to agree to take and hold such
securities subject to the provisions and upon the conditions
specified in this Agreement.
(b) Each
certificate, instrument, or book entry representing (i) the
Registrable Securities, and (ii) any other securities issued in
respect of the securities referenced in clause (i), upon any
Recapitalization, merger, consolidation, or similar event, shall
(unless otherwise permitted by the provisions of
Section 2.11(c))
be notated with a legend substantially in the following
form:
THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
THE
SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
The
Holders consent to the Company making a notation in its records and
giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer set
forth in this Section 2.11.
(c) The
holder of such Restricted Securities, by acceptance of ownership
thereof, agrees to comply in all respects with the provisions of
this Section 2.
Before any proposed sale, pledge, or transfer of any Restricted
Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transaction, the
Holder thereof shall give notice to the Company of such
Holder’s intention to effect such sale, pledge, or transfer.
Each such notice shall describe the manner and circumstances of the
proposed sale, pledge, or transfer in sufficient detail and, if
reasonably requested by the Company, shall be accompanied at such
Holder’s expense by either (i) a written opinion of legal
counsel who shall, and whose legal opinion shall, be reasonably
satisfactory to the Company, addressed to the Company, to the
effect that the proposed transaction may be effected without
registration under the Securities Act; (ii) a “no
action” letter from the SEC to the effect that the proposed
sale, pledge, or transfer of such Restricted Securities without
registration will not result in a recommendation by the staff of
the SEC that action be taken with respect thereto; or (iii) any
other evidence reasonably satisfactory to counsel to the Company to
the effect that the proposed sale, pledge, or transfer of the
Restricted Securities may be effected without registration under
the Securities Act, whereupon the Holder of such Restricted
Securities shall be entitled to sell, pledge, or transfer such
Restricted Securities in accordance with the terms of the notice
given by the Holder to the Company. The Company will not require
such a legal opinion or “no action” letter or detail
with respect to such transfer other than the number of shares and
the name of the transferee (x) in any transaction in compliance
with SEC Rule 144; or (y) in any transaction in which such Holder
distributes Restricted Securities to an Affiliate of such Holder
for no consideration; provided that each transferee agrees in writing to be
subject to the terms of this Section 2.11.
Each certificate, instrument, or book entry representing the
Restricted Securities transferred as above provided shall be
notated with, except if such transfer is made pursuant to SEC Rule
144, the appropriate restrictive legend set forth in
Section 2.11(b),
except that such certificate instrument, or book entry shall not be
notated with such restrictive legend if, in the opinion of counsel
for such Holder and the Company, such legend is not required in
order to establish compliance with any provisions of the Securities
Act.
2.12 Termination
of Registration Rights. The right of any
Holder to request registration or inclusion of Registrable
Securities in any registration pursuant to Sections 2.1 or 2.2 shall terminate upon
the earliest to occur of:
(a) such
time as Rule 144 or another similar exemption under the Securities
Act is available for the sale of all of such Holder’s shares without limitation during a three-month
period without registration; and
(b) the
fifth anniversary of the IPO.
3. Information
Rights
3.1 Delivery of Financial
Statements. The Company shall
deliver to each Investor:
(a) as
soon as practicable, but in any event within one hundred twenty
(120) days after the end of each fiscal year of the Company (i) a
balance sheet as of the end of such year, (ii) statements of income
and of cash flows for such year, and (iii) a statement of
stockholders’ equity as of the end of such
year, all prepared in
accordance with GAAP and audited and certified by independent
public accountants of nationally recognized standing selected by
the Company;
(b) as
soon as practicable, but in any event within sixty (60) days after
the end of each of the first three (3) quarters of each fiscal year
of the Company, unaudited statements of income and cash flows for
such fiscal quarter, and an unaudited balance sheet, all prepared
in accordance with GAAP (except that such financial statements may
(i) be subject to normal year-end audit adjustments; and (ii) not
contain all notes thereto that may be required in accordance with
GAAP);
(c) as
soon as practicable, but in any event before the end of each fiscal
year, a budget and business plan for the next fiscal year
(collectively, the “Budget”),
prepared on a monthly basis, including balance sheets, income
statements, and statements of cash flow for such months and,
promptly after prepared, any other budgets or revised budgets
prepared by the Company; and
(d) such
other information relating to the financial condition, business,
prospects, or corporate affairs of the Company as any Investor may
from time to time reasonably request; provided, however, that the Company shall not be obligated under
this Section 3.1
to provide information that the
Company reasonably determines in good faith (i) to be a trade
secret or confidential information (unless covered by an
enforceable confidentiality agreement, in a form reasonably
acceptable to the Company) or (ii) would, if disclosed, adversely
affect the attorney-client privilege between the Company and its
counsel.
If, for
any period, the Company has any subsidiary whose accounts are
consolidated with those of the Company, then in respect of such
period the financial statements delivered pursuant to the foregoing
sections shall be the consolidated and consolidating financial
statements of the Company and all such consolidated
subsidiaries.
Notwithstanding
anything else in this Section 3.1 to the contrary, the
Company may cease providing the information set forth in this
Section 3.1 during the period starting
with the date one hundred twenty (120) days before the
Company’s good-faith estimate of the date of filing
of a registration statement if it
reasonably concludes it must do so to comply with the SEC rules
applicable to such registration statement and related
offering; provided
that the Company’s covenants under this Section 3.1 shall be reinstated at such
time as the Company is no longer actively employing its
commercially reasonable efforts to cause such registration
statement to become effective.
3.2 Inspection.
The Company shall permit each Investor, at such Investor’s
expense, to visit and inspect the Company’s properties;
examine its books of account and records; and discuss the
Company’s affairs, finances, and accounts with its officers,
during normal business hours of the Company as may be reasonably
requested by the Investor upon at least five (5) days’
notice; provided, however,
that the Company shall not be obligated pursuant to this
Section 3.2 to provide access to
any information that it reasonably and in good faith determines (a)
to be a trade secret or confidential information (unless covered by
an enforceable confidentiality agreement, in form reasonably
acceptable to the Company) (b) would, if disclosed, adversely
affect the attorney-client privilege between the Company and its
counsel.
3.3 Toba
Observer Rights. As long as
Toba and/or its Affiliates beneficially own any Registrable
Securities, the Company shall invite a representative of Toba to
attend all meetings of the Board in a nonvoting observer capacity
and, in this respect, shall give such representative copies of all
notices, minutes, consents, and other materials that it provides to
its directors at the same time and in the same manner as provided
to such directors; provided, however, that such representative shall agree to hold in
confidence and trust and to act in a fiduciary manner with respect
to all information so provided; and provided further, that the Company reserves the right to withhold
any information and to exclude such representative from any meeting
or portion thereof if the Company reasonably determines in good
faith, upon advice of counsel, that access to such information or
attendance at such meeting could adversely affect the
attorney-client privilege between the Company and its counsel or
result in disclosure of trade secrets or a conflict of
interest.
3.4 Termination
of Information Rights
and Observer Right. The
covenants set forth in Sections 3.1, 3.2, and 3.3 shall terminate and be of
no further force or effect immediately before the consummation of a
Qualified Public Offering.
3.5 Confidentiality.
Each Investor agrees that such Investor will keep confidential and
will not disclose, divulge, or use for any purpose (other than to
monitor its investment in the Company) any confidential information
obtained from the Company pursuant to the terms of this Agreement
(including notice of the Company’s intention to file a
registration statement), unless such confidential information (a)
is known or becomes known to the public in general (other than as a
result of a breach of this Section 3.55 by such Investor), (b) is or
has been independently developed or conceived by the Investor
without use of the Company’s confidential information as
evidenced by written documentation, or (c) is or has been made
known or disclosed to the Investor by a third party without a
breach of any obligation of confidentiality such third party may
have to the Company; provided,
however, that an Investor may disclose confidential
information (i) to its attorneys, accountants, consultants, and
other professionals to the extent necessary to obtain their
services in connection with monitoring its investment in the
Company; (ii) to any prospective purchaser of any Registrable
Securities from such Investor, if such prospective purchaser agrees
to be bound by the provisions of this Section 3.55; (iii) to any Affiliate, partner,
member, stockholder, or wholly owned subsidiary of such Investor in
the ordinary course of business, provided that such Investor informs
such Person that such information is confidential and directs such
Person to maintain the confidentiality of such information; or (iv)
as may otherwise be required by law, provided that the Investor promptly
notifies the Company of such disclosure and takes reasonable steps
to minimize the extent of any such required
disclosure.
4. Rights
Related to Future Stock Issuances
4.1 Pro Rata Purchase
Rights. Subject to the
terms and conditions of this Section 4.1 and applicable securities
laws, if, after the date of this Agreement, the Company proposes to
offer or sell any New Securities, the Company shall first offer
such New Securities to each Investor. Each Investor shall be
entitled to apportion the pro rata purchase right hereby granted to
it among itself and its Affiliates in such proportions as it deems
appropriate.
(a) The
Company shall give notice (the “Offer
Notice”) to each
Investor, stating (i) its bona fide intention to offer such New
Securities, (ii) the number of such New Securities to be offered,
and (iii) the price and terms, if any, upon which it proposes to
offer such New Securities.
(b) By
notification to the Company within twenty (20) days after the Offer
Notice is given, each Investor may, in its sole discretion, elect
to purchase or otherwise acquire, at the price and on the terms
specified in the Offer Notice, up to that portion of such New Securities which
equals the proportion that the number of shares of Common Stock
then held by such Investor (including all shares of Common Stock
then issuable (directly or indirectly) upon conversion and/or
exercise, as applicable, of any and all Derivative Securities then
held by such Investor) bears to the total number of shares of
Common Stock of the Company then outstanding (assuming full
conversion and/or exercise, as applicable, of all Derivative
Securities). The closing of any sale pursuant to this Section
4.1(b) shall occur at the same closing covering the initial sale of
New Securities pursuant to Section 4.1(c).
(c) If
all New Securities referred to in the Offer Notice are not elected
to be purchased or acquired as provided in Section 4.1(b),
the Company may, during the ninety (90) day period following the
expiration of the period provided in Section 4.1(b),
offer and sell the remaining unsubscribed portion of such New
Securities to any Person(s) at a price not less than, and upon
terms no more favorable to the offeree than, those specified in the
Offer Notice. If the Company does not enter into an agreement for
the sale of the New Securities within such period, or if such
agreement is not consummated within thirty (30) days of the
execution thereof, the right provided hereunder shall be deemed to
be revived and such New Securities shall not be offered unless
first reoffered to the Investors in accordance with this
Section 4.1.
(d) The
pro rata purchase rights in this Section 4.1
shall not be applicable to (i)
Exempted Securities or (ii) any shares of Common Stock issued
pursuant to Section
4.2.
4.2 Down
Round Protection. If, after the
date of this Agreement, the Company issues any New Securities
(other than Exempted Securities and any shares of Common Stock
issued pursuant to this Section
4.2) at a price implying a
pre-money valuation of the Company of less than $40,000,000 (a
“Down Round
Valuation”), then,
subject to all applicable securities laws, the Company shall
promptly (and in any event within 7 days thereafter) issue to each
Investor, without the payment of any additional consideration by
such Investor, such number of additional shares of Common Stock as
is equal to the positive difference between (x) the aggregate
number of shares of Common Stock issued to such Investor pursuant
to the Purchase Agreement (as adjusted for any Recapitalization
with respect to the Common Stock effected after the date of the
Purchase Agreement) and (y) if the Down Round Valuation is greater
than or equal to $20,000,000, then the aggregate number of shares
of Common Stock that would have been issued to such Investor
pursuant to the Purchase Agreement (subject to appropriate
adjustment for any Recapitalization with respect to the Common
Stock effected after the date of the Purchase Agreement) if the
price per share of the Common Stock issued and sold thereunder had
been calculated at that time on the basis of a Company pre-money
valuation equal to such Down Round Valuation (and utilizing the
same treasury stock method as was used by the Company in originally
calculating the Original Issue Price), or (z) if the Down Round
Valuation is less than $20,000,000, then the aggregate number of
shares of Common Stock that would have been issued to such Investor
pursuant to the Purchase Agreement (subject to appropriate
adjustment for any Recapitalization with respect to the Common
Stock effected after the date of the Purchase Agreement) if the
price per share of the Common Stock issued and sold thereunder had
been calculated at that time on the basis of a Company pre-money
valuation equal to $20,000,000 (and utilizing the same treasury
stock method as was used by the Company in originally calculating
the Original Issue Price).
4.3 Termination.
The covenants set forth in Sections 4.1 and 4.2, shall terminate and be of
no further force or effect immediately before the consummation of a
Qualified Public Offering.
5.1 Employee
Agreements. The Company will
cause each person now or hereafter employed by it or by any
subsidiary (or engaged by the Company or any subsidiary as a
consultant/independent contractor) with access to confidential
information and/or trade secrets to enter into a nondisclosure and
proprietary rights assignment agreement. In addition, the Company
shall not amend, modify, terminate, waive, or otherwise alter, in
whole or in part, any of the above-referenced agreements or any
restricted stock agreement between the Company and any employee,
without the majority consent of the Board.
5.2 Employee
Stock. Unless otherwise
approved by a majority of the Board, all future employees and
consultants of the Company who purchase, receive options to
purchase, or receive awards of shares of the Company’s
capital stock after the date hereof shall be required to execute
restricted stock or option agreements, as applicable, providing for
vesting of shares over a four (4) year period, with vesting in
equal monthly installments over the forty-eight (48)
months.
5.3 Qualified
Small Business Stock. The
Company shall use commercially reasonable efforts to cause the
shares of Common Stock issued pursuant to the Purchase Agreement to
constitute “qualified small business stock” as defined
in Section 1202(c) of the Internal Revenue Code (the
“Code”);
provided,
however, that such requirement
shall not be applicable if the Board determines, in its good-faith
business judgment, that such qualification is inconsistent with the
best interests of the Company. The Company shall submit to its
stockholders (including the Investors) and to the Internal Revenue
Service any reports that may be required under Section
1202(d)(1)(C) of the Code and the regulations promulgated
thereunder. In addition, within twenty (20) business days after any
Investor’s written request therefor, the Company shall, at
its option, either (i) deliver to such Investor a written statement
indicating whether (and what portion of) such Investor’s
interest in the Company constitutes “qualified small business
stock” as defined in Section 1202(c) of the Code or (ii)
deliver to such Investor such factual information in the
Company’s possession as is reasonably necessary to enable
such Investor to determine whether (and what portion of) such
Investor’s interest in the Company constitutes
“qualified small business stock” as defined in Section
1202(c) of the Code.
5.4 Board
Matters. The Company shall
reimburse its directors for all reasonable out-of-pocket travel
expenses incurred (consistent with the Company’s travel
policy) in connection with attending meetings of the Board or any
committees thereof and in connection with attending any other
events (e.g. meetings and
trade shows) required by or at the request of the
Company.
5.5 Successor
Indemnification. If the Company or
any of its successors or assignees consolidates with or merges into
any other Person and is not the continuing or surviving corporation
or entity of such consolidation or merger, then to the extent
necessary, proper provision shall be made so that the successors
and assignees of the Company assume the obligations of the Company
with respect to indemnification of members of the Board as in
effect immediately before such transaction, whether such
obligations are contained in the Company’s Bylaws, the
Restated Certificate, or elsewhere, as the case may
be.
5.6 Termination
of Covenants. The covenants set
forth in this Section 5, except for Section 5.5, shall terminate
and be of no further force or effect immediately before the
consummation of a Qualified Public Offering.
6. Miscellaneous
6.1 Successors and
Assigns. The rights under
this Agreement may be assigned (but only with all
related obligations) by a Holder to a transferee of Registrable
Securities that (i) is an Affiliate of a Holder, (ii) is a
Holder’s Immediate Family Member or trust for the benefit of
an individual Holder or one or more of such Holder’s
Immediate Family Members, or (iii) after such transfer, holds at
least 100,000 shares of Registrable Securities (subject to
appropriate adjustment for Recapitalizations); provided, however, that (x) the Company
is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee and the
Registrable Securities with respect to which such rights are being
transferred; and (y) such transferee agrees in a written instrument
delivered to the Company to be bound by and subject to the terms
and conditions of this Agreement, including the provisions of
Section 2.10. For the purposes of
determining the number of shares of Registrable Securities held by
a transferee, the holdings of a transferee (1) that is an Affiliate
or stockholder of a Holder; (2) who is a Holder’s Immediate
Family Member; or (3) that is a trust for the benefit of an
individual Holder or such Holder’s Immediate Family Member
shall be aggregated together and with those of the transferring
Holder; provided further that all transferees who would not qualify
individually for assignment of rights shall have a single
attorney-in-fact for the purpose of exercising any rights,
receiving notices, or taking any action under this Agreement. The
terms and conditions of this Agreement inure to the benefit of and
are binding upon the respective successors and permitted assignees
of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or
their respective successors and permitted assignees any rights,
remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
6.2 Governing
Law. This Agreement
shall be governed by and construed under the internal laws of the
State of Delaware, irrespective of conflict of law
principles.
6.3 Counterparts.
This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts
may be delivered via facsimile, electronic mail (including pdf or
any electronic signature complying with the U.S. federal ESIGN Act
of 2000, e.g.,
www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly
delivered and be valid and effective for all purposes.
6.4 Titles
and Subtitles. The titles and
subtitles used in this Agreement are for convenience only and are
not to be considered in construing or interpreting this
Agreement.
6.5 Notices.
All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given
upon the earlier of actual receipt or (i) personal delivery to the
party to be notified; (ii) when sent, if sent by electronic mail or
facsimile during the recipient’s normal business hours, and
if not sent during normal business hours, then on the
recipient’s next business day; (iii) five (5) days after
having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one (1) business day after the
business day of deposit with a nationally recognized overnight
courier, freight prepaid, specifying next-day delivery, with
written verification of receipt. All communications shall be sent
to the respective parties at their addresses as set forth on
Schedule 1
hereto, or to the principal office of the Company and to the
attention of the Chief Executive Officer, in the case of the
Company, or to such email address, facsimile number, or address as
subsequently modified by written notice given in accordance with
this Section 6.5. If notice is given to the
Company, a copy shall also be sent to Gregory L. Hrncir, Esq.,
General Counsel, Super League Gaming, Inc., 2906 Colorado Ave.,
Santa Monica, CA 90404, gregg@superleague.com,
and if notice is given to Toba, a copy (which shall not constitute
notice) shall also be given to Christopher E. La Chance, VLP Law
Group LLP, 3126 Scott Street, Suite 1, San Francisco, CA 94123,
clachance@vlplawgroup.com.
6.6 Amendments and
Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance, and either retroactively or prospectively) only with the
written consent of the Company and the holders of at least a
majority of the Registrable Securities then outstanding (which such
majority must include Toba); provided that any amendment or waiver
of Section 3.3 or
3.4 (or, solely to
the extent such provision pertains to Section 3.3 or 3.4, any other provision of
this Agreement) shall require the written consent of Toba;
provided further that the
Company may in its sole discretion waive compliance with
Section 2.11(c) (and the
Company’s failure to object promptly in writing after
notification of a proposed assignment allegedly in violation of
Section 2.11(c) shall be deemed to be a
waiver); and provided
further that any provision hereof may be waived by any
waiving party on such party’s own behalf, without the consent
of any other party. Notwithstanding the foregoing, this Agreement
may not be amended or terminated and the observance of any term
hereof may not be waived with respect to any Investor without the
written consent of such Investor, unless such amendment,
termination, or waiver applies to all Investors in the same
fashion. The Company shall give prompt notice of any amendment or
termination hereof or waiver hereunder to any party hereto that did
not consent in writing to such amendment, termination, or waiver.
Any amendment, termination, or waiver effected in accordance with
this Section 6.6 shall be binding on all
parties hereto, regardless of whether any such party has consented
thereto. No waivers of or exceptions to any term, condition, or
provision of this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any
such term, condition, or provision.
6.7 Severability.
In case any one or more of the provisions contained in this
Agreement is for any reason held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this
Agreement, and such invalid, illegal, or unenforceable provision
shall be reformed and construed so that it will be valid, legal,
and enforceable to the maximum extent permitted by
law.
6.8 Aggregation
of Stock. All shares of
Registrable Securities held or acquired by Affiliates shall be
aggregated together for the purpose of determining the availability
of any rights under this Agreement and such Affiliated persons may
apportion such rights as among themselves in any manner they deem
appropriate.
6.9 Entire
Agreement. This Agreement
constitutes the full and entire understanding and agreement among
the parties with respect to the subject matter hereof, and any
other written or oral agreement relating to the subject matter
hereof existing between the parties is expressly
canceled.
6.10 Dispute
Resolution. The parties (a)
hereby irrevocably and unconditionally submit to the jurisdiction
of the federal and state courts located in Los Angeles County,
California for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement, (b) agree not to
commence any suit, action or other proceeding arising out of or
based upon this Agreement except in the federal and state courts
located in Los Angeles County, California, and (c) hereby waive,
and agree not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that
it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court.
WAIVER
OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE
SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
6.11 Delays
or Omissions. No delay or
omission to exercise any right, power, or remedy accruing to any
party under this Agreement, upon any breach or default of any other
party under this Agreement, shall impair any such right, power, or
remedy of such non-breaching or non-defaulting party, nor shall it
be construed to be a waiver of or acquiescence to any such breach
or default, or to any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or
thereafter occurring. All remedies, whether under this Agreement or
by law or otherwise afforded to any party, shall be cumulative and
not alternative
6.12 Acknowledgment.
The Company acknowledges that Toba and certain of the Investors are
in the business of venture capital investing and therefore review
the business plans and related proprietary information of many
enterprises, including enterprises which may have products or
services which compete directly or indirectly with those of the
Company. Nothing in this Agreement shall preclude or in any way
restrict the Investors from investing or participating in any
particular enterprise whether or not such enterprise has products
or services that compete with those of the
Company.
[Signature Pages Follow]
IN
WITNESS WHEREOF, the parties have executed this Investors’
Rights Agreement as of the date first written above.
COMPANY:
SUPER
LEAGUE GAMING, INC.
Ann
Hand, CEO & President
IN
WITNESS WHEREOF, the parties have executed this Investors’
Rights Agreement as of the date first written above.
INVESTOR:
By:
Name:
Title:
SCHEDULE 1
INVESTORS
Name and Address of Investor
___________________________
___________________________
___________________________
Exhibit 10.12
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is
made and entered into effective as of June 16, 2017 (the
“Effective Date”), by and between Super League Gaming,
Inc., a Delaware corporation (“COMPANY”), and Ann Hand,
an individual (“EXECUTIVE”). This Agreement shall amend
and supersede that certain Employment
WITNESSETH:
WHEREAS, COMPANY
and EXECUTIVE deem it to be in their respective best interests to
enter into an agreement providing for COMPANY’s employment of
EXECUTIVE pursuant to the terms herein stated.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as
follows:
1. Term. COMPANY
hereby employs and EXECUTIVE hereby accepts employment with COMPANY
for a period of three (3) years beginning on the Effective Date
(“Initial Term”). Unless COMPANY or EXECUTIVE provides
written notice that this Agreement shall be allowed to expire and
the employment relationship thereby terminated at least thirty (30)
days prior to the expiration of the Initial Term or any Renewal
Term (as defined herein), this Agreement shall continue in effect
for successive periods of one (1) year (each such one (1) year
period being a “Renewal Term”; collectively, the
Initial Term and all Renewal Terms under this Agreement being the
“Term”).
2. Duties of
EXECUTIVE; Chairman Role. EXECUTIVE’s position with COMPANY
shall be Chief Executive Officer, President and Chairman. EXECUTIVE
shall do and perform all services reasonably necessary or advisable
to accomplish the objectives of the COMPANY’s Board of
Directors. EXECUTIVE shall report to the Board. EXECUTIVE reserves
the right to resign for Good Reason (as defined
below).
3. Devotion of Time to
Company’s Business. EXECUTIVE shall be a full-time EXECUTIVE
of COMPANY and shall devote such substantial and sufficient amounts
of her productive time, ability, and attention to the business of
COMPANY during the Term of this Agreement as may be reasonable and
necessary to accomplish the objectives and complete the tasks
assigned to EXECUTIVE. EXECUTIVE may devote reasonable time to
activities other than those required under this Agreement,
including activities involving professional, charitable, community,
educational, religious and similar types of organizations, speaking
engagements, membership on the boards of directors of other
organizations and similar types of activities to the extent that
such activities do not inhibit or prohibit the performance of
services under this Agreement.
4. Uniqueness of
Services. EXECUTIVE hereby acknowledges that the services to be
performed by her under the terms of this Agreement are of a special
and unique value. Accordingly, the obligations of EXECUTIVE under
this Agreement are non-assignable.
5. Compensation of
EXECUTIVE.
a. Base Annual Salary.
Subject to other specific provisions in this Agreement, as
compensation for services hereunder, EXECUTIVE shall receive a Base
Annual Salary of $400,000 USD payable in accordance with the
Company’s ordinary payroll practices. On each anniversary
date hereof, EXECUTIVE’s Base Annual Salary will be reviewed
and may be increased at the sole discretion of the COMPANY’S
Board of Directors.
b. Annual Cash Bonus.
EXECUTIVE shall be entitled to receive cash bonuses as may be
determined from time to time by the Company’s Board of
Directors and Compensation Committee.
c. Common Stock
Purchase Warrant. EXECUTIVE is hereby granted a common stock
purchase warrant (“Warrant”), in the form attached
hereto as Exhibit A, in the amount of Three Hundred Thousand
(300,000) shares, exercisable for a period of ten (10) years from
the Effective Date and bearing an exercise price of $3.60 per
share. The Warrant will be exercisable, to the extent vested, by
EXECUTIVE at any time during the ten (10) year Warrant term without
regard for any termination of EXECUTIVE’s employment. The
Warrant is expressly subject to the following vesting
schedule:
(a) The Warrant will
vest at the rate of 1/48th on the 15th calendar day of each month
commencing July 15, 2017 and ending June 15, 2023 (i.e., 300,000/48
= 6,250 shares vest per month), except as provided in Section
5.c.ii immediately below.
ii.
Accelerated Vesting
on a Change in Control Transaction (defined below).
(a) The Warrant shall
vest in full (prior to the date otherwise becoming time-vested
above) immediately prior to the closing of a Change of Control
Transaction involving the COMPANY (i.e., a sale of all or
substantially all of the assets of the COMPANY or a merger, sale of
shares or other transaction whereby the voting shareholders of the
COMPANY, collectively, prior to the close of such transaction do
not hold a majority voting interest in the post-transaction in the
Company on a post-transaction basis.
d. Health Insurance.
EXECUTIVE and her dependents shall be entitled to participate in
the health insurance plan offered to COMPANY employees, and the
Company will pay 90% of the premium related thereto.
e. 401(k). EXECUTIVE
will be permitted to participate in the Company’s 401(k) Plan
upon the Board of Directors electing to institute it.
f. Business Expenses.
COMPANY will reimburse EXECUTIVE for all reasonable business
expenses directly incurred in performing EXECUTIVE’s duties
and promoting the business of COMPANY.
6.
Termination of
Employment.
a. In the event
COMPANY should terminate EXECUTIVE’s employment
other
than for “Cause” as defined in Section 6(b) below or
EXECUTIVE resigns for “Good Reason” as defined in
Section 6(c) below (either such termination a “Severance
Termination”), EXECUTIVE shall receive the
following:
i. Severance
Termination prior to six (6) month anniversary of Effective Date
shall result in the following:
(a)
Accrued
Obligations (defined in Section 6(d) below);
(b)
Cash
equal to the greater of (I) Annual Salary for one and one-half
(1.5) years, payable 50% upon termination date, 25% at 90-day
anniversary of termination date, and 25% at 180-day anniversary of
termination date; and (II) the remaining Term of the Agreement;
and
(c)
Additional eighteen
(18) months’ vesting of Warrant.
b. COMPANY shall have
the right to terminate EXECUTIVE’s employment at any time for
Cause by giving EXECUTIVE written notice of the effective date of
termination. For the purposes of this Agreement,
“Cause” shall mean:
i. Fraud,
misappropriation, embezzlement or any other action of material
misconduct against COMPANY or any of its affiliates or
subsidiaries;
ii.
Substantial willful
failure to render services in accordance with the provisions of
this Agreement (for which purpose, no act or omission to act will
be “willful” if conducted in good faith or with a
reasonable belief that such conduct was in the best interests of
COMPANY), provided that:
(a)
a
written demand for performance has been delivered to EXECUTIVE at
least ten (10) days prior to termination identifying the manner in
which COMPANY believes that EXECUTIVE has failed to perform;
and
(b)
EXECUTIVE has thereafter failed to remedy such failure to
perform;
iii.
Material violation
of any law, rule or regulation of any governmental or regulatory
body material to the business of COMPANY;
iv.
Conviction or a guilty
plea or nolo contendere plea to a felony;
v.
Repeated and
persistent material failure to abide by the policies established by
COMPANY after written warning from COMPANY;
vi.
Any acts of
violence or threats of violence made by EXECUTIVE against COMPANY
or anyone associated with COMPANY’s business;
vii.
The solicitation or
acceptance of payment or gratuity from any existing or potential
customer or supplier of COMPANY without the prior written
consent
of COMPANY’s Board of Director’s; or
viii.
Drug dependency or
habitual insobriety.
c. EXECUTIVE shall
have the right to terminate employment at any time without Good
Reason by giving COMPANY written notice of the effective date of
termination. For the purposes of this Agreement, “Good
Reason” shall mean:
i. Any material
adverse change in EXECUTIVE’s title, duties or
responsibilities (including reporting
responsibilities);
ii. Any reduction of
EXECUTIVE’s Base Annual Salary;
iii. Any
relocation, without EXECUTIVE’s written consent, of
EXECUTIVE’s principal office of employment by more than 35
miles from the location applicable on the Effective Date;
or
iv. Any failure of
COMPANY to assign or of a successor of COMPANY to assume the
obligations of COMPANY under this Agreement.
d. In the event of
termination for Cause by COMPANY or termination without Good Reason
by EXECUTIVE, EXECUTIVE shall be paid EXECUTIVE’s Base Annual
Salary and accrued vacation through the effective date of
termination on the date of termination, EXECUTIVE’s business
expenses incurred through the date of termination in accordance
with Section 3(g), and EXECUTIVE’s accrued and vested
employee benefits pursuant to Section 3(e) and (f) in accordance
with the applicable benefit plan (collectively, all such amounts
under this sentence being the “Accrued Obligations”).
After the effective date of Termination, EXECUTIVE shall not be
entitled to accrue or vest in any further salary, severance pay,
stock options, benefits, fringe benefits or entitlements; provided
that EXECUTIVE shall retain the right to exercise the portion of
the Warrant that has vested as of the effective date of termination
as provided above.
e. COMPANY may
terminate EXECUTIVE’s employment in the event that: (i)
EXECUTIVE fails or is unable to perform EXECUTIVE’s duties
due to injury, illness or other incapacity for ninety (90) days in
any twelve (12) month period (except that EXECUTIVE may be entitled
to disability payments pursuant to COMPANY’s disability plan,
if any); or (ii) Death of EXECUTIVE .
7. Covenant of
Confidentiality. All documents, records, files, manuals, forms,
materials, supplies, computer programs, trade secrets and other
information which comes into EXECUTIVE’s possession from time
to time during EXECUTIVE’s employment by COMPANY and/or any
of COMPANY’s subsidiaries or affiliates, shall be deemed to
be confidential and proprietary to COMPANY and shall remain the
sole and exclusive property of COMPANY. EXECUTIVE acknowledges that
all such confidential and proprietary information is confidential
and proprietary and not readily available to COMPANY’s
business competitors. On the effective date of the termination of
the employment relationship or at such other date as specified by
COMPANY, EXECUTIVE agrees that she will return to COMPANY all such
confidential and proprietary items (including, but not limited to,
Company marketing material, business cards, keys, etc.) in her
control or possession, and all copies thereof, and that she will
not remove any such items from the offices of COMPANY.
8. Covenant of
Non-Disclosure. Without the prior written approval of COMPANY
EXECUTIVE except as required to discharge EXECUTIVE’s duties
under this Agreement, EXECUTIVE shall keep confidential and not
disclose or otherwise make use of any of the confidential or
proprietary information or trade secrets referred to in Section 7
nor reveal the same to any third party whomsoever, except as
required by law.
9. Covenant of
Non-Solicitation. During the Term of this Agreement and for a
period of two (2) years following the effective date of
termination, EXECUTIVE, either on EXECUTIVE’s own account or
for any person, firm, Company or other entity, shall not solicit,
interfere with or induce, or attempt to induce, any EXECUTIVE of
COMPANY, or any of its subsidiaries or affiliates to leave their
employment or to breach their employment agreement, if any, with
COMPANY.
10. Covenant of
Cooperation. EXECUTIVE agrees to cooperate with COMPANY in any
litigation or administrative proceedings involving any matters with
which EXECUTIVE was involved during her employment by COMPANY.
COMPANY shall reimburse EXECUTIVE for reasonable expenses incurred
in providing such assistance.
11. Covenant Against
Competition.
a. Scope and Term.
During the Term of this Agreement and for an additional period
ending one (1) year after the effective date of termination or
expiration of this Agreement, whichever occurs first, EXECUTIVE
shall not directly or indirectly engage in or become a partner,
officer, principal, EXECUTIVE, consultant, investor, creditor or
stockholder of any business, proprietorship, association, firm,
corporation or any other business entity which is engaged or
proposes to engage or hereafter engages in any business which
competes with the business of COMPANY and/or any of COMPANY's
subsidiaries or affiliates in any geographic area in which COMPANY
conducts business at the time of the termination or expiration of
the employment relationship.
12. Rights to
Inventions.
a. Inventions Defined.
“Inventions” means discoveries, concepts, and ideas,
whether patentable or not, relating to any present or contemplated
activity of COMPANY, including without limitation devices,
processes, methods, formulae, techniques, and any improvements to
the foregoing.
b. Application. This
Section 11 shall apply to all Inventions made or conceived by
EXECUTIVE, whether or not during the hours of her employment or
with the use of COMPANY facilities, materials, or personnel, either
solely or jointly with others, during the Term of her employment by
COMPANY and for a period of one (1) year after any termination of
such employment. This Section 12 does not apply to any invention
disclosed in writing to COMPANY by EXECUTIVE prior to the execution
of this Agreement.
c. Assignment.
EXECUTIVE hereby assigns and agrees to assign to COMPANY all of her
rights to Inventions and to all proprietary rights therein, based
thereon or related thereto, including without limitation
applications for United States and foreign letters patent and
resulting letters patent.
d. Reports. EXECUTIVE
shall inform COMPANY promptly and
fully
of each Invention by a written report, setting forth in detail the
structures, procedures, and methodology employed and the results
achieved (“Notice of Invention”). A report shall also
be submitted by EXECUTIVE upon completion of any study or research
project undertaken on COMPANY’s behalf, whether or not in
EXECUTIVE’s opinion a given study or project has
resulted in an
Invention.
e. Patents. At
COMPANY’s request and expense, EXECUTIVE shall execute such
documents and provide such assistance as may be deemed necessary
by
COMPANY
to apply for, defend or enforce any United States and foreign
letters patent based on or related to such Inventions.
13. Remedies.
Notwithstanding any other provision in this Agreement to the
contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE
commits a material breach of the Covenant of Confidentiality
(Section 7), Covenant of Non-Disclosure (Section 8), Covenant of
Non-Solicitation (Section 9), Covenant of Cooperation (Section 10),
Covenant Against Competition (Section 11) or Rights to Inventions
(Section 12), COMPANY shall have the right to have the obligations
of EXECUTIVE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury
to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies
at law or equity, all of which remedies shall be cumulative and not
exclusive. EXECUTIVE further acknowledges and agrees that the
obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE’s future
employment and business opportunities, and are commensurate with
the compensation arrangements set out in this
Agreement.
14. Survivability.
Sections 7 through 13, of this Agreement, and Section 6 to the
extent required to give effect thereto, shall survive termination
of the employment relationship and this Agreement.
15. General
Provisions.
a. Arbitration. Any
controversy involving the construction, application, enforceability
or breach of any of the terms, provisions, or conditions of this
Agreement, including without limitation, claims for breach of
contract, violation of public policy, breach of implied covenant,
intentional infliction of emotional distress or any other
alleged claims which are
not settled by mutual agreement of the parties, shall be submitted
to final and binding arbitration before a single arbitrator in
accordance with the rules of the American Arbitration Association
with respect to employment disputes in Los Angeles County,
California. The cost of the arbitrator shall be borne by COMPANY,
and each party shall be responsible for such party’s own
attorneys’ fees and litigation costs (other than costs of
arbitrator). In consideration of each party’s agreement to
submit to arbitration any and all disputes that arise under this
Agreement, each party agrees that the arbitration provisions of
this Agreement shall constitute her/its exclusive remedy and each
party expressly waives the right to pursue redress of any kind in
any other forum. The parties further agree that the arbitrator
acting hereunder shall not be empowered to add to, subtract from,
delete or in any other way modify the terms of this Agreement.
Notwithstanding the foregoing, any party shall have the limited
right to seek equitable relief in the form of a temporary
restraining order or preliminary injunction in a
court
of competent jurisdiction to protect itself from actual or
threatened irreparable injury resulting from an alleged breach of
this Agreement pending a final decision in
arbitration.
b. Authorization.
COMPANY and EXECUTIVE each represent and warrant to the other that
it has the authority, power and right to deliver, execute and fully
perform the terms of this Agreement.
c. Entire Agreement.
EXECUTIVE understands and acknowledges that this document
constitutes the entire agreement between EXECUTIVE and COMPANY with
regard to EXECUTIVE’s employment by COMPANY and
EXECUTIVE’s post-employment activities concerning COMPANY.
This Agreement supersedes any and all other written and oral
agreements between the parties with respect to the subject matter
hereof. Any and all prior agreements, promises, negotiations, or
representations, either written or oral, relating to the subject
matter of this Agreement not expressly set forth in this Agreement
are of no force and effect. This Agreement may be altered, amended,
or modified only in writing signed by all of the parties hereto.
Any oral representations or modifications concerning this
instrument shall be of no force and effect.
d. Severability. If
any term, provision, covenant, or condition of this Agreement is
held by a court or other tribunal of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of such provisions
and all of the remaining provisions hereof shall remain in full
force and effect to the fullest extent permitted by law and shall
in no way be affected, impaired, or invalidated as a result of such
decision.
e. Governing Law.
Except to the extent that federal law may preempt California law,
this Agreement and the rights and obligations hereunder shall be
governed, construed and enforced in accordance with the laws of the
State of California.
f. Taxes. All
compensation payable hereunder is gross and shall be subject to
such withholding taxes and other taxes as may be provided by law.
EXECUTIVE shall be responsible for the payment of all taxes
attributable to the compensation provided by this Agreement except
for those taxes required by law to be paid or withheld by
COMPANY.
g. Assignment. This
Agreement shall be binding upon and inure to the benefit of the
successors and assigns of COMPANY. EXECUTIVE may not sell,
transfer, assign, or pledge any of her rights or interests pursuant
to this Agreement. In the event of EXECUTIVE’s death,
EXECUTIVE’s estate shall succeed to all rights of EXECUTIVE
as effective at such time (including under Sections 5(d), 5(e) and
6).
h. Waiver. Either
party’s failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any
such provision or provisions, or prevent that party thereafter from
enforcing such provision or provisions and each and every other
provision of this Agreement.
i. Captions. Titles
and headings to sections in this Agreement are for the purpose of
reference only and shall in no way limit, define, or otherwise
affect any provisions contained therein.
j. Breach - Right to
Cure. A party shall be deemed in breach of this Agreement only upon
the failure to perform any obligation under this Agreement after
receipt of written notice of breach and failure to cure such breach
within ten (10) days thereafter; provided, however, such notice
shall not be required where a breach or threatened breach would
cause irreparable harm to the other party and such other party may
immediately seek equitable relief in a court of competent
jurisdiction to enjoin such breach.
k. All notices,
demands and all other communications required or otherwise provided
for in this Agreement shall be in writing and shall be deemed to
have been duly given when delivered either personally, by reputable
overnight courier or three (3) business days after
deposit
via United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to
EXECUTIVE:
At
EXECUTIVE’s last known address shown on the Company’s
payroll records
If to
the Company:
Attn:
Gregory L. Hrncir; General Counsel Super League Gaming,
Inc.
2906
Colorado Ave.
Santa
Monica, CA 90404
or to
such other address as any party may have furnished to the other in
writing in accordance with this Agreement, except that notices of
change of address shall be effective only upon
receipt.
16. Acknowledgement.
EXECUTIVE acknowledges that he has been given a reasonable period
of time to study this Agreement before signing it. EXECUTIVE
certifies that he has fully read, has received an explanation of,
and completely understands the terms, nature, and effect of this
Agreement. EXECUTIVE further acknowledges that he is executing this
Agreement freely, knowingly, and voluntarily and that
EXECUTIVE’s execution of this Agreement is not the result of
any fraud, duress, mistake, or undue influence whatsoever. In
executing this Agreement, EXECUTIVE does not rely on any
inducements, promises, or representations by COMPANY other than the
terms and conditions of this Agreement.
17. Section 409A. The
parties intend that all payments and benefits under this Agreement
comply with Section 409A of the Code and the regulations
promulgated thereunder (collectively “Section 409A”)
and, accordingly, to the maximum extent permitted, this Agreement
shall be interpreted in a manner in compliance therewith. To the
extent that any provision hereof is modified in order to comply
with Section 409A, such modification shall be made in good faith
and shall, to the maximum extent reasonably possible, maintain the
original intent and economic benefit to EXECUTIVE and COMPANY of
the applicable provision without violating the provisions of
Section 409A. No amount shall be payable pursuant to Section 6 or
otherwise upon a termination of EXECUTIVE’s employment unless
such termination constitutes a “separation from
service” with COMPANY under Section 409A. To the maximum
extent permitted by applicable law, amounts payable to EXECUTIVE
pursuant to such Sections herein shall be made in reliance upon the
exception for certain involuntary terminations under a separation
pay plan or as short-term deferral under Section 409A. To the
extent that reimbursements or other in-kind benefits under this
Agreement constitute nonqualified deferred compensation, (i) all
expenses or other reimbursements hereunder shall be made on or
prior to the last day of the taxable year following the taxable
year in which such expenses were incurred by EXECUTIVE, (ii) any
right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit, and (ii) no such
reimbursement, expenses eligible for reimbursement, or in-kind
benefits provided in any taxable year shall in any way affect the
expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year. For purposes of Section 409A,
EXECUTIVE’s right to receive installment payments pursuant to
this Agreement shall be treated as a right to receive a series of
separate and distinct payments. Any other provision of this
Agreement to the contrary notwithstanding, in no event shall any
payment or benefit under this Agreement that constitutes
nonqualified deferred compensation for purposes of Section 409A be
subject to offset by any other amount unless otherwise permitted by
Section 409A.
