UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant   ☒ Filed by a Party other than the Registrant    ☐
Check the appropriate box:

 

Preliminary Proxy Statement
   
Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))
   
Definitive Proxy Statement
   
Definitive Additional Materials
   
Soliciting Material Pursuant to §240.14a-12
   
TheStreet, Inc.
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):

 

No fee required.
   
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
   
  (1) Title of each class of securities to which transaction applies:
 

 

Common stock, par value $0.01 per share

  (2) Aggregate number of securities to which transaction applies:
 

 

As of June 20, 2019, 5,336,639 shares of common stock were issued and outstanding (excluding 1,070,634 shares of common stock held by the Registrant in treasury). 

  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 

 

Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated based on 5,336,639 shares of common stock (excluding 1,070,634 shares held by the Registrant in treasury) multiplied by an assumed per share aggregate consideration amount of $3.86183364 per share, which consists of (i) $3.09183364 in upfront per share cash consideration and (ii) one contingent value right that the Registrant estimates could result in additional cash payments of up to $0.77 per share.

  (4) Proposed maximum aggregate value of transaction:
 

 

$20,609,212.01

  (5) Total fee paid:
 

 

$2,497.84

   
Fee paid previously with preliminary materials.
   
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and date of its filing.
   
  (1) Amount Previously Paid:
     
  (2) Form, Schedule or Registration Statement No.:
     
  (3) Filing Party:
     
  (4) Date Filed:
     
       

 

 

PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

 

TheStreet, Inc.

14 Wall Street, 15th Floor

New York, NY 10005

 

[●], 2019

 

Dear Fellow Stockholder,

 

We are pleased to invite you to attend a Special Meeting (the “Special Meeting”) of Stockholders of TheStreet, Inc. (“TheStreet”). The Special Meeting will be held at [●], Eastern Daylight Time, on [●], 2019, at the offices of Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, New York 10019. More detailed information about the Special Meeting and the events leading up this meeting are included in the accompanying proxy statement, which we encourage you to read carefully.

 

As we previously announced on June 12, 2019, TheStreet, a leading financial news and information company, has entered into a definitive merger agreement with TheMaven, Inc., a coalition of content producers operating on a shared digital publishing, advertising and distribution platform (“Maven”), by which a subsidiary of Maven will acquire all of the outstanding common stock of TheStreet for $16.5 million in cash (the “Purchase Price”), together with a contingent value right as described below. In addition, each stockholder of TheStreet will receive a final cash distribution immediately prior to the merger, after which TheStreet will cease to be a public company.

 

This decision followed the unanimous recommendation of a Special Committee (the “Strategic Committee”) of the Board of Directors (the “Board”) that was formed in December 2017 to review, among other things, our mix of businesses with a view to possibly unlocking the value the Board believed was in our portfolio as well as possibly growing our businesses through acquisitions. The Board of Directors, acting through the Strategic Committee, which was comprised entirely of independent directors and chaired by Kevin Rendino, a representative of our largest stockholder, conducted a thorough process with respect to a review of strategic alternatives to maximize value for the TheStreet stockholders.

 

This unlocking of value began through the divestiture of our RateWatch business in June 2018 for a sale price of $33.5 million and continued through the sale of our institutional business units, The Deal and BoardEx (the “B2B Business”), for $87.3 million in February 2019. Following the successful sales of RateWatch, The Deal and BoardEx, we experienced an overall reduction in headcount and operations and took other actions to bring our overhead costs in line with our continuing operations, which comprised our business-to-consumer operations, including our namesake website, TheStreet.com, and several premium subscription products that target varying segments of the retail investing public (the “B2C Business”). We also approved and paid a special cash distribution of approximately $94.3 million to our stockholders in April 2019 from the proceeds of these prior transactions.

 

Although we were prepared to continue to operate our B2C Business as a standalone business, we also continued to explore strategic alternatives for the company. As a result of this ongoing strategic review, and after taking into account the ongoing development needs and operating costs of the remaining B2C Business as a stand-alone public company and other factors as described in the accompany proxy statement, we believe that this merger with Maven represents the best way to maximize value to TheStreet stockholders.

 

In addition to a pro-rata portion of the Purchase Price, which is equal to an amount in cash equal to $3.09183364 per share, our stockholders will receive additional consideration in connection with the closing of the merger transaction consisting of (1) a special cash distribution equal to the cash held by TheStreet immediately prior to the closing, less any excluded liabilities as agreed to between the parties, and (2) a contingent value right, or CVR, which will entitle each holder to receive a pro-rata portion of the expected release of funds from the outstanding escrow agreements entered into in connection with the sale of each of RateWatch and the B2B Business.

 

 

 

 

 

Currently, we estimate that the amount of cash we will be able to distribute immediately prior to the merger will range from approximately $2.44 per share to approximately $2.61 per share. This estimate reflects management’s estimate of cash on hand assuming that the distribution is effectuated on or about July 31, 2019. The actual amount to be distributed will be affected by our operating results, transaction expenses, certain severance benefits that were earned prior to the merger, the actual timing of the distribution and other factors. Currently, we estimate that the total amounts that will be released from the escrows for the CVRs will range from approximately $0.66 per share to approximately $0.77 per share. As a result of the foregoing, TheStreet stockholders are expected to receive total cash consideration, including payments under the CVRs, of approximately $33.0 million to $34.5 million, or approximately $6.19 to $6.47 per share, which represents an average premium of 7.8% to 12.6%, respectively, over the seven-day volume weighted average price of $5.74 of our common stock as of June 11, 2019, the last trading day before we announced the merger transaction.

 

The Board of Directors of TheStreet, after considering the factors more fully described in the accompanying proxy statement, determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of TheStreet and its stockholders and approved the merger agreement and the transactions contemplated thereby, including the merger, and we now are asking for your vote to adopt the merger agreement, and thereby approve the merger agreement and the transactions contemplated thereby, including the merger, and the related proposals as more fully described in the proxy statement.

 

On behalf of the entire Board of Directors of TheStreet, we would like to thank you for being a stockholder and express our appreciation for your ongoing support of TheStreet.

 

Very truly yours,

 

 

 

Larry Kramer

Chairman of the Board

 

 

 

Eric F. Lundberg
Chief Executive Officer and Chief Financial Officer

 

 

Kevin Rendino

Chair of the Strategic Committee

 

 

 

 

 

 

TheStreet, Inc.

14 Wall Street, 15th Floor

New York, NY 10005

 

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [●], 2019

 

 

 

NOTICE IS HEREBY GIVEN that a Special Meeting (“Special Meeting”) of Stockholders of TheStreet, Inc. (“TheStreet” or the “Company”) will be held on [●], [●], 2019, at [●], Eastern Daylight Time, at the offices of Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, New York 10019. A proxy card and a proxy statement for the Special Meeting are enclosed.

 

The purpose of the Special Meeting is to consider and act upon the following proposals:

 

(i)to adopt the Agreement and Plan of Merger, dated as of June 11, 2019 (the “Merger Agreement”), by and among TheStreet, TheMaven, Inc. a Delaware corporation (“Maven”), and TST Acquisition Co., Inc. a Delaware corporation and wholly owned subsidiary of Maven (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into TheStreet and the separate corporate existence of Merger Sub will cease, with TheStreet continuing as the surviving corporation (the “Merger”);

 

(ii)to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to certain of TheStreet’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Merger-Related Compensation Proposal”); and

 

(iii)to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

 

The Board of Directors of TheStreet recommends that you vote “FOR” the adoption of the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger; “FOR” the approval, on a non-binding, advisory basis, of the Merger-Related Compensation Proposal; and “FOR” an adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

 

Only holders of record of shares of TheStreet common stock at the close of business on June 20, 2019, are entitled to notice of, and to vote at, the Special Meeting and any postponements or adjournments thereof. At the close of business on the record date, TheStreet had 5,336,639 shares of common stock outstanding and entitled to vote. Everyone attending the Special Meeting will be required to present valid picture identification, such as a driver’s license or passport, as more fully described elsewhere in the accompanying proxy statement.

 

Your vote is very important. Proposal No. 1, the proposal to adopt of the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger, requires the approval by the affirmative vote of the holders of a majority of the outstanding common stock of TheStreet entitled to vote on the matter. Proposal No. 2, the approval, on a non-binding, advisory basis, of the Merger-Related Compensation Proposal, and Proposal No. 3, the proposal to adjourn of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of the proposal to adopt the Merger Agreement, each require approval by the affirmative vote of the holders of a majority of the common stock of TheStreet present in person or by proxy and entitled to vote on the matter at the Special Meeting.

 

 

 

 

All stockholders of TheStreet are cordially invited to attend the Special Meeting in person. However, even if you plan to attend the Special Meeting in person, we request that you complete, date, sign and return the enclosed proxy card in the postage-paid envelope or vote your shares by telephone or through the Internet as instructed in these materials as promptly as possible prior to the Special Meeting to ensure that your shares of TheStreet common stock will be represented at the Special Meeting if you are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, all of your shares will be voted “FOR” Proposal Nos. 1, 2, and 3. If you fail to return your proxy card as instructed on the enclosed proxy card or fail to submit your proxy by telephone or through the Internet and do not vote in person at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and will have the same effect as an “AGAINST” vote with respect to Proposal No. 1, but will have no effect with respect to the vote on Proposal Nos. 2 and 3. If you do attend the Special Meeting and wish to vote in person, you may withdraw your proxy and vote in person.

 

The accompanying proxy statement provides you with detailed information about the Special Meeting, the Merger, the Merger Agreement and the CVRs and the other business to be considered by TheStreet stockholders. We encourage you to read the entire proxy statement and its annexes, including, but not limited to, the Merger Agreement, carefully and in their entirety. A copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement and the form of contingent value rights agreement is attached as Exhibit A to the Merger Agreement. You may also obtain more information about TheStreet from documents we have filed with the U.S. Securities and Exchange Commission. If you have any questions concerning the Special Meeting, the Merger, the Merger Agreement and the CVRs or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or additional proxy cards, please contact our proxy solicitor:

 

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Phone number for banks and brokerage firms: (203) 658-9400

Phone number for shareholders: (800) 662-5200

Email: tst.info@morrowsodali.com

 

By Order of the Board of Directors,

 

 

Jared Verteramo
Secretary of the Company
New York, New York

 

[●], 2019

 

IMPORTANT: If you hold shares of common stock of TheStreet through an account with a broker, dealer, bank or other nominee please follow the instructions you receive from them to vote your shares.

 

 

 

 

 

 

TheStreet, Inc.

14 Wall Street, 15th Floor

New York, NY 10005

 

 

 

PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [●], 2019

 

 

 

This proxy statement and related proxy solicitation materials are being first mailed, sent or given on or about [●], 2019, to stockholders of TheStreet, Inc. (“TheStreet” or the “Company”) in connection with the solicitation of proxies by the Board of Directors of TheStreet (the “Board of Directors”) for a special meeting of TheStreet stockholders and any adjournment or postponement thereof (the “Special Meeting”) for the purposes set forth in the accompanying Notice of Special Meeting. The Special Meeting will be held on [●], [●], 2019, at [●], Eastern Daylight Time, at the offices of Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, New York 10019. The Board of Directors encourages you to read this proxy statement and its annexes carefully and in their entirety, and to take the opportunity to submit a proxy to vote your shares on the matters to be decided at the Special Meeting.

 

Only holders of record of shares of TheStreet common stock at the close of business on June 20, 2019, are entitled to notice of, and to vote at, the Special Meeting and any postponements or adjournments thereof. At the close of business on the record date, TheStreet had 5,336,639 shares of common stock outstanding and entitled to vote. Everyone attending the Special Meeting will be required to present valid picture identification, such as a driver’s license or passport, as more fully described elsewhere in this proxy statement.

 

If you have any questions concerning the Special Meeting or this proxy statement, or would like additional copies of the proxy statement or additional proxy cards, please contact our proxy solicitor:

 

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Phone number for banks and brokerage firms: (203) 658-9400

Phone number for shareholders: (800) 662-5200

Email: tst.info@morrowsodali.com

 

The date of this proxy statement is [●], 2019.

 

 

 

TABLE OF CONTENTS

 

Page

SUMMARY OF TERMS OF THE MERGER 1
Overview 1
Parties to the Merger 2
Merger Consideration 2
Pre-Merger Distribution 3
Recommendation of the Board of Directors 3
Opinion of Lake Street Capital Markets, LLC 4
Interests of Certain Persons in the Merger 4
Voting Agreement 4
Financing of the Merger 5
Conditions to the Completion of the Merger 5
Governmental and Regulatory Approvals 5
No Solicitation of Other Offers 5
Termination of the Merger Agreement; Termination Fee 7
Material United States Federal Income Tax Consequences 8
Appraisal Rights 9
Risk Factors Related to the Merger 9
The Special Meeting 10
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING 11
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 19
RISK FACTORS 20
PROPOSAL NO. 1:  THE MERGER PROPOSAL 25
Overview of the Merger 25
Parties to the Merger 26
Background of the Merger 26
Recommendation of the Board of Directors and its Reasons for the Merger 44
Certain Financial Projections 48
Opinion of Lake Street Capital Markets, LLC 51
Certain Material United States Federal Income Tax Consequences of the Merger, the Pre-Merger Distribution and Receipt of a CVR to United States Holders of TheStreet Common Stock 58
Accounting Treatment of the Merger 60
Governmental and Regulatory Approvals 60
Appraisal Rights 60
Employee Matters 65
Treatment of Company Equity Awards 65
Interests of Certain Persons in the Merger 65
Financing of the Merger 69
Agreements Related to the Merger 69
Required Vote; Recommendation of the Board of Directors 87
PROPOSAL NO. 2:  THE MERGER-RELATED COMPENSATION PROPOSAL 88
Required Vote; Recommendation of the Board of Directors 88
PROPOSAL NO. 3:  THE ADJOURNMENT PROPOSAL 89
Required Vote; Recommendation of the Board of  Directors 89
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 90
FUTURE STOCKHOLDER PROPOSALS 92
OTHER MATTERS 92

 

 

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DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS 92
WHERE YOU CAN FIND ADDITIONAL INFORMATION 92

ANNEX A Agreement and Plan of Merger
ANNEX B Opinion of Lake Street Capital Markets, LLC
ANNEX C Section 262 of the General Corporation Law of the State of Delaware

 

 ii

 

 

SUMMARY OF TERMS OF THE MERGER

 

This summary highlights selected information from this proxy statement. It may not contain all of the information that is important to you with respect to the Merger (as defined below) or any other matter described in this proxy statement. We urge you to carefully read this proxy statement, as well as the documents attached to or referred to in this proxy statement, to fully understand the Merger Proposal (as defined below). In particular, you should read the Merger Agreement (as defined below), which is described elsewhere in this proxy statement and is attached hereto as Annex A. You may obtain copies of our publicly-filed reports and other information from the sources listed under the section “Where You Can Find Additional Information” on page 92 of this proxy statement.

 

In this proxy statement, references to (i) “TheStreet,” the “Company,” “we,” “our” or “us” refer to TheStreet, Inc. and its subsidiaries, (ii) the “Board” or the “Board of Directors” refer to the Board of Directors of TheStreet and (iii) “Maven” or “Parent” refers to TheMaven, Inc. unless, in each case, otherwise indicated or the context otherwise requires. In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated June 11, 2019, by and among TheStreet, Maven and Merger Sub, as the “Merger Agreement,” our common stock, par value $0.01 per share as the “common stock” or “TheStreet common stock” and the holders of TheStreet common stock as “TheStreet stockholders.” Unless indicated otherwise, any other capitalized term used herein but not otherwise defined herein has the meaning assigned to such term in the Merger Agreement.

 

Overview

 

TheStreet is a leading financial news and information provider to investors and institutions worldwide. The Company’s flagship brand, TheStreet (www.thestreet.com), has provided unbiased business news and market analysis for financial investors for more than 20 years.

 

From time to time, the Board of Directors and our senior management team review and evaluate strategic opportunities and alternatives as part of a long-term strategy to increase stockholder value. Such opportunities and alternatives include remaining as a stand-alone entity, potential acquisitions of companies, businesses or assets that align with our strategic objectives and potential dispositions of one or more of our businesses. The Board’s consideration of strategic opportunities and alternatives took on a renewed focus following the realignment of our capital structure in November 2017, with the Board determining to review, among other things, our mix of businesses with a view to possibly unlocking the value the Board believed was in our portfolio as well as possibly growing our businesses through acquisitions. This unlocking of value began through the divestiture of our RateWatch business in June 2018 for a sale price of $33.5 million and continued through the sale of our institutional business units, The Deal and BoardEx (the “B2B Business”), for $87.3 million in February 2019 (collectively, the “Prior Transactions”).

 

Following the successful sales of RateWatch, The Deal and BoardEx, we experienced an overall reduction in headcount and operations and took other actions to bring our overhead costs in line with our continuing operations which comprised our business-to-consumer operations (the “B2C Business”). We also approved and paid a special cash distribution of approximately $94.3 million to our stockholders in April 2019 from the proceeds of the Prior Transactions.

 

On June 11, 2019, TheStreet, Inc., a Delaware corporation (“TheStreet”), TheMaven, Inc., a Delaware corporation (“Maven”), and TST Acquisition Co., Inc., a Delaware corporation and wholly owned subsidiary of Maven (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of Merger Sub with and into TheStreet (the “Merger”), with TheStreet surviving the Merger as a wholly owned subsidiary of Maven (the “Surviving Corporation”).

 

As a result of the Merger, TheStreet common stock will no longer be publicly traded and will be delisted from the Nasdaq Capital Market. In addition, TheStreet common stock will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and TheStreet will no longer file periodic reports with the United States Securities and Exchange Commission (the “SEC”). If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation. The time at which the Merger will become effective will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware in accordance with the applicable provision of the General Corporation Law of the State of Delaware (the “DGCL”) (the time of such filing and the acceptance for record by the Secretary of State of the State of Delaware, or such later time as may be agreed in writing by Maven, Merger Sub and TheStreet and specified in the certificate of merger, being referred to herein as the “Effective Time”).

 

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On June 9, 2019, following approval of the Merger Agreement by TheStreet’s Board of Directors, TheStreet provided a potential transaction notice to Mr. James Cramer, founder and Chief Markets Commentator of TheStreet, pursuant to the terms of his employment agreement with TheStreet. On June 11, 2019, Mr. Cramer responded to the notice, informing TheStreet of his intention to terminate his employment within thirty (30) days of consummation of the Merger. The continued employment of Mr. Cramer is not a closing condition to the Merger nor may Maven terminate the Merger Agreement due to the termination of Mr. Cramer’s employment for any reason.

 

Parties to the Merger

 

TheStreet, Inc.

 

TheStreet is a leading financial news and information provider. TheStreet was founded in 1996 as a limited liability company and reorganized as a C corporation in 1998. TheStreet’s principal executive offices are located at 14 Wall Street, New York, New York 10005, and its telephone number is (212) 321-5000. TheStreet’s website address is www.t.st. Information contained on, or that can be accessed through, our website is not incorporated by reference into this proxy statement, and you should not consider information on our website to be part of this proxy statement. TheStreet common stock is listed on the Nasdaq Capital Market under the trading symbol “TST.” Additional information about TheStreet is contained in our public filings. See the section entitled “Where You Can Find Additional Information” beginning on page 92.

 

TheMaven, Inc.

 

Maven (maven.io) is a coalition of Mavens, including individual thought-leaders to world-leading independent publishers, operating on a shared digital publishing, advertising, and distribution platform and unified under a single media brand. Based in Seattle, Maven is publicly traded under the ticker symbol MVEN. The information provided on or accessible through Maven’s website is not part of or incorporated by reference in this proxy statement.

 

TST Acquisition Co., Inc.

 

TST Acquisition Co., Inc., a Delaware corporation and a wholly owned subsidiary of Maven, which we refer to as “Merger Sub,” was formed solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will merge with and into TheStreet and will cease to exist.

 

Merger Consideration

 

TheStreet Common Stock

 

At the Effective Time, each share of common stock, par value $0.01 per share, of TheStreet issued and outstanding immediately prior to the Effective Time (other than shares, if any, held by TheStreet, Maven or Merger Sub and shares with respect to which appraisal rights have been properly exercised in accordance with the DGCL), after giving effect to the Pre-Merger Distribution described below, will automatically be cancelled and converted into the right to receive (i) an amount in cash equal to $3.09183364 per share of TheStreet common stock and (ii) one contractual contingent value right (each, a “CVR”) per share of TheStreet common stock (collectively, the “Merger Consideration”), in each case, without interest and less applicable withholding taxes.

 

Each CVR will entitle the holder thereof to receive a pro rata portion of the funds escrowed in connection with the Prior Transactions when they are released from the relevant escrows, which are currently scheduled to be released after August 20, 2019, and January 31, 2020, respectively. The terms and conditions of the CVRs will be set forth in a contingent value rights agreement to be entered into prior to the closing of the Merger among TheStreet, Maven and a rights agent (the “CVR Agreement”). For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The CVR Agreement” beginning on page 83. Currently, TheStreet’s management estimates that the total amounts that will be released from such escrows will range from approximately $0.66 per share of TheStreet common stock to approximately $0.77 per share of TheStreet common stock. There can be no assurance that

  

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these escrows will be released in full or at all since the purchasers in the Prior Transactions have certain indemnification rights under their agreements with TheStreet which may be satisfied through their receipt of all or portions of such escrows.

 

The CVRs will not represent any equity or ownership interest in TheStreet, Maven or any affiliate thereof (or any other person) and will not be represented by any certificates or other instruments. The CVRs will not have any voting or dividend rights and no interest will accrue on any amounts payable on the CVRs to any holder thereof. The CVRs may not be sold, assigned, transferred, pledged or encumbered in any manner, other than transfers by will or intestacy, by inter vivos or testamentary trust where the CVR is to be passed to the beneficiaries upon the death of the trustee, pursuant to a court order, by operation of law, or in connection with the dissolution, liquidation or termination of a corporation or other entity which is the holder thereof. The CVRs will not be registered under the Securities Act of 1933, as amended (the “Securities Act”).

 

Treatment of Company Equity Awards

 

At the Effective Time, each option granted by TheStreet to purchase shares of common stock under its 2007 Performance Incentive Plan, as amended and restated, which is outstanding and unexercised immediately prior to the Effective Time will be cancelled without consideration.

 

Pre-Merger Distribution

 

Immediately prior to the Effective Time, TheStreet will distribute all of its cash on hand, less certain liabilities and expenses relating to the Prior Transactions and the Merger Agreement and the related transactions, in the form of a cash distribution declared by the Board of Directors and paid to holders of TheStreet common stock (the “Pre-Merger Distribution”), which is expected to be paid concurrently with the cash consideration in the Merger. Currently, TheStreet’s management estimates that the amount of cash TheStreet will be able to distribute in the Pre-Merger Distribution will range from approximately $2.44 per share of TheStreet common stock to approximately $2.61 per share of TheStreet common stock. This estimate reflects management’s estimate of cash to be held by TheStreet assuming that the Pre-Merger Distribution is effectuated on or about July 31, 2019. The actual amount to be distributed will be affected by TheStreet’s operating results, transaction expenses, certain severance benefits that were earned prior to the Merger, the actual timing of the Pre-Merger Distribution and other factors. The effectiveness of the Merger is conditioned upon effectuation of the Pre-Merger Distribution.

 

Recommendation of the Board of Directors

 

The Board of Directors considered a number of factors before deciding to enter into the Merger Agreement, including, among other factors, the price to be paid by Maven for the Company, the ability to make a substantial additional distribution of cash to the company’s stockholders immediately prior to the closing of the Merger, the scope of the sale process with respect to the Company that led to entering into the Merger Agreement, the future business prospects of the Company, including the costs to remain competitive and grow following the previous sales of its business-to-business operations in June 2018 and February 2019 and substantially reduced scope of operations, and the terms and conditions of the Merger Agreement.

 

The Board of Directors determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of TheStreet and its stockholders, approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that you vote:

 

FOR” the proposal to adopt the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Merger Proposal”);

 

FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to certain of TheStreet’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Merger-Related Compensation Proposal”); and

 

FOR” an adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

 

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The Merger Proposal, Merger-Related Compensation Proposal and Adjournment Proposal are collectively referred to herein as the “Proposals.”

 

Our Board, by a vote of six to one, determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of TheStreet stockholders. Mr. James Cramer, a member of the Board, voted against the Merger and did not provide the Board with any reasons for his vote.

 

For a discussion of factors that the Board of Directors considered in deciding to recommend the approval of the Merger Proposal, see the section entitled “Proposal No. 1: The Merger Proposal—Recommendation of the Board of Directors and its Reasons for the Merger” beginning on page 44.

 

Opinion of Lake Street Capital Markets, LLC

 

Lake Street Capital Markets, LLC (“Lake Street”) rendered its oral opinion, and subsequently confirmed in writing, to our Board of Directors that, as of June 9, 2019, and based upon and subject to the factors and assumptions set forth therein, the right to receive $3.09183364 per share in cash and a contractual contingent value right to be paid pursuant to the Merger Agreement was fair, from a financial point of view, to the holders of our common stock.

 

Lake Street’s opinion was provided for the benefit of our Board of Directors in connection with and for the purposes of its consideration of the Merger. The opinion only addresses the fairness, from a financial point of view, to the stockholders of the Merger Consideration to be received by the stockholders in the Merger pursuant to the Merger Agreement and did not address any other term or aspect of the Merger Agreement or the Merger. The summary of Lake Street's opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex B to this proxy statement and describes the assumptions made, qualifications and limitations on the review undertaken and other matters considered by Lake Street in connection with the preparation of its opinion. However, neither Lake Street's opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Board of Directors, any security holder or any other party as to how to act or vote with respect to any matter relating to the Merger or otherwise or any form of assurance by Lake Street as to the condition of the Company. The decision as to whether to proceed with the proposed Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which Lake Street’s opinion was based.

 

For a more complete description, see the section entitled “Proposal No. 1: The Merger Proposal—Opinion of Lake Street Capital Markets, LLC” beginning on page 51.

 

Interests of Certain Persons in the Merger

 

In considering the recommendation of the Board of Directors to vote in favor of the Merger Proposal, stockholders should be aware that certain of our directors and executive officers have interests in the completion of the Merger that are different from, or in addition to, the interests of TheStreet stockholders generally, as discussed in the section entitled “Proposal No. 1: The Merger Proposal—Interests of Certain Persons in the Merger.” The members of the Board of Directors were aware of such different or additional interests and considered those interests, among other matters, in negotiating, evaluating, and approving the Merger Agreement, and in recommending to TheStreet stockholders that the Merger Proposal be approved.

