1.01 Entry into a Material Definitive Agreement.
July 25, 2019, Simplicity Esports and Gaming Company (the “Company”) entered an Agreement and Plan of Merger (the
“Merger Agreement”) with Esports Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”),
PLAYLive Nation, Inc. (“PLAYLive”), Duncan Wood, Robert J. Steinberger, Eric J. Charneski, Jordan C. Jenson, and Alec
T. Carpenter (collectively, Messrs. Wood, Steinberger, Charneski, Jenson and Carpenter are referred to herein as the “Stockholders”),
and Mr. Wood in his capacity as representative of the Stockholders (the “Stockholder Representative”), pursuant to
which the Company agreed to acquire 100% of the issued and outstanding common stock of PLAYLive by way of a merger (the “Merger”)
pursuant to which Merger Sub will merge with and into PLAYLive, with PLAYLive surviving the Merger and continuing as a wholly
owned subsidiary of the Company, in exchange for 750,000 shares of the Company’s common stock (the “Merger Consideration”).
name of the surviving corporation will remain “PLAYLive Nation, Inc.” Unless otherwise determined by the Company prior
to the effective time of the Merger, the Certificate of Incorporation of the surviving corporation will be the certificate of
incorporation of PLAYLive as in effect immediately prior to the effective time of the Merger. Unless otherwise determined by the
Company prior to the effective time of the Merger, the bylaws of the surviving corporation will be the bylaws of PLAYLive as in
effect immediately prior to the effective time of the Merger. The directors and officers of Merger Sub immediately prior to the
effective time of the Merger will be the directors and officers, respectively, of PLAYLive.
the effective time of the Merger, by virtue of the Merger and without any action on the part of Merger Sub, PLAYLive or the holders
of shares of PLAYLive common stock, each share of PLAYLive common stock issued and outstanding immediately prior to the effective
time of the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement will be cancelled and extinguished
and will be converted automatically into the right to receive the per share Merger Consideration upon surrender of the certificate
representing such shares of PLAYLive common stock as provided in the Merger Agreement. Each share of common stock of Merger Sub
issued and outstanding immediately prior to the effective time of the Merger will be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock of PLAYLive. Each stock certificate of Merger Sub evidencing ownership
of any such shares shall continue to evidence ownership of such shares of capital stock of PLAYLive.
following the effective time of the Merger, the Company will make available for exchange in accordance with the terms of the Merger
Agreement that portion of the Merger Consideration issuable pursuant to the Merger Agreement in exchange for outstanding PLAYLive
common stock, provided, however, that the Company will deposit into escrow 75,000 shares of Company common stock out of the aggregate
Merger Consideration otherwise issuable to the Stockholders pursuant to the Merger Agreement as partial security for the indemnification
obligations set forth in the Merger Agreement. No fractional shares will be issued in connection with the Merger. The number of
shares of Company common stock to be issued to each Stockholder in connection with the Merger (after aggregating all fractional
shares of Company common stock that otherwise would be received by such holder) will be rounded up to the next whole share in
lieu of such fractional share.
the closing of the Merger, PLAYLive will have not less than $10,000 in cash net of issued but uncleared checks, ACHs, and drafts,
on deposit in PLAYLive’s principal bank account (“Minimum Cash”). Within 60 days after the closing date, the
Company may deliver a notice to the Stockholder Representative setting forth a description of any item which caused Minimum Cash
to exceed or fall below $10,000 and the actual amount of Minimum Cash on deposit in PLAYLive’s principal bank account as
of the closing (a “Minimum Cash Adjustment Notice”). If the actual amount of Minimum Cash as of the closing is more
than $10,000, then the Company will pay to the Stockholder Representative (for distribution to the Stockholders), the amount by
which Minimum Cash exceeds $10,000 provided, however, in no event shall the cash payment exceed an amount that will permit the
transactions contemplated by the Merger Agreement to qualify for the intended tax treatment. If the actual amount of Minimum Cash
as of the closing is less than $10,000, then the Stockholder Representative (on behalf of the Stockholders) will pay to the Company
the amount by which Minimum Cash is less than $10,000.
with execution of the Merger Agreement, the Stockholders will execute and deliver a restrictive covenant agreement as provided
in the Merger Agreement. At closing, each of Messrs. Wood, Jenson, and Carpenter will enter into an employment agreement with
PLAYLive, and each of the Stockholders will enter into a one-year lock-up agreement with the Company.
completion of the Merger is subject to certain customary closing conditions. The Merger Agreement is not subject to a financing
condition. The parties have made customary representations, warranties and covenants in the Merger Agreement.
Merger Agreement contains certain termination rights that may be exercised by the Company or PLAYLive, as applicable, including
in the event that (i) both parties agree by mutual written consent to terminate the Merger Agreement, or (ii) the Merger is not
consummated by October 1, 2019.
Merger is intended to be a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “Code”), and the Merger Agreement is intended to be a “plan of reorganization” within the meaning
of the regulations promulgated under Section 368(a) of the Code and for the purpose of qualifying as a tax-free transaction for
federal income tax purposes.
foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is
qualified in its entirety by the actual Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form
8-K and incorporated herein by reference.