Item 1.01
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Entry into a Material Definitive Agreement.
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On April 23, 2021, Sports Entertainment Acquisition Corp., a Delaware corporation (“SEAC”), entered into a Business Combination Agreement (the “Business Combination Agreement”) with SGHC Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey (the “Company”), Super
Group (SGHC) Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey (“NewCo”), Super Group (SGHC) Merger Sub, Inc., a Delaware corporation
and a wholly-owned subsidiary of NewCo (“Merger Sub” and, together with NewCo, the Company and the Company’s direct and indirect subsidiaries, the “Target Companies”), and Sports Entertainment Acquisition Holdings LLC, a Delaware limited liability company (the “Sponsor”). The transactions contemplated by
the Business Combination Agreement are referred to herein as the “Business Combination.” Capitalized terms used in this report without definition shall have the meanings assigned to them in
the Business Combination Agreement.
Business Combination Agreement
Consideration and Structure
Pursuant to the Business Combination Agreement, subject to the terms and conditions therein, prior to the closing of the Business Combination (the “Closing”), the Company will undergo a
pre-closing reorganization (the “Reorganization”) wherein all existing shares of the Company will be exchanged for newly issued ordinary shares of NewCo (“NewCo Common Shares”). Following the Reorganization, the shareholders of the Company (the “Pre-Closing
Holders”) will hold that number of NewCo Common Shares equal to the quotient obtained by dividing (i) 4,750,000,000, plus the amount by which the cash and cash equivalent balance of the Target Companies exceeds $300,000,000
(but in no event in excess of $4,850,000,000), less the amount by which the cash and cash equivalent balance of the Target Companies is less than $300,000,000, by (ii) $10.00 (the “Aggregate Stock Consideration Shares”).
Pursuant to the Business Combination Agreement, subject to the satisfaction or waiver of certain conditions set forth therein, the following shall occur: (a) immediately prior to the Merger Effective Time, each issued and outstanding share of SEAC
Class B Common Stock will automatically convert in accordance with the terms of SEAC’s Amended and Restated Certificate of Incorporation into one share of SEAC Class A Common Stock, as more fully set forth in, and subject to the terms and conditions
of, the Founder Holders Consent Letter (as defined below); (b) on the Closing Date, Merger Sub will merge with and into SEAC, with SEAC continuing as the surviving company, as a result of which (i) SEAC will become a wholly-owned subsidiary of NewCo,
(ii) each issued and outstanding unit of SEAC, consisting of one share of SEAC Class A Common Stock and one-half of one warrant (the “SEAC Warrants”), will be automatically detached, (iii)
each issued and outstanding share of SEAC Class A Common Stock (other than Treasury Shares), will be converted into the right to receive one NewCo Common Share, and (iv) each issued and outstanding SEAC Warrant to purchase a share of SEAC Class A
Common Stock will convert into a warrant exercisable for one NewCo Common Share (the “NewCo Warrants”); and (c) effective immediately following the Closing, pursuant to Repurchase Agreements
entered into by and among NewCo, the Company and certain Pre-Closing Holders (the “Repurchase Agreements”), NewCo will purchase NewCo Common Shares from such Pre-Closing Holders in exchange
for cash consideration equal to $10.00 per NewCo Common Share (the “Repurchased Shares”).
In addition, the Pre-Closing Holders will be entitled to a right to receive additional contingent consideration based on the number of shares held after taking into account those shares sold
pursuant to Repurchase Agreements in the form of three potential earn-out payments. The earn-out payments will become payable at or after the Closing if the following share price trigger events occur any time during the period beginning on the date
of the Business Combination Agreement and ending on the five (5) year anniversary of the Closing as follows: (a) if the closing share price of one share of SEAC Class A Common Stock, or following the Closing, one NewCo Common Share, is equal to or
exceeds $11.50 for 20 Trading Days in any 30 consecutive Trading Day period, a one-time issuance of a number of NewCo Common Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus
(ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; (b) if the closing share price of one share of SEAC Class A Common Stock, or following the Closing, one NewCo Common Share, is equal to or exceeds $12.50 for 20 Trading Days in any
30 consecutive Trading Day period, a one-time issuance of a number of NewCo Common Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90,
multiplied by (2) 0.025; and (c) if the closing share price of one share of SEAC Class A Common Stock, or following the Closing, one NewCo Common Share, is equal to or exceeds $14.00 for 20 Trading Days in any 30 consecutive Trading Day period, a
one-time issuance of a number of NewCo Common Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.05.
As described in the Business Combination Agreement, Available Distributable Cash (where Available Distributable Cash means the cash in SEAC’s trust account, less amounts required for the SEAC Share Redemptions plus the Cash and Cash
Equivalents Balance) shall be disbursed or allocated (including to NewCo’s balance sheet) in accordance with a distribution and allocation waterfall as more specifically set forth in the Business Combination Agreement.