 

Voting Agreement

 

In connection with the execution of the Merger Agreement, 180 Degree Capital Corp. and TheStreet SPV Series – a Series of 180 Degree Capital Management, LLC, solely in their capacities and stockholders of TheStreet, entered into a voting agreement with Maven and Merger Sub (the “Voting Agreement”), pursuant to which these stockholders agreed, among other things and subject to certain exceptions and limitations, to vote the shares of TheStreet common stock they beneficially own in favor of the Merger and the adoption of the Merger Agreement. As of the record date, these stockholders collectively beneficially owned approximately 15.4% of the outstanding shares of TheStreet common stock. Mr. Kevin Rendino, a member of the Board of Directors of TheStreet, is Chief Executive Officer of 180 Degree Capital Corp. and 180 Degree Capital Corp. is the investment manager of TheStreet SPV Series. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Voting Agreement” beginning on page 86.

 

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Financing of the Merger

 

While the Merger is not conditioned on Maven or any other party obtaining financing, Maven has deposited the aggregate cash portion of the Merger Consideration (equal to $16.5 million) with an escrow agent pursuant to an Escrow Agreement, dated as of June 11, 2019 (the “Escrow Agreement”), among TheStreet, Maven and Citibank, N.A., as escrow agent. Pursuant to the Escrow Agreement, such cash portion of the Merger Consideration will be paid automatically to a paying agent immediately after the Effective Time, which paying agent shall be responsible for paying such cash portion of the Merger Consideration to the former stockholders of TheStreet. TheStreet is entitled to seek specific performance against Maven in order to enforce Maven’s obligations under the Merger Agreement, including payment of such cash portion of the Merger Consideration and release of these funds. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—The Escrow Agreement; Escrow of Aggregate Cash Merger Consideration” beginning on page 70.

 

In the Merger Agreement, Maven has represented to TheStreet that, at the Effective Time, Maven will have sufficient funds available to pay all costs, fees and expenses related to the Merger Agreement and the transactions contemplated thereby and to satisfy the working capital needs and other general corporate requirements of Maven and TheStreet following the Merger. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement” beginning on page 69.

 

Conditions to the Completion of the Merger

 

We expect to complete the Merger as soon as possible following the approval of the Merger Proposal at the Special Meeting. The parties’ obligations to effect the Merger are subject to the satisfaction or, to the extent permitted, waiver, of various conditions, including, among others, the following:

 

the adoption of the Merger Agreement by the requisite affirmative vote of TheStreet stockholders (the “Requisite Stockholder Approval”);

 

the absence of any law or governmental order preventing or seeking to prevent the consummation of the Merger;

 

the completion of the Pre-Merger Distribution;

 

the absence of a material adverse effect on the Company;

 

subject to certain materiality exceptions, the accuracy of the representations and warranties of each of the parties to the Merger Agreement; and

 

the compliance in all material respects by the parties with the covenants contained in the Merger Agreement.

 

For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Conditions to the Closing of the Merger” beginning on page 80.

 

Governmental and Regulatory Approvals

 

TheStreet is not aware of any material federal or state regulatory requirements or regulatory approvals, including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), that must be obtained in connection with the Merger or the other transactions contemplated by the Merger Agreement.

 

No Solicitation of Other Offers

 

Under the Merger Agreement, from the date of the Merger Agreement until the earlier to occur of the Effective Time or the termination of the Merger Agreement, TheStreet has agreed not to, and to cause its respective representatives not to, directly or indirectly:

 

solicit, initiate, seek, knowingly encourage or knowingly facilitate (including by way of furnishing information) any inquiry, discussion, offer or request that constitutes, or could reasonably be expected to lead to, a Competing Proposal (see “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—No Solicitation of Other Offers” for the definition of “Competing Proposal”);

 

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engage in, continue or otherwise participate in any discussions or negotiations with (other than to state they are not permitted to engage discussions), or furnish any non-public information relating to TheStreet or any of its subsidiaries to, or afford access to the books or records of TheStreet or its subsidiaries to, any third party that, to the knowledge of TheStreet, is seeking to make, or has made, a Competing Proposal; or

 

approve, endorse, recommend or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or similar definitive agreement (other than an acceptable, customary confidentiality agreement containing terms no less favorable to TheStreet in the aggregate than the terms set forth in the confidentiality agreement between TheStreet and Maven) with respect to any Competing Proposal (an “Alternative Acquisition Agreement”).

 

Notwithstanding the foregoing restrictions, under certain circumstances, at any time after the date of the Merger Agreement and prior to obtaining the Requisite Stockholder Approval, TheStreet, its Board of Directors or the Strategic Committee of the Board of Directors, directly or indirectly through its representatives, may (1) furnish nonpublic information to any third party making an unsolicited, written Competing Proposal (provided, however, that prior to so furnishing such information, TheStreet receives from the third party an executed acceptable confidentiality agreement), and (2) engage in discussions or negotiations with such third party with respect to the Competing Proposal if:

 

such third party has submitted an unsolicited, written Competing Proposal which the Board of Directors or the Strategic Committee determines in good faith, after consultation with its financial and legal advisors, constitutes, or could reasonably be expected to lead to, a Superior Proposal (see “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—No Solicitation of Other Offers” for the definition of “Superior Proposal”); and

 

the Board of Directors or the Strategic Committee determines in good faith, after consultation with legal counsel, that failure to take such action would likely be inconsistent with the directors’ fiduciary duties under applicable law.

 

Prior to taking any of the actions referred to above, TheStreet will notify Maven and Merger Sub within two days orally and in writing that it proposes to furnish non-public information and/or enter into discussions or negotiations as provided above.

 

Except as expressly permitted below, neither the Board of Directors nor the Strategic Committee will (1) withdraw, change, qualify or modify, or publicly propose to withdraw, change, qualify or modify, in a manner adverse to Maven or Merger Sub, the recommendation of the Board of Directors that TheStreet stockholders adopt the Merger Agreement and approve the transactions contemplated thereby, including the Merger; (2) approve, adopt or recommend, or publicly propose to approve, adopt or recommend, any Competing Proposal or Alternative Acquisition Agreement made or received after the date of the Merger Agreement (any of the actions described in clauses (1) and (2), an “Adverse Recommendation Change”); or (3) cause or permit TheStreet to enter into any Alternative Acquisition Agreement. However, notwithstanding anything to the contrary set forth in the Merger Agreement, at any time prior to obtaining the Requisite Stockholder Approval, the Board of Directors, upon the recommendation of the Strategic Committee, will be permitted (a) to terminate the Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal, if the Board of Directors or the Strategic Committee (i) has received a Competing Proposal that, in the good faith determination of the Board of Directors and upon the recommendation of the Strategic Committee, constitutes, or could reasonably be expected to lead to, a Superior Proposal, after having complied with, and giving effect to all of the adjustments which may be offered by Maven and Merger Sub, and (ii) determines in good faith, upon the recommendation of the Strategic Committee and after consultation with its legal advisors, that failure to take such action may be inconsistent with the directors’ fiduciary duties under applicable law, or (b) to effect an Adverse Recommendation Change described in clause (1) above, if the Board of Directors determines in good faith, upon the recommendation of the Strategic Committee and after consultation with its legal advisors, that failure to take such action may be inconsistent with the directors’ fiduciary duties under applicable law.

 

TheStreet will not be entitled to effect an Adverse Recommendation Change or to terminate the Merger Agreement as permitted in the preceding paragraph with respect to a Superior Proposal unless (1) TheStreet has provided a written notice (a “Notice of Superior Proposal”) to Maven and Merger Sub that TheStreet intends to take such action and provides a copy of the Superior Proposal and a copy of any transaction agreements, (2) during the three business day period following Maven’s and Merger Sub’s receipt of the Notice of Superior Proposal, TheStreet will, and will cause its representatives to, negotiate with Maven and Merger Sub in good faith (to the extent Maven and Merger Sub desire to negotiate) to make such adjustments in the terms and conditions of the Merger Agreement so that such Superior Proposal ceases to constitute a Superior Proposal, and (3) following the end of such three business day period, the Board of Directors of TheStreet will have determined in good faith,

 

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upon recommendation of the Strategic Committee and taking into account any changes to the Merger Agreement proposed in writing by Maven and Merger Sub in response to the Notice of Superior Proposal or otherwise, that the Superior Proposal giving rise to the Notice of Superior Proposal continues to constitute a Superior Proposal. Any material amendment to the financial terms or any other material amendment of such Superior Proposal will require a new Notice of Superior Proposal and TheStreet will be required to comply again with the notice requirements; provided, however, that references to the three business day period above will be deemed to be references to a two business day period; and, provided, further, that (a) TheStreet has complied in all material respects with its obligations described in the previous paragraphs, (b) any purported termination is in accordance with the provisions described below under “—Termination of the Merger Agreement; Termination Fee,” and (c) TheStreet pays Maven the applicable termination fee (as described below) prior to or concurrently with such termination.

 

Nothing contained in the Merger Agreement will prohibit TheStreet or its Board of Directors, directly or indirectly, from (1) taking and disclosing to TheStreet stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act (or any similar communication to TheStreet stockholders in connection with the making or amendment of a tender offer or exchange offer), or from making a statement contemplated by Item 1012(a) of Regulation M-A or Rule 14d-9 promulgated under the Exchange Act, (2) making any other disclosure to TheStreet stockholders with regard to the Merger Agreement and the transactions contemplated thereby, including the Merger, that the Board of Directors determines (after consultation with its outside legal counsel) is required by applicable law or stock exchange rule (in which event TheStreet will give Maven notice of such requirement as soon as reasonably practicable prior to such disclosure), or (3) issuing a “stop, look and listen” statement pending disclosure of its position with respect to any tender offer or exchange offer; provided, however, that any disclosures permitted in this paragraph will not be a basis, in themselves, for Maven to terminate the Merger Agreement as described below under “—Termination of the Merger Agreement; Termination Fee.”

 

For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—No Solicitation of Other Offers” beginning on page 76.

 

Termination of the Merger Agreement; Termination Fee

 

Generally, the Merger Agreement and the transactions contemplated thereby may be terminated prior to the Effective Time:

 

by the mutual written consent of TheStreet and Maven;

 

by either Maven or TheStreet, if:

 

the Effective Time will not have occurred on or before October 31, 2019 (the “Termination Date”); or

 

(1) a law will have been enacted, entered or promulgated prohibiting the consummation of the Merger on the terms contemplated hereby, or (2) any governmental authority of competent jurisdiction will have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such order or other action will have become final and non-appealable; or

 

if the Requisite Stockholder Approval will not have been obtained by TheStreet at the special meeting duly convened therefor or at any adjournment or postponement thereof; or

 

by TheStreet, if:

  

Maven or Merger Sub will have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement, which breach or failure to perform (1) would result in a failure of certain conditions set forth in the Merger Agreement, and (2) cannot be cured on or before the Termination Date or, if curable, is not cured by Maven within thirty days of receipt by Maven of written notice of such breach or failure; or

 

prior to receipt of the Requisite Stockholder Approval, (1) the Board of Directors of TheStreet has determined to enter into a definitive agreement with respect to a Superior Proposal to the extent permitted by, and subject to the terms and conditions of certain conditions set forth in the Merger Agreement, and (2) concurrently with such termination, TheStreet pays to Maven the termination fee described below; or

 

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all of the closing conditions of TheStreet have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the closing of the Merger), and Maven and Merger Sub fail to consummate the Merger within two business days following the date the closing of the Merger should have occurred; or

 

by Maven, if:

 

TheStreet will have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement, which breach or failure to perform (1) would result in a failure of certain conditions set forth in the Merger Agreement, and (2) cannot be cured on or before the Termination Date or, if curable, is not cured by TheStreet within thirty days of receipt by TheStreet of written notice of such breach or failure; or

 

(1) the Board of Directors of TheStreet will have made an Adverse Recommendation Change; (2) TheStreet enters into an Alternative Acquisition Agreement; or (3) the Board of Directors of TheStreet fails to include the recommendation of the Board of Directors that TheStreet stockholders adopt the Merger Agreement and approve the transactions contemplated thereby, including the Merger, in the proxy statement.

 

For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Termination of the Merger Agreement” beginning on page 80.

 

The Merger Agreement provides that TheStreet will be required to pay Maven a termination fee of $330,000 in the event the Merger Agreement is terminated under the following circumstances:

 

the Merger Agreement is terminated by TheStreet prior to receipt of the Requisite Stockholder Approval because the Board of Directors of TheStreet has determined to enter into a definitive agreement with respect to a Superior Proposal to the extent permitted by, and subject to certain terms and conditions of the Merger Agreement;

 

the Merger Agreement is terminated by Maven because TheStreet enters into an Alternative Acquisition Agreement; or

 

if the Merger Agreement is terminated by:

 

either Maven or TheStreet because the Effective Time will not have occurred on or before the Termination Date or the Requisite Stockholder Approval will not have been obtained by TheStreet, or by Maven pursuant to TheStreet breaching or failing to perform certain covenants, the Board of Directors of TheStreet will have made an Adverse Recommendation Change or the Board of Directors fails to include its recommendation that TheStreet stockholders adopt the Merger Agreement and approve the transactions contemplated thereby, including the Merger, in the proxy statement; and

 

TheStreet (a) receives or has received a Competing Proposal from a third party after the date of the Merger Agreement, which Competing Proposal becomes publicly known, and (b) within twelve months of the termination of the Merger Agreement, enters into, agrees to or consummates a transaction regarding such Competing Proposal or any Competing Proposal.

 

For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Termination Fee” beginning on page 81.

 

Material United States Federal Income Tax Consequences

 

The transfer of the shares of TheStreet common stock in the Merger and the receipt of the Pre-Merger Distribution and the CVRs will be a taxable transaction for United States federal income tax purposes. See the section entitled “Proposal No. 1: The Merger Proposal—Certain Material United States Federal Income Tax Consequences of the Merger, the Pre-Merger Distribution and Receipt of a CVR to United States Holders of TheStreet Common Stock” beginning on page 58 for additional information.

 

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Appraisal Rights

 

If the Merger is consummated and certain conditions are met, TheStreet stockholders who continuously hold shares of TheStreet common stock through the Effective Time, who do not vote in favor of the adoption of the Merger Agreement and who properly demand appraisal of their shares and who do not withdraw their demands or otherwise lose their rights to seek appraisal will be entitled to seek appraisal of their shares in connection with the Merger under Section 262 of the DGCL. This means that TheStreet stockholders may be entitled to have their shares of TheStreet common stock appraised by the Delaware Court of Chancery, and to receive payment in cash of the “fair value” of their shares of TheStreet common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the court (or in certain circumstances described in further detail in the section of this proxy statement entitled “Proposal No. 1: The Merger Proposal—Appraisal Rights” beginning on page 60) on the difference between the amount determined to be the fair value and the amount paid by the Surviving Corporation to each stockholder entitled to appraisal prior to the entry of judgment in any appraisal proceeding). Due to the complexity of the appraisal process, TheStreet stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

 

TheStreet stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the Merger Agreement if they did not seek appraisal of their shares of TheStreet common stock.

 

To exercise appraisal rights, TheStreet stockholders must: (1) submit a written demand for appraisal to TheStreet before the vote is taken on the proposal to adopt the Merger Agreement; (2) not submit a proxy or otherwise vote in favor of the proposal to adopt the Merger Agreement; (3) continue to hold shares of TheStreet common stock of record through the Effective Time; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. Failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of TheStreet unless certain stock ownership conditions are satisfied by TheStreet stockholders seeking appraisal. The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, which is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights. A copy of Section 262 of the DGCL is reproduced in Annex C to this proxy statement. If you hold your shares of TheStreet common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee. For more information, please see the section of this proxy statement entitled “Proposal No. 1: The Merger Proposal—Appraisal Rights” beginning on page 60.”

 

Risk Factors Related to the Merger

 

The Merger, including the possibility that the Merger may not be completed, involves a number of risks to TheStreet and its stockholders, including the following:

 

the consummation of the Merger is subject to a number of conditions, and, if these conditions are not satisfied or waived on a timely basis, the Merger Agreement may be terminated and the Merger may not be completed;

 

if we fail to complete the Merger, our business and financial results may be adversely affected;

 

while the Merger is pending, TheStreet will be subject to business uncertainties and certain contractual restrictions that could adversely affect the its business and operations;

 

during the pendency of the Merger, TheStreet may not be able to enter into a business combination with another party on favorable terms because of restrictions in the Merger Agreement, which could adversely affect TheStreet’s businesses;

 

TheStreet will incur substantial transaction fees and costs in connection with the Merger;

 

certain provisions of the Merger Agreement make it more difficult for TheStreet to pursue alternatives to the Merger and may discourage third parties from submitting alternative proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement;

 

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the termination fee and restrictions on solicitation contained in the Merger Agreement may discourage other companies from acquiring TheStreet;

 

litigation against TheStreet or the members of the Board of Directors could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger;

 

our directors and executive officers may have interests in the Merger other than, or in addition to, the interests of our stockholders generally;

 

the CVRs are nontransferable and may not be transferred or assigned except in limited circumstances;

 

the projected value of CVRs may not be realized and the U.S. federal income tax treatment of the CVRs is uncertain; and

 

the fairness opinion obtained from the financial advisor to the Board of Directors will not reflect subsequent developments between the signing of the Merger Agreement and the closing of the Merger.

 

For additional information regarding the risk factors related to the Merger, see the section entitled “Risk Factors” beginning on page 20.

 

The Special Meeting

 

Time, Date and Place. The Special Meeting will be held on [●], 2019, at [●], Eastern Daylight Time, at the offices of Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, New York 10019.

 

Matters to be Considered at the Special Meeting. At the Special Meeting, holders of TheStreet common stock as of the record date will consider and vote on the following proposals:

 

to adopt the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger;

 

to approve, on a non-binding, advisory basis, the Merger-Related Compensation Proposal; and

 

the Adjournment Proposal.

 

Record Date and Quorum. Holders of TheStreet common stock as of the close of business on June 20, 2019, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting and any postponements or adjournments of the Special Meeting.

 

Holders of a majority of shares of TheStreet common stock entitled to vote at the Special Meeting must be present at the Special Meeting, in person or by proxy, to constitute a quorum, which is necessary to conduct the Special Meeting.

 

Required Vote. The approval of the proposal to adopt the Merger Agreement requires the affirmative vote of the holders of a majority of the outstanding common stock of TheStreet entitled to vote on the matter at the Special Meeting (meaning that of the shares of common stock outstanding on the record date for the Special Meeting, a majority of them must be voted “FOR” the Merger Proposal for it to be approved). The approval of the Merger-Related Compensation Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of TheStreet common stock present in person or by proxy and entitled to vote on the matter at the Special Meeting (meaning that of the shares of common stock represented at the Special Meeting and entitled to vote, a majority of them must be voted “FOR” these proposals for them to be approved).

 

For additional information regarding the Special Meeting, see the section entitled “Questions and Answers about the Merger and the Special Meeting” beginning on page 11.

 

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

 

The following are some questions that you, as a stockholder of TheStreet, may have regarding the Merger and the Special Meeting, together with brief answers to those questions. We urge you to read carefully the remainder of this proxy statement, including the annexes and other documents referred to in this proxy statement, because the information in this section may not provide all of the information that might be important to you with respect to the Merger and the Special Meeting.

 

Q.Why am I receiving these materials and why am I being asked to vote on the Merger?

 

A.On June 11, 2019, TheStreet entered into the Merger Agreement with Maven and Merger Sub, pursuant to which Maven will acquire, upon the terms and subject to the conditions of the Merger Agreement, TheStreet for $16.5 million in cash. The Merger Agreement provides that Merger Sub will merge with and into TheStreet, which we refer to as the “Merger,” with TheStreet continuing as the Surviving Corporation and wholly owned subsidiary of Maven. You are receiving this proxy statement in connection with the solicitation of proxies by the Board of Directors in favor of the proposal to adopt the Merger Agreement and to approve the other proposals to be voted on at the Special Meeting. TheStreet is sending these materials to you to help you decide how to vote your shares of TheStreet common stock with respect to the proposed Merger and the other matters to be considered at the Special Meeting. This proxy statement contains important information about the Merger, the Special Meeting and the other Proposals, and you should read it carefully.

 

Q.When and where will the Special Meeting take place?

 

A.The Special Meeting will be held on [●], 2019, at [●], Eastern Daylight Time, at the offices of Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, New York 10019.

 

Q.What am I being asked to vote on at the Special Meeting?

 

A.You are being asked to vote on the following proposals:

 

to adopt the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger;

 

to approve, on a non-binding, advisory basis, the Merger-Related Compensation Proposal; and

 

to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

 

Q.Who can attend and vote at the Special Meeting?

 

A.Holders of common stock of TheStreet as of the close of business on June 20, 2019, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting. Each share of TheStreet common stock is entitled to one vote on all matters that come before the meeting. At the close of business on the record date, there were 5,336,639 shares of TheStreet common stock issued and outstanding.

 

Q.What will holders of TheStreet common stock receive if the Merger is completed?

 

A.If the Merger is completed, each share of TheStreet common stock issued and outstanding immediately prior to the Effective Time will automatically be cancelled and converted into the right to receive, after giving effect to the Pre-Merger Distribution, the following Merger Consideration: (i) an amount in cash equal to $3.09183364 and (ii) one CVR, in each case, without interest and less applicable withholding taxes, per share of TheStreet common stock. For example, if you own 100 shares of TheStreet common stock, you will be entitled to receive $309.18 in cash and 100 CVRs in exchange for your shares of TheStreet common stock (less any amount that may be withheld with respect to any applicable withholding taxes). Holders of TheStreet common stock will not be entitled to receive shares in the Surviving Corporation or in Maven.

 

Q.Will holders of TheStreet common stock receive anything other than Merger Consideration in connection with the Merger?

 

A.As discussed elsewhere in this proxy statement, immediately prior to the Effective Time, TheStreet will distribute all of its cash on hand, less certain liabilities and expenses relating to TheStreet’s prior sales of its RateWatch and B2B Business units

 

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(collectively, the “Prior Transactions”) and the Merger Agreement and the transaction contemplated thereby, in the form of a cash distribution declared by the Board of Directors and paid to holders of TheStreet common stock (the “Pre-Merger Distribution”), which is expected to be paid concurrently with the cash consideration in the Merger. Currently, TheStreet’s management estimates that the amount of cash TheStreet will be able to distribute in the Pre-Merger Distribution will range from approximately $2.44 per share of TheStreet common stock to approximately $2.61 per share of TheStreet common stock. This estimate reflects management’s estimate of cash to be held by TheStreet assuming that the Pre-Merger Distribution is effectuated on or about July 31, 2019. The actual amount to be distributed will be affected by TheStreet’s operating results, transaction expenses, certain severance benefits that were earned prior to the Merger, the actual timing of the Pre-Merger Distribution and other factors. The effectiveness of the Merger is conditioned upon effectuation of the Pre-Merger Distribution.

 

Q:Is it possible that I will receive separate payments with respect to the cash consideration in the Merger and the Pre-Merger Distribution?

 

A:Yes. Although TheStreet currently expects that the Pre-Merger Distribution will be paid to holders of TheStreet common stock concurrently with the cash consideration in the Merger, stockholders may receive separate payments with respect to their per share Pre-Merger Distribution and the cash consideration in the Merger. After the Merger is completed, the payment agent will send each holder of record immediately prior to the Effective Time a letter of transmittal and written instructions that explain how to exchange shares of TheStreet common stock represented by such holder’s book-entry shares for Merger Consideration. These transmittal materials will also contain information for holders of record about the payment procedures for the Pre-Merger Distribution. If your shares of TheStreet common stock are held in “street name” by your broker, dealer, bank or other nominee, you may receive instructions from your broker, dealer, bank or other nominee as to what action, if any, you need to take in order to effect the surrender of your “street name” shares in exchange for the Merger Consideration. With respect to any payments to be made in connection with the Pre-Merger Distribution, the paying agent will accomplish the payment to any former “street name” holders of shares of TheStreet common stock by sending one lump sum payment through the facilities of The Depositary Trust Company (“DTC”) for distribution to your broker, dealer, bank or other nominee.

 

Q.What are the CVRs?

 

A.The CVRs are contractual contingent value rights that entitle the holder thereof to receive a pro rata portion of the funds escrowed in connection with the Prior Transactions when they are released from the relevant escrows, which are currently scheduled to be released after August 20, 2019, and January 31, 2020, respectively. The terms and conditions of the CVRs will be set forth in a contingent value rights agreement to be entered into prior to the closing of the Merger among TheStreet, Maven and a rights agent (the “CVR Agreement”). Currently, TheStreet’s management estimates that the total amounts that will be released from such escrows will range from approximately $0.66 per share of TheStreet common stock to approximately $0.77 per share of TheStreet common stock. There can be no assurance that these escrows will be released in full or at all since the purchasers in the Prior Transactions have certain indemnification rights under their agreements with TheStreet which may be satisfied through their receipt of all or portions of such escrows. Under the Merger Agreement, the Board has the discretion to determine to distribute the CVRs to stockholders as part of the Pre-Merger Distribution in lieu of including the CVRs in the Merger Consideration.

 

The CVRs will not represent any equity or ownership interest in TheStreet, Maven or any affiliate thereof (or any other person) and will not be represented by any certificates or other instruments. The CVRs will not have any voting or dividend rights and no interest will accrue on any amounts payable on the CVRs to any holder thereof. The CVRs will not be registered under the Securities Act.

 

Q.Can I sell the CVRs?

 

A.No. The CVRs may not be sold, assigned, transferred, pledged or encumbered in any manner, other than transfers by will or intestacy, by inter vivos or testamentary trust where the CVR is to be passed to the beneficiaries upon the death of the trustee, pursuant to a court order, by operation of law, or in connection with the dissolution, liquidation or termination of a corporation or other entity which is the holder thereof.

 

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Q:Is it possible that I will receive more than one payment under the CVRs?

