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Item 1.01
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Entry into a Material Definitive Agreement.
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On June 29, 2020,
Landcadia Holdings II, Inc. (the “Company”) and Tilman Fertitta announced that on June 28, 2020,
the Company entered into a Purchase Agreement (the “Purchase Agreement”) with LHGN HoldCo, LLC, a
Delaware limited liability company (“Landcadia HoldCo”), Golden Nugget Online Gaming, Inc. (f/k/a
Landry’s Finance Acquisition Co.), a New Jersey corporation (“GNOG Inc.”), GNOG Holdings,
LLC, a Delaware limited liability company (“GNOG HoldCo”), and Landry’s Fertitta, LLC, a
Texas limited liability company (“LF LLC”). The transactions contemplated by the Purchase Agreement
are referred to herein as the “Transactions”.
This Current Report on Form 8-K is being filed to describe the
material terms of the Purchase Agreement which is filed as Exhibit 2.1.
Purchase Agreement
Consideration and
Structure
Pursuant to the Purchase
Agreement, subject to the satisfaction or waiver of certain conditions set forth therein, at the time of the closing of the Transactions
(the “Closing”), LF LLC will contribute all of the membership interests in GNOG HoldCo to Landcadia HoldCo,
a newly created, wholly-owned subsidiary of the Company (the “GNOG Contribution”), in exchange for (i)
31,350,625 Class B membership interests in Landcadia HoldCo (the “HoldCo Class B Units”) and (ii) 31,350,625
shares of a new non-economic Class B common stock of the Company (the “New Class B Common Stock”), which
will be created as of the Closing (subject to Stockholder Approval (as defined below)) and will entitle the holder to ten votes
per share subject to the limitations described below (the “High Voting Rights”), and which will replace
the Company’s existing Class B common stock (the “Existing Class B Common Stock”) at the Closing.
Prior to the Closing, GNOG Inc. will merge with and into Golden Nugget Online Gaming, LLC, a New Jersey limited liability company
(“GNOG LLC”) with GNOG LLC surviving as a direct, wholly owned subsidiary of GNOG HoldCo.
Following the Closing,
the combined Company will be organized in an “Up-C” structure in which substantially all the assets and the business
of the combined Company will be held indirectly by Landcadia HoldCo, and the Company’s only direct assets will consist of
Class A membership interests of Landcadia HoldCo. The combined Company’s business will continue to operate through GNOG LLC.
The Company is expected to own approximately 48% of the combined membership interests in Landcadia HoldCo and will control Landcadia
HoldCo as the sole manager of Landcadia HoldCo in accordance with the terms of the amended and restated limited liability agreement
of Landcadia HoldCo to be entered into in connection with the Closing (the “HoldCo LLC Agreement”). Beginning
six months after the Closing, each HoldCo Class B Unit to be held by LF LLC may be exchanged for one share of the Company’s
Class A common stock (“Class A Common Stock”). One share of the New Class B Common Stock held by LF LLC
will be canceled for each HoldCo Class B Unit exchanged.
Pursuant to the Purchase
Agreement, in further consideration of the GNOG Contribution, the Company will pay to LF LLC cash consideration in an amount of
$30 million and will repay one-half of the existing debt of GNOG Inc. under an existing credit agreement (the “Credit
Agreement”) in an amount of $150 million, together with related prepayment fees and expenses in an amount of approximately
$24 million. Following the Closing, GNOG will remain liable for the remaining principal balance of $150 million under the Credit
Agreement. In addition, GNOG LLC will pay certain expenses incurred in connection with the Transaction and the Credit Agreement.
Upon consummation of
the Transactions contemplated by the Purchase Agreement, the Company will change its name to Golden Nugget Online Gaming, Inc.
Representations, Warranties and Covenants
The parties to the
Purchase Agreement have agreed to customary representations, warranties and covenants in the Purchase Agreement, including, among
others, covenants with respect to the conduct of GNOG HoldCo, GNOG Inc., GNOG LLC and their respective subsidiaries during the
period between execution of the Purchase Agreement and the Closing. Each of the Company, Landcadia HoldCo, GNOG Inc., GNOG HoldCo
and LF LLC has agreed to use its commercially reasonable efforts to cause the Transactions to be consummated reasonably promptly
after the date of the execution of the Purchase Agreement. The representations and warranties of the parties to the Purchase Agreement
will not survive the Closing.