At the Closing, the board of directors of NewCo will be comprised of nine members, two of whom will be designated by Knutsson Ltd., a shareholder of the Company (or NewCo to the extent Knutsson Ltd. does not designate two members), four of whom
will be designated by NewCo unilaterally, one of whom will be designated by NewCo in consultation with SEAC, and two of whom will be Eric Grubman and John Collins.
Representations, Warranties and Covenants
The parties to the Business Combination Agreement have agreed to customary representations and warranties for transactions of this type. The representations and warranties made under the Business Combination Agreement will not survive the Closing,
and no party to the Business Combination Agreement will have any liabilities to such other parties, other than claims for fraud, with respect to the making of its applicable representations and warranties. In addition, the parties to the Business
Combination Agreement agreed to be bound by certain customary covenants for transactions of this type, including, among others, covenants with respect to the conduct of the Company, NewCo, SEAC and their respective subsidiaries during the period
between execution of the Business Combination Agreement and the Closing. The covenants made under the Business Combination Agreement will not survive the Closing, unless by their terms they are to be performed in whole or in part after the Closing.
Each of the parties to the Business Combination Agreement has agreed to use its commercially reasonable efforts to cause the Business Combination to be consummated after the date of the execution of the Business Combination Agreement in the most
expeditious manner practicable.
Conditions to Closing
Under the Business Combination Agreement, the obligations of the parties (or, in some cases, some of the parties) to consummate the Business Combination are subject to the satisfaction or waiver of certain regulatory or other customary closing
conditions of the respective parties, including, without limitation: (i) the approval by the Malta Gaming Authority and the United Kingdom Gambling Commission of the 2020 Reorganization; (ii) absence of communications from the Malta Gaming Authority
or United Kingdom Gambling Commission that either intends to object to the change of control applications to be filed in connection with the Transaction (iii) the approval and adoption of the Business Combination Agreement and transactions
contemplated thereby and certain other matters by the requisite vote of SEAC’s stockholders; (iv) the effectiveness of the Registration Statement (as defined below); (v) the approval of the listing of the NewCo Common Shares and NewCo Warrants on the
New York Stock Exchange; (v) SEAC having Minimum Cash equaling at least $300 million (where Minimum Cash means the cash in SEAC’s trust account, less amounts required for the SEAC Share Redemptions); (vi) the Reorganization has been effected;
and (vii) material compliance by the parties with their respective covenants, and the accuracy of each party’s representations and warranties in the Business Combination Agreement, in each case subject to certain materiality standards contained in
the Business Combination Agreement.
Termination
The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, without limitation, (i) upon the mutual written consent of the Company and SEAC, (ii) by SEAC, on
the one hand, or the Company, on the other hand, as a result of certain material breaches by the counterparties to the Business Combination Agreement that remain uncured after any applicable cure period, (iii) by the Company or SEAC if the SEAC
Stockholder Approval has not been obtained following the SEAC Stockholder meeting, (iv) by the Company or SEAC, if the transactions contemplated by the Business Combination Agreement cause NewCo to be treated as a domestic corporation or the Company
to be treated as a “surrogate foreign corporation”; in each case, within the meaning of Code Section 7874 and the parties are not able to find a mutually agreeable solution within 35 days after such determination, and (v) by the Company or SEAC if
the Closing has not occurred on or before December 31, 2021; provided, however, that such termination right is not available to the applicable party if such party is in material breach of its representations, warranties, covenants or agreements
under the Business Combination Agreement.
The foregoing description of the Business Combination Agreement and the Business Combination does not purport to be complete and is qualified in its entirety by the terms and conditions of the Business Combination Agreement, a copy of which is
attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Business Combination 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 Business Combination Agreement. It is not intended to provide any other factual information about the parties to the Business Combination Agreement. In particular, the representations, warranties, covenants and
agreements contained in the Business Combination Agreement, which were made only for purposes of the Business Combination Agreement and as of specific dates, were solely for the benefit of the parties to the Business Combination 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 Business Combination 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 Business Combination Agreement. In addition, the representations, warranties, covenants and agreements and other terms of the Business Combination 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 Business Combination Agreement, which subsequent information may or may not be fully reflected in SEAC’s public
disclosures.
Other Agreement
The Business Combination Agreement contemplates the execution of various additional agreements and instruments, on or before the Closing, including, among others, the below:
Exchange Agreement
In connection with the execution of the Business Combination Agreement, NewCo, the Company and the Pre-Closing Holders entered into an Exchange Agreement (the “Exchange Agreement”),
pursuant to which, on the Closing Date but prior to the Closing (and conditioned upon the Closing), the Company will undergo the Reorganization which provides for, among other things, the exchange by the Pre-Closing Holders of all issued ordinary
shares of the Company for newly issued NewCo Common Shares.
The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Exchange Agreement, a copy of which is attached hereto as Exhibit 10.1 and is
incorporated herein by reference.
Founder Holders Consent Letter
In connection with the execution of the Business Combination Agreement, the Founder Holders, the Company, NewCo and SEAC have entered into the Founder Holders Consent Letter (the “Founder
Holders Consent Letter”), pursuant to which, among other things, the Founder Holders have agreed to waive any and all anti-dilution rights described in SEAC’s Amended and Restated Certificate of Incorporation with respect to the shares of
SEAC Class B Common Stock held by the Founder Holders.