18. Effective Only Upon
Execution by Authorized Officer of COMPANY; Counterparts. This
Agreement shall have no force or effect and shall be unenforceable
in its entirety until it is executed by a duly authorized officer
of COMPANY and such executed Agreement is delivered to EXECUTIVE.
This Agreement may be executed in counterparts, each being an
original and all such counterparts together constituting one and
the same instrument.
IN
WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first
above written.
EXECUTIVE
|
COMPANY
|
|
|
/s/ Ann
Hand
|
By: /s/ David
Steigelfest
|
Ann Hand
|
David
Steigelfest
|
|
Co-Founder &
CTO
|
Exhibit A
Common Stock Purchase Warrant
THE
SECURITIES REPRESENTED BY THIS COMMON STOCK PURCHASE WARRANT HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY
SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
COMMON
STOCK PURCHASE WARRANT
For the
Purchase of 300,000 Shares of Common Stock, $0.001 par value
of
SUPER LEAGUE GAMING, INC.
A
Delaware Corporation
For
value received, ANN HAND
(the “Holder”), or its assigns, is entitled to, on or
before the date specified below on which this Common Stock Purchase
Warrant (the “Warrant”) expires, but not thereafter, to
subscribe for, purchase and receive the number of fully paid and
non-assessable shares of the common stock, $0.001 par value (the
“Common Stock”), of Super League Gaming, Inc., a
Delaware corporation (the “Company”) set forth above,
at a price of $3.60 per share (the “Exercise Price”),
upon presentation and surrender of this Warrant and upon payment by
wire transfer or bank check of the Exercise Price for such shares
of Common Stock to the Company at its principal office. The Warrant
will vest at the rate of 1/36th per month in arrears, subject to
acceleration of all unvested shares upon a change of control of the
Company consisting of a sale of all
or substantially all of the assets of the Company, or a merger,
sale of shares or other transaction whereby the voting shareholders
of the Company, collectively, prior to the close of such
transaction do not hold a majority voting interest in the Company
on a post-transaction basis.
1. Exercise of Warrant. This
Warrant may be exercised in whole or in part, from time to time and
expressly subject to satisfaction of vesting conditions, commencing
on the date hereof (the “Issue Date”) and expiring on
the tenth (10th) anniversary
date hereof, by presentation and surrender hereof to the Company,
with the Exercise Form annexed hereto duly executed and accompanied
by payment by wire transfer or bank check of the Exercise Price for
the number of shares specified in such form, together with all
federal and state taxes applicable upon such exercise, if any. If
this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to
purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company
of this
Warrant and the Exercise Price at the office of the Company, in
proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that certificates representing such
shares of Common Stock shall not then be actually delivered to the
Holder. If the subscription rights represented hereby shall not be
exercised at or before 5:00 P.M., Pacific Time, on the expiration
date specified above, this Warrant shall become void and without
further force or effect, and all rights represented hereby shall
cease and expire.
2. Rights of the Holder. Prior to
exercise of this Warrant, the Holder shall not, by virtue hereof,
be entitled to any rights of a shareholder in the Company, either
at law or equity, and the rights of the Holder are limited to those
expressed in this Warrant and are not enforceable against the
Company except to the extent set forth herein.
3. Adjustment in Number of
Shares.
(A) Adjustment for
Reclassifications. In case at any time, or from time to
time, after the Issue Date the holders of the Common Stock of the
Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received,
or, on or after the record date fixed for the determination of
eligible stockholders, shall have become entitled to receive,
without payment therefore, other or additional stock or other
securities or property (including cash) by way of stock-split,
spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or
any subsidiary’s capital stock), then and in each such case
the Holder(s) of this Warrant, upon the exercise hereof as provided
in Section 1, shall be entitled to receive the amount of stock and
other securities and property which such Holder(s) would hold on
the date of such exercise if on the Issue Date they had been the
holder of record of the number of shares of Common Stock of the
Company called for on the face of this Warrant and had thereafter,
during the period from the Issue Date, to and including the date of
such exercise, retained such shares and/or all other or additional
stock and other securities and property receivable by them as
aforesaid during such period, giving effect to all adjustments
called for during such period. In the event of a declaration of a
dividend payable in shares of any equity security of a subsidiary
of the Company, then the Company may cause to be issued a warrant
to purchase shares of the subsidiary (“Springing
Warrant”) in an amount equal to such number of shares of the
subsidiary’s securities to which the Holders would have been
entitled, but conditioned upon the exercise of this Warrant as a
prerequisite to receiving the shares issuable pursuant to the
Springing Warrant.
(B) Adjustment for Reorganization,
Consolidation, Merger. In case of any reorganization of the
Company (or any other corporation the stock or other securities of
which are at the time receivable on the exercise of this Warrant)
after the Issue Date, or in case, after such date, the Company (or
any such other corporation) shall consolidate with or merge into
another corporation or convey all or substantially all of its
assets to another corporation, then and in each such case the
Holder(s) of this Warrant, upon the exercise hereof as provided in
Section 1, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be
entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this
Warrant prior to such consummation, the stock or other securities
or property to which such Holder(s) would be entitled had the
Holders exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares
of stock or other securities or property receivable upon the
exercise of this Warrant after such consummation.
4. Officer’s Certificate.
Whenever the number of shares of Common Stock issuable upon
exercise of this Warrant or the Exercise Price shall be adjusted as
required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary at its principal office, an
officer’s certificate showing the adjusted number of shares
of Common Stock or Exercise Price determined as herein provided and
setting forth in reasonable detail the facts requiring such
adjustment. Each such officer’s certificate shall be made
available at all reasonable times for inspection by the Holder(s)
and the Company shall, forthwith after each such adjustment,
deliver a copy of such certificate to the Holder(s). Such
certificate shall be conclusive as to the correctness of such
adjustment.
5. Restrictions on Transfer.
Certificates for the shares of Common Stock to be issued upon
exercise of this Warrant shall bear the following
legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY
SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
The
Holder, by acceptance hereof, agrees that, absent an effective
registration statement under the Securities Act of 1933, as amended
(the “Act”), covering the disposition of this Warrant
or the Common Stock issued or issuable upon exercise hereof, such
Holder(s) will not sell or transfer any or all of this Warrant or
such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the
effect that such sale or transfer will be exempt from the
registration and prospectus delivery requirements of the Act. The
Holder agrees that the certificates evidencing the Warrant and
Common Stock which will be delivered to the Holder by the Company
shall bear substantially the following legend: The Holder of this
Warrant, at the time all or a portion of such Warrant is exercised,
agrees to make such written representations to the Company as
counsel for the Company may reasonably request, in order that the
Company may be reasonably satisfied that such exercise of
the Warrant and
consequent issuance of Common Shares will not violate the
registration and prospectus delivery requirements of the Act, or
other applicable state securities laws.
6. Loss or Mutilation. Upon
receipt by the Company of evidence satisfactory to it (in the
exercise of reasonable discretion) of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it
(in the exercise of reasonable discretion), and (in the case of
mutilation) upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant of like
tenor.
7. Reservation of Common Stock.
The Company shall at all times reserve and keep available for issue
upon the exercise of the Warrants such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants.
8. Notices. All notices and other
communications from the Company to the Holder of this Warrant shall
be mailed by first class registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the
Holder.
9. Change; Waiver. Neither this
Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver,
discharge or termination is sought.
10. Law Governing. This Warrant
shall be construed and enforced in accordance with and governed by
the laws of Delaware.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer on June 16, 2017.
|
SUPER LEAGUE GAMING,
INC.
|
|
|
|
By: /s/ David
Steigelfest
|
|
David
Steigelfest
Co-Founder & CTO
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NOTICE
OF EXERCISE
TO:
SUPER LEAGUE
GAMING, INC.
DATE:
________________________
The undersigned
hereby elects irrevocably to exercise the within Warrant and to
purchase ___________ shares of the Common Stock of the Company
called for thereby, and hereby makes payment by bank check or wire
transfer in the amount of $_____________ (at the rate of $3.60 per
share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to
which this Warrant is exercised to:
____________________________
____________________________
____________________________
and if
said number of Warrants shall not be all the Warrants evidenced by
the Common Stock Purchase Warrant surrendered in connection with
this exercise, then the Company shall issue a new Warrant
Certificate for the balance remaining of such Warrants to
______________________ at the
address stated above.
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By:
__________________________
Print Name:
___________________
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|
|
Exhibit 10.13
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is
made and entered into effective as October 31, 2016 (the
“Effective Date”), by and between Super League Gaming,
Inc., a Delaware corporation (“COMPANY”), and David
Steigelfest, an individual (“EXECUTIVE”).
WITNESSETH:
WHEREAS, COMPANY
and EXECUTIVE deem it to be in their respective best interests to
enter into an agreement providing for COMPANY's employment of
EXECUTIVE pursuant to the terms herein stated.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as
follows:
1. Term. COMPANY
hereby employs and EXECUTIVE hereby accepts employment with COMPANY
for a period of two (2) years beginning on the date hereof
("Term"). Unless COMPANY or EXECUTIVE provides written notice that
this Agreement shall be allowed to expire and the employment
relationship thereby terminated at least thirty (30) days prior to
the expiration of the Term or any Renewal Term (as defined herein),
this Agreement shall continue in effect for an additional term of
one (1) year ("Renewal Term").
2. Duties of
EXECUTIVE. EXECUTIVE’s position with COMPANY shall be Chief
Technology Officer. EXECUTIVE shall do and perform all services,
acts, or things reasonably necessary or advisable to accomplish the
objectives of the COMPANY's Board of Directors. The COMPANY
reserves the right to change the role and title of EXECUTIVE at its
sole discretion.
3. Devotion of Time to
Company's Business. EXECUTIVE shall be a full-time EXECUTIVE of
COMPANY and shall devote such substantial and sufficient amounts of
his productive time, ability, and attention to the business of
COMPANY during the Term of this Agreement as may be reasonable and
necessary to accomplish the objectives and complete the tasks
assigned to EXECUTIVE. EXECUTIVE may devote reasonable time to
activities other than those required under this Agreement,
including activities involving professional, charitable, community,
educational, religious and similar types of organizations, speaking
engagements, membership on the boards of directors of other
organizations and similar types of activities to the extent that
such activities do not inhibit or prohibit the performance of
services under this Agreement.
4. Uniqueness of
Services. EXECUTIVE hereby acknowledges that the services to be
performed by him under the terms of this Agreement are of a special
and unique value. Accordingly, the obligations of EXECUTIVE under
this Agreement are non-assignable.
5. Compensation of
EXECUTIVE.
a. Base Annual Salary.
Subject to other specific provisions in this Agreement, as
compensation for services hereunder, EXECUTIVE shall receive a Base
Annual Salary of $270,000 payable in accordance with the Company's
ordinary payroll practices (and in any event no less frequently
than monthly). On each anniversary date hereof, EXECUTIVE's Base
Annual Salary will be reviewed and may be increased at the sole
discretion of the COMPANY’S Board of Directors.
b. Health Insurance.
EXECUTIVE and his dependents shall be entitled to participate in
the health insurance plan offered to COMPANY employees, and the
Company will pay 50% of the premium related thereto.
c. 401(k). EXECUTIVE
will be permitted to participate in the Company’s 401(k) Plan
upon the Board of Directors electing to institute it.
d. Business Expenses.
COMPANY will reimburse EXECUTIVE for all reasonable business
expenses directly incurred in performing EXECUTIVE's duties and
promoting the business of COMPANY.
6 . Termination
of Employment.
a. In the event
COMPANY should terminate this Agreement other than for just "Cause"
as defined in Section 6(b) below ("Termination without Cause"),
EXECUTIVE shall receive the following: six (6) months of
accelerated vesting of the Option from the date of
termination.
b. COMPANY shall have
the right to terminate EXECUTIVE's employment at any time for Cause
by giving EXECUTIVE written notice of the effective date of
Termination. For the purposes of this Agreement, "Cause" shall
mean:
i.
Fraud,
misappropriation, embezzlement or any other action of material
misconduct against COMPANY or any of its affiliates or
subsidiaries;
ii.
Substantial
failure to render services in accordance with the provisions of
this Agreement, provided that:
(a) a written demand
for performance has been delivered to EXECUTIVE at least ten (10)
days prior to termination identifying the manner in which COMPANY
believes that EXECUTIVE has failed to perform; and
(b) EXECUTIVE
has thereafter failed to remedy such failure to
perform;
iii.
Material violation
of any law, rule or regulation of any governmental or regulatory
body material to the business of COMPANY;
iv.
Conviction
or a guilty plea or nolo contendere plea to a felony;
v.
Repeated and
persistent failure to abide by the policies established by COMPANY
after written warning from COMPANY;
vi.
Any acts of
violence or threats of violence made by EXECUTIVE against COMPANY
or anyone associated with COMPANY's business;
vii.
The
solicitation or acceptance of payment or gratuity from any existing
or potential customer or supplier of COMPANY without the prior
written consent of
COMPANY's Board of Director’s.
viii.
Drug dependency or habitual insobriety; or
ix.
Gross incompetence.
(a) In the event of
termination for cause, EXECUTIVE shall be paid EXECUTIVE's salary
through the effective date of termination on the date of
termination. After the effective date of Termination, EXECUTIVE
shall not be entitled to accrue or vest in any further salary,
severance pay, stock options, benefits, fringe benefits or
entitlements; provided that EXECUTIVE shall retain the right to
exercise any stock options which are vested as of the effective
date of termination.
(b) This Agreement
shall terminate automatically in the event that: (i) EXECUTIVE
fails or is unable to perform EXECUTIVE 's duties due to injury,
illness or other incapacity for ninety (90) days in any twelve (12)
month period (except that EXECUTIVE may be entitled to disability
payments pursuant to COMPANY's disability plan, if any); or (ii)
Death of EXECUTIVE .
7. Covenant of
Confidentiality. All documents, records, files, manuals, forms,
materials, supplies, computer programs, trade secrets and other
information which comes into EXECUTIVE's possession from time to
time during EXECUTIVE's employment by COMPANY and/or any of
COMPANY's subsidiaries or affiliates, shall be deemed to be
confidential and proprietary to COMPANY and shall remain the sole
and exclusive property of COMPANY. EXECUTIVE acknowledges that all
such confidential and proprietary information is confidential and
proprietary and not readily available to COMPANY's business
competitors. On the effective date of the termination of the
employment relationship or at such other date as specified by
COMPANY, EXECUTIVE agrees that he will return to COMPANY all such
confidential and proprietary items (including, but not limited to,
Company marketing material, business cards, keys, etc.) in his
control or possession, and all copies thereof, and that he will not
remove any such items from the offices of COMPANY.
8. Covenant of
Non-Disclosure. Without the prior written approval of COMPANY,
EXECUTIVE shall keep confidential and not disclose or otherwise
make use of any of the confidential or proprietary information or
trade secrets referred to in Section 7 nor reveal the same to any
third party whomsoever, except as required by law.
9. Covenant of
Non-Solicitation. During the Term of this Agreement and for a
period of two (2) years following the effective date of
termination, EXECUTIVE, either on EXECUTIVE's own account or for
any person, firm, Company or other entity, shall not solicit,
interfere with or induce, or attempt to induce, any EXECUTIVE of
COMPANY, or any of its subsidiaries or affiliates to leave their
employment or to breach their employment agreement, if any, with
COMPANY.
10. Covenant of
Cooperation. EXECUTIVE agrees to cooperate with COMPANY in any
litigation or administrative proceedings involving any matters with
which EXECUTIVE was involved during his employment by COMPANY.
COMPANY shall reimburse EXECUTIVE for reasonable expenses incurred
in providing such assistance.
11.
Covenant Against
Competition.
a. Scope and Term.
During the Term of this Agreement and for an additional period
ending one (1) year after the effective date of termination or
expiration of this Agreement,
whichever occurs first, EXECUTIVE shall not directly or indirectly
engage in or become a partner, officer, principal, EXECUTIVE,
consultant, investor, creditor or stockholder of any business,
proprietorship, association, firm, corporation or any other
business entity which is engaged or proposes to engage or hereafter
engages in any business which competes with the business of COMPANY
and/or any of COMPANY's subsidiaries or affiliates in any
geographic area in which COMPANY conducts business at the time of
the termination or expiration of the employment
relationship.
12.
Rights to
Inventions.
a. Inventions Defined.
"Inventions" means discoveries, concepts, and ideas, whether
patentable or not, relating to any present or contemplated activity
of COMPANY, including without limitation devices, processes,
methods, formulae, techniques, and any improvements to the
foregoing.
b. Application. This
Section 12 shall apply to all Inventions made or conceived by
EXECUTIVE, whether or not during the hours of his employment or
with the use of COMPANY facilities, materials, or personnel, either
solely or jointly with others, during the Term of his employment by
COMPANY and for a period of one (1) year after any termination of
such employment. This Section 12 does not apply to any invention
disclosed in writing to COMPANY by EXECUTIVE prior to the execution
of this Agreement.
c. Assignment.
EXECUTIVE hereby assigns and agrees to assign to COMPANY all of his
rights to Inventions and to all proprietary rights therein, based
thereon or related thereto, including without limitation
applications for United States and foreign letters patent and
resulting letters patent.
d. Reports.
EXECUTIVE shall inform COMPANY promptly and fully of each
Invention by a written report, setting forth in detail the
structures, procedures, and methodology employed and the results
achieved ("Notice of Invention"). A report shall also be submitted
by EXECUTIVE upon completion of any study or research project
undertaken on COMPANY's behalf, whether or not in EXECUTIVE's
opinion a given study or project has resulted in an
Invention.
e. Patents. At
COMPANY's request and expense, EXECUTIVE shall execute such
documents and provide such assistance as may be deemed necessary
by COMPANY to apply
for, defend or enforce any United States and foreign letters patent
based on or related to such Inventions.
13.
Remedies.
Notwithstanding any other provision in this Agreement to the
contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE
commits a material breach of the Covenant of Confidentiality
(Section 7), Covenant of Non-Disclosure (Section 8), Covenant of
Non-Solicitation (Section 9), Covenant of Cooperation (Section 10),
Covenant Against Competition (Section 11), or Rights to Inventions
(Section 12), COMPANY shall have the right to have the obligations
of EXECUTIVE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury
to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies
at law or equity, all of which remedies shall be cumulative and not
exclusive. EXECUTIVE further acknowledges and agrees that the
obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE's future
employment and business opportunities, and are commensurate with
the compensation arrangements set
out in this Agreement.
14.
Survivability.
Sections 7 through 13, of this Agreement shall survive termination
of the employment relationship and this Agreement.
15.
General
Provisions.
a. Arbitration. Any
controversy involving the construction, application, enforceability
or breach of any of the terms, provisions, or conditions of this
Agreement, including without limitation, claims for breach of
contract, violation of public policy, breach of implied covenant,
intentional infliction of emotional distress or any other
alleged claims which are
not settled by mutual agreement of the parties, shall be submitted
to final and binding arbitration in accordance with the rules of
the American Arbitration Association in Los Angeles County,
California. The cost of arbitration shall be borne by the losing
party. In consideration of each party's agreement to submit to
arbitration any and all disputes that arise under this Agreement,
each party agrees that the arbitration provisions of this Agreement
shall constitute his/its exclusive remedy and each party expressly
waives the right to pursue redress of any kind in any other forum.
The parties further agree that the arbitrator acting hereunder
shall not be empowered to add to, subtract from, delete or in any
other way modify the terms of this Agreement. Notwithstanding the
foregoing, any party shall have the limited right to seek equitable
relief in the form of a temporary restraining order or preliminary
injunction in a court of competent
jurisdiction to protect itself from actual or threatened
irreparable injury resulting from an alleged breach of this
Agreement pending a final decision in arbitration.
b. Authorization.
COMPANY and EXECUTIVE each represent and warrant to the other that
he/it has the authority, power and right to deliver, execute and
fully perform the terms of this Agreement.
c. Entire Agreement.
EXECUTIVE understands and acknowledges that this document
constitutes the entire agreement between EXECUTIVE and COMPANY with
regard to EXECUTIVE's employment by COMPANY and EXECUTIVE's
post-employment activities concerning COMPANY. This Agreement
supersedes any and all other written and oral agreements between
the parties with respect to the subject matter hereof. Any and all
prior agreements, promises, negotiations, or representations,
either written or oral, relating to the subject matter of this
Agreement not expressly set forth in this Agreement are of no force
and effect. This Agreement may be altered, amended, or modified
only in writing signed by all of the parties hereto. Any oral
representations or modifications concerning this instrument shall
be of no force and effect.
d. Severability. If
any term, provision, covenant, or condition of this Agreement is
held by a court or other tribunal of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of such provisions
and all of the remaining provisions hereof shall remain in full
force and effect to the fullest extent permitted by law and shall
in no way be affected, impaired, or invalidated as a result of such
decision.
e. Governing Law.
Except to the extent that federal law may preempt California law,
this Agreement and the rights and obligations hereunder shall be
governed, construed and enforced in accordance with the laws of the
State of California.
f. Taxes. All
compensation payable hereunder is gross and shall be subject to
such withholding taxes and other taxes as may be provided by law.
EXECUTIVE shall be responsible for the
payment of all taxes attributable to the compensation provided by
this Agreement except for those taxes required by law to be paid or
withheld by COMPANY.
g. Assignment. This
Agreement shall be binding upon and inure to the benefit of the
successors and assigns of COMPANY. EXECUTIVE may not sell,
transfer, assign, or pledge any of his rights or interests pursuant
to this Agreement.
h. Waiver. Either
party's failure to enforce any provision or provisions of this
Agreement shall not in any way be construed as a waiver of any such
provision or provisions, or prevent that party thereafter from
enforcing such provision or provisions and each and every other
provision of this Agreement.
i. Captions. Titles
and headings to sections in this Agreement are for the purpose of
reference only and shall in no way limit, define, or otherwise
affect any provisions contained therein.
j. Breach - Right to
Cure. A party shall be deemed in breach of this Agreement only upon
the failure to perform any obligation under this Agreement after
receipt of written notice of breach and failure to cure such breach
within ten (10) days thereafter; provided, however, such notice
shall not be required where a breach or threatened breach would
cause irreparable harm to the other party and such other party may
immediately seek equitable relief in a court of competent
jurisdiction to enjoin such breach.
16.
Acknowledgement.
EXECUTIVE acknowledges that he has been given a reasonable period
of time to study this Agreement before signing it. EXECUTIVE
certifies that he has fully read, has received an explanation of,
and completely understands the terms, nature, and effect of this
Agreement. EXECUTIVE further acknowledges that he is executing this
Agreement freely, knowingly, and voluntarily and that EXECUTIVE's
execution of this Agreement is not the result of any fraud, duress,
mistake, or undue influence whatsoever. In executing this
Agreement, EXECUTIVE does not rely on any inducements, promises, or
representations by COMPANY other than the terms and conditions of
this Agreement.
17.
Effective Only Upon
Execution by Authorized Officer of COMPANY. This Agreement shall
have no force or effect and shall be unenforceable in its entirety
until it is executed by a duly authorized officer of COMPANY and
such executed Agreement is delivered to EXECUTIVE.
IN
WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first
above written.
EXECUTIVE
COMPANY
/s/ David
Steigelfest
By: /s/ Ann
Hand
David
Steigelfest
Ann Hand
CEO & President
Exhibit
10.14
Dan
D. Nabel
Riot
Games, Inc.
12333 W. Olympic Blvd.
Los Angeles, CA 90064
dnabel@riotgames.com
November 21,
2017
VIA
EMAIL & FEDERAL EXPRESS
Super
League Gaming, Inc. 2912 Colorado Ave., Suite 200 Santa Monica, CA
90404 Attn: General Counsel gregg@superleague.com
Re:
Extension of License Agreement Dear Gregg:
I am writing about the license agreement (the
“Agreement”) made as of June 22, 2016 between Riot
Games, Inc. (“Riot”) and Super League Gaming, Inc.
(“SLG”). Although SLG has not achieved its KPIs
as defined in Section 6.2, Riot hereby elects to extend the
Agreement for the Extension Term pursuant to Section
6.3.
Also, please note that for any future notices
delivered to Riot, please omit the copy to Sean Haran (no longer
with Riot) and instead please provide a copy to Chris Wyatt
(cwyatt@riotgames.com).
Sincerely,
Dan
D. Nabel Principal Counsel
Exhibit
10.15
SUPER
LEAGUE GAMING, INC. NOTE PURCHASE AGREEMENT
This
Note Purchase Agreement (this “Agreement”)
is made as of , by and among Super League Gaming, Inc., a
Delaware corporation (the “Company”),
and the investors listed on Exhibit A attached to this
Agreement (each a “Purchaser”
and together the “Purchasers”).
The
parties hereby agree as follows:
1.
Purchase and Sale of 9% Secured
Convertible Promissory Notes.
1.1 Sale
and Issuance.
(a) Subject
to the terms and conditions of this Agreement, each Purchaser
agrees, severally and not jointly, to purchase at the Closing (as
defined below), and the Company agrees to sell and issue to such
Purchaser at such Closing, a 9% Secured Convertible Promissory Note
(the “Note”),
in the original principal amount set forth opposite such
Purchaser’s name on Exhibit A with respect to such
Closing, and in the form attached hereto as Exhibit B, and a callable
common stock purchase warrant in the form attached hereto as
Exhibit C (the
“Warrant”).
The Notes issued to the Purchasers pursuant to this Agreement
(including any Notes issued at the Initial Closing and any
Additional Notes (as defined below) issued at Subsequent Closings
(as defined below)) shall be referred to in this Agreement as the
“Notes”.
The Warrants issued to the Purchasers pursuant to this Agreement
(including any Warrants issued at the Initial Closing and any
Additional Warrants (as defined below) issued at Subsequent
Closings) shall be referred to in this Agreement as the
“Warrants”.
The Notes and the Warrants shall be collectively referred to herein
as the “Securities”.
The Company is authorized to sell and issue up to ten million
dollars ($10,000,000) of
Notes pursuant to this Agreement, along with accepting the
conversion of three million dollars ($3,000,000) of issued and outstanding
secured convertible promissory notes of the Company, plus accrued
interest thereon.
For the avoidance
of doubt, the term “Purchaser” herein shall at all
times include the pre- existing secured
convertible noteholders of the Company that are converting their
respective Notes into the
Notes and Warrant issuable hereunder.
1.2 Closings;
Delivery.
(a) The
purchase, sale and issuance of the Notes shall take place at one or
more closings (each of which is referred to in this Agreement as a
“Closing”).
The initial Closing (the “Initial
Closing”) shall take place remotely via the exchange
of documents and signatures on the date hereof, or at such other
time and place as the Company and the Purchasers mutually agree,
either orally or in writing.
(b) If
less than all of the Notes are sold and issued at the Initial
Closing, then the Company may sell and issue at one or more
subsequent Closings (each a “Subsequent
Closing”), on the same terms and conditions as those
contained in this Agreement, up to the balance of the unissued
Notes (the “Additional
Notes”), and accompanying additional warrants
(“Additional
Warrants”) to one or more Persons (as defined below)
as may be approved by the Company in its
sole
discretion (the “Additional
Purchasers”), provided that (i) such Subsequent
Closing is consummated on or before May 31, 2018, and (ii) each
Additional Purchaser shall become a party to, and bound by, each of
the Transaction Agreements (as defined below), in each case as of
the date of such Subsequent Closing, by executing and delivering a
counterpart signature page to each of the Transaction Agreements.
Exhibit A to this
Agreement shall be updated to reflect each Additional Purchaser and
the number of Additional Notes purchased, and Additional Warrants
issued, or to be purchased, by each Additional Purchaser at each
applicable Subsequent Closing, and each such Additional Purchaser
shall be deemed a Purchaser for all purposes under this Agreement
as of the date of such Subsequent Closing.
(c) At
each Closing, the Company shall deliver to each Purchaser
participating in such Closing the following: (i) an executed
Agreement; (ii) an executed Note in the form attached hereto as
Exhibit B; (iii) an
executed Warrant in the form attached hereto as Exhibit C; (iv) an executed
Security Agreement in the form attached hereto as Exhibit D (the
“Security
Agreement”); (v) an executed Intercreditor and
Collateral Agent Agreement in the form attached hereto as
Exhibit E (the
“Intercreditor
Agreement”); (vi) an executed Investors Rights
Agreement in the form attached hereto as Exhibit F (the
“Investors
Rights Agreement”) representing the Note being
purchased by such Purchaser at such Closing against payment of the
purchase price therefor by wire transfer to the following bank
account designated by the Company:
Wells
Fargo Bank, N.A. 11836
San
Vicente Blvd. Los Angeles, CA 90049
Routing
Number: #########
Account
Number: #########
Account
Name: Super League Gaming, Inc.
1.3 Use
of Proceeds. In accordance with the directions of the Board
(as defined below), the Company will use the proceeds from the sale
of the Notes for Business expansion, merger and acquisitions, game
licensing, and working capital. None of the proceeds will be used
to reduce any indebtedness outstanding as of the date of this
Agreement (other than regularly scheduled payments pursuant to
agreements in effect as of the date hereof, if any) or to make any
dividend or distributions to any stockholders or Affiliates of the
Company.
1.4 Lock-Up
Restriction. To preserve an orderly trading market following
the close of the Company’s initial public offering
(“IPO”),
the Conversion Shares (as defined in the 9% Secured Convertible
Promissory Note attached hereto as Exhibit B) and the Warrant
Shares (as defined in the Callable Common Stock Purchase Warrant
attached hereto as Exhibit C) (the Conversion Shares and the
Warrant Shares are collectively referred to in this Section 1.4 as
the “Lock-Up
Shares”) shall have the following lock-up restriction
(i.e., before sales can be made in open market transactions): (i)
20% of the Lock-Up Shares made available for resale in the
Company’s Form 1-A filed with the Securities and Exchange
Commission (“SEC”)
will become freely tradeable on each of the 60-day, 90-day,
120-day, 150-day and 180-day anniversaries of the IPO closing; and
(ii) 20% of the Lock-Up Shares registered in the Company’s
registration statement on Form S-1 (“S-1”),
to be filed within 45 days of the IPO closing with the SEC, will
become freely tradeable on each of the 60-day, 90-day, 120-day,
150-day and 180- day anniversaries
of the date the S-1 is declared effective by the SEC. All Lock-Up
shares not included in the Company’s Form 1-A shall be
included in the Form S-1.
1.5 Defined
Terms Used in this Agreement. In addition to the terms
defined elsewhere in this Agreement, the following terms used in
this Agreement shall be construed to have the meanings set forth or
referenced below.
(a) “Affiliate”
means, with respect to any specified Person, any other Person who,
directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation, any
general partner, managing member, officer or director of such
Person, or such Person’s principal, or any venture capital
fund, financial investment firm or collective investment vehicle
now or hereafter existing that is controlled by one or more general
partners or managing members (or any affiliates thereof, which
shall include any series or cell of a general partner or managing
member that is structured as a series limited liability company)
of, or shares the same management company with, such Person. For
purposes of this definition, the terms “controlling,”
“controlled by,” or “under common control
with” shall mean the possession, directly or indirectly, of
(i) the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise, or (ii) the power to elect
or appoint at least 50% of the directors, managers, general
partners, or Persons exercising similar authority with respect to
such Person. For the avoidance of doubt, an “Affiliate”
of a specified Person shall include (x) such Person’s
partners, members, stockholders, other equity owners, officers,
directors, managers, former or retired partners, former or retired
members, former or retired stockholders, former or retired other
equity owners, and the estate of any of the foregoing and (y) a
parent or subsidiary of a Person that is an entity
(b) “Board”
means the board of directors of the Company.
(c) “Code”
means the Internal Revenue Code of 1986, as amended.
(d) “Company
Covered Person” means, with respect to the Company as
an “issuer” for purposes of Rule 506 promulgated under
the Securities Act, any Person listed in the first paragraph of
Rule 506(d)(1).
(e) “Company
Intellectual Property” means all patents, patent
applications, trademarks, trademark applications, service marks,
service mark applications, tradenames, copyrights, trade secrets,
domain names, mask works, information and proprietary rights and
processes, similar or other intellectual property rights, subject
matter of any of the foregoing, tangible embodiments of any of the
foregoing, licenses in, to and under any of the foregoing, and any
and all such cases as are necessary to the Company in the conduct
of the Company’s business as now conducted and as presently
proposed to be conducted.
(f) “Intercreditor
and Collateral Agent Agreement” means the agreement
among the Company and the Purchasers in the form of Exhibit E attached to this
Agreement.
(g) “Investors’
Rights Agreement” means the agreement among the
Company and the Purchasers in the form of Exhibit F attached to this
Agreement.
(h) “Key
Employee” means any executive-level employee
(including division director and vice president-level positions) as
well as any employee or consultant who either alone or in concert
with others develops, invents, programs or designs any Company
Intellectual Property.
(i) “Knowledge”
including the phrase “to
the Company’s knowledge” shall mean the actual
knowledge, after reasonable investigation, of Ann Hand and David
Steigelfest.
(j) “Material
Adverse Effect” means a material adverse effect on the
business, assets (including intangible assets), liabilities,
financial condition, property, prospects, or results of operations
of the Company.
(k) “Person”
means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
(l) “Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
(m) “Security
Agreement” means the agreement among the Company and
the Purchasers in the form of Exhibit D attached to this
Agreement.
(n) “Transaction
Agreements” means this Agreement, the Note, the
Warrant, the Security Agreement, the Intercreditor Agreement, the
Collateral Agent Agreement, and the Investors’ Rights
Agreement.
2.
Representations and Warranties of the
Company. A Disclosure Schedule, attached as Exhibit G to this Agreement
(each a “Disclosure
Schedule”), shall be delivered to the Purchasers in
connection with each Closing. Except as set forth on the Disclosure
Schedule delivered to the Purchasers at the applicable Closing,
which exceptions shall be deemed to be part of the representations
and warranties made hereunder, the Company hereby represents and
warrants to the Purchasers that the following representations are
true and complete. The Disclosure Schedule shall be arranged in
sections corresponding to the numbered and lettered sections
contained in this Section 2, and the disclosures in
any section of the Disclosure Schedule shall qualify other sections
in this Section
2 only to the extent it is
readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections.
2.1 Organization,
Good Standing, Corporate Power and Qualification. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business as
presently conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
Material Adverse Effect. The Company’s good standing
certificate with the State of Delaware dated February 16, 2018 is
included herewith as Schedule 2.1.
(a) The
authorized capital of the Company consists, immediately prior to
the Initial Closing, of 50,000,000 shares of Common Stock, $0.001
par value. Immediately prior to the Initial Closing, there are
13,810,487 shares of Common Stock issued and outstanding. In
additional there are three million dollars ($3.000,000.00) of
outstanding secured convertible promissory notes that are
converting into the Securities. All of the outstanding shares of
Common Stock have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable
federal and state securities laws. The Company holds no Common
Stock in its treasury.
(b) The
Company has reserved 4,500,000 shares of Common Stock for issuance
to officers, directors, employees, consultants and other service
providers of the Company pursuant to its 2014 Stock Option and
Incentive Plan (the “2014
Plan”), duly adopted by the Board and approved by the
Company stockholders. Of such reserved shares of Common Stock under
the 2014 Plan, (i) zero shares have been issued pursuant to
restricted stock purchase agreements, options to purchase 3,743,820
shares of common stock have been granted and are currently
outstanding, 70,000 shares have been issued pursuant to stock
option exercises, and 686,180 shares of Common Stock remain
available for issuance to officers, directors, employees,
consultants and other service providers of the Company pursuant to
the 2014 Plan. The Company has furnished to the Purchasers complete
and accurate copies of the 2014 Plan and forms of agreements used
thereunder.
(c) Section 2.2(c) of the Disclosure
Schedule sets forth the capitalization of the Company immediately
prior to the Initial Closing including the number of shares of the
following: (i) issued and outstanding Common Stock, including, with
respect to restricted Common Stock, vesting schedule and repurchase
price; (ii) granted stock options, including vesting schedule and
exercise price; (iii) shares of Common Stock reserved for future
award grants under the Stock Plans; and (iv) warrants or other
rights to purchase any of the Company’s authorized and
unissued capital stock. Except for (A) the rights provided in
Section 4 of the
Investors’ Rights Agreement, and (B) the securities
and rights described in Section 2.2 of this Agreement and
Section 2.2(c) of the Disclosure
Schedule, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first
refusal or similar rights) or agreements, orally or in writing, to
purchase or acquire from the Company any shares of Common Stock, or
any securities convertible into or exchangeable for shares of
Common Stock.
(d) The
Company has never adjusted or amended the exercise price of any
stock options previously awarded, whether through amendment,
cancellation, replacement grant, repricing, or any other
means.
2.3 Subsidiaries.
The Company does not currently own or control, directly or
indirectly, any interest in any other corporation, partnership,
trust, limited liability company, association, or other business
entity. The Company is not a participant in any partnership or
similar arrangement, other than license agreements with third
parties in the ordinary course and scope of the Company’s
business.
2.4 Authorization.
All corporate action required to be taken by the Board and
stockholders in order to authorize the Company to enter into the
Transaction Agreements, and to issue
the
Notes at each Closing, has been taken or will be taken prior to the
Initial Closing. All action on the part of the officers of the
Company necessary for the execution and delivery of the Transaction
Agreements, the performance of all obligations of the Company under
the Transaction Agreements to be performed as of the Closing has
been taken or will be taken prior to such Closing. The Transaction
Agreements, when executed and delivered by the Company, shall
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or
other equitable remedies, or (iii) to the extent the
indemnification provisions contained in the Investors’ Rights
Agreement may be limited by applicable federal or state securities
laws.
2.5 Valid
Issuance of Securities.
(a) The
Securities, when issued, sold and delivered in accordance with the
terms and for the consideration set forth in this Agreement, will
be validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under
the Transaction Agreements, applicable state and federal securities
laws and liens or encumbrances created by or imposed by a
Purchaser. Assuming the accuracy of the representations of the
Purchasers in Section 3
of this Agreement and subject to the filings described in
Section 2.6 below, the Securities
will be issued in compliance with all applicable federal and state
securities laws.
(b) No
“bad actor” disqualifying event described in Rule
506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification
Event”) is applicable to the Company or, to the
Company’s knowledge, any Company Covered Person, except for a
Disqualification Event as to which Rule 506(d)(2)(ii–iv) or
(d)(3), is applicable. The Company has exercised reasonable care,
in accordance with SEC rules and guidance, to determine whether any
Company Covered Person is subject to any Disqualification Event.
The Company has complied, to the extent applicable, with any
disclosure obligations under Rule 506(e) under the Securities
Act.
2.6 Governmental Consents and
Filings. Assuming the accuracy of the representations made
by the Purchasers in Section 3
of this Agreement, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority is
required on the part of the Company in connection with the
consummation of the transactions contemplated by this Agreement,
except for (i) filings pursuant to Regulation D of the Securities
Act, and applicable state securities laws, which will be made in a
timely manner; and (ii) the filing of a financing statement on Form
UCC-1 with the California Secretary of State on behalf of the
Purchasers.
2.7 Litigation.
There is no claim, action, suit, proceeding, arbitration,
complaint, charge or investigation pending or, to the
Company’s knowledge, currently threatened (i) against the
Company or any officer, director or Key Employee of the Company; or
(ii) that questions the validity of the Transaction Agreements or
the right of the Company to enter into them, or to consummate the
transactions contemplated by the Transaction Agreements; or (iii)
to the Company’s knowledge, that would reasonably be expected
to have, either individually or in the aggregate, a Material
Adverse Effect. Neither the Company nor, to the Company’s
knowledge, any of its officers, directors or Key
Employees is a
party or is named as subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality (in the case of officers, directors or Key
Employees, such as would affect the Company). There is no action,
suit, proceeding or investigation by the Company pending or which
the Company intends to initiate. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending
or threatened in writing (or any basis therefor known to the
Company) involving the prior employment of any of the
Company’s employees, their services provided in connection
with the Company’s business, any information or techniques
allegedly proprietary to any of their former employers or their
obligations under any agreements with prior employers.
