Leisure Acquisition Corporation *

PROPOSED BUSINESS COMBINATION: Ensysce Biosciences, Inc.

ENTERPRISE VALUE: $267.5 million

ANTICIPATED SYMBOL:  ENSC

Leisure Acquisition Corporation proposes to combine with Ensysce Biosciences, Inc., a clinical stage biopharmaceutical company with a mission to solve prescription drug abuse that is focused on launching a new class of opioid pain therapeutics.

The transaction reflects an enterprise valuation for Ensysce of $207 million, including the Company’s existing convertible indebtedness, but excluding transaction expenses as well as the impact of Leisure’s sponsor shares and subject to certain closing adjustments.

Ensysce is a clinical-stage drug company that is developing an innovative new class of powerful, tamper-proof prescription medicines that seek to prevent both drug abuse and drug overdoses. The Company has created two revolutionary new drug platforms that have been proven clinically to be safe and effective. 1Ensysce believes Trypsin Activated Abuse Protection (TAAP™) is the only approach that protects against all forms of abuse (snorting, chewing and injecting), accomplished through the Company’s proprietary chemical modulation that inactivates the ingredient until it is swallowed. The Company’s Multi-Pill Abuse Resistant (MPAR™) overdose-protection is designed to work in unison with TAAP™ in order to eliminate drug overdoses.

The Company’s lead program addresses the unmet need for safe, abuse-resistant opioids. With its lead drug candidate PF614, Ensysce has secured FDA “Fast-Track” status and is permitted to use the 505(b)(2) regulatory pathway to accelerate the development timeline. Ensysce believes this will allow for PF614 to be commercialized within three years and to become the drug of choice for responsible severe pain therapy. With several drugs in the pipeline, Ensysce seeks to achieve approximately 20% of the branded opioid market in the United States by 2030.

Ensysce Pipeline

Ensysce’s drug portfolio, consisting of TAAP™, which has been granted “Fast Track” status, and MPAR™, spans an approximate $9 billion and an approximate $13 billion Pain & Addiction and ADHD market, respectively, in the United States. Ensysce believes its pipeline of Pain & Addiction and ADHD candidates using TAAP™ & MPAR™ technologies show advantageous clinical and regulatory positioning because they are safe, effective prodrugs with a decreased development time due to the FDA 505(b)(2) pathway.

Further, Ensysce believes certain of its strategic advantages are due to the new drug class designation with potential extended market exclusivity. The Company’s leading drug candidate, PF614, is currently positioned to enter the Chronic Pain market in 2024, where market growth has been driven by the rising prevalence of chronic conditions, the surging geriatric population and increasing government support regarding chronic pain management. Other drug candidates in the Company’s development pipeline for each of Chronic and Acute Pain Management are expected to follow as the Company progresses its planned clinical roll out of products.

Prospective Ensysce Milestones

Ensysce management has established the following operational milestones for 2021 and 2022:

• Complete a multi-ascending dose and bioequivalence clinical study for PF614 in healthy subjects
• Complete two Human Abuse Liability studies for PF614
• Complete a Phase 1 safety study with pharmaceutic development milestones for PF614-MPAR
• Identify a lead drug candidate in its Opioid Use Disorder program

The Company expects to provide updates with respect to these milestones, and other material developments, to the extent material information becomes available.

TRANSACTION

Consideration paid to Ensysce’s shareholders for their interests in the Company will consist of shares of Leisure common stock issued at a price equal to $10.00 per share. Assuming none of Leisure’s shares of common stock are redeemed for cash in trust, Ensysce’s existing shareholders would own approximately 71% of the combined company’s outstanding common stock at closing.

At the closing of the Transaction, Ensysce Biosciences, Inc. will merge into a wholly-owned subsidiary of Leisure.  In connection with the merger, outstanding shares of Ensysce (including shares resulting from the conversion of Ensyce’s convertible debt prior to closing) will be converted in the business combination into the right to receive shares of Leisure at an exchange rate of .06585.  In addition, Ensysce’s existing options and warrants will be exchanged for equivalent securities in Leisure on their existing terms (with standard adjustments to exercise price and underlying shares, consistent with the foregoing exchange rate).