 

A:Yes. Although there is no guaranty that any payment will be made to holders of CVRs, in respect of their contingent value rights, such holders may receive more than one payment under the CVR, pursuant to the terms of the CVR Agreement. In the event you receive any cash payment as a holder of CVR, it is uncertain that there would be more than one such payment during the term of the form of CVR agreement. You may receive one payment, you may receive more than one payment or you may not receive any payment. Any payment to you is contingent on whether any funds escrowed in connection with the Prior Transactions are released from the relevant escrows, which are currently scheduled to be released after August 20, 2019, and January 31, 2020, respectively. There can be no assurance that these escrows will be released in full or at all since the purchasers in the Prior Transactions have certain indemnification rights under their agreements with TheStreet which may be satisfied through their receipt of all or portions of such escrows.

 

Q:Is it possible that I will not receive any payment under the CVRs?

 

A:Yes. There is no guaranty that any payment will be made to holders of CVRs in respect of their contingent value rights. Any payment to you as a holder of CVRs is contingent on whether any funds escrowed in connection with the Prior Transactions are released from the relevant escrows, which are currently scheduled to be released after August 20, 2019, and January 31, 2020, respectively. There can be no assurance that these escrows will be released in full or at all since the purchasers in the Prior Transactions have certain indemnification rights under their agreements with TheStreet which may be satisfied through their receipt of all or portions of such escrows.

 

Q.Will the Merger Consideration I receive in the Merger increase if the results of operations of TheStreet improve or if the market price of TheStreet common stock increases?

 

A.No. The Merger Consideration payable for each share of TheStreet common stock at closing is fixed at (i) an amount in cash equal to $3.09183364 and (ii) one CVR, in each case, without interest and less applicable withholding taxes, per share of TheStreet common stock, and the payment received at closing will not change regardless of the results of operations of TheStreet or the market price of the publicly traded common stock of TheStreet.

 

Q.What will happen to TheStreet’s outstanding equity awards?

 

A.At the Effective Time, each option granted by TheStreet to purchase shares of common stock under its 2007 Performance Incentive Plan, as amended and restated, which is outstanding and unexercised immediately prior to the Effective Time will be cancelled without consideration.

 

Q.Are there any risks associated with the Merger?

 

A.Yes. You should carefully review the section entitled “Risk Factors” beginning on page 20, which presents risks and uncertainties related to the Merger and the Company’s business in the event the Merger Agreement is terminated prior to completion of the Merger.

 

Q.What are the United States federal income tax consequences of the Merger to United States stockholders?

 

A.The transfer of the shares of TheStreet common stock in the Merger and the receipt of the Pre-Merger Distribution and the CVRs will be a taxable transaction for United States federal income tax purposes. See the section entitled “Proposal No. 1: The Merger Proposal—Certain Material United States Federal Income Tax Consequences of the Merger, the Pre-Merger Distribution and Receipt of a CVR to United States Holders of TheStreet Common Stock” beginning on page 58 for additional information.

 

Q.What stockholder approval is required to complete the Merger?

 

A.As a condition to the completion of the Merger, TheStreet stockholders must approve the Merger Proposal to adopt the Merger Agreement, which requires the affirmative vote of the holders of a majority of the outstanding common stock of TheStreet entitled to vote on the matter at the Special Meeting (meaning that of the shares of common stock outstanding on the record date for the Special Meeting, a majority of them must be voted “FOR” the Merger Proposal for it to be approved). The Merger is not contingent upon approval of the other Proposals by TheStreet stockholders.

 

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In addition to the approval of the Merger Proposal by TheStreet stockholders, each of the other conditions to the completion of the Merger contained in the Merger Agreement must be satisfied or waived. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 80.

  

Q.What will happen if TheStreet stockholders do not approve the Merger Proposal or if the Merger is not completed for any other reason?

 

A.If the Merger Agreement is not adopted by TheStreet stockholders or if the Merger is not completed for any other reason, stockholders will not receive any payment for their shares of TheStreet common stock. Instead, TheStreet will remain an independent public company, TheStreet common stock will continue to be listed and traded on the Nasdaq Capital Market and registered under the Exchange Act, and TheStreet will continue to file periodic reports with the SEC. In addition, TheStreet may be required to pay a termination fee of $330,000 to Maven under certain circumstances, (ii) TheStreet may have difficulty recouping the costs incurred in connection with negotiating the Merger, (iii) TheStreet’s relationships with its customers, suppliers and employees may be damaged and its business may be harmed and (iv) the market price for TheStreet common stock may decline.

 

If the Merger is not completed, TheStreet may explore other potential transactions, including a sale of the Company’s business to another party on such terms as the Board of Directors may approve. The terms of an alternative transaction may be less favorable to TheStreet than the terms of the Merger and there can be no assurance that TheStreet will be able to reach agreement with or complete an alternative transaction with another party.

 

Notwithstanding approval of the Merger Proposal by TheStreet stockholders at the Special Meeting, the Board of Directors may, subject to the terms and conditions of the Merger Agreement, abandon the Merger without further action by the stockholders.

 

Q.What effects will the Merger have on TheStreet?

 

A.TheStreet common stock is currently registered under the Exchange Act and is listed on the Nasdaq Capital Market under the symbol “TST.” If the Merger is completed, TheStreet will cease to be a publicly traded company and will become a wholly owned subsidiary of Maven. Following the consummation of the Merger, TheStreet common stock will be delisted from the Nasdaq Capital Market and deregistered under the Exchange Act and TheStreet will no longer file periodic reports with the SEC.

 

Q.When is the closing of the Merger expected to occur?

 

A.If the Merger Proposal is approved by TheStreet stockholders and all other conditions to the completion of the Merger are satisfied or waived on a timely basis, the closing of the Merger is expected to occur in the third quarter of 2019.

 

Q.Why is TheStreet proposing to effect the Merger?

 

A.In the course of reaching its decision to approve the Merger, the Board of Directors considered, among other factors, the price to be paid by Maven for the Company’s business, the scope of the sale process that led to entering into the Merger Agreement, the future business prospects of the Company’s business as a stand-alone entity, including the ongoing development needs and operating costs, and the terms and conditions of the Merger Agreement. After taking into account these factors and others, the Board determined that a sale of the Company to Maven represents the best way to maximize value to TheStreet stockholders. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Recommendation of the Board of Directors and its Reasons for the Merger” beginning on page 44.

 

Q.Why am I being asked to cast a non-binding, advisory vote to approve the Merger-Related Compensation Proposal and what will happen if such proposal is not approved at the Special Meeting?

 

A.In accordance with the rules promulgated under Section 14A of the Exchange Act, TheStreet is providing its stockholders with the opportunity to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to certain of TheStreet’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement.

 

Approval of the Merger-Related Compensation Proposal is not a condition to the completion of the Merger. This non-binding proposal is merely an advisory vote and will not be binding on TheStreet, the Board of Directors or Maven.

 

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Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory vote, if the Merger is completed, certain of our named executive officers will be eligible to receive certain payments, under certain circumstances. For additional information, see the sections entitled “Proposal No. 1: The Merger Proposal—Interests of Certain Persons in the Merger” beginning on page 65 and “Proposal No. 2: The Merger-Related Compensation Proposal” beginning on page 88.

 

Q.What vote is required to approve the Merger-Related Compensation Proposal and the Adjournment Proposal?

 

A.The Merger-Related Compensation Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of TheStreet common stock present in person or by proxy and entitled to vote on the matter at the Special Meeting for approval (meaning that of the shares of common stock represented at the Special Meeting and entitled to vote, a majority of them must be voted “FOR” each proposal).

 

Q.How does the Board of Directors recommend that TheStreet stockholders vote with respect to each of the Proposals?

 

A.A majority of the Board of Directors determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of TheStreet and its stockholders, approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that you vote “FOR” the Merger Proposal, “FOR” the Merger-Related Compensation Proposal and “FOR” the Adjournment Proposal.

 

For a discussion of factors that the Board of Directors considered in deciding to recommend the approval of the Merger Proposal, see the section entitled “Proposal No. 1: The Merger Proposal—Recommendation of the Board of Directors and its Reasons for the Merger” beginning on page 44.

 

Q.Do any of the directors or executive officers have interests in the Merger that are in addition to or may differ from those of TheStreet stockholders generally?

 

​A.Yes. In considering the recommendation of the Board of Directors to vote in favor of the Merger Proposal, you should be aware that certain of our directors and executive officers have interests in the completion of the Merger that are different from, or in addition to, the interests of TheStreet stockholders generally, as discussed in the section entitled “Proposal No. 1: The Merger Proposal—Interests of Certain Persons in the Merger.” The members of the Board of Directors were aware of such different or additional interests and considered those interests, among other matters, in negotiating, evaluating, and approving the Merger Agreement, and in recommending to TheStreet stockholders that the Merger Proposal be approved.

  

Q.What constitutes a quorum for the Special Meeting?

 

A.Holders of a majority of shares of TheStreet common stock entitled to vote at the Special Meeting must be present at the Special Meeting, in person or by proxy, to constitute a quorum, which is necessary to conduct the Special Meeting. Your shares will be counted toward the quorum if you submit a properly executed proxy or vote at the Special Meeting. In addition, abstentions and broker non-votes will be treated as present for the purpose of determining the presence of a quorum for the transaction of business at the Special Meeting. If there is no quorum, then either the chairman of the meeting or the holders of a majority in voting power of the shares of common stock that are entitled to vote at the meeting, present in person or by proxy, may adjourn the meeting until a quorum is present or represented.

 

Q.Will TheStreet continue to be publicly traded following the Merger?

 

A.No. The Merger Agreement provides for the merger of Merger Sub with and into TheStreet, with TheStreet surviving the Merger as a wholly owned subsidiary of Maven. Following the completion of the Merger, the Surviving Corporation will be owned and operated by Maven. TheStreet common stock will no longer be publicly traded and will be delisted from the Nasdaq Capital Market. In addition, TheStreet common stock will be deregistered under the Exchange Act and TheStreet will no longer file periodic reports with the SEC.

 

Q.Am I entitled to exercise dissenters’ or appraisal rights instead of receiving the Merger Consideration for my shares of TheStreet common stock?

 

A.Yes. Under Section 262 of the DGCL, TheStreet stockholders who do not vote for the adoption of the Merger Agreement have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery, but only if they fully comply with all applicable requirements of the DGCL, which are summarized in this proxy statement.

 

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Any appraisal amount determined by the court could be more than, the same as or less than the value of the Merger Consideration. Any stockholder intending to exercise appraisal rights must, among other things, submit a written demand for appraisal to TheStreet before the vote on the proposal to adopt the Merger Agreement and such stockholder must not vote or otherwise submit a proxy in favor of the adoption of the Merger Agreement. Failure to comply exactly with the procedures and requirements specified under the DGCL will result in the loss of appraisal rights. The discussion of appraisal rights contained in this proxy statement is not a full summary of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL that is attached as Annex C to this proxy statement. Due to the complexity of the appraisal process, stockholders of TheStreet who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Appraisal Rights” beginning on page 60.

 

Q.What happens if I sell or otherwise transfer my shares of TheStreet common stock after the record date but before the Special Meeting?

 

A.In order to receive the Merger Consideration, you must hold your shares of TheStreet common stock through completion of the Merger. Consequently, if you transfer your shares of TheStreet common stock before completion of the Merger, you will have transferred your right to receive the Merger Consideration in the Merger.

 

The record date for the Special Meeting is earlier than the date of the Special Meeting and the date the Merger is expected to be completed. If you sell or transfer your shares of TheStreet common stock after the record date but before the Special Meeting, you will retain your right to vote at the Special Meeting, but the right to receive the Merger Consideration will pass to the person who holds your shares of TheStreet common stock as of immediately prior to the Effective Time. Even if you sell or otherwise transfer your shares of TheStreet common stock after the record date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). For additional information, see the response to “—Who can attend and vote at the Special Meeting?” above.

 

Q.What do I need to do now and how do I vote?

 

A.TheStreet encourages you to read this proxy statement carefully, including its annexes, and to consider how the Merger and the actions contemplated by each of the Proposals may affect you.

 

If your shares of TheStreet common stock are registered directly in your name with TheStreet’s transfer agent, you are considered, with respect to those shares, to be the “stockholder of record,” and the proxy materials and proxy card are being sent directly to you by TheStreet. There are four methods by which you may vote your shares at the Special Meeting:

 

Vote in Person. You may vote your shares in person at the Special Meeting (if you satisfy the admission requirements, as described below). Even if you plan to attend the Special Meeting in person, we encourage you to vote in advance by telephone, through the Internet or by mail so that your vote will be counted in the event you later decide not to attend the Special Meeting.

 

Vote by Telephone. You may vote your shares 24 hours a day by calling the telephone number listed on the proxy card and following the instructions provided by the recorded message any time up until 11:59 p.m., Eastern Daylight Time, on [●], 2019, the day before the Special Meeting.

 

Vote by Internet. You may vote your shares 24 hours a day by logging onto the secure website included on the proxy card and following the instructions provided any time up until 11:59 p.m., Eastern Daylight Time, on [●], 2019, the day before the Special Meeting.

 

Vote by Mail. You may vote by completing, signing, dating and promptly returning the proxy card in the postage-paid return envelope provided with the proxy materials for receipt prior to the Special Meeting.

 

Everyone attending the Special Meeting will be required to present valid picture identification, such as a driver’s license or passport. If your shares are held through an account with a broker, dealer, bank or other nominee, you will need a recent brokerage account statement or letter from your broker, dealer, bank or other nominee reflecting stock ownership as of the record date. If you do not have valid picture identification and, if applicable, a recent brokerage account statement or letter from your broker, dealer, bank or other nominee reflecting stock ownership as of the record date, you may not be admitted to the Special Meeting.

 

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No cameras (including cell phone cameras), recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Special Meeting.

 

Q.Should I surrender my book-entry shares now?

 

A.No. After the Merger is completed, the payment agent will send each holder of record immediately prior to the Effective Time a letter of transmittal and written instructions that explain how to exchange shares of TheStreet common stock represented by such holder’s book-entry shares for Merger Consideration. If your shares of TheStreet common stock are held in “street name” by your broker, dealer, bank or other nominee, you may receive instructions from your broker, dealer, bank or other nominee as to what action, if any, you need to take in order to effect the surrender of your “street name” shares in exchange for the Merger Consideration.

 

Q.If my shares of TheStreet common stock are held in “street name” by my broker, dealer, bank or other nominee, will my broker, dealer, bank or nominee vote my shares for me and may I vote in person?

 

A.If your shares of TheStreet common stock are held through an account with a broker, dealer, bank or nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you together with a voting instruction card. You must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, dealer, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to TheStreet.

 

As the beneficial owner, you are also invited to attend the Special Meeting in person. However, because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Special Meeting unless you obtain a “legal proxy” from the broker, dealer, bank or other nominee that holds your shares giving you the right to vote the shares in person at the Special Meeting.

 

Q.What happens if I do not sign and return my proxy card or vote by telephone, through the Internet or in person at the Special Meeting or I do not otherwise provide proxy instructions?

 

A.If you are a stockholder of record of TheStreet common stock and you do not sign and return your proxy card or vote by telephone, through the Internet or in person, your shares will not be voted at the Special Meeting and will not be counted as present for the purpose of determining the presence of a quorum, which is required to transact business at the Special Meeting. Assuming the presence of a quorum, the failure to return your proxy card or otherwise vote your shares at the Special Meeting will have the same effect as voting “AGAINST” the Merger Proposal and your failure to take action will have no effect on the outcome of the Merger-Related Compensation Proposal or the Adjournment Proposal.

 

If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as present for the purpose of determining the presence of a quorum for the Special Meeting and all of your shares will be voted “FOR” each proposal.

 

Q.What if I abstain from voting?

 

A.If you attend the Special Meeting or submit a proxy card, but affirmatively elect to abstain from voting, your proxy will be counted as present for the purpose of determining the presence of a quorum for the Special Meeting, but will not be voted at the Special Meeting. As a result, your abstention will have the same effect as voting “AGAINST” each proposal.

 

Q.What is a “broker non-vote?”

 

A.“Broker non-votes” are shares held in “street name” by brokers, dealers, banks and other nominees that are present or represented by proxy at the Special Meeting, but with respect to which the broker, dealer, bank or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such broker, dealer, bank or nominee does not have discretionary voting power on such proposal. Because brokers, dealers, banks and other nominees holding shares in “street name” do not have discretionary voting authority with respect to the Merger Proposal, the Merger-Related Compensation Proposal or the Adjournment Proposal described in this proxy statement, if a beneficial owner of shares of TheStreet common stock held in “street name” does not give voting instructions to the broker, dealer, bank or other nominee, then those shares will not be counted as present in person or by proxy at the Special Meeting with respect to those proposals. If you fail to issue voting instructions to your broker, dealer, bank or other nominee, it will have the

  

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same effect as a vote “AGAINST” the Merger Proposal. The failure to issue voting instructions to your broker, dealer, bank or other nominee will have no effect on the outcome of the Merger-Related Compensation Proposal or the Adjournment Proposal.

 

Q.May I revoke or change my vote after I have provided proxy instructions?

 

A.Yes. You may revoke or change your vote at any time before your proxy is voted at the Special Meeting. You can do this in one of three ways: (i) delivering written notice to the Secretary of the Company at TheStreet’s principal executive offices, (ii) executing and delivering a proxy bearing a later date to the Secretary of the Company at TheStreet’s principal executive office or (iii) voting in person at the Special Meeting. Your attendance at the Special Meeting without further action on your part will not automatically revoke your proxy. If you have instructed your broker, dealer, bank or other nominee to vote your shares, you must follow directions received from your broker, dealer, bank or other nominee in order to change those instructions.

 

Q.Who is paying for this proxy solicitation?

 

A.TheStreet will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. TheStreet will bear any fees paid to the SEC. TheStreet may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners for their reasonable expenses in forwarding solicitation material to such beneficial owners. TheStreet’s directors, officers and other regular employees may also solicit proxies in person or by other means of communication. Such directors, officers and other regular employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation.

 

Q.What does it mean if I received more than one proxy card?

 

A.If you received more than one proxy card, your shares are likely registered in more than one name or are held in more than one account. These should each be voted and returned separately in order to ensure that all of your shares of TheStreet common stock are voted.

 

Q.Will a proxy solicitor be used?

 

A.Yes. TheStreet has engaged Morrow Sodali LLC to assist in the solicitation of proxies and to provide related advice and informational support, for a services fee, plus customary disbursements, which are not expected to exceed $10,000.

 

Q.Where can I find the voting results of the Special Meeting?

 

A.TheStreet intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the Special Meeting. All reports that TheStreet files with the SEC are publicly available when filed. For more information, please see the section of this proxy statement captioned “Where You Can Find Additional Information.”

 

Q.Whom should I contact if I have any questions about the Merger or the Special Meeting?

 

A.If you have any questions about the Merger or the Special Meeting, or if you need assistance in submitting your proxy or voting your shares or need additional copies of this proxy statement or the enclosed proxy card, please contact Morrow Sodali LLC, our proxy solicitor, at the address and telephone number listed below:

 

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Phone number for banks and brokerage firms: (203) 658-9400

Phone number for shareholders: (800) 662-5200

Email: tst.info@morrowsodali.com

 

If your shares are held through an account with a broker, dealer, bank or other nominee, you should call your broker, dealer, bank or other nominee for additional information.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement and the other documents attached to or referred to in this proxy statement contain or may contain “forward-looking statements” of TheStreet within the meaning of Section 21E of the Exchange Act. For this purpose, any statements contained herein, other than statements of historical fact, may be forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. Statements that include words such as “may”, “will”, “project”, “might”, “expect”, “believe”, “anticipate”, “intend”, “could”, “would”, “estimate”, “continue” or “pursue” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. These forward-looking statements are found at various places throughout this proxy statement and the other documents attached to or referred to in this proxy statement and relate to a variety of matters, including but not limited to, (i) the timing and anticipated completion of the proposed Merger; (ii) the expected benefits and costs of the proposed Merger; (iii) the tax consequences of the Merger; (iv) the projections of future financial performance of the Company; and (v) other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of our management, are not guarantees of performance and are subject to significant risks and uncertainty. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this proxy statement and those that are attached to or referred to in this proxy statement. Additional factors that could cause actual results to differ materially from those described in forward-looking statements contained herein include, but are not limited to:

 

the inability to complete the Merger due to the failure to obtain the Requisite Stockholder Approval or failure to satisfy the other conditions to the completion of the Merger;

 

potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger;

 

litigation or adverse judgments relating to the Merger;

 

fluctuations in our financial results that could affect our stock price;

 

volatility of our stock price, including risks that our stock price may decline significantly if the Merger is not completed;

 

risks associated with the fixed Merger Consideration;

 

risks that TheStreet’s expected cash on hand prior to the Merger will be less than currently expected due to deteriorations in its ongoing business prior to the Merger;

 

the amount of the costs, fees and expenses related to the Merger and the Pre-Merger Distribution;

 

claims and liabilities in connection with the Prior Transactions which would reduce the value of the CVRs;

 

any changes in general economic or industry-specific conditions;

 

the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement;

 

the timing of the completion of the Merger and the impact on our capital resources, cash requirements, continuing losses, management resources and liquidity;

 

the fact that, if the Merger is completed, stockholders will forgo the opportunity to realize the potential long-term value of the successful execution of TheStreet’s current strategy as an independent public company; and

 

the factors discussed under the heading “Risk Factors” in this proxy statement.

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement or, in the case of documents referred to in this proxy statement, as of the date of those documents. The Company disclaims any obligation to publicly update or release any revisions to these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this proxy statement or to reflect the occurrence of unanticipated events, except as required by law.

 

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RISK FACTORS

 

In addition to the other information included in and referred to in this proxy statement, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors before deciding when evaluating whether to vote your shares to adopt the Merger Agreement and thereby to approve the transactions contemplated by the Merger Agreement, including the Merger. These factors should be considered in conjunction with the other information included in this proxy statement and the risk factors described in TheStreet’s other filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2018. You may obtain copies of our publicly-filed reports and other information from the sources listed under the section “Where You Can Find Additional Information” on page 92 of this proxy statement. This summary of risks is not exhaustive. New risks may emerge from time to time and it is not possible to predict all risk factors, nor can we assess the impact of all factors on the Merger and the Company or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward-looking statements. If any of the risks described below or otherwise referred to in this proxy statement actually materialize, the business, financial condition, results of operations, or prospects of TheStreet, or the stock price of TheStreet, could be materially and adversely affected.

 

Risks Related to the Merger

 

The consummation of the Merger is subject to a number of conditions, and, if these conditions are not satisfied or waived on a timely basis, the Merger Agreement may be terminated and the Merger may not be completed.

 

The Merger is subject to certain customary closing conditions, including: (i) requisite adoption of the Merger Agreement by the holders of TheStreet common stock; (ii) the absence of any law, governmental order or pending action of any governmental authority preventing or seeking to prevent the consummation of the Merger; (iii) the absence of a material adverse effect on the Company; (iv) the completion of the Pre-Merger Distribution; (v) the accuracy of the representations and warranties of each of the parties to the Merger Agreement (subject to certain materiality exceptions); and (vi) the compliance in all material respects by the parties with the covenants contained in the Merger Agreement. See the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 80. The Merger Agreement will terminate if the Merger does not occur on or before October 31, 2019, and failure to satisfy all of the required conditions could delay the completion of the Merger by a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause the parties to not realize some or all of the intended benefits that are expected to be achieved if the Merger and the transactions contemplated by the Merger Agreement are successfully completed within the expected timeframe.

 

If we fail to complete the Merger, our business and financial results may be adversely affected.

 

There can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed. If the Merger is not completed, our ongoing business could be adversely affected and we will be subject to a variety of risks and possible consequences associated with the failure to complete the Merger, including the following:

 

TheStreet may experience negative reactions from the financial markets, including a negative impact on trading price of TheStreet common stock, and from their respective customers, vendors and employees;

 

upon termination of the Merger Agreement under specified circumstances, TheStreet may be required to pay Maven a termination fee of approximately $330,000;

 

TheStreet will incur certain transaction costs, including legal, accounting, financial advisor, filing, printing and mailing fees, regardless of whether the Merger closes;

 

under the Merger Agreement, TheStreet is subject to certain restrictions on the conduct of its business prior to the closing of the Merger, and such restrictions may prevent TheStreet from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Merger that TheStreet would have made, taken or pursued if these restrictions were not in place which may adversely affect its ability to execute certain of its business strategies;

 

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TheStreet may lose key employees during the period in which TheStreet and Maven are pursuing the Merger or if the Merger does not occur, which may adversely affect TheStreet in the future if it is not able to hire and retain qualified personnel to replace departing employees; and

 

the proposed Merger will require substantial commitments of time and resources from and divert the attention of certain management and other key employees of TheStreet which would otherwise have been dedicated to day-to-day operations, including the pursuit of other opportunities that could be beneficial to TheStreet as an independent company.

 

If the Merger is not completed, these risks could materially affect the business and financial results of TheStreet and its stock price.

 

While the Merger is pending, TheStreet will be subject to business uncertainties and certain contractual restrictions that could adversely affect the its business and operations.

 

In connection with the Merger, some customers, vendors or other third parties of TheStreet may react unfavorably, delay or defer decisions concerning their business relationships or transactions with TheStreet which could adversely affect the revenues, earnings, funds from operations, cash flows and expenses of TheStreet, regardless of whether the Merger is completed. For example, Mr. James Cramer, our founder and Chief Markets Commentator has advised TheStreet that he intends to terminate his Employment Agreement with TheStreet within thirty days following the closing of the Merger. Although Mr. Cramer’s continued employment is not a condition to the closing of the Merger, his decision may have an adverse impact on obtaining new subscribers for our premium subscription products or on renewals for such subscriptions. Furthermore, due to certain restrictions in the Merger Agreement on the conduct of business prior to the consummation of the Merger, TheStreet may be unable, during the pendency of the Merger, to pursue strategic transactions, undertake significant capital expenditures or financing transactions or otherwise pursue other actions related to its business, even if such actions would prove beneficial, which may cause TheStreet to forego certain business opportunities it might otherwise pursue. In addition, the pendency of the merger may make it more difficult for TheStreet to effectively retain and incentivize key personnel and may cause distractions from TheStreet’s business strategy and day-to-day operations for its current employees and management.

 

During the pendency of the Merger, TheStreet may not be able to enter into a business combination with another party on favorable terms because of restrictions in the Merger Agreement, which could adversely affect TheStreet’s businesses.