2.8 Intellectual Property. The
Company owns or possesses sufficient legal rights to all Company
Intellectual Property without (i) any conflict with, or
infringement of, the rights of others, other than the rights of
third parties in, to and under third-party patents and patent
applications (“Third-Party
Patent Rights”), and (ii) to the knowledge of the
Company, any conflict with, or infringement of, any Third-Party
Patent Rights. No product or service marketed or sold (or proposed
to be marketed or sold) by the Company violates or will violate any
license or infringes or will infringe (x) any
intellectual property rights of any other party other than
Third-Party Patent Rights and (y) to the knowledge of the Company,
any Third-Party Patent Rights. Other than with respect to
commercially available software products under standard end-user
object code license agreements, there are no outstanding options,
licenses, agreements, claims, encumbrances or shared ownership
interests of any kind relating to the Company Intellectual
Property, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any
other Person. The Company is not aware of any violation by a third
party of any Company Intellectual Property, and the Company has not
received any communications alleging that the Company has violated
or, by conducting its business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets,
mask works or other proprietary rights or processes of any other
Person. The Company has obtained and possesses valid licenses to
use all of the software programs present on the computers and other
software-enabled electronic devices that it owns or leases or that
it has otherwise provided to its employees for their use in
connection with the Company’s business. It will not be
necessary to use any inventions of any of its employees or
consultants (or Persons it currently intends to hire) made prior to
their employment by the Company. Each employee and consultant has
assigned to the Company all intellectual property rights he or she
owns that are related to the Company’s business as now
conducted and as presently proposed to be conducted. Section 2.8 of the Disclosure
Schedule lists all Company patents, patent applications,
trademarks, trademark applications, service marks, service mark
applications, tradenames, domain names, copyrights, and licenses to
and under any of the foregoing. The Company has not embedded, used
or distributed any open source, copyleft or community source code
(including, but not limited to, any libraries or code, software,
technologies or other materials that are licensed or distributed
under any General Public License, Lesser General Public License or
similar license arrangement or other distribution model described
by the Open Source Initiative at www.opensource.org)
(collectively “Open
Source Software”) in, or in connection with, any of
its products or services that are generally available or in
development in any manner that would materially restrict the
ability of the Company to protect its proprietary interests in any
such product or service or in any manner that would (i) require, or
purport to require, any Company Intellectual Property (other than
the Open Source Software itself) to be disclosed or distributed in
source code form, or to be licensed for the
purpose
of making derivative works; (ii) restrict, or purport to restrict,
the consideration that could be charged for the distribution or use
of any Company Intellectual Property, or otherwise limit, or
purport to limit, the use of any Company Intellectual Property for
commercial purposes; (iii) create, or purport to create, any
obligation on the Company with respect to any Company Intellectual
Property owned by the Company, or otherwise grant, or purport to
grant, to any third party any rights in or to, or immunities under,
Company Intellectual Property owned by the Company; or (iv) impose,
or purport to impose, any other limitation, restriction or
condition on the right of the Company with respect to its use or
distribution of any Company Intellectual Property. For purposes of
this Section
2.8, the Company shall be
deemed to have knowledge of a patent right if the Company has
actual knowledge of the patent right or would be found to be on
notice of such patent right as determined by reference to United
States patent laws.
2.9 Compliance
with Other Instruments. The Company is not in violation or
default (i) of any provisions of its Amended & Restated
Certificate of Incorporation (“Restated Certificate”) or Bylaws,
(ii) of any instrument, judgment, order, writ or decree, (iii)
under any note, indenture or mortgage, or (iv) under any lease,
agreement, contract or purchase order to which it is a party or by
which it is bound that is required to be listed on the Disclosure
Schedule, or (v) to its knowledge, of any provision of federal or
state statute, rule or regulation applicable to the Company, the
violation of which would have a Material Adverse Effect. The
execution, delivery and performance of the Transaction Agreements
and the consummation of the transactions contemplated by the
Transaction Agreements will not result in any such violation or be
in conflict with or constitute, with or without the passage of time
and giving of notice, either (i) a default under any such
provision, instrument, judgment, order, writ, decree, contract or
agreement; or (ii) an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, forfeiture, or nonrenewal of any material
permit or license applicable to the Company.
2.10 Agreements;
Actions.
(a) Except
for the Transaction Agreements, issued and outstanding employment
agreements with executives of the Company, the existing real
property lease agreement for the Company’s headquarters
located at 2906 Colorado Ave., Santa Monica, CA 90404, there are no
agreements, understandings, instruments, contracts or proposed
transactions to which the Company is a party or by which it is
bound that involve (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of $100,000, or (ii) the grant
of rights to manufacture, produce, assemble, license, market, or
sell its products to any other Person that limit the
Company’s exclusive right to develop, manufacture, assemble,
distribute, market or sell its products.
(b) The
Company has not (i) declared or paid any dividends or authorized or
made any distribution upon or with respect to any class or series
of its capital stock, or (ii) sold, exchanged or otherwise disposed
of any of its assets or rights, other than the sale of its
inventory in the ordinary course of business.
(c) The
Company is not a guarantor or indemnitor of any indebtedness
of any other
Person.
2.11 Certain
Transactions.
(a) Other
than (i) standard employee benefits generally made available to all
employees, (ii) executive employment agreements for Ann Hand and
David Steigelfest, (iii) standard director and officer
indemnification agreements approved by the Board, and (iv) the
purchase of shares of the Company’s capital stock and the
issuance of options and warrants to purchase shares of the
Company’s Common Stock, in each instance, approved in the
written minutes of the Board, there are no agreements,
understandings or proposed transactions between the Company and any
of its officers, directors, consultants or Key Employees, or any
Affiliate thereof.
(b) The
Company is not indebted, directly or indirectly, to any of its
directors, officers or employees or to their respective spouses or
children or to any Affiliate of any of the foregoing, other than in
connection with expenses or advances of expenses incurred in the
ordinary course of business or employee relocation expenses and for
other customary employee benefits made generally available to all
employees. None of the Company’s directors, officers or
employees, or any members of their immediate families, or any
Affiliate of the foregoing are, directly or indirectly, indebted to
the Company or, to the Company’s knowledge, have any (i)
material commercial, industrial, banking, consulting, legal,
accounting, charitable or familial relationship with any of the
Company’s customers, suppliers, service providers, joint
venture partners, licensees and competitors, (ii) direct or
indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the
Company except that directors, officers or employees or
stockholders of the Company may own stock in (but not exceeding two
percent (2%) of the outstanding capital stock of) publicly traded
companies that may compete with the Company or (iii) financial
interest in any material contract with the Company.
2.12 Rights
of Registration and Voting Rights. Except as provided in the
Investors’ Rights Agreement, and in Section 2.12 of the
Disclosure Schedule, the Company is not under any obligation to
register under the Securities Act any of its currently outstanding
securities or any securities issuable upon exercise or conversion
of its currently outstanding securities. To the Company’s
knowledge, no stockholder of the Company has entered into any
agreements with respect to the voting of capital shares of the
Company.
2.13 Property.
The property and assets that the Company owns are free and clear of
all mortgages, deeds of trust, liens, loans and encumbrances,
except for statutory liens for the payment of current taxes that
are not yet delinquent and encumbrances and liens that arise in the
ordinary course of business and do not materially impair the
Company’s ownership or use of such property or assets. With
respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances other
than those of the lessors of such property or assets. The Company
does not own any real property.
2.14 Financial
Statements. The Company has delivered to each Purchaser its
audited financial statements for the fiscal years ended December
31, 2015 and December 31, 2016 and its unaudited financial
statements (including balance sheet, income statement and statement
of stockholders’ equity) for the fiscal year ended December
31, 2017 (collectively, the “Financial
Statements”). The Financial Statements have been
prepared in accordance with generally accepted
accounting
principles (“GAAP”)
applied on a consistent basis throughout the periods indicated,
except that the Financial Statements may not contain all footnotes
required by GAAP. The Financial Statements fairly present in all
material respects the financial condition and operating results of
the Company as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. Except as
set forth in the Financial Statements, the Company has no material
liabilities or obligations, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent
to December 31, 2017; (ii) obligations under contracts and
commitments incurred in the ordinary course of business; and (iii)
liabilities and obligations of a type or nature not required under
GAAP to be reflected in the Financial Statements, which, in all
such cases, individually and in the aggregate would not have a
Material Adverse Effect. The Company maintains and will continue to
maintain a standard system of accounting established and
administered in accordance with GAAP.
2.15 Changes.
Since December 31, 2017, there has not been:
(a) any
change in the assets, liabilities, financial condition or operating
results of the Company, except changes in the ordinary course of
business that have not caused, in the aggregate, a Material Adverse
Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance,
that would have a Material Adverse Effect;
(c) any
waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary
course of business and the satisfaction or discharge of which would
not have a Material Adverse Effect;
(e) any
material change to a material contract or agreement by which the
Company or any of its assets is bound or subject;
(f) any
material change in any compensation arrangement or agreement with
any employee, officer, director or stockholder;
(g) any
mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable
and liens that arise in the ordinary course of business and do not
materially impair the Company’s ownership or use of such
property or assets;
(h) any
loans or guarantees made by the Company to or for the benefit of
its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances
made in the ordinary course of its business;
(i) any
declaration, setting aside or payment or other distribution in
respect of any of the Company’s capital stock, or any direct
or indirect redemption, purchase, or other acquisition of any of
such stock by the Company;
(j) any sale,
assignment or transfer of any Company Intellectual Property that
could reasonably be expected to result in a Material Adverse
Effect;
(k) receipt
of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(l) to
the Company’s knowledge, any other event or condition of any
character, other than events affecting the economy or the
Company’s industry generally, that could reasonably be
expected to result in a Material Adverse Effect; or
(m) any
arrangement or commitment by the Company to do any of the things
described in this Subsection 2.15.
(a) As
of the April 1, 2018, the Company employs 41 full-time employees
and has five (5) consultants or independent
contractors.
(b) To
the Company’s knowledge, none of its employees is obligated
under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree
or order of any court or administrative agency, that would
materially interfere with such employee’s ability to promote
the interest of the Company or that would conflict with the
Company’s business. Neither the execution or delivery of the
Transaction Agreements, nor the carrying on of the Company’s
business by the employees of the Company, nor the conduct of the
Company’s business as now conducted and as presently proposed
to be conducted, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions, or provisions
of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now
obligated.
(c) The
Company is not delinquent in payments to any of its employees,
consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service
performed for it to the date hereof or amounts required to be
reimbursed to such employees, consultants or independent
contractors. The Company has complied in all material respects with
all applicable state and federal equal employment opportunity laws
and with other laws related to employment, including those related
to wages, hours, worker classification and collective bargaining.
The Company has withheld and paid to the appropriate governmental
entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the
Company and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the
foregoing.
(d) To
the Company’s knowledge, no Key Employee intends to terminate
employment with the Company or is otherwise likely to become
unavailable to continue as a Key Employee, nor does the Company
have a present intention to terminate the employment of any of the
foregoing. The employment of each employee of the Company is
terminable at the will of the Company, other than executives who
have employment agreements with the Company.
(e) The Company has not
made any representations regarding equity incentives to any
officer, employee, director or consultant that are inconsistent
with the share amounts and terms set forth in the minutes of
meetings of the Board.
(f) Each
former Key Employee whose employment was terminated by the Company
has entered into an agreement with the Company providing for the
full release of any claims against the Company or any related party
arising out of such employment.
(g) Section 2.166(g) of the Disclosure
Schedule sets forth each employee benefit plan maintained,
established or sponsored by the Company, or which the Company
participates in or contributes to, which is subject to the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”).
The Company has made all required contributions and has no
liability to any such employee benefit plan, other than liability
for health plan continuation coverage described in Part 6 of Title
I(B) of ERISA and has complied in all material respects with all
applicable laws for any such employee benefit plan.
(h) The
Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express
or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or
other labor dispute involving the Company pending, or to the
Company’s knowledge, threatened, which could have a Material
Adverse Effect, nor is the Company aware of any labor organization
activity involving its employees.
(i) None
of the Key Employees or officers or directors of the Company has
been (i) subject to voluntary or involuntary petition under the
federal bankruptcy laws or any state insolvency law or the
appointment of a receiver, fiscal agent or similar officer by a
court for his business or property; (ii) convicted in a criminal
proceeding or named as a subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses); (iii)
subject to any order, judgment or decree (not subsequently
reversed, suspended, or vacated) of any court of competent
jurisdiction permanently or temporarily enjoining him from
engaging, or otherwise imposing limits or conditions on his
engagement in any securities, investment advisory, banking,
insurance, or other type of business or acting as an officer or
director of a public company; or (iv) found by a court of competent
jurisdiction in a civil action or by the Securities and Exchange
Commission or the Commodity Futures Trading Commission to have
violated any federal or state securities, commodities, or unfair
trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated.
2.17 Tax
Returns and Payments. There are no federal, state, county,
local or foreign taxes due and payable by the Company which have
not been timely paid, excluding approximately $40,000 of state
and local taxes relating to ticket sales from prior periods. There
are no accrued and unpaid federal, state, country, local or foreign
taxes of the Company which are due, whether or not assessed or
disputed. There have been no examinations or audits of any tax
returns or reports by any applicable federal, state, local or
foreign governmental agency. The Company has duly and timely filed
all federal, state, county, local and foreign tax returns required
to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any
year.
2.18 Insurance.
The Company has in full force and effect fire and casualty
insurance policies with extended coverage, sufficient in amount
(subject to reasonable deductions) to allow it to replace any of
its properties that might be damaged or destroyed.
2.19 Employee Agreements. Each
current and former employee, consultant and officer of the Company
has executed an agreement with the Company regarding
confidentiality and proprietary information (collectively, the
“Confidential
Information Agreements”). No current or former Key
Employee has excluded works or inventions from his or her
assignment of inventions pursuant to such Key Employee’s
Confidential Information Agreement. Each current and former Key
Employee has executed a non-solicitation agreement. The Company is
not aware that any of its Key Employees is in violation of any
agreement covered by this Section 2.199.
2.20 Permits.
The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business, the lack of
which could reasonably be expected to have a Material Adverse
Effect. The Company is not in default in any material respect under
any of such franchises, permits, licenses or other similar
authority.
2.21 Corporate
Documents. The copy of the minute books of the Company
provided to the Purchasers contains minutes of all meetings of
directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date
of incorporation and accurately reflects in all material respects
all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such
minutes.
2.22 Environmental
and Safety Laws. (a) The Company is and has been in
compliance with all Environmental Laws; (b) there has been no
release or threatened release of any pollutant, contaminant or
toxic or hazardous material, substance or waste or petroleum or any
fraction thereof (each a “Hazardous
Substance”), on, upon, into or from any site currently
or heretofore owned, leased or otherwise used by the Company; (c)
there have been no Hazardous Substances generated by the Company
that have been disposed of or come to rest at any site that has
been included in any published U.S. federal, state or local
“superfund” site list or any other similar list of
hazardous or toxic waste sites published by any governmental
authority in the United States; and (d) there are no underground
storage tanks located on, no polychlorinated biphenyls
(“PCBs”)
or PCB-containing equipment used or stored on, and no hazardous
waste as defined by the Resource Conservation and Recovery Act, as
amended, stored on, any site owned or operated by the Company,
except for the storage of hazardous waste in compliance with
Environmental Laws. The Company has made available to the
Purchasers true and complete copies of all material environmental
records, reports, notifications, certificates of need, permits,
pending permit applications, correspondence, engineering studies
and environmental studies or assessments.
For
purposes of this Section
2.22, “Environmental
Laws” means any law, regulation, or other applicable
requirement relating to (a) releases or threatened release of
Hazardous Substance; (b) pollution or protection of employee health
or safety, public health or the environment; or (c) the
manufacture, handling, transport, use, treatment, storage, or
disposal of Hazardous Substances.
2.23 Qualified
Small Business Stock. As of and immediately following each
Closing: (i) the Company will be an eligible corporation as defined
in Section 1202(e)(4) of the Code, (ii) the Company
will not have made purchases of its own stock described in Code
Section
1202(c)(3)(B)
during the one-year period preceding the Initial Closing, except
for purchases that are disregarded for such purposes under Treasury
Regulation Section 1.1202-2 and (iii) the Company’s aggregate
gross assets, as defined by Code Section 1202(d)(2), at no time
between its incorporation and through the Initial Closing have
exceeded $50 million, taking into account the assets of any
corporations required to be aggregated with the Company in
accordance with Code Section 1202(d)(3); provided, however, that in no event
shall the Company be liable to the Purchasers or any other party
for any damages arising from any subsequently proven or identified
error in the Company’s determination with respect to the
applicability or interpretation of Code Section 1202, unless such
determination shall have been given by the Company in a manner
either grossly negligent or fraudulent.
2.24 Data
Privacy. In connection with its collection, storage,
transfer (including without limitation, any transfer across
national borders) and/or use of any personally identifiable
information from any individuals, including, without limitation,
any customers, prospective customers, employees and/or other third
parties (collectively, “Personal
Information”), the Company is and has been in
compliance with all applicable laws in all relevant jurisdictions,
the Company’s privacy policies, and the requirements of any
contract or codes of conduct to which the Company is a party. The
Company has commercially reasonable physical, technical,
organizational and administrative security measures and policies in
place to protect all Personal Information collected by it or on its
behalf from and against unauthorized access, use and/or disclosure.
The Company is and has been in compliance in all material respects
with all laws relating to data loss, theft and breach of security
notification obligations.
2.25 Disclosure.
The Company has made available to the Purchasers all the
information reasonably available to the Company that the Purchasers
have requested for deciding whether to acquire the Notes, including
certain of the Company’s projections describing its proposed
business plan (the “Business
Plan”). No representation or warranty of the Company
contained in this Agreement, as qualified by the Disclosure
Schedule, and no certificate furnished or to be furnished to
Purchasers at any Closing contains any untrue statement of a
material fact or, to the Company’s knowledge, omits to state
a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances
under which they were made. The Business Plan was prepared in good
faith; however, the Company does not warrant that it will achieve
any results projected in the Business Plan. It is understood that
this representation is qualified by the fact that the Company has
not delivered to the Purchasers, and has not been requested to
deliver, a private placement or similar memorandum or any written
disclosure of the types of information customarily furnished to
purchasers of securities.
3.
Representations and Warranties of the
Purchasers. Each Purchaser hereby represents and warrants to
the Company, severally and not jointly, that:
3.1 Authorization.
The Purchaser has full power and authority to enter into the
Transaction Agreements. The Transaction Agreements to which the
Purchaser is a party, when executed and delivered by the Purchaser,
will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and any other laws of general
application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the
availability of
specific performance, injunctive relief or other equitable
remedies, or (b) to the extent the indemnification provisions
contained in the Investors’ Rights Agreement may be limited
by applicable federal or state securities laws.
3.2 Purchase
Entirely for Own Account. This Agreement is made with the
Purchaser in reliance upon the Purchaser’s representation to
the Company, which by the Purchaser’s execution of this
Agreement, the Purchaser hereby confirms, that the Notes to be
acquired by the Purchaser will be acquired for investment for the
Purchaser’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and
that the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same in
violation of applicable securities laws. By executing this
Agreement, the Purchaser further represents that the Purchaser does
not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect
to any of the Notes. The Purchaser has not been formed for the
specific purpose of acquiring the Notes.
3.3 Disclosure
of Information. The Purchaser has had an opportunity to
discuss the Company’s business, management, financial affairs
and the terms and conditions of the offering of the Notes with the
Company’s management and has had an opportunity to review the
Company’s facilities. The foregoing, however, does not limit
or modify the representations and warranties of the Company in
Section 2
of this Agreement or the right of the Purchasers to rely
thereon.
3.4 Restricted
Securities. The Purchaser understands that the Securities,
and the shares of common stock issuable upon conversion and
exercise of the Notes and Warrants, respectively, have not been,
and will not be, registered under the Securities Act, by reason of
a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of the
Purchaser’s representations as expressed herein. The
Purchaser understands that the Notes are “restricted
securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Purchaser
must hold the Securities, and the shares of common stock issuable
upon conversion and exercise of the Notes and Warrants,
respectively, must be held indefinitely unless they are registered
with the Securities and Exchange Commission and qualified by state
authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges
that the Company has no obligation to register or qualify the
Notes, Warrants or the shares of common stock issuable upon
conversion of the Notes and Warrants, respectively, for resale
except as set forth in the Investors’ Rights Agreement. The
Purchaser further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and
manner of sale, the holding period for the shares of common stock
issuable upon the conversion and exercise of the Notes and
Warrants, respectively, and on requirements relating to the Company
which are outside of the Purchaser’s control, and which the
Company is under no obligation and may not be able to
satisfy.
3.5 No
Public Market. The Purchaser understands that no public
market now exists for the Securities, and that the Company has made
no assurances that a public market will ever exist for the
Securities, or the shares of common stock issuable upon conversion
and exercise of the Notes and Warrants, respectively.
3.6 Legends. The Purchaser
understands that the Securities, and any securities issued in
respect of or exchange for the Securities, may be notated with a
legend similar to the following:
“THE SHARES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.”
(a) Any legend set forth
in, or required by, the other Transaction Agreements.
(b) Any legend required
by the securities laws of any state to the extent
such
laws are applicable to the Securities represented by the
certificate, instrument, or book entry so legended.
3.7 Accredited
Investor. The Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act.
3.8 No
General Solicitation. Neither the Purchaser, nor any of its
officers, directors, employees, agents, stockholders or partners
has either directly or indirectly, including, through a broker or
finder (a) engaged in any general solicitation, or (b) published
any advertisement in connection with the offer and sale of the
Notes.
3.9 Exculpation
Among Purchasers. The Purchaser acknowledges that it is not
relying upon any Person, other than the Company and its officers
and directors, in making its investment or decision to invest in
the Company. The Purchaser agrees that neither any Purchaser nor
the respective controlling Persons, officers, directors, partners,
agents, or employees of any Purchaser shall be liable to any other
Purchaser for any action heretofore taken or omitted to be taken by
any of them in connection with the purchase of the
Notes.
3.10 Residence.
If the Purchaser is an individual, then the Purchaser resides in
the state or province identified in the address of the Purchaser
set forth on Exhibit
A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of
the Purchaser in which its principal place of business is
identified in the address or addresses of the Purchaser set forth
on Exhibit
A.
4.
Conditions to the Purchasers’
Obligations at Closing. The obligations of each Purchaser to
purchase Notes at any Closing are subject to the fulfillment, on or
before such Closing, of each of the following conditions, unless
otherwise waived by such Purchaser:
4.1 Representations
and Warranties.
(a) With respect to the
Initial Closing, except as set forth in or modified by the
Disclosure Schedule delivered to the Purchasers at the Initial
Closing, the representations and warranties of the Company
contained in Section 2
shall be true and correct in all respects as of the date of the
Initial Closing.
(b) With
respect to any Subsequent Closing, except as set forth in or
modified by the Disclosure Schedule delivered to the Purchasers at
the Initial Closing (or, if necessary, an updated version of the
Disclosure Schedule delivered to the Purchasers participating in
such Subsequent Closing along with the certificate described in
Section 4.3(b)),
the representations and warranties made by the Company in
Section 2 shall be
true and correct in all material respects (without giving effect to
any limitation as to “materiality” or Material Adverse
Effect set forth therein) on and as of the date of such Subsequent
Closing as though such representations and warranties were made on
and as of such date (other than those representations and
warranties of the Company contained in Section 2 made as of a
specified date or made only with respect to a specified period of
time, which need only be true and correct in all material respects
(without giving effect to any limitation as to
“materiality” or Material Adverse Effect set forth
therein) as of such specified date or with respect to such
specified period of time).
4.2 Performance.
The Company shall have performed and complied with all covenants,
agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by the Company
on or before such Closing.
4.3 Compliance
Certificate.
(a) With
respect to the Initial Closing, the President of the Company shall
deliver to the Purchasers participating in the Initial Closing a
certificate certifying that the conditions specified in
Sections 4.1(a) and
4.2 have been
fulfilled.
(b) With
respect to any Subsequent Closing, the President of the Company
shall deliver to the Purchasers participating in such Subsequent
Closing a certificate certifying that the conditions specified in
Sections 4.1(b) and
4.2 have been
fulfilled.
4.4 Qualifications.
All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Notes pursuant to this Agreement shall be
obtained and effective as of such Closing.
4.5 Board
of Directors. As of the Initial Closing, the authorized size
of the Board shall be six (6), and the Board shall be comprised of
Ann Hand, David Steigelfest, Jeff Gehl, Robert Stewart, John Miller
and Marc Cummins.
4.6 Investors’
Rights Agreement. The Company and each Purchaser shall have
executed and delivered the Investors’ Rights
Agreement.
4.7 Secretary’s
Certificate. The Secretary of the Company shall have
delivered to the Purchasers at the Initial Closing a certificate
certifying (i) the Bylaws of the Company, and (ii)
resolutions of the
Board approving the Transaction Agreements and the transactions
contemplated under the Transaction Agreements.
4.8 Proceedings
and Documents. All corporate and other proceedings in
connection with the transactions contemplated at such Closing and
all documents incident thereto shall be reasonably satisfactory in
form and substance to each Purchaser, and each Purchaser (or its
counsel) shall have received all such counterpart original and
certified or other copies of such documents as reasonably
requested. Such documents may include good standing
certificates.
5.
Conditions of the
Company’s Obligations at Closing. The obligations of
the Company to sell Notes to the Purchasers at any Closing are
subject to the fulfillment, on or before such Closing, of each of
the following conditions, unless otherwise waived:
5.1 Representations
and Warranties. The representations and warranties of each
Purchaser contained in Section 3
shall be true and correct in all respects as of such
Closing.
5.2 Performance.
The Purchasers shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by
them on or before such Closing.
5.3 Qualifications.
All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Notes pursuant to this Agreement shall be
obtained and effective as of such Closing.
5.4 Investors’
Rights Agreement. Each Purchaser shall have executed and
delivered the Investors’ Rights Agreement.
6.1 Survival
of Warranties. Unless otherwise set forth in this Agreement,
the representations and warranties of the Company and the
Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and each
Closing and shall in no way be affected by any investigation or
knowledge of the subject matter thereof made by or on behalf of the
Purchasers or the Company.
6.2 Successors
and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any
rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this
Agreement.
6.3 Governing
Law. This Agreement shall be governed by and construed under
the internal laws of the State of Delaware, irrespective of
conflict of law principles.
6.4 Counterparts.
This Agreement may be executed and delivered via (i) the DocuSign
digital signature service, or (ii) by facsimile signature and in
two (2) or more counterparts,
each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of
2000, e.g., www.docusign.com)
or other transmission method and any counterpart so delivered shall
be deemed to have been duly and validly delivered and be valid and
effective for all purposes.
6.5 Titles
and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.
6.6 Notices. All notices and other
communications given or made pursuant to this Agreement shall be in
writing and shall be deemed effectively given upon the earlier of
actual receipt, or (a) personal delivery to the party to be
notified, (b) when sent, if sent by electronic mail or facsimile
during normal business hours of the recipient, and if not sent
during normal business hours, then on the recipient’s next
business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) business day after deposit with a
nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of
receipt. All communications shall be sent to the respective parties
at their address as set forth on the signature page or Exhibit A, or to such e-mail
address, facsimile number or address as subsequently modified by
written notice given in accordance with this Section 6.6. If notice is given to
the Company, a copy shall also be sent to Ann Hand, President &
CEO, Super League Gaming, Inc., 2906 Colorado Ave., Santa Monica,
CA 90404, ann.hand@superleague.com.
6.7 Attorneys’
Fees. If any action at law or in equity (including,
arbitration) is necessary to enforce or interpret the terms of any
of the Transaction Agreements, the prevailing party shall be
entitled to reasonable attorneys’ fees, costs and necessary
disbursements in addition to any other relief to which such party
may be entitled.
6.8 Amendments and Waivers. Any
term of this Agreement may be amended, terminated or waived only
with the written consent of the Company and (a) the holders of at
least a majority of the then-outstanding Notes or (b) for an
amendment, termination or waiver effected prior to the Initial
Closing, Purchasers obligated to purchase at least a majority of
the Notes to be issued at the Initial Closing. Notwithstanding the
foregoing, Purchasers purchasing Additional Notes in a Subsequent
Closing may become parties to this Agreement in accordance with
Section 1.2(b) without any amendment of this Agreement pursuant to
this paragraph or any consent or approval of any other Purchaser
(other than any consent or approval explicitly required pursuant to
Section 1.2(b)). Any amendment or waiver effected in accordance
with this Section
6.8 shall be binding upon
each Purchaser and each transferee of the Notes, each future holder
of the Notes, and the Company.
6.9 Severability.
The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other
provision.
6.10 Delays
or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon
any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-breaching
or non- defaulting party nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or
in any similar breach or default thereafter occurring; nor shall
any waiver of any single breach or default be deemed a waiver of
any other breach or default theretofore
or
thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement or
by law or otherwise afforded to any party, shall be cumulative and
not alternative.
6.11 Entire
Agreement. This Agreement (including the Exhibits hereto),
and the other Transaction Agreements, constitute the full and
entire understanding and agreement between the parties with respect
to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between
the parties are expressly canceled.
6.12 Corporate
Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF
THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE
IS SO EXEMPT.
6.13 Dispute
Resolution. The parties (a) hereby irrevocably and
unconditionally submit to the jurisdiction of the federal and state
courts located in Los Angeles County, California for the purpose of
any suit, action or other proceeding arising out of or based upon
this Agreement, (b) agree not to commence any suit, action or other
proceeding arising out of or based upon this Agreement except in
the federal and state courts located in Los Angeles County,
California, and (c) hereby waive, and agree not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt
or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of
the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced in or by such
court.
WAIVER
OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE
SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL
6.14 No
Commitment for Additional Financing. The Company
acknowledges and agrees that no Purchaser has made any
representation, undertaking, commitment or agreement to provide or
assist the Company in obtaining any financing, investment or other
assistance, other than the purchase of the Notes as set forth
herein and subject to the conditions set forth herein. In addition,
the Company acknowledges and agrees that (a) no statements, whether
written or oral, made by any Purchaser or its representatives on or
after the date of this Agreement shall create an obligation,
commitment or agreement to provide or assist the Company in
obtaining any financing or investment, (b) the Company
shall not rely on any such statement by any Purchaser or its
representatives, and (c) an obligation, commitment or agreement to
provide or assist the Company in obtaining any financing or
investment may only be created by a written agreement, signed by
such Purchaser and the Company, setting forth the terms and
conditions of such financing or investment and stating that the
parties intend for such writing to be a binding obligation or
agreement. Each Purchaser shall have the right, in its sole and
absolute discretion, to refuse or decline to participate in any
other financing of or investment in the Company and shall have no
obligation to assist or cooperate with the Company in obtaining any
financing, investment or other assistance.
[Signature Pages
Follow]
IN
WITNESS WHEREOF, the parties have executed this Note Purchase
Agreement as of the date first written above.
|
COMPANY:
SUPER
LEAGUE GAMING, INC.
By: Ann
Hand
Chief
Executive Officer & President
Address:
2906 Colorado
Ave.
Santa
Monica, CA 90404
|
SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
-22-
IN
WITNESS WHEREOF, the Purchaser has executed this Note Purchase
Agreement as of the date first written above.
|
PURCHASER:
[Name
of Entity if applicable]
Name:
Title:
|
SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
-24-
EXHIBIT A SCHEDULE OF PURCHASERS
Name
and Address of Purchaser
|
Original
Principal
Amount
of Note
|
No.
of Shares of Common Stock
Underlying
Common Stock
Purchase
Warrant
|
|
$
|
Equal
to one hundred percent (100.0%) of the investment amount in the
Notes exercisable at the lesser of (a) $3.60 per share, or (b) a
fifteen percent (15.0%) discount to the price per share
(“Exercise
Price”) of the Company’s initial public offering
(“IPO”).
For the avoidance of doubt, the actual number of shares of common
stock shall be set upon the final determination of the IPO price
per share.
|
EXHIBIT A TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT B
FORM
OF 9% SECURED CONVERTIBLE PROMISSORY NOTE
EXHIBIT B TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT C
FORM
OF CALLABLE COMMON STOCK PURCHASE WARRANT
EXHIBIT C TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT D
FORM
OF SECURITY AGREEMENT
EXHIBIT D TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT E
FORM
OF INTERCREDITOR AND COLLATERAL AGENT AGREEMENT
EXHIBIT E TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT F
FORM
OF INVESTORS’ RIGHTS AGREEMENT
EXHIBIT
F TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
EXHIBIT G
DISCLOSURE
SCHEDULE
This
Disclosure Schedule is made and given pursuant to Section 2 of the Common Stock
Purchase Agreement, dated as of April 24, 2018 (the
“Agreement”),
between Super League Gaming, Inc. (the “Company”)
and the Purchasers listed on Exhibit A thereto. All
capitalized terms used but not defined herein shall have the
meanings as defined in the Agreement, unless otherwise provided.
The section numbers below correspond to the section numbers of the
representations and warranties in the Agreement; provided, however, that any information
disclosed herein under any section number shall be deemed to be
disclosed and incorporated into any other section number under the
Agreement where such disclosure would be appropriate and such
appropriateness is reasonably apparent from the face of such
disclosure. Nothing in this Disclosure Schedule is intended to
broaden the scope of any representation or warranty contained in
the Agreement or to create any covenant. Inclusion of any item in
this Disclosure Schedule (1) does not represent a determination
that such item is material or establish a standard of materiality,
(2) does not represent a determination that such item did not arise
in the ordinary course of business, (3) does not represent a
determination that the transactions contemplated by the Agreement
require the consent of third parties, and (4) shall not constitute,
or be deemed to be, an admission to any third party concerning such
item. This Disclosure Schedule includes brief descriptions or
summaries of certain agreements and instruments, copies of which
are available upon reasonable request. Such descriptions do not
purport to be comprehensive and are qualified in their entirety by
reference to the text of the documents described, true and complete
copies of which have been provided to the Purchasers or their
respective counsel.
EXHIBIT
G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
SECTION
2.1
Good
Standing Certificate
EXHIBIT
G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
Delaware
The FirstState
I,
JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO
HEREBY CERTIFY "SUPER LEAGUE GAMING, INC." IS
DULY
INCORPORTED
UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN
GOOD
STANDING AND
HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE
RECORDS
OF THIS OFFICE
SHOW AS OF THE SIXTEENTH DAY OF FEBRUARY, A.D.
2018.
AND I DO HEREBY FURTHER
CERTIFY THAT THE ANNUAL REPORTS HAVE
BEEN FILED TO DATE.
AND I HEREBY FURTHER CERTIFY THAT SAID "SUPER LEAGUES
GAMING INC" WAS INCORPORATED ON THE FIRST DAY OF OCTOBER,
A.D.
2014.
AND I HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES
HAVE
BEEN
PAID TO DA.re.
56137
41 8300
SR#
2013]
061122
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Authentication:
202168294
Date:
02-16-18
SECTION
2.2(c)
Capitalization
As of
the close of business on April 24, 2018, and immediately prior to
the commencement to this Offering, the following represents all
issued and outstanding securities of the Company:
FULLY-DILUTED SUMMATION
|
Amount
|
Percentage
|
COMMON
STOCK
|
13,810,487
|
68.38%
|
OPTIONS
(1)
|
3,743,820
|
18.54%
|
RESTRICTED
STOCK UNITS
|
25,000
|
0.12%
|
WARRANTS
(2)
|
2,617,489
|
12.96%
|
TOTAL OUTSTANDING F-D (3)
|
20,196,796
|
100.00%
|
|
|
|
(1)
Weighted average exercise price of $2.92 per share; $11,008,852
total exercise value based on 3,763,820 options
outstanding.
|
(2)
Weighted average exercise price of $2.98 per share; $7,813,162
total exercise value based on 2,617,489 warrants
outstanding.
(3)
Excludes the
conversion of $3,000,000 of 9% Secured Convertible Promissory Notes
into shares of common stock that
were placed by the Company in February and March 2018. The
foregoing is being converted into this financing round on identical
terms.
|
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
SECTION
2.8
Patents
& Trademarks
Patents
Pending
|
Matter
Name/Description
|
|
Application
No.
|
Filing Date
|
Priority Claim
|
|
001WO
(PCT –
International)
|
Game
System – Generating Game Projection Views
|
PENDING:
1. Entered
National Phase in the U.S. with 001C1
& 001C2
2. Case
Expires May 5, 2017
|
PCT/US2015/0
29532
|
05/06/2015
|
001PR
(Provisional) filed
11/5/14
|
1. John
Miller
2. David
Steigelfest
|
001C1
(U.S. Non-
Provisional)
|
Multi-User Game
System with Trigger- Based Generation of Projection
View
|
PENDING
1. Filed
with Prioritized Examination Request
2. Awaiting
Examination by Patent Office
|
15/179,868
|
06/10/2016
|
Continuation of
001WO
|
1. John
Miller
2. David
Steigelfest
|
001C2
(U.S. Non-
Provisional)
|
Multi-User Game
System with Character-Based Generation of Projection
View
|
PENDING
1. Filed
with Prioritized Examination Request
2. Awaiting
Examination by Patent Office
|
15/179,878
|
06/10/2016
|
Continuation of
001WO
|
1. John
Miller
2. David
Steigelfest
|
Registered
Trademarks:
i.
International Class
9 – Serial No. 86725324
ii.
International Class
28 – Serial No. 86725331
iii.
International Class
41 – Serial No. 86725326
2.
Super League Gaming
(Stylized)
a.
Registered with
European Registration Community Mark No. 14945976
3.
Super League Gaming
(logo)
a.
Registered with
European Registration Community Mark No. 14945976
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
4.
Pending Trademarks
– SLG City Teams
a.
Los Angeles
Shockwaves – stylized and with design; design
only
i.
International
Classes 9, 25, 28, and 41
b.
Dallas Dynamite -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
c.
Miami Menace -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
d.
Chicago Force -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
e.
Boston Revolt -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
f.
Denver Drakes -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
g.
Houston Blast -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
h.
Las Vegas Wildcards
- stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
i.
New York Fury -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
j.
Phoenix Blaze -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
k.
Seattle Siege -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
l.
San Francisco
Ionics - stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
m.
Virtual Storm -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
n.
Beijing Brawler - -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
o.
Shanghai Roaring
Tigers - stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
SECTION
2.12
Registration
Rights
1. The
investors in the Company’s Series A, B and C common stock
rounds hold unlimited piggyback registration rights, and in the
case of Series B and C round investors such parties hold demand
rights subject to certain restrictions.
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
SECTION
2.16(g)
Employee
Benefit Plan
None.
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
Exhibit
10.16
SUPER
LEAGUE GAMING, INC. SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this "Agreement”),is
entered into as of
by and between
Super League Gaming, Inc., a Delaware corporation (the
“Borrower”),
Charles Tien, an individual (the “Collateral
Agent”), and each of the secured parties whose name
appears on the signature pages to this Agreement (individually, a
“Secured
Party” and, collectively, the “Secured
Parties”). All capitalized terms not otherwise defined
herein shall the meanings ascribed to them in those certain Note
Purchase Agreements and the Notes (as defined below) by and between
Borrower and each Secured Party (the “Note
Purchase Agreements”).
RECITALS
WHEREAS, the
Secured Parties have loaned monies to Borrower as more particularly
described in the Note Purchase Agreements and as evidenced by the
9% Secured Convertible Promissory Notes issued by Borrower to the
Secured Parties (the “Notes”);
WHEREAS, Borrower,
Collateral Agent and the Secured Parties have entered into that
certain Intercreditor and Collateral Agent Agreement of even date
herewith (the “Intercreditor
Agreement”) whereby the security interests and liens
of the Secured Parties are to be of equal priority position,
notwithstanding the different dates of their Notes and perfection
their respective security interests;
WHEREAS, the term
“Secured Party” as used in this Agreement shall mean,
collectively, all holders of Notes, including those persons who
become holders of Notes subsequent to the date hereof;
and
WHEREAS, this
Agreement is being executed and delivered by Borrower to secure
the Notes.
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, each of the parties hereto hereby agrees as
follows:
1. Obligations Secured. This
Agreement secures, in part, the prompt payment and performance of
all obligations of Borrower under the Notes, and all renewals,
extensions, modifications, amendments, and/or supplements thereto
(collectively, the “Secured
Obligations”).
2. Grant of Security
Interest.
(a) Collateral. Borrower hereby
grants, pledges, and collaterally assigns to the Collateral Agent
for the benefit of itself and each other Secured Party, and there
is hereby created in favor of the Secured Parties, a security
interest in and to all of Borrower’s right, title, and
interest in, to, and under all of the collateral set forth on
Exhibit A hereto (collectively, “Collateral”).
(b) Effective Date. This grant of
security shall be effective as of the date hereof.
(c) Senior Interest. Except as set
forth herein, the Notes and the Secured Obligations shall be senior
to all other obligations of Borrower other than trade debt and
other debt incurred in the ordinary course of
business.
3. Filings to Perfect Security
Interest. The Collateral Agent may (and is hereby authorized
to) file with any filing office such financing statements,
amendments, addenda, continuations, terminations, assignments and
other records (whether or not executed by Borrower) as Collateral
Agent may deem necessary in its sole discretion to perfect and to
maintain perfected security interests in the Collateral, where (a)
immediately upon the execution of this Agreement, a UCC-1 Financing
Statement shall be filed with the California Secretary of State
with respect to the Collateral; Such documents may designate the
Collateral Agent as the secured party and Borrower as the debtor,
identify the security interest in the Collateral, and contain any
other items required by law or deemed necessary by Collateral
Agent. Such financing statements shall contain a description of
collateral consistent with the description set forth herein and
shall not describe the collateral as “all assets” or
“all personal property.” Upon Collateral Agent’s
request, Borrower shall execute any such documents (whether or not
required by law).
4. Transfers and Other Liens.
Except as set forth herein or in the Notes or in the Intercreditor
Agreement, Borrower shall not, without the prior written consent of
the Collateral Agent, in its sole and absolute
discretion:
(a) Sell, transfer,
assign, or dispose of (by operation of law or otherwise), any of
the Collateral outside of the ordinary course of
business;
(b) Create or suffer to
exist any lien, security interest, or other charge or encumbrance
upon or with respect to any of the Collateral, except the security
interests created hereby; or
(c) Permit any of the
Collateral to be levied upon under any legal process.
5. Representations and Warranties.
Borrower hereby represents and warrants to Collateral Agent and the
Secured Parties as follows: (a) to Borrower’s knowledge,
Borrower is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights in
the Collateral, will be the owner thereof) and that, except as
expressly provided herein, no other person has (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of
Lien or otherwise) in, against or to the Collateral; (b) to
Borrower’s knowledge, except as expressly provided herein,
upon the filing of a UCC-1 financing statement with the California
Secretary of State, the Collateral Agent will have for the benefit
of the Secured Parties (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will
have) a perfected security interest in the Collateral to the extent
that a security interest in the Collateral can be perfected by such
filing; (c) all Accounts
Receivable (as defined in Exhibit A) are genuine and enforceable
against the party obligated to pay the same; (d) Borrower has full
power and authority to enter into the transactions provided for in
this Agreement, the Notes and the Intercreditor Agreement; (e) this
Agreement, the Notes and the Intercreditor Agreement, when executed
and delivered by Borrower, will constitute the legal, valid and
binding obligations of Borrower enforceable in accordance with
their
terms;
(f) the execution and delivery by Borrower of this Agreement, the
Intercreditor Agreement and the Notes and the performance and
consummation of the transactions contemplated hereby and thereby do
not and will not violate Borrower’s Certificate of
Incorporation or Bylaws or any material judgment, order, writ,
decree, statute, rule or regulation applicable to Borrower (g)
there does not exist any default or violation by Borrower of or
under any of the terms, conditions or obligations of (i) any
indenture, mortgage, deed of trust, franchise, permit, contract,
agreement, or other instrument to which Borrower is a party or by
which Borrower is bound, or (ii) any law, ordinance, regulation,
ruling, order, injunction, decree, condition or other requirement
applicable to or imposed upon Borrower by any law, the action of
any court or any governmental authority or agency; and the
execution, delivery and performance of this Agreement will not
result in any such default or violation; (h) there is no action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand pending or, to the knowledge of Borrower, threatened
which adversely affects Borrower’s business or financial
condition and there is no basis known to Borrower for any action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand which could result in the same; and (i) this Agreement,
the Notes and the Intercreditor Agreement do not contain any untrue
statement of material fact or omit to state a material fact
necessary in order to make the statements contained in this
Agreement, the Notes and the Intercreditor Agreement not
misleading.
