Entry into Material Definitive Agreement.
On June 14, 2019,
TheMaven, Inc. (the “Company”) and ABG-SI LLC (“ABG”), a Delaware limited liability company and indirect
wholly-owned subsidiary of Authentic Brands Group, entered into a Licensing Agreement (the “Licensing Agreement”) pursuant
to which the Company shall have the exclusive right and license in the United States, Canada, Mexico, The United Kingdom, The Republic
of Ireland, Australia and New Zealand to operate the Sports Illustrated media business (in the English and Spanish languages),
including to (i) operate the digital and print editions of
(including all special interest issues and
the swimsuit issue) and
Sports Illustrated for Kids
, (ii) develop new digital media channels under the Sports Illustrated
brands and (iii) operate certain related businesses, including without limitation, special interest publications, video channels,
bookazines and the licensing and/or syndication of certain products and content under the Sports Illustrated brand (collectively,
the “Licensed Business”). The Company is not required to implement geofiltering or other systems to prevent users located
outside the territory from accessing the digital channels in the territory.
Levinsohn, the former senior executive from Fox and Yahoo!, has agreed to become the new CEO of the Licensed Business. The terms
of Mr. Levinsohn’s employment will be disclosed separately.
The initial term
of the Licensing Agreement shall commence upon the termination of the Meredith License Agreement (as defined below) and shall continue
through December 31, 2029. The Company has the option, subject to certain conditions, to renew the term of the Licensing Agreement
for nine consecutive renewal terms of 10 years each (collectively, the “Term”), for a total of 100 years.
The Licensing Agreement
provides that the Company shall pay to ABG annual royalties in respect of each year of the Term based on gross revenues (“Royalties”)
with guaranteed minimum annual amounts. The Company has prepaid ABG $45 million against future Royalties. ABG will pay to the Company
a share of revenues relating to certain Sports Illustrated business lines not licensed to the Company, such as commerce. The two
companies will be partnering in building the brand worldwide.
Pursuant to a publicly
announced agreement between ABG and Meredith Corporation (“Meredith”), an Iowa corporation, Meredith currently operates
the Licensed Business under license from ABG (the “Meredith License Agreement). Maven and ABG are pursuing discussions with
Meredith for it to continue to operate certain aspects of the business, including print operations, however the Licensing Agreement
is not contingent on reaching such an agreement with Meredith.
The Company has
agreed to issue to ABG within 30 days of the execution of the Licensing Agreement warrants to acquire common stock of the Company
representing 10% of the Company’s fully diluted equity securities (“Warrants”). Half the Warrants shall have
an exercise price of $0.42 per share (the “Forty-Two Cents Warrants”). The other half of the Warrants shall have an
exercise price of $0.84 per share (the “Eighty-Four Cents Warrants”). The documentation for all the Warrants shall
provide for the following additional terms: (1) 40% of the Forty-Two Cents Warrants and 40% of the Eighty-Four Cents Warrants shall
vest in equal monthly increments over a period of two years beginning on the one year anniversary of the date of issuance of the
Warrants (any unvested portion of such Warrants to be forfeited by ABG upon certain terminations by the Company of the Licensing
Agreement); (2) 60% of the Forty-Two Cents Warrants and 60% of the Eighty-Four Cents Warrants shall vest based on the achievement
of certain performance goals for the Licensed Business in calendar years 2020, 2021, 2022 or 2023; (3) under certain circumstances
the Company may require ABG to exercise all (and not less than all) of the Warrants, in which case all of the Warrants shall be
vested; (4) all of the Warrants shall automatically vest upon certain terminations of the Licensing Agreement by ABG or upon a
change of control of the Company; and (5) ABG shall have the right to participate, on a pro-rata basis (including vested and unvested
Warrants, exercised or unexercised), in any future equity issuance of the Company (subject to customary exceptions).
The Licensing Agreement
contains various customary representations, warranties and indemnities by the parties.
B Riley FBR, Inc. acted as the Company’s
financial advisor in the transaction.