 

TheStreet has made customary representations and warranties to Maven in the Merger Agreement and has agreed to customary covenants, including covenants regarding the operation of TheStreet’s business prior to the completion of the Merger. While the Merger Agreement is in effect, TheStreet is prohibited from entering into or initiating certain transactions, such as a sale of assets, merger, acquisition or other business combination, with any third party, other than in the ordinary course of business. These restrictions apply even if such transactions could be favorable to TheStreet stockholders. As a result, if the Merger is not completed, TheStreet may be at a disadvantage to its competitors.

 

TheStreet will incur substantial transaction fees and costs in connection with the Merger.

 

TheStreet will be required to pay certain transaction expenses and other costs incurred in connection with the Merger whether or not the Merger is completed. We expect to incur non-recurring transaction fees, including legal and advisory fees and substantial costs associated with completing the Merger.

 

Certain provisions of the Merger Agreement make it more difficult for TheStreet to pursue alternatives to the Merger and may discourage third parties from submitting alternative proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

 

The Merger Agreement contains covenants prohibiting TheStreet and its representatives from soliciting, providing information or entering into discussions concerning competing proposals to the Merger, except in limited circumstances relating to bona fide, unsolicited proposals received by TheStreet in writing before the receipt of stockholder approval of the Merger Proposal where the Board of Directors of TheStreet determines in good faith, after consultation with TheStreet’s outside legal and financial advisors, that any such proposal constitutes or could reasonably be expected to result in, after taking such action with respect to such proposal, a “Superior Proposal” (see “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger —The Merger Agreement—Conditions to the Completion of the Merger” for the definition of “Superior Proposal”) and that the failure to take such action with respect to such proposal would likely be a violation of the directors’ fiduciary duties

 

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under applicable law. If the Merger Agreement is terminated by TheStreet under such circumstances, TheStreet will be required to pay a termination fee of approximately $330,000. As a result, the Board of Directors may be less inclined to recommend an alternative proposal to the stockholders of TheStreet.

 

The termination fee and restrictions on solicitation contained in the Merger Agreement may discourage other companies from acquiring TheStreet.

 

Subject to certain exceptions set forth in the Merger Agreement relating to the receipt of certain unsolicited offers, the Merger Agreement provides that prior to the completion of the Merger, TheStreet will not, among other things, directly or indirectly (i) solicit, initiate or knowingly facilitate or encourage any Competing Proposal (see “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Conditions to the Completion of the Merger” for the definition of “Competing Proposal”), or the making of any proposal that would reasonably be expected to lead to a Competing Proposal; (ii) conduct or participate in any negotiations with or furnish or afford access to any non-public information relating to TheStreet (including the business, properties, assets, books or records of TheStreet) to any third party that is seeking to make, or has made, any Competing Proposal; (iii) engage in discussions with any person with respect to any Competing Proposal; (iv) approve or recommend any Competing Proposal; (v) enter into any letter of intent or similar agreement providing for or relating to any Competing Proposal, or enter into any agreement requiring TheStreet to abandon, terminate or fail to consummate the transactions contemplated by the Merger Agreement or breach its obligations thereunder; or (vi) propose or agree to do any of the foregoing. The Company believes that these provisions are reasonable and not preclusive of other offers, but these restrictions might discourage a third party that has an interest in acquiring all or a significant part of the Company’s business from considering or proposing an acquisition, even if that party were prepared to pay consideration with a higher per-share value than the currently proposed Merger Consideration or that party were prepared to enter into an agreement that may be favorable to TheStreet or its stockholders.

 

The Merger Agreement requires TheStreet to pay Maven a termination fee of approximately $330,000, under certain circumstances specified in the Merger Agreement, including termination of the Merger Agreement by TheStreet as a result of an adverse change in the recommendation of the Board of Directors (a “Change of Recommendation”) in order to enter into a definitive agreement with respect to a Superior Proposal. The termination fee and restrictions could discourage other interested parties from acquiring TheStreet even though such parties might be willing to offer greater value to TheStreet stockholders than contemplated by the Merger Agreement. Furthermore, the termination fee described above may result in a potential competing acquirer proposing to pay a lower per-share price to acquire the Company than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable by such party in certain circumstances. For additional information, see the section entitled “Proposal No. 1: The Merger Proposal—Agreements Related to the Merger—The Merger Agreement—Termination Fee” beginning on page 81.

 

Litigation against TheStreet or the members of the Board of Directors could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

 

It is a condition to the Merger that no governmental authority of competent jurisdiction shall have issued a final or nonappealable order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement. It is possible that TheStreet stockholders may file lawsuits challenging the Merger or the other transactions contemplated by the Merger Agreement, which may name TheStreet and members of TheStreet’s Board of Directors as defendants. The outcome of such lawsuits cannot be assured, including the amount of costs and expenses associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims. If plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Merger on the agreed-upon terms, such an injunction may delay the consummation of the Merger or prevent the Merger from being consummated at all. Whether or not any plaintiff’s claim is successful, this type of litigation can result in significant costs and divert management’s attention and resources from the closing of the Merger and ongoing business activities, which could adversely affect the operation of the Company’s business.

 

Our directors and executive officers may have interests in the Merger other than, or in addition to, the interests of our stockholders generally.

 

Our directors and executive officers may have interests in the Merger that are different from, or are in addition to, the interests of our stockholders generally. As described in more detail below in the section entitled “Proposal No. 1: The Merger Proposal—Interests of Certain Persons in the Merger” beginning on page 65, these interests include, among other things:

 

strategic committee fees as further described below under the section “—Fees Paid to Strategic Committee of the Board of Directors;”

 

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cash severance payments and benefits under individual Transaction Severance Agreements upon certain types of terminations of employment occurring prior to or following the Merger, as further described below under the sections captioned “—Transaction Severance Agreements” and “—Employment Arrangements with Eric Lundberg and Margaret de Luna;”

 

new compensation arrangements with Eric Lundberg and Margaret de Luna that will become effective upon the closing of the Merger, as further described below under the section captioned “—Employment Arrangements with Eric Lundberg and Margaret de Luna;” and

 

stay bonuses and pro-rated 2019 annual cash bonuses for all the executive officers of TheStreet, as further described below under the section captioned “—2019 Stay Bonuses and Pro-Rated 2019 Target Bonuses.”

 

The Board of Directors was aware of these interests, and considered them, in addition to other matters, in evaluating and negotiating the Merger Agreement, reaching its decision to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommending the adoption of the Merger Agreement to TheStreet stockholders.

 

The CVRs are nontransferable and may not be transferred or assigned except in limited circumstances.

 

The CVRs are nontransferable, meaning that they may not be sold, assigned, transferred, pledged or encumbered in any manner, other than transfers by will or intestacy, by inter vivos or testamentary trust where the CVR is to be passed to the beneficiaries upon the death of the trustee, pursuant to a court order, by operation of law, or in connection with the dissolution, liquidation or termination of a corporation or other entity which is the holder thereof. The CVRs will not be registered under the Securities Act, and they will not be listed or traded on any stock exchange in the United States or elsewhere. Therefore, stockholders of TheStreet will not be permitted to sell or transfer the CVRs, except for in certain limited circumstances. The CVRs will not represent any equity or ownership interest in TheStreet, Maven or any affiliate thereof (or any other person) and will not be represented by any certificates or other instruments. In addition, the CVRs will not have any voting or dividend rights and no interest will accrue on any amounts payable on the CVRs to any holder thereof.

 

The projected value of the CVRs may not be realized.

 

The CVRs will entitle each holder thereof to receive a pro rata portion of the funds escrowed in connection with the Prior Transactions when they are released from the relevant escrows, which are currently scheduled to be released after August 20, 2019, and January 31, 2020, respectively. Currently, TheStreet’s management estimates that the total amounts that will be released from such escrows will range from approximately $0.66 per share of TheStreet common stock to approximately $0.77 per share of TheStreet common stock. However, there can be no assurance that these escrows will be released in full or at all since the purchasers in the prior transactions have certain indemnification rights under their agreements with TheStreet which may be satisfied through their receipt of all or portions of such escrows.

 

The United States federal income tax treatment of the Merger, the Pre-Merger Distribution and the CVRs is uncertain.

 

The transfer of the shares of TheStreet common stock in the Merger and the receipt of the Pre-Merger Distribution and the CVRs will be a taxable transaction for United States federal income tax purposes. There is no legal authority directly addressing the United States federal income tax treatment of the CVRs or the treatment of payments that may be received pursuant to the CVRs and, therefore, the taxation of the receipt of and payment on the CVRs is uncertain. It is also not entirely clear whether the Pre-Merger Distribution and the receipt of the CVRs will be treated as separate distributions with respect to TheStreet common stock or instead treated as a single integrated transaction with the sale of the holder’s TheStreet common stock in the Merger and treated for federal income tax purposes as a single sale of TheStreet common stock and included as part of the consideration received in the Merger transaction. For a summary of certain material United States federal income tax consequences of the Merger, the Pre-Merger Distribution and receipt of the CVRs see the section entitled “Proposal No. 1: The Merger Proposal—Certain Material United States Federal Income Tax Consequences of the Merger, the Pre-Merger Distribution and Receipt of a CVR to United States Holders of TheStreet Common Stock” beginning on page 58 for additional information.

 

The fairness opinion obtained from the financial advisor to the Board of Directors will not reflect subsequent developments between the signing of the Merger Agreement and the closing of the Merger.

 

In connection with the Merger, TheStreet’s Board of Directors received a written opinion, dated June 9, 2019, from Lake Street Capital Markets, LLC, as to the fairness, from a financial point of view and as of the date of such opinion, of the

  

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consideration to be received in the Merger pursuant to the Merger Agreement by the holders of TheStreet common stock, which opinion was based on and subject to various assumptions, procedures, considerations, limitations and qualifications, more fully described in the section titled “Proposal No. 1: The Merger Proposal—Opinion of Lake Street Capital Markets, LLC” beginning on page 51. The opinion does not reflect developments that may occur or may have occurred after the date of the opinion, including changes in the market prices of TheStreet common stock, changes to the operations and prospects of TheStreet, changes in general market and economic conditions or regulatory or other factors. Any such changes, or other changes in factors on which the opinions are based, may materially alter or affect the relative value of TheStreet.

 

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PROPOSAL NO. 1:
THE MERGER PROPOSAL

 

The discussion of the Merger in section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and hereby incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. We encourage you to read the Merger Agreement carefully and in its entirety, as it is the legal document that governs the Merger.

 

Overview of the Merger

 

On June 11, 2019, TheStreet, Maven, and Merger Sub entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of Merger Sub with and into TheStreet (the “Merger”), with TheStreet surviving the Merger as a wholly owned subsidiary of Maven (the “Surviving Corporation”).

 

As a result of the Merger, TheStreet common stock will no longer be publicly traded and will be delisted from the Nasdaq Capital Market. In addition, TheStreet common stock will be deregistered under the Exchange Act, and TheStreet will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation. The time at which the Merger will become effective will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware in accordance with the applicable provision of the DGCL (the time of such filing and the acceptance for record by the Secretary of State of the State of Delaware, or such later time as may be agreed in writing by Maven, Merger Sub and TheStreet and specified in the certificate of merger, being referred to herein as the “Effective Time”).

 

Merger Consideration

 

At the Effective Time, each share of common stock, par value $0.01 per share, of TheStreet issued and outstanding immediately prior to the Effective Time (other than shares, if any, held by TheStreet, Maven or Merger Sub and shares with respect to which appraisal rights have been properly exercised in accordance with the DGCL), after giving effect to the Pre-Merger Distribution described below, will automatically be cancelled and converted into the right to receive (i) an amount in cash equal to $3.09183364 per share of TheStreet common stock and (ii) one contractual contingent value right (each, a “CVR”) per share of TheStreet common stock (collectively, the “Merger Consideration”), in each case, without interest and less applicable withholding taxes.

 

Each CVR will entitle the holder thereof to receive a pro rata portion of the funds escrowed in connection with the Prior Transactions when they are released from the relevant escrows, which are currently scheduled to be released after August 20, 2019, and January 31, 2020, respectively. The terms and conditions of the CVRs will be set forth in a contingent value rights agreement to be entered into prior to the closing of the Merger among TheStreet, Maven and a rights agent (the “CVR Agreement”), as described below under the heading “—Agreements Related to the Merger—The CVR Agreement.” Currently, TheStreet’s management estimates that the total amounts that will be released from such escrows will range from approximately $0.66 per share of TheStreet common stock to approximately $0.77 per share of TheStreet common stock. There can be no assurance that these escrows will be released in full or at all since the purchasers in the Prior Transactions have certain indemnification rights under their agreements with TheStreet which may be satisfied through their receipt of all or portions of such escrows.

 

The CVRs will not represent any equity or ownership interest in TheStreet, Maven or any affiliate thereof (or any other person) and will not be represented by any certificates or other instruments. The CVRs will not have any voting or dividend rights and no interest will accrue on any amounts payable on the CVRs to any holder thereof. The CVRs may not be sold, assigned, transferred, pledged or encumbered in any manner, other than transfers by will or intestacy, by inter vivos or testamentary trust where the CVR is to be passed to the beneficiaries upon the death of the trustee, pursuant to a court order, by operation of law, or in connection with the dissolution, liquidation or termination of a corporation or other entity which is the holder thereof. The CVRs will not be registered under the Securities Act.

 

Pre-Merger Distribution

 

Immediately prior to the Effective Time, TheStreet will distribute all of its cash on hand, less certain liabilities and expenses relating to TheStreet’s prior sales of its RateWatch and B2B Business units (collectively, the “Prior Transactions”) and the Merger Agreement and the related transactions, in the form of a cash distribution declared by the Board of Directors and

  

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paid to holders of TheStreet common stock (the “Pre-Merger Distribution”), which is expected to be paid concurrently with the cash consideration in the Merger. Currently, TheStreet’s management estimates that the amount of cash TheStreet will be able to distribute in the Pre-Merger Distribution will range from approximately $2.44 per share of TheStreet common stock to approximately $2.61 per share of TheStreet common stock. This estimate reflects management’s estimate of cash to be held by TheStreet assuming that the Pre-Merger Distribution is effectuated on or about July 31, 2019. The actual amount to be distributed will be affected by TheStreet’s operating results, transaction expenses, certain severance benefits that were earned prior to the Merger, the actual timing of the Pre-Merger Distribution and other factors. The effectiveness of the Merger is conditioned upon effectuation of the Pre-Merger Distribution.

 

Parties to the Merger

 

TheStreet, Inc.

 

TheStreet is a leading financial news and information provider to investors and institutions worldwide. The Company’s flagship brand, TheStreet (www.thestreet.com), has produced unbiased business news and market analysis for individual investors for more than 20 years.

 

TheStreet was founded in 1996 as a limited liability company and reorganized as a C corporation in 1998. TheStreet’s principal executive offices are located at 14 Wall Street, New York, New York 10005, and its telephone number is (212) 321-5000. TheStreet’s website address is www.t.st. Information contained on, or that can be accessed through, our website is not incorporated by reference into this proxy statement, and you should not consider information on our website to be part of this proxy statement. TheStreet common stock is listed on the Nasdaq Capital Market under the trading symbol “TST.” For additional information, see the section entitled “Where You Can Find Additional Information” beginning on page 92.

 

TheMaven, Inc.

 

Maven (maven.io) is a coalition of Mavens, including individual thought-leaders to world-leading independent publishers, operating on a shared digital publishing, advertising, and distribution platform and unified under a single media brand. Based in Seattle, Maven is publicly traded under the ticker symbol MVEN. Maven’s principal executive offices are located at 1500 4th Ave, Suite 200, Seattle, Washington 98101, and the telephone number at that location is (775) 600-2765. The information provided on or accessible through Maven’s website is not part of or incorporated by reference in this proxy statement.

 

TST Acquisition Co., Inc.

 

TST Acquisition Co., Inc., a Delaware corporation and a wholly owned subsidiary of Maven, which we refer to as “Merger Sub,” was formed solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will merge with and into TheStreet and will cease to exist.

 

Background of the Merger

 

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement and the sale of the B2C Business to Maven. This chronology does not purport to catalogue every conversation among the Strategic Committee (as defined below), the Board of Directors or the representatives of TheStreet, and other parties.

 

From time to time, the Board of Directors and our senior management team review and evaluate strategic opportunities and alternatives as part of a long-term strategy to increase stockholder value. Such opportunities and alternatives include remaining as a stand-alone entity, potential acquisitions of companies, businesses or assets that align with our strategic objectives and potential dispositions of one or more of our businesses.

 

The Board’s consideration of strategic opportunities and alternatives took on a renewed focus following the realignment of our capital structure in November 2017, with the Board determining to review, among other things, our mix of businesses with a view to possibly unlocking the value the Board believed was in our portfolio as well as possibly growing our businesses through acquisitions. On November 16, 2017, the Board held a meeting at which the Board discussed possible strategies in this regard and decided that we should pursue a potential divestiture of our RateWatch business which business the Board viewed as a non-core asset of TheStreet.

 

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At a regularly scheduled meeting held on December 14, 2017, the Board approved the formation of a Strategic Committee of the Board (the “Strategic Committee”) to oversee the effort to potentially divest our RateWatch business. The Board appointed Kevin Rendino, Bowers Espy, Stephen Zacharias and Larry Kramer, Chairman of our Board, to serve as the initial members of the Strategic Committee and appointed Mr. Rendino as Chairman effective January 1, 2018.

 

On February 8, 2018, Messrs. Rendino and Kramer and David Callaway, TheStreet’s Chief Executive Officer at the time, spoke by phone with the Chief Executive Officer of Company A, a leading media company about their potential interest in a strategic transaction with the Company. In the course of this discussion, the Chief Executive Officer of Company A asked whether Company A could sign a non-disclosure agreement with us and receive non-public information about TheStreet. Subsequently, we entered into such a non-disclosure agreement (“NDA”) and provided limited non-public information to Company A. The NDA included a standstill provision (a “standstill”) prohibiting Company A, among other things, from offering to purchase shares of or offering to acquire TheStreet for a period of two years, except when invited to do so by TheStreet. The NDA also included a provision stating that Company A was not permitted to ask for a waiver of the standstill, or a “no-ask, no waiver” provision.

 

On February 25, 2018, our Board held a meeting to further discuss whether to engage in a review of possible strategic options to maximize value for stockholders. The directors also discussed expanding the authority of the Strategic Committee to oversee this process. Also attending the meeting were representatives of Orrick, Herrington & Sutcliffe LLP, outside legal counsel to TheStreet, which we refer to as “Orrick.” The representatives of Orrick discussed with the members of the Board their fiduciary duties in connection with a sale process and reviewed and discussed with the Board potential conflicts of interests that certain directors may have in connection with the sale process based on other business relationships.

 

On March 1, 2018, the Board held a regularly scheduled meeting and received updates on TheStreet’s business initiatives and 2017 financial results for TheStreet as a whole and for each of TheStreet’s operating segments, including the B2B Business and the B2C Business. The Board approved expanding the scope of the Strategic Committee to also include a broader review and exploration of TheStreet’s strategic options, code named “Project Boulevard,” to maximize value for all stockholders. The directors agreed that although Project Boulevard would be important to pursue, management must stay focused on, and continue to execute, TheStreet’s strategic plan, which plan had been leading to some improvement in financial results for TheStreet, including in both of the B2B and B2C Businesses. The Board also received an update from Mr. Rendino with respect to the meetings held with financial advisors and discussed the Strategic Committee’s recommendation that TheStreet engage Moelis & Company LLC, which we refer to as “Moelis,” subject to agreement on acceptable engagement terms, including fee structure, to provide financial advice in connection with this review and exploration by the Board and the Strategic Committee. The Board requested that Mr. Rendino negotiate on behalf of TheStreet an appropriate engagement letter with Moelis.

 

Moelis was formally engaged by us at the end of March 2018 as our financial advisor in connection with the sale process and Moelis is entitled to receive an aggregate fee of $3.25 million for its services as financial advisor, a portion of which was previously paid in connection with the sale of the B2B Business to Euromoney and the balance of which will become payable upon closing of the Merger. Thereafter, the Strategic Committee held, with some exceptions, weekly updates with representatives of Moelis to discuss the status of and to provide direction to these representatives with respect to Project Boulevard. Messrs. Callaway and Eric Lundberg, TheStreet’s current Chief Executive Officer and Chief Financial Officer, joined most of these calls, with Mr. Callaway ceasing to participate upon his resignation from the Board and as Chief Executive Officer of the Company on February 14, 2019.

 

During March and April of 2018, detailed information was provided by TheStreet to Moelis to enable Moelis to undertake a review of TheStreet’s strategic options, including through various presentations by TheStreet’s management to Moelis. On April 10, 2018, at a regularly scheduled meeting of the Board, representatives of Moelis presented to the Board their preliminary views on certain strategic alternatives for TheStreet, including organic growth and bolt-on acquisitions for certain business units, as well as a sale of TheStreet as a whole to a strategic or financial buyer or a sale of either or both of the B2B Business and the B2C Business to distinct buyers. Representatives of Moelis discussed positive and negative considerations associated with each alternative described. The representatives of Moelis further observed that selling these businesses separately, or even parts of them, might yield higher values since potential acquirers could purchase only the asset they wished to acquire. Following this presentation, the Board reviewed and discussed the strategic options available to TheStreet and authorized TheStreet’s management and Moelis to explore a possible sale of TheStreet as a whole or its underlying business units through a tailored process reviewed by Moelis and instructed senior management to continue to execute on TheStreet’s strategic plan.

 

On May 17, 2018, the Board held a regularly scheduled meeting during which representatives of Moelis and Orrick joined to discuss Project Boulevard. Representatives of Moelis provided an update on their work and reviewed a list of potential strategic acquirers and potential financial sponsors to be contacted. Orrick also reviewed with the Board their legal duties with respect to reviewing a potential transaction, noted that Board members should direct all inquiries to Mr. Rendino as Chair of the Strategic Committee and responded to questions from the Board. The Board also met in executive session without management or Mr. Cramer to review potential conflicts and review the process to be followed for the strategic review.

 

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Company B, a world leader in business and financial news was identified by TheStreet and Moelis at an early stage in the strategic process review as a potential acquirer of all or a portion of TheStreet given the close relationship of TheStreet’s founder, Mr. Cramer, with both companies. The Board acknowledged the potential conflict of Mr. Cramer with respect to any potential transaction involving Company B given the existing business relationships and synergies between the companies. Another conflict considered by the Board and its advisors was Mr. Cramer’s role as an employee and Chief Markets Commentator of TheStreet, providing services under an employment agreement which expires December 31, 2021, and Mr. Cramer’s association with a significant amount of the revenue in TheStreet’s B2C Business segment.

 

Company C, a leading media company, was also identified by TheStreet and Moelis at an early stage in the strategic process review as a potential acquirer of all or a portion of TheStreet. The Board acknowledged the potential conflict of Mr. Kramer, a member of the Strategic Committee and Chairman of the Board of TheStreet, who was also a member of the Board of Directors of Company C. Moelis was instructed not to include Mr. Kramer on communications with the Strategic Committee or the Board that included information with respect to Company C’s potential involvement in the sale process.

 

On May 18, 2018, the Compensation Committee of the Board approved retention arrangements for our named executive officers and certain non-executive employees who would likely be involved with or affected by a potential sale process.

 

At the direction of the Strategic Committee, representatives of Moelis undertook an outreach program beginning after the May 17, 2018 Board meeting to potential acquirers of TheStreet as a whole or its underlying business units. During this initial process, which continued though the first stage of Project Boulevard and culminated in a definitive agreement to sell the B2B Business on December 6, 2019, more than 80 parties were contacted to gauge their potential interest. These parties consisted of public and private strategic players and financial sponsors in the internet, media, information services and software industries. Of those contacted, 21 strategic parties and 7 financial sponsors executed an NDA, undertook due diligence (including being granted access to an electronic due diligence data site containing confidential information about TheStreet), received a confidential information presentation concerning TheStreet and the B2B and B2C Business units, and received a bid instruction letter requesting that they deliver, by July 16, 2018, formal preliminary, non-binding indications of interest to purchase TheStreet in its entirety or one of its underlying business units. Twenty-three of the NDAs included a standstill provision prohibiting the potential bidder, among other things, from offering to purchase shares of or offering to acquire TheStreet for negotiated time periods ranging from one year to two years, except when invited by TheStreet to do so in accordance with bid procedures established by TheStreet. The standstill included in three of these NDAs terminated upon public announcement of the definitive agreement to sell the B2B Business which occurred on December 6, 2018. Nineteen of the NDAs included a “no-ask, no-waiver” provision stating that a potential bidder was not permitted to ask for a waiver of the standstill. The no-ask, no-waiver provision included in two of these NDAs also terminated on December 6, 2018.

 

TheStreet and Company B entered into an NDA on June 7, 2018 which did not include a standstill provision.

 

TheStreet and Company C entered into an NDA on June 7, 2018 which included a standstill provision which expired on December 6, 2018.

 

On June 20, 2018, TheStreet announced the sale of its RateWatch business unit for $33.5 million to S&P Global, a leading provider of business information to the capital, corporate and commodities markets worldwide (“S&P”). This amount included approximately $3.5 million which was placed in escrow to secure certain indemnification obligations of TheStreet to S&P, which escrow is currently set to be released after August 20, 2019, subject to any indemnification claims made by S&P with respect to the sale transaction. Lake Street Capital Markets, LLC, which we refer to as “Lake Street,” served as financial advisor to TheStreet in connection with the RateWatch sale.

 

During July and August of 2018, management presentations were made to, and follow-up discussions led by Moelis, at the direction of the Strategic Committee, were held with, nine potential parties, including Company A, Company B and Company C.

 

In response to the request for non-binding indications of interest, Moelis, on behalf of TheStreet, received two non-binding indications of interest from parties interested in acquiring all of the outstanding equity of TheStreet for cash: a proposal from a private equity firm which valued TheStreet at $54 million on an enterprise value basis and a proposal from Euromoney Institutional Investor PLC (“Euromoney”), an international business-to-business information company focusing on the global financial community, which valued TheStreet at $100 million to $115 million on an enterprise value basis. Moelis also received two other non-binding indications of interest from parties interested in acquiring only the B2B Business.