6. Events of Default. For purposes
of this Agreement, the term “Event of Default” shall
mean and refer to any of the following:
(a) Failure of Borrower
to perform or observe any covenant set forth in this Agreement, or
to perform or observe any other term, condition, covenant,
warranty, agreement or other provision contained in this Agreement,
where such failure continues for twenty (20) business days after
receipt of written notice from Lender specifying such
failure;
(b) Any representation
or warranty made or furnished by Borrower in writing in connection
with this Agreement, the Notes or the Intercreditor Agreement or
any statement or representation made in any certificate, report or
opinion delivered pursuant to this Agreement or in connection with
this Agreement is false, incorrect or incomplete in any material
respect at the time it is furnished; or
(c) Occurrence of any
other Event of Default as defined in the Note.
7. Remedies. Upon the occurrence
and during the continuance of an Event of Default (subject to the
notice and cure provisions provided for herein, if any), the
Collateral Agent for the benefit of itself and each Secured Party
shall have the rights of a secured creditor under the California
Uniform Commercial Code, all rights granted by the Notes, this
Security Agreement and by law, including the right to require
Borrower to assemble the Collateral and make it available to the
Collateral Agent at a place to be designated by Borrower. The
rights and remedies provided in this Agreement, the Notes and the
Intercreditor Agreement are cumulative and may be exercised
independently or concurrently and are not exclusive of any other
right or remedy provided at law or in equity. No failure to
exercise or delay by the Collateral Agent for the benefit of itself
and the Secured Parties in exercising any right or remedy under
this Agreement, the Notes or the Intercreditor Agreement shall
impair or prohibit the exercise of any such rights or remedies in
the
future
or be deemed to constitute a waiver or limitation of any such right
or remedy or acquiescence therein. Every right and remedy granted
to the Collateral Agent and the Secured Parties under this
Agreement, the Notes and the Intercreditor Agreement or by law or
in equity may be exercised by the Collateral Agent at any time and
from time to time, and as often as the Collateral Agent may deem it
expedient.
8. Further Assurances. Borrower
agrees that, from time to time, at its own expense,
it
will:
(a) Protect and defend
the Collateral against all claims and demands of all
persons
at any time claiming the same or any interest therein and preserve
and protect Secured Party’s security interest in the
Collateral.
(b) Promptly execute
and deliver to Collateral Agent all instruments and documents, and
take all further action necessary or desirable, as Collateral Agent
may reasonably request to (i) continue, perfect, or protect any
security interest granted or purported to be granted hereby, and
(ii) enable Collateral Agent to exercise and enforce any of Secured
Party’s rights and remedies hereunder with respect to any
Collateral.
(c) Permit Collateral
Agent’s representatives to inspect and make copies of all
books and records relating to the Collateral, wherever such books
and records are located, and to conduct an audit relating to the
Collateral at any reasonable time or times.
9. Attorney-in-Fact. In case
Borrower fails to do any act or execute any documents, for the
perfection or continuation of any security interest granted to
Secured Parties hereunder, Borrower hereby irrevocably appoints
Collateral Agent as its true and lawful attorney-in-fact, with full
power of substitution, to do such acts and execute any such
documents on its behalf; provided, however, that Collateral Agent
shall not exercise such power of attorney unless it shall have
previously requested Borrower to take such action and Borrower
shall have failed to do so within five (5) business
days.
10. Notices.All
notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex, e-mail
or facsimile if sent during normal business hours of the recipient,
if not, then on the next business day, (c) five (5) days after
having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications
shall be sent as follows:
If to the Collateral
Agent:
Charles
Tien, CFO
Super
League Gaming, Inc. 2906 Colorado Ave.
Santa
Monica, CA 90404
If to Borrower:
To Holder’s
address listed in Exhibit A to the Note Purchase
Agreement
If to the
Company:
Super League
Gaming, Inc.
2906
Colorado Ave. Santa Monica, CA 90404
Attention: CEO
& President
or to
such other address or telecopy number as the party to whom notice
is to be given may have furnished to the other party in writing in
accordance herewith.
11. Amendments and Waivers. No
modification, amendment or waiver of any provision of, or consent
required by, this Agreement, nor any consent to any departure
herefrom, shall be effective unless it is in writing and signed by
each of the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for
the purpose for which given.
12. Exclusivity and Waiver of
Rights. No failure to exercise and no delay in exercising on
the part of any party, any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right,
power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any other rights or remedies
provided by law.
13. Invalidity. Any term or
provision of this Agreement shall be ineffective to the extent it
is declared invalid or unenforceable, without rendering invalid or
enforceable the remaining terms and provisions of this
Agreement.
14. Headings. Headings used in this
Agreement are inserted for convenience only and shall not affect
the meaning of any term or provision of this
Agreement.
15. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original instrument, but all of which collectively shall
constitute one and the same agreement.
16. Assignment. This Agreement and
the rights and obligations hereunder shall not be assignable or
transferable by the any of the parties without the prior written
consent of the other parties.
17. Survival. Unless otherwise
expressly provided herein, all representations warranties,
agreements and covenants contained in this Agreement shall survive
the execution hereof and shall remain in full force and effect
until the earliest to occur of (a) the payment in full of the
Notes, and (b) the conversion of the principal and accrued and
unpaid interest and all other amounts owing under the Notes into
equity securities of Borrower.
18. Miscellaneous. This Agreement
shall inure to the benefit of each of the parties hereto and all
their respective successors and permitted assigns. Nothing in this
Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein
contained.
19. GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
20. CONSENT
TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON- EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA. EACH OF THE
PARTIES HERETO AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY MUST BE LITIGATED EXCLUSIVELY IN ANY SUCH STATE OR FEDERAL
COURT, AND ACCORDINGLY, EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH LITIGATION IN ANY SUCH
COURT.
21. WAIVER
OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND EACH OF THE OTHER PARTIES
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
21
22. Attorneys’ Fees. In
the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation,
such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and
expenses of appeals.
23. Entire Agreement. This
Agreement contains the entire agreement among the parties with
respect to the transactions contemplated by this Agreement and
supersedes all prior agreements or understandings among the
parties.
[Signature page follows]
IN
WITNESS WHEREOF, this Security Agreement has been executed as of
the date first set written above.
SECURED
PARTY
By:
_____________________________
Name:
__________________________
Title:
___________________________
COLLATERAL
AGENT
By:
Charles Tien., an individual
BORROWER
SUPER
LEAGUE GAMING, INC.
By: Ann
Hand
Chief
Executive Officer & President
EXHIBIT
A COLLATERAL
All
cash and cash equivalents, bank and Deposit accounts (including any
control account, disbursement account and any other bank accounts),
commercial tort claims, insurance claims, rights and policies,
letter of credit rights, investment property, Accounts, Goods,
Fixtures, Securities, Documents of Title, Inventory, General
Intangibles, Equipment and Records now owned or acquired at any
time hereafter by Debtor, wherever located or situated, and the
products and proceeds (including condemnation proceeds) of the
foregoing.
The
capitalized terms used hereinabove shall have the meanings set
forth below. All other terms used herein are used as defined in the
UCC.
"Accounts" means
any and all rights to payment for goods, including Inventory, sold
or leased or to be sold or leased or for services rendered or to be
rendered, whether or not evidenced by an instrument or chattel
paper, and no matter how evidenced, including such rights in the
form of accounts (as that term is defined in the UCC), accounts
receivable, exchange Receivables, contract rights, Instruments,
Documents, Chattel Paper, purchase orders, notes drafts,
acceptances and all other forms of obligations and receivables,
including all right, title and interest of the Debtor in the
Inventory which gave rise to any of the foregoing, including the
right of stoppage in transit and all returned, rejected, rerouted
or repossessed Inventory.
"Chattel paper"
means "chattel paper" as that term is defined in the
UCC.
"Deposit Account"
means a demand, time, savings, passbook or like account maintained
with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a certificate of
deposit.
"Documents" means
"documents" as that term is defined in the UCC, "Documents of
Title" means "documents of title" as defined in the
UCC.
"Equipment" means
"equipment" as defined in the UCC, and also all motor vehicles,
rolling stock, machinery, office
equipment, plant equipment, tools, dies, molds, store fixtures,
furniture, and other goods, property, and assets which are used
and/or were purchased for use in the operation of furtherance of
the Debtor's business, and any and all accessions, additions
thereto, and substitutions therefore.
"Fixtures" means
"fixtures" as that term is defined in the UCC.
"General
Intangibles" means "general intangibles" as defined in the UCC and
also all books and records; customer lists; goodwill; causes of
action; judgments; literary rights; rights to performance;
licenses, permits, certificates of convenience and necessity, and
similar rights granted by any governmental authority; copyrights,
trademarks, patents, patent applications, proprietary processes,
blueprints, drawings, designs, diagrams, plans, reports, charts,
catalogs, manuals, literature, technical data, proposals, cost
estimates, source codes, object codes, computer
programs, computer
program flow diagrams, and tangible property embodying or
incorporating any of the foregoing, and all other reproductions on
paper, or otherwise, of any and all the design, development,
manufacture, sale, marketing, lease or use of any or all goods
produced or sold or leased or credit extended, or service performed
by the Debtor, whether intended for an individual customer or the
general business of Debtor.
"Goods"
means "goods" as that term is defined in the UCC. "Instruments"
means "instruments" as that term is defined in the
UCC.
"Inventory" means
any and all raw materials, supplies, work in process, finished
goods, goods returned by customers, and inventory (as that term is
defined in the UCC), including goods in transit, wherever located,
which are-held for sale (but excluding goods subject to leases and
goods not manufactured by the Debtor or an affiliate and which were
purchased for resale directly or indirectly by the Debtor from a
non-affiliate pursuant to a then existing agreement or arrangement
with a non-affiliate customer), including the right of stoppage in
transit, or goods which are or might be used in connection with the
manufacturing or packing of such goods, and all such goods, the
sale or disposition of which has given rise to an Account, which
are returned to and/or repossessed and/or stopped in transit by the
Debtor or by the Secured Party, or at any time hereafter in the
possession or under the control of the Debtor or the Secured Party
or any agent or bailee of the Debtor or the Secured Party, and any
documents of title representing any of the above.
"Records" means all
books, records, customer lists, ledger cards, computer programs,
computer tapes, disks, printouts and records and other property and
general intangibles at any time evidencing or relating to any of
the types (or items) of property covered by this financing
statement, whether now in existence or hereafter
created.
"Securities" means
"securities" as that term is defined in the UCC.
"UCC"
means the Uniform Commercial Code as in effect in the State of
California.
Exhibit
10.17
SUPER
LEAGUE GAMING, INC. INTERCREDITOR AND COLLATERAL AGENT
AGREEMENT
THIS INTERCREDITOR
AND COLLATERAL AGENT AGREEMENT (this“Agreement”),
is entered into as of by and among each of the parties whose
names appear on the signature pages to this Agreement
(individually, a “Secured
Party”, and collectively, the “Secured
Parties”), Charles Tien (the “Collateral
Agent”), and Super League Gaming, Inc., a Delaware
corporation ( the “Borrower”).
RECITALS
WHEREAS, each of
the Secured Parties has loaned monies to Borrower, as evidenced by
9% Secured Convertible Promissory Notes (collectively, the
“Notes”)
more particularly described in the Note Purchase Agreement entered
into by and between Borrower and each Secured Party;
and
WHEREAS, it is the
intention of each of the Secured Parties that his, her or its
security interests and liens against the collateral referred to in
Exhibit 1 of the Notes be of equal priority position with regard to
the respective security interests, notwithstanding the different
dates of investment.
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, each of the Secured
Parties hereby agree as follows:
1. Definitions. All capitalized
terms not otherwise defined herein shall the meanings ascribed to
them in the Note Purchase Agreement.
2. Pari Passu Ranking.
Notwithstanding the dates and times of perfection of the security
interest issued in favor of each Secured Party pursuant to the
Security Agreement, each Secured Party’s security interest in
and lien against the collateral referred to in Exhibit 1 of the
Notes (the “Collateral”) shall rank pari passu, and, accordingly, have the
same and equal priority position.
3. Collateral Agent. Subject to
the terms of this Agreement, the Secured Parties hereby agrees to
the appointment of Charles Tien to serve as the collateral agent
with respect to enforcement of the collective rights and remedies
available to the Secured Parties in the event of a default by
Borrower (the “Collateral Agent”).
(a) Actions. The Secured Parties
hereby authorize and appoints the Collateral Agent to act on behalf
of each such Secured Party as collateral agent for and
representative of such Secured Party under this Agreement and each
of the Notes, to enforce the rights provided under this Agreement
and each of the Notes and the obligations of the Company hereunder
and thereunder and, to exercise such powers hereunder and
thereunder as are specifically delegated to or required of the
Collateral Agent by the terms hereof and thereof, together with
such powers as may be reasonably incidental thereto. The Secured
Parties agree (which agreement shall survive any termination of
this Agreement) to indemnify the Collateral Agent, from and against
any and
all
liabilities, obligations, losses, damages, claims, penalties,
actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against the Collateral Agent in any way
relating to or arising out of this Agreement, the Notes and any
other agreement relating thereto, including the reimbursement of
the Collateral Agent for all reasonable out-of-pocket expenses
(including attorneys' fees and expenses) incurred by the Collateral
Agent hereunder or in connection herewith or in enforcing the
obligations of the Company under this Agreement and the Notes, in
all cases as to which the Collateral Agent is not reimbursed by the
Company; provided, that
none of the Secured Parties, expressly excluding the Collateral
Agent, shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements determined by a
court of competent jurisdiction in a final proceeding to have
resulted solely from the Collateral Agent's gross negligence or
willful misconduct. The Collateral Agent shall not be required to
take or omit to take any action hereunder or under the Notes, or to
prosecute or defend any suit in respect of this Agreement or any of
the Notes, or any other agreement relating thereto, unless
indemnified to its satisfaction by the Secured Parties against
loss, costs, liability, and expense. The Collateral Agent may
delegate its duties hereunder to affiliates, agents,
attorneys-in-fact and receivers (which term includes receivers as
managers) selected in good faith by the Collateral
Agent.
(b) Exculpation
(i) The Collateral
Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement, and the Collateral Agent
shall not by reason of this Agreement or any of the Notes (or
otherwise) be a trustee for any Secured Party or have any fiduciary
obligation to any Secured Party or any of their affiliates. Neither
the Collateral Agent nor any of its directors, partners, members,
managers, officers, employees or agents (collectively, the
“Related
Parties”) shall be liable to any Secured Party for any
action taken or omitted to be taken by it under this Agreement and
the Notes, or in any agreements delivered in connection therewith,
or in connection herewith or therewith, except for its own willful
misconduct or gross negligence, nor shall the Collateral Agent or
any Related Parties be responsible for any recitals or
representations or warranties herein or therein or in any other
agreement delivered in connection therewith, or for the
effectiveness, enforceability, validity or due execution of any of
this Agreement, the Notes or in any other agreement delivered in
connection therewith, nor for the creation, perfection or priority
of any security interests purported to be created under any of the
Notes or the validity, genuineness, enforceability, existence,
value or sufficiency of any Collateral, nor shall the Collateral
Agent or any Related Parties be obligated to make any inquiry
respecting the performance by the Company of its obligations
hereunder or thereunder or in any other agreement delivered in
connection therewith. Any such inquiry by the Collateral Agent
shall not obligate it to make any further inquiry or to take any
action. The Collateral Agent shall be entitled to rely upon advice
of counsel concerning legal matters and upon any notice, consent,
certificate, statement, or writing which they believe to be genuine
and to have been presented by a proper Person. The Collateral Agent
shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable
care.
(ii) The
Collateral Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by email,
telex, telecopy, telegram or cable) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on behalf
of the proper person or persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Collateral Agent with
reasonable care. As to any matters not expressly provided for by
this Agreement, the Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by all Secured Parties, in its
capacity as agent of the Secured Parties, and any action taken or
failure to act pursuant thereto, shall be binding on all of the
Secured Parties.
(iii) The
Collateral Agent shall not be required to take any action that is
in its opinion contrary to law or to the terms of this Agreement
and the Notes, or which would in its opinion subject it or any of
its Related Parties to liability. The Collateral Agent shall, in
all cases, be fully justified in failing or refusing to act
hereunder and under the Notes unless it shall be fully indemnified
to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any
such action.
(iv) The
Collateral Agent may deem and treat the payee of any promissory
note or other evidence of indebtedness relating to the Notes as the
owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof, signed by such payee
and in form reasonably satisfactory to the Collateral Agent, shall
have been filed with the Collateral Agent. Any request, authority
or consent of any Person who at the time of making such request or
giving such authority or consent is the holder of any such note or
other evidence of indebtedness shall be conclusive and binding on
any subsequent holder, transferee or assignee of such note or other
evidence of indebtedness and of any note or notes or other
evidences of indebtedness issued in exchange therefor.
(c) Successor. The Collateral Agent
may resign at any time upon at least 30 days' notice to the Secured
Parties. If the Collateral Agent at any time shall resign, the
Secured Parties, by majority consent, may appoint another mutually
agreed Secured Party as a successor to Collateral Agent. If the
Secured Parties do not make such appointment within ten (10)
business days prior to the scheduled resignation date of the
Collateral Agent, the retiring Collateral Agent shall appoint a new
Collateral Agent from the Secured Parties or, if no Secured Party
accepts such appointment, from among commercial banking
institutions or trust institutions generally. In furtherance of the
foregoing, upon the announcement that the Collateral Agent will
resign in its capacity as the Collateral Agent, each of the Secured
Parties agrees to use its best efforts to promptly appoint another
Collateral Agent. Upon the acceptance of any appointment as the
Collateral Agent hereunder, such successor Collateral Agent shall
be entitled to receive from the retiring Collateral Agent such
documents of transfer and assignment as such successor Collateral
Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall
be discharged from its duties and obligations under this Agreement
and the Notes. After the retiring Collateral Agent's resignation
hereunder as the Collateral Agent, the provisions of this Section 3
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Collateral Agent under this Agreement
and the Notes, and any other agreement relating
thereto.
4.
Application of Proceeds
(a) Any and all amounts
actually received by the Collateral Agent in connection with the
enforcement of the Notes, shall, promptly upon receipt by the
Collateral Agent, be applied:
(i) first, to the payment in full of all
amounts owing to the Collateral Agent in respect of any fees and
expenses (including attorneys' fees and expenses and fees and
expenses of its agents) incurred by or on behalf of the Collateral
Agent as a result of administering this Agreement or the Collateral
or exercising any rights (including foreclosure of the Collateral)
in its capacity as Collateral Agent;
(ii) second,
following payment of all obligations under clause (i), between and
among each of the Secured Parties on a pro rata basis, computed
using the then outstanding indebtedness, of both principal and
accrued interest, of Borrower to each of the Secured Parties, as of
the date of such distribution. Until the proceeds are so
distributed, the Collateral Agent shall hold the proceeds in trust
for the benefit of each of the Secured Parties; and
(iii) third,
to the Company unless otherwise directed by a court of competent
jurisdiction.
(b) The priorities of
allocation set forth in Section 3(a) shall apply in all
circumstances, including with respect to any distribution made in
any case or proceeding under any bankruptcy law or insolvency law
involving creditors' rights generally.
(c) If any Secured
Party (an “Excess
Party”) shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff, or
otherwise) as a result of the realization, sale or other remedial
disposition of, or foreclosure on, any Collateral in excess of the
amount it is then entitled to receive under the terms of this
Agreement, such Excess Party shall hold such amount in trust for
the ratable benefit of the other Secured Parties in accordance with
the terms of this Agreement and shall pay an amount equal to such
excess to the Collateral Agent for distribution to the Secured
Parties in accordance with the terms of this
Agreement.
5. Further Assurances. Each party
agrees to execute such other documents, instruments, agreements and
consents, and take such other actions as may be reasonably
requested by the other parties hereto to effectuate the purposes of
this Agreement.
6. Notices. All notices required
or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed telex, e-mail or facsimile if
sent during normal business hours of the recipient, if not, then on
the next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent
as follows:
If to the
Holder:
To Secured Party’s address listed in Exhibit A to the Note
Purchase Agreement
If to Collateral
Agent:
Charles Tien, CFO
Super
League Gaming, Inc.
2906 Colorado Ave.
Santa
Monica, CA 90404
If to
Borrower:
Super League Gaming, Inc.
2906
Colorado Ave.
Santa Monica, CA 90404
Attention: Ann Hand
or to
such other address or telecopy number as the party to whom notice
is to be given may have furnished to the other party in writing in
accordance herewith.
7. Amendments and Waivers. No
modification, amendment or waiver of any provision of, or consent
required by, this Agreement, nor any consent to any departure
herefrom, shall be effective unless it is in writing and signed by
each of the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for
the purpose for which given.
8. Exclusivity and Waiver of
Rights. No failure to exercise and no delay in exercising on
the part of any party, any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right,
power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any other rights or remedies
provided by law.
9. Invalidity. Any term or
provision of this Agreement shall be ineffective to the extent it
is declared invalid or unenforceable, without rendering invalid or
enforceable the remaining terms and provisions of this
Agreement.
10. Headings. Headings used in this
Agreement are inserted for convenience only and shall not affect
the meaning of any term or provision of this
Agreement.
11. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original instrument, but all of which collectively shall
constitute one and the same agreement.
12. Assignment. This Agreement and
the rights and obligations hereunder shall not be assignable or
transferable by the any of the parties without the prior written
consent of the other parties.
13. Survival. Unless otherwise
expressly provided herein, all representations warranties,
agreements and covenants contained in this Agreement shall survive
the execution hereof and shall remain in full force and effect
until the earliest to occur of (i) the payment in full
of the
Notes, and (ii) the conversion of the principal and accrued and
unpaid interest and all other amounts owing under the Notes into
equity securities of the Company.
14. Miscellaneous. This Agreement
shall inure to the benefit of each of the parties hereto and all
their respective successors and permitted assigns. Nothing in this
Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein
contained.
15. GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAWS PROVISIONS).
16. CONSENT TO JURISDICTION. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF CALIFORNIA. EACH OF THE PARTIES HERETO AGREES THAT ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE LITIGATED
EXCLUSIVELY IN ANY SUCH STATE OR FEDERAL COURT, AND ACCORDINGLY,
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
LITIGATION IN ANY SUCH COURT.
17. WAIVER OF JURY TRIAL. EACH OF
THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND EACH OF THE
OTHER PARTIES HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 17.
18. Attorneys’ Fees. In
the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation,
such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and
expenses of appeals.
19. Entire Agreement. This
Agreement contains the entire agreement among the parties with
respect to the transactions contemplated by this Agreement and
supersedes all prior agreements or understandings among the
parties.
IN WITNESS WHEREOF, this Agreement has
been executed as of the date first set written above.
SECURED
PARTY
________________________________
By:
____________________________
Name:
___________________________
Title:
____________________________
IN WITNESS WHEREOF, this Agreement has
been executed as of the date first set written above.
COLLATERAL
AGENT
By:
Charles Tien, an
individual
IN WITNESS WHEREOF, this Agreement has
been executed as of the date first set written above.
SUPER
LEAGUE GAMING, INC.
Chief
Executive Officer & President
SUPER
LEAGUE GAMING, INC. INVESTORS’ RIGHTS AGREEMENT
THIS INVESTORS’ RIGHTS AGREEMENT
(this “Agreement”),
is made as of __________________,
by and among Super League Gaming, Inc., a Delaware corporation (the
“Company”),
and the purchasers of the Company’s 9% Secured Convertible
Promissory Notes (the “Investors”).
RECITALS
WHEREAS, the Company and the Investors
are parties to that certain Note Purchase Agreement of even date
herewith (the “Purchase
Agreement”).
WHEREAS, in order to induce the Company
to enter into the Purchase Agreement and to induce the Investors to
invest funds in the Company pursuant to the Purchase Agreement, the
Investors and the Company hereby agree that this Agreement shall
govern the rights of the Investors to cause the Company to register
shares of common stock issuable to the Investors upon conversion of
the 9% Secured Convertible Promissory Notes (collectively, the
“Notes”)
and upon exercise of the Callable Common Stock Purchase Warrants
(collectively, the “Warrants”)(the
Notes and the
Warrants are collectively referred to herein as the
“Securities”),
to receive certain information from the Company, and to participate
in future equity offerings by the Company, and shall govern certain
other matters as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, the parties to this
Agreement agree as follows:
1.
Definitions. For
purposes of this Agreement:
1.1 “Affiliate”
means, with respect to any specified Person, any other Person who,
directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation, any
general partner, managing member, officer or director of such
Person, or such Person’s principal, or any venture capital
fund, financial investment firm or collective investment vehicle
now or hereafter existing that is controlled by one or more general
partners or managing members (or any affiliates thereof, which
shall include any series or cell of a general partner or managing
member that is structured as a series limited liability company)
of, or shares the same management company with, such Person. For
purposes of this definition, the terms “controlling,”
“controlled by,” or “under common control
with” shall mean the possession, directly or indirectly,
of (a) the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise, or (b) the power to elect or appoint at
least 50% of the directors, managers, general partners, or Persons
exercising similar authority with respect to such Person. For the
avoidance of doubt, an “Affiliate” of a specified
Person shall include (x) such Person’s partners, members,
stockholders, other equity owners, officers, directors,
managers, former or retired partners, former or retired members,
former or retired stockholders, former or retired other equity
owners, and the estate of any of the foregoing and (y) a parent or
subsidiary of a Person that is an entity.
1.2 “Board”
means the board of directors of the Company.
1.3 “Common
Stock” means shares of the Company’s common
stock, par value $0.001 per share.
For the avoidance of doubt, the term Common Stock as used herein
shall include shares of Common Stock issuable upon conversion of
the Notes and exercise of the Warrants.
1.4 “Damages”
means any loss, damage, claim or liability (joint or several) to
which a party hereto may become subject under the Securities Act,
the Exchange Act, or other federal or state law, insofar as such
loss, damage, claim or liability (or any action in respect thereof)
arises out of or is based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement of the Company, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements
thereto, and any free-writing prospectus and any issuer information
(as defined in Rule 433 of the Securities Act) filed or required to
be filed pursuant to Rule 433(d) under the Securities Act or any
other document incident to such registration prepared by or on
behalf of the Company or used or referred to by the Company; (ii)
an omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation
by the indemnifying party (or any of its agents or Affiliates) of
the Securities Act, the Exchange Act, any state securities law, or
any rule or regulation promulgated under the Securities Act, the
Exchange Act, or any state securities law.
1.5 “Deemed
Liquidation Event” has the meaning given to such term
in the Restated Certificate in effect on the date
hereof.
1.6 “Derivative
Securities” means any securities or rights convertible
into, or exercisable or exchangeable for (in each case, directly or
indirectly), Common Stock, including the Notes, Warrants, stock
options and other warrants to purchase shares of the
Company’s Common Stock.
1.7 “Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
1.8 “Excluded
Registration” means (i) a registration relating to the
sale of securities to employees of the Company or a subsidiary
pursuant to a stock option, stock purchase, or similar plan; (ii) a
registration relating to an SEC Rule 145 transaction; or (iii) a
registration on any form that does not include substantially the
same information as would be required to be included in a
registration statement covering the sale of the Registrable
Securities.
1.9 “Exempted
Securities” means: (i) securities issued pursuant to a
Recapitalization; (ii) securities issued to employees, consultants,
officers or directors for bona fide compensatory
purposes pursuant to the Company’s existing equity incentive
plan(s), such issuances to be approved by a majority of the Board;
(iii) securities issued upon exercise or conversion of options,
warrants or other exercisable or convertible securities outstanding
as of April 24, 2018; (iv) securities issued in connection with the
closing of the IPO; (v) securities issued in connection with a bona
fide acquisition of another entity by the Company by merger,
purchase of substantially all of the assets or other reorganization
or a joint venture agreement approved by a majority of the Board;
(vi) securities issued to banks, equipment lessors or other
financial institutions pursuant to a debt financing or commercial
leasing transaction approved by a majority of the Board; (vii)
securities issued in connection with sponsored research,
collaboration, technology license, development, marketing or other
similar agreements or strategic partnerships approved by a majority
of the Board; and (viii) securities issued to suppliers or third
party service providers in connection with the provision of goods
or services pursuant to transactions approved by a majority of the
Board.
1.10 “Form
1-A” means such
form under the Securities Act as in effect on the date hereof or
any successor offering statement under the Securities Act
subsequently adopted by the SEC.
1.11 “Form
S-1” means such form under the Securities Act as in
effect on the date hereof or any successor registration form under
the Securities Act subsequently adopted by the SEC.
1.12 “Form
S-3” means such form under the Securities Act as in
effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the SEC that permits
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
1.13 “GAAP”
means generally accepted accounting principles in the United
States, consistently applied.
1.14 “Holder”
means any holder of Registrable Securities who is a party to
this
Agreement.
1.15 “Immediate
Family Member” means a child, stepchild, grandchild,
parent,
stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including, adoptive relationships, of a natural person referred to
herein.
1.16 “Initiating
Holders” means, collectively, Holders who properly
initiate a registration request under this Agreement.
1.17 “IPO”
means the Company’s initial public offering of its Common
Stock.
1.18 “New
Securities” means, collectively, equity securities of
the Company, whether or not currently authorized, as well as any
rights, options, or warrants to purchase such equity securities, or
securities of any type whatsoever that are, or may become,
convertible or exchangeable into or exercisable (in each case,
directly or indirectly) for such equity securities.
1.19 “Person”
means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
1.20 “Recapitalization”
means any stock dividend, stock split, combination of shares,
reorganization, recapitalization, reclassification or other similar
event.
1.21 “Registrable
Securities” means (i) any Common Stock issued pursuant
to conversion of the Notes and upon exercise of the Warrants (the
Notes and Warrants being issued pursuant to the Purchase
Agreement), (ii) any Common Stock, or any Common Stock issued or
issuable (directly or indirectly) upon conversion and/or exercise
of any other securities of the Company, currently owned, or
acquired after the date hereof, by any Investor or its
Affiliate(s); and
(iii)
any Common Stock issued as (or issuable upon the conversion or
exercise of any warrant, right, or other security that is issued
as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares referenced in clauses
(i)-(ii) above held by an Investor; excluding in all cases,
however, any Registrable Securities sold by a Person in a
transaction in which the applicable rights under this Agreement are
not assigned pursuant to Section 6.1,
and excluding for purposes of Section 2 any shares for which
registration rights have terminated pursuant to Section 2.12 of this Agreement.
1.22 “Registrable
Securities then outstanding” means the number of
shares determined by adding the number of shares of outstanding
Common Stock that are Registrable Securities and the number of
shares of Common Stock issuable (directly or indirectly) pursuant
to then exercisable and/or convertible securities that are
Registrable Securities.
1.23 “Restated
Certificate” means the Company’s Amended and
Restated Certificate of Incorporation, as amended from time to
time.
1.24 “Restricted
Securities” means the securities of the Company
required to be notated with the legend set forth in Section
2.11(b) hereof.
1.25 “SEC”
means the Securities and Exchange Commission.
1.26 “SEC
Rule 144” means Rule 144 promulgated by the SEC under
the Securities Act.
Act.
1.27
“SEC
Rule 145” means Rule 145 promulgated by the SEC under
the Securities
1.28
“Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations
promulgated thereunder.
1.29 “Selling
Expenses” means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of
Registrable Securities, and fees and disbursements of counsel for
any Holder, all of which shall be borne and paid for by the
Holder(s) as described in this Agreement,
except for the fees and disbursements of the Selling Holder Counsel
(as defined herein) borne and paid by the Company as provided in
Section 2.6.
2.
Registration
Rights. The Company covenants and agrees as follows:
2.1 Company
Registration.
(a) Form 1-A.
Approximately thirty percent (30.0%) (which percentage may be
increased based on the aggregate offering amount stated in the Form
1-A) of (i) the shares of common stock issuable upon conversion of
the Notes (“Conversion
Shares”), or (ii) the shares of common stock issuable
upon exercise of the Warrants (“Warrant
Shares”), shall be made available for resale in the
Company’s Form 1-A filed with the SEC. The Company shall have
the exclusive right to determine whether the Conversion Shares or
Warrant Shares are included in the Form 1-A. The shares of common
stock made available for resale on Form 1-A shall be subject to the
following lock-up restriction: (x) 20% shall become freely
tradeable on each of the 60-day, 90-day, 120-day, 150-day and
180-day anniversaries of the IPO closing.
(b) Form S-1. Within 45
days of closing of the IPO, the Company shall file a registration
statement on Form S-1 with the SEC to register the Conversion
Shares and Warrant Shares not otherwise included in the Form 1-A.
The shares of common stock registered in the Form S-1 shall be
subject to the following lock-up restriction: (x) 20% shall become
freely tradeable on each of the 60- day, 90-day, 120-day, 150-day
and 180-day anniversaries of the date the S-1 is declared effective
by the SEC.
2.2 Demand
Registration.
(a) Form S-1 Demand. If
at any time after the earlier of (i) three (3) years after the date
of this Agreement or (ii) one (1) year after the effective date of
the registration statement for the IPO, the Company receives a
request from Holders of at least fifty percent (50%) of the
Registrable Securities then outstanding that the Company file a
Form S-1 registration statement with respect to Registrable
Securities then outstanding with an anticipated aggregate offering
price, net of Selling Expenses, in excess of $10,000,000, then the
Company shall (x) within ten (10) days after the date such request
is given, give notice thereof (the “Demand
Notice”) to all Holders other than the Initiating
Holders; and (y) as soon as practicable, and in any event within
one hundred twenty (120) days after the date such request is given
by the Initiating Holders, file such Form S-1 registration
statement under the Securities Act covering all Registrable
Securities that the Initiating Holders requested to be registered
and any additional Registrable Securities requested to be included
in such registration by any other Holders, as specified by notice
given by each such Holder to the Company within twenty (20) days of
the date the Demand Notice is given, and in each case, subject to
the limitations of Subsections 2.2(c) and 2.3.
(b) Form S-3 Demand. If
at any time when it is eligible to use a Form S-3 registration
statement, the Company receives a request from Holders of at least
fifty percent (50%) of the Registrable Securities then outstanding
that the Company file a Form S-3 registration statement
with
respect to outstanding Registrable Securities of such Holders
having an anticipated aggregate offering price, net of Selling
Expenses, of at least $5,000,000, then the Company shall (i) within
ten (10) days after the
date such request is given, give a Demand Notice to all Holders
other than the Initiating Holders; and (ii) as soon as practicable,
and in any event within sixty (60) days after the date such request
is given by the Initiating Holders, file such Form S-3 registration
statement under the Securities Act covering all Registrable
Securities requested to be included in such registration by any
other Holders, as specified by notice given by each such Holder to
the Company within twenty
(20)
days of the date the Demand Notice is given, and in each case,
subject to the limitations of Subsections 2.2(c) and
2.3.
(c) Notwithstanding the
foregoing obligations, if the Company furnishes to Holders
requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s
chief executive officer stating that in the good faith judgment of
the Board it would be materially detrimental to the Company and its
stockholders for such registration statement to either become
effective or remain effective for as long as such registration
statement otherwise would be required to remain effective, because
such action would (i) materially interfere with a significant
acquisition, corporate reorganization, or other similar transaction
involving the Company; (ii) require premature disclosure of
material information that the Company has a bona fide business
purpose for preserving as confidential; or (iii) render the Company
unable to comply with requirements under the Securities Act or
Exchange Act, then the Company shall have the right to defer taking
action with respect to such filing for a period of not more than
one hundred eighty (180) days after the request of the Initiating
Holders is given; provided, however, that the Company may not
invoke this right more than once in any twelve (12) month period;
and provided further that the Company shall not register any
securities for its own account or that of any other stockholder
during such ninety (90) day period other than an Excluded
Registration.
(d) The Company shall not
be obligated to effect, or to take any action to effect, any
registration pursuant to Subsection 2.2(a): (i) during the period that is ninety (90)
days before the Company’s good faith estimate of the date of
filing of, and ending on a date that is one hundred eighty (180)
days after the effective date of, a Company-initiated registration,
provided that the Company is actively employing in good faith
commercially reasonable efforts to cause such registration
statement to become effective; (ii) after the Company has effected
two registrations pursuant to Subsection 2.2(a); or (iii) if the Initiating Holders propose
to dispose of shares of Registrable Securities that may be
immediately registered on Form S-3 pursuant to a request made
pursuant to Subsection 2.2(b). The
Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to Subsection 2.2(b): (i) during the period that is forty-five
(45) days before the Company’s good faith estimate of the
date of filing of, and ending on a date that is ninety
(90)
days after the effective date of, a Company-initiated registration,
provided that the Company is actively employing in good faith
commercially reasonable efforts to cause such registration
statement to become effective; or (ii) if the Company has effected
two registrations pursuant to Subsection 2.2(b) within the twelve (12) month period
immediately preceding the date of such request. A registration
shall not be counted as “effected” for purposes of this
Subsection 2.2(d) until such time as the
applicable registration statement has been declared effective by
the SEC, unless the Initiating Holders withdraw
their request for such registration, elect not to pay the
registration expenses therefor, and forfeit their right to one (1)
demand registration statement pursuant to Subsection 2.6, in which case such withdrawn registration
statement shall be counted as “effected” for purposes
of this Subsection 2.2(d).
2.3 Underwriting
Requirements.
(a) If, pursuant to
Section 2.2, the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 2.2, and the Company shall include
such information in the Demand Notice. The underwriter(s) will be
selected by the Company and shall be reasonably acceptable to a
majority in interest of the Initiating Holders. In such event, the
right of any Holder to include such Holder’s Registrable
Securities in such registration shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion
of such Holder’s Registrable Securities in the underwriting
to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the
Company as provided in Section 2.4(e))
enter into an underwriting agreement in customary form with the
underwriter(s) selected for such underwriting. Notwithstanding any
other provision of this Section 2.4, if the managing underwriter(s)
advise(s) the Initiating Holders in writing that marketing or other
factors, in its reasonable discretion, require a limitation on the
number of shares to be underwritten, or the elimination thereof,
then the Initiating Holders shall so advise all Holders of
Registrable Securities that otherwise would be underwritten
pursuant hereto, and the number of Registrable Securities that may
be included in the underwriting shall be allocated among such
Holders of Registrable Securities, including the Initiating
Holders, in proportion (as nearly as practicable) to the number of
Registrable Securities owned by each Holder or in such other
proportion as shall unanimously be agreed to by all such selling
Holders; provided, however,
that the number of Registrable Securities held by the Holders, to
be included in such underwriting, shall only be reduced in
proportion to the percentage reduction of other registrable
securities of the Company included in such underwriting and not
part of the Registrable Securities defined herein. To facilitate
the allocation of shares in accordance with the above provisions,
the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100)
shares.
(b) In connection with
any offering involving an underwriting of shares of the
Company’s capital stock pursuant to Section 2.3, the Company
shall not be required to include any of the Holders’
Registrable Securities in such underwriting unless the Holders
accept the terms of the underwriting as agreed upon between the
Company and its underwriters, and then only in such quantity, if
any, as the underwriters in their sole discretion determine will
not jeopardize the success of the offering by the Company. If the
total number of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds
the number of securities to be sold (other than by the Company),
that the underwriters in their reasonable discretion determine is
compatible with the success of the offering, then the Company shall
be required to include in the offering only that number of such
securities, including Registrable Securities, which the
underwriters and the Company in their sole discretion determine
will not jeopardize the success of the offering. If
the
underwriters determine that less than all of the Registrable
Securities requested to be registered can be included in such
offering, then the Registrable Securities that are included in such
offering shall be allocated among the selling Holders in proportion
(as nearly as practicable) to the number of Registrable Securities
owned by each selling Holder or in such other proportions as shall
mutually be agreed to by all such selling Holders. To facilitate
the allocation of shares in accordance with the above provisions,
the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100) shares.
Notwithstanding the foregoing, in no event shall (i) the number of
Registrable Securities included in the offering be reduced unless
all other securities (expressly excluding securities to be sold by
the Company) are proportionally reduced, or (ii) the number of
Registrable Securities included in the offering be reduced below
fifty percent (50%) of the total number of securities included in
such offering, unless such offering is the IPO, in which case the
selling Holders may be excluded in full if the underwriters make
the determination described above and no other stockholder’s
securities are included in such offering. For purposes of the
provision in this Section 2.3(b) concerning apportionment, for any
selling Holder that is a partnership, limited liability company, or
corporation, the partners, members, retired partners, retired
members, stockholders, and Affiliates of such Holder, or the
estates and Immediate Family Members of any such partners, retired
partners, members, and retired members and any trusts for the
benefit of any of the foregoing Persons, shall be deemed to be a
single “selling Holder,” and any pro rata reduction
with respect to such “selling Holder” shall be based
upon the aggregate number of Registrable Securities owned by all
Persons included in such “selling Holder,” as defined
in this sentence.
(c) For purposes of
Section 2.2, a registration shall not be counted as
“effected” if, as a result of an exercise of the
underwriter’s cutback provisions in Section 2.3(a), fewer
than twenty-five percent (25%) of the total number of Registrable
Securities that Holders have requested to be included in such
registration statement are actually included.