The combined company’s sources of available cash are expected to be comprised of:

• (i) cash in Leisure’s trust account (subject to any redemptions),
• (ii) any excess cash on the respective balance sheets of Leisure and Ensysce at the closing date and
• (iii) any proceeds drawn pursuant to a $60 million forward equity purchase facility previously entered into by Ensysce.

The combined company’s available cash is expected to be used to:

• • (i) pay transaction fees and expenses and
  • (ii) for general corporate purposes of the combined company.

WARRANT SURRENDER

• LACQ entered into a Warrant Surrender Agreement, by and among LACQ, MLCP GLL Funding LLC (“MLCP”) and Hydra LAC, LLC (“Hydra”), pursuant to which each of MLCP and Hydra agreed to irrevocably forfeit and surrender 250,000 LACQ warrants immediately prior to, and contingent upon, the Closing.

DEFERRED FEE REDUCTION

• The underwriters of the Company’s initial public offering agreed to reduce the total deferred underwriting fee that is to be paid to such underwriters upon the consummation of the Company’s initial business combination to $2,000,000, which may under certain situations be payable in the form of LACQ Common Stock.

NOTABLE CONDITIONS TO CLOSING

• Following payment by LACQ to its stockholders who have validly elected to have their shares of LACQ Common Stock redeemed for cash pursuant to LACQ’s governing documents and after giving effect to the payment of transaction expenses incurred by or on behalf of LACQ, LACQ having an aggregate amount of cash of at least $5,000,000.

NOTABLE CONDITIONS TO TERMINATION

• By LACQ if the Transaction is not consummated on or before June 30, 2021 (the “Outside Date”).
• LACQ will be obligated to pay Ensysce a one-time termination fee equal to $5,250,000 if:
  • (i) the Merger Agreement is terminated due to the LACQ Board determining to accept a Superior Business Combination Proposal or a Change of Board Recommendation and
  • (ii) LACQ enters into a definitive merger or purchase agreement with respect to such Superior Business Combination Proposal.

ADVISORS

• Proskauer Rose LLP acted as legal counsel to Leisure.
• Troutman Pepper LLP acted as legal counsel to Ensysce.

**The transaction with Gateway was terminated on July 16, 2020. For reference, the information below remains for reference**

PROPOSED BUSINESS COMBINATION: Gateway Casinos & Entertainment Ltd. [Terminated 7/16/20]

ESTIMATED CURRENT FUNDS in TRUST: $13.2 million*

CURRENT PER SHARE REDEMPTION PRICE: $10.44*

ENTERPRISE VALUE: $1.1 billion

*SPACInsider estimate a/o 7-15-20

Leisure Acquisition Corp. proposes to combine with Gateway Casinos & Entertainment Limited (“Gateway”), in a transaction with a pro forma enterprise valuation of approximately US$1.115 billion (C$1.463 billion).  HG Vora Capital Management, LLC, (“HG Vora“) on behalf of certain of its affiliates, is supporting the Transaction through a US$30 million equity commitment.  HG Vora has committed more than $100 million in total, including previously invested capital.

Gateway is one of the largest and most diversified gaming and entertainment companies in Canada, which is currently majority owned by The Catalyst Capital Group Inc. (“Catalyst“). Gateway has 25 properties across British Columbia and Ontario – up from 10 in 2015.  Year-to-date (through September 30, 2019) growth in Adjusted EBITDA is up 10.8% to US$103.7 million (C$137.9 million). Q3 2019 YTD Adjusted EBITDA shown in $USD is based upon the average USD / Canadian exchange rate for the period of 1.3294. Q3 2018 YTD Adjusted EBITDA includes a C$6.9MM full-year run-rate adjustment in which Gateway sold the real estate of Grand Villa Burnaby, Starlight New Westminster and Cascades Casino Langley to a third-party on March 12, 2018.  Year-over-year growth rates are calculated on $CAD basis.

• 2020 Projected Adjusted EBITDA is expected to be US$148.6 million (C$195.0 million).^iv 2020 Projected Adjusted EBITDA to Free Cash Flow Conversion is expected to be 90.8%.
  • (Free Cash Flow  Conversion calculated as (a) Adjusted EBITDA less the sum of maintenance capital expenditures and (y) cash taxes divided by (b) Adjusted EBITDA)

The Transaction is expected to close in the second quarter of 2020.