 

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On July 17, 2018, Company B submitted a non-binding indication of interest to acquire all assets primarily related to the B2C Business for a purchase price of between $5 million and $10 million in cash. On July 27, 2018, Company C notified Moelis by email of its intention not to make an indicative proposal for an acquisition of TheStreet due to there not being a sufficiently large opportunity to accelerate TheStreet’s consumer subscription business to a level that would justify a premium valuation.

 

Representatives of Company B and Company C had numerous contacts with representatives of TheStreet, including Mr. Cramer, Margaret de Luna, President of the B2C Business at the time and currently President and Chief Operating Officer of TheStreet, and Mr. Lundberg as well as representatives of Moelis and Orrick during the initial phase of the sale process. These parties also conducted due diligence on our B2C Business.

 

On July 30, 2018, the Strategic Committee held a meeting to discuss Project Boulevard with representatives of our management, Moelis and Orrick in attendance. The representatives of Moelis updated the members of the Strategic Committee on their outreach efforts and the indications of interest described in the preceding paragraphs. The representatives of Moelis reported, among other things, that Company A indicated that it would not submit a bid for TheStreet as a whole and had advised Moelis that they could not offer a purchase price per share greater than the then current trading price of TheStreet’s common stock. Moelis reviewed with the Strategic Committee the non-binding indication of interest from Company B. The representatives of Moelis reported that both Company A and Company C had verbally indicated an interest in the B2C Business only but had not yet submitted indicative proposals to acquire the B2C Business.

 

On July 30, 2018, Mr. Cramer and a representative of Moelis met with an executive of Euromoney to discuss our B2C Business as Euromoney’s existing business was a multi-brand information business primarily focused on business institutions. On July 31, 2018, representatives of Euromoney attended a management presentation concerning TheStreet, including the B2B and B2C Businesses.

 

On August 1, 2018, the Board held a meeting to discuss Project Boulevard with representatives of our management, Moelis and Orrick in attendance. The representatives of Moelis provided the members of the Board with a substantially similar update to what they had provided to the Strategic Committee on July 30, 2018.

 

On August 1, 2018, representatives of Moelis spoke to Company C to explore whether they would be interested in a potential acquisition of the B2C Business only. Following further discussions with the Chair of the Strategic Committee it was decided to provide Company C with additional information to allow them to explore such a transaction.

 

On August 8, 2018, representatives of Euromoney met with members of our management, including Mr. Cramer, Ms. de Luna, Mr. Lundberg and representatives of Moelis to further discuss our B2C Business.

 

On August 10, 2018, an executive of Euromoney spoke by phone with a representative of Moelis and advised that Euromoney had reached a firm conclusion that our B2C Business was not a good fit for the business-to-business information focus of Euromoney and therefore Euromoney would not proceed with an acquisition transaction which included the B2C Business. Euromoney further communicated that they would like to pursue an acquisition of the B2B Business only rather than acquiring TheStreet as a whole. Later that same day, Euromoney submitted a new non-binding indication of interest to acquire only the B2B Business at an enterprise valuation range of $90 million to $95 million.

 

On August 13, 2018, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Moelis and Orrick. Representatives of Moelis described the new indication of interest received from Euromoney for the acquisition of the B2B Business only and noted that Company B remained the only entity that had submitted a written indication of interest for the B2C Business only. Representatives of Moelis then described the positive and negative considerations of the principal transaction alternatives available to TheStreet in light of Euromoney’s withdrawal of its proposal to acquire TheStreet as a whole and the lack of any other meaningful bids for TheStreet as a whole. Among the alternatives discussed were the following:

 

Sale of the B2B Business and concurrent sale of the residual public company (containing the B2C Business) to separate acquirers;

 

Sale of the B2B Business and concurrent sale of the B2C Business to separate acquirers with a subsequent public company dissolution; and

 

Sale of the B2B Business with public company (containing the B2C Business) remaining a stand-alone company.

 

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Representatives of Moelis also reported that there had not been significant engagement with Company B concerning its non-binding indication of interest to acquire the B2C Business. The members of the Strategic Committee discussed with the Moelis representatives various possible scenarios for encouraging Company B to increase its interest in and engagement concerning such transaction and to possibly acquire TheStreet as a whole with the B2B Business being sold to a different party given the elevated levels of interest of several bidders for the B2B Business. The members also discussed the possibility of Company A or Company C being interested in the B2C Business although to date neither company had demonstrated any significant interest. Representatives of Moelis advised that the strategic review process had resulted in little interest being shown in the B2C Business. In addition, the members of the Strategic Committee discussed the need for management to prepare a business plan for our B2C Business as operated by TheStreet assuming that the B2B Business is sold and that a transaction involving the B2C Business does not occur and would continue to operate as stand-alone business for the foreseeable future.

 

On August 17, 2018, a representative of Moelis spoke with a representative of Company C who advised that Company C might have an interest in acquiring TheStreet (including the B2C Business) on the assumption that another party would acquire the B2B Business at the same time. The representative of Company C provided no indication of a possible acquisition price Company C might pay in such a transaction.

 

On August 22, 2018, Euromoney submitted to Moelis a new non-binding indication of interest for the acquisition of the B2B Business only and reflecting an enterprise value of $88.5 million.

 

On August 23, 2018, the Strategic Committee met with representatives of TheStreet’s management, Moelis and Orrick in attendance. Representatives of Moelis provided an update on Project Boulevard. Such representatives also discussed the updated proposal from Euromoney which was now just limited to the B2B Business, and the continued strong interest from multiple bidders for the B2B Business. Such representatives also noted that no bidders remained interested in acquiring TheStreet as a whole and interest to date in the B2C Business had been limited, notwithstanding the extensive outreach to date. After Mr. Kramer excused himself from the meeting, the representatives discussed the written indication of interest from Company B for certain assets of the B2C Business and Moelis provided an update on further communications with Company B. Moelis also provided an update on communications with Company C and the Strategic Committee directed Moelis to encourage Company C who had made an oral indication of interest for the B2C Business to provide a firm bid in writing and to make a bid to acquire the entire company assuming the B2B business was sold in a separate transaction to a separate buyer.

 

On August 26, 2018, a representative of Company D, a private equity fund that had previously expressed an interest in an investment in TheStreet and whose principal was personally known to Mr. Cramer, contacted Moelis to express an interest in receiving information about the B2C Business. TheStreet and Company D entered into an NDA on August 28, 2018 which included a two-year standstill provision which included a “no ask, no waiver” provision. Company D also attended a management presentation on September 4, 2018.

 

On September 4, 2018, the Strategic Committee held a weekly update call with members of TheStreet’s management and representatives of Moelis and Orrick. Representatives of Moelis provided an update on the sale process, including proposals from various parties with respect to an interest in acquiring the B2B Business, or portions thereof, or the B2C Business, with no parties expressing an interest in acquiring the entire company at this time. After Mr. Kramer excused himself from the meeting, the representatives discussed the status of potential bids for the B2C Business, and strategies to continue to keep Company B and Company C engaged in the process and to encourage them to refresh their bids. The Strategic Committee also discussed the recent involvement of Company D in the sales process, the fact that Mr. Cramer was personally acquainted with the principal of Company D and their potential interest in the B2C Business.

 

On September 10, 2018, the Strategic Committee met, with representatives of TheStreet’s management, Moelis and Orrick in attendance, to review the status of indications of interests for both the B2B and B2C Businesses. The Strategic Committee discussed an additional indication of interest received for the B2B Business which was less than the current proposal from Euromoney. After Mr. Kramer was excused from the meeting, the Strategic Committee discussed the renewed engagement of Company C, one of the potential bidders for the B2C Business on whose Board of Directors Mr. Kramer sits. The Strategic Committee determined that Mr. Kramer should no longer attend meetings of the Strategic Committee until such time as Company C discontinues its interest in pursuing the B2C Business. The Strategic Committee also determined that notwithstanding Mr. Kramer’s conflict, that there were good reasons for Mr. Kramer to continue to attend a previously scheduled meeting with Company B the following week, which was scheduled prior to the active interest that Company C began to show for the first time since the Labor Day holiday.

 

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On September 11, 2018, a representative of Company B called a representative of Moelis and confirmed that Company B was only interested in acquiring the premium subscription component of the B2C Business and had no interest in acquiring TheStreet as a whole or the free website. Company B’s representative inquired about the sales process with respect to our B2C Business and expressed an interest in continuing in this process.

 

On September 12, 2018, the Strategic Committee met (with Mr. Kramer not in attendance) with representatives of TheStreet’s management, Moelis and Orrick in attendance, to discuss the upcoming meeting with Company B and the possible and actual conflicts of Mr. Cramer, Mr. Kramer and Mr. Lundberg, and to discuss the advisability of having an independent director attend the meeting. Counsel noted that Mr. Cramer has an interest as to who might acquire the B2C Business and assume his employment agreement. Although Mr. Cramer has expressed no such interest to date, Mr. Cramer also might be viewed as a logical buyer. Mr. Kramer’s conflict arises from his role as a member of the board of directors of one of the potential bidders for the B2C Business (Company C). Mr. Lundberg, an as officer and employee of TheStreet, might be perceived as conflicted since he serves at the pleasure of the Board, two of whose members are Mr. Cramer and Mr. Kramer. As a result of the foregoing, Mr. Rendino, an independent director and Chair of the Strategic Committee agreed to attend the upcoming meeting with Company B. In light of Company B’s continued expression of interest in only certain assets of the B2C Business, and the ongoing active interest by multiple bidders for the B2B Business, the Strategic Committee also discussed potential scenarios for the remaining assets following such asset sales, such as selling the remaining public company “shell” or the use of a liquidating trust, or other means to maximize value for TheStreet stockholders.

 

In response to further inquiries from Company D, a due diligence call was held on September 13, 2018, among representatives of management of TheStreet, including Mr. Lundberg and Ms. de Luna, and representatives of Company D and Moelis.

 

On September 14, 2018, a representative of Moelis spoke with a representative of Company B regarding a meeting scheduled for September 17, 2018 to discuss our B2C Business, which meeting would include members of the Strategic Committee and our management. The representative of Company B said that they were interested in hearing about opportunities and synergies between our B2C Business and one of their business units. This representative also said they would be interested in hearing what value TheStreet.com might provide given their current view that that portion of our B2C Business was not a natural fit. This representative further advised that they would quickly come to a view on whether they are only interested in the premium component of our B2C Business or would have an interest in acquiring the entire B2C Business.

 

On September 17, 2018, Messrs. Rendino, Kramer, Lundberg and Cramer met with representatives of Company B to discuss our B2C Business. On September 18, 2018, representatives of TheStreet, including Mr. Lundberg and Ms. de Luna held a follow up call with representatives of Company B to discuss our B2C Business. Several additional due diligence calls of this kind, as well as a meeting, were held over the next ten days between representatives of TheStreet, including Mr. Lundberg and/or Ms. de Luna, and representatives of Company B.

 

On September 18, 2018, members of the Strategic Committee, excluding Mr. Kramer, met, with representatives of TheStreet’s management, Moelis and Orrick in attendance to receive updates regarding potential bidders in the Project Boulevard process. Mr. Rendino provided an update on the recent meeting with Company B noting that although there was enthusiasm shown by Company B for the B2C Business there was a significant gap in the perceived value of the business. Moelis reported on engagement with Company C noting they expected a written offer to be forthcoming. Moelis also reported on the continuing interest of Company D in our B2C Business.

 

On September 18, 2018, members of the Compensation Committee and the Strategic Committee also jointly met to review the impact of possible transaction scenarios on TheStreet’s equity plans and retention agreements.

 

On September 19, 2018, Company D submitted a non-binding indication of interest to acquire the B2C Business in an asset acquisition transaction for a cash purchase price of $17 million, subject to a working capital adjustment. This non-binding indication of interest indicated that Company D would agree to assume Mr. Cramer’s current employment agreement and required that Mr. Cramer become an employee of the purchaser as a condition to closing.

 

On September 21, 2018, Company C submitted an offer to acquire substantially all of our B2C Business assets for an aggregate purchase price of $20 million to $22 million. Alternatively, the offer noted that they would consider an acquisition of TheStreet as a whole excluding our B2B Business for an aggregate purchase price of $8 million to $10 million, which variance reflected the legal and economic risks perceived by Company C to be associated with acquiring the public entity after TheStreet divested its B2B Business.

 

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On September 24, 2018, TheStreet received an updated indication of interest from Euromoney which reaffirmed its interest in acquiring only the B2B Business at an enterprise valuation of $88.5 million.

 

On September 24, 2018, the Strategic Committee, excluding Mr. Kramer, held an update call with members of TheStreet’s management and representatives of Moelis and Orrick. Representatives of Moelis discussed with the Strategic Committee the non-binding indications of interest submitted by Company C and Company D with respect to the B2C Business. These representatives also advised the Strategic Committee that Company B had informed them that Company B was not yet ready to submit an updated non-binding indication of interest based on the recent meetings and diligence and also confirmed again that they only were interested in acquiring the premium subscription component of our B2C Business. The Strategic Committee also discussed the status of bids for the B2B business.

 

On September 26, 2018, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Moelis and Orrick. Representatives of Moelis reported on a recent conversation with a representative of Company B who stated that Company B’s view of the value of the B2C Business remained unchanged from the non-binding indication of interest Company B submitted on July 16, 2018 and reiterated that Company B was only interested in acquiring the premium subscription business of our B2C Business. Representatives of Moelis also observed that that Company C still had substantial due diligence work left to do as to our B2C Business and our corporate functions before they could provide a more precise value for an acquisition of either our B2C Business or TheStreet as a whole excluding our B2B Business. The members discussed at length strategies for encouraging the bidders for the B2C Business to increase their interest and engagement and the need for management to prepare a business plan for our B2C Business as operated by TheStreet if the B2B Business were to be sold and a similar transaction involving the B2C Business does not occur at this time.

 

On October 3, 2018, Messrs. Rendino and Cramer and representatives of Moelis met with representatives of Company C to discuss the B2C Business.

 

On October 8, 2018, a meeting of the Strategic Committee was held, with representatives of TheStreet’s management, Moelis and Orrick in attendance. A representative from Orrick discussed with the Strategic Committee, among other things, the considerations relating to approving exclusivity with Euromoney for the sale of the B2B Business, the fact that a sale of the B2B Business would constitute a “change of control” for several purposes, including under TheStreet’s employee benefit plans and arrangements and under Mr. Cramer’s employment agreement, which would accelerate all of his unvested restricted stock unit awards, the Board’s fiduciary duties and other legal considerations, an estimated timetable for execution of the sale and the process of dissolution in the event the Company were to sell its B2C Business in addition to the B2B Business in two separate asset transactions.

 

On October 9, 2018, a further meeting of the Strategic Committee was held to evaluate Euromoney’s latest indication of interest and request for exclusivity. During the meeting, representatives of Moelis discussed with the Strategic Committee TheStreet’s five-year projections for TheStreet prepared by TheStreet’s management and certain preliminary financial information, including a discussion of TheStreet and its projections for both the B2B and B2C Businesses together as well as its projections assuming that the B2B Business is sold and that the B2C Business is not sold. Management noted that the projections for the standalone B2C Business assume that Mr. Cramer’s employment agreement is renewed at the end of 2021, when his current agreement expires. TheStreet’s management, representatives of Moelis and the Strategic Committee further discussed the prospects of the B2C Business continuing as a standalone business, including the effect of transaction expenses, restructuring costs and employee-related costs on valuation. The Strategic Committee then discussed Euromoney’s request for four weeks of exclusivity, with representatives of Moelis noting that Euromoney had expressed concern about spending considerable resources in connection with the purchase of the B2B Business in the absence of exclusivity while being aware that TheStreet would be permitted to continue to pursue a sale of the B2C Business. The Strategic Committee also discussed possible strategies for eliciting best and final bids for the B2C business from current bidders. Following discussion, the Strategic Committee concluded that entering into an exclusivity agreement with Euromoney would be in the best interests of TheStreet and its stockholders and recommended that the Board authorize TheStreet to enter into an exclusivity agreement with Euromoney. The Strategic Committee also instructed Moelis to seek refreshed non-binding indications of interest in our B2C Business from Company B, Company C and an initial non-binding indication of interest from Company D.

 

On October 12, 2018, at the direction of the Strategic Committee, Moelis sent bid instruction letters to Company B, Company C, Company D and a fourth company that had recently requested information about the process requesting that they deliver, by October 16, 2018, formal preliminary, non-binding indications of interest to purchase our B2C Business.

 

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On October 16, 2018, TheStreet entered into an exclusivity agreement with Euromoney to sell the B2B Business, which exclusivity agreement expressly preserved TheStreet’s right to simultaneously explore the sale of its B2C Business. For additional information concerning the sale process of the B2B Business, see TheStreet’s Definitive Proxy Statement on Schedule 14A filed with the SEC on January 11, 2019, as supplemented on February 4, 2019, and in particular the “Background of the Sale” included therein, a copy of which may be obtained from the sources listed under the section “Where You Can Find Additional Information” on page 92 of this proxy statement.

 

On October 17, 2018, the Strategic Committee met with representatives of TheStreet’s management, Moelis and Orrick. Mr. Kramer did not attend the meeting. The representatives of Moelis discussed with the Strategic Committee the non-binding indications of interest received in response to the updated bid requests sent out on October 12, 2018 to four parties who had previously expressed an interest in the B2C Business, which request included an October 16, 2018 deadline. Moelis noted that two bidders had provided new indications of interest by the requested deadline. Company B submitted an updated indication of interest to acquire all of the assets primarily related to TheStreet’s premium newsletter business at a purchase price of $12 million and included the following conditions to closing: (i) successful negotiation of employment contracts with key personnel, including Mr. Cramer, (ii) appropriate transition services for a period to be determined, (iii) completion of due diligence, and (iv) acceptable review of the other contemplated assets sale transactions and its retained assets in relation to indemnification for the buyer. Company D submitted a revised indication of interest to acquire the B2C Business in an asset acquisition transaction for a cash purchase price of $22 million (on a cash free, debt free basis and subject to a working capital adjustment), agreed to assume Mr. Cramer’s current employment agreement and required Mr. Cramer to become an employee of the purchaser, requested customary transition services and was subject to ongoing due diligence. Neither Company C, which previously had indicated an interest in the B2C business in the $20 million to $22 million range (and had expressed an interest in acquiring the entire company, other than the B2B Business, for a purchase price of $8 million to $10 million), nor a fourth company which had conducted some limited due diligence, submitted an indication of interest as requested, although Company C had advised Moelis that it would not be able to submit such an indication in line with the timetable set by TheStreet.

 

The Strategic Committee discussed the indications of interest submitted noting that Company D included in its indication of interest a willingness to assume the lease for TheStreet’s headquarter offices at 14 Wall Street (which would entail additional value to TheStreet of approximately $3.6 million) and would also assume Mr. Cramer’s current employment agreement without change (consistent with Mr. Cramer’s expressed preference). The Strategic Committee noted that Company B continued to be interested in only a portion of the B2C Business and that Company C’s previous bid was conditioned among other things, on successful negotiation of an amended employment agreement with Mr. Cramer, which added additional uncertainty in a sale of the B2C Business. The Strategic Committee directed Moelis to encourage Company C to submit an updated indication of interest which should address the treatment of the lease and indicate whether they would assume Mr. Cramer’s existing employment agreement as written. After further discussion, the Strategic Committee directed Orrick to begin preparing a draft exclusivity agreement for submission to Company D assuming authorization by the Board.

 

On October 18, 2018, Ms. de Luna and a representative of Moelis held a call with a representative of Company C to discuss the B2C Business.

 

On October 19, 2018, a representative of Company C informed a representative of Moelis that Company C was not ready to submit an updated bid for our B2C Business and recognized this meant that TheStreet may pursue a transaction with another party.

 

On October 19, 2018, the Strategic Committee met, with representatives of TheStreet’s management, Moelis and Orrick present, to again discuss the non-binding indications of interest from Company B and Company D to acquire our B2C Business and a request by Company D for four weeks of exclusivity. Prior to the meeting, Mr. Cramer requested that Orrick share with the Board (other than Mr. Kramer due to his relationship with Company C) an email which expressed his views on the potential sale of the B2C Business given the potential effect on his employment agreement. Among other things, Mr. Cramer stated in this email that he was not willing to amend the terms of his existing employment agreement now or after the closing of any transaction with any buyer without considering his contractual rights. Mr. Cramer further stated in his email that he had told Company D that he did not presently intend to exercise his rights to terminate his employment agreement if Company D is the ultimate buyer of the B2C business. Mr. Cramer also stated in his email that he had met with representatives of Company C, one of whom said to him that he would like to amend his employment agreement, and Mr. Cramer gave him no assurances he was willing to do so as Company C provided no guidance or comfort to Mr. Cramer on how Company C intended to operate the B2C Business going forward. Mr. Cramer also stated that at no point did he discuss with either bidder anything relating to the consideration they might pay to acquire the B2C Business or the terms of any future arrangements with him, including any

  

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terms of his employment agreement or any amendment to it. Lastly, in his email Mr. Cramer disclosed that he and his wife are close personal acquaintances with the principal of Company D, although they have never done business together. Mr. Cramer further advised the Board that he was available to speak with any of the potential bidders about his current role at TheStreet, his views about its future and his thoughts about his employment agreement with TheStreet in the event of a sale transaction.

 

Representatives from Moelis also notified the Strategic Committee that Company C had informed them that Company C would not submit a revised indication of interest and suggested that Company C would no longer continue to participate in the sale process for the B2C Business. Representatives from Moelis explained that Company C was aware of the Board meeting scheduled and that Company C had willingly missed a deadline set earlier in the week for receipt of revised bids. During the meeting, representatives of Moelis noted that the bid submitted by Company D offered greater value than the bid submitted by Company B. Representatives of Moelis also reviewed in detail with the Strategic Committee the purchase price offered by Company D to acquire our B2C Business and certain financial analyses relating to TheStreet. A representative from Orrick discussed with the Strategic Committee, among other things, considerations related to approving exclusivity with Company D and the Board’s fiduciary duties and other legal considerations. Following discussion, the Strategic Committee concluded that entering into an exclusivity agreement with Company D for the sale of the B2C Business would be in the best interests of TheStreet and its stockholders and recommended that the Board authorize TheStreet to enter into an exclusivity agreement with Company D.

 

On October 19, 2018, the Board held a meeting immediately following the Strategic Committee meeting to consider the non-binding indications of interest from Company B and Company D to acquire our B2C Business and the Strategic Committee’s recommendation to enter into exclusivity with Company D. Mr. Cramer did not attend the meeting due to his previously disclosed potential conflicts of interests with respect to the B2C Business and the email he requested that counsel share with the Board prior to the meeting as described above. At this meeting, representatives of Moelis and Orrick made presentations substantially similar to those that they made to the Strategic Committee. Following discussion, the Board accepted the Strategic Committee’s recommendation and authorized TheStreet to finalize and enter into an exclusivity agreement with Company D for the sale of the B2C Business, which exclusivity agreement was finalized and executed on October 24, 2018. Thereafter, members of TheStreet’s management team and representatives from Moelis met with representatives of Company D to facilitate Company D’s due diligence on the B2C Business.

 

On November 2, 2018, the principal of Company D informed Mr. Rendino that Company D was withdrawing from the process to acquire the B2C Business. The principal of Company D noted in a subsequent conversation with representatives of Moelis that based on additional due diligence, Company D had concluded that they could no longer adhere to the value they had assigned to our B2C Business in their last non-binding indication of interest and were not prepared to assign a new value. The principal indicated that if they did offer a new value, it would be substantially lower than their prior indications of interests.

 

On November 6, 2018, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Moelis and Orrick. The members of the Strategic Committee discussed with representatives of management and TheStreet’s advisors various options for proceeding in light of the withdrawal of Company D from the sale process with respect to the B2C business. After extensive discussion, the Strategic Committee instructed Moelis to contact Company B to gauge their interest in a transaction involving the B2C Business.

 

On November 8, 2018, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Moelis and Orrick. Representatives of Moelis reported on communications with representatives of Company B, and reported that Company B had expressed a willingness to move quickly on a B2C transaction. After discussion by the members of the Strategic Committee with their advisors, the Strategic Committee instructed the representatives of Moelis to request Company B to make a new bid for the premium subscription component of the B2C Business and to apprise Company B that any such bid should offer a “public company style deal” with no post-closing liability for TheStreet or post-closing escrows or indemnities, and that Company B would need to take Mr. Cramer’s employment agreement with TheStreet “as is.”

 

On November 9, 2018, at the direction of the Strategic Committee, representatives of Moelis spoke with a representative of Company B, communicating the Strategic Committee’s message and informed them that TheStreet was no longer in exclusivity with respect to the B2C Business and any interest in a transaction involving the B2C Business should be communicated to representatives of Moelis. Representatives of Moelis and Orrick held a call with representatives of Company B on November 13, 2018 to further discuss the Strategic Committee’s message.

 

On November 30, 2018, Company B submitted to Moelis a non-binding indication of interest to acquire certain assets of our B2C Business, primarily related to the premium subscription business, for $12 million in cash (the same purchase price

 

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as their prior indication of interest on October 16, 2018). The indication of interest requested eight weeks of exclusivity and was conditioned on the successful negotiation of employment contracts with key personnel, including Mr. Cramer, as well as a review of indemnification for the buyer in light of the contemplated transaction involving the sale of the B2B Business to Euromoney which was being negotiated concurrently at this point in time.

 

On December 2, 2018, at the direction of the Strategic Committee, representatives of Moelis spoke with representatives of Company B and communicated the views of the Strategic Committee that exclusivity was not acceptable at this time and suggested instead that TheStreet and Company B should work to agree on and sign a definitive acquisition agreement within the next 7 to 10 days. At this time the Strategic Committee was seeking to be able to announce definitive agreements for the sale of both the B2B Business and the B2C Business at the same time. The representatives of Company B stated that they were unwilling to proceed on that timeline and would no longer have any further discussions concerning our B2C Business.

 

On December 4, 2018, representatives of Moelis spoke with representatives of Company C regarding their interest in our B2C Business, the due diligence work they had performed and still needed to perform and the value that they assigned to our B2C Business. After that conversation, Company C delivered an updated non-binding indication of interest to acquire the assets of the B2C Business for an aggregate purchase price of $14 million to $17 million. Company C indicated they remained open to acquiring the parent entity excluding the B2B Business but would need additional information with respect to corporate overhead, public company costs, severance obligations and other liabilities to assess the legal and economic risks associated with an acquisition of the public entity following the divesture of the B2B Business. The revised proposal also indicated that Company C sought to amend the existing employment agreement of Mr. Cramer to expand the scope of his responsibilities and would also look to extend the agreement to expire four years after a transaction close and adjust Mr. Cramer’s termination right on mutually agreeable terms.

