Item 1.01 Entry into a Material Definitive Agreement
Term Sheet
On April 29, 2016, DraftDay Fantasy Sports Inc., a Delaware corporation (“DraftDay” or the “Company”), entered into a Binding Term Sheet (the “Binding Term Sheet”) with Rant, Inc. (“Rant”). In connection with the Binding Term Sheet, DraftDay will purchase the assets of the Rant business (the “Transaction”). The loan will be secured by all the assets of Rant.
As consideration for the assets, Rant will receive the following consideration:
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$5,000,000 cash (the “Cash Consideration”). The cash consideration shall initially be advanced by DraftDay as a loan to Rant, which will be deemed satisfied provided Rant delivers audited financial statements to DraftDay within 45 days of the closing of the Transaction.
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Shares of DraftDay’s common stock equal to an amount between 20% and 24% of the total outstanding common stock of DraftDay (the “Share Consideration”). The Share Consideration shall be determined by the mutual agreement of the parties.
Additionally, the Binding Term Sheet provides for the following:
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Rant will have at least $2,000,000 in cash at the closing of the Transaction.
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If DraftDay does not proceed to execution of definitive documents for any reason except (i) a breach by Rant of its obligations under the Binding Term Sheet or (ii) if information regarding Rant’s 2015 revenues, cost of goods sold exclusive of non-cash items) and traffic statistics previously provided to DraftDay by Rant is materially incorrect, DraftDay must pay Rant a $1,000,000 break-up fee.
The Transaction shall be subject to the preparation of definitive documents. Because the documents are subject to a number of conditions that must be satisfied by each of the parties, there is no assurance that the proposed terms may not be changed or that any transaction may be consummated.
On April 29, 2016, DraftDay also entered into a Binding Term Sheet dated April 29, 2016 (the “Loan Term Sheet”) with Rant, pursuant to which, at closing of the Transaction, Rant will loan $3,000,000 to DraftDay from the Cash Consideration received upon closing of the Transaction. The loan will be secured by all the assets of DraftDay on the same priority as loans made to DraftDay by Robert F.X. Sillerman, the Company’s Chairman, or his affiliates (collectively, “Sillerman”). At the request of either party, the Loan shall be satisfied in cash or repaid through the issuance of shares of DraftDay common stock on the same basis as Sillerman may exchange all or a substantial portion of its loans to the Company. The Loan will bear interest at 12% per annum. The Loan will be repaid not later than December 31, 2016, or earlier in the event of (i) a public offering of DraftDay shares raising at least $15,000,000 or (ii) a change of control of the Company.
Copies of the Term Sheet and the Loan Term Sheet are filed with this Current Report on Form 8-K as Exhibits 2.1 and 2.2, respectively, and are incorporated herein by reference. The foregoing description of the Term Sheet and the Loan Term Sheet are qualified in their entirety by reference to the full text of the Term Sheet and Loan Term Sheet filed with this Current Report on Form 8-K.
The Term Sheet and the Loan Term Sheet have been included to provide investors with information regarding the terms of the Transaction and the Loan. Neither the Term Sheet nor the Loan Term Sheet are intended to provide any other factual information about DraftDay, Rant or their respective subsidiaries or affiliates. To the extent either the Term Sheet or the Loan Term Sheet contain representations or warranties, the assertions embodied in those representations and warranties and are qualified by information in confidential disclosure schedules that the parties have exchanged in connection with the execution of such term sheets. Accordingly, you should read the representations and warranties in the Term Sheet, the Loan Term Sheet, and the definitive documents to be prepared in connection therewith not in isolation but only in conjunction with the other information about DraftDay, Rant and their respective subsidiaries that are included in reports, statements and other filings made by DraftDay with the Securities and Exchange Commission.