Gateway Business Highlights:

• Diversified portfolio of 25 gaming and entertainment destinations in British Columbia and Ontario, featuring over 12,800 slot machines, 365 table games and 72 food and beverage outlets.
• Leading market position in both British Columbia and Ontario. Gateway operates over 40% of all slot machines and table games in British Columbia and is the exclusive service provider in the North, Southwest and Central Ontario Bundles (as defined in the contracts with the Ontario Lottery and Gaming Corporation).
• Operator of four principal casino brands, each focused on providing distinctive entertainment experiences and value to their guests: Grand Villa, Starlight, Cascades and Playtime. Gateway also offers four well-known, proprietary F&B brands: Atlas Steak + Fish, Match Eatery & Public House, Chow Lucky Noodle Bar and The Buffet.
• Significant capital investment made by Gateway over the last three years is projected to yield strong Adjusted EBITDA growth in 2020 and beyond. As part of its expansion plan, over the next three years Gateway expects to open three new casinos in Ontario, relocate two casinos in Ontario and relocate two casinos in British Columbia, all in attractive and underpenetrated new markets. Pursuant to Gateway’s current organic growth plan, the Company expects to add more than 1,900 slot machines, nearly 100 table games and 15 branded F&B outlets to its operating base.

Financial Projections for the respective years ending December 31:

(US/C $ in millions)^viii

TRANSACTION SUMMARY

• At the closing of the Transaction, Leisure will merge with a new wholly-owned subsidiary of GTWY. In connection with the merger, outstanding shares of Leisure will be converted in the business combination into the right to receive shares of GTWY at a fixed exchange rate of one-to-one.
• All outstanding public warrants to purchase Leisure shares will be converted automatically into warrants to purchase shares of GTWY at an exercise price of US$11.50 per share. GTWY will be the publicly traded company with its shares expected to be listed on the NYSE under the ticker “GTWY.”
• The combined company’s sources of available cash are expected to be comprised of:
  • (i) cash in Leisure’s trust account (subject to any redemptions)
  • (ii) proceeds from a private placement whereby HG Vora has agreed to purchase 3 million Units of GTWY for US$10.00 per Unit
  • (iii) any excess cash on the respective balance sheets of Leisure and Gateway at the closing date.
• The combined company’s available cash is expected to be used to:
  • (i) pay transaction fees and expenses
  • (ii) repay all or a portion of GTWY’s existing approximately US$154 million holding co. loan^vii
  • (iii) repay a portion of Gateway’s existing operating company term loan
  • (iv) fund any cash consideration to the existing shareholders of GTWY, and
  • (v) for general corporate purposes of the combined company.
• Insiders of Leisure (the “Sponsors“) and HG Vora have agreed with respect to any private placement warrants (the “Sponsor Warrants“) to amend the terms of the Sponsor Warrants such that the Sponsor Warrants will be comprised of:
  • (a) 2,775,000 warrants with a strike price of US$11.50 which will be exercisable for five years from the closing date of the initial business combination
  • (b) 2,775,000 warrants with a strike price of US$12.50 which will be exercisable for five years from the closing date of the initial business combination and
  • (c) 2,775,000 warrants with a strike price of US$15.00 which will be exercisable for seven years from the closing date of Transaction.

EARNOUT

The existing shareholders of GTWY will have the ability to receive an earn-out payment of up to 4.743 million common shares of GTWY to be delivered in the form of warrants, subject to vesting conditions:

• Warrants for 1.898 million common shares will become exercisable if, after the closing date of the Transaction, the last reported sales price of GTWY’s common stock equals or exceeds US$12.50 per share for any 20 trading days within a 30 trading-day period commencing at least 150 days after the closing date of the Transaction through and including the second anniversary of the closing date of the Transaction.
• Warrants for 2.846 million additional common shares will become exercisable if, after the closing date of the Transaction, the last reported sales price of GTWY’s common stock equals or exceeds US$15.00 per share for any 20 trading days within a 30 trading-day period commencing at least 150 days after the closing date of the Transaction through and including the third anniversary of the closing date of the Transaction.