2.4 Obligations of the
Company. Whenever required under this Section 2 to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) prepare and file
with the SEC a registration statement with respect to such
Registrable Securities and use its commercially reasonable efforts
to cause such registration statement to become effective and, upon
the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement
effective for a period of up to one hundred twenty (120) days or,
if earlier, until the distribution contemplated in the registration
statement has been completed; provided, however, that such one
hundred twenty (120) day period shall be extended for a period of
time equal to the period the Holder refrains, at the request of an
underwriter of Common Stock (or other securities) of the Company,
from selling any securities included in such
registration;
(b) prepare and file
with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such
registration statement, as may be necessary
to comply with the Securities Act in order to enable the
disposition of all securities covered by such registration
statement;
(c) furnish to the
selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such
other documents as the Holders may reasonably request in order to
facilitate their disposition of their Registrable
Securities;
(d) use its
commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue-sky laws of such jurisdictions as shall be
reasonably requested by the selling Holders; provided that the Company shall not be
required to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the
Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act;
(e) in the event of any
underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary
form, with the underwriter(s) of such offering;
(f) use its
commercially reasonable efforts to cause all such Registrable
Securities covered by such registration statement to be listed on a
national securities exchange or trading system and each securities
exchange and trading system (if any) on which similar securities
issued by the Company are then listed;
(g) provide a transfer
agent and registrar for all Registrable Securities registered
pursuant to this Agreement and provide a CUSIP number for all such
Registrable Securities, in each case not later than the effective
date of such registration;
(h) promptly make
available for inspection by the selling Holders, any underwriter(s)
participating in any disposition pursuant to such registration
statement, and any attorney or accountant or other agent retained
by any such underwriter or selected by the selling Holders, all
financial and other records, pertinent corporate documents, and
properties of the Company, and cause the Company’s officers,
directors, employees, and independent accountants to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant, or agent, in each case, as necessary or
advisable to verify the accuracy of the information in such
registration statement and to conduct appropriate due diligence in
connection therewith;
(i) notify each selling
Holder, promptly after the Company receives notice thereof, of the
time when such registration statement has been declared effective
or a supplement to any prospectus forming a part of such
registration statement has been filed; and
(j) after such
registration statement becomes effective, notify each selling
Holder of any request by the SEC that the Company amend or
supplement such registration statement or prospectus.
In
addition, the Company shall ensure that, at all times after any
registration statement covering a public offering of securities of
the Company under the Securities Act shall have become effective,
its insider trading policy shall provide that the Company’s
directors may implement a trading program under Rule 10b5-1 of the
Exchange Act.
2.5 Furnish
Information. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended
method of disposition of such securities as is reasonably required
to effect the registration of such Holder’s Registrable
Securities.
2.6 Expenses of
Registration. All expenses (other than Selling Expenses) incurred
in connection with registrations, filings, or qualifications
pursuant to Section 2, including all registration, filing, and
qualification fees; printers’ and accounting fees; fees and
disbursements of counsel for the Company; and the reasonable fees
and disbursements, not to exceed $25,000, of one counsel for the
selling Holders (“Selling
Holder Counsel”), shall be borne and paid by the
Company; provided, however,
that the Company shall not be required to pay for any expenses of
any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all selling
Holders shall bear such expenses pro rata based upon the number of
Registrable Securities that were to be included in the withdrawn
registration), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one registration
pursuant to Sections 2.2(a) or 2.2(b), as the case may be, in which case the
Holders shall not be required to pay any of such expenses and shall
not forfeit their right to one registration pursuant to Sections
2.2(a) or 2.2(b). All Selling Expenses relating to
Registrable Securities registered pursuant to this Section 2 shall
be borne and paid by the Holders pro rata on the basis of the
number of Registrable Securities registered on their
behalf.
2.7 Delay of
Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any registration
pursuant to this Agreement as the result of any controversy that
might arise with respect to the interpretation or implementation of
this Section 2.
2.8 Indemnification. If
any Registrable Securities are included in a registration statement
under this Section 2:
(a) To the extent
permitted by law, the Company will indemnify and hold harmless each
selling Holder, and the partners, members, officers, directors, and
stockholders of each such Holder; legal counsel and accountants for
each such Holder; any underwriter (as defined in the Securities
Act) for each such Holder; and each Person, if any, who controls
such Holder or underwriter within the meaning of the Securities Act
or the Exchange Act, against any Damages, and the Company will pay
to each such Holder, underwriter, controlling Person, or other
aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating or
defending any claim
or proceeding from which Damages may result, as such expenses are
incurred; provided,
however, that the indemnity agreement contained in this
Section 2.8(a) shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable for
any Damages to the extent that they arise out of or are based upon
actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of any such Holder,
underwriter, controlling Person, or other aforementioned Person
expressly for use in connection with such
registration.
(b) To the extent
permitted by law, each selling Holder, severally and not jointly,
will indemnify and hold harmless the Company, and each of its
directors, each of its officers who has signed the registration
statement, each Person (if any), who controls the Company within
the meaning of the Securities Act, legal counsel and accountants
for the Company, any underwriter (as defined in the Securities
Act), any other Holder selling securities in such registration
statement, and any controlling Person of any such underwriter or
other Holder, against any Damages, in each case only to the extent
that such Damages arise out of or are based upon actions or
omissions made in reliance upon and in conformity with written
information furnished by or on behalf of such selling Holder
expressly for use in connection with such registration; and each
such selling Holder will pay to the Company and each other
aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating or defending any
claim or proceeding from which Damages may result, as such expenses
are incurred; provided,
however, that the indemnity agreement contained in this
Section 2.8(b) shall not apply to
amounts paid in settlement of any such claim or proceeding if such
settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; and provided further that in no event shall
the aggregate amounts payable by any Holder by way of indemnity or
contribution under Sections 2.8(b) and
2.8(d) exceed the proceeds from the
offering received by such Holder (net of any Selling Expenses paid
by such Holder), except in the case of fraud or willful misconduct
by such Holder.
(c) Promptly after
receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action
(including any governmental action) for which a party may be
entitled to indemnification hereunder, such indemnified party will,
if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.8, give the indemnifying party notice of the
commencement thereof. The indemnifying party shall have the right
to participate in such action and, to the extent the indemnifying
party so desires, participate jointly with any other indemnifying
party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an
indemnified party (together with all other indemnified parties that
may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such action. The failure to give
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying
party of any liability to the indemnified party under this Section
2.8, to the extent that
such
failure materially prejudices the indemnifying party’s
ability to defend such action. The failure to give notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section
2.8.
(d) To provide for just
and equitable contribution to joint liability under the Securities
Act in any case in which either: (i) any party otherwise entitled
to indemnification hereunder makes a claim for indemnification
pursuant to this Section 2.8 but it is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding
the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any party hereto for
which indemnification is provided under this Section 2.8, then, and in each such case, such parties
will contribute to the aggregate losses, claims, damages,
liabilities, or expenses to which they may be subject (after
contribution from others) in such proportion as is appropriate to
reflect the relative fault of each of the indemnifying party and
the indemnified party in connection with the statements, omissions,
or other actions that resulted in such loss, claim, damage,
liability, or expense, as well as to reflect any other relevant
equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or allegedly untrue
statement of a material fact, or the omission or alleged omission
of a material fact, relates to information supplied by the
indemnifying party or by the indemnified party and the
parties’ relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission;
provided, however, that, in
any such case (x) no Holder will be required to contribute any
amount in excess of the public offering price of all such
Registrable Securities offered and sold by such Holder pursuant to
such registration statement, and
(y) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation; and
provided further that in no
event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid
or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering
received by such Holder (net of any Selling Expenses paid by such
Holder), except in the case of willful misconduct or fraud by such
Holder.
(e) Notwithstanding the
foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into
in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) Unless otherwise
superseded by an underwriting agreement entered into in connection
with the underwritten public offering, the obligations of the
Company and Holders under this Section
2.8 shall survive the completion of any offering of Registrable
Securities in a registration under this Section 2, and otherwise
shall survive the termination of this Agreement.
2.9 Reports Under
Exchange Act. With a view to making available to the Holders the
benefits of SEC Rule 144 and any other rule or regulation of the
SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company
shall:
(a) make and keep
available adequate current public information, as those terms are
understood and defined in SEC Rule 144, at all times after the
effective date of the registration statement filed by the Company
for the IPO;
(b) use commercially
reasonable efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after the Company
has become subject to such reporting requirements);
and
(c) furnish to any
Holder, so long as the Holder owns any Registrable Securities,
forthwith upon request to the extent accurate, a written statement
by the Company that it has complied with the reporting requirements
of SEC Rule 144 (at any time after ninety (90) days after the
effective date of the registration statement filed by the Company
for the IPO), the Securities Act, and the Exchange Act (at any time
after the Company has become subject to such reporting
requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after
the Company so qualifies); and (ii) such other information as may
be reasonably requested in availing any Holder of any rule or
regulation of the SEC that permits the selling of any such
securities without registration (at any time after the Company has
become subject to the reporting requirements under the Exchange
Act) or pursuant to Form S-3 (at any time after the Company so
qualifies to use such form).
2.10 “Market Stand-off”
Agreement. Each Holder hereby agrees that it will not, without the
prior written consent of the managing underwriter, during the
period commencing on the date of the final prospectus relating to
the registration by the Company of shares of its Common Stock or
any other equity securities under the Securities Act on a
registration statement on Form S-1 or Form S-3, and ending on the
date specified by the Company and the managing underwriter (such
period not to exceed one hundred eighty (180) days in the case of
the IPO, or such other period as may be requested by the Company or
an underwriter to accommodate regulatory restrictions on (1) the
publication or other distribution of research reports, and (2)
analyst recommendations and opinions, including, but not limited
to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE
Rule 472(f)(4), or any successor provisions or amendments thereto),
(i) lend; offer; pledge; sell; contract to sell; sell any option or
contract to purchase; purchase any option or contract to sell;
grant any option, right, or warrant to purchase; or otherwise
transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable (directly or indirectly) for Common Stock held
immediately before the effective date of the registration statement
for such offering or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of such securities, whether any such
transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or other securities, in cash, or
otherwise. The foregoing provisions of this Section 2.100 shall apply only to the IPO, shall
not apply to the sale of any shares to an underwriter
pursuant to an
underwriting agreement, or the transfer of any shares to any trust
for the direct or indirect benefit of the Holder or the immediate
family of the Holder, provided that the trustee of the trust agrees
to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a
disposition for value. The underwriters in connection with such
registration are intended third-party beneficiaries of this
Section 2.10 and shall have the right,
power and authority to enforce the provisions hereof as though they
were a party hereto. Each Holder further agrees to execute such
agreements as may be reasonably requested by the underwriters in
connection with such registration that are consistent with this
Section 2.10 or that are necessary to
give further effect thereto, and the Company shall cause all future
stockholders of the Company to execute a document containing a
market stand-off agreement comparable to this Section 2.10. Any
discretionary waiver or termination of the restrictions of any or
all of such agreements by the Company or the underwriters shall
apply pro rata to all Holders subject to such agreements, based on
the number of shares subject to such agreements.
2.11 Restrictions
on Transfer.
(a) The Registrable
Securities shall not be sold, pledged, or otherwise transferred
other than in conformity with the Securities Act, and the Company
shall not recognize and shall issue stop-transfer instructions to
its transfer agent (when a transfer agent has been engaged by the
Company) with respect to any such sale, pledge, or transfer, except
upon the conditions specified in this Agreement, which conditions
are intended to ensure compliance with the provisions of the
Securities Act. A transferring Holder will cause any proposed
purchaser, pledgee, or transferee of the Registrable Securities
held by such Holder to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this
Agreement.
(b) Each certificate,
instrument, or book entry representing (i) the Registrable
Securities, and (ii) any other securities issued in respect of the
securities referenced in clause (i), upon any Recapitalization,
merger, consolidation, or similar event, shall (unless otherwise
permitted by the provisions of Section 2.11(c)) be notated with a
legend substantially in the following form:
THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
THE
SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
The
Holders consent to the Company making a notation in its records and
giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer set
forth in this Section 2.11.
(c) The holder of such
Restricted Securities, by acceptance of ownership thereof, agrees
to comply in all respects with the provisions of this Section 2.
Before any proposed sale, pledge, or transfer of any Restricted
Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transaction, the
Holder thereof shall give notice to the Company of such
Holder’s intention to effect such sale, pledge, or transfer.
Each such notice shall describe the manner and circumstances of the
proposed sale, pledge, or transfer in sufficient detail and, if
reasonably requested by the Company, shall be accompanied at such
Holder’s expense by either (i) a written opinion of legal
counsel who shall, and whose legal opinion shall, be reasonably
satisfactory to the Company, addressed to the Company, to the
effect that the proposed transaction may be effected without
registration under the Securities Act; (ii) a “no
action” letter from the SEC to the effect that the proposed
sale, pledge, or transfer of such Restricted Securities without
registration will not result in a recommendation by the staff of
the SEC that action be taken with respect thereto; or (iii) any
other evidence reasonably satisfactory to counsel to the Company to
the effect that the proposed sale, pledge, or transfer of the
Restricted Securities may be effected without registration under
the Securities Act, whereupon the Holder of such Restricted
Securities shall be entitled to sell, pledge, or transfer such
Restricted Securities in accordance with the terms of the notice
given by the Holder to the Company. The Company will not require
such a legal opinion or “no action” letter or detail
with respect to such transfer other than the number of shares and
the name of the transferee (x) in any transaction in compliance
with SEC Rule 144; or (y) in any transaction in which such Holder
distributes Restricted Securities to an Affiliate of such Holder
for no consideration; provided that each transferee agrees in
writing to be subject to the terms of this Section 2.11. Each
certificate, instrument, or book entry representing the Restricted
Securities transferred as above provided shall be notated with,
except if such transfer is made pursuant to SEC Rule 144, the
appropriate restrictive legend set forth in Section 2.11(b), except that such certificate instrument, or
book entry shall not be notated with such restrictive legend if, in
the opinion of counsel for such Holder and the Company, such legend
is not required in order to establish compliance with any
provisions of the Securities Act.
2.12 Termination of Registration
Rights. The right of any Holder to request registration or
inclusion of Registrable Securities in any registration pursuant to
Section 2 shall terminate upon the earliest to occur
of:
(a) such time as Rule
144 or another similar exemption under the Securities Act is
available for the sale of all of such Holder’s shares without
limitation during a three-month period without registration;
and
(b) the fifth
anniversary of the IPO.
3.1 Delivery of
Financial Statements. The Company shall deliver to each
Investor:
(a) as soon as
practicable, but in any event within one hundred twenty
(120)
days after the end of each fiscal year of the Company (i) a balance
sheet as of the end of such year, (ii) statements of income and of
cash flows for such year, and (iii) a statement of
stockholders’ equity as of the end of such year, all prepared
in accordance with GAAP and audited and certified by independent
public accountants of nationally recognized standing selected by
the Company;
(b) as soon as
practicable, but in any event within sixty (60) days after the end
of each of the first three (3) quarters of each fiscal year of the
Company, unaudited statements of income and cash flows for such
fiscal quarter, and an unaudited balance sheet, all prepared in
accordance with GAAP (except that such financial statements may (i)
be subject to normal year-end audit adjustments; and (ii) not
contain all notes thereto that may be required in accordance with
GAAP);
(c) as soon as
practicable, but in any event before the end of each fiscal year, a
budget and business plan for the next fiscal year (collectively,
the “Budget”),
prepared on a monthly basis, including balance sheets, income
statements, and statements of cash flow for such months and,
promptly after prepared, any other budgets or revised budgets
prepared by the Company; and
(d) such other
information relating to the financial condition, business,
prospects, or corporate affairs of the Company as any Investor may
from time to time reasonably request; provided, however, that the Company shall not be
obligated under this Section 3.1 to
provide information that the Company reasonably determines in good
faith (i) to be a trade secret or confidential information (unless
covered by an enforceable confidentiality agreement, in a form
reasonably acceptable to the Company) or (ii) would, if disclosed,
adversely affect the attorney-client privilege between the Company
and its counsel.
If, for
any period, the Company has any subsidiary whose accounts are
consolidated with those of the Company, then in respect of such
period the financial statements delivered pursuant to the foregoing
sections shall be the consolidated and consolidating financial
statements of the Company and all such consolidated
subsidiaries.
Notwithstanding
anything else in this Section 3.1 to the
contrary, the Company may cease providing the information set forth
in this Section 3.1 during the period
starting with the date one hundred twenty (120) days before the
Company’s good-faith estimate of the date of filing of a
registration statement if it reasonably concludes it must do so to
comply with the SEC rules applicable to such registration statement
and related offering; provided that the Company’s
covenants under this Section 3.1 shall be reinstated at
such time as the Company is no longer actively employing its
commercially reasonable efforts to cause such registration
statement to become effective.
3.2 Inspection. The
Company shall permit each Investor, at such Investor’s
expense, to visit and inspect the Company’s properties;
examine its books of account and records; and discuss the
Company’s affairs, finances, and accounts with its officers,
during normal business hours of the Company as may be reasonably
requested by the Investor upon at least five (5) days’
notice; provided, however,
that the Company shall not be obligated pursuant to this
Section 3.2 to provide access to
any information that it reasonably and in good faith determines (a)
to be a trade secret or confidential information (unless covered by
an enforceable confidentiality agreement, in form reasonably
acceptable to the Company) (b) would, if disclosed, adversely
affect the attorney- client privilege between the Company and its
counsel.
3.3 Termination of Information Rights and
Observer Right. The covenants set forth in Sections 3.1, and 3.2 shall terminate and be
of no further force or effect immediately before the consummation
of an IPO.
3.4 Confidentiality.
Each Investor agrees that such Investor will keep confidential and
will not disclose, divulge, or use for any purpose (other than to
monitor its investment in the Company) any confidential information
obtained from the Company pursuant to the terms of this Agreement
(including notice of the Company’s intention to file a
registration statement), unless such confidential information (a)
is known or becomes known to the public in general (other than as a
result of a breach of this Section 3.44 by such Investor), (b) is or
has been independently developed or conceived by the Investor
without use of the Company’s confidential information as
evidenced by written documentation, or (c) is or has been made
known or disclosed to the Investor by a third party without a
breach of any obligation of confidentiality such third party may
have to the Company; provided,
however, that an Investor may disclose confidential
information (i) to its attorneys, accountants, consultants, and
other professionals to the extent necessary to obtain their
services in connection with monitoring its investment in the
Company; (ii) to any prospective purchaser of any Registrable
Securities from such Investor, if such prospective purchaser agrees
to be bound by the provisions of this Section 3.44; (iii) to any Affiliate,
partner, member, stockholder, or wholly owned subsidiary of such
Investor in the ordinary course of business, provided that such Investor informs
such Person that such information is confidential and directs such
Person to maintain the confidentiality of such information; or (iv)
as may otherwise be required by law, provided that the Investor promptly
notifies the Company of such disclosure and takes reasonable steps
to minimize the extent of any such required
disclosure.
4.
Rights Related to
Future Stock Issuances.
4.1
Pro Rata Purchase
Rights. Subject to the terms and conditions of this
Section
4.1 and applicable
securities laws, if, after the date of this Agreement, the Company
proposes to offer or sell any New Securities, the Company shall
first offer such New Securities to each Investor. Each Investor
shall be entitled to apportion the pro rata purchase right hereby
granted to it among itself and its Affiliates in such proportions
as it deems appropriate.
(a) The Company shall
give notice (the “Offer
Notice”) to each Investor, stating (i) its bona fide
intention to offer such New Securities, (ii) the number of such New
Securities to be offered, and (iii) the price and terms, if any,
upon which it proposes to offer such New Securities.
(b) By notification to
the Company within twenty (20) days after the Offer Notice is
given, each Investor may, in its sole discretion, elect to purchase
or otherwise acquire, at the price and on the terms specified in
the Offer Notice, up to that portion of such New Securities which
equals the proportion that the number of shares of Common Stock
then held by such Investor (including all shares of Common Stock
then issuable (directly or indirectly) upon conversion and/or
exercise, as applicable, of any and all Derivative Securities then
held by such Investor) bears to the total number of shares of
Common Stock of the Company then outstanding (assuming full
conversion and/or exercise, as applicable, of all Derivative
Securities). The closing of any sale pursuant to this Section
4.1(b) shall occur at the same closing covering the initial sale of
New Securities pursuant to Section 4.1(c).
(c) If all New
Securities referred to in the Offer Notice are not elected to be
purchased or acquired as provided in Section 4.1(b), the Company may, during
the ninety (90) day period following the expiration of the period
provided in Section
4.1(b), offer and sell the
remaining unsubscribed portion of such New Securities to any
Person(s) at a price not less than, and upon terms no more
favorable to the offeree than, those specified in the Offer Notice.
If the Company does not enter into an agreement for the sale of the
New Securities within such period, or if such agreement is not
consummated within thirty (30) days of the execution thereof, the
right provided hereunder shall be deemed to be revived and such New
Securities shall not be offered unless first reoffered to the
Investors in accordance with this Section 4.1.
(d) The pro rata
purchase rights in this Section 4.1 shall not be applicable
to Exempted Securities.
4.2 Termination. The
covenants set forth in Section 4.1, shall terminate and be
of no further force or effect immediately before the consummation
of the IPO.
5.1 Employee
Agreements. The Company will cause each person now or hereafter
employed by it or by any subsidiary (or engaged by the Company or
any subsidiary as a consultant/independent contractor) with access
to confidential information and/or trade secrets to enter into a
nondisclosure and proprietary rights assignment agreement. In
addition, the Company shall not amend, modify, terminate, waive, or
otherwise alter, in whole or in part, any of the above- referenced
agreements or any restricted stock agreement between the Company
and any employee, without the majority consent of the
Board.
5.2 Employee Stock.
Unless otherwise approved by a majority of the Board, all future
employees and consultants of the Company who purchase, receive
options to purchase, or receive awards of shares of the
Company’s capital stock after the date hereof shall be
required to execute restricted
stock or option agreements, as applicable, providing for vesting of
shares over a four (4) year period, with vesting in equal monthly
installments over the forty-eight (48) months.
5.3 Qualified Small
Business Stock. The Company shall use commercially reasonable
efforts to cause the shares of Common Stock issued upon conversion
of the Notes and exercise of the Warrants pursuant to the Purchase
Agreement to constitute “qualified small business
stock” as defined in Section 1202(c) of the Internal Revenue
Code (the “Code”);
provided, however, that
such requirement shall not be applicable if the Board determines,
in its good-faith business judgment, that such qualification is
inconsistent with the best interests of the Company. The Company
shall submit to its stockholders (including the Investors) and to
the Internal Revenue Service any reports that may be required under
Section 1202(d)(1)(C) of the Code and the regulations promulgated
thereunder. In addition, within twenty (20) business days after any
Investor’s written request therefor, the Company shall, at
its option, either (i) deliver to such Investor a written statement
indicating whether (and what portion of) such Investor’s
interest in the Company constitutes “qualified small business
stock” as defined in Section 1202(c) of the Code or (ii)
deliver to such Investor such factual information in the
Company’s possession as is reasonably necessary to enable
such Investor to determine whether (and what portion of) such
Investor’s interest in the Company constitutes
“qualified small business stock” as defined in Section
1202(c) of the Code.
5.4 Board Matters. The
Company shall reimburse its directors for all reasonable
out-of-pocket travel expenses incurred (consistent with the
Company’s travel policy) in connection with attending
meetings of the Board or any committees thereof and in connection
with attending any other events (e.g. meetings and trade shows) required
by or at the request of the Company.
5.5 Successor
Indemnification. If the Company or any of its successors or
assignees consolidates with or merges into any other Person and is
not the continuing or surviving corporation or entity of such
consolidation or merger, then to the extent necessary, proper
provision shall be made so that the successors and assignees of the
Company assume the obligations of the Company with respect to
indemnification of members of the Board as in effect immediately
before such transaction, whether such obligations are contained in
the Company’s Bylaws, the Restated Certificate, or elsewhere,
as the case may be
5.6 Termination of
Covenants. The covenants set forth in this Section 5, except for Section 5.5, shall terminate
and be of no further force or effect immediately before the
consummation of a Qualified Public Offering.
6.1 Successors and
Assigns. The rights under this Agreement may be assigned (but only
with all related obligations) by a Holder to a transferee of
Registrable Securities that (i) is an Affiliate of a Holder, (ii)
is a Holder’s Immediate Family Member or trust for the
benefit of an individual Holder or one or more of such
Holder’s Immediate Family Members, or (iii) after such
transfer, holds at least 100,000 shares of Registrable Securities
(subject to appropriate adjustment for Recapitalizations);
provided, however, that (x)
the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such
transferee and the Registrable Securities with respect to which
such rights are being transferred; and (y) such transferee agrees
in a written instrument delivered to the Company to be bound by and
subject to the terms and conditions of this Agreement, including
the provisions of Section 2.10. For the
purposes of determining the number of shares of Registrable
Securities held by a transferee, the holdings of a transferee (1)
that is an Affiliate or stockholder of a Holder; (2) who is a
Holder’s Immediate Family Member; or (3) that is a trust for
the benefit of an individual Holder or such Holder’s
Immediate Family Member shall be aggregated together and with those
of the transferring Holder; provided further that all transferees
who would not qualify individually for assignment of rights shall
have a single attorney- in-fact for the purpose of exercising any
rights, receiving notices, or taking any action under this
Agreement. The terms and conditions of this Agreement inure to the
benefit of and are binding upon the respective successors and
permitted assignees of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted
assignees any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided
herein.
6.2 Governing Law. This
Agreement shall be governed by and construed under the internal
laws of the State of Delaware, irrespective of conflict of law
principles.
6.3 Counterparts. This
Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of
2000, e.g.,
www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly
delivered and be valid and effective for all purposes.
6.4 Titles and
Subtitles. The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or
interpreting this Agreement.
6.5 Notices. All
notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given
upon the earlier of actual receipt or (i) personal delivery to the
party to be notified; (ii) when sent, if sent by electronic mail or
facsimile during the recipient’s normal business hours, and
if not sent during normal business hours, then on the
recipient’s next business day; (iii) five (5) days after
having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one (1) business day after the
business day of deposit with a nationally recognized overnight
courier, freight prepaid, specifying next-day delivery, with
written verification of receipt. All communications shall be sent
to the respective parties at their addresses as set forth on
Schedule 1 hereto, or to the principal office of the Company and to
the attention of the Chief Executive Officer, in the case of the
Company, or to such email address, facsimile number, or address as
subsequently modified by written notice given in accordance with
this Section
6.5. If notice is given to
the Company, a copy shall also be sent to Ann Hand,
President & CEO, Super
League Gaming, Inc., 2906 Colorado Ave., Santa Monica, CA 90404,
ann.hand@superleague.com,.
6.6 Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Company and the
holders of at least a majority of the Registrable Securities then
outstanding; Notwithstanding the foregoing, this Agreement may not
be amended or terminated and the observance of any term hereof may
not be waived with respect to any Investor without the written
consent of such Investor, unless such amendment, termination, or
waiver applies to all Investors in the same fashion. The Company
shall give prompt notice of any amendment or termination hereof or
waiver hereunder to any party hereto that did not consent in
writing to such amendment, termination, or waiver. Any amendment,
termination, or waiver effected in accordance with this
Section
6.6 shall be
binding on all parties hereto, regardless of whether any such party
has consented thereto. No waivers of or exceptions to any term,
condition, or provision of this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or
continuing waiver of any such term, condition, or
provision.
6.7 Severability. In
case any one or more of the provisions contained in this Agreement
is for any reason held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality, or unenforceability shall
not affect any other provision of this Agreement, and such invalid,
illegal, or unenforceable provision shall be reformed and construed
so that it will be valid, legal, and enforceable to the maximum
extent permitted by law.
6.8 Aggregation of
Stock. All shares of Registrable Securities held or acquired by
Affiliates shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement and
such Affiliated persons may apportion such rights as among
themselves in any manner they deem appropriate.
6.9 Entire Agreement.
This Agreement constitutes the full and entire understanding and
agreement among the parties with respect to the subject matter
hereof, and any other written or oral agreement relating to the
subject matter hereof existing between the parties is expressly
canceled.
6.10 Dispute
Resolution. The parties (a) hereby irrevocably and unconditionally
submit to the jurisdiction of the federal and state courts located
in Los Angeles County, California for the purpose of any suit,
action or other proceeding arising out of or based upon this
Agreement, (b) agree not to commence any suit, action or other
proceeding arising out of or based upon this Agreement except in
the federal and state courts located in Los Angeles County,
California, and (c) hereby waive, and agree not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt
or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of
the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced in or by such
court.
WAIVER
OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE
SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
6.11 Delays
or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any party under this Agreement, upon any breach
or default of any other party under this Agreement, shall impair
any such right, power, or remedy of such non-breaching or non-
defaulting party, nor shall it be construed to be a waiver of or
acquiescence to any such breach or default, or to any similar
breach or default thereafter occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, whether
under this Agreement or by law or otherwise afforded to any party,
shall be cumulative and not alternative
6.12 Acknowledgment.
The Company acknowledges that certain of the Investors are in the
business of venture capital investing and therefore review the
business plans and related proprietary information of many
enterprises, including enterprises which may have products or
services which compete directly or indirectly with those of the
Company. Nothing in this Agreement shall preclude or in any way
restrict the Investors from investing or participating in any
particular enterprise whether or not such enterprise has products
or services that compete with those of the Company.
[Signature Pages Follow]
IN
WITNESS WHEREOF, the parties have executed this Investors’
Rights Agreement as of the date first written above.
COMPANY:
SUPER
LEAGUE GAMING, INC.
By: Ann
Hand
Chief
Executive Officer & President
IN
WITNESS WHEREOF, the parties have executed this Investors’
Rights Agreement as of the date first written above.
INVESTOR:
Exhibit 10.19
MASTER
SERVICE AGREEMENT
CONTRACTOR
INFORMATION:
Company
or Individual Name: Super League Gaming, Inc.
Place
of Incorporation: Delaware
Principal Place of
Business Address: 2906 Colorado Ave.
City/State/Province:
Santa Monica,
CA
Zip/Postal Code: 90404
Country:
USA
Coordinator/Contact
Name: Matt
Edelman
Contact Phone: 310,770,7194
E-Mail Address:
matt@superleague.com
LOGITECH
INFORMATION:
Logitech entity:
Logitech Inc.
Street
Address: 7700 Gateway Blvd
City/State: Newark,
CA
Zip/Postal Code: 94560
Country:
USA
Coordinator/Contact
Name: Peter
Kingsley
Contact Phone:
E-Mail
Address: pkingsley@logitech.com
This
Agreement consists of 11 pages.
EFFECTIVE DATE:
March 1, 2018
Signatures
of the parties to the Master Service Agreement
Super
League Gaming, Inc.
|
|
Logitech
Inc.
|
|
|
|
/s/
Ann Hand
|
|
/s/ Ujesh Desai
|
Authorized
Signature
|
|
Authorized
Signature
|
|
|
|
Ann
Hand
|
|
Ujesh
Desai
|
Name
|
|
Name
|
CEO &
President
|
|
|
Title
|
|
Title
|
|
|
|
3/16/2018
|
|
3/16/2018
|
Date
|
|
|
This
Master Service Agreement (“Agreement”) is made and
entered into as of the effective date set forth on the cover page
(“Effective Date”) by and between the Logitech entity
set forth on the cover page (“Logitech”), and the
contractor set forth on the cover page (“Contractor”).
Logitech desires to retain Contractor as an independent contractor
to perform services for Logitech and its Affiliates, and Contractor
is willing to complete these services on terms set forth more fully
below. For purposes of this Agreement, “Affiliate”
means any entity which directly or indirectly, controls, is
controlled by, or is under common control with Logitech, where
“control” means ownership of at least fifty percent
(50%) of the outstanding shares or securities (representing the
right to vote for the election of directors or other managing
authority). In consideration of the mutual promises contained
herein, the parties agree as follows:
1.
ENGAGEMENT
OF SERVICES
1.1 Services, Deliverables. Subject
to the terms of this Agreement, Contractor will render the services
(“Services”) and develop the deliverables
(“Deliverables”) as requested by Logitech on a project
by project basis. Each new project will be described in a Purchase
Order (“PO”) delivered by Logitech or an Affiliate or,
upon request by Logitech or an Affiliate, a statement of work
(“SOW”) agreed to by both parties substantially in the
form of the SOW attached hereto as Exhibit A. The deadline(s) to
deliver the Services and Deliverables will be defined in each PO
or, if applicable, each SOW.
1.2 Purchase Order, Statement of
Work. Each PO delivered by Logitech or an Affiliate under
this Agreement will become effective according to the terms of the
PO and be subject to the terms and conditions of this Agreement.
Each SOW will become effective and subject to the terms and
conditions of this Agreement once mutually agreed and signed by
both parties. If a SOW is requested by Logitech or an Affiliate,
Contractor agrees that it will not commence work under any SOW
prior to receiving both a signed PO issued by Logitech or an
Affiliate and a fully executed SOW.
1.3 Term. This Agreement will
commence on the Effective Date and will continue unless terminated
earlier pursuant to Section 4 below.
2.1 Compensation.
Logitech will pay Contractor a fee according to the schedule of
payments set forth in the applicable PO or SOW. Contractor will use
its commercially reasonable efforts to implement procedures to
reduce costs and expenses without adversely impacting its
performance. The rates and fees set forth in a PO or SOW will not
be increased for the term of such PO or SOW without
Logitech’s prior written approval. Contractor warrants that
the compensation due to Contractor under each PO and SOW will not
exceed the lowest compensation due to Contractor for similar
services and work of like quality performed for similarly situated
customers.
2.2 Reimbursement of Approved
Expenses. Contractor will be liable for all expenses
incurred in the performance of the Services except those
specifically set out in a SOW or PO or otherwise authorized by
Logitech in writing in advance and documented for reimbursement by
Logitech. Contractor will provide receipts and other supporting
documentation to Logitech for such expenses. Any reimbursable
expenses for business travel by Contractor will be subject to
Logitech’s travel guidelines.
2.3 Payment Term. Logitech agrees
to pay Contractor on amounts invoiced, within
forty-five
(45)
days of receipt of each such invoice. Each invoice must contain a
complete description of the work performed and/or Deliverables
provided and reference the applicable Logitech PO. If the fees are
based on a time and materials basis, the invoice must also include
an itemization of the hours worked.
2.4 Taxes, Labor and other Legal
Obligations. Unless otherwise provided in a SOW or PO, the
fees payable by Logitech to Contractor for the Services and
Deliverables under this Agreement do not include taxes, and
Logitech will pay sales, use, service and value-added taxes
assessed on the provision of the Services and Deliverables under
this Agreement. Contractor will pay taxes assessed on
Contractor’s income, and bear full responsibility for
complying with all applicable tax, contractual, labor and social
security obligations in relation to employees, agents or
representatives hired or retained by the Contractor in connection
with the performance of the Services and delivery of the
Deliverables. Contractor will be responsible for the calculation,
reporting, deposit and payment of any such taxes and other
obligations in full on
a
timely basis and prior to the imposition of any interest or
penalties. Logitech will not reimburse Contractor nor have any
liability for any penalties or interest which may be imposed due to
a failure by Contractor to timely file returns or deposit or pay
the due taxes or other obligations.
3. RELATIONSHIP
OF PARTIES AND ADDITIONAL OBLIGATIONS
3.1 Nature of Relationship.
Contractor and Logitech are independent contractors and nothing in
this Agreement creates a partnership, joint venture, or
employer-employee relationship. Contractor will not be supervised
by Logitech. Contractor is required to use its discretion in
performing the Services, subject to the general direction of
Logitech and the express condition that Contractor will at all
times comply with applicable law. Contractor is not the agent of
Logitech and is not authorized to make any representation,
contract, or commitment on behalf of Logitech unless specifically
requested or authorized to do so by Logitech. Contractor agrees to
accept exclusive liability for complying with all applicable state
and federal laws governing independent contractors, including
obligations such as payment of taxes, social security,
workers’ compensation, disability, and other contributions
based on fees paid to Contractor, its agents, or employees, under
this Agreement. Contractor hereby agrees to indemnify and defend
Logitech against any and all such taxes or contributions, including
without limitation, penalties and interest.
3.2 Warranties. Contractor
represents and warrants to Logitech that:
a. Contractor has all
requisite right and authority to enter into this Agreement, and the
performance of its obligations hereunder will not conflict with any
of its agreements with or obligations to any third
party.
b. Contractor will
establish and maintain its status as an independent contractor by
participating in Logitech’s independent contractor evaluation
and scoring process from time to time as specified by
Logitech.
c. Contractor will
perform all Services in a professional and workmanlike manner, in
accordance with the best practices of Contractor’s industry,
and the Services and Deliverables will conform to the applicable
specification, PO and/or SOW.
d. The Deliverables
will not violate any patent, copyright, trademark, trade secret or
other intellectual property right of any third party, or any
privacy right of any third party.
e. Contractor is the
sole and exclusive owner of, or has the right to enter into this
Agreement on behalf of the owner of, any services or work product
provided hereunder and any derivative works thereof prepared by or
for Contractor pursuant to this Agreement.
f. Contractor
represents and warrants that, in performing its obligations under
this Agreement, it complies with all applicable laws, orders and
regulations of any governmental authority with jurisdiction over
its activities in connection with this Agreement, including but not
limited to, laws, orders and regulations pertaining to imports,
exports, environmental laws, and any applicable laws against
bribery and corruption, including the United States Foreign Corrupt
Practices Act. Contractor will furnish to Logitech any information
required to enable Logitech to comply with applicable laws, orders
and regulations related to this Agreement.
g. In addition to, and
without limiting the foregoing, Contractor represents and warrants
that it, and each of its owners, directors, employees and every
other person working on its behalf, has not and will not, in
connection with the transactions contemplated by this Agreement or
in connection with any other business transaction involving
Logitech or Logitech’s products, make, offer or promise to
make any payment or transfer anything of value, directly or
indirectly: (a) to any governmental official or employee (including
employees of government-owned and government-controlled
corporations and public international organization); (b) to any
political party, official of a political party or candidate; (c) to
any intermediary for payment to any of the foregoing; or (d) to any
other person or entity if such payment or transfer would violate
the laws of the country in which it is made or the laws of the
United States. It is the intent of the parties that no payments or
transfers of value will be made which have the purpose or effect of
public or commercial bribery, acceptance of or acquiescence in
extortion, kickbacks or other unlawful or improper means of
obtaining business. Contractor warrants that it is not owned, in
whole or in part, by any non-U.S.
government or
non-U.S. government agency or instrumentality.
3.3 Insurance. Contractor will, at
Contractor’s expense, maintain insurance policies that cover
Contractor’s activities under this Agreement and the
activities of Contractor’s employees, agents and
representatives, including, but not limited to, workers
compensation insurance and commercial general liability, bodily
injury liability, property damage liability, errors and omissions
liability and media liability. Contractor’s insurance will be
primary to any insurance maintained by Logitech. Insurance carried
by Logitech will be excess only, and will be noncontributory to
insurance carried by Contractor. Upon the request of Logitech,
Contractor will provide Logitech with a certificate of insurance
evidencing such coverage. In addition, Contractor will provide
Logitech thirty
(30)
days advance written notice of any cancellation or reduction in
coverage or limits.
3.4 Conflict of Interest.
Contractor agrees during the term of this Agreement not to accept
work or enter into a contract or accept an obligation inconsistent
or incompatible with Contractor’s obligations under this
Agreement or the scope of the Services. Contractor further agrees
not to disclose to Logitech, bring onto Logitech’s premises,
or induce Logitech to use any confidential information that belongs
to anyone other than Logitech or Contractor.
3.5 Indemnification. Contractor
agrees to defend, indemnify and hold harmless Logitech, its
Affiliates and their respective officers, directors, employees and
agents from any and all losses, liabilities or damages that the
indemnified parties may incur or suffer and that arise, result from
or are related to any breach or failure by Contractor to perform
its obligations under this Agreement.
a. “Confidential
Information” means all information relating to the terms and
conditions of this Agreement, specifications and information
relating to any SOW or PO, and other business and technical
information disclosed by Logitech and / or its Affiliates.
Confidential Information does not include information that: (1) was
rightfully known to Contractor at the time of disclosure without an
obligation of confidentiality, (2) is lawfully obtained by
Contractor from a third party without
restriction on use
or disclosure, (3) is or becomes generally known to the public
through no fault or breach of this Agreement, or (4) is developed
independently by Contractor without use of the Confidential
Information.
b. Contractor will not
use the Confidential Information except as necessary under this
Agreement, and will not disclose any portion of the Confidential
Information to any other person or entity. Contractor will use all
reasonable steps to protect the Confidential Information from
unauthorized use or disclosure, including but not limited to all
steps Contractor uses to protect its own proprietary, confidential
and trade secret information.
c. The Confidential
Information remains the property of Logitech and/ or its
Affiliates, and no license or other rights in the Confidential
Information is granted hereby, except those granted expressly
herein. The Confidential Information is provided “AS
IS” and without any warranty, express, implied or otherwise,
regarding its accuracy or performance.
d. Contractor further
agrees that, in the event it determines that any portion of the
Confidential Information is not confidential for the reasons set
forth above, it will give Logitech at least ten (10) days’
notice before disclosing such portion to any third
party.
e. The obligations of
confidentiality set forth in this Section 3.6 will remain in force
for three (3) years from the termination of this
Agreement.
3.7 Injunctive Relief.
Contractor acknowledges that disclosure of any Confidential
Information will give rise to irreparable injury to Logitech and/or
its Affiliates, which may be inadequately compensable in damages.
Accordingly, Logitech and/or its Affiliates may seek injunctive
relief against the breach or threatened breach of the foregoing
undertakings, in addition to any other legal remedies which may be
available.
