Item 1.01 Entry into a Material Definitive Agreement.
On August 9, 2021, Golden
Nugget Online Gaming, Inc., a Delaware corporation (the “Company” or “GNOG”), DraftKings Inc., a
Nevada corporation ( “DraftKings”), New Duke Holdco, Inc., a Nevada corporation and a wholly owned subsidiary of DraftKings
(“New DraftKings”), Duke Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of New DraftKings (“Duke
Merger Sub”), and Gulf Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of New DraftKings (“Gulf Merger
Sub” and, together with Duke Merger Sub, the “Merger Subs”), entered into an agreement and plan of merger
(the “Merger Agreement”) pursuant to which DraftKings will, among other things, acquire all issued and outstanding
shares of common stock of GNOG (the “GNOG Shares”).
The Merger Agreement and the
transactions contemplated therein (the “Acquisition”) were (i) unanimously approved and declared fair to, advisable
and in the commercial interests of DraftKings by the board of directors of DraftKings and (ii) unanimously approved and declared advisable
and fair to, and in the best interests of, GNOG and its stockholders by the board of directors of GNOG (the “GNOG Board”)
acting upon the unanimous recommendation of a special committee of the GNOG Board (the “GNOG Special Committee”).
Concurrently with the execution
of the Merger Agreement, certain affiliates of DraftKings and GNOG entered into that certain commercial agreement with respect to expansion
of market access, database access and marketing integrations of DraftKings (the “Commercial Agreement”), and Draftkings
entered into a support and registration rights agreement (the “Support Agreement”) with New DraftKings, Tilman J.
Fertitta, Fertitta Entertainment, Inc., a Texas corporation (“FEI”), Landry’s Fertitta, LLC, a Texas limited
liability company (“Landry’s Fertitta” and, together with Mr. Fertitta and FEI, the “Fertitta Parties”),
pursuant to which the Fertitta Parties agreed to (i) not transfer the New DraftKings Class A Common Stock that the Fertitta Parties will
receive in the Acquisition prior to the first anniversary of the closing of the Acquisition, (ii) from the date of the Support Agreement
to the five-year anniversary of the closing of the Acquisition, not engage in a Competing Business (as defined in the Support Agreement)
and (iii) pay the termination fee owed by GNOG in the event the Merger Agreement is terminated because of the failure of GNOG to obtain
the requisite stockholder vote to approve the Acquisition. New DraftKings agreed to provide the Fertitta Parties with shelf registration
rights with respect to New DraftKings Class A Common Stock and warrants to purchase New DraftKings Class A Common Stock that the Fertitta
Parties will receive in connection with the Acquisition. In addition, the Fertitta Parties have agreed to execute (and cause its affiliates
to execute) all such agreements and take such action as required to waive the obligations of all Feritta Parties to make interest payments
on behalf of GNOG and of GNOG to issue equity in relation to such payments.
The description of the Merger Agreement contained in this Current Report on Form 8-K does not purport to be complete and it is qualified
in its entirety by reference to the full text of the Merger Agreement, which is included as Exhibit 2.1 and incorporated by reference
herein.
The Merger Agreement has
been attached as an exhibit to this Current Report on Form 8-K in order to provide investors and security holders with information regarding
its terms. It is not intended to provide any other information about GNOG, DraftKings or their respective subsidiaries and affiliates
or to modify or supplement any factual disclosures about the Company in its public reports filed with the United States Securities and
Exchange Commission (the “SEC”). The representations, warranties and covenants contained in the Merger Agreement were
made only for purposes of such agreement and as of specific dates, are solely for the benefit of the parties to the Merger Agreement,
may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes
of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the parties that differ from those applicable to investors or to GNOG's SEC filings.
Investors should not rely on the representations, warranties or covenants or any description thereof as characterizations of the actual
state of facts or condition of GNOG, DraftKings or any of their respective subsidiaries or affiliates. Moreover, information concerning
the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent
information may or may not be fully reflected in public disclosures by GNOG, DraftKings or their respective subsidiaries or affiliates.
Merger Agreement
Transaction Structure & Merger Consideration
On the terms and subject to
the conditions set forth in the Merger Agreement, (a) at the Duke Effective Time (as defined in the Merger Agreement), Duke Merger Sub
will be merged with and into DraftKings in accordance with the Nevada Revised Statutes (the “NRS”), with DraftKings
becoming the surviving corporation (the “Duke Surviving Corporation”) and (b) at the Gulf Effective Time (as defined
in the Merger Agreement), Gulf Merger Sub will be merged with and into GNOG in accordance with the General Corporation Law of the State
of Delaware (the “DGCL”), with GNOG becoming the surviving corporation (the “Gulf Surviving Corporation”,
and together with the Duke Surviving Corporation, collectively the “Surviving Corporations”). In connection with the
Acquisition, certain affiliates of Fertitta will consummate certain reorganization transactions to allow LGHN HoldCo, LLC to become a
wholly-owned subsidiary of GNOG following the consummation of the Acquisition.
