Vivid Seats Inc. 10-K

Item 9A. Controls and Procedures Limitations on Effectiveness of Disclosure Controls and Procedures In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective at reasonable assurance levels as of December 31, 2021 due to the reasons described below. Material Weakness In connection with the audit of our consolidated financial statements as of December 31, 2021 and 2020, we identified a material weakness in our internal control over financial reporting related to the implementation of segregation of duties as part of our control activities, establishment of clearly defined roles within our finance and accounting functions and the number of personnel in our finance and accounting functions with an appropriate level of technical accounting and SEC reporting experience, which in the aggregate, constitute a material weakness. Remediation Activities As part of our plan to remediate this material weakness, we are performing a full review of our internal control procedures. We have implemented, and plan to continue to implement, new controls and new processes. We have begun to hire and plan to continue to hire additional qualified personnel and establish more robust processes to support our internal control over financial reporting, including clearly defined roles and responsibilities and appropriate segregation of duties. Management's Annual Report on Internal Control over Financial Reporting This Annual Report on Form 10-K does not include a report of management’s assessment regarding our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or an attestation report of our independent registered accounting firm due to a transition period established by rules of the SEC for newly public companies. Additionally, our independent registered accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act. 96 Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 97 Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. PART III ITEM 10. Directors, Executive Officers and Corporate Governance Directors The following table provides summary information about each of our directors as of December 31, 2021: Committees of the Board of Directors Name Age Director Since Audit Committee Compensation Committee Nominating and Corporate Governance Committee Stanley Chia 40 2018 Mark Anderson 46 2021 C Todd Boehly 48 2021 M Jane DeFlorio 51 2021 C Craig Dixon 46 2021 M David Donnini 56 2021 C M Tom Ehrhart 34 2021 M Julie Masino 51 2021 M M Martin Taylor 52 2021 C – Chairperson; M - Member The information presented below sets forth each director’s specific experience, qualifications, attributes, and skills that has led our Board of Directors ("Board") to the conclusion that s/he should serve as a Director. We also believe that all of our directors have a reputation for integrity, honesty, and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Vivid Seats and our Board. Stanley Chia. From April 2015 until November 2018, Mr. Chia served as Chief Operating Officer at Grubhub Inc. He serves on the Board and Nominating Committee of 1871 and on the President’s Advisory Board of the Georgia Institute of Technology. Mr. Chia graduated from the Georgia Institute of Technology and Emory University Goizueta Business School. Mr. Chia also served in the Singapore Armed Forces as an Armored Infantry Platoon Commander. Mr. Chia is well qualified to serve on our Board due to his role as our Chief Executive Officer, his depth of knowledge of us and our operations, his acute business judgment and extensive familiarity with the business in which we compete. Mark M. Anderson. Since 2000, Mr. Anderson has worked at GTCR, most recently as a Managing Director. Mr. Anderson has served on the Board of Gogo Inc. (NASDAQ: GOGO) since March 2021 and also serves on the Boards of CommerceHub and Jet Support Services Inc. Mr. Anderson graduated from the University of Virginia and Harvard Business School. Mr. Anderson is well qualified to serve on our Board because of his directorship experience and deep understanding of the technology and e-commerce industries. Todd Boehly. Since June 2020, Mr. Boehly has served as the Chief Executive Officer and member of the Board of Directors of Horizon and since July 2020, he has served as Horizon’s Chief Financial Officer and Chairman. Mr. Boehly has also served as the Chief Executive Officer, Chief Financial Officer and Director of Horizon Acquisition Corporation 98 II (NYSE: HZON) since August 2020 and of Horizon Acquisition Corporation III (NYSE: HZNA) since November 2020. In 2015, Mr. Boehly co-founded Eldridge, a holding company with a unique network of businesses across finance, technology, real estate and entertainment, and since then has served as the Chairman and Chief Executive Officer. From 2002 to 2015, Mr. Boehly worked at Guggenheim Partners, most recently as president. Mr. Boehly serves on the board of directors of Kennedy-Wilson Holdings (NYSE: KW), the Los Angeles Lakers, Flexjet, PayActiv, CAIS, and Cain International. Mr. Boehly graduated from the College of William & Mary. He also studied at the London School of Economics. Mr. Boehly is well qualified to serve on our Board because of his substantial experience building and managing businesses. Jane DeFlorio. Ms. DeFlorio was Managing Director of Deutsche Bank AG Retail/Consumer Sector Investment Banking Coverage from 2007 to 2013. From 2002 to 2007, Ms. DeFlorio was an Executive Director in the Investment Banking Consumer and Retail Group at UBS Investment Bank. Ms. DeFlorio has served on the Board of SITE Centers Corp. (NYSE: SITC) since 2017, where she is Chair of the Audit Committee and a member of the Compensation and Pricing Committees. Ms. DeFlorio served as a Director of Perry Ellis International from 2014 to 2018. Ms. DeFlorio is a member of the Board of Trustees and Chairman of the Audit and Risk Committee at The New School University in New York City. She also serves on the Boards of Directors for The Parsons School of Design and the Museum at Fashion Institute of Technology. Ms. DeFlorio graduated from the University of Notre Dame and Harvard Business School. Ms. DeFlorio is well qualified to serve on our Board because of her over 15 years of experience in investment banking, as well as her recent public board service. Craig Dixon. Mr. Dixon is the Co-Founder and Co-Chief Executive Officer of The St. James, a leading developer and operator of premium performance, wellness and lifestyle brands, technology experiences and destinations. From 2006 to 2013, Mr. Dixon was Senior Counsel and Assistant Corporate Secretary at Smithfield Foods, a global food business. Mr. Dixon began his legal career at McGuireWoods LLP and Cooley LLP, and as a Law Clerk to the Honorable James R. Spencer, United States District Court for the Eastern District of Virginia. He is a member of the Board of Trustees of Episcopal High School. Mr. Dixon graduated from the College of William & Mary and William & Mary School of Law. Mr. Dixon is well qualified to serve on our Board because of his extensive experience in corporate governance and business transactions, as well as his executive experience. David Donnini. Mr. Donnini joined GTCR in 1991 and is currently a Managing Director. Prior to joining GTCR, Mr. Donnini worked at Bain & Company. Mr. Donnini is currently a Director of AssuredPartners, Consumer Cellular, Park Place Technologies and Sotera (NYSE: SHC), where he serves on the Nomination and Corporate Governance Committee. Mr. Donnini graduated from Yale University and Stanford Graduate School of Business. Mr. Donnini is well qualified to serve on our Board because of his directorship experience and deep understanding of the technology and e-commerce industries. Tom Ehrhart. Mr. Ehrhart joined GTCR in 2012 and is currently a Director. Prior to joining GTCR, Mr. Ehrhart worked as an Analyst in the Financial Institutions group at Credit Suisse. Mr. Ehrhart serves on the Board of Directors of AssuredPartners and Consumer Cellular. He was previously a Director of GreatCall and Park Place Technologies. Mr. Ehrhart graduated from Georgetown University. Mr. Ehrhart is well qualified to serve on our Board because of his directorship experience and deep understanding of the technology and e-commerce industries. Julie Masino. Since January 2020, Ms. Masino has served as the President, International of Taco Bell, a subsidiary of Yum! Brands (NYSE: YUM). From January 2018 to December 2019, Ms. Masino served as President, North America of Taco Bell. Ms. Masino held senior positions at Mattel (NASDAQ: MAT) from April 2017 to January 2018 and at Sprinkles Cupcakes from 2014 to 2017. Ms. Masino serves on the Board of PhysicianOne Urgent Care. Ms. Masino graduated from Miami University. 