3.8 Logitech Property. In the event
that Logitech furnishes any of the following items to Contractor in
connection with this Agreement, such items shall be referred to
herein as “Logitech Property” (regardless of whether
such items constitute the Confidential Information of Logitech):
any equipment, tools, software, access to information technology
systems, or
documents or other
materials relating to the products of Logitech, its business or
customers or suppliers (which may include, without limitation,
drawings, blueprints, manuals, letters, notes, notebooks, reports,
sketches, formulae, memoranda, records, files, computer programs,
machine listings, data, employee lists, part numbers, costs,
profits, market, sales, customer lists and the like). All Logitech
Property is and remains Logitech’s sole and exclusive
property. All Logitech Property must be kept free of liens and
encumbrances. Contractor will use the Logitech Property solely to
perform its obligations under this Agreement. All Logitech Property
is made available “as is” and with no warranties
whatsoever, express or implied. Contractor agrees to deliver
promptly to Logitech all Logitech Property and all copies of
Logitech Property in Contractor’s possession at any time upon
Logitech’s request. Upon termination of this Agreement for
any reason, Contractor agrees to deliver promptly to Logitech, or,
at Logitech’s option, destroy and provide an officer’s
certification of such destruction, all tangible items of Logitech
Property, together with any other of Logitech’s Property then
in Contractor’s possession, except as Logitech may, by prior
written permission, allow Contractor to retain.
3.9 Records and Audit. Contractor
will maintain complete and accurate accounting records in
accordance with sound accounting practices to substantiate
Contractor’s fees. Contractor will preserve such records for
a period of at least two (2) years after completion of the
Deliverables. Logitech may audit such records, either through its
own representatives or through an accounting firm selected by
Logitech, at its own expense, to verify Contractor’s fees.
Any audit of Contractor’s records will be conducted during
business hours and in a manner so as not to unreasonably interfere
with Contractor’s normal business operations. If an audit
should disclose an overcharge by Contractor, Contractor will pay to
Logitech the amount of the overcharge within ten
(10)
days from notice thereof.
3.10 Data
Processing and Security. To the extent, if any, that
Contractor has access to Logitech data, systems or confidential
information, Contractor shall be subject to the additional terms
set out on Exhibit B to this Agreement.
3.11 Ownership.
Logitech is the owner of all intellectual property rights to all
Deliverables provided hereunder. Contractor agrees to assign and
hereby assigns all rights it has or may acquire in the Deliverables
produced and provided pursuant to this Agreement, including all
intellectual property rights, including moral or publicity rights,
therein. Contractor understands that such work product is a
“work for hire” and will be the exclusive property of
Logitech. Contractor agrees to disclose promptly in writing to
Logitech, or any person designated by Logitech, every computer
program, trade secret, invention,discovery,improvement,
copyrightable material, process, manufacturing technique, formula
or know-how, whether or not patentable, copyrightable or otherwise
protectable, which is conceived, made, reduced to practice, or
learned by Contractor in the course of any work performed for
Logitech under this Agreement. Contractor will assist and cooperate
with Logitech and take such further acts reasonably requested by
Logitech to enable Logitech to acquire and perfect its ownership
rights in the work produced under this Agreement. Nothwithstanding
the foregoing, all pre-existing intellectual property and trade
secrets of Contractor shall remain the exclusive property of
Contractor.
3.12 Intellectual
Property Rights. Contractor acknowledges that the
intellectual property rights of Logitech and/or its Affiliates,
including but not limited to patent, trademark, trade names,
copyright and trade secret rights, remain exclusively owned by
Logitech and/or its Affiliates. Contractor is hereby granted a non-
exclusive, non-assignable, and limited license to use those
trademarks, logos, trade names, and service marks provided by
Logitech to Contractor (“Marks”) solely during the term
of the applicable PO or SOW for the sole purpose of performing
Services under this Agreement. All goodwill generated by such use
of the Marks will inure exclusively to the benefit of Logitech and
its Affiliates. Contractor’s use of the Marks will comply
with the trademark guidelines set forth at
www.logitech.com.
4.1 Termination by Logitech.
Logitech may terminate this Agreement or a specific SOW or cancel a
specific PO under this Agreement for convenience at any time with
one hundred
twenty
(120) days prior written notice to Contractor.
4.2 Termination by Contractor.
Contractor may only terminate this Agreement for convenience when
no SOW or PO is in effect and the Contractor provides Logitech with
at least one hundred and twenty (120) days prior written
notice.
4.3 Termination for Breach. Either
party may terminate this Agreement or a specific SOW or PO if the
other party is in material breach of this Agreement, SOW or PO and
the breaching party fails to cure such material breach within
thirty
(30)
days of receiving notice thereof from the non-breaching party. In
the case of material breach by Contractor, Logitech will not be
obligated to make any payments to Contractor.
4.4 Effect of Termination. Except
as provided in this Section 4, upon any termination of this
Agreement, Logitech will pay to Contractor costs for any work
performed and accepted by Logitech up to the effective date of
termination on a time and materials basis or according to the
milestone schedule as reasonably determined by Logitech. Any
invoices for such costs must be received by Logitech within ninety
(90) days after the date of termination. Contractor will promptly
return to Logitech all advance payments, if any, received by
Contractor reduced by Contractor’s fees due on the date of
termination and reasonable and supportable costs incurred by
Contractor up to the notice date of termination. Contractor will
deliver to Logitech all work in process, in whole or in part,
including all versions and portions thereof, and will confirm in
writing the assignment to Logitech of ownership in the
results.
4.5 No Liability. Neither party
will be liable to the other for damages of any sort solely as a
result of terminating this Agreement in accordance with its terms.
Termination of this Agreement will be without prejudice to any
other right or remedy of either party.
5. LIMITATION
OF LIABILITY. IN NO EVENT WILL LOGITECH BE LIABLE FOR LOST
PROFITS, OR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING IN
ANY WAY IN CONNECTION WITH THIS AGREEMENT. THIS LIMITATION WILL
APPLY EVEN IF LOGITECH HAS BEEN ADVISED OF
THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. EACH PARTY ACKNOWLEDGES
AND AGREES THAT THE LIMITATIONS OF LIABILITY CONTAINED IN THIS
SECTION REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT
AND THAT NEITHER PARTY WOULD ENTER INTO THIS AGREEMENT WITHOUT THIS
LIMITATION OF LIABILITY.
6. ENTIRE
AGREEMENT; PRECEDENCE. This Agreement, together with all
agreed upon SOWs, and POs represents the entire agreement between
the parties and replaces and supersedes all previous or
contemporaneous oral or written agreements, understandings or
arrangements between the parties with respect to its subject
matter. In case of any conflict among this Agreement and any SOW or
any PO, or any attachments thereto, the terms and conditions of
this Agreement will prevail. In case of any conflict between any
SOW and any PO to which the SOW relates, or any attachments to any
such PO, the terms of the SOW will prevail.
7. AMENDMENT.
This Agreement may not be modified or amended except in writing
executed by an authorized representative of each
party.
8. CHOICE
OF LAW AND VENUE. This Agreement will be exclusively
governed by the laws of California without reference to its
conflicts of law principles. All disputes will be subject to the
exclusive jurisdiction of California.
9. ASSIGNMENT.
As Logitech has specifically contracted for Contractor’s
services, Contractor may not sub-contract, assign or delegate its
obligations under this Agreement either in whole or in part,
without the prior written consent of Logitech. Any attempted
assignment in violation of the provisions of this section will be
void. Notwithstanding the foregoing, in the event of a change of
control involving Contractor, whether in the form of the sale of
all or substantially all of the assets of Contractor or a merger
whereby the stockholders of Contractor immediately prior to the
merger do not maintain voting control following the close of the
merger, then in such event Contractor shall have the right to
assign this Agreement; provided, Contractor shall give Logitech at
least fourteen (14) days prior written notice to the closing of the
change of control
transaction, and
the entity or stockholders acquiring control of Contractor and/or
Contractor’s assets are not competitors to Logitech, as
determined solely by Logitech.
10. NO
WAIVER. No delay or failure to act in the event of a breach
of this Agreement will be deemed a waiver of that or any subsequent
breach of any provision of this Agreement. Any remedies at law or
equity not specifically disclaimed or modified by this Agreement
remain available to both parties.
11. INDEPENDENT
EFFORTS. Provided there is no infringement of the other
party’s intellectual property rights, nothing in this
Agreement will impair either party’s right to develop,
manufacture, purchase, use or market, directly or indirectly, alone
or with others, products or services competitive with those offered
by the other.
12. NO
PUBLICITY. Contractor will not use or reproduce the
trademark, trade name, trade dress or logo of Logitech, or refer to
Logitech as a client of Contractor, without Logitech’s prior
written consent, which consent shall not be unreasonably withheld
in relation to performing the services set forth in an
SOW.
13. FORCE
MAJEURE. Nonperformance by either party will be excused to
the extent that performance is rendered impossible by any reason
wholly beyond the control and not caused by the negligence of the
nonperforming party; provided that any such nonperformance will be
cause for termination of this Agreement by the other party if the
nonperformance continues for more than thirty (30)
days.
14. NOTICES.
All notices must be in writing and delivered to the parties listed
on page 1 of this Agreement. For Logitech, a copy must also
be
.
sent to
Logitech’s Legal Department, 7600 Gateway Blvd., Newark CA
94560, Attn: General Counsel, or by email to
legalnotices@logitech.com. Either party may at any time change the
name and address of persons to who all notices required to be given
under this Agreement must be sent by giving written notice to the
other party.
15. SURVIVAL. Sections 3.1, 3.5, 3.6,
3.7, 3.8, 3.9, 3.11, 3.12,
4.3, 4.4, 4.5, 5, 8, 10, 11, 12, and 14 through 18 will
survive the termination of this Agreement.
16. SEVERABILITY.
In the event any one or more of the provisions of this Agreement
will for any reason be held to be invalid, illegal, or
unenforceable, the remaining provisions of this Agreement will be
unimpaired and the invalid, illegal or unenforceable provision will
be replaced by a provision which, being valid, legal and
enforceable comes close to the intention of the parties underlying
the invalid, illegal, or unenforceable provisions.
17. BINDING
EFFECT; SUCCESSORS. The provisions of this Agreement will be
binding upon and inure solely to the benefit of the parties and
their respective successors and permitted assignees.
18. EXECUTION;
COUNTERPARTS. This Agreement, including any amendment,
waiver or modification hereto, may be executed by original,
facsimile or electronic signature in counterparts, each of which
will be deemed an original, but all of which together will
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page by fax, e-mail or other electronic
delivery or signature method will be as effective as physical
delivery of a manually executed counterpart of this
Agreement.
STATEMENT
OF WORK
The
following is Statement of Work Number (“SOW”) made as
of March 1, 2018, to the Master Service Agreement
(“Agreement”) executed as of March 1, 2018, by and
between Logitech Inc. (“Logitech”) and Super League
Gaming, Inc. (“Contractor”). Except as specifically
stated herein, all terms used in this SOW will have the same
meaning as in the Agreement.
CONTRACTOR
INFORMATION:
Coordinator/Contact
Name: Matt
Edelman
Contact Phone: (310) 770-7194
E-Mail
Address: matt.edelman@superleague.com
LOGITECH
CONTACT INFORMATION:
Coordinator/Contact
Name: Peter
Kingsley
Contact Phone: E-Mail Address: pkingsley@logitech.com
Description of
Services and Deliverables: With this SOW, Contractor will
perform certain services and create certain deliverables for
Logitech.
Logitech shall be
designated as the official “Gaming Gear Provider” for
Contractor and shall be the exclusive sponsor for such category
during the entirety of this agreement.
The
Term shall be as follows:
Initial
Term: the first six months of 2018, up to and including June 2,
2018
Option
Term: the second six months of 2018. The Option Term shall be
exercised no later than thirty (30) days prior to the end of the
Initial Term, June 2, 2018.
Extended Term:
Calendar year 2019 Full Term: Calendar year 2020
Logitech shall have
the right to continue this partnership in 2019 (Extended Term) and
2020 (Full Term), each upon written notification to Contractor
prior to November 1st of the
prior calendar year.
Contractor will
provide multiple ongoing promotional and marketing opportunities
for Logitech, as defined below, through live and digital media
placements, experiential activations, product sampling, prizing and
give-away opportunities, digital branded content, and the
distribution of esports learning and peak performance programs that
will be co-developed with Logitech.
The
schedule and deliverables are further described as
follows.
Schedule:
Initial
Term
Q1
2018
●
March/April: League of Legends
City Champs Tournament
Q2
2018
●
April: Minecraft After School
Program
●
April/May: Minecraft City
Champs Tournament
Option
Term
Q3
2018
●
July or August: Game Title TBD
City Champs Tournament (format, venue and number of cities
TBD)
●
July or August: Summer Camp
(format, curriculum, location TBD)
Q4
2018
●
September/October: League of
Legends City Champs Tournament
●
October/November: Minecraft
City Champs Tournament
●
November/October: Minecraft
After School Program
Initial Term Deliverables
City
Champs Tournaments
HUD (on
movie screen)
●
Logitech
logo on-screen throughout tournament Physical Signage
●
Logitech logo
attached to banners and included in digital welcome posters where
offered
Printed
Collateral
●
Logitech logo on
printed programs, player handbooks, player passes (certain items
may not be available for March/April League of Legends City Champs
Tournament)
Interstitial
Content
●
:15 or :30 second
videos to be played pre-, during or post-gameplay
●
Videos to be either
existing Logitech ‘commercial’ videos or new videos
developed by Contractor and Logitech together, to be produced by
Contractor
Emcee
Shout-Outs
●
Multiple Logitech
brand references according to agreed-upon messaging during
tournament
Brand
Activation
●
Opportunities for
Logitech product sampling, product give-ways, coupon distribution,
sweepstakes, etc.
●
Social & Digital Marketing
Social Media
●
During seasonal
play, regular posts inclusive of mutually agreed upon Logitech
references on all relevant Contractor accounts
●
Off-season,
intermittent posts inclusive of mutually agreed upon Logitech
references on all relevant Contractor accounts
Influencer
Marketing
●
Contractor to
engage creatively-appropriate, mutually agreed upon social media
influencers to amplify the Video Series.
Website
●
Logitech logo and
supportive content inclusive of mutually agreed upon Logitech
references to be produced by Contractor on Tournament Central pages
and select promotional inventory dedicated to the
tournaments
●
Logitech logo
included in tournament promotional and informational email
newsletters, with supportive content in select emails
Ticketing
●
Logitech branding
included in digital ticket design
Minecraft
Scholastic
●
Social & Digital Marketing
Social Media
●
During promotion
and activation of the program, posts inclusive of mutually agreed
upon Logitech references on all relevant Contractor
accounts
Website
●
Logitech logo and
supportive content on pages that may be dedicated to the
program
Email
●
Logitech logo
included in promotional and informational email newsletters, with
mutually agreed upon supportive content in select
emails
Hero
Videos
●
Contractor to
produce a series of 2-5 minute long videos featuring Logitech
Employees, to be distributed digitally and in-school throughout the
program
Workshop Game
Mode
●
Contractor and
Logitech to collaborate on the development of a new Workshop Game
Mode in which students are asked to work as a team to create the
most effective machine to achieve a specific
objective.
●
Contractor to
produce the new Workshop Game Mode.
●
The Workshop Game
Mode to be included in the Q4 program and presented as developed in
collaboration with Logitech G Academy.
Original
Content
●
Contractor and
Logitech to collaborate on the development of, and Contractor to
produce, up to 30 minutes of original video content per quarter,
beginning in Q2.
●
Each 30 minutes of
content to be produced and packaged as a single episode or as a
series consisting of as many as 20 unique episodes, dependent upon
the creative direction, as mutually agreed.
●
Each episode to be
distributed through all relevant Contractor and Logitech social
media accounts, possibly in addition to third party distribution
platforms as mutually agreed.
●
Contractor to
engage a creatively-appropriate, mutually agreed upon social media
influencer to assist in the promotion of each content
offering.
Option Term Deliverables
In
addition to the promotional and marketing support provided
throughout the Initial Term, the aforementioned elements will be
provided throughout the Option Term.
●
Parents Information Session
In-Theater
●
Contractor and
Logitech to collaborate on the development of a 30-45 minute
session specifically designed for parents of Minecraft players to
educate them about the tournament, about Minecraft and about the
benefits of gaming, to take place during the Minecraft City Champs
Tournament Practice Day.
●
The session to be
produced by Contractor and presented as developed in collaboration
with Logitech G Academy.
Email
●
Promotional and
informational email newsletters sent about the Parents Information
Session to include mutually agreed upon Logitech
references.
Video
Series
●
Contractor and
Logitech to mutually agree upon two short form video series to be
produced by Contractor during and/or after each City Champs season,
based on the City Champs experience and directionally aligned with
Logitech G Academy themes.
●
Each video series
to consist of 3 episodes of 1-3 minutes in length and to include
Logitech references according to mutually agreed-upon messaging and
branding.
●
Player Development Session
In-Theater
●
Contractor and
Logitech to collaborate on the development of a 5-10 minute
content-driven presentation specifically designed for League of
Legends players to educate them about peak performance as an
esports athlete, to take place during the League of Legends City
Champs Tournament Practice Day (may not be available for
March/April League of Legends City Champs Tournament based on
timing).
●
The session to be
produced by Contractor and presented as developed in collaboration
with Logitech G Academy.
Email
●
Promotional email
newsletters that include information about the peak performance
session to include mutually agreed upon Logitech
references.
●
Contractor and
Logitech to collaborate on the development of an
‘alpha’ version of a Summer Camp experience designed to
deliver upon the initial core themes and values of the Logitech G
Academy.
●
The investment to
produce the Summer Camp experience remains an unknown for both
Parties and is not included in the Fees outlined below in this
Statement of Work.
Logitech Commitments
●
Social & Digital Marketing
Social Media
●
Reasonable number
of posts on relevant Logitech social media accounts announcing
and/or promoting Logitech’s activations with
Contractor.
Email
●
Reasonable number
of references to activations with Contractor within emails sent to
relevant Logitech email newsletter subscribers.
Website
●
Dedicated web page
inclusive of mutually agreed upon content within www.logitechg.com
●
Minimum Product Commitment
City
Champs (Minecraft and League of Legends)
●
Logitech product
awarded to all members of the City Champs Finals
teams.
●
League of Legends:
168 players
●
Logitech product
awarded to a standout single player on each of the 16 City Club
teams for each game title, with selection of the player to be based
on mutually agreed upon criteria.
Minecraft
Scholastic
●
Logitech product
packs shipped to all participating schools, with contents of the
packs to be determined by Logitech. Each of the estimated 100
schools activated in 2018 to receive only one product pack in
2018.
●
Logitech product to
be awarded to select students who excel within the program,
according to criteria and a volume to be mutually agreed
upon.
Initial Term
Fees: Total Strategic Investment for the Deliverables in the
Initial Term - $180,000 to be paid as follows:
●
50% of payment,
$90,000, due immediately upon execution of SOW
●
50% of payment,
$90,000 due no later than June 30, 2018
Option Term Fees: Total Strategic Investment for the deliverables
in the Option Term - $180,000 to be paid as follows:
●
50% of payment,
$90,000, due immediately upon exercise of the Option
Term
●
50% of payment,
$90,000 due no later than December 31, 2018
Extended Term and
Full Term Fees, if applicable: Upon continuation of this
partnership into the Extended Term or the Full Term, Logitech
agrees to a minimum Strategic Investment of $450,000 for the same
or an equivalent level of Deliverables as required from Contractor
in 2018, which would be paid as follows:
●
50% of payment,
$225,000, due no later than Jan 31st of the applicable year
●
25% of payment,
$112,500, due no later than June 30th of the applicable year
●
25% of payment,
$112,500 due no later than September 30th of the applicable year
If
Contractor and Logitech agree to expand the scope of the
deliverables for the Extended Term and/or the Full Term, the
Parties agree to negotiate in good faith an increase in the amount
of the fees.
All payments shall be made in accordance with Section 2.3 of the
Agreement.
Performance
Reporting (List any expected reports or management metrics
to be provided with their due dates and frequency, if
any
City
Champs
●
Number of seasons in 2018
●
City Clubs by year-end 2018
●
Unique Players per season
●
League of Legends
qualifier round players: 1,700
●
League of Legends
in-theater players: 960
●
Minecraft
in-theater players: 800
●
Total In-Theater Player Gameplay Hours per season
●
League of Legends:
4,500
●
Total In-Theater Player Hours per season
●
League of Legends:
7,500
●
Total In-Theater Spectators per season
Scholastic
●
20-25 schools;
10-20 students per school
●
100 schools; 10-20
students per school
Digital
Impressions
●
Social media
(primarily Facebook) during Contractor tournaments:
25,000
●
Social media
(primarily Facebook) in months when Contractor is not running
tournaments: 5,000
●
Social (primarily
Facebook) during tournaments: 50,000
●
Social (primarily
Facebook) in months when not running tournaments:
5,000
●
Pageviews during
tournaments: 200,000
●
Pageviews in months
when not running tournaments: 60,000
THIS
STATEMENT OF WORK IS AGREED TO AND ACCEPTED BY CONTRACTOR AND
LOGITECH.
Super League
Gaming,
Inc.
|
Logitech
Inc.
|
|
|
/s/
Ann
Hand
|
|
Ann
Hand
|
Ujesh
Desai
|
CEO
|
VP/GM Logitech G
Gaming 3/16/2018
|
3/16/2018
|
|
|
|
EXHIBIT B
Logitech
Data Processing and Security Standard Terms
THIS DATA PROCESSING AND SECURITY STANDARD
TERMS (“Addendum”) is effective as
the
same date of the Effective Date of the Master Services Agreement by
and between Logitech and Contractor.
WHEREAS, Logitech contractors,
suppliers, distributors, subcontractors or other business partners
and their employees (collectively “Contractors”) must
comply with the requirements set forth in this Addendum with
respect to any information (“Logitech Data”) that
Logitech employees, representatives or business partners make
available to such Contractor in the context of its business
relationship with Logitech, in addition, not in lieu of, any other
contractual obligations and applicable laws it may have with
respect to Logitech Data.
NOW THEREFORE, the parties agree as
follows:
1. Control and Ownership.
Contractor may not access, collect, store, retain, transfer, use or
otherwise process in any manner any Logitech Data, except (a) in
the interest and on behalf of Logitech, and (b) as directed by
authorized personnel of Logitech or one of its affiliates
(collectively “Logitech”) in writing. Without limiting
the generality of the foregoing, Contractor may not make Logitech
Data accessible to any subcontractors or relocate Logitech Data to
new locations, except as set forth in written agreements with, or
written instructions from Logitech.
2. Keep Data Secure. Contractor
must keep Logitech Data secure from unauthorized access by using
its best efforts and state-of-the art organizational and technical
safeguards.
3. Comply with Approved Policies.
Contractor must comply with its own information security policies,
subject to prior review and written approval by Logitech, or at
Logitech’s discretion, with Logitech’s information
security policies, which shall be provided by Logitech if
applicable. Contractor must refrain from making any changes to such
policies that reduce the level of security and provide 30 days
prior written notice to Logitech of any significant changes to its
own information security policies. If Contractor has conducted SOC
Type II or similar audits, Contractor must comply with its SOC Type
II or similar standards and provide Logitech 30 days notice of any
changes. In addition, Contractor shall provide to Logitech any
3rd party audits and/or
certifications such as SOC2 Type II, SSAE16, SAS70, and
ISO9001.
4. Cooperate with Compliance
Obligations. At Logitech’s request, Contractor must
(a) contractually agree with Logitech to comply with laws or
industry standards designed to protect Logitech Data, including,
without limitation, the Standard Contractual Clauses approved by
the European Commission for data transfers to processors, PCI
Standards, HIPAA requirements for business associates (as
applicable), as well as similar and other frameworks, or (b) allow
Logitech to terminate certain or all contracts with Contractor,
subject to (i) a proportionate refund of any prepaid fees, (ii)
transition or migration assistance as reasonably required and at
time and materials rates not exceeding Logitech’s then
current rates for professional services offered to its customers,
and (iii) without applying any early termination charges or other
extra charges.
5. Submit to Audits. Contractor
must submit to reasonable data security and privacy compliance
audits by Logitech and, at Logitech’s request, or an
independent third party, to verify compliance with this Addendum,
applicable law, and any other applicable contractual
undertakings.
6.
Data
Breach Notification. In the event of an actual or suspected
breach or compromise to the
physical or
electronic security of Logitech Data, including but not limited to
actual or suspected loss of control, theft or unauthorized
processing, loss, use, disclosure or acquisition of, or access to,
any Protected Personal Data (“Breach”), Contractor
shall notify Logitech’s General Counsel of such actual or
suspected Breach by telephone at 510-795-8500 and in writing at
7700 Gateway Blvd., Newark, California, 94560, USA within 48 hours
of discovery of the actual or suspected Breach. The notice shall
summarize in reasonable detail the nature of the actual or
suspected Breach; the data that has been or is suspected to have
been lost, stolen or potentially compromised; and the corrective
action taken or to be taken by Contractor. Contractor shall
promptly take all necessary and advisable corrective actions, and
shall cooperate fully with Logitech in all reasonable and lawful
efforts to promptly, mitigate or rectify, otherwise respond to,
such Breach.
7. Indemnification for Data
Breach. In the event of a Breach, in addition to immediately
notifying Logitech of such Breach, Contractor shall at
Logitech’s option and at the direction of Logitech, whether
or not required by law, provide written notice to the individuals
whose Logitech Data was reasonably connected to the Breach, or
reimburse Logitech for all direct out-of-pocket and commercially
reasonable costs that Logitech incurs in providing such notice.
Contractor shall indemnify Logitech for any additional financial
loss to Logitech arising from such Breach, including without
limitation Logitech (1) obtaining legal advice to assist Logitech
in identifying its legal obligations regarding such Breach; (2)
providing and paying for remediation services offered by third
parties to help prevent or cure identity fraud or theft, including
but not limited to identity theft analytics, fraud monitoring,
identity theft resolution, and credit freezes; and(3) legal damages
awarded against Logitech as a result of the Breach.
8. Effects of Termination or
Expiration. Following the effective date of termination,
Contractor shall have ten (10) days (“the Data Removal
Period”) to remove all Logitech Data and other information,
including without limitation backup copies thereof, that Contractor
has stored on any of its storage servers or data that Logitech has
authorized Contractor to upload, store or otherwise input onto any
Contractor storage servers or devices. Contractor shall provide
reasonable migration assistance at then-current time and material
rates for professional services and Contractor may charge regular
fees for data stored during the portion of the Data Removal Period
utilized by Logitech unless Logitech terminates the Agreement for
breach by Contractor, in which case migration assistance and
storage shall be free of charge. Following the expiration of the
Data Removal Period, Contractor shall delete any and all Logitech
Data from Contractor’s server, website or any other data
storage systems, including without limitation any and all backup
copies thereof if Contractor has complied with all of its
obligations under this Agreement and verified that Logitech has in
fact been able to remove Logitech Data.
Exhibit
10.20
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE
AGREEMENT (the
"Agreement") is made and entered into as of June 22,
2018 ("Execution
Date"), by and between
Super League Gaming, Inc., a Delaware corporation, on the one and
(the "Purchaser"
or "SLG"), and Minehut, a sole
proprietorship, on the other hand ("Minehut" or "Seller"). The Purchaser and the Seller may
be referred to collectively herein as the "Parties" and individually as a "Party."
RECITALS
WHEREAS,
Seller desires to sell the
tangible and intangible assets, and the services, listed in Exhibit
A hereto, to Purchaser upon the conditions set forth in this
Agreement; and
WHEREAS,
Purchaser desires to purchase
the assets, listed in Exhibit A hereto, of Seller upon the terms
and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE,
in consideration of the premises
and the respective representations and warranties hereinafter set
forth, and the respective covenants and agreements contained
herein, and intending to be legally bound hereby, the Parties agree
as follows:
ARTICLE I.
PURCHASE
AND SALE; TRANSFER OF SERVICES AND RELATIONSHIPS; TECHNOLOGY
MILESTONES; CONSULTING SERVICES.
1.1 Agreement to Purchase and Sell
Assets. Upon the
terms and subject to the conditions set forth in this Agreement, at
the Closing, Seller will sell, transfer, convey, assign and deliver
to the Purchaser, and the Purchaser will purchase from the Seller,
all legal right, title and interest of the Seller in and to all of
the assets specifically detailed in Exhibit A hereto (collectively,
the “Assets”).
1.2
No
Assumption of
Liabilities. Purchaser shall not
assume, and shall not be responsible for, any of the liabilities of
Seller.
1.3
Total Purchase Price.
The total purchase price to be
paid by Purchaser for the Assets shall be One Hundred Thousand
Dollars ($100,000.00) (the ''Purchase Consideration"),
payable to Luke Chatton as
follows:
(a)
$25,000.00 upon execution
hereof.
(b)
$25,000.00 upon transfer of all services and
relationships to SLG as outlined in Section 1.4
hereinbelow:
i.
To occur within first
7-14 days following execution of
theAgreement
ii
period from June 30, 2018 to July 7, 2018 is carved out from this
agreement for the purpose of the transfer of all services and
relationships to SLG. SLG understands that no transfer activity
will occur in this time frame and that the 7-14 days described in
the preceding paragraph will apply to dates before and after the
carved out period as necessary.
(c)
$30,000.00 upon reaching tech milestones
outlined in Section 1.5 hereinbelow:
i.
This amount may be reduced by the Purchaser based on true cost of
maintenance assessment
(d)
$20,000.00 in consulting and support fees payable to
Luke Chatton as described in Section 1.6 hereinbelow and payable as
follows:
(i)
July 15 , 2018 - $3,000.00
(ii)
August 15, 2018 - $3,000.00
(iii)
September 15, 2018 - $3,000.00 (iv) October 15, 2018 -
$3,000.00
(v)
November
15, 2018 - $3,000.00 (vi) December 15, 2018 -
$2,500.00
(vii)
January 15, 2019 - $2,500.00
1.4
Transfer of Services and
Relationships. Seller shall effectuate the transfer of the
following services and relationships to SLG, and upon doing so the
payment referred to in Section 1.3(b) hereinabove shall be
made:
(a)
Volunteer Staff - It is understood that as a result of the
acquisition the volunteer staff may choose not to continue as
volunteers. Luke Chatton will use best efforts to transition the
volunteer staff to SLG oversight /management;
(b)
Vendors / Subscription
Services;
(c)
Introductions to the user-base
of Minehut via various means, including social and within systems
and forums, using communications developed by SLG;
and
(d)
Any other relationships not currently identified, but subsequently
deemed necessary by SLG during the transfer
process.
1.5
Technology Milestones.
The following technology
milestones shall be satisfied prior to the payment referred to in
Section 1.3(c) hereinabove:
(a)
Technology knowledge transfer of web,
infrastructure, and data repositories and systems to SLG's internal
technology team, including Connor James, Kenny Goodin, and Catalin
Ionescu;
(b)
Documentation delivered related to all
Minehut services, code repositories and
infrastructure:
(i)
This documentation includes a detailed 'operating runbook' of administrative , business and
technology activities; and
(ii)
Training and escalation protocols for customer
service.
(c)
User migration, including the importing of accounts
into SLG systems.
(d)
Full transition shall be deemed
achieved when SLG staff takes over maintenance of all Minehut
related systems on a continuous basis for a period of twenty (20)
calendar days. SLG and
Luke Chatton will work in good faith to produce a joint time
assessment as to how many
hours of maintenance are (on average) required on a per day basis.
This time assessment will impact the final payment installment as
follows:
(i)
< l hour on average per day = $30,000.00, or full payment per
Section1.5
hereinabove;
(ii)
>I but less than 2 hours on average per day = $20 ,000.00
payment;
(iii)
>2 but less than 3 hours on average per day= $10,00.00 payment;
and
(iv)
>3 hours on average per day= no additional
payment.
(e)
Maintenance activities included in the time assessment consist of
the following:
(A)
24/7 Operational support
(B)
Maintenance checklist including adding/ updating
plugins
(C)
Maintaining existing marketing /sales/growth
activities
(D)
Administration and Communications
(ii)
Maintaining the staff/players community
(A)
Necessary customer service activities
1.6
Consulting Services. In order
to receive the consulting fees per the schedule set forth in
Section l.3(d) hereinabove, Luke Chatton shall be onsite at the SLG
offices in Santa Monica until the technology milestones identified
in Section 1.5 hereinabove are achieved. Upon the successful
achievement of the technology milestones, Luke Chatton shall not be
required to be onsite and agrees to respond to escalations within
four (4) hours of being made by SLG to Chatton via email, or other
means of communication, until the conclusion of the consulting
period on January 31, 2019.
l. 7 Closing. The closing of the purchase and sale of the
Assets (the "Closing") shall occur on June 22, 2018 at the offices
of Purchaser, located at 2906 Colorado Ave., Santa Monica, CA
90404.
ARTICLE
II.
REPRESENTATIONS AND WARRANTIES OF SELLER.
2.1
Sole Proprietorship Status.
Seller is a sole proprietorship owned and operated by Luke Chatton.
Seller has full authority to execute and deliver this Agreement and
perform the transactions contemplated
hereby.
2.2
Actions. All actions and proceedings necessary to be
taken by or on the part of Seller in connection with the execution
and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly and
validly taken, and this Agreement has been duly and validly
authorized, executed and delivered by Seller and constitutes the
legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with and subject to its
terms.
2.3
No
Defaults. Neither
the execution, delivery or performance by Seller of this Agreement
nor the consummation by Seller of the transactions contemplated
hereby is an event that, of itself or with the giving of notice or
the passage of time or both, will:
(a) Violate or conflict with or result in any breach
of or any default under, result in any termination or modification
of, or cause any acceleration of any obligation under, any
contract, mortgage, indenture, agreement, lease or other instrument
to which Seller is a party to orby
which it is bound, or by which it may be affected, or result in the
creation of any lien or encumbrance upon any of Seller's assets;
or
(b)
Violate any judgment, decree, order, statute,
rule or regulation applicable toSeller.
2.4
Breach. Seller is not in violation or breach of any
of the terms, conditions or provisions of any contracts, lease,
instrument, court order, judgment, arbitration award, or decree
materially affecting the business of Seller, to which Seller is a
party or by which it is otherwise bound, where the effect thereof
would have a material adverse effect on
Seller.
2.5
Approvals and Consents; Assignment of
Contracts. To
Seller's knowledge, no permit, license, consent, approval or
authorization of, or filing with, any governmental regulatory
authority or agency is required in connection with the execution,
delivery and performance of this Agreement, or the consummation of
the transactions contemplated hereby, except where its absence
would not have a material adverse effect on the
Assets.
2.6
Title to and
Condition of Assets.
(a)
Seller has good, valid and marketable title to all of the Assets,
free and clear of all liens, encumbrances and security interests of
every kind or character.
2.7
No
Broker or Finder. Seller has not employed or used the services
of any broker or finder in connection with this transaction and
Seller shall hold Purchaser completely free and harmless from the
claims of any person claiming to have so acted on behalf of
Seller.
ARTICLE III.
REPRESENTATIONS
AND
WARRANTIES OF PURCHASER
3.1
Corporate Status. Purchaser is
a corporation which is duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Purchaser is
duly qualified to do business in each jurisdiction in which the
character of and location of its assets or operations makes
qualification to do business necessary. Purchaser has full
corporate power to carry on its business as it is now being
conducted and as proposed to be conducted and to own and operate
its assets. Purchaser has full corporate power and authority to
execute and deliver this Agreement and perform the transactions
contemplated hereby.
3.2
Corporate Actions.
All corporate or other actions
and proceedings necessary to be taken by or on the part of
Purchaser in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated by
this Agreement, including the obtaining of approval by the
directors of Purchaser, have been duly and validly taken, and this
Agreement has been duly and validly authorized, executed and
delivered by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in
accordance with and subject to its
terms.
3.3
No
Defaults. Neither
the execution, delivery or performance by Purchaser of this
Agreement nor the consummation by Purchaser of the transactions
contemplated hereby is an event that, of itself or with the giving
of notice or the passage of time or both,
will:
(a)
Violate or conflict with the provisions of the articles of
incorporation or bylaws of Purchaser;
(b)
Violate or conflict with or result in any breach of or any default
under, result in any termination or modification of, or cause any
acceleration of any obligation under, any contract, mortgage,
indenture, agreement, lease or other instrument to which Purchaser
is a party to or by which it is bound, or by which it may be
affected, or result in the creation of any lien or encumbrance upon
any of Purchaser's assets, except for agreements, indentures and
instruments related to the financing of the transactions
contemplated by this Agreement; or
(c)
Violate any judgment,
decree, order, statute, rule or regulation applicable
to
Purchaser.
3.4
Breach. Purchaser is not in violation or breach of
any of the terms, conditions or provisions of its articles
of organization,
as amended, its operating agreement, as amended, or any indenture,
mortgage or deed of trust or other contracts, lease, instrument,
court order, judgment, arbitration award, or decree materially
affecting the business of Purchaser, to which Purchaser is a party
or by which it is otherwise bound, where the effect thereof would
have a material adverse effect on
Purchaser.
3.5
Approvals and Consents.
All approvals and consents of
entities not a party to this Agreement, legally and contractually
required, have been obtained by Purchaser in connection with the
execution and delivery of this Agreement and the consummation of
the transactions contemplated by this
Agreement.
3.6
Litigation. There are no lawsuits, judgments,
arbitrations, administrative charges or other legal proceedings,
claims or governmental investigations pending against, or to
Purchaser's knowledge, threatened against the Purchaser relating to
or affecting the execution, delivery or performance of this
Agreement or the ability of Purchaser to perform its obligations
under this Agreement.
3.7
No
Broker or Finder. Purchaser has not employed or used the
services of any broker or finder in connection with this
transaction and shall hold Seller completely free and harmless from
the claims of any person claiming to have so acted on behalf of
Purchaser.
ARTICLE IV.
COVENANTS OF SELLER.
4.1
Representations and
Warranties. Seller shall give detailed written notice to
Purchaser promptly upon learning of any fact which (i) would render
untrue in any material respect any of Seller's representations or
warranties contained in this Agreement, or (ii) would cause Seller
to fail to comply with its obligations hereunder in any material
respect between the Execution Date and the
Closing.
4.2
Consummation of
Agreement. Seller
shall use its best efforts to fulfill and perform all conditions
and obligations on its part to be fulfilled and performed under
this Agreement, and cause the transactions contemplated by this
Agreement to be fully consummated.
4.3
Restrictions.
Prior to the Closing, and
without the prior written consent of Purchaser, Seller shall not
encumber or grant any security interest in any of the
Assets.
ARTICLE V.
COVENANTS OF PURCHASER.
5.1
Representations and
Warranties. Purchaser shall give detailed written notice
to Seller promptly upon learning of any fact which (i) would render
untrue in any material respect any of Purchaser' s representations
or warranties contained in this Agreement, or (ii) would cause
Purchaser to fail to comply with is obligations hereunder in any
material respect between the Execution Date and the
Closing.
5.2
Consummation of
Agreement. Purchaser shall fulfill and perform all
conditions and obligations on its part to be fulfilled and
performed under this Agreement, and cause the transactions
contemplated by this Agreement to be fully
consummated.
ARTICLE VI.
ITEMS TO BE DELIVERED AT THE CLOSING.
6.1
Deliveries by Seller. At the
Closing, Seller shall deliver to Purchaser the
following:
(a)
All of the Assets specified in Exhibit A hereto;
and
(b)
Such deeds, bills of sale, certificates of title, endorsements,
assignments and other good and sufficient instruments of sale,
conveyance and transfer and assignment in form and substance
reasonably satisfactory to Purchaser sufficient to sell, convey,
transfer and assign to Purchaser all right, title and interest of
Seller in and to the Assets.
6.2
Deliveries by Purchaser.
At the Closing, Purchaser shall
deliver to Seller the following:
(a)
Certified copies of resolutions, duly adopted and executed by the
board of directors of Purchaser, which shall be in full force and
effect at the time of the Closing, authorizing the execution,
delivery and performance by Purchaser of this Agreement and the
consummation of the transactions contemplated
hereby.
(b)
A check, or wire transfer to Luke Chatton, in
the amount of $25,000.00.
ARTICLE VII.
POST-CLOSING MATTERS.
7.1 Post-Closing
Obligations. Purchaser shall make the remaining, and
applicable, payments specified in Sections l .3(b)-(d) upon the
completion by Seller, including Luke Chatton, of the requirements
specified in Sections 1.4, 1.5 and 1.6.
ARTICLE VIII.
INDEMNIFICATION.
8.1 Indemnification by Seller.
Seller shall indemnify, defend and hold Purchaser harmless from and
against any and all liabilities or obligations arising with respect
to the Assets up to the Closing. Further, Seller shall indemnify,
defend and hold harmless Purchaser from and
against any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including reasonable attorney's fees and costs
(collectively, "Losses") that Purchaser may incur or suffer, which
arise, result from, or relate to: (i) any inaccuracy of Seller's
representations and warranties contained in this Agreement or in
any agreement, instrument or document entered into pursuant hereto
or in connection with the Closing, or (ii) any breach of or failure
by Seller to perform any of its covenants or agreements contained
in this Agreement or in any agreement, instrument or document
pursuant hereto or in connection with the Closing. Seller shall not
have any liability under this Section 8.1 unless Purchaser gives
written notice to Seller asserting a claim for Losses, including
reasonably detailed facts and circumstances pertaining thereto,
before the expiration of one (1) year from the
Closing.
8.2
Indemnification by
Purchaser. Purchaser shall indemnify, defend and hold
Seller harmless from and against any and all liabilities or
obligations arising with respect to the Assets, excepting claims
asserted after the Closing that relate to actions taken by Seller
prior to the Closing. Further, Purchaser shall indemnify, defend
and hold harmless Seller from and against any and all claims,
demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including reasonable
attorney's fees and costs (collectively, "Losses") that Seller may incur or suffer, which
arise, result from, or relate to: (i) any inaccuracy of Purchaser's
representations and warranties contained in this Agreement or in
any agreement, instrument or document pursuant hereto or in
connection with the Closing, or (ii) any breach of or failure by
Purchaser to perform any of its covenants or agreements contained
in this Agreement or in any agreement, instrument or document
pursuant hereto or in connection with the Closing. Purchaser shall
not have any liability under this Section 8.2 unless Seller gives
written notice to Purchaser asserting a claim for Losses, including
reasonably detailed facts and circumstances pertaining thereto,
before the expiration of one (1) year from the
Closing.