 

On December 4, 2019, the Board approved the definitive purchase agreement with Euromoney to sell the B2B Business. On December 4, 2018, the Compensation Committee of the Board approved the vesting acceleration of all outstanding equity awards effective as of, and contingent upon, the consummation of the sale of the B2B Business, which closed on February 14, 2019. For additional information concerning the B2B sale process, see TheStreet’s Definitive Proxy Statement on Schedule 14A filed with the SEC on January 11, 2019, as supplemented on February 4, 2019, and in particular the “Background of the Sale” included therein, a copy of which may be obtained from the sources listed under the section “Where You Can Find Additional Information” on page 92 of this proxy statement.

 

Following the public announcement of the sale of the B2B Business to Euromoney on December 6, 2018, which announcement also stated that TheStreet was continuing to consider strategic alternatives for its B2C Business, at the direction of the Strategic Committee, Moelis contacted and had discussions with 18 additional parties not previously contacted earlier in the Project Boulevard process. Six of those parties signed NDAs and five were granted access to the data room or met with management. Five of the additional NDAs entered into in the second phase of the sale process included a standstill provision prohibiting the potential bidder, among other things, from offering to purchase shares of or offering to acquire TheStreet for negotiated time periods ranging from one year to two years, except when invited by TheStreet to do so in accordance with bid procedures established by TheStreet. The standstill included in one of these NDAs terminated upon the public announcement of the Merger Agreement on June 12, 2019. Four of the NDAs included a “no-ask, no-waiver” provision stating that a potential bidder was not permitted to ask for a waiver of the standstill, none of which provisions terminated upon the public announcement of the Merger Agreement.

 

Representatives of Moelis also continued to engage with Company A, Company B and Company C at the direction of the Strategic Committee.

 

On December 10, 2018, Mr. Rendino received a call from John Fichthorn, Head of B. Riley Alternatives (“B Riley”), a division of B. Riley Capital Management, LLC, and Chairman of Maven, inquiring about the B2C Business and ongoing B2C Business sale process. Mr. Rendino directed Mr. Fichthorn to contact representatives of Moelis if Maven wished to enter into an NDA and receive confidential information about our B2C Business.

 

On December 10, 2019 the Strategic Committee met to review the B2C Business sale process and to review previous discussions held with companies to date and to explore how the pool of potential bidders could be expanded in light of the fact that a definitive agreement for the sale of the B2B Business had been entered into which should simplify the sale of all of the TheStreet’s common stock with only a single operating segment remaining.

  

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On December 13, 2018, at a regularly scheduled quarterly Board meeting, the Board discussed the ongoing plan to operate the B2C Business as standalone business and discussed the ongoing sale process.

 

On December 18, 2018, at the direction of the Strategic Committee, a representative of Moelis reached out to a representative of Company A suggesting a call to reconnect on their potential interest in the B2C Business in light of the pending sale of the B2B Business.

 

On January 3, 2019, representatives of TheStreet’s management team, including Ms. de Luna, Mr. Lundberg and Mr. Cramer, together with representatives from Moelis met with representatives of Company C to provide an update on the performance of the B2C Business and an overview of TheStreet’s business initiatives and budget plans for the 2019 fiscal year. Later in the evening, TheStreet’s management team attended a dinner with these representatives to further discuss strategic opportunities for the combined business. On January 7, 2019, discussions among the parties continued with respect to the performance of the B2C Business and potential synergies resulting from a business combination.

 

On January 7, 2019, members of the Strategic Committee held a regularly scheduled weekly update call with TheStreet’s senior management team and representatives from Moelis and Orrick to provide an update on the status of the sale of the B2B Business to Euromoney and to review the ongoing process with respect to strategic options for the B2C Business. Mr. Kramer was not invited to attend the call as the ongoing engagement with Company C would be discussed. Management provided an update on the recent meetings with Company C. Representatives from Moelis also provided an update on outreach and conversations with additional parties contacted to elicit their possible interest in the B2C Business.

 

On January 8, 2019, Mr. Fichthorn had a call with Mr. Rendino and Mr. Lundberg and a call with representatives from Moelis to discuss a possible interest in pursuing a strategic combination of Maven with TheStreet. Mr. Fichthorn indicated that B Riley had recently made a significant investment in Maven. Mr. Fichthorn stated that a potential transaction between TheStreet and Maven might be worth exploring and offered to set up additional meetings with the CEO of Maven as a next step. The representatives discussed next steps and agreed to schedule additional calls between TheStreet’s management and representatives of Maven.

 

On January 9, 2019, the Compensation Committee of the Board met to review and consider a broad-based retention program for employees of the ongoing B2C Business in light of the pending completion of the sale of the B2B Business to Euromoney. Euromoney had agreed to hire substantially all of the employees primarily associated with the B2B Business which would result in the departure of a significant number of employees from TheStreet’s headquarter offices in New York. The Compensation Committee expressed concern about the negative impact of these events on employee morale, particularly in light of the ongoing strategic process with respect to the B2C Business which had been publicly disclosed and the potential uncertainty of continued long-term employment by TheStreet while the process continued.

 

On January 14, 2019, a representative of Company A reached out to Moelis for an update on the performance of B2C Business and indicated that Company A would follow up to discuss next steps.

 

On January 14 and January 22, 2019, members of the Strategic Committee held regularly scheduled weekly calls with TheStreet’s senior management team and representatives from Moelis and Orrick to provide updates on the ongoing strategic process with respect to the B2C Business. Mr. Kramer was not invited to attend these calls as the ongoing engagement with Company C would be discussed. Representatives from Moelis provided an update on active discussions with parties interested in the B2C Business.

 

On January 23, 2019, B. Riley Financial, Inc., together with affiliates, filed a Schedule 13G beneficial ownership report with the SEC reporting that they had acquired shares of TheStreet common stock representing approximately 7.32% of the outstanding shares of TheStreet.

 

On January 28, 2019, TheStreet and Maven entered into an NDA which did not include a standstill provision.

 

On January 30, 2019, Mr. Lundberg and Ms. de Luna held a meeting with representatives of Moelis and Maven to discuss the recent performance of the B2C Business. On January 30, 2019, members of the Strategic Committee held a regularly scheduled weekly call with TheStreet’s senior management team and representatives from Moelis and Orrick to provide an update on the ongoing strategic process with respect to the B2C Business. Representatives from Moelis provided an update on active discussions with parties interested in the B2C Business. Later that evening, Mr. Lundberg, Ms. de Luna and Mr. Cramer attended a dinner with representatives from Maven to further discuss the possibility of a strategic transaction between Maven and TheStreet.

  

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On February 3, 2019, representatives from TheStreet, Maven and Moelis held a call to further discuss Maven’s interest in acquiring the B2C Business and next steps with respect to Maven’s due diligence process.

 

On February 4, 2019, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Moelis and Orrick. Mr. Cramer participated in the update call by invitation of the Strategic Committee. Members of TheStreet’s management reported on recent developments during meetings with representatives of Maven. At this time, Mr. Rendino also informed the members of the Strategic Committee that Moelis had advised him that they had been engaged by an entity that had made an unsolicited offer to acquire Company C and therefore in light of resulting potential conflicts Mr. Rendino would take on direct engagement with the representatives of Company C with respect to their ongoing interest in pursuing a transaction with TheStreet.

 

On February 5, 2019, representatives of Maven, Moelis and TheStreet’s management held a call to discuss in detail the B2C subscription business and potential synergies in the event of a strategic acquisition.

 

On February 9, 2019 and February 10, 2019, Mr. Lundberg spoke with Mr. James Heckman, CEO of Maven, to discuss Maven’s operating model for a combined company and compensation incentives for the management team of the B2C Business.

 

On various occasions throughout the week of February 11, 2019, Mr. Lundberg spoke by phone with representatives of Maven to discuss their financial projections for a combined company reflecting Maven’s acquisition of the B2C Business.

 

On February 11, 2019, the Board held a regularly scheduled quarterly meeting which included an update on the pending completion of the sale of the B2B Business, which was expected to close later in the week, as well as an update on the B2C Business strategic process. Mr. Rendino as Chair of the Strategic Committee reported that a limited number of communications with potential bidders for the B2C Business were ongoing and he provided an update on the status of each of them. The Board also reviewed the standalone business plan for the B2C Business following the sale of the B2B Business and the related long-term financial model and noted that TheStreet’s ongoing costs as a public company would not be reduced by an equivalent percentage to the reduction in TheStreet’s revenue due to such sale. The Board also discussed the expected amount of the potential distribution to be made to TheStreet stockholders from the net proceeds from the sale of the B2B Business and cash on hand.

 

On February 12, 2019, TheStreet stockholders approved the sale of the B2B Business to Euromoney for $87.3 million, which sale closed on February 14, 2019. This amount included approximately $0.6 million which was placed in escrow to secure purchase price adjustment payments, if any, and as security for the performance of TheStreet’s tax indemnification obligations to Euromoney, which escrow is currently set to be released after January 31, 2020, subject to any indemnification claim made by Euromoney.

 

Following the sale of the B2B Business, the continuing operations of TheStreet consisted of solely the B2C Business.

 

On February 14, 2019 and February 15, 2019, members of TheStreet’s management spoke with representatives of Maven to review in detail Maven’s operating model for a combined company and to discuss the combined operating expenses of such combined company and the potential for various revenue streams.

 

On February 19, 2019, members of TheStreet’s management spoke with representatives of Maven, who indicated that Maven remained interested in acquiring the B2C Business and would continue to pursue a transaction with the Company in the event Mr. Cramer chose to terminate his employment after the sale.

 

On February 19, 2019, the Strategic Committee held a meeting with members of TheStreet’s management and representatives of Moelis and Orrick participating to discuss recent developments with respect to the ongoing strategic process for the B2C Business. Representatives of Moelis reviewed its discussions with Maven regarding a possible transaction in which Maven indicated a willingness to acquire all of the outstanding stock of TheStreet while allowing TheStreet to distribute its excess cash to its stockholders. The Strategic Committee also discussed whether Company B might be engaged to reopen discussions with respect to their previous interest in a portion of the B2C Business. After discussion among the members, the Strategic Committee instructed Moelis to assess whether Company B might still have an interest in the B2C Business and to seek clarification from Maven about certain aspects of its expressed interest. After representatives from Moelis and Mr. Kramer excused themselves from the meeting, the Strategic Committee also received an update on the potential ongoing interest of Company C in the B2C Business.

 

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On February 25, 2019, Mr. Cramer shared with the Board and management of TheStreet a memorandum collecting and summarizing publicly available information about Maven and its principal executives in advance of additional meetings with Maven scheduled for later in the day. On February 25, 2019, Mr. Rendino, Mr. Cramer and members of TheStreet’s management team, including Mr. Lundberg and Ms. de Luna, met with representatives of Moelis and Maven to discuss a potential strategic transaction.

 

On February 28, 2019, representatives of Maven shared with representatives of TheStreet a talking points memorandum for further discussion purposes which summarized a potential commercial agreement as well as a separate potential stock-for-stock merger transaction which would combine Maven and TheStreet.

 

Following Mr. Zacharias’s resignation from the Board of Directors on March 2, 2019, the Board of Directors appointed Sarah Fay to the Strategic Committee on March 11, 2019.

 

On March 4, 2019, members of TheStreet’s management and representatives of Moelis spoke with representatives of Maven to discuss Maven’s interest in a strategic transaction with TheStreet.

 

On March 5, 2019, at the request of members of management of TheStreet, representatives of Moelis reached out to a leading private equity firm that had recently participated in the acquisition of a financial media company on behalf of one of their portfolio companies, which we refer to as Company E, with regard to their possible interest in an acquisition of TheStreet and/or the B2C Business and to suggest that Company E enter into an NDA so that Company E could receive confidential information about our B2C Business.

 

On March 6, 2019, representatives of Moelis received a written proposal from Maven to acquire TheStreet in an all cash transaction with an enterprise value of $10 million, less $3 million for working capital and the to-be-confirmed cost of buyer-side representation and warranty insurance.

  

On March 11, 2019, the Board held a meeting with members of TheStreet’s management and representatives of Moelis and Orrick in attendance. Representatives of Moelis provided an update on their work and reviewed a list of potential strategic acquirers and potential financial sponsors to be contacted. Members of the Board observed that the purchase price as proposed by Maven did not adequately capture the value of the B2C Business. Representatives of Moelis were instructed to communicate this message and to seek clarification on certain aspects of Maven’s bid.

 

On March 11, 2019, Company E informed Moelis of its interest in scheduling a meeting with TheStreet’s management to discuss, among other things, the growth of the subscription business and Mr. Cramer’s role and responsibilities with respect to the B2C Business.

 

On March 13, 2019, Maven informed representatives of Moelis that it would remain interested in pursuing a strategic acquisition with TheStreet even if Mr. Cramer chose to terminate his employment agreement after the sale.

 

On March 13, 2019, TheStreet entered into an NDA with the financial sponsor of Company E which included a two-year standstill and a “no-ask, no waiver” provision.

 

On March 15, 2019, TheStreet received a revised non-binding indication of interest from Maven with an enterprise value of $12 million, less $2 million in the event Mr. Cramer terminated his employment agreement with TheStreet and less the to-be-confirmed cost of buyer-side representation and warranty insurance. The indication of interest indicated that Maven would provide a “highly confident” letter from B Riley with respect to providing financing for the transaction and ongoing working capital following an acquisition. The Strategic Committee held an update call the same day with members of TheStreet’s management and representatives of Orrick to discuss the revised non-binding indication of interest. The Strategic Committee instructed Orrick to review the term sheet received from Golenbock Eiseman Assor Bell & Peskoe LLP (“Golenbock”), counsel to Maven.

 

On March 26, 2019, TheStreet’s management held a meeting with representatives of Moelis and Maven to discuss Maven’s proposed acquisition of TheStreet.

 

On March 27, 2019, representatives of Moelis, at the direction of TheStreet, communicated to Maven that receipt of the previously mentioned highly confident letter from B Riley referred to in the most recent indication of interest from Maven would be a condition to entering into exclusivity agreement with Maven.

 

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On March 29, 2019, Mr. Lundberg and Jared Verteramo, TheStreet’s General Counsel, held an introductory call with the Chairman of Company E to further explore their interest in the B2C Business.

 

On March 30, 2019, representatives of Moelis received a revised indication of interest from Maven which reflected an acquisition of all the equity interests of TheStreet for aggregate cash consideration of $12 million, which consideration would remain unchanged in the event Mr. Cramer chose not to continue his employment in connection with the transaction. Representatives of Moelis also received a highly confident letter dated March 29, 2019 addressed to Maven and TheStreet and signed by B Riley which indicated that B Riley was highly confident of its ability to underwrite, arrange and/or place the financing that would be necessary for Maven to acquire all of the issued and outstanding capital stock of TheStreet, pay Maven’s costs and expenses incurred in connection with the acquisition and to provide for the ongoing working capital needs and other general corporate requirements of Maven and its subsidiaries after giving effect to the acquisition.

 

On April 1, 2019, the Board held a meeting to receive updates on the sale process and to review and approve a special cash distribution of approximately $94.3 million, or $1.77 per share, to TheStreet stockholders to distribute substantially all of the proceeds of the sale of the B2B Business and cash on hand, while also retaining sufficient capital to operate the B2C Business as a standalone company for the next several years. On April 3, 2019, TheStreet announced that the Board had declared the special cash distribution. In connection with the special cash distribution, the Board also approved a 1-for-10 reverse stock split of TheStreet common stock, which was effected on April 26, 2019.

 

On April 3, 2019, Company E received preliminary financial analyses prepared by TheStreet’s management and began undertaking due diligence and were provided access to the data room. TheStreet’s management and representatives of Moelis held a call with Company E to discuss the performance of the B2C Business and the possibility of a strategic transaction.

 

On April 8, 2019, members of the Strategic Committee held a regularly scheduled weekly update call with TheStreet’s senior management team and representatives from Moelis and Orrick to provide an update on the ongoing sales process with respect to the B2C Business. Representatives from Moelis provided an update on discussions with Maven and discussions with Company E. Mr. Lundberg reported that he had spoken with a representative of Company B to discuss their previous bid of $12 million which was only for a portion of the B2C subscription products. Company B indicated that they would honor their previous indication of interest for certain of the premium subscription assets but that they were not inclined to increase the purchase price even when advised that higher bids had been received. The Strategic Committee directed Moelis to continue to engage in discussions with Maven and Company E to explore the best terms for the sale of TheStreet.

 

On April 8, 2019, representatives from TheStreet, Moelis and Orrick participated in a conference call with representatives from Maven and Golenbock to further discuss the key terms of a potential transaction with Maven which included their confirmation that they would place the aggregate merger consideration to be provided by B Riley in escrow in connection with signing a definitive agreement. On this call, representatives of Maven noted that obtaining voting agreements from at least two existing stockholders of TheStreet would be a condition to a transaction and shared their views on the period of time Maven would need for exclusivity based on other transactions they were considering.

 

On April 9, 2019, TheStreet received a revised term sheet and non-binding indication of interest from Maven which provided for an acquisition of all the outstanding stock of TheStreet pursuant to a merger, for aggregate cash consideration of $12 million. It reflected that B Riley would undertake to guarantee sufficient capital to fund the transaction on Maven’s behalf. The term sheet provided that TheStreet would be able to pay a dividend to its stockholders in amount equal to its cash balance after a provision for certain excluded liabilities and included provisions for certain cash holdbacks associated with the escrows from the Prior Transactions.

 

On April 9, 2019, representatives from TheStreet, Moelis and Orrick participated in a conference call with representatives from Maven and Golenbock to further discuss the key terms of a potential transaction with Maven and to respond to the issues raised in the call the previous day and provide counter-proposals.

 

On April 9, 2019, representatives of Orrick participated in a call with counsel for Mr. Cramer to provide an update on the various sale transactions being considered by the Strategic Committee and noted that neither the Strategic Committee nor the Board had made a decision to enter into exclusivity with any party and therefore TheStreet was not prepared to provide Mr. Cramer a potential transaction notice under his employment agreement at this time. Pursuant to the terms of Mr. Cramer’s employment agreement, Mr. Cramer has the right to terminate his employment agreement for “good reason” following a change of control transaction under certain circumstances.

 

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On April 10, 2019, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Orrick and Moelis to discuss recent developments with respect to the ongoing sale process. Representatives of Moelis reported that TheStreet had received a non-binding indication of interest from Company E, with an enterprise value of $15 million, with a deduction of $2.5 million for certain restructuring and other costs, resulting in an adjusted enterprise value of $12.5 million, together with cash on hand resulting in an illustrative equity value with a range of $30 million to $33 million. The offer was subject to due diligence and conditional on Mr. Cramer’s continued employment with TheStreet and requested six weeks of exclusivity. Representatives of Moelis also reviewed in depth the revised term sheet and non-binding indication of interest previously received from Maven and subsequent calls among the principals. The Strategic Committee directed the Moelis representatives to seek clarification from Maven with respect to certain aspects of its revised indication of interest and to continue discussions with Company E regarding their preliminary offer.

 

On April 12, 2019, the Strategic Committee held an update call with members of TheStreet’s management and representatives of Orrick and Moelis to discuss the status of the ongoing sale process. Representatives of Moelis provided an update on their work and reviewed the bids previously received from potential strategic acquirers and financial sponsors, including Maven and Company E. Representatives of Moelis reviewed and compared the most recent bids from Maven and Company E noting the differences in the transaction structure of the two deals, the difference in terms with respect to the treatment of Mr. Cramer’s employment relationship and other material terms.

 

On April 14, 2019, Mr. Lundberg spoke with the Chief Executive Officer of Company E and indicated that TheStreet would be willing to consider a proposal with an increased enterprise value of $20 million and an initial 30-day exclusivity period.

 

On April 14, 2019, following the exchange of various drafts of the term sheet and exclusivity agreement, Maven sent an updated offer confirming adjustments in certain deal terms to their previous term sheet, including an increase in the aggregate purchase price from $12 million to $14 million, included a material adverse change condition with respect to potential actions by Mr. Cramer, reiterated there would be no financing contingency based on the previously provided highly confident letter from B Riley, and included their interpretation of Mr. Cramer’s employment agreement. Maven also delivered a letter addressed to Mr. Cramer stating their interpretation of his employment agreement assuming actions taken by TheStreet and reaffirming their willingness to employ Mr. Cramer subject to the conditions included in the letter, which included the delivery of an irrevocable proxy to vote his shares in support of a transaction with Maven and offering to waive certain restrictions in his employment agreement following the closing of an acquisition by Maven if Mr. Cramer was willing to assist in the negotiation of certain strategic relationships with TheStreet and a third party. Mr. Verteramo promptly contacted the General Counsel of Maven to confirm receipt of the letters and to also advise Maven that their assumptions with respect to actions taken by TheStreet under Mr. Cramer’s employment agreement were incorrect and provided them with contact information for Mr. Cramer’s counsel should Maven wish to engage in a dialogue with respect to employment terms for Mr. Cramer in connection with a transaction.

 

On April 17, 2019, representatives from Moelis provided the Strategic Committee with an update on their ongoing communications with representatives of Maven, which included a discussion of key open items on the material terms of a proposed transaction and related matters. Later in the evening on April 17, 2019, Mr. Verteramo sent to the General Counsel of Maven a summary of the key required changes to the comments from Golenbock on the draft merger agreement markup received from Maven earlier in the day, together with a revised exclusivity agreement and term sheet dated April 18, 2019 which provided for exclusivity through April 25, 2019 and noted that TheStreet’s Board would be meeting on the evening of April 18, 2019 to seek approval of the exclusivity agreement and term sheet. Mr. Verteramo also provided clarification with respect to the terms of Mr. Cramer’s employment agreement and again confirmed what had previously been communicated to Maven that TheStreet had not yet provided a potential transaction notice to Mr. Cramer pursuant to Section 4(d) of his employment agreement but was prepared to do so once the exclusivity agreement was signed, and reiterated the Strategic Committee’s previous position that a buyer of the B2C Business should be prepared to assume the employment agreement as written, so that no key employee would be a condition to signing a definitive agreement or to closing a sale transaction.

 

On April 18, 2019, Company E sent an updated indication of interest to their offer letter of April 10, 2019, indicating a revised preliminary offer to acquire all of the equity interests of TheStreet for a total enterprise value of $17 million, on a cash-free, debt-free basis and with a normal level of working capital, subject to a $2.5 million adjustment for debt like items. Company E’s updated indication of interest also confirmed that its representatives had reviewed the existing employment agreement of Mr. Cramer and would be prepared to continue to operate the business with the current agreement remaining in place. Company E’s letter confirmed it was willing to complete its remaining due diligence quickly and requested a six-week period of exclusivity to negotiate definitive agreements.

 

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On April 18, 2019, the Board meet with members of TheStreet’s management and representatives of Moelis and Orrick to review the sale process. Representatives of Moelis reported that a revised indication of interest had been received from Company E and that due diligence undertakings were underway. They reviewed the current terms of the indication of interest and resulting potential proceeds to the stockholders of TheStreet and other material terms of the proposed transaction. Representatives of Moelis then provided an update to the Board on communications with Maven and noted that the key terms had continued to improve, with an increase in price, an agreement to place the merger consideration into escrow at signing, but that Maven was also requiring that TheStreet offer exclusivity. Representatives from Orrick reported on an issues list with respect to the merger agreement, term sheet and a revised proposal regarding exclusivity that had been sent to Maven and their counsel on April 17, 2019, and that comments to these documents were requested of Maven prior to the Board meeting. The advisors reported that Maven did not communicate with Moelis, Orrick or TheStreet following the delivery of the documents which included a notification of TheStreet’s Board meeting. The Board directed its advisors to continue to work on the proposals with Maven and Company E. The Board also approved the engagement of Lake Street as financial advisor to TheStreet to render a fairness opinion in connection with the sale of all the equity securities of TheStreet or a sale of all or a portion of the assets of TheStreet, and following the meeting an engagement letter was signed.

 

Subsequent to the Board meeting, on April 19, 2019, TheStreet received a letter from Maven indicating that it was withdrawing its previous offer and indicating that it was no longer interested in acquiring TheStreet.

 

On April 21, 2019, the Board held a meeting with TheStreet’s management and representatives of Moelis and Orrick to discuss Company E’s revised indication of interest and request for exclusivity which included a verbal agreement to increase its enterprise value to $20 million ($17.5 million net of restructuring and other costs) and an initial exclusivity period of four weeks. The Board directed Moelis to indicate to Company E that TheStreet was prepared to move forward with exclusivity and directed Orrick to prepare an exclusivity agreement and negotiate it with Company E.

 

On April 23, 2019 the Strategic Committee held a meeting with TheStreet’s management and representatives of Moelis and Orrick. Representatives of Moelis reported that Company E had submitted an indication of interest with a non-binding valuation of TheStreet at $17.5 million (enterprise value of $20.0 million, less $2.5 million in adjustments for excess space, restructuring and severance costs), which would be increased by the amount of TheStreet’s cash on hand, and was requesting four weeks of exclusivity. The Strategic Committee discussed the possibility of entering into an exclusivity agreement with Company E. The representatives of Moelis updated the members of the Strategic Committee on their outreach efforts and the indications of interest received to date, noting that they had contacted approximately 100 parties since the launch of the process and currently had only received two indicative proposals for the B2C Business that remained outstanding. Company B had previously expressed an interest in acquiring the premium subscription business of the B2C Business for a purchase price of $12 million but had not been willing to increase their offer. After further discussion, the Strategic Committee recommended that the Board approve four weeks of exclusivity with Company E.

 

On April 23, 2019, the Board held a meeting to consider Company E’s latest indication of interest and the Strategic Committee’s recommendation to enter into exclusivity with Company E. Representatives of TheStreet’s management, Moelis and Orrick were in attendance. At this meeting, representatives of Moelis and Orrick made presentations substantially similar to those they made to the Strategic Committee. Following discussion, the Board accepted the Strategic Committee’s recommendation and authorized TheStreet to finalize and enter into an exclusivity agreement with Company E.

