EMMIS CORPORATION Item 1.01 Entry into a Material Definitive Agreement.
In accordance with the closing under that certain Contribution and Distribution Agreement (the "Contribution Agreement"), dated as ofJune 28, 2019 , amongEmmis Communications Corporation ("Emmis" or the "Company"),MediaCo Holding Inc. ("MediaCo") andSG Broadcasting LLC , an affiliate ofStandard General L.P. ("Standard General"), Emmis or its subsidiaries entered into the following agreements:
• Unsecured Convertible Promissory Note by
have a maturity date of the fifth (5th) anniversary of its execution, will
carry interest at a base rate equal to the interest on any senior credit
facility of MediaCo , or if no senior credit facility is outstanding, of
6.00%, plus an additional 1.00% on any payment of interest in kind and,
without regard to whether
increase of 1.00% following the second anniversary of the date of issuance
and additional increases of 1.00% following each successive anniversary
thereafter. The promissory note will be convertible, in whole or in part,
into MediaCo Class A Shares at the option of Emmis beginning six (6) months
after issuance and at a strike price equal to the thirty (30) day volume
weighted average price of the MediaCo Class A Shares on the date of
conversion.
• Employee Leasing Agreement, between
lease from EOC personnel at radio stations WBLS-FM and WQHT-FM who are
existing employees of EOC to perform services for MediaCo consistent witheach leased employees' past practices at the radio stations. The initial
term of the Employee Leasing Agreement will last through
and will automatically renew for successive six-month periods, unless
otherwise terminated upon the occurrence of certain events.
reimburse EOC for all costs and expenses directly attributable to the leased
employees for their services to
out-of-pocket expenses incurred in connection with the administration of
benefits.
• Management Agreement, between EOC and
pursuant to which, for an initial term of two years, EOC will provide direct
management of
arising as a public company. EOC will be paid an annual management fee equal
to
expenses directly related to the operation of
also be prohibited from directly or indirectly investing in any business
that competes with
termination of the ELA.
• Shared Services Agreement (WLIB) between EOC and
2019, pursuant to which EOC will be allowed to continue to use
facilities, equipment and personal consistent with past practices in
connection with the operation of radio station
MediaCo for all incremental out of pocket costs and expenses incurred byMediaCo in connection with this arrangement.
• Shared Services Agreement (WEPN) between EOC and
2019, pursuant to which EOC will be allowed to continue to use
facilities, equipment and personal consistent with past practices in
connection with the operation of radio station
MediaCo for all incremental out of pocket costs and expenses incurred byMediaCo in connection with this arrangement. • Local Programming and Marketing Agreement betweenWBLS-WLIB, LLC , a subsidiary of EOC ("WBLS-WLIB") andMediaCo , datedNovember 25, 2019 ,
pursuant to which, except for the hours of
Sunday,
the LMA is intended to continue through
terminate upon the occurrence of certain other events. WBLS-WLIB will be
responsible for the salaries of
personnel used in broadcasting WLIB-AM programing, all other costs
associated with the production of WLIB-AM programming, and the costs of
delivering WLIB-AM programing to WQHT-FM .
• Antenna Site Agreement between
permitted to continue to use the antenna site owned by WLIB in
programs in the event its other broadcast antennas are unavailable. The
Antenna Site Agreement will allow
as well as ground space for
Agreement will last for an initial term of 20 years, with two automatic
renewal periods of 10 years each, unless
its intention to not renew the lease for an additional term.
pay to WLIB an annual license fee of ten dollars ($10 ).
The foregoing summaries are qualified in their entirety by reference to the actual agreements which are filed as Exhibits 10.1, 10.2. 10.3, 10.4, 10.5, 10.6, and 10.7, respectively.
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Item 2.01 Completion of Acquisition or Disposition of Assets.
OnJune 28, 2019 ,Emmis Communications Corporation ("Emmis" or the "Company") entered into a Contribution and Distribution Agreement (the "Contribution Agreement") withMediaCo Holding Inc. , anIndiana corporation ("MediaCo") andSG Broadcasting LLC , an affiliate ofStandard General L.P. ("Standard General"), pursuant to which (i) Emmis was to contribute the assets of its radio stationsWQHT-FM andWBLS-FM , both inNew York, NY , in exchange for$91.5 million in cash, a$5.0 million note and 23.72% of the common stock ofMediaCo (the "Contribution"), (ii) Standard General was to purchase 76.28% of the common stock ofMediaCo (the "SG Purchase"), and (iii) the common stock ofMediaCo received by Emmis (the "MediaCo Class A Common Stock") is to be distributed pro rata in a taxable dividend to Emmis' shareholders, makingMediaCo a public company to be listed on Nasdaq (ticker: MDIA) (the "Distribution"). The closing of the Contribution and the SG Purchase occurred onNovember 25, 2019 and Emmis recognized a gain on sale of approximately$40 million . Cash proceeds, net of transaction-related expenses and estimated tax liabilities, were approximately$90 million , and were used to repay certain debt outstanding, with the balance expected to be used for general corporate purposes, including capital expenditures, working capital and potential acquisitions and investments. The Company intends to distribute the MediaCo Class A Common Stock, pro rata, to all of the Company's common shareholders of record as of the close of business onJanuary 3, 2020 (the "Record Date"), with the MediaCo Class A Common Stock to be distributed to such shareholders onJanuary 17, 2020 (the "Distribution Date"). Emmis shareholders are to receive 0.1265 shares of MediaCo Class A Common Stock for each share of Emmis common stock.
Item 9.01Financial Statements and Exhibits.
(c) Exhibits. Exhibit No. Description
10.1 Unsecured Convertible Promissory Note by
10.2 Employee Leasing Agreement, between
10.3 Management Agreement, between
10.4 Shared Services Agreement (WLIB), between
10.5 Shared Services Agreement (WEPN), between
10.6 Local Programming and Marketing Agreement between
10.7 Antenna Site Agreement between
# Portions of this exhibit, marked by brackets, have been omitted pursuant to
Item 601(b)(10) of Regulation S-K because they are both (i) not material and
(ii) would likely cause competitive harm to the registrant if publicly
disclosed. The registrant undertakes to promptly provide an unredacted copy
of the exhibit on a supplemental basis, if requested by the Commission or its
staff.
-------------------------------------------------------------------------------- Note to this Form 8-K: Certain statements included in this report which are not statements of historical fact, including but not limited to those identified with the words "expect," "will" or "look" are intended to be, and are, by this Note, identified as "forward-looking statements," as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:
• general economic and business conditions;
• fluctuations in the demand for advertising and demand for different types of advertising media;
• our ability to obtain additional capital or to service our outstanding debt;
• competition from new or different media and technologies;
• increased competition in our markets and the broadcasting industry, including our competitors changing the format of a station they operate to more directly compete with a station we operate in the same market;
• our ability to attract and secure programming, on-air talent, writers and photographers;
• inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control;
• increases in the costs of programming, including on-air talent;
• inability to grow through suitable acquisitions or to consummate dispositions;
• new or changing technologies, including those that provide additional competition for our businesses;
• new or changing regulations of the
• war, terrorist acts or political instability; and
• other factors mentioned in documents filed by the Company with the
Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
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