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As filed with the Securities and Exchange Commission on September 30, 2019.

File No. 001-39029


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10



GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934



Mediaco Holding Inc.
(Exact name of Registrant as specified in its charter)



Indiana
(State or other jurisdiction of
incorporation or organization)
  84-2427771
(I.R.S. Employer
Identification No.)

One Emmis Plaza, 40 Monument Circle, Suite 700,

 

 
Indianapolis, Indiana   46204
(Address of principal executive offices)   (Zip Code)

(317) 266-0100
(Registrant's telephone number, including area code)

        Securities to be registered pursuant to Section 12(b) of the Act:

   
 
Title of Each Class
to be so Registered

  Name of Each Exchange on which
each class is to be registered

 

Class A Common Stock, par value $0.01 per share

  The Nasdaq Stock Market LLC

 

        Securities to be registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer o   Smaller reporting company ý

Emerging growth company ý

        If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

   



Mediaco Holding Inc.

INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10

        Certain information required to be included in this Form 10 is incorporated by reference to specifically identified portions of the body of the information statement that is filed with this Form 10 as Exhibit 99.1. The cross-references below identify where the items required by Form 10 can be found in the information statement. None of the information contained in the information statement shall be incorporated by reference in this Form 10 or deemed to be a part of this Form 10 unless such information is specifically incorporated by reference.

Item 1.    Business.

        The information required by this item is contained under the sections of the information statement entitled "Information Statement Summary," "Summary Historical Carve Out Financial Data for Mediaco," "Risk Factors," "Cautionary Notice Concerning Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations For Mediaco," "Unaudited Pro Forma Condensed Combined Financial Statements," "Description of Business," "Related Party Transactions," "Where You Can Find More Information" and "Index to Financial Statements" and the financial statements referenced in the information statement. Those sections are incorporated by reference herein.

Item 1A.    Risk Factors.

        The information required by this item is contained under the section of the information statement entitled "Risk Factors." That section is incorporated by reference herein.

Item 2.    Financial Information.

        The information required by this item is contained under the sections of the information statement entitled "Summary Historical Carve Out Financial Data for Mediaco," "Management's Discussion and Analysis of Financial Condition and Results of Operations For Mediaco," "Unaudited Pro Forma Condensed Combined Financial Information," "Capitalization," and "Index to Financial Statements" and the financial statements referenced in the information statement. Those sections are incorporated by reference herein.

Item 3.    Properties.

        The information required by this item is contained under the section of the information statement entitled "Description of Business—Facilities." That section is incorporated by reference herein.

Item 4.    Security Ownership of Certain Beneficial Owners and Management.

        The information required by this item is contained under the section of the information statement entitled "Security Ownership of Certain Beneficial Owners and Management." That section is incorporated by reference herein.

Item 5.    Directors and Executive Officers.

        The information required by this item is contained under the section of the information statement entitled "Management." That section is incorporated by reference herein.

2


Item 6.    Executive Compensation.

        The information required by this item is contained under the section of the information statement entitled "Executive and Director Compensation." That section is incorporated by reference herein.

Item 7.    Certain Relationships and Related Transactions, and Director Independence.

        The information required by this item is contained under the sections of the information statement entitled "Management," "Executive and Director Compensation," and "Related Party Transactions." Those sections are incorporated by reference herein.

Item 8.    Legal Proceedings.

        The information required by this item is contained under the section of the information statement entitled "Description of Business—Legal Proceedings." That section is incorporated by reference herein.

Item 9.    Market Price of, and Dividends on, the Registrant's Common Equity and Related Stockholder Matters.

        The information required by this item is contained under the sections of the information statement entitled "Information Statement Summary," "Dividend Policy," "Capitalization," "Description of the Transactions," and "Description of Mediaco Securities—Indemnification of Officers and Directors." Those sections are incorporated by reference herein.

Item 10.    Recent Sales of Unregistered Securities.

        The information required by this item is contained under the section of the information statement entitled "Description of Mediaco Securities—Indemnification of Officers and Directors—Sales of Unregistered Securities." That section is incorporated by reference herein.

Item 11.    Description of Registrant's Securities to be Registered.

        The information required by this item is contained under the section of the information statement entitled "Description of Mediaco Securities—Indemnification of Officers and Directors." That section is incorporated by reference herein.

Item 12.    Indemnification of Directors and Officers.

        The information required by this item is contained under the section of the information statement entitled "Description of Mediaco Securities—Indemnification of Officers and Directors." That section is incorporated by reference herein.

Item 13.    Financial Statements and Supplementary Data.

        The information required by this item is contained under the section of the information statement entitled "Index to Financial Statements" and the financial statements referenced therein. That section is incorporated by reference herein.

Item 14.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        None.

3


Item 15.    Financial Statements and Exhibits.

(a)
Financial Statements

        The information required by this item is contained under the section of the information statement entitled "Index to Financial Statements" and the financial statements referenced therein. That section is incorporated by reference herein.

(b)
Exhibits

        The following documents are filed as exhibits hereto:

Exhibit
Number
  Exhibit Description
  2.1   Contribution and Distribution Agreement by and among Emmis Communications Corporation, Mediaco Holding Inc., and SG Broadcasting LLC, dated as of June 28, 2019.*

 

3.1

 

Form of Amended and Restated Articles of Incorporation of Mediaco Holdings Inc.**

 

3.2

 

Form of By-laws of Mediaco Holding Inc.**

 

10.1

 

Form of Promissory Note by Mediaco Holding Inc. in favor of Emmis Communications Corporation.

 

10.2

 

Form of Employee Leasing Agreement by and between Emmis Operating Company and Mediaco Holding Inc.*#

 

10.3

 

Form of Management Agreement by and between Emmis Operating Company and Mediaco Holding Inc.*#

 

10.4

 

Form of Local Programming and Marketing Agreement by and between Mediaco Holding Inc. and WBLS-WLIB LLC.

 

10.5

 

Form of Shared Services Agreement (WEPN) by and between Emmis Operating Company and Mediaco Holding Inc.#

 

10.6

 

Form of Shared Services Agreement (WLIB) by and between WBLS-WLIB LLC and Mediaco Holding Inc.#

 

10.7

 

Form of Antenna Site Agreement (WBLS Aux) by and between WLIB Tower LLC and Mediaco Holding Inc.#

 

10.8

 

Form of Officer and Director Indemnification Agreement.**+

 

99.1

 

Information Statement of Mediaco Holdings, preliminary and subject to completion, dated September 30, 2019.

*
Schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant will furnish a copy of any omitted schedule as a supplement to the Commission or its staff upon request.

#
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.

**
To be filed by amendment.

+
Management contract or compensatory plan or arrangement.

4



SIGNATURES

        Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 
   
   
   

  MEDIACO HOLDING INC.

 

By:

 

GRAPHIC


      Name:   Jeffrey Smulyan

      Title:   Chief Executive Officer

Date: September 30, 2019




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Mediaco Holding Inc. INFORMATION REQUIRED IN REGISTRATION STATEMENT CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10
SIGNATURES

Exhibit 2.1

 

CONFIDENTIAL

 

CONTRIBUTION AND DISTRIBUTION AGREEMENT

 

by and among

 

EMMIS COMMUNICATIONS CORPORATION,

 

MEDIACO HOLDING INC.

 

and

 

SG BROADCASTING LLC

 

DATED AS OF JUNE 28, 2019

 


 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

2

 

 

 

Section 1.1

General

2

 

Section 1.2

Construction

13

 

Section 1.3

References to Time

14

 

 

 

 

ARTICLE II THE INITIAL CONTRIBUTION AND PURCHASER INVESTMENT

14

 

 

 

Section 2.1

Contribution and Transfer of Mediaco Assets and Mediaco Liabilities

14

 

Section 2.2

Purchaser Investment

20

 

Section 2.3

Transfers Requiring Consent or Governmental Approval

20

 

Section 2.4

Misallocated Assets and Liabilities

21

 

Section 2.5

Conveyancing and Assumption Agreements

22

 

Section 2.6

Shared Contracts

22

 

 

 

 

ARTICLE III PURCHASE PRICE

23

 

 

 

Section 3.1

Purchase Price and Adjustment

23

 

Section 3.2

Post-Closing Obligations with respect to Working Capital

26

 

Section 3.3

Transfer Taxes

26

 

 

 

 

ARTICLE IV CLOSING

27

 

 

 

Section 4.1

General Closing Procedures

27

 

Section 4.2

Conditions to Obligations of All Parties

27

 

Section 4.3

Condition to Obligations of Emmis

27

 

Section 4.4

Conditions to Obligations of Mediaco

28

 

Section 4.5

Conditions to Obligations of Purchaser

28

 

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF EMMIS AND MEDIACO

29

 

 

 

Section 5.1

Due Organization, Good Standing, Corporate Power and Subsidiaries

29

 

Section 5.2

Authorization and Binding Obligation

30

 

Section 5.3

Capitalization

30

 

Section 5.4

Subsidiaries

30

 

Section 5.5

Valid Issuance of Shares

30

 

Section 5.6

Absence of Conflicting Agreements; Consents

31

 

Section 5.7

Litigation

31

 

Section 5.8

Station Licenses

31

 

Section 5.9

Assets

32

 

Section 5.10

Real Property

33

 

Section 5.11

Contracts

33

 

Section 5.12

Compliance with Laws

34

 

i


 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

Section 5.13

Governmental Consents

34

 

Section 5.14

Taxes

34

 

Section 5.15

Environmental Matters in respect of the Real Property

35

 

Section 5.16

Broker’s Fees; Transaction Bonuses

35

 

Section 5.17

Insurance

36

 

Section 5.18

Property

36

 

Section 5.19

Financial Statements

36

 

Section 5.20

Absence of Undisclosed Liabilities

36

 

Section 5.21

Employment Matters

36

 

Section 5.22

Permits and Rights

40

 

Section 5.23

Claims Against Third Parties

40

 

Section 5.24

Station Intellectual Property

40

 

Section 5.25

Disclaimer of Other Representatives

42

 

 

 

 

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER

43

 

 

 

 

 

Section 6.1

Authorization

43

 

Section 6.2

Consents and Approvals

43

 

Section 6.3

Litigation

43

 

Section 6.4

Brokers

43

 

Section 6.5

Disclosure of Information

43

 

Section 6.6

Investment Representation

44

 

Section 6.7

Solvency

44

 

Section 6.8

Equity Financing

44

 

 

 

 

ARTICLE VII THE DISTRIBUTION

44

 

 

 

 

 

Section 7.1

Record Date and Closing Date

44

 

Section 7.2

Authorization of Mediaco Common Stock; Charter and By-laws

45

 

Section 7.3

The Agent

45

 

Section 7.4

Delivery of Shares to the Agent

45

 

Section 7.5

The Distribution

45

 

 

 

 

ARTICLE VIII INDEMNIFICATION

46

 

 

 

 

 

Section 8.1

Emmis’ Indemnities

46

 

Section 8.2

Mediaco’s Indemnities

47

 

Section 8.3

Procedure for Indemnification

47

 

Section 8.4

Limitations

48

 

Section 8.5

Certain Limitations

49

 

Section 8.6

Survival

49

 

Section 8.7

Exclusive Remedies following the Closing

50

 

Section 8.8

Mitigation of Damages

50

 

 

 

 

ARTICLE IX ADDITIONAL COVENANTS

50

 

 

 

 

 

Section 9.1

Affirmative Covenants of Emmis

50

 

Section 9.2

Negative Covenants of Emmis

51

 

ii


 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

Section 9.3

Covenants of Mediaco

52

 

Section 9.4

Covenants of Purchaser

52

 

Section 9.5

Access

52

 

Section 9.6

No Inconsistent Action

53

 

Section 9.7

Exclusivity

53

 

Section 9.8

Further Assurances

53

 

Section 9.9

Transition Efforts

53

 

Section 9.10

Press Releases

54

 

Section 9.11

Off-the-Shelf Software Licenses

54

 

Section 9.12

Social Media Accounts

54

 

Section 9.13

Missing IP

54

 

Section 9.14

Accounting

54

 

Section 9.15

Financing

54

 

Section 9.16

Replacement of Guaranties

55

 

Section 9.17

Governmental Approvals

55

 

Section 9.18

Board of Directors of Mediaco

56

 

Section 9.19

Actions Relating to the Distribution; Listing of Class A Common Stock

56

 

Section 9.20

Certain Tax Matters

57

 

 

 

 

ARTICLE X ACCESS TO INFORMATION

58

 

 

 

 

 

Section 10.1

Provision of Information

58

 

Section 10.2

Privileged Information

59

 

Section 10.3

Production of Witnesses

60

 

Section 10.4

Retention of Information

61

 

Section 10.5

Confidentiality

61

 

Section 10.6

Cooperation with Respect to Government Reports and Filings

62

 

 

 

 

ARTICLE XI TERMINATION RIGHTS

63

 

 

 

 

 

Section 11.1

Termination

63

 

 

 

 

ARTICLE XII EMPLOYEE MATTERS

64

 

 

 

 

 

Section 12.1

Employee Lease

64

 

Section 12.2

No Assumption of Emmis Plans

64

 

Section 12.3

COBRA Obligations

64

 

 

 

 

ARTICLE XIII MISCELLANEOUS

65

 

 

 

 

 

Section 13.1

Expenses

65

 

Section 13.2

Notices

65

 

Section 13.3

Interpretation

66

 

Section 13.4

Headings

66

 

Section 13.5

Severability

66

 

Section 13.6

Assignment

67

 

Section 13.7

No Third Party Beneficiaries

67

 

Section 13.8

Entire Agreement

67

 

Section 13.9

Governing Law

67

 

iii


 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

Section 13.10

Counterparts

68

 

Section 13.11

Amendments; Waivers

68

 

Section 13.12

WAIVER OF JURY TRIAL

68

 

Section 13.13

JURISDICTION; SERVICE OF PROCESS

68

 

Section 13.14

Specific Performance

69

 

Section 13.15

Damages Waiver

70

 

Section 13.16

Lenders

70

 

Emmis/Mediaco Disclosure Schedules

 

Schedule Section 2.1(b)(i)

FCC Licenses

Schedule Section 2.1(b)(ii)

Personal Property

Schedule Section 2.1(b)(iii)

Real Estate Leases

Schedule Section 2.1(b)(iv)

Assumed Contracts

Schedule Section 2.1(b)(v)

Station Intellectual Property

Schedule Section 2.1(c)(xi)

Excluded Assets

Schedule Section 2.6

Shared Contracts

Schedule Section 5.3

Capitalization of Mediaco

Schedule Section 5.4

Subsidiaries

Schedule Section 5.6

Conflicts in the Material Contracts

Schedule Section 5.7

Litigation

Schedule Section 5.9

Assets

Schedule Section 5.9(b)

Permitted Encumbrances

Schedule Section 5.9(c)

Overhead and Shared Services

Schedule Section 5.12

Compliance with Laws

Schedule Section 5.14(b)

Emmis Tax Basis Estimate

Schedule Section 5.16(b)

Broker’s Fees; Transaction Bonuses

Schedule Section 5.23

Claims Against Third Parties

Schedule Section 5.24

Station Intellectual Property

Schedule Section 9.15

Guaranties

Schedule Section 12.1

Station Employees

 

 

Exhibits

 

 

Exhibit A

Emmis Promissory Note

Exhibit B

Restated Articles of Mediaco

Exhibit C

Employee Leasing Agreement

Exhibit D

Management Agreement

Exhibit E

[intentionally omitted]

Exhibit F

Local Marketing Agreement

Exhibit G

Shared Services Agreements

 

iv


 

CONTRIBUTION AND DISTRIBUTION AGREEMENT

 

This CONTRIBUTION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as of June 28, 2019, is entered into by and between Emmis Communications Corporation, an Indiana corporation (“Emmis”), Mediaco Holding Inc., an Indiana corporation and a wholly-owned direct Subsidiary of Emmis (“Mediaco”), SG Broadcasting LLC, a Delaware limited liability company (“Purchaser” and, collectively with Emmis and Mediaco, the “Parties” and each, a “Party”), and solely for purposes of the guaranty of Purchaser’s obligations in Section 3.2(c), Standard General L.P.

 

RECITALS

 

WHEREAS, Emmis operates the following radio stations (each, a “Purchased Station” and, together, the “Purchased Stations”) through its Subsidiaries, including Emmis License Corporation of New York, WBLS-WLIB LLC, and WBLS-WLIB License LLC:

 

WBLS-FM
WQHT-FM;

 

WHEREAS, Mediaco is a newly-formed, indirect wholly-owned Subsidiary of Emmis;

 

WHEREAS, prior to the Distribution, upon and subject to the terms and conditions set forth in this Agreement, including the terms set forth in Section 2.3, Section 2.4 and Section 2.6, Emmis shall: (a) cause the Mediaco Assets held by any member of the Emmis Group to be transferred, assigned, delivered and conveyed to Mediaco; and (b) cause the Mediaco Liabilities to which any member of the Emmis Group is subject to be accepted and assumed by Mediaco (the foregoing clauses (a) and (b), as may be amended pursuant to Section 2.1(h), are referred to as the “Initial Contribution”);

 

WHEREAS, in consideration for the Initial Contribution, at Closing (a) Mediaco will pay Emmis the sum of $91,500,000 (the “Emmis Purchase Price”), (b) Mediaco will issue a promissory note in the form of Exhibit A attached to this Agreement, payable by Mediaco to the order of Emmis, in the original principal amount of $5,000,000 (the “Emmis Promissory Note”), and (c) Emmis shall receive a number of shares of the Class A Common Stock, par value $0.01 per share, of Mediaco (“Class A Common Stock”), which, together with any shares previously issued to Emmis Operating Company, shall constitute all of the issued and outstanding Class A Common Stock and represent a 23.72% equity ownership interest in Mediaco as of the completion of the Closing;

 

WHEREAS, simultaneously with the Initial Contribution, upon and subject to the terms and conditions set forth in this Agreement, Purchaser agrees to purchase at the Closing and Mediaco agrees to sell and issue to Purchaser (the “Purchaser Investment”) for an aggregate purchase price of cash in the amount of $91,500,000, a number of shares of the Class B Common Stock, par value $0.01 per share, of Mediaco (“Class B Common Stock”), which shall constitute all of the issued and outstanding Class B Common Stock and represent a 76.28% equity ownership interest in Mediaco as of the completion of the Closing;

 

1


 

WHEREAS, the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of Mediaco (including the respective voting rights of the Class A Common Stock, which shall be entitled to one (1) vote per share and the Class B Common Stock, which shall be entitled to ten (10) votes per share) shall be set forth in the Amended and Restated Articles of Incorporation in the form of Exhibit B attached to this Agreement (the “Restated Articles”) and to be filed upon the Closing;

 

WHEREAS, immediately following the Initial Contribution, upon and subject to the terms and conditions set forth in this Agreement, Emmis will distribute on a pro rata basis (the “Distribution”) all of the issued and outstanding shares of Class A Common Stock held by the Emmis Group (as defined below) to the holders as of the Record Date (as defined herein) of the outstanding shares of Class A and Class B common stock, par value $0.01 per share, of Emmis (the “Emmis Common Stock”).

 

NOW, THEREFORE, in consideration of these premises, and of the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                                                       General. The definitions contained in the preamble and recitals set forth above are incorporated in and made part of this Agreement. As used in this Agreement, if not otherwise defined herein, the following terms shall have the following meanings:

 

Accounting Firm” means Ernst & Young LLP or, if Ernst & Young LLP is unable to serve, the office of an impartial nationally recognized firm of independent certified public accountants mutually agreed by Emmis and Purchaser.

 

Accounts Receivable” has the meaning set forth in Section 2.1(b)(vi).

 

Affiliate” means a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. The term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise; provided, however, that for purposes of this Agreement, from and after the Distribution Time, no member of either Group shall be deemed an Affiliate of any member of the other Group.

 

Agent” means the distribution agent agreed upon by Emmis and Purchaser, to be appointed by Emmis to distribute the shares of Class A Common Stock pursuant to the Distribution.

 

Agreement” has the meaning set forth in the Preamble.

 

2


 

Asset” means any and all assets, properties and rights, wherever located, whether real, personal or mixed, tangible or intangible, current or long-term.

 

Assumed Contract” has the meaning set forth in Section 2.1(b)(iv).

 

Benefit Plan” means any employment, consulting, bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock, leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, accident, disability, worker’s compensation or other insurance, severance, separation or other benefit plan, practice, policy or arrangement, whether written or oral, or whether for the benefit of a single individual or more than one individual including, but not limited to, any “employee benefit plan” within the meaning of Section 3(3) of ERISA.

 

Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by applicable Law to close.

 

Class A Common Stock” has the meaning set forth in the Recitals.

 

Class A Valuation Statement” has the meaning set forth in Section 9.19(d).

 

Class B Common Stock” has the meaning set forth in the Recitals.

 

Closing” has the meaning set forth in Section 4.1.

 

Closing Date” has the meaning set forth in Section 4.1.

 

Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

Confidential Information” means all confidential or proprietary information concerning a Party and/or its Subsidiaries which, prior to or following the Closing, has been disclosed by a Party or its Subsidiaries to the other Party or its Subsidiaries, in written, oral (including by recording), electronic or visual form, or otherwise has come into the possession of the other Party, including pursuant to the access provisions or any other provision of this Agreement or any other Transaction Agreement (except to the extent that (i) such information can be shown to be or have become generally available to the public other than as a result of an act or omission by the receiving Party or any of its Representatives, (ii) a receiving Party receives or has received such information on a non-confidential basis from a source other than the providing Party or any of its Representatives, provided that such source is not known to the receiving Party to be subject to a contractual, legal, fiduciary or other obligation of confidentiality with respect to such information, (iii) such information is already known by the receiving Party as evidenced by contemporaneous competent proof, or (iv) such information is independently developed by the receiving Party after the date hereof without reference to the Confidential Information of the disclosing Party or its Subsidiaries and without a breach of this Agreement).

 

Confidentiality Agreement” means the Non-Disclosure Agreement by and between Emmis and Purchaser, dated as of January 31, 2019.

 

3


 

Consent” means any approval, authorization, clearance, consent, ratification, permission, exemption or waiver, or the expiration, lapse or termination of any waiting period (including any extension thereof).

 

Contract” means any contract, agreement or binding arrangement or understanding, whether written or oral and whether express or implied, including all amendments, modifications and supplements thereto and waivers and consents thereunder.

 

Dataroom” means the electronic data room established by Merrill DatasiteOne on behalf of Emmis located at https://datasiteone.merrillcorp.com/global/ under code name “Project D Dataroom.”

 

Debt Financing” has the meaning set forth in Section 9.15(a).

 

Delayed Transfer Assets” has the meaning set forth in Section 2.3(a).

 

Delayed Transfer Liabilities” has the meaning set forth in Section 2.3(a).

 

Distribution” has the meaning set forth in the Recitals.

 

Distribution Time” means the time established by Emmis as the effective time of the Distribution on the Closing Date.

 

Emmis” has the meaning set forth in the Preamble.

 

Emmis Business” means all of the businesses and operations conducted by the Emmis Group, other than the Mediaco Business, at any time, whether prior to, on or after the Closing Date.

 

Emmis Common Stock” has the meaning set forth in the Recitals.

 

Emmis Group” means Emmis and the Emmis Subsidiaries.

 

Emmis Plan” means any (i) Benefit Plan which is established, sponsored or maintained by Emmis or any ERISA Affiliate, (ii) any Benefit Plan with respect to which Emmis or any ERISA Affiliate has or could reasonably be expected to have any direct or indirect liability or (iii) any Benefit Plan covering or providing for compensation or benefits for any current or former employee or independent contractor of Emmis or any ERISA Affiliate.

 

Emmis Promissory Note” has the meaning set forth in the Recitals.

 

Emmis Share Number” has the meaning set forth in Section 7.5(a).

 

Emmis Stockholders” means the stockholders of Emmis.

 

Emmis Stock Consideration” shall have the meaning set forth in Section 3.1(a).

 

Emmis Subsidiaries” means all direct and indirect Subsidiaries of Emmis other than Mediaco and the Mediaco Subsidiaries.

 

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Emmis/Mediaco Disclosure Schedules” means the disclosure schedules delivered by Emmis and Mediaco to Purchaser concurrently herewith.

 

Employee Leasing Agreement” mean the Employee Leasing Agreement by and between Emmis and Mediaco in the form attached as Exhibit C, and to be executed and delivered, on or prior to, the Closing.

 

Encumbrances” means all liens (statutory or otherwise), security interests, hypothecations, indentures, preferences, priorities, easements, rights of way, pledges, bailments (in the nature of a pledge or for purposes of security), mortgages, deeds of trusts, covenants, grants of power to confess judgment, charges (including any conditional sale or other title retention agreement or lease in the nature thereof), claims, options, encroachments, encumbrances or other restrictions of any kind, including restrictions on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, and all other similar rights of third parties, of any kind or nature and restrictions or limitations on ownership or use of real or personal property or irregularities in title thereto.

 

Equity Commitment Letter” has the meaning set forth in 6.8.

 

Equity Financing” has the meaning set forth in 6.8.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

 

ERISA Affiliate” means any Person that, together with Emmis or any of its Affiliates, is or was at any time treated as a single employer under Section 414 of the Code or Section 4001 of ERISA and any general partnership of which Emmis or any of its Affiliates is or has been a general partner, or any predecessor of the foregoing.

 

Estimated Closing Adjustment” has the meaning set forth in Section 3.1(b).

 

Excluded Assets” has the meaning set forth in Section 2.1(c).

 

Excluded Liabilities” has the meaning set forth in Section 2.1(e).

 

FCC” means the Federal Communications Commission.

 

FCC Applications means the application or applications that the Parties must file with the FCC requesting its consent to the assignment of the FCC Licenses from the applicable Emmis Subsidiaries to Mediaco as it is proposed to be owned subsequent to the Closing.

 

FCC Consents shall mean the action or actions by the FCC granting or approving the FCC Applications.

 

FCC Licenses” means all licenses, permits, consents, approvals, authorizations, and orders, any applications therefor and for facilities modifications, any renewals, extensions, or modifications thereof, and any waivers or special temporary authorizations, in each case issued to Emmis or its Subsidiaries by the FCC relating to the Purchased Stations.

 

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Fraud” means common law fraud with respect, and limited, to the making of the representations and warranties set forth in this Agreement.

 

GAAP” means United States generally accepted accounting principles.

 

Governmental Authority” means any foreign, federal, state or local court, administrative agency, official board, bureau, governmental or quasi-governmental entities having competent jurisdiction over Emmis, Mediaco or Purchaser, any of their respective Subsidiaries and any other tribunal or commission or other governmental department, authority or instrumentality or any subdivision, agency, mediator, commission or authority of competent jurisdiction.

 

Group” means the Emmis Group or the Mediaco Group, as the case may be.

 

Hazardous Substances” means any substance or material regulated or classified as a hazardous waste or hazardous substance under applicable Environmental Laws.

 

Information” means all lists of customers, records pertaining to customers and accounts, copies of Contracts, personnel records, lists and records pertaining to customers, suppliers and agents, and all accounting and other books, records, ledgers, files and business records, data and other information of every kind (whether in paper, electronic, microfilm, computer tape or disc, magnetic tape or any other form).

 

Initial Contribution” has the meaning set forth in the Recitals.

 

Intellectual Property” means, collectively, all intellectual property and similar rights in any jurisdiction, whether registered or unregistered, including such rights in and to (i) patents and patent applications, utility models and utility model applications, together with any divisionals, continuations, continuations-in-part, reissues, renewals, re-examinations, provisionals, and extensions of the foregoing; (ii) inventor’s certificates and invention disclosures; (iii) copyrightable works of authorship, and copyrights (including any registrations, applications for registration and renewals for the foregoing), moral rights, rights of publicity and rights of privacy; (iv) trademarks and service marks (including those which are protected without registration), trade names, corporate names, logos, slogans, taglines, trade dress, design rights, and other indicia of source or origin (collectively “Trademarks”) together with all registrations and applications for registration of any of the foregoing and all goodwill related to any of the foregoing; (v) Internet domain names, social media user names/accounts and uniform resource locators; (vi) databases and data collections; (vii) unpatented inventions (whether or not patentable and whether or not reduced to practice), trade secrets, know-how and confidential or proprietary information, including (in whatever form or medium) discoveries, ideas, compositions, drawings, plans, proposals, specifications, processes, procedures, data, information, manuals, reports, financial, marketing and business data, pricing and cost information, correspondence and notes; (viii) copyrights and other intellectual property rights with respect to Software; (ix) all claims and rights related to any of the foregoing, including the right to sue and recover for present and future infringement or other violation of any of the foregoing; and (x) all documents in whatever format.

 

Intended Tax Treatment” has the meaning set forth in Section 9.20(a).

 

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IP Limiting Contract” means any Contract that materially limits, restricts or impairs the ability to use, register, or enforce any Owned Station IP in a manner substantially consistent with the manner in which it has been used, registered or enforced during the twelve (12) months prior to the Closing Date, including any Contracts entered into in connection with any settlement, co-existence or non-compete arrangement.

 

Knowledge” means (i) with respect to Emmis, the actual knowledge of Jeffrey H. Smulyan, Patrick M. Walsh, Ryan Hornaday and J. Scott Enright, and (ii) with respect to the Purchaser, the actual knowledge of Soohyung Kim, David Glazek and Gail Steiner; provided, that, each such individual will be deemed to have knowledge of a fact or other matter that a reasonably prudent individual could be expected to have in the course of such individual’s duties with respect to the Emmis Group or Purchaser, as the case may be.

 

Law” means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation, judgment, Order, injunction, decree, arbitration award, agency requirement, license, treaty or permit of any Governmental Authority.

 

Lease” means any lease, sublease, license or other agreement governing any leasehold or subleasehold estates and other similar rights of a Person to use or occupy any land, buildings, structures or other improvements on such land.

 

Lease Deposits” has the meaning set forth in Section 2.1(b)(iii).

 

Leased Real Property” has the meaning set forth in Section 2.1(b)(iii).

 

Lender” has the meaning set forth in Section 9.15(a).

 

Liability” or “Liabilities” means all debts, liabilities, obligations, Losses, interest and penalties of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising.

 

Licensed Station IP” means all Intellectual Property owned by a third party that is used by any member of the Emmis Group under a written license or sublicense and that relates to the operation of the Mediaco Business.

 

Litigation Matters” means all demands, actions, claims, charges, grievances, complaints, arbitrations, mediations, proceedings, inquiries, reviews, audits, hearings, pending or threatened litigation, investigations, suits, countersuits or other legal matters of any nature, whether civil, criminal, administrative, investigative, regulatory or informal, commenced, brought or heard by or before any Governmental Authority, private arbitration organization or pursuant to a collective bargaining agreement, in the case of each of the foregoing, that have been or may be asserted against, or otherwise adversely affect, Emmis or Mediaco (or members of either Group).

 

Local Marketing Agreement” has the meaning set forth in Section 4.3(d).

 

Losses” means any and all damages, judgments, awards, liabilities, losses, obligations, claims of any kind or nature, fines, and costs and expenses (including interest, penalties, reasonable

 

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fees and expenses of attorneys, auditors, consultants and other agents and all amounts paid in investigation, defense or settlement of any of the foregoing); provided, however, that “Losses” shall not include any incidental, consequential, special or punitive damages, lost profits, lost revenues or diminution in value, except to the extent actually awarded to a Governmental Authority or other third party in a third party claim.

 

Management Agreement” mean the Management Agreement by and between Emmis and Mediaco in the form attached as Exhibit D, and to be executed and delivered, on or prior to, the Closing.

 

Material Adverse Effect means any event, transaction, condition, change or effect that (individually or in the aggregate with all other such events, transactions, conditions, changes or effects) has had, or would reasonably be expected to have, a material adverse effect on the Mediaco Assets, or on the business, assets, liabilities, financial condition or results of operations of the business of the Purchased Stations, taken as a whole; provided, however, that for purposes of determining whether any Material Adverse Effect shall have occurred, there shall be excluded and disregarded any event, transaction, condition, change or effect resulting from or relating to (i) general business or economic conditions, or conditions generally affecting the industry in which the business of the Purchased Stations operates which do not disproportionately impact the business of the Purchased Stations, (ii) any changes in financial or securities markets in general; (iii) any change in accounting requirements or principles or in any applicable Laws, (iv) the compliance with the terms of, or the taking of any action expressly required by, this Agreement, (v) acts of terrorism or military action or the threat or escalation thereof, (vi) actions taken by any Person that are attributable to the announcement of this Agreement and the transactions contemplated hereby or the identity of Mediaco or Purchaser, and (vii) any existing event, occurrence or circumstance expressly described on a Schedule hereto, solely to the extent such event, occurrence or circumstance is described as a potentially adverse matter therein.

 

Material Assumed Contract” has the meaning set forth in Section 2.1(b)(iv).

 

Material Shared Contract” has the meaning set forth in Section 2.6.

 

Mediaco” has the meaning set forth in the Preamble.

 

Mediaco Assets” has the meaning set forth in Section 2.1(b).

 

Mediaco Business” means the business of the Purchased Stations, as conducted and operated by Emmis and its Subsidiaries at any time during the twelve (12) month period prior to the Closing.

 

Mediaco Current Assets” means Accounts Receivable, prepaid assets and other current assets with respect to the Purchased Stations (but excluding any intercompany receivable or payable balance with Emmis); provided, however, that Mediaco Current Assets shall not include trade or barter arrangements except to the extent that the balance of the consideration to be received at or after Closing under all such arrangements exceeds the aggregate net liability for the contracted balance of the air time remaining as of Closing under all such arrangements by more than $50,000 for the Purchased Stations.

 

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Mediaco Current Liabilities” means accounts payable, accrued expenses, and other current liabilities with respect to the Purchased Stations (but excluding any intercompany receivable or payable balance with Emmis); provided, however, that Mediaco Current Liabilities shall not include (i) the current portion of operating lease liabilities, or (ii) trade or barter arrangements except to the extent that the aggregate net liability for the contracted balance of the air time remaining as of Closing under all such arrangements exceeds the balance of the consideration to be received at or after Closing under all such arrangements by more than $50,000 for the Purchased Stations.

 

Mediaco Entities” mean Mediaco and each of the Mediaco Subsidiaries.

 

Mediaco Form 10” shall mean the registration statement on Form 10 to be filed by Mediaco with the SEC under the Securities Exchange Act of 1934, as amended, in connection with the Distribution, including any amendment or supplement thereto.

 

Mediaco Group” means Mediaco and the Mediaco Subsidiaries.

 

Mediaco Liabilities” has the meaning set forth in Section 2.1(b).

 

Mediaco License Entity” means a wholly-owned subsidiary of Mediaco to which the FCC Licenses will be transferred in connection with the Initial Contribution.

 

Mediaco Subsidiaries” means the Subsidiaries of Emmis that will be contributed, directly or indirectly, to Mediaco in connection with the Initial Contribution, if any, and Mediaco License Entity.

 

Missing IP” means any Intellectual Property that is owned or has been licensed to be used by a member of the Emmis Group and that is or has been used in connection with the business of the Purchased Stations at any time within the twelve (12) months prior to the date hereof, in each case where the lack of such Intellectual Property may cause an adverse impact on the business of the Purchased Stations, except for an impact that is “de minimis.”

 

Multiemployer Plans” has the meaning set forth in Section 5.21(l).

 

Net Collected Working Capital” means the difference between (A) the Accounts Receivable collected by Mediaco following Closing plus the value of other Mediaco Current Assets (excluding any uncollected Accounts Receivable), minus (B) the amount of Mediaco Current Liabilities actually paid and settled by Mediaco following Closing.

 

Notice of Disagreement” has the meaning set forth in Section 3.1(f).

 

Owned Station IP” means all Intellectual Property owned or purported to be owned by any member of the Emmis Group and used in the operation of the Mediaco Business.

 

Order” means any decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, settlement, ruling, restriction, charge or writ of any Governmental Authority, whether temporary, preliminary or permanent.

 

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Parties” has the meaning set forth in the Preamble.

 

Permit means any permit, franchise, certificate, consent, clearance, waiver, notification, authorization, approval, registration or license granted by or obtained from any Governmental Authority in accordance with applicable Law, other than the FCC Licenses.

 

Permitted Encumbrances” means (i) those items set forth in Section 5.9(b) of the Emmis/Mediaco Disclosure Schedules; (ii) liens for Taxes not yet due and payable; (iii) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of any Mediaco Entity or the Assets, as applicable; (iv) zoning ordinances and easements, rights of way, other similar encumbrances on, over or affecting the Leased Real Property provided the same do not materially interfere with the operation of the Leased Real Property, individually or in the aggregate; (v) statutory liens in favor of Third Party Landlords, provided the same do not materially detract from the value of the affected Real Estate Lease, materially interfere with the operation of the Leased Real Property, or individually or in the aggregate have a Material Adverse Effect on the Leased Real Property as currently operated; (vi) liens released at or prior to Closing and thus not encumbering the Mediaco Assets following Closing; or (vii) liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of any Mediaco Entity.

 

Personmeans any individual, sole proprietorship, partnership, joint venture, corporation, estate, trust, unincorporated organization, association, limited liability company, institution or other entity, including any that is a Governmental Authority.

 

Personal Information” means any information or data that alone or in combination with other information identifies or can be used to identify, directly or indirectly, an individual natural Person, including (a) name, physical address, telephone number, email address, financial account number or government-issued identifier (including Social Security number and driver’s license number), information about an individual’s personality, personal status, intimate affairs, health, vocational qualifications opinions or beliefs, educational or employment information, marital or other status, and any other data used or intended to be used to identify, contact or precisely locate an individual (e.g., geolocation data); (b) information that is created, maintained, or accessed by an individual (e.g., videos, audio or individual contact information); (c) any data regarding an individual’s activities online or on a mobile device or other application (e.g., searches conducted, web pages or content visited or viewed); and (d) Internet Protocol address, unique identifiers or other persistent identifiers. Personal information includes information in any form, including paper, electronic and other forms.

 

Personal Property” has the meaning set forth in Section 2.1(b)(ii).

 

Privacy and Information Security Requirements” mean, collectively, all Laws worldwide relating to the processing, privacy or security of Personal Information and all guidance issued thereunder, including the European Union Data Protection Directive (EU Directive 95/46/EC) and all laws implementing it and any successor legislation thereto (including the EU General Data

 

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Protection Regulation (EU) 2016/679), Section 5 of the Federal Trade Commission Act, the CAN SPAM Act, Children’s Online Privacy Protection Act, state data breach notification laws, state data security laws, and any law concerning requirements for website and mobile application privacy policies and practices, or any outbound communications (including e-mail marketing, telemarketing and text messaging), tracking and marketing, including the Telephone Consumer Protection Act.

 

Privileged Information” means with respect to either Group, Information regarding a member of such Group or any of its operations, Assets or Liabilities (whether in documents or stored in any other form (electronic or tangible) or known to its Representatives) that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or another applicable privilege, that a member of the other Group may come into possession of or obtain access to pursuant to this Agreement, any other Transaction Agreement or otherwise.

 

Proceeding means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

 

Purchased Station” and “Purchased Stations” have the meanings set forth in the Recitals.

 

Purchaser” has the meaning set forth in the Recitals.

 

Purchaser Stock Consideration” shall have the meaning set forth in Section 2.2(b).

 

Qualified Plan” has the meaning set forth in Section 5.21(d).

 

Real Estate Leases” has the meaning set forth in Section 2.1(b)(iii).

 

Record Date” means the close of business on the date to be determined by the Board of Directors of Emmis as the record date for determining stockholders of Emmis entitled to participate in the Distribution.

 

Related Parties” means, with respect to any Person, such Person’s present, former and future Representatives and each of their respective heirs, executors, successors and assigns.

 

Representative” means, with respect to any Person, any of such Person’s directors, managers or persons acting in a similar capacity with such Person’s approval on its behalf, officers, employees, agents, consultants, financial and other advisors, accountants, attorneys and other representatives.

 

Restated Articles” has the meaning set forth in the Recitals.

 

SEC” means the United States Securities and Exchange Commission.

 

Settlement Statement” has the meaning set forth in Section 3.1(d).

 

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Shared Contracts” means Contracts to which Emmis or any of its Affiliates is a party pursuant to which the counterparty currently provides products or services to, or licenses Intellectual Property for use in, both the Mediaco Business and the Emmis Business, but excluding Assumed Contracts and Contracts under which products or services are provided to, or Intellectual Property is licensed for use in, the Mediaco Business in connection with overhead or shared services and charged directly or indirectly to the Mediaco Business as corporate overhead.

 

Shared Services Agreements” has the meaning set forth in Section 4.3(d).

 

Software” means computer software, computer programs, data files, source code, object code, middleware, application program interfaces and libraries.

 

Solvent” means, with regard to any Person, that (i) the sum of the assets of such Person, both at a fair valuation and at present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated and disputed liabilities, (ii) such Person has sufficient capital and liquidity with which to conduct its business and (iii) such Person has not incurred and does not plan to incur debts beyond its ability to pay such debts as they mature or become due.

 

Station Employees” has the meaning set forth in Section 12.1.

 

Station Intellectual Property” has the meaning set forth in Section 2.1(b)(v).

 

Station IT Assets” means all websites, Software, databases, systems (telecommunications and otherwise), servers, computers, hardware, firmware, middleware, networks, data communications lines, routers, hubs, switches and all other information technology equipment, and all associated documentation, in each case to the extent used in connection with the Purchased Stations and not constituting an Excluded Asset.

 

Station Plan” means any Emmis Plan covering or providing for compensation or benefits for any Station Employee.

 

Subsidiary” means, with respect to any Person (but subject to the proviso in the definition of Affiliate), a corporation, partnership, association, limited liability company, trust or other form of legal entity in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, has either (i) a majority ownership in (A) the equity or (B) the interest in the capital or profits thereof, (ii) the power to elect, or to direct the election of, a majority of the board of directors or other analogous governing body of such entity, or (iii) the title or function of general partner or manager, or the right to designate the Person having such title or function.

 

Tax” or “Taxes” means (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties (including stamp duty), impositions and liabilities, including capital gains tax, taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, escheat, excise and property taxes as well as public imposts, fees and social security charges (including health, unemployment, workers’ compensation and pension insurance), together with all interest, penalties, and additions imposed with respect to such amounts; (ii) any liability for the payment of any amounts of the type described in clause (i) as a

 

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result of being or having been a member of an affiliated, consolidated, combined, unitary or similar group (including any arrangement for group or consortium relief or similar arrangement) for any period; and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligation under any Contract with any other Person (other than a Contract the principle subject of which is not Taxes) with respect to such amounts and including any liability for taxes of a predecessor or transferor or otherwise by operation of law.

 

Tax Basis Statement” has the meaning set forth in Section 9.20(b).

 

Tax Purposes” shall mean for U.S. federal income tax purposes together with any state and local tax purposes to the extent following U.S. federal income tax principles.

 

Total Emmis Consideration” shall mean the sum of (i) the Emmis Purchase Price as adjusted pursuant to this Agreement, (ii) the balance of the Emmis Promissory Note immediately after the Closing, and (iii) the fair market value of the Emmis Stock Consideration as set forth in the Class A Valuation Statement, as may be revised and finally determined pursuant to Section 9.19(b).

 

Third-Party Claim” means any Litigation Matter by or before any Governmental Authority asserted by a Person who or which is neither a Party nor a controlled or jointly controlled Affiliate of a Party.

 

Third-Party Landlord” means the applicable third-party landlord under each of the Leases.

 

Transaction Agreements” means this Agreement, the Management Agreement,  the Employee Leasing Agreement, the Local Marketing Agreement, the Shared Services Agreements and all other documents required to be delivered by any party on the Closing Date pursuant to this Agreement or otherwise delivered by any party on or about the Closing Date to effectuate the Transactions (including any bills of sale, assignments and assumptions, certificates of title and all other instruments of sale, transfer, assignment, conveyance and delivery that are delivered in connection with the consummation of the Transactions).

 

Transactions” means the Initial Contribution, Distribution and Purchaser Investment.

 

WBLS Leased Real Property” the tower site used by WBLS in the Meadowlands, New Jersey, that is part of the Leased Real Property.

 

Section 1.2                                                                       Construction. When a reference is made in this Agreement to an Article, Section, or Schedule, such reference shall be to an Article or Section of this Agreement or to a Schedule in the Emmis/Mediaco Disclosure Schedules unless otherwise indicated. The table of contents to this Agreement, and the Article and Section headings contained in this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms

 

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of such terms and to the masculine as well as to the feminine and neuter genders of such terms and any reference to the masculine, feminine or neuter gender shall be deemed to include any gender or all three as appropriate. Unless otherwise specified, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes, and including all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns. Unless expressly stated to the contrary in this Agreement or in any other Transaction Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to June 28, 2019 (or the date of which the relevant Transaction Agreement is first entered into, as the case may be) regardless of any amendment or restatement hereof (or thereof). The use of the phrase “ordinary course of business” or other derivations thereof shall mean “ordinary course of business consistent with past practice.” Unless the context otherwise requires, “or,” “neither,” “nor,” “any,” “either,” and “or” shall not be exclusive. Wherever and whenever in this Agreement there is a consent right of a Party or a reference to the “satisfaction” or “sole discretion” of a Party, such Party shall be entitled to consider solely its own interests (and not the interests of any other Person) or, at its sole election, any such other interests and factors as such Party desires.

 

Section 1.3                                                                       References to Time. All references in this Agreement to times of the day shall be to New York City time.

 

ARTICLE II

 

THE INITIAL CONTRIBUTION AND PURCHASER INVESTMENT

 

Section 2.1                                                                       Contribution and Transfer of Mediaco Assets and Mediaco Liabilities.

 

(a)                                 On the terms and subject to the conditions set forth in this Agreement, including Section 2.1(h), Section 2.3, and Section 2.6 and, in the case of Information, Article X, effective on or prior to the Closing Date, and in any event immediately prior to the Distribution Time, Emmis shall and shall cause its Affiliates to, consummate the transactions contemplated hereby, including the Initial Contribution. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date:

 

(i)                                     Emmis shall transfer, assign, deliver and convey to Mediaco all of its right, title and interest in and to the Mediaco Assets; and

 

(ii)                                  Emmis shall transfer, assign, deliver and convey to Mediaco all of the Mediaco Liabilities.

 

(b)                                 Transfer of Assets of the Purchased Stations.  On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, immediately prior to the Distribution, Emmis shall (or shall cause its Subsidiaries to) sell, assign, transfer, convey and deliver to Mediaco (or Mediaco License Entity, in the case of the FCC Licenses), in each case free and clear of all Encumbrances (other than Permitted Encumbrances), (i) all of the assets, interests, property and

 

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rights of Emmis and its Subsidiaries used primarily in the operation of the Purchased Stations (collectively, and together with those assets, properties and rights allocated to Mediaco under Section 2.1(f), the “Mediaco Assets”), and (ii) the Mediaco Liabilities, but excluding the Excluded Assets and subject to Section 2.1(f).  Except for the Excluded Assets and subject to Section 2.1(f), the Mediaco Assets shall include, but not be limited to, those items set forth in subsections (i) - (x) below:

 

(i)                                     all FCC Licenses relating to the Purchased Stations, including those listed on Section 2.1(b)(i), together with renewals or modifications thereof between the date hereof and the Closing Date;

 

(ii)                                  all equipment, furniture, fixtures, materials and supplies, fixed assets, production equipment, computers, computer servers, telephone systems, cell phones, smart phones, personal data assistants, personal computers and similar devices, tablets, leasehold improvements, inventories, vehicles, towers, transmitters, antennas, receivers, spare parts and other tangible personal property owned by any Subsidiary of Emmis and used primarily in the operation of the Purchased Stations, including the property listed on Section 2.1(b)(ii), together with replacements thereof and additions thereto made between the date of such Schedule and the Closing Date, but excluding any such property disposed of in the ordinary course of business before the date hereof or in accordance with Section 9.2(d) subsequent to the date hereof (collectively, the “Personal Property”);

 

(iii)                               the real estate leases listed and described on Section 2.1(b)(iii) (collectively, the “Real Estate Leases” and the premises thereunder, the “Leased Real Property”), including any security deposits thereunder (the “Lease Deposits”);

 

(iv)                              all Contracts of any member of the Emmis Group relating primarily to the Purchased Stations, including those listed on Section 2.1(b)(iv) (together with the Real Estate Leases, the “Assumed Contracts”) (but excluding any employment agreement and any other Emmis Plan except to the extent transferred and assumed pursuant to, and upon termination or expiration of, the Employee Leasing Agreement), which Section 2.1(b)(iv) lists all Contracts with an annual cost of at least $50,000 per year or $150,000 over the term of the Contract and all Contracts otherwise material to the Purchased Stations, in each case unless terminable without penalty by notice of ninety (90) days or less and not otherwise material (together with the Real Estate Leases, the “Material Assumed Contracts”), and including agreements for the sale of advertising time on the Purchased Stations existing as of Closing;

 

(v)                                 all of Emmis’ right, title and interest in and to all Intellectual Property owned by any member of the Emmis Group, all in whatever form or medium, including all goodwill, if any, associated with the foregoing, that is primarily used in the operation of the Purchased Stations, including the items listed on Schedule Section 2.1(b)(v) hereto, together with the Contracts listed on Schedule Section 2.1(b)(v) (with respect to Shared Contracts, to the extent used in Operation of the Purchased Stations and all Intellectual Property used or held by any member of the Emmis Group under such Contracts (with respect to Shared Contracts, to the extent used in Operation of the Purchased Stations) (all

 

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such Intellectual Property included in the Mediaco Assets, collectively, the “Station Intellectual Property”);

 

(vi)                              all accounts receivable and other rights to payment arising from the operation of the Purchased Stations prior to Closing (the “Accounts Receivable”);

 

(vii)                           any prepaid assets and other current assets (but excluding any intercompany receivable or payable balance with Emmis) with respect to the Purchased Stations;

 

(viii)                        each Purchased Station’s public inspection file, filings with the FCC relating to the Purchased Stations, all records required by the FCC to be kept by the Purchased Stations, all records relating to the Real Estate Leases and the Personal Property, and such technical information, engineering data, and, to the extent transferable, rights under manufacturers’ warranties as they exist at the Closing and directly related to the Assets being conveyed hereunder;

 

(ix)                              electronic or paper copies of all books and records related to the Purchased Stations, including proprietary information, financial data and information, technical information and data, operating manuals, data, studies, records, reports, ledgers, files, correspondence, computer files, plans, diagrams, blueprints and schematics for the Purchased Stations and including computer readable disk or tape copies of any items stored on computer files, together with original registration certificates for Trademarks included in the Station Intellectual Property to the extent in possession of the Emmis Group;

 

(x)                                 all Permits of the Emmis Group (other than FCC Licenses) used primarily in the operation of the Purchased Stations and to conduct the business of the Purchased Stations, to the extent transferable;

 

(xi)                              all claims and rights of action (A) against any third party that arise out of the use of any of the Mediaco Assets by the Emmis Group following the Closing or (B) against any person relating to any of the Mediaco Assets or Mediaco Liabilities, in each case to the extent attributable to the period of time following the Closing; and

 

(xii)                           all goodwill associated with the other Mediaco Assets and the business of the Purchased Stations.

 

(c)                                  Excluded Assets. The following assets of the Emmis Group shall not be transferred to Mediaco hereunder (collectively, the “Excluded Assets”):

 

(i)                                     all cash and cash equivalents of the Emmis Group;

 

(ii)                                  any insurance policies, and any cash surrender value in regard thereto, of any member of the Emmis Group;

 

(iii)                               any Emmis Plan or other Benefit Plan and the assets thereof;

 

(iv)                              any interest in and to any refunds of Taxes or other charges of Governmental Authorities with respect to the Purchased Stations for periods prior to the Closing;

 

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(v)                                 the “Emmis” name and any derivations thereof and related corporate and trade and service marks for the “Emmis” name and derivations thereof;

 

(vi)                              the shares of capital stock or other equity of Emmis and each Emmis Subsidiary;

 

(vii)                           the corporate records of Emmis and each Emmis Subsidiary, including transfer books, and all corporate assets and business units;

 

(viii)                        any accounts receivable from Emmis or any of its Affiliates, including any other Emmis Subsidiary, that are unrelated to the Purchased Stations;

 

(ix)                              all claims and rights of action (A) against any third party that arise out of the ownership, use or possession of any of the Mediaco Assets by the Emmis Group prior to the Closing or (B) against any person relating to any of the Excluded Assets or Excluded Liabilities, in each case to the extent attributable to the period of time prior to the Closing;

 

(x)                                 non-transferable computer software including that set out on Schedule 2.1(c)(x), computers not primarily used in the operation of the Purchased Stations, the centralized server facility, data links, payroll system, accounting system and other operating systems that are used in the operation of multiple stations;

 

(xi)                              the assets identified on Section 2.1(c)(xi) or excluded by Section 2.1(f), and the real property described on Schedule 5.10;

 

(xii)                           all tangible and intangible Assets and properties retired or disposed of prior to Closing in compliance with Section 9.1 and Section 9.2;

 

(xiii)                        all Contracts terminated or expired prior to Closing in compliance with Section 9.1 and Section 9.2; and

 

(xiv)                       except as provided in Section 2.1(f) or Section 2.6, all other assets, rights, and properties of the Emmis Group used in the Emmis Business and primarily used in the operation of stations or businesses owned by the Emmis Group other than the Purchased Stations.

 

(d)                                 Assumption of Only Certain Liabilities and Obligations. At Closing, Mediaco shall assume and agree to pay or perform when due only the liabilities and obligations of the Emmis Group set forth below, and excluding in all cases any liability arising directly or indirectly from (i) any breach or default by any member of the Emmis Group under any Assumed Contract (including any Real Estate Lease) occurring prior to Closing, (ii) any violation of Laws by any member of the Emmis Group occurring prior to Closing, (iii) any breach of warranty, tort or infringement by any member of the Emmis Group occurring prior to Closing, or (iv) any charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand to the extent that it relates to the foregoing clauses (i), (ii) and (iii) or any liability not specifically assumed hereunder (after giving effect to such exclusions, the “Mediaco Liabilities”):

 

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(i)                                     all accounts payable, accrued expenses, and other current liabilities (but excluding any intercompany receivable or payable balance with Emmis) with respect to the Purchased Stations;

 

(ii)                                  all liabilities or obligations of the Emmis Group under the Assumed Contracts (including Real Estate Leases) to the extent such liabilities or obligations first accrue or are first required to be satisfied, discharged or performed after Closing (subject to Section 2.1(d)(iv)); provided, however, that any liabilities or obligations first accrued or required to be satisfied, discharged or performed after Closing that are caused by the operation of the Stations prior to Closing shall not be Mediaco Liabilities;

 

(iii)                               all liabilities or obligations of the Emmis Group under the FCC Licenses to the extent such liabilities or obligations first accrue or are first required to be satisfied, discharged or performed after Closing (subject to Section 2.1(d)(v)), provided, however, that any liabilities or obligations first accrued or required to be satisfied, discharged or performed after Closing that are caused by the operation of the Stations prior to Closing shall not be Mediaco Liabilities;

 

(iv)                              the liabilities, obligations and commitments with respect to Station Employees that relate to the period after hiring, if any, by Mediaco as provided for in the Employee Leasing Agreement; and

 

(v)                                 any liability or obligation for which Mediaco receives a credit in the prorations under Section 3.1 it being understood that Taxes shall constitute Mediaco Liabilities only to the extent expressly assumed by Mediaco pursuant to Section 3.1(c).

 

(e)                                  Excluded Liabilities. Except for the Mediaco Liabilities, Mediaco shall not and does not assume or agree to become liable for or successor to any liabilities of or relating to any member of the Emmis Group, their predecessors, successors or any of their Affiliates (collectively, the “Excluded Liabilities”). All Excluded Liabilities shall be and remain the sole obligation of the applicable member of the Emmis Group, and Mediaco shall not be obligated in any respect therefor. Following the Closing, the Excluded Liabilities shall be the sole responsibility of the Emmis Group. For the avoidance of doubt, the Excluded Liabilities shall include (i) any and all Taxes except for those expressly assumed by Mediaco pursuant to Section 3.1(c), (ii) Transfer Taxes (subject to Section 3.3), (iii) except as provided in the Employee Leasing Agreement, any and all Liabilities arising out of or related to the employment or termination of employment of any Station Employees or any other employees by Emmis or any Affiliate of Emmis; (iv) any and all Liabilities arising out of or related to the Emmis Plans; and (v) any Liabilities, whether relating to a period before or after the Closing Date, relating to claims, litigation, arbitrations or other legal proceedings listed on Schedule 5.7.

 

(f)                                   Shared Assets. With respect to assets (including tangible and intangible assets) of any member of the Emmis Group that are, as of the date of this Agreement, used both in the operation of the Purchased Stations and in the operation of other stations operated by Emmis and/or its Affiliates, such assets shall be allocated, and shall constitute either Mediaco Assets or Excluded Assets, consistent with the Schedules to this Agreement, with items of shared tangible personal property allocated to the station of primary use and items of shared intangible personal property

 

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either allocated to the station of primary use or made available for all such stations as the context requires (provided, however, for clarity that items of shared intangible personal property not allocated to a Purchased Station will be made available for use by the Purchased Stations). The Parties acknowledge that the Contracts as set forth on Schedule Section 2.1(b)(iv) under “Shared Contracts” and “Digital Agreements” and “Replacement Contracts,” or portions thereof, have historically provided benefits and obligations relating to the operation of the Purchased Stations as well as the operation of other stations operated by Emmis and/or its Affiliates, and Emmis and Mediaco shall comply with Section 2.1(b)(iv) with respect thereto. Such Contracts shall constitute Assumed Contracts to the extent included and Excluded Assets to the extent excluded.

 

(g)                                  At the Closing, Emmis shall use reasonable best efforts, and provide all information and materials necessary, to convey to Mediaco rights to and control over all for social media accounts (including Facebook, Twitter, and Instagram) that are included in the Mediaco Assets (including the social media accounts listed on Schedule Section 5.24(b)).  To the extent that rights to and control over any such social media accounts are not conveyed to Mediaco at Closing, Emmis shall continue to use reasonable best efforts to ensure that such conveyance occurs as soon as practicable after the Closing.

 

(h)                                 For the avoidance of doubt, Emmis may effect the Initial Contribution in any form or manner that it deems necessary or desirable that complies with the terms of this Agreement and applicable Law, so long as (i) immediately prior to the Distribution, all of the Mediaco Assets and Mediaco Liabilities, and no other Assets or Liabilities, are held by Mediaco or one or more Mediaco Subsidiaries (other than any Delayed Transfer Assets or Delayed Transfer Liabilities) and (ii) any such change would not cause Mediaco to own or hold or otherwise incur Liability in respect of any Excluded Liability (other than, for the avoidance of doubt, Taxes), unless Emmis agrees to fully indemnify Mediaco for such Liability. References in this Agreement to the “Initial Contribution” shall be deemed to refer to the Initial Contribution as so effected by Emmis. Notwithstanding the foregoing, Emmis shall consult in good faith with Purchaser regarding the material aspects of the structure of the Initial Contribution and the form and manner of the Initial Contribution.

 

(i)                                     Each of Mediaco and Purchaser hereby waives Emmis’ and the Emmis Group’s compliance with the requirements and provisions of the “bulk-sale” or “bulk-transfer” Laws for the benefit of creditors of any jurisdiction that may otherwise be applicable with respect to the transfer, assignment, delivery, conveyance or sale of any or all of the Mediaco Assets or Mediaco Liabilities to any member of the Mediaco Group. Emmis hereby waives Mediaco’s and the Mediaco Group’s compliance with the requirements and provisions of the “bulk-sale” or “bulk-transfer” Laws for the benefit of creditors of any jurisdiction that may otherwise be applicable with respect to the transfer, assignment, delivery, conveyance or sale of any or all of the Excluded Assets or Excluded Liabilities to any member of the Emmis Group.

 

(j)                                    The Parties acknowledge and agree that as between the Emmis Group and the Mediaco Group, on the one hand, and any third Person asserting a Liability against a member of the Emmis Group or the Mediaco Group, on the other hand, nothing in this Agreement shall alter or otherwise change the legal entity within the Emmis Group and the Mediaco Group that may be subject to such Liability and the Emmis Group shall retain and be responsible for the Excluded Liabilities.

 

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Section 2.2                                                                       Purchaser Investment.

 

(a)                                 Mediaco shall adopt and file with the Secretary of State of the State of Indiana on or before the Closing the Restated Articles.

 

(b)                                 Subject to the terms and conditions of this Agreement, Purchaser and Mediaco agree to consummate, at the Closing, the Purchaser Investment, pursuant to which Purchaser shall purchase from Mediaco at the Closing and Mediaco shall sell and issue to Purchaser at the Closing a number of shares of Class B Common Stock as shall represent as of the completion of the Closing a 76.28% equity ownership interest in Mediaco (the “Purchaser Stock Consideration”), at a purchase price equal to $91,500,000 divided by such number of shares per share, payable at Closing.

 

Section 2.3                                                                       Transfers Requiring Consent or Governmental Approval.

 

(a)                                 Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign, directly or indirectly, any Asset or assume any Liability if, but solely to the extent, an attempted direct or indirect assignment or assumption thereof, without any applicable Consent of a third party or approval of a Governmental Authority, would constitute a breach, default, violation or other contravention of the rights of such third party or Governmental Authority or of applicable Law (including any Privacy and Information Security Requirements) until such time as the necessary Consent or approval or waiver thereof is obtained. If any direct or indirect transfer, assignment, or assumption, as the case may be, in the case of any Mediaco Asset or Mediaco Liability, by any member of the Emmis Group to Mediaco requires the prior Consent of a third party or approval of a Governmental Authority, then such transfer or assignment or assumption shall be subject to such prior Consent of a third party or approval of a Governmental Authority or, where permitted by applicable Law, waiver thereof being obtained (following the Closing Date, each such subject Asset, a “Delayed Transfer Asset,” and each such subject Liability, a “Delayed Transfer Liability”). For the sake of clarity, the FCC Licenses may not be a Delayed Transfer Asset.

 

(b)                                 Prior to the Closing Date, Emmis and Mediaco shall use their respective reasonable best efforts to obtain any third-party Consent or approval of a Governmental Authority required in connection with the Initial Contribution or any other transactions contemplated by this Agreement; provided, that in connection with obtaining any such third-party Consent or approval of a Governmental Authority, neither Emmis nor Mediaco shall enter into or otherwise agree to any modification of the terms of any Contract that is required in order to effect the transactions contemplated herein that would adversely affect Mediaco (including due to an increase in payment or other incremental cost to Mediaco under such Contract) or Purchaser in any material respect without the prior written Consent of Purchaser. [With respect to the Real Estate Leases, Emmis and Mediaco shall use their respective reasonable best efforts to obtain an estoppel certificate, in form and substance satisfactory to Purchaser, duly executed by each Third Party Landlord.]

 

(c)                                  If any third-party Consent or approval of a Governmental Authority (where such prior approval of a Governmental Authority is not required by Law to complete the Closing) referred to in this Section 2.3  is not obtained on or prior to the Closing Date, the Closing shall, subject to the satisfaction of the conditions set forth in Article IV, nonetheless take place on the

 

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terms set forth herein and, thereafter, Emmis and Mediaco shall cooperate and use reasonable best efforts to establish arrangements at no charge to Mediaco under which, from and following the Closing Date, Mediaco shall (without infringing upon the legal rights of any third party or Governmental Authority or violating any applicable Law) (i) receive, from the party responsible for transferring such Delayed Transfer Asset or Delayed Transfer Liability, the economic benefit of such Delayed Transfer Asset or Delayed Transfer Liability, including the right to obtain the economic claims, rights and benefits under the Delayed Transfer Asset or Delayed Transfer Liability and (ii) assume the economic burden with respect Delayed Transfer Asset or Delayed Transfer Liability, in each case, as closely as possible to that which would be applicable to Mediaco, if the Consent or approval had been obtained and the Delayed Transfer Asset or Delayed Transfer Liability had transferred. In furtherance of the foregoing, Emmis shall execute such powers of attorney as are permitted under applicable Law and reasonably necessary to enable Mediaco to obtain the benefits under any Permit (x) that constitutes a Delayed Transfer Asset or (y) with respect to which independent registration or licensure is required to be effected by Mediaco following the Closing. The obligations set forth in this Section 2.3 shall survive for the duration of the term of the applicable Contract governing such arrangements (without any obligation to renew or extend) or until the applicable third-party Consent or approval of a Governmental Authority is obtained.

 

(d)                                 Following the Closing Date, Emmis and Mediaco shall use reasonable best efforts (and each Party shall cooperate with the other Party) to obtain any third-party Consents and/or approvals of Governmental Authorities referred to in this Section 2.3 which were not obtained prior to the Closing as promptly as practicable; provided, that in connection with obtaining any such third-party Consent or approval of a Governmental Authority, neither Emmis nor Mediaco shall enter into or otherwise agree to any modification of the terms of any Contract that is required in order to effect the transactions contemplated herein that would adversely affect Mediaco or Emmis (including due to an increase in payment or other incremental cost to Mediaco or Emmis under such Contract) without the prior written consent of Mediaco, in the case that Mediaco would be adversely affected, or Emmis, in the case that Emmis would be adversely affected, which consent shall not be unreasonably withheld, delayed or conditioned. If and when any such third-party Consent or approval of a Governmental Authority is obtained after the Closing, the assignment of the Delayed Transfer Asset or assumption of the Delayed Transfer Liability to which such third-party Consent or approval of a Governmental Authority relates shall be promptly effected in accordance with the terms of this Agreement without the payment of additional consideration and thereafter such Asset or Liability shall no longer be considered a Delayed Transfer Asset or a Delayed Transfer Liability, as applicable, for purposes of this Section 2.3.

 

Section 2.4                                                                       Misallocated Assets and Liabilities.

 

(a)                                 In the event that at any time Emmis becomes aware (including by request of Mediaco) that it possesses any Mediaco Asset or Mediaco Liability (including any payments and reimbursements to which Mediaco is entitled under this Agreement), other than a Delayed Transfer Asset or a Delayed Transfer Liability, Emmis shall cause the prompt transfer of such Mediaco Assets to Mediaco or assumption of such Mediaco Liability by Mediaco, and Mediaco shall accept and assume such Mediaco Asset or Mediaco Liability (except as otherwise contemplated by the Transaction Agreements), in each case, without further consideration; provided, that, without limiting the generality of the foregoing, Emmis shall transfer to Mediaco (or its designee) any

 

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amounts received by any member of the Emmis Group in respect of any Mediaco Asset or Mediaco Liability within five (5) days of receipt. Prior to any such transfer, Emmis shall hold such Mediaco Assets in trust for Mediaco and pay over to Mediaco as promptly as practicable any amounts or benefits received by any member of the Emmis Group with respect to such Mediaco Assets following the Closing Date.

 

(b)                                 In the event that at any time, Mediaco becomes aware that it possesses any Excluded Assets or Excluded Liability (except as otherwise contemplated by the Transaction Agreements) (including any payments and reimbursements to which any member of the Emmis Group is entitled under this Agreement), other than a Delayed Transfer Asset or a Delayed Transfer Liability, Mediaco shall cause the prompt transfer of such Excluded Assets to Emmis or assumption of such Excluded Liability by Emmis, and Emmis shall accept and assume such Excluded Asset or Excluded Liability, in each case, without further consideration; provided, that, without limiting the generality of the foregoing, Mediaco shall transfer to Emmis (or its designee) any amounts received by Mediaco in respect of any Excluded Assets or Excluded Liability within five (5) days of receipt. Prior to any such transfer, Mediaco shall hold such Excluded Assets in trust for Emmis and pay over to Emmis as promptly as practicable any amounts or benefits received with respect to such Excluded Assets following the Closing Date.

 

Section 2.5                                                                       Conveyancing and Assumption Agreements. In connection with (i) the transfer of the Mediaco Assets and the assumption of the Mediaco Liabilities contemplated by this Article II, Emmis and Mediaco shall execute, or cause to be executed by the appropriate entities, any notices or transfer, conveyance, assignment, novation and assumption instruments or releases as and to the extent reasonably necessary or desirable to evidence the transfer, conveyance, novation and assignment of all of Emmis and its Subsidiaries’ right, title and interest in and to such Mediaco Assets and the valid and effective assumption by Mediaco or unconditional release of all parties to such Mediaco Liabilities and (ii) the transfer of the Excluded Assets and the assumption by Emmis of the Excluded Liabilities, in each case in accordance with this Article II, Emmis and Mediaco shall execute, or cause to be executed by the appropriate entities, any notices or transfer, conveyance, assignment, novation and assumption instruments or releases as and to the extent reasonably necessary or desirable to evidence the transfer, conveyance, novation and assignment of all of Mediaco’s right, title and interest in and to such Excluded Assets and the valid and effective assumption by Emmis and its Subsidiaries of or unconditional release of all parties to such Excluded Liabilities; provided, that such instruments shall not impose obligations on either Emmis or Mediaco or grant rights, through representations or otherwise, beyond those set forth in this Agreement (but shall merely implement the obligations herein), other than customary obligations with respect to due execution, title and similar matters.

 

Section 2.6                                                                       Shared Contracts.  Schedule Section 2.6 contains a complete and accurate list of the Shared Contracts with an annual cost of at least $50,000 per year or $150,000 over the term of the Shared Contract and all Shared Contracts otherwise material to the Purchased Stations, in each case unless terminable without penalty by notice of ninety (90) days or less and not otherwise material (the “Material Shared Contracts”). The Parties will use their reasonable best efforts (and each Party shall cooperate with the other Party) to separate the Shared Contracts into separate Contracts effective as of the Closing so that from and after the Closing, Mediaco will have the sole benefit and Liabilities with respect to each Shared Contract to the extent related to the Mediaco Business and Emmis will have the sole benefit and Liabilities with respect to each Shared

 

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Contract to the extent not related to the Mediaco Business. Upon such separation of a Shared Contract, the separated Contract that is related to the Mediaco Business will be a Mediaco Asset and the other separated Contract will be an Excluded Asset. If any Shared Contract is not separated prior to the Closing Date, then such Shared Contract shall be governed under Section 2.3, including the Parties agreeing to use reasonable best efforts (and each Party agreeing to cooperate with the other Party) to establish arrangements at no charge to Mediaco under which the party which is a party to such Shared Contract will use reasonable best efforts to perform its obligations and exercise its rights thereunder to enable each Group to continue to receive the benefits and assume the obligations, in each case, that it received or assumed prior to the Closing Date, until such Shared Contract expires in accordance with its terms. Emmis and Mediaco shall share equally any and all third party fees and out-of-pocket expenses (including attorneys’ and other third party fees) that may be reasonably required in connection with obtaining, whether before or after the Closing, any such separation of a Shared Contract. Neither Emmis nor Mediaco will amend, renew, extend or otherwise modify any Shared Contract without the consent of the other Party to the extent such amendment, renewal, extension or modification would adversely affect or impose any material obligations on other Party.

 

ARTICLE III

 

PURCHASE PRICE

 

Section 3.1                                                                       Purchase Price and Adjustment.

 

(a)                                 In consideration for the sale of the Mediaco Assets and assumption of the Mediaco Liabilities, on the Closing Date, immediately prior to or simultaneous with Closing (as defined in Section 4.1 below), Mediaco shall (i) pay the Emmis Purchase Price, subject to adjustment as provided in this Section 3.1, by wire transfer of immediately available funds pursuant to wire transfer instructions to be provided by Emmis to Mediaco and (ii) issue to Emmis a number of shares of the Class A Common Stock as shall represent as of the completion of Closing a 23.72% equity interest in Mediaco (the “Emmis Stock Consideration”).