Conditions to Closing
Under the Purchase
Agreement, the obligations of the parties to consummate the Transactions are subject to the approval at a special meeting of the
stockholders of the Company by (A)(i) a majority of the shares of the Company’s common stock voted at the meeting and (ii)
a majority of the shares of Class A Common Stock outstanding and held by the stockholders of the Company other than those shares
beneficially owned by Tilman J. Fertitta and Jefferies Financial Group, Inc. (“Jefferies”) (the “Disinterested
Stockholders”) and (B) with respect to the amendments to the Company’s Certificate of Incorporation necessary
to effect the Transactions, (i) a majority of the shares of the Company’s common stock outstanding and (ii) a majority of
the shares of Class A Common Stock outstanding and held by the Disinterested Stockholders (collectively, the “Stockholder
Approval”). In addition, the Closing is subject to, among other conditions, (i) the expiration or termination of
any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) the receipt of all
necessary permits, approvals, clearances, licenses, and consents of, or filings with, any governmental or regulatory authorities
(including all relevant approvals and licenses required under applicable gaming law to operate in the ordinary course the business
of GNOG Inc., or GNOG LLC as its successor), and (iii) material compliance by the parties with their respective pre-Closing and
Closing obligations and the accuracy of each party’s representations and warranties in the Purchase Agreement, in each case
subject to the materiality standards contained in the Purchase Agreement.
Termination
The Purchase Agreement
may be terminated at any time prior to the Closing upon the parties’ mutual written consent and in certain other circumstances,
including, (i) by LF LLC or the Company if the Stockholder Approval is not obtained, (ii) by LF LLC if the board of directors of
the Company (the “Board”) has withdrawn, amended, qualified or modified its recommendation to the Company’s
stockholders, (iii) by LF LLC if the cash balance at GNOG LLC immediately following the Closing would be less than of $80 million,
(iv) by LF LLC if there exists a deficiency under Nasdaq Listing Rule 5620(a) after December 31, 2020, or any other deficiency
which causes a de-listing from Nasdaq to the Company prior to Closing (a “Listing Deficiency”), or (v)
by LF LLC or the Company if the Closing has not occurred by January 30, 2021 and the delay is not due to the material breach of
the Purchase Agreement by the party seeking termination.
None of the parties
to the Purchase Agreement is required to pay a termination fee; provided, however, that the Company may be required to reimburse
GNOG Inc. for any and all expenses, including reasonable attorney’s fees, in the event that the Company (i) fails to obtain
the Stockholder Approval or (ii) fails to cure any Listing Deficiency.
Other Agreements
The Purchase Agreement
contemplates the execution of various additional agreements and instruments, on or before the Closing, including, among others,
the following:
Tax Receivable Agreement
Prior to the Closing,
the Company and LF LLC will negotiate a tax receivable agreement to be entered into at the Closing which will provide for payment
by the Company to LF LLC in respect of 85% of the U.S. federal income tax savings (by way of increased depreciation and amortization
deductions) allocable to the Company from Landcadia HoldCo subject to certain terms and conditions, to the extent arising from
both (a) certain transactions contemplated under the Purchase Agreement and (b) the exchange of LF LLC’s HoldCo Class B Units
for Class B Common Stock, as determined on a “with and without” basis, and for an early termination payment by the
Company to LF LLC in the event of a change of control calculated using a mutually agreeable discount rate, subject to appropriate
and customary limitations, including in connection with available cash flow and financing facilities.
Fourth Amended and
Restated Certificate of Incorporation of the Company
The Company’s
Fourth Amended and Restated Certificate of Incorporation, to be adopted by the Company at Closing will, among other things, authorize
the issuance of the New Class B Common Stock, and will provide that LF LLC will be able to exercise the High Voting Rights of
the New Class B Common Stock only to the extent that the voting power held by Mr. Fertitta and certain of his affiliates does not
exceed 79.9%. Any excess voting power will be automatically adjusted downward to 79.9%. The High Voting Rights will expire if and
when the aggregate of (i) the number of shares of Class A Common Stock beneficially owned by Mr. Fertitta and certain of his affiliates,
and (ii) the number of shares of Class A Common Stock into which the HoldCo Class B Units held by Mr. Fertitta and certain of his
affiliates may be exchanged falls below 30% of the total number of Class A Common Stock issued and outstanding.
