Item 1.01
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Entry into a Material Definitive Agreement.
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On April 29, 2021, Digital Turbine, Inc. (the “Company”)
and Digital Turbine Media, Inc., a wholly-owned subsidiary of the Company (“DT Media”), completed the acquisition of AdColony
Holding AS, a Norway company (“AdColony”) pursuant to the previously-reported Share Purchase Agreement (the “Purchase
Agreement”) with AdColony and Otello Corporation ASA, a Norway company and the sole shareholder of AdColony (“Otello”).
DT Media acquired (the “Acquisition”) all of the outstanding capital stock of AdColony in exchange for an estimated total
consideration in the range of $350.0 million to $375.0 million, to be paid as follows: (1) $100.0 million in cash paid at closing (which
was subject to customary closing purchase price adjustments), (2) $100.0 million in cash to be paid six months after closing, and (3)
an estimated earn-out in the range of $150.0 million to $175.0 million, to be paid in cash, based on AdColony achieving certain future
target net revenues, less associated cost of goods sold, over a twelve month period ending on December 31, 2021 (the “Earn-Out Period”).
Under the terms of the earn-out, DT Media would pay Otello a certain percentage of actual net revenues (less associated cost of goods
sold) of AdColony depending on the extent to which AdColony achieves certain target net revenues (less associated cost of goods sold)
over the Earn-Out Period. The earn-out payment will be made following the expiration of the Earn-Out Period. The Company paid the closing
amount and intends to pay the remainder of the purchase price with a combination of available cash on hand and borrowings under its existing
senior credit facility along with future capital financing.
On April 29, 2021, the Company entered into an
amended and restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as a lender and administrative
agent, and a syndicate of lenders, which provides for a revolving line of credit of $400.0 million to be used for working capital, permitted
acquisitions, capital expenditures, and other lawful corporate purposes. DT Media and Digital Turbine USA, Inc. (“DT USA”)
are additional co-borrowers under the Credit Agreement, and Mobile Posse, Inc. is a guarantor (together with the Company, DT Media and
DT USA, collectively, the “Loan Parties”). The Credit Agreement contains an accordion feature that permits an increase of
the revolver by up to $75.0 million plus an amount that would enable the Loan Parties to remain in compliance with a consolidated secured
net leverage ratio, on such terms as agreed to by the parties.
The revolving line of credit matures on April 29,
2026.
Amounts outstanding under the Credit Agreement
accrue interest at an annual rate equal to, at the Company’s election, (i) LIBOR plus between 1.50% and 2.25% based on the Company’s
consolidated leverage ratio or (ii) a base rate determined based upon the highest of (a) the federal funds rate plus 0.50%, (b) Bank of
America, N.A.’s prime rate or (c) LIBOR plus 1.00%, plus between 0.50% and 1.25% based on the Company’s consolidated leverage
ratio. The Credit Agreement contains customary covenants, representations and events of default, and also requires the Company to comply
with a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio.
The Loan Parties’ payment and performance
obligations under the Credit Agreement and related loan documents are secured by their grant of a security interest in substantially all
of their personal property assets, whether now existing or hereafter acquired, subject to certain exclusions. If the Loan Parties acquire
any real property assets with a fair market value in excess of $5.0 million, they are required to grant a security interest in such real
property as well. All such security interests are required to be first priority security interests, subject to certain permitted liens.
The description of the Credit Agreement provided
herein is qualified by reference to the Credit Agreement, which is attached to this Form 8-K as Exhibit 10.1 and is incorporated by reference
herein.
The Credit Agreement contains representations and
warranties by each of the parties to the Credit Agreement, which were made only for purposes of the Credit Agreement and as of specified
dates. The representations, warranties and covenants in the Credit Agreement were made solely for the benefit of the parties to the Credit
Agreement, are subject to limitations agreed upon by such parties, including being qualified by schedules, may have been made for the
purposes of allocating contractual risk between the parties instead of establishing these matters as facts, and are subject to standards
of materiality applicable to the parties that may differ from those applicable to others. Others should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or
any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants
may change after the date of the Credit Agreement, which subsequent information may or may not be fully reflected in the Company’s
public disclosures.