 

(b)                                 To the extent not included in the Mediaco Current Assets or Mediaco Current Liabilities, all income and expenses from the ownership or holding of the Mediaco Assets (including Taxes only to the extent referenced in Section 3.1(c)) shall be prorated between Emmis and Mediaco as of Closing, with all expenses incurred and income earned prior to Closing for the account of Emmis (including income earned from advertising which has been broadcast on the Purchased Stations prior to Closing, but not yet billed), and all income earned and expenses incurred after Closing, for the account of Mediaco. The prorations of income and expense provided for in this Section 3.1 shall be estimated at the Closing based on the best information then available (the “Estimated Closing Adjustment”) and shall be subject to adjustment post-Closing as provided in this Section 3.1. Based on the Estimated Closing Adjustment, the Emmis Purchase Price paid at Closing (i) shall be increased by the amount, if any, by which the prorated income allocated to Emmis exceeds the prorated expenses allocated to Emmis or (ii) shall be decreased by the amount, if any, by which the prorated expenses allocated to Emmis exceed the prorated income allocated

 

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to Emmis. The Emmis Purchase Price shall also be increased by the aggregate value of the Lease Deposits.

 

(c)                                  To the extent not included in the Mediaco Current Assets or Mediaco Current Liabilities, the adjustments provided for in this Section 3.1 shall include prorations to account for all property taxes and similar ad valorem taxes, business and license fees, including FCC regulatory fees, utility expenses, liabilities and obligations under the Assumed Contracts and Real Estate Leases, rents and similar prepaid and deferred items and all other expenses and obligations, such as deferred revenue and prepayments attributable to the ownership or holding of the Assets and operation of the Purchased Stations that straddle an assessment period that begins before and ends after Closing. If such amounts were prepaid by Emmis prior to Closing, and Mediaco will receive a benefit after Closing, then Emmis shall receive a credit for such amounts (which would include security deposits made by Emmis but assumed by Mediaco). If Emmis received a benefit prior to Closing, and such amounts will be paid by Mediaco after Closing, Mediaco will receive a credit for such amounts. To the extent not known, real estate and personal property taxes shall be apportioned on the basis of taxes assessed for the preceding year.

 

(d)                                 Within forty-five (45) days after the Closing Date, Mediaco shall prepare and deliver to Emmis a proposed pro rata adjustment of income and expenses in the manner described in Section 3.1(b) and Section 3.1(c) for the Purchased Stations as of Closing, showing the difference between Mediaco’s post-Closing determination of such adjustment and the Estimated Closing Adjustment (the “Settlement Statement”), together with a schedule setting forth, in reasonable detail, the components thereof. During such 45-day period, Mediaco and its representatives shall be provided reasonable access, upon reasonable advance notice and during normal business hours, to such books and records of the Emmis Group, and to employees of the Emmis Group and their independent auditors, if any, as Mediaco may reasonably request in connection with its preparation of the Settlement Statement.

 

(e)                                  During the 30-day period following receipt of the Settlement Statement, Mediaco shall provide Emmis and its representatives reasonable access, upon reasonable advance notice and during normal business hours, to such books and records of Mediaco, and to employees of Mediaco and its independent auditors, if any, as Emmis may reasonably request in connection with its review of the Settlement Statement.

 

(f)                                   The Settlement Statement shall become final and binding upon the Parties on the 30th day following delivery thereof to Emmis, unless Emmis give written notice of disagreement with the Settlement Statement (the “Notice of Disagreement”) to Mediaco prior to such date. The Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. If a Notice of Disagreement is given to Mediaco in the period specified, then the Settlement Statement (as revised in accordance with clause (i) or (ii) below) shall become final and binding upon the Parties on the earlier of (i) the date Mediaco and Emmis resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement or (ii) the date any disputed matters are finally resolved in writing by the Accounting Firm as provided herein.

 

(g)                                  Within ten (10) Business Days after the Settlement Statement becomes final and binding upon the Parties, (i) Mediaco shall pay to Emmis the amount, if any, by which the

 

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Settlement Statement as finally determined reflects a higher Emmis Purchase Price than that determined by the Estimated Closing Adjustment or (ii) Emmis shall pay to Mediaco the amount, if any, by which the Settlement Statement as finally determined reflects a lower Emmis Purchase Price than that determined by the Estimated Closing Adjustment. All payments made pursuant to this Section 3.1(g) shall be made by wire transfer of immediately available funds to an account designated by the recipient party.

 

(h)                                 Notwithstanding any statement in this Section 3.1(h) to the contrary, if Emmis delivers a Notice of Disagreement, Emmis or Mediaco, as applicable, shall make a payment to the other Party in immediately available funds of any undisputed amount within ten (10) Business Days of the receipt of the Notice of Disagreement.

 

(i)                                     During the 30-day period following the delivery of a Notice of Disagreement to Mediaco that complies with the preceding paragraphs, Mediaco and Emmis shall seek in good faith to resolve in writing any differences they may have with respect to the matters specified in the Notice of Disagreement. During such period: (i) each of Mediaco and Emmis, and their respective independent auditors, if any, and at each of Mediaco’s and Emmis’ sole cost and expense, shall be permitted to review and make copies reasonably required of: (A) the financial statements of Emmis, in the case of Mediaco, and Mediaco, in the case of Emmis, relating to the Notice of Disagreement, (B) the books and records of Emmis, in the case of Mediaco, and Mediaco, in the case of Emmis, relating to the Notice of Disagreement, and (C) any supporting schedules, analyses and documentation relating to the Notice of Disagreement; and (ii) Emmis and Mediaco each shall provide reasonable access, upon reasonable advance notice and during normal business hours, to such employees of the other Party and such other Party’s independent auditors, if any, as such first Party reasonably believes is necessary or desirable in connection with its review of the Notice of Disagreement.

 

(j)                                    If, at the end of such 30-day period, Mediaco and Emmis have not resolved their differences, Mediaco and Emmis shall submit to the Accounting Firm for review and resolution any and all matters that remain in dispute and that were included in the Notice of Disagreement. Within thirty (30) days after selection of the Accounting Firm, Mediaco and Emmis shall submit their respective positions to the Accounting Firm in writing, together with any other materials relied upon in support of their respective positions. Mediaco and Emmis shall cooperate with each other and otherwise use commercially reasonable efforts to cause the Accounting Firm to render a decision resolving the matters in dispute within thirty (30) days following the submission of such materials to the Accounting Firm. The decision of the Accounting Firm shall be final and binding on each of the Parties, and judgment upon the determination of the Accounting Firm may be entered in any court of competent jurisdiction (but subject to Section 13.13 hereof). The fees and expenses of the Accounting Firm shall be divided equally between Emmis and Mediaco. The fees and expenses (if any) of Mediaco’s independent auditors and attorneys incurred in connection with the review of the Notice of Disagreement shall be borne by Mediaco, and the fees and expenses (if any) of Emmis’ independent auditors and attorneys incurred in connection with their review of the Settlement Statement shall be borne by Emmis.

 

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Section 3.2                                                                       Post-Closing Obligations with respect to Working Capital.

 

(a)                                 Satisfaction of Mediaco Current Liabilities. Following the Closing, Mediaco shall pay or otherwise satisfy all Mediaco Current Liabilities in accordance with their terms or other applicable requirements.

 

(b)                                 Collection of Accounts Receivable.

 

(i)                                     Following Closing Mediaco shall use commercially reasonable efforts to collect the Accounts Receivable, and Mediaco shall be entitled to retain collections on Accounts Receivable until the Net Collected Working Capital is equal to Five Million Dollars ($5,000,000). Within 15 days after the end of each calendar month prior to reaching Five Million Dollars ($5,000,000) of Net Collected Working Capital, Mediaco shall provide Emmis with an accounting of the collections of Accounts Receivable for that calendar month.  Mediaco shall also provide Emmis with such information regarding the current status of the Accounts Receivable as Emmis may reasonably request in order for Emmis to take such actions as may be necessary or desirable in order for Emmis to protect its residual interest in the Accounts Receivable. Mediaco will not compromise, reduce or write off any Accounts Receivable without Emmis’s prior written consent. Mediaco will maintain a separate account for collection of the receivables arising from operation of the Purchased Stations after Closing.

 

(ii)                                  When the Net Collected Working Capital equals Five Million Dollars ($5,000,000) Mediaco shall immediately assign to Emmis, without any payment from Emmis, all rights to any remaining uncollected Accounts Receivable, so that Emmis is entitled to all collections of Accounts Receivable in excess of Five Million Dollars ($5,000,000) Net Collected Working Capital.

 

(iii)                               After the assignment of Accounts Receivable pursuant to Section 3.2(b)(ii), Mediaco shall not collect any other Accounts Receivable, and Mediaco shall promptly pay over to Emmis any Accounts Receivable that it receives without offset. Emmis shall not collect any receivables arising from operation of the Purchased Stations after Closing, and Emmis shall promptly pay over to Mediaco any such receivables of Mediaco that Emmis receives without offset. In determining any amounts to be paid over under this Section 3.2, all amounts collected from the Purchased Stations’ account debtors shall be applied to the oldest account first, unless received by Mediaco and otherwise directed by such account debtor under circumstances where Mediaco believes in good faith that the application of payment thereof is not in violation of any existing or prior agreement between such account debtor and Emmis.

 

(c)                                  Payment by Purchaser Nine Months following Closing. On the date that is nine (9) months following the Closing Date, Mediaco shall pay to Emmis Five Million Dollars ($5,000,000) by wire transfer of immediately available funds pursuant to wire transfer instructions to be provided by Emmis to Mediaco. This payment is guaranteed by Standard General as provided on the signature page to this Agreement.

 

Section 3.3                                                                       Transfer Taxes.  Notwithstanding anything in this Agreement to the contrary, Purchaser on the one hand, and Emmis on the other hand, shall each bear and pay fifty percent (50%) of any transfer, stamp duty, sales and similar Taxes and all transfer or similar fees payable in connection with the transfer of the Mediaco Assets or otherwise in connection with the transactions contemplated hereby, including the Initial Contribution, (collectively, “Transfer

 

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Taxes”).  The Person(s) required by Law will, at their own expense (but subject to fifty percent (50%) reimbursement as if such expense were a Transfer Tax), file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, and, if required by applicable law, the other party will join in the execution of any such Tax Returns and other documentation.

 

ARTICLE IV

 

CLOSING

 

Section 4.1                                                                       General Closing Procedures. The consummation of the Initial Contribution and sale and purchase of Class B Common Stock (the “Closing”) shall take place no later than three (3) Business Days following the later of (a) the date that all FCC Consents have been granted by initial order and (b) satisfaction or waiver (where permitted by applicable Law) of the conditions set forth in Section 4.2, Section 4.3, Section 4.4, and Section 4.5 (the “Closing Date”), at a mutually agreeable location or by electronic exchange of signatures, with required deliveries and payments. Notwithstanding anything set forth in this Article IV to the contrary, the Parties agree that the Distribution shall occur on the same date as the Closing Date.

 

Section 4.2                                                                       Conditions to Obligations of All Parties. Each Party’s respective obligations to effect the Transactions are subject to the satisfaction or waiver (to the extent permitted by applicable Law) at or prior to the Closing of the following conditions:

 

(a)                                 the Mediaco Entities’ having obtained all FCC Licenses and all other material licenses, permits, registrations, authorizations or certificates necessary to operate the Mediaco Business following the Closing;

 

(b)                                 no order of any court or administrative agency shall be in effect which restrains or prohibits the transactions contemplated by this Agreement in accordance with its terms. No Proceeding by or before any Governmental Authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which would restrain, prohibit or invalidate the transactions contemplated by this Agreement;

 

(c)                                  The FCC Consents shall have been granted without the imposition upon Mediaco of any material adverse conditions; and

 

(d)                                 An assignment and assumption for each of the Real Estate Leases in a form reasonably acceptable to Emmis, Mediaco and Purchaser, duly executed by Emmis and Mediaco, together with the required Third Party Landlord consents listed on Schedule 4.2(d);

 

Section 4.3                                                                       Condition to Obligations of Emmis. Emmis’s obligations to effect the Transaction are further subject to satisfaction or waiver at or prior to the Closing of the following conditions:

 

(a)                                 All representations and warranties made by Purchaser in this Agreement shall be true and correct in all material respects (without regard to any materiality qualification therein) on and as of the Closing Date as if made on and as of that date, except those that are made as of a specific date, which shall only be tested as of such date;

 

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(b)                                 All of the terms, covenants and conditions to be complied with or performed by Purchaser under this Agreement on or prior to the Closing Date shall have been complied with or performed by Purchaser in all material respects;

 

(c)                                  Purchaser and Mediaco shall have entered into and delivered to Emmis the Transaction Agreements to which they or any of their Subsidiaries is a party and such agreements shall be in full force and effect and no default thereunder shall be occurring; and

 

(d)                                 Emmis and Mediaco shall have entered into (i) a Local Marketing Agreement with respect to the use by WLIB-AM of the HD-2 channel of WQHT-FM, in the form attached as Exhibit F (the “Local Marketing Agreement”), and (ii) Shared Services Agreements with respect to the operation of WEPN-FM and WLIB-AM, in the form attached as Exhibit G (the “Shared Services Agreements”); provided that Emmis shall waive clause (i) if entering into the Local Marketing Agreement would delay or prevent obtaining all FCC licenses.

 

Section 4.4                                                                       Conditions to Obligations of Mediaco. Mediaco’s obligations to effect the Transaction are further subject to satisfaction or waiver at or prior to the Closing of the following conditions:

 

(a)                                 All representations and warranties made by Purchaser in this Agreement shall be true and correct in all material respects (without regard to any materiality qualification therein) on and as of the Closing Date as if made on and as of that date, except those that are made as of a specific date, which shall only be tested as of such date;

 

(b)                                 All representations and warranties made by Emmis shall be true and correct on the Closing Date as if made on the Closing Date except (i) where the failure of any representations and warranties to be true and correct (without regard to any materiality or Material Adverse Effect qualification therein) would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect, and (ii) representations and warranties that are made as of a specific date shall only be tested as of such date;

 

(c)                                  All of the terms, covenants and conditions to be complied with or performed by Emmis and Purchaser under this Agreement on or prior to the Closing Date shall have been complied with or performed by Emmis and Purchaser in all material respects; and

 

(d)                                 Emmis and Purchaser shall have entered into and delivered to Mediaco the Transaction Agreements to which it or any of its Subsidiaries is a party and such agreements shall be in full force and effect and no default thereunder shall be occurring.

 

Section 4.5                                                                       Conditions to Obligations of Purchaser. Purchaser’s obligations to effect the Transaction are further subject to satisfaction or waiver at or prior to the Closing of the following conditions:

 

(a)                                 All representations and warranties made by Emmis and Mediaco shall be true and correct on the Closing Date as if made on the Closing Date except (i) where the failure of any representations and warranties to be true and correct (without regard to any materiality or Material Adverse Effect qualification therein) would not reasonably be expected to result in, individually

 

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or in the aggregate, a Material Adverse Effect, and (ii) representations and warranties that are made as of a specific date shall only be tested as of such date;

 

(b)                                 All of the terms, covenants and conditions to be complied with or performed by Emmis and Mediaco under this Agreement on or prior to the Closing Date shall have been complied with or performed by Emmis and Mediaco in all material respects;

 

(c)                                  No Order of any court or Governmental Authority shall be in effect which restrains or prohibits the transactions contemplated by this Agreement in accordance with its terms. No Proceeding by or before any Governmental Authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which would impose material restrictions, limitations or conditions with respect to Mediaco’s ownership or use of the Mediaco Assets;

 

(d)                                 The Initial Contribution shall have been completed;

 

(e)                                  The SEC shall have completed its review of the Mediaco Form 10; provided, however, that to the extent the Parties reasonably agree that there are no material comments outstanding from the SEC on the Mediaco Form 10, the Parties will waive this Closing condition; and

 

(f)                                   Mediaco and Emmis shall have entered into and delivered to Purchaser the Transaction Agreements to which it or any of their respective Subsidiaries is a party and such agreements shall be in full force and effect and no default thereunder shall be occurring.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF EMMIS AND MEDIACO

 

Except as set forth in the correspondingly numbered Schedules, it being understood and agreed that each disclosure set forth in the Schedules shall qualify or modify each of the representations and warranties set forth in this Article V to the extent the applicability of the disclosure to such representation and warranty is readily apparent from the text of the disclosure made (without reference to any additional information, investigation, or documentation), Emmis and Mediaco hereby represent and warrant to Purchaser as of the date of this Agreement and as of the Closing Date as follows (with “Emmis” as used in this Article V referring to Emmis and the Emmis Subsidiaries, as applicable):

 

Section 5.1                                                                       Due Organization, Good Standing, Corporate Power and Subsidiaries. Emmis is a corporation duly organized, validly existing and in good standing under the Laws of the State of Indiana. Mediaco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Indiana. Emmis and its Subsidiaries have all requisite corporate power and authority to lease and operate their properties and assets that will be contributed to Mediaco pursuant to this Agreement and to carry on the Mediaco Business as it is now being conducted. Each of Emmis and its Subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the property, leased or operated by the Mediaco Business that will be contributed to Mediaco pursuant to this Agreement or in which the nature of the Mediaco Business conducted by

 

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it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed or to be in good standing has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 5.2                                                                       Authorization and Binding Obligation. Each of Emmis and Mediaco has all necessary corporate power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been, and each of the other documents contemplated hereby at or prior to Closing will be, duly executed and delivered by each of Emmis and Mediaco, as applicable, and have been approved by all necessary corporate action on the part of the applicable Party. This Agreement constitutes (and each of the other documents contemplated hereby, when executed and delivered, will constitute) valid and binding obligations enforceable against Emmis and Mediaco in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally or the availability of equitable remedies.

 

Section 5.3                                                                       Capitalization. The authorized capital of Mediaco consists, immediately prior to the Initial Contribution, of the number of shares of Class A Common Stock calculated in accordance with Section 3.1(a) and the number of shares of Class B Common Stock calculated in accordance with Section 2.2(b). Schedule Section 5.3 sets forth the capitalization of Mediaco immediately following the Closing.

 

Section 5.4                                                                       Subsidiaries. Schedule Section 5.4 sets forth a list of Subsidiaries of Emmis.

 

Section 5.5                                                                       Valid Issuance of Shares. The shares of Class A Common Stock and Class B Common Stock, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable state and federal securities laws and liens or encumbrances created by or imposed by Purchaser. Assuming the accuracy of the representations of Purchaser in Article VI, the shares of Class A Common Stock and Class B Common Stock will be issued in compliance with all applicable federal and state securities laws.

 

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Section 5.6                                                                       Absence of Conflicting Agreements; Consents.

 

(a)                                 The execution, delivery and performance of this Agreement and the Transaction Agreements by Emmis and Mediaco do not and will not: (i) violate any provisions of the Organizational Documents of Emmis or Mediaco; (ii) violate any applicable Law or Order; (iii) constitute a material default under, or accelerate or permit the acceleration of any performance required by the terms of any Material Assumed Contracts or Material Shared Contracts (including any Real Estate Leases), or to Emmis’ Knowledge any other Assumed Contract, assuming in either case any necessary consents are obtained; (iv) create any material claim, Encumbrance upon any of the Mediaco Assets, other than Permitted Encumbrances; or (v) create any material claim, Encumbrance upon any of the capital stock of Mediaco (other than Encumbrances created by or imposed by Purchaser).

 

(b)                                 No additional approval or consent of any Person is required to be obtained by Emmis or Mediaco for the authorization of this Agreement or the other documents contemplated hereby or the execution, delivery, performance and consummation by Emmis and Mediaco of the transactions contemplated by this Agreement and the other documents contemplate hereby.

 

Section 5.7                                                                       Litigation. There are no material claims, litigation, arbitrations or other legal proceedings pending against Emmis or Mediaco that have been served on Emmis or Mediaco or, to Emmis’ Knowledge, which are pending but not served on Emmis or Mediaco or threatened against Emmis or Mediaco (i) with respect to the Mediaco Assets or operation of any of the Purchased Stations or the Leased Real Property, (ii) with respect to the capital stock of Mediaco, or (iii) that questions the validity of this Agreement or the right of the Parties to enter into them, or to consummate the transactions contemplated by this Agreement.

 

Section 5.8                                                                       Station Licenses.

 

(a)                                 Schedule Section 2.1(b)(i) contains a true and complete list of the FCC Licenses used or held for use in connection with the operation of the Purchased Stations as currently operated and the holder of each such FCC License. Each of the holders of FCC Licenses identified on Schedule Section 2.1(b)(i) is the authorized legal holder of such FCC License. The FCC Licenses (i) have been issued for the full terms customarily issued by the FCC for authorizations of such type for such class of station and (ii) are not subject to any condition, except for those conditions appearing on the face of the FCC Licenses and conditions generally applicable to authorizations of such type for such class of station.

 

(b)                                 Except as set forth on Schedule Section 5.8(b), (i) each of the Purchased Stations and the facilities of the Purchased Stations are being and have been operated during Emmis’ operation of the Purchased Stations in compliance in all material respects with the FCC Licenses, the Communications Act and all FCC rules and policies, (ii) all material registrations and reports required to be filed with the FCC or uploaded to each Purchased Station’s public inspection file related to the FCC licenses (which registrations and reports were accurate in all material respects as of the time such registrations and reports were filed) have been timely filed or uploaded, (iii) all material FCC regulatory fees due in respect of each Purchased Station have been timely paid, (iv) the construction of all facilities or changes contemplated by any of the FCC Licenses have been

 

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completed, and (v) the FCC Licenses are all of the FCC licenses, permits and authorizations required for the operation of the Purchased Stations substantially as currently operated.

 

(c)                                  Except for proceedings affecting the radio broadcasting industry generally or as permitted or required in connection with this Agreement and the Transactions, (i) there are no applications, petitions, complaints, investigations, notices of violations, notice of apparent liabilities, pending license terminations, forfeitures, proceedings or other actions pending or threatened from or before the FCC relating to the Purchased Stations or the FCC Licenses, except as would not result in a Material Adverse Effect, and (ii) Emmis has not filed with the FCC any applications or petitions relating to the Purchased Stations or the FCC Licenses which are pending before the FCC.

 

(d)                                 The Mediaco Assets owned by Emmis are in material compliance with all rules and regulations of the Federal Aviation Administration applicable to the Purchased Stations. Each antenna structure that is required to be registered with the FCC has been registered with the FCC. Schedule Section 2.1(b)(i) contains a list of the antenna registration numbers for each tower owned or leased by Emmis (and included in the Mediaco Assets) that requires registration under the rules and regulations of the FCC. All material reports and other filings required by the FCC with respect to the Purchased Stations have been properly and timely filed.

 

(e)                                  The operation of the Purchased Stations does not expose workers or others to levels of radio frequency radiation in excess of the “Radio Frequency Protection Guides” recommended in “American National Standard Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic Fields 3 kHz to 300 GHz” (ANSI/IEEE C95.1 - 1992), issued by the American National Standards Institute, and renewal of the FCC Licenses would not constitute a “major action” within the meaning of section 1.1301 et seq., of the FCC’s rules.

 

Section 5.9                                                                       Assets.

 

(a)                                 Except for the Excluded Assets (other than those excluded assets described in Section 2.1(c)(xiv)), any Delayed Transfer Assets and the items set forth on Schedule Section 5.6, after giving effect to the Transactions, the Mediaco Assets, when taken together with the services being provided under the other Transaction Agreements, will, at the Closing, constitute those assets used or held for use by Emmis and its Affiliates necessary to operate the Mediaco Business in all material respects as it is currently conducted and as it has been conducted in the twelve (12) months prior to the date hereof (except with respect to changes in the ordinary course, in each case not implemented with the intent of adversely manipulating the assets or liabilities that would be transferred to Mediaco in connection with the Initial Contribution).

 

(b)                                 Except for Delayed Transfer Assets, following the Initial Contribution, Mediaco will have good and valid title to, or in the case of leased properties and assets, valid leasehold interests in, all of the tangible Mediaco Assets, except where the failure to have such good and valid title or valid leasehold interests would not, individually or in the aggregate, reasonably be expected to be materially adverse to Mediaco and the Mediaco Subsidiaries, taken as a whole, in each case subject to no Encumbrance (other than a Permitted Encumbrance).

 

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(c)                                  Schedule Section 5.9(c) lists the material overhead and services currently provided to any Mediaco Entity and/or the Mediaco Business, by Emmis or any of its Affiliates other than Mediaco.

 

(d)                                 Neither Emmis, with respect to the Mediaco Business, nor Mediaco, is a party to any agreement that will remain in effect following the Closing to purchase any material real property.

 

Section 5.10                                                                Real Property. Neither Emmis, with respect to the Mediaco Business, nor Mediaco, owns any real property or interest in real property. Schedule Section 5.10(a) sets forth an accurate and complete list of (A) the address (or other identifying description) and (B) the identity of the lessor and lessee of each parcel of real property leased by Mediaco following the Distribution (the “Mediaco Leased Real Property”).  True, correct and complete copies of the Real Estate Leases and all amendments, modifications, supplements, extensions and memoranda thereof, have been delivered by Emmis to Purchaser. All buildings, structures and improvements located on such Mediaco Leased Real Property are in good condition and repair, ordinary wear and tear excepted, except if the failure to meet such standards would not materially and adversely impair the use of any such real property as currently used by the Mediaco Business. At Closing, upon the receipt of any required consents, Mediaco will have a good and valid and binding leasehold interest in each parcel of Mediaco Leased Real Property, free and clear of any material Encumbrances other than Permitted Encumbrances. Except for the Real Estate Leases, neither Emmis, with respect to the Mediaco Business, nor Mediaco, is a party to any Lease for real property. Except as set forth on Schedule Section 5.10(a), neither Emmis, with respect to the Mediaco Business, nor Mediaco has subleased, licensed or otherwise granted to a third party any material right to possess, use or occupy all or any portion of the Mediaco Leased Real Property. Mediaco is not in default under, or in breach of, any of the Real Estate Leases or Permitted Encumbrances, and to Emmis’ Knowledge, no other party to any of the Real Estate Leases or Permitted Encumbrances is in default under, or in breach of, any of the Real Estate Leases or Permitted Encumbrances.  No condemnation proceeding is pending with respect to the Mediaco Leased Real Property and to Emmis’ Knowledge, no condemnation proceeding has been threatened with respect to any Mediaco Leased Real Property.  Neither Emmis nor, to Emmis’ Knowledge, any other party to any Real Estate Lease has exercised any option or right to (i) terminate such Real Estate Lease, (ii) lease additional premises, (iii) reduce or relocate the premises demised by such Real Estate Lease or (iv) purchase any real property pursuant to any Real Estate Lease.  The Mediaco Leased Real Property constitutes all of the real property that is necessary to conduct and operate the Mediaco Business as currently conducted and operated and there are no other Leases needed for the Mediaco Business as currently conducted and operated.  The Mediaco Leased Real Property is in compliance in all material respects with all applicable Laws and to Emmis’ Knowledge there are no pending or contemplated, zoning changes, variances, or special zoning exceptions, conditions or agreements affecting or which would reasonably be expected to affect any portion of the Mediaco Leased Real Property.

 

Section 5.11                                                                Contracts. The Material Assumed Contracts and Material Shared Contracts (including the Real Estate Leases) constitute as of the date hereof all of the material Contracts to which Emmis is a party and that are used primarily in the operation of the Purchased Stations, except for Excluded Assets and subject to Section 2.1(f). Each of the Assumed Contracts (including the Real Estate Leases) constitutes a legal, valid and binding obligation of Emmis and,

 

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to Emmis’ Knowledge, each other party thereto, and is enforceable by Emmis in accordance with its terms, except as limited by Laws affecting creditor’s rights or equitable principles generally. Neither Emmis, to Emmis’ Knowledge, any other party thereto, is in any material respect in default under the Assumed Contracts and Material Shared Contracts (including the Real Estate Leases).

 

Section 5.12                                                                Compliance with Laws. Except as set forth on Schedule Section 5.12, Emmis and Mediaco have in all material respects complied with, and are not in material violation of, any Laws or Orders. Neither Emmis nor Mediaco has received any notice asserting any material noncompliance with any Law or Order relating to (i) the Mediaco Assets, (ii) the capital stock of Mediaco or (iii) in connection with the operation of the Purchased Stations. There is no pending or, to Emmis’ Knowledge, threatened, investigation, audit, review or other examination of the Purchased Stations, and Emmis is not subject to any Order, enforcement or similar agreement, memorandum of understanding or other regulatory enforcement action or proceeding with or by the FCC or any other Governmental Authority.

 

Section 5.13                                                                Governmental Consents. Except for the FCC Consents and filings with the SEC with respect to the Distribution, the execution, delivery and performance by Emmis of this Agreement and the other Transaction Agreements, and the consummation by Emmis of the transactions contemplated hereby and thereby, do not and will not require the authorization, consent, approval, exemption, clearance or other action by or notice or declaration to, or filing with, any court, administrative or other Governmental Authority.

 

Section 5.14                                                                Taxes.

 

(a)                                 Mediaco is newly formed and capitalized as of the Closing Date for Tax Purposes as provided under the Intended Tax Treatment and has not been, and will not be, included in any consolidated, unitary, or combined Tax Return of Emmis or any of its Affiliates.

 

(b)                                 Immediately after the Closing and giving effect to the Intended Tax Treatment, the aggregate tax basis of Mediaco in the Mediaco Assets for Tax Purposes will be equal to the Total Emmis Consideration.  Schedule Section 5.14(b) sets forth a good faith Emmis calculation of this tax basis and the apportionment of this basis as among the Mediaco Assets immediately after the Closing in accordance with the Intended Tax Treatment (the “Emmis Tax Basis Estimate”).

 

(c)                                  To the extent an inaccuracy of any of the following could reasonably be expected to result in a liability of Mediaco or an Encumbrance on any of the Mediaco Assets, or a direct liability on Purchaser or any of its Affiliates:

 

(i)                                     All material Tax Returns required to be filed have been filed in a timely manner.  Each such Tax Return is correct and complete in all material respects.

 

(ii)                                  All Taxes due and owing have been timely paid in full (whether or not shown on any Tax Return).

 

(iii)                               No material claim, audit, action, suit, proceeding, investigation or other examination with respect to Taxes (each, a “Tax Contest”) is pending or, to the knowledge of Emmis, threatened.

 

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(iv)                              No waiver of any statute of limitations regarding, or any extension of any period for the assessment of, any material amount of Tax has been granted.

 

(v)                                 The Mediaco Assets are not subject to any ruling or contract from any Governmental Authority with respect to Taxes.

 

Section 5.15                                                                Environmental Matters in respect of the Real Property.

 

(a)                                 Emmis has never received, and to Emmis’ Knowledge no landlord has received, any notice from any Governmental Authority with respect to any Leased Real Property of any material violation or alleged violation of any Law pertaining to environmental matters, including those arising under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended, the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act, the Solid Waste Disposal Act, as amended, the Federal Clean Air Act, the Toxic Substances Control Act, or any federal, state or local statute, regulation, ordinance, order or decree relating to the environment (hereinafter collectively “Environmental Laws”);

 

(b)                                 No portion of the Leased Real Property, other than the WBLS Leased Real Property, has been used by Emmis, or, as indicated in any specific information in the possession of Emmis, by any other Person, for the handling, manufacturing, processing, storage or disposal of Hazardous Substances in material violation of applicable Environmental Laws related to the Leased Real Property;

 

(c)                                  Emmis has not, nor does Emmis have specific information indicating that any other Person has, released any Hazardous Substances (i.e., any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping) on, upon, into or from any of the Leased Real Property, other than the WBLS Leased Real Property, in material violation of applicable Environmental Laws; and

 

(d)                                 Notwithstanding anything else to the contrary in this Article V, the representations and warranties in this Section 5.15 constitute the sole representations and warranties of Emmis with respect to environmental matters or compliance with Environmental Law.

 

Section 5.16                                                                Broker’s Fees; Transaction Bonuses.

 

(a)                                 Except for Moelis & Company, neither Emmis, its Subsidiaries nor Mediaco has employed any investment banker, broker, finder or intermediary in connection with the Transactions who might be entitled to any fee or any commission in connection with or upon consummation of the Transactions, and any such fee or commission, and any costs or expenses incurred in connection therewith shall be borne solely by Emmis.

 

(b)                                 There are no special bonuses or other similar compensation payable to any Emmis employee in connection with the Transactions that would reasonably be expected to become a Liability of Mediaco. Emmis has provided to Purchaser true and complete copies of any agreements set forth on Section 5.16(b) to the extent Mediaco shall have or will have any Liability thereunder.

 

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Section 5.17                                                                Insurance. Emmis maintains insurance policies or other arrangements with respect to the Purchased Stations consistent with industry practice, including coverage of all buildings, towers, antennas, dishes, transmission lines, transmitters and other Assets used in the operation of the Purchased Stations, and will maintain such policies or arrangements until the Closing. Emmis has not received notice from any issuer of any material policy currently in effect of its intention to cancel, terminate or refuse to renew any such policy issued by it with respect to the Purchased Stations.

 

Section 5.18                                                                Property. Emmis owns or holds the Mediaco Assets free and clear of Encumbrances (other than Permitted Encumbrances). All items of Personal Property are in normal operating condition, ordinary wear and tear excepted. All material equipment used in the day-to-day operations of the Purchased Stations that is included in the Mediaco Assets is in normal operating condition and repair, subject only to ordinary wear and tear and routine maintenance, and, to Emmis’ Knowledge, is in conformity with all applicable Laws. All tangible Mediaco Assets are in the possession or control of Emmis.

 

Section 5.19                                                                Financial Statements.  Emmis has provided to Purchaser copies of the (i) audited statements of operations and balance sheets for the Purchased Stations for the years ended February 28, 2018 and February 28, 2019 (the “Full Year Financial Statements”) and (ii) unaudited statements of operations and balance sheets for the Purchased Stations dated May 31, 2019 and for the three-month period then ended (the “Interim Financial Statements” and, together with the Full Year Financial Statements, the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations of the Purchased Stations as operated by Emmis for the respective periods covered thereby; except that (A) shared operating expenses (if applicable) are allocated among business units, which might or might not include the Purchased Stations, as determined by Emmis in good faith and consistently with past practice, and (B) the Financial Statements do not include (x) income tax expense or benefit, interest income and expense, and non-cash compensation expenses associated with equity compensation arrangements, or (y) amortization of the deferred credit under the national sales representation agreement related to the buyout of the prior national sales representation agreement in 2007, or (z) disclosures required by GAAP in notes accompanying the financial statements.

 

Section 5.20                                                                Absence of Undisclosed Liabilities. Except for the Mediaco Liabilities and pursuant to the prorations under Section 2.1(d), there are no Liabilities of Emmis with respect to the Purchased Stations that will be binding upon Mediaco after Closing.

 

Section 5.21                                                                Employment Matters.

 

(a)                                 For purposes of this Section 5.21, the term “Emmis” includes any ERISA Affiliate.  Schedule Section 5.21(a) of the Emmis/Mediaco Disclosure Schedules contains a complete and accurate list of all Station Plans. Emmis has made no plan or commitment, whether or not legally binding, to create any additional Station Plan or to modify or change any existing Station Plan except as would be permitted prior to Closing in accordance with Section 9.2(a) and Section 9.2(b).

 

(b)                                 No Station Plan, Emmis Plan nor any other Benefit Plan is or has been established, sponsored or maintained by Mediaco. There are no Station Plans nor any other Emmis Plans (other

 

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than the Multiemployer Plans) that Mediaco has or could reasonably be expected to have any direct or indirect material liability at any time.

 

(c)                                  True, correct, and complete copies of all the following documents with respect to each Station Plan (including a written summary of any unwritten Station Plan, and other than the Multiemployer Plans) to the extent applicable, have been made available to Purchaser: (i) the plan document and all amendments thereto; (ii) the most recent IRS determination or opinion letter; (iii) the most recent summary plan description and any amendments or modifications thereof; (iv) all material notices that were issued within the preceding three years by the IRS, Department of Labor, or any other Governmental Authority relating to the legal compliance or tax qualification of such Station Plan; and (v) all employee manuals or handbooks containing personnel or employee relations policies.

 

(d)                                 The Station Plans marked on Schedule Section 5.21(c) of the Emmis/Mediaco Disclosure Schedules as “Qualified Plans” are the only Station Plans (other than the Multiemployer Plans) that are intended to meet the requirements of Section 401(a) of the Code (a “Qualified Plan”).  Each of the Qualified Plans and, to the Knowledge of Emmis, Multiemployer Plans has received a favorable determination letter from the Internal Revenue Service, or with respect to a prototype plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan sponsor, to the effect that such Qualified Plan is qualified under Section 401(a) of the Code and the related trust is exempt from tax under Section 501(a) of the Code, and each such determination or opinion letter remains in effect and has not been revoked. Nothing has occurred with respect to the design or operation of any Qualified Plan or, to the Knowledge of Emmis, any Multiemployer Plan that could reasonably be expected to adversely affect the qualified status of such Qualified Plan or Multiemployer Plan or the tax-exempt status of its related trust or the imposition of any material liability, lien, penalty, or tax under ERISA or the Code, and the Qualified Plans and to the Knowledge of Emmis, the Multiemployer Plans have been timely amended to comply with applicable Law.

 

(e)                                  Emmis does not sponsor, maintain or contribute to, and has never sponsored, maintained or contributed to, or had any liability with respect to, any employee benefit plan subject to Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA (other than the Multiemployer Plans).

 

(f)                                   All Station Plans (including, to the Knowledge of Emmis, the Multiemployer Plans) conform in all material respects to the requirements of ERISA, the Code and all applicable Laws.  Each Station Plan (including, to the Knowledge of Emmis, each Multiemployer Plan) has been maintained in accordance with its documents and in all material respects with all applicable provisions of the Code, ERISA and other applicable Law.

 

(g)                                  With respect to each Station Plan (including, to the Knowledge of Emmis, each Multiemployer Plan), there has occurred no non-exempt “prohibited transaction” (within the meaning of Section 4975 of the Code or Section 406 of ERISA) or breach of any fiduciary duty described in Section 404 of ERISA that could result in any material liability, direct or indirect, for Mediaco or any stockholder, officer, director, or employee of Mediaco.

 

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(h)                                 Emmis has paid all amounts that Emmis is required to pay as contributions to the Station Plans as of the last day of the most recent fiscal year of each of the Station Plans; all benefits accrued under any funded or unfunded Station Plan (other than Multiemployer Plans) will have been paid or properly accrued as of the Closing; and all monies withheld from employee paychecks with respect to Station Plans have been transferred to the appropriate Station Plan in a timely manner as required by applicable Law.

 

(i)                                     Emmis has not incurred any material liability for any excise, income or other taxes or penalties with respect to any Station Plan, and no event has occurred and no circumstance exists that could reasonably be expected to give rise to any such liability. There are no pending or, to the Knowledge of Emmis, threatened claims by or on behalf of any Station Plans, or by or on behalf of any participants or beneficiaries of any Station Plans or any other Person, alleging any breach of fiduciary duty on the part of Emmis or any of its officers, directors or employees under ERISA or any applicable Law, or claiming benefit payments other than those made in the ordinary operation of such Station Plans. No Station Plan (including, to the Knowledge of Emmis, no Multiemployer Plan) is presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, the Department of Labor, or any other Governmental Authority, and no matters are pending with respect to any Station Plan (including, to the Knowledge of Emmis, any Multiemployer Plan) under any IRS amnesty, voluntary compliance, self-correction or similar program.

 

(j)                                    No Emmis Plan contains any provision nor is subject to any Law that would prohibit the transactions contemplated by this Agreement or that would give rise to any vesting of benefits, severance, termination, or other similar payments or liabilities as a result of the transactions contemplated by this Agreement other than vesting of stock options and restricted stock of Emmis, and no payments or benefits under any Emmis Plan or other agreement of Emmis will be considered “excess parachute payments” under Section 280G of the Code.  Emmis has not declared or paid any bonus compensation in contemplation of the transactions contemplated by this Agreement, except as would be permitted prior to Closing in accordance with Section 9.2(a) and Section 9.2(b).  Each Station Plan that is subject to Section 409A of the Code has been maintained and operated in compliance in all material respects with Section 409A of the Code.

 

(k)                                 With respect to any Station Plan (and to the Knowledge of Emmis, the than Multiemployer Plans) that is an “employee welfare benefit plan” (within the meaning of Section 3(1) of ERISA), (i) with respect to any “welfare benefit fund” (within the meaning of Section 419 of the Code) related to such Station Plan, there is no “disqualified benefit” (within the meaning of Section 4976(b) of the Code) that would result in the imposition of a tax under Section 4976(a) of the Code, and (ii) no such Station Plan provides health or other benefits after an employee’s or former employee’s retirement or other termination of employment except as required by Section 4980B of the Code.

 

(l)                                     The Emmis Plans marked as “Multiemployer Plans” on Schedule 5.21(l) of the Emmis/Mediaco Disclosure Schedules are the only Emmis Plans that are “multiemployer plans,” as defined in Section 3(37) of ERISA (“Multiemployer Plans”).  Except as set forth on Schedule 5.21(l), with respect to each Multiemployer Plan (i) no withdrawal liability has been incurred by Emmis that has not been paid off in full, and Emmis has no reason to believe that any such liability will be incurred by Emmis or Mediaco on or prior to the Closing Date or the end of the term of the

 

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Employee Leasing Agreement and the actions contemplated by Section 6 of the Employee Leasing Agreement, (ii) no notice has been received that such plan is in “reorganization” (within the meaning of Section 4241 of ERISA), (iii) no notice has been received that increased contributions may be required to avoid a reduction in plan benefits or the imposition of an excise tax, or that the plan is or may become “insolvent” (within the meaning of Section 4241 of ERISA), (iv) no notice has been received that proceedings have been instituted by the Pension Benefit Guaranty Corporation against the plan, (v) no notice has been received of a projected funding deficiency within the five (5) year period following the date hereof, and (vi) if Emmis were to have a complete or partial withdrawal under Section 4203 of ERISA as of the Closing Date or the end of the term of the Employee Leasing Agreement and the actions contemplated by Section 6 of the Employee Leasing Agreement, no obligation to pay withdrawal liability would exist on the part of Emmis or Mediaco.

 

(m)                             Emmis will provide an updated Excel spreadsheet that sets forth the name of each Station Employee as of the Closing Date, and, with respect to each such employee, his or her: (i) employing entity; (ii) job title; (iii) current base salary or hourly rate of pay (if a current employee); (iv) total compensation received in 2018; (v) place of residence and physical work location; (vi) status as exempt or non-exempt under applicable federal, state and/or local wage and hour laws; (vii) hire date and service date (if different); (viii) leave status (including nature and expected duration of any leave); and (ix) visa status (if applicable).

 

(n)                                 Other than as set forth in its employment agreements and collective bargaining agreements, Emmis has not made any binding, enforceable guarantees or commitments to any of employees with respect to continued employment or increased compensation after the Closing Date.

 

(o)                                 For any Contract Employee, Emmis has not promised or agreed to any future variation in the terms of that Contract Employee’s employment or engagement other than as permitted by this Agreement.

 

(p)                                 Emmis is in compliance in all material respects with all applicable laws respecting employment practices, terms and conditions of employment, wages and hours, health and safety, and immigration as they affect the Purchased Stations, including but not limited to: (i) Title VII of the Civil Rights Act of 1964; (ii) the Equal Pay Act of 1967; (iii) the Age Discrimination in Employment Act of 1967; (iv) the Americans with Disabilities Act; (v) the Family and Medical Leave Act; (vi) the Fair Credit Reporting Act; (vii) ERISA; (viii) the Fair Labor Standards Act (the “FLSA”) and the related rules and regulations adopted by those federal agencies responsible for the administration of such laws; (ix) the WARN Act, and any similar state WARN Act Law, and the related rules and regulations adopted by those federal agencies responsible for the administration of such laws; (x) the Immigration Reform and Control Act of 1986, and all related regulations and all executive orders in effect regarding the employment in the U.S. of persons who are not citizens of the U.S.; (xi) United States National Labor Relations Act; (xii) Occupational Safety and Health Act; (xiii) federal and state constitutions; (xiv) federal, state, and local statutes and ordinances; and (xv) other federal and state laws relating to employment, employment discrimination, and employment practices, terms and conditions of employment, wages, pay equity, hours, collective bargaining, and the payment and withholding of taxes or other sums as required by the appropriate Governmental Authority, and has withheld and paid to the appropriate

 

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Governmental Authority or is holding for payment not yet due to such Governmental Authority all amounts required to be withheld from current and former employees, and there are no material arrearages or delinquencies in the payment of wages, salaries, commissions, bonuses or other direct compensation.

 

(q)                                 Emmis has, in all material respects, properly classified its consultants, independent contractors, and other non-employee service providers who provide services to the Purchased Stations.

 

(r)                                    Emmis has properly classified its employees who provide services to the Purchased Stations as exempt or non-exempt under the FLSA as well as any applicable state and local wage and hour laws.

 

(s)                                   Each employee of Emmis who provides services to the Purchased Stations has provided the required legal authorization to work in the United States.

 

(t)                                    Since January 1, 2015, Emmis has not received written or, to the knowledge of Emmis, other notice of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation of the Purchased Stations that has not been concluded, and, to the knowledge of Emmis, no such investigation is in progress.

 

(u)                                 Except for the agreements with the Screen Actors Guild — American Federation of Television and Radio Artists (AFL-CIO) contained in the Dataroom or any successor agreement thereto, Emmis is not a party to or bound by any collective bargaining agreement with any labor organization with respect to the Purchased Stations.  To Emmis’ Knowledge, there have been no union organizing activities with respect to Emmis since March 1, 2017.

 

(v)                                 To the knowledge of Emmis, no work stoppage, labor strike, slowdown, or other material labor disruption with respect to the Purchased Stations has in the last twelve (12) months been threatened in writing.

 

Section 5.22                                                                Permits and Rights. Emmis possesses all material Permits that are necessary to permit Emmis to engage in the business of the Purchased Stations as presently conducted in and at all locations and places where they are currently operating and conducting the business of the Purchased Stations.  Emmis and Mediaco have not assigned, pledged, mortgaged, hypothecated or otherwise transferred any material Permits.

 

Section 5.23                                                                Claims Against Third Parties.  Schedule Section 5.23 sets forth a list and brief description to Emmis’s Knowledge of all of material breach of contract and tort claims against Emmis, if any, related to the conduct of the business of the Purchased Stations.

 

Section 5.24                                                                Station Intellectual Property.  Except as disclosed on Schedule 5.24:

 

(a)                                 The member of the Emmis Group that is listed as the registered owner of the Owned Station IP in Schedule Section 2.1(b)(v) exclusively owns all right, title and interest in such Owned Station IP, the member of the Emmis Group listed as the licensee of any Licensed Station IP in Schedule Section 2.1(b)(v) has a valid and enforceable license to use such Licensed Station IP,

 

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and Emmis either owns or has a valid and enforceable license to use all other Station Intellectual Property, in each case free and clear of Encumbrances (other than Permitted Encumbrances).

 

(b)                                 Schedule Section 2.1(b)(v) sets forth as of the Effective Date, with respect to the Purchased Stations, a list of all (i) patents and applications therefor; (ii) Trademark registrations and applications therefor; (iii) copyright registrations and applications therefor; (iv) domain names and social media user names/accounts; and (v) any other material unregistered Intellectual Property, in each case included in the Owned Station IP, and specifying, where applicable, the jurisdictions in which each such item of Owned Station IP has been issued or registered or in which an application for such issuance or registration has been filed, including the respective registration or application numbers and the names of the respective registered owners, and any filing deadlines for responses, affidavits or renewals that occur within three (3) months after the date of this Agreement. Schedule Section 2.1(b)(v) sets forth a list of (i) all material written licenses for Licensed Station IP, (ii) all material written licenses, sublicenses and other agreements pursuant to which any Person is authorized by Emmis to use any Owned Station IP or any other material Station Intellectual Property (collectively, “Licenses Out”), and (iii) except as set forth in Schedule 2.1(b)(v), all material written Contracts with social media influencers and/or on-air talent relating to the Purchased Stations (collectively, “Talent Agreements”). The execution and delivery of this Agreement by Emmis, and the consummation of the transactions contemplated by this Agreement, will not cause Emmis to be in violation or default in any material respect under any licenses for Licensed Station IP, any Licenses Out, or any Talent Agreements, nor entitle any other party to any such Contract to terminate or modify in any material respect such Contract. All Owned Station IP and all Licensed Station IP and Talent Agreements listed on Schedule Section 2.1(b)(v) are included in the Station Intellectual Property, except that which is “de minimis”. No member of the Emmis Group is a party to any IP Limiting Contract.

 

(c)                                  No written claim has been received by Emmis or, to Emmis’ Knowledge, has been threatened by any Person (i) alleging that the business of the Purchased Stations as currently conducted or as conducted within the past two (2) years infringes, misappropriates or otherwise violates any Intellectual Property of any other Person, (ii) objecting to the use by Emmis of any Intellectual Property used in the business of the Purchased Stations as currently conducted or under development for use in the business of the Purchased Stations or (iii) challenging the ownership by Emmis, or the validity or effectiveness, of any Owned Station IP, in each case that would be material to the business of the Purchased Stations either individually or in the aggregate. To Emmis’ Knowledge, there is not currently any material unauthorized use, infringement or misappropriation or other violation of any Owned Station IP by any Person, including, to Emmis’ Knowledge, any employee or former employee of Emmis. No Owned Station IP is subject to any Order, and no claim or Proceeding is pending (or to Emmis’ Knowledge, threatened) that challenges, the legality, validity, enforceability, use or ownership of any Owned Station IP.

 

(d)                                 With respect to the Purchased Stations, Emmis is in compliance in all material respects with all applicable Laws (including any Privacy and Information Security Requirements) and contractual obligations of Emmis governing the collection, interception, storage, receipt, purchase, sale, transfer and use (“Collection and Use”) of Personal Information of consumers or customers (“Customer Information”). Collection and Use of such Customer Information with respect to the Purchased Stations is in accordance in all material respects with Emmis’ privacy policies (or applicable terms of use) as published on its websites or any other privacy policies (or

 

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applicable terms of use) presented to consumers or customers (actual or potential) and to which Emmis is bound or otherwise subject and any contractual obligations of Emmis to its customers (actual or potential) regarding privacy. With respect to the Purchased Stations, Emmis takes commercially reasonable steps to protect the confidentiality, integrity and security of its software, databases, systems, networks and Internet sites and all information stored or contained therein or transmitted thereby from unauthorized or improper Collection and Use including appropriate backup, security, and disaster recovery technology, and to Emmis’ Knowledge no Person has gained unauthorized access to any of Emmis’ software, data, systems, or networks with respect to the Purchased Stations.

 

(e)                                  The business of the Purchased Stations does not infringe, misappropriate or otherwise violate in any material respect any Intellectual Property of any other Person. To Emmis’ Knowledge, the execution or delivery of this Agreement or any other agreement or document contemplated by this Agreement, or the performance of Emmis’ obligations hereunder or thereunder, will not violate in any material respect any applicable Law or any of Emmis’ privacy policies (or applicable terms of use) or any other contractual obligation of Emmis governing the Collection and Use of Customer Information.

 

(f)                                   The Station IT Assets are free from material bugs and other defects, have not materially malfunctioned or failed within the past three years, and to Emmis’ Knowledge do not contain any viruses, malware, Trojan horses, or similar devices, except any of the foregoing that would not be material to the business of the Purchased Stations either individually or in the aggregate. All Station IT Assets are owned exclusively by Emmis, or are used pursuant to a valid license and are not a “bootleg” version or unauthorized copy. Subject to Section 2.1(f) and Section 2.6, the Station IT Assets owned or used by Emmis prior to the Closing will be owned or available for use (as applicable) by the Purchased Stations, and any Contract related to any of the foregoing, including license, hosting, maintenance, service and support agreements, will continue to benefit the Purchased Stations on substantially similar terms and conditions, in each case immediately after the Closing.

 

(g)                                  The Station Intellectual Property constitutes all Intellectual Property necessary to operate the business of the Purchased Stations in all material respects as it is currently conducted and as it has been conducted in the twelve (12) months prior to the date hereof.

 

Section 5.25                            Disclaimer of Other Representations and Warranties. Except for the representations and warranties contained in this Article V (including the related portions of the Emmis/Mediaco Disclosure Schedules), neither Emmis nor any of its Affiliates nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Emmis or Mediaco, and Emmis and Mediaco disclaim any other representations or warranties, including any representation or warranty as to the accuracy, appropriateness, completeness, suitability or sufficiency of any information (whether written or oral) regarding the Mediaco Assets furnished or made available to Purchaser or any of its Representatives (including any information, documents or material delivered to Purchaser or otherwise made available to Purchaser in any electronic document site established on behalf of Emmis or in any other form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability, cost estimates, financial projections or success of the Mediaco Business, or any representation or warranty arising from statute or otherwise in law.

 

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ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to Emmis and Mediaco that:

 

Section 6.1                                                                       Authorization. Purchaser has full power and authority to enter into the Transaction Agreements. The Transaction Agreements to which Purchaser is a party, when executed and delivered by Purchaser, will constitute valid and legally binding obligations of Purchaser, enforceable in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

Section 6.2                                                                       Consents and Approvals. The execution, delivery and performance of this Agreement and the other Transaction Agreements by Purchaser does not and will not: (i) violate any provisions of the Organizational Documents of Purchaser or (ii) violate any applicable Law or Order. Except for the FCC Consents, no approval or consent of any Person is or was required to be obtained by Purchaser for the authorization of this Agreement or the other documents contemplated hereby or the execution, delivery, performance and consummation by Purchaser of the transactions contemplated by this Agreement and the other Transaction Agreements.

 

Section 6.3                                                                       Litigation. There are no claims, litigation, arbitrations or other legal proceedings pending against Purchaser or its Affiliates or, to Purchaser’s Knowledge, which are pending but not served on Purchaser or its Affiliates or threatened against Purchaser or its Affiliates that questions the validity of this Agreement or the right of the Parties to enter into them, or to consummate the transactions contemplated by this Agreement or that seek damages in connection with the transactions contemplated by this Agreement.

 

Section 6.4                                                                       Brokers. Neither Purchaser nor any of its Affiliates has employed any investment banker, broker, finder or intermediary in connection with the Transactions who might be entitled to any fee or any commission in connection with or upon consummation of the Transactions, and any such fee or commission, and any costs or expenses incurred in connection therewith shall be borne solely by Purchaser.

 

Section 6.5                                                                       Disclosure of Information. Purchaser has had an opportunity to discuss the Mediaco Business, management, financial affairs and the terms and conditions of the offering of the shares of Class B Common Stock with Emmis and Mediaco management and has had an opportunity to review the Purchased Stations. Purchaser has conducted its own independent investigation, review and analysis of the Mediaco Business and the Mediaco Assets, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Emmis for such purpose. Purchaser acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Purchaser has relied solely upon its own investigation and the express representations and warranties of Emmis and Mediaco set forth in Article V (including related portions of the Emmis/Mediaco Disclosure Schedules); and (b) neither

 

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Emmis nor any other Person has made any representation or warranty as to Mediaco, the Mediaco Business, the Mediaco Assets or this Agreement, except as expressly set forth in Article V (including the related portions of the Emmis/Mediaco Disclosure Schedules). The foregoing, however, does not limit or modify the representations and warranties of Emmis and Mediaco in Article V of this Agreement or the right of Purchaser to rely thereon.

 

Section 6.6                                                                       Investment Representation. Purchaser is acquiring the Class B Common Stock pursuant to this Agreement for its own account for investment purposes only and not with a view to any resale, distribution, subdivision or fractionalization of them. Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

Section 6.7                                                                       Solvency. Each of Purchaser, Mediaco and the Mediaco Subsidiaries shall be Solvent following the Closing, after giving effect to the transactions contemplated by this Agreement.

 

Section 6.8                                                                       Equity Financing. Purchaser has delivered to Emmis a true and complete copy of the executed commitment letter, dated as of the date hereof (the “Equity Commitment Letter”), from Standard General L.P. (the “Equity Investor”), pursuant to which Standard General L.P. commits to invest, or to cause one or more of its Affiliates to invest, in Purchaser, subject to the terms and conditions thereof, cash in the aggregate amount set forth therein (the “Equity Financing”). The Equity Commitment Letter is (a) in full force and effect, (b) unamended, (c) a legal, valid and binding obligation of the Equity Investor and (d) enforceable in accordance with its terms against the Equity Investor, except to the extent that enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other applicable Laws affecting creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable Law. Except as expressly set forth in the Equity Commitment Letter, there are no conditions precedent to the obligations of the parties thereto to provide the full amount of the financing set forth therein. The Equity Investor is not in default or breach of the Equity Commitment Letter.  Provided that all conditions set forth in the Equity Commitment Letter are satisfied, at the Closing, Purchaser will have sufficient cash or other sources of immediately available funds to permit it to make the Purchaser Investment and consummate the other Transactions.

 

ARTICLE VII

 

THE DISTRIBUTION

 

Section 7.1                                                                       Record Date and Closing Date. Subject to the satisfaction, or to the extent permitted by applicable Law, waiver, in whole or in part, of the conditions set forth in Article IV, the Board of Directors of Emmis in consultation with Purchaser, shall establish the Record Date and the Closing Date and any necessary or appropriate procedures in connection with the Distribution; provided, that Emmis shall provide Purchaser written notice no fewer than two (2) Business Days prior to Emmis’ announcement of the Record Date to its stockholders.

 

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Section 7.2                                                                       Authorization of Mediaco Common Stock; Charter and By-laws.

 

(a)                                 Prior to the Closing Date, Emmis and Mediaco shall take all actions necessary (including amending the Mediaco certificate of incorporation as applicable) to issue to Emmis such number of shares of Class A Common Stock, including, if applicable, by reclassifying the outstanding shares of Class A Common Stock or by declaring a dividend payable to Emmis in shares of Class A Common Stock, for the purpose of increasing the outstanding shares of Class A Common Stock such that, immediately prior to the Closing Date, Mediaco will have an aggregate number of shares of Class A Common Stock to be determined by Emmis, Mediaco and Purchaser prior to the Closing Date, all of which will be held by Emmis.

 

(b)                                 On or prior to the Closing Date, Mediaco and Emmis shall cause Mediaco’s certificate of incorporation and by-laws to be amended and restated, in forms mutually satisfactory to the Parties.

 

Section 7.3                                                                       The Agent. Prior to the Closing Date, Emmis shall enter into an agreement with the Agent on terms reasonably satisfactory to Mediaco and Purchaser providing for, among other things, the distribution to the holders of Emmis Common Stock in accordance with this Article VII of the shares Class A Common Stock to be distributed in the Distribution.

 

Section 7.4                                                                       Delivery of Shares to the Agent. At or prior to the Closing Date, Emmis shall authorize the book-entry transfer by the Agent of all of the outstanding shares of Class A Common Stock to be distributed in connection with the Distribution.

 

Section 7.5                                                                       The Distribution.

 

(a)                                 Upon the terms and subject to the conditions of this Agreement, following consummation of the authorization of Class A Common Stock pursuant to Section 7.2 and the Initial Contribution on the Closing Date, Emmis shall declare and effect the Distribution, in accordance with Section 7.5(c), to each holder of issued and outstanding shares of Emmis Common Stock as of the Record Date (excluding treasury shares held by Emmis and any other shares of Emmis Common Stock otherwise held by a member of the Emmis Group), such that each such holder will receive a pro-rata share of the aggregate shares of Class A Common Stock held by Emmis as of the Distribution Time (the aggregate number of shares of Class A Common Stock held by Emmis as of the Distribution Time, the “Emmis Share Number”).

 

(b)                                 Any fractional shares of Class A Common Stock that would otherwise be issuable to a Emmis Stockholder pursuant to Section 7.5(a) shall be aggregated and such Emmis Stockholder shall be issued in respect of all such fractional shares a number of shares of Class A Common Stock equal to such aggregate number, rounded to the nearest whole number. Emmis, Mediaco and Purchaser acknowledge and agree that the conversion set forth in the preceding sentence in lieu of issuing fractional shares of Class A Common Stock was not separately bargained-for consideration but merely represents a mechanical rounding off for purposes of avoiding the expense and inconvenience to Mediaco that would otherwise be caused by the issuance of fractional shares of Class A Common Stock. In the event that after giving effect to this Section 7.5(b), the aggregate number of shares of Class A Common Stock issued to the Emmis Stockholders is greater than the number of shares of Class A Common Stock to be issued as the Emmis Share Number, the Emmis Share Number shall be deemed to be amended to include such number of additional shares of Class A Common Stock issued pursuant to this Section 7.5(b), but

 

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in no event shall the total number of issued shares of Class A Common Stock represent more than 25% of the equity of Mediaco.

 

(c)                                  At or prior to the Distribution Time, Emmis shall deliver to the Agent evidence of Class A Common Stock in book-entry form being distributed in the Distribution for the account of the holders of Emmis Common Stock that are entitled thereto pursuant to Section 7.5(a) or Section 7.5(b). The Distribution shall be deemed to be effective upon written authorization from Emmis to the Agent to proceed, after the receipt of which the Agent shall then distribute by book-entry transfer in respect of the outstanding shares of Emmis Common Stock held by holders of record of Emmis Common Stock on the Record Date (excluding treasury shares held by Emmis and any other shares of Emmis Common Stock otherwise held by a member of the Emmis Group) all of the shares of Class A Common Stock distributed in the Distribution pursuant to Section 7.5(a) and Section 7.5(b).

 

(d)                                 Purchaser shall be responsible for out of pocket costs related to the Distribution, including the costs of engaging the Agent, listing fees and filing fees. Notwithstanding the foregoing, each party shall be pay the fees of its own counsel, provided that counsel to Purchaser, on behalf of Mediaco, shall be primarily responsible for securities filings with respect to the Distribution, with cooperation and assistance as reasonably necessary from Emmis and its counsel.

 

ARTICLE VIII

 

INDEMNIFICATION

 

Section 8.1                                                                       Emmis’ Indemnities. From and after Closing, Emmis (the “Emmis Indemnifying Parties”) shall indemnify, defend, and hold harmless Mediaco and its Affiliates (collectively, the “Mediaco Indemnified Parties”) from and against, and reimburse them for, all Losses resulting from, related to, or in connection with:

 

(a)                                 any breach or misrepresentation by Emmis of any of its representations or warranties in this Agreement;

 

(b)                                 any breach, misrepresentation, or other violation by Emmis of any of its covenants or agreements in this Agreement;

 

(c)                                  any third-party claims brought against Mediaco, Purchaser or their Affiliates to the extent attributable to Emmis’ operation of the Purchased Stations or other business prior to the Closing;

 

(d)                                 any Excluded Liabilities; and

 

(e)                                  withdrawal liability with respect to the Multiemployer Plans.

 

To the extent a claim for indemnification is or may be based on both a breach of a representation and warranty and pursuant to Section 8.1(c), Section 8.1(d), or Section 8.1(e), the indemnification claim shall be made pursuant to Section 8.1(c), Section 8.1(d), or Section 8.1(e), unless Purchaser specifically provides otherwise in the notice of claim. With respect to any Losses suffered by a Mediaco Indemnified Party that are determined to be indemnifiable pursuant to Section 8.1(e),

 

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Mediaco shall have the option to offset such indemnifiable Losses against amounts due pursuant to the Emmis Promissory Note.

 

Section 8.2                                                                       Mediaco’s Indemnities.  From and after Closing, Mediaco shall indemnify, defend, and hold harmless Emmis and its Affiliates from and against, and reimburse them for, all Losses resulting from, related to, or in connection with:

 

(a)                                 Any breach, misrepresentation, or other violation by Mediaco of any of its covenants or agreements in this Agreement after the Closing;

 

(b)                                 Any Mediaco Liabilities; and

 

(c)                                  Any third-party claims brought against the Emmis Indemnified Parties to the extent attributable to Mediaco’s operation of the Stations following the Closing.

 

Section 8.3                                                                       Procedure for Indemnification. The procedure for indemnification shall be as follows:

 

(a)                                 The Party seeking indemnification under this Article VIII (the “Claimant”) shall give notice to the Party from whom indemnification is sought (the “Indemnitor”) of any claim or liability that might result in an indemnified Loss (an “Indemnified Claim”), specifying in reasonable detail (i) the factual basis for and circumstances surrounding the Indemnified Claim; and (ii) the amount of the potential Loss pursuant to the Indemnified Claim if then known, and including copies of any material correspondence or written documents relating to the Indemnified Claim. If the Indemnified Claim relates to a Proceeding filed by a third party against Claimant, notice shall be given by Claimant as soon as practical, but in all events within fifteen (15) Business Days after Claimant learns of the Proceeding or written notice of the Proceeding is given to Claimant. In all other circumstances, notice shall be given by Claimant as soon as practical, but in all events within twenty (20) Business Days after Claimant becomes aware of the facts giving rise to the potential Loss; provided, however, that should the Claimant fail to notify the Indemnitor in the time required above, the Indemnitor shall only be relieved of its obligations pursuant to this Article VIII to the extent the Indemnitor is materially prejudiced by such delay or failure to timely give notice of an Indemnified Claim or potential Loss.

 

(b)                                 The Claimant shall make available to Indemnitor and/or its authorized representatives the information relied upon by the Claimant to substantiate the Indemnified Claim or Loss and shall make available any information or documentation in Claimant’s possession, custody or control that is or may be helpful in defending or responding to the Indemnified Claim or Loss.

 

(c)                                  The Indemnitor shall have thirty (30) days after receipt of the indemnification notice referred to in sub-section (a) to notify the Claimant in writing that it elects to conduct and control the defense of any such Indemnified Claim; provided, however, such thirty (30) day period shall be reduced to such shorter period of time set forth in the applicable indemnification notice if the Indemnified Claim or Loss is based upon a third-party claim requiring a response in fewer than thirty (30) days, but in no event fewer than ten (10) days.

 

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(d)                                 If the Indemnitor does not advise the Claimant of its intent to conduct and control the defense of the Indemnified Claim or Proceeding within the time period specified above, the Claimant shall have the right to defend, contest, settle, or compromise such Indemnified Claim or Proceeding. If the Indemnitor properly advises the Claimant that it will conduct and control the Indemnified Claim or Proceeding, the Indemnitor shall have the right to undertake, conduct, defend, and control, through counsel of its own choosing and at its sole expense, the conduct, defense, and settlement of the Indemnified Claim or Proceeding, and the Claimant shall cooperate with the Indemnitor in connection therewith; provided, however, that: (i) the Indemnitor shall not consent to the imposition of any injunction against the Claimant without the prior written consent of the Claimant, which consent shall not be unreasonably withheld; (ii) the Indemnitor shall permit the Claimant to participate in such conduct or settlement through counsel chosen by the Claimant, but the fees and expenses of such counsel shall be borne by the Claimant; (iii) upon a final determination of Proceeding, the Indemnitor shall promptly reimburse the Claimant for the full amount of any indemnified Loss or indemnified portion of any Loss resulting from the Indemnified Claim or Proceeding and all reasonable expenses related to such indemnified Loss incurred by the Claimant, except (A) fees and expenses of counsel for the Claimant in the event that Indemnitor has conducted or controlled the Proceeding and (B) any Loss not indemnifiable by Indemnitor; and (iv) no Indemnitor may, without the prior written consent of the Claimant, settle or compromise, or consent to the entry of any judgment in connection with, any Proceeding with respect to the claim described in the indemnification notice unless (A) such settlement or compromise involves only the payment of money; (B) there is no finding or admission of liability, any violation of any Law or any violation of the rights of any Person by the Claimant; and (C) the Indemnitor obtains an unconditional release of each Claimant from all Indemnified Claims or potential Loss arising out of the claim described in the indemnification notice and any Indemnified Claim or Proceeding related thereto. If the Claimant is controlling the defense of an Indemnified Claim or Proceeding pursuant to this Section 8.3(d), then it shall not agree to any settlement without the written consent of the Indemnitor (which consent shall not be unreasonably withheld or delayed).

 

Section 8.4                                                                       Limitations.

 

(a)                                 Except in the case of Fraud, the Indemnitor shall only be required to indemnify the Claimant under this Article VIII for breaches of representations or warranties by the Emmis Indemnifying Parties pursuant to Section 8.1(a) if the aggregate amount of all Losses relating to claims for breaches of representations or warranties of the Emmis Indemnifying Parties pursuant to Section 8.1(a) (with respect to Mediaco Indemnified Parties) exceeds one percent (1%) of the Emmis Purchase Price (the “Basket”), after which the Claimant shall be entitled to recover, and the Emmis Indemnifying Parties shall be obligated for, Losses in excess of the Basket; provided that the foregoing limitation shall not apply to Losses relating to a breach by Emmis of its representations or warranties in Section 5.1 (Due Organization; Good Standing; Corporate Power and Subsidiaries), Section 5.2 (Authorization and Binding Obligation), Section 5.8(a) (Station Licenses), and Section 5.16 (Broker’s Fees) and shall not apply to Losses relating to Taxes or a breach by Purchaser of its representations or warranties in Section 6.1 (Authorization), Section 6.4 (Brokers), Section 6.5 (Disclosure of Information), and Section 6.8 (Equity Financing).

 

(b)                                 Except in the case of Fraud, the maximum aggregate liability of Emmis pursuant to Section 8.1(a) for any claim or claims for Losses for breaches of representations or warranties shall

 

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not exceed ten percent (10%) of the Emmis Purchase Price (the “Cap”); provided, however, that the Cap for any claim or claims for Losses relating to Taxes or a breach by Emmis of its representations or warranties in Section 5.1 (Due Organization; Good Standing; Corporate Power and Subsidiaries), Section 5.2 (Authorization and Binding Obligation), Section 5.8(a) (Station Licenses), and Section 5.16 (Broker’s Fees) shall be the Emmis Purchase Price.

 

Section 8.5                                                                       Certain Limitations. In calculating the amount of Losses of a Claimant under this Article VIII:

 

(a)                                 any claim for indemnification under this Agreement shall be reduced and offset dollar-for-dollar by any insurance payment with respect to the matter for which indemnification is sought, in each case as and when actually received by the Party claiming indemnification (and the Claimant shall use its commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Losses prior to seeking indemnification under this Agreement);

 

(b)                                 for purposes of indemnification for breaches of representations or warranties by a Party, (i) references to materiality, Material Adverse Effect or other similar qualification (collectively, “Materiality Qualifiers”) are to be used solely for the purpose of determining whether a breach of a representation or warranty has occurred, and (ii) once a breach has occurred, the Materiality Qualifiers shall be ignored and the amount of the applicable Losses shall be calculated without regard to any Materiality Qualifiers contained in any such breached representation or warranty; and

 

(c)                                  no amounts will be recoverable under this Article VIII by any Party with respect to any matter to the extent such matter was reflected in the prorations of income and expenses pursuant to Section 2.1.

 

Section 8.6                                                                       Survival. Unless otherwise specified herein, each covenant and agreement contained in this Agreement or in any other Transaction Agreement and required to be performed after Closing shall survive the Closing and be enforceable in accordance with its terms until the expiration of the applicable statute of limitations (including extensions thereof) for breach or enforcement of such covenant and agreement under applicable Law. All representations and warranties contained in this Agreement and each covenant or agreement contained in this Agreement that is required to be performed at or prior to Closing shall survive for a period of fifteen (15) months after the Closing and thereafter such representations and warranties shall expire, except that (i) any representation or warranty with respect to which an indemnification notice has been delivered for a breach thereof prior to the expiration of such fifteen (15) month period shall survive as to such claim until such claim is resolved; (ii) the representations, warranties, covenants, and indemnity agreements as to Taxes as well as the representations and warranties set forth in Section 5.1 (Due Organization; Good Standing; Corporate Power and Subsidiaries), Section 5.2 (Authorization and Binding Obligation), Section 5.8(a) (Station Licenses), and Section 5.16 (Broker’s Fees) shall survive for the applicable statute of limitations applicable to the matters subject to such respective representations and warranties, respectively, plus ten (10) Business Days.

 

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Section 8.7                                                                       Exclusive Remedies following the Closing. The Parties acknowledge and agree that the foregoing indemnification provisions in this Article VIII shall, except in the case of Fraud, be the exclusive remedy of the Parties with respect to Losses after Closing relating to the transactions contemplated by this Agreement; provided, however, that notwithstanding the foregoing any Party may pursue injunctive relief following Closing to enforce covenants in the Agreement that survive Closing and are supportable under applicable Law.

 

Section 8.8                                                                       Mitigation of Damages. The Parties agree to use reasonable efforts to mitigate any Losses which form the basis for any claim for indemnification, defense, hold harmless, payment or reimbursement hereunder other than with respect to claims for the indemnification of Mediaco Liabilities or Excluded Liabilities. Notwithstanding anything contained in this Agreement to the contrary, no Party will be entitled to lost profits, punitive damages or other special or consequential damages regardless of the theory of recovery.