Amended and Restated
HoldCo LLC Agreement
At the Closing, the
Company, Landcadia HoldCo and LF LLC will enter into the Amended and Restated HoldCo LLC Agreement, which will provide, among other
things, that after six months from the Closing, the HoldCo Class B Units held by LF LLC may be exchanged for shares of Class A
Common Stock. One share of the New Class B Common Stock held by LF LLC will be canceled for each HoldCo Class B Unit exchanged.
The Amended and Restated Holdco LLC Agreement provides for additional issuances of HoldCo Class B Units to LF LLC in consideration
of payments to be made following Closing by LF LLC in connection with an existing intercompany agreement for the purpose of payment
of interest under the Credit Agreement. The additional HoldCo LLC Class B Units will be issued at the then-current market price
of the Class A Common Stock calculated as set forth in the Amended and Restated LLC Agreement.
Amendment to Insider
Letter
At the Closing, certain
insiders of the Company, including Jefferies and Fertitta Entertainment Inc., the co-sponsors of the Company, and certain of the
Company’s directors, will enter into an amendment (the “Lock-Up Amendment”) to a letter agreement
entered into on May 6, 2019 in connection with the Company’s initial public offering (the “Letter Agreement”),
which adds an additional acceleration event as an exception to the lock-up period contemplated under the Letter Agreement based
on a certain price target of the Company’s common stock following a period of 60 days after the Closing. The exceptions under
the Letter Agreement and the Lock-Up Amendment do not apply to the HoldCo Class B Units or shares of New Class B Common Stock to
be received by LF LLC pursuant to the Purchase Agreement.
Amended and Restated
Registration Rights Agreement
At the Closing, the
Company and certain of its investors will amend and restate the existing registration rights agreement in a form mutually agreed
by the Company and LF LLC.
Approval by Independent Directors
At a meeting held on
May 29, 2020, the Board authorized the formation of a transaction review committee consisting solely of all the independent directors
of the Company (the “Committee”) and authorized the Committee to engage independent financial advisors
(the “Financial Advisor”). At a meeting held on June 28, 2020, following deliberations and receipt of
a fairness opinion by the Financial Advisor, the Committee unanimously approved the Transactions and recommended their approval
to the board of directors of the Company. At a subsequent meeting on the same day, the Board unanimously approved the Transactions
and recommended their approval to the holders of the Company’s common stock.
The Purchase Agreement
is filed as Exhibit 2.1 to this Current Report on Form 8-K (this “Current Report”), and the foregoing
description is qualified in its entirety by reference to the full text of the Purchase Agreement. The Purchase Agreement contains
representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other
specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract
among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection
with negotiating the Purchase Agreement. The Purchase Agreement has been attached to provide investors with information regarding
its terms. It is not intended to provide any other factual information about the parties to the Purchase Agreement. In particular,
the representations, warranties, covenants and agreements contained in the Purchase Agreement, which were made only for purposes
of the Purchase Agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, may be
subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the
purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as
facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to
investors and reports and documents filed with the U.S. Securities and Exchange Commission (the “SEC”).
Investors should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations
of the actual state of facts or condition of any party to the Purchase Agreement. In addition, the representations, warranties,
covenants and agreements and other terms of the Purchase Agreement may be subject to subsequent waiver or modification. Moreover,
information concerning the subject matter of the representations and warranties and other terms may change after the date of the
Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Forfeiture and Call-Option Agreement
In connection with
the execution of the Purchase Agreement, Jefferies and the Company have entered into an agreement (the “Forfeiture
and Call-Option Agreement”), pursuant to which, as of and contingent upon the Closing, Jefferies will forfeit two
thirds (or 2,543,750) of its shares of the Existing Class B Common Stock. In addition, following and contingent upon the Closing,
Jefferies has granted to the Company an option to repurchase any of Jefferies’ previously-issued private placement warrants
exercisable to purchase shares of the Class A Common Stock, to the extent that Jefferies wishes to exercise or sell warrants, subject
to certain terms and conditions set forth in the Forfeiture and Call-Option Agreement.
The foregoing description of the Forfeiture
and Call-Option Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the
Forfeiture and Call-Option Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.