99 Ms. Masino is well qualified to serve on the Board because of her extensive experience in the areas of marketing, organizational strategy, technology, and public company leadership. Martin Taylor. Mr. Taylor has been an Operating Managing Director at Vista Equity Partners since 2006. Prior to joining Vista, Mr. Taylor spent over 13 years at Microsoft Corporation, including in roles managing corporate strategy, sales, product marketing and segment focused teams in North America and Latin America. Mr. Taylor has served on the Board of Jamf Holding Corp. (NASDAQ: JAMF) since 2017 and Ping Identity Holding Corp. (NYSE: PING) since November 2020. Mr. Taylor graduated from George Mason University. Mr. Taylor is well qualified to serve on the Board because of his extensive experience in the areas of corporate strategy, technology, finance, business transactions and software investments. Our Executive Officers Below are the names, ages and principal occupations of each of our current executive officers. All such persons have been elected to serve until their successors are elected and qualified or until their earlier resignation or removal. Name Age Executive Officer Since Position Stanley Chia 40 2018 Chief Executive Officer and Director Riva Bakal 37 2021 SVP, Strategy and Product Lawrence Fey 41 2020 Chief Financial Officer David Morris 47 2021 General Counsel Jon Wagner 49 2018 Chief Technology Officer Riva Bakal. Ms. Bakal joined Vivid Seats in February 2019 as our Vice President of Strategy and Corporate Development. From August 2016 to December 2018, Ms. Bakal held a variety of senior positions across functions at Grubhub, most recently serving as Vice President of Market Operations. Ms. Bakal is a graduate of the Massachusetts Institute of Technology and Harvard Business School. Lawrence Fey. Mr. Fey joined Vivid Seats in April 2020 and served as a member of our Board from July 2017 through February 2020. From 2005 until 2020, he worked at GTCR, a private equity firm, most recently serving as a Managing Director. While at GTCR, Mr. Fey was a member of the Board of many successful investments, including Six3 Systems, CAMP Systems, Zayo Group, Cision, Park Place Technologies, GreatCall, Simpli.fi and EaglePicher. Mr. Fey graduated from Dartmouth College. David Morris. Mr. Morris joined Vivid Seats in June 2021. From 2008 until he joined Vivid Seats, he worked at TripAdvisor Inc., most recently as Vice President and Associate General Counsel. From 2003 to 2008, he worked at Invensys, PLC, most recently as Senior Counsel. Mr. Morris began his legal career at the law firms of WilmerHale and Hinckley Allen. Mr. Morris serves on the Board of the Doug Flutie Jr. Foundation for Autism and the Brandeis University Alumni Association. Mr. Morris received his undergraduate degree from Brandeis University, and graduate degrees from Boston University School of Law, Suffolk University Sawyer Business School, and Boston University School of Communications. Jon Wagner. Mr. Wagner joined Vivid Seats in December 2018 with over 25 years of experience in the technology sector, including most recently as a freelance Decision Engineering Consultant from January 2018 to December 2018. From June 2017 to January 2018, Mr. Wagner served as Co-Founder of Aidan.ai, a start-up specializing in applied artificial intelligence, from February 2017 to May 2017, he served as Vice President of Systems and Decision Engineering at Grubhub, and from March 2015 to February 2017, he served as Chief Operating Officer of Zoomer, a B2B food delivery company. Mr. Wagner graduated from La Salle University. 100 Family Relationships There are no family relationships among our directors and executive officers. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors, executive officers, our principal accounting officer and persons who beneficially own more than 10% of our common stock to file with the SEC reports of their ownership and changes in their ownership of our common stock. To our knowledge, based solely on review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 2021 filed with the SEC and on written representations by our directors and executive officers, all required Section 16 reports under the Exchange Act for our directors, executive officers, principal accounting officer and beneficial owners of greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 2021 other than one Form 3 that reflected no beneficial ownership of any class of equity securities of Vivid Seats during the year ended December 31, 2021 that was filed late by Edward Pickus, our Chief Accounting Officer. Code of Ethics We have a code of ethics that applies to all of our executive officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The code of ethics is available on our website, www.vividseats.com. We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website rather than by filing a Current Report on Form 8-K. Corporate Governance Audit Committee The Audit Committee consists of Julie Masino, Craig Dixon and Jane DeFlorio, who serves as Chair of the Audit Committee. The parties have affirmatively determined that each member of the Audit Committee qualifies as independent under Nasdaq rules applicable to Board members generally and under Nasdaq rules and Exchange Act Rule 10A-3 specific to Audit Committee members. All members of our Audit Committee meet the requirements for financial literacy under the applicable Nasdaq rules. In addition, Jane DeFlorio qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. ITEM 11. Executive Compensation This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below. In 2021, our “named executive officers” and their positions were as follows: • Stanley Chia, Chief Executive Officer; • Lawrence Fey, Chief Financial Officer; and • Jon Wagner, Chief Technology Officer. 2021 Summary Compensation Table The following table sets forth all of the compensation awarded to, earned by, or paid to our named executive officers for the fiscal year ended December 31, 2021. 101 Name and Principal Position Year Salary ($) Stock Awards ($) (1) Option Awards ($) (2) Non-equity Incentive Plan Compensation ($) (3) All Other Compensation ($) (4) Total ($) Stanley Chia, Chief Executive Officer 2021 600,000 2,500,000 4,303,791 900,000 20,417 8,324,208 2020 551,539 1,042,105 — 275,769 26,906 1,896,319 Lawrence Fey, Chief Financial Officer 2021 300,000 2,000,000 3,443,033 225,000 11,400 5,979,433 2020 192,692 483,973 — 48,173 6,877 731,715 Jon Wagner, Chief Technology Officer 2021 360,231 1,000,000 1,721,516 270,173 11,400 3,363,320 2020 350,000 303,354 — 87,500 9,205 750,059 (1) The amounts shown in this column represent restricted stock units granted under our 2021 Incentive Award Plan. The amounts represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For a detailed description of the assumptions used for purposes of determining grant date fair value, see Item 8 "Financial Statements and Supplementary Data - Note 20 to our Consolidated Financial Statements" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates – Equity-Based Compensation" . (2) The amounts shown in this column represent stock options granted under our 2021 Incentive Award Plan. The amounts represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For a detailed description of the assumptions used for purposes of determining grant date fair value, see Item 8 "Financial Statements and Supplementary Data - Note 20 to our Consolidated Financial Statements" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates – Equity-Based Compensation." (3) The amounts shown in this column represent cash incentive awards earned for 2021 and paid in the first quarter of 2022 under our Annual Incentive Plan. See “2021 Annual Incentive Plan Awards” below. (4) The amount for Mr. Chia reflects (a) Young President’s Organization international membership in the amount of $9,017, and (b) employer matching contribution under our 401(k) in the amount of $11,400. The amounts for Mr. Fey and Mr. Wagner reflect employer matching contributions under our 401(k). 