 

ARTICLE IX

 

ADDITIONAL COVENANTS

 

Section 9.1                                                                       Affirmative Covenants of Emmis. Between the date of this Agreement and the Closing Date:

 

(a)                                 Emmis shall promptly notify Purchaser in writing if Emmis has Knowledge prior to Closing of: (1) any representations or warranties contained in Article V and Article VI that are no longer true and correct in any material respect or of any fact or condition that would constitute a material breach of any such representation or warranty as of Closing, (2) the occurrence of any event that would require any material changes or amendments to the schedules and exhibits attached to this Agreement, (3) the occurrence of any event that may make the satisfaction of the conditions in Article IV impossible or materially unlikely, or (4) the occurrence of any other event that violates any material covenants, conditions or agreements to be complied with or satisfied by Emmis under this Agreement; provided, however, that no such notice shall qualify or otherwise limit in any way Emmis’ representations, warranties, covenants or agreements herein.

 

(b)                                 Emmis will use all commercially reasonable efforts to comply in all material respects with all Laws applicable to Emmis’ use of the Mediaco Assets and operate and maintain the Purchased Stations and all operations in material conformity with the FCC Licenses, the Communications Act, and the rules and regulations of the FCC;

 

(c)                                  Emmis will maintain the Mediaco Assets in customary repair, maintenance and condition, except for wear and tear incurred in the ordinary course of business, and Emmis will continue to make capital expenditures in the ordinary course of business consistent with past practices as contemplated in the current capital expenditure plan of Emmis, if any;

 

(d)                                 Emmis will maintain in full force and effect the FCC Licenses relating to the Purchased Stations and the Mediaco Assets and, except as set forth elsewhere in this Agreement, take any action reasonably necessary before the FCC, including the preparation and prosecution of applications for renewal of the FCC Licenses, if necessary, to preserve such licenses in full force and effect in all material respects;

 

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(e)                                  Emmis will maintain in full force and effect reasonable property damage and liability insurance on the Mediaco Assets in at least the amount provided for by the policies currently maintained by Emmis;

 

(f)                                   Emmis shall conduct the business of the Purchased Stations in the ordinary course of business consistent with past practices of the Purchased Stations;

 

(g)                                  Emmis shall use commercially reasonable efforts to preserve intact the business of the Purchased Stations and maintain the relations and goodwill, if any, with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with the business of the Purchased Stations;

 

(h)                                 Emmis shall use commercially reasonable efforts to cause the conditions set forth in Article IV to be satisfied promptly;

 

(i)                                     Emmis shall maintain all registrations and prosecute any pending applications for Owned Station IP (except where not permitted under applicable Law); and

 

(j)                                    Emmis shall maintain all books and records relating to the business of the Purchased Stations.

 

Section 9.2                                                                       Negative Covenants of Emmis. Between the date of this Agreement and the Closing Date, except as expressly permitted by this Agreement, or with the prior written consent of Purchaser (which consent may be authorized by David Glazek or Gail Steiner or any officer of Purchaser), with respect to the Mediaco Business:

 

(a)                                 Emmis will not (i) engage in any hiring, discharge or employee compensation decisions or practices with respect to any Station Employees that are outside the ordinary course of business consistent with past practice, (ii) increase the compensation or benefits of any Station Employee or establish, modify or terminate any Station Plan, in each case outside the ordinary course of business consistent with past practice, or (iii) enter into, amend or terminate any collective bargaining agreement other than agreements, amendments, or terminations with respect to the Screen Actors Guild — American Federation of Television and Radio Artists (AFL-CIO) in the ordinary course of business consistent with past practice, except in each case for (A) actions required pursuant to Contracts or Law, and (B) stay bonuses and other contractual or legal obligations that will be satisfied by Emmis, provided that Emmis will provide Mediaco with reasonable advance notice of any hiring, discharge or compensation decisions made prior to the Closing;

 

(b)                                 Emmis will not (A) terminate, assign, modify or amend any Assumed Contract except in the ordinary course of business or as reasonably necessary to transfer such Assumed Contract to Mediaco, or (B) knowingly take or fail to take any action that would cause a breach of any Assumed Contract;

 

(c)                                  Emmis will not voluntarily create any Encumbrance (other than a Permitted Encumbrance) on any of the Mediaco Assets or capital stock of Mediaco;

 

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(d)                                 Emmis will not sell, assign, lease or otherwise transfer or dispose of any of the Mediaco Assets, except for Assets consumed or disposed of in the ordinary course of business consistent with past practices;

 

(e)                                  Emmis will not modify or amend, or seek to modify or amend, any of the main station FCC Licenses without Mediaco’s prior written consent except as necessary for Emmis to be in compliance with the Communications Act; provided, that Purchaser shall not unreasonably withhold, condition or delay their consent unless the modification is materially adverse to the interests of Mediaco or the Purchased Stations; and provided, further, that Emmis shall have the right to file and pursue any and all FCC License renewals that Emmis deems necessary or advisable;

 

(f)                                   Emmis shall not authorize or enter into any local marketing agreement, time brokerage agreement, joint sales agreement or similar agreement with respect to the Purchased Stations;

 

(g)                                  Emmis will not purchase or acquire, or enter into any purchase and sale agreement, lease, sublease, license or occupancy agreement with respect to, any real property or interests in real property on behalf of Mediaco or enter into any agreement which would be binding on the Real Estate Leases following the Closing; and

 

(h)                                 Emmis shall not authorize or enter into an agreement to do any of the foregoing.

 

Section 9.3                                                                       Covenants of Mediaco. Mediaco shall promptly notify Purchaser in writing if Mediaco has Knowledge prior to the Closing of: (1) any representations or warranties contained in Article V that are no longer true and correct in any material respect, (2) the occurrence of any event that would require any changes or amendments to the schedules or exhibits attached to this Agreement, or (3) the occurrence of any other event that may reasonably be expected to result in a violation of any covenants, conditions or agreements to be complied with or satisfied by Mediaco under this Agreement; provided, however, that no such notice shall qualify or otherwise limit in any way Mediaco’s representations, warranties, covenants or agreements herein.

 

Section 9.4                                                                       Covenants of Purchaser. Purchaser shall promptly notify Emmis in writing if Purchaser has Knowledge prior to the Closing of: (1) any representations or warranties contained in Article VI that are no longer true and correct in any material respect, (2) the occurrence of any event that would require any changes or amendments to the schedules or exhibits attached to this Agreement, (3) the occurrence of any other event that may reasonably be expected to result in a violation of any covenants, conditions or agreements to be complied with or satisfied by Purchaser under this Agreement; provided, however, that no such notice shall qualify or otherwise limit in any way Purchaser’s representations, warranties, covenants or agreements herein.

 

Section 9.5                                                                       Access. Between the date of this Agreement and the Closing Date, Emmis will provide Purchaser, its counsel, accountants, financial advisors, bankers or other financing parties, environmental consultants, appraisers and other advisers and representatives, (i) such books and records, including copies of all Assumed Contracts, environmental and engineering studies and reports, and other documents and contracts pertaining solely to the

 

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Mediaco Assets or the Purchased Stations that are in Emmis’ possession, custody or control and (ii) access to the Purchased Stations’ properties and Leased Real Property (including for purposes of performing one or more ALTA surveys of the Leased Real Property or any portion thereof), Assets and personnel. Except as permitted under Section 9.15, Purchaser and its consultants and agents shall not contact employees of Emmis without Emmis’ express approval, which shall not be unreasonably delayed or withheld. All information shared or discovered in connection with such access shall be subject to the Confidentiality Agreement and Section 10.5. Emmis shall use reasonable best efforts to cause its officers, employees and advisors to provide reasonable cooperation in connection with requests for information, documents and/or data from Purchaser and its consultants.

 

Section 9.6                                                                       No Inconsistent Action. Between the date of this Agreement and Closing hereunder or termination of this Agreement, each Party shall use its commercially reasonable efforts to cause the fulfillment at the earliest practicable date of all of the conditions to the obligations of such Party to consummate the contribution of the Mediaco Assets, the Purchaser Investment and the Distribution, and shall take no action inconsistent with such consummation.

 

Section 9.7                                                                       Exclusivity. Neither Emmis nor any of its Affiliates or Representatives shall, during the period commencing on the date of this Agreement and ending with the earlier to occur of the Closing hereunder or the termination of this Agreement, directly or indirectly solicit, initiate or encourage offers from, negotiate, engage in discussions with or in any manner encourage, accept or actively consider any proposal of any other Person relating to the acquisition of the business of the Purchased Stations or the Mediaco Assets in any manner that would conflict with this Agreement or that otherwise would prevent the consummation of the transactions contemplated hereby.

 

Section 9.8                                                                       Further Assurances. In addition to the actions specifically provided for elsewhere in this Agreement, the Parties shall use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Transaction Agreements (including all actions contemplated to be taken from time to time after the Closing Date, which shall be taken at the expense of the Party taking such action and for no further consideration from any other Party or its Affiliates (except as otherwise expressly provided in this Agreement)). Without limiting the foregoing, the Parties shall cooperate with the other Parties, and execute and deliver, or use their respective reasonable best efforts to cause to be executed and delivered, all instruments, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument, and take all such other actions as a Party (as the case may be) may reasonably be requested to take by another Party from time to time, consistent with the terms of this Agreement and the other Transaction Agreements, in order to effectuate the provisions and purposes of this Agreement.

 

Section 9.9                                                                       Transition Efforts. The Parties shall use their respective commercially reasonable efforts to accomplish a timely, smooth, uninterrupted and organized transfer of the Mediaco Assets upon Closing.

 

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Section 9.10                                                                Press Releases. Emmis, Mediaco and Purchaser agree that no public release or announcement concerning the transactions contemplated hereby shall be issued by any Party without the prior consent of the other Parties, which consent shall not be unreasonably withheld, except as such release or announcement may be required by any Law or securities exchange requirement, in which case the Party required to make the release or announcement shall, allow the other Parties reasonable time to comment on such release or announcement in advance of such issuance.

 

Section 9.11                                                                Off-the-Shelf Software Licenses. Between the date hereof and the Closing, Emmis shall ensure that it has sufficient licenses for off-the-shelf software used in the operation of the Purchased Stations as currently operated. If any such license is not transferable to Mediaco as of the Closing, then Emmis shall acquire such software licenses prior to the Closing at Mediaco’s cost and expense.

 

Section 9.12                                                                Social Media Accounts.  Between the date hereof and the Closing, Emmis shall cause employees or agents of the Emmis Group who are the account holders for social media accounts (including Facebook, Twitter, and Instagram) that are included in the Mediaco Assets to take all actions and provide all information and materials necessary for Emmis to convey rights to and control over such accounts to individuals designated by Mediaco as of the Closing.

 

Section 9.13                                                                Missing IP. Notwithstanding anything to the contrary in this Agreement or any of the other Transaction Agreements, if at any time prior to the later of (a) five (5) years after the Closing or (b) three (3) years after the date that the last Transaction Agreement expires or terminates, either Party discovers that any Missing IP is held by Seller (whether by way of ownership or by a license or permission from a third party, which license or permission may by its terms be transferred to Buyer), Emmis will promptly transfer such Missing IP to Buyer or its designated Affiliate, in each case for no additional consideration and at Emmis’s expense.

 

Section 9.14                                                                Accounting.  During the first fifteen (15) Business Days after Closing, Mediaco shall make available to Emmis, at no additional cost, access to the Purchased Stations’ books and records, and the responsible employee(s) to consult with respect to such books and records, for the purposes of closing the books of the Purchased Stations for the period prior to Closing.

 

Section 9.15                                                                Financing.

 

(a)                                 Purchaser shall cause the financing contemplated by the Equity Commitment Letter to be available to Mediaco at the Closing;  provided, however, that Purchaser may, in its sole discretion, reduce the amount of the Equity Financing by an amount equal to the amount of financing (the “Debt Financing”) provided by an Affiliate, a bank or another third-party financial institution (such institution, the “Lender”) to Purchaser or Mediaco to the extent such amount is used to pay the Emmis Purchase Price and consummate the other Transactions.

 

(b)                                 Emmis and Mediaco shall use reasonable best efforts to cause their officers, employees and advisors to provide reasonable cooperation in connection with the arrangement of the Debt Financing with respect to the transactions contemplated by this Agreement, including participation in meetings, due diligence sessions, road shows, the preparation of offering

 

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memoranda, private placement memoranda, prospectuses and similar documents, the execution and delivery of any commitment letters, underwriting or placement agreements, pledge and security documents, other definitive financing documents, or other requested certificates of documents, including a customary certificate of the chief financial officer with respect to solvency matters, comfort letters of accountants, legal opinions and real estate title documentation as may be reasonably requested by Purchaser.

 

Section 9.16                                                                Replacement of Guaranties. Emmis or its Affiliates have provided certain guarantees, letters of credit, surety bonds, indemnities and similar obligations with respect to the Mediaco Business as set forth on Schedule 9.16 (each, an “Existing Guaranty”). Purchaser shall use its reasonable best efforts to cause the complete and unconditional release of Emmis and its Affiliates and the substitution of a similar obligation of Purchaser, Mediaco or an Affiliate or a third party as the guarantor, indemnitor or responsible party (“Substitute Guaranties”) under each Existing Guaranty, which Substitute Guaranties will be effective upon the Closing. Without limiting the foregoing, if any Existing Guaranty remains outstanding and not fully released after the Closing, Purchaser shall (i) continue to use reasonable best efforts after the Closing to relieve and release Emmis and its Affiliates of any liabilities and obligations under any Existing Guaranty under which a new guarantor has not been substituted in all respects for Emmis or any of its Affiliates as of the Closing Date; (ii) not permit any of the Mediaco Entities to (A) renew or extend the term of or (B) increase the obligations under, or transfer to another Person, any liability for which Emmis or any of its Affiliates (other than the Mediaco Entities) is or would reasonably be expected to be liable under any such outstanding Existing Guaranty; and (iii) indemnify and hold harmless Emmis and its Affiliates with respect to all liabilities or obligations arising out of or relating to any such Existing Guaranty.

 

Section 9.17                                                                Governmental Approvals.

 

(a)                                 General. Each Party shall, as promptly as possible, use its reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement. Each Party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The Parties shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

 

(b)                                 FCC Consents.

 

(i)                                     The assignments of the FCC Licenses as contemplated by this Agreement are subject to the prior consent and approval of the FCC.  Prior to Closing, Mediaco shall not directly or indirectly control, supervise, direct, or attempt to control, supervise, or direct, the operation of any Purchased Station.

 

(ii)                                  As soon as practicable, and in any event within five (5) business days following the date of the execution of this Agreement, the Parties shall prepare and jointly file the FCC Applications and the Parties shall use all reasonable best efforts to cause the FCC to accept the FCC Applications for filing as soon as practicable after such filing.  Each

 

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Party shall thereafter prosecute the FCC Applications in good faith and with all reasonable diligence and otherwise use all reasonable best efforts to obtain the grant of the FCC Consents as expeditiously as practicable.  No Party will take any action that it knows, or reasonably believes, would prevent or materially delay grant of the FCC Applications.  Emmis shall promptly enter into reasonable tolling or other arrangements with the FCC if necessary to resolve any complaints before the FCC relating to the Purchased Stations in order to obtain the FCC Consents and any liability imposed upon the Purchased Stations by the FCC relating to the basis for such tolling shall be deemed an Excluded Liability. Each Party shall (i) keep the other Parties informed in a timely manner and in all material respects of any material communication received by such Party from, or given by such Party, to the FCC or any other Governmental Authority (including the provision of copies of any pleadings, documents, or other communications exchanged with the FCC or any other Governmental Authority) and the material non-confidential portions of any communications received or given by a private party with respect to this Agreement and the transactions contemplated hereby, (ii) permit the other party to review any material non-confidential portions of any communication given or to be given by it to the FCC, and any other Governmental Authority with respect to this Agreement and the transactions contemplated hereby, and (iii) consult with each other in advance of and be permitted to attend any meeting or conference with, the FCC or any such other Governmental Authority or, in connection with any proceeding by a private party, with any other Person, in each case regarding any of the transactions contemplated by this Agreement.

 

(iii)                               Each of Emmis and Mediaco shall bear one-half of the cost of the FCC filing fees for the FCC Applications. Each Party shall bear its own costs and expenses (including the legal fees and disbursements of its counsel) in connection with the preparation of the portion of the FCC Applications to be prepared by it and in connection with the processing and defense of the application.

 

(iv)                              Each Party, at its own expense, shall use its reasonable best efforts to oppose any efforts or any requests by third parties for reconsideration or review of the FCC Consents or any petitions to deny the applications with respect to the FCC Consents, by the FCC or a court of competent jurisdiction.

 

Section 9.18                                                                Board of Directors of Mediaco. At the Closing, in accordance with Section 7.4 of the Restated Articles, the Board of Directors of Mediaco shall be composed of seven members, of whom four shall be appointed by Purchaser and three shall be appointed by Emmis.

 

Section 9.19                                                                Actions Relating to the Distribution; Listing of Class A Common Stock. As promptly as reasonably practicable after the date of this Agreement, Mediaco and Emmis (with the assistance of Purchaser and Purchaser’s counsel (at Purchaser’s expense), and subject to Section 7.5(d)) shall prepare and, in accordance with applicable Law, file with the SEC the Mediaco Form 10, including amendments, supplements and any such other documentation which is necessary or desirable to effectuate the Distribution, and Mediaco and Emmis shall each use reasonable best efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable. Mediaco and Emmis shall take all such action as may be necessary or appropriate under the securities or “blue sky” Laws of the states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution. To the extent not already

 

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approved and effective, Mediaco shall use reasonable best efforts to cause the Class A Common Stock to be issued in the Transactions to be approved for trading on the Nasdaq Capital Market effective upon the consummation of the Distribution.

 

Section 9.20                                                                Certain Tax Matters.

 

(a)                                 The Parties hereto, and their respective Affiliates intend that the Transactions be treated as follows for Tax Purposes (the “Intended Tax Treatment”):

 

(i)                                     Upon the Closing, Mediaco shall be treated as newly formed and capitalized in a transaction described in Section 351 of Code pursuant to which (a) Emmis made the Initial Contribution in exchange for the Total Emmis Consideration with the Emmis Purchase Price and Emmis Promissory Note constituting “other property or money” as described in Section 351(b) of the Code and (b) Purchaser made the Purchaser Investment and issued the Emmis Promissory Note in exchange for the Purchaser Stock Consideration.

 

(ii)                                  The Distribution shall be treated as having been made immediately after the Closing in a distribution fully subject to Section 301 of the Code and without application of Section 355 of the Code for the avoidance of doubt.

 

(b)                                 No later than thirty (30) days following the finalization of the Settlement Statement pursuant to Section 3.1, Emmis shall prepare and provide to Purchaser an update of the Emmis Tax Basis Estimate, calculated in accordance with the Intended Tax Treatment, the Class A Valuation Statement, and any adjustments to the Emmis Purchase Price made pursuant to this Agreement. Within thirty (30) days following the receipt from Emmis of the updated Emmis Tax Basis Estimate Purchaser shall provide Emmis with any comments to the updated the Class A Valuation Statement and the Emmis Tax Basis Estimate (failure to so comment shall be deemed acceptance of the Class A Valuation Statement and the Emmis Tax Basis Estimate).  Emmis shall consider Purchaser’s comments in good faith.  If Emmis objects to Purchaser’s comments, Emmis and Standard shall use commercially reasonable efforts to settle the dispute with respect to such comments promptly.  If Emmis and Purchaser have not resolved such dispute within thirty (30) days of the receipt by Emmis of Purchaser’s comments, the dispute shall be referred to the Accounting Firm for resolution in accordance with the Intended Tax Treatment pursuant to the dispute resolution principles and terms set forth in Section 3.1(j).  The findings of the Accounting Firm shall be final and binding on the Parties (including, for the avoidance of doubt, all determinations as to the valuation and tax basis allocation matters that are the subject of the Class A Valuation Statement and the Emmis Tax Basis Estimate).     Upon final resolution of disputed items, the Emmis Tax Basis Estimate and Class A Valuation Statement shall be adjusted to reflect such resolution.  The Emmis Tax Basis Estimate and Class A Valuation Statement as finalized pursuant to this Section 9.20(b) shall be collectively thereafter referred to as the “Tax Basis Statement.”  Any adjustments to the Emmis Purchase Price made pursuant to this Agreement made after the finalization of the Tax Basis Statement pursuant to this Section 9.20(b) shall be reflected in amendments to the Tax Basis Statement made by Purchaser in good faith that reflect the principles set forth in the Tax Basis Statement.

 

(c)                                  The Parties hereto and their respective Affiliates hereby covenant and agree to (i) be bound by the Tax Basis Statement and Intended Tax Treatment for all Tax Purposes, (ii) prepare

 

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and file all relevant Tax Returns on a basis consistent with the Tax Basis Statement and Intended Tax Treatment and (iii) not take any position on any Tax Return, before any Governmental Entity charged with the collection of any Tax, or in any judicial proceeding that is in any way inconsistent with the Tax Basis Statement and Intended Tax Treatment unless otherwise required by a determination within the meaning of Section 1313(a) of the Code.

 

(d)                                 At least three days prior to the Closing, Emmis shall deliver to Purchaser a written statement setting forth its good faith estimate of the fair market value of the Class A Common Stock to be received by Emmis as a component of the Total Emmis Consideration (the “Class A Valuation Statement”).

 

ARTICLE X

 

ACCESS TO INFORMATION

 

Section 10.1                                                                Provision of Information. Notwithstanding anything herein to the contrary and subject to the restrictions for Privileged Information or Confidential Information set forth herein and any appropriate restrictions for Personal Information, the Parties agree that the obligation of Emmis to deliver Information (excluding any Intellectual Property related thereto) that is part of the Mediaco Assets to Mediaco from and after the Distribution will be governed by this Article X. Subject to the terms of this Article X:

 

(a)                                 Prior to or as promptly as practicable following the Closing Date, Emmis shall deliver to Mediaco at the address specified for notices to Purchaser in Section 13.2 below (or to such other address in the continental United States as may be designated by Purchaser to Emmis no less than ten (10) days prior to the Closing Date), (i) complete copies of the Information constituting Mediaco Assets that are continuing property records, (ii) accurate copies of the Information constituting or concerning Mediaco Assets and Mediaco Liabilities that is contained in the Dataroom which Purchaser has had access prior to the date hereof, together with such other information to be made available between the date hereof and the Closing Date in the Dataroom, and such additional Information constituting or concerning Mediaco Assets and/or Mediaco Liabilities that is in the same general categories as the existing Information in the Dataroom and is added to the Dataroom by Emmis (using reasonable best efforts to do so) immediately prior to the Closing Date and (iii) minute books and organizational documents of Mediaco and the Mediaco Subsidiaries.

 

(b)                                 Following the Closing Date until the seventh (7th) anniversary thereof and except in connection with any dispute among Emmis and any of its Subsidiaries, on the one hand, and Mediaco and any of its Subsidiaries, on the other hand (which shall be governed by such discovery rules as may be applicable thereto), Emmis shall deliver or make available to Mediaco from time to time, upon the reasonable request of Mediaco, Information in Emmis’ possession and not provided pursuant to Section 10.1(b) relating directly or primarily to the Mediaco Assets, the Mediaco Business or the Mediaco Liabilities, including, in each case, all: (i) Contracts, (ii) litigation files and (iii) all other Information that constitutes Mediaco Assets or relates directly to any Mediaco Liability, in each case to the extent they are material to the conduct of the Mediaco Business following the Closing Date. Emmis also will cooperate with Mediaco to accommodate Mediaco’s reasonable requests from time to time following the Closing Date for other Information

 

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relating directly or primarily to the Mediaco Assets, the Mediaco Business or the Mediaco Liabilities. Subject to Section 10.5, Emmis may retain complete and accurate copies of such Information. Emmis shall maintain all such Information consistently with Emmis’ ordinary course document retention policies except to the extent that any such Information has already been provided to Mediaco or has been offered to and declined by the Mediaco and in accordance with Section 10.4 following the Closing Date. The out-of-pocket costs and expenses incurred in the identification, isolation and provision of Information to the Mediaco Group (and in the case of any Information provided pursuant to the second sentence of this paragraph, a reasonable internal cost allocation) shall be paid for (i) by the Mediaco Group if incurred after the Closing and (ii) by Emmis if incurred prior to the Closing. Information shall be provided as promptly as practicable upon request by Mediaco and with due regard for other commitments of Emmis personnel and the materiality of the information to Mediaco (including the need to comply with any legal or regulatory requirement of any Governmental Authority).

 

(c)                                  Notwithstanding anything in this Agreement to the contrary, Emmis and its Subsidiaries shall not be required to provide access, retain, deliver or disclose Information, where such access, retention, delivery or disclosure would conflict with any (i) Law (including Privacy and Information Security Requirements) or Order applicable to Emmis or any of its Subsidiaries or the assets, information or operation of the Emmis Business or the Mediaco Business, (ii) Contract to which Emmis or any of its Subsidiaries is a party or by which any of the assets or properties of Emmis or any of its Subsidiaries is bound, (iii) Consent previously given by any natural person relating to the collection, acquisition, storage, protection, use, disclosure, transfer or any other processing (as defined by any applicable Law) of data (including Personal Information), or (iv) result in the disclosure of competitively sensitive information; provided, that Emmis and its Subsidiaries shall have used reasonable best efforts to provide such access or make such disclosure in a form or manner that would not conflict with any such Law, Order, Contract, Consent or other obligation.

 

Section 10.2                                                                Privileged Information.

 

(a)                                 Each Party acknowledges that: (i) each of Emmis and Mediaco (and the members of the Emmis Group and the Mediaco Group, respectively) has or may obtain Privileged Information; (ii) there are or may be a number of Litigation Matters affecting each or both of Emmis and Mediaco; (iii) both Emmis and Mediaco have a common legal interest in Litigation Matters, in the Privileged Information and in the preservation of the confidential status of the Privileged Information, in each case relating to the pre-Distribution Mediaco Business or Emmis Business or, in the case of the Mediaco Group, relating to or arising in connection with the relationship among Emmis and its Subsidiaries on or prior to the Closing Date; and (iv) both Emmis and Mediaco intend that the transactions contemplated hereby and the other Transaction Agreements and any transfer of Privileged Information in connection therewith shall not operate as a waiver of any potentially applicable privilege.

 

(b)                                 Each of Emmis and Mediaco agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the pre-Distribution Mediaco Business or Emmis Business, as applicable, or, in the case of the Mediaco Group, relating to or arising in connection with the relationship among Emmis and its Subsidiaries on or prior to the Closing Date, without providing

 

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prompt written notice to and obtaining the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed and shall not be withheld, conditioned or delayed if the other Party certifies that such disclosure is to be made in response to a likely threat of suspension or debarment or similar action; provided, that Mediaco and Emmis shall not be required to give any such notice or obtain any such consent and may make such disclosure or waiver with respect to Privileged Information if such Privileged Information relates solely to the pre-Distribution Mediaco Business or Emmis Business, respectively. In the event of a disagreement between any member of the Emmis Group and any member of the Mediaco Group concerning the reasonableness of withholding such consent, no disclosure shall be made prior to a resolution of such disagreement by a court of competent jurisdiction, provided that the limitations in this sentence shall not apply in the case of disclosure required by Law and so certified as provided in the first sentence of this paragraph.

 

(c)                                  Upon any member of the Emmis Group or any member of the Mediaco Group receiving any subpoena or other compulsory disclosure notice from a court or other Governmental Authority which requests disclosure of Privileged Information, in each case relating to pre-Distribution Mediaco Business or Emmis Business, as applicable, or, in the case of the Mediaco Group, relating to or arising in connection with the relationship among Emmis and its Subsidiaries on or prior to the Closing Date, the recipient of the notice shall (to the extent consent is required in connection with the disclosure of such Privileged Information under paragraph (b) of this Section 10.2) as promptly as practicable provide to the other Group (following the notice provisions set forth herein) a copy of such notice, the intended response, and all materials or information relating to the other Group that might be disclosed and the proposed date of disclosure. In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in paragraph (b) of this Section 10.2, the Parties shall cooperate to assert all defenses to disclosure claimed by either such Party’s Group, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been finally determined, except as otherwise required by a court order requiring such disclosure.

 

(d)                                 Notwithstanding anything to the contrary herein, this Section 10.2 shall not apply to Information referred to in clauses (i) and (ii) of Section 10.1(c).

 

Section 10.3                                                                Production of Witnesses. Subject to Section 10.2, after the Closing Date, each of Emmis and Mediaco shall, and shall cause each member of its Group to, use its reasonable best efforts to make available to Mediaco or Emmis or any member of the Mediaco Group or of the Emmis Group, as the case may be, upon reasonable prior written request, such Group’s directors, managers or other persons acting in a similar capacity, officers, employees and agents as witnesses to the extent that any such Person may reasonably be required in connection with any Litigation Matters, administrative or other proceedings in which the requesting Party may from time to time be involved and relating to the pre-Distribution Mediaco Business or the Emmis Business, as applicable, or, in the case of the Mediaco Group, relating to or in connection with the relationship among Emmis and its Subsidiaries on or prior to the Closing Date. The out-of-pocket costs and expenses incurred in the provision of such witnesses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as witnesses) shall be paid by the Party requesting

 

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the availability of such persons; provided, that the out-of-pocket costs and expenses incurred in the provision of such witnesses to the Mediaco Group (including a reasonable internal cost allocation) shall be paid for by Mediaco. In connection with any matter contemplated by this Section 10.3, the Parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege, work product immunity or other applicable privileges or immunities of any member of any Group.

 

Section 10.4                                                                Retention of Information. Except as otherwise agreed in writing, or as otherwise provided in the other Transaction Agreements, each of Emmis and Mediaco shall, and shall cause each member of its Group to, retain all Information (including any Confidential Information) in such Party’s Group’s possession or under its control, relating directly to the pre-Distribution business, Assets or Liabilities of the other Party’s Group (such information “Retained Information”) for so long as such Information is required to be retained pursuant to such Party’s ordinary course document retention policies as of such time or such later date as may be required by Law (including any Privacy and Information Security Requirements), except that if, prior to the expiration of such period, any member of either Party’s Group wishes to destroy or dispose of any such Retained Information that is at least five (5) years old, prior to destroying or disposing of any of such Retained Information, (a) the Party whose Group is proposing to dispose of or destroy any such Retained Information shall provide no less than thirty (30) days’ prior written notice to the other Party, specifying the Retained Information proposed to be destroyed or disposed of, and (b) if, prior to the scheduled date for such destruction or disposal, the other Party requests in writing that any of the Retained Information proposed to be destroyed or disposed of be delivered to such other Party, the Party whose Group is proposing to dispose of or destroy such Retained Information promptly shall arrange for the delivery of the requested Retained Information to a location specified by, and at the expense of, the requesting Party. This Section 10.4 shall not apply to Information referred to in clauses (i) and (ii) of Section 10.1(c).

 

Section 10.5                                                                Confidentiality.

 

(a)                                 The Parties acknowledge that in connection with the Transactions, the Parties have disclosed and will continue to disclose to each other Information, including Confidential Information. The Parties agree that, after the Closing, Information that constitutes a Mediaco Asset shall be Information of Mediaco for purposes of this Section 10.5 and Emmis shall be deemed a receiving party of such Information for purposes of this Section 10.5.

 

(b)                                 Subject to Section 10.2, which shall govern Privileged Information, from and after the Closing Date, the Parties shall hold, and shall cause each of their respective controlled Affiliates to hold, and each of the foregoing shall cause their respective Representatives to hold, in strict confidence, and not to disclose to any other Person (including by issuing a press release or otherwise making any public statement), use, for any purpose other than as expressly permitted pursuant to this Agreement or the other Transaction Agreements, without the prior written consent of the other Party, any and all Confidential Information concerning the other Party or such Party’s Subsidiaries; provided, that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective Representatives who have a need to know such information for auditing and other non-commercial purposes and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties

 

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or any of their respective controlled Affiliates are requested or required to disclose any such Confidential Information by oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, or by other requirements of Law or stock exchange rule, (iii) as required in connection with any legal or other proceeding by one Party against any other Party, or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, or other required disclosures required by Law or such applicable stock exchange. Mediaco and Emmis further agree to use reasonable best efforts (and to cause each of their respective controlled Affiliates to use reasonable best efforts) to safeguard such Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, the Party subject to such demand or request, as applicable, shall provide the other with prompt written notice of any such request or requirement so that the other Party has an opportunity to seek a protective order or other appropriate remedy, which such Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other applicable Party or Parties to furnish, or cause to be furnished, only that portion of the Confidential Information that is in the opinion of outside counsel necessary to be disclosed and shall use its reasonable best efforts to ensure confidential treatment is accorded to such disclosed information.

 

(c)                                  If the Closing is not consummated, each Party shall promptly (i) deliver or cause to be delivered to any requesting Party (and if in electronic format, delete or destroy or cause to be deleted or destroyed) all Confidential Information furnished to it or to any of its Affiliates by such requesting Party and (ii) if specifically requested by such requesting Party, destroy any copies of such Confidential Information (including any extracts therefrom), unless such delivery or destruction would violate any Law. Upon the written request of such requesting Party, the Party subject to such request shall cause one of its duly authorized officers to certify promptly in writing to such requesting Party that all Confidential Information has been returned, destroyed or deleted as required by the preceding sentence.

 

(d)                                 Emmis and Purchaser acknowledge that they have previously executed the Confidentiality Agreement, which shall continue in full force and effect in accordance with its terms and that the provisions of this Section 10.5 are in furtherance of, and do not limit the obligations of, Emmis and Purchaser under the Confidentiality Agreement.

 

(e)                                  Notwithstanding anything to the contrary herein, this Section 10.5 shall not apply to (i) Information referred to in clauses (i) and (ii) of Section 10.1(c) or (ii) any non-controlled Affiliate of either Party except to the extent such non-controlled Affiliate receives Confidential Information with respect to Mediaco, Emmis, or any of their respective Subsidiaries, as applicable.

 

Section 10.6                                                                Cooperation with Respect to Government Reports and Filings. Emmis, on behalf of itself and each member of the Emmis Group, agrees to provide any member of the Mediaco Group, and Mediaco, on behalf of itself and each member of the Mediaco Group, agrees to provide any member of the Emmis Group, with such cooperation and Information (in each case, with respect to the Mediaco Business only) as may be reasonably requested by the other in connection with the preparation or filing of any government report or other government filing contemplated by this Agreement or in conducting or responding to any other government

 

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proceeding relating to the pre-Distribution business of the Emmis Group or the Mediaco Group, Assets or Liabilities of either Group or relating to or in connection with the relationship between the Groups on or prior to the Closing Date. Such cooperation and Information shall include promptly forwarding copies of appropriate notices, forms and other communications received from or sent to any Governmental Authority that relate to the Emmis Group, in the case of the Mediaco Group, or the Mediaco Group, in the case of the Emmis Group. All cooperation provided under this Section 10.6 shall be provided at the expense of the Party requesting such cooperation; provided, that any such expense of Mediaco (or any other member of the Mediaco Group) incurred prior to the Closing shall be borne by Emmis. Each Party shall make its employees and facilities available during normal business hours and on reasonable prior notice to provide explanation of any documents or Information provided hereunder. This Section 10.6 shall not apply to Information referred to in clauses (i) and (ii) of Section 10.1(c).  For the avoidance of doubt, none of Emmis, Mediaco or any of their respective Affiliates will be required to offer or agree to sell, divest, lease, license, transfer, dispose of or otherwise encumber before or after the Closing any assets, licenses, operations, rights, product lines, business or interests therein of Mediaco or Emmis or any of their respective Affiliates or agree to make any material changes or restriction on, or other impairment of Mediaco’s or Emmis’ or either of their respective Affiliates’ ability to own, operate or exercise rights in respect of such assets, licenses, operations, rights, product lines, businesses or interests therein for the purpose of complying with Emmis’ or Mediaco’s obligations under this Section 10.6.

 

ARTICLE XI

 

TERMINATION RIGHTS

 

Section 11.1                                                                Termination.

 

(a)                                 This Agreement may be terminated by either Emmis or Purchaser upon written notice to the other Party, if:

 

(i)                                     the other Party is in material breach of this Agreement and such breach has been neither cured or agreed to be cured in a manner reasonably acceptable to the non-breaching Party within the cure period allowed under subsection (e) below nor waived by the Party giving such termination notice and in each such case such breach would give rise to the failure of a condition in Section 4.2, Section 4.3, Section 4.4 or Section 4.5 provided that the Party seeking to terminate is not in material breach of this Agreement;

 

(ii)                                  a court of competent jurisdiction or Governmental Authority shall have issued an Order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such Order, decree, ruling or other action shall have become final and nonappealable; or

 

(iii)                               Closing has not occurred by December 31, 2019; provided, however, that such date shall be extended to March 31, 2020 if, on or before December 31, 2019, either (A) the SEC shall not have completed its review of the Mediaco Form 10 or (B) the FCC Consents have not been granted by initial order; further provided that the right to terminate

 

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this Agreement under this Section 11.1(a)(iii) shall not be available to a party whose breach of this Agreement caused the Closing not to occur.

 

(b)                                 This Agreement may be terminated by mutual written consent of Emmis and Purchaser.

 

(c)                                  Emmis may terminate this Agreement by written notice to Purchaser in the event that Purchaser fails to close on the transactions contemplated by this Agreement when all of Mediaco’s and Purchaser’s Closing conditions have been satisfied in full (or would be satisfied with delivery at Closing and Emmis stands ready, willing and able to make such delivery) or waived by Mediaco and Purchaser.

 

(d)                                 Purchaser may terminate this Agreement by written notice to Emmis in the event that Emmis fails to close on the transactions contemplated by this Agreement when all Purchaser’s Closing conditions have been satisfied in full (or would be satisfied with delivery at Closing and Purchaser stands ready, willing and able to make such delivery) or waived by Emmis.

 

(e)                                  If either Party believes the other to be in breach or default of this Agreement, the non-defaulting Party shall, prior to exercising its right to terminate under Section 11.1(a)(i), provide the defaulting Party with notice specifying in reasonable detail the nature of such breach or default. Except for a failure to pay its respective purchase price, the defaulting Party shall have fifteen (15) days from receipt of such notice to cure such default or if such default is not capable of being cured in fifteen days of such notice, the defaulting Party shall have agreed to cure such default in a manner reasonably acceptable to the non-breaching Party.

 

ARTICLE XII

 

EMPLOYEE MATTERS

 

Section 12.1                                                                Employee Lease. At Closing, the Station Employees shall remain employed by Emmis and leased to Mediaco pursuant to and subject to the terms and conditions of the Employee Leasing Agreement. “Station Employees” means the employees listed on Schedule Section 12.1 who are employed by Emmis as of Closing and leased to Mediaco pursuant to the Employee Leasing Agreement.

 

Section 12.2                                                                No Assumption of Emmis Plans. Mediaco shall not assume any of the Emmis Plans and Emmis shall be responsible for all liabilities and obligations of the Emmis Plans.

 

Section 12.3                                                                COBRA Obligations. Emmis will be solely responsible for any obligations for continuation coverage under section 4980B of the Code and part 6 of Subtitle B of Title I of ERISA with respect to all of the Station Employees and any other former employees of Emmis, including Employees on Leave, with respect to any “qualifying event” that occurred on or before the Closing Date or, if later, on or before the date any such Station Employee becomes an employee of Mediaco.

 

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ARTICLE XIII

 

MISCELLANEOUS

 

Section 13.1                                                                Expenses. Except as otherwise provided elsewhere in this Agreement, each Party shall be solely responsible for and shall pay all other costs and expenses (including attorney and accounting fees) incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement.

 

Section 13.2                                                                Notices. All notices, requests, claims, demands and other communications to be given or delivered under or by the provisions of this Agreement shall be in writing and shall be deemed given only (a) when delivered personally to the recipient, (b) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), provided that confirmation of delivery is received, (c) upon machine-generated acknowledgment of receipt after transmittal by facsimile or (d) five (5) days after being mailed to the recipient by certified or registered mail (return receipt requested and postage prepaid). Such notices, demands and other communications shall be sent to the Parties at the following addresses (or at such address for a Party as will be specified by like notice):

 

If to Emmis or, prior to the Closing, to Mediaco:

 

One Emmis Plaza, Suite 700

40 Monument Circle

Indianapolis, Indiana 46204

Telephone: 317.684.6565

Facsimile: 317.684.5583

Attention: Legal Department

 

with a copy (which shall not constitute notice) to:

 

Taft Stettinius & Hollister LLP
One Indiana Square, Suite 3500
Indianapolis, IN  46204-2023

Telephone: 317.713.3569
Facsimile:  317.713.3699
Attention:  Ian D. Arnold

 

If to Mediaco after the Closing:

 

 

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
1701 Market Street

Philadelphia, PA 19103

 

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Telephone: 215.963.5061
Facsimile: 215.963.5001
Attention: Justin W. Chairman

 

If to Purchaser:

 

767 Fifth Ave, 12th Floor

New York, NY 10153

Telephone:
Facsimile:
Attention: Gail Steiner, General Counsel

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
1701 Market Street

Philadelphia, PA 19103

Telephone: 215.963.5061
Facsimile: 215.963.5001
Attention: Justin W. Chairman

 

Any Party to this Agreement may notify any other Party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five Business Days after the notice is given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver. Any notice to Emmis will be deemed notice to all members of the Emmis Group, and any notice to Mediaco will be deemed notice to all members of the Mediaco Group.

 

Section 13.3                                                                Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

Section 13.4                                                                Headings. The headings and captions of the Articles and Sections used in this Agreement and the table of contents to this Agreement are for reference and convenience purposes of the Parties only, and will be given no substantive or interpretive effect whatsoever.

 

Section 13.5                                                                Severability. If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the Parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable to the maximum extent permitted while preserving its intent or, if such

 

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modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and that achieves the original intent of the Parties.

 

Section 13.6                                                                Assignment. Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any purported assignment without such consent shall be null and void, except that, prior to the Closing, Mediaco may assign any or all of its rights and interests under this Agreement without the consent of the other Parties hereto (a) to any Person providing any Debt Financing pursuant to the terms thereof for purposes of creating a security interest herein or otherwise assign as collateral in respect of such Debt Financing or (b) to any purchaser of all or substantially all of the assets of such Person; provided, however, that, in each case, no such assignment shall release Mediaco from any liability or obligation under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

 

Section 13.7                                                                No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties and their respective successors and permitted assigns) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, and, except (a) as provided in Article VIII relating to certain indemnitees and the release of certain Liabilities and (b) with respect to any Lender as contemplated by Sections 11.1, 13.6, 13.7, 13.9, 13.11, 13.12, 13.13, 13.15, and 13.16, no Person shall be deemed a third party beneficiary under or by reason of this Agreement.

 

Section 13.8                                                                Entire Agreement. This Agreement and each Schedule of the Emmis/Mediaco Disclosure Schedules hereto, the Confidentiality Agreement, the other Transaction Agreements and other documents referred to herein shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. In the case of any conflict between the terms of this Agreement and the terms of any other Transaction Agreement, the terms of such other Transaction Agreement shall control.

 

Section 13.9                                                                Governing Law.

 

(a)                                 This Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement (and all Schedules hereto) shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement (and all Schedules hereto), even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.

 

(b)                                 Each of the parties agree that, except as specifically set forth in the documents governing the Debt Financing, all claims or causes of action (whether at law, in equity, in contract, in tort or otherwise) against any of the Lenders in any way relating to the Debt Financing, will be

 

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exclusively governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of laws of another jurisdiction.

 

Section 13.10                                                         Counterparts. This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.

 

Section 13.11                                                         Amendments; Waivers. This Agreement may not be amended except by an instrument in writing signed by each of the Parties. No failure or delay by any Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of any Party to any such waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party; provided, that, notwithstanding anything in this Agreement to the contrary, the provisions relating to the Debt Financing and the Lender set forth in this Agreement (including this Section 13.11 and Sections 11.1, Section 13.6, Section 13.7, Section 13.9, Section 13.12, Section 13.13, Section 13.15, and Section 13.16) may not be amended in a manner adverse to the Lenders without the written consent of the Lenders.

 

Section 13.12                                                         WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

Section 13.13                                                         JURISDICTION; SERVICE OF PROCESS.

 

(a)                                 ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN DELAWARE STATE COURT AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF INDIANA). EACH OF THE PARTIES HEREBY IRREVOCABLY AGREES AND CONSENTS TO PERSONAL JURISDICTION, SERVICE OF PROCESS AND VENUE IN THE

 

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AFORESAID COURTS AND WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS Section 13.13, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN Section 13.2, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, each of the parties hereto acknowledges and irrevocably agrees (i) that any legal proceeding, whether at law or in equity, whether in contract or in tort or otherwise, involving the Lenders arising out of, or relating to the Debt Financing or the performance of services related thereto will be subject to the exclusive jurisdiction of any state or federal court sitting in the State of New York in the borough of Manhattan and any appellate court thereof, and each party submits for itself and its property with respect to any such legal proceeding to the exclusive jurisdiction of such court; (ii) not to bring or permit any of their Affiliates to bring or support anyone else in bringing any such legal proceeding in any other court; (iii) that service of process, summons, notice or document by registered mail addressed to them at their respective addresses provided in the documents governing the Debt Financing will be effective service of process against them for any such legal proceeding brought in any such court; (iv) to waive and hereby waive, to the fullest extent permitted by applicable Law, any objection which any of them may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such legal proceeding in any such court; and (v) any such legal proceeding will be governed and construed in accordance with the laws of the State of New York.

 

Section 13.14                                                         Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any other Transaction Agreement, the Party who is, or is to be, thereby aggrieved will have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement or such Transaction Agreement, in addition to any and all other rights and remedies at law or in equity. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any Loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.

 

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Section 13.15                                                         Damages Waiver. No Party shall be liable to another Party or any of its Affiliates (or any of their respective Related Parties) for any exemplary damages or punitive damages, or any other damages to the extent not reasonably foreseeable, arising out of or in connection with this Agreement or any Transaction Agreement (in each case, unless any such damages are payable to a third party pursuant to a Third-Party Claim).

 

Section 13.16                                                         Lenders. Notwithstanding anything to the contrary contained in this Agreement, (i) neither Emmis nor any of its Subsidiaries, Affiliates, directors, officers, employees, agents, partners, managers, members or shareholders shall have any rights or claims against the Lenders (in their capacities as such) in any way relating to this Agreement or any of the transactions contemplated by this Agreement, or in respect of any oral representations made or alleged to have been made in connection herewith or therewith, including any dispute arising out of or relating in any way to the Debt Financing, whether in law or equity, in contract, in tort or otherwise, and (ii) the Lenders (in their capacities as such) shall not have any liability (whether in contract, in tort or otherwise) to Emmis or any of its Subsidiaries, Affiliates, directors, officers, employees, agents, partners, managers, members or shareholders for any obligations or liabilities of any party hereto under this Agreement or for any claim based on, in respect of, or by reason of the transactions contemplated hereby and thereby or in respect of any oral representations made or alleged to have been made in connection herewith or therewith, including any dispute arising out of or relating in any way to the Debt Financing, whether at law or equity, in contract, in tort or otherwise.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

EMMIS COMMUNICATIONS CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

MEDIACO HOLDING INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

SG BROADCASTING LLC

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

Standard General L.P., on behalf of all of the funds for which it serves as investment advisor (collectively, “SG”), does hereby absolutely, unconditionally, and irrevocably guarantee to Emmis the full and complete performance and the full and prompt payment of Purchaser’s obligations pursuant to Section 3.2(c) of this Agreement. SG agrees that its liability pursuant to this guaranty shall be primary and not as a surety, and that in any right of action which shall accrue to Emmis hereunder Emmis may, at his option, proceed against SG without having commenced any action or having obtained any judgment against the Purchaser.  SG waives notice of default in the performance by the Purchaser of its obligations pursuant to Section 3.2(c) of this Agreement.  SG shall remain liable under this Guaranty unless specifically released in writing by Emmis.  SG hereby agrees that no delay, waiver, or accommodation on the part of Emmis in the exercise of any right, power or privilege with respect to the Purchaser’s obligations shall operate as a waiver of such right, power or privilege, or as a release or diminution in the obligation of SG hereunder. SG further agrees to be bound by the following provisions of this Agreement in connection with any interpretation or enforcement of this guaranty: Section 13.2 (Notices) (with SG receiving notices at the same address and other information as Purchaser), Section 13.3 (Interpretation), Section 13.9 (Governing Law), Section 13.12 (Waiver of Jury Trial), and Section 13.13 (Jurisdiction; Service of Process).

 

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STANDARD GENERAL L.P.,

 

 

 

By:

 

 

Name:

 

Title:

 

72




Exhibit 10.1

 

THIS NOTE IS SUBJECT TO THE PROVISIONS OF A CONTRIBUTION AND DISTRIBUTION AGREEMENT, DATED THE DATE HEREOF, BY AND AMONG, MEDIACO HOLDINGS INC., THE HOLDER (AS DEFINED BELOW) AND THE OTHER PARTIES IDENTIFIED THEREIN.

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES LAW. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY HAS RECEIVED EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY.

 

MEDIACO HOLDINGS INC.

 

UNSECURED PROMISSORY NOTE

 

                 , 2019

$5,000,000.00

 

Mediaco Holdings Inc., an Indiana corporation (the “Company”), hereby promises to pay to Emmis Communications Corporation (the “Holder”), the principal amount of $5,000,000.00, together with interest thereon calculated from the date hereof in accordance with the provisions of this Unsecured Promissory Note (as amended, amended and restated, modified or supplemented, this “Note”).

 

This Note was issued pursuant to that certain Contribution and Distribution Agreement, dated as of the date hereof (as amended, amended and restated, modified or supplemented, the “Contribution Agreement”), by and among the Company, the Holder and the other parties identified therein. This Note is the “Seller Note” as defined in the Contribution Agreement.  All provisions of the Contribution Agreement are hereby incorporated herein by reference.  Except as defined in Section 5 hereof or unless otherwise indicated herein, capitalized terms used in this Note have the same meanings set forth in the Contribution Agreement.

 

1.                                      Interest.

 

(a)                                 Accrual; Payment.  Subject to Section 4(b)(ii) below, interest shall accrue on the principal sums outstanding at a rate per annum equal to the Base Rate, plus, (i) if the Company pays such interest in kind, 1.00% and, (ii) without regard to whether or not the Company pays such interest in kind (and in addition to any increase pursuant to clause (i) of this sentence), an increase of 1.00% following the second anniversary of the date hereof and additional increases of 1.00% following each anniversary of the date of this Note thereafter (the “Applicable Interest”).  The Applicable Interest shall become due and payable in accordance with Section 2.  Any accrued interest which for any reason has not theretofore been paid shall be paid in full on the Maturity Date.

 

(b)                                 Offset.  This Note and all amounts payable hereunder (including principal and interest) are subject to a right of offset with respect to amounts owed to the Company under the Contribution Agreement,

 


 

which right of offset may be exercised solely to the extent provided in Section 8.1 of the Contribution Agreement (and subject to the limitations therein).

 

2.                                      Payment of Principal and Interest on Note.

 

(a)                                 Scheduled Payments.  The Company shall pay the Applicable Interest in cash or in kind annually on the date of this Note; provided that the Applicable Interest paid in kind shall be added to the principal amount of this Note on such payment date.  The Company shall pay the entire principal amount of this Note, together with all accrued interest thereon, on the Maturity Date or such earlier date as required by the terms hereof.

 

(b)                                 Optional Prepayments.  The Company may, at any time and from time to time without premium or penalty, prepay all or any portion of the outstanding principal amount of, or interest on, this Note; provided that such prepayment is not prohibited by Section 3 hereof or any applicable subordination agreement executed by the Holder. In connection with each prepayment of principal hereunder, the Company shall also pay all then accrued and unpaid interest hereunder, subject to Section 1(b) above.

 

(c)                                  Mandatory Prepayments.  Upon the first to occur of (i) a Sale of the Company or (ii) a Change of Control, the Company shall pay the outstanding principal amount of this Note, together with all accrued and unpaid interest on the principal amount being repaid.

 

(d)                                 Application of Payments.  Payments under this Note shall be applied (i) first, to the payment of then accrued interest hereunder until all such interest is paid and (ii) second, to the repayment of the principal outstanding hereunder.

 

3.                                      Subordination.  If at any time a Senior Lender requires this Note to be subordinated to such Senior Lender’s Company Senior Debt, Holder hereby agrees to subordinate this Note to such Senior Lender’s Company Senior Debt upon commercially reasonable terms and conditions and execute all documents, including any amendments to this Note, requested by such Senior Lender to evidence such subordination.  Such subordination agreement shall permit payments pursuant to Section 1 hereof.

 

4.                                      Events of Default.

 

(a)                                 Definition.  For purposes of this Note, an “Event of Default” shall be deemed to have occurred if:

 

(i)                                     subject to any applicable subordination agreement executed by the Holder and the Company Senior Debt, the Company fails to pay the full principal amount of this Note together with accrued and unpaid interest thereon on the date the same becomes due and payable hereunder, and such failure to pay is not cured within fifteen (15) days after the occurrence thereof;

 

(ii)                                  the Company fails to comply with any other provision of this Note and such failure is not cured within thirty (30) days after the occurrence thereof; or

 

(iii)                               an Insolvency Event occurs.

 

The foregoing shall constitute Events of Default whatever the reason or cause for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court of competent jurisdiction or any order, rule or regulation of any administrative or governmental body having jurisdiction therein.

 

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(b)                                 Consequences of Events of Default.

 

(i)                                     Subject to Section 3 above, any applicable subordination agreement executed by the Holder, and the Company Senior Debt, if an Event of Default other than of the type described in Section 4(a)(ii) has occurred, the Holder may declare the aggregate principal amount of this Note (together with all accrued interest thereon and all other amounts due and payable with respect thereto, including without limitation all interest accrued pursuant to Section 4(b)(ii), below) to be immediately due and payable and the Company shall immediately thereafter pay to the Holder all amounts due and payable with respect to this Note.

 

(ii)                                  Upon and during the continuance of an Event of Default, the Applicable Interest shall be equal to the Base Rate plus four percentage points (4.0%).

 

(iii)                               Subject to Section 3 above, any applicable subordination agreement executed by the Holder, and the Company Senior Debt, the Holder shall also have any other rights which the Holder may have pursuant to applicable law.

 

5.                                      Covenants. While any amount is outstanding under this Note, the Company shall not (and shall not permit), without the prior written consent of Holders, directly or indirectly do the following: pay any management or similar fees to the SG Affiliates.

 

6.                                      Definitions.  For purposes of this Note, the following capitalized terms have the following meaning.

 

Base Rate” means the interest rate on the Company Senior Debt, or if no Company Senior Debt is outstanding, 6.00%.

 

Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to close under the laws of, or are in fact closed in the State of New York.

 

Capital Stock” means any and all shares, interests, participations, units or other equivalents (however designated) of capital stock of a corporation, membership interests in a limited liability company, partnership interests of a limited partnership, any and all equivalent ownership interests in a Person, and in each case any and all warrants, rights or options to purchase, and all conversion or exchange rights, voting rights, calls or rights of any character with respect to, any of the foregoing.

 

Change of Control” means the occurrence of any of the following:

 

(a)                         the SG Affiliates (taken as a whole) at any time ceasing (i) to own and control, directly or indirectly, beneficially and of record, on a fully diluted basis, at least 51.0% on a fully diluted basis of the outstanding Voting Stock of the Company or (ii) to have or exercise the power to elect a majority of the board of directors or other managing body of the Company;

 

(b)                         any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a greater amount of Voting Stock of the Company than is owned and controlled, directly or indirectly, by the SG Affiliates (taken as a whole);

 

(c)                          the completion of a sale of any Capital Stock of the Company pursuant to a registration statement which has become effective under the Securities Act; or

 

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(d)                         a “change of control” (or any comparable term or provision) (i) as defined in any Company Senior Debt document, or any term of similar effect under any document executed in connection with any other Company Senior Debt document or (ii) under or with respect to any documents or agreements governing the Capital Stock of the Company.

 

Company Senior Debt” means all principal of, premium (if any), interest (including, without limitation, interest accruing or that would have accrued but for the filing of a bankruptcy, reorganization or other insolvency proceeding whether or not such interest constitutes an allowable claim in such proceeding) on, and any and all other fees, expense reimbursement obligations, and other amounts due pursuant to the terms of all agreements, documents and instruments providing for, creating, securing or evidencing or otherwise entered into in connection with (i) indebtedness for borrowed money of the Company (including, without limitation, guarantees and other contingent obligations with respect to indebtedness for borrowed money of its Subsidiaries) of the type typically held by commercial banks, investment banks, insurance companies and other recognized lending institutions, entities and funds or subsidiaries thereof, whether now outstanding or hereafter created, incurred, assumed or guaranteed which is not by its terms on parity with or subordinated to the Company’s obligations under this Note, (ii) obligations evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, of the type typically held by commercial banks, investment banks, insurance companies and other recognized lending institutions, entities and funds or subsidiaries thereof, whether now outstanding or hereafter created, incurred, assumed or guaranteed which is not by its terms on parity with or subordinated to the Company’s obligations under this Note, or (iii) capital leases and similar types of financing, together with renewals, extensions, refundings, refinancings, deferrals, restructurings, amendments and modifications of the items described in (i), (ii), or (iii) above; provided that Company Senior Debt shall not include any of the foregoing to the extent owing to an Affiliate of the Company.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

Insolvency Event” means the occurrence of any of the following: (i) the Company makes a general assignment for the benefit of creditors; (ii) an order, judgment or decree is entered adjudicating the Company bankrupt or insolvent; (iii) any order for relief with respect to the Company is entered under any applicable bankruptcy law; (iv) the Company petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Company or of any substantial part of the assets of the Company, or commences any proceeding relating to the Company under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or (v) any such petition or application is filed, or any such proceeding is commenced, against the Company and not dismissed or stayed within 60 days.

 

Maturity Date” means the fifth (5th) anniversary of the date hereof.

 

Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust (including any beneficiary thereof), a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

 

Sale of the Company” means the sale of the Company to a third party or group of third parties pursuant to which such party or parties acquire all or substantially all of the assets or business of the Company on a consolidated basis.

 

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Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Senior Lender” means any holders of Company Senior Debt.

 

SG Affiliates” means Standard General, L.P. and the funds for which it serves as an investment advisor and their respective Affiliates.

 

Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity.

 

Voting Stock” means, with respect to any Person, shares of such Person’s Capital Stock having the right to vote for the election of directors (or Persons acting in a comparable capacity) of such Person under ordinary circumstances.

 

7.                                      Amendment and Waiver.  Subject to any applicable subordination agreement, this Note may be amended only with the written consent of the Company and the Holder.

 

8.                                      Assignment and Transfer.  Except as set forth below, the Holder shall not sell, assign, transfer, pledge, hypothecate, mortgage, or otherwise encumber this Note; provided, however, that the Holder may assign or transfer all or any portion of this Note with the prior written consent of the Company, in its sole discretion (provided that any such assignee agrees to be bound by and subject to the terms and conditions of this Note and any applicable subordination agreement executed by the Holder). The Company shall not assign its interest in this Note, either voluntarily or by operation of law, without the prior written consent of the Holder; provided, that the Company shall be permitted to assign this Note to any Affiliate of equivalent or greater net worth as the Company at the time of such assignment.

 

9.                                      Cancellation.  After all principal and then accrued interest at any time owed on this Note has been paid in full, this Note shall be surrendered to the Company for cancellation and shall not be reissued.

 

10.                               Payments.  All payments to be made to the Holder shall be made in U.S. Dollars by check or wire transfer of immediately available funds.

 

11.                               Place of Payment.  Payments of principal and interest shall be delivered to the Holder at such address as is specified by timely prior written notice by the Holder.

 

12.                               Governing Law.  All questions concerning the construction, validity, and interpretation of this Note will be governed by and construed in accordance with the domestic laws of the State of New York, without giving effect to any choice of law or conflicts of laws provision or rule (whether of the State of

 

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New York or any other jurisdiction) that would compel the application of the substantive laws of any jurisdiction other than the State of New York.

 

13.                               Business Days.  If any payment is due, or any time period for giving notice or taking action expires, on a day which is not a Business Day, the payment shall be due and payable on, and the time period shall automatically be extended to, the next day Business Day, and interest shall continue to accrue at the required rate hereunder until any such payment is made.

 

14.                               Acknowledgement. The Holder (a) is, by reason of its and its advisors’ business and financial experience, capable of evaluating the merits and risks of this Note and making an informed investment decision with respect hereto and with respect to the Company’s ability to repay the Note, in each case without reliance upon any Affiliate of the Company, (b) has had full access to such other information (including the opportunity to ask questions and receive answers) concerning the Company as the Holder has deemed appropriate, and has made its own investigation, without reliance upon the Company (other than as set forth in the Contribution Agreement and the documents referred to therein) or any of its Affiliates, into the business, prospects, operations, property, financial, and other condition and creditworthiness of the Company, and (c) is able to bear the economic and financial risk of the Note.

 

15.                               Usury Laws.  It is the intention of the Company and the Holder to conform strictly to all applicable usury laws now or hereafter in force, and any interest payable under this Note shall be subject to reduction to the amount not in excess of the maximum legal amount allowed under the applicable usury laws as now or hereafter construed by the courts having jurisdiction over such matters. The aggregate of all interest (whether designated as interest, service charges, points, or otherwise) contracted for, chargeable, or receivable under this Note shall under no circumstances exceed the maximum legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time.  If such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess shall be canceled automatically and, if theretofore paid, rebated to the Company or credited on the principal amount of this Note, or if this Note has been repaid, then such excess shall be rebated to the Company.

 

16.                               Waiver of Jury Trial.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES TO THIS NOTE HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

6


 

IN WITNESS WHEREOF, each of the Company and the Holder has executed and delivered this Unsecured Promissory Note on the date first above written.

 

 

MEDIACO HOLDINGS INC.

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

EMMIS COMMUNICATIONS CORPORATION

 

 

 

By:

 

 

Name:

 

Title:

 

 

[Signature Page to Unsecured Promissory Note]

 




Exhibit 10.2

 

Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

EMPLOYEE LEASING AGREEMENT

 

This Employee Leasing Agreement (this “Agreement”) is entered into by and between Emmis Operating Company, an Indiana corporation (“Emmis”) and Mediaco Holdings Inc., an Indiana corporation (“Mediaco”), effective as of               , 2019.  Emmis and Mediaco shall sometimes be referred to individually as a “Party” and together as the “Parties”.

 

WHEREAS, Emmis has sold its radio stations, WBLS-FM and WQHT-FM, in New York, NY, including the business operations and radio licenses (the “Stations”) to Mediaco as of the date hereof pursuant to a Contribution and Distribution Agreement among Emmis Communications Corporation (the direct parent of Emmis), Mediaco and SG Broadcasting LLC dated as of June 28, 2019 (the “Contribution Agreement”); and

 

WHEREAS, in connection with the aforementioned sale, Mediaco and Emmis are entering into a Management Agreement pursuant to which Emmis shall provide certain management and oversight of the Stations and the Stations’ employees (the “Management Agreement”); and

 

WHEREAS, Mediaco desires to lease from Emmis the Stations’ existing personnel who are employees of Emmis pursuant to the terms and conditions of this Agreement.  Accordingly, the parties agree as follows:

 

1.             Lease of Employees.  During the Term (as defined below), Mediaco shall lease from Emmis the employees set forth on Exhibit A (such employees, together with any replacement employees to those on Exhibit A and any other subsequently hired employees to which Mediaco has consented, the “Leased Employees”) to perform the certain services for Mediaco as reasonably requested by, and at the direction of, Mediaco (the “Services”), consistent with the terms of the Management Agreement.  Leased Employees shall exclusively dedicate their full time and attention to the Services to the extent consistent with each Leased Employee’s past practice, except with respect to any Leased Employee who at Emmis’ cost will continue to provide support to Emmis’ operations other than the Stations, consistent with past practice and not to unreasonably interfere with any such Leased Employee’s services to the Stations (any such support, the “Support Services”).

 

2.             Term.  The initial term of this Agreement shall commence on the date hereof and shall continue through 11:59 p.m. on December 31, 2020, provided that at any time beginning on October 1, 2019, Mediaco may terminate this Agreement on no less than three (3) months’ prior notice and Emmis may terminate this Agreement if Emmis ceases to be responsible for managing the employees at the Stations under the Management Agreement.  Beginning on January 1, 2021, the term of this Agreement shall automatically renew for six (6) month periods unless, beginning on October 1, 2020, either party gives the other notice of non-renewal at least three (3) months prior to the expiration of the then-current term.  Either party may extend the effective date of any non-renewal, expiration or termination of this Agreement (other than a termination by Emmis due to no longer managing Station employees under the Management Agreement) for up to ninety (90) days in the event Mediaco benefit plans are not in place on the original effective date of termination.  The period for which this Agreement is in effect shall hereinafter be referred to

 


 

as the “Term.” Either party may terminate this Agreement for cause, effective upon notice to the other party (the “Defaulting Party”), if the Defaulting Party:

 

(a)(i) materially breaches this Agreement, and such breach is incapable of cure; or (ii) with respect to a material breach capable of cure, the Defaulting Party does not cure such breach within [***] after receipt of notice of such breach.

 

(b)(i) becomes insolvent or admits its inability to pay its debts generally as they become due; (ii) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, which is not fully stayed within [***] or is not dismissed or vacated within [***] after filing; (iii) is dissolved or liquidated or takes any corporate action for such purpose; (iv) makes a general assignment for the benefit of creditors; or (v) has a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

 

3.             Reimbursement.

 

(a)           During the Term, Mediaco shall promptly reimburse Emmis for all costs and expense directly attributable to the Leased Employees for their performance of the Services in an amount equal to Emmis’ actual out-of-pocket cost incurred in connection with the provision of the Services by the Leased Employees, which reimbursement shall include without limitation the Leased Employees’ salary and/or hourly wages earned for the performance of the Services (reduced by an amount appropriately reflective of the time spent by any Leased Employee on Support Services), bonuses awarded at the discretion and recommendation of Mediaco for the performance of the Services and/or as set forth in a written employment agreement (if any), and Emmis’ actual out-of-pocket cost incurred in connection with benefits (including the actual out-of-pocket expense of any self-insured health claims (less any stop loss reimbursements received by Emmis), workers’ compensation expenses, unemployment compensation expenses, severance expenses, and the employer portion of premiums and administrative fees under all benefits provided, including self-insured health coverage, life insurance coverage and long-term disability coverage), employer portion of employment taxes, costs associated with certain Leased Employees’ authorizations to live and work in the United States), and other expense reimbursement (including out-of-pocket expenses attributable to claims involving Leased Employees, unless the allegations relate primarily to the conduct of employees of Emmis or any Affiliate thereof who are not Leased Employees, but solely with respect to conduct that occurred during the Term and is not subject to indemnity by Emmis under Section 7(c)), all such amounts to be scheduled in advance to the extent practicable.  For the avoidance of doubt, Emmis shall not be entitled to receive from Mediaco reimbursement for (i) any wages, benefits costs or expenses of Emmis employees who are not Leased Employees, (ii) any out-of-pocket expenses incurred by Emmis in the conduct of those portions of Emmis’ business that are not related to Mediaco, (iii) any payments or benefits triggered by or otherwise relating to the transactions contemplated by this Agreement, the Management Agreement or the Contribution Agreement, including without limitation the vesting, funding, or settlement of any equity or equity-based compensation and any bonus paid in connection with this transaction, including such items referenced in Section 5.21(j) of the Contribution Agreement or (iv) any reimbursement for any

 

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withdrawal liability incurred or triggered by Emmis or its ERISA Affiliates (as defined in the Contribution Agreement) under ERISA (as defined in the Contribution Agreement) including any contingent or secondary withdrawal liability to any “multiemployer plan” (as defined in Section 3(37) of ERISA) (a “Multiemployer Plan”), but shall be entitled to reimbursement for any out-of-pocket costs incurred by Emmis with respect to Leased Employees that are incremental to the costs and expenses Emmis would otherwise incur with respect to its employees who are not Leased Employees (e.g., pro rata share of health and employer’s liability insurance).

 

(b)           With respect to payroll, Emmis shall invoice Mediaco on the second business day before the date bi-weekly payroll is drawn from Emmis’ bank account and Mediaco shall wire such amount to Emmis before the end of the following day.  With respect to other employee costs during the Term, including but not limited to health care costs, Emmis shall invoice Mediaco on the first Business Day of the month for the amounts incurred with respect to the Leased Employees in the prior month(s), and Mediaco shall pay such amount to Emmis on or before the tenth day of the same month, provided that Mediaco agrees with the amounts listed on the invoice.  In providing each invoice, Emmis shall provide Mediaco with sufficient information about the amounts listed in the invoice and, upon Mediaco’s request, Emmis shall provide Mediaco with such additional information as is reasonably necessary for Mediaco to verify the accuracy of any such invoice.

 

(c)           Mediaco agrees to pay interest to Emmis for any past due amounts that are not disputed by Mediaco in good faith at the lesser of the highest rate allowable by law or [***] from the due date until such amounts are paid. In addition, Mediaco shall promptly reimburse Emmis for all reasonable costs incurred in collecting any past due amounts, including but not limited to reasonable attorneys’ fees and expenses.  This section shall not limit or waive any other legal and equitable rights and remedies Emmis shall have under this Agreement for a delinquent payment.

 

4.             Emmis’ Responsibilities.

 

(a)           Employment of Leased Employees. During the Term, all Leased Employees shall at all times remain employees of Emmis and on the direct payroll of Emmis.  Emmis shall maintain complete employment files for each Leased Employee in accordance with all applicable Laws (as defined in the Contribution Agreement). Emmis is solely responsible for supervising, performance managing, promoting, disciplining, and/or terminating the Leased Employees; provided, that Mediaco may at its discretion provide input to Emmis as to the management, promotion, discipline and termination of any Leased Employee and in all cases consistent with the terms of the Management Agreement. Emmis will provide Mediaco with all information relating to the Leased Employees or their employment as reasonably requested by Mediaco, and will otherwise reasonably cooperate with Mediaco in relation to the Leased Employees and their employment.

 

(b)           Compliance with Laws. Emmis shall use its commercially reasonable efforts to comply with all applicable Laws governing its employment of the Leased Employees and the Leased Employees’ performance of the Services.  Emmis shall use commercially reasonable

 

3


 

efforts to comply with all applicable Laws regarding the legal status of each Leased Employee to work and reside in the United States.

 

(c)           Taxes.  During the Term and subject to Emmis’ reimbursement rights under Section 3, Emmis shall be solely responsible for the payment of all federal, state and local employment taxes and withholdings for each Leased Employee, including income taxes, FICA and unemployment insurance taxes.  Emmis shall also properly file all information and tax returns and issue all wage and tax statements related to any compensation paid to Leased Employees during the Term.

 

(d)           Workers’ Compensation and Unemployment Compensation.  During the Term and subject to Mediaco’s reimbursement obligation under Section 3, Emmis shall be responsible for (i) maintaining valid workers’ compensation insurance for the Leased Employees, and (ii) all unemployment compensation claims filed by any Leased Employee; provided, however, any and all out-of-pocket expense associated with the foregoing shall be paid by Mediaco to Emmis consistent with Section 3 above.

 

(e)           Employee Benefits.  During the Term, Emmis shall be solely responsible for maintaining employee benefit plans for the Leased Employees consistent with those provided to other Emmis employees; provided, however that any Leased Employees who are part of a Station’s collective bargaining unit shall receive benefit plans required under the applicable collective bargaining agreement and Emmis shall not make any changes to or enter into any employee benefit plans (including employment agreements) covering the Leased Employees that would materially increase the cost to Mediaco without at least [***] advance notice to Mediaco; provided any such benefit plan changes must be applicable to Emmis’ employees that are not Leased Employees on the same basis as the Leased Employees.