Furthermore, the existing shareholders of GTWY will receive newly-issued warrants in the following tranches:

• (i) 6,325,110 warrants with a strike price of US$11.50 which will be exercisable for five years from the closing date of the Transaction
• (ii) 6,325,111 warrants with a strike price of US$12.50 which will be exercisable for five years from the closing date of the Transaction
• (iii) 6,325,111 warrants with a strike price of US$15.00 which will be exercisable for seven years from the closing date of the Transaction.

The Company will also issue 1.281 million options to certain members of management in the same proportion and equivalent term and conditions as the earn-out payment and the warrants being issued to existing shareholders of GTWY.

FOUNDER SHARES & PRIVATE PLACEMENT PURCHASE

• 5,000,000 Founder Shares at IPO – 1,000,000 to be forfeited and cancelled
• 6,825,000 Private Placement Warrants at IPO – amended so that:
  • (a) 2,775,000 warrants with a strike price of US$11.50 which will be exercisable for five years from the closing date of the initial business combination
  • (b) 2,775,000 warrants with a strike price of US$12.50 which will be exercisable for five years from the closing date of the initial business combination and
  • (c) 2,775,000 warrants with a strike price of US$15.00 which will be exercisable for seven years from the closing date of Transaction.

NOTABLE CONDITIONS TO CLOSING

• Cash from LACQ’s trust account of at least the greater of: (a) $15,000,000 or (b) the aggregate amount of LACQ’s transaction expenses.

NOTABLE CONDITIONS TO TERMINATION

• By LACQ if the Transaction is not consummated on or before July 15, 2020
• By the Company if the Transaction is not consummated on or before the later of (a) June 1, 2020 and (b) if audited financial statements for the year ended December 31, 2019 are required to be included in the Proxy Statement/Prospectus the date that is 45 days after the Company’s delivery of such audited financial statements to LACQ

MANAGMENT & BOARD

Upon closing of the Transaction:

• A. Lorne Weil, Daniel B. Silvers and Marc J. Falcone, Leisure’s Executive Chairman, Chief Executive Officer and Director, respectively, are expected to join Gateway’s Board of Directors.
• Lyle Hall, Olga Ilich and Dr. Michael Percy also are expected to join upon closing of the Transaction.
• Additional independent directors are expected to be appointed at or following the completion of the Transaction such that Gateway Board of Directors may be comprised of up to 9 members.

ADVISORS

• Morgan Stanley & Co. LLC. acted as M&A advisor to Gateway.
• Latham & Watkins LLP and Bennett Jones LLP acted as legal counsel to Gateway.
• Credit Suisse acted as M&A advisor to Leisure.
• Proskauer Rose LLP and Miller Thomson LLP acted as legal counsel to Leisure.

LEISURE ACQUISITION CORP. MANAGEMENT & BOARD

Executive Officers

Daniel B. Silvers, 41
CEO and Director 

Mr. Silvers has served as Managing Member of Matthews Lane Capital Partners LLC, an investment firm, since June 2015 and also has served as Chief Strategy Officer of Inspired Entertainment, Inc., a company involved in the gaming equipment supplier industry, since December 2016. He is the former President of SpringOwl Asset Management LLC, an investment management firm, a position he held from March 2009 to June 2015 (including predecessor entities). From April 2009 to October 2010, Mr. Silvers also served as President of Western Liberty Bancorp, an acquisition oriented holding company that acquired and recapitalized a community bank in Las Vegas, Nevada. Mr. Silvers joined a predecessor of SpringOwl from Fortress Investment Group, a leading global alternative asset manager, where he worked from 2005 to 2009. At Fortress, Mr. Silvers’ primary focus was to originate and oversee due diligence on and asset management for real estate and gaming investments in Fortress’ Drawbridge Special Opportunities Fund. Prior to joining Fortress, Mr. Silvers was a senior member of the real estate, gaming and lodging investment banking group at Bear, Stearns & Co., Inc. Mr. Silvers serves as lead independent director of PICO Holdings, Inc., a holding company with water resource operations. Mr. Silvers previously served on the board of directors of Forestar Group, Inc., International Game Technology, bwin.party digital entertainment plc, Universal Health Services, Inc., Ashford Hospitality Prime, Inc. and India Hospitality Corp. Mr. Silvers holds a B.S. in Economics, as well as an M.B.A with a concentration in Finance, from The Wharton School of the University of Pennsylvania.