 

On April 24, 2019, TheStreet entered into an exclusivity agreement with Company E, which included a confidential non-binding term sheet. The exclusivity agreement required that TheStreet cease all current discussions with anyone other than Company E and prohibited TheStreet from soliciting, providing information to or negotiating with other potential buyers of the B2C Business for a period that would extend to May 24, 2019, which could be extended until June 1, 2019 if Company E was continuing to pursue the transaction and confirmed in writing that the consideration and other material terms set forth in the proposed terms had not changed. Later that same day, representatives from Orrick held an initial call with counsel for Company E to discuss the transaction structure, transaction documents, timetable and other matters.

 

On April 25, 2019, counsel for TheStreet delivered a potential transaction notice to Mr. Cramer pursuant to Section 4(d) of his employment agreement formally notifying Mr. Cramer that TheStreet was pursuing a transaction as outlined in the April 24, 2019 exclusivity agreement entered into with Company E. This was the first such notice provided to Mr. Cramer under Section 4(d) of his employment agreement since the commencement of the sale process in 2018.

 

Between April 25, 2019 and through May 24, 2019, members of TheStreet’s management team continued to respond to due diligence requests and attend diligence meetings with representatives from Company E and their financial sponsor.

 

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On May 6, 2019, the Board held a meeting with TheStreet’s management and representatives of Orrick and Moelis in attendance. TheStreet’s management reported on due diligence meetings held the week of April 29, 2019 with representatives of Company E and Moelis and that were continuing. Management also reported on the first quarter financial results for the B2C Business.

 

On May 7, 2019, Orrick delivered drafts of the transaction documents to counsel for Company E. Members of TheStreet’s management team continued to meet with representatives from Company E and their financial sponsor to conduct further due diligence and coordinate various diligence calls and meetings over the next several weeks.

 

On May 22, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis to discuss recent developments with respect to the ongoing sale process. Representatives of Moelis provided an update on calls with representatives of Company E who relayed that after several weeks of diligence they had confirmed the strength of the management team of TheStreet but were no longer willing to pursue a transaction for all of the outstanding equity interests of TheStreet on the terms set forth on the term sheet attached to the exclusivity agreement dated April 24, 2019. The representatives noted that Company E may be interested in pursuing a transaction involving the assets of the B2C Business in light of concerns they had with the merger structure contemplated by the term sheet. Following discussion, the Strategic Committee directed Moelis to convey to Company E that TheStreet would consider such a proposal, but that it should be in writing and specify what assets they would be willing to acquire and set forth the proposed purchase price and other material terms.

 

On May 23, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick, Moelis and Lake Street to discuss the status of the sale of the company. Representatives of Lake Street reviewed a preliminary valuation analysis based on management projections for the current B2C Business through 2022 and provided summary valuation observations, both on an enterprise value basis for the B2C Business and on a per share equity value basis with certain assumptions with respect to cash upon closing as well as potential cash to be received in the future by TheStreet stockholders following the release of escrows associated with the Prior Transactions.

 

On May 24, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis to discuss the sale process. Representatives of Moelis noted that they had yet to receive an alternative proposal for an asset transaction from Company E and that no further communications had been received from Company E. The Strategic Committee also observed that exclusivity with Company E would expire shortly.

 

On May 28, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis to discuss next steps with respect to the sale process following the expiration of exclusivity with Company E. Representatives of Moelis noted that the Board of Directors of Company E, including their financial sponsor, would be meeting in New York that week to further discuss their possible interest in submitting a revised proposal to TheStreet.

 

On May 30, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis to review and discuss revised indications of interest received from Company E and Maven earlier that day. Company E had submitted a revised proposal to acquire certain assets of TheStreet for $15 million, which would leave TheStreet with significant costs and liabilities associated with the winddown of a public company. Representatives of Moelis reported that they had participated in a call earlier in the day with Mr. Lundberg and representatives of Company E to discuss the revised proposal and had explained to Company E that their proposal not only reduced value but involved TST bearing additional costs of winding down the public entity which costs would be significant. Company E was asked whether they would reconsider submitting an offer to acquire the entire company and they indicated they were not prepared to do so, and if they did the aggregate purchase price would be substantially less than $15 million.

 

On May 30, 2019, Maven confirmed a renewed interest in engaging with TheStreet and submitted a revised proposal to acquire all the equity interests of TheStreet in a cash merger transaction for aggregate merger consideration of $14 million, which transaction would also allow TheStreet to distribute its excess cash to stockholders immediately prior to the merger and include a structure where cash held in escrow based on the Prior Transactions would be paid to TheStreet stockholders using a contingent value rights (“CVR”) structure. The proposal included comments from Maven on a draft merger agreement that had been sent to them in April during the prior discussion, included a commitment to deposit the full purchase price in escrow upon the execution of the merger agreement and included a proposal to, upon the closing of an acquisition, enter into an amendment to the current employment agreement with Mr. Cramer to provide that Mr. Cramer could retain the right to terminate his employment agreement with “good reason” within 90 days following the closing of an acquisition (Mr. Cramer’s current employment agreement provides for 30 days).

 

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The Strategic Committee instructed representatives of Moelis to follow up with Company E and asked representatives of Orrick and Mr. Verteramo to follow up with legal counsel for Maven.

 

On May 31, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis. Representatives of Orrick reported on a call with Golenbock with respect to questions raised on their revised proposal. The Strategic Committee instructed management and representatives of Orrick to move forward with pursuing a potential transaction with Maven. On May 31, 2019, TheStreet informed Company E that it would not be proceeding with their revised proposal.

 

On June 2, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis to discuss the timing of the Strategic Committee’s response to Maven’s proposal and additional communications among the principals.

 

On June 3, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis. Representatives of Moelis reported that a revised draft of the merger agreement had been sent to Maven. The Strategic Committee also discussed the current financial terms of the transaction, including the proposed amount of consideration to be received by TheStreet stockholders from the merger consideration, the expected cash distribution, as well as the potential value of the CVR to be issued with respect to cash in escrow from the Prior Transactions.

 

On June 3, 2019, Orrick distributed a revised draft of the merger agreement, escrow agreement and related agreements to counsel for Maven.

 

On June 5, 2019, the Strategic Committee held an update call with TheStreet’s management and representatives of Orrick and Moelis to discuss the proposed transaction with Maven. Mr. Lundberg reported on his call with Mr. Heckman with respect to areas of concern, including a request that Mr. Lundberg and Ms. de Luna remain with TheStreet following an acquisition to assist with transition matters. Representatives from Moelis updated the Strategic Committee on their communications with Maven which confirmed that Maven was prepared to increase the merger consideration to $16.5 million. The Strategic Committee also discussed the current financial terms of the transaction, including the proposed amount of consideration to be received by TheStreet stockholders from the merger consideration, the expected cash distribution, as well as the potential value of the CVRs to be issued with respect to cash in escrow from the Prior Transactions.

 

On June 6, 2019, the Compensation Committee of TheStreet met to consider the terms requested by Mr. Lundberg and Ms. de Luna in exchange for their respective commitments to remain employed by TheStreet for at least three months following the closing of a transaction with Maven and the Compensation Committee approved amendments to their current employment, retention and severance arrangements.

 

On June 6, 2019, representatives of Orrick held a call with representatives of Maven and Golenbock to discuss open points on the merger agreement and the excluded liabilities schedule.

 

On June 7, 2019, members of the Strategic Committee participated in a call with representatives from Moelis and Orrick to receive further updates on the status of open business and legal points on the transaction documents.

 

On June 7, 2019, Maven delivered an updated letter addressed to TheStreet confirming that B Riley was highly confident in its ability to underwrite, arrange and/or place financing sufficient to provide Maven, as of the date of the merger agreement and following the closing of the merger, with sufficient funds to pay the merger consideration and operate the combined businesses.

 

Between June 1, 2019 and June 9, 2019, management and employees of TheStreet gathered due diligence information requested by Maven and its representatives and advisors and held several telephone conferences with Maven and its representatives and advisors regarding due diligence matters.

 

Between June 3, 2019 and June 9, 2019, representatives of Orrick and Golenbock exchanged additional drafts of the merger agreement, escrow agreement and CVR agreement and held telephone discussions both with and without representatives of TheStreet and Maven to finalize the merger agreement, ancillary documents and disclosure schedules.

 

On June 9, 2019, a joint meeting of the Strategic Committee and Board was held, with representatives of TheStreet’s management, Moelis, Lake Street and Orrick present, for purposes of updating the Strategic Committee and Board on the status of the final open points and other issues relating to the sale of TheStreet and voting on the transactions related thereto. Representatives of Orrick summarized key changes to the terms of the merger agreement since the prior meeting. Also, at this

 

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meeting, representatives of Moelis reviewed with the Board of Directors the extensive sale process undertaken by TheStreet. Lake Street then reviewed with the Board their presentation and financial analysis regarding the valuation of the B2C Business and the consideration to be received in the merger. Lake Street then rendered its oral opinion to the Board of Directors, which opinion was subsequently confirmed by delivery of a written opinion, dated June 9, 2019, addressed to the Board of Directors to the effect that, as of the date of the opinion and based upon and subject to the conditions and limitations set forth in the opinion, the cash consideration and CVRs to be paid in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the holders of TheStreet common stock. For more information about Lake Street’s analysis and opinion, see the section of this proxy statement captioned “—Opinion of Lake Street Capital Markets, LLC.” After further discussion, the Strategic Committee unanimously recommended the approval of the Merger to the Board, and the Board, by a vote of six to one (a) determined that it is fair and in the best interests of TheStreet and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; (b) approved the execution and delivery of the Merger Agreement by TheStreet, the performance by TheStreet of its covenants and other obligations under the Merger Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; and (c) resolved to recommend that TheStreet stockholders adopt the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL. Mr. Cramer voted against the Merger and did not provide the Board with any reasons for his vote.

 

On June 9, 2019, following approval of the Merger Agreement by TheStreet’s Board of Directors, TheStreet provided a potential transaction notice to Mr. Cramer pursuant to the terms of his employment agreement that stated that TheStreet plans to pursue a potential transaction with Maven on terms discussed at the Board meeting held on that date. On June 11, 2019, Mr. Cramer responded to the notice, informing TheStreet of his intention to terminate the employment agreement within thirty (30) days of consummation of the Merger. The continued employment of Mr. Cramer is not a closing condition to the Merger nor may Maven terminate the Merger Agreement due to the termination of Mr. Cramer’s employment for any reason.

 

On June 10, 2019, B Riley, on behalf of Maven, wired to a designated escrow account established by TheStreet, the cash portion of the Merger Consideration in an aggregate amount of $16.5 million to be held in escrow pursuant to the terms of the Escrow Agreement.

 

On June 11, 2019, TheStreet and Maven executed and delivered the Merger Agreement, and both parties issued press releases announcing their entry into the Merger Agreement.

 

Recommendation of the Board of Directors and its Reasons for the Merger

 

Recommendation of the Board of Directors

 

The Board of Directors, with the assistance of TheStreet’s outside legal counsel and financial advisors, evaluated the terms of the Merger Agreement and the Merger. After careful consideration, our Board of Directors, in a meeting held on June 9, 2019, by a vote of six to one, (i) determined that it is fair and in the best interests of TheStreet and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; (ii) approved the execution and delivery of the Merger Agreement by TheStreet, the performance by TheStreet of its covenants and other obligations under the Merger Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in the Merger Agreement; and (iii) resolved to recommend that TheStreet stockholders adopt the Merger Agreement, and thereby approve the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL. Mr. Cramer voted against the matters above and did not provide the Board with any reasons for doing so.

 

Our Board of Directors recommends that you vote: (1) “FOR” the Merger Proposal; (2) “FOR”, on a non-binding, advisory basis, the Merger-Related Compensation Proposal; and (3) “FOR” the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

  

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Reasons for the Merger

 

In recommending that stockholders vote in favor of the Merger Proposal, the Board of Directors considered a number of factors that it believed supported its decision to take the foregoing actions, including, but not limited to, the following:

 

Strategic Review Process. The Board of Directors considered the robust and lengthy process discussed above in “—Background of the Merger” (which began in December 2017) through which a special committee of independent directors focused on returning maximum value to our stockholders by reviewing and exploring strategic options available to TheStreet, including the sale of TheStreet as a going-concern and separate sales of the B2B Business and B2C Business segments (the “Strategic Review Process”). The Board of Directors also considered the successful completion of the sales of the RateWatch business in June 2018 and the B2B Business in February 2019. The Board of Directors noted that TheStreet and its advisors contacted approximately 100 parties during the entire Strategic Review Process, executing confidentiality agreements with 34 potential bidders that expressed interest in a potential transaction, out of which TheStreet received written indications of interest from two parties (including Euromoney, which subsequently withdrew its proposal) to acquire TheStreet, including both segments, seven parties to acquire the B2B Business or certain component parts of the B2B Business and five parties (including Maven), two of which were subsequently withdrawn after entering into exclusivity and conducting additional diligence, to acquire the B2C Business or certain component parts of the B2C Business.

 

Certainty of Value. The Board of Directors considered the consideration to be received by stockholders of TheStreet in the Merger, which will equal a fixed amount of $3.09183364 per share of TheStreet common stock, to (i) the historical earnings and financial performance of the B2C Business and share price of TheStreet and (ii) the Board of Director’s estimate of the current and future prospects of TheStreet as a standalone entity following the sale of RateWatch and the B2B Business. The Board of Directors took into account the fact that upon execution of the Merger Agreement, Maven agreed to deposit, and has in fact deposited, the aggregate cash portion of the Merger Consideration (equal to $16.5 million) with an escrow agent pursuant to the Escrow Agreement, and that these escrowed funds will be paid automatically to a paying agent immediately after the Effective Time, which paying agent will be responsible for paying the cash portion of the Merger Consideration to the former stockholders of TheStreet. The Board of Directors further considered the fact that the form of the Merger Consideration would be a combination of cash, which will provide stockholders with certainty of value and immediate liquidity, and the CVRs, which will entitle the holders thereof to receive the funds escrowed in connection with the Prior Transactions when they are released from the relevant escrows as well as the risks that stockholders will not receive the entire escrowed amounts. Currently, TheStreet’s management estimates that the total amounts that will be released from such escrows will range from approximately $0.66 per share of TheStreet common stock to approximately $0.77 per share of TheStreet common stock. The Board of Directors also considered the Pre-Merger Distribution, which will entail the distribution immediately prior to effectiveness of the Merger of all of TheStreet’s cash on hand, less certain liabilities and expenses relating to the Prior Transactions and the Merger Agreement, which distribution TheStreet’s management estimates will range from approximately $2.44 per share of TheStreet common stock to approximately $2.61 per share of TheStreet common stock. The Board of Directors believed that the certainty of value, in the aggregate, to be so received by TheStreet stockholders was compelling compared to the potential long-term value creation potential of TheStreet and the long-term business risks posed by continuing to operate TheStreet as an independent entity. The Board of Directors further believed that, based upon all of the other factors considered by the Board of Directors after discussion with TheStreet’s management, financial advisors and legal counsel, this was the best reasonably attainable value for TheStreet stockholders and, in particular, that the consideration payable in the Merger represented the highest price that Maven was willing to pay and the highest price per share value reasonably obtainable as of the date of the Merger Agreement. In this regard, the Board of Directors also took into account, among other factors, that during the course of negotiations with Maven, Maven raised its offer price for TheStreet three times, from $2.25 per share on April 9, 2019 to $2.62 per share on May 30, 2019 and finally to $3.09183364 per share on June 5, 2019.

 

Prospects for the Company. The Board of Directors considered its familiarity with TheStreet’s business, financial condition, results of operations, intellectual property, marketing prowess, management and competitive position and prospects, as well as current industry, economic and stock and credit market conditions. The Board of Directors also considered certain other strategic options to the Merger, as well as the possibility of not engaging in a transaction at all. In that regard, the Board of Directors considered TheStreet’s long- and short-term strategic plan and initiatives, including proposals to enhance the overall performance of the B2C Business, which currently is TheStreet’s only business unit, its ability to remain competitive and grow, and certain financial projections for TheStreet (as described under “—Certain Financial Projections” below). The Board of Directors also considered the benefits and potential risks, including execution risks, of pursuing other strategic options

 

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available to TheStreet. In addition, the Board of Directors considered the prospects and business plan for TheStreet, including its focus on subscription revenue and expanding event revenue. The Board of Directors noted that TheStreet has reported improving metrics for its B2C subscription business over the last few quarters, including an increase in new orders, average price, bookings, conversion and renewal rates. However, the Board of Directors also considered that revenues for the B2C Business had declined for at least the last three years prior to 2019 and a majority of its revenue is attributable directly to the contributions of the founder of the Company whose current employment agreement expires December 31, 2021, subjecting the Company to significant key person risk.

 

Ability to Consider Alternative Transactions and to Terminate the Merger Agreement. The Board of Directors noted that, although the Merger Agreement contains customary provisions prohibiting TheStreet from soliciting Competing Proposals from a third party or engaging in negotiations or discussions regarding any Competing Proposal, if a majority of the entire Board of Directors concludes, upon the recommendation of the Strategic Committee and after consultation with TheStreet’s outside legal and financial advisors, that a Competing Proposal constitutes a Superior Proposal that is more favorable from a financial point of view to TheStreet stockholders than the transactions contemplated by the Merger Agreement, and TheStreet has otherwise complied with its obligations described below under the heading “—Agreements Related to the Merger—The Merger Agreement—No Solicitation of Other Offers,” the Board of Directors is permitted to enter into a binding written agreement with respect to such Superior Proposal and terminate the Merger Agreement (subject to the payment of the termination fee, as described below under the heading “—Agreements Related to the Merger—The Merger Agreement—Termination Fee”).

 

Ability to Change Recommendation to Stockholders. The Board of Directors noted that the Merger Agreement maintains the Board of Directors’ ability to change, qualify, withhold or withdraw TheStreet’s recommendation that its stockholders approve the Merger Proposal in a manner adverse to Maven if, prior to the receipt of the Requisite Stockholder Approval, the Board of Directors concludes in good faith, after consultation with TheStreet’s outside legal and financial advisors, and upon the recommendation of the Strategic Committee, that the failure of the Board of Directors to change, qualify, withhold or withdraw such recommendation may be inconsistent with the directors’ fiduciary duties to TheStreet stockholders under applicable law, provided that, subject to limited exceptions, TheStreet has otherwise complied with its obligations described below under the heading “—Agreements Related to the Merger—The Merger Agreement—No Solicitation of Other Offers.”

 

Termination Fee. The Board of Directors considered the $330,000 termination fee to be paid to Maven by TheStreet if the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, including if the Board of Directors approves the termination of the Merger Agreement in order to enable TheStreet to enter into a binding written agreement with respect to a Superior Proposal. The Board of Directors noted that the termination fee is equal to approximately 2% of the cash Merger Consideration (i.e., implied equity value), which the Board of Directors viewed as reasonable, and which percentage is within the market averages for such fees. The Board of Directors also noted that TheStreet has sufficient liquidity to pay the termination fee if and when it becomes necessary to do so. Accordingly, the Board of Directors believed that a termination fee of this size for the proposed Merger would not, in and of itself, be preclusive of, or a substantial impediment to, other offers and therefore should not unduly deter a third party from making a Superior Proposal or inhibit the Board of Directors from evaluating, negotiating and, if appropriate, terminating the Merger Agreement and accepting a Superior Proposal.

 

Remedies Available to TheStreet. The Board of Directors considered the fact that TheStreet is entitled to seek specific performance against Maven in order to enforce Maven’s obligations under the Merger Agreement, including payment of the cash portion of the Merger Consideration and release of the escrowed funds to the paying agent. In addition, Maven may receive such escrowed funds back only if the Merger Agreement is terminated in accordance with its terms. See “—Agreements Related to the Merger—The Escrow Agreement; Escrow of Aggregate Cash Merger Consideration.” Further, the Board of Directors considered that TheStreet could terminate the Merger Agreement if Maven were to breach or fail to perform any of Maven’s representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach has prevented or would prevent the satisfaction of any condition to the closing, or if all of the conditions to the obligations of Maven to effect the closing have been satisfied (other than those conditions which by their nature are to be satisfied at the closing) as of the date on which the closing otherwise should have occurred and Maven fails to consummate the closing within two business days following the date on which the closing otherwise should have occurred.

 

Terms of the Merger Agreement. The Board of Directors considered the terms and conditions of the Merger Agreement, including the limited number and nature of the conditions to Maven’s obligation to consummate the transaction and the likelihood that those conditions would be satisfied. The Board of Directors also considered the changes favorable to TheStreet in the terms and conditions of the Merger Agreement from those initially proposed by Maven.

 

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Likelihood of Completing the Merger. The Board of Directors considered the likelihood that the Merger will be completed, including its belief that there likely would not be regulatory impediments to the transaction nor would the Merger require notification under the HSR Act. The Board of Directors considered the fact that the closing is not conditioned upon Maven’s ability to raise funds to pay the Merger Consideration and that Maven would not need to obtain approval for the transaction from its stockholders. The Board of Directors also considered the facts that Maven would be allowed to terminate the Merger Agreement and abandon the Merger if the employment of either or both of Mr. Eric Lundberg or Ms. Margaret de Luna was terminated (other than due to death or disability) prior to the closing or if 30% or more of the total number of TheStreet’s employees as of the date of the Merger Agreement ceased working for TheStreet. In addition, the Board of Directors considered that the continued employment of Mr. Cramer by TheStreet was not a condition to closing under the Merger Agreement nor would termination of his employment for any reason prior to closing allow Maven to terminate the Merger Agreement and abandon the Merger.

 

Opinion of Lake Street. The Board of Directors considered the oral opinion of Lake Street, subsequently confirmed in writing, that as of June 9, 2019, based upon and subject to the factors and assumptions set forth therein, the right to receive the cash consideration and CVRs to be paid in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the holders of our common stock, as more fully described below under the section of this proxy statement captioned “—Opinion of Lake Street Capital Markets, LLC,” the full text of which written opinion is attached as Annex B to this proxy statement and is incorporated by reference in this proxy statement in its entirety.

 

The Board of Directors also considered a variety of risks and other potentially negative factors concerning the Merger Agreement and the transactions contemplated thereby, including, among others, the factors described under “Risk Factors” beginning on page 20 in addition to the following:

 

No Longer an Independent Public Company. The Board of Directors considered the fact that TheStreet would no longer exist as an independent, publicly traded company, and stockholders would no longer participate in any future earnings or growth and would not benefit from any potential future appreciation in value of TheStreet.

 

Value of CVRs. The Board of Directors considered the risk that the respective buyers of RateWatch and the B2B Business may make indemnification claims against the escrows funded in connection with the Prior Transactions prior to their release and therefore payment of such funds to holders of CVRs may be delayed significantly until such claims are resolved or may not be made at all if these buyers are entitled to receive all of the escrowed amounts in satisfaction of their claims. The Board of Directors also took into account the fact TheStreet and Maven will agree on mutually acceptable principles to allow Maven to recover from these escrows prior to their distribution to holders of CVRs the reasonable and documented cost of any counsel and other reasonable and documented costs of defending any dispute, claim or litigation relating to, arising out of or in connection with the CVR Agreement from these escrows prior to their distribution to holders of CVRs. Any such recovery by Maven would reduce the funds payable to holders of CVRs. See “—Agreements Related to the Merger—The CVR Agreement”.

 

Risk of Non-Completion. The Board of Directors considered the possibility that the Merger may not be completed and the adverse effects that a failure to complete the Merger could have on TheStreet’s business, the market price for TheStreet common stock and TheStreet’s relationships with customers and employees, including the facts that (i) TheStreet’s directors, senior management and other employees will have expended extensive time and effort and will have experienced significant distractions from their work during the pendency of the Merger, (ii) TheStreet will have incurred significant transaction costs, (iii) TheStreet’s prospects could be adversely affected or may be perceived by the market as having been adversely affected, and (iv) TheStreet’s continuing business relationships may be disrupted.

 

Possible Disruption of the Business of TheStreet. The Board of Directors considered the possible disruption to TheStreet that might result from the announcement of the proposed Merger and the resulting distraction of the attention or departure of TheStreet’s management and employees. The Board of Directors also considered the fact that the Merger Agreement contains certain customary limitations regarding the operation of TheStreet during the period between the signing of the Merger Agreement and the completion of the Merger. See “—Agreements Related to the Merger—The Merger Agreement—Conduct of Business Pending the Merger.” The Board of Directors believed that such limitations were customary for transactions similar to the Merger and appropriately tailored to the specific requirements of the operation of TheStreet.

 

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Differing Interests. In addition to considering the factors described above, the Board of Directors was aware of and considered the interests that certain of our directors and executive officers may have with respect to the Merger that are different from, or in addition to, the interests of TheStreet stockholders generally, as discussed in the section below entitled “—Interests of Certain Persons in the Merger.” The Board of Directors also considered the terms of the Voting Agreement entered into between Maven, on the one hand, and 180 Degree Capital Corp. and TheStreet SPV Series – a Series of 180 Degree Capital Management, LLC, which together beneficially own approximately 15.4% of our outstanding shares at the close of business on June 20, 2019, the record date of the Special Meeting, and collectively are our largest stockholder. See “—Agreements Related to the Merger—The Voting Agreement.” Pursuant to the Voting Agreement, these stockholders have agreed to vote all of their shares of TheStreet common stock in favor of the Merger Proposal at the Special Meeting. The Board of Directors took into the termination provisions of the Voting Agreement, which, among other things, require automatic termination of the Voting Agreement should the Merger Agreement be terminated in accordance with its terms.

 

The above discussion of the factors considered by the Board of Directors is not intended to be exhaustive but does set forth certain material factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the Board of Directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative or specific weight or values to any of these factors, and individual directors may have held varied views of the relative importance of the factors considered. The Board of Directors viewed its position and recommendation as being based on an overall review of the totality of the information available to it.

 

Certain Financial Projections

 

TheStreet does not, as a matter of course, publicly disclose long-term forecasts or internal projections as to future revenues, earnings or other results, due to, among other reasons, the unpredictability of the underlying assumptions and estimates. However, in connection with the proposed Merger, TheStreet’s senior management prepared certain non-public, unaudited prospective financial information for the calendar years ending December 31, 2019, through December 31, 2023. Such information was reviewed by the Board in its evaluation of the proposed Merger and also provided to TheStreet’s financial advisors, Moelis and Lake Street. The financial projections were also made available to Lake Street in connection with the rendering of Lake Street’s opinion to the Board of Directors.