 

(f)            Severance.  To the extent that, during the Term, Mediaco instructs Emmis to terminate any Leased Employee and Emmis determines (in its reasonable discretion) that the terminated Leased Employee is entitled to severance, Emmis shall pay such severance consistent with, as applicable, (i) Emmis’ severance policy in place at the time of such termination, (ii) if the terminated Leased Employee has an employment agreement with Emmis or its Affiliates (as defined in the Contribution Agreement) as of the date of termination, as provided in such employment agreement, or (iii) if the terminated Leased Employee is a member of a collective bargaining unit, consistent with the terms of the applicable collective bargaining agreement; provided, that in all cases Emmis shall condition any severance on a release that, includes, among other terms, a release of any claims against Mediaco and its Affiliates (as defined in the Contribution Agreement), except that such requirement shall not apply to a Leased Employee that is the member of a collective bargaining unit to the extent that such release requirement would be in violation of such collective bargaining agreement.

 

5.             Restrictive Covenants.  Emmis acknowledges and agrees that, to the extent supportable by the applicable underlying agreement, any restrictive covenants (including with respect to confidentiality, non-disclosure, non-competition, non-solicitation, assignment of intellectual property or otherwise) shall also apply to, and for the benefit of, Mediaco and its Affiliates.

 

4


 

6.             Employment Following the Term.  Prior to the expiration or earlier termination of the Term, Mediaco or one of its Affiliates shall offer employment to all of the Leased Employees who are employed by Emmis at the termination of the Term (all such Leased Employee to whom employment is offered, collectively, the “Continuing Employees”).  The offer of employment to the Continuing Employees shall have a base salary or hourly rate that is the same as, and benefits package that, in the aggregate, is substantially similar to, the base salary or hourly rate and benefits package in effect for such Continuing Employees immediately prior to the offer of employment. Upon the expiration or earlier termination of the Term, Emmis shall take all necessary steps to assign to Mediaco, and Mediaco shall, subject to such assignment by Emmis, assume, any employment agreement to which a Leased Employee is subject to Mediaco, subject to the extent required to any consent, and Emmis shall take all necessary steps to assign to Mediaco, and Mediaco shall, subject to such assignment by Emmis, assume any collective bargaining agreement then in effect between SAG-AFTRA and Emmis, subject to the extent required to any consent.  Provided that Mediaco makes and honors the offer of employment required by this Section 6, Mediaco shall not be responsible for, and Emmis hereby agrees to indemnify defend and hold harmless Mediaco and its Affiliates from, any liabilities relating to any Leased Employee that does not become a Continuing Employee (including by reason of declining an offer of employment pursuant to this Section 6, declining to continue providing services under employment agreement assigned to and assumed by Mediaco, or otherwise), including any severance or other termination liabilities or costs relating to such Leased Employee. To the extent that the employment of any employee of Mediaco who was a Leased Employee hereunder (other than any employee subject to an employment agreement or who is a member of a collective bargaining unit) is terminated by Mediaco other than ‘for cause’ during the first [***] after the expiration or termination of the Term, Mediaco shall pay such employee severance in accordance with the Emmis severance policy in effect at the time of the expiration or earlier termination of the Term.

 

7.             Limitation of Liability and Indemnity.

 

(a)           None of Emmis, its Affiliates or any officer, director, employee, partner, manager or other agent of Emmis or its Affiliates (as defined in the Contribution Agreement) will have any liability to Mediaco hereunder for any action under this Employee Leasing Agreement unless such conduct is not taken in accordance with the standards of conduct under Indiana Code 23-1-35-1 (taking into account Emmis’ obligations under this Agreement), and the failure to meet that standard has been judicially determined to have constituted fraud, recklessness or willful misconduct.  The Parties agree that Indiana Code 23-1-35-1 is the standard of conduct applicable to directors of an Indiana corporation and that such standards are different than the standards applicable to directors of a Delaware corporation, all as outlined in the official Indiana Comment to Indiana Code 23-1-35-1.

 

(b)           Mediaco hereby agrees to indemnify defend and hold harmless Emmis and its Affiliates and any of their respective current or former officers, directors, employees, partners, managers or other agents (individually and collectively, “Emmis Indemnified Person”) from any and all loss, liability, cost and expense including but not limited to reasonable attorneys’ fees and expenses incurred by the Emmis Indemnified Person in connection with, arising from or related to the performance by it of its obligations hereunder or otherwise related to Mediaco, except if such loss, liability cost or expense results from the fraudulent, reckless or willful misconduct of

 

5


 

Emmis; provided, however, that no Emmis Indemnified Person shall be entitled to indemnification for any withdrawal liability incurred by Emmis or its ERISA Affiliates under ERISA (including any contingent or secondary liability) to any Multiemployer Plan.  Mediaco will reimburse each Emmis Indemnified Person for the reasonable out-of-pocket costs and expenses (including attorneys’ fees and expenses) of investigating, preparing for and responding to any actual or threatened action, claim, suit, investigation or proceeding or enforcing this Agreement, as they are incurred; provided that Emmis shall promptly reimburse Mediaco for any amounts advanced to the extent that a court of competent jurisdiction determines that an Emmis Indemnified Person acted recklessly, or engaged in willful misconduct.

 

(c)           Emmis hereby agrees to indemnify defend and hold harmless Mediaco and its Affiliates and any of their respective current or former officers, directors, employees, partners, managers or other agents (individually and collectively, “Mediaco Indemnified Person”) (i) from any and all loss, liability, cost and expense including but not limited to reasonable attorneys’ fees and expenses incurred by the Mediaco Indemnified Person in connection with Emmis’ failure to comply with the standard of conduct set forth in Section 7(a) above, except if such loss, liability cost or expense results from the fraudulent, reckless or willful misconduct of Mediaco, and (ii) from any withdrawal liability incurred by Mediaco or its Affiliates under ERISA (including any contingent, secondary or successor liability) to any Multiemployer Plan to the extent based on the contribution histories of Emmis and its ERISA Affiliates (as opposed to any contributions made after the end of the Term by Mediaco and its ERISA Affiliates).  Emmis will reimburse each Mediaco Indemnified Person for the reasonable out-of-pocket costs and expenses (including attorneys’ fees and expenses) of investigating, preparing for and responding to any actual or threatened action, claim, suit, investigation or proceeding relating to Emmis’ violation of the standard of conduct set forth in Section 7(a) above, as they are incurred; provided that Mediaco shall promptly reimburse Emmis for any amounts advanced to the extent that a court of competent jurisdiction determines that an Mediaco Indemnified Person acted recklessly, or engaged in willful misconduct.

 

8.             Miscellaneous Terms.

 

(a)           Entire Agreement. This Agreement contains the complete and entire agreement between the parties pertaining to the subject matter hereof. This Agreement may not be modified, amended or waived in any manner except by a written document executed by the parties.

 

(b)           Assignment.  Neither party shall assign or transfer this Agreement or any rights and interests in this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld. Notwithstanding the forgoing, Mediaco may assign this Agreement and all of its rights and interests in this Agreement to any Affiliate of Mediaco or any third party in the event of a merger, acquisition or consolidation, in either case, without Emmis’ consent.

 

(c)           Governing Law; Waiver of Jury Trial.

 

(i)            Except as otherwise set forth in this Agreement, this Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation

 

6


 

of this Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.  In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement, even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.

 

(ii)                   AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

(d)           Jurisdiction; Service of Process.  ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN DELAWARE STATE COURT AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF INDIANA). EACH OF THE PARTIES HEREBY IRREVOCABLY AGREES AND CONSENTS TO PERSONAL JURISDICTION, SERVICE OF PROCESS AND VENUE IN THE AFORESAID COURTS AND WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS SECTION 17, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B)

 

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THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS.  THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

 

(e)           Notice.   All notices, requests, claims, demands and other communications to be given or delivered under or by the provisions of this Agreement shall be in writing and shall be deemed given only (i) when delivered personally to the recipient, (ii) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), provided that confirmation of delivery is received, (iii) upon machine-generated acknowledgment of receipt after transmittal by facsimile (iv) five (5) days after being mailed to the recipient by certified or registered mail (return receipt requested and postage prepaid), or (v) the date such delivery is made (or, if such date is not a Business Day, the next subsequent Business Day), if delivered via email to the Operational Email Address (as defined below) of the other Party set forth below.  Such notices, demands and other communications shall be sent to the Parties at the following addresses (or at such address for a Party as will be specified by like notice):

 

If to Emmis:

One Emmis Plaza, Suite 700

40 Monument Circle

Indianapolis, Indiana 46204

Telephone: 317.684.6565

Facsimile: 317.684.5583

Attention: Legal Department

Operational Email Address:  legal@emmis.com and HRHelp@emmis.com

 

with a copy (which shall not constitute notice) to:

Taft Stettinius & Hollister LLP
One Indiana Square, Suite 3500

Indianapolis, Indiana 46204

Telephone: 317.713.3569
Facsimile: 317.713.3699
Attention: Ian D. Arnold

 

If to Mediaco:

 

 

 

Operational Email Address:

 

with a copy (which shall not constitute notice) to:

Morgan, Lewis & Bockius LLP

 

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1701 Market Street

Philadelphia, PA 19103

Telephone: 215.963.5061

Facsimile: 215.963.5001

Attention: Justin W. Chairman

 

Any Party to this Agreement may notify any other Party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five (5) Business Days after the notice is given, whichever is later.  Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

 

(f)            Right to Examine.  Mediaco shall have, upon reasonable prior notice and during normal working hours, the right to conduct examinations of, and to make copies of, the books and records of Emmis relating to the Leased Employees or the Services, no matter where such books and records are located.  Such right may be exercised through any agent or employee of Mediaco or any representative designated by Mediaco.  All examinations conducted by or on behalf of Mediaco will be at its sole expense.

 

(g)           Further Assurances.  The parties shall execute and deliver such further instruments and do such further acts and things as may reasonably be required to carry out the intent and purposes of this Agreement.

 

(h)           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.  Electronically transmitted copies of this Agreement and electronically transmitted signature pages shall be binding and effective as to all Parties and may be used in lieu of the original Agreement, and, in particular, in lieu of original signatures, for any purpose whatsoever.

 

(i)            Construction of Agreement.  The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

(j)            No Joint Venture.  This Agreement is not intended to be and shall not be construed as a partnership or joint venture agreement between the Parties.  Except as otherwise specifically provided in this Agreement, no party to this Agreement shall be authorized to act as agent of or otherwise represent any other Party to this Agreement.

 

(k)           No Third Party Beneficiaries.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any person or entity (other than the Parties and their respective successors and permitted assigns and any person or entity indemnified under Section 7 hereof)

 

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any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

[signature page(s) follow]

 

10


 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective names by their duly authorized representatives as of the date first written above.

 

Mediaco Holdings Inc.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

Emmis Operating Company

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

11




Exhibit 10.3

 

Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”) is entered into as of         , 2019 (the “Effective Date”) by and between Emmis Operating Company, an Indiana corporation (“Management Company”), and Mediaco Holdings Inc., an Indiana corporation (“Mediaco”).  Management Company and Mediaco are sometimes referred to together in this Agreement as the “Parties” and each individually as a “Party.”  All capitalized terms used but not specifically defined in this Agreement shall have the meanings ascribed to such terms in the Contribution Agreement (as defined below).

 

RECITALS

 

WHEREAS, Management Company’s parent, Emmis Communications Corporation (“ECC”), SG Broadcasting LLC and Mediaco have entered into that certain Contribution and Distribution Agreement, dated as of June 28, 2019 (the “Contribution Agreement”);

 

WHEREAS, in connection with the transactions contemplated by the Contribution Agreement, ECC and Management Company have contributed to Mediaco substantially all of the assets and business relating to radio stations WBLS-FM and WQHT-FM (together, the “Stations”); and

 

WHEREAS, the Parties desire to enter into this Agreement to provide for the management by Management Company, as set forth herein, of the Stations in New York, NY, and, to the extent consented to by Management Company, other businesses acquired or created by Mediaco (collectively, the “Business”).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                                      Retention.

 

(a)                                 Mediaco hereby retains Management Company, and Management Company hereby agrees to serve, on the terms and conditions set forth herein, as the management company to the Stations.  Management Company, on behalf of itself and the Managers (as defined below), covenants to use professional skill and prudent business judgment in performing its duties and responsibilities as set forth herein.  The parties acknowledge that Management Company and the Managers’ service hereunder is not exclusive, and that Management Company and the Managers may manage stations and businesses separately from those set forth in this Agreement and the transactions contemplated by the Contribution Agreement.

 

(b)                                 The Management Services (as defined below) are for (i) the direct management of the Stations, and (ii) the overall management of Mediaco’s financial reporting, SEC compliance and other similar obligations as a public company.  If Mediaco acquires additional businesses, Mediaco and Management Company will have good faith discussions on the terms, if any, under

 


 

which Management Company would directly manage such acquired businesses and will amend this Agreement to reflect any agreement coming out of those discussions.  For avoidance of doubt, even if Management Company is not engaged to directly manage such additional businesses, Management Company shall continue to provide the public company-related services for Mediaco.

 

2.                                      Responsibilities.

 

(a)                                 Generally.  Subject in all respects to the ultimate authority of Mediaco, such authority to be exercised in good faith compliance with applicable law, Management Company shall in good faith make decisions with respect to the operation and management of the Stations and the Business in providing the management functions and services set forth on Schedule A attached hereto (the “Management Services”).  The initial officers of Mediaco shall be the individuals listed on Schedule B as officers of Mediaco, to serve in the capacities set forth opposite their names and to have the power and authority commensurate with such capacities.  Management Company shall make available to Mediaco the senior executives of Management Company set forth on Schedule C (as the same may be substituted or replaced from time to time by Management Company, the “Managers”) to serve as officers of Mediaco and to provide the services to Mediaco contemplated by this Agreement; provided that any attorneys employed by Management Company who are providing Management Services shall be officers of Mediaco.    In the event that an individual Manager is terminated by Management Company or otherwise terminates his or her employment with Management Company, Management Company agrees to engage in good faith consultation with Mediaco with respect to the replacement of services provided by any such Manager, either by replacement of such Manager or by the absorption by the remaining Managers of the responsibilities of the outgoing Manager; provided, that (A) if Management Company elects to replace the outgoing Manager, such replacement shall be capable of providing an equivalent level of service to Mediaco as the outgoing Manager; or (B) if Management Company elects not to replace the outgoing Manager, the existing Managers shall, in the aggregate, provide an equivalent level of service to Mediaco hereunder as the outgoing Manager without a material diminution in the aggregate level of Management Services provided to  Mediaco hereunder.  Mediaco shall have the right to appoint any replacement Manager as an officer of Mediaco, to serve in the capacities designated by Mediaco and to have the power and authority commensurate with such capacities.  In performing the Management Services, Management Company agrees, on behalf of itself and the Managers, to use commercially reasonable efforts to make such decisions and take such actions as are materially consistent with, and not in contravention of, the provisions of this Agreement, the Contribution Agreement, and the governing documents of Mediaco effective as of the date hereof (as amended and/or restated from time to time with, in the case of this Agreement or the Contribution Agreement, the consent of Management Company, such consent not to be unreasonably withheld, conditioned or delayed, the “Governing Agreements” and, together with this Agreement and the Contribution Agreement, the “Transaction Documents”).  Management Company hereby represents and warrants to Mediaco that the services provided under this Agreement constitute all of the services necessary to run the Stations and the Business in substantially the same manner as immediately prior to this Agreement.

 

(b)                                 Sources of Funds.  Any and all payments, disbursements, liabilities and financial obligations in connection with Mediaco’s operations and actions, including without limitation any matter that is the subject of the duties and responsibilities of Management Company hereunder,

 

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shall be solely for the account of Mediaco, subject to and taking into account the provisions of Section 4 below, and shall be made solely from and only to the extent of such sums as are available in the operating account of Mediaco or otherwise approved by Mediaco.  Management Company shall not be obligated to make any advance to or for the account of Mediaco or to pay any sum, liability, expense or obligation of Mediaco, except from funds held or provided by Mediaco.

 

(c)                                  Transaction Documents.  All actions taken by Management Company and each Manager under the provisions of this Section 2 shall be taken as agent of Mediaco and shall be taken by Management Company or by the individual Manager in a manner that Management Company or the individual Manager reasonably believes to be consistent with, and not in violation of, or reasonably likely to cause or create a default under, the Transaction Documents.  Management Company has been provided with copies of and/or is a party to the Transaction Documents, and expressly agrees that its management of the business and affairs of Mediaco is limited to the extent set forth therein.

 

(d)                                 Benefit Plans and other Systems. For so long as Management Company is providing Management Services relating to the following systems, Mediaco shall use commercially reasonable efforts to implement the same or substantially similar benefit plans, payroll processing, accounting, treasury management and other systems as are used by Management Company in the conduct of its business for the benefit of the Leased Employees (as defined in the Leasing Agreement).  To the extent that different plans or systems are used by Mediaco, Management Company shall use commercially reasonable efforts to manage such plans and systems, but Mediaco acknowledges and agrees that Mediaco shall engage additional personnel or incur additional expense to the extent reasonably required to manage the implementation, operation and administration of such plans and systems.

 

3.                                      Compensation.  Mediaco shall pay Management Company, and Management Company shall accept as full compensation for Management Company and/or Managers’ services in accordance with this Agreement, an annual management fee (the “Management Fee”) equal to $1,250,000.  Mediaco shall pay the Management Fee monthly in an amount equal to one-twelfth (1/12) of the Management Fee no later than [***] following the end of each month.  Management Company shall have no right to receive a Management Fee after the expiration or earlier termination of this Agreement, except for such Management Fees as are earned through the termination date.  The Management Fee for any partial month or year shall be pro-rated based upon the number of days in such month or the number of days in such year.  The parties agree to negotiate in good faith a reasonable increase in the Management Fee to reflect any increases in the costs incurred by Management Company with respect to any new businesses acquired by Mediaco that Management Company is not directly managing or any material increase in the activities of the Stations.  Further, if, with respect to actions taken pursuant to clause (A) or (B) of Section 2(a), the aggregate compensation payable by Management Company to all Managers declines by more than [***] the parties agree to negotiate in good faith a reasonable decrease in the Management Fee to reflect any decreases in the level of services being provided by Management Company hereunder.

 

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4.                                      Expenses.

 

(a)                                 Generally.  Management Company shall not be entitled to receive from Mediaco reimbursement for (i) any wages or benefits of Management Company employees (other than those pursuant to that certain Employee Leasing Agreement between the Parties of even date herewith (the “Leasing Agreement”) and other than with respect to two (2) non-executive Management Company digital employees for whom the wages and benefits shall be split evenly between Mediaco and Management Company), or (ii) any out-of-pocket expenses incurred by Management Company in the conduct of those portions of Management Company’s business that are not Management Services under this Agreement, but shall be entitled to reimbursement for any (A) out-of-pocket costs incurred directly for the benefit of Mediaco (e.g., legal, accounting and other third party costs, as well as travel and similar expenses, incurred for the benefit of Mediaco), and  (B) any Incremental Costs (as defined below).  Management Company will use commercially reasonable efforts to operate the Business in accordance with the annual budget established by Mediaco, but Mediaco acknowledges and agrees that neither Management Company nor any Manager shall be liable for any expenses in excess of such budget that are incurred in good faith by Management Company.  For the avoidance of doubt, Management Company shall not be permitted to be reimbursed for the same costs under both this Agreement and the Leasing Agreement.  “Incremental Costs” means any incremental out-of-pocket costs incurred by Management Company for goods or services that are necessary for the provision of the Management Services as well as for other business activities of Management Company, and that can be reasonably demonstrated by Management Company to represent an increase to the cost for such goods or services as compared to the cost that would have been incurred by Management Company for such goods or services if it were not providing the Management Services.  Incremental Costs shall not include any allocation of a portion of any costs that would have been incurred by Management Company regardless of its provision of the Management Services.

 

(b)                                 Reimbursable Costs.

 

1.                                      Management Company shall invoice Mediaco on or before the [***] of each month for the estimated costs and expenses incurred by Management Company under this Agreement (other than the Management Fee) for such month plus a true-up of the actual to estimated expenses incurred by Management Company under this Agreement for any prior months (the “Invoice”), and Mediaco shall pay such amount on or before the [***] of such month.  Upon Mediaco’s request, Management Company shall provide Mediaco with reasonably detailed information to verify the accuracy of any Invoice, including an itemized list of all third party fees or expenses.  If, at any time during the [***] period following the delivery of an Invoice, Mediaco delivers to Management Company in writing a dispute notice, then the Parties shall use commercially reasonable efforts to resolve the disputes set forth in such notice during the [***] period commencing on such delivery.  If, following such [***] period, the dispute between the Parties is not resolved, then the Parties shall engage a mutually agreed upon accounting firm to resolve the dispute.  The final decision of the accounting firm shall be mutually binding on both Parties.  The costs associated with the engagement of the accounting firm shall be borne equally by the Parties.  During such period of time that the Invoice is under dispute, the interest rate penalty set forth in Section 4(b)(2) will be tolled and will not accrue with respect to the disputed amount.

 

2.                                      Subject to Section 4(b)(1), Mediaco agrees to pay interest to Management Company for any past due amounts that are not disputed by Mediaco in good faith at the lesser of

 

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the highest rate allowable by law or [***] from the due date until such amounts are paid. In addition, Mediaco shall promptly reimburse Management Company for all reasonable costs incurred in collecting any past due amounts, including but not limited to reasonable attorneys’ fees and expenses.  This section shall not limit or waive any other legal and equitable rights and remedies Management Company shall have under this Agreement for a delinquent payment.

 

(c)                                  Non-Reimbursable Costs.  For the avoidance of doubt, the following expenses or costs incurred by Management Company in connection with the performance of its duties hereunder will be at the sole cost and expense of Management Company and will not be reimbursed by Mediaco:

 

1.                                      except as set forth in Section 4(a), cost of salary and wages, payroll taxes, insurance, worker’s compensation and other benefits of the Management Company’s employees and any other agents or consultants of the Management Company (excluding Leased Employees, and excluding agents and consultants retained by the Management Company to perform services on behalf of Mediaco);

 

2.                                      the cost of all rent, utilities, telecommunications, data processing, administration and related expenses with respect to the Management Company’s primary office space in Indianapolis or any secondary space outside the New York metropolitan area, other than under the Antenna Site Agreement of even date herewith (WBLS back up antenna) and other than Incremental Costs such as those related to:  Unclaimed Property, 1099 Prepare and Mail, Accounting and tax research software, Stock option administration software, Bank Service Fees, LinkedIn recruiting tools, HRIS system fees, General ledger system, Hardware and software maintenance, Data backup and redundancy, teleconferencing systems, Corporate telecom/data/network, ITGC Audit, or Insurance agent; and

 

3.                                      dues of the Management Company or of any of its employees (other than Leased Employees) in professional organizations or the cost of any of the Management Company’s employees (other than Leased Employees) participating in industry conventions, meetings or other functions, and all subscriptions, newsletters and other trade or industry periodicals (including online services) other than subscriptions, newsletters and other trade or industry periodicals used by Leased Employees.

 

5.                                      Management Company Covenants.

 

(a)                                 Management Company shall, at Management Company’s non-reimbursable expense, maintain its legal existence and good standing and obtain and maintain in effect all licenses and permits not directly attributable to Mediaco or the Business that are necessary or desirable to carry out its duties hereunder (other than licenses and permits directly attributable to the Stations or the Business).

 

(b)                                 Management Company will maintain (except under and subject to the terms and conditions of the Leasing Agreement) workers’ compensation and similar insurance as required by applicable Laws and shall maintain (at its own expense to the extent not attributable to the operations of the Stations or the Business) commercial general liability insurance and such other

 

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insurance coverage for its own operations as is reasonably comparable to prevailing industry standards.  Such insurance shall be in addition to any insurance, including but not limited to directors and officer’s insurance, obtained by or on behalf of Mediaco with respect to which Management Company shall be an additional insured.

 

(c)                                  Upon the written request of Mediaco following its determination that such individual has engaged in conduct or whose acts or omissions otherwise satisfy the criteria for a termination for “Cause,” Mediaco shall if applicable terminate such Manager’s status as an officer of Mediaco and Management Company shall terminate the employment of such employee of Management Company (including any Leased Employee) with respect to the provision of services under this Management Agreement.  For purposes of this Agreement, “Cause” means, with respect to any Person, any of the following: (1) the making of dishonest statements or acts with respect to Mediaco or any of its Affiliates (as defined in the Contribution Agreement); (2) the commission of, or indictment for, (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud (“indictment,” for these purposes, meaning an indictment, probable cause hearing or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made); (3) the material and sustained failure to perform, to the reasonable satisfaction of Mediaco, the duties and responsibilities assigned or delegated under this Agreement, which failure continues, after notice to such Person specifying in reasonable detail the basis for asserting such failure, for an unreasonable period of time, as determined by Mediaco (but in no event less than [***] after such notice); or (4) the material breach of this Agreement and, to the extent such breach is curable, which breach remains uncured following notice thereof (providing in reasonable detail the basis for asserting such breach) and the expiration of [***] thereafter.

 

(d)                                 Management Company will not, and will cause the Managers not to, without the prior written approval of the Approval Committee (as defined below), take any of the following actions with respect to Mediaco, the Stations or the Business, or directly or indirectly cause Mediaco or its Affiliates to:

 

1.                                      take any action that adversely affects the preferences, power, rights or privileges of any class of equity securities of Mediaco;

 

2.                                      enter into any agreement, whether written or oral, relating to the lease, license, sale or other disposition of the assets or equity securities of any of Mediaco;

 

3.                                      enter into any agreement, written or oral, or otherwise obligate Mediaco, to issue any equity securities, debt or debt convertible into or exchangeable for equity securities;

 

4.                                      acquire or invest in any new business (whether effected by stock or asset acquisition, consolidation, merger or otherwise);

 

5.                                      adopt or materially alter any budget of Mediaco;

 

6.                                      enter into, or obligate Mediaco to enter into, any new line of business;

 

7.                                      change the size, composition or powers of the board of Mediaco, or any committee thereof, including the formation of any new committee;

 

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8.                                      make any change to, appoint or terminate any member of senior management, including without limitation, the General Manager (defined below) or      of Mediaco;

 

9.                                      enter into any transaction or agreement between Mediaco, on the one hand, and any officer, director, member, employee or other Affiliate of Mediaco or Management Company, or persons controlling, controlled by, under common control with or otherwise affiliated with such officer, director, member or employee, including any Affiliate of Management Company, on the other hand; provided that this prohibition shall not apply to any cost sharing arrangements to which Mediaco consents where a third party provides goods or services to both Management Company (and/or its Affiliates) and Mediaco and the costs are allocated using a reasonable allocation method;

 

10.                               enter into any material litigation or any material settlement, or make any other material decision with respect to any litigation, arbitration, mediation, investigation or similar proceeding involving Mediaco, the Stations or the Business (including any bankruptcy proceeding in which Mediaco has an interest);

 

11.                               incur or issue any indebtedness for borrowed money (including without limitation capital leases), or grant any mortgage, security interest or any other lien on any assets;

 

12.                               execute, amend or otherwise modify or renew any retransmission consent or network affiliation agreement, any joint venture, partnership, local marketing agreement, shared services agreement or joint sales agreement, or any material agreement with any other owner or operator of broadcast radio or television stations (including any contract or agreement that would restrict Mediaco or its Affiliates from entering into any line of business or acquiring or disposing of any securities, indebtedness or other assets, or conducting any other business activities), or any multi-station contract;

 

13.                               effect a conversion or other change in the status or tax status of Mediaco;

 

14.                               adopt or amend any incentive plan, employee unit ownership plan or phantom unit or similar plan, or other employee benefit plan, policy, arrangement or practice for Mediaco (such restriction not to apply to Management Company’s employees that provide services to Mediaco under the Leasing Agreement);

 

15.                               hire or engage an investment banker or broker on behalf of Mediaco;

 

16.                               take any action or waive any rights on behalf of Mediaco with respect to the Transaction Documents, including the exhibits or schedules thereto, including, without limitation, initiating or defending any lawsuit or proceeding, or initiating any claim for indemnity thereunder (provided that this provision shall not in any way affect or limit Management Company’s or ECC’s right to assert claims and otherwise defend its rights under the Transaction Documents);

 

17.                               dissolve, liquidate or wind-up the operations of any of Mediaco;

 

18.                               effect any sale, merger, consolidation, refinancing or restructuring of Mediaco or all or substantially all of its assets;

 

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19.                               amend the organizational documents of Mediaco;

 

20.                               declare or pay any dividend or make any distribution, or redeem or acquire any equity securities of Mediaco; or

 

21.                               enter into any agreement to do any of the foregoing.

 

Mediaco acknowledges that Mediaco’s failure to timely take action with respect to any of the foregoing could adversely impact Mediaco and the Business.  For the purposes of this Section 5, the “Approval Committee” means a duly constituted and empowered committee of the board of directors of Mediaco dedicated to the responsibility of approving the matters set forth in this Section 5 and comprised of one individual who shall initially be David Glazek.

 

6.                                      Notices.  Without limiting any other obligations hereunder or under the Transaction Documents, Management Company shall provide notice to Mediaco of the following:

 

(a)                                 (i) any litigation affecting the Stations, the Business, Mediaco or its assets; (ii) upon becoming aware, or receiving notice, of any threatened litigation that could reasonably be expected to have an adverse effect on the Stations, the Business and/or Mediaco, and (iii) any litigation affecting Management Company or the Managers that could reasonably be expected to have an adverse effect on Management Company and its ability to perform its duties hereunder promptly upon Management Company becoming aware thereof;

 

(b)                                 upon notice, or becoming aware, of a violation of any material agreement of Mediaco that is likely, if not cured, to have an adverse effect on the Stations, the Business and/or Mediaco;

 

(c)                                  prompt notice upon becoming aware of the commission of any act or omission or other conduct by an employee of Mediaco, Management Company or the Managers, including any Leased Employee which constitutes or could reasonably be likely to constitute “Cause”; and

 

(d)                                 prompt notice of the receipt of any notice under the Contribution and Distribution Agreement or any notice or request from the Federal Communications Commission.

 

7.                                      Term.  The term of this Agreement shall commence on the Effective Date and, unless earlier terminated in accordance with Section 8, remain in full force and effect following the Effective Date for a term of two (2) years (the “Initial Term” as extended pursuant to this Section 7, the “Term”); provided that following the Initial Term, the Term shall automatically continue for successive one (1) year periods.

 

8.                                      Termination.

 

(a)                                 During the Initial Term, Mediaco may terminate this Agreement in its discretion for any reason upon six (6) months’ prior written notice of termination to Management Company; provided that if the termination is effective prior to the end of the eighteenth month after the Effective Date, Mediaco shall continue to pay Management Company the Management Fee through the end of the [***] after the Effective Date as if the Agreement were in full force and effect.

 

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(b)                                 Following the Initial Term, either Party may terminate this Agreement by providing the other Party written notice of termination, in which case, the Term shall end and the Agreement shall terminate six (6) months’ after delivery of such written notice (which may, for the avoidance of doubt, be delivered at any time after the date that is [***] after the Effective Date).

 

(c)                                  Mediaco may at any time and for any reason terminate one or more categories of Management Services set forth on Schedule A at Mediaco’s convenience, whereupon the parties shall agree in good faith on a reduction of the Management Fees to account for such terminated Management Services; provided that if such termination is effective prior to the end of the [***] after the Effective Date, no such reduction of the Management Fees shall be effective until after the end of the [***] after the Effective Date.

 

(d)                                 Any Party may terminate this Agreement in the event of material breach of any provision of this Agreement by another Party hereto by giving notice to the defaulting Party, and:

 

1.                                      If such breach is for nonpayment of an amount that is not in dispute, the defaulting Party shall cure the breach within [***] of receipt of such notice.  If the defaulting Party does not cure such breach by such date, then the non-defaulting Party shall have the right to terminate this Agreement effective immediately upon notice to the defaulting Party.  The defaulting Party shall remain liable to the non-defaulting Party for any amounts due to the non-defaulting Party through the end of the cure period.

 

2.                                      If such breach is for any other material failure to perform in accordance with this Agreement, the defaulting Party shall cure such breach within [***] of the date of its receipt of such notice.  If the defaulting Party does not cure such breach within such period, then the non-defaulting Party shall have the right to terminate this Agreement effective immediately upon notice to the defaulting Party.

 

(e)                                  The provisions of Sections 4 (with respect to any expenses or costs incurred prior to any termination of the Agreement), 8, 11, 13 and 15 through 24 shall survive the termination or expiration of this Agreement unless otherwise agreed to in writing.

 

9.                                      Entire Agreement.  This Agreement, the Contribution Agreement and other documents referred to herein or therein shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

 

10.                               Notices.  All notices, requests, claims, demands and other communications to be given or delivered under or by the provisions of this Agreement shall be in writing and shall be deemed given only (i) when delivered personally to the recipient, (ii) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), provided that confirmation of delivery is received, (iii) upon machine-generated acknowledgment of receipt after transmittal by facsimile (iv) five (5) days after being mailed to the recipient by certified or registered mail (return receipt requested and postage prepaid), or (v) the date such delivery is made (or, if such date is not a Business Day, the next subsequent Business Day), if delivered via email to the Operational Email Address (as defined below) of the other Party set forth below.  Such

 

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notices, demands and other communications shall be sent to the Parties at the following addresses (or at such address for a Party as will be specified by like notice):

 

If to Management Company:

 

One Emmis Plaza, Suite 700

40 Monument Circle

Indianapolis, Indiana 46204

Telephone: 317.684.6565

Facsimile: 317.684.5583

Attention: Legal Department

Operational Email Address:  legal@emmis.com and

 

with a copy (which shall not constitute notice) to:

 

Taft Stettinius & Hollister LLP
One Indiana Square, Suite 3500

Indianapolis, Indiana 46204

Telephone: 317.713.3569
Facsimile: 317.713.3699
Attention: Ian D. Arnold

 

If to Mediaco:

 

 

 

Operational Email Address:

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
1701 Market Street

Philadelphia, PA 19103

Telephone: 215.963.5061
Facsimile: 215.963.5001
Attention: Justin W. Chairman

 

Any Party to this Agreement may notify any other Party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five (5) Business Days after the notice is given, whichever is later.  Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

 

11.                               Non-Competition; Non-Solicitation.

 

(a)                                 During the Term and for the applicable “Post-Term Non-Compete Period” (as defined below), neither any Manager (to the extent permitted by applicable law), nor Management

 

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Company, nor any of its Affiliates shall, without the prior written approval of Mediaco, directly or indirectly through an entity controlled by any of them, whether as an owner, partner, shareholder, member of a limited liability company, guarantor, surety, co-venturer or otherwise, either (i) engage or participate in or (ii) make any investment, directly or indirectly, in the debt or equity securities (an “Investment”) of, any business that owns or operates any broadcasting business in New York City (each, a “Competitive Business”); provided, however, that (x) Management Company, the Managers or their Affiliates shall be permitted to make Investments in securities of publicly traded companies engaging in a Competitive Business that in the aggregate do not constitute more than [***] of any such publicly traded company’s total outstanding equity, and (y) this restriction shall not apply to the ownership or operation of any radio station owned or operated by Management Company or its Affiliates as of the Effective Date.  The “Post-Term Non-Compete Period” shall mean (1) with respect to the Management Company and any of its Affiliates, a period of [***] following the Term and (2) with respect to any Manager subject to an employment agreement with Management Company (other than Managers residing in a state that prohibits non-competition or similar agreements as applicable to such Managers), a period of [***] following the earlier of (A) termination of such Manager’s employment relationship with Management Company or any of its Affiliates and (B) the end of the Term; provided that if such Manager is hired by Management Company or any of its Affiliates during such Manager’s Post-Term Non-Compete Period, such Post-Term Non-Compete Period shall end and a new Post-Term Non-Compete period shall begin in accordance with this clause (2).

 

(b)                                 During the Term and until the end of the [***] of the date of termination of the Leasing Agreement, neither Management Company, the Managers nor any of its Affiliates shall, directly or indirectly, solicit for employment or attempt to hire, employ or solicit for employment any then-current employee of Mediaco or its Affiliates whom Management Company, the applicable Manager or applicable Affiliate managed under this Agreement during the Term; provided that this provision shall not prohibit Management Company from employing such employees to provide part time services to Management Company in a manner consistent with past practices with respect to Management Company’s operation of radio stations WEPN-FM or WLIB-AM, and provided further that this provision shall not prohibit general solicitations of employment not targeted at any employee of Mediaco or its Affiliates.

 

(c)                                  During the Term and until the end of the [***] of the date of termination of the Leasing Agreement, neither Mediaco, Standard General, nor any of their respective Affiliates shall, directly or indirectly, except as contemplated by the Leasing Agreement, solicit for employment or attempt to hire, employ or solicit for employment any then-current employee of Management Company or its Affiliates to whom Mediaco, Standard General or its applicable Affiliate were introduced by Management Company or its Affiliates during the Term or in connection with the negotiation of the transactions contemplated by the Transaction Documents; provided that this provision shall not prohibit general solicitations of employment not targeted at any employee of Management Company or its Affiliates.

 

12.                               Confidentiality.  Management Company acknowledges that it will have access to confidential and proprietary information of Mediaco and agrees that it shall use such information only in furtherance of its performance under this Agreement, shall not disclose or use for any other purpose such information and shall cause the Managers to comply with this confidentiality

 

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provision.  Management Company shall have no obligation to keep confidential any information that: (i) is or becomes generally known or available by publication, commercial use or otherwise through no action or fault of Management Company; (ii) is known, without violation of any obligation hereunder, and has been reduced to tangible form by Management Company prior to the time of disclosure and is not subject to restriction; (iii) is independently developed by Management Company without reference to Mediaco’s confidential information; or (iv) is lawfully obtained from a third party who has the right to make such disclosure. In the event that Management Company or a Manager receives a request or becomes legally required to disclose any confidential and proprietary information of Mediaco under the terms of a valid and effective subpoena or order issued by a court of competent jurisdiction or in an investigatory, legal, regulatory or administrative proceeding, Management Company agrees to, to the extent permitted by law, (i) immediately notify Mediaco of the existence, terms and circumstances surrounding such requirement, (ii) consult with Mediaco on the advisability of taking legally available steps (all at Mediaco’s cost and expense) to resist or narrow such requirement, and (iii) if disclosure of such information is required, use its best efforts to cooperate with Mediaco in its efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such information.  Notwithstanding any of the foregoing, Management Company may disclose confidential and proprietary information of Mediaco, following prior notice to Mediaco, to any regulatory authority (including any self-regulatory authority) with jurisdiction over Management Company in connection with any routine examination, investigation, regulatory sweep or other regulatory inquiry.

 

13.                               Right to Audit.  Mediaco shall have, upon reasonable prior notice and during normal working hours, the right to conduct audits and examinations of, and to make copies of, the books and records of Management Company relating to the Stations or to Mediaco (to the extent related to the Business), no matter where such books and records are located.  Such right may be exercised through any agent or employee of Mediaco or any certified public accountant or other representative designated by Mediaco.  In the event that Mediaco discovers either a material weaknesses in internal control or material errors in record keeping, Management Company will use commercially reasonable efforts to correct such discrepancies promptly upon Mediaco’s written request and reasonable recommendation and will inform Mediaco in writing of the action taken to correct such audit discrepancies.  All audits conducted by or on behalf of Mediaco will be at its sole expense and shall not take place more than once annually absent any finding of material weaknesses in internal control or material errors in record keeping.

 

14.                               Assignment.  Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any purported assignment without such consent shall be null and void.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

 

15.                               Limitation on Liability and Indemnification.

 

(a)                                 Neither the Management Company, nor its Affiliates or any officer, director, employee, partner, manager or other agent of Management Company or its Affiliates (“Management Agents”) will have any liability to Mediaco hereunder for any action under this

 

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Management Agreement unless such conduct is not taken in accordance with the standards of conduct under Indiana Code 23-1-35-1 (taking into account Management Company’s obligations under this Agreement), and the failure to meet that standard has been judicially determined to have constituted fraud, recklessness or willful misconduct.  The Parties agree that Indiana Code 23-1-35-1 is the standard of conduct applicable to directors of an Indiana corporation, that Mediaco is an Indiana corporation, that the same standard that applies to the directors of Mediaco should apply to the Management Agents, and that such standard is different than the standard of conduct applicable to directors of a Delaware corporation (see, the Official Indiana Comment to Indiana Code 23-1-35-1).

 

(b)                                 Mediaco hereby agrees to indemnify defend and hold harmless Management Company, Managers and their respective Affiliates and any of their respective current or former officers, directors, employees, partners, managers or other agents (individually and collectively, “Indemnified Person”) from any and all loss, liability, cost and expense (including but not limited to reasonable attorneys’ fees and expenses) incurred by the Indemnified Person in connection with, arising from or related to the performance by it of its obligations hereunder or otherwise related to Mediaco or the Business, except if such loss, liability, cost or expense results from fraud, recklessness or willful misconduct of Management Company.  To the extent permitted by law, Mediaco will reimburse each Indemnified Person for the reasonable out-of-pocket costs and expenses (including attorneys’ fees and expenses) of investigating, preparing for and responding to any actual or threatened action, claim, suit, investigation or proceeding or enforcing this Agreement, as they are incurred; provided that Management Company shall promptly reimburse Mediaco for any amounts advanced to the extent that a court of competent jurisdiction determines that an Indemnified Person acted fraudulently, recklessly or engaged in willful misconduct.

 

(c)                                  Management Company hereby agrees to indemnify defend and hold harmless Mediaco and its Affiliates for any and all loss, liability, cost and expense (including but not limited to reasonable attorneys’ fees and expenses) incurred by Mediaco or its Affiliates arising out of the fraud, recklessness or the willful misconduct of Management Company or any Manager.  The maximum liability of the Management Company or Mediaco in respect of an indemnification claim under this Section 15 shall not exceed [***] hereunder; provided, however, that the foregoing limitation shall not apply to any claims based on, related to or in connection with fraud, willful misconduct and/or a breach of the provisions of Sections 11 and 12 of this Agreement.

 

16.                               Governing Law; Waiver of Jury Trial.

 

(a)                                 Except as otherwise set forth in this Agreement, this Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.  In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement, even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.

 

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(b)                                 AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

17.                               Jurisdiction; Service of Process.  ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN DELAWARE STATE COURT AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF INDIANA). EACH OF THE PARTIES HEREBY IRREVOCABLY AGREES AND CONSENTS TO PERSONAL JURISDICTION, SERVICE OF PROCESS AND VENUE IN THE AFORESAID COURTS AND WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS SECTION 17, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS.  THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

 

18.                               Further Assurances.  The parties shall execute and deliver such further instruments and do such further acts and things as may reasonably be required to carry out the intent and purposes of this Agreement.

 

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19.                               Amendment; Waiver.  This Agreement may not be amended except by an instrument in writing signed by each of the Parties.  No failure or delay by any Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder.  Any agreement on the part of any Party to any such waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.

 

20.                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.  Electronically transmitted copies of this Agreement and electronically transmitted signature pages shall be binding and effective as to all Parties and may be used in lieu of the original Agreement, and, in particular, in lieu of original signatures, for any purpose whatsoever.

 

21.                               Remedies.  Each of the parties agree that money damages would not be a sufficient remedy for any breach by either Party or any of its Affiliates of this Agreement, and that, in addition to all other remedies that may be available, Mediaco shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach, and each Party further agrees to waive and to use its best efforts to waive, any requirement for the securing or posting of any bond in connection with any such remedy.

 

22.                               Construction of Agreement.  The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

23.                               No Joint Venture.  This Agreement is not intended to be and shall not be construed as a partnership or joint venture agreement between the Parties.  Except as otherwise specifically provided in this Agreement, no party to this Agreement shall be authorized to act as agent of or otherwise represent any other Party to this Agreement.

 

24.                               No Third Party Beneficiaries.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties and their respective successors and permitted assigns and any Management Indemnified Persons or Mediaco Indemnified Persons) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

15


 

IN WITNESS WHEREOF, the parties have executed this Management Agreement as of the day and year first above written.

 

 

MANAGEMENT COMPANY

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

Signature Page to Management Agreement

 


 

 

MEDIACO

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

Signature Page to Management Agreement

 




Exhibit 10.4

 

LOCAL PROGRAMMING AND MARKETING AGREEMENT
(WQHT HD2)

 

THIS LOCAL PROGRAMMING AND MARKETING AGREEMENT (this “Agreement”) is made as of          , 2019 by and between Mediaco Holdings Inc., an Indiana corporation (the “Licensee”), and WBLS-WLIB LLC, an Indiana limited liability company (“Programmer”).

 

Recitals

 

A.                                    Licensee owns and operates the following radio station (the “Station”) pursuant to licenses issued by the Federal Communications Commission (“FCC”): WQHT-FM, New York, NY (Facility ID No. 19615). The Station has the capability to transmit an in-band, on-channel (“IBOC”) digital broadcast signal.

 

B.                                    Programmer desires to have radio broadcast station WLIB-AM, New York, NY (Facility ID No. 28204) (“WLIB”) rebroadcast on the Station’s HD-2 channel (the “HD2 Channel”) at a bandwidth of 24kbps.

 

C.                                    Licensee has agreed to make available to Programmer airtime on the HD2 Channel and accept for rebroadcast the programs of WLIB on the terms and conditions set forth in this Agreement.

 

Agreement

 

NOW, THEREFORE, taking the foregoing recitals into account, and in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

 

1.                                      Agreement Term. The term of this Agreement (the “Term”) will begin on the date hereof (the “Commencement Date”), and will continue until the earlier of (i) December 31, 2022, (ii) the termination or expiration of the Studio Lease (defined below), (iii) election to terminate and notice thereof given by Programmer to Licensee, and (iv) mutual written consent of Licensee and Programmer (the “Term”), unless extended or earlier terminated pursuant to Section 11 hereof. The term “Studio Lease” means that certain Lease dated as of February 23, 1996 of certain real estate located on the 7th Floor of an office building located at 395 Hudson St., New York, New York.

 

2.                                      Programmer’s Use of Airtime and Provision of Programming. During the Term, and subject in all respects to Section 6 hereof, Programmer shall be entitled to simulcast the programming of WLIB (the “WLIB Programs”) on the HD2 Channel, excluding the period from 6:00 a.m. to 8:00 a.m. each Sunday morning, on the terms specified below, and shall transmit to Licensee the WLIB Programs for broadcast on the HD2 Channel twenty-four (24) hours per day, seven (7) days per week, excluding the period from 6:00 a.m. to 8:00 a.m. each Sunday morning (the “Broadcasting Period”). Programmer will transmit, at its own cost, the WLIB Programs to the Station’s transmitting facilities via a mode of transmission (e.g., satellite facilities, microwave facilities and/or telephone lines) that will ensure that the WLIB Programs meet

 


 

technical and quality standards at least equal to those of the HD2 Channel’s broadcasts prior to commencement of the Term.

 

3.                                      Broadcasting Obligations. During the Term, Licensee shall broadcast on the HD2 Channel the WLIB Programs delivered by Programmer during the Broadcasting Period specified in Section 2 above, subject to the provisions of Section 6 below.

 

4.                                      Advertising Sales. Programmer shall not separately sell advertising time on the HD2 Channel but may market the WLIB Programs as being rebroadcast on the HD2 Channel.

 

5.                                      Term Payments. No payment is due from Programmer to Licensee for broadcast of the Programs pursuant to this Agreement.

 

6.                                      Operation, Ownership and Control of the Station. Notwithstanding anything to the contrary in this Agreement Licensee will have full authority, power and control over the operation of the Station, including the HD2 Channel, and over all persons working at the Station’s facilities during the Term. Licensee will bear the responsibility for the Station’s compliance with all applicable provisions of the rules and policies of the FCC. Nothing contained herein shall prevent Licensee from (a) rejecting or refusing programs which Licensee believes to be contrary to the public interest, or (b) substituting programs which Licensee believes to be of greater local or national importance or which are designed to address the problems, needs and interests of the local communities. Licensee reserves the right to refuse to broadcast any WLIB Program containing matter which violates any right of any third party or which constitutes a personal attack. Licensee also reserves the right to refuse to broadcast any WLIB Program which does not meet the requirements of the rules, regulations, and policies of the FCC or the regulations and restrictions set forth in Section 8. Licensee further reserves the right to preempt any WLIB Program in the event of a local, state, or national emergency. Licensee agrees that its right of preemption shall not be exercised in an arbitrary or unreasonable manner, or for commercial advantage. Licensee reserves the right to delete any commercial announcements that do not comply with the requirements of the FCC’s sponsorship identification policy. Programmer will immediately serve Licensee with notice and a copy of any letters of complaint it receives concerning any WLIB Program for Licensee review.  Licensee’s rights under this Section 6 and its decisions regarding whether to exercise such rights in any particular circumstance shall not in any way affect Programmer’s obligations under Section 12 hereunder.  Pursuant to Note 2 to Section 73.3555 of the FCC’s rules, Licensee certifies that it maintains ultimate control over WQHT(FM)’s finances, personnel and programming, and Programmer certifies that this Agreement complies with Section 73.3555(b) of the FCC’s rules.

 

7.                                      Music Licenses. During the Term, Programmer will obtain and maintain in full force and effect in its own name all necessary or appropriate music licenses with respect to the WLIB Programs rebroadcast on the HD2 Channel. Programmer represents and warrants to Licensee that Programmer has all rights in and to the WLIB Programs necessary or appropriate to rebroadcast such WLIB Programs on the HD2 Channel.

 

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8.                                      Programs.

 

8.1                               Production of the Programs. Programmer agrees that the contents of the WLIB Programs it transmits to Licensee shall conform to all FCC rules, regulations and policies. Programmer shall provide only the WLIB Programs, and not any other programming, for broadcast on the HD2 Channel.

 

8.2                               Political Time. Licensee shall oversee and take ultimate responsibility with respect to the provision of equal opportunities, lowest unit charge, and reasonable access to political candidates, and compliance with the political broadcast rules of the FCC. During the Term, Programmer shall cooperate with Licensee as Licensee complies with its political broadcast responsibilities, and shall supply such information promptly to Licensee as may be necessary to comply with the political advertising time record keeping, reasonable access, and lowest unit charge requirements of federal law. Programmer shall release advertising availabilities to Licensee during the Broadcasting Period as necessary to permit Licensee to comply with the political broadcast rules of the FCC and the Communications Act of 1934, as amended.

 

9.                                      Expenses. During the Term, Programmer will be responsible for (i) the salaries, taxes, insurance and related costs for all personnel used in the production of the WLIB Programs, (ii) all other costs associated with the production of the WLIB Programs supplied to Licensee, and (iii) the costs of delivering the WLIB Programs to Licensee.

 

10.                               Call Signs. During the Term, Licensee will retain all rights to the call letters of the Station or any other call letters which may be assigned by the FCC for use by the Station. Programmer shall include in the WLIB Programs it delivers for broadcast an announcement at the beginning of each hour of such WLIB Programs to identify such call letters, as well as any other announcements required by the rules and regulations of the FCC. Programmer is specifically authorized to use such call letters in its WLIB Programs and in any promotional material, in any media, used to promote the WLIB Programs.

 

11.                               Events of Default; Termination.

 

11.1                        Programmer’s Events of Default. The occurrence of any of the following will be deemed an Event of Default by Programmer under this Agreement: (a) Programmer fails to observe or perform its obligations contained in this Agreement in any material respect; or (b) Programmer breaches the representations and warranties made by it under this Agreement in any material respect.

 

11.2                        Licensee Events of Default. The occurrence of the following will be deemed an Event of Default by Licensee under this Agreement: (a) Licensee fails to observe or perform its obligations contained in this Agreement in any material respect; or (b) Licensee breaches the representations and warranties made by it under this Agreement in any material respect.

 

11.3                        Cure Period. Notwithstanding the foregoing, any Event of Default will not be deemed to have occurred until fifteen (15) days after the non-defaulting party has provided

 

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the defaulting party with written notice specifying the Event of Default and such Event of Default remains uncured.

 

11.4                        Termination in the Event of Default. Upon the occurrence of an Event of Default, and in the absence of a timely cure pursuant to Section 11.3, the non-defaulting party may terminate this Agreement, effective immediately upon written notice to the defaulting party.

 

11.5                        Cooperation Upon Termination. If this Agreement is terminated for any reason, the parties agree to cooperate with one another and to take all actions necessary to rescind this Agreement and return the parties to the status quo ante.

 

12.                               Indemnification. Programmer shall indemnify and hold Licensee harmless against any and all liability arising from Programmer’s use of Licensee’s facilities, if any, or from the broadcast of the WLIB Programs on the HD2 Channel, including without limitation for libel, slander, illegal competition or trade practice, infringement of trademarks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights or any other violation of third party rights or FCC rules or other applicable law. The obligations under this Section shall survive any termination of this Agreement.

 

13.                               Authority. Programmer and Licensee each represent and warrant to the other that (i) it has the power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, (ii) it is in good standing in the jurisdiction of its organization and is qualified to do business in all jurisdictions where the nature of its business requires such qualification, (iii) it has duly authorized this Agreement, and this Agreement is binding upon it, and (iv) the execution, delivery, and performance by it of this Agreement does not conflict with, result in a breach of, or constitute a default or ground for termination under any agreement to which it is a party or by which it is bound.

 

14.                               Modification and Waiver; Remedies Cumulative. No modification of any provision of this Agreement will be effective unless in writing and signed by all parties. No failure or delay on the part of Programmer or Licensee in exercising any right or power under this Agreement will operate as a waiver of such right or power, nor will any single or partial exercise of any such right or power or the exercise of any other right or power preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. Except as otherwise provided in this Agreement, the rights and remedies provided in this Agreement are cumulative and are not exclusive of any other rights or remedies which a party may otherwise have.

 

15.                               Assignability; No Third-Party Rights. Programmer may not assign this Agreement without the prior written consent of Licensee, which shall not be unreasonably withheld, conditioned, or delayed. No transfer or assignment shall relieve Programmer of any obligation or liability under this Agreement. The covenants, conditions and provisions hereof are and shall be for the exclusive benefit of the parties hereto and their successors and permitted assigns, and nothing herein, express or implied, is intended or shall be construed to confer upon or to give any person or entity other than the parties hereto and their successors and permitted assigns any right, remedy or claim, legal or equitable, under or by reason of this Agreement.

 

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16.                               Construction. This Agreement will be construed in accordance with the laws of the State of Indiana without regard to principles of conflicts of laws.

 

17.                               Counterpart Signatures. This Agreement may be signed in one or more counterparts, each of which will be deemed a duplicate original.

 

18.                               Notices. Any notice pursuant to this Agreement shall be in writing and shall be deemed delivered on the date of personal delivery or confirmed delivery by a nationally-recognized overnight courier service, or on the third day after prepaid mailing by certified U.S. mail, return receipt requested, and shall be addressed as follows (or to such other address as any party may request by written notice):

 

 

If to Licensee, then to:

Mediaco Holdings Inc.

 

C/O SG Broadcasting LLC

 

767 Fifth Ave, 12th Floor

 

New York, NY 10153

 

Attention: Gail Steiner, General Counsel

 

Facsimile:

 

 

with a copy (which shall not constitute notice) to:

Morgan, Lewis & Bockius LLP

 

1701 Market Street

 

Philadelphia, PA 19103

 

Attention: Justin W. Chairman

 

Facsimile: (215) 963-5001

 

 

If to Programmer, then to:

WBLS-WLIB LLC

 

c/o Emmis Communications Corporation

 

One Emmis Plaza

 

40 Monument Circle, Suite 700

 

Indianapolis, IN 46204

 

Attention: J. Scott Enright, General Counsel

 

 

with a copy (which shall not constitute notice) to:

Edinger Associates PLLC

 

1725 I Street, N.W., Suite 300

 

Washington, D.C. 20006

 

Attention: Brook Edinger

 

19.                               Entire Agreement. This Agreement embodies the entire agreement, and supersedes all prior oral or written understandings, between the parties with respect to the subject matter of this Agreement.

 

20.                               Relationship of Parties. Neither the Programmer nor Licensee will be deemed to be the agent, partner, or representative of the other party to this Agreement, and neither party is authorized to bind the other to any contract, agreement, or understanding.

 

21.                               Force Majeure and Facilities Upgrades. The failure of either party hereto to comply with its obligations under this Agreement due to (i) facility maintenance, repair or

 

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modification at a transmitter site or to move a transmitter site in response to FCC authorization of an improvement to or modification of the Station’s operating parameters, or (ii) with respect to a failure to comply with an obligation under this Agreement, acts of God, strikes or threats thereof or a force majeure event or due to causes beyond such party’s reasonable control, will not constitute an Event of Default under Section 11 of this Agreement and neither party will be liable to the other party therefor. Programmer and Licensee each agrees to exercise its commercially reasonable efforts to remedy the conditions described in parts “(i)” and “(ii)” of this Section as soon as practicable.

 

22.                               Subject to Laws; Partial Invalidity. The obligations of the parties under this Agreement are subject to the rules, regulations and policies of the FCC and all other applicable laws. The parties agree that Licensee may file a copy of this Agreement with the FCC. If any provision in this Agreement is held to be invalid, illegal, or unenforceable, so long as no party is deprived of the benefits of this Agreement in any material respect, such invalidity, illegality, or unenforceability will not affect any other provision of this Agreement, and this Agreement will be construed as if it did not contain such invalid, illegal, or unenforceable provision.

 

23.                               Headings. The headings of the various provisions of this Agreement are included for convenience only, and no such heading shall in any way affect or alter the meaning of any provision.

 

24.                               Successors and Assigns. Subject to the provisions of Section 15 above, this Agreement shall be binding and inure to the benefit of Licensee and its successors and assigns and Programmer and its permitted successors and assigns.

 

[SIGNATURE PAGE FOLLOWS]

 

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SIGNATURE PAGE TO
LOCAL PROGRAMMING AND MARKETING AGREEMENT

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

 

LICENSEE:

MEDIACO HOLDINGS INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

PROGRAMMER:

WBLS-WLIB LLC

 

 

 

 

 

By:

 

 

Name:

 

Title:

 




Exhibit 10.5

 

Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

SHARED SERVICES AGREEMENT
(WEPN)

 

This SHARED SERVICES AGREEMENT (the “Agreement”), effective as of                  , 2019 (the “Effective Date”), is entered into by and between Emmis Operating Company, an Indiana limited liability company (“Company”), and Mediaco Holdings Inc., an Indiana corporation (“Service Provider”).

 

RECITALS

 

WHEREAS, Service Provider is the prime tenant pursuant to that certain February 23, 1996 Lease (as amended or substituted, the “Prime Lease”) of certain real estate located on the 7th Floor of an office building located at 395 W. Hudson St., New York, New York, and Service Provider uses such location for the business and operations of radio broadcast stations WQHT-FM, New York, NY (Facility ID No. 19615) and WBLS-FM, New York, NY (Facility ID No. 28203) (the “Business”);

 

WHEREAS, Company is the licensee of radio broadcast station WEPN-FM (the “Station”);

 

WHEREAS, the Company is party to a Local Programming and Marketing Agreement pursuant to which Company (as Licensee) provides air time to the Programmer thereunder to broadcast ESPN Radio on the Station; and

 

WHEREAS, Company desires to receive, and Service Provider is willing to provide, the Services (defined below), for the compensation, and otherwise on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the parties agree as follows:

 

AGREEMENT

 

ARTICLE 1
SERVICES

 

1.1                               Provision of Services. During the term of this Agreement, Service Provider will allow Company, on the terms and conditions described herein, to use Service Provider’s facilities and equipment and to use Service Provider personnel, to assist Company in performing its obligations with respect to the Company’s ownership and operation of the Station consistent with past practices (the “Services”). All of the Services shall be for the sole use and benefit of Company.

 

1.2                               Termination of Services. Company may elect to terminate any or all of the Services at any time upon thirty (30) days’ written notice to Service Provider, provided that no such termination shall relieve Company of its obligation to pay all amounts owing hereunder in connection with the Services through the effective date of such termination, together with the

 


 

amount of all third-party commitments or cancellation charges incurred by Service Provider in connection with such termination.

 

ARTICLE 2
COMPENSATION

 

2.1                               Compensation. Company will reimburse Service Provider for all out of pocket costs and expenses relating to, or incurred in connection with providing, the Services, including without limitation payments to third parties, purchase or leasing of equipment or supplies, rental value of equipment owned or leased by Service Provider, personnel, taxes, overhead, and management, but only to the extent that such costs and expenses are incremental to the costs and expenses Service Provider otherwise incurs in the operation of the Business, and provided further that Company shall separately engage or employ, and separately compensate, any employee of Service Provider who is providing services to the Station. Such compensation to Service Provider will be paid within [***] of invoice in immediately available funds, without offset, deduction, or counterclaim.

 

ARTICLE 3
REQUIRED CONSENTS

 

3.1                               Required Consents. Service Provider shall use commercially reasonable efforts to obtain any consents from third parties required to enable Service Provider to perform the Services (“Required Consents”), with all out-of-pocket expenses that may be associated with such efforts to be paid by the Company. Company shall cooperate with Service Provider and provide Service Provider such assistance with regard to obtaining Required Consents as Service Provider may request. Notwithstanding anything in this Agreement to the contrary, if any third-party consent is required under an applicable agreement to permit shared use or sublicensing of an agreement pursuant hereto, then such use or sublicensing is subject to receipt of such consent. Neither party shall be obligated by this Agreement to pay any fee to any third party to obtain any Required Consent. If Service Provider is unable to obtain a Required Consent, Service Provider shall have no obligation hereunder to provide the applicable Services to which such Required Consent relates.

 

ARTICLE 4
CONFIDENTIALITY; INTELLECTUAL PROPERTY

 

4.1                               Confidentiality. Each party will hold the confidential information of the other in confidence, and will share such information only with such party’s employees, contractors, or agents on a need to know basis, and will not release or use such information to the detriment of the other party.

 

4.2                               Intellectual Property. Nothing in this Agreement shall be construed as an assignment or grant of any right, title or interest in any trademark, copyright, design, trade name, patent right or other intellectual property right.

 

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ARTICLE 5
PERSONNEL

 

5.1                               Personnel. Each party’s Personnel will remain employees, contractors, agents or representatives, as applicable, solely of such party, and will be under the direction, control and supervision of such party.

 

ARTICLE 6
LIMITATION OF LIABILITY; INDEMNITY

 

6.1                               Limitation of Liability. Neither party shall be liable to the other for monetary damages for any losses, claims, damages, or liabilities arising from any act or omission taken or omitted hereunder to the extent such act or omission was taken in good faith, was not attributable to such party’s material breach of this Agreement, and did not constitute fraud, willful misconduct, or recklessness. Notwithstanding any other provision herein, in no event shall either party have any liability to the other hereunder for any lost profits or consequential, punitive, special or indirect damages in connection with the performance or nonperformance of this Agreement (whether resulting from negligence or otherwise). Other than indemnification for third party claims under Section 6.3 and claims of fraud, willful misconduct or recklessness, the maximum liability of Service Provider to Company in connection with this Agreement, shall be the sum of the costs of the Services paid by Company to Service Provider hereunder during the twelve months preceding the date on which the claim first arose.

 

6.2                               Disclaimer of Warranties. Notwithstanding any other provision herein, Service Provider makes no representation or warranty, express or implied, with respect to the Services or Service Provider personnel provided pursuant to this Agreement, all of which are expressly disclaimed and waived by Company.

 

6.3                               Indemnity. Company will defend, indemnify, and hold harmless Service Provider, Landlord under the Prime Lease, and their respective affiliates, partners, members, officers, directors, managers, employees, agents, contractors, licensees and invitees (“Indemnified Parties”) from and against all suits, claims, demands, liability, damages, costs, and expenses relating to third party claims of every kind and nature, including reasonable attorneys’ fees and expenses, arising out of or relating to breach or default by Company of this Agreement and the acts or omissions of Company’s Personnel.

 

ARTICLE 7
TERM AND TERMINATION

 

7.1                               Term. The term of this Agreement will commence on the Effective Date and will continue until the first to occur of: (a) August 31, 2024, and (b) the Company’s election to terminate, unless sooner terminated in accordance with the terms hereof (the “Term”).

 

7.2                               Termination for Breach. Each party will have the right to terminate this Agreement in whole or in part by giving to the other party written notice of termination if (i) the other party fails to make any payment due under this Agreement or perform any of the other obligations imposed upon it in any material respect under this Agreement, (ii) the non-breaching party sends the breaching party written notice of such failure, (iii) with respect to a monetary

 

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failure, Company does not cure the failure within [***] following the date of notice, but no more than two such cure periods shall be permitted, and (iv) with respect to a non-monetary failure, the breaching party does not cure the failure within [***] following the date of notice.

 

7.3                               Effect of Termination.

 

(a)                                 Upon termination or expiration of this Agreement or a Service, Service Provider and Company shall promptly return to each other any of the other party’s equipment and materials containing the other party’s confidential information that are in the first party’s possession or control and that are not required for use in connection with any non-terminated Services. No termination shall relieve a party of liability for failure to comply with this Agreement prior to termination.

 

(b)                                 If a portion of the use of Services provided by this Agreement is terminated pursuant to the terms of this Agreement, then (i) the Company shall be obligated to pay within [***] after termination of this Agreement with respect to such use or Service all fees and expense reimbursements owing for the Services and otherwise hereunder through the effective date of such termination, together with the amount of all third-party commitments or cancellation charges incurred in connection with such termination, and (ii) such partial termination shall not affect the other terms and conditions of this Agreement with respect to any other Service then being provided pursuant to this Agreement, except in the case of a termination for breach pursuant to Section 7.2.

 

7.4                               Survival. The following provisions of this Agreement will survive the termination or expiration of this Agreement: Sections 4, 6, and 7.

 

7.5                               Force Majeure. Neither party shall be liable for any default or delay in the performance of its non-monetary obligations under this Agreement if, and to the extent that, the default or delay is caused, directly or indirectly, by a Force Majeure Event. “Force Majeure Event” means an event such as a fire, flood, earthquake, war, act of terrorism, labor disputes, government or court action, failure of facilities, or act of God, with respect to which the non-performing party is without fault and the default or delay results from causes beyond such party’s reasonable control.

 

ARTICLE 8
MISCELLANEOUS

 

8.1                               Relationship of the Parties. Each party will be deemed to be an independent contractor and not an agent, joint venturer or representative of the other party. Neither party will have the right to create any obligations or responsibilities on behalf of or in the name of the other party. Neither party will hold itself out as a partner, employee, franchisee, representative, servant or agent of the other party.

 

8.2                               Waiver. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each

 

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and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

 

8.3                               Notices. All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service or (iv) when delivered by telecopy (with respect to this clause (iv), solely if receipt is confirmed), addressed as follows:

 

If to Company:

 

c/o Emmis Operating Company
One Emmis Plaza
40 Monument Circle
Suite 700
Indianapolis, Indiana 46204
Attn: Legal Department
Tel: (317) 684-6565
Facsimile: (317) 684-5583

 

With a copy (which shall not constitute notice) to:

 

Edinger Associates PLLC
1725 I Street, NW, Suite 300
Washington, DC 20006
Attn: Brook Edinger
Tel: (202) 747-1693
Facsimile: (202) 747-1691

 

If to Service Provider:

 

Mediaco Holdings Inc.
C/O SG Broadcasting LLC
767 Fifth Ave, 12th Floor
New York, NY 10153
Attention: Gail Steiner, General Counsel
Tel:
Facsimile:

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Justin W. Chairman
Tel: (215) 963-5061
Facsimile: (215) 963-5001

 

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or to such other address or addresses as the parties may from time to time designate in writing.

 

8.4                               Assignment. No party shall assign this Agreement or any part thereof without the prior written consent of the other party, which shall not be unreasonably withheld. No assignment shall relieve a party of any obligations or liabilities under this Agreement. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Notwithstanding anything herein to the contrary, (a) Service Provider may assign this Agreement to any entity that is the successor Tenant under the Prime Lease, provided that such assignee agrees to assume all of the rights and obligations of Service Provider hereunder, and, in the event of such an assignment by Service Provider, Service Provider shall be released from all obligations hereunder from and after the effective date of such assignment, and (b) Company may assign this Agreement to any entity that is the successor FCC licensee of the Station, and, in the event of such an assignment by Company, Company shall be released from all obligations hereunder from and after the effective date of such assignment.

 

8.5                               Rights of Third parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement.

 

8.6                               Expenses. Except as otherwise provided herein, each party shall bear its own expenses incurred in connection with this Agreement and the transactions herein contemplated whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants. No party may make any offset against amounts due to any other party pursuant to this Agreement.

 

8.7                               Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York.

 

8.8                               Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

8.9                               Entire Agreement. This Agreement (together with the Schedules hereto) constitutes the entire agreement among the parties relating to the transactions contemplated hereby and supersedes any other agreements, whether written or oral, that may have been made or entered into in respect of the subject matter hereof.

 

8.10                        Amendments. This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the same manner as this Agreement and which makes reference to this Agreement.

 

8.11                        Severability. If any provision of this Agreement is held invalid or unenforceable by the Federal Communications Commission or any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted

 

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by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties to the fullest extent possible.

 

8.12                        Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.

 

(a)                                 Each of the Service Provider, on the one hand, and Company, on the other hand, agrees that any dispute, controversy or claim arising out of or relating to this Agreement or the transaction contemplated thereby shall be resolved only in the Courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the Service Provider, Company, by this Agreement irrevocably and unconditionally:

 

(i)                                     submits for itself and its property in any Action relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the Courts of the State of New York sitting in the County of New York, the court of the United States of America for the Southern District of New York and appellate courts having jurisdiction of appeals from any of the foregoing and agrees that all claims in respect of any such Action shall be heard and determined in such New York State court or, to the extent permitted by Law, in such federal court;

 

(ii)                                  consents that any such Action may and shall be brought in such courts and waives any objection that it may now or hereafter have to the venue or jurisdiction of any such Action in any such court or that such Action was brought in an inconvenient court and agrees not to plead or claim the same;

 

(iii)                               agrees that service of process in any such Action may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 8.3; and

 

(iv)                              agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the Laws of the State of New York.

 

(b)                                 EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN

 

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INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

8.13                        Compliance with Communications Act. The transactions contemplated by this Agreement are intended to comply with the Communications Act of 1934, as amended, and the rules of the Federal Communications Commission. Such transactions will not be deemed to constitute “joint sales,” “time brokerage,” or “local marketing” arrangements, and this Agreement will not give Service Provider any rights to control the policies, finances, operations, management or programming of the Company station.

 

[SIGNATURE PAGE FOLLOWS]

 

8


 

SIGNATURE PAGE TO SHARED SERVICES AGREEMENT

 

IN WITNESS WHEREOF, the parties hereto have caused this Shared Services Agreement to be duly executed as of the date first written above.

 

SERVICE PROVIDER:

MEDIACO HOLDINGS INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

COMPANY:

EMMIS OPERATING COMPANY

 

 

 

 

 

By:

 

 

Name:

 

Title:

 




Exhibit 10.6

 

Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

SHARED SERVICES AGREEMENT
(WLIB)

 

This SHARED SERVICES AGREEMENT (the “Agreement”), effective as of                  , 2019 (the “Effective Date”), is entered into by and between WBLS-WLIB LLC, an Indiana limited liability company (“Company”), and Mediaco Holdings Inc., an Indiana corporation (“Service Provider”).

 

RECITALS

 

WHEREAS, Service Provider is the prime tenant pursuant to that certain February 23, 1996 Lease (as amended, the “Prime Lease”) of certain real estate located on the 7th Floor of an office building located at 395 W. Hudson St., New York, New York (the “Space”), and Service Provider uses the Space for the business and operations of radio broadcast stations WQHT-FM, New York, NY (Facility ID No. 19615) and WBLS-FM, New York, NY (Facility ID No. 28203) (the “Service Provider Stations”);

 

WHEREAS, Company is the licensee of radio broadcast station WLIB-AM, New York, NY (Facility ID No. 28204)  (the “Station”);

 

WHEREAS, concurrently herewith Service Provider and an affiliate of Service Provider (as Licensee) and Company (as Programmer) are commencing a Local Programming and Marketing Agreement permitting Company to rebroadcast programming of the Station on WQHT-FM’s HD-2 channel (the “HD-2 LMA”); and

 

WHEREAS, Company desires to receive, and Service Provider is willing to provide, the Services (defined below), for the compensation, and otherwise on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the parties agree as follows:

 

AGREEMENT

 

ARTICLE 1
SERVICES

 

1.1                               Provision of Services. During the term of this Agreement, Service Provider will allow Company, on the terms and conditions described herein, to use Service Provider’s facilities and equipment and to use Service Provider personnel, to assist Company in performing the Company’s obligations with respect to the ownership and operation of the Station consistent with past practices (the “Services”). All of the Services shall be for the sole use and benefit of Company.