The foregoing description of the Founder Holders Consent Letter does not purport to be complete and is qualified in its entirety by the terms and conditions of the Founder Holders Consent Letter, a copy of which is attached hereto as Exhibit
10.2 and is incorporated herein by reference.
Amended and Restated Registration Rights Agreement
At the Closing, SEAC, the Company, NewCo, the Founder Holders, certain Pre-Closing Holders and PJT Partners Holdings LP (“PJT”) will enter into an Amended and Restated Registration Rights
Agreement (the “A&R Registration Rights Agreement”) (i) amending and restating SEAC’s Registration Rights Agreement, dated as
of October 6, 2020, in its entirety, and (ii) pursuant to which, among other things, NewCo will provide certain registration rights for the NewCo Common Shares and NewCo Warrants held by the parties to the A&R Registration Rights Agreement,
subject to certain exceptions and as more fully described in the A&R Registration Rights Agreement, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Lock-Up Agreement
At the Closing, SEAC, the Company, NewCo, the Founder Holders, and all Pre-Closing Holders will enter into
Lock-Up Agreements (the “Lock-Up Agreements”) pursuant to which,
among other things, the Pre-Closing Holders and the Founder Holders will agree not to transfer, sell, assign or otherwise dispose of the NewCo Common Shares held by such person for 12 months following the Closing (with respect to the Founder
Holders) and 6 months following the Closing (with respect to the Pre-Closing Holders), in each case subject to certain exceptions and as more fully described in the Lock-Up Agreement, a copy of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.
In connection with the execution of the Lock-Up Agreements, SEAC, the Sponsor, the Founder Holders and PJT will amend their
Letter Agreement, dated October 6, 2020 (the “Amendment to Letter Agreement”), to, among other things, terminate certain transfer restrictions with respect to SEAC’s securities, subject to certain exceptions and as more fully described in the Amendment
to Letter Agreement, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.
Restrictive Covenant Agreement
At the Closing, NewCo will enter into a Restrictive Covenant Agreement (the “Restrictive Covenant Agreement”) with each of Eric Grubman and John Collins pursuant to which, among other
things, each of Mr. Grubman and Mr. Collins will agree not to, for the period during which they sit on the NewCo board of directors and for 18 months thereafter, directly or indirectly, engage in a competing business with the Company or NewCo, or
form or participate in a SPAC (as a founder or as a 10% or greater economic or voting investor) which acquires a business that competes with the Company or NewCo subject to certain exceptions and as more
fully described in the Restrictive Covenant Agreement, the form of which is attached hereto as Exhibit 10.6 and is incorporated herein by reference.
Transaction Support Agreement
In connection with the execution of the Business Combination Agreement, NewCo, the Company, SEAC and all Pre-Closing Holders (the “TSA Shareholders”) entered into Transaction Support
Agreements (the “TSAs”), pursuant to which, among other things, the TSA Shareholders have agreed to vote their outstanding shares of the Company at any meeting of the Company in favor of the
transactions contemplated by the Business Combination Agreement, and provided a power of attorney to the Company to take certain actions in connection with the transactions contemplated by the Business Combination Agreement on behalf of such
shareholders.
The foregoing description of the TSAs does not purport to be complete and is qualified in its entirety by the terms and conditions of the TSAs, the form of which is attached hereto as Exhibit 10.7 and is incorporated herein by reference.
Repurchase Agreements
In connection with the execution of the Business Combination Agreement, prior to the Closing Date, NewCo, the Company and certain existing shareholders of the Company will enter into the Repurchase Agreements pursuant to which NewCo will
repurchase NewCo Common Shares from such shareholders in exchange for cash consideration equal to $10.00 per NewCo Common Share, effective immediately following and conditioned upon the Closing.
The foregoing description of the Repurchase Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the Repurchase Agreements, a copy of which is attached hereto as Exhibit 10.8 and is
incorporated herein by reference.
Founder Holders Deferral Agreement
At the Closing, NewCo, SEAC, the Sponsor, PJT, Eric Grubman and John Collins will enter into a Founder Holders Deferral Agreement (the “Founder Holders Deferral Agreement”) pursuant to
which, among other things, (i) NewCo is granted a cash redemption right with respect to the NewCo Sponsor Warrants (including the underlying NewCo Common Shares acquired following a permitted exercise of the NewCo Sponsor Warrants) upon the trading
price of the NewCo Common Shares hitting certain price targets, as more fully described in the Founder Holders Deferral Agreement, and (ii) any NewCo Sponsor Warrants (or NewCo Common Shares acquired upon a
permitted exercise of the NewCo Sponsor Warrants) directly or indirectly owned by Eric Grubman and John Collins (or their affiliates) will be subject to additional restrictions on payment, as more fully described in the Founder Holders Deferral
Agreement, a copy of which is attached hereto as Exhibit 10.9 and is incorporated herein by reference.