2021 Salaries The named executive officers receive a base salary to compensate them for services rendered to us. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Other than a four percent (4%) merit increase to Mr. Wagner’s base salary in March 2021, there were no changes to the named executive officers’ base salaries in 2021. 2021 Annual Incentive Plan Awards In 2021, each of the named executive officers was eligible to receive a cash incentive award under our 2021 Annual Incentive Plan (“AIP”); the targeted award levels for officers for the AIP are specified in their respective employment agreements, expressed as a percentage of annual base salary, as described below in “Executive Compensation Arrangements”. Actual award payouts were determined by us on a discretionary basis based on our overall performance for the year, as well as each individual’s performance, subject to each named executive officer’s continued employment through the payment date. 102 The 2021 AIP was designed by our Compensation Committee in early 2021 to stimulate and support a high-performance environment by tying 2021 cash incentive awards to the attainment of short-term goals across two metrics aligned with our financial objectives that the committee believed are valued by our stockholders: revenue (50% weighting) and adjusted EBITDA (50% weighting). The committee further determined that for each metric, the award payout would be determined by measuring our actual performance, based on our financial results for 2021, against our 2021 operating plan targets approved by our board of directors in early 2021, as set out in the following graph: Actual Revenue / Adjusted EBITDA Performance as % of Operating Plan Target Payout Threshold 85% 40% 90% 60% 95% 80% Target 100% 100% 105% 120% 110% 135% Maximum 115% 150% No payout would be received for Company performance less than 85% of the operating plan target. The maximum award payout that could be earned was 150% of the target value. To the extent the level of achievement fell between any of the levels in the above graph, straight-line interpolation would be utilized to calculate the payout level for the metric. There was substantial uncertainty at the time the committee established the targets as to the likelihood of our attainment of the targeted levels of performance and the actual payout of the AIP. Each officer’s AIP award was subject to continued employment through the payment date. Based on our 2021 achievement of actual revenue and adjusted EBITDA at levels 263% and 1,557%, respectively, above the operating plan targets, the Compensation Committee in early 2022 determined that the cash incentive awards earned for 2021 under the AIP would be 150% of the targeted award levels for each executive officer. Equity Compensation Equity-based awards for our named executive officers were granted in the form of restricted stock units and stock options under our 2021 Incentive Award Plan. We adopted the 2021 Incentive Award Plan in order to facilitate the grant of cash and equity incentives to our directors, employees (including our named executive officers) and consultants and certain of our affiliates and to enable us and certain of our affiliates to obtain and retain services of these individuals, which is essential to our long-term success. The plan became effective on the date on which it was adopted by our board of directors, subject to approval of such plan by our stockholders. See “Outstanding Equity Awards at Fiscal Year-End” for additional information on the equity awards granted during 2021. Other Elements of Compensation Retirement Plans We maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers will be eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee contributions, and these matching contributions are fully vested as of the date on which the contribution is made. We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan, and making fully vested matching contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies. Employee Benefits and Perquisites 103 Health/Welfare Plans. All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including: • medical, dental and vision benefits; • medical and dependent care flexible spending accounts; • short-term and long-term disability insurance; and • life insurance We believe the perquisites described above are necessary and appropriate to provide a competitive compensation package to our named executive officers. No Tax Gross-Ups We do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by us. Executive Compensation Arrangements Stanley Chia, Chief Executive Officer On October 3, 2018, we entered into an employment agreement with Mr. Chia, providing for his position as our Chief Executive Officer. Subsequently, on August 9, 2021, we and Vivid Seats, LLC entered into a new employment agreement with Mr. Chia that became effective upon the closing of the Business Combination, and superseded his existing employment agreement. For purposes of the following description of Mr. Chia’s employment terms, we refer to his existing employment agreement and his new employment agreement that became effective upon the closing of the Business Combination, collectively, as the "Chia Employment Agreement." Mr. Chia’s employment with us is at-will and either party may terminate the Chia Employment Agreement without notice. With respect to 2021, the Chia Employment Agreement provided that Mr. Chia was entitled to a base salary of $600,000 per year, that Mr. Chia had the opportunity to earn an annual incentive bonus in an amount equal to up to one-hundred percent (100%) of his annual base salary, determined by reference to the attainment of Company performance metrics and individual performance objectives, in each case, in the sole discretion of our board of directors, and that Mr. Chia was also entitled to participate in our health and welfare plans. Under the Chia Employment Agreement, Mr. Chia is subject to perpetual confidentiality, a non-compete provision during his employment and in the one-year period post termination, a non-solicitation of customers and employee provision during his employment and in the one-year period post termination and a perpetual mutual non-disparagement provision. The Chia Employment Agreement also provides for potential payments upon termination as described below under “Potential Payments Upon Termination”. Lawrence Fey, Chief Financial Officer On March 19, 2020, we entered into an employment agreement with Mr. Fey, providing for his position as our Chief Financial Officer. Subsequently, on August 9, 2021, we and Vivid Seats, LLC entered into a new employment agreement with Mr. Fey that became effective upon the closing of the Business Combination, and then superseded his existing employment agreement. For purposes of the following description of Mr. Fey’s employment terms, we refer to his existing employment agreement and his new employment agreement that became effective upon the closing of the Business Combination, collectively, as the “Fey Employment Agreement.” Mr. Fey’s employment with us is at-will and either party may terminate the Fey Employment Agreement without notice. With respect to 2021, the Fey Employment Agreement provided that Mr. Fey was entitled to a base salary of $300,000 per year and that Mr. Fey was entitled to participate in our health and welfare plans. Mr. Fey has the opportunity to earn an annual incentive bonus in an amount equal to up to fifty percent (50%) of his annual base 104 salary, determined by reference to the attainment of Company performance metrics and individual performance objectives, in each case, in the sole discretion of our board of directors. Under the Fey Employment Agreement, Mr. Fey is subject to perpetual confidentiality, a non-compete provision during his employment and in the one-year period post termination, a non-solicitation of customers and employee provision during his employment and in the one-year period post termination and a perpetual mutual non-disparagement provision. In addition, Mr. Fey is also party to a and restrictive covenants agreement, pursuant to which he is subject to perpetual confidentiality, a non-compete provision during his employment and in the two-year period post termination, a non-solicitation of customers and employee provision during his employment and in