 

1.2                               Termination of Services. Company may elect to terminate any or all of the Services at any time upon thirty (30) days’ written notice to Service Provider, provided that no such termination shall relieve Company of its obligation to pay all amounts owing hereunder in

 


 

connection with the Services through the effective date of such termination, together with the amount of all third-party commitments or cancellation charges incurred by Service Provider in connection with such termination.

 

ARTICLE 2
COMPENSATION

 

2.1                               Compensation. Company will reimburse Service Provider for all out of pocket costs and expenses relating to, or incurred in connection with providing, the Services, including without limitation payments to third parties, purchase or leasing of equipment or supplies, rental value of equipment owned or leased by Service Provider, personnel, taxes, overhead, and management, but only to the extent that such costs and expenses are incremental to the costs and expenses Service Provider otherwise incurs in the operation of the Service Provider Stations, and provided further that Company shall separately engage or employ, and separately compensate, any employee of Service Provider who is providing services to the Station. Such compensation to Service Provider will be paid within [***] of invoice in immediately available funds, without offset, deduction, or counterclaim.

 

ARTICLE 3
REQUIRED CONSENTS

 

3.1                               Required Consents. Service Provider shall use commercially reasonable efforts to obtain any consents from third parties required to enable Service Provider to perform the Services (“Required Consents”), with all out-of-pocket expenses that may be associated with such efforts to be prepared by the Company. Company shall cooperate with Service Provider and provide Service Provider such assistance with regard to obtaining Required Consents as Service Provider may request. Notwithstanding anything in this Agreement to the contrary, if any third-party consent is required under an applicable agreement to permit shared use or sublicensing of an agreement pursuant hereto, then such use or sublicensing is subject to receipt of such consent. Neither party shall be obligated by this Agreement to pay any fee to any third party to obtain any Required Consent. If Service Provider is unable to obtain a Required Consent, Service Provider shall have no obligation hereunder to provide the applicable Services to which such Required Consent relates.

 

ARTICLE 4
CONFIDENTIALITY; INTELLECTUAL PROPERTY

 

4.1                               Confidentiality. Each party will hold the confidential information of the other in confidence, and will share such information only with such party’s employees, contractors, or agents on a need to know basis, and will not release or use such information to the detriment of the other party.

 

4.2                               Intellectual Property. Nothing in this Agreement shall be construed as an assignment or grant of any right, title or interest in any trademark, copyright, design, trade name, patent right or other intellectual property right.

 

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ARTICLE 5
PERSONNEL

 

5.1                               Personnel. Each party’s Personnel will remain employees, contractors, agents or representatives, as applicable, solely of such party, and will be under the direction, control and supervision of such party.

 

ARTICLE 6
LIMITATION OF LIABILITY; INDEMNITY

 

6.1                               Limitation of Liability. Neither party shall be liable to the other for monetary damages for any losses, claims, damages, or liabilities arising from any act or omission taken or omitted hereunder to the extent such act or omission was taken in good faith, was not attributable to such party’s material breach of this Agreement, and did not constitute fraud, willful misconduct, or recklessness. Notwithstanding any other provision herein, in no event shall either party have any liability to the other hereunder for any lost profits or consequential, punitive, special or indirect damages in connection with the performance or nonperformance of this Agreement (whether resulting from negligence or otherwise). Other than indemnification for third party claims under Section 6.3 and claims of fraud, willful misconduct or recklessness, the maximum liability of Service Provider to Company in connection with this Agreement, shall be the sum of the costs of the Services paid by Company to Service Provider hereunder during the twelve months preceding the date on which the claim first arose.

 

6.2                               Disclaimer of Warranties. Notwithstanding any other provision herein, Service Provider makes no representation or warranty, express or implied, with respect to the Services or Service Provider personnel provided pursuant to this Agreement, all of which are expressly disclaimed and waived by Company.

 

6.3                               Indemnity. Company will defend, indemnify, and hold harmless Service Provider, Landlord under the Prime Lease, and their respective affiliates, partners, members, officers, directors, managers, employees, agents, contractors, licensees and invitees (“Indemnified Parties”) from and against all suits, claims, demands, liability, damages, costs, and expenses relating to third party claims of every kind and nature, including reasonable attorneys’ fees and expenses, arising out of or relating to breach or default by Company of this Agreement and the acts or omissions of Company’s Personnel.

 

ARTICLE 7
TERM AND TERMINATION

 

7.1                               Term. The term of this Agreement will commence on the Effective Date and will continue until the first to occur of: (a) August 14, 2023, (b) the termination of the Prime Lease, unless sooner terminated in accordance with the terms hereof, and (c) the Company’s election to terminate (the “Term”).

 

7.2                               Termination for Breach. Each party will have the right to terminate this Agreement in whole or in part by giving to the other party written notice of termination if (i) the other party fails to make any payment due under this Agreement or perform any of the other obligations imposed upon it in any material respect under this Agreement, (ii) the non-breaching

 

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party sends the breaching party written notice of such failure, (iii) with respect to a monetary failure, Company does not cure the failure within [***] following the date of notice, but no more than two such cure periods shall be permitted, and (iv) with respect to a non-monetary failure, the breaching party does not cure the failure within [***] following the date of notice.

 

7.3                               Effect of Termination.

 

(a)                                 Upon termination or expiration of this Agreement or a Service, Service Provider and Company shall promptly return to each other any of the other party’s equipment and materials containing the other party’s confidential information that are in the first party’s possession or control and that are not required for use in connection with any non-terminated Services. No termination shall relieve a party of liability for failure to comply with this Agreement prior to termination.

 

(b)                                 If a portion of the use of Services provided by this Agreement is terminated pursuant to the terms of this Agreement, then (i) the Company shall be obligated to pay within five (5) business days after termination of this Agreement with respect to such use or Service all fees and expense reimbursements owing for the Services and otherwise hereunder through the effective date of such termination, together with the amount of all third-party commitments or cancellation charges incurred in connection with such termination, and (ii) such partial termination shall not affect the other terms and conditions of this Agreement with respect to any other Service then being provided pursuant to this Agreement, except in the case of a termination for breach pursuant to Section 7.2.

 

7.4                               Survival. The following provisions of this Agreement will survive the termination or expiration of this Agreement: Sections 4, 6, 7, and 8.2.

 

7.5                               Force Majeure. Neither party shall be liable for any default or delay in the performance of its non-monetary obligations under this Agreement if, and to the extent that, the default or delay is caused, directly or indirectly, by a Force Majeure Event. “Force Majeure Event” means an event such as a fire, flood, earthquake, war, act of terrorism, labor disputes, government or court action, failure of facilities, or act of God, with respect to which the non-performing party is without fault and the default or delay results from causes beyond such party’s reasonable control.

 

ARTICLE 8
ACCESS TO SPACE

 

8.1                               Company Personnel Access. During the Term, Company personnel may have access to such portions of the Space as Service Provider shall from time to time designate in accordance with past practices for the purpose of producing programming for the Station, transmitting the Station’s programming to Company’s transmission tower site, Company work relating to such programming and transmitting, and for such other purposes as are mutually agreed by Company and Service Provider. No consideration shall be due for such use of the Space beyond the consideration otherwise due under this Agreement. Company shall not make any alterations to the Space without the advance written consent of Service Provider, which may be granted or

 

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withheld in Service Provider’s sole discretion. Only those employees, agents, and invitees of Company who have been approved by Service Provider in writing in advance will be permitted into the Space (the “Company Personnel”). Company and Company Personnel shall comply with all rules, regulations, and procedures established by Service Provider and/or the Prime Landlord, as in effect from time to time.

 

8.2                               Subordination to and Compliance with Prime Lease. This Agreement is expressly subordinate to the Prime Lease and, in the event that provision of the Services shall conflict in any respect with the Prime Lease, the Prime Lease shall control and this Agreement shall be deemed modified to eliminate such conflict. Company will keep, observe, and perform every term, provision, covenant, and condition required pursuant to the Prime Lease, all of which are incorporated herein by reference, to the extent relating to Company’s use of any part of the Space, and will not do or permit anything to be done that could constitute a default under the Prime Lease. Service Provider will have the same rights and remedies with respect to a breach of hereof or of the Prime Lease as the Landlord thereunder would have as against Service Provider, and Service Provider will have, with respect to Company, all of the rights as the Landlord under the Prime Lease would have. Service Provider will not be responsible for any breach of the Prime Lease by the Landlord under the Prime Lease.

 

8.3                               Insurance. Company will procure and maintain the following policies of insurance during the Term, each naming Service Provider as an additional insured: (a) Statutory Workers’ Compensation including $[***] Employers’ Liability; (b) Commercial General Liability including personal injury with limits not less than $[***] per occurrence; and (c) fire and extended coverage insurance on its property in the Space. Company will provide [***] written notification of any cancellation or expiration of any such policy, and will provide certificates of such policies to Service Provider upon request.

 

ARTICLE 9
MISCELLANEOUS

 

9.1                               Relationship of the Parties. Each party will be deemed to be an independent contractor and not an agent, joint venturer or representative of the other party. Neither party will have the right to create any obligations or responsibilities on behalf of or in the name of the other party. Neither party will hold itself out as a partner, employee, franchisee, representative, servant or agent of the other party.

 

9.2                               Waiver. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

 

9.3                               Notices. All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized

 

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overnight delivery service or (iv) when delivered by telecopy (with respect to this clause (iv), solely if receipt is confirmed), addressed as follows:

 

If to Company:

 

c/o Emmis Radio, LLC
One Emmis Plaza
40 Monument Circle
Suite 700
Indianapolis, Indiana 46204
Attn: Legal Department
Tel: (317) 684-6565
Facsimile: (317) 684-5583

 

With a copy (which shall not constitute notice) to:

 

Edinger Associates PLLC
1725 I Street, NW, Suite 300
Washington, DC 20006
Attn: Brook Edinger
Tel: (202) 747-1693
Facsimile: (202) 747-1691

 

If to Service Provider:

 

Mediaco Holdings Inc.
C/O SG Broadcasting LLC
767 Fifth Ave, 12th Floor
New York, NY 10153
Attention: Gail Steiner, General Counsel
Tel:
Facsimile:

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Justin W. Chairman
Tel: (215) 963-5061
Facsimile: (215) 963-5001

 

or to such other address or addresses as the parties may from time to time designate in writing.

 

9.4                               Assignment. No party shall assign this Agreement or any part thereof without the prior written consent of the other party, which shall not be unreasonably withheld. No assignment shall relieve a party of any obligations or liabilities under this Agreement. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto

 

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and their respective permitted successors and assigns. Notwithstanding anything herein to the contrary, (a) Service Provider may assign this Agreement to any entity that is the successor Tenant under the Prime Lease, provided that such assignee agrees to assume all of the rights and obligations of Service Provider hereunder, and, in the event of such an assignment by Service Provider, Service Provider shall be released from all obligations hereunder from and after the effective date of such assignment, and (b) Company may assign this Agreement to any entity that is the successor FCC licensee of the Station, and, in the event of such an assignment by Company, Company shall be released from all obligations hereunder from and after the effective date of such assignment.

 

9.5                               Rights of Third parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement.

 

9.6                               Expenses. Except as otherwise provided herein, each party shall bear its own expenses incurred in connection with this Agreement and the transactions herein contemplated whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants. No party may make any offset against amounts due to any other party pursuant to this Agreement.

 

9.7                               Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York.

 

9.8                               Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

9.9                               Entire Agreement. This Agreement (together with the Schedules hereto) constitutes the entire agreement among the parties relating to the transactions contemplated hereby and supersedes any other agreements, whether written or oral, that may have been made or entered into in respect of the subject matter hereof.

 

9.10                        Amendments. This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the same manner as this Agreement and which makes reference to this Agreement.

 

9.11                        Severability. If any provision of this Agreement is held invalid or unenforceable by the Federal Communications Commission or any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties to the fullest extent possible.

 

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9.12                        Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.

 

(a)                                 Each of the Service Provider, on the one hand, and Company, on the other hand, agrees that any dispute, controversy or claim arising out of or relating to this Agreement or the transaction contemplated thereby shall be resolved only in the Courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the Service Provider, Company, by this Agreement irrevocably and unconditionally:

 

(i)                                     submits for itself and its property in any Action relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the Courts of the State of New York sitting in the County of New York, the court of the United States of America for the Southern District of New York and appellate courts having jurisdiction of appeals from any of the foregoing and agrees that all claims in respect of any such Action shall be heard and determined in such New York State court or, to the extent permitted by Law, in such federal court;

 

(ii)                                  consents that any such Action may and shall be brought in such courts and waives any objection that it may now or hereafter have to the venue or jurisdiction of any such Action in any such court or that such Action was brought in an inconvenient court and agrees not to plead or claim the same;

 

(iii)                               agrees that service of process in any such Action may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 9.3; and

 

(iv)                              agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the Laws of the State of New York.

 

(b)                                 EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

9.13                        Compliance with Communications Act. The transactions contemplated by this Agreement are intended to comply with the Communications Act of 1934, as amended, and

 

8


 

the rules of the Federal Communications Commission. Such transactions will not be deemed to constitute “joint sales,” “time brokerage,” or “local marketing” arrangements, and this Agreement will not give Service Provider any rights to control the policies, finances, operations, management or programming of the Company station.

 

[SIGNATURE PAGE FOLLOWS]

 

9


 

SIGNATURE PAGE TO SHARED SERVICES AGREEMENT

 

IN WITNESS WHEREOF, the parties hereto have caused this Shared Services Agreement to be duly executed as of the date first written above.

 

SERVICE PROVIDER:

MEDIACO HOLDINGS INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

COMPANY:

WBLS-WLIB LLC

 

 

 

 

 

By:

 

 

Name:

 

Title:

 




Exhibit 10.7

 

Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

ANTENNA SITE AGREEMENT
(WBLS Aux)

 

1.                                      Premises and Use. WLIB Tower LLC, an Indiana limited liability company (“Owner”), hereby licenses to Mediaco Holdings Inc., an Indiana corporation (“Licensee”), the site described below: antenna space on the tower (the “Tower”); ground space for placement of Pad or Shelter (“Shelter”) for Licensee’s transmission equipment or space in the existing equipment building; space for Licensee’s genset and related fuel tank, equipment, and cabling; and space required for Licensee’s cable ladders, cable runs, and cable bridges to connect telecommunications equipment and antennas, in the location at which such equipment is currently installed as further shown on Exhibit A, together with a non-exclusive easement for reasonable access thereto and to the source of electric and telephone facilities, in all cases consistent with past practices (collectively, the “Site”). The Site will be used by Licensee for the purpose of installing, removing, replacing, modifying, maintaining and operating, at its expense, a telecommunications service system facility consisting of the antenna(s) and related equipment set forth on Exhibit B (the “Equipment”). Licensee will use commercially reasonable efforts to use the Site in a manner which will not unreasonably disturb the occupancy of Owner; provided however, that Licensee’s equipment was installed at the Site prior to any other existing Licensee’s or licensee’s equipment and shall be considered “first in time” and Licensee’s right to use the Site in accordance with past practice in all material respects shall be superior to the right to use the Site of every other current and future user of the Site. Owner, at Owner’s sole cost and expense, shall maintain and repair (and if necessary, replace) the Tower, the equipment building, and all improvements thereon in good order and repair sufficient for the operation of the Tower and the use of the Site by Licensee consistent with past practice, and in compliance with all laws, codes, regulations, and orders, including without limitation all FAA and FCC rules and regulations. Owner shall maintain all required records and shall file any required notification concerning any failure of, repairs to, and correction of the Tower in compliance with the rules and regulations of the FAA, the FCC, and all other applicable governmental authorities. Owner shall maintain access to and the appearance of the Site, including the access road, weeding and mowing, and similar.

 

2.                                      Term. The “Term” of this Agreement shall be ten (10) years beginning on the date hereof (“Commencement Date”) and terminating on the twentieth anniversary of the Commencement Date (the “Initial Term”). This Agreement will automatically renew for two (2) additional terms (each a “Renewal Term” and together with the Initial Term the “Term”) of ten (10) years each, unless Licensee provides notice to Owner of its intention not to renew not less than ninety (90) days prior to the expiration of the Initial Term or any Renewal Term.

 

3.                                      License Fee. The license fee shall be Ten Dollars ($10) per annum, payable in advance in a lump sum, the receipt of which is hereby acknowledged by Owner.

 

4.                                      Title and Quiet Possession. Owner represents and agrees (a) that it is in possession of the Site as fee owner; (b) that it has the right to enter into this Agreement; (c) that the person signing this Agreement has the authority to sign; and (e) that Licensee is entitled to the quiet possession of the Site subject to zoning and other requirements imposed by governmental authorities, any easements, restrictions, or encumbrances of record throughout the Term. This Agreement shall be subordinate to any mortgage or deed of trust now of record against the Site; but, solely with respect to any mortgage or deed of trust granted by Owner, only if the holder of

 


 

any mortgage or deed of trust agrees not to disturb Licensee’s peaceable enjoyment of the Site upon any foreclosure or other proceeding by such party pursuant to a customary subordination, nondisturbance and attornment agreement in form and substance reasonably acceptable to Licensee.

 

5.                                      Assignment/Subletting. Licensee may not assign or transfer this Agreement without the prior written consent of Owner, which consent will not be unreasonably withheld, delayed or conditioned. However, Licensee may assign without the Owner’s prior written consent to any party acquiring the broadcast facilities and FCC license operated by Licensee at the Site. In the event that Owner transfers the Site or any interest in the Site, it shall require the transferee of the Site to assume and agree to perform this Agreement.

 

6.                                      Access and Security. Licensee will have unrestricted access twenty-four (24) hours a day seven (7) days a week to the Site, the Shelter, and the Tower.

 

7.                                      Notices. All notices must be in writing and are effective when deposited in the U.S. mail, certified and postage prepaid, or when sent via overnight delivery, to the address set forth below, or as otherwise provided by law.

 

Owner:                                                                                                         WLIB Tower LLC
c/o EMMIS Communications Corporation
One EMMIS Plaza
40 Monument Circle, Suite 700
Indianapolis, IN 46204
Attention: J. Scott Enright, General Counsel
Facsimile: (317) 684-5583

 

with a copy (which shall not constitute notice) to:

 

Edinger Associates PLLC
1725 I Street, NW, Suite 300
Washington, DC 20006
Attention: Brook Edinger
Facsimile: (202) 747-1691

 

Licensee:                                                                                             Mediaco Holdings Inc.
C/O SG Broadcasting LLC
767 Fifth Ave, 12th Floor
New York, NY 10153
Attention: Gail Steiner, General Counsel
Facsimile:

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103

Attention: Justin W. Chairman
Facsimile: (215) 963-5001

 

2


 

8.                                      Installation and Improvements. Owner and Licensee acknowledge that the Equipment was previously installed at the Site and on the Tower prior to the date hereof. Prior to installing any additional Equipment at the Site or making any changes, modifications or alterations to such Equipment, Licensee, at its expense, will obtain all required approvals and will submit to Owner plans, specifications and proposed dates of the planned installation or other activity. All installation of or other work on the Equipment on the Tower will be at Licensee’s sole expense and performed by contractors selected by Licensee. Upon termination or expiration of this Agreement, Licensee shall remove its Equipment and improvements and will restore the Site to the condition existing on the Commencement Date, except for ordinary wear and tear; provided, however, that Owner may require Licensee to leave in place any Equipment to the extent the removal of such Equipment would interfere with the broadcast operations of WLIB-AM.

 

9.                                      Compliance with Laws. Owner accepts responsibility for, and will ensure, the Tower’s and Site’s compliance with all laws, rules and regulations applicable to the Tower or the Site, including tower or building marking, fencing, painting, and lighting regulations promulgated by the Federal Aviation Administration “FAA” or the Federal Communications Commission “FCC,” as applicable. Owner represents and warrants that the Site complies with all applicable tower or building marking or lighting regulations promulgated by the FAA or the FCC, which Owner shall maintain in compliance with applicable law and regulations in all material respects.

 

10.                               Insurance. Licensee will procure and maintain a public liability policy, with limits of not less than $[***] for bodily injury, $[***] for property damage, $[***] aggregate, with a certificate of insurance to be furnished to Owner within [***] of request and prior to performing any work. Should policies be cancelled before the expiration date listed on certificates provided, Licensee agrees to provide [***] written notification of said cancellation. Owner shall carry public liability insurance covering the Tower and the Site. Owner shall maintain the following insurance coverage: (i) Statutory Workers’ Compensation including $[***] Employers’ Liability; (ii) Commercial General Liability including personal injury with limits not less than $[***] per occurrence; (iii) Automobile Liability with limits not less than $[***] per occurrence; and (iv) Fire and extended coverage insurance on the Tower and the Site. All policies required to be provided pursuant to this paragraph shall contain a waiver of subrogation in favor of Licensee. Owner shall provide certificates evidencing said coverage to Licensee upon request. Owner shall provide a declaration of said policies to Licensee upon request.

 

11.                               Interference; Licensee is First in Time.

 

(a)                                 As Licensee’s Equipment was installed on the Tower and at the Site prior to the installation of any other existing Licensee’s equipment, Licensee’s equipment shall be considered “first in time” and Licensee’s right to use the Site in accordance with past practice in all material respects shall be superior to the right to use the Site of every other current and future user of the Site, subject, however, to the existence of provisions in tower space agreements of other licensees on the tower as of the date of this Agreement permitting Owner to enforce Licensee’s rights under this sentence. Owner shall cause all future users on the Tower (and all existing licensees on the Tower unless required otherwise by an existing licensee or lease) not to cause, by their transmitters or other activities, including the addition of any equipment at a future date, interference to Licensee or other licensees at the Site or on the Tower.

 

3


 

(b)                                 Owner agrees that neither Owner nor other existing users of the Site other than Licensee as of the date hereof (unless directly permitted by such other users’ current lease or license) shall permit their equipment to interfere with Licensee’s transmissions or reception in accordance with Licensee’s FCC licenses. In the event that Licensee experiences RF interference caused by any other Licensee at the Tower, Licensee shall notify Owner in writing of such interference (the “Interference Notice”) and Owner shall, as soon as the applicable lease or license for such licensee permits, cause the party causing such interference to reduce power and/or cease operations in order to correct and eliminate such interference. In the event Owner is notified of any interference experienced by Licensee, Owner shall cause the entity responsible for the interference to perform (or cause to be performed) whatever actions are commercially reasonable and necessary at no cost or expense to Licensee to eliminate such interference within 24 hours following receipt of notice of such interference. Owner agrees that any future licenses, leases or other agreements with third parties for a transmission at the Tower, or at any other portion of the Site from which transmissions may cause interference to Licensee’s use of the Tower, will contain provisions that similarly require such users to correct or eliminate interference with Licensee’s operation of its Equipment within 24 hours following receipt of a notice of such interference.

 

(c)                                  Without limiting Owner’s obligations hereunder, Owner will require non-interference language in all future lease, license, or similar agreements related to the Site sufficient to permit Owner to perform its obligations hereunder, and will fully enforce such language.

 

12.                               Utilities. Landlord will supply, without charge, all utilities used by Licensee at the Site. To the extent not already included in Licensee’s Equipment, Licensee may bring a temporary generator or other alternate source of power to the Site during any prolonged utility outage.

 

13.                               Termination by Licensee. Licensee may terminate this Agreement at any time by notice to Owner without further liability. Any such termination by Licensee shall not relieve Owner of liability for any breach or default hereunder.

 

14.                               Default. If either party is in default under this Agreement for a period of [***] following receipt of notice from the non-defaulting party, then the non-defaulting party may pursue any remedies available to it against the defaulting party under this Agreement and applicable law, including, but not limited to, the right to terminate this Agreement.

 

15.                               Taxes. Licensee shall pay all taxes, including, without limitation, sales, use and excise taxes, and all fees, assessments and any other cost or expense now or hereafter imposed by any government authority in connection with Licensee’s Equipment or Licensee’s use of the Site. Owner shall pay all real estate taxes levied on the Site and all taxes on the Tower and on any equipment located at the Site (other than Licensee’s).

 

16.                               Indemnity. Owner and Licensee each indemnifies the other against and holds the other harmless from any and all costs (including reasonable attorneys’ fees and costs) and claims of liability or loss which arise out of a breach or default by it of any provision of this Agreement which remains uncured after the expiration of the applicable cure periods under this Agreement and the use and/or occupancy of the Site by the indemnifying party. This indemnity does not apply to any claims arising from the gross negligence or intentional misconduct of the indemnified party.

 

4


 

17.                               Hazardous Substances. Licensee or Owner will not introduce or use, or permit any other party to introduce or use, any hazardous substance on the Site in violation of any applicable law, or permit any discharge or release of such substance on the Site, it being understood that Licensee may have fuel, oil, cleaning and maintenance supplies, and other similar items stored at the Site in compliance with applicable law in connection with any gensets or other ordinary course operations of Licensee at the Site.

 

18.                               RF Exposure; Scheduled Maintenance. Licensee agrees to reduce power or suspend operation of its Equipment if necessary and upon reasonable notice from Owner to prevent exposure of workers or the public to RF radiation in excess of the then-existing regulatory standards, provided that such reductions in power or suspension of operations shall not exceed two (2) hours in any one calendar month period, unless a reasonable amount of additional time is required under the circumstances, and shall be scheduled, if at all possible, between the hours of midnight and 5am local time. Owner agrees for itself and to direct other Licensees at the Tower to reduce power or suspend operation of their equipment if necessary and upon reasonable notice from Licensee to prevent exposure of workers or the public to RF radiation in excess of the then-existing regulatory standards, provided that such reductions in power or suspension of operations shall not exceed two (2) hours in any one calendar month period, unless a reasonable amount of additional time is required under the circumstances, and shall be scheduled, if at all possible, between the hours of midnight and 5am local time. Without limiting the foregoing for RF radiation and with respect to scheduled maintenance, Owner agrees to provide Licensee with at least ten (10) business days’ notice for maintenance on the Tower or surrounding property that will require Licensee to reduce power or suspend operations of its Equipment (except with respect to the requirements set forth above in this Section, a force majeure or other emergency). Owner agrees that it shall use all commercially reasonable efforts to schedule such maintenance either on weekends (for no more than 8 consecutive hours) or on weekday evening/overnight between 8:00 p.m. local time and 5:00 a.m. local time.

 

19.                               Miscellaneous. (a) This Agreement applies to and binds the heirs, successors, executors, administrators and assigns of the parties to this Agreement; (b) this Agreement is governed by the laws of the State in which the Site is located; (c) if requested by Licensee, Owner agrees to promptly execute and deliver to Licensee a recordable Memorandum of this Agreement in the form of Exhibit C; (d) this Agreement (including the Exhibits) constitutes the entire Agreement between the parties and supersedes all prior written and verbal agreements, representations, promises or understandings between the parties relating to the subject matter hereof. Any amendments to this Agreement must be in writing and executed by both parties; (e) if any provision of this Agreement is invalid or unenforceable with respect to any party, the remainder of this Agreement or the application of such provision to persons other than those as to whom it is held invalid or unenforceable, will not be affected and each provision of this Agreement will be valid and enforceable to the fullest extent permitted by law; (f) the prevailing party in any action or proceeding in court or mutually agreed upon arbitration proceeding to enforce the terms of this Agreement is entitled to receive its reasonable attorneys’ fees and other reasonable enforcement costs and expenses from the non-prevailing party; and (g) failure or delay on the part of Licensee or Owner to exercise any right, power, or privilege hereunder will not operate as a

 

5


 

waiver thereof; waiver of a breach of any provision hereof under any circumstances will not constitute a waiver of any subsequent breach of the provision, or of a breach of any other provision of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

6


 

SIGNATURE PAGE TO TOWER SPACE AGREEMENT

 

OWNER:

WLIB TOWER LLC

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

LICENSEE:

MEDIACO HOLDINGS INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 





Exhibit 99.1

LOGO

Dear Emmis Communications Corporation Shareholder:

        We are pleased to inform you that on                        , 2019, the board of directors of Emmis Communications Corporation ("Emmis") declared the distribution on a pro rata basis of 100% of the shares of Class A common stock, par value $0.01 per share, of Mediaco Holding Inc. (the "Mediaco Class A Shares"), to the holders (the "Emmis Shareholders") of the outstanding shares of Class A and Class B common stock, par value $0.01 per share, of Emmis (the "Emmis Common Stock"). At the time of the distribution, Mediaco will hold, directly or indirectly, two radio stations in New York City, WBLS-FM and WQHT-FM, as well as certain other related assets.

        Upon the distribution, the Emmis Shareholders will own 100% of the Mediaco Class A Shares, which will represent, in the aggregate, an approximately 23.72% equity ownership interest and a 3.02% voting interest in Mediaco. SG Broadcasting LLC, a Delaware limited liability company ("SG Broadcasting"), will own the remaining approximately 76.28% equity ownership interest and a 96.98% voting interest in Mediaco, which will consist of Class B common stock, par value $0.01 per share, of Mediaco (the "Mediaco Class B Shares"). The powers, privileges and rights, and the qualifications, limitations or restrictions in respect of the Mediaco Class A Shares and Mediaco Class B Shares will be substantially the same, except that the Mediaco Class A Shares shall be entitled to one (1) vote per share and the Mediaco Class B Shares shall be entitled to ten (10) votes per share.

        The board of directors of Emmis has determined, upon careful review and consideration, that creating Mediaco is in the best interests of Emmis.

        The distribution of the Mediaco Class A Shares will occur on                        , 2019 by way of a taxable pro rata special distribution to the Emmis Shareholders of record on the record date of the distribution. Each Emmis Shareholder will be entitled to receive            Mediaco Class A Share for every                shares of Emmis Common Stock held by such Emmis Shareholder at the close of business on                        , 2019, the record date of the distribution. The Mediaco Class A Shares will be issued in book-entry form only, which means that no physical share certificates will be issued.

        Shareholder approval of the distribution is not required, and you are not required to take any action to receive the Mediaco Class A Shares.

        Following the distribution, you will own shares in both Emmis and Mediaco. The number of shares of Emmis Common Stock you own will not change as a result of this distribution. The Emmis Class A common stock will continue to trade on the Nasdaq Global Select Market under the symbol "EMMS." Mediaco intends to list the Mediaco Class A Shares on the Nasdaq Capital Market under the symbol "                        ."

        The information statement, which is being mailed to all Emmis Shareholders on the record date for the distribution, describes the distribution in detail and contains important information about Mediaco, its business, financial condition and operations. We urge you to read the information statement carefully.

        We want to thank you for your continued support of Emmis and we look forward to your future support of Mediaco.

Sincerely,

EMMIS COMMUNICATIONS CORPORATION

GRAPHIC

Jeffrey H. Smulyan
Chairman of the Board and CEO


The information contained herein is not complete and may be changed. A Registration Statement on Form 10 relating to these securities has been filed with the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934, as amended. This preliminary information statement is not an offer to sell or a solicitation of an offer to buy any securities.

PRELIMINARY AND SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 2019

INFORMATION STATEMENT

Emmis Communications Corporation

Distribution of        Class A Common Stock
of Mediaco Holding Inc.

          This information statement is being furnished in connection with the distribution (the "Distribution") by Emmis Communications Corporation ("Emmis") to the holders (the "Emmis Shareholders") of all of its outstanding shares of Class A and Class B common stock, par value $0.01 per share, of Emmis (the "Emmis Common Stock") of all        then-outstanding shares of the Class A common stock, par value $0.01 per share (the "Mediaco Class A Shares") of Mediaco Holding Inc. ("Mediaco" or the "Company"). Emmis formed Mediaco for the purposes of holding two of Emmis' radio stations, WBLS-FM and WQHT-FM, and associated assets and liabilities (the "Initial Contribution" or "Spin-off") and combining these assets with an initial contribution by SG Broadcasting LLC, a Delaware limited liability company ("SG Broadcasting"), or certain funds for which its parent entity, Standard General L.P. ("Standard General") serves as investment advisor, of $91,500,000, in addition to certain transaction expenses, which contribution will be reduced by the net proceeds of any financing arrangements entered into by Mediaco prior to the closing of the Transactions (the "SG Broadcasting Investment") pursuant to the Contribution and Distribution Agreement, dated as of June 28, 2019 (the "Transaction Agreement"), by and among Emmis, Mediaco and SG Broadcasting. Based on the anticipated net proceeds of such financing arrangements, the Company anticipates that SG Broadcasting will contribute $46,500,000 of the SG Broadcasting Investment. As consideration for the Initial Contribution, Mediaco will pay to Emmis the sum of $91,500,000, issue a promissory note payable by Mediaco to Emmis in the amount of $5,000,000 (the "Emmis Promissory Note") and issue to Emmis         Mediaco Class A Shares, which shares Emmis will distribute pro rata to the Emmis Shareholders. As consideration for the SG Broadcasting Investment, Mediaco will issue to SG Broadcasting         shares of Mediaco Class B common stock, par value $0.01 per share (the "Mediaco Class B Shares"). Such issuance, collectively with the Spin-off, the SG Broadcasting Investment and the Distribution, is referred to herein as the "Transactions"). After giving effect to the Transactions, it is anticipated there will be        Mediaco Class A Shares and         Mediaco Class B Shares outstanding.

          Mediaco expects that, after giving effect to the Transactions, it will be one of the premier radio broadcasting media companies in New York City, with each station ranking in the top five of its primary demographic target.

          To implement the Distribution, Emmis will distribute all of the Mediaco Class A Shares that it holds following the Initial Contribution, representing approximately 23.72% of the outstanding common stock of Mediaco and 3.02% of the outstanding voting interests of Mediaco immediately following the Transactions, by way of a pro rata distribution to the Emmis Shareholders. An amount equal to the fair market value of the Mediaco Class A Shares received by an Emmis Shareholder on the distribution date will be treated as a taxable dividend to the extent of such Emmis Shareholder's ratable share of Emmis' current and accumulated earnings and profits allocable to the Distribution, with the excess, if any, treated first as a non-taxable return of capital to the extent of such Emmis Shareholder's tax basis in its shares of Emmis Common Stock and thereafter as capital gain.

          Each Emmis Shareholder will receive            Mediaco Class A Shares for every        shares of Emmis Common Stock held by such Emmis Shareholder at the close of business on                        , 2019 (the "record date"). Emmis Shareholders will not receive cash in lieu of fractional shares. Any fractional Mediaco Class A Shares that any Emmis Shareholder would otherwise be entitled to receive will be rounded to the nearest whole number. The Company expects the Mediaco Class A Shares to be distributed to Emmis Shareholders on        (the "distribution date").

          Following the Distribution, you will own both shares of Emmis Common Stock and Mediaco Class A Shares. No vote or action of Emmis Shareholders is required to approve the Transactions. Neither Emmis nor the Company is asking you for a proxy and you are requested not to send Emmis or the Company a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of Emmis Common Stock or take any other action to receive your Mediaco Class A Shares.

          There is no current trading market for Mediaco Class A Shares. The Company expects, however, that a limited trading market for Mediaco Class A Shares, commonly known as a "when-issued" trading market, will develop beginning on or shortly before the record date, and the Company expects that "regular-way" trading of Mediaco Class A Shares will begin on the first trading day following the distribution date. The Company plans to apply to list on the Nasdaq Capital Market ("Nasdaq") the Mediaco Class A Shares under the ticker symbol "        ." The Emmis Class A common stock is expected to continue to trade on the Nasdaq Global Select Market under the symbol "EMMS."

          The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933 (the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Therefore, the Company is allowed to provide in this information statement more limited disclosures than a registrant that would not so qualify. In addition, for so long as the Company remains an emerging growth company, the Company may also take advantage of certain limited exceptions from investor protection laws such as the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") for limited periods. See "Information Statement Summary—Emerging Growth Company Status." In addition, we will be a "controlled company" within the meaning of the corporate governance rules of the Nasdaq Stock Market due to SG Broadcasting's anticipated ownership interests following the completion of the Transactions.

          In reviewing this information statement, you should carefully consider the matters described under the caption "Risk Factors" beginning on page 16.

          Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

          This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is                        , 2019.

This information statement will be mailed to Emmis Shareholders as of                        , 2019.



TABLE OF CONTENTS

ABOUT THIS DOCUMENT

    1  

MARKET DATA

    1  

INFORMATION STATEMENT SUMMARY

    2  

QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS

    9  

SUMMARY HISTORICAL CARVE OUT FINANCIAL DATA FOR MEDIACO

    15  

RISK FACTORS

    16  

CAUTIONARY NOTICE CONCERNING FORWARD-LOOKING STATEMENTS

    29  

DIVIDEND POLICY

    31  

CAPITALIZATION

    32  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR MEDIACO

    33  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

    44  

DESCRIPTION OF BUSINESS

    53  

MANAGEMENT

    65  

EXECUTIVE AND DIRECTOR COMPENSATION

    71  

RELATED PARTY TRANSACTIONS

    72  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    76  

DESCRIPTION OF THE TRANSACTIONS

    78  

DESCRIPTION OF MEDIACO SECURITIES—INDEMNIFICATION OF OFFICERS AND DIRECTORS

    83  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

    88  

RESALE OF SHARES OF MEDIACO ISSUED IN THE TRANSACTIONS

    92  

WHERE YOU CAN FIND MORE INFORMATION

    93  

INDEX TO FINANCIAL STATEMENTS

    F-1  


ABOUT THIS DOCUMENT

        SG Broadcasting has supplied all information contained in this information statement related to SG Broadcasting. Emmis has supplied all information contained in this information statement related to Emmis and Mediaco, including the historical combined pro forma financial information in respect of Mediaco, which constitutes the WBLS-FM and WQHT-FM radio stations and associated assets and liabilities. SG Broadcasting and Emmis have both contributed information to this information statement relating to the Transactions. Unless the context requires otherwise, all references in this information statement to "Mediaco," "the Company," "we," "us," "our," and similar terms refer to Mediaco Holding Inc. and its consolidated subsidiaries.


MARKET DATA

        The Company uses market data throughout this information statement. The Company has obtained certain market data from subscription services, publicly available information and industry publications, including the following:

        These sources generally state that the information they provide has been obtained from sources believed to be reliable, but the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on industry surveys and the preparers' experience in the industry, and there is no assurance that any of the projections or forecasts will be achieved. The Company believes that the surveys and market research others have performed are reliable, but the Company has not independently verified this information.

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INFORMATION STATEMENT SUMMARY

        The following is a summary of material information discussed in this information statement and, unless otherwise indicated, the discussion regarding the Company and its market opportunities assumes the completion of the Transactions. This summary may not contain all of the details concerning the Transactions or other information that may be important to you. To better understand the separation, the Distribution, and the Company's business and financial position following the Transactions, you should carefully review this entire information statement. Some of the statements in this summary constitute forward-looking statements. See "Cautionary Notice Concerning Forward-Looking Statements," beginning on page         .

The Company

        Mediaco is a radio broadcasting media company, formed in June 2019, for the purpose of acquiring from Emmis and operating the New York City radio stations WBLS-FM and WQHT-FM and the associated assets. We are committed to improving the operating results of our core assets while simultaneously seeking future growth opportunities in new businesses. Our strategy is focused on the following operating principles:

Radio Stations

        In the following table, "Market Rank by Revenue" is the ranking of the market revenue size of the principal radio market served by our stations among all radio markets in the United States. Market revenue rankings are from BIA Advisory Services, LLC's Media Access Pro database as of July 18, 2019. "Ranking in Primary Demographic Target" is the ranking of the station within its designated primary demographic target among all radio stations in its market based on the June 2019 Nielsen Audio, Inc. ("Nielsen") Portable People Meter results. "Station Audience Share" represents a percentage generally computed by dividing the average number of persons in the primary demographic listening to a particular station during specified time periods by the average number of such persons in the primary demographic for all stations in the market area as determined by Nielsen.

STATION AND MARKET
  MARKET
RANK BY
REVENUE
  FORMAT   PRIMARY
DEMOGRAPHIC
TARGET AGES
  RANKING IN
PRIMARY
DEMOGRAPHIC
TARGET
  STATION
AUDIENCE
SHARE

New York, NY

  2                

WQHT-FM

      Hip-Hop   18 - 34   2   6.1

WBLS-FM

      Urban Adult Contemporary   25 - 54   4 (t) 5.2

(t)
Indicates the station tied with another station for the stated ranking.

Community Involvement

        We believe that to be successful, we must be integrally involved in the communities we serve. We see ourselves as community partners. To that end, both of our radio stations participate in many

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community programs, fundraisers and activities that benefit a wide variety of causes. Charitable organizations that have been the beneficiaries of our support include, among others, the Harlem Chamber of Commerce, the Sarcoidosis Foundation, New York Cares, American AIDS Foundation and the Queens Police Service Area Community Counsel.

        The National Association of Broadcasters Education Foundation recognized WQHT-FM in New York for its outreach after Hurricane Sandy, both for the news coverage it provided and the relief efforts it organized in the weeks after the storm. In 2017, WBLS-FM won a national Crystal Award from the National Association of Broadcasters.

Industry Involvement

        We have an active leadership role in a wide range of industry organizations. Our senior managers have served in various capacities with industry associations, including as directors of the National Association of Broadcasters, the Radio Advertising Bureau, the Nielsen Audio Advisory Council and the Media Financial Management Association. Our chief executive officer has been honored with the National Association of Broadcasters' "National Radio Award," was named Radio Ink's "Radio Executive of the Year" and was named the 2017 recipient of the Broadcasters Foundation of America's "Lowry Mays Excellence in Broadcasting Award." In 2018, our chief financial officer was awarded Media Financial Management's "Rainmaker Award" recognizing his efforts and contributions in helping Media Financial Management's growth initiatives. Our other management and on-air personalities have won numerous industry awards.

Competition

        Radio broadcasting stations compete with the other broadcasting stations in their respective market areas, as well as with other advertising media such as newspapers, cable, magazines, outdoor advertising, transit advertising, the Internet, satellite radio, direct marketing and mobile and wireless device marketing. Competition within the broadcasting industry occurs primarily in individual market areas, so that a station in one market (e.g., New York) generally does not compete with stations in other markets (e.g., Austin). Our stations face competition from other stations with substantial financial resources, including stations targeting the same demographic groups. In addition to management experience, factors that are material to competitive position include the station's rank in its market in terms of the number of listeners, authorized power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area. We attempt to improve our competitive position with programming and promotional campaigns aimed at the demographic groups targeted by our stations. We also seek to improve our position through sales efforts designed to attract advertisers that have done little or no radio advertising by emphasizing the effectiveness of radio advertising in increasing the advertisers' revenues. The policies and rules of the Federal Communications Commission (the "FCC") permit certain joint ownership and joint operation of local stations. Our radio stations take advantage of these joint arrangements where appropriate in an effort to lower operating costs and to offer advertisers more attractive rates and services. Although we believe that each of our stations can compete effectively in the New York City market, there can be no assurance that either of our stations will be able to maintain or increase its current audience ratings or advertising revenue market share.

        Although the broadcasting industry is highly competitive, barriers to entry exist. The operation of a broadcasting station in the United States requires a license from the FCC. Also, the number of stations that can operate in a given market is limited by the availability of the frequencies that the FCC will license in that market, as well as by the FCC's multiple ownership rules regulating the number and types of stations that may be owned or controlled by a single entity.

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Advertising Sales

        Our stations derive their advertising revenue from local and regional advertising, as well as from the sale of national advertising. Local and most regional sales are made by a station's sales staff. National sales are made by firms specializing in such sales, which are compensated on a commission-only basis. We believe that the volume of national advertising revenue tends to adjust to shifts in a station's audience share position more rapidly than does the volume of local and regional advertising revenue. During the year ended February 28, 2019, approximately 15% of our stations' total advertising revenues were derived from national sales, and 85% were derived from local sales.

        For further discussion of the business and operations of the Company, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations for Mediaco," beginning on page         and "Description of Business," beginning on page         .

The Transactions

        Emmis formed Mediaco to hold two of Emmis' radio stations, WBLS-FM and WQHT-FM, and associated assets and liabilities, and to combine these assets with an initial contribution by SG Broadcasting of $91,500,000, in addition to certain transaction expenses, which contribution will be reduced by the net proceeds of any financing arrangements entered into by Mediaco prior to the closing of the Transactions, pursuant to the Transaction Agreement. The Company estimates that the net proceeds from such financing arrangements will aggregate $50,000,000. As consideration for the Initial Contribution, Mediaco will pay to Emmis the sum of $91,500,000, issue a promissory note payable by Mediaco to Emmis in the amount of $5,000,000 and issue to Emmis        Mediaco Class A Shares, which shares Emmis will distribute pro rata to the Emmis Shareholders. As consideration for the SG Broadcasting Investment, of which the Company anticipates SG Broadcasing will fund $46,500,000 (after giving effect to the estimated net proceeds from financing arrangements), Mediaco will issue to SG Broadcasting        Mediaco Class B Shares.

Ownership of the Company Following the Transactions

        Immediately following the Transactions, Emmis Shareholders are expected to own Mediaco Class A Shares that represent approximately 23.72% of the outstanding common shares on a fully diluted basis and 3.02% of the outstanding voting interests of Mediaco, and SG Broadcasting is expected to own Mediaco Class B Shares that represent approximately 76.28% of the outstanding common stock on a fully diluted basis and 96.98% of the outstanding voting interests of Mediaco.

Board of Directors and Management of the Company Following the Transactions

        We expect that the initial board of directors of Mediaco will consist of seven members following the completion of the Transactions, a majority of whom are expected to be independent for purposes of the Nasdaq listing rules. We anticipate that the initial board of directors will include Jeffrey H. Smulyan, Patrick M. Walsh, J. Scott Enright, Andrew Glaze, Laura Lee, Mary Beth McAdaragh, and Deborah McDermott.

        Upon the completion of the Transactions, Mediaco will enter into a Management Agreement with Emmis Operating Company ("EOC"), which currently owns and operates all of the radio stations and other assets of Emmis. We expect that certain key executive officers of Emmis will become executive officers of Mediaco and continue to manage the business and operations of our radio stations and other assets.

        For further information relating to members of our board of directors and our executive officers, refer to "Management," beginning on page         .

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Listing of Mediaco Class A Shares on Stock Exchange

        The Company plans to apply to list the Mediaco Class A Shares on Nasdaq under the trading symbol "        ."

Reason for Furnishing this Information Statement

        This information statement is being furnished solely to provide information to Emmis Shareholders who will receive Mediaco Class A Shares in the Distribution. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of the Company's or Emmis' securities. The information contained in this information statement is believed by the Company to be accurate as of the date set forth on its cover. Changes may occur after that date and neither Emmis nor the Company intends to update the information except in the normal course of their respective disclosure obligations and practices.

Material U.S. Federal Income Tax Consequences

        The Distribution will be made in the form of a taxable distribution to Emmis Shareholders. An amount equal to the fair market value of the Mediaco Class A Shares received by an Emmis Shareholder on the distribution date will be treated as a taxable dividend to the extent of such Emmis Shareholder's ratable share of Emmis' current and accumulated earnings and profits allocable to the Distribution, with the excess, if any, treated first as a non-taxable return of capital to the extent of such Emmis Shareholder's tax basis in its shares of Emmis Common Stock and thereafter as capital gain.

        You should consult your tax advisor as to the particular consequences of the Distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as foreign tax laws. For more information regarding certain U.S. federal income tax considerations of the Distribution, please refer to the discussion under "Material U.S. Federal Income Tax Considerations," beginning on page         .

Federal Securities Law Considerations

        All Mediaco Class A Shares received by Emmis Shareholders upon completion of the Distribution will be freely tradable without restriction under the Securities Act, except that Mediaco Class A Shares received by persons who are affiliates of the Company for purposes of Rule 144 under the Securities Act may be transferred by such affiliates only pursuant to Rule 144, or as otherwise permitted under the Securities Act.

Risks Associated with the Company

        Ownership of Mediaco Class A Shares is subject to a number of risks. The following list of risk factors is not exhaustive. Please read the information in the section captioned "Risk Factors," beginning on page         for a more thorough description of these and other risks.

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Emerging Growth Company Status

        The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, the Company is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in the Company's periodic reports and proxy statements, and exemptions from the requirements of holding non-binding advisory "say-on-pay" votes on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find the Company's securities less attractive as a result, the trading market for these

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securities may be reduced, and the prices of these securities may be traded at lower prices and experience greater volatility.

        In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Emerging growth companies may also take advantage of an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board that require mandatory audit firm rotation or a supplement to the auditors' report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer. The Company intends to take advantage of the benefits of this extended transition period for as long as it is available. The Company's financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Section 107 of the JOBS Act provides that the decision not to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

        The Company will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of the Company's common equity securities pursuant to an effective registration statement under the Securities Act or (b) in which the Company has total annual gross revenue of at least $1.07 billion, (2) the date on which the Company is deemed to be a large accelerated filer, which means the market value of the Company's common stock that is held by non-affiliates exceeds $700 million as of the last business day of the Company's most recently complete second fiscal quarter, and (3) the date on which the Company has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

        The Company's corporate headquarters is located at 767 Fifth Avenue, 12th Floor, New York, NY 10153.

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS

Why am I receiving this document?

        You are receiving this document because you are an Emmis Shareholder. If you are an Emmis Shareholder as of                        , you are entitled to receive                        Mediaco Class A Shares for every                shares of Emmis Common Stock that you held on such date. This document will help you understand how the Transactions will affect your investment in Emmis and your investment in Mediaco after the Transactions.

Why is Emmis separating its WBLS-FM and WQHT-FM radio stations and distributing Mediaco Class A Shares?

        Mediaco, a wholly owned subsidiary of Emmis, was formed for the purpose of acquiring, via contribution from Emmis, the New York City radio stations WBLS-FM and WQHT-FM and the associated assets and liabilities, and for the purpose of creating a public company, controlled by Standard General, to make future media and other acquisitions.

        The Transactions mark a strategic step for Emmis aimed at unlocking value for Emmis Shareholders by effectively selling a controlling stake in WBLS-FM and WQHT-FM and creating two separate publicly traded companies, each of which is able to focus on its respective business strategies and adapt to the markets in which they operate. Emmis expects that the separation and Distribution will streamline operations for both companies on a going-forward basis, thereby unlocking significant shareholder value.

What is Mediaco?

        Mediaco will be a new, independent publicly traded company after the distribution of Mediaco Class A Shares by Emmis and the completion of the Transactions. Immediately prior to the Distribution, Mediaco will acquire the business and operations of the New York City radio stations WBLS-FM and WQHT-FM and the associated assets and liabilities.

Who is SG Broadcasting?

        Upon completion of the Transactions, SG Broadcasting will be wholly owned by funds managed by Standard General. Standard General, a registered investment advisor, is a New York-based investment firm that manages strategic investments in companies in which they have an opportunity to create or unlock significant value. It is anticipated that immediately following the Transactions, SG Broadcasting will own Mediaco Class B Shares that represent approximately 76.28% of the outstanding common shares on a fully diluted basis and 96.98% of the outstanding voting interests of Mediaco.

What will be the voting rights of the Mediaco Class A Shares?

        The holders of Mediaco Class A Shares and the holders of Mediaco Class B Shares will vote together as a single class in all matters submitted for a vote, except in limited circumstances as further described below and in "Description of Mediaco Securities—Indemnification of Officers and Directors," beginning on page         . The holders of Mediaco Class A Shares will be entitled to vote as a single class, exclusive of all other classes of shares, to elect three members of the Mediaco board of directors, which directors EOC will have the right to nominate so long as the Management Agreement remains in effect or so long as any amount is outstanding under the Emmis Promissory Note. The holders of Mediaco Class B Shares will be entitled to vote as a single class, exclusive of all other classes of shares, to elect four members of the Mediaco board of directors. The holders of Mediaco Class A Shares and the holders of Mediaco Class B Shares will vote together as a single class on all remaining members of the Mediaco board of directors. In all matters submitted to a shareholder vote in which all classes of

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shares participate, the holders of Mediaco Class A Shares will be entitled to one vote per share and the holders of Mediaco Class B Shares will be entitled to ten votes per share.

        Immediately following the completion of the Transactions, it is expected that the number of votes to which holders of Mediaco Class A Shares and holders of Mediaco Class B Shares will be entitled will represent approximately 3.02% and 96.98%, respectively, of the outstanding voting interests of Mediaco.

How will the Distribution of Mediaco Class A Shares from Emmis work?

        If you are a registered Emmis Shareholder (meaning you hold physical Emmis stock certificates or you own your shares of Emmis Common Stock directly through an account with Emmis' transfer agent,                        ), the transfer agent will credit the number of whole Mediaco Class A Shares you receive in the Distribution to your book-entry account on or shortly after the distribution date.

        If you own your shares of Emmis Common Stock in "street name," meaning you own your shares beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the number of whole Mediaco Class A Shares you receive in the Distribution on or shortly after the distribution date. Please contact your bank, broker or other nominee for further information about your account.

        We will not issue any physical stock certificates to any shareholders receiving shares in the Distribution, unless requested through                        . For more information, see "Description of the Transactions," beginning on page         .

What is the record date for the Distribution?

        The record date for the Distribution will be                        , 2019.

What do Emmis Shareholders need to do to participate in the Distribution?

        Emmis Shareholders as of the record date will not be required to take any action to receive Mediaco Class A Shares in the Distribution, but you are urged to read this entire information statement carefully. No Emmis Shareholder approval of the separation or the Distribution is required. You are not being asked for a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of Emmis Common Stock or take any other action to receive your Mediaco Class A Shares. Please do not send in your Emmis share certificates.

How will I receive my Mediaco Class A Shares?

        You will receive Mediaco Class A Shares through the same channels that you currently use to hold or trade shares of Emmis Common Stock, whether through a brokerage account or other channel. Receipt of Mediaco Class A Shares will be documented for you in the same manner that you typically receive shareholder updates, such as monthly broker statements. If you own shares of Emmis Common Stock as of the record date, Emmis, with the assistance of                        the transfer agent, will electronically distribute your Mediaco Class A Shares to you or to your brokerage firm on your behalf in book-entry form.                        will mail you a book-entry account statement that reflects your Mediaco Class A Shares, or your bank or brokerage firm will credit your account for the shares. Following the Distribution, shareholders whose Mediaco Class A Shares are held in book-entry form may request that their Mediaco Class A Shares held in book-entry form be transferred to a brokerage or other account at any time, without charge.

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How many Mediaco Class A Shares will I receive in the Distribution?

        Emmis will distribute to you            Mediaco Class A Shares for every                shares of Emmis Common Stock you hold at the close of business on the record date, with the aggregate shares distributed to each Emmis Shareholder of record rounded to the nearest whole number of shares. Based on approximately                 shares of Emmis Common Stock outstanding as of                        , and applying the distribution ratio (without accounting for any rounding in lieu of fractional shares), a total of approximately                        Mediaco Class A Shares and approximately                        Mediaco Class A Shares will be distributed. For further information on the Distribution, see "Description of the Transactions—When and How You Will Receive the Distribution," beginning on page         .

What are Mediaco Class A Shares worth?

        The value of Mediaco Class A Shares will be determined by their trading price after the Distribution. Neither Emmis nor the Company knows what the trading price will be, and neither of them can provide any assurance as to value.

Will fractional shares be distributed in the Distribution?

        No. Emmis Shareholders will not receive cash in lieu of fractional shares. Any fractional Mediaco Class A Shares that any Emmis Shareholder would otherwise be entitled to receive will be rounded to the nearest whole number.

Are Emmis Shareholders entitled to dissenters' rights in connection with the Transactions?

        No. Emmis Shareholders are not entitled to dissenters' rights in connection with the Transactions.

Will Mediaco incur or assume indebtedness in connection with the Transactions?

        In connection with the Transactions, Mediaco intends to enter into a senior secured term loan facility, under which we expect to use net proceeds in an aggregate amount of approximately $50,000,000 to fund a portion of the consideration owed to Emmis in exchange for the Initial Contribution. The terms of such anticipated indebtedness are subject to change and will be finalized prior to the closing of the Transactions. In addition, Mediaco will issue to Emmis the Emmis Promissory Note, which we expect to be subordinate to any senior secured indebtedness. See "Capitalization," beginning on page         , "Management's Discussion and Analysis of Financial Condition and Results of Operations for Mediaco—Liquidity and Capital Resources," on page         , and "Unaudited Pro Forma Condensed Combined Financial Statements," beginning on page         , for more information.

What are the conditions to consummation of the Transactions?

        The Transactions are subject to the satisfaction of a number of conditions (unless waived by one or more parties to the Transaction Agreement), including the following:

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        The obligation of each of Emmis, SG Broadcasting and the Company to consummate the Transactions is also subject to several customary and other conditions. In addition, each of Emmis and SG Broadcasting has the right to terminate the Transaction Agreement in certain circumstances. For further information, see "Description of the Transactions—Termination," beginning on page         .

        The Company cannot assure you that any or all of the conditions described above will be met.

What is the expected date of completion of the Transactions?

        The completion and timing of the Transactions are dependent upon a number of conditions. It is expected that Emmis will distribute its Mediaco Class A Shares on                        , to the holders of record of shares of Emmis Common Stock at                        , on the record date.

What if I want to sell my shares of Emmis Common Stock or my Mediaco Class A Shares?

        You should consult with your financial advisors, such as your stockbroker, bank or tax advisor.

What is "regular-way" and "ex-distribution" trading of shares of Emmis Common Stock?

        Beginning on or shortly before the record date and continuing up to and through the Distribution date, it is expected that there will be two markets in shares of Emmis Common Stock: a "regular-way" market and an "ex-distribution" market. Shares of Emmis Common Stock that trade in the "regular-way" market will trade with an entitlement to Mediaco Class A Shares distributed pursuant to the Distribution. Shares of Emmis Common Stock that trade in the "ex-distribution" market will trade without an entitlement to Mediaco Class A Shares distributed pursuant to the Distribution.

        If you decide to sell any shares of Emmis Common Stock before the Distribution date, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your shares of Emmis Common Stock with or without your entitlement to Mediaco Class A Shares pursuant to the Distribution.

Where will I be able to trade Mediaco Class A Shares?

        The Company plans to apply to list the Mediaco Class A Shares on Nasdaq under the trading symbol "                        ." Mediaco anticipates that trading in Mediaco Class A Shares will begin on a "when-issued" basis on or shortly before the record date and will continue up to and through the distribution date and that "regular-way" trading in Mediaco Class A Shares will begin on the first trading day following the distribution date. If trading begins on a "when-issued" basis, you may purchase or sell Mediaco Class A Shares up to and through the distribution date, but your transactions will not settle until after the distribution date. Mediaco cannot predict the trading prices for Mediaco Class A Shares before, on or after the distribution date.

What will happen to the listing of Emmis Class A common stock?

        Emmis Class A common stock is expected to continue to trade on the Nasdaq Global Select Market after the Distribution under the symbol "EMMS".

Will the number of shares of Emmis Common Stock that I own change as a result of the Distribution?

        No. The number of shares of Emmis Common Stock that you own will not change as a result of the Distribution.

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What are the material U.S. federal income tax considerations of the Distribution?

        The Distribution will be made in the form of a taxable distribution to Emmis Shareholders. An amount equal to the fair market value of the Mediaco Class A Shares received by an Emmis Shareholder on the distribution date will be treated as a taxable dividend to the extent of such Emmis Shareholder's ratable share of Emmis' current and accumulated earnings and profits allocable to the Distribution, with the excess, if any, treated first as a non-taxable return of capital to the extent of such Emmis Shareholder's tax basis in its shares of Emmis Common Stock and thereafter as capital gain.

        You should consult your tax advisor as to the particular consequences of the Distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as foreign tax laws. For additional information concerning the U.S. federal income tax considerations of the Distribution, see "Material U.S. Federal Income Tax Considerations," beginning on page         .

What will Mediaco's relationship be with Emmis following the Distribution?

        Emmis does not expect to own any of the Mediaco Class A Shares or otherwise have an ownership interest in Mediaco following completion of the Transactions. Following the Distribution, Emmis and Mediaco will be separate publicly traded companies, each with its own board of directors.

        As part of the Transactions, Mediaco and Emmis' wholly owned subsidiary, EOC, intend to enter into an Employee Leasing Agreement and a Management Agreement. Pursuant to the terms of the agreements, Emmis will provide operations and management services to Mediaco's radio stations for a fee. Emmis officers will also serve as the initial Mediaco Class A Directors, as defined in "Description of Mediaco Securities—Indemnification of Officers and Directors," and, during the term of the Management Agreement or so long as amounts remain outstanding under the Emmis Promissory Note, Mediaco's board of directors is obligated to nominate as Mediaco Class A Directors only persons specified by EOC.

How will Mediaco receive its initial cash capitalization?

        In connection with the Transactions, Emmis, SG Broadcasting and Mediaco have entered into the Transaction Agreement, pursuant to which, upon the completion of the Distribution, SG Broadcasting will make an aggregate cash investment in Mediaco of $91.5 million, in addition to funding certain transaction expenses, to be reduced by the net proceeds of any financing arrangements entered into by Mediaco prior to the closing of the Transactions, in exchange for Mediaco Class B Shares. Mediaco intends to enter into a senior secured term loan facility, under which Mediaco anticipates using proceeds in an aggregate amount of approximately $50,000,000 to fund a portion of the consideration owed to Emmis in exchange for the Initial Contribution. Accordingly, the Company anticipates SG Broadcasting will contribute $46,500,000 of the SG Broadcasting Investment. Our management believes that the proceeds from these anticipated arrangements, after the payment of certain separation-related expenses, will be sufficient to fund Mediaco's operating expenses and capital expenditure requirements through                        .

Who will manage Mediaco after the Transactions?

        Effective upon the closing of the Transactions, Mediaco will enter into a Management Agreement with EOC for an initial term of two years. Pursuant to the Management Agreement, EOC will continue to provide management services relating to WBLS-FM and WQHT-FM. Mediaco will pay to EOC an annual management fee, as well as reimburse certain fees and costs incurred in managing Mediaco's operations.

        Current Emmis executives Mr. Jeffrey H. Smulyan, Chairman and Chief Executive Officer, Mr. J. Scott Enright, Executive Vice President, General Counsel and Secretary, Mr. Ryan A. Hornaday,

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Executive Vice President, Chief Financial Officer and Treasurer, and Mr. Patrick M. Walsh, President and Chief Operating Officer are expected to serve in the same capacity as officers of Mediaco, except that Mr. Smulyan will not serve as Chairman of Mediaco. For further information regarding our executive officers, see "Management," beginning on page         .

Who will own Mediaco following the Transactions?

        Immediately following the Transactions, Emmis Shareholders are expected to own Mediaco Class A Shares, representing approximately 23.72% of the outstanding common shares on a fully diluted basis and 3.02% of the outstanding voting interests of Mediaco and SG Broadcasting is expected to own Mediaco Class B Shares, representing approximately 76.28% of the outstanding common stock on a fully diluted basis and 96.98% of the outstanding voting interests of Mediaco.

Are there risks associated with owning Mediaco Class A Shares?

        Yes. Ownership of Mediaco Class A Shares is subject to both general risks and specific risks relating to Mediaco's business, the industry in which it operates, its ongoing contractual relationships with Emmis and its status as a separate, publicly traded company. Ownership of Mediaco Class A Shares is also subject to risks relating to the Transactions. Certain of these risks are described in "Risk Factors," beginning on page         . You are encouraged to read that section carefully.

Does Mediaco plan to pay dividends?

        No. Mediaco currently intends to retain future earnings for use in its business and has no plans to pay any dividends on shares of its common stock in the foreseeable future.

Who will be the distribution agent, transfer agent and registrar for the Mediaco Class A Shares?

        The distribution agent, transfer agent and registrar for the Mediaco Class A Shares will be                        . For questions relating to the mechanics of the Distribution or matters relating to the subsequent transfer of Mediaco Class A Shares, you should contact:

Where can I find more information about Emmis and Mediaco?

        Before the Distribution, if you have any questions, you should contact:

        After the Distribution, Mediaco shareholders who have any questions relating to Mediaco should contact Mediaco at:

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SUMMARY HISTORICAL CARVE OUT FINANCIAL DATA FOR MEDIACO

        The following table presents summary carve out financial information with respect to (i) the combined balance sheets of WQHT-FM and WBLS-FM as of February 28, 2019 and the related combined statements of operations for the years ended February 28, 2018 and 2019, and (ii) the combined condensed balance sheets of WQHT-FM and WBLS-FM as of May 31, 2019 and the related combined condensed statements of operations for the three months ended May 31, 2018 and 2019. The statements of operations and balance sheet data as of February 28, 2019 and for the years ended February 28, 2018 and 2019 has been derived from the audited combined carve out financial statements of WQHT-FM and WBLS-FM for such periods. The statements of operations and balance sheet data as of May 31, 2019 and for the quarters ended May 31, 2018 and 2019 information has been derived from the unaudited combined condensed financial statements of WQHT-FM and WBLS-FM for such periods, and in the opinion of Mediaco's management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the data for such periods. The financial information included here may not necessarily reflect Mediaco's financial position, results of operations and cash flows in the future or what Mediaco's financial position, results of operations and cash flows would have been had Mediaco been an independent, publicly traded company during the periods presented.

        For a better understanding, this section should be read in conjunction with the discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operations of Mediaco" and the audited combined financial statements and corresponding notes included elsewhere in this information statement.

        All amounts presented herein are expressed in thousands, except share and per-share data, unless otherwise specifically noted.

(Amounts in thousands)

 
  Year Ended   Three Months
Ended
 
 
  February 28,
2018
  February 28,
2019
  May 31,
2018
  May 31,
2019
 
 
   
   
  (unaudited)
 

Statements of Operations Data:

                         

Net revenues

  $ 44,557   $ 43,091   $ 9,315   $ 9,838  

Operating income

    10,346     7,887     2,395     2,178  

Net income

    2,000     5,369     1,622     1,481  

 

 
  February 28,
2019
  May 31,
2019
 
 
   
  (unaudited)
 

Balance Sheet Data:

             

Total current assets

  $ 9,786   $ 9,958  

Total intangible assets, net

    64,025     63,951  

Total assets

    83,128     94,881  

Current liabilities

    3,871     6,031  

Total liabilities

    5,650     18,169  

Total liabilities and equity

    83,128     94,881  

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RISK FACTORS

        We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could have a material and adverse effect on our business, financial condition, and results of operations. The following risks highlight some of the more significant factors that have affected us and could affect us in the future. We may also be affected by unknown risks or risks that we currently believe are immaterial. If any such events actually occur, our business, financial condition, and results of operations could be materially and adversely affected. You should carefully consider the following factors and other information contained in this information statement when evaluating our common stock.

Risks Related to the Transactions

The combined post-separation value of shares of Emmis Common Stock and Mediaco Class A Shares may not equal or exceed the pre-separation value of shares of Emmis Common Stock.

        As a result of the Distribution, Emmis expects the trading price of shares of Emmis Common Stock immediately following the Distribution to be lower than the "regular-way" trading price of such shares immediately prior to the Distribution because the trading price will no longer reflect the full value of Emmis' pre-separation business. There can be no assurance that the aggregate market value of the shares of Emmis Common Stock and the Mediaco Class A Shares following the separation will be equal to or higher than the market value that shares of Emmis Common Stock would have been if the separation did not occur.

The Transaction Agreement may be terminated in accordance with its terms and the Transactions may not be consummated.

        The Transaction Agreement contains a number of conditions that must be fulfilled in order to consummate the Transactions. Those conditions include receipt of the requisite regulatory approvals, including effectiveness of the registration statement on Form 10 of which this information statement is a part; absence of orders prohibiting the closing of the Transactions; certain consents to contract assignments; the continued accuracy of the representations and warranties of both parties subject to specified materiality standards; and the performance by all parties of their covenants and agreements. These conditions to the closing of the Transactions may not be fulfilled and, accordingly, the Transactions may not be consummated. In addition, if the Transactions are not consummated by December 31, 2019, either Emmis or SG Broadcasting may choose not to proceed with the Transactions. Emmis or SG Broadcasting may also elect to terminate the Transactions in certain other circumstances, including if the other party is in material breach of the Transaction Agreement or a court or governmental authority has issued a final and nonappealable order, decree or ruling prohibiting or restraining the Transactions. Emmis and SG Broadcasting can also mutually decide to terminate the Transaction Agreement at any time prior to the consummation of the Transactions. For further information, see "Description of the Transactions—Termination," beginning on page        .

Emmis Shareholders will not be entitled to dissenters' rights in connection with the Transactions.

        The Transactions do not require a vote of Emmis Shareholders. Accordingly, Emmis Shareholders will not be entitled to dissenters' rights if they do not want to receive Mediaco Class A Shares. If holders of shares of Emmis Common Stock do not want to receive Mediaco Class A Shares in the Distribution, their only recourse will be to divest themselves of their shares of Emmis Common Stock prior to the record date or, to the extent feasible, divest themselves of their entitlement to Mediaco Class A Shares prior to the distribution date.

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Directors and executive officers of Emmis and Standard General may have interests in the Transactions that differ from, are in addition to or conflict with the interests of Emmis Shareholders, including, if the Transactions are completed, the receipt of financial and other benefits.

        The directors and executive officers of Emmis and Standard General negotiated the terms of the Transaction Agreement. These directors and executive officers may have interests in the Transactions that are different from, in addition to or in conflict with those of Emmis Shareholders generally. These interests include the continued service of certain directors or executive officers of Emmis and of Standard General as directors or executive officers of Mediaco.

The Transactions may disrupt attention of Emmis' management from ongoing business operations of the radio stations being contributed to Mediaco.

        Emmis has expended, and expects to continue to expend, significant management resources to complete the Transactions. Management's attention may be diverted away from the day-to-day operations of radio stations WBLS-FM and WQHT-FM and execution of existing business plans in an effort to complete the Transactions. This diversion of management resources could disrupt the stations' operations and may have an adverse effect on the respective businesses and the financial conditions and results of operations of the business of Mediaco.

Emmis Shareholders will have a reduced ownership and voting interest in Mediaco after the Transactions and will exercise less influence over management of Mediaco.

        Emmis Shareholders have the right to vote in the election of the board of directors of Emmis and on other matters affecting Emmis. Upon the completion of the Transactions, each Emmis Shareholder will have a smaller percentage ownership and voting power of Mediaco than such shareholder had of Emmis immediately prior to the completion of the Transactions. It is currently expected that current shareholders of Emmis as a group will hold shares of Mediaco immediately after the Transactions constituting approximately 23.72% of the Mediaco common shares outstanding on a fully diluted basis and approximately 3.02% of the outstanding voting interests of Mediaco. Because of this, Emmis Shareholders will have significantly less influence on the management and policies of Mediaco than they now have on the management and policies of Emmis.

The Company may not achieve some or all of the expected benefits of the Transactions, and its historical and pro forma financial information is not necessarily representative of future results.

        There is a risk that some or all of the expected benefits of the Transactions may fail to materialize, or may not occur within the time periods anticipated. The realization of such benefits may be affected by a number of factors, many of which are beyond the Company's control, including but not limited to the strength or weakness of the economy and competitive factors in the area where it does business, the effects of competition in the market in which it operates, and the impact of changes in the laws and regulations regulating radio broadcasting in the United States and New York City. The challenge of decoupling businesses previously operated as a consolidated group, particularly where some of the radio stations operated by Emmis in New York City are not included in the Transactions, makes evaluating the Company's business and future financial prospects following the Transactions difficult. The Company's ability to realize anticipated benefits will depend, in part, on its ability to successfully operate the Company's business independent of the larger Emmis operations in a manner that results in various benefits, including, among other things, expanding market ranking and operating efficiencies, and that does not materially disrupt existing relationships nor result in decreased revenues.