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George Peng, 47
CFO, Treasurer and Secretary

Mr. Peng has been a Principal of Hydra Management, LLC, an investment vehicle of Mr. Weil’s since July 2014 and as Vice President of Finance at Inspired Entertainment, Inc., since January 2017. Previously, he was Chief Financial Officer of Hydra Industries Acquisition Corp., a special-purpose acquisition corporation that acquired Inspired Entertainment, Inc., from August 2015 until January 2017. Before that, Mr. Peng was a consultant to Scientific Games Corporation from May 2013 to April 2014, where he assisted in its integration of the acquisition of WMS Industries. Mr. Peng was focused on the financial and operational impacts of integrating the accounting and finance functions of both companies, including human resource allocation, budgeting, and cost reductions. Prior to consulting to Scientific Games, Mr. Peng was a consultant primarily focused on financial planning and analysis for various industries, including retail and financial services. Previously, he was an Associate in the Investment Banking division of Credit Suisse, focusing on private equity, high yield, and leveraged lending products. Mr. Peng holds an A.B. in Economics from the University of Michigan, Ann Arbor, as well as an M.B.A. with a concentration in Finance from the Anderson School at UCLA. Mr. Peng is a CFA Charterholder, which he was awarded in 2006.

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Eric Carrera, 28
Senior Vice President – Finance & Business Development

Mr. Carrera has served as the Senior Associate of Hydra Management, LLC, an investment vehicle of Mr. Weil, since June 2015 and as Manager of Finance/M&A of Inspired Entertainment, Inc. since January 2017. Mr. Carrera has also served as Senior Vice President at Andina Acquisition Corp. II, a special-purpose acquisition corporation, since November 2015. From June 2011 to February 2015, Mr. Carrera was an international business development associate with Scientific Games Corporation, a supplier of technology-based products, systems and services to gaming markets worldwide. From September 2011 to December 2013, Mr. Carrera acted as an advisor to Andina Acquisition Corp. and was a member of the team that successfully completed a business transaction with Tecnoglass S.A., a Colombian manufacturer of glass and windows. Mr. Carrera received a B.S. from Boston University School of Management and is also a CFA Charterholder.

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Board of Directors

A. Lorne Weil, 71
Executive Chairman

Mr. Weil has been a principal of Hydra Management, an investment vehicle formed by Mr. Weil, since September 2014. Mr. Weil serves as Executive Chairman of Inspired Entertainment, Inc., a position he has held since December 2016. Previously, Mr. Weil served as Chairman and CEO of Inspired’s predecessor, Hydra Industries Acquisition Corp., since October 2014. Mr. Weil previously served as Chairman of the Board of Scientific Games Corporation (and its predecessor Autotote Corporation) from October 1991 to November 2013. Mr. Weil also served as the Chief Executive Officer of Scientific Games Corporation (and its predecessor Autotote Corporation) from 1992 to 2008 and from November 2010 to November 2013 (Mr. Weil had retired in 2008) and as the President from August 1997 to June 2005. Under Mr. Weil’s stewardship, the company made a number of significant acquisitions and joint ventures, including the privatization of the off-track betting operations of the State of Connecticut, and the acquisitions of Scientific Games Holdings Corp., IGT Online Entertainment Systems, Global Draw and WMS Industries, and the privatization of the Illinois, New Jersey and Italian lotteries. Prior to joining Scientific Games, Mr. Weil was President of Lorne Weil, Inc., a firm he founded which provided strategic planning and corporate development services to technology-based industries, a role he maintained from 1979 to November 1992. From 1974 to 1979, Mr. Weil was Vice President — Corporate Development at General Instrument Corporation. From 1970 to 1974, Mr. Weil was a manager with the Boston Consulting Group. Mr. Weil received his undergraduate degree from the University of Toronto, an M.S. degree from the London School of Economics and an M.B.A. from Columbia University, where he served for more than 10 years on the Board of Overseers. From 2011 to 2013, Mr. Weil was a director of Avantair Inc. In 2012, Mr. Weil was the sponsor and Chairman of the Board of Andina Acquisition Corp., a NASDAQ-listed blank check company. Mr. Weil is currently the Non-Executive Chairman of the Board of the successor entity, Tecnoglass Inc.