the two-year period post termination and a perpetual non-disparagement provision in favor of us. The Fey Employment Agreement also provides for potential payments upon termination as described below under “Potential Payments Upon Termination”. Jon Wagner, Chief Technology Officer On December 4, 2018, we entered into an employment agreement with Mr. Wagner, providing for his position as our Chief Technology Officer. Mr. Wagner’s employment with us is at-will and either party may terminate the Wagner Employment Agreement without notice. Subsequently, on August 9, 2021, we and Vivid Seats, LLC entered into a new employment agreement with Mr. Wagner that became effective upon the closing of the Business Combination, and then superseded his existing employment agreement. For purposes of the following description of Mr. Wagner’s employment terms, we refer to his existing employment agreement and his new employment agreement that became effective upon the closing of the Business Combination, collectively, as the “Wagner Employment Agreement.” The Wagner Employment Agreement provides that Mr. Wagner is entitled to a base salary of $350,000 per year, which was increased based on merit to $364,000 in March 2021. Mr. Wagner has the opportunity to earn an annual incentive bonus in an amount equal to up to fifty percent (50%) of his annual base salary, determined in the sole discretion of our board of directors. Mr. Wagner is currently not entitled to any severance payments. Mr. Wagner is also entitled to participate in our health and welfare plans. Mr. Wagner has the opportunity to earn an annual incentive bonus in an amount equal to up to fifty percent (50%) of his annual base salary, determined by reference to the attainment of our performance metrics and individual performance objectives, in each case, in the sole discretion of our board of directors. Under the Wagner Employment Agreement, Mr. Wagner is subject to perpetual confidentiality, a non-compete provision during his employment and in the one-year period post termination, a non-solicitation of customers and employee provision during his employment and in the one-year period post termination and a perpetual mutual non-disparagement provision. In addition, Mr. Wagner is also party to an employment and restrictive covenants agreement, pursuant to which he is subject to perpetual confidentiality, a non-compete provision during his employment and in the two-year period post termination, a non-solicitation of customers and employee provision during his employment and in the two-year period post termination and a perpetual non-disparagement provision in favor of us. The Wagner Employment Agreement also provides for potential payments upon termination as described below under “Potential Payments Upon Termination”. Potential Payments Upon Termination The Chia Employment Agreement, the Fey Employment Agreement and the Wagner Agreement provide that upon termination of their employment by us without Cause (as defined below) or if they resign for Good Reason (as defined below), they will be entitled to receive, subject to their execution and non-revocation of a release of claims: (a) continued payment of their annual base salary for the periods set forth below, (b) a prorated annual cash incentive payment for the year in which termination occurs (determined at fifty percent (50%) achievement), (c) 105 payment of any unpaid bonus or annual cash incentive payment for a prior fiscal year, and (d) reimbursement for COBRA health insurance premiums for the periods set forth below. Annual Base Salary COBRA Health Insurance Premiums Mr. Chia 12 months 12 months Mr. Fey 12 months 12 months Mr. Wagner 9 months 9 months “ Cause ” is defined, with respect to each executive officer, as: (a) a material failure to perform his responsibilities or duties under the applicable employment agreement or those other responsibilities or duties as reasonably requested from time to time by our board of directors; (b) engagement in illegal conduct or gross misconduct that has materially harmed or is reasonably likely to materially harm our standing and reputation; (c) commission or conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude or any other act or omission that has materially harmed or is reasonably likely to materially harm our standing and reputation; (d) a material breach of the duty of loyalty or our code of conduct and business ethics, in either case, that has materially harmed or is reasonably likely to materially harm our standing and reputation or material breach of his restrictive covenants agreement or any other material written agreement with us; (e) dishonesty that has materially harmed or is reasonably likely to materially harm us; (f) fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of his duties as an employee; or (g) excessive and unreasonable absences from his duties for any reason (other than authorized leave as a result of his death or disability); provided, however, as to clauses (a), (b), (d), (f) or (g), an event will only constitute Cause after written notice has been given by our board of directors and has not been cured for a period of thirty (30) days. “ Good Reason ” is defined, with respect to each executive officer, as: (a) a material adverse change in title, position, duties or responsibilities, including, but not limited, to (x) our failure to maintain the title, position, duties and responsibilities as set forth below, (y) any requirement to report directly to anyone other than as set forth below, or (z) with respect to Mr. Chia, while Mr. Chia is our Chief Executive Officer, Mr. Chia’s failure to be nominated to our board of directors or any governing body of us; (b) a reduction in then-current base salary or then-current targeted annual cash incentive award by more than ten percent (10%); (c) our material breach of any agreement with the executive officer; or (d) a relocation of the primary location of work more than thirty (30) miles from the location set forth below; provided, however, that in each case above the executive officer must (i) first provide written notice to us of the existence of the Good Reason condition within thirty (30) days of the initial existence of such event specifying the basis for his belief that he is entitled to terminate his employment for Good Reason, (b) give us an opportunity to cure any of the foregoing within thirty (30) days following delivery to us of such written notice, and (c) actually resign from employment with us within thirty (30) days following the expiration of our thirty (30) day cure period. 106 Position Reporting Structure Primary Location Mr. Chia sole CEO, most senior officer, and member of Board of Directors Our Board of Directors Headquarters in Chicago Mr. Fey CFO CEO or Board of Directors Austin-Round Rock-San Marcos metropolitan area or Chicago-Naperville-Elgin metropolitan area Mr. Wagner CTO CEO Philadelphia-Camden-Wilmington metropolitan area or Chicago-Naperville-Elgin metropolitan area Outstanding Equity Awards at Fiscal Year-End The following table sets forth the information regarding each outstanding unexercised or unvested equity award held by our named executive officers as of December 31, 2021. Option Awards Stock Awards Name Type of Equity Grant Date Number of Securities Underlying Unexercised Options (#) Unexercisable Number of Securities Underlying Unexercised Options (#) Unexercisable (1) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) (2) Market Value of Shares or Units of Stock That Have Not Vested ($) Stanley Chia Profit interests 11/5/2018 — 200,306 (1) 874,262 (8) Phantom equity 9/1/2020 — 360,000 (2) 2,674,172 (8) Profit interests 9/1/2020 — 360,000 (2) 14,760,865 (8) Stock Options 10/19/2021 — 938,812 (3) 12.86 (4) 10/19/2031 Stock Options 10/19/2021 — 275,682 (3) 15.00 10/19/2031 Restricted Stock Units 10/19/2021 — 250,000 (5) 2,720,000 (9) Lawrence Fey Phantom equity 9/1/2020 — 88,000 (6) 653,686 (8) Profit interests 9/1/2020 — 88,000 (6) 3,608,212 (8) Profit interests 9/1/2020 — 352,000 (6) 1,310,901 (8) Stock Options 10/19/2021 — 751,050 (3) 12.86 (4) 10/19/2031 Stock Options 10/19/2021 — 220,546 (3) 15.00 10/19/2031 Restricted Stock Units 10/19/2021 — 200,000 (5) 2,176,000 (9) Jon Wagner Profit interests 12/17/2018 — 36,000 (7) 0 (8) Phantom equity 9/1/2020 — 61,600 (6) 457,580 (8) 107 Profit interests 9/1/2020 — 61,600 (6) 