        The past financial performance of each of WQHT-FM and WBLS-FM may not be indicative of future financial performance of Mediaco. Realization of the anticipated benefits of the Transactions will depend, in part, on the Company's ability to successfully separate and operate its business. Additionally,

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the Company expects to devote significant attention to coordinating processes of reporting and procedures for oversight as part of managing an independent public company. The diversion of management's attention and any delays or difficulties encountered in connection with the Transactions and the separation of the Company's operations from Emmis could have an adverse effect on the Company's business, financial condition, results of operations and cash flows. The consummation of the Transactions and the separation of the businesses may also result in additional and unforeseen expenses.

        Failure to realize all of the anticipated benefits of the Transactions may impact the Company's business, financial condition and results of operations.

The Distribution of the Mediaco Class A Shares may result in a taxable dividend and/or capital gain without a distribution of associated cash to pay the resulting tax liability.

        A U.S. Emmis Shareholder receiving Mediaco Class A Shares in the Distribution will be treated as receiving a taxable distribution in an amount equal to the fair market value of the Mediaco Class A Shares received on the distribution date. That distribution will be treated as a taxable dividend to the extent of such U.S. Holder's, as defined in "Material U.S. Federal Income Tax Considerations," ratable share of Emmis' current and accumulated earnings and profits allocable to the Distribution (including any additional earnings and profits recognized by Emmis as a result of the Initial Contribution and Distribution), with the excess, if any, treated first as a non-taxable return of capital to the extent of the U.S. Holder's adjusted tax basis in its shares of Emmis Common Stock (thus reducing such adjusted tax basis) and thereafter as capital gain. See "Material U.S. Federal Income Tax Considerations," beginning on page        , for an explanation of the material U.S. federal income tax considerations of the Distribution. The Distribution will not serve as a source of cash to pay any resulting tax liability related to the Distribution.

The Company will incur increased costs and obligations as a result of being an independent public company.

        As an independent publicly traded company, the Company will incur significant legal, accounting and other expenses that the Company was not required to incur in the recent past, particularly after the Company is no longer an "emerging growth company" as defined under the JOBS Act. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd Frank Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act, the JOBS Act, and the rules and regulations of the SEC and Nasdaq, have created uncertainty for public companies and increased the Company's costs and the time that the Company's board of directors and management must devote to complying with these rules and regulations. The Company expects these rules and regulations to increase its legal and financial compliance costs and lead to a diversion of management time and attention from revenue generating activities.

        Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management's attention from implementing the Company's growth strategy, which could prevent the Company from improving its business, financial condition, results of operations and cash flows. The Company has made, and will continue to make, changes to its internal controls and procedures for financial reporting and accounting systems to meet its reporting obligations as a publicly traded company. However, the measures the Company takes may not be sufficient to satisfy its obligations as a publicly traded company.

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As an emerging growth company, the Company cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make Mediaco Class A Shares less attractive to investors.

        The Company is an emerging growth company as defined in the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to obtain an assessment of the effectiveness of the Company's internal controls over financial reporting from its independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. The Company cannot predict if investors will find its shares less attractive because it will rely on these exemptions. If some investors find the Company's shares less attractive as a result, there may be a less active market for the Company's shares and its share price may be more volatile.

        In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. The Company intends to take advantage of the benefits of this extended transition period, for as long as it is available. As a result, the Company's financial statements may not be comparable to those of companies that comply with such new or revised accounting standards.

        Pursuant to the JOBS Act, the Company's independent registered public accounting firm will not be required to attest to the effectiveness of the Company's internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for so long as it is an emerging growth company.

        Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of the Company's internal control over financial reporting, starting with the second annual report that it files with the SEC after the consummation of its initial public listing, and generally requires in the same report a report by its independent registered public accounting firm on the effectiveness of its internal control over financial reporting. However, as an emerging growth company, the Company's independent registered public accounting firm will not be required to attest to the effectiveness of its internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until it is no longer an emerging growth company. The Company could be an emerging growth company for up to five years.

Risks Related to our Business

Our results of operations could be negatively impacted by weak economic conditions and instability in financial markets.

        We believe that advertising is a discretionary business expense. Spending on advertising tends to decline disproportionately during an economic recession or downturn as compared to other types of business spending. Consequently, a downturn in the United States economy generally has an adverse effect on our advertising revenue and, therefore, our results of operations. A recession or downturn in the economy of any individual geographic market, particularly our exclusive market of New York, could have a significant adverse effect on us.

        Even in the absence of a general recession or downturn in the economy, an individual business sector (such as the automotive industry) that tends to spend more on advertising than other sectors might be forced to reduce its advertising expenditures if that sector experiences a downturn. If that sector's spending represents a significant portion of our advertising revenues, any reduction in its advertising expenditures may affect our revenue.

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Radio revenues in the market in which we operate have been challenging and may remain so.

        Radio revenues in the market in which we operate have lagged the growth of the general United States economy. New York market revenues, as measured by the accounting firm Miller Kaplan Arase LLP ("Miller Kaplan"), during the years ended February 2018 and 2019 were down 0.3% and 2.0%, respectively. During this same period, the U.S. Bureau of Economic Analysis reports that U.S. real gross domestic product growth has been approximately 2% to 3% each year. Our results of operations could be negatively impacted if radio revenue performance in the markets in which we operate continues to lag general United States economic growth.

We may lose audience share and advertising revenue to competing radio stations or other types of media.

        The radio broadcasting industry is highly competitive. Our radio stations compete for audiences and advertising revenue with other radio stations and station groups, as well as with other media. Shifts in population, demographics, audience tastes, consumer use of technology and forms of media and other factors beyond our control could cause us to lose market share. Any adverse change in our market, or adverse change in the relative market positions of ours stations, could have a material adverse effect on our revenue or ratings, could require increased promotion or other expenses in that market, and could adversely affect our revenue. Other radio broadcasting companies may enter the market in which we operate or markets in which we may operate in the future. These companies may be larger and have more financial resources than we have. Our radio stations may not be able to maintain or increase their current audience ratings and advertising revenue in the face of such competition.

        Mediaco expects to continue to routinely conduct market research to review the competitive position of our stations in the market. If we determine that a station could improve its operating performance by serving a different demographic, we may change the format of that station. Our competitors may respond to our actions by more aggressive promotions of their stations or by replacing the format we vacate, limiting our options if we do not achieve expected results with our new format.

        From time to time, other stations may change their format or programming, a new station may adopt a format to compete directly with our stations for audiences and advertisers, or stations might engage in aggressive promotional campaigns. These tactics could result in lower ratings and advertising revenue or increased promotion and other expenses and, consequently, lower earnings and cash flow for us. Any failure by us to respond, or to respond as quickly as our competitors, could also have an adverse effect on our business and financial performance.

        Because of the competitive factors we face, we cannot assure investors that we will be able to maintain or increase our current audience ratings and advertising revenue.

Our radio operations are exclusively concentrated in the New York City market.

        Our radio operations are located exclusively in New York City. Since our revenues are concentrated in this market, an economic downturn, increased competition or another significant negative event in the New York City market could reduce our revenues more dramatically than other companies that do not depend as much on this market, which could have a material and adverse effect on our financial condition and results of operations.

Our radio operations lack the scale of some of our competitors.

        Mediaco's only radio stations will be two stations in New York. Some of our competitors in this market have larger clusters of radio stations. Our competitors may be able to leverage their market share to extract a greater percentage of available advertising revenues in this market and may be able to realize operating efficiencies by programming multiple stations in the market. Also, given our reliance on urban formats in New York, our financial condition and results of operations could be materially and adversely affected by additional urban format competition by our competitors.

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We depend upon Emmis' management to operate our radio stations and expect to do so for the foreseeable future.

        In connection with the completion of the Transactions, we expect to enter into a Management Agreement with Emmis' wholly-owned subsidiary, EOC. Pursuant to this agreement, EOC will be responsible for substantially all of the operations and management of our radio stations for a fee. As such, we will be dependent on the reliability and effectiveness of Emmis' management, and cannot guarantee that their officers and employees will be sufficient in number or will have the necessary capability for their assigned roles, particularly with Emmis personnel who will, for the first time, have responsibility for running two public companies at the same time.

        We can make no assurances that we will be able to continue to receive such services from Emmis on a long-term basis on acceptable terms or at all. We would be materially adversely affected if Emmis becomes unable or unwilling to continue providing services for our benefit at the level of quality and at the cost provided in the Management Agreement. If we were required to employ a management company other than EOC, we cannot offer any assurances that the terms of such management agreement would be on terms as favorable to the Company in the long term.

We are a "controlled company" within the meaning of the Nasdaq listing standards and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

        Immediately following this offering and the application of net proceeds from this offering, SG Broadcasting will control approximately 96.98% of the outstanding voting interests of Mediaco immediately following the Transactions through their ownership of Mediaco Class B Shares. Because of the voting power of SG Broadcasting, we are considered a "controlled company" for purposes of Nasdaq requirements. As such, we are exempt from certain corporate governance requirements of Nasdaq, including the requirements that (i) a majority of the board of directors consist of independent directors, (ii) we have a Nominating and Corporate Governance Committee that is composed entirely of independent directors and (iii) we have a Compensation Committee that is composed entirely of independent directors. Following the Transactions, we intend to rely on some or all of these exemptions. As a result, we will not have a majority of independent directors, we will not have a Nominating and Corporate Governance Committee and our Compensation Committee may not consist entirely of independent directors so long as we are considered a "controlled company" under Nasdaq requirements. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of Nasdaq's corporate governance requirements.

We must respond to the rapid changes in technology, services and standards that characterize our industry in order to remain competitive, and changes in technology may increase the risk of material intellectual property infringement claims.

        The radio broadcasting industry is subject to rapid technological changes, evolving industry standards and the emergence of competition from new technologies and services. We cannot assure you that we will have the resources to acquire new technologies or to introduce new services that could compete with these new technologies. Various media technologies and services that have been developed or introduced include:

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        New media has resulted in fragmentation in the advertising market, but we cannot predict the impact that additional competition arising from new technologies may have on the radio broadcasting industry or on our financial condition and results of operations.

        A number of automakers are introducing more advanced, interactive dashboard technology including the introduction of technologies like Apple CarPlay and Google Android Auto that enable vehicle entertainment systems to more easily interface with a consumer's smartphone and include alternative audio entertainment options.

        Programmatic buying, which enables an advertiser to purchase advertising inventory through an exchange or other service and bypass the traditional personal sales relationship, has become widely adopted in the purchase of digital advertising and is an emerging trend in the radio industry. We cannot predict the impact programmatic buying may have on the radio industry or our financial condition and results of operations.

        Additionally, technological advancements in the operation of radio stations and related businesses have increased the number of patent and other intellectual property infringement claims brought against broadcasters, including Emmis. While our stations have not historically been subject to material patent and other intellectual property claims and the Company intends to take steps to limit the likelihood of, and exposure to, such claims, no assurance can be given that material claims will not be asserted in the future.

Our business depends on maintaining our licenses with the FCC. We could be prevented from operating a radio station if we fail to maintain our licenses.

        The radio broadcasting industry is subject to extensive and changing regulation. The Communications Act and FCC rules and policies require FCC approval for transfers of control and assignments of FCC licenses. The filing of petitions or complaints against FCC applications for approval could result in the FCC delaying the grant of, or refusing to grant, its consent to the assignment of an FCC license or to the transfer of control of an FCC licensee. In certain circumstances, the Communications Act and FCC rules and policies will operate to impose limitations on alien ownership and voting of our common stock. There can be no assurance that there will be no changes in the current regulatory scheme or that additional regulations will not be imposed or additional regulatory agencies created, if any, which could restrict or curtail our ability to acquire, operate and dispose of stations or, in general, to compete profitably with other operators of radio and other media properties.

        Each of our radio stations operates pursuant to one or more licenses issued by the FCC. Under FCC rules, radio station licenses are granted for a term of eight years. Our licenses expire in June 2022. Although we will apply to renew these licenses, third parties may challenge our renewal applications. While we are not aware of facts or circumstances that would prevent us from having our current licenses renewed, there can be no assurance that the licenses will be renewed or that renewals will not include conditions or qualifications that could adversely affect our business and operations. Failure to obtain the renewal of any of our broadcast licenses may have a material adverse effect on our business and operations. In addition, if we or any of our officers, directors or significant shareholders materially violates the FCC's rules and regulations or the Communications Act, is convicted of a felony or is found to have engaged in unlawful anticompetitive conduct or fraud upon

22


another government agency, the FCC may, in response to a petition from a third party or on its own initiative, in its discretion, commence a proceeding to impose sanctions upon us which could involve the imposition of monetary fines, the revocation of our broadcast licenses or other sanctions. If the FCC were to issue an order denying a license renewal application or revoking a license, we would be required to cease operating the applicable radio station only after we had exhausted all rights to administrative and judicial review without success.

We disseminate large amounts of content to the public. An ill-conceived or mistimed on-air statement or social media post could have a material adverse effect on our business.

        The FCC's rules prohibit the broadcast of obscene material at any time and prohibit indecent material between the hours of 6 a.m. and 10 p.m. Broadcasters are at risk of violating the prohibition on the broadcast of indecent material because of the FCC's broad definition of such material, coupled with the spontaneity of live programming.

        Congress has dramatically increased the penalties for broadcasting obscene, indecent or profane programming and broadcasters can potentially face license revocation, renewal or qualification proceedings in the event that they broadcast indecent material. In addition, the FCC's heightened focus on indecency, against the broadcast industry generally, may encourage third parties to oppose our license renewal applications or applications for consent to acquire broadcast stations. As a result of these developments, we have implemented certain measures that are designed to reduce the risk of broadcasting indecent material in violation of the FCC's rules. These and other future modifications to our programming in an effort to reduce the risk of indecency violations could have an adverse effect on our competitive position.

        Even statements that do not violate the FCC's indecency rules or social media posts could offend our audiences and advertisers or infringe the rights of third parties, resulting in a decline in ratings, a loss in revenues, a challenge to our broadcast licenses, or extended litigation. While we maintain insurance covering some of these risks, others are effectively uninsurable and could have a material and adverse effect on our financial condition and results of operations.

Changes in current Federal regulations could adversely affect our business operations.

        Congress and the FCC have under consideration, and may in the future consider and adopt, new laws, regulations and policies that could, directly or indirectly, affect the profitability of our broadcast stations. In particular, Congress is considering a revocation of radio's exemption from paying royalties to performing artists for use of their recordings (radio already pays a royalty to songwriters). A requirement to pay additional royalties could have a material and adverse effect on our financial condition and results of operations.

Our business strategy and our ability to operate profitably depend on the continued services of key personnel, including on-air personalities, the loss of whom could have a material adverse effect on our business.

        Our success depends in large part upon the leadership and performance of the radio stations' management team and other key personnel, all of whom will initially continue to be employed by Emmis under the terms of the Employee Leasing Agreement. Operating as an independent company will demand a significant amount of time and effort from our management and other personnel and may give rise to increased turnover. If we lose the services of members of our management team or other key personnel, we may not be able to successfully manage our business or achieve our business objectives.

        Following the separation, we will need to continue to attract and retain qualified key personnel in a highly competitive environment. Our ability to attract, recruit and retain such talent will depend on a number of factors, including the hiring practices of our competitors, the performance of our developing

23


business programs, our compensation and benefits, and economic conditions affecting our industry generally. Our radio stations' personnel includes several on-air personalities and hosts of syndicated radio programs with large and loyal audiences in their respective broadcast areas. These on-air personalities are sometimes significantly responsible for the ranking of a station and, thus, the ability of the station to sell advertising. Such on-air personalities or other key individuals may not remain with our radio stations and we may not retain their audiences, which could affect our competitive position. If we cannot effectively hire and retain qualified employees, our business, prospects, financial condition and results of operations could suffer.

Impairment losses related to our intangible assets have reduced our stations' earnings in the past and could reduce them in the future.

        We have reported significant net losses in our combined statement of operations in the past as a result of recording noncash impairment charges, mostly related to FCC licenses and goodwill. However, we did not record any impairment charges during the years ended February 28, 2018 and 2019. As of February 28, 2019, our FCC licenses comprised 76% of our total assets. If events occur or circumstances change, or even if radio valuations trend downward, the fair value of our FCC licenses might fall below the amount reflected on our balance sheet, and we may be required to recognize impairment charges, which may be material, in future periods.

The operating results of Mediaco's radio stations have been, and may again in the future be, adversely affected by acts of war, terrorism and natural catastrophes.

        Acts of war and terrorism against the United States, and the country's response to such acts, may negatively affect the U.S. advertising market, which could cause our advertising revenues to decline due to advertising cancellations, delays or defaults in payment for advertising time, and other factors. In addition, these events may have other negative effects on our business, the nature and duration of which we cannot predict.

        For example, after the September 11, 2001 terrorist attacks, Emmis decided that the public interest would be best served by the presentation of continuous commercial-free coverage of the unfolding events on our stations. That temporary policy had a material adverse effect on Emmis' advertising revenues and operating results for the month of September 2001. Future events like those of September 11, 2001 may cause us to adopt similar policies, which could have a material adverse effect on our advertising revenues and operating results.

        Additionally, the attacks on the World Trade Center on September 11, 2001 resulted in the destruction of the transmitter facilities that were located there. Broadcasters that had facilities located in the destroyed buildings experienced temporary disruptions in their ability to broadcast. Since we tend to locate transmission facilities for stations serving urban areas on tall buildings or other significant structures, such as the Empire State Building in New York, further terrorist attacks or other disasters could cause similar disruptions in our broadcasts in the areas affected. If these disruptions occur, we may not be able to locate adequate replacement facilities in a cost-effective or timely manner or at all. Failure to remedy disruptions caused by terrorist attacks or other disasters and any resulting degradation in signal coverage could have a material adverse effect on our business and results of operations.

        Similarly, hurricanes, floods, tornadoes, earthquakes, wild fires and other natural disasters could have a material adverse effect on our operations. While we generally carry insurance covering such catastrophes, we cannot be sure that the proceeds from such insurance will be sufficient to offset the costs of rebuilding or repairing our property or the lost income.

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Our business is dependent upon the proper functioning of our internal business processes and information systems and modification or interruption of such systems may disrupt our business, processes and internal controls.

        The proper functioning of our internal business processes and information systems is critical to the efficient operation and management of our business. If these information technology systems fail or are interrupted, our operations may be adversely affected and operating results could be harmed. Our business processes and information systems need to be sufficiently scalable to adapt to the size of our business and may require modifications or upgrades that expose us to a number of operational risks. Our information technology systems, and those of third party providers, may also be vulnerable to damage or disruption caused by circumstances beyond our control. These include catastrophic events, power anomalies or outages, natural disasters, computer system or network failures, viruses or malware, physical or electronic intrusions, unauthorized access and cyber-attacks. Any material disruption, malfunction or similar challenges with our business processes or information systems, or disruptions or challenges relating to the transition to new processes, systems or providers, could have a material adverse effect on our financial condition and results of operations.

We may not be successful in identifying any additional suitable acquisition or investment opportunities.

        As part of our business strategy, we may pursue acquisitions or other investment opportunities. However, there is no assurance that we will be successful in identifying or consummating any suitable acquisitions and certain acquisition opportunities may be limited or prohibited by applicable regulatory regimes. Even if we do complete acquisitions or business combinations, there is no assurance that any of them will be of value in enhancing our business or our financial condition. In addition, our ongoing activities could divert a substantial amount of our management time and may be difficult for us to integrate, which could adversely affect management's ability to identify and consummate other investment opportunities. The failure to identify or successfully integrate future acquisitions and investment opportunities could have a material adverse effect on our results of operations and financial condition.

        Because we face significant competition for acquisition and investment opportunities, it may be difficult for us to fully execute our business strategy. We expect to encounter intense competition for acquisition and investment opportunities from both strategic investors and other potential competitors, such as private investors (which may be individuals or investment partnerships), blank check companies, and other entities, domestic and international, competing for the type of businesses that we may intend to acquire. Many of these competitors possess greater technical, human and other resources, or more local industry knowledge, or greater access to capital, than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. These factors may place us at a competitive disadvantage in successfully completing future acquisitions and investments.

        In addition, while we believe that there are numerous target businesses that we could potentially acquire or invest in, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing acquisition and investment opportunities.

Future acquisitions or investments could involve unknown risks that could harm our business and adversely affect our financial condition.

        We may make acquisitions in a variety of industries and market sectors. Future acquisitions that we consummate will involve unknown risks, some of which will be particular to the industry in which the acquisition target operates. We may be unable to adequately address the financial, legal and operational risks raised by such acquisitions, especially if we are unfamiliar with the industry in which we invest. The realization of any unknown risks could prevent or limit us from realizing the projected

25


benefits of the acquisitions, which could adversely affect our financial condition and liquidity. In addition, our financial condition and results of operations will be subject to the specific risks applicable to any company in which we invest.

Risks Related to our Indebtedness

We expect to enter into debt financing prior to the closing of the Transactions that will result in substantial indebtedness for the Company. Our substantial indebtedness could adversely affect our financial health.

        In connection with the Transactions, we expect to enter into a financing arrangement in the form of a senior secured term loan, which we anticipate will provide for a borrowing of $50,000,000 upon the close of the Transactions, with the net proceeds to be paid concurrently to Emmis as consideration for the Initial Contribution. In addition, Mediaco intends to issue to Emmis the Emmis Promissory Note, which we expect will be for a principal amount of $5 million and be subordinated to any senior secured indebtedness. As a result, after the Transactions, we expect to be responsible for servicing significant outstanding debt incurred in connection with the Transactions, as well as for obtaining and maintaining sufficient working capital and other funds to satisfy our cash requirements.

        We cannot be certain that our earnings will be sufficient to allow us to timely pay principal and interest on our debt or to meet our other obligations. If we do not have sufficient earnings, we may be required to refinance all or part of any future indebtedness, sell assets, borrow more money or sell more securities, none of which we can guarantee we will be able to do. Our ability to incur additional debt will be limited by the terms and conditions of any future credit facility. Any of the above listed factors could have a material adverse effect on our business, financial condition and results of operations.

To service any future indebtedness and other obligations, we will likely require a significant amount of cash. Our ability to generate cash will depend on many factors beyond our control.

        Any future long-term debt agreements will likely require us to pay periodic interest and principal payments during the term of such indebtedness. Our ability to make payments on any future indebtedness and to fund capital expenditures will depend on our ability to generate cash in the future. This ability to generate cash, to a certain extent, will be subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our businesses might not generate sufficient cash flow from operations. We might not be able to complete future offerings, and future borrowings might not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

The terms of any future indebtedness may restrict our current and future operations, particularly our ability to respond to changes in market conditions or to take some actions.

        Any future long-term debt instruments may impose significant operating and financial restrictions on us. These restrictions will likely significantly limit or prohibit, among other things, our ability to incur additional indebtedness, pay dividends on securities, incur liens, enter into asset purchase or sale transactions, merge or consolidate with another company, dispose of our assets or make certain other payments or investments.

        These restrictions may limit our ability to grow our business through acquisitions and could limit our ability to respond to market conditions or meet extraordinary capital needs. They also could restrict our corporate activities in other ways and could adversely affect our ability to finance our future operations or capital needs.

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If we cannot comply with the financial covenants in any debt instruments into which we enter, or obtain waivers or other relief from our lenders, we may default, which could result in loss of our sources of liquidity and acceleration of our indebtedness.

        The instruments governing the debt that we expect to incur prior to the closing of the Transactions will likely contain restrictive financial covenants. Our ability to comply with the covenants in our debt instruments will depend upon our future performance and various other factors, such as business, competitive, technological, legislative and regulatory factors, some of which will be beyond our control. We may not be able to maintain compliance with all of these covenants. In that event, we would need to seek an amendment to our debt instruments, or would need to refinance our debt instruments. There can be no assurance that we will be able to obtain future amendments or waivers of our debt instruments, or refinance our debt instruments and, even if so, it is likely that such relief would only last for a specified period, potentially necessitating additional amendments, waivers or refinancings in the future. In the event that we do not maintain compliance with the covenants under any future debt instruments, the lenders could declare an event of default, resulting in a material adverse impact on our financial position. Upon the occurrence of an event of default under any future debt instruments, the lenders will likely be able to elect to declare all amounts outstanding under our credit agreements to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against any collateral granted to them to secure that indebtedness. If the lenders accelerate the repayment of borrowings, we may be forced to liquidate certain assets to repay all or part of any future debt instruments, and we cannot be assured that sufficient assets will remain for us to continue our business operations after we have paid all of the borrowings. Our ability to liquidate assets will be affected by the regulatory restrictions associated with radio stations, including FCC licensing, which may make the market for these assets less liquid and increase the chances that these assets will be liquidated at a significant loss.

Risks Related to our Common Stock

SG Broadcasting will possess significant voting interest with respect to our outstanding common stock, which limits the influence on corporate matters by holders of Mediaco Class A Shares.

        As a result of the Transactions, it is expected that SG Broadcasting will hold approximately 96.98% of the voting interests of our outstanding common stock on a fully diluted basis. Accordingly, SG Broadcasting will have the ability to significantly influence our management and affairs through the election and removal of our board of directors and all other matters requiring shareholder approval unless a separate vote of the Mediaco Class A Shares is required by our articles of incorporation or Indiana law, including any future merger, consolidation or sale of all or substantially all of our assets. This concentrated voting interest could also discourage others from initiating any potential merger, takeover or other change-of-control transaction that may otherwise be beneficial to our shareholders. Furthermore, this concentrated control will limit the practical effect of the influence by holders of Mediaco Class A Shares over our business and affairs, through any shareholder vote or otherwise. Accordingly, the effects of any of the above could depress the price of Mediaco Class A Shares.

Standard General's and Emmis' interests may conflict with those of other shareholders.

        As noted above, the directors and executive officers of Emmis and Standard General negotiated the terms of the Transaction Agreement and they may have interests in the Transactions that are different from, in addition to or in conflict with those of Emmis Shareholders. Potential conflicts could arise, for example, over matters such as the desirability of changes in our business and operations, funding and capital matters, regulatory matters, matters arising with respect to the separation or otherwise, employee retention or recruiting, or our dividend policy. Immediately after the Transactions, SG Broadcasting, a company wholly owned by funds managed by Standard General, is expected to beneficially own shares representing approximately 96.98% of the outstanding combined voting power

27


of all classes of our common stock. Therefore, SG Broadcasting is in a position to exercise substantial influence over the outcome of most matters submitted to a vote of our shareholders, including the election of a majority of our directors, the determination to engage in a merger, acquisition or disposition of a material amount of assets, or otherwise.

        Additionally, Emmis does not expect to hold any common stock of Mediaco after the consummation of the Transactions, and its officers will be serving as the initial Mediaco Class A Directors. These officers will initially be shareholders of Mediaco, but no assurance can be given that they will retain their ownership of Mediaco shares. Further, during the term of the Management Agreement or so long as amounts remain outstanding under the Emmis Promissory Note, Mediaco's board of directors is obligated to nominate as Mediaco Class A Directors only persons specified by Emmis. Under Indiana law, directors of Mediaco may, in considering the best interests of the Company, consider the effects of any action on shareholders, employees, suppliers, and customers of the Company, and communities in which offices or other facilities of the Company are located, and any other factors the directors consider pertinent.

Mediaco Class A Shares may cease to be listed on Nasdaq.

        The Company plans to apply to list the Mediaco Class A Shares on Nasdaq under the ticker symbol "        ". If approved for listing, we may not be able to meet the continued listing requirements of Nasdaq, which require, among other things, a minimum closing price of Mediaco Class A Shares, a minimum market capitalization and minimum shareholders' equity. If we are unable to satisfy the requirements of Nasdaq for continued listing, Mediaco Class A Shares would be subject to delisting from that market, and we might or might not be eligible to list our shares on another market.

        A delisting of Mediaco Class A Shares from Nasdaq could negatively impact us by, among other things, reducing the liquidity and market price of Mediaco Class A Shares. There can be no assurance that we will be able to comply with Nasdaq's continued listing requirements.

We are an "emerging growth company" and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, Mediaco Class A Shares may be less attractive to investors for so long as we remain an emerging growth company.

        We are an "emerging growth company," as defined in the JOBS Act, and we intend to take advantage of some of the exemptions from reporting requirements that are afforded to emerging growth companies, including, but not limited to, exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find Mediaco Class A Shares less attractive because we intend to rely on these exemptions. If some investors find Mediaco Class A Shares less attractive as a result, there may be a less active trading market for Mediaco Class A Shares and its stock price may be lower or more volatile as a result. We may take advantage of these exemptions until we no longer qualify as an emerging growth company.

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CAUTIONARY NOTICE CONCERNING FORWARD-LOOKING STATEMENTS

        This report includes or incorporates statements that are intended as forward-looking statements. These forward-looking statements are based upon management's assumptions, expectations, projections, intentions and beliefs about future events, particularly in relation to our operations, cash flows, financial position, plans, strategies, business prospects, changes and trends in our business and the markets in which we operate. In some cases, predictive, future-tense or forward-looking words such as "intend," "plan," "may," "will," "project," "estimate," "anticipate," "believe," "expect," "continue," "potential," "opportunity," "forecast," "should" and similar expressions, whether in the negative or affirmative, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.

        Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, such matters as:

        We caution that the forward-looking statements included in this information statement represent our estimates and assumptions only as of the date of this information statement and are not intended to give any assurance as to future results. These forward-looking statements are not statements of historical fact and represent only our management's beliefs and expectations as of the date hereof, and involve risks and uncertainties that could cause actual results to differ materially and inversely from expectations expressed in or indicated by the forward-looking statements. Assumptions, expectations, projections, intentions and beliefs about future events may, and often do, vary from actual results and these differences can be material. There are a variety of factors, many of which are beyond our control, which affect our operations, performance, business strategy and results and could cause actual reported results and performance to differ materially from the performance and expectations expressed in these forward-looking statements. These factors include, but are not limited to, the strength of the economy

29


and the financial markets in which we operate; our dependence upon Emmis to manage the operations of our radio stations; changes in federal and local regulations of the broadcasting industry; our ability to maintain regulatory licenses necessary to operate our radio stations; and the other risks and uncertainties that are outlined in this information statement. As a result, the forward-looking events discussed in this information statement might not occur and our actual results may differ materially from those anticipated in the forward-looking statements. Accordingly, you should not unduly rely on any forward-looking statements.

        We undertake no obligation to update or revise any forward-looking statements contained in this information statement, whether as a result of new information, future events, a change in our views or expectations or otherwise. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

30



DIVIDEND POLICY

        Mediaco currently intends to retain future earnings for use in its business and has no plans to pay any dividends on shares of its common stock in the foreseeable future.

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CAPITALIZATION

        The following table, which you should read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of Mediaco," "Unaudited Pro Forma Condensed Combined Financial Statements" and the historical combined financial statements and accompanying notes included elsewhere in this information statement, sets forth our cash and cash equivalents and combined capitalization as of May 31, 2019 on an historical basis and on a pro forma basis after giving effect to the Transactions. The information below is not necessarily indicative of what the Company's capitalization would have been had the Transactions been completed as of May 31, 2019. In addition, it is not indicative of the Company's future capitalization.

 
  MAY 31, 2019  
 
  (Historical)   (Pro Forma)  
 
  (Unaudited)
(in thousands, except
per share amounts)

 

LIABILITIES AND EQUITY

             

CURRENT LIABILITIES:

             

Accounts payable and accrued expenses

  $ 1,044   $ 8,161  

Current maturities of long-term debt

         

Accrued salaries and commissions

    584     584  

Deferred revenue

    1,132     1,132  

Income taxes payable

    919      

Operating lease liabilities

    2,271     2,271  

Other

    81     81  

Total current liabilities

    6,031     12,229  

LONG-TERM DEBT, NET OF CURRENT PORTION

        53,000  

OPERATING LEASE LIABILITIES, NET OF CURRENT

    12,053     12,053  

OTHER NONCURRENT LIABILITIES

    85     85  

DEFERRED INCOME TAXES

         

Total liabilities

    18,169     77,367  

COMMITMENTS AND CONTINGENCIES (NOTE 8)

             

EQUITY:

             

Class A common stock, $.01 par value; authorized            shares; issued and outstanding 2,372,000 shares at May 31, 2019

        24  

Class B common stock, $.01 par value; authorized            shares; issued and outstanding 7,628,000 shares at May 31, 2019

        76  

Class C common stock, $.01 par value; authorized            shares; none issued

         

Additional paid-in capital

        11,290  

Net parent company investment

    76,712      

Total equity

    76,712     11,390  

Total liabilities and equity

  $ 94,881   $ 88,757  

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR MEDIACO

        The following discussion and analysis should be read in conjunction with the financial statements of Mediaco presented elsewhere in this document. Operating results are not necessarily indicative of results that may occur in future periods. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors including, but not limited to, those set forth under "Cautionary Notice Concerning Forward-Looking Statements" and "Risk Factors" elsewhere in this document. All forward-looking statements regarding Mediaco included in this document are based on the information available to Mediaco on the date of this document and Mediaco assumes no obligation to update any forward-looking statements contained in this document.

Spin-off of Mediaco from Emmis

        On June 28, 2019, Mediaco entered into the Transaction Agreement with Emmis and SG Broadcasting, an affiliate of Standard General, a New York-based investment firm that manages event-driven opportunity funds. Pursuant to the Transaction Agreement, Emmis intends to contribute the assets of its radio stations WQHT-FM and WBLS-FM, both in New York, NY, in exchange for $91.5 million in cash, a $5.0 million promissory note by Mediaco in favor of Emmis and        Mediaco Class A Shares representing approximately 23.72% of the Mediaco common stock outstanding on a fully diluted basis and approximately 3.02% of the outstanding voting interests of Mediaco. Simultaneously, SG Broadcasting will make an initial contribution to Mediaco of $91.5 million, in addition to funding certain transaction expenses, to be reduced by the net proceeds of any financing arrangements entered into by Mediaco prior to the closing of the Transactions. Based on the anticipated net proceeds of such financing arrangements, the Company anticipates that SG Broadcasting will contribute $46,500,000 to Mediaco, in exchange for which Mediaco will issue to SG Broadcasting        Mediaco Class B Shares representing approximately 76.28% of the Mediaco common stock outstanding on a fully diluted basis and approximately 96.98% of the outstanding voting interests of Mediaco. On the distribution date, each Emmis Shareholder will receive            Mediaco Class A Shares for every        shares of Emmis Common Stock held by such Emmis Shareholders at the close of business on        , 2019. Following the Distribution, Mediaco will operate as a separate, publicly traded company. The completion of the Distribution and the closing of the Transactions as described in this information statement is subject to the satisfaction or waiver by Mediaco, Emmis or SG Broadcasting, as the case may be, of certain conditions. For a more detailed description of these conditions, see "Description of the Transactions—Conditions to the Distribution," beginning on page    .

        Mediaco's historical combined financial statements have been prepared on a stand-alone basis and are derived from Emmis' combined financial statements and accounting records and are presented in conformity with U.S. GAAP. Mediaco's financial position, results of operations and cash flows historically operated, and will continue to operate, as part of Emmis' financial position, results of operations and cash flows prior to and until the Distribution. These historical combined financial statements may not be indicative of Mediaco's future performance and do not necessarily reflect what Mediaco's combined results of operations, financial condition and cash flows would have been had Mediaco operated as a separate, publicly traded company during the periods presented. Mediaco expects that changes will occur in its operating structure and its capitalization as a result of the separation from Emmis. For additional detail, see "Capitalization," beginning on page     , "Description of Business," beginning on page     , and "Description of the Transactions," beginning on page     .

Overview

        We own and operate two radio stations located in New York, New York. Our revenues are mostly affected by the advertising rates our stations charge, as advertising sales represent approximately 70%

33


of our consolidated revenues. These rates are in large part based on our stations' ability to attract audiences in demographic groups targeted by their advertisers. The Nielsen Company generally measures radio station ratings weekly for markets measured by the Portable People Meter™, which includes our radio stations. Because audience ratings in a station's local market are critical to the station's financial success, our strategy is to use market research, advertising and promotion to attract and retain audiences in each of our station's chosen demographic target group.

        Our revenues vary throughout the year. As is typical in the broadcasting industry, our revenues and operating income are usually lowest in our fourth fiscal quarter.

        In addition to the sale of advertising time for cash, our stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. These barter transactions are recorded at the estimated fair value of the product or service received. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to preempt advertising spots paid for in cash with advertising spots paid for in trade.

KNOWN TRENDS AND UNCERTAINTIES

        The U.S. radio industry is a mature industry and its growth rate has stalled. Management believes this is principally the result of two factors: (1) new media, such as various media distributed via the Internet, telecommunication companies and cable interconnects, as well as social networks, have gained advertising share against radio and other traditional media and created a proliferation of advertising inventory and (2) the fragmentation of the radio audience and time spent listening caused by satellite radio, audio streaming services and podcasts has led some investors and advertisers to conclude that the effectiveness of radio advertising has diminished.

        Along with a large portion of the radio industry, our stations have deployed HD Radio®. HD Radio offers listeners advantages over standard analog broadcasts, including improved sound quality and additional digital channels. In addition to offering secondary channels, the HD Radio spectrum allows broadcasters to transmit other forms of data. We are participating in a joint venture with other broadcasters to provide the bandwidth that a third party uses to transmit location-based data to hand-held and in-car navigation devices. The number of radio receivers incorporating HD Radio has increased in the past year, particularly in new automobiles. It is unclear what impact HD Radio will have on the market in which we operate.

        Our stations have also aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by developing highly interactive websites with content that engages our listeners, deploying mobile applications and streaming our content, harnessing the power of digital video on our websites and YouTube channels, and delivering real-time traffic to navigation devices.

        Our two radio stations in New York account for 100% of our operating results. Some of our competitors that operate larger station clusters in the New York market are able to leverage their market share to extract a greater percentage of available advertising revenue through packaging a variety of advertising inventory at discounted unit rates. Market revenues in New York as measured by Miller Kaplan Arase LLP ("Miller Kaplan"), an independent public accounting firm used by the radio industry to compile revenue information, were down 2.0% for the twelve months ended February 28, 2019 and up 4.1% for the three months ended May 31, 2019, as compared to the same periods of the prior year. During these periods, revenues for our stations were down 3.4% and up 4.8%, respectively. As discussed in further detail below, our underperformance in fiscal 2019 was largely attributable to lower ticket sale revenues for our largest concert, Summer Jam. Poor weather on the day of the concert negatively impacted ticket sales.

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CRITICAL ACCOUNTING POLICIES

        Critical accounting policies are defined as those that encompass significant judgments and uncertainties, and potentially derive materially different results under different assumptions and conditions. We believe that our critical accounting policies are those described below.

Revenue Recognition

        Broadcasting revenue is recognized as advertisements are aired. Broadcasting revenue recognition is subject to meeting certain conditions. These criteria are generally met at the time the advertisement is aired for broadcasting revenue. Advertising revenues presented in the financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues.

FCC Licenses

        As of February 28, 2019 and May 31, 2019, we have recorded approximately $63.3 million in FCC licenses, which represents approximately 76% and 67%, respectively, of our total assets. We would not be able to operate our radio stations without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor our stations' compliance with the various regulatory requirements. Historically, each of our FCC licenses has been renewed at the end of its respective period, and we expect that each FCC license will continue to be renewed in the future. We consider our FCC licenses to be indefinite-lived intangibles.

        We do not amortize indefinite-lived intangible assets, but rather test for impairment at least annually or more frequently if events or circumstances indicate that an asset may be impaired. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by Accounting Standards Codification ("ASC") Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under a Local Marketing Agreement by another broadcaster. Consequently, our two radio stations in New York are considered a single unit of accounting.

        We complete our annual impairment tests on December 1 of each year and perform additional interim impairment testing whenever triggering events suggest such testing is warranted.

Valuation of Indefinite-lived Broadcasting Licenses

        Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by its unit of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in the unit of accounting's market remains unchanged, with the exception that the unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into our license valuations take current economic conditions into consideration.

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        Below are some of the key assumptions used in our annual impairment assessments. In recent years, we have reduced long-term growth rates based on recent industry trends and our expectations for the New York market going forward. The methodology used to value our FCC licenses has not changed in the two year period ended February 28, 2019.

 
  December 1, 2017   December 1, 2018  

Discount Rate

    12.1 %   11.9 %

Long-term Revenue Growth Rate

    1.0 %   0.3 %

Mature Market Share

    12.7 %   12.9 %

Operating Profit Margin

    39.1 %   38.0 %

        The Company did not record any impairment charges related to FCC licenses in the two-year period ended February 28, 2019.

Sensitivity Analysis

        Based on the results of our December 1, 2018 annual impairment assessment, the fair value of our broadcasting licenses was approximately $94.2 million, which was in excess of the $63.3 million carrying value by $30.9 million, or 48.9%. Should our estimates or assumptions worsen, or should negative events or circumstances occur in our unit of accounting, we may need to record license impairments in the future.

 
  Radio Broadcasting Licenses  
 
  As of
December 1, 2018
   
 
 
  Percentage by
which fair
value exceeds
carrying
value
 
Unit of Accounting
  Carrying
Value
  Fair
Value
 

New York Cluster

    63,265     94,225     48.9 %

        If we were to assume a 100 basis point change in any of our three key assumptions (a reduction in the long-term revenue growth rate, a reduction in local commercial share or an increase in the discount rate) used to determine the fair value of our broadcasting licenses on December 1, 2018, it would not result in an impairment charge.

Deferred Taxes

        The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company's financial statements or income tax returns. Income taxes are recognized during the year in which the underlying transactions are reflected in the consolidated statements of operations. Deferred taxes are provided for temporary differences between amounts of assets and liabilities recorded for financial reporting purposes as compared to amounts recorded for income tax purposes. After determining the total amount of deferred tax assets, the Company determines whether it is more likely than not that some portion of the deferred tax assets will not be realized. If the Company determines that a deferred tax asset is not likely to be realized, a valuation allowance will be established against that asset to record it at its expected realizable value.

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RESULTS OF OPERATIONS
QUARTER ENDED MAY 31, 2018 COMPARED TO QUARTER ENDED MAY 31, 2019

        The following table summarizes the sources of our revenues for the three-month periods ended May 31, 2018 and 2019. The category "Non Traditional" principally consists of ticket sales and sponsorships of events our stations conduct in New York. The category "Other" includes, among other items, network revenues and barter.

 
  Three Months Ended May 31,  
 
  2018   % of Total   2019   % of Total  
 
  (As reported, dollar amounts in thousands)
 

Net revenues:

                         

Local

  $ 5,910     63.4 % $ 6,137     62.4 %

National

    830     8.9 %   942     9.6 %

Political

        %       %

Non Traditional

    610     6.5 %   640     6.5 %

Digital

    722     7.8 %   960     9.8 %

Other

    1,243     13.4 %   1,159     11.7 %

Total net revenues

  $ 9,315         $ 9,838        

        As previously mentioned, we derive approximately 70% of our net revenues from advertising sales. In the three-month period ended May 31, 2019, local sales, excluding political revenues, represented approximately 87% of the advertising revenues for our radio stations.

        No customer represents more than 10% of our net revenues. Our top ten categories represent approximately 65% and 70% of our stations' total advertising net revenues for the three-month periods ended May 31, 2018 and 2019, respectively. Media was our largest category for the three-month periods ended May 31, 2018 and 2019, representing approximately 10% and 11% of our net revenues, respectively.

        A significant portion of our expenses varies in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our costs that do not vary as much in relation to revenue are mostly in our programming and general and administrative departments, such as talent costs, syndicated programming fees, utilities, office expenses and salaries. Lastly, our costs that are highly discretionary are costs in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience and market share.

Net revenues:

 
  For the Three
Months Ended
May 31,
   
   
 
 
  2018   2019   $ Change   % Change  
 
  (As reported, dollar amounts in thousands)
 

Net revenues

  $ 9,315   $ 9,838   $ 523     5.6 %

        Net revenues were up due to strong growth in digital revenues, coupled with higher average advertising rates during the period at WQHT, which has improved its relative position in the market by growing its ratings.

37


        We typically monitor the performance of our stations against the aggregate performance of the market in which we operate based on reports for the period prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter and syndication arrangements. Miller Kaplan reported gross revenues for the New York market increased 4.1% for the three-month period ended May 31, 2019, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were up 4.8% for the three-month period ended May 31, 2019, as compared to the same period of the prior year.

Station operating expenses excluding depreciation and amortization expense:

 
  For the Three
Months Ended
May 31,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

 

Station operating expenses excluding depreciation and amortization expense

  $ 6,628   $ 7,337   $ 709     10.7 %

        Station operating expenses excluding depreciation and amortization expense were up in the quarter principally due to three factors: (1) higher employee health care costs, (2) costs associated with supporting digital sales growth during the quarter, and (3) personnel additions in the back half of the prior fiscal year, particularly in sales leadership roles.

Depreciation and amortization:

 
  For the Three
Months Ended
May 31,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

 

Depreciation and amortization

  $ 292   $ 323   $ 31     10.6 %

        The increase in depreciation and amortization expense relates to projects placed into service in the fourth quarter of the prior fiscal year.

Operating income:

 
  For the Three
Months Ended
May 31,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

 

Operating income

  $ 2,395   $ 2,178   $ (217 )   (9.1 )%

        Operating income decreased as expense growth outpaced revenue growth due to the items discussed above.

38


Provision for income taxes:

 
  For the Three
Months Ended
May 31,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

 

Provision for income taxes

  $ 773   $ 697   $ (76 )   (9.8 )%

        Our provision for income taxes decreased due to the decline in operating income. For purposes of the combined condensed carve out financial statements of WQHT and WBLS, the provision for income taxes was determined using the separate return method.

Net income:

 
  For the Three
Months Ended
May 31,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

 

Net income

  $ 1,622   $ 1,481   $ (141 )   (8.7 )%

        Net income decreased due to a decline in our operating income, partially offset by a decrease in our provision for income taxes.

Intangibles

        As of May 31, 2019, approximately 67% of our total assets consisted of FCC broadcast licenses, the values of which depend significantly upon various factors including, among other things, market revenues and estimated market growth rates. We would not be able to operate our stations without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor our stations' compliance with the various regulatory requirements. Historically, our FCC licenses have been renewed (or a waiver has been granted pending renewal) at the end of their respective eight-year periods, and we expect that each FCC license will continue to be renewed in the future.

Regulatory, Legal and Other Matters

        Our stations are parties to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company that we believe are likely to have a material adverse effect on the Company.

RESULTS OF OPERATIONS
YEAR ENDED FEBRUARY 28, 2018 COMPARED TO YEAR ENDED FEBRUARY 28, 2019

        The following table summarizes the sources of our revenues for the twelve-month periods ended February 28, 2018 and 2019. The category "Non Traditional" principally consists of ticket sales and

39


sponsorships of events our stations conduct in New York. The category "Other" includes, among other items, network revenues and barter.

 
  Year Ended February 28,  
 
  2018   % of Total   2019   % of Total  
 
  (As reported, dollar amounts in thousands)
 

Net revenues:

                         

Local

  $ 24,300     54.5 % $ 24,539     56.9 %

National

    4,535     10.2 %   3,799     8.8 %

Political

    221     0.5 %   559     1.3 %

Non Traditional

    8,449     19.0 %   7,024     16.3 %

Digital

    3,214     7.2 %   2,756     6.4 %

Other

    3,838     8.6 %   4,414     10.3 %

Total net revenues

  $ 44,557         $ 43,091        

        As previously mentioned, we derive approximately 70% of our net revenues from advertising sales. In the year ended February 28, 2019, local sales, excluding political revenues, represented approximately 87% of the advertising revenues for our radio stations.

        No customer represents more than 10% of our net revenues. Our top ten categories represent approximately 67% and 66% of our stations' total advertising net revenues for the years ended February 28, 2018 and 2019, respectively. Media was our largest category for the years ended February 28, 2018 and 2019, representing approximately 11% and 10% of our net revenues, respectively.

        A significant portion of our expenses varies in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our costs that do not vary as much in relation to revenue are mostly in our programming and general and administrative departments, such as talent costs, syndicated programming fees, utilities, office expenses and salaries. Lastly, our costs that are highly discretionary are costs in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience and market share.

Net revenues:

 
  For the years ended
February 28,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

   
 

Net revenues

  $ 44,557   $ 43,091   $ (1,466 )   (3.3 )%

        Net revenues decreased during the year ended February 28, 2019 mostly due to a decline in ticket sales for our largest concert, Summer Jam. Poor weather on the day of the concert negatively impacted ticket sales.

        We typically monitor the performance of our stations against the aggregate performance of the market in which we operate based on reports for the period prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter and syndication arrangements. Miller Kaplan reported gross revenues for the New York market decreased 2.0% for the year ended February 28, 2019, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were down 2.5% for the year ended February 28, 2019, as compared to the same period of the prior year.

40


Station operating expenses excluding depreciation and amortization expense:

 
  For the years ended
February 28,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

   
 

Station operating expenses excluding depreciation and amortization expense

  $ 33,094   $ 33,830   $ 736     2.2 %

        Station operating expenses excluding depreciation and amortization expense increased principally due to higher production costs for our largest concert, Summer Jam. In addition, our personnel costs increased in the back half of fiscal 2019 as we made a couple of strategic hires in our sales department.

Depreciation and amortization:

 
  For the years ended
February 28,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

   
 

Depreciation and amortization expense

  $ 1,117   $ 1,318   $ 201     18.0 %

        Depreciation and amortization expense increased due to broadcasting facility improvements that were placed into service during fiscal 2019.

Operating income:

 
  For the years ended
February 28,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

   
 

Operating income

  $ 10,346   $ 7,887   $ (2,459 )   (23.8 )%

        Operating income decreased due to the reduction in revenues and increase in operating expenses, as discussed above.

Provision for income taxes:

 
  For the years ended
February 28,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

   
 

Provision for income taxes

  $ 8,331   $ 2,518   $ (5,813 )   (69.8 )%

        Our provision for income taxes decreased due to a decline in operating income and the impact of the Tax Cuts and Jobs Act (the "Tax Act"), which was signed into law on December 22, 2017. As a result of the Tax Act, we remeasured our deferred tax balances to account for the reduction in the corporate federal rate, which caused us to book an additional $3.7 million of provision for income taxes in the year ended February 28, 2018.

        For purposes of the combined condensed carve out financial statements of WQHT and WBLS, the provision for income taxes was determined using the separate return method.

41


Net income:

 
  For the years ended
February 28,
   
   
 
 
  $
Change
  %
Change
 
 
  2018   2019  
 
  (As reported, dollar amounts
in thousands)

   
 

Net income

  $ 2,000   $ 5,369   $ 3,369     168.5 %

        Net income increased, despite a decrease in our operating income, due to a decline in our provision for income taxes in the fiscal year ended February 28, 2019 as compared to the fiscal year ended February 28, 2018, as discussed above.

Liquidity and Capital Resources

        Our primary sources of liquidity are cash on hand and cash provided by operations. Our stations' primary uses of cash provided by operations during the past few years have been capital expenditures, working capital and distributions to Emmis, and are expected to be capital expenditures, working capital, debt service requirements and repayment of debt after the closing of the Transactions. Additionally, we may grow in the future through acquisitions that may be financed with debt or equity, or any combination thereof. The Company continually projects its anticipated cash needs, which include its operating needs, capital needs, and principal and interest payments on its indebtedness. Following the Transactions, the Company will also incur costs associated with being a standalone public reporting company, as well as with respect to ongoing payments to EOC in connection with the Employee Leasing Agreement, the Management Agreement and other agreements with EOC relating to EOC's management of our operations. For further details relating to agreements with EOC, refer to "Related Party Transactions—Agreements with Emmis," beginning on page     . The Company intends to meet its cash requirements and obligations following the Transactions through operating cash flow. To the extent of any shortfall in operating cash flow following the Transactions, SG Broadcasting will fund a portion of Mediaco's cash requirements and obligations.

        At February 28, 2019 and May 31, 2019, we had no cash or cash equivalents on our combined condensed balance sheets because Emmis uses a centralized approach to cash management and financing of its operations, and none of Emmis' cash or cash equivalents were assigned to us in our combined financial statements. At February 28, 2019 and May 31, 2019, our net working capital was $5.9 million and $3.9 million, respectively. On March 1, 2019, we adopted ASC 842, Leases, which resulted in a current liability of $2.3 million as of May 31, 2019, negatively impacting our net working capital.

        At February 28, 2018 and 2019, we had no cash or cash equivalents on our combined balance sheets because Emmis uses a centralized approach to cash management and financing of its operations and none of Emmis' cash or cash equivalents were assigned to us in our combined financial statements. At February 28, 2018 and 2019, our net working capital was $5.3 million and $5.9 million, respectively.

        Cash provided by operating activities was $2.0 million and $2.4 million for the three-month periods ended May 31, 2018 and 2019, respectively. Capital expenditures were not material, and this cash provided by operating activities was swept to and retained by Emmis, as discussed above.

        Cash provided by operating activities was $11.2 million and $8.7 million for the years ended February 28, 2018 and 2019, respectively. Net cash used in investing activities, consisting solely of capital expenditures, were $0.7 million and $0.2 million, respectively. These net amounts, or $10.5 million and $8.5 million for the years ended February 28, 2018 and 2019, respectively, were swept to and retained by Emmis, as discussed above.

42


Description of Anticipated Indebtedness

        In connection with Transactions, we expect to enter into a senior secured term loan, which we expect will provide for a borrowing of $50,000,000 upon the close of the Transactions, with the net proceeds to be paid concurrently to Emmis as consideration for the Initial Contribution. We anticipate that the senior secured term loan will contain repayment terms, interest rates, financial covenants, and affirmative and negative covenants that are usual and customary for a facility of this nature and for a borrower similarly situated to Mediaco. We expect that the term loan will be secured and collateralized by Mediaco assets in a nature consistent with a senior secured term loan of this kind.

        Additionally, upon the close of the Transactions, Mediaco anticipates issuing to Emmis the Emmis Promissory Note in the amount of $5,000,000. The Emmis Promissory Note will have a maturity date of the fifth anniversary of its execution. For further details relating to the anticipated terms of the senior secured term loan and the Emmis Promissory Note, refer to Note (H) to the Unaudited Pro Forma Condensed Combined Financial Statements.

Intangibles

        As of February 28, 2019, approximately 76% of our total assets consisted of FCC broadcast licenses, the values of which depend significantly upon various factors including, among other things, market revenues and estimated market growth rates. In the case of our radio stations, we would not be able to operate the properties without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor the activities of our stations for compliance with regulatory requirements. Historically, our FCC licenses have been renewed (or a waiver has been granted pending renewal) at the end of their respective eight-year periods, and we expect that each FCC license will continue to be renewed in the future.

Seasonality

        Our results of operations are subject to seasonal fluctuations, which result in higher second and third quarter revenues and operating income. This seasonality is partly due to the younger demographic composition of WQHT. Advertisers increase spending during the summer months to target younger listeners. In addition, we produce a large outdoor concert in June every year, Hot 97's Summer Jam, which falls in our second fiscal quarter, resulting in higher revenues and generally higher operating income, depending on the success of the event, in the quarter. Finally, advertisers generally increase spending during the months of October and November, which are part of our third fiscal quarter, in anticipation of the holiday season.

Inflation

        The impact of inflation on operations has not been significant to date. However, there can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operating results.

Off-Balance Sheet Financings and Liabilities

        Other than lease commitments, legal contingencies incurred in the normal course of business, contractual commitments to purchase goods and services and employment contracts for key employees, all of which are discussed in Note 8 to the combined financial statements, the Company does not have any material off-balance sheet financings or liabilities. The Company does not have any majority-owned and controlled subsidiaries that are not included in the combined financial statements, nor does the Company have any interests in or relationships with any "special-purpose entities" that are not reflected in the combined financial statements or disclosed in the Notes to Combined Financial Statements.

43



UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

        The following unaudited pro forma condensed combined financial statements should be read in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations for Mediaco" and our audited and unaudited combined financial statements and accompanying notes included elsewhere in this Information Statement.

        Our unaudited pro forma condensed combined financial statements consist of an unaudited pro forma condensed combined balance sheet as of May 31, 2019 and unaudited pro forma condensed combined statements of operations for the three months ended May 31, 2018 and 2019 and the year ended February 28, 2019. The unaudited pro forma condensed combined financial statements are based on and have been derived from our historical combined financial statements included elsewhere in this Information Statement.

        In management's opinion, the unaudited pro forma condensed combined financial statements reflect certain adjustments that are necessary to present fairly our unaudited pro forma condensed combined results of operations and our unaudited pro forma condensed combined balance sheet as of and for the periods indicated. The pro forma adjustments give effect to events that are (i) directly attributable to the transactions described below, (ii) factually supportable, and, (iii) with respect to the statement of operations, expected to have a continuing impact on us. The pro forma adjustments are based on assumptions that management believes are reasonable given the best information currently available. Mediaco has elected to use the historical carrying value of the WQHT-FM and WBLS-FM assets and liabilities for financial reporting purposes rather than apply push-down accounting, which would have resulted in the assets and liabilities being recorded at fair value.

        The unaudited pro forma condensed combined financial statements are for illustrative and informational purposes only and are not intended to represent what our results of operations or financial position would have been had we operated as an independent, publicly traded company during the periods presented or if the transactions described below had actually occurred as of the dates indicated. The unaudited pro forma condensed combined financial statements also should not be considered indicative of our future results of operations or financial position as an independent, publicly traded company.

        The unaudited pro forma condensed combined financial statements give effect to the following transactions, which we refer to as the "Transactions," as if they each had occurred on May 31, 2019 for the unaudited pro forma condensed combined balance sheet and on March 1, 2018 for the pro forma condensed combined statements of operations:

44


        Our combined financial statements include expense allocations related to certain Emmis corporate functions, including, but not limited to, executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, and information technology. These expenses have been allocated to us based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount or other measures. We believe that this expense methodology, and the results thereof, is reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred if we would have operated as an independent, publicly traded company for the period presented. Following the Transactions, Emmis will continue to provide us with some of the services related to these functions pursuant to a Management Agreement in exchange for an agreed-upon fee and we expect to incur other costs to replace the services and resources that will not be provided by Emmis. We will also incur new costs relating to our public reporting and compliance obligations as an independent, publicly traded company. We have not adjusted the accompanying unaudited pro forma condensed combined statements of operations for these estimated costs as they are projected amounts based on estimates and are not factually supportable. For purposes of these unaudited pro forma condensed combined financial statements, we have assumed the sale of 7,628,000 shares of Mediaco Class B Shares to SG Broadcasting for $46.5 million of net proceeds and issuance of 2,372,000 shares of Mediaco Class A Shares to Emmis at par value. These assumptions are subject to change prior to the Distribution.

45



Unaudited Pro Forma Condensed Combined Balance Sheet

As of May 31, 2019

 
  Historical   Pro Forma
Adjustments
  Notes   Pro Forma  
 
  (Dollars in thousands)
 

ASSETS

                       

CURRENT ASSETS:

                       

Cash and cash equivalents

  $   $   (A)   $  

Accounts receivable, net

    8,079             8,079  

Prepaid expenses

    1,705             1,705  

Other

    174             174  

Total current assets

    9,958             9,958  

PROPERTY AND EQUIPMENT, NET

    2,238             2,238  

INTANGIBLE ASSETS, NET

    63,951             63,951  

OTHER ASSETS:

                     

Deferred tax assets

    6,124     (6,124 ) (B)      

Operating lease right of use assets

    12,267             12,267  

Deposits and other

    343             343  

Total other assets

    18,734     (6,124 )       12,610  

Total assets

  $ 94,881   $ (6,124 )     $ 88,757  

LIABILITIES AND EQUITY

                       

CURRENT LIABILITIES:

                       

Accounts payable and accrued expenses

  $ 1,044   $ 7,117   (C)   $ 8,161  

Accrued salaries and commissions

    584             584  

Deferred revenue

    1,132             1,132  

Income taxes payable

    919     (919 ) (B)      

Operating lease liabilities

    2,271             2,271  

Current portion of long-term debt

                 

Other

    81             81  

Total current liabilities

    6,031     6,198         12,229  

OPERATING LEASE LIABILITIES, NET OF CURRENT

    12,053             12,053  

LONG-TERM DEBT, NET OF CURRENT

        53,000   (D)     53,000  

OTHER NONCURRENT LIABILITIES

    85             85  

Total liabilities

    18,169     59,198         77,367  

COMMITMENTS AND CONTINGENCIES

                       

EQUITY:

                       

Net parent company investment

    76,712     (76,712 ) (E)      

Class A common stock, $.01 par value,            shares authorized; 2,372,000 shares issued and outstanding on a pro forma basis

        24   (F)     24  

Class B common stock, $.01 par value,            shares authorized; 7,628,000 shares issued and outstanding on a pro forma basis

        76   (F)     76  

Additional paid-in capital

        11,290   (F)     11,290  

Total equity

    76,712     (65,322 )       11,390  

Total liabilities and equity

  $ 94,881   $ (6,124 )     $ 88,757  

   

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

46



Unaudited Pro Forma Condensed Combined Statements of Operations

Three Months Ended May 31, 2019

 
  Historical   Pro Forma
Adjustments
  Notes   Pro Forma  
 
  (In thousands, except per share data)
 

NET REVENUES

  $ 9,838   $       $ 9,838  

OPERATING EXPENSES:

                       

Station operating expenses excluding depreciation and amortization expense

    7,337     313   (G)     7,650  

Depreciation and amortization

    323             323  

Total operating expenses

    7,660     313         7,973  

OPERATING INCOME

    2,178     (313 )       1,865  

INTEREST EXPENSE

        1,484   (H)     1,484  

INCOME BEFORE INCOME TAXES

    2,178     (1,797 )       381  

PROVISION FOR INCOME TAXES

    697     (565 ) (I)     132  

NET INCOME

  $ 1,481   $ (1,232 )     $ 249  

NET INCOME PER SHARE—BASIC AND DILUTED

              (J)   $ 0.02  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

              (J)     10,000  

   

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

47



Unaudited Pro Forma Condensed Combined Statements of Operations

Three Months Ended May 31, 2018

 
  Historical   Pro Forma
Adjustments
  Notes   Pro Forma  
 
  (In thousands, except per share data)
 

NET REVENUES

  $ 9,315   $       $ 9,315  

OPERATING EXPENSES:

                       

Station operating expenses excluding depreciation and amortization expense

    6,628     313   (G)     6,941  

Depreciation and amortization

    292             292  

Total operating expenses

    6,920     313         7,233  

OPERATING INCOME

    2,395     (313 )       2,082  

INTEREST EXPENSE

        1,484   (H)     1,484  

INCOME BEFORE INCOME TAXES

    2,395     (1,797 )       598  

PROVISION FOR INCOME TAXES

    773     (565 ) (I)     208  

NET INCOME

  $ 1,622   $ (1,232 )     $ 390  

NET INCOME PER SHARE—BASIC AND DILUTED

              (J)   $ 0.04  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

              (J)     10,000  

   

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

48



Unaudited Pro Forma Condensed Combined Statements of Operations

Year Ended February 28, 2019

 
  Historical   Pro Forma
Adjustments
  Notes   Pro Forma  
 
  (In thousands, except per share data)
 

NET REVENUES

  $ 43,091   $       $ 43,091  

OPERATING EXPENSES:

                       

Station operating expenses excluding depreciation and amortization expense

    33,830     1,250   (G)     35,080  

Depreciation and amortization

    1,318             1,318  

Loss on disposal of assets

    56               56  

Total operating expenses

    35,204     1,250         36,454  

OPERATING INCOME

    7,887     (1,250 )       6,637  

INTEREST EXPENSE

        5,935   (H)     5,935  

INCOME BEFORE INCOME TAXES

    7,887     (7,185 )       702  

PROVISION FOR INCOME TAXES

    2,518     (2,258 ) (I)     260  

NET INCOME

  $ 5,369   $ (4,927 )     $ 442  

NET INCOME PER SHARE—BASIC AND DILUTED

              (J)   $ 0.04  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

              (J)     10,000  

   

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

49



Notes to Unaudited Pro Forma Condensed Combined Financial Statements

(A)
Pro forma adjustments, which net to zero, include the following:

Net proceeds from senior credit facility

  $ 48,000  

Net proceeds from sale of Mediaco Class B Shares

    46,500  

Less: Distribution of debt and equity net proceeds to Emmis

    (91,500 )

Less: Distribution for estimated transaction fees and expenses

    (3,000 )

Total pro forma adjustment

  $  
(B)
Reflects the elimination of income tax balances because (i) we anticipate that Mediaco will receive a step-up in tax basis upon the completion of the Transactions, thereby eliminating the current book/tax differences as of the closing date, and (ii) the recorded tax payable balance will remain with Emmis upon closing of the transaction. After the closing of the Transactions, we expect to obtain a valuation of the acquired assets and liabilities, which will be used to determine the tax basis in these assets and liabilities, giving rise to new deferred tax assets and liabilities. The unaudited pro forma condensed combined financial statements do not reflect the establishment of any new deferred tax balances because the valuation of the assets and liabilities has not been completed. However, upon completion, we expect that the tax basis of acquired intangible assets will exceed the book basis and give rise to a net deferred tax asset.

(C)
Reflects adjustment for net working capital. Pursuant to the Transaction Agreement, Emmis agreed to leave $5.0 million of net working capital in Mediaco and Mediaco has agreed to pay this amount to Emmis on the nine month anniversary of the closing date. Furthermore, any net working capital balance in excess of $5.0 million is retained by Emmis. Under the terms of the Transaction Agreement, the current portion of operating lease liabilities and income taxes payable are excluded from the determination of net working capital. Accordingly, the calculation of net working capital as of May 31, 2019 under the Transaction Agreement is as follows:

Total current assets

  $ 9,958  

Less: Total current liabilities

    (6,031 )

Unadjusted net working capital

    3,927  

Plus: income taxes payable

    919  

Plus: current portion of operating lease liabilties

    2,271  

Net working capital, as adjusted

  $ 7,117  
(D)
Reflects $50.0 million of proceeds from borrowings under the senior credit facility and the $5.0 million Emmis Promissory Note, which are offset by estimated debt issuance costs of $2.0 million. The Emmis Promissory Note will carry interest at a base rate equal to the interest on any senior credit facility, 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 the Company pays such interest in kind, an additional 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 Emmis Promissory Note will contain a maturity date of the fifth anniversary of its issuance.

(E)
Represents the reclassification of parent net investment to additional paid-in capital at closing.

50



Notes to Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

(F)
Represents the adjustments to additional paid-in capital resulting from the Transactions, calculated as follows:

Issuance of shares(i)

  $ 46,400  

Distribution of debt and equity net proceeds to Emmis(ii)

    (91,500 )

Distribution for estimated transaction fees and expenses

    (3,000 )

Issuance of Emmis Promissory Note

    (5,000 )

Distribution of assets and liabilities that will remain with Emmis(iii)

    (12,322 )

Reclassification of NPI to APIC

    76,712  

Total pro forma adjustment

  $ 11,290  

(i)
Reflects the sale of 7,628,000 shares of Mediaco Class B Shares to Standard General for $46.5 million of net proceeds and issuance of 2,372,000 shares of Mediaco Class A Shares to Emmis at par value.

(ii)
Net proceeds from the sale of Mediaco Class B Shares and borrowings under the senior credit facility will be distributed to Emmis. This represents the adjustment to reflect $91.5 million of cash being distributed to Emmis at closing under the Transaction Agreement.

(iii)
Represents the distribution of certain net working capital balances and income tax balances that will be retained by Emmis.
(G)
Reflects the pro rata portion of the $1.25 million annual management fee to Emmis. Included in the historical amounts are certain allocated costs from Emmis. While the annual management fee is intended to replace a portion of these expenses, these expenses are not being eliminated in the pro forma financial statements. These allocated costs, included in station operating expenses, excluding depreciation and amortization in the accompanying combined financial statements were as follows for each period presented:
 
  Three Months
May 31, 2019
  Three Months
May 31, 2018
  Twelve Months
February 28, 2019
 

Allocated charges from Emmis

  $ 702   $ 796   $ 2,894  
(H)
Reflects interest expense related to the senior credit facility, the Emmis Promissory Note, amortization of the associated deferred debt issuance costs, and agent monitoring fees. The interest expense has been calculated based on the estimated rate for borrowings under the senior credit facility and Emmis Promissory Note of 9.7%, along with an estimated $2.0 million of debt issuance costs amortized over the term of the senior credit facility. The expected borrowing rate under the senior credit facility is LIBOR + 7.50% with a 2.00% LIBOR floor. The interest rate for the Emmis Promissory Note is the same as the senior credit facility. We have used 2.20% as

51



Notes to Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

    the applicable LIBOR for these pro forma statements. A 1/8 percent variance in our assumed interest rate would cause our annual interest expense to increase or decrease by $68 thousand.

 
  Three Months
May 31, 2019
  Three Months
May 31, 2018
  Twelve Months
February 28, 2019
 

Senior credit facility

  $ 1,213   $ 1,213   $ 4,850  

Emmis Promissory Note

    121     121     485  

Amortization of debt issuance fees

    100     100     400  

Agent monitoring fees

    50     50     200  

Total pro forma interest expense

  $ 1,484   $ 1,484   $ 5,935  
(I)
Reflects the impact of the pro forma adjustments on income tax calculated using our statutory tax rate of 31.4% for all periods presented. This represents our U.S. statutory rate during these periods, which differs from our effective rate and does not include the tax impact of valuation allowances.

(J)
We have calculated earnings per share based on assuming 10,000,000 shares were outstanding for the full period. This represents 2,372,000 shares of Mediaco Class A Shares issued to Emmis and immediately distributed to Emmis' shareholders on a pro rata basis, and 7,628,000 shares of Mediaco Class B Shares purchased by Standard General for $46.5 million in cash.

52



DESCRIPTION OF BUSINESS

        Unless otherwise indicated, the discussion below regarding Mediaco and its market opportunities assumes the completion of the Transactions. To better understand the separation, the Distribution, and Mediaco's business, risks, and financial position following the Transactions, you should carefully read this information statement in its entirety.

General

        Mediaco is a radio broadcasting media company, formed in June 2019, for the purpose of acquiring from Emmis and operating the New York City radio stations WBLS-FM and WQHT-FM and the associated assets. Mediaco is an Indiana corporation.

Business Strategy

        We are committed to improving the operating results of our core assets while simultaneously seeking future growth opportunities in new businesses. Our strategy is focused on the following operating principles:

Develop unique and compelling content and strong local brands

        Our established radio station brands have achieved and sustained a leading position in their respective market segments over many years. Knowledge of the local market and consistently producing unique and compelling content that meets the needs of our target audiences are critical to our success. As such, our radio stations make substantial investments in areas such as market research, data analysis and creative talent to ensure that our content remains relevant, has a meaningful impact on the communities we serve and reinforces the core brand image of each respective property.

Extend the reach and relevance of our local brands through digital platforms

        In recent years, our radio stations have placed substantial emphasis on enhancing the distribution of our content through digital and mobile platforms. We believe these digital platforms offer excellent opportunities to further enhance the relationships we have with our audiences by allowing them to consume and share our content in new ways and providing us with new distribution channels for one-to-one communication with them.

Deliver results to advertisers

        Competition for advertising revenue is intense and becoming more so. To remain competitive, our stations focus on sustaining and growing their audiences, optimizing their pricing strategy and developing innovative marketing programs for their clients that allow clients to interact with our stations' audiences in more direct and measurable ways. These programs often include elements such as on-air endorsements, events, contests, special promotions, Internet advertising, email marketing, interactive mobile advertising and online video. Our stations' ability to deploy multi-touchpoint marketing programs allows the stations to deliver a stronger return-on-investment for our clients while simultaneously generating ancillary revenue streams for our media properties.

Extend sales efforts into new market segments

        Given the competitive pressures in many of our "traditional" advertising categories, our stations have been expanding their network of advertiser relationships into not-for-profits, political advertising, corporate philanthropy, environmental initiatives and government agencies. These efforts primarily focus on the health care and education sectors. We believe our stations' capabilities can address these clients' under-served needs.

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Enhance the efficiency of our operations

        We believe it is essential that we operate our businesses as efficiently as possible. We intend to regularly review our business operations and reduce costs or realign resources as necessary. We have also entered into a Management Agreement that allows us to leverage Emmis' common technology platforms across our radio stations to reduce our costs.

Pursue acquisition and investment opportunities

        We may pursue acquisitions or other investment opportunities in the radio industry or in a variety of other industries and market sectors. We believe that consummating such acquisitions and investments can be a valuable tool in our efforts to grow our business.