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Marc J. Falcone, 44
Director

Mr. Falcone served as Executive Vice President, Chief Financial Officer and Treasurer of Red Rock Resorts, Inc. from October 2015 until May 2017 and as Executive Vice President and Chief Financial Officer of Station Casinos LLC from June 2011 until May 2017. Mr. Falcone served as Treasurer of Station Casinos LLC since January 2013 until May 2017. Mr. Falcone also served as Chief Financial Officer of Fertitta Entertainment LLC from October 2010 through May 2016. From June 2008 to October 2010, Mr. Falcone worked at Goldman Sachs & Co. where he focused on restructuring transactions in the hospitality and gaming sectors under that firm’s Whitehall division. From May 2006 to June 2008, Mr. Falcone was a senior analyst at Magnetar Capital, LLC (an alternative asset management firm), covering the gaming, lodging, leisure, REIT and airline industries. From May 2002 to June 2006, Mr. Falcone was a Managing Director for Deutsche Bank Securities Inc. covering gaming, lodging and leisure companies and was recognized as one of the industry’s top analysts. Prior to joining Deutsche Bank Securities Inc., Mr. Falcone worked for Bear, Stearns & Co. Inc., covering the gaming, lodging and leisure industries. Mr. Falcone holds a bachelor’s degree in Real Estate Finance and Hotel Administration from Cornell University.

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Steven M. Rittvo, 68
Director

Since February 2017, Mr. Rittvo serves as Chairman and Chief Executive Officer of Innovation Project Development, a multi-disciplinary development management services company focused on leisure- and residential-related developments. Mr. Rittvo has been with Innovation Project Development since November 2005. In May 1993, Mr. Rittvo co-founded The Innovation Group, Inc., a gaming, hospitality and leisure sector consulting firm headquartered in Denver with offices in New Orleans, Atlantic City, Aspen, Minneapolis and Orlando. Mr. Rittvo served as President of Innovation Group until February 2017. In Mr. Rittvo’s various roles with The Innovation Group, he advised and participated in gaming studies for clients ranging from Caesars Entertainment, MGM Mirage, Pinnacle Entertainment, Mandalay Resort Group, Isle of Capri, Harrah’s Entertainment, Trump Hotels and Casinos, as well as numerous Native American tribes and government agencies throughout the United States and the World. Mr. Rittvo holds a bachelor’s degree in Systems Engineering and a master’s degree in Transportation Engineering and Planning from the Polytechnic Institute of New York.

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David L. Weinstein, 51
Director

Mr. Weinstein is a partner at Belvedere Capital, a real estate investment firm based in New York, and is primarily focused on Belvedere’ s investment in Industry City, a six million square foot redevelopment project in Sunset Park, Brooklyn. Mr. Weinstein was previously a partner at Belvedere Capital from September 2008 until October 2013. From February 2015 until August 2016, Mr. Weinstein was a member of the board of directors of Forestar Group, Inc. Mr. Weinstein previously served as President and Chief Executive Officer of MPG Office Trust, Inc., a publicly traded office REIT, from November 2010 until the sale of the Company in October 2013. He was a member of the board of directors of MPG Office Trust, Inc. from August 2008 until October 2013. From April 2007 until August 2008, Mr. Weinstein was a Managing Director of Westbridge Investment Group/Westmont Hospitality Group, a real estate investment fund focused on hospitality. From 1996 until January 2007, Mr. Weinstein worked at Goldman, Sachs & Co. in New York, first as a Vice President in the real estate investment banking group (focusing on mergers, asset sales and corporate finance) and then, from 2004, as a Vice President in the Special Situations Group (focused on real estate debt investments). Mr. Weinstein holds a Bachelor of Science degree in Economics, magna cum laude, from The Wharton School of the University of Pennsylvania and a Juris Doctor, cum laude, from the University of Pennsylvania Law School. He is a member of the New York State Bar Association.

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