2,525,748 (8) Profit interests 9/1/2020 — 192,000 (6) 715,037 (8) Stock Options 10/19/2021 — 375,525 (3) 12.86 (4) 10/19/2031 Stock Options 10/19/2021 — 110,273 (3) 15.00 10/19/2031 Restricted Stock Units 10/19/2021 — 100,000 (5) 1,088,000 (9) (1) Vesting occurs in 20% equal installments on each anniversary of November 5, 2018, subject to Mr. Chia’s continued employment through each vesting date. Upon certain qualifying terminations, (a) an additional 10% of unvested profits interests will accelerate and vest in connection with Mr. Chia’s termination and (b) if a sale of Hoya Topco is consummated in the six-month period following Mr. Chia’s termination, all of the unvested units will accelerate and vest. (2) Vesting occurs in 20% equal installments on each anniversary of June 30, 2020, subject to Mr. Chia’s continued employment through each vesting date. Upon certain qualifying terminations, (a) an additional 10% of unvested profits interests will accelerate and vest in connection with Mr. Chia’s termination and (b) if a sale of Hoya Topco is consummated in the six-month period following Mr. Chia’s termination, all of the unvested units will accelerate and vest. (3) The stock options vest in 16 equal quarterly installments beginning on January 19, 2022. (4) The options were awarded with an original exercise price of $13.09 per share on the date of grant. On the grant date, we anticipated that we would pay an extraordinary dividend of $0.23 per share in the near term. When the dividend was paid on November 2, 2021, the exercise price of the options was reduced by $0.23 per share, which resulted in an exercise price of $12.86 per share. (5) The restricted stock units vest in 16 equal quarterly installments beginning on January 19, 2022. (6) Vesting occurs in 20% equal installments on each anniversary of June 30, 2020, subject to the named executive officer’s continued employment through each vesting date. (7) Vesting occurs in 20% equal installments on each anniversary of December 12, 2018, subject to the named executive officer’s continued employment through each vesting date. (8) There is no public market for the profits interests. For purposes of this disclosure, we have valued the profits interests primarily based on the Class A share price as of December 31, 2021. The amount reported above under the heading "Market Value of Shares or Units of Stock That Have Not Vested" reflects the intrinsic value of the profits interests as of December 31, 2021, based upon the terms of each individual’s profits interests. (9) Represents the fair market value per share of our common stock of $10.88, as of December 31, 2021. Director Compensation The following table sets forth information concerning the compensation of our Board for the year ended December 31, 2021. Please note that Mr. Chia receives no compensation for his role as director, and the entirety of his compensation is reported in the Summary Compensation Table. 108 Name Fees Earned or Paid in Cash ($) Stock Awards ($) (1) (2) All Other Compensation ($) Total ($) Mark Anderson 9,680.71 320,000 — 329,681 Todd Boehly 9,680.71 320,000 — 329,681 Jane DeFlorio 10,190.22 320,000 — 330,190 Craig Dixon 10,190.22 320,000 — 330,190 David Donnini 10,699.73 320,000 — 330,700 Tom Ehrhart 9,171.20 320,000 — 329,171 Julie Masino 11,209.24 320,000 — 331,209 Martin Taylor — — — — (1) The amounts shown in this column for 2021 represent awards granted under our 2021 Incentive Award Plan. The amounts listed are equal to the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For a detailed description of the assumptions used for purposes of determining grant date fair value, see Item 8 "Financial Statements and Supplementary Data - Note 20 to our Consolidated Financial Statements" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates – Equity-Based Compensation". (2) The restricted stock units vest in five equal annual installments on the first five anniversaries of the date of grant, subject to the non-employee director’s continued service through each vesting date. We pay each non-employee director an annual base cash fee of $40,000 for service as our director. Members of the Audit Committee are paid an additional annual cash fee of $10,000 in recognition of the additional responsibilities the Audit Committee holds. Members of the Compensation Committee are paid an additional annual cash fee of $5,000 in recognition of the additional responsibilities the Compensation Committee holds. Members of the Nominating and Corporate Governance Committee are paid an additional annual cash fee of $7,500 in recognition of the additional responsibilities the Nominating and Corporate Governance Committee holds. All fees are earned on a quarterly basis. No additional fees are paid for attending meetings of our Board or any committee of our Board. We reimburse expenses incurred by directors in attending meetings of our Board of Directors and of our respective committees. Our non-employee director compensation policy provides for the grant of equity to each non-employee director as follows: • Restricted stock units having an aggregate grant date fair value of $320,000 on the date of his or her initial election or appointment to our Board, which will vest in five equal installments on the first five anniversaries of the date of grant, and • Restricted stock units having an aggregate grant date fair value of $160,000 on an annual basis on the date of our annual meeting of shareholders; provided, however, that the value of this award will be paid pro rata based on the number of days that have elapsed during the Board term. Each annual award will vest on the earlier of the day before the date of the first annual meeting of shareholders after the date of grant and the first anniversary of the date of grant. Each equity grant requires continued service on our Board through the applicable vesting date. No portion of an equity award that is unvested at the time of a director’s termination of service on our Board will vest thereafter, subject, in the case of death or disability, to the award remaining outstanding for 30 days following such event and the discretion of our Board (or a designated committee thereof) to accelerate unvested awards during such period. All of a director’s equity award will vest in full immediately prior to a change in control, to the extent outstanding at such time. Compensation Committee Interlocks and Insider Participation During the 2021 fiscal year, the Compensation Committee consisted of David Donnini, Julie Masino and Tom Ehrhart, with David Donnini serving as the chair of the committee. None of these individuals has served as our officer or employee or for any of our subsidiaries. We are not aware of any Compensation Committee interlocks. 109 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2021 with respect to the shares of our common stock that may be issued under our existing equity compensation plans approved by shareholders, which are the 2021 Incentive Award Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”): Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 5,439,597 (1) $13.56 (2) 10,148,463 (3) Equity compensation plans not approved by security holders __ __ __ Total 5,439,597 (1) $13.56 (2) 10,148,463 (3) (1) The securities listed are comprised of 1,378,111 shares that may be issued pursuant to stock options upon exercise and 4,061,486 shares that may be issued pursuant to restricted stock units upon vesting pursuant to the 2021 Plan. The securities listed exclude purchase rights outstanding under the 2021 ESPP. (2) Represents the weighted average exercise price of outstanding options to purchase common stock. No weighting is assigned to restricted stock units as no exercise price is applicable to such restricted stock units. (3) The securities listed are comprised of 7,550,453 shares available for future issuance under the 2021 Plan and 2,598,010 shares available for issuance under the 2021 ESPP. The number of shares of common stock reserved for issuance under the 2021 Plan will increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031, by a number equal to the lesser of (i) two percent (2%) of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of Shares (as defined in the 2021 Plan) as is determined by the Board. The number of shares of common stock reserved for issuance under the 2021 ESPP will also increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031 by a equal to the lesser of (a) 0.5% of the aggregate number of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of Shares (as defined in the 2021 ESPP) as determined by the Board. Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information with respect to holdings of our Class A and Class B common stock by: • stockholders who beneficially owned more than 5% of the outstanding shares of our common stock; • each of our named executive officers and directors; and • all directors and executive officers as a group. The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC and includes voting or investment power with respect to securities. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. We have based our calculation of the percentage of beneficial ownership on 79,166,943 shares of Class A common stock and 118,200,000 shares of Class B common stock issued and outstanding as of February 28, 2022. 110 Unless otherwise indicated, we believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect to all shares of voting shares beneficially owned by them. Unless otherwise noted, the business address of each of those listed in the table below is 111 N. Canal Street, Suite 800, Chicago, IL 60606. Class A Common Stock Class B Common Stock Name and Address of Beneficial Owner Number % Number % Combined Voting Power (%) (1) Five Percent Holders: Hoya Topco, LLC (2) — — 124,200,000 100 61.07 Eldridge Industries, LLC (3) (5) 100,243,630 80.29 — — 41.24 The Vanguard Group (4) 4,108,645 5.19 — — 2.08 Delaware Life Holdings Parent II, LLC (6) 5,000,000 6.32 — — 2.53 Named Executive Officers: Stanley Chia (3) 183,061 * — — * Lawrence Fey (3) 146,449 * — — * Jon Wagner (3) 71,085 * — — * Non-Employee Directors: Mark Anderson (2) (3) — * 124,200,000 100 61.07 Todd Boehly (3) (5) 100,243,630 80.29 — — 41.24 Jane DeFlorio (3) — * — — * Craig Dixon (3) — * — — * David Donnini (2) (3) — * 124,200,000 100 61.07 Tom Ehrhart (3) — * — — * Julie Masino (3) — * — — * Martin Taylor (3) — * — — * All directors and executive officers, as a group (13 individuals) 100,705,080 80.38 124,200,000 100 90.15 *Less than 1% (1) Percentage of combined voting power represents voting power with respect to all shares of Class A common stock and Class B common stock, voting together as a single class. Each holder of Class A common stock and Class B common stock is entitled to one vote per share. (2) GTCR Fund XI/B LP (“GTCR Fund XI/B”), GTCR Fund XI/C LP (“GTCR Fund XI/C”) and certain other entities affiliated with GTCR LLC (“GTCR”) have the right to appoint a majority of the members of the Board of Managers of Hoya Topco, LLC. GTCR Partners XI/B LP (“GTCR Partners XI/B”) is the general partner of GTCR Fund XI/B. GTCR Partners XI/A&C LP (“GTCR Partners XI/A&C”) is the general partner of GTCR Fund XI/C LP. GTCR Investment XI LLC (“GTCR Investment XI”) is the general partner of each of GTCR Partners XI/B and GTCR Partners XI/A&C. GTCR Investment XI is managed by a Board of Managers which includes Mark M. Anderson and David A. Donnini, and no single person has voting or dispositive authority over the securities reported herein. As such, each of the foregoing entities and individuals may be deemed to share beneficial ownership of the securities reported herein. Each of them disclaims any such beneficial ownership. The address for each of the entities and individuals is 300 North LaSalle Street, Suite 5600, Chicago, Illinois, 60654. This amount includes shares of Class B common stock issuable in connection with 111 6,000,000 Vivid Seats Class B Warrants. The following table sets forth our directors’ and named executive officers’ direct and indirect beneficial ownership interests in Hoya Topco, LLC excluding, in the case of directors, any shares indirectly owned by such individuals as a result of his or her partnership interest in GTCR or its affiliates. Name of Beneficial Owner Class B Units Class B-1 Incentive Units Class C Units(a) Percentage of Class C Units Beneficially Owned Class D Units Class E Units Stanley Chia(b) — 450,000 — — — 500,765 Lawrence Fey(c) — 110,000 — — 440,000 — Jon Wagner(d) — 77,000 — — 330,000 — (a) The Class C Units are the voting securities of Hoya Topco, LLC. (b) Includes vested and unvested interests. Excludes 450,000 phantom units of Hoya Topco. The Class E Units are profit interests of Hoya Topco. (c) Includes vested and unvested interests. Excludes 110,000 phantom units of Hoya Topco. The Class D Units are profit interests of Hoya Topco. (d) Includes vested and unvested interests. Excludes 77,000 phantom units of Hoya Topco. The Class D Units are profit interests of Hoya Topco. (3) The following table sets forth our named executive officers’, directors’, and executive officers and directors as a group's shares of common stock subject to options that are exercisable within 60 days of February 28, 2022. Name of Beneficial Owner Number of Shares subject to Options Executive Officers Stanley Chia 151,811 Lawrence Fey 121,449 Jon Wagner 60,724 Non-Employee Directors Mark Anderson — Todd Boehly — Jane DeFlorio — Craig Dixon — David Donnini — Tom Ehrhart — Julie Masino — Martin Taylor — All executive officers and directors as a group (13 individuals) 386,014 (4) The number of shares of Class A common stock held by The Vanguard Group (“Vanguard”) is based on a Schedule 13G filed with the SEC on February 10, 2022 by Vanguard. Vanguard reported that it has sole voting power with respect to 0 shares, shared voting power with respect to 3,710 shares, sole dispositive power with respect to 4,097,467 shares and shared dispositive power with respect to 11,178 shares. The address of Vanguard is 100 Vanguard Blvd. Malvern, PA 19355. (5) Interests shown consist of shares of Class A common stock held by Eldridge Industries, LLC (“Eldridge”), Horizon Sponsor, LLC (“Horizon”) and Post Portfolio Trust, LLC (“PPT”). Interests shown include (i) 52,057,173 shares of Class A common stock and (ii) 45,686,457 shares of Class A common stock subject to warrants that are exercisable within 60 days of February 28, 2022. Eldridge is a private investment firm specializing in providing both equity and debt capital. Todd L. Boehly is the Chairman, Chief Executive Officer and indirect controlling member of Eldridge and in such capacity may be deemed to have voting and dispositive power with respect to the shares held by Horizon and PPT. DraftKings has appointed Mr. Boehly as its true and lawful proxy and attorney-in-fact, with full power of 112 substitution, for and in the name, place and stead of DraftKings, to represent it at all annual and special meetings of our stockholders and all written consents of our stockholders with respect to the shares of Class A common stock held by DraftKings and to vote such shares at any meeting of our stockholders, however called, and at any adjournment or adjournments thereof, or in connection with any written consent of our stockholders, and to otherwise do all things which DraftKings might do if present and acting itself with respect to such shares. As such, Mr. Boehly may be deemed to have voting power with respect to the shares held by DraftKings for so long as DraftKings still holds such shares until October 18, 2022. Eldrige and Mr. Boehly have shared voting and dispositive power with respect to 100,243,630 shares; Horizon has shared voting and dispositive power with respect to 61,236,457 shares; and PPT has shared voting and dispositive power with respect to 36,507,173 shares. The address of DraftKings is 222 Berkeley Street, Boston, MA 02116. The address for each of the other entities and individual listed in this footnote is 600 Steamboat Road, Suite 200, Greenwich, CT 06830. (6) Based on a Schedule 13G filed with the SEC on March 4, 2022 on behalf of Vivid Public Holdings, LLC (“VPH”), DLHPII Public Investments, LLC (“Public Investment”), DLHPII Investment Holdings, LLC (“Investment Holdings”), Delaware Life Holdings Parent II, LLC (“Parent”), Delaware Life Holdings Manager, LLC (“Manager”) and Mark R. Walter (“Mr. Walter”) (together, VPH, Public Investment, Investment Holdings, Parent, Manager, and Mr. Walter are the “Reporting Persons”). Consists of 5,000,000 shares of Class A Common Stock (the “Class A Shares”) held directly by VPH. VPH is a wholly-owned subsidiary of Public Investments. Public Investments is a