Radio Stations

        In the following table, "Market Rank by Revenue" is the ranking of the market revenue size of the principal radio market served by our stations among all radio markets in the United States. Market revenue rankings are from BIA Advisory Services, LLC's Media Access Pro database as of July 18, 2019. "Ranking in Primary Demographic Target" is the ranking of the station within its designated primary demographic target among all radio stations in its market based on the June 2019 Nielsen Audio, Inc. ("Nielsen") Portable People Meter results. "Station Audience Share" represents a percentage generally computed by dividing the average number of persons in the primary demographic listening to a particular station during specified time periods by the average number of such persons in the primary demographic for all stations in the market area as determined by Nielsen.

STATION AND
MARKET
  MARKET
RANK BY
REVENUE
  FORMAT   PRIMARY
DEMOGRAPHIC
TARGET AGES
  RANKING IN
PRIMARY
DEMOGRAPHIC
TARGET
  STATION
AUDIENCE
SHARE

New York, NY

  2                

WQHT-FM

      Hip-Hop   18 - 34   2   6.1

WBLS-FM

      Urban Adult Contemporary   25 - 54   4 (t) 5.2

(t)
Indicates the station tied with another station for the stated ranking.

New Technologies

        We believe that the growth of new technologies not only presents challenges, but also opportunities for broadcasters. The primary challenge is increased competition for the time and attention of our listeners. The primary opportunity is to further enhance the relationships we already have with our listeners by expanding products and services offered by our radio stations and to increase distribution to in-home devices like smart speakers, as well as portable devices like smartphones.

Community Involvement

        We believe that to be successful, we must be integrally involved in the communities we serve. We see ourselves as community partners. To that end, both of our radio stations participate in many community programs, fundraisers and activities that benefit a wide variety of causes. Charitable organizations that have been the beneficiaries of our support include, among others, the Harlem Chamber of Commerce, the Sarcoidosis Foundation, New York Cares, American AIDS Foundation and the Queens Police Service Area Community Counsel.

        The National Association of Broadcasters Education Foundation recognized WQHT-FM in New York for its outreach after Hurricane Sandy, both for the news coverage it provided and the relief

54


efforts it organized in the weeks after the storm. In 2017, WBLS-FM won a national Crystal Award from the National Association of Broadcasters.

Industry Involvement

        We have an active leadership role in a wide range of industry organizations. Our senior executives have served in various capacities with industry associations, including as directors of the National Association of Broadcasters, the Radio Advertising Bureau, the Nielsen Audio Advisory Council, and the Media Financial Management Association. Our chief executive officer has been honored with the National Association of Broadcasters' "National Radio Award," was named Radio Ink's "Radio Executive of the Year," and was named the 2017 recipient of the Broadcasters Foundation of America's "Lowry Mays Excellence in Broadcasting Award." In 2018, our chief financial officer was awarded Media Financial Management's "Rainmaker Award" recognizing his efforts and contributions in helping Media Financial Management's growth initiatives. Our other management and on-air personalities have won numerous industry awards.

Competition

        Radio broadcasting stations compete with the other broadcasting stations in their respective market areas, as well as with other advertising media such as newspapers, cable, magazines, outdoor advertising, transit advertising, the Internet, satellite radio, direct marketing and mobile and wireless device marketing. Competition within the broadcasting industry occurs primarily in individual market areas, so that a station in one market (e.g., New York) does not generally compete with stations in other markets (e.g., Austin). Our stations face competition from other stations with substantial financial resources, including stations targeting the same demographic groups. In addition to management experience, factors that are material to competitive position include the station's rank in its market in terms of the number of listeners, authorized power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area. We attempt to improve our competitive position with programming and promotional campaigns aimed at the demographic groups targeted by our stations. We also seek to improve our position through sales efforts designed to attract advertisers that have done little or no radio advertising by emphasizing the effectiveness of radio advertising in increasing the advertisers' revenues. The policies and rules of the Federal Communications Commission (the "FCC") permit certain joint ownership and joint operation of local stations. Our radio stations take advantage of these joint arrangements when appropriate in an effort to lower operating costs and to offer advertisers more attractive rates and services. Although we believe that each of our stations can compete effectively in its market, there can be no assurance that any of our stations will be able to maintain or increase its current audience ratings or advertising revenue market share.

        Although the broadcasting industry is highly competitive, barriers to entry exist. The operation of a broadcasting station in the United States requires a license from the FCC. Also, the number of stations that can operate in a given market is limited by the availability of the frequencies that the FCC will license in that market, as well as by the FCC's multiple ownership rules regulating the number of stations that may be owned or controlled by a single entity, and cross ownership rules which limit the types of media properties in any given market that can be owned by the same person or company.

Advertising Sales

        Our stations derive their advertising revenue from local and regional advertising, as well as from the sale of national advertising. Local and most regional sales are made by a station's sales staff. National sales are made by firms specializing in such sales, which are compensated on a commission-only basis. We believe that the volume of national advertising revenue tends to adjust to shifts in a station's audience share position more rapidly than does the volume of local and regional

55


advertising revenue. During the year ended February 28, 2019, approximately 15% of our total advertising revenues were derived from national sales, and 85% were derived from local sales.

Non-Traditional Revenues

        Our stations are involved with numerous events in the market in which we operate that support the local community, entertain our audiences, and better connect our listeners with our stations and our advertisers. In most cases, a third party produces the event, which we help promote, and we sell certain sponsorship opportunities to our advertisers. In these situations, we do not bear financial risk on the success of the event. In limited cases, such as our two signature events, Hot 97's Summer Jam and WBLS' Circle of Sisters, we produce the event, including securing the performing artists and venue, and are primarily responsible for the financial risk and reward, including ticket and sponsorship sales associated with the event.

Employees

        The Company is not expected to have any employees during the term of the Employee Leasing Agreement. As of June         , 2019, approximately        full-time employees and approximately        part-time employees would have been employed by Emmis under the Employee Leasing Agreement to provide services for the Company, four of whom act as the Company's executive officers. Approximately        of those employees were represented by unions at the Mediaco radio stations. Mediaco considers relations with employees who provide services under the Employee Leasing Agreement to be good.

Facilities

        The types of properties required to support our radio stations include offices, studios and transmitter/antenna sites. We lease our studio and office spaces. Our stations' studios are housed within its offices in Manhattan. We generally consider our facilities to be suitable and of adequate size for our current and intended purposes. We lease primary and backup transmitter/antenna sites for WQHT and WBLS in Manhattan. With regard to WBLS, we intend to lease an additional backup transmitter/antenna site in Lyndhurst, New Jersey from WLIB Tower LLC, an Indiana corporation and subsidiary of Emmis ("WLIB") pursuant to a transmitter/antenna site lease. The transmitter/antenna site lease is for an initial term of 20 years, with two automatic renewal periods of 10 years each, unless Mediaco provides notice to WLIB of its intention to not renew the lease for an additional term. The transmitter/antenna site for each station is generally located so as to provide maximum market coverage, consistent with the station's FCC license. In general, we do not anticipate difficulties in renewing the transmitter/antenna site leases or in leasing additional space or sites if required.

        Our principal executive offices are located at 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, in approximately 115,000 square feet of office space owned by Emmis and which we share with Emmis during the term of the Management Agreement.

Legal Proceedings

        We are not a party to any material legal proceedings at this time. From time to time, we may be subject to various legal proceedings and claims, which may have a material adverse effect on our financial position or results of operations.

Federal Regulation of Broadcasting

        Radio broadcasting in the United States is subject to the jurisdiction of the FCC under the Communications Act of 1934 (the "Communications Act"), as amended in part numerous times, including by the Telecommunications Act of 1996 (the "1996 Act"). Radio broadcasting is prohibited

56


except in accordance with a license issued by the FCC upon a finding that the public interest, convenience and necessity would be served by the grant of such license. The FCC has the power to revoke licenses for, among other things, false statements made in applications or willful or repeated violations of the Communications Act or of FCC rules. In general, the Communications Act provides that the FCC shall allocate broadcast licenses for radio stations in such a manner as will provide a fair, efficient and equitable distribution of service throughout the United States. The FCC determines the operating frequency, location and power of stations; regulates the equipment used by stations; and regulates numerous other areas of radio broadcasting pursuant to rules, regulations and policies adopted under authority of the Communications Act. The Communications Act, among other things, prohibits the assignment of a broadcast license or the transfer of control of an entity holding such a license without the prior approval of the FCC.

        The following is a brief summary of certain provisions of the Communications Act and of specific FCC regulations and policies. Reference should be made to the Communications Act, as well as FCC rules, public notices and rulings for further information concerning the nature and extent of federal regulation of radio stations. Legislation has been introduced from time to time which would amend the Communications Act in various respects, and the FCC from time to time considers new regulations or amendments to its existing regulations. We cannot predict whether any such legislation will be enacted or whether new or amended FCC regulations will be adopted or what their effect would be on Mediaco.

LICENSE RENEWAL.

        Radio stations operate pursuant to broadcast licenses that are ordinarily granted by the FCC for maximum terms of eight years and are subject to renewal upon approval by the FCC. The following table sets forth our FCC license expiration dates in addition to the call letters, license classification, antenna elevation above average terrain, power and frequency of all owned stations as of July 1, 2019:

Radio Market
  Stations   City of License   Frequency   Expiration
Date
of License
  FCC Class   Height
Above
Average
Terrain
(in feet)
  Power
(in Kilowatts)

New York, NY

  WQHT-FM   New York, NY   97.1   June 2022   B   1,339   6.7

New York, NY

  WBLS-FM   New York, NY   107.5   June 2022   B   1,362   4.2

        Under the Communications Act, at the time an application is filed for renewal of a station license, parties in interest, as well as members of the public, may apprise the FCC of the service the station has provided during the preceding license term and urge the denial of the application. If such a petition to deny presents information from which the FCC concludes (or if the FCC concludes on its own motion) that there is a "substantial and material" question as to whether grant of the renewal application would be in the public interest under applicable rules and policy, the FCC may conduct a hearing on specified issues to determine whether the renewal application should be granted. The Communications Act provides for the grant of a renewal application upon a finding by the FCC that the licensee:

        If the FCC cannot make such a finding, it may deny the renewal application, and only then may the FCC consider competing applications for the same frequency. In a vast majority of cases, the FCC renews a broadcast license even when petitions to deny have been filed against the renewal application.

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REVIEW OF OWNERSHIP RESTRICTIONS.

        The FCC is required by statute to review all of its broadcast ownership rules on a quadrennial basis (i.e., every four years) and to repeal or modify any of its rules that are no longer "necessary in the public interest."

        Despite several such reviews and appellate remands, the FCC's rules limiting the number of radio stations that may be commonly owned in a local market have remained largely intact since their initial adoption following the 1996 Act. The FCC's previous ownership reviews have been subject to litigation. The most recent court decision was issued by the Third Circuit in May 2016 and concerned the FCC's then-pending 2010 and 2014 reviews. In August 2016, the FCC concluded its 2010 and 2014 reviews, deciding to retain the local radio ownership rule, as well as several other media ownership rules, without significant alteration. Various parties appealed the FCC's August 2016 order, and other parties filed petitions for reconsideration. In November 2017, the FCC issued a decision on reconsideration of the August 2016 Order (the "November 2017 Order") which, while making only a minor change to the local radio ownership rule (discussed below), eliminated the restrictions on newspaper/broadcast cross-ownership and radio/television cross-ownership and relaxed the local television ownership rule. Several parties have jointly appealed the FCC's November 2017 Order, and their appeal remains pending. In December 2018, the FCC commenced its 2018 quadrennial review of its media ownership regulations. Among other things, the FCC is seeking comment on all aspects of the local radio ownership rule's implementation and whether the current version of the rule remains necessary in the public interest. We cannot predict whether the appeal or current review proceeding will result in modifications of the ownership rules or the impact (if any) that such modifications would have on our business.

        The discussion below reviews the pertinent ownership rules currently in effect as a result of the FCC's August 2016 and November 2017 Orders.

Local Radio Ownership:

        The local radio ownership rule limits the number of commercial radio stations that may be owned by one entity in a given radio market based on the number of radio stations in that market:

        The New York market has at least 45 radio stations.

        Although the FCC's quadrennial review decisions have not changed the numerical caps under the local radio rule, the FCC adjusted the rule in June 2003 by deciding that both commercial and noncommercial stations could be counted in determining the number of stations in a radio market. The decision also altered the definition of the relevant local market for purposes of the rule. The FCC "grandfathered" existing station "clusters" not in compliance with the numerical caps as calculated pursuant to the new market definition, but provided that they could be sold intact only to small businesses meeting certain requirements. In December 2007, the FCC expanded this policy to allow an owner to sell a grandfathered station cluster to any buyer, so long as the buyer committed to file, within 12 months, an application with the FCC to transfer the excess station(s) to an eligible small

58


business or to a trust for ultimate sale to such an entity. Although the Third Circuit vacated the FCC's selected definition of small businesses eligible to purchase clusters that exceed the numerical limits in 2011, the FCC reinstated that definition in its August 2016 order.

Cross-Media Ownership:

        Prior to the November 2017 Order, the FCC's rules generally restricted the common ownership of (1) certain combinations of radio and television stations and (2) a daily newspaper and a radio or television station in the same local market. The November 2017 Order, which has, as noted above, been appealed, eliminated these restrictions.

ATTRIBUTION OF OWNERSHIP INTERESTS.

        In applying its ownership rules, the FCC has developed specific criteria that it uses to determine whether a certain ownership interest or other relationship with an FCC licensee is significant enough to be "attributable" or "cognizable" under its rules. Specifically, among other relationships, certain shareholders, officers and directors of a broadcasting company are deemed to have an attributable interest in the licenses held by that company, such that there would be a violation of the FCC's rules where the broadcasting company and such a shareholder, officer or director together hold attributable interests in more than the permitted number of stations or a prohibited combination of outlets in the same market. The FCC's regulations generally deem the following relationships and interests to be attributable for purposes of its ownership restrictions:

        To assess whether a voting stock interest in a direct or indirect parent corporation of a broadcast licensee is attributable, the FCC uses a "multiplier" analysis in which non-controlling voting stock interests are deemed proportionally reduced at each non-controlling link in a multi-corporation ownership chain.

        Under existing FCC policy, in the case of corporations having a "single majority shareholder," the interests of minority shareholders are generally not deemed attributable. Because SG Broadcasting's voting interest in the Company currently exceeds 50%, this exemption appears to apply to the Company. Elimination of the exemption is, however, under consideration by the FCC. If the exemption is eliminated, or if SG Broadcasting's voting interest falls to or below 50%, then the interests of any minority shareholders that meet or exceed the thresholds described above would become attributable and would be combined with the Company's interests for purposes of determining compliance with FCC ownership rules.

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        Ownership-rule conflicts arising as a result of aggregating the media interests of the Company and its attributable shareholders could require divestitures by either the Company or the affected shareholders. Any such conflicts could result in Mediaco being unable to obtain FCC consents necessary for future acquisitions. Conversely, Mediaco's media interests could operate to restrict other media investments by shareholders having or acquiring an interest in Mediaco.

ALIEN OWNERSHIP.

        Under the Communications Act, no FCC license may be held by a corporation if more than one-fifth of its capital stock is owned or voted by aliens or their representatives, a foreign government or representative thereof, or an entity organized under the laws of a foreign country (collectively, "Non-U.S. Persons"). Furthermore, the Communications Act provides that no FCC license may be granted to an entity directly or indirectly controlled by another entity of which more than one-fourth of its capital stock is owned or voted by Non-U.S. Persons if the FCC finds that the public interest will be served by the denial of such license. The FCC staff had interpreted this provision to require an affirmative public interest finding to permit the grant or holding of a license, and had made such a finding only in limited circumstances. In November 2013 the FCC clarified that it would accept requests to allow foreign investment above 25% in broadcast holding companies, and that it would evaluate those requests on a case-by-case basis to determine whether the requesting party had provided a sufficient public interest showing. In September 2016, the FCC adopted rules to simplify and streamline the process for requesting authority to exceed the 25% indirect foreign ownership limit in broadcast licensees and revised the methodology that publicly traded broadcasters must use to assess their compliance with the foreign ownership restrictions. The foregoing restrictions on alien ownership apply in modified form to other types of business organizations, including partnerships and limited liability companies.

ASSIGNMENTS AND TRANSFERS OF CONTROL.

        The Communications Act prohibits the assignment of a broadcast license or the transfer of control of a broadcast licensee without the prior approval of the FCC. In determining whether to grant such approval, the FCC considers a number of factors, including compliance with the various rules limiting common ownership of media properties, the "character" of the assignee or transferee and those persons holding attributable interests therein and compliance with the Communications Act's limitations on alien ownership as well as other statutory and regulatory requirements. When evaluating an assignment or transfer of control application, the FCC is prohibited from considering whether the public interest might be served by an assignment of the broadcast license or transfer of control of the licensee to a party other than the assignee or transferee specified in the application.

PROGRAMMING AND OPERATION.

        The Communications Act requires broadcasters to serve the "public interest." Beginning in the late 1970s, the FCC gradually relaxed or eliminated many of the more formalized procedures it had developed to promote the broadcast of certain types of programming responsive to the needs of a station's community of license. However, licensees are still required to present programming that is responsive to community problems, needs and interests and to maintain certain records demonstrating such responsiveness.

        Federal law prohibits the broadcast of obscene material at any time and the broadcast of indecent material during specified time periods; these prohibitions are subject to enforcement by the FCC and carry fines of up to $407,270 for each violation or each day of a continuing violation, up to a maximum of $3,759,410 per continuing violation. Our radio stations have received, and may receive in the future, letters of inquiry or other notifications concerning alleged violations of the indecency rules. We cannot

60


predict the outcome of any indecency complaint proceeding or investigation or the extent or nature of future FCC enforcement actions.

        The FCC's indecency rules have also been the subject of litigation. In July 2010, the Second Circuit held the FCC's indecency standards to be unconstitutionally vague in violation of the First Amendment. The Second Circuit later vacated the agency decision at issue in another appeal based on its earlier decision. The FCC challenged these rulings in the Supreme Court. In June 2012 the Supreme Court vacated the Second Circuit's decision, finding that the FCC had failed to provide adequate notice regarding the contours of its indecency policy with respect to the broadcasts at issue in the underlying proceedings, but leaving open the possibility that the agency might be able to enforce the prohibition on broadcast indecency in the future. The Third Circuit issued a decision vacating another FCC indecency ruling in November 2011, and the Supreme Court denied the FCC's request for review of this decision. It is not clear how the FCC will apply these judicial decisions to outstanding complaints, including any that may involve our radio stations, or how they will impact future FCC policies in this area. The FCC has also solicited public comment on whether, and if so how, to revise its indecency enforcement policies, in a proceeding that remains pending.

        Federal law also imposes sponsorship identification (or "payola") requirements, which mandate the disclosure of information concerning programming the airing of which is paid for by third parties. Our radio stations have received, and may receive in the future, letters of inquiry or other notifications concerning alleged violations of the sponsorship identification rules. We cannot predict the outcome of any sponsorship identification complaint proceeding or investigation or the extent or nature of future FCC enforcement actions.

        Stations also must pay regulatory and application fees and follow various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identification, equal employment opportunities, contest and lottery advertisements, and technical operations, including limits on radio frequency radiation. Radio stations are also required to maintain an online public file where listeners and other interested parties may obtain information on the station and its activities.

        Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary fines, the grant of "short-term" (less than the maximum term) license renewals or, for particularly egregious violations, the denial of a license renewal application or the revocation of a license.

ADDITIONAL DEVELOPMENTS AND PROPOSED CHANGES.

        The FCC has adopted rules implementing a low power FM ("LPFM") service, and approximately 800 such stations are in operation. In November 2007, the FCC adopted rules that, among other things, enhance LPFM's interference protection from subsequently-authorized full-service stations. Congress then passed legislation eliminating certain minimum distance separation requirements between full-power and LPFM stations, thereby reducing the interference protection afforded to FM stations. As required by the legislation, the FCC in January 2012 submitted a report to Congress indicating that the results of a statutorily mandated economic study indicated that, on the whole, LPFM stations do not currently have, and in the future are unlikely to have, a demonstrable economic impact on full-service commercial FM radio stations. In March 2012, the FCC modified its rules to permit the processing of additional LPFM applications and to implement the legislative requirements regarding interference protection. The FCC opened a window for the filing of applications seeking authority to construct or make major changes to LPFM facilities which extended from October 15 through November 14, 2013, and in which it received more than 2,800 LPFM applications. The FCC continues to process the applications submitted during the window and, although to date there have been very few, if any,

61


instances of LPFM stations interfering with full-power radio stations, we cannot predict whether any LPFM stations will actually interfere with the coverage of our radio stations in the future.

        In June 2009, the FCC adopted rules that allow an AM radio station to use currently authorized FM translator stations to retransmit the AM station's programming within the AM station's authorized service area. In October 2015, the FCC issued an order that adopted a two-stage process for AM radio stations to acquire additional FM translators. The FCC has also adopted certain changes to its rules that govern AM radio stations, and has sought comment on additional changes to those rules, which remain pending.

        The FCC also previously authorized the launch and operation of a satellite digital audio radio service ("SDARS") system. In July 2008, the two original SDARS companies-Sirius Satellite Radio, Inc. and XM Satellite Radio Holdings, Inc.-merged into a new company called Sirius XM, which currently provides nationwide programming service. Sirius XM also offers channels that provide local traffic and weather information for major cities.

        In October 2002, the FCC issued an order selecting a technical standard for terrestrial digital audio broadcasting ("DAB," also known as high definition radio or "HD Radio®"). The in-band, on-channel ("IBOC") technology chosen by the agency allows AM and FM radio broadcasters to introduce digital operations and permits existing stations to operate on their current frequencies in either full analog mode, full digital mode, or a combination of both (at reduced power). In March 2005, the FCC announced that, pending adoption of final rules, it would allow stations on an interim basis to broadcast multiple digital channels. In March 2007, the FCC adopted service rules for HD Radio®. Significantly, the FCC decided to allow FM stations to broadcast digital multicast streams without seeking prior FCC authority, to provide datacasting services, to lease excess digital capacity to third parties, and to offer subscription services pursuant to requests for experimental authority. Under these rules, FM stations may operate in the "extended hybrid mode," which provides more flexibility for multicasting and datacasting services; and may use separate analog and digital antennas without seeking prior FCC authority. FM translators, FM boosters and low power FM stations may also broadcast digitally where feasible, and AM stations may now operate digitally during nighttime hours. The rules mandate that broadcasters offering digital service provide at least one free over-the-air signal comparable in quality to their analog signal and that they simulcast their analog programming on their main digital stream, but the FCC chose not to adopt rules that would permit broadcasters to operate exclusively in digital. The FCC also declined to set any mandatory deadline for broadcasters to convert to digital operations, or to impose additional public interest obligations (beyond those that already apply to analog broadcasters) on broadcasters using IBOC technology. In January 2010, the FCC revised its DAB service rules to allow FM DAB stations to increase the permitted power levels of DAB transmissions. In September 2008, shortly after approving the Sirius-XM merger, the FCC sought comment on whether it should mandate the inclusion of HD Radio® features in satellite radio receivers. That proceeding remains pending, and we cannot predict its outcome or the impact that a decision might have on our business.

        In order to broadcast musical compositions or to stream them over the Internet, the Company must pay royalties to copyright owners of musical compositions (typically, songwriters and publishers). These copyright owners often rely on organizations known as performing rights organizations, which negotiate licenses with copyright users for the public performance of their compositions, collect royalties, and distribute them to copyright owners. The three major performing rights organizations, from which our stations have licenses and to which our stations pay royalties, are the American Society of Composers, Authors, and Publishers, Broadcast Music, Inc., and SESAC, Inc. These rates are set periodically, are often negotiated by organizations acting on behalf of broadcasters, and may increase in the future. It also is possible that songwriters or publishers may disassociate with these performing rights organizations, or that additional such organizations could emerge in the future. In 2013 a new performing rights organization, named Global Music Rights ("GMR"), was formed. GMR has obtained

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the rights to certain copyrights and is seeking to negotiate individual licensing agreements with radio stations for songs within its repertoire. GMR and the Radio Music License Committee, Inc. ("RMLC"), which negotiates music licensing fees with performance rights organizations on behalf of many radio stations, have initiated antitrust litigation against one another, which remains pending. In addition, there has been litigation concerning whether the consent decrees between the Department of Justice ("DOJ") and major performance rights organizations require so-called "full-work" licenses (which would allow a license-holder to play all of the works in a performance rights organization's repertoire), most recently resulting in a ruling by a federal appeals court that they do not. If a significant number of musical composition copyright owners withdraw from the established performing rights organizations, if new performing rights organizations form to license compositions that are not already licensed, or if the consent decrees between the DOJ and certain major performance rights organizations are eliminated, our stations' royalty rates or negotiation costs could increase. Our stations' royalty rates or negotiation costs could also change as a result of GMR/RMLC litigation or the resolution of the full-work licensing issue.

        In order to stream music over the Internet, our stations must also obtain licenses and pay royalties to the owners of copyrights in sound recordings (typically, artists and record companies). These royalties are in addition to royalties for Internet streaming that must also be paid to performance rights organizations. The Copyright Royalty Board ("CRB") set a rate for the 2016-2020 license period for performances by non-subscription noninteractive services of 0.17 cent per listener per song, and a rate for noninteractive subscription services of 0.22 cent per listener per song, both of which are subject to changes that mirror changes in the Consumer Price Index. A proceeding to establish the rates for 2021-2025 is expected to begin in 2019.

        Sound recordings fixed on or after February 15, 1972 are protected by federal copyright law. Sound recording copyright owners have asserted that state law provides copyright protection for recordings fixed before that date ("pre-72 recordings"). Sound recording copyright owners have sued radio broadcasters and digital audio transmission services for unauthorized public performances and reproductions of pre-72 recordings under various state laws. In October 2018, federal legislation was signed into law that applies a statutory licensing regime to pre-72 recordings similar to that which governs post-72 recordings. Among other things, the new law extends remedies for copyright infringement to owners of pre-72 recordings when recordings are used without authorization. The new law creates a public performance right for pre-72 recordings streamed online that may increase our licensing costs.

        Legislation also has previously been introduced in Congress that would require the payment of performance royalties to artists, musicians, or record companies whose music is played on terrestrial radio stations, ending a long-standing copyright law exception. If enacted, such legislation could have an adverse impact on the cost of music programming.

        Congress and the FCC also have under consideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of additional matters that could, directly or indirectly, affect the operation, ownership and profitability of our broadcast stations, result in the loss of audience share and advertising revenues for our broadcast stations and/or affect our ability to acquire additional broadcast stations or finance such acquisitions. Such matters include, but are not limited to:

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        We cannot predict whether any proposed changes will be adopted, what other matters might be considered in the future, or what impact, if any, the implementation of any of these proposals or changes might have on our business. The foregoing is only a brief summary of certain provisions of the Communications Act and of specific FCC regulations. Reference should be made to the Communications Act, as well as FCC regulations, public notices and rulings for further information concerning the nature and extent of federal regulation of broadcast stations.

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MANAGEMENT

Our Board of Directors and Executive Officers

Executive Officers Following the Distribution

        The following table sets forth information regarding individuals who are serving as our executive officers, and are expected to continue to serve following the Distribution, and is followed by biographical information. All of our executive officers currently are employees of Emmis, and some also serve as executive officers of Emmis. Following the Distribution, these individuals will continue to serve in their roles with Emmis in addition to their roles as our executive officers.

NAME
  POSITION   AGE AT
SEPTEMBER     ,
2019
  YEAR FIRST
ELECTED
OFFICER

Jeffrey H. Smulyan

  Chief Executive Officer   72   2019

Patrick M. Walsh

  President and Chief Operating Officer   52   2019

J. Scott Enright

  Executive Vice President, General Counsel and Secretary   56   2019

Ryan A. Hornaday

  Executive Vice President, Chief Financial Officer and Treasurer   45   2019

Biographical Information for Executive Officers

        Jeffrey Smulyan was appointed our Chief Executive Officer and a member of our board of directors in June 2019. Mr. Smulyan founded Emmis in 1979 and serves as its Chairman of the board of directors and Chief Executive Officer. At Emmis, he has held the positions of Chairman of the board of directors and Chief Executive Officer since 1981 and was President until August 2015. Mr. Smulyan began working in radio in 1973, and has owned one or more radio stations since then. Formerly, he was also the owner and chief executive officer of the Seattle Mariners Major League Baseball team. He is former Chairman of the Radio Advertising Bureau; a former director of The Finish Line, a sports apparel manufacturer; and serves as a Trustee of his alma mater, the University of Southern California. Among other awards, Mr. Smulyan has received the National Radio Award, been inducted into the Broadcasting and Cable Hall of Fame, been named a "Giant of Broadcasting" by the Library of American Broadcasting, and been honored as an Indiana Living Legend.

        Patrick Walsh was appointed our President and Chief Operating Officer in June 2019 and was appointed to our board of directors on                   , 2019. Mr. Walsh also serves as the President and Chief Operating Officer of Emmis, positions he has held since August 2015. Previously, he was Executive Vice President, Chief Financial Officer and Chief Operating Officer of Emmis, having joined Emmis in September 2006. Mr. Walsh joined Emmis from iBiquity Digital Corporation (now Xperi Corporation), the developer and licensor of HD Radio technology, where he served as Chief Financial Officer and Senior Vice President from 2002 to 2006. Prior to joining iBiquity, Mr. Walsh was a management consultant for McKinsey & Company, and served in various management positions at General Motors and Deloitte. Mr. Walsh also serves as a director and member of the Executive Committee of the National Association of Broadcasters, and a director of the Radio Advertising Bureau, the Radio Music License Committee, and the Center for Leadership Development. He also sits on the Alumni Board of Governors at the Ross School of Business Administration at the University of Michigan.

        Scott Enright was appointed our Executive Vice President, General Counsel and Secretary in June 2019 and was appointed to our board of directors on                  , 2019. Mr. Enright also serves as Executive Vice President, General Counsel and Secretary of Emmis, a position he has held since March 2009. Previously he served as Senior Vice President, Associate General Counsel and Secretary from

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September 2006 to February 2009 and as Vice President, Associate General Counsel and Assistant Secretary from the date he joined Emmis in October 1998, previously being a partner at the law firm Bose McKinney & Evans. Mr. Enright serves on the boards of Digonex Technologies, Inc. (a dynamic pricing company) and Broadcaster Traffic Consortium, LLC (an aggregator of radio broadcast spectrum used to distribute traffic data to in-dash and hand held mapping devices), as well as on the boards of charitable organizations such as Goodwill of Central and Southern Indiana, Inc., EdChoice, Inc. (formerly the Milton and Rose D. Friedman Foundation) and the Endowment of the Second Presbyterian Church of Indianapolis.

        Ryan Hornaday was appointed our Executive Vice President, Chief Financial Officer and Treasurer in June 2019. Mr. Hornaday also serves as Executive Vice President, Chief Financial Officer and Treasurer of Emmis, a position he has held since August 2015. Previously, Mr. Hornaday served as Senior Vice President—Finance and Treasurer from December 2008 to July 2015. Mr. Hornaday joined Emmis in 1999. Mr. Hornaday also serves as a director of Choices, Inc. (a non-profit organization that provides cross system coordination services for youth and their families) and as a community adviser to the Finance Committee of The Children's Museum of Indianapolis.

Board of Directors Following the Distribution

        Upon completion of the Transactions, our board of directors is expected to be comprised of seven members, three of whom will be executives of Emmis. Each of our directors will serve until the first annual meeting of our shareholders and until his or her successor is duly elected and qualified. Thereafter, the holders of Mediaco Class A Shares will be entitled to elect three directors and holders of Mediaco Class B Shares will be entitled to elect four directors, each to serve until the next annual meeting of our shareholders and until his or her successor is duly elected and qualified. Under Mediaco's Articles of Incorporation, during the term of the Management Agreement or so long as amounts remain outstanding under the Emmis Promissory Note, Mediaco's board of directors is required to nominate three persons specified by EOC, and no other persons, to serve as Mediaco Class A Directors. We expect our board of directors to determine that each of Andrew Glaze, Laura Lee, Mary Beth McAdaragh and Deborah McDermott, listed in the table below, satisfy Nasdaq's listing standards for independence. We further expect that our By-Laws will provide that a majority of the entire board of directors may at any time increase or decrease the number of directors. However, the number of directors may never be less than six, nor more than fifteen, unless our Articles of Incorporation are amended.

        The following table sets forth those individuals expected to serve on our board of directors following the Distribution, as well as the anticipated membership of our Audit Committee and Compensation Committee. Biographical information is provided for each director (other than Messrs. Smulyan, Walsh, and Enright, whose biographical information is set forth above).

NAME
  AGE AT
SEPTEMBER     ,
2019
  ANTICIPATED
AUDIT COMMITTEE
  ANTICIPATED
COMPENSATION
COMMITTEE
 

Jeffrey H. Smulyan

  72              

Patrick M. Walsh

  52              

J. Scott Enright

  56              

Andrew Glaze

  41              

Laura Lee

  43              

Mary Beth McAdaragh

  55              

Deborah McDermott

  65              

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Biographical Information for Non-Management Directors

        Andrew Glaze is the founder and has served as the Chief Investment Officer of Shiro Capital since 2019. Prior to Shiro Capital, Mr. Glaze served as a Research Analyst at Standard General from 2016 to June 2019. Before joining Standard General, Mr. Glaze was a Managing Director at Claar Advisors, LLC, which he joined in 2014. Mr. Glaze was the founder, and, from 2009 through 2014, the Chief Investment Officer of Emys Capital, LLC. Prior to May 2009 he was an investment banking associate on the Consumer and Leveraged Finance teams at Merrill Lynch. Mr. Glaze began his career in the United States Army where he served as an officer for five years in the 1st Cavalry Division. As part of his service, Mr. Glaze deployed to Baghdad, Iraq for one year where he served with distinction as a Captain and Aviation Brigade Fire Support Officer. Mr. Glaze is a service-disabled veteran. He holds a B.S. from the United States Military Academy at West Point and an M.B.A. from Columbia Business School, where he participated in the highly selective Value Investing Program. He is also a member of the Success Academy Charter Network Advisory Board. Mr. Glaze is a Chartered Financial Analyst.

        Laura Lee is a seasoned tech and media executive and advisor who has been recognized as a top executive by Variety, NACD, Crain's New York, and Multichannel News. Since 2018, Ms. Lee has been advising Patreon and other growth companies. Previously, she held senior positions at various media, tech, and consumer companies including Executive Vice President of Content, Strategy, and Operations at NBCUniversal in 2017, Chief Digital Officer and President of Media at Margaritaville Media (Jimmy Buffett's lifestyle company) from 2015-2016, Global Head of Top Creators and North American Content at YouTube from 2007-2015, and various roles at Viacom from 2003-2007, including Vice President of Business Development and Operations at MTV Networks. Ms. Lee is a former board member of American Apparel and currently sits on the advisory boards of Marca Global, LLC and Womensphere. Ms. Lee is a class officer for her Brown University class and is an active alumna for Harvard Business School.

        Mary Beth McAdaragh has over 30 years of experience in media production, distribution and marketing having been involved with the branding and marketing of some of the most recognizable television franchises in domestic and international syndication. Since January 2017, Ms. McAdaragh has served as Executive Vice President, Marketing for CBS Television Distribution, where she is responsible for the Marketing and Affiliate Relations for an industry-leading roster of first-run and off-network syndicated programs, including Judge Judy, Dr. Phil, Entertainment Tonight, Jeopardy! and Wheel of Fortune. She is also responsible for the branding and on-going marketing of the division's new multi-platform network, Dabl. Prior to her role at CBS Television Distribution, Ms. McAdaragh held senior positions at numerous national and international media and broadcasting companies, including Vice President, Marketing/Creative Services at Eyemark Entertainment from January 1996 to August 2000; Vice President, Marketing (Domestic and International) at NBC/Universal Television Distribution from November 2000 to May 2005; Senior Vice President, Business Development at Launch Pad Productions from May 2005 to October 2006; and Senior Vice President, Affiliate Relations at MyNetworkTV from December 2006 to September 2009. In addition, she has served as a Marketing consultant and brand manager for programs including Monopoly Millionaires' Club and The Wendy Williams Show. She also served as an executive producer and co-creator of Food Network's, The Surreal Gourmet. Ms. McAdaragh received her B.A. in Broadcast Journalism from South Dakota State University and is a member of the university's Mass Communications Department Advisory Council.

        Deborah McDermott has served as Chief Executive Officer of Standard Media Group LLC since April 2018. Ms. McDermott has over twenty years of experience leading broadcast groups, most recently as Chief Operating Officer of Media General and the Chief Executive Officer and President of Young Broadcasting. In these roles, Ms. McDermott served as a key member of the leadership teams responsible for the successful acquisition and integration of more than 90 stations. During her tenure at Young Broadcasting, she guided that company through a series of successful mergers, including

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transformative transactions with Media General and Lin Media, and finally a sale to Nexstar Broadcasting. Ms. McDermott is also a member of the Broadcasting & Cable Hall of Fame and has served as Chair of the National Association of Television Program Executives (NATPE), Chair of the ABC Affiliate Board of Governors, and as a member of the Boards of the National Association of Broadcasters (NAB) and the Television Bureau of Advertising (TVB).

Corporate Governance—Committees of the Board of Directors

        Upon the completion of the Transactions, we expect that our board of directors will have two standing committees: an Audit Committee and a Compensation Committee, both of which will operate pursuant to written charters to be adopted by our board of directors and which will be available on our website at www.mediacoholding.net. Mediaco anticipates qualifying as a "controlled company" within the meaning of the Nasdaq listing standards. As such, we expect to be exempt from certain of Nasdaq's corporate governance requirements, including the requirement that director nominees be selected exclusively by independent directors constituting a majority of the independent directors of the board of directors or that Mediaco have a nominations committee comprised solely of independent directors. Accordingly, Mediaco will not have a separate standing nomination and corporate governance committee comprised of independent directors. The responsibilities and functions normally associated with such committee will instead be carried out by the full board of directors. The responsibilities of our board of directors will be described in the Mediaco Corporate Governance Guidelines to be adopted by our board of directors, which will be available on our website at www.mediacoholding.net.

Audit Committee

        Our Audit Committee will be composed of three independent directors, Mr. Glaze, Ms. McDermott, and Ms. Lee, as required by the Nasdaq listing standards and Rule 10A-3 under the Securities and Exchange Act of 1934, as amended.        will be designated as our audit committee financial expert, as that term is defined by the SEC. Each of these audit committee members are "financially literate" under the rules of the Nasdaq.

        The responsibilities of the Audit Committee will be more fully described in the Mediaco Audit Committee Charter and are expected to include, among other things:

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Compensation Committee

        Our Compensation Committee will be composed of three directors,          . As a "controlled company" we expect to be exempt from the Nasdaq requirement that the Compensation Committee be composed entirely of independent directors. We expect that        will meet the independence requirements set forth in the listing standards of the Nasdaq.

        The responsibilities of the Compensation Committee will be more fully described in the Mediaco Compensation Committee Charter and are expected to include, among other things:

Board of Directors Role in Risk Oversight

        After careful consideration, we have determined that risk oversight is a function best served by the entire Mediaco board of directors and the committees thereof. As described above, the Audit Committee will initially review certain elements of risk oversight related to financial risks, including

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internal controls and procedures for financial reporting and related party transactions. Similarly, the Compensation Committee will initially review risks posed by Mediaco's compensation practices. While both committees are responsible for evaluating and overseeing management of such risks, to facilitate oversight of risk by the entire board of directors, each committee will be required to report regularly to the full board of directors regarding such risks. The Mediaco board of directors will also communicate regularly with the executive officers managing Mediaco regarding material risks that Mediaco faces so that all members of the board of directors understand the risks associated with the business.

Code of Business Conduct and Ethics

        Upon the closing of the Transactions, we intend to adopt the Mediaco Code of Business Conduct and Ethics. The Mediaco Code of Business Conduct and Ethics will apply to all Mediaco employees, officers and directors. The purpose of the Mediaco Code of Business Conduct and Ethics will be to promote honest and ethical conduct by all of our employees, officers and directors, to promote compliance with all applicable laws and regulations, to provide a mechanism for reporting unethical conduct and to create accountability for adherence to the Mediaco Code of Business Conduct and Ethics. A copy of the Mediaco Code of Business Conduct and Ethics will be available on our website at www.mediacoholding.net.

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EXECUTIVE AND DIRECTOR COMPENSATION

Executive Compensation

        We are managed by EOC, which provides us with executive officers, and we currently have no employees independent of EOC. As employees of EOC, all of our executive officers devote a portion of their time to our affairs as is required pursuant to the Management Agreement. We currently do not pay our executive officers any cash or other compensation, and we have no compensation agreements with our executive officers, who are indirectly compensated for their services to Mediaco through the fees paid to EOC under the Management Agreement. As a result, we do not determine their compensation amounts. Instead, we pay EOC a management fee and EOC pays and has discretion to determine the form and level of compensation paid to and earned by our executive officers.

Director Compensation

        Following completion of the Transactions, our board of directors will determine compensation to be paid to members of our board who are independent directors. Compensation for our independent directors is anticipated to consist of an annual retention fee of $        . The annual retention fee may be comprised of cash compensation, equity compensation, or a combination thereof. The Chairman and committee chairs of our board of directors are anticipated to receive additional payments for their services in that capacity. Except in the case of independent directors, our directors who also serve as executive officers will not receive additional compensation for their service on our board of directors. Following the separation, the board of directors may adopt stock ownership guidelines for directors.

Compensation Committee Interlocks and Insider Participation

        The members of the compensation committee of the board of directors will be independent directors. Upon completion of the Transactions, none of our compensation committee members, or any of our executive officers, will serve as a member of a board of directors or board of trustees or any compensation committee of any entity that has one or more executive officers serving as a member of our board.

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RELATED PARTY TRANSACTIONS

Relationship with Emmis

        Prior to the completion of the Transactions, all of the outstanding Mediaco Class A Shares are owned by Emmis. Following the completion of the Distribution, Emmis will no longer own any shares of our common stock. See "Risk Factors—Risks Related to the Transactions" and "Description of the Transactions."

        Following the Distribution, Emmis and the Company will operate separately, each as an independent public company. In connection with this separation, we and Emmis have entered or will enter into certain agreements that will affect the separation of our business from Emmis and govern our relationship with Emmis after the separation. The following is a summary of the terms of the material agreements that we have entered or intend to enter into with Emmis prior to the completion of this separation, which have been filed as exhibits to the registration statement of which this information statement is a part. These summaries set forth the terms of the agreements that we believe are material and are qualified in their entirety by reference to the full text of such agreements. The terms of some of the agreements described below that will be in effect following the Distribution have not yet been finalized. Changes to these agreements, some of which may be material, may be made prior to the Distribution.

Agreements with Emmis

Transaction Agreement

        On June 28, 2019, we entered into the Transaction Agreement with Emmis and SG Broadcasting. The Transaction Agreement sets forth our agreements with Emmis and SG Broadcasting regarding the principal actions to be taken in connection with the Transactions. The Transaction Agreement identifies assets to be transferred, liabilities to be assumed and contracts to be assigned to the Company as part of the separation, and it provides for when and how these transfers, assumptions and assignments will occur.

        Initial Contribution, SG Broadcasting Investment, Purchase Price and Adjustment.    At the closing of the Transactions and pursuant to the terms of the Transaction Agreement, SG Broadcasting will make the SG Broadcasting Investment, consisting of $91,500,000, in addition to funding certain transaction expenses, to be reduced by the net proceeds of any financing arrangements entered into by Mediaco prior to the closing of the Transactions, which is anticipated to result in net proceeds of approximately $50,000,000 that will be used to fund a portion of the consideration owed to Emmis in exchange for the Initial Contribution. Accordingly, the Company anticipates SG Broadcasting ultimately will contribute $46,500,000 of the SG Broadcasting Investment. As consideration for the SG Broadcasting Investment, Mediaco will issue to SG Broadcasting        Mediaco Class B Shares, which will constitute all of the issued and outstanding Mediaco Class B Shares, representing in the aggregate an approximately 76.28% equity ownership interest and 96.98% of the outstanding voting interests of Mediaco immediately following the Transactions. Simultaneous with the Initial Contribution, Mediaco will pay to Emmis the sum of $91,500,000 (the "Purchase Price"), a promissory note payable by Mediaco to Emmis in the amount of $5,000,000 and issue to Emmis        Mediaco Class A Shares will constitute all of the issued and outstanding Mediaco Class A Shares and represent in the aggregate approximately 23.72% equity ownership interest and 3.02% of the outstanding voting interests of Mediaco immediately following the Transactions.

        The Distribution.    The Transaction Agreement governs the rights and obligations of the parties with respect to the Distribution and certain actions that must occur prior to the Distribution. Emmis will cause the transfer agent to distribute on a pro rata basis to Emmis Shareholders as of the record date for the Distribution all of the issued and outstanding Mediaco Class A Shares. The fractional

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shares that an Emmis Shareholder would be entitled to receive will be aggregated and rounded to the nearest whole number and distributed to the Emmis Shareholder. For further information regarding the Distribution, see "Description of the TransactionsThe Number of Mediaco Class A Shares You Will Receive," beginning on page        .

        Conditions to the Transaction Agreement.    The Transaction Agreement provides that the Distribution is subject to several conditions that must be satisfied (or waived by the relevant party). For further information regarding these conditions, see "Description of the TransactionsConditions to the Distribution," beginning on page        .

        Indemnification.    The Transaction Agreement provides for releases with respect to pre-closing claims arising from the Transactions, and with respect to post-Distribution claims, except as otherwise provided in the Transaction Agreement, indemnifications principally designed to place financial responsibility for obligations and liabilities allocated to Mediaco under the Transaction Agreement with Mediaco and financial responsibility for obligations and liabilities allocated to Emmis under the Transaction Agreement with Emmis. Other than in limited circumstances, Emmis shall only be responsible for certain breaches of representations and warranties if losses exceed one percent (1%) and the maximum recovery is limited to ten percent (10%) of the Purchase Price.

        Termination.    The Transaction Agreement is subject to certain termination rights of Emmis and SG Broadcasting. Emmis or SG Broadcasting may terminate the Transactions upon notice to the other party where there has been a material breach of the Transaction Agreement; a court or governmental authority has issued a final and nonappealable order, decree or ruling prohibiting or restraining the Transactions; or, the Transactions have not occurred by December 31, 2019, unless that date has otherwise been extended pursuant to the terms of the Transaction Agreement. Emmis and SG Broadcasting may also terminate the Transactions by mutual written consent. For further information regarding these conditions, see "Description of the TransactionsConditions to the Distribution," beginning on page         .

        Other Matters Governed by the Contribution and Distribution Agreement.    Other matters governed by the Transaction Agreement include, without limitation, access to financial and other information, insurance, confidentiality and access to and provision of records.

Employee Leasing Agreement

        Prior to the Distribution, we intend to enter into an Employee Leasing Agreement with EOC. Pursuant to the Employee Leasing Agreement, the Company will lease from EOC personnel at the WBLS-FM and WQHT-FM radio stations who are existing employees of EOC to perform services for Mediaco consistent with each leased employees' past practices at the WBLS-FM and WQHT-FM radio stations. The initial term of the Employee Leasing Agreement will last through December 31, 2020 and will automatically renew for successive six-month periods, unless otherwise terminated upon the occurrence of certain events. Mediaco will reimburse EOC for all costs and expenses directly attributable to the leased employees for their services to Mediaco, including salaries, benefits, and out-of-pocket expenses incurred in connection with the administration of benefits.

Management Agreement

        Prior to the Distribution, we intend to enter into a Management Agreement with EOC for an initial term of two years. Under the Management Agreement, EOC will provide to us direct management of our radio stations and related assets, management of the Company's financial reporting, SEC compliance and other similar obligations arising as a public company. The Company will pay EOC an annual management fee equal to $1,250,000 in equal monthly installments, plus reimbursement of certain expenses directly related to the operation of Mediaco's business. EOC will

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also be prohibited from directly or indirectly investing in any business that competes with the Company and from soliciting or attempting to hire any of the Company's employees during the term and through the fifth anniversary of the termination of the Employee Leasing Agreement.

Shared Services Agreements

        Prior to the Distribution, we intend to enter into two Shared Services Agreements with EOC. Historically, EOC has operated radio stations WLIB-AM and WEPN-FM (which are being retained by EOC) from many of the same facilities and using many of the same personnel as used in the operation of radio stations WBLS-FM and WQHT-FM (which are being contributed to Mediaco). The Shared Services Agreements will become operative as of the completion of the separation of the WBLS-FM and WQHT-FM radio stations from Emmis, and will allow EOC to continue to use Mediaco's facilities, equipment and personal consistent with past practices. EOC will reimburse Mediaco for all incremental out of pocket costs and expenses incurred by Mediaco in connection with this arrangement.

Local Programming and Marketing Agreement

        Prior to the Distribution, we intend to enter into a Local Programming and Marketing Agreement (the "LMA") with WBLS-WLIB LLC, an Indiana limited liability company and a subsidiary of Emmis ("WBLS-WLIB"). Pursuant to the terms and provisions of the LMA, except for the hours of 6:00 a.m. to 8:00 a.m. each Sunday, Mediaco shall make available to WBLS-WLIB the HD-2 channel of WQHT-FM for purposes of rebroadcasting the programs of WLIB-AM. The term of the LMA is intended to continue through December 31, 2022, but may otherwise terminate upon the occurrence of certain other events. WBLS-WLIB will be responsible for the salaries of WQHT-FM employees and related costs for all 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

        Prior to the Distribution, we intend to enter into an Antenna Site Agreement with WLIB. Historically, WBLS-FM has used the antenna site owned by WLIB in Lyndhurst, New Jersey as an emergency backup site from which to broadcast WBLS-FM's programs in the event its other broadcast antennas are unavailable. The Antenna Site Agreement will allow WBLS-FM antenna space on the WLIB tower, as well as ground space for WBLS-FM transmission equipment. The Antenna Site Agreement will last for an initial term of 20 years, with two automatic renewal periods of 10 years each, unless Mediaco provides notice to WLIB of its intention to not renew the lease for an additional term. Mediaco will pay to WLIB an annual license fee of ten dollars ($10).

Related Party Transactions Policy

        Effective upon consummation of the Distribution, our board of directors expects to adopt a Related Party Transactions Policy that applies to transactions exceeding $120,000 in which any of our officers, directors, beneficial owners of more than 5% of our common shares, or any member of their immediate family, has a direct or indirect material interest, determined in accordance with the policy, each of which we refer to as a Related Person Transaction. A Related Person Transaction must be reported to our outside legal counsel and our Chief Financial Officer, and will be subject to review and approval by our Audit Committee prior to effectiveness or consummation, to the extent practical. In addition, any Related Person Transaction that is ongoing in nature will be reviewed by the Audit Committee annually to ensure that the transaction has been conducted in accordance with any previous approval and that all required disclosures regarding the transaction are made.

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        The Audit Committee will review all relevant information available to it about a Related Person Transaction. The Audit Committee may approve or ratify the Related Person Transaction only if the Audit Committee determines that, under all of the circumstances, the transaction is in, or is not in conflict with, our best interests. The Audit Committee may, in its sole discretion, impose such conditions as it deems appropriate on us or the Related Person in connection with approval of the Related Person Transaction.

        As appropriate for the circumstances, the Audit Committee will review and consider:

        A copy of our Related Person Transaction Policy will be posted on our website at www.mediacoholding.net concurrently with the Distribution.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Prior to the Distribution, all of the issued and outstanding Mediaco Class A Shares will be owned beneficially and of record by Emmis and all of the issued and outstanding Mediaco Class B Shares will be owned beneficially and of record by SG Broadcasting. Pursuant to the terms of the Transactions Agreement, Emmis shall recieve a number of Mediaco Class A Shares equal to 23.72% of the total number of Mediaco Class A Shares and Mediaco Class B Shares to be issued and outstanding after giving effect to the Transactions and SG Broadcasting shall receive a number of Mediaco Class B Shares equal to 76.28% of the total number of Mediaco Class A Shares and Mediaco Class B Shares to be issued and outstanding after giving effect to the Transactions. It is anticipated that immediately following the Distribution,        Mediaco Class A Shares and        Mediaco Class B Shares will be issued and outstanding. The following table sets forth information after giving effect to the Transactions on the anticipated beneficial ownership percentages of each person or group who is known by us to beneficially own more than 5% of the outstanding shares of common stock of Emmis (based on the anticipated Distribution of common stock of Mediaco), each of the Company's expected executive officers, each of the Company's expected directors and all of the Company's expected executive officers and directors as a group. All of the Company's shareholders, including the shareholders listed in this table, will be entitled to one vote for each Mediaco Class A Share held. SG Broadcasting and its affiliates are the only permitted holders of Mediaco Class B Shares and will be entitled to ten votes for each Mediaco Class B Share held. Unless otherwise indicated, the address of each beneficial owner is in care of One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204.

        Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, shares subject to options held by that person that are currently exercisable or convertible, or exercisable or convertible within 60 days of the date of this information statement, are deemed to be beneficially owned by that person. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all shares held by them.

Name and Address of Beneficial Owner
  Amount and
Nature of
Beneficial
Ownership of
Mediaco
Class A
Shares(1)(2)
  Percent
of Class
  Amount and
Nature of
Beneficial
Ownership of
Mediaco
Class B
Shares(1)
  Percent
of Class
  Total
Beneficial
Ownership of
Outstanding
Mediaco
Interests(4)
  Total Voting
Power of
Outstanding
Mediaco
Interests
 

Standard General L.P.(3)
767 Fifth Avenue, 12th Floor
New York, NY 10153

                                         %            %            %

Jeffrey H. Smulyan

                          %                    %            %

Patrick M. Walsh

                          %           *     *  

J. Scott Enright

                   %           *     *  

Ryan A. Hornaday

                   %           *     *  

Andrew Glaze

                         

Laura Lee

                         

Mary Beth McAdaragh

                         

Deborah McDermott

                         

All directors and executive
officers as a group

                                     

*
Indicates less than one percent (1%) ownership.

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(1)
Unless otherwise indicated, each of the shareholders has sole voting and investment power with respect to the securities shown to be owned by such shareholder. The inclusion herein of securities listed as beneficially owned does not constitute an admission of beneficial ownership.

(2)
The number of Mediaco Class A Shares in this column includes (i) the number of Mediaco Class A Shares held by such beneficial owner as of                     , 2019, and (ii) the number of Mediaco Class A Shares into which the Mediaco Class B Shares held by such beneficial owner would convert if so elected by such holder.

(3)
Shares are held by SG Broadcasting LLC, an entity for which Soohyung Kim is the managing member and Standard General L.P. ("Standard General") serves as investment manager. Mr. Kim is the managing partner and chief investment officer of Standard General and a director of the general partner of Standard General. By virtue of the foregoing, Standard General and Mr. Kim may be deemed to beneficially own these shares. Each of Mr. Kim and Standard General disclaims beneficial ownership of the shares reported except to the extent of its or his pecuniary interest in such shares.

(4)
As Mediaco Class B Shares are convertible into Mediaco Class A Shares at the election of the holder, the beneficial ownership reported herein assumes that the beneficial owner (and no other stockholder) elected to convert all Mediaco Class B Shares beneficially owned by such beneficial owner into Mediaco Class A Shares.

(5)
As of the date hereof, Standard General and its affiliates own % of the issued and outstanding Mediaco Class A Shares and Mediaco Class B Shares.

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DESCRIPTION OF THE TRANSACTIONS

Overview

        On July 1, 2019, Emmis announced its plans to separate the WBLS-FM and WQHT-FM radio stations and the associated assets from its radio broadcasting business through a pro rata distribution of Mediaco Class A Shares to shareholders of Emmis.

        In furtherance of this plan, on        , 2019, Emmis' board of directors approved the distribution to the Emmis Shareholders of all of the Mediaco Class A Shares on the basis of        Mediaco Class A Shares for every        shares of Emmis Common Stock issued and outstanding as of the close of business on        , 2019, the record date for the Distribution. As a result of the Distribution, Emmis and Mediaco will become two independent, publicly traded companies.

        On        , 2019, the distribution date, each Emmis Shareholder will receive        Mediaco Class A Shares for every        shares of Emmis Common Stock held of record at the close of business on the record date, as described below. Registered shareholders will not receive cash in lieu of any fractional shares of Emmis Common Stock that they would have received as a result of the application of the distribution ratio. Any fractional Mediaco Class A Shares that any Emmis Shareholder would otherwise be entitled to receive will be rounded to the nearest whole number. Shareholders will not be required to make any payment, surrender or exchange their shares of Emmis Common Stock or take any other action to receive Mediaco Class A Shares in the Distribution.

        The distribution of Mediaco Class A Shares as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see this section under "—Conditions to the Distribution."

Reasons for the Separation

        Emmis' board of directors determined that separating the WBLS-FM and WQHT-FM radio stations and the associated assets from Emmis would be in the best interests of Emmis and approved the Transaction Agreement. A wide variety of factors were considered by Emmis' board of directors in evaluating the separation, with the decision largely driven by the view that the Transactions are effectively a sale of the stations by Emmis. Among other things, Emmis' board of directors considered the following potential benefits of the separation:

    Sale of the stations for consideration approximating eight times the stations' adjusted (or pro forma) broadcast cash flow exceeded the trading multiples of other publicly traded radio broadcasting companies;

    Entering into the Management Agreement and Employee Leasing Agreement allowed Emmis to offset some of its existing overhead costs and provided a chance to participate in further expansion of Mediaco's business;

    Standard General has an excellent track record with its prior media ventures, creating the possibility of increased value of the Mediaco Class A Shares to be distributed to Emmis Shareholders; and

    Cash proceeds to Emmis will enable Emmis to invest in new businesses with growth profiles exceeding those of radio broadcasting.

        Emmis' board of directors also considered a number of potentially negative factors in evaluating the separation, including the following factors impacting Mediaco:

    Risk that certain of Emmis' corporate resources could be stretched too thin with the prospect of managing two public companies; and

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    Risk that certain Emmis Shareholders may not want to receive a distribution of Mediaco Class A Shares in a taxable distribution.

        Emmis' board of directors concluded that the potential benefits of the Transactions outweighed these factors. However, neither Emmis nor the Company can assure you that, following the separation, any of the benefits described above or otherwise will be realized to the extent anticipated or at all. For more information on the risks involved in the separation process, see "Risk Factors—Risks Related to the Transactions," beginning on page        .

Formation of a Holding Company Prior to the Distribution

        In connection with and prior to the Distribution, Mediaco was incorporated by Emmis in the State of Indiana on June 27, 2019, for the purpose of holding the WBLS-FM and WQHT-FM radio stations and the associated assets and liabilities in connection with the separation described herein. As part of the plan to create two independent public companies, Emmis plans to transfer the assets and liabilities of the WBLS-FM and WQHT-FM radio stations to Mediaco prior to the Distribution through an internal reorganization.

When and How You Will Receive the Distribution

        With the assistance of the transfer agent, Emmis expects to distribute Mediaco Class A Shares on        , 2019, the distribution date, to all holders of outstanding shares of Emmis Common Stock as of the close of business on        , 2019, the record date (the "Record Date").                        will serve as the transfer agent in connection with the Distribution.

        If you own shares of Emmis Common Stock as of the close of business on the Record Date, Mediaco Class A Shares that you are entitled to receive in the Distribution will be issued electronically, as of the distribution date, to you in direct registration form or to your bank or brokerage firm on your behalf. If you are a registered holder, the transfer agent will then mail you a direct registration account statement that reflects your Mediaco Class A Shares. "Direct registration form" refers to a method of recording share ownership when no physical share certificates are issued to shareholders, as is the case in this distribution.

        Commencing on or shortly after the distribution date, if you hold physical share certificates that represent your shares of Emmis Common Stock and you are the registered holder of the shares represented by those certificates, the transfer agent will mail to you an account statement that indicates the number of Mediaco Class A Shares that have been registered in book-entry form in your name. If you sell shares of Emmis Common Stock in the "regular way" market up to and including the distribution date, you will be selling your right to receive Mediaco Class A Shares in the Distribution.

        Most Emmis Shareholders hold their shares of Emmis Common Stock through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the shares in "street name" and ownership would be recorded on the bank or brokerage firm's books. If you hold your shares of Emmis Common Stock through a bank or brokerage firm, your bank or brokerage firm will credit your account for the Mediaco Class A Shares that you are entitled to receive in the Distribution. If you have any questions concerning the mechanics of having shares held in "street name," please contact your bank or brokerage firm.

Results of the Distribution

        After its separation from Emmis, Mediaco will be an independent, publicly traded company. The actual number of shares to be distributed will be determined on the Record Date, and will reflect any exercise of Emmis options between the date the Emmis board of directors declares the distribution and

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the record date for the Distribution. The Distribution will not affect the number of outstanding shares of Emmis Common Stock or any rights of Emmis Shareholders.

        Prior to the Distribution, Mediaco entered into the Transaction Agreement and will enter into other agreements with Emmis to effect the separation and govern Mediaco's relationship with Emmis after the separation. These agreements will provide for the transfer between Emmis and Mediaco of the WBLS-FM and WQHT-FM radio stations and the associated assets and liabilities attributable to periods prior to and after Mediaco's separation from Emmis and will govern certain relationships between Emmis and Mediaco after the separation. For a more detailed description of these agreements, see "Certain Relationships and Related Person Transactions—Agreements with Emmis," beginning on page        .

The Number of Mediaco Class A Shares You Will Receive

        For every        shares of Emmis Common Stock that you own at the close of business on        , 2019, the record date, you will receive        Mediaco Class A Shares on the distribution date. In the event that an Emmis Shareholder would receive fractional Mediaco Class A Shares as a result of the Distribution, the fractional shares that an Emmis Shareholder would receive will be aggregated and rounded to the nearest whole number and distributed to the Emmis Shareholder.                        is not an affiliate of either Emmis or Mediaco. Any broker-dealer used by the transfer agent will not be an affiliate of either Emmis or Mediaco. Neither Emmis nor Mediaco will be able to guarantee any minimum sale price in connection with the sale of these shares.

        See "Material U.S. Federal Income Tax Considerations," beginning on page     , for an explanation of the material U.S. federal income tax considerations of the Distribution.

Transferability of Shares You Receive

        Mediaco Class A Shares distributed to holders through the Distribution will be transferable without registration under the Securities Act, except for shares received by persons who may be deemed to be Mediaco affiliates. Persons who may be deemed to be Mediaco affiliates after the Distribution generally include individuals or entities that control, are controlled by or are under common control with Mediaco, which may include certain of Mediaco executive officers, directors or principal shareholders. Securities held by Mediaco affiliates will be subject to resale restrictions under the Securities Act. Mediaco affiliates will be permitted to sell Mediaco Class A Shares only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 promulgated under the Securities Act.

Market for Mediaco Class A Shares

        There is currently no public trading market for Mediaco Class A Shares. The Company intends to apply to have Mediaco Class A Shares authorized for listing on Nasdaq under the symbol "        ." Mediaco has not and will not set the initial price of Mediaco Class A Shares. The initial price will be established by the public markets.

        Mediaco cannot predict the price at which Mediaco Class A Shares will trade after the Distribution. In fact, the combined trading prices, after the Distribution, of the Mediaco Class A Shares that each Emmis Shareholder will receive in the Distribution and shares of Emmis Common Stock held at the record date may not equal the "regular way" trading price of a share of Emmis Common Stock immediately prior to the Distribution. The price at which Mediaco Class A Shares trades may fluctuate significantly, particularly until an orderly public market develops. Trading prices for Mediaco Class A Shares will be determined in the public markets and may be influenced by many factors. See "Risk Factors—Risks Related to our Common Stock," beginning on        .

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Trading Between the Record Date and Distribution Date

        Beginning on or shortly before the Record Date and continuing up to and including through the distribution date, we expect that there will be two markets in shares of Emmis Common Stock: a "regular way" market and an "ex-distribution" market. Shares of Emmis Common Stock that trade on the "regular way" market will trade with an entitlement to Mediaco Class A Shares distributed pursuant to the separation. Shares of Emmis Common Stock that trade on the "ex-distribution" market will trade without an entitlement to Mediaco Class A Shares distributed pursuant to the Distribution. Therefore, if you sell shares of Emmis Common Stock in the "regular way" market up to and including through the distribution date, you will be selling your right to receive Mediaco Class A Shares in the Distribution. If you own shares of Emmis Common Stock at the close of business on the Record Date and sell those shares on the "ex-distribution" market up to and including through the distribution date, you will receive the Mediaco Class A Shares that you are entitled to receive pursuant to your ownership as of the Record Date.

        Furthermore, we anticipate that trading in Mediaco Class A Shares will begin on a "when issued" basis on or shortly before the record date for the Distribution and will continue up to and including the distribution date. "When issued" trading in the context of a separation refers to a sale or purchase made conditionally on or before the distribution date because the securities of the separated entity have not yet been distributed. The "when issued" trading market will be a market for Mediaco Class A Shares that will be distributed to holders of shares of Emmis Common Stock on the distribution date. If you owned shares of Emmis Common Stock at the close of business on the record date, you would be entitled to Mediaco Class A Shares distributed pursuant to the Distribution. You may trade this entitlement to Mediaco Class A Shares, without shares of Emmis Common Stock you own, on the "when issued" market. On the first trading day following the distribution date, "when issued" trading with respect to Mediaco Class A Shares will end, and "regular way" trading will begin.

Conditions to the Distribution

        Mediaco expects that the Distribution will be effective at                , on        , 2019, the distribution date, provided that certain conditions, including the following, shall have been satisfied or waived by Emmis, SG Broadcasting, or Mediaco, as the case may be:

    Mediaco having obtained all FCC licenses and all other material licenses, permits, registrations, authorizations or certificates necessary to conduct its business and the FCC shall have consented to the assignment of all FCC licenses to Mediaco;

    No court or administrative agency shall have issued an order and no proceeding by or before any governmental authority shall have been instituted or threatened that would restrain, prohibit or invalidate the Transactions; and

    The SEC shall have declared effective the registration statement on Form 10 of which this information statement forms a part, and such registration statement shall not be subject to any stop order or proceeding seeking a stop order.

        The Company cannot assure you that any or all of these conditions will be met.

        Additionally, the Transaction Agreement is subject to certain termination rights of Emmis and SG Broadcasting. Emmis or SG Broadcasting may termination the Transactions upon notice to the other party, and that party's inability to cure within fifteen days, of a material breach of the Transaction Agreement; a court or governmental authority has issued a final and nonappealable order, decree or ruling prohibiting or restraining the Transactions; or, the Transactions have not occurred by December 31, 2019 (the "Outside Date") and the Outside Date has not otherwise been extended pursuant to the terms of the Transaction Agreement. Emmis and SG Broadcasting may also terminate the Transactions by mutual written consent. Emmis does not intend to notify its shareholders of any

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modifications to the terms of the separation that, in the judgment of its board of directors, are not material. For example, the Emmis board of directors might consider material such matters as significant changes to the distribution ratio, the assets to be contributed or the liabilities to be assumed in the separation. To the extent that the Emmis board of directors determines that any modifications by Emmis materially change the material terms of the Distribution or to abandon the Distribution, Emmis will notify Emmis Shareholders in a manner reasonably calculated to inform them about the modification as may be required by law, by, for example, publishing a press release, filing a Current Report on Form 8-K, or circulating a supplement to this information statement.

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DESCRIPTION OF MEDIACO SECURITIES—INDEMNIFICATION OF OFFICERS AND DIRECTORS

Common Stock

        General.    The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to our Articles of Incorporation and By-laws that will be in effect upon the Distribution, which have been filed as exhibits to the Form 10 of which this information statement is a part, and to the applicable provisions of the Indiana Business Corporation Law (the "IBCL"). Upon the Distribution, our authorized common stock will consists of        shares of Class A Common Stock, $.01 par value per share,        shares of Class B Common Stock, $.01 par value per share, and        shares of Class C Common Stock ("Mediaco Class C Shares"), $.01 par value per share. Holders of common stock will have no preemptive rights. Under Indiana law, shareholders will generally not be liable for our debts or obligations.

        Dividends.    Holders of record of shares of common stock on a record date fixed by our board of directors will be entitled to receive such dividends as may be declared by the board of directors out of funds legally available for such distributions. Mediaco will be restricted from declaring or paying dividends in cash or property on any share of any classes of common stock, however, unless simultaneously the same dividend is declared or paid on each share of the other class of common stock. In the case of any stock dividend, holders of Mediaco Class A Shares will be entitled to receive the same percentage dividend (payable in Mediaco Class A Shares) as the holders of Mediaco Class B Shares receive (payable in Mediaco Class B Shares) and the holders of Mediaco Class C Shares receive (payable in Mediaco Class C Shares). Notwithstanding the forgoing, holders of Mediaco Class B Shares may receive a different dividend or share of dividends than is received by the holders of Mediaco Class A Shares and Mediaco Class C Shares if such disparity is approved in advance by the affirmative vote of the holders of the majority of the then-outstanding Mediaco Class A Shares and a majority of the then-outstanding Mediaco Class B Shares, each voting as a separate class. We anticipate the payment of common stock dividends will be restricted by any credit facility we enter into prior to the close of the Transactions.

        Voting Rights.    Holders of Mediaco Class A Shares and holders of Mediaco Class B Shares will vote as a single class on all matters submitted to a vote of the common shareholders, with each Mediaco Class A Share entitled to one vote and each Mediaco Class B Shares entitled to ten votes, except:

    for the election of three directors voted on by the holders of Mediaco Class A Shares voting as a separate class (the "Mediaco Class A Directors") and the election of four directors voted on by the holders of Mediaco Class B Shares voting as a separate class (the "Mediaco Class B Directors");

    with respect to any proposed "going private" transaction (as defined below) between the Company and SG Broadcasting (the holder of all the Mediaco Class B Shares Stock), or an affiliate of SG Broadcasting, or any group of which SG Broadcasting or an affiliate of SG Broadcasting is a member; and

    as otherwise provided by law.

        In the election of directors, the holders of Mediaco Class A Shares will be entitled to vote as a separate class to elect the Mediaco Class A Directors. Under Mediaco's Articles of Incorporation, during the term of the Management Agreement or so long as amounts remain outstanding under the Emmis Promissory Note, Mediaco's board of directors is required to nominate three persons specified by EOC, and no other persons, to serve as Mediaco Class A Directors. The holders of Mediaco Class B Shares will be entitled to vote as a separate class to elect the Mediaco Class B Directors. The holders of Mediaco Class A Shares and the holders of Mediaco Class B Shares will be entitled to elect

83


the remaining directors by voting as a single class with each Mediaco Class A Shares entitled to one vote and each Mediaco Class B Shares entitled to ten votes.

        Directors will be divided into three classes, as nearly equal in number as possible, whose three-year terms expire in successive years. At each annual election of directors, the successors to the class of directors whose term then expires are elected to hold office for a term of three years and until the director's successor is elected and qualifies or until the director's earlier resignation, removal from office or death. Holders of common stock will not entitled to cumulate votes in the election of directors.

        The holders of Mediaco Class A Shares and the holders of Mediaco Class B Shares will vote as a single class with respect to any proposed "going private" transaction, with each Mediaco Class A Shares entitled to one vote and each Mediaco Class B Shares entitled to ten votes. In addition, the approval of any proposed "going private" transaction shall require the approval of the holders of the majority of the outstanding Mediaco Class A Shares. A "going private" transaction is any "Rule 13e-3 Transaction," as that term is defined in Rule 13e-3 promulgated under the Securities Exchange Act of 1934, as amended, between Mediaco and SG Broadcasting, any affiliate of SG Broadcasting or any group of which SG Broadcasting or an affiliate of SG Broadcasting is a member. An "affiliate" is defined as:

    any individual or entity who or that, directly or indirectly, controls, is controlled by, or is under common control with SG Broadcasting; or

    any corporation or organization (other than Mediaco or a majority-owned subsidiary of Mediaco) of which SG Broadcasting is, directly or indirectly, the beneficial owner of 10% or more of any class of voting securities, or in which SG Broadcasting has a substantial beneficial interest.