The Merger Agreement provides
that upon the consummation of the Acquisition, each holder of GNOG Shares (a “GNOG Shareholder”) will receive 0.365
(the “Exchange Ratio”) of a share of New DraftKings Class A common stock (the “New DraftKings Class A Common
Stock”) for each GNOG Share issued and outstanding immediately prior to the Gulf Effective Time, other than any Excluded Shares
(as defined in the Merger Agreement).
Each share of DraftKings Class
A common stock (“DraftKings Class A Common Stock”) issued and outstanding immediately prior to the Duke Effective Time
will be cancelled, cease to exist and be converted into one validly issued, fully paid and non-assessable share of New DraftKings Class
A Common Stock and each share of DraftKings Class B common stock issued and outstanding immediately prior to the Duke Effective Time shall
be converted into one validly issued, fully paid and non-assessable share of New DraftKings Class B common stock.
Treatment of GNOG RSUs and GNOG Private Placement Warrants
At the Gulf Effective Time,
each outstanding restricted stock unit (a “GNOG RSU”) issued by GNOG will automatically and without any required action
on the part of the holder thereof vest, then be cancelled and thereafter only entitle the holder of such GNOG RSU to receive (without
interest) a number of shares of New DraftKings Class A Common Stock equal to (x) the product obtained by multiplying (i) the number of
GNOG Shares subject to such GNOG RSU immediately prior to the Gulf Effective Time by (ii) the Exchange Ratio, less (y) a number of shares
of New DraftKings Class A Common Stock equal to the applicable taxes required to be withheld with respect to such GNOG RSU settlement.
At the Gulf Effective Time,
each outstanding warrant issued by GNOG (“GNOG Private Warrant”) to purchase shares of GNOG Class A common stock (“GNOG
Class A Common Stock”) will automatically and without any required action on the part of the holder convert into a warrant to
purchase a number of New DraftKings Class A Common Stock equal to the product of (x) the number of shares of GNOG Class A Common Stock
subject to such GNOG Private Warrant immediately prior to the Gulf Effective Time multiplied by (y) the Exchange Ratio, and the exercise
price of such GNOG Private Warrant will be determined by dividing (1) the per share exercise price of such GNOG Private Warrant immediately
prior to the Gulf Effective Time by (2) the Exchange Ratio.
Treatment of DraftKings RSUs
At the Duke Effective Time,
each outstanding restricted stock unit (a “DraftKings RSU”) issued by DraftKings will automatically and without any
required action on the part of the holder thereof, cease to represent a restricted stock unit denominated in one share of DraftKings Class
A Common Stock and will be converted into a restricted stock unit denominated in one share of New DraftKings Class A Common Stock (a “New
DraftKings RSU”). Except as specifically provided in the Merger Agreement, following the Duke Effective Time, each such DraftKings
RSU will continue to be governed by the same terms and conditions (including vesting terms) as were applicable to the applicable DraftKings
RSU immediately prior to the Duke Effective Time.
Representations and Warranties and Covenants
The Merger Agreement
contains customary representations and warranties from DraftKings, GNOG, New DraftKings and the Merger Subs, and each party thereto
has agreed to customary covenants, including, among others, covenants relating to (1) the conduct of its business prior to the
closing, (2) the use of reasonable best efforts to consummate the Acquisition, (3) with respect to GNOG, delivering to DraftKings,
no later than September 8, 2021 (the “Company Written Consent Delivery Date”), a written consent of Tilman J.
Fertitta, a stockholder of GNOG currently holding approximately 79.9% of voting power in issued and outstanding GNOG Shares,
pursuant to which Fertitta will irrevocably adopt, approve and ratify the Merger Agreement and the Acquisition (the “GNOG
Written Consent”), and (4) with respect to DraftKings, delivering to GNOG written consents from its stockholders
sufficient to approve the Acquisition in accordance with the NRS and its organizational documents (the “DraftKings Written
Consent”). Upon delivery, the GNOG Written Consent and the DraftKings Written Consent will constitute the stockholder
approval of GNOG and DraftKings, respectively, required to consummate the Acquisition.
Among other things, the Merger
Agreement also prohibits GNOG from soliciting competing acquisition proposals from third parties, except that, subject to certain exceptions
and limitations, GNOG may provide information to, and negotiate with, a third party that makes an unsolicited bona fide acquisition
proposal if the GNOG Board or the GNOG Special Committee determines in good faith after consultation with its outside legal counsel and
financial advisor that (i) such acquisition proposal either constitutes or would reasonably be expected to result in a Superior Proposal
(as defined in the Merger Agreement) and (ii) failure to take such actions would be inconsistent with the directors’ fiduciary duties
under applicable law (the “No-Shop Provision”). Upon notice of the receipt of a Superior Proposal by GNOG, DraftKings
will have certain match-rights to amend the terms of the Acquisition.