wholly-owned subsidiary of Investment Holdings. Investment Holdings is a wholly-owned subsidiary of Parent. Each of VPH, Public Investments, Investment Holdings and Parent is managed by Manager and each of Parent and Manager is controlled by Mr. Walter. Each of the Reporting Persons have shared voting and dispositive power over the securities reported. Each of Public Investments, Investment Holdings, Parent, Manager and Mr. Walter disclaim beneficial ownership of such securities except to the extent of their respective pecuniary interest therein. The principal business address of each of VPH, Public Investments, Investment Holdings, Parent, Manager and Mr. Walter is 227 West Monroe, Suite 5000 Chicago, IL 60606. ITEM 13. Certain Relationships and Related Transactions, and Director Independence Policies and Procedures for Related Person Transactions Our Board adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions. A “related person transaction” is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “related person” means: • any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; • any person who is known by us to be the beneficial owner of more than 5% of our voting shares; • any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our voting shares, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our voting shares; and • any firm, corporation or other entity in which any of the foregoing persons is a partner or principal, or in a similar position, or in which such person has a 10% or greater beneficial ownership interest. We have policies and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to our Audit Committee charter, the Audit Committee has the responsibility to review related party transactions. 113 Related Party Transactions Since January 1, 2021 Viral Nation We signed an agreement with Viral Nation. Viral Nation is a marketing agency that creates viral and social media influencer campaigns and provides advertising, marketing, and technology services. Viral Nation will produce a B2C campaign to improve our online brand reputation. The approximate dollar value of this transaction is $240,000. Eldridge Industries owns in excess of twenty-five percent (25%) of Viral Nation. Todd Boehly is the co-founder, Chairman and CEO of Eldridge Industries and is a member of our Board. The Audit Committee reviewed the facts and circumstances of this related person transaction pursuant to our formal policy for the review, approval or ratification of related party transactions. Rolling Stone We signed two agreements with Rolling Stone to sponsor events and receive other marketing benefits. Rolling Stone is a high-profile magazine and media platform that focuses on music, film, TV, and news coverages. We sponsored a party after Lollapalooza in Chicago at TAO with Rolling Stone (“TAO Event”). The approximate dollar value of this sponsorship was $145,000. We also sponsored a Rolling Stone party at Super Bowl LVI (“Super Bowl Event”). The approximate dollar value of this sponsorship was $140,000. Eldridge Industries owns in excess of twenty percent (20%) of Rolling Stone. Todd Boehly is the co-founder, Chairman and CEO of Eldridge Industries and is a member of our Board. Prior to the Merger Transaction, we had not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the TAO Event was not reviewed, approved or ratified in accordance with any such policy. The Audit Committee reviewed the facts and circumstances of the Super Bowl Event pursuant to our formal policy for the review, approval or ratification of related party transactions. Composition of the Board of Directors The Board is chaired by David Donnini, and includes Stanley Chia, Todd Boehly, Martin Taylor, Jane DeFlorio, Julie Masino, Craig Dixon, Mark Anderson and Tom Ehrhart, four of whom qualify as independent. Director Independence As a result of our Class A common stock and warrants being listed on Nasdaq, we are required to comply with the applicable rules of Nasdaq in determining whether a director is independent. Our Board has determined that each of Martin Taylor, Jane DeFlorio, Julie Masino and Craig Dixon qualifies as “independent” as defined under the applicable Nasdaq rules. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our Board of Directors has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. Controlled Company Exemption GTCR Fund XI/B LP, GTCR Fund XI/C LP, GTCR Co-Invest XI LP, GTCR Golder Rauner, LLC, GTCR Golder Rauner II, LLC, GTCR Management XI LLC and GTCR LLC collectively beneficially own more than 50% of the combined voting power for the election of our directors to our Board. As a result, we are a “controlled company” within the meaning of the 114 corporate governance standards of Nasdaq and may elect not to comply with certain corporate governance standards including, but not limited to, the following requirements: • that a majority of our Board consist of directors who qualify as “independent” as defined under Nasdaq rules; • that we have a Nominating and Corporate Governance Committee and, if we have such a committee, that it is composed entirely of independent directors; and • that we have a Compensation Committee and, if we have such a committee, that it is composed entirely of independent directors. We may elect to utilize one or more of these exemptions for so long as we remain a “controlled company.” Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of these corporate governance requirements. In the event that we cease to be a “controlled company” and the shares of our Class A common stock continue to be listed on Nasdaq, we will be required to comply with these provisions within the applicable transition periods. See “Risk Factors — Risks Related to Our Organizational Structure — We are a “controlled company” within the meaning of the Nasdaq listing standards and, as a result, rely on exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.” ITEM 14. Principal Accountant Fees and Services The following table summarizes the fees of Deloitte & Touche LLP, our independent registered public accounting firm, billed to us for the years ended December 31, 2021 and 2020 (in thousands): Fee Category 2021 2020 Audit Fees (1) $ 1,457 $ 793 Audit-Related Fees (2) 897 2,726 Total Fees $ 2,354 $ 3,519 (1) Audit fees consist of fees for the audit of our consolidated financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements. (2) Audit-related fees consist of other audit and attest services not required by statute or regulation, including those related to the Merger Transaction. Audit Committee Pre-Approval Policy and Procedures The Audit Committee has adopted a policy (the “Pre-Approval Policy”) that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the independent auditor may be pre-approved. The Pre-Approval Policy generally provides that we will not engage Deloitte and Touche LLP to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the Pre-Approval Policy (“general pre-approval”). Unless a type of service to be provided by Deloitte and Touche LLP has received general pre-approval under the Pre-Approval Policy, it requires specific pre-approval by the Audit Committee or by a designated member of the Audit Committee to whom the committee has delegated the authority to grant pre-approvals. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee will also consider whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with our business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance our ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative. On a periodic basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may 115 be provided by Deloitte and Touche LLP without first obtaining specific pre-approval from the Audit Committee. The Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. PART IV Item 15. Exhibits, Financial Statement Schedules (a)(1) Financial Statements. The financial statements required by this item are listed in Item 8. (a)(2) Financial Statement Schedules. All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the financial statements or the notes thereto. (a)(3) Exhibits. The following is a list of exhibits filed as part of this Annual Report on Form 10-K. 116 Exhibits Incorporated by Reference Exhibit Number Description Form Exhibit Filing Date Filed / Furnished Herewith 2.1 Transaction Agreement dated April 21, 2021 among Horizon Acquisition Corporation, Horizon Sponsor, LLC, Hoya Topco, LLC, Hoya Intermediate, LLC and Vivid Seats Inc. S-4 2.1 05/28/2021 2.2 Purchase, Sale and Redemption Agreement dated April 21, 2021 among Hoya Topco, LLC, Hoya Intermediate, LLC, Vivid Seats Inc., Crescent Mezzanine Partners VIB, L.P., Crescent Mezzanine Partners VIC, L.P., NPS/Crescent Strategic Partnership II, LP, CM7C VS Equity Holdings, LP, Crescent Mezzanine Partners VIIB, L.P., CM6B Vivid Equity, Inc., CM6C Vivid Equity, Inc., CM7C VS Equity, LLC, CM7B VS Equity, LLC, Crescent Mezzanine Partners VI, L.P., Crescent Mezzanine Partners VII, L.P., Crescent Mezzanine Partners VII (LTL), L.P., CBDC Universal Equity, Inc., Crescent Capital Group, LP and Horizon Acquisition Corporation S-4 2.2 05/28/2021 2.3 Plan of Merger dated October 18, 2021 among Horizon Acquisition Corporation, Horizon Sponsor, LLC, Hoya Topco, LLC, Hoya Intermediate, LLC and Vivid Seats Inc. 10-Q 2.3 11/15/2021 3.1 Amended and Restated Certificate of Incorporation 8-K 3.1 10/22/2021 3.2 Amended and Restated Bylaws. 