ARTICLE IX.
MISCELLANEOUS.
9.1
Termination of
Agreement. This
Agreement may be terminated at any time on or prior to the Closing:
(a) by the mutual written consent of Seller and Purchaser; (b) by
Purchaser at any time prior to Closing if Purchaser, prior to such
date, determines in its sole discretion that the results of its due
diligence investigation of Seller is in any way unsatisfactory. A
termination pursuant to this Section 9.1 shall not relieve any
Party of any liability it otherwise has for a breach of this
Agreement. As a condition to any termination by Purchaser
hereunder, all information and materials relating to the Assets and
to which Purchaser obtained access during the negotiations leading
to, or following, execution of this Agreement, and any other
writings containing excerpts of such materials or information, and
any or all copes thereof, shall be delivered to
Seller.
9.2
Expenses. Each Party hereto shall bear all of its
expenses incurred in connection with the transactions contemplated
by this Agreement, including without limitation, accounting and
legal fees incurred in connection
herewith.
9.3
Further Assurances.
From time to time prior to, on
and after the Closing, each Party hereto will execute all such
instruments and take all such actions as any other Party, being
advised by counsel, shall reasonably request, without payment of
further consideration, in connection with carrying out and
effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement , including without
limitation the execution and delivery of any and all confirmatory
and other instruments in addition to those to be delivered on the
Closing, and
any and all actions which may reasonably be necessary or desirable
to complete the transactions contemplated hereby. The Parties shall
cooperate fully with each other and with their respective counsel
and accountants in connection with any steps required to be taken
as part of their respective obligations under this
Agreement.
9.4
Construction. All signatories
hereto agree that each of them and their respective counsel, and
other advisors, has reviewed and had an opportunity to revise this
Agreement and the exhibits hereto and, therefore, the normal rule
of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any exhibits
hereto.
ARTICLE X.
DISPUTE RESOLUTION.
10.1
Direct
Discussion. In the
event of any dispute, claim, question, or disagreement arising out
of or relating to this Agreement (a "Dispute"), the Parties involved in such Dispute shall
use their best efforts to settle such Dispute. To this effect,
management of the Parties involved shall consult and negotiate with
each other in good faith to attempt to reach a just and equitable
solution satisfactory to both parties.
10.2
Governing Law.
This Agreement and all questions
relating to its validity, interpretation, performance and
enforcement shall be governed by and construed in accordance with
the laws of the State of California.
10.3
Submission to
Jurisdiction. The
Parties irrevocably and unconditionally:
(a)
submit to the non-exclusive jurisdiction of the courts of the State
of California, County of Los Angeles, and all courts of appeal from
them; and
(b)
waive any objection they may now or in the future have to the
bringing of proceedings in those courts and any claim that any
proceedings have been brought in an inconvenient
forum.
ARTICLE XI.
GENERAL PROVISIONS.
11.1
Successors and Assigns.
Except as otherwise expressly
provided herein, this Agreement shall be binding upon and inure to
the benefit of the Parties hereto, and their respective
representative, successors and assigns. No Party hereto may assign
any of its rights or delegate any of its duties hereunder without
the prior written consent of the other Party, and any such
attempted assignment or delegation without such consent shall be
void. Seller agrees not to unreasonably withhold its consent to any
assignment by Purchaser of its rights hereunder prior to Closing to
a corporation or other entity controlled by Purchaser, provided
that (a) such assignee will assume all obligations of Purchaser
hereunder, without Purchaser being released, and (b) such
assignment will not, in Seller's reasonable judgment, delay in any
material way or make more doubtful the
Closing.
11.2
Amendments; Waivers.
The terms, covenants,
representations, warranties and conditions of this Agreement may be
changed, amended modified, waived, discharged or terminated only by
a written instrument executed by the Party waiving compliance. The
failure of
any Party at any time or times to require performance of any
provision of this Agreement shall in no manner affect the right of
such Party at a later date to enforce the same. No waiver by any
Party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instance shall
be deemed to be or construed as a further or continuing waiver of
any such condition or of the breach of any other provision, term,
covenant, representation or warranty of this
Agreement.
11.3
Notices. All notices, requests,
demands and other communications required or permitted under this
Agreement shall be in writing (which shall include notice by telex
or facsimile transmission) and shall be deemed to have been duly
made and received when personally served, or when delivered by
Federal Express or a similar overnight courier service, expenses
prepaid, or, if sent by telex, graphic scanning or other facsimile
communications equipment, delivered by such equipment, addressed as
set forth below:
(a)
If to Seller, then to Luke Chatton, 11130 San Gabriel Way, Valley
Center, CA 92082; and
(b)
If to
Purchaser, then to: Super League Gaming, Inc.; 2906 Colorado Ave.,
Santa Monica, CA 90404; Attn: Ann Hand, CEO &
President.
Any Party may alter the address to which communications are to be
sent by giving notice of such change of address in conformity with
the provisions of this Section 11.3 providing for the giving of
notice.
11.4
Captions. The captions of Articles and Sections of
this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this
Agreement.
11.5
Entire Agreement.
This Agreement and the other
documents delivered hereunder constitute the full and entire
understanding and agreement between the Parties with regard to the
subject matter hereof, and supersedes all prior agreements,
understandings, inducements or conditions, express or implied, oral
or written, relating to the subject matter hereof, except as herein
contained. The express terms hereof control and supersede any
course of performance and/or usage of trade inconsistent with any
of the terms hereof.
11.6
Execution; Counterparts.
This Agreement may be executed
in any number of original or facsimile counterparts, each of which
shall be deemed to be an original as against any Party whose
signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the Parties reflected
hereon as the signatories.
11.7
Time. Time is of
the essence in complying with all stated dates and
times.
11.8
Currency.
A reference to ' US$' is a
reference to the currency of the USA.
11.9
Related Party Transaction; Arms-Length
Negotiation. For the avoidance of doubt,
this Agreement has been negotiated at arm's-length between the
Parties and, by their execution of this Agreement, has been unanimously agreed upon by
both Seller and Purchaser.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed by their authorized signatories as of the date first
written above.
PURCHASER:
SUPER LEAGUE GAMING, INC.,
A Delaware
corporation
By:
/s/ Ann Hand
Ann
Hand
CEO
& President
SELLER:
MINEHUT,
A Sole proprietorship
By: /s/ Luke Chatton
Luke
Chatton
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
EXHIBIT A
LIST OF ASSETS
The tangible and intangible assets being sold to SLG consist of the
following:
●
All
Minehut assets, trademarks, IP and service
relationships related to the development, infrastructure and
support of the Minehut system
●
Twitter https://twitter.com/MinehutMC
●
OVH account (dedicated servers)
●
Paypal Account (needs to be transferred as it holds active
subscriptions)
●
Any
other services
not currently identified, but subsequently deemed necessary by SLG
during the transfer process
EXHIBIT B
BILL OF SALE
FOR GOOD, ADEQUATE, AND
VALUABLE CONSIDERATION, the receipt and sufficiency which is hereby
acknowledged, the undersigned Minehut, a sole proprietorship
("Seller") , hereby grants, bargains, sells, transfers, conveys,
and delivers to Super League Gaming , Inc., a Delaware corporation
("'Purchaser"), the following property:
I.
All tangible and intangible property listed in Exhibit A and in the
Asset Purchase Agreement (collectively, the "Assets") attached
hereto and incorporated herein in its entirety by this
reference.
Seller warrants and represents that it is
the lawful owner of all the Assets and that it has full legal
right, power, and authority to sell and transfer the Assets. Seller
further warrants and represents that the Assets are free from all
liens, encumbrances, liabilities, and adverse claims of every nature and
description and that Seller will warrant and defend the Assets
against any and all lawful claims.
Dated: June 22, 2018
SELLER:
MINEHUT,
A sole proprietorship
By: /s/ Luke Chatton
Luke
Chatton
PURCHASER:
SUPER LEAGUE GAMING, INC.
By: /s/ Ann
Hand
Ann Hand
CEO & President
Exhibit
10.21
AMENDED
& RESTATED EMPLOYMENT AGREEMENT
This Amended & Restated Employment
Agreement (this “Agreement”) is made and entered
into effective as of November 1, 2018 (the “Effective
Date”), by and between Super League Gaming, Inc., a Delaware
corporation (“COMPANY”), and Ann Hand, an individual
(“EXECUTIVE”). This Agreement shall amend and supersede
that certain prior Employment Agreement dated June 16,
2017.
WITNESSETH:
WHEREAS, COMPANY
and EXECUTIVE deem it to be in their respective best interests to
enter into an agreement providing for COMPANY’s employment of
EXECUTIVE pursuant to the terms herein stated.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as
follows:
1.
Term. COMPANY hereby amends and extends EXECUTIVE’s
employment term with the COMPANY to conclude on December 31, 2021
(“Term”). Unless COMPANY or EXECUTIVE provides written
notice that this Agreement shall be allowed to expire and the
employment relationship thereby terminated at least thirty (30)
days prior to the expiration of the Term or any Renewal Term (as
defined herein), this Agreement shall continue in effect for
successive periods of one (1) year (each such one (1) year period
being a “Renewal Term”; collectively, the Term and all
Renewal Terms under this Agreement being the “Employment
Term”).
2.
Duties and Titles. EXECUTIVE’s position with COMPANY shall be
Chief Executive Officer, President and Chairman. EXECUTIVE shall do
and perform all services reasonably necessary or advisable to
accomplish the objectives of the COMPANY’s Board of
Directors. EXECUTIVE shall report to the Board. EXECUTIVE reserves
the right to resign for Good Reason (as defined
below).
3.
Devotion of Time to Company’s Business. EXECUTIVE shall be a
full-time EXECUTIVE of COMPANY and shall devote such substantial
and sufficient amounts of her productive time, ability, and
attention to the business of COMPANY during the Employment Term of
this Agreement as may be reasonable and necessary to accomplish the
objectives and complete the tasks assigned to EXECUTIVE. EXECUTIVE
may devote reasonable time to activities other than those required
under this Agreement, including activities involving professional,
charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of
directors of other organizations and similar types of activities to
the extent that such activities do not inhibit or prohibit the
performance of services under this Agreement.
4.
Uniqueness of Services. EXECUTIVE hereby acknowledges that the
services to be performed by her under the terms of this Agreement
are of a special and unique value. Accordingly, the obligations of
EXECUTIVE under this Agreement are non-assignable.
5. Compensation
of EXECUTIVE.
a. Base
Annual Salary. Subject to other specific provisions in this
Agreement, as compensation for services hereunder, EXECUTIVE shall
receive a Base Annual Salary of $400,000 payable in accordance with
the Company’s ordinary payroll practices. On each anniversary
date hereof, EXECUTIVE’s Base Annual Salary will be reviewed
and may be increased at the sole discretion of the COMPANY’S
Board of Directors.
b.
Cash Bonuses. EXECUTIVE shall be entitled to receive (i) a cash
bonus of $100,000 upon the close of a fully subscribed $10,000,000
private placement of 9% Secured Convertible Promissory Notes, (ii)
a cash bonus of $250,000 upon the close of the COMPANY’s
initial public offering (“IPO”) or private financing
(occurring subsequent to September 1, 2018) of not less than
$15,000,000; (iii) $150,000, payable in three increments of $50,000
upon achieving (a) 200,000 registered members, (b) a total of four
(4) large brand sponsors (minimum of $250,000 of annual
sponsorship) from date of commencement of CEO role, and (c) license
of a total of four (4) tier 1 esports game titles from date of
commencement of CEO role, and (d) cash bonuses as may be determined
from time to time by the Company’s Board of Directors and
Compensation Committee.
c.
Common Stock Purchase Warrant. EXECUTIVE is hereby granted a common
stock purchase warrant (“Restricted Grant”), in the
amount of Seven Hundred Fifty Thousand (750,000) shares,
exercisable at $3.60 per share for a period of ten (10) years, and
subject to the following vesting schedule: (i) 25% upon issuance;
(ii) 50% upon close of the COMPANY’s IPO or an additional
private financing (occurring subsequent to September 1, 2018) of
not less than $15,000,000; and (iii) 25% on the one-year
anniversary of the IPO or the one-year anniversary of an additional
private equity financing of not less than $15,000,000 (occurring
subsequent to September 1, 2018).
d.
Stock Option Grant. EXECUTIVE is hereby issued an option to
purchase 500,000 shares of common stock (the “Option
Grant”), exercisable at $3.60 per share for a period of ten
(10) years and subject to the following vesting schedule: (i) 50%
upon close of the COMPANY’s IPO or an additional private
equity financing (occurring subsequent to September 1, 2018) of not
less than $15,000,000; (ii) 25% upon achievement of 300,000
registered members; and (iii) 25% upon achievement of 400,000
registered members. The Option Grant shall be issued pursuant to
the COMPANY’s 2014 Amended and Restated Stock Option and
Incentive Plan.
e.
Vesting Acceleration. All outstanding common stock purchase
warrants previously issued in favor of EXECUTIVE, as well as those
issued in Section 5.c hereinabove, shall immediately vest upon a
“change of control” of the COMPANY. Change of control
is defined as a sale of all or substantially all of the assets of
the COMPANY, or a merger, sale of shares or other transaction
whereby the voting shareholders of the COMPANY, collectively, prior
to the close of such transaction do not hold a majority voting
interest in the COMPANY on a post-transaction basis.
f.
Health Insurance. EXECUTIVE and her dependents shall be entitled to
participate in the health insurance plan offered to COMPANY
employees, and the Company will pay 90% of the premium related
thereto.
g.
401(k). EXECUTIVE will be permitted to participate in the
Company’s 401(k) Plan upon the Board of Directors electing to
institute it.
h.
Business Expenses. COMPANY will reimburse EXECUTIVE for all
reasonable business expenses directly incurred in performing
EXECUTIVE’s duties and promoting the business of
COMPANY.
6.
Termination of Employment.
a. In
the event COMPANY should terminate EXECUTIVE’s employment
other than for “Cause” as defined in Section 6(b) below
or EXECUTIVE resigns for “Good Reason” as defined in
Section 6(c) below (either such termination a “Severance
Termination”), EXECUTIVE shall receive the
following:
i. Severance
Termination shall result in the following payment on effective date
of termination:
(a) Payment of all
Accrued Obligations (defined in Section 6(d) below);
(b) Cash equal to the
greater of (I) Annual Salary for one and one-half (1.5) years; or
(II) Annual Salary for the remaining Term of the Agreement;
and
(c) Full vesting of all
unvested securities issued in the name of EXECUTIVE.
b.
COMPANY shall have the right to terminate EXECUTIVE’s
employment at any time for Cause by giving EXECUTIVE written notice
of the effective date of termination. For the purposes of this
Agreement, “Cause” shall mean:
i.
Fraud, misappropriation, embezzlement or any other action of
material misconduct against COMPANY or any of its affiliates or
subsidiaries;
ii
.
Substantial willful failure to render services in accordance with
the provisions of this Agreement (for which purpose, no act or
omission to act will be “willful” if conducted in good
faith or with a reasonable belief that such conduct was in the best
interests of COMPANY), provided that:
(a) a
written demand for performance has beendelivered to
EXECUTIVE at least ten (10) days prior to termination identifying
the manner in which COMPANY believes that EXECUTIVE has failed to
perform; and
(b)
EXECUTIVE has
thereafter failed to remedy such failure to
perform;
iii
.
Material violation of any law, rule or regulation of any
governmental or regulatory body material to the business of
COMPANY;
iv
.
Conviction or a guilty plea or nolo contendere plea to a
felony;
v
.
Repeated and persistent material failure to abide by the policies
established by COMPANY after written warning from
COMPANY;
vi
.
Any acts of violence or threats of violence made by EXECUTIVE
against COMPANY or anyone associated with COMPANY’s
business;
vii
.
The solicitation or acceptance of payment or gratuity from any
existing or potential customer or supplier of COMPANY without the
prior written
consent
of COMPANY’s Board of Director’s; or
viii
.
Drug dependency or habitual insobriety.
c. EXECUTIVE
shall have the right to terminate employment at any time with Good
Reason by giving COMPANY written notice of the effective date of
termination. For the purposes of this Agreement, “Good
Reason” shall mean:
i. Any
material adverse change in EXECUTIVE’s title, duties or
responsibilities (including reporting
responsibilities);
ii. Any
reduction of EXECUTIVE’s Base Annual Salary;
iii. Any
relocation, without EXECUTIVE’s written consent, of
EXECUTIVE’s principal office of employment by more than 35
miles from the location applicable on the Effective Date;
or
iv. Any
failure of COMPANY to assign, or a successor of COMPANY to assume,
the obligations of COMPANY under this Agreement.
d.
In the event of termination for Cause by COMPANY or termination
without Good Reason by EXECUTIVE, EXECUTIVE shall be paid
EXECUTIVE’s Base Annual Salary and accrued vacation through
the effective date of termination on the date of termination,
EXECUTIVE’s business expenses incurred through the date of
termination in accordance with Section 3(g), and EXECUTIVE’s
accrued and vested employee benefits pursuant to Section 3(e)
and (f) in accordance with the applicable benefit plan
(collectively, all such amounts under this sentence being the
“Accrued Obligations”). After the effective date of
Termination, EXECUTIVE shall not be entitled to accrue or vest in
any further salary, severance pay, stock options, benefits, fringe
benefits or entitlements; provided that EXECUTIVE shall retain the
right to exercise the portion of the Warrant that has vested as of
the effective date of termination as provided above.
e.
COMPANY may terminate EXECUTIVE’s employment in the event
that: (i) EXECUTIVE fails or is unable to perform EXECUTIVE’s
duties due to injury, illness or other incapacity for one hundred
eighty (180) days in any twelve (12) month period (except that
EXECUTIVE may be entitled to disability payments pursuant to
COMPANY’s disability plan, if any); or (ii) Death of
EXECUTIVE.
7.
Covenant of Confidentiality. All documents, records, files,
manuals, forms, materials, supplies, computer programs, trade
secrets and other information which comes into EXECUTIVE’s
possession from time to time during EXECUTIVE’s employment by
COMPANY and/or any of COMPANY’s subsidiaries or affiliates,
shall be deemed to be confidential and proprietary to COMPANY and
shall remain the sole and exclusive property of COMPANY. EXECUTIVE
acknowledges that all such confidential and proprietary information
is confidential and proprietary and not readily available to
COMPANY’s business competitors. On the effective date of the
termination of the employment relationship or at such other date as
specified by COMPANY, EXECUTIVE agrees that she will return to
COMPANY all such confidential and proprietary items (including, but
not limited to, Company marketing material, business cards, keys,
etc.) in her control or possession, and all copies thereof, and
that she will not remove any such items from the offices of
COMPANY.
8.
Covenant of Non-Disclosure. Without the prior written approval of
COMPANY EXECUTIVE except as required to discharge EXECUTIVE’s
duties under this Agreement, EXECUTIVE shall keep confidential and
not disclose or otherwise make use of any of the confidential or
proprietary information or trade secrets referred to in Section 7
nor reveal the same to any third party whomsoever, except as
required by law.
9.
Covenant of Non-Solicitation. During the Employment Term of this
Agreement and for a period of two (2) years following the effective
date of termination, EXECUTIVE, either on EXECUTIVE’s own
account or for any person, firm, Company or other entity, shall not
solicit, interfere with or induce, or attempt to induce, any
EXECUTIVE of COMPANY, or any of its subsidiaries or affiliates to
leave their employment or to breach their employment agreement, if
any, with COMPANY.
10.
Covenant of Cooperation. EXECUTIVE agrees to cooperate with COMPANY
in any litigation or administrative proceedings involving any
matters with which EXECUTIVE was involved during her employment by
COMPANY. COMPANY shall reimburse EXECUTIVE for reasonable expenses
incurred in providing such assistance.
11.
Covenant Against Competition.
a.
Scope and Term. During the Term of this Agreement and for an
additional period ending one (1) year after the effective date of
termination or expiration of this Agreement, whichever occurs
first, EXECUTIVE shall not directly or indirectly engage in or
become a partner, officer, principal, EXECUTIVE, consultant,
investor, creditor or stockholder of any business, proprietorship,
association, firm, corporation or any other business entity which
is engaged or proposes to engage or hereafter engages in any
business which competes with the business of COMPANY and/or any of
COMPANY's subsidiaries or affiliates in any geographic area in
which COMPANY conducts business at the time of the termination or
expiration of the employment relationship.
12. Rights
to Inventions.
a.
Inventions Defined. “Inventions” means discoveries,
concepts, and ideas, whether patentable or not, relating to any
present or contemplated activity of COMPANY, including without
limitation devices, processes, methods, formulae, techniques, and
any improvements to the foregoing.
b.
Application. This Section 11 shall apply to all Inventions made or
conceived by EXECUTIVE, whether or not during the hours of her
employment or with the use of COMPANY facilities, materials, or
personnel, either solely or jointly with others, during the Term of
her employment by COMPANY and for a period of one (1) year after
any termination of such employment. This Section 12 does not apply
to any invention disclosed in writing to COMPANY by EXECUTIVE prior
to the execution of this Agreement.
c.
Assignment. EXECUTIVE hereby assigns and agrees to assign to
COMPANY all of her rights to Inventions and to all proprietary
rights therein, based thereon or related thereto, including without
limitation applications for United States and foreign letters
patent and resulting letters patent.
d. Reports.
EXECUTIVE shall inform COMPANY promptly and fully of each
Invention by a written report, setting forth in detail the
structures, procedures, and methodology employed, and the results
achieved (“Notice of Invention”). A report shall also
be submitted by EXECUTIVE upon completion of any study or research
project undertaken on COMPANY’s behalf, whether or not in
EXECUTIVE’s opinion a given study or project has resulted in
an Invention.
e.
Patents. At COMPANY’s request and expense, EXECUTIVE
shall
execute such documents and provide such assistance as may be deemed
necessary by COMPANY to apply for, defend or enforce any United
States and foreign letters patent based on or related to such
Inventions.
13.
Remedies. Notwithstanding any other provision in this Agreement to
the contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE
commits a material breach of the Covenant of Confidentiality
(Section 7), Covenant of Non-Disclosure (Section 8), Covenant of
Non-Solicitation (Section 9), Covenant of Cooperation (Section 10),
Covenant Against Competition (Section 11) or Rights to Inventions
(Section 12), COMPANY shall have the right to have the obligations
of EXECUTIVE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury
to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies
at law or equity, all of which remedies shall be cumulative and not
exclusive. EXECUTIVE further acknowledges and agrees that the
obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE’s future
employment and business opportunities, and are commensurate with
the compensation arrangements set out in this
Agreement.
14.
Survivability. Sections 7 through 13, of this Agreement, and
Section 6 to the extent required to give effect thereto, shall
survive termination of the employment relationship and this
Agreement.
15. General
Provisions.
a.
Arbitration. Any controversy involving the construction,
application, enforceability or breach of any of the terms,
provisions, or conditions of this Agreement, including without
limitation, claims for breach of contract, violation of public
policy, breach of implied covenant, intentional infliction of
emotional distress or any other alleged claims which are
not settled by mutual agreement of the parties, shall be submitted
to final and binding arbitration before a single arbitrator in
accordance with the rules of the American Arbitration Association
with respect to employment disputes in Los Angeles County,
California. The cost of the arbitrator shall be borne by COMPANY,
and each party shall be responsible for such party’s own
attorneys’ fees and litigation costs (other than costs of
arbitrator). In consideration of each party’s agreement to
submit to arbitration any and all disputes that arise under this
Agreement, each party agrees that the arbitration provisions of
this Agreement shall constitute her/its exclusive remedy and each
party expressly waives the right to pursue redress of any kind in
any other forum. The parties further agree that the arbitrator
acting hereunder shall not be empowered to add to, subtract from,
delete or in any other way modify the terms of this Agreement.
Notwithstanding the foregoing, any party shall have the limited
right to seek equitable relief in the form of a temporary
restraining order or preliminary injunction in a
court
of competent jurisdiction to protect itself from actual or
threatened irreparable injury resulting from an alleged breach of
this Agreement pending a final decision in
arbitration.
b.
Authorization. COMPANY and EXECUTIVE each represent and warrant to
the other that it has the authority, power and right to deliver,
execute and fully perform the terms of this Agreement.
c.
Entire Agreement. EXECUTIVE understands and acknowledges that this
document constitutes the entire agreement between EXECUTIVE and
COMPANY with regard to EXECUTIVE’s employment by COMPANY and
EXECUTIVE’s post-employment activities concerning COMPANY.
This Agreement supersedes any and all other written and oral
agreements between the parties with respect to the subject matter
hereof. Any and all prior agreements, promises, negotiations, or
representations, either written or oral, relating to the subject
matter of this Agreement not expressly set forth in this Agreement
are of no force and effect. This Agreement may be altered, amended,
or modified only in writing signed by all of the parties hereto.
Any oral representations or modifications concerning this
instrument shall be of no force and effect.
d.
Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court or other tribunal of competent
jurisdiction to be invalid, void, or unenforceable, the remainder
of such provisions and all of the remaining provisions hereof shall
remain in full force and effect to the fullest extent permitted by
law and shall in no way be
affected, impaired,
or invalidated as a result of such decision.
e.
Governing Law. Except to the extent that federal law may preempt
California law, this Agreement and the rights and obligations
hereunder shall be governed, construed and enforced in accordance
with the laws of the State of California.
f.
Taxes. All compensation payable hereunder is gross and shall be
subject to such withholding taxes and other taxes as may be
provided by law. EXECUTIVE shall be responsible for the payment of
all taxes attributable to the compensation provided by this
Agreement except for those taxes required by law to be paid or
withheld by COMPANY.
g.
Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of COMPANY. EXECUTIVE may not
sell, transfer, assign, or pledge any of her rights or interests
pursuant to this Agreement. In the event of EXECUTIVE’s
death, EXECUTIVE’s estate shall succeed to all rights of
EXECUTIVE as effective at such time (including under Sections 5(d),
5(e) and 6).
h.
Waiver. Either party’s failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions, or prevent that party
thereafter from enforcing such provision or provisions and each and
every other provision of this Agreement.
i.
Captions. Titles and headings to sections in this Agreement are for
the purpose of reference only and shall in no way limit, define, or
otherwise affect any provisions contained therein.
j.
Breach - Right to Cure. A party shall be deemed in breach of this
Agreement only upon the failure to perform any obligation under
this Agreement after receipt of written notice of breach and
failure to cure such breach within ten (10) days thereafter;
provided, however, such notice shall not be required where a breach
or threatened breach would cause irreparable harm to the other
party and such other party may immediately seek equitable relief in
a court of competent jurisdiction to enjoin such
breach.
k. All
notices, demands and all other communications required or otherwise
provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered either personally, by
reputable overnight courier or three (3) business days after
deposit via United States certified or registered mail, return
receipt requested, postage prepaid, addressed as
follows:
If to
EXECUTIVE:
At
EXECUTIVE’s last known address shown on the Company’s
payroll records
If to
the Company:
Attn:
David Steigelfest, Co-Founder & CPO
Super
League Gaming, Inc.
2906
Colorado Ave.
Santa
Monica, CA 90404
or to
such other address as any party may have furnished to the other in
writing in accordance with this Agreement, except that notices of
change of address shall be effective only upon
receipt.
16.
Acknowledgement. EXECUTIVE acknowledges that he has been given a
reasonable period of time to study this Agreement before signing
it. EXECUTIVE certifies that he has fully read, has received an
explanation of, and completely understands the terms, nature, and
effect of this Agreement. EXECUTIVE further acknowledges that he is
executing this Agreement freely, knowingly, and voluntarily and
that EXECUTIVE’s execution of this Agreement is not the
result of any fraud, duress, mistake, or undue influence
whatsoever. In executing this Agreement, EXECUTIVE does not rely on
any inducements, promises, or representations by COMPANY other than
the terms and conditions of this Agreement.
17.
Section 409A. The parties intend that all payments and benefits
under this Agreement comply with Section 409A of the Code and the
regulations promulgated thereunder (collectively “Section
409A”) and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted in a manner in compliance
therewith. To the extent that any provision hereof is modified in
order to comply with Section 409A, such modification shall be made
in good faith and shall, to the maximum extent reasonably possible,
maintain the original intent and economic benefit to EXECUTIVE and
COMPANY of the applicable provision without violating the
provisions of Section 409A. No amount shall be payable pursuant to
Section 6 or otherwise upon a termination of EXECUTIVE’s
employment unless such termination constitutes a “separation
from service” with COMPANY under Section 409A. To the maximum
extent permitted by applicable law, amounts payable to EXECUTIVE
pursuant to such Sections herein shall be made in reliance upon the
exception for certain involuntary terminations under a separation
pay plan or as short-term deferral under Section 409A. To the
extent that reimbursements or other in-kind benefits under this
Agreement constitute nonqualified deferred compensation, (i) all
expenses or other reimbursements hereunder shall be made on or
prior to the last day of the taxable year following the taxable
year in which such expenses were incurred by EXECUTIVE, (ii) any
right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit, and (ii) no such
reimbursement, expenses eligible for reimbursement, or in-kind
benefits provided in any taxable year shall in any way affect the
expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year. For purposes of Section 409A,
EXECUTIVE’s right to receive installment payments pursuant to
this Agreement shall be treated as a right to receive a series of
separate and distinct payments. Any other provision of this
Agreement to the contrary notwithstanding, in no event shall any
payment or benefit under this Agreement that constitutes
nonqualified deferred compensation for purposes of Section 409A be
subject to offset by any other amount unless otherwise permitted by
Section 409A.
18.
Effective Only Upon Execution by Authorized Officer of COMPANY;
Counterparts. This Agreement shall have no force or effect and
shall be unenforceable in its entirety until it is executed by a
duly authorized officer of COMPANY and such executed Agreement is
delivered to EXECUTIVE. This Agreement may be executed in
counterparts, each being an original and all such counterparts
together constituting one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first
above written.
EXECUTIVE
COMPANY
/s/ Ann
Hand
By: /s/ David
Steigelfest
Ann
Hand
David Steigelfest
Co-Founder, CTO
& CPO
Exhibit 10.22
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment
Agreement (this “Agreement”) is made and entered
into effective as November 1, 2018 (the “Effective
Date”), by and between Super League Gaming, Inc., a Delaware
corporation (“COMPANY”), and David Steigelfest, an
individual (“EXECUTIVE”) and hereby amends and replaces
in its entirety that certain employment agreement dated October 31,
2016.
WITNESSETH:
WHEREAS, COMPANY
and EXECUTIVE deem it to be in their respective best interests to
enter into an agreement providing for COMPANY's employment of
EXECUTIVE pursuant to the terms herein stated.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as
follows:
1.
Term. COMPANY hereby employs, and EXECUTIVE hereby accepts
employment with COMPANY for a period of two (2) years beginning on
the date hereof ("Term"). Unless COMPANY or EXECUTIVE provides
written notice that this Agreement shall be allowed to expire, and
the employment relationship thereby terminated at least thirty (30)
days prior to the expiration of the Term or any Renewal Term (as
defined herein), this Agreement shall continue in effect for an
additional term of one (1) year ("Renewal Term").
2.
Duties of EXECUTIVE. EXECUTIVE’s position with COMPANY shall
be Chief Technology Officer and Chief Product Officer. EXECUTIVE
shall do and perform all services, acts, or things reasonably
necessary or advisable to accomplish the objectives of his director
report, Ann Hand, CEO & President. The COMPANY reserves the
right to change the role and title of EXECUTIVE at its sole
discretion.
3.
Devotion of Time to Company's Business. EXECUTIVE shall be a
full-time EXECUTIVE of COMPANY and shall devote such substantial
and sufficient amounts of his productive time, ability, and
attention to the business of COMPANY during the Term of this
Agreement as may be reasonable and necessary to accomplish the
objectives and complete the tasks assigned to EXECUTIVE. EXECUTIVE
may devote reasonable time to activities other than those required
under this Agreement, including activities involving professional,
charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of
directors of other organizations and similar types of activities to
the extent that such activities do not inhibit or prohibit the
performance of services under this Agreement.
4.
Uniqueness of Services. EXECUTIVE hereby acknowledges that the
services to be performed by him under the terms of this Agreement
are of a special and unique value. Accordingly, the obligations of
EXECUTIVE under this Agreement are non-assignable.
5.
Compensation of EXECUTIVE.
a. Base
Annual Salary. Subject to other specific provisions in this
Agreement, as compensation for services hereunder, EXECUTIVE shall
receive a Base Annual Salary of $300,000 payable in accordance with
the Company's ordinary payroll practices (and in any event no less
frequently than monthly). On each anniversary date hereof,
EXECUTIVE's Base Annual Salary will be reviewed and may be
increased at the sole discretion of the COMPANY’S Board of
Directors.
b.
Cash Bonuses. EXECUTIVE shall be entitled to receive (i) a cash
bonus of $50,000 upon the close of the Company’s initial
public offering (“IPO”) or private financing of not
less than $15,000,000; (ii) a cash bonus of $75,000, payable in
five (5) separate increments of $15,000 upon achieving (a) 300,000
registered members, (b) launch of event admin for internal use, (c)
successful delivery of three (3) City Champs Programs; (d) launch
of subscription program (aka monthly); and (e) Fortnite launch, and
(iii ) a cash bonus of $100,000, payable in four (4) separate
increments of $25,000 upon achieving the following no later than
June 30, 2019 (forego if not achieved by such date) (i) 500,000
users, (ii) ten (10) external (non-SLG) users of the SLG platform;
(iii) successful delivery of Rocket League High School Program; and
(iv) Launch of ‘Always On’ and consisting of at least
two (2) titles.
c. Stock
Option Grant. EXECUTIVE shall be issued a stock option grant to
purchase 300,000 shares issued pursuant to the Company’s 2014
Stock Option and Incentive Plan, with an exercise term of ten (10)
years, subject to the Company’s traditional vesting schedule
and to be priced at the price per share of the Company’s
initial public offering (IPO).
d. Health
Insurance. EXECUTIVE and his dependents shall be entitled to
participate in the health insurance plan offered to COMPANY
employees, and the Company will pay 90% of the premium related
thereto.
e.
401(k). EXECUTIVE will be permitted to participate in the
Company’s 401(k) Plan upon the Board of Directors electing to
institute it.
f.
Business Expenses. COMPANY will reimburse EXECUTIVE for all
reasonable business expenses directly incurred in performing
EXECUTIVE's duties and promoting the business of
COMPANY.
6.
Termination of Employment.
a.
In the event COMPANY should
terminate this Agreement other than for just "Cause" as defined in
Section 6(b) below ("Termination without Cause"), EXECUTIVE shall
receive cash equal to the Annual Salary for one (1)
year.
b.
COMPANY shall have the right to terminate EXECUTIVE's employment at
any time for Cause by giving EXECUTIVE written notice of the
effective date of Termination. For the purposes of this Agreement,
"Cause" shall mean:
i.
Fraud, misappropriation, embezzlement or any other action of
material misconduct against COMPANY or any of its affiliates or
subsidiaries;
ii.
Substantial failure to render services in accordance with the
provisions of this Agreement, provided that:
(a)
a written demand for performance has
been delivered to EXECUTIVE at least ten (10) days prior to
termination identifying the manner in which COMPANY believes that
EXECUTIVE has failed to perform; and
(b)
EXECUTIVE has thereafter failed to remedy such failure to
perform;
iii.
Material violation of any law, rule or regulation of any
governmental or regulatory body material to the business of
COMPANY;
iv.
Conviction or a guilty plea or nolo contendere plea to a
felony;
v.
Repeated and persistent failure to abide by the policies
established by COMPANY after written warning from
COMPANY;
vi.
Any acts of violence or threats of violence made by EXECUTIVE
against COMPANY or anyone associated with COMPANY's
business;
vii.
The solicitation or acceptance of payment or gratuity from any
existing or potential customer or supplier of COMPANY without the
prior written consent of
COMPANY's Board of Director’s.
viii.
Drug dependency or habitual insobriety; or
ix.
Gross incompetence.
(a)
In the event of termination for cause, EXECUTIVE shall be paid
EXECUTIVE's salary through the effective date of termination on the
date of termination. After the effective date of Termination,
EXECUTIVE shall not be entitled to accrue or vest in any further
salary, severance pay, stock options, benefits, fringe benefits or
entitlements; provided that EXECUTIVE shall retain the right to
exercise any stock options which are vested as of the effective
date of termination.
(b)
This Agreement shall terminate automatically in the event that: (i)
EXECUTIVE fails or is unable to perform EXECUTIVE 's duties due to
injury, illness or other incapacity for ninety (90) days in any
twelve (12) month period (except that EXECUTIVE may be entitled to
disability payments pursuant to COMPANY's disability plan, if any);
or (ii) Death of EXECUTIVE.
7.
Covenant of Confidentiality. All documents,
records, files, manuals, forms, materials, supplies, computer
programs, trade secrets and other information which comes into
EXECUTIVE's possession from time to time during EXECUTIVE's
employment by COMPANY and/or any of COMPANY's subsidiaries or
affiliates, shall be deemed to be confidential and proprietary to
COMPANY and shall remain the sole and exclusive property of
COMPANY. EXECUTIVE acknowledges that all such confidential and
proprietary information is confidential and proprietary and not
readily available to COMPANY's business competitors. On the
effective date of the termination of the employment relationship or
at such other date as specified by COMPANY, EXECUTIVE agrees that
he will return to COMPANY all such confidential and proprietary
items (including, but not limited to, Company marketing material,
business cards, keys, etc.) in his control or possession, and all
copies thereof, and that he will not remove any such items from the
offices of COMPANY.
8.
Covenant of Non-Disclosure. Without the prior written approval of
COMPANY, EXECUTIVE shall keep confidential and not disclose or
otherwise make use of any of the confidential or proprietary
information or trade secrets referred to in Section 7 nor reveal
the same to any third party whomsoever, except as required by
law.
9.
Covenant of Non-Solicitation. During the Term of this
Agreement and for a period of two (2) years following the effective
date of termination, EXECUTIVE, either on EXECUTIVE's own account
or for any person, firm, Company or other entity, shall not
solicit, interfere with or induce, or attempt to induce, any
EXECUTIVE of COMPANY, or any of its subsidiaries or affiliates to
leave their employment or to breach their employment agreement, if
any, with COMPANY.
10.
Covenant of Cooperation. EXECUTIVE agrees to cooperate with COMPANY
in any litigation or administrative proceedings involving any
matters with which EXECUTIVE was involved during his employment by
COMPANY. COMPANY shall reimburse EXECUTIVE for reasonable expenses
incurred in providing such assistance.
11.
Covenant Against Competition.
a.
Scope and Term. During the Term of this Agreement and for an
additional period ending one (1) year after the effective date of
termination or expiration of this Agreement, whichever occurs
first, EXECUTIVE shall not directly or indirectly engage in or
become a partner, officer, principal, EXECUTIVE, consultant,
investor, creditor or stockholder of any business, proprietorship,
association, firm, corporation or any other business entity which
is engaged or proposes to engage or hereafter engages in any
business which competes with the business of COMPANY and/or any of
COMPANY's subsidiaries or affiliates in any geographic area in
which COMPANY conducts business at the time of the termination or
expiration of the employment relationship.
12.
Rights to Inventions.
a.
Inventions Defined. "Inventions" means discoveries, concepts, and
ideas, whether patentable or not, relating to any present or
contemplated activity of COMPANY, including without limitation
devices, processes, methods, formulae, techniques, and any
improvements to the foregoing.
b.
Application. This Section 12 shall apply to all Inventions made or
conceived by EXECUTIVE, whether or not during the hours of his
employment or with the use of COMPANY facilities, materials, or
personnel, either solely or jointly with others, during the Term of
his employment by COMPANY and for a period of one (1) year after
any termination of such employment. This Section 12 does not apply
to any invention disclosed in writing to COMPANY by EXECUTIVE prior
to the execution of this Agreement.
c.
Assignment. EXECUTIVE hereby assigns and agrees to assign to
COMPANY all of his rights to Inventions and to all proprietary
rights therein, based thereon or related thereto, including without
limitation applications for United States and foreign letters
patent and resulting letters patent.
d. Reports.
EXECUTIVE shall inform COMPANY promptly and fully of each
Invention by a written report, setting forth in detail the
structures, procedures, and methodology employed, and the results
achieved ("Notice of Invention"). A report shall also be submitted
by EXECUTIVE upon completion of any study or research project
undertaken on COMPANY's behalf, whether or not in EXECUTIVE's
opinion a given study or project has resulted in an
Invention.
e.
Patents. At COMPANY's request and expense, EXECUTIVE
shall
execute such documents and provide such assistance as may be deemed
necessary by COMPANY to apply for, defend or enforce any United
States and foreign letters patent based on or related to such
Inventions.
13.
Remedies. Notwithstanding any other provision in this Agreement to
the contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE
commits a material breach of the Covenant of Confidentiality
(Section 7), Covenant of Non-Disclosure (Section 8), Covenant of
Non-Solicitation (Section 9), Covenant of Cooperation (Section 10),
Covenant Against Competition (Section 11), or Rights to Inventions
(Section 12), COMPANY shall have the right to have the obligations
of EXECUTIVE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury
to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies
at law or equity, all of which remedies shall be cumulative and not
exclusive. EXECUTIVE further acknowledges and agrees that the
obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE's future
employment and business opportunities, and are commensurate with
the compensation arrangements set out in this
Agreement.
14.
Survivability. Sections 7 through 13, of this Agreement shall
survive termination of the employment relationship and this
Agreement.
15.
General Provisions.
a.
Arbitration. Any controversy involving the construction,
application, enforceability or breach of any of the terms,
provisions, or conditions of this Agreement, including without
limitation, claims for breach of contract, violation of public
policy, breach of implied covenant, intentional infliction of
emotional distress or any other alleged claims which are
not settled by mutual agreement of the parties, shall be submitted
to final and binding arbitration in accordance with the rules of
the American Arbitration Association in Los Angeles County,
California. The cost of arbitration shall be borne by the losing
party. In consideration of each party's agreement to submit to
arbitration any and all disputes that arise under this Agreement,
each party agrees that the arbitration provisions of this Agreement
shall constitute his/its exclusive remedy and each party expressly
waives the right to pursue redress of any kind in any other forum.