Closing Conditions
The obligation
of each Party to consummate the Acquisition is subject to the satisfaction or mutual waiver at or prior to the Closing (as defined in
the Merger Agreement) of each of the following conditions: (1) receipt of GNOG stockholder approval, (2) receipt of DraftKings stockholder
approval, (3) authorization for listing on NASDAQ of shares of New DraftKings Class A Common Stock issuable pursuant to the Acquisition
upon official notice of issuance, (4) expiration or early termination of the waiting period (and any extension thereof) under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, (5) receipt of all requisite gaming approvals by GNOG and DraftKings in connection with the Acquisition,
(6) absence of any law or governmental order that is in effect and restrains, enjoins, makes illegal or otherwise prohibits the consummation
of the Acquisition, and (7) the Registration Statement on Form S-4 should have become effective in accordance with the provisions of the
Securities Act of 1933, as amended (the “Securities Act”).
The obligation of DraftKings to consummate the
Acquisition is subject to the satisfaction or waiver at or prior to the Closing of certain additional conditions, including, among other
conditions, (1) the accuracy of GNOG’s representations and warranties contained in the Merger Agreement (subject to Company Material
Adverse Effect (as defined in the Merger Agreement) and certain de minimis qualifiers), (2) GNOG’s performance of its obligations
under the Merger Agreement in all material respects, (3) the absence, since the date of the Merger Agreement, of any effect, event, development,
change, state of facts, condition, circumstance or occurrence that, individually or in the aggregate, has had or would reasonably be expected
to have a Company Material Adverse Effect, (4) all Company Material Licenses (as defined in the Merger Agreement) being in full force
and effect, and (5) the Commercial Agreement being in full force and effect.
The obligation of GNOG to consummate the Acquisition
is subject to the satisfaction or waiver at or prior to the Closing of certain additional conditions, including, among other conditions,
(1) the accuracy of DraftKings’ representations and warranties contained in the Merger Agreement (subject to certain materiality
qualifiers and certain de minimis qualifiers), (2) DraftKings’, New DraftKings’ and Merger Subs’ performance
of its obligations under the Merger Agreement in all material respects, and (3) the absence, since the date of the Merger Agreement, of
any effect, event, development, change, state of facts, condition, circumstance or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have a Parent Material Adverse Effect (as defined in the Merger Agreement).
Termination Rights
The Merger Agreement may
be terminated by DraftKings or GNOG under certain circumstances, including, among other termination rights, (i) by mutual written
consent of DraftKings and GNOG, (ii) by either DraftKings or GNOG if the closing of the Acquisition has not occurred on or before
February 28, 2022, subject to extension, and (iii) by DraftKings if, among others, (A) the GNOG Board has made a change of
recommendation to its stockholders to approve the Acquisition (a “Change of Recommendation”), (B) at any time
following receipt of an acquisition proposal and prior to the Company Written Consent Delivery Date, the GNOG Board fails to
reaffirm its approval or recommendation of the Merger Agreement and the merger as promptly as practicable (but in any event within
five business days) after receipt of any written request to do so from DraftKings (provided that the GNOG Board will not be required
to reaffirm such approval or recommendation on more than two occasions), (C) GNOG Board has failed to hold a vote of the holders of
GNOG Shares in order to obtain the required approval of its stockholders prior to a specified time, (D) GNOG fails to deliver the
GNOG Written Consent to DraftKings on or prior to the Company Written Consent Delivery Date, or (E) there is a material breach by
GNOG of its representations, warranties, agreements or covenants of the Merger Agreement that is not cured within a specifed period
of time, and (iv) by GNOG if, (A) there is a material breach by DraftKings of its representations, warranties, agreements or
covenants of the Merger Agreement that is not cured within a specifed period of time, (B) at any time prior to the later of (x) the
GNOG stockholder approval is obtained and (y) one day after the date on which DraftKings could have but did not exercise its
"matching" right pursuant to the Merger Agreement in relation to an acquisition proposal prior to the Company Written
Consent Delivery Date, in order to concurrently enter into an alternative acquisition agreement with respect to a Superior Proposal
(provided that GNOG has complied with the applicable provisions under the Merger Agreement and paid the Termination Fee and
DraftKings Expense Reimbursement, or (C) DraftKings fails to timely deliver the DraftKings Written Consent to GNOG.
In the event the Merger Agreement
is terminated (1) by DraftKings pursuant to (i) GNOG’s failure to obtain the required stockholders approval, (ii) GNOG’s material
breach of its obligations under the No-Shop Provision and, within twelve months of such termination, the GNOG enters into a definitive
agreement in respect of another acquisition transaction and subsequently consummates such transaction, (iii) a Change of Recommendation
by the GNOG Board, or (iv) GNOG’s failure to timely deliver the GNOG Written Consent, or (2) by GNOG in order to accept a Superior
Proposal, GNOG agrees to pay to DraftKings a termination fee equal to $55 million (the “Termination Fee”) and reimburse
DraftKings for its reasonable and documented out-of-pocket expenses incurred in connection with the Acquisition (the “DraftKings
Expense Reimbursement”). The Termination Fee and the DraftKings Expense Reimbursement will be DraftKings’ sole and exclusive
remedy in connection with the foregoing terminations except in the case of GNOG’s willful breach of the Merger Agreement.