 

The financial projections for TheStreet were not prepared with a view toward public disclosure. The financial projections reflect numerous estimates and assumptions made by TheStreet’s senior management team with respect to general business and economic conditions and competitive, regulatory and other future events, as well as, among other things, matters related specifically to the recent operational performance and anticipated development of TheStreet’s business, all of which are difficult to predict and inherently subjective and many of which are beyond TheStreet’s control. Please read the information set forth in the section below entitled “Important Information About the Financial Projections.”

 

The financial projections include three forecasts to capture potential scenarios based on the prospects of the continued employment of Mr. James Cramer, founder and Chief Markets Commentator of TheStreet. On November 8, 2017, TheStreet and Mr. Cramer entered into an amended and restated employment agreement with a new four-year term commencing January 1, 2018. The continued employment of Mr. Cramer is not a closing condition to the Merger. The scenarios include the following assumptions:

 

  Scenario 1: Assumes no change to the current employment arrangement with Mr. Cramer (the “Status Quo Forecast”);

 

  Scenario 2: Assumes that Mr. Cramer’s employment agreement is not renewed after its expiration on December 31, 2021 (the “Key Person Contract Forecast”); and

 

  Scenario 3: Assumes the closing date of the Merger is August 31, 2019, and that Mr. Cramer’s services are terminated upon the consummation of the Merger (the “Key Person Early Termination Forecast”).

 

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The following tables provide summaries of the three forecasts for the calendar years ending December 31, 2019, through December 31, 2023, with respect to total revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. The financial projections do not include amounts relating to TheStreet’s B2B Business, the sale of which to Euromoney was completed on February 14, 2019, including gain from sale of the B2B Business, and further exclude compensation and related operating costs relating to employees that did not continue with TheStreet after the closing of the B2B Business sale. The forecasts of Free Cash Flow were prepared by Lake Street and not by TheStreet’s senior management.

 

Status Quo Forecast

 

   2019E  2020E  2021E  2022E  2023E
   (Dollars in millions) 
Total revenue(1)  $29.8   $31.9   $33.5   $35.2   $37.1 
Adjusted EBITDA(1)(2)(3)  $(1.8)  $(0.5)  $0.5   $1.2   $1.9 
Adjusted EBITDA Margin(2)(4)   (6.0)%   (1.5)%   1.5%   3.3%   5.1%
Free Cash Flow(1)(2)(5)  $(4.0)  $(1.4)  $0.0   $0.7   $1.4 

Key Person Contract Forecast

 

   2019E  2020E  2021E  2022E   2023E
   (Dollars in millions) 
Total revenue(1)  $29.8   $31.9   $33.5   $28.6   $25.5 
Adjusted EBITDA(1)(2)(3)  $(1.8)  $(0.5)  $0.5   $(2.0)  $(6.2)
Adjusted EBITDA Margin(2)(4)   (6.0)%   (1.5)%   1.5%   (7.1)%   (24.3)%
Free Cash Flow(1)(2)(5)  $(4.0)  $(1.4)  $0.0   $(4.8)  $(8.3)

Key Person Early Termination Forecast

 

   2019E  2020E  2021E  2022E  2023E
  (Dollars in millions) 
Total revenue(1)  $28.3   $23.6   $22.0   $23.3   $25.1 
Adjusted EBITDA(1)(2)(3)  $(1.9)  $(5.6)  $(7.8)  $(7.4)  $(6.5)
Adjusted EBITDA Margin(2)(4)   (6.5)%   (23.8)%   (35.4)%   (31.6)%   (26.0)%
Free Cash Flow(1)(2)(5)  $(4.6)  $(8.9)  $(9.4)  $(8.0)  $(7.0)

 

 

(1)Excludes amounts relating to TheStreet’s B2B Business, the sale of which to Euromoney was completed on February 14, 2019, and compensation and related operating costs relating to employees that did not continue with TheStreet after the closing of the B2B Business sale.

(2)Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by TheStreet may not be comparable to similarly titled amounts used by other companies.

(3)TheStreet uses “Adjusted EBITDA” as a non-GAAP financial measure, which is defined as results based on GAAP adjusted to exclude interest, income taxes, depreciation and amortization, restructuring, non-cash compensation, severance, gain from the sale of the B2B Business and transactions costs after allocation of corporate overhead.

(4)TheStreet uses “Adjusted EBITDA Margin” as a non-GAAP financial measure, which is defined as Adjusted EBITDA divided by total revenue.

(5)“Free Cash Flow” is a non-GAAP financial measure, which is defined as Adjusted EBITDA (as shown in the tables above) less increases in net working capital and capital expenditures. The forecasts of Free Cash Flow were prepared by Lake Street and not by TheStreet’s senior management.

 

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Important Information About the Financial Projections

 

The financial projections were developed by TheStreet’s senior management (except for the forecasts of Free Cash Flow, which were prepared by Lake Street) on a standalone basis without giving effect to the Merger and the other transactions contemplated by the Merger Agreement (except as noted in Scenario 3 – Key Person Early Termination Forecast), or any changes to TheStreet’s operations or strategy that may be implemented after the consummation of the Merger, including any costs incurred in connection with the Merger and the other transactions contemplated by the Merger Agreement. Furthermore, the financial projections do not take into account the effect of any failure of the transactions contemplated by the Merger Agreement to be completed and should not be viewed as accurate or continuing in that context.

 

TheStreet’s senior management team prepared the financial projections (except for the forecasts of Free Cash Flow, which were prepared by Lake Street) in good faith and on a reasonable basis based on the best information available to TheStreet’s senior management team at the time such projections were prepared. The financial projections, however, are not actual results and should not be relied upon as being necessarily indicative of actual future results, and readers of this proxy statement are cautioned not to place undue reliance on the information provided in this “Certain Financial Projections” section of the proxy statement. Since the projections cover multiple years, such information by its nature becomes less predictive with each successive year. The estimates and assumptions underlying the financial projections involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, the risks and uncertainties described under the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond TheStreet’s control and will be beyond its control following the Merger. There can be no assurance as to which of the financial forecasts will be realized or that any of the financial forecasts will be realized, and actual results may differ materially from those reflected in the financial projections, whether or not the Merger is completed.

 

The financial projections summarized in this section were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements, or accounting principles generally accepted in the U.S. (“GAAP”). As noted in the tables above, certain of the measures included in the financial projections may be considered “non-GAAP financial measures,” which are financial performance measures that are not calculated in accordance with GAAP. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by TheStreet may not be comparable to similarly titled amounts used by other companies. The non-GAAP financial measures used in the financial projections were relied upon by Lake Street for purposes of its opinion and by the Board of Directors in connection with its evaluation of the Merger. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures included in disclosures relating to a proposed business combination such as the Merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by Lake Street for purposes of its opinion or by the Board of Directors in connection with its evaluation of the Merger. Accordingly, TheStreet has not provided a reconciliation of the financial measures included in the financial projections to the relevant GAAP financial measures.

 

All of the financial projections summarized in this section were prepared by, and are the responsibility of, TheStreet’s senior management team, as indicated (except for the forecasts of Free Cash Flow, which were prepared by Lake Street). BDO USA, LLP (“BDO”), TheStreet’s independent registered public accounting firm, did not provide any assistance in preparing the financial projections and has not examined, compiled or otherwise performed any procedures with respect to the financial projections and, accordingly, BDO has not expressed any opinion or given any other form of assurance with respect thereto and assumes no responsibility for the prospective financial information.

 

By including in this proxy statement a summary of the financial projections, neither TheStreet nor any of its advisors or representatives has made or makes any representation to any person regarding the ultimate performance of TheStreet’s business compared to the information contained in the financial projections. TheStreet has made no representation to Maven, in the Merger Agreement or otherwise, concerning the financial projections. The financial projections summarized in this section were prepared during the periods described above and have not been updated to reflect any changes since the date of their preparation or any actual results of TheStreet’s business. TheStreet undertakes no obligation, except as required by law, to update or otherwise revise the financial projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are not realized, or to reflect changes in general economic or industry conditions.

 

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The inclusion of the financial projections in this proxy statement should not be regarded as an indication that TheStreet, the Board of Directors, Lake Street, Moelis or any party that received the financial projections then considered, or now considers, the financial projections to be necessarily predictive of actual future events, and the financial projections should not be relied upon as such.

 

The foregoing summary of the financial projections is not included in this proxy statement in order to induce any stockholder of TheStreet to vote in favor of the Merger Proposal or any other Proposals.

 

Opinion of Lake Street Capital Markets, LLC

 

Lake Street rendered its opinion to our Board of Directors that, as of June 9, 2019 and based upon and subject to the factors and assumptions set forth therein, the right to receive $3.09183364 per share in cash and a contractual contingent value right to be paid pursuant to the Merger Agreement was fair, from a financial point of view, to the holders of our common stock.

 

Lake Street’s opinion was provided for the benefit of our Board of Directors in connection with and for the purposes of its consideration of the Merger. The opinion only addresses the fairness, from a financial point of view, to the stockholders of the Merger Consideration to be received by the stockholders in the Merger pursuant to the Merger Agreement and did not address any other term or aspect of the Merger Agreement or the Merger. The summary of Lake Street’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex B to this proxy statement and describes the assumptions made, qualifications and limitations on the review undertaken and other matters considered by Lake Street in connection with the preparation of its opinion. However, neither Lake Street’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Board of Directors, any security holder or any other party as to how to act or vote with respect to any matter relating to the Merger or otherwise or any form of assurance by Lake Street as to the condition of the Company. The decision as to whether to proceed with the proposed Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which Lake Street’s opinion was based.

 

In arriving at its opinion, Lake Street, among other things:

 

reviewed drafts of the definitive Merger Agreement and the Escrow Agreement provided to it on June 7, 2019, and a draft of the contingent value rights agreement and disclosure schedules to the Merger Agreement provided to it on June 2, 2019 (which we collectively refer to as the “Transaction Documents”);

 

reviewed certain business, financial and other information and data with respect to the Company that were publicly available or made available to us from the Company’s internal records, including its filed Form 10-K for the year ended December 31, 2018;

 

reviewed certain internal financial projections for the Company’s remaining business, prepared for financial planning purposes and furnished to us by management;

 

conducted discussions with members of senior management with respect to the past and present operations of the business and prospects of the Company’s remaining business;

 

compared the financial performance of the Company’s remaining business with that of publicly traded companies deemed by us to be comparable to the Company’s remaining business to complete a sum-of-the parts valuation;

 

reviewed the financial terms, to the extent publicly available, of certain comparable merger and acquisition transactions;

 

performed a discounted cash flow analyses for the Company’s remaining business, based on projected financial performance prepared by management;

 

reviewed the historical market prices and trading activity of the Company’s remaining business common stock;

 

conducted such other analyses, examinations and inquiries and considered such other financial, economic and market criteria as we have deemed necessary and appropriate in arriving at our opinion; and

 

held discussions with our executive officers regarding our projections and their assessment of the past and current business operations, financial condition and future prospects of the Company.

  

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Lake Street’s opinion was subject to the following additional qualifications and limitations, with the Company’s consent:

 

Lake Street relied upon and assumed, without assuming liability or responsibility for independent verification, the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to Lake Street or discussed with or reviewed by or for Lake Street. In particular, Lake Street assumed that our projections were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of our management as to the expected future results of operations and financial condition of the Company. Lake Street expresses no opinion as to our projections or the assumptions on which they were based.

 

Lake Street also assumed that the Merger will be consummated pursuant to the terms of the Transaction Documents without amendment of any term or condition thereof the effect of which would be in any way meaningful to its analysis, and all conditions to the consummation of the Merger will be satisfied without waiver by any party of any conditions or obligations thereunder the effect of which would be in any way meaningful to its analysis. Lake Street also assumed that all the necessary regulatory approvals and consents required for the Merger will be obtained in a manner that will not adversely affect us or the contemplated benefits of the Merger.

 

Lake Street’s opinion addressed only the fairness, from a financial point of view, to the holders of the Company’s common stock of the Merger Consideration of a right to receive $3.09183364 per share in cash and a contractual contingent value right. Lake Street was not requested to opine as to, and its opinion does not in any manner address the relative merits of the Merger or any alternatives to the Merger, our underlying decision to proceed with or effect the Merger, or any other aspect of the Merger. Other than with respect to the holders of our common stock, this opinion does not address the fairness of the Merger to the holders of any class of securities, creditors or other constituencies of the Company. Lake Street also did not express an opinion about the fairness of the amount or nature of any compensation payable or to be paid to any of our officers, directors or employees, whether or not relative to the Merger. In addition, Lake Street was not retained to and did not provide advice concerning the structure, the specific amount of the consideration, or any other aspect of the Merger, or alternatives available to the Merger.

 

In arriving at its opinion, Lake Street did not perform any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of the Company, and was not been furnished or provided with any such appraisals or valuations. The analyses performed by Lake Street in connection with its opinion were going concern analyses.

 

Material Financial Analyses

 

The following is a summary of the material financial analyses delivered by Lake Street to our Board of Directors in connection with rendering the opinion described above.

 

The summary of Lake Street’s analyses is not a complete description of the analyses underlying Lake Street’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. Lake Street arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching Lake Street’s overall conclusion with respect to fairness, Lake Street did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Lake Street believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create an inaccurate or incomplete view of the processes underlying Lake Street’s analyses and opinion.

 

The implied reference range values indicated by Lake Street’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. Much of the information used in, and accordingly the results of, Lake Street’s analyses are inherently subject to substantial uncertainty.

 

Analysis Overview

 

In preparing its opinion, Lake Street Capital Markets, LLC performed a variety of financial and comparative analyses. The following paragraphs summarize the material financial analyses performed by Lake Street Capital Markets, LLC in arriving at its opinion. Some of the summaries of the financial analyses include information presented in tabular format. The tables are

 

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not intended to stand alone, and in order to more fully understand the financial analyses used by Lake Street Capital Markets, the tables must be read together with the full text of each summary. The following quantitative information, to the extent it is based on market data, is, except as otherwise indicated, based on market data as they existed on June 7, 2019. For purposes of its analyses, Lake Street Capital Markets, LLC utilized Capital IQ market data as of June 7, 2019.

 

Consideration of Key Person

 

A critical consideration in Lake Street’s fairness opinion was the outsized contribution of one particular employee towards the overall revenue production of TST’s revenue. According to the Company’s estimates, a majority (53%) of its total revenue is attributable directly to Mr. James Cramer (“Key Person”), who is the founder of the original company. Moreover, the Company further estimates that over 70% of its subscription revenue is attributed to this individual. This Key Person is 64 years of age and currently has an employment agreement to provide services to the Company through December 31, 2021. Further, pursuant to the proposed acquisition offer, the Purchaser provided the Key Person an opportunity to terminate his contract within 90 days of the closing of the proposed acquisition. Given the significant concentration of revenue from the Key Person and the uncertainty of his future contribution to the Company due to his unknown intentions, a limited contract term and an age that is generally considered to be near retirement, Lake Street believes that any valuation analysis must reflect the likelihood for the business to lose that Key Person’s services. In Lake Street’s view, the most effective approach to measure the potential impact of the Key Person was to consider the impact to a discounted cash flow, or DCF, analysis under the varied scenarios. Lake Street also reviewed the implied valuations from the analysis of comparable companies and transactions. However, because it was not able to identify an even remotely similar Key Person element to these comparables, it did not view those as instructive to determining fairness. Finally, given the uncertainty of the Key Person’s future contribution, Lake Street analyzed those comparables against a pro forma revenue metric for the Company that excluded the revenue from the Key Person to determine an implied range of value for the remainder of the business.

 

Discounted Cash Flow Analysis

 

Because a DCF analysis allows for the direct calculation of the effects of various scenarios detailing the potential impact of the Key Person to TST, Lake Street believes that this approach provided the most accurate view into the value of the business. Utilizing estimates prepared by management, Lake Street calculated discounted cash flow analyses based upon different exit scenarios for the Key Person.

 

Status Quo DCF: Lake Street calculated a “status quo” DCF as the sum of the net present value of the estimated unleveraged free cash flows that the Company will generate for the fiscal years ending August 2018 through August 2023, plus the terminal value at the end of such period, in each case assuming that the Key Person continues working with the business indefinitely.

 

Contract Expiration DCF: Additionally, Lake Street calculated a “contract expiration” DCF as the sum of the net present value of the estimated unleveraged free cash flows that the Company will generate for the fiscal years ending August 2018 through August 2023, plus the terminal value at the end of such period, in each case assuming that the Key Person’s services to the Company terminate upon the expiration of his current employment agreement on December 31, 2021.

 

Early Termination DCF: Finally, Lake Street calculated an “early termination” DCF as the sum of the net present value of the estimated unleveraged free cash flows that the Company will generate for the fiscal years ending August 2018 through August 2023, plus the terminal value at the end of such period, in each case assuming that the Key Person’s services terminate upon the closing of the Merger.

 

The terminal values for all three scenarios were calculated using a terminal multiple. The implied terminal value was calculated, using Lake Street’s professional judgement and experience, based on an enterprise value to revenue multiple of 1.5x. Lake Street noted that the selected terminal EV/Revenue multiple of 1.5x, represented a premium to the current EV/ Revenue of 0.6x; reflecting the median values of comparable companies and transactions. Based on discussions with management, Lake Street further assumed no effective tax rate due to the Company’s NOLs. Lake Street also estimated working capital and capital expenditures as a percent of annual sales per management forecasts, consistent with the Company’s historical rates. Lake Street applied discount rates ranging from 20% to 22% based on its analysis of the weighted average cost of capital and terminal enterprise value to revenue multiples ranging from 1.0x to 2.0x.

 

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The DCF analyses indicated an implied enterprise value range for the Company for each DCF scenario as listed below:

 

Enterprise Value

(Dollars in millions)

 

Status Quo  $9.7 to $25.8 
Contract  $(2.3) to $8.3 
Early Termination  $(17.0) to $(6.9) 

 

To determine the implied equity value per share resulting from the estimated enterprise value, Lake Street relied on the Company’s expected net cash as of closing. This figure was derived by taking the Company’s current net cash of $27 million and subtracting the Company’s estimated future expenses of $12.6 million. Added to this net cash figure was the forecasted value of the Contingent Value Right (“CVR”) of $3.80 million to determine the Company’s expected net cash of $18.22 million as of closing. The resulting implied equity value per share range is below:

 

Implied Per Share Equity Value

 

Status Quo  $5.23 to $8.24 
Contract   $2.98 to $4.97 
Early Termination   $0.22 to $2.12 

 

Sum of The Parts Comparable Public Company Analysis (SoP)

 

Lake Street analyzed the public market statistics of certain companies it considered comparable to TST and examined various operating performance, trading statistics and information relating to those companies. TST’s remaining segment generates the vast majority of its revenue from two distinct Business-to-Consumer (“B2C”) revenue sources— Digital Media Advertising and Subscription services. This allowed Lake Street to perform a Sum of the Parts analysis; comparing companies that, in our view, are engaged in businesses and have operating profiles more directly comparable to these two primary segments of TST’s remaining business.

 

Lake Streets Subscription comparable companies analysis included six companies that primarily generate revenue from subscription services to consumers. Lake Street applied both a status quo valuation reflecting revenue estimates provided by management, and a pro forma valuation adjusting for the Key Person impact on company revenue. Management estimated that less than 30% of revenue is not directly driven by the Key Person. Lake Street utilized 2018 and 2019E EV / Revenue multiples ranging 1.4x -3.4x, and 1.4x – 2.1x, respectively; as this multiple range reflected the 75th and 25th percentile of multiple ranges for the group. These six companies used are listed below:

 

The Meet Group, Inc. (MEET)

 

LiveXLive Media, Inc. (LIVX)

 

Spark Networks SE (LOV)

 

Gaia, Inc. (GAIA)

 

Chicken Soup for the Soul Entertainment, Inc. (CSSE)

 

Professional Diversity Network, Inc. (IPDN)

 

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Selected Comparable Subscription Company Data

(Dollars in millions, except per share data) 

                                                                                       
                                    LTM Financials     LTM Margins     Enterprise
Value / Revenue
 
Company    

Price on

6/7/2019

   

Market

Cap

   

Enterprise 

Value 

    Revenue     EBITDA     Gross     EBITDA     LTM    

CY
18

   

CY

19E

 
The Meet Group, Inc. (MEET)     $ 3.73     $ 281     $ 301     $ 190     $ 25       NM       13 %     1.6 x     1.7 x   1.4x  
LiveXLive Media, Inc. (LIVX)     $ 3.51     $ 183     $ 183     $ 32     $ -26       6 %     NM       5.8 x     5.8 x   3.6x  
Spark Networks SE (LOV)     $ 12.00     $ 156     $ 157     $ 120     $ 5       34 %     4 %     1.3 x     1.3 x   1.0x  
Gaia, Inc. (GAIA)     $ 7.19     $ 129     $ 119     $ 47     $ -27       87 %     NM       2.5 x     2.7 x   2.1x  
Chicken Soup for the Soul Entertainment (CSSE)     $ 7.63     $ 91     $ 96     $ 23     $ 1       53 %     NM       4.1 x     3.6 x   1.6x  
Professional Diversity Network, Inc. (IPDN)     $ 2.16     $ 11     $ 11     $ 7     $ -5       80 %     NM       1.5 x     1.3 x   NA  
                                                                                       
      Median     $ 142     $ 138     $ 39     $ -3       53 %     9 %     2.1 x     2.2 x   1.6x  
      Average     $ 142     $ 144     $ 70     $ -5       52 %     9 %     2.8 x     2.7 x   1.9x  
      25th Percentile     $ 101     $ 102     $ 25     $ -21       34 %     6 %     1.5 x     1.4 x   1.4x  
      75th Percentile     $ 176     $ 177     $ 102     $ 4       80 %     11 %     3.7 x     3.4 x   2.1x  
                                                                                       

 

Lake Streets Digital Media comparable companies analysis included eight companies that primarily generate revenue from Digital Media Advertising. Lake Street applied both a status quo valuation reflecting revenue estimates provided by management, and a pro forma valuation adjusting for the Key Person impact on company revenue. Management estimated that 86% of revenue is not directly driven by the Key Person. Lake Street utilized 2018 and 2019E EV / Revenue multiples ranging 0.3x -1.8x, and 0.3x – 1.5x, respectively; as this multiple range reflected the 75th and 25th percentile of multiples ranges for the group. These eight companies used are listed below:

 

Criteo S.A. (CRTO)

 

TrueCar, Inc. (TRUE)

 

Care.com, Inc. (CRCM)

 

Travelzoo (TZOO)

 

Perion Network Ltd. (PERI)

 

AutoWeb, Inc. (AUTO)

 

Sohu.com Ltd. (SOHU)

 

Zedge, Inc. (ZDGE)

 

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Selected Comparable Digital Media Company Data

(Dollars in millions, except per share data)  

                                                                                       
                                    LTM Financials     LTM Margins     Enterprise
Value / Revenue
 
Company     Price on 6/7/2019     Market
Cap
   

Enterprise 

Value 

    Revenue     EBITDA     Gross     EBITDA     LTM    

CY
18

   

CY

19E

 
Criteo S.A. (CRTO)     $ 18.84     $ 1,217     $ 1,068     $ 2,294     $ 223       36 %     10 %     0.5 x     0.5 x   1.1x  
TrueCar, Inc. (TRUE)     $ 5.45     $ 574     $ 442     $ 358     $ -22       91 %     NM       1.2 x     1.3 x   1.2x  
Care.com, Inc. (CRCM)     $ 14.59     $ 474     $ 430     $ 198     $ 12       76 %     6 %     2.2 x     2.2 x   2.0x  
Travelzoo (TZOO)     $ 17.13     $ 203     $ 200     $ 111     $ 11       89 %     10 %     1.8 x     1.8 x   1.7x  
Perion Network Ltd. (PERI)     $ 3.05     $ 79     $ 90     $ 246     $ 23       40 %     9 %     0.4 x     0.4 x   0.4x  
AutoWeb, Inc. (AUTO)     $ 3.51     $ 46     $ 39     $ 125     $ -14       18 %     NM       0.3 x     0.3 x   0.3x  
Sohu.com Limited (SOHU)     $ 13.81     $ 542     $ 26     $ 1,859     $ 10       43 %     1 %     0.0 x     0.0 x   0.0x  
Zedge, Inc. (ZDGE)     $ 2.07     $ 21     $ 19     $ 10     $ 0       85 %     1 %     1.9 x     1.9 x   NA  
                                                                                       
      Median     $ 339     $ 145     $ 222     $ 11       60 %     8 %     0.9 x     0.9 x   1.1x  
      Average     $ 394     $ 289     $ 650     $ 30       60 %     6 %     1.0 x     1.0 x   1.0x  
      25th Percentile     $ 71     $ 36     $ 121     $ -4       39 %     2 %     0.4 x     0.3 x   0.3x  
      75th Percentile     $ 550     $ 433     $ 733     $ 14       86 %     10 %     1.8 x     1.8 x   1.5x  

 

Lake Street analyzed the following statistics for the comparative analysis:

 

The ratio of fully-diluted enterprise value to calendar year 2018 and calendar 2019 consensus revenue estimates; and

 

The ratio of fully-diluted enterprise value to calendar year 2018 and calendar 2019 on a pro forma basis; reflecting management estimates of revenue related to the Key Person

 

In evaluating the comparable companies, Lake Street made judgments and assumptions with regard to company profile, industry focus and operating metrics. However, no company utilized in the comparable public company analysis was substantially comparable to the Company. Accordingly, Lake Street believes the analysis of publicly traded companies is not a simple mathematical analysis (such as determining the mean and median). Rather, it involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics of the comparable companies and other factors that could affect the public trading value of the comparable companies.

 

The SoP comparable public company analysis indicated the following equity value per share range:

 

(Dollars in millions, except per share data)

 

      Status Quo Implied Equity Value
Per Share
Metric 

TST

Statistic

   25th  Median   75th 
2018 Revenue                    
Subscription  $19.5   $27.3   $42.8   $65.3 
Ads  $8.0   $2.8   $6.9   $14.6 
Total  $27.5   $30.1   $49.7   $79.8 
Implied EV/ Rev        1.1x   1.8x   2.9x
2019 Revenue                    
Subscription  $20.5   $29.0   $32.9   $44.0 
Ads  $9.3   $3.1   $10.3   $13.7 
Total  $29.8   $32.1   $43.2   $57.7 
Implied EV/Rev        1.1x   1.5