The parties further agree that the arbitrator acting hereunder
shall not be empowered to add to, subtract from, delete or in any
other way modify the terms of this Agreement. Notwithstanding the
foregoing, any party shall have the limited right to seek equitable
relief in the form of a temporary restraining order or preliminary
injunction in a court of competent
jurisdiction to protect itself from actual or threatened
irreparable injury resulting from an alleged breach of this
Agreement pending a final decision in arbitration.
b.
Authorization. COMPANY and EXECUTIVE each represent and warrant to
the other that he/it has the authority, power and right to deliver,
execute and fully perform the terms of this Agreement.
c.
Entire Agreement. EXECUTIVE understands and acknowledges that this
document constitutes the entire agreement between EXECUTIVE and
COMPANY with regard to EXECUTIVE's employment by COMPANY and
EXECUTIVE's post-employment activities concerning COMPANY. This
Agreement supersedes any and all other written and oral agreements
between the parties with respect to the subject matter hereof. Any
and all prior agreements, promises, negotiations, or
representations, either written or oral, relating to the subject
matter of this Agreement not expressly set forth in this Agreement
are of no force and effect. This Agreement may be altered, amended,
or modified only in writing signed by all of the parties hereto.
Any oral representations or modifications concerning this
instrument shall be of no force and effect.
d.
Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court or other tribunal of competent
jurisdiction to be invalid, void, or unenforceable, the remainder
of such provisions and all of the remaining provisions hereof shall
remain in full force and effect to the fullest extent permitted by
law and shall in no way be affected, impaired,
or invalidated as a result of such decision.
e.
Governing Law. Except to the extent that federal law may preempt
California law, this Agreement and the rights and obligations
hereunder shall be governed, construed and enforced in accordance
with the laws of the State of California.
f.
Taxes. All compensation payable hereunder is gross and shall be
subject to such withholding taxes and other taxes as may be
provided by law. EXECUTIVE shall be responsible for the payment of
all taxes attributable to the compensation provided by this
Agreement except for those taxes required by law to be paid or
withheld by COMPANY.
g.
Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of COMPANY. EXECUTIVE may not
sell, transfer, assign, or pledge any of his rights or interests
pursuant to this Agreement.
h.
Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions or prevent that party
thereafter from enforcing such provision or provisions and each and
every other provision of this Agreement.
i.
Captions. Titles and headings to sections in this Agreement are for
the purpose of reference only and shall in no way limit, define, or
otherwise affect any provisions contained therein.
j.
Breach - Right to Cure. A party shall be deemed in breach of this
Agreement only upon the failure to perform any obligation under
this Agreement after receipt of written notice of breach and
failure to cure such breach within ten (10) days thereafter;
provided, however, such notice shall not be required where a breach
or threatened breach would cause irreparable harm to the other
party and such other party may immediately seek equitable relief in
a court of competent jurisdiction to enjoin such
breach.
16.
Acknowledgement. EXECUTIVE acknowledges that he has been given a
reasonable period of time to study this Agreement before signing
it. EXECUTIVE certifies that he has fully read, has received an
explanation of, and completely understands the terms, nature, and
effect of this Agreement. EXECUTIVE further acknowledges that he is
executing this Agreement freely, knowingly, and voluntarily and
that EXECUTIVE's execution of this Agreement is not the result of
any fraud, duress, mistake, or undue influence whatsoever. In
executing this Agreement, EXECUTIVE does not rely on any
inducements, promises, or representations by COMPANY other than the
terms and conditions of this Agreement.
17.
Effective Only Upon Execution by Authorized Officer of COMPANY.
This Agreement shall have no force or effect and shall be
unenforceable in its entirety until it is executed by a duly
authorized officer of COMPANY and such executed Agreement is
delivered to EXECUTIVE.
IN
WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first
above written.
EXECUTIVE
|
COMPANY
|
|
|
|
By:
/s/ Ann Hand
|
David
Steigelfest
|
Ann
Hand
|
|
CEO
& President
|
Exhibit 10.23
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“Agreement”) is made and entered into effective as
November 1, 2018 (the “Effective Date”), by and between
Super League Gaming, Inc., a Delaware corporation
(“COMPANY”), and Matt Edelman, an individual
(“EXECUTIVE”).
WITNESSETH:
WHEREAS, COMPANY
and EXECUTIVE deem it to be in their respective best interests to
enter into an agreement providing for COMPANY's employment of
EXECUTIVE pursuant to the terms herein stated.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as
follows:
1.
Term. COMPANY hereby employs, and EXECUTIVE hereby accepts
employment with COMPANY for a period of two (2) years beginning on
the date hereof ("Term"). Unless COMPANY or EXECUTIVE provides
written notice that this Agreement shall be allowed to expire, and
the employment relationship thereby terminated at least thirty (30)
days prior to the expiration of the Term or any Renewal Term (as
defined herein), this Agreement shall continue in effect for an
additional term of one (1) year ("Renewal Term").
2.
Duties of EXECUTIVE. EXECUTIVE’s position with COMPANY shall
be Chief Commercial Officer. EXECUTIVE shall do and perform all
services, acts, or things reasonably necessary or advisable to
accomplish the objectives of his director report, Ann Hand, CEO
& President. The COMPANY reserves the right to change the role
and title of EXECUTIVE at its sole discretion.
3.
Devotion of Time to Company's Business. EXECUTIVE shall be a
full-time EXECUTIVE of COMPANY and shall devote such substantial
and sufficient amounts of his productive time, ability, and
attention to the business of COMPANY during the Term of this
Agreement as may be reasonable and necessary to accomplish the
objectives and complete the tasks assigned to EXECUTIVE. EXECUTIVE
may devote reasonable time to activities other than those required
under this Agreement, incluing activities involving professional,
charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of
directors of other organizations and similar types of activities to
the extent that such activities do not inhibit or prohibit the
performance of services under this Agreement.
4.
Uniqueness of Services. EXECUTIVE hereby acknowledges that the
services to be performed by him under the terms of this Agreement
are of a special and unique value. Accordingly, the obligations of
EXECUTIVE under this Agreement are non-assignable.
5.
Compensation of EXECUTIVE.
a. Base
Annual Salary. Subject to other specific provisions in this
Agreement, as compensation for services hereunder, EXECUTIVE shall
receive a Base Annual Salary of $300,000 payable in accordance with
the Company's ordinary payroll practices (and in any event no less
frequently than monthly). On each anniversary date hereof,
EXECUTIVE's Base Annual Salary will be reviewed and may be
increased at the sole discretion of the COMPANY’S Board of
Directors.
b.
Health Insurance. EXECUTIVE and his dependents shall be entitled to
participate in the health insurance plan offered to COMPANY
employees, and the Company will pay 90% of the premium related
thereto.
c.
401(k). EXECUTIVE will be permitted to participate in the
Company’s 401(k) Plan upon the Board of Directors electing to
institute it.
d.
Business Expenses. COMPANY
will reimburse EXECUTIVE for all reasonable business expenses
directly incurred in performing EXECUTIVE's duties and promoting
the business of COMPANY.
6.
Termination of Employment.
a. In
the event COMPANY should terminate this Agreement other than for
just "Cause" as defined in Section 6(b) below ("Termination without
Cause"), EXECUTIVE shall be entitled to the following severance
payment based upon your length of employment with the Company and
calculated based upon your then existing annual salary: (i) more
than six (6) months of employment but less than nine (9) months,
will entitle you to one (1) month of severance; (ii) more than nine
(9) months of employment but less than one (1) year of employment,
will entitle you to two (2) months of severance; (iii) more than
one (1) year employment but less than two (2) years of employment,
will entitle you to three (3) months of severance pay; and (ii) for
each full year of employment beyond one (1) year, you will be
entitled to an additional one (1) month of severance pay. By way of
illustration only, if you are terminated “without
cause” after 3.5 years of employment, you would be entitled
to a total of five (5) months of severance pay. The applicable
severance payment amount, based on the formula set forth
immediately above, shall be made thirty (30) days following the
final day of employment and shall require the execution of a
mutually agreed upon Mutual Release agreement that shall include
traditional provisions therein. Notwithstanding the foregoing, in the event of a
change of control transaction involving the Company (whereby the
stockholders of the Company immediately prior to the change of
control do not hold a majority of the voting stock of the Company
following the change of control transaction), then in such event
EXECUTIVE shall be entitled to six (6) month’s severance pay
based on the then existing Base Annual Salary.
b.
COMPANY shall have the right to terminate EXECUTIVE's employment at
any time for Cause by giving EXECUTIVE written notice of the
effective date of Termination. For the purposes of this Agreement,
"Cause" shall mean:
i.
Fraud, misappropriation, embezzlement or any other action of
material misconduct against COMPANY or any of its affiliates or
subsidiaries;
ii.
Substantial failure to render services in accordance with the
provisions of this Agreement, provided that:
(a)
delivered to
EXECUTIVE at least ten (10) days prior to termination identifying
the manner in which COMPANY believes that EXECUTIVE has failed to
perform; and
(b)
EXECUTIVE has thereafter failed to remedy such failure to
perform;
iii.
Material violation of any law, rule or regulation of any
governmental or regulatory body material to the business of
COMPANY;
iv.
Conviction or a guilty plea or nolo contendere plea to a
felony;
v.
Repeated and persistent failure to abide by the policies
established by COMPANY after written warning from
COMPANY;
vi.
Any acts of violence or threats of violence made by EXECUTIVE
against COMPANY or anyone associated with COMPANY's
business;
vii.
The solicitation or acceptance of payment or gratuity from any
existing or potential customer or supplier of COMPANY without the
prior written consent of
COMPANY's Board of Director’s.
viii.
Drug dependency or habitual insobriety; or
ix.
Gross incompetence.
(a)
In the event of termination for cause, EXECUTIVE shall be paid
EXECUTIVE's salary through the effective date of termination on the
date of termination. After the effective date of Termination,
EXECUTIVE shall not be entitled to accrue or vest in any further
salary, severance pay, stock options, benefits, fringe benefits or
entitlements; provided that EXECUTIVE shall retain the right to
exercise any stock options which are vested as of the effective
date of termination.
(b)
This Agreement shall terminate automatically in the event that: (i)
EXECUTIVE fails or is unable to perform EXECUTIVE 's duties due to
injury, illness or other incapacity for ninety (90) days in any
twelve (12) month period (except that EXECUTIVE may be entitled to
disability payments pursuant to COMPANY's disability plan, if any);
or (ii) Death of EXECUTIVE.
7.
Covenant of Confidentiality. All
documents, records, files, manuals, forms, materials, supplies,
computer programs, trade secrets and other information which comes
into EXECUTIVE's possession from time to time during EXECUTIVE's
employment by COMPANY and/or any of COMPANY's subsidiaries or
affiliates, shall be deemed to be confidential and proprietary to
COMPANY and shall remain the sole and exclusive property of
COMPANY. EXECUTIVE acknowledges that all such confidential and
proprietary information is confidential and proprietary and not
readily available to COMPANY's business competitors. On the
effective date of the termination of the employment relationship or
at such other date as specified by COMPANY, EXECUTIVE agrees that
he will return to COMPANY all such confidential and proprietary
items (including, but not limited to, Company marketing material,
business cards, keys, etc.) in his control or possession, and all
copies thereof, and that he will not remove any such items from the
offices of COMPANY.
8.
Covenant of Non-Disclosure. Without the prior
written approval of COMPANY, EXECUTIVE shall keep confidential and
not disclose or otherwise make use of any of the confidential or
proprietary information or trade secrets referred to in Section 7
nor reveal the same to any third party whomsoever, except as
required by law.
9.
Covenant of Non-Solicitation. During the Term
of this Agreement and for a period of two (2) years following the
effective date of termination, EXECUTIVE, either on EXECUTIVE's own
account or for any person, firm, Company or other entity, shall not
solicit, interfere with or induce, or attempt to induce, any
EXECUTIVE of COMPANY, or any of its subsidiaries or affiliates to
leave their employment or to breach their employment agreement, if
any, with COMPANY.
10.
Covenant of Cooperation. EXECUTIVE agrees to cooperate with COMPANY
in any litigation or administrative proceedings involving any
matters with which EXECUTIVE was involved during his employment by
COMPANY. COMPANY shall reimburse EXECUTIVE for reasonable expenses
incurred in providing such assistance.
11.
Covenant Against Competition.
a.
Scope and Term. During the Term of this Agreement and for an
additional period ending one (1) year after the effective date of
termination or expiration of this Agreement, whichever occurs
first, EXECUTIVE shall not directly or indirectly engage in or
become a partner, officer, principal, EXECUTIVE, consultant,
investor, creditor or stockholder of any business, proprietorship,
association, firm, corporation or any other business entity which
is engaged or proposes to engage or hereafter engages in any
business which competes with the business of COMPANY and/or any of
COMPANY's subsidiaries or affiliates in any geographic area in
which COMPANY conducts business at the time of the termination or
expiration of the employment relationship.
12.
Rights to Inventions.
a.
Inventions Defined. "Inventions" means discoveries, concepts, and
ideas, whether patentable or not, relating to any present or
contemplated activity of COMPANY, including without limitation
devices, processes, methods, formulae, techniques, and any
improvements to the foregoing.
b.
Application. This Section 12 shall apply to all Inventions made or
conceived by EXECUTIVE, whether or not during the hours of his
employment or with the use of COMPANY facilities, materials, or
personnel, either solely or jointly with others, during the Term of
his employment by COMPANY and for a period of one (1) year after
any termination of such employment. This Section 12 does not apply
to any invention disclosed in writing to COMPANY by EXECUTIVE prior
to the execution of this Agreement.
c.
Assignment. EXECUTIVE hereby assigns and agrees to assign to
COMPANY all of his rights to Inventions and to all proprietary
rights therein, based thereon or related thereto, including without
limitation applications for United States and foreign letters
patent and resulting letters patent.
d. Reports.
EXECUTIVE shall inform COMPANY promptly and fully of each
Invention by a written report, setting forth in detail the
structures, procedures, and methodology employed, and the results
achieved ("Notice of Invention"). A report shall also be submitted
by EXECUTIVE upon completion of any study or research project
undertaken on COMPANY's behalf, whether or not in EXECUTIVE's
opinion a given study or project has resulted in an
Invention.
e.
Patents. At COMPANY's request and expense, EXECUTIVE
shall
execute such documents and provide such assistance as may be deemed
necessary by COMPANY to apply for, defend or enforce any United
States and foreign letters patent based on or related to such
Inventions.
13.
Remedies. Notwithstanding any other provision in this Agreement to
the contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE
commits a material breach of the Covenant of Confidentiality
(Section 7), Covenant of Non-Disclosure (Section 8), Covenant of
Non-Solicitation (Section 9), Covenant of Cooperation (Section 10),
Covenant Against Competition (Section 11), or Rights to Inventions
(Section 12), COMPANY shall have the right to have the obligations
of EXECUTIVE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury
to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies
at law or equity, all of which remedies shall be cumulative and not
exclusive. EXECUTIVE further acknowledges and agrees that the
obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE's future
employment and business opportunities, and are commensurate with
the compensation arrangements set out in this
Agreement.
14.
Survivability. Sections 7 through 13, of this Agreement shall
survive termination of the employment relationship and this
Agreement.
15.
General Provisions.
a.
Arbitration. Any controversy involving the construction,
application, enforceability or breach of any of the terms,
provisions, or conditions of this Agreement, including without
limitation, claims for breach of contract, violation of public
policy, breach of implied covenant, intentional infliction of
emotional distress or any other alleged claims which are
not settled by mutual agreement of the parties, shall be submitted
to final and binding arbitration in accordance with the rules of
the American Arbitration Association in Los Angeles County,
California. The cost of arbitration shall be borne by the losing
party. In consideration of each party's agreement to submit to
arbitration any and all disputes that arise under this Agreement,
each party agrees that the arbitration provisions of this Agreement
shall constitute his/its exclusive remedy and each party expressly
waives the right to pursue redress of any kind in any other forum.
The parties further agree that the arbitrator acting hereunder
shall not be empowered to add to, subtract from, delete or in any
other way modify the terms of this Agreement. Notwithstanding the
foregoing, any party shall have the limited right to seek equitable
relief in the form of a temporary restraining order or preliminary
injunction in a court of competent
jurisdiction to protect itself from actual or threatened
irreparable injury resulting from an alleged breach of this
Agreement pending a final decision in arbitration.
b.
Authorization. COMPANY and EXECUTIVE each represent
and warrant to the other that he/it has the authority, power and
right to deliver, execute and fully perform the terms of this
Agreement.
c.
Entire Agreement. EXECUTIVE understands and acknowledges that this
document constitutes the entire agreement between EXECUTIVE and
COMPANY with regard to EXECUTIVE's employment by COMPANY and
EXECUTIVE's post-employment activities concerning COMPANY. This
Agreement supersedes any and all other written and oral agreements
between the parties with respect to the subject matter hereof. Any
and all prior agreements, promises, negotiations, or
representations, either written or oral, relating to the subject
matter of this Agreement not expressly set forth in this Agreement
are of no force and effect. This Agreement may be altered, amended,
or modified only in writing signed by all of the parties hereto.
Any oral representations or modifications concerning this
instrument shall be of no force and effect.
d.
Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court or other tribunal of competent
jurisdiction to be invalid, void, or unenforceable, the remainder
of such provisions and all of the remaining provisions hereof shall
remain in full force and effect to the fullest extent permitted by
law and shall in no way be affected, impaired,
or invalidated as a result of such decision.
e.
Governing Law. Except to the extent that federal law may preempt
California law, this Agreement and the rights and obligations
hereunder shall be governed, construed and enforced in accordance
with the laws of the State of California.
f.
Taxes. All compensation payable hereunder is gross and shall be
subject to such withholding taxes and other taxes as may be
provided by law. EXECUTIVE shall be responsible for the payment of
all taxes attributable to the compensation provided by this
Agreement except for those taxes required by law to be paid or
withheld by COMPANY.
g.
Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of COMPANY. EXECUTIVE may not
sell, transfer, assign, or pledge any of his rights or interests
pursuant to this Agreement.
h.
Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions or prevent that party
thereafter from enforcing such provision or provisions and each and
every other provision of this Agreement.
i.
Captions. Titles and headings to sections in this Agreement are for
the purpose of reference only and shall in no way limit, define, or
otherwise affect any provisions contained therein.
j.
Breach - Right to Cure. A party shall be deemed in breach of this
Agreement only upon the failure to perform any obligation under
this Agreement after receipt of written notice of breach and
failure to cure such breach within ten (10) days thereafter;
provided, however, such notice shall not be required where a breach
or threatened breach would cause irreparable harm to the other
party and such other party may immediately seek equitable relief in
a court of competent jurisdiction to enjoin such
breach.
16.
Acknowledgement. EXECUTIVE acknowledges that he has been given a
reasonable period of time to study this Agreement before signing
it. EXECUTIVE certifies that he has fully read, has received an
explanation of, and completely understands the terms, nature, and
effect of this Agreement. EXECUTIVE further acknowledges that he is
executing this Agreement freely, knowingly, and voluntarily and
that EXECUTIVE's execution of this Agreement is not the result of
any fraud, duress, mistake, or undue influence whatsoever. In
executing this Agreement, EXECUTIVE does not rely on any
inducements, promises, or representations by COMPANY other than the
terms and conditions of this Agreement.
17.
Effective Only Upon Execution by Authorized Officer of COMPANY.
This Agreement shall have no force or effect and shall be
unenforceable in its entirety until it is executed by a duly
authorized officer of COMPANY and such executed Agreement is
delivered to EXECUTIVE.
IN
WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first
above written.
EXECUTIVE
|
COMPANY
|
|
|
|
By:
/s/ Ann Hand
|
Matt
Edelman
|
Ann
Hand
|
|
CEO
& President
|
Exhibit 10.24
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“Agreement”) is made and entered into effective as
November 1, 2018 (the “Effective Date”), by and between
Super League Gaming, Inc., a Delaware corporation
(“COMPANY”), and Clayton Haynes, an individual
(“EXECUTIVE”).
WITNESSETH:
WHEREAS, COMPANY
and EXECUTIVE deem it to be in their respective best interests to
enter into an agreement providing for COMPANY's employment of
EXECUTIVE pursuant to the terms herein stated.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as
follows:
1.
Term. COMPANY hereby employs, and EXECUTIVE hereby accepts
employment with COMPANY for a period of two (2) years beginning on
the date hereof ("Term"). Unless COMPANY or EXECUTIVE provides
written notice that this Agreement shall be allowed to expire, and
the employment relationship thereby terminated at least thirty (30)
days prior to the expiration of the Term or any Renewal Term (as
defined herein), this Agreement shall continue in effect for an
additional term of one (1) year ("Renewal Term").
2.
Duties of EXECUTIVE. EXECUTIVE’s position with COMPANY shall
be Chief Financial Officer. EXECUTIVE shall do and perform all
services, acts, or things reasonably necessary or advisable to
accomplish the objectives of his director report, Ann Hand, CEO
& President. The COMPANY reserves the right to change the role
and title of EXECUTIVE at its sole discretion.
3.
Devotion of Time to Company's Business. EXECUTIVE shall be a
full-time EXECUTIVE of COMPANY and shall devote such substantial
and sufficient amounts of his productive time, ability, and
attention to the business of COMPANY during the Term of this
Agreement as may be reasonable and necessary to accomplish the
objectives and complete the tasks assigned to EXECUTIVE. EXECUTIVE
may devote reasonable time to activities other than those required
under this Agreement, including activities involving professional,
charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of
directors of other organizations and similar types of activities to
the extent that such activities do not inhibit or prohibit the
performance of services under this Agreement.
4.
Uniqueness of Services. EXECUTIVE hereby acknowledges that the
services to be performed by him under the terms of this Agreement
are of a special and unique value. Accordingly, the obligations of
EXECUTIVE under this Agreement are non-assignable.
5.
Compensation of EXECUTIVE.
a. Base
Annual Salary. Subject to other specific provisions in this
Agreement, as compensation for services hereunder, EXECUTIVE shall
receive a Base Annual Salary of $300,000 payable in accordance with
the Company's ordinary payroll practices (and in any event no less
frequently than monthly). On each anniversary date hereof,
EXECUTIVE's Base Annual Salary will be reviewed and may be
increased at the sole discretion of the COMPANY’S Board of
Directors.
b.
Health Insurance. EXECUTIVE and his dependents shall be entitled to
participate in the health insurance plan offered to COMPANY
employees, and the Company will pay 90% of the premium related
thereto.
c.
401(k). EXECUTIVE will be permitted to participate in the
Company’s 401(k) Plan upon the Board of Directors electing to
institute it.
d.
Business Expenses. COMPANY will reimburse EXECUTIVE for all
reasonable business expenses directly incurred in performing
EXECUTIVE's duties and promoting the business of
COMPANY.
6.
Termination of Employment.
a. In
the event COMPANY should terminate this Agreement other than for
just "Cause" as defined in Section 6(b) below ("Termination without
Cause"), EXECUTIVE shall be entitled to the following severance
payment based upon your length of employment with the Company and
calculated based upon your then existing annual salary: (i) more
than six (6) months of employment but less than nine (9) months,
will entitle you to one (1) month of severance; (ii) more than nine
(9) months of employment but less than one (1) year of employment,
will entitle you to two (2) months of severance; (iii) more than
one (1) year employment but less than two (2) years of employment,
will entitle you to three (3) months of severance pay; and (ii) for
each full year of employment beyond one (1) year, you will be
entitled to an additional one (1) month of severance pay. By way of
illustration only, if you are terminated “without
cause” after 3.5 years of employment, you would be entitled
to a total of five (5) months of severance pay. The applicable
severance payment amount, based on the formula set forth
immediately above, shall be made thirty (30) days following the
final day of employment and shall require the execution of a
mutually agreed upon Mutual Release agreement that shall include
traditional provisions therein. Notwithstanding the foregoing, in the event of a
change of control transaction involving the Company (whereby the
stockholders of the Company immediately prior to the change of
control do not hold a majority of the voting stock of the Company
following the change of control transaction), then in such event
EXECUTIVE shall be entitled to six (6) month’s severance pay
based on the then existing Base Annual Salary.
b.
COMPANY shall have the right to terminate EXECUTIVE's employment at
any time for Cause by giving EXECUTIVE written notice of the
effective date of Termination. For the purposes of this Agreement,
"Cause" shall mean:
i.
Fraud, misappropriation, embezzlement or any
other action of material misconduct against COMPANY or any of its
affiliates or subsidiaries;
ii.
Substantial failure to render services in
accordance with the provisions of this Agreement, provided
that:
(a) a
written demand for performance has been delivered to
EXECUTIVE at least ten (10) days prior to termination identifying
the manner in which COMPANY believes that EXECUTIVE has failed to
perform; and
(b)
EXECUTIVE has thereafter failed to remedy such failure to
perform;
iii.
Material violation of any law, rule or regulation of
any governmental or regulatory body material to the business of
COMPANY;
iv.
Conviction or a guilty plea or nolo contendere plea to
a felony;
v.
Repeated and persistent failure to abide by the
policies established by COMPANY after written warning from
COMPANY;
vi.
Any acts of violence or threats of violence made by EXECUTIVE
against COMPANY or anyone associated with COMPANY's
business;
vii.
The solicitation or acceptance of payment or
gratuity from any existing or potential customer or supplier of
COMPANY without the prior written consent of
COMPANY's Board of Director’s.
viii.
Drug dependency or habitual insobriety;
or
ix.
Gross incompetence.
(a)
In the event of termination for cause, EXECUTIVE shall be paid
EXECUTIVE's salary through the effective date of termination on the
date of termination. After the effective date of Termination,
EXECUTIVE shall not be entitled to accrue or vest in any further
salary, severance pay, stock options, benefits, fringe benefits or
entitlements; provided that EXECUTIVE shall retain the right to
exercise any stock options which are vested as of the effective
date of termination.
(b)
This Agreement shall terminate automatically in the event that: (i)
EXECUTIVE fails or is unable to perform EXECUTIVE 's duties due to
injury, illness or other incapacity for ninety (90) days in any
twelve (12) month period (except that EXECUTIVE may be entitled to
disability payments pursuant to COMPANY's disability plan, if any);
or (ii) Death of EXECUTIVE.
7.
Covenant of Confidentiality. All documents, records, files,
manuals, forms, materials, supplies, computer programs, trade
secrets and other information which comes into EXECUTIVE's
possession from time to time during EXECUTIVE's employment by
COMPANY and/or any of COMPANY's subsidiaries or affiliates, shall
be deemed to be confidential and proprietary to COMPANY and shall
remain the sole and exclusive property of COMPANY. EXECUTIVE
acknowledges that all such confidential and proprietary information
is confidential and proprietary and not readily available to
COMPANY's business competitors. On the effective date of the
termination of the employment relationship or at such other date as
specified by COMPANY, EXECUTIVE agrees that he will return to
COMPANY all such confidential and proprietary items (including, but
not limited to, Company marketing material, business cards, keys,
etc.) in his control or possession, and all copies thereof, and
that he will not remove any such items from the offices of
COMPANY.
8.
Covenant of Non-Disclosure. Without the prior written approval of
COMPANY, EXECUTIVE shall keep confidential and not disclose or
otherwise make use of any of the confidential or proprietary
information or trade secrets referred to in Section 7 nor reveal
the same to any third party whomsoever, except as required by
law.
9.
Covenant of Non-Solicitation. During the Term of this Agreement and
for a period of two (2) years following the effective date of
termination, EXECUTIVE, either on EXECUTIVE's own account or for
any person, firm, Company or other entity, shall not solicit,
interfere with or induce, or attempt to induce, any EXECUTIVE of
COMPANY, or any of its subsidiaries or affiliates to leave their
employment or to breach their employment agreement, if any, with
COMPANY.
10.
Covenant of Cooperation. EXECUTIVE agrees to cooperate with COMPANY
in any litigation or administrative proceedings involving any
matters with which EXECUTIVE was involved during his employment by
COMPANY. COMPANY shall reimburse EXECUTIVE for reasonable expenses
incurred in providing such assistance.
11.
Covenant Against Competition.
a.
Scope and Term. During the Term of this Agreement and for an
additional period ending one (1) year after the effective date of
termination or expiration of this Agreement, whichever occurs
first, EXECUTIVE shall not directly or indirectly engage in or
become a partner, officer, principal, EXECUTIVE, consultant,
investor, creditor or stockholder of any business, proprietorship,
association, firm, corporation or any other business entity which
is engaged or proposes to engage or hereafter engages in any
business which competes with the business of COMPANY and/or any of
COMPANY's subsidiaries or affiliates in any geographic area in
which COMPANY conducts business at the time of the termination or
expiration of the employment relationship.
12.
Rights to Inventions.
a.
Inventions Defined. "Inventions" means discoveries, concepts, and
ideas, whether patentable or not, relating to any present or
contemplated activity of COMPANY, including without limitation
devices, processes, methods, formulae, techniques, and any
improvements to the foregoing.
b.
Application. This Section 12 shall apply to all Inventions made or
conceived by EXECUTIVE, whether or not during the hours of his
employment or with the use of COMPANY facilities, materials, or
personnel, either solely or jointly with others, during the Term of
his employment by COMPANY and for a period of one (1) year after
any termination of such employment. This Section 12 does not apply
to any invention disclosed in writing to COMPANY by EXECUTIVE prior
to the execution of this Agreement.
c.
Assignment. EXECUTIVE hereby assigns and agrees to assign to
COMPANY all of his rights to Inventions and to all proprietary
rights therein, based thereon or related thereto, including without
limitation applications for United States and foreign letters
patent and resulting letters patent.
d. Reports.
EXECUTIVE shall inform COMPANY promptly and fully of each
Invention by a written report, setting forth in detail the
structures, procedures, and methodology employed, and the results
achieved ("Notice of Invention"). A report shall also be submitted
by EXECUTIVE upon completion of any study or research project
undertaken on COMPANY's behalf, whether or not in EXECUTIVE's
opinion a given study or project has resulted in an
Invention.
e.
Patents. At COMPANY's request and expense, EXECUTIVE
shall
execute such documents and provide such assistance as may be deemed
necessary by COMPANY to apply for, defend or enforce any United
States and foreign letters patent based on or related to such
Inventions.
13.
Remedies. Notwithstanding any other provision in this Agreement to
the contrary, EXECUTIVE acknowledges and agrees that if EXECUTIVE
commits a material breach of the Covenant of Confidentiality
(Section 7), Covenant of Non-Disclosure (Section 8), Covenant of
Non-Solicitation (Section 9), Covenant of Cooperation (Section 10),
Covenant Against Competition (Section 11), or Rights to Inventions
(Section 12), COMPANY shall have the right to have the obligations
of EXECUTIVE specifically enforced by any court having jurisdiction
on the grounds that any such breach will cause irreparable injury
to COMPANY and money damages will not provide an adequate remedy.
Such equitable remedies shall be in addition to any other remedies
at law or equity, all of which remedies shall be cumulative and not
exclusive. EXECUTIVE further acknowledges and agrees that the
obligations contained in Sections 7 through 12, of this Agreement
are fair, do not unreasonably restrict EXECUTIVE's future
employment and business opportunities, and are commensurate with
the compensation arrangements set out in this
Agreement.
14.
Survivability. Sections 7 through 13, of this Agreement shall
survive termination of the employment relationship and this
Agreement.
15.
General Provisions.
a.
Arbitration. Any controversy involving the
construction, application, enforceability or breach of any of the
terms, provisions, or conditions of this Agreement, including
without limitation, claims for breach of contract, violation of
public policy, breach of implied covenant, intentional infliction
of emotional distress or any other alleged claims which are
not settled by mutual agreement of the parties, shall be submitted
to final and binding arbitration in accordance with the rules of
the American Arbitration Association in Los Angeles County,
California. The cost of arbitration shall be borne by the losing
party. In consideration of each party's agreement to submit to
arbitration any and all disputes that arise under this Agreement,
each party agrees that the arbitration provisions of this Agreement
shall constitute his/its exclusive remedy and each party expressly
waives the right to pursue redress of any kind in any other forum.
The parties further agree that the arbitrator acting hereunder
shall not be empowered to add to, subtract from, delete or in any
other way modify the terms of this Agreement. Notwithstanding the
foregoing, any party shall have the limited right to seek equitable
relief in the form of a temporary restraining order or preliminary
injunction in a
court
of competent jurisdiction to protect itself from actual or
threatened irreparable injury resulting from an alleged breach of
this Agreement pending a final decision in
arbitration.
b.
Authorization. COMPANY
and EXECUTIVE each represent and warrant to the other that he/it
has the authority, power and right to deliver, execute and fully
perform the terms of this Agreement.
c.
Entire Agreement. EXECUTIVE understands and
acknowledges that this document constitutes the entire agreement
between EXECUTIVE and COMPANY with regard to EXECUTIVE's employment
by COMPANY and EXECUTIVE's post-employment activities concerning
COMPANY. This Agreement supersedes any and all other written and
oral agreements between the parties with respect to the subject
matter hereof. Any and all prior agreements, promises,
negotiations, or representations, either written or oral, relating
to the subject matter of this Agreement not expressly set forth in
this Agreement are of no force and effect. This Agreement may be
altered, amended, or modified only in writing signed by all of the
parties hereto. Any oral representations or modifications
concerning this instrument shall be of no force and
effect.
d.
Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court or other tribunal of competent
jurisdiction to be invalid, void, or unenforceable, the remainder
of such provisions and all of the remaining provisions hereof shall
remain in full force and effect to the fullest extent permitted by
law and shall in no way be affected, impaired,
or invalidated as a result of such decision.
e.
Governing Law. Except to the extent that federal law may preempt
California law, this Agreement and the rights and obligations
hereunder shall be governed, construed and enforced in accordance
with the laws of the State of California.
f.
Taxes. All compensation payable hereunder is gross and shall be
subject to such withholding taxes and other taxes as may be
provided by law. EXECUTIVE shall be responsible for the payment of
all taxes attributable to the compensation provided by this
Agreement except for those taxes required by law to be paid or
withheld by COMPANY.
g.
Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of COMPANY. EXECUTIVE may not
sell, transfer, assign, or pledge any of his rights or interests
pursuant to this Agreement.
h.
Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions or prevent that party
thereafter from enforcing such provision or provisions and each and
every other provision of this Agreement.
i.
Captions. Titles and headings to sections in this Agreement are for
the purpose of reference only and shall in no way limit, define, or
otherwise affect any provisions contained therein.
j.
Breach - Right to Cure. A party shall be deemed in breach of this
Agreement only upon the failure to perform any obligation under
this Agreement after receipt of written notice of breach and
failure to cure such breach within ten (10) days thereafter;
provided, however, such notice shall not be required where a breach
or threatened breach would cause irreparable harm to the other
party and such other party may immediately seek equitable relief in
a court of competent jurisdiction to enjoin such
breach.
16.
Acknowledgement. EXECUTIVE acknowledges that he has been given a
reasonable period of time to study this Agreement before signing
it. EXECUTIVE certifies that he has fully read, has received an
explanation of, and completely understands the terms, nature, and
effect of this Agreement. EXECUTIVE further acknowledges that he is
executing this Agreement freely, knowingly, and voluntarily and
that EXECUTIVE's execution of this Agreement is not the result of
any fraud, duress, mistake, or undue influence whatsoever. In
executing this Agreement, EXECUTIVE does not rely on any
inducements, promises, or representations by COMPANY other than the
terms and conditions of this Agreement.
17.
Effective Only Upon Execution by
Authorized Officer of COMPANY. This Agreement shall have no force
or effect and shall be unenforceable in its entirety until it is
executed by a duly authorized officer of COMPANY and such executed
Agreement is delivered to EXECUTIVE.
IN
WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first
above written.
EXECUTIVE
|
COMPANY
|
|
|
|
By:
/s/ Ann Hand
|
Clayton
Haynes
|
Ann
Hand
|
|
CEO
& President
|
Exhibit
14.1
SUPER
LEAGUE GAMING, INC.
CODE
OF BUSINESS CONDUCT AND ETHICS
The
Board of Directors (the “Board”) of Super League
Gaming, Inc., a Delaware corporation (the “Company”), has adopted
this Code of Business Conduct and Ethics (the “Code”) for the members of
the Board, the executive officers (as defined under the regulations
of the Securities and Exchange Commission) of the Company,
including, in any case, but not limited to, the Company’s
principal executive officer, principal financial officer, principal
accounting officer or persons performing similar functions, and the
employees of the Company. Each director, executive officer, and
employee shall be responsible for complying with this
Code.
If any
director, executive officer or employee believes that a prohibited
act under this Code has occurred, then he or she shall promptly
report such belief to the Chairman of the Board and the General
Counsel of the Company. Although this is the preferred method for
reporting prohibited acts, any director, executive officer or
employee should also feel free to report any such alleged
prohibited act hereunder to the Chairman of the Audit
Committee.
The
Board shall review and investigate any such reported prohibited
act, without the participation of any director who may be the
subject of such report. If the Board determines that any such act
represents a violation under this Code, then appropriate remedial
or disciplinary action shall be taken. The Company shall disclose
any such violation and the remedial or disciplinary action taken,
to the extent required by the Federal securities or other
applicable laws, including a full, fair, accurate, timely and
understandable disclosure in reports and documents the Company
submits to or files with the Securities and Exchange Commission
(when and if it is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended). If the Board
determines that any such act represents a violation under this
Code, but does not believe that any remedial or disciplinary action
is necessary or desirable (or if the entire Board agrees to waive
compliance with a provision of the Code on behalf of any director
or executive officer), then the Company shall promptly disclose the
violation or waiver and the Board's rationale for its decision. In
addition, the Company shall disclose if the Board fails to
investigate or take action within a reasonable period of time after
learning of any such alleged prohibited act under this
Code.
All
directors, executive officers and employees are expected to provide
full cooperation and disclosure to the Board, the Company and its
internal and external auditors in connection with any review of
compliance with this Code.
II.
CONFLICTS
OF INTEREST
Every
director, executive officer and employee has a duty to avoid
business, financial or other direct or indirect interests or
relationships that conflict with the interests of the Company or
that divide such person’s loyalty to the Company. A conflict
or the appearance of a conflict of interest may arise in many ways.
Each director, executive officer and employee must deal at arm's
length with the Company and should disclose to the independent
directors, as so designated by the Board, any conflict or any
appearance of a conflict of interest on his or her part. Any
activity that even appears to present such a conflict must be
avoided or terminated unless, after such disclosure to the
independent directors, it is determined that the activity is not
harmful to the Company or otherwise improper. The result of the
process of disclosure, discussion and consultation may result in
the approval of certain relationships or transactions on the ground
that, despite the appearance of any conflict of interest, they are
not harmful to the Company. Notwithstanding the foregoing, all
conflicts and appearances of conflicts of interest are prohibited,
even if they do not harm the Company, unless they have gone through
this process.
III.
CONDUCT
OF BUSINESS AND FAIR DEALING
No
director, executive officer or employee shall:
1. Compete with the
Company by providing services to a competitor as an employee,
officer or director or in a similar capacity;
2. Profit, or assist
others to profit, from confidential information or business
opportunities that are available because of services to the
Company;
3. Take unfair
advantage of any customer, supplier, competitor or other person
through manipulation, concealment, misrepresentation of material
facts or other unfair-dealing practice; or
4. Improperly
influence or attempt to influence any business transaction between
the Company and another entity in which a director, executive
officer or employee has a direct or indirect financial interest or
acts as an employee, officer or director or in a similar
capacity.
No
director, executive officer or employee shall solicit or accept
gifts, payments, loans, services or any form of compensation from
suppliers, customers, competitors or others seeking to do business
with the Company. Social amenities customarily associated with
legitimate business relationships are permissible. Such amenities
include the usual forms of entertainment such as lunches or dinners
as well as occasional gifts of modest value. While it is difficult
to define "customary," "modest" or "usual" by stating a specific
dollar amount, common sense should dictate what would be considered
extravagant or excessive. If a disinterested third party would be
likely to infer that it affected the judgment of a director,
executive officer or employee, then such amenity is impermissible.
All business dealings must be on arm's length terms and free of any
favorable treatment resulting from the personal interest of our
directors, executive officers and employees.
V.
COMPLIANCE
WITH LAWS AND REGULATIONS
It is
the policy of the Company to comply with the laws of each country
in which the Company conducts business. Each director, executive
officer and employee shall comply with all applicable laws, rules
and regulations, and shall use all reasonable efforts to oversee
compliance by other employees, directors and executive officers
with all applicable laws, rules and regulations.
VI.
USE
OF NON-PUBLIC INFORMATION
A
director, executive officer or employee who knows important
information about the Company that has not been disclosed to the
public must keep such information confidential. The foregoing shall
apply both in the case of the Company being privately held and when
it is publicly traded and subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended. Directors,
executive officers and employees shall maintain the confidentiality
of any non-public information learned in the performance of their
duties on behalf of the Company, except when disclosure is
authorized or legally mandated.
It is a
violation of United States law to purchase or sell the Company's
stock on the basis of such important non-public information when
publicly traded. Directors, executive officers and employees may
not do so and may not provide such information to others for that
or any other purpose. Directors, executive officers and employees
also may not buy or sell securities of any other Company using
important non-public information obtained in the performance of
their duties on behalf of the Company and may not provide any such
information so obtained to others.
VII.
USE
OF COMPANY FUNDS, ASSETS AND INFORMATION
Each
director, executive officer and employee shall protect the
Company's funds, assets and information and shall not use the
Company funds, assets or information to pursue personal
opportunities or gain. No undisclosed or unrecorded fund or asset
shall be established for any purpose. No Company funds, assets or
information shall be used for any unlawful purpose. No false or
artificial entries shall be made in the books and records of the
Company for any reason, and no director, executive officer or
employee shall engage in any arrangement that results in such
prohibited act.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We
consent to the use in this Registration Statement (No. 333- ) on
Form S-1 of Super League Gaming, Inc. of our report dated September
14, 2018 relating to the financial statements of Super League
Gaming, Inc., appearing in the Prospectus, which is part of this
Registration Statement.
We also
consent to the reference to our firm under the heading
“Experts”.
/s/
SQUAR MILNER LLP
Irvine,
California
January
4, 2019