8-K 3.2 10/22/2021 4.1 Amended and Restated Warrant Agreement dated October 14, 2021 between Horizon Acquisition Corporation and Continental Stock Transfer & Trust Company 8-K 10.7 10/22/2021 4.2 Specimen Class A Common Stock Certificate of Vivid Seats Inc. * * 4.3 Specimen Warrant Certificate of Vivid Seats Inc. * * 4.4 Description of Capital Stock * * 10.1 Stockholders’ Agreement dated October 18, 2021 among Vivid Seats Inc., Hoya Topco, LLC and Horizon Sponsor, LLC 8-K 10.1 10/22/2021 117 10.2 Amended and Restated Registration Rights Agreement dated October 18, 2021 among Vivid Seats Inc., Hoya Topco, LLC and Horizon Sponsor, LLC 8-K 10.2 10/22/2021 10.3 Tax Receivable Agreement dated October 18, 2021 among Vivid Seats Inc., Hoya Intermediate, LLC, GTCR Management XI, LLC, Hoya Topco, LLC and several Blocker TRA Holders 8-K 10.3 10/22/2021 10.4 Private Warrant Agreement dated October 18, 2021 between Vivid Seats Inc. and Hoya Topco, LLC 8-K 10.6 10/22/2021 10.5 Amended and Restated Warrant Agreement dated October 14, 2021 between Hoya Acquisition Corporation and Continental Stock Transfer & Trust Company 8-K 10.7 10/22/2021 10.6 Private Warrant Agreement dated October 15, 2021 between Hoya Acquisition Corporation and Continental Stock Transfer & Trust Company 8-K 10.8 10/22/2021 10.7 Private Warrant Agreement dated October 15, 2021 between Horizon Acquisition Corporation and Continental Stock Transfer & Trust Company 8-K 10.9 10/22/2021 10.8 Private Warrant Agreement ($10.00 exercise price) dated October 18, 2021 between Hoya Intermediate, LLC and Hoya Topco, LLC 8-K 10.10 10/22/2021 10.9 Private Warrant Agreement ($15.00 exercise price) dated October 18, 2021 between Hoya Intermediate, LLC and Hoya Topco, LLC 8-K 10.11 10/22/2021 10.10 Form of Subscription Agreement S-4/A 10.4 10/22/2021 10.11# Form of Indemnification Agreement 8-K 10.5 10/22/2021 10.12# 2021 Incentive Award Plan S-8 99.1 10/18/2021 10.13# 2021 Employee Stock Purchase Plan S-8 99.2 10/18/2021 10.14# Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement S-8 99.3 10/18/2021 10.15# Form of Non-Employee Director Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement S-8 99.4 10/18/2021 10.16# Form of Stock Option Grant Notice and Stock Option Agreement S-8 99.5 10/18/2021 10.17# Non-Employee Director Compensation Policy S-4/A 10.36 09/09/2021 10.18# Employment Agreement dated August 9, 2021, among Stanley Chia, Vivid Seats Inc. and Vivid Seats, LLC S-4/A 10.14 08/16/2021 118 10.19# Employment and Restrictive Covenants Agreement, dated April 1, 2020, between Lawrence Fey and Vivid Seats LLC S-4/A 10.19 08/16/2021 10.20# Employment Agreement dated August 9, 2021, among Lawrence Fey, Vivid Seats Inc. and Vivid Seats, LLC S-4/A 10.18 08/16/2021 10.21# Employment and Restrictive Covenants Agreement, dated December 12, 2018, between Jon Wagner and Vivid Seats LLC S-4/A 10.24 08/16/2021 10.22# Employment Agreement dated August 9, 2021, among Jon Wagner, Vivid Seats Inc. and Vivid Seats, LLC S-4/A 10.23 08/16/2021 10.23# Class E Securities Agreement, dated November 5, 2018, between Stanley Chia and Hoya Topco, LLC S-4/A 10.15 08/16/2021 10.24# Class B Securities Agreement, dated September 1, 2020, between Stanley Chia and Hoya Topco, LLC S-4/A 10.16 08/16/2021 10.25# First Amendment to Class E Securities Agreement, dated November 5, 2018, between Stanley Chia and Hoya Topco, LLC, and Class B Securities Agreement, dated September 1, 2020, between Stanley Chia and Hoya Topco, LLC S-4/A 10.17 08/16/2021 10.26# Class D Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC S-4/A 10.20 08/16/2021 10.27# Class B Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC S-4/A 10.21 08/16/2021 10.28# First Amendment to Class D Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC, and Class B Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC S-4/A 10.22 08/16/2021 10.29# Class D Securities Agreement, dated December 17, 2018, between Jon Wagner and Hoya Topco, LLC S-4/A 10.25 08/16/2021 10.30# Class B Securities Agreement, dated September 1, 2020, between Jon Wagner and Hoya Topco, LLC S-4/A 10.26 08/16/2021 10.31# Class D Securities Agreement, dated September 1, 2020, between Jon Wagner and Hoya Topco, LLC S-4/A 10.27 08/16/2021 10.32† Lease dated December 21, 2021 between Vivid Seats, LLC and BSREP II SS Chicago LLC 8-K 10.1 12/22/2021 119 10.33† First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC S-4/A 10.7 07/07/2021 10.34† Amendment No. 1, dated March 28, 2018, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC S-4/A 10.8 07/07/2021 10.35† Amendment No. 2, dated July 2, 2018, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC S-4/A 10.9 07/07/2021 10.36† Amendment No. 3, dated May 22, 2020, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC S-4/A 10.10 07/07/2021 10.37† Amendment No. 4, dated February 3, 2022, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC 8-K 10.1 02/07/2022 21.1 Subsidiaries * 23.1 Consent of Deloitte & Touche LLP * 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a). * 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a). * 32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350. ** 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350. ** 120 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. * 101.SCH Inline XBRL Taxonomy Extension Schema Document * 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document * 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document * 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document * 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * * Filed herewith. ** Furnished herewith. # Indicates management contract or compensatory plan † Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to provide a copy of all omitted exhibits and schedules to the SEC upon its request. Item 16. Form 10-K Summary None. 121 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Vivid Seats Inc. By: /s/ Stanley Chia Stanley Chia Chief Executive Officer March 15, 2022 Power of Attorney Each person whose signature appears below constitutes and appoints each of Stanley Chia and Lawrence Fey, acting alone or together with another attorney-in-fact, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any or all further amendments (including post-effective amendments) to this registration statement (and any additional registration statement related hereto permitted by Rule 462(b) promulgated under the Securities Act of 1933 (and all further amendments, including post-effective amendments, thereto)), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. 122 Signature Title Date /s/ Stanley Chia Chief Executive and Director March 15, 2022 Stanley Chia (principal executive officer) /s/ Lawrence Fey Chief Financial Officer March 15, 2022 Lawrence Fey (principal financial officer) /s/ Edward Pickus Chief Accounting Officer March 15, 2022 Edward Pickus (principal accounting officer) /s/ Mark Anderson Director March 15, 2022 Mark Anderson /s/ Todd Boehly Director March 15, 2022 Todd Boehly /s/ Jane DeFlorio Director March 15, 2022 Jane DeFlorio /s/ Craig Dixon Director March 15, 2022 Craig Dixon /s/ David Donnini Director March 15, 2022 David Donnini /s/ Tom Ehrhart Director March 15, 2022 Tom Ehrhart /s/ Julie Masino Director March 15, 2022 Julie Masino /s/ Martin Taylor Director March 15, 2022 Martin Taylor 123