        Under Indiana law, the affirmative vote of the holders of a majority of the outstanding shares of any class of capital stock is required to approve, among other things, a change in the designation, rights, preferences or limitations of the shares of such class of capital stock.

        Holders of Mediaco Class C Shares do not have any rights to vote, except as may be required by Indiana law.

        Liquidation Rights.    Upon liquidation, dissolution or winding-up of Mediaco, except as otherwise provided in the Articles of Incorporation or as approved by the affirmative vote of the holders of a majority of the then-outstanding Mediaco Class A Shares and the holders of a majority of the then-outstanding Mediaco Class B Shares, each voting as a separate class, the holders of Mediaco Class A Shares will be entitled to share ratably with the holders of Mediaco Class B Shares in all assets available for distribution after payment in full of creditors and payment in full to any holders of our preferred stock then outstanding of any amount required to be paid under the terms of such preferred stock.

        Conversion.    Each Mediaco Class B Shares will be convertible, at the option of its holder, into one Mediaco Class A Shares at any time. One Mediaco Class B Shares will convert automatically and without the requirement of any further action into one Mediaco Class A Shares upon its sale or other transfer to a person or entity other than SG Broadcasting or an affiliate of SG Broadcasting. A pledge of Mediaco Class B Shares will not be considered a transfer for this purpose unless the pledge is enforced. All outstanding Mediaco Class B Shares will convert automatically and without the requirement of any further action into an equivalent number of Mediaco Class A Shares upon the affirmative vote of the holders of two-thirds of the holders of the then-outstanding Mediaco Class B Shares, voting as a separate class.

        Other Provisions.    The holders of common stock will not be entitled to preemptive rights.

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        In any merger, consolidation or business combination, the consideration to be received per share by the holders of Mediaco Class A Shares, Mediaco Class B Shares and Mediaco Class C Shares must be identical for each class of stock, except that (i) in any such transaction in which shares of common stock are to be distributed, such shares may differ as to voting rights to the extent that the voting rights provided in the Mediaco Articles of Incorporation differ between the Mediaco Class A Shares, the Mediaco Class B Shares and the Mediaco Class C Shares, and (ii) holders of Mediaco Class B Shares may receive different or disproportionate distributions or payments in connection with such merger, consolidation or business combination as compared to those received by the holders of Mediaco Class A Shares and Mediaco Class C Shares if such merger, consolidation or business combination is approved by the affirmative vote of the holders of the majority of the then-outstanding Mediaco Class A Shares, a majority of the then-outstanding Mediaco Class B Shares, and a majority of the then-outstanding Mediaco Class C Shares, each voting as a separate class.

        No class of common stock may be subdivided, combined, or reclassified unless concurrently the other classes of common stock are subdivided, consolidated, reclassified or otherwise changed in the same proportion and in the same manner, except that shares of one class may be subdivided, combined or reclassified in a different or disproportionate manner if such subdivision, combination or reclassification is approved by the affirmative vote of the holders of the majority of the then-outstanding Mediaco Class A Shares, a majority of the then-outstanding Mediaco Class B Shares, and a majority of the then-outstanding Mediaco Class C Shares, each voting as a separate class.

        Foreign Ownership Restriction.    Our Articles of Incorporation will restrict the ownership, voting and transfer of our capital stock, including the Mediaco Class A Shares, in accordance with the Communications Act of 1934, as amended (the "Communications Act"), and the rules of the Federal Communications Commission (the "FCC"), to prohibit ownership of more than 25% of our outstanding capital stock or more than 25% of the voting rights it represents by or for the account of aliens (as defined in the Communications Act) or corporations otherwise subject to domination or control by aliens. The Articles of Incorporation will authorize our board of directors to prohibit any transfer of our capital stock that would cause Mediaco to violate this prohibition. In addition, the Articles of Incorporation will provide that shares of our capital stock determined by the board of directors to be beneficially owned by an alien shall always be subject to redemption by Mediaco by action of the board of directors to the extent necessary, in the judgment of the board of directors, to comply with the alien ownership restrictions of the Communications Act and FCC rules. The Articles of Incorporation will further authorize our board of directors to adopt such provisions as it deems necessary to enforce these alien ownership restrictions.

        Listing.    Mediaco intends to list the Mediaco Class A Shares on Nasdaq under the symbol "        ."

        Holders.    There are currently no beneficial holders of the Mediaco Class A Shares, Mediaco Class B Shares or Mediaco Class C Shares. Immediately following consummation of the Transactions, we expect that there will be a number of beneficial holders of Mediaco Class A Shares equal to the number of Emmis Shareholders on the Record Date, one beneficial holder of Mediaco Class B Shares and no beneficial holders of Mediaco Class C Shares.

Preferred Stock

        Upon the Distribution, our authorized stock will also include        shares of preferred stock, $.01 par value per share. The preferred stock may be issued with such designations, preferences, limitations and relative rights as the board of directors may authorize, including but not limited to:

    the distinctive designation of each series and the number of shares that will constitute such series;

    the voting rights, if any, of shares of such series;

85


    the dividend rate on the shares of such series, any restriction, limitation or condition upon the payment of such dividends, whether dividends shall be cumulative, and the dates on which dividends are payable;

    the prices at which, and the terms and conditions on which, the shares of such series may be redeemed, if such shares are redeemable;

    the purchase or sinking fund provisions, if any, for the purchase or redemption of shares of such series;

    any preferential amount payable upon shares of such series in the event of the liquidation, dissolution or winding-up of the company or the distribution of its assets; and

    the prices or rates of conversion at which, and the terms and conditions of which, the shares of such series may be converted into other securities, if such shares are convertible.

Sales of Unregistered Securities

        As consideration for the Initial Contribution, Mediaco will issue to Emmis        Mediaco Class A Shares, which shares Emmis will distribute pro rata to the Emmis Shareholders. As consideration for the SG Broadcasting Investment, Mediaco will issue to SG Broadcasting        Mediaco Class B Shares. Both issuances of securities will be made pursuant to Section 4(a)(2) of the Securities Act, and we will not use an underwriter in connection with either issuance. We will not register the issuances of such shares under the Securities Act because the issuances will not constitute a public offering.

Indemnification of Officers and Directors

        Chapter 37 of the IBCL requires a corporation, unless its articles of incorporation provide otherwise, to indemnify a director or an officer of the corporation who is wholly successful, on the merits or otherwise, in the defense of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, against reasonable expenses, including counsel fees, incurred in connection with the proceeding. Mediaco's Articles of Incorporation will expressly require such indemnification.

        The IBCL also permits a corporation to indemnify a director, officer, employee or agent who is made a party to a proceeding because the person was a director, officer, employee or agent of the corporation against liability incurred in the proceeding if (i) the individual's conduct was in good faith and (ii) the individual reasonably believed (A) in the case of conduct in the individual's official capacity with the corporation that the conduct was in the corporation's best interests and (B) in all other cases that the individual's conduct was at least not opposed to the corporation's best interests and (iii) in the case of a criminal proceeding, the individual either (A) had reasonable cause to believe the individual's conduct was lawful or (B) had no reasonable cause to believe the individual's conduct was unlawful. The IBCL also permits a corporation to pay for or reimburse reasonable expenses incurred before the final disposition of the proceeding and permits a court of competent jurisdiction to order a corporation to indemnify a director or officer if the court determines that the person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the person met the standards for indemnification otherwise provided in the IBCL.

        Mediaco's Articles of Incorporation will provide that any director or officer of the Company or any person who is serving at the request of the Company as a director, officer, employee or agent of another entity shall be indemnified and held harmless by the Company to the fullest extent authorized by the IBCL. The Articles of Incorporation will also provide that the Company shall, upon a determination that such indemnification is permissible, pay the expenses incurred in defending proceedings in advance of their final disposition and authorize the Company to maintain insurance to protect itself and any director, officer, employee or agent of the Company or any person who is or was

86


serving at the request of the Company as a director, officer, partner, trustee, employee or agent of another entity against expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Articles of Incorporation.

        At closing, the Company will enter into written indemnification agreements with each of its officers and directors that provide for indemnification by the Company to the maximum extent permitted under Indiana law.

87



MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

Material U.S. Federal Income Tax Consequences of the Distribution

        The following is a summary of certain material U.S. federal income tax consequences to U.S. Holders (as defined below) of shares of Emmis Common Stock in connection with the Distribution and certain related transactions. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder and judicial and administrative interpretations thereof, in each case as in effect and available as of the date of this information statement, and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below.

        This summary is limited to holders of Emmis Common Stock that are "U.S. Holders" (as defined below) who hold their shares of Emmis Common Stock as capital assets. A U.S. Holder is a beneficial owner of Emmis Common Stock that is, for U.S. federal income tax purposes:

    an individual who is a citizen or a resident of the United States;

    a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state thereof or the District of Columbia;

    an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

    a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more United States persons have the authority to control all of its substantial decisions, or (ii) that has a valid election is in place under applicable Treasury Regulations to be treated as a United States person.

        This summary does not discuss all tax considerations that may be relevant to U.S. Holders in light of their particular circumstances, nor does it address the consequences to shareholders subject to special treatment under the U.S. federal income tax laws, such as:

    dealers or traders in securities or currencies;

    persons who have a functional currency other than the U.S. dollar;

    broker-dealers;

    persons acting as nominees or otherwise not as beneficial owners;

    regulated investment companies;

    real estate investment trusts;

    banks, financial institutions or insurance companies;

    persons who acquired Emmis Common Stock pursuant to the exercise of employee stock options or otherwise as compensation;

    tax-exempt entities;

    shareholders who own, or are deemed to own, at least 5% or more, by voting power or value, Emmis equity;

    persons subject to special tax accounting rules under Section 451(b) of the Code;

    persons who acquired their Emmis Common Stock pursuant to the exercise of warrants or conversion rights under convertible instruments;

88


    persons who own Emmis Common Stock that is "section 306 stock" within the meaning of Section 306(c) of the Code;

    persons who hold Emmis Common Stock through individual retirement accounts or other tax-deferred accounts;

    holders owning Emmis Common Stock as part of a position in a straddle or as part of a hedging, conversion or other risk reduction transaction for U.S. federal income tax purposes;

    certain former citizens or long-term residents of the United States;

    holders who are subject to the alternative minimum tax; and

    pass-through entities (such as entities treated as partnerships for U.S. federal income tax purposes), or persons that own Emmis Common Stock through partnerships or other pass-through entities, including any persons subject to Section 1061 of the Code.

        This summary does not address any state, local or foreign tax consequences, or any estate, gift or other non-income tax consequences (including the tax on net investment income or the alternative minimum tax). If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds Emmis Common Stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership should consult its own tax advisor as to its tax consequences.

        The following discussion does not purport to address the U.S. federal income tax position of any individual taxpayer, and does not include any matters of state or local tax laws or regulations, or any matters of any tax laws or regulations of any country other than the United States of America. The following discussion is not and should not be construed to be tax advice to any Emmis Shareholder or any recipient of any Mediaco Class A Shares.

        All Emmis Shareholders should consult their own tax advisors concerning the specific tax consequences of the Distribution to them in light of their particular circumstances. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any Emmis Shareholder or recipient of Mediaco Class A Shares.

        A U.S. Holder receiving Mediaco Class A Shares in the Distribution will be treated as receiving a taxable distribution in an amount equal to the fair market value of the Mediaco Class A Shares received on the distribution date. That distribution will be treated as a taxable dividend to the extent of such U.S. Holder's ratable share of Emmis' current and accumulated earnings and profits allocable to the Distribution (including any additional earnings and profits recognized by Emmis as a result of the Initial Contribution and Distribution), with the excess, if any, treated first as a non-taxable return of capital to the extent of the U.S. Holder's adjusted tax basis in its shares of Emmis Common Stock (thus reducing such adjusted tax basis) and thereafter as capital gain. Such capital gain will be long term capital gain if the U.S. Holder's holding period for the shares of Emmis Common Stock exceeded one year at the distribution date. Any such taxable dividend income and capital gain should be included in the U.S. Holder's income in the taxable year that includes the distribution date.

        A U.S. Holder's tax basis in Mediaco Class A Shares received in the Distribution generally will equal the fair market value of such shares on the distribution date, and the holding period for such shares will begin the day after the distribution date. The holding period for the U.S. Holder's shares of Emmis Common Stock will not be affected by the fact that the Distribution was taxable, and the adjusted tax basis in such shares will be affected to the extent described in the preceding paragraph.

        In calculating the amount, if any, of the Distribution to be considered a taxable dividend, non-taxable return of capital, or capital gain, it is the fair market value of the Mediaco Class A Shares that is utilized in the calculation and analysis. The fair market value of Mediaco Class A Shares

89


reported by Emmis to certain U.S. Holder's on IRS From 1099-DIV may differ from the trading price of Mediaco Class A Shares on the distribution date. Additionally, although Emmis will be ascribing a value to the Mediaco Class A Shares in the Distribution for tax purposes, this valuation is not binding on the IRS or any other tax authority. These taxing authorities could ascribe a higher valuation to Mediaco Class A Shares, particularly if such stock trades at prices significantly above the value ascribed to Mediaco Class A Shares in the period following the Distribution. Such a higher valuation may cause a larger reduction in the tax basis of a U.S. Holder's Emmis Common Stock or may cause a U.S. Holder to recognize additional dividend or capital gain income.

        Emmis will not be able to conclusively determine the amount of its current and accumulated earnings and profits until after the end of the current tax year. Additionally, Emmis' current earnings and profits (which include additional earnings and profits recognized by Emmis as a result of the Initial Contribution and Distribution) are measured as of the end of the tax year and are generally allocated to all distributions made during such tax year on a pro rata basis. As a result, a proportionate part of Emmis' current earnings and profits for the entire taxable year of the Distribution will be allocated to the Distribution. That proportionate part will be treated as dividend income to a U.S. Holder even if such U.S. Holder has not held Emmis Common Stock for the entire taxable year of Emmis in which the Distribution occurs. Thus, if a U.S. Holder did not hold their Emmis Common Stock for the entire taxable year of Emmis in which the Distribution occurs, such U.S. Holder may be allocated a disproportionate amount of ordinary dividend income attributable to Emmis' current earnings and profits as a result of the Distribution.

        Corporate U.S. Holders may be entitled to a dividends-received deduction with respect to the Distribution, to the extent taxable as a dividend, for U.S. federal income tax purposes, subject to limitations and requirements. Corporate U.S. Holders should be aware that under certain circumstances, a corporation that receives an "extraordinary dividend" (as defined in Section 1059 of the Code) is required to (i) reduce its tax basis (but not below zero) by the portion of such dividend that is not taxed because of the dividends received deduction and (ii) treat the non-taxed portion of such dividend as gain from the sale or exchange of Emmis Common Stock for the taxable year in which such dividend is received (to the extent that the non-taxed portion of such dividend exceeds such holder's tax basis).

        Individual and certain other non-corporate U.S. Holders may qualify for preferential rates of taxation for qualified dividend income with respect to their taxable dividend income from the Distribution, provided that a minimum holding period and other requirements are satisfied. Such U.S. Holders who receive an "extraordinary dividend" may be required to treat any losses on a subsequent sale of Emmis Common Stock as long-term capital losses, regardless of its actual holding period, to the extent such U.S. Holders claimed the preferential rate of taxation for qualified dividend income on the Distribution.

        U.S. Holders should consult their tax advisors with respect to the potential application of the extraordinary dividend rules to the Distribution.

Backup Withholding and Information Reporting

        In general, information reporting requirements will apply to payments of dividends on Emmis Common Stock held by U.S. Holders, unless the U.S. Holder provides proof of an applicable exemption or an exception applies. Such payments that are subject to information reporting may also be subject to backup withholding (currently at a rate of 24 percent), unless the U.S. Holder (1) is an exempt recipient or (2) provides a certificate (generally on an IRS Form W-9) containing the holder's name, address, correct federal taxpayer identification number and statement that the holder is a U.S. person and is not subject to backup withholding. Some U.S. Holders, including corporations, may be exempt from backup withholding and information reporting. Any backup withholding tax with respect

90


to the Distribution must be remitted in cash to the IRS. A U.S. Holder's broker or other applicable withholding agent may obtain the funds necessary to remit such withholding tax by selling (on the U.S. Holder's behalf) Mediaco Class A Shares that such U.S. Holder would otherwise receive in the Distribution. Such holder may bear brokerage or other costs for this withholding procedure. Backup withholding does not constitute an additional tax, but merely an advance payment, which may be refunded or credited against a shareholder's U.S. federal income tax liability, provided the required information is timely supplied to the IRS.

        In addition, Emmis or other applicable withholding agents may be required or permitted to withhold at the applicable rate on all or a portion of the Distribution payable to non-U.S. stockholders, and any such withholding could be satisfied by Emmis or such agent withholding by selling a portion of the Mediaco Class A Shares otherwise distributable to non-U.S. stockholders or by withholding from other property held in the non-U.S. stockholder's account with Emmis or the withholding agent.

        The preceding is a summary of certain anticipated U.S. federal income tax consequences of the Distribution to U.S. Holders. Emmis' shareholders should consult their own tax advisors as to the specific tax consequences of the Distribution to them, including the application and effect of state, local or non- U.S. tax laws and non-income tax laws and of changes in applicable tax laws.

91



RESALE OF SHARES OF MEDIACO ISSUED IN THE TRANSACTIONS

        Sales or the availability for sale of substantial amounts of Mediaco Class A Shares in the public market could adversely affect the prevailing market price for such stock. Upon completion of the Distribution, we will have outstanding an aggregate of approximately        Mediaco Class A Shares based upon the Emmis Common Stock outstanding on        , 2019, excluding treasury stock and assuming no exercise of outstanding options. In general, all of the Mediaco Class A Shares distributed pursuant to the Transactions will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the "Securities Act"), unless the shares are owned by our "affiliates" as that term is defined in Rule 405 under the Securities Act. Shares held by affiliates may be sold in the public market only if registered or if they qualify for an exemption from registration or in compliance with Rule 144 under the Securities Act which is summarized below.

Rule 144

        In general, a person who has beneficially owned restricted Mediaco common stock for at least six months would be entitled to freely sell its securities provided that (1) such person is not deemed to have been one of Mediaco's affiliates at the time of, or at any time during the 90 days preceding, a sale and (2) Mediaco is subject to, and in compliance with, the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned restricted Mediaco Class A Shares for at least six months but who are Mediaco's affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, and such person would be entitled to freely sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

    one percent of the number of Mediaco Class A Shares then outstanding; or

    the average weekly trading volume of Mediaco Class A Shares on Nasdaq during the four calendar weeks preceding the filing of a notice of Form 144 with respect to such sale.

provided, in each case, that Mediaco is subject to, and in compliance with, the Exchange Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must also comply with the manner of sale, current public information, and notice provisions of Rule 144.

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WHERE YOU CAN FIND MORE INFORMATION

        The Company has filed a registration statement on Form 10 with the SEC with respect to the Mediaco Class A Shares being distributed as contemplated by this information statement. This information statement is a part of the registration statement and does not contain all of the information set forth in, and the exhibits and schedules to, the registration statement. For further information with respect to the Company and the Mediaco Class A Shares, please refer to the registration statement, including its exhibits and schedules. Statements made in this information statement relating to any contract or other document are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract or document.

        As a result of the Distribution, the Company will become subject to the information and reporting requirements of the Exchange Act and, in accordance with the Exchange Act, will file periodic reports, proxy statements and other information with the SEC. Those periodic reports, proxy statements and other information will be available on the SEC's website at http://www.sec.gov. The Company plans to make available free of charge on its website, www.mediacoholding.net, such materials as soon as reasonably practicable after the Company electronically files or furnishes such materials to the SEC. Such materials will also be provided free of charge to any shareholders requesting a copy by writing to:        , Telephone:        . The Company intends to use its website as a channel for routine distribution of important information, including news releases, analyst presentations and financial information. In addition, the Company's website allows investors and other interested persons to sign up to automatically receive e-mail alerts when the Company posts news releases and financial information on its website. Information contained on any website referenced in this information statement is not incorporated by reference into this information statement.

        We intend to furnish holders of our common shares with annual reports containing financial statements prepared in accordance with U.S. generally accepted accounting principles and audited and reported on, with an opinion expressed, by an independent registered public accounting firm.

        You should rely only on the information contained in this information statement or to which this information statement has referred you. The Company has not authorized any person to provide you with different information or to make any representation not contained in this information statement and, if given or made, such information or representation must not be relied upon as having been authorized by the Company, Emmis or SG Broadcasting. Neither the delivery of this information statement nor consummation of the Distribution shall, under any circumstances, create any implication that there has been no change in the affairs of the Company, Emmis or SG Broadcasting since the date of this information statement, or that the information in this information statement is correct as of any time after its date.

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INDEX TO FINANCIAL STATEMENTS

Unudited Financial Statements

       

Combined Condensed Statements of Operations

   
F-3
 

Combined Condensed Balance Sheets

    F-4  

Combined Condensed Statements of Changes in Equity

    F-6  

Combined Condensed Statements of Cash Flows

    F-7  

Notes to Combined Condensed Financial Statements

    F-8  

Report of Independent Registered Public Accounting Firm

   
F-20
 

Audited Financial Statements

   
 
 

Combined Statements of Operations

    F-22  

Combined Balance Sheets

    F-23  

Combined Statements of Changes in Equity

    F-25  

Combined Statements of Cash Flows

    F-26  

Notes to Combined Financial Statements

    F-27  

F-1



WQHT-FM and WBLS-FM

Carved-out Stations of Emmis Communications Corporation

Combined Condensed Financial Statements

Three months ended May 31, 2018 and 2019

Contents

Unaudited Financial Statements

       

Combined Condensed Statements of Operations

   
F-3
 

Combined Condensed Balance Sheets

    F-4  

Combined Condensed Statements of Changes in Equity

    F-6  

Combined Condensed Statements of Cash Flows

    F-7  

Notes to Combined Condensed Financial Statements

    F-8  

F-2



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Condensed Statements of Operations
(Amounts in thousands)
(Unaudited)

 
  For the three
months ended
May 31,
 
 
  2018   2019  

NET REVENUES

  $ 9,315   $ 9,838  

OPERATING EXPENSES:

             

Station operating expenses excluding depreciation and amortization expense

    6,628     7,337  

Depreciation and amortization

    292     323  

Total operating expenses

    6,920     7,660  

OPERATING INCOME

    2,395     2,178  

INCOME BEFORE INCOME TAXES

    2,395     2,178  

PROVISION FOR INCOME TAXES

    773     697  

NET INCOME

  $ 1,622   $ 1,481  

   

The accompanying notes to combined condensed financial statements are
an integral part of these statements.

F-3



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Condensed Balance Sheets

(Amounts in thousands)

 
  February 28,
2019
  May 31,
2019
 
 
   
  (Unaudited)
 

ASSETS

             

CURRENT ASSETS:

             

Accounts receivable, net of allowance for doubtful accounts of $198 and $274, respectively

  $ 7,886   $ 8,079  

Prepaid expenses

    1,680     1,705  

Other

    220     174  

Total current assets

    9,786     9,958  

PROPERTY AND EQUIPMENT, NET

    2,421     2,238  

INTANGIBLE ASSETS, NET

    64,025     63,951  

OTHER ASSETS:

             

Deferred tax assets

    6,753     6,124  

Operating lease right of use assets

        12,267  

Deposits and other

    143     343  

Total other assets

    6,896     18,734  

Total assets

  $ 83,128   $ 94,881  

   

The accompanying notes to combined condensed financial statements are
an integral part of these statements.

F-4



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Condensed Balance Sheets (Continued)

(Amounts in thousands)

 
  February 28,
2019
  May 31,
2019
 
 
   
  (Unaudited)
 

LIABILITIES AND EQUITY

             

CURRENT LIABILITIES:

             

Accounts payable and accrued expenses

  $ 809   $ 1,044  

Accrued salaries and commissions

    370     584  

Deferred revenue

    1,299     1,132  

Income taxes payable

    850     919  

Operating lease liabilities

        2,271  

Other

    543     81  

Total current liabilities

    3,871     6,031  

OPERATING LEASE LIABILITIES, NET OF CURRENT

        12,053  

OTHER NONCURRENT LIABILITIES

    1,779     85  

Total liabilities

    5,650     18,169  

COMMITMENTS AND CONTINGENCIES (NOTE 8)

             

EQUITY:

             

Net parent company investment

    77,478     76,712  

Total equity

    77,478     76,712  

Total liabilities and equity

  $ 83,128   $ 94,881  

   

The accompanying notes to combined condensed financial statements are
an integral part of these statements.

F-5



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Condensed Statements of Changes in Equity

(Amounts in thousands)

(Unaudited)

 
  Total Equity  

BALANCE, FEBRUARY 28, 2018

  $ 80,291  

Net income

    1,622  

Net distributions to Emmis Communications Corp. 

    (1,957 )

BALANCE, May 31, 2018

  $ 79,956  

BALANCE, FEBRUARY 28, 2019

  $ 77,478  

Net income

    1,481  

Net distributions to Emmis Communications Corp. 

    (2,247 )

BALANCE, May 31, 2019

  $ 76,712  

   

The accompanying notes to combined condensed financial statements are
an integral part of these statements.

F-6



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Condensed Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 
  For the three
months ended
May 31,
 
 
  2018   2019  

OPERATING ACTIVITIES:

             

Net income

  $ 1,622   $ 1,481  

Adjustments to reconcile net income to net cash provided by operating activities—Depreciation and amortization

    292     323  

(Recovery of) provision for bad debts

    (27 )   77  

Provision for deferred income taxes

    773     629  

Noncash compensation

    85     71  

Changes in assets and liabilities—Accounts receivable

    422     (270 )

Prepaid expenses and other current assets

    (1,060 )   22  

Other assets

        316  

Accounts payable and accrued liabilities

    (603 )   449  

Deferred revenue

    584     (167 )

Income taxes

        69  

Other liabilities

    (46 )   (615 )

Net cash provided by operating activities

    2,042     2,385  

INVESTING ACTIVITIES:

             

Purchases of property and equipment

        (67 )

Net cash used in investing activities

        (67 )

FINANCING ACTIVITIES:

             

Net transactions with Emmis Communications Corp. 

    (2,042 )   (2,318 )

Net cash used in financing activities

    (2,042 )   (2,318 )

INCREASE IN CASH AND CASH EQUIVALENTS

         

CASH AND CASH EQUIVALENTS:

             

Beginning of period

         

End of period

  $   $  

   

The accompanying notes to combined condensed financial statements are
an integral part of these statements.

F-7



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Notes to Combined Condensed Financial Statements
(Dollars in thousands, unless otherwise noted)

1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

    Organization

        Emmis Communications Corporation ("Emmis" or the "Company"), an Indiana corporation, is a diversified media company, principally focused on radio broadcasting. Included within the Company are the net assets and operations of two radio stations doing business as WQHT-FM and WBLS-FM, along with the FCC licenses applicable to each station (collectively, the "Carved-out Stations," "we," "us," or "our"). These combined condensed financial statements reflect the financial position, results of operations, and cash flows of the Carved-out Stations. The Carved-out Stations were acquired by Emmis through acquisitions. Purchase accounting adjustments arising from these acquisitions have been reflected in these combined condensed financial statements to the extent that these adjustments related to the Carved-out Stations and the applicable FCC licenses.

    Business

        Both of the Carved-out Stations operate in New York, New York. WQHT-FM broadcasts at 97.1 and WBLS-FM broadcasts at 107.5. Both stations operate pursuant to broadcast licenses granted by the Federal Communications Commission (FCC) for a maximum term of eight years and are subject to renewal upon approval by the FCC. The current licenses for both WQHT-FM and WBLS-FM expire in June 2022.

    Basis of Presentation

        The combined condensed financial statements of the Carved-out Stations give effect to accounting and allocation policies established by the Company's management for purposes of these combined statements and are in accordance with the guidelines provided by Staff Accounting Bulletin Topic 1.B, "Allocation of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions, and Lesser Business Components of Another Entity" of the Securities and Exchange Commission. Allocations include corporate overhead, taxes, and other expenses. The combined condensed financial statements of the Carved-out Stations have been prepared on a basis that management believes to be reasonable to reflect the combined financial position, results of operations and cash flows of the businesses that comprise the Carved-out Stations, including allocated portions of Emmis' overhead and administrative shared services.

        In the opinion of management, the accompanying combined condensed financial statements contain all material adjustments (consisting only of normal recurring adjustments, except as otherwise noted) necessary to present fairly the consolidated financial position of the Carved-out Stations at May 31, 2019, the results of their operations for the three-month periods ended May 31, 2018 and 2019, and cash flows for the three-month periods ended May 31, 2018 and 2019.

        The Company's results are subject to seasonal fluctuations. Therefore, results shown on an interim basis are not necessarily indicative of results for a full year.

        All intercompany transactions and accounts within the Carved-out Stations have been eliminated. All transactions between us and Emmis are considered to be effectively settled in the combined condensed financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined condensed statements of

F-8



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION (Continued)

cash flows as a financing activity and in the combined condensed balance sheets as net parent company investment.

        Emmis maintains various benefit and share-based compensation plans at a corporate level. Our employees participate in such programs and the portion of the cost of those plans related to our employees is included in our financial statements. However, the combined condensed balance sheets do not include any equity issued related to share-based compensation plans maintained by Emmis.

        The equity balance in these combined condensed financial statements represents the excess of total assets over total liabilities, including intercompany balances between us and Emmis (net parent company investment). Net parent company investment primarily consists of contributions from Emmis, principally related to the initial purchase of the Carved-out Stations, offset by treasury activities, which include daily sweeps of cash balances and centralized funding of accounts payable and payroll.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    a. Allocation Policies

        The following allocation policies have been established by management of Emmis. Unless otherwise noted, these policies have been consistently applied in the historical financial statements. In the opinion of management, the methods for allocating these costs are reasonable. It is not practicable to estimate the costs that would have been incurred by us if we had been operated on a stand-alone basis.

    (i)    Specifically Identifiable Operating Expenses

        Costs which relate entirely to the operations of the Carved-out Stations are attributed entirely to the Carved-out Stations. These expenses consist of costs of personnel who are 100% dedicated to the operations of the Carved-out Stations, all costs associated with locations that conduct only the business of the Carved-out Stations and amounts paid to third parties for services rendered to the Carved-out Stations. In addition, any costs incurred by Emmis, which are specifically identifiable to the operations of the Carved-out Stations, are attributed to the Carved-out Stations.

    (ii)    Shared Operating Expenses

        Emmis incurs the cost of certain corporate general and administrative services and shared services that benefit all of its entities, including the Carved-out Stations. These shared services include radio executive management, legal, accounting, information services, telecommunications, human resources, insurance, and intellectual property compliance and maintenance. These costs have been allocated to the Carved-out Stations based on one of the following allocation methods: (1) percentage of Company revenues, (2) percentage of Company's radio revenues, (3) headcount, and (4) pro rata portion based on the number of stations owned by Emmis. Management determined which allocation method was appropriate based on the nature of the shared service being provided.

    (iii)    Debt and Interest Expense

        Emmis incurred debt and related debt issuance costs with respect to the acquisition of the Carved-out Stations as well as other stations. However, such debt has been refinanced since the consummation of these acquisitions, the proceeds of such refinancing being utilized for additional

F-9



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

acquisitions unrelated to the Carved-out Stations, retirement of original debt obligations, as well as the funding of other Emmis expenditures. The Carved-out Stations are anticipated to be sold. No Emmis debt will be assumed by the purchaser of the Carved-out Stations. As a result, an allocation of Emmis' debt is not included in these combined condensed financial statements. See Note 3 for the total amount of Emmis' debt obligations at February 28, 2019 and May 31, 2019, as well as a discussion of the Carved-out Stations' assets which served as collateral for that debt. Interest expense and amortization of debt issuance costs have not been allocated to the Carved-out Stations consistent with Emmis' policy and practice.

    (iv)    Taxes

        The Carved-out Stations' allocated share of the consolidated Emmis federal tax provision is determined using the separate return method. Under the separate return method, tax expense or benefit is calculated as if the Carved-out Stations were subject to their own tax returns. State income taxes generally are allocated in a similar manner. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities carried by the Carved-out Stations, and are measured using the enacted tax rates that are expected to be in effect in the period in which these differences are expected to reverse. The principal components of deferred taxes relate to tax amortization of indefinite-lived intangibles, namely FCC licenses, which are not amortized (but subject to impairment testing) for financial reporting purposes.

    (v)    Allocated Charges

        Allocations of Emmis' costs have been included in the combined condensed statements of operations of the Carved-out Stations as follows:

 
  For the three
months ended
May 31,
 
 
  2018   2019  

Station operating expenses, excluding depreciation and amortization expense

  $ 711   $ 631  

Noncash compensation

    85     71  

Allocated charges from Emmis

  $ 796   $ 702  

        Intercompany accounts between the Carved-out Stations and Emmis have been included in combined equity.

    b. Revenue Recognition

        The Carved-out Stations generate revenues from the sale of services and products including, but not limited to: (i) on-air commercial broadcast time, (ii) non-traditional revenues including event-related revenues and event sponsorship revenues, and (iii) digital advertising. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue. Substantially all deferred revenue is recognized within twelve months of the payment date. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising revenues presented in the combined condensed financial statements are

F-10



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues.

    Advertising

        On-air broadcast revenue is recognized when or as performance obligations under the terms of a contract with a customer are satisfied. This typically occurs over the period of time that advertisements are provided, or as an event occurs. Revenues are reported at the amount the Carved-out Stations expect to be entitled to receive under the contract. Payments received by advertisers before the performance obligation is satisfied are recorded as deferred revenue in the combined condensed balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date.

    Nontraditional

        Nontraditional revenues principally consist of ticket sales and sponsorship of events the Carved-out Stations conduct in their local market. These revenues are recognized when performance obligations are fulfilled, which generally coincides with the occurrence of the related event.

    Digital

        Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video sponsorships) to advertisers. Digital revenues are generally recognized as the digital advertising is delivered.

    Other

        Other revenue includes barter revenue and network revenue. The Carved-out Stations provide advertising broadcast time in exchange for certain products and services, including on-air radio programming. These barter arrangements generally allow the Carved-out Stations to preempt such bartered broadcast time in favor of advertisers who purchase time for cash consideration. These barter arrangements are valued based upon the Carved-out Stations' estimate of the fair value of the products and services received. Revenue is recognized on barter arrangements when we broadcast the advertisements. Advertisements delivered under barter arrangements are typically aired during the same period in which the products and services are consumed. The Carved-out Stations also sell certain remnant advertising inventory to third-parties for cash, and we refer to this as network revenue. The third-parties aggregate our remnant inventory with other broadcasters' remnant inventory and sell this greater scale, generally to large national advertisers. This network revenue is recognized as we broadcast the advertisements.

    Disaggregation of Revenue

        The following table presents the Carved-out Stations' revenues disaggregated by revenue source. The category "Non Traditional" principally consists of ticket sales and sponsorships of events our

F-11



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

stations conduct in New York. The category "Other" includes, among other items, network revenues and barter.

 
  For the three months ended May 31,  
 
  2018   % of Total   2019   % of Total  

Net revenues:

                         

Advertising

  $ 6,740     72.4 % $ 7,079     72.0 %

Non Traditional

    610     6.5 %   640     6.5 %

Digital

    722     7.8 %   960     9.8 %

Other

    1,243     13.3 %   1,159     11.7 %

Total net revenues

  $ 9,315         $ 9,838        

    c. Implementation of Recent Accounting Pronouncements

        On March 1, 2019, we adopted Accounting Standard Update 2016-02, Leases, using the modified retrospective approach, applied at the beginning of the period of adoption, and we elected the package of transitional practical expedients. The adoption of this standard resulted in recording operating lease liabilities of approximately $14.9 million as of March 1, 2019. The implementation of this standard did not have an impact on our combined condensed statements of operations. See Note 11 for more discussion of the Carved-out Stations' leases.

    d. Recent Accounting Pronouncements Not Yet Implemented

        In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, Financial Instruments—Credit Losses, which introduces new guidance for an approach based on using expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities and net investments in leases as well as reinsurance and trade receivables. This standard will be effective for us as of March 1, 2020. We are currently evaluating the impact that the adoption of the new standard will have on our combined condensed financial statements.

F-12



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

3. LONG-TERM DEBT OF EMMIS

        The total consolidated debt of Emmis is presented below. See Note 2 for a discussion of why such debt has not been allocated to these combined condensed financial statements of the Carved-out Stations.

 
  February 28,
2019
  May 31,
2019
 

2014 Credit Agreement Term Loan

  $ 25,000   $  

Mortgage

        22,891  

Term Loan

        3,778  

98.7FM non-recourse debt

    47,332     45,613  

Other non-recourse debt

    10,074     10,095  

Less: Current maturities

    (32,150 )   (8,922 )

Less: Unamortized original issue discount

    (1,499 )   (1,977 )

Total long-term debt, net of current portion and debt discount

  $ 48,757   $ 71,478  

        Cash generated by the Carved-out Stations is routinely sent to Emmis and used for various operating, investing and financing activities, including the servicing of Emmis' debt. A portion of the assets of the Carved-out Stations as well as other Emmis stations has been pledged as security for Emmis' consolidated debt.

4. SHARE-BASED COMPENSATION

        Emmis maintains various share-based compensation programs for the benefit of its officers, directors and certain employees, including employees of the Carved-out Stations. As we receive the employee services in consideration for the participation of the Carved-out Stations' employees in these plans, share-based compensation expense for the awards granted to our employees has been reflected in the combined condensed statements of operations. Additionally, share-based compensation expense for employees of Emmis providing corporate general and administrative services and shared services that benefit the Carved-out Stations has been included in the allocated charges discussed in Note 1.

        Emmis' share-based compensation granted to our employees consists of stock option and restricted stock grants, as well as common stock issued to our employees in lieu of cash payments. The share-based compensation expense has been derived from the equity awards granted by Emmis to our employees. The compensation expense is based on the fair value of share-based awards, which is recognized as compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. The awards are settled by Emmis.

        As the share-based compensation plans are Emmis' plans and the awards are settled by Emmis, the offset to the expense has been recognized through net parent company investment on the combined condensed balance sheets.

        Share-based compensation expense related to our employees for the three-month periods ended May 31, 2018 and 2019 was approximately $0.1 million in both periods.

F-13



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

4. SHARE-BASED COMPENSATION (Continued)

    Stock Option Awards

        Stock options have been granted to certain of our employees and are settled in shares of Emmis' common stock. These options are granted for a term not exceeding 10 years and are forfeited, except in certain circumstances, in the event the employee terminates his or her employment or relationship with the Company. Generally, these options either vest annually over 3 years (one-third each year for 3 years), or cliff vest at the end of 3 years. The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model and expensed on a straight-line basis over the vesting period. Expected volatilities are based on historical volatility of Emmis' stock. We use historical data to estimate option exercises and employee terminations within the valuation model. We include estimated forfeitures in our compensation cost and update the estimated forfeiture rate through the final vesting date of awards. The risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

        The weighted-average fair values of the stock options granted during the three-month periods ended May 31, 2018 and 2019 were $2.03 and $1.65, respectively, determined using the following assumptions:

 
  For the three months ended
May 31,
 
  2018   2019

Risk-Free Interest Rate:

  2.6%   2.5% - 2.6%

Expected Dividend Yield:

  0%   0%

Expected Life (Years):

  4.8   4.6

Expected Volatility:

  53.2%   50.3% - 50.4%

    Restricted Stock Awards

        Restricted stock awards have been granted to certain of our employees and are payable in shares of Emmis' common stock. Restricted stock awards are accounted for at fair value based upon Emmis' closing stock price on the date of grant. The corresponding expense is amortized over the vesting period, typically one to three years. Certain of our employees have also been awarded stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restriction on these shares may be immediately lapsed on the grant date. The weighted average grant date fair value per share of restricted stock awards granted during the three-month periods ended May 31, 2018 and 2019 was $4.43 and $3.68, respectively.

        As of May 31, 2019, there was $0.2 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 1.5 years.

5. FAIR VALUE MEASUREMENTS

        As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Carved-out Stations utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally

F-14



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

5. FAIR VALUE MEASUREMENTS (Continued)

unobservable. The Carved-out Stations utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

    Recurring Fair Value Measurements

        The Carved-out Stations have no financial assets or liabilities that were accounted for at fair value on a recurring basis as of February 28, 2019 and May 31, 2019. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

    Non-Recurring Fair Value Measurements

        The Carved-out Stations have certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 6, Intangible Assets, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 6 for more discussion).

6. INTANGIBLE ASSETS

        In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Carved-out Stations review their intangible assets at least annually for impairment. In connection with any such review, if the recorded value of an intangible asset is greater than its fair value, the intangible asset is written down and charged to results of operations. FCC licenses are renewed every eight years at a nominal cost, and historically all of Emmis' FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives. Radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under a Local Marketing Agreement by another broadcaster. Accordingly, the two FCC licenses held by the Carved-out Stations are analyzed as a single unit of accounting.

    Impairment testing

        The Carved-out Stations generally perform their annual impairment review of indefinite-lived intangibles as of December 1 each year. At the time of each impairment review, if the fair value of the indefinite-lived intangible is less than its carrying value, a charge is recorded to results of operations. When indicators of impairment are present, the Carved-out Stations will perform an interim impairment test. The Carved-out Stations did not record any impairment losses during any period presented in these combined condensed financial statement.

    Valuation of Indefinite-lived Broadcasting Licenses

        Fair value of the Carved-out Stations' FCC licenses is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, we use an

F-15



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

6. INTANGIBLE ASSETS (Continued)

income valuation method when we perform our impairment tests. Under this method, we project cash flows that would be generated by each of our units of accounting assuming the unit of accounting was commencing operations in its respective market (e.g., New York City) at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Carved-out Stations assume the competitive situation that exists in the market remains unchanged, with the exception that their unit of accounting commenced operations at the beginning of the valuation period. In doing so, we extract the value of going concern and any other assets acquired, and strictly value the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into the Carved-out Stations' license valuations take into consideration then current economic conditions.

        As of February 28, 2019 and May 31, 2019, the carrying amounts of the Carved-out Stations' FCC licenses were $63.3 million.

    Definite-lived intangibles

        The following table presents the weighted-average remaining useful life at May 31, 2019 and gross carrying amount and accumulated amortization for the Carved-out Stations' definite-lived intangible assets at February 28, 2019 and May 31, 2019:

 
  As of February 28, 2019   As of May 31, 2019  
 
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
  Weighted
Average
Remaining
Useful
Life
(in years)
 

Programming Contract

  $ 2,154   $ 1,394   $ 760   $ 2,154   $ 1,468   $ 686     2.3  

        In accordance with Accounting Standards Codification Subtopic 360-10, the Carved-out Stations perform an analysis to (i) determine if indicators of impairment of a long-lived asset are present, and if present (ii) test the long-lived asset for recoverability by comparing undiscounted cash flows of the long-lived asset to its carrying value and (iii) measure any potential impairment by comparing the long-lived asset's fair value to its current carrying value. No impairment was recognized during the three-month periods ended May 31, 2018 and 2019.

        Total amortization expense related to definite-lived intangibles was $0.1 million for each of the three-month periods ended May 31, 2018 and 2019. The following table presents our estimate of amortization expense for the remaining life of our definite-lived intangibles:

Year ending February 28 (29)
  Expected
Amortization
Expense
 
 
  (in 000's)
 

Remainder of 2020

  $ 220  

2021

    294  

2022

    172  

F-16



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

7. LEGAL MATTERS

        The Carved-out Stations are a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Carved-out Stations, there are no legal proceedings pending or threatened against us that are reasonably likely to have a material adverse effect on us.

8. INCOME TAXES

        As discussed in Note 2, the provision for income taxes for the Carved-out Stations in these combined condensed financial statements has been calculated using the separate return basis, as if the Carved-Out Stations filed separate tax returns. The effective tax rate for the three months ended May 31, 2018 and 2019 was 32%, which approximates the combined federal, state and local statutory rate of 31%.

9. COMBINED EQUITY

        Combined equity includes retained earnings of the Carved-out Stations and the funding of allocated expenses from Emmis. Corporate overhead and other amounts have been allocated from Emmis and offset within combined equity.

10. RELATED PARTY TRANSACTIONS

        The Carved-out Stations are party to a number of transactions with our parent, Emmis Communications. Such transactions primarily involve the provision for certain corporate services, which have been allocated to the Carved-out Stations as described in Note 2 and are reflected in the accompanying combined condensed financial statements. There were no revenues earned from related parties during the three-month periods ended May 31, 2018 and 2019.

11. LEASES

        We determine if an arrangement is a lease at inception. We have operating leases for office space, tower space, equipment and automobiles expiring at various dates through March 2032, some of which leases have options to extend and some have options to terminate. Beginning March 1, 2019 operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities in our combined condensed balance sheet.

        Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use Emmis' incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate if it is readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain and there is a significant economic incentive to exercise that option.

        Operating lease expense for operating lease assets is recognized on a straight-line basis over the lease term. Variable lease payments, which represent lease payments that vary due to changes in facts or circumstances occurring after the commencement date other than the passage of time, are expensed in the period in which the obligation for these payments was incurred. Variable lease expense recognized in the three months ended May 31, 2019 was not material.

F-17



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

11. LEASES (Continued)

        We elected not to apply the recognition requirements of Accounting Standards Codification Topic 842, Leases, to short-term leases, which are deemed to be leases with a lease term of 12 months or less. Instead, we recognized lease payments in the combined condensed statements of operations on a straight-line basis over the lease term and variable payments in the period in which the obligation for these payments was incurred. We elected this policy for all classes of underlying assets. Short-term lease expense recognized in the three months ended May 31, 2019 was not material.

        The impact of operating leases to our combined condensed financial statements were as follows:

 
  Three Months
Ended
May 31, 2019
 

Operating lease cost

  $ 647  

Other information

   
 
 

Operating cash flows from operating leases

    748  

Right-of-use assets obtained in exchange for new operating lease liabilities

    14,940  

Weighted-average remaining lease term—operating leases (in years)

    7.4  

Weighted-average discount rate—operating leases

    5.4 %

        As of May 31, 2019, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending February 28 (29),
   
 

Remainder of 2020

  $ 2,248  

2021

    2,998  

2022

    3,006  

2023

    2,899  

2024

    1,626  

After 2024

    4,939  

Total lease payments

    17,716  

Less: imputed interest

    (3,392 )

Total

  $ 14,324  

12. SUBSEQUENT EVENTS

        On June 28, 2019, Emmis entered into a Contribution and Distribution Agreement (the "Contribution Agreement") with Mediaco Holding Inc., an Indiana corporation ("Mediaco") and SG Broadcasting LLC, an affiliate of Standard General L.P., a New York-based investment firm that manages event-driven opportunity funds ("Standard General"), pursuant to which (i) Emmis will contribute the assets of the Carved-out Stations in exchange for $91.5 million in cash, a $5.0 million note and 23.72% of the common stock of Mediaco, (ii) Standard General will purchase 76.28% of the common stock of Mediaco, and (iii) the common stock of Mediaco received by Emmis will be distributed pro rata in a taxable dividend to Emmis' shareholders, making Mediaco a public company expected to be listed on Nasdaq. The common stock of Mediaco acquired by Standard General will be entitled to ten votes per share and the common stock acquired by Emmis and distributed to Emmis'

F-18



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

12. SUBSEQUENT EVENTS (Continued)

shareholders will be entitled to one vote per share. After closing, Emmis will continue to provide management services to the Carved-Out Stations under a Management Agreement, subject to the direction of the Mediaco board of directors which will initially consist of four directors appointed by Standard General and three directors appointed by Emmis. Emmis will receive an annual management fee of $1.25 million, plus reimbursement of certain expenses directly related to the operation of Mediaco's business. Closing of the transaction is subject to customary closing conditions, including the consent of the FCC to the transfer of control of the Carved-out Stations' FCC licenses and the completion by the Securities and Exchange Commission of a review of the Form 10 to be filed for the distribution of the Mediaco common stock to Emmis shareholders. The Contribution Agreement contains customary representations, warranties, covenants and indemnities.

        Management has evaluated subsequent events through July 8, 2019, the date the financial statements were available to be issued, and determined that there are no additional subsequent events that require adjustments to, or disclosure in, the combined condensed financial statements.

F-19



WQHT-FM and WBLS-FM

Carved-out Stations of Emmis Communications Corporation

Combined Financial Statements

Years ended February 28, 2018 and 2019
with Report of Independent Registered Public Accounting Firm

Contents

F-20



Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors
of Emmis Communications Corporation and Subsidiaries

Opinion on the Financial Statements

        We have audited the accompanying combined balance sheets of WQHT-FM and WBLS-FM (the Company) as of February 28, 2019 and 2018, the related combined statements of operations, equity and cash flows for each of the two years in the period ended February 28, 2019, and the related notes (collectively referred to as the "combined financial statements"). In our opinion, the combined financial statements present fairly, in all material respects, the financial position of the Company at February 28, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended February 28, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

        These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

        We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

        Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2019.
Indianapolis, IN
June 4, 2019

F-21



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Statements of Operations
(Amounts in thousands)

 
  For the year ended
February 28,
 
 
  2018   2019  

NET REVENUES

  $ 44,557   $ 43,091  

OPERATING EXPENSES:

             

Station operating expenses excluding depreciation and amortization expense

    33,094     33,830  

Depreciation and amortization

    1,117     1,318  

Loss on disposal of assets

        56  

Total operating expenses

    34,211     35,204  

OPERATING INCOME

    10,346     7,887  

OTHER EXPENSE:

             

Other expense

    (15 )    

Total other expense

    (15 )    

INCOME BEFORE INCOME TAXES

    10,331     7,887  

PROVISION FOR INCOME TAXES

    8,331     2,518  

NET INCOME

  $ 2,000   $ 5,369  

   

The accompanying notes to combined financial statements are an integral part of these statements.

F-22



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Balance Sheets
(Amounts in thousands)

 
  February 28,  
 
  2018   2019  

ASSETS

             

CURRENT ASSETS:

             

Accounts receivable, net of allowance for doubtful accounts of $170 and $198, respectively

  $ 7,916   $ 7,886  

Prepaid expenses

    865     1,680  

Other

    307     220  

Total current assets

    9,088     9,786  

PROPERTY AND EQUIPMENT:

             

Leasehold improvements

    8,395     8,474  

Broadcasting equipment

    6,378     6,134  

Office equipment, computer equipment, software and automobiles

    1,906     1,671  

Construction in progress

    239      

    16,918     16,279  

Less-accumulated depreciation and amortization

    13,607     13,858  

Total property and equipment, net

    3,311     2,421  

INTANGIBLE ASSETS:

             

Indefinite lived intangibles

    63,265     63,265  

Other intangibles

    2,154     2,154  

    65,419     65,419  

Less-accumulated amortization

    1,101     1,394  

Total intangible assets, net

    64,318     64,025  

OTHER ASSETS:

             

Deferred tax assets

    9,271     6,753  

Deposits and other

    243     143  

Total other assets

    9,514     6,896  

Total assets

  $ 86,231   $ 83,128  

   

The accompanying notes to combined financial statements are an integral part of these statements.

F-23



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Balance Sheets
(Amounts in thousands) (Continued)

 
  February 28,  
 
  2018   2019  

LIABILITIES AND EQUITY

             

CURRENT LIABILITIES:

             

Accounts payable and accrued expenses

  $ 1,117   $ 809  

Accrued salaries and commissions

    622     370  

Deferred revenue

    723     1,299  

Income taxes payable

    850     850  

Other

    433     543  

Total current liabilities

    3,745     3,871  

OTHER NONCURRENT LIABILITIES

    2,195     1,779  

Total liabilities

    5,940     5,650  

COMMITMENTS AND CONTINGENCIES (NOTE 8)

             

EQUITY:

             

Net parent company investment

    80,291     77,478  

Total equity

    80,291     77,478  

Total liabilities and equity

  $ 86,231   $ 83,128  

   

The accompanying notes to combined financial statements are an integral part of these statements.

F-24



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Statements of Changes in Equity

Years ended February 28, 2018 and 2019
(Amounts in thousands)

 
  Total Equity  

BALANCE, FEBRUARY 28, 2017

  $ 88,475  

Net income

    2,000  

Net distributions to Emmis Communications Corp. 

    (10,184 )

BALANCE, FEBRUARY 28, 2018

    80,291  

Net income

    5,369  

Net distributions to Emmis Communications Corp. 

    (8,182 )

BALANCE, FEBRUARY 28, 2019

  $ 77,478  

   

The accompanying notes to combined financial statements are an integral part of these statements.

F-25



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Combined Statements of Cash Flows
(Amounts in thousands)

 
  For the year ended
February 28,
 
 
  2018   2019  

OPERATING ACTIVITIES:

             

Net income

  $ 2,000   $ 5,369  

Adjustments to reconcile net income to net cash provided by operating activities—Depreciation and amortization

    1,117     1,318  

Provision for bad debts

    233     329  

Provision for deferred income taxes

    7,481     2,518  

Noncash compensation

    334     281  

Loss on disposal of assets

        56  

Changes in assets and liabilities—Accounts receivable

    333     (299 )

Prepaid expenses and other current assets

    570     (729 )

Other assets

    99     100  

Accounts payable and accrued liabilities

    (1,439 )   (560 )

Deferred revenue

    (263 )   576  

Income taxes

    850      

Other liabilities

    (125 )   (306 )

Net cash provided by operating activities

    11,190     8,653  

INVESTING ACTIVITIES:

             

Purchases of property and equipment

    (672 )   (190 )

Net cash used in investing activities

    (672 )   (190 )

FINANCING ACTIVITIES:

             

Net transactions with Emmis Communications Corp. 

    (10,518 )   (8,463 )

Net cash used in financing activities

    (10,518 )   (8,463 )

INCREASE IN CASH AND CASH EQUIVALENTS

         

CASH AND CASH EQUIVALENTS:

             

Beginning of period

         

End of period

  $   $  

   

The accompanying notes to combined financial statements are an integral part of these statements.

F-26



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation)

Notes to Combined Financial Statements
(Dollars in thousands, unless otherwise noted)

1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

    Organization

        Emmis Communications Corporation ("Emmis" or the "Company"), an Indiana corporation, is a diversified media company, principally focused on radio broadcasting. Included within the Company are the net assets and operations of two radio stations doing business as WQHT-FM and WBLS-FM, along with the FCC licenses applicable to each station (collectively, the "Carved-out Stations," "we," "us," or "our"). These combined financial statements reflect the financial position, results of operations, and cash flows of the Carved-out Stations. The Carved-out Stations were acquired by Emmis through acquisitions. Purchase accounting adjustments arising from these acquisitions have been reflected in these combined financial statements to the extent that these adjustments related to the Carved-out Stations and the applicable FCC licenses.

    Business

        Both of the Carved-out Stations operate in New York, New York. WQHT-FM broadcasts at 97.1 and WBLS-FM broadcasts at 107.5. Both stations operate pursuant to broadcast licenses granted by the Federal Communications Commission (FCC) for a maximum term of eight years and are subject to renewal upon approval by the FCC. The current licenses for both WQHT-FM and WBLS-FM expire in June 2022.

    Basis of Presentation

        The combined financial statements of the Carved-out Stations give effect to accounting and allocation policies established by the Company's management for purposes of these combined statements and are in accordance with the guidelines provided by Staff Accounting Bulletin Topic 1.B, "Allocation of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions, and Lesser Business Components of Another Entity" of the Securities and Exchange Commission. Allocations include corporate overhead, taxes, and other expenses. The combined financial statements of the Carved-out Stations have been prepared on a basis that management believes to be reasonable to reflect the combined financial position, results of operations and cash flows of the businesses that comprise the Carved-out Stations, including allocated portions of Emmis' overhead and administrative shared services.

        All intercompany transactions and accounts within the Carved-out Stations have been eliminated. All transactions between us and Emmis are considered to be effectively settled in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity and in the combined balance sheets as net parent company investment.

        Emmis maintains various benefit and share-based compensation plans at a corporate level. Our employees participate in such programs and the portion of the cost of those plans related to our employees is included in our financial statements. However, the combined balance sheets do not include any equity issued related to share-based compensation plans maintained by Emmis.

        The equity balance in these combined financial statements represents the excess of total assets over total liabilities, including intercompany balances between us and Emmis (net parent company

F-27



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION (Continued)

investment). Net parent company investment primarily consists of contributions from Emmis, principally related to the initial purchase of the Carved-out Stations, offset by treasury activities, which include daily sweeps of cash balances and centralized funding of accounts payable and payroll.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    a.    Allocation Policies

        The following allocation policies have been established by management of Emmis. Unless otherwise noted, these policies have been consistently applied in the historical financial statements. In the opinion of management, the methods for allocating these costs are reasonable. It is not practicable to estimate the costs that would have been incurred by us if we had been operated on a stand-alone basis.

    (i)    Specifically Identifiable Operating Expenses

        Costs which relate entirely to the operations of the Carved-out Stations are attributed entirely to the Carved-out Stations. These expenses consist of costs of personnel who are 100% dedicated to the operations of the Carved-out Stations, all costs associated with locations that conduct only the business of the Carved-out Stations and amounts paid to third parties for services rendered to the Carved-out Stations. In addition, any costs incurred by Emmis, which are specifically identifiable to the operations of the Carved-out Stations, are attributed to the Carved-out Stations.

    (ii)    Shared Operating Expenses

        Emmis incurs the cost of certain corporate general and administrative services and shared services that benefit all of its entities, including the Carved-out Stations. These shared services include radio executive management, legal, accounting, information services, telecommunications, human resources, insurance, and intellectual property compliance and maintenance. These costs have been allocated to the Carved-out Stations based on one of the following allocation methods: (1) percentage of Company revenues, (2) percentage of Company's radio revenues, (3) headcount, and (4) pro rata portion based on the number of stations owned by Emmis. Management determined which allocation method was appropriate based on the nature of the shared service being provided.

    (iii)    Debt and Interest Expense

        Emmis incurred debt and related debt issuance costs with respect to the acquisition of the Carved-out Stations as well as other stations. However, such debt has been refinanced since the consummation of these acquisitions, the proceeds of such refinancing being utilized for additional acquisitions unrelated to the Carved-out Stations, retirement of original debt obligations, as well as the funding of other Emmis expenditures. The Carved-out Stations are anticipated to be sold. No Emmis debt will be assumed by the purchaser of the Carved-out Stations. As a result, an allocation of Emmis' debt is not included in these combined financial statements. See Note 3 for the total amount of Emmis' debt obligations at February 28, 2018 and 2019, as well as a discussion of the Carved-out Stations' assets which served as collateral for that debt. Interest expense and amortization of debt issuance costs have not been allocated to the Carved-out Stations consistent with Emmis' policy and practice.

F-28



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

    (iv)    Taxes

        The Carved-out Stations' allocated share of the consolidated Emmis federal tax provision is determined using the separate return method. Under the standalone method, tax expense or benefit is calculated as if the Carved-out Stations were subject to their own tax returns. State income taxes generally are allocated in a similar manner. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities carried by the Carved-out Stations, and are measured using the enacted tax rates that are expected to be in effect in the period in which these differences are expected to reverse. The principal components of deferred taxes relate to tax amortization of indefinite-lived intangibles, namely FCC licenses, which are not amortized (but subject to impairment testing) for financial reporting purposes.

    (v)    Allocated Charges

        Allocations of Emmis' costs have been included in the combined statements of operations of the Carved-out Stations as follows:

 
  For the year ended
February 28,
 
 
  2018   2019  

Station operating expenses, excluding depreciation and amortization expense

  $ 2,517   $ 2,613  

Noncash compensation

    334     281  

Allocated charges from Emmis

  $ 2,851   $ 2,894  

        Intercompany accounts between the Carved-out Stations and Emmis have been included in combined equity.

    b.    Revenue Recognition

        The Carved-out Stations generate revenues from the sale of services and products including, but not limited to: (i) on-air commercial broadcast time, (ii) non-traditional revenues including event-related revenues and event sponsorship revenues, and (iii) digital advertising. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue. Substantially all deferred revenue is recognized within twelve months of the payment date. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising revenues presented in the combined financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues.

    Advertising

        On-air broadcast revenue is recognized when or as performance obligations under the terms of a contract with a customer are satisfied. This typically occurs over the period of time that advertisements are provided, or as an event occurs. Revenues are reported at the amount the Carved-out Stations expect to be entitled to receive under the contract. Payments received by advertisers before the

F-29



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

performance obligation is satisfied are recorded as deferred revenue in the combined balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date.

    Nontraditional

        Nontraditional revenues principally consist of ticket sales and sponsorship of events the Carved-out Stations conduct in their local market. These revenues are recognized when performance obligations are fulfilled, which generally coincides with the occurrence of the related event.

    Digital

        Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video sponsorships) to advertisers. Digital revenues are generally recognized as the digital advertising is delivered.

    Disaggregation of Revenue

        The following table presents the Carved-out Stations' revenues disaggregated by revenue source. The category "Non Traditional" principally consists of ticket sales and sponsorships of events our stations conduct in New York. The category "Other" includes, among other items, network revenues and barter.

 
  For the year ended February 28,  
 
  2018   % of Total   2019   % of Total  

Net revenues:

                         

Advertising

  $ 29,056     65.2 % $ 28,897     67.1 %

Non Traditional

    8,449     19.0 %   7,024     16.3 %

Digital

    3,214     7.2 %   2,756     6.4 %

Other

    3,838     8.6 %   4,414     10.2 %

Total net revenues

  $ 44,557         $ 43,091        

    c.    Allowance for Doubtful Accounts

        An allowance for doubtful accounts is recorded based on management's judgment of the collectability of receivables. When assessing the collectability of receivables, management considers, among other things, historical loss experience and existing economic conditions. Amounts are written off after all normal collection efforts have been exhausted. The activity in the allowance for doubtful accounts for the two years ended February 28, 2019 was as follows:

 
  Balance At
Beginning
Of Year
  Provision   Write-Offs   Balance
At End
Of Year
 

Year ended February 28, 2018

  $ 232   $ 233   $ (295 ) $ 170  

Year ended February 28, 2019

    170     329     (301 )   198  

F-30



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

    d.    Share-based Compensation

        The Company determines the fair value of its employee stock options at the date of grant using a Black-Scholes option-pricing model. The Black-Scholes option pricing model was developed for use in estimating the value of exchange-traded options that have no vesting restrictions and are fully transferable. The Company's employee stock options have characteristics significantly different than these traded options. In addition, option pricing models require the input of highly subjective assumptions, including the expected stock price volatility and expected term of the options granted. The Company relies heavily upon historical data of its stock price when determining expected volatility, but each year the Company reassesses whether or not historical data is representative of expected results. In accordance with Accounting Standards Codification ("ASC") Topic 718, "Compensation—Stock Compensation," awards granted to employees of the Carved-out Stations are reflected in these combined financial statements even though the stock compensation was granted in the common stock of Emmis. Additional non-cash compensation costs for corporate employees have been allocated to these combined financial statements as discussed herein. See Note 4 for more discussion of share-based compensation.

    e.    Cash and Cash Equivalents

        The Carved-out Stations consider time deposits, money market fund shares and all highly liquid debt investment instruments with original maturities of three months or less to be cash equivalents. Emmis uses a centralized approach to cash management and financing of its operations. Accordingly, none of Emmis' cash or cash equivalents have been assigned to us in the combined financial statements.

    f.    Property and Equipment

        Property and equipment are recorded at cost. Depreciation is generally computed using the straight-line method over the estimated useful lives of the related assets, which are the shorter of economic life or expected lease term for leasehold improvements, five to seven years for broadcasting equipment, five years for automobiles, office equipment and computer equipment, and three to five years for software. Maintenance, repairs and minor renewals are expensed as incurred; improvements are capitalized. On a continuing basis, the Company reviews the carrying value of property and equipment for impairment. If events or changes in circumstances were to indicate that an asset's carrying value may not be recoverable, a write-down of the asset would be recorded through a charge to operations. See below for more discussion of impairment policies related to our property and equipment. Depreciation expense for the years ended February 2018 and 2019 was $0.8 million and $1.0 million, respectively.

    g.    Intangible Assets

    Indefinite-lived Intangibles

        In connection with the acquisition of the Carved-out Stations, a significant amount of the purchase price was allocated to radio broadcasting licenses and other intangible assets. In accordance with ASC Topic 350, "Intangibles—Goodwill and Other," the book value of the radio broadcasting licenses is not amortized, but is tested at least annually for impairment at the unit of accounting level. The Carved-out Stations test for impairment annually, on December 1 of each year, or more frequently

F-31



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

when events or changes in circumstances or other conditions suggest impairment may have occurred. Impairment exists when the asset's carrying values exceed their respective fair values, and the excess is then recorded to operations as an impairment charge. See Note 6, Intangible Assets, for more discussion of our impairment tests performed during the two years ended February 28, 2019.

    Definite-lived Intangibles

        The Carved-out Stations' definite-lived intangible asset is a programming contract that is being amortized over the period of time the contract is expected to contribute directly or indirectly to the Company's future cash flows.

    h.    Advertising and Subscription Acquisition Costs

        Advertising costs are expensed when incurred. Advertising expense for the years ended February 2018 and 2019 was $0.5 million in both periods.

    i.    Deferred Revenue and Barter Transactions

        Deferred revenue includes deferred barter and other transactions in which payments are received prior to the performance of services (i.e. cash-in-advance advertising). Barter transactions are recorded at the estimated fair value of the product or service received. Revenue from barter transactions is recognized when commercials are broadcast or a publication is delivered. The appropriate expense or asset is recognized when merchandise or services are used or received. Barter revenues for the years ended February 2018 and 2019 were $0.9 million and $1.0 million, respectively, and barter expenses were $0.9 million, and $1.0 million, respectively.

    j.    Income Taxes

        The Carved-out Stations account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Carved-out Stations' financial statements or Emmis' income tax returns. Income taxes are recognized during the year in which the underlying transactions are reflected in the combined statements of operations. Deferred taxes are provided for temporary differences between amounts of assets and liabilities recorded for financial reporting purposes and amounts recorded for income tax purposes.

        After determining the total amount of deferred tax assets, the Carved-out Stations determine whether it is more likely than not that some portion of the deferred tax assets will not be realized. If the Carved-out Stations determine that a deferred tax asset is not likely to be realized, a valuation allowance will be established against that asset to record it at its expected realizable value.

    k.    Long-Lived Tangible Assets

        The Carved-out Stations periodically consider whether indicators of impairment of long-lived tangible assets are present. If such indicators are present, the Carved-out Stations determine whether the sum of the estimated undiscounted cash flows attributable to the assets in question are less than their carrying value. If less, the Carved-out Stations recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by

F-32



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

discounted future cash flows, appraisals and other methods. If the assets determined to be impaired are to be held and used, the Carved-out Stations recognize an impairment charge to the extent the asset's carrying value is greater than the fair value. The fair value of the asset then becomes the asset's new carrying value, which, if applicable, the Carved-out Stations depreciate or amortize over the remaining estimated useful life of the asset. No impairment of long-lived tangible assets was recorded during the two years ended February 28, 2019.

    l.    Estimates

        The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

    m.    Recent Accounting Standards Updates

        In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326), which introduces new guidance for an approach based on using expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. This standard will be effective for the Carved-out Stations as of March 1, 2020. We are currently evaluating the impact that the adoption of the new standard will have on our combined financial statements.

        In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. Upon adoption on March 1, 2019, the Carved-out Stations expect to recognize a right of use asset and corresponding lease liability of $12 million to $16 million, representing the present value of future lease payments required under our lessee arrangements. The Carved-out Stations utilized lease terms ranging from 2019 to 2032, including periods for which exercising an extension option is reasonably assured and discount rates from 5.1% to 6.2% when determining the present value of future lease payments. All of the Carved-out Stations' existing lessee arrangements upon adoption will continue to be classified as operating leases, in which case the pattern of lease expense recognition will be unchanged.

        In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles used to recognize revenue for all entities. The FASB deferred implementation of this guidance by one year with the issuance of Accounting Standards Update 2015-14. The Carved-out Stations adopted this guidance on March 1, 2018 using the modified retrospective method with no impact on its combined financial statements for the year ending February 28, 2018. The cumulative effect of initially applying the new guidance had no impact on opening equity as of March 1, 2018 and we do not expect this guidance will have a material impact on our combined financial statements in future periods.

F-33



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

3. LONG-TERM DEBT OF EMMIS

        The total consolidated debt of Emmis is presented below. See Note 2 for a discussion of why such debt has not been allocated to these combined financial statements of the Carved-out Stations.

 
  As of
February 28,
2018
  As of
February 28,
2019
 

Revolver

  $ 9,000   $  

Term Loan

    69,451     25,000  

Total 2014 Credit Agreement debt

    78,451     25,000  

Other nonrecourse debt

    9,992     10,074  

98.7FM nonrecourse debt

    53,919     47,332  

Current maturities

    (16,037 )   (32,150 )

Unamortized original issue discount

    (3,476 )   (1,499 )

Total long-term debt

  $ 122,849   $ 48,757  

        Cash generated by the Carved-out Stations is routinely sent to Emmis and used for various operating, investing and financing activities, including the servicing of Emmis' debt. A portion of the assets of the Carved-out Stations as well as other Emmis stations has been pledged as security for Emmis' consolidated debt.

4. SHARE-BASED COMPENSATION

        Emmis maintains various share-based compensation programs for the benefit of its officers, directors and certain employees, including employees of the Carved-out Stations. As we receive the employee services in consideration for the participation of the Carved-out Stations' employees in these plans, share-based compensation expense for the awards granted to our employees has been reflected in the combined statements of operations. Additionally, share-based compensation expense for employees of Emmis providing corporate general and administrative services and shared services that benefit the Carved-out Stations has been included in the allocated charges discussed in Note 1.

        Emmis' share-based compensation granted to our employees consists of stock option and restricted stock grants, as well as common stock issued to our employees in lieu of cash payments. The share-based compensation expense has been derived from the equity awards granted by Emmis to our employees. The compensation expense is based on the fair value of share-based awards, which is recognized as compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. The awards are settled by Emmis.

        As the share-based compensation plans are Emmis' plans and the awards are settled by Emmis, the offset to the expense has been recognized through net parent company investment on the combined balance sheets.

        Share-based compensation expense related to our employees for years ended February 28, 2018 and 2019 was $0.3 million in both years.

    Stock Option Awards

        Stock options have been granted to certain of our employees and are settled in shares of Emmis' common stock. These options are granted for a term not exceeding 10 years and are forfeited, except

F-34



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

4. SHARE-BASED COMPENSATION (Continued)

in certain circumstances, in the event the employee terminates his or her employment or relationship with the Company. Generally, these options either vest annually over 3 years (one-third each year for 3 years), or cliff vest at the end of 3 years. The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model and expensed on a straight-line basis over the vesting period. Expected volatilities are based on historical volatility of Emmis' stock. We use historical data to estimate option exercises and employee terminations within the valuation model. We include estimated forfeitures in our compensation cost and update the estimated forfeiture rate through the final vesting date of awards. The risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

        The weighted-average fair values of the stock options granted during the years ended February 28, 2018 and 2019 were $1.25 and $2.27, respectively, determined using the following assumptions:

 
  For the years ended February 28,
 
  2018   2019

Risk-Free Interest Rate:

  1.7% - 2.0%   2.6% - 2.8%

Expected Dividend Yield:

  0%   0%

Expected Life (Years):

  4.4   4.8 - 4.9

Expected Volatility:

  52.9% - 53.9%   51.3% - 53.2%

    Restricted Stock Awards

        Restricted stock awards have been granted to certain of our employees and are payable in shares of Emmis' common stock. Restricted stock awards are accounted for at fair value based upon Emmis' closing stock price on the date of grant. The corresponding expense is amortized over the vesting period, typically one to three years. Certain of our employees have also been awarded stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restriction on these shares may be immediately lapsed on the grant date. The fair value per share of restricted stock awards granted during the years ended February 28, 2018 and 2019 was $2.96 and $4.45, respectively.

        As of February 28, 2019, there was $0.1 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 9 months.

5. FAIR VALUE MEASUREMENTS

        As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Carved-out Stations utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Carved-out Stations utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

F-35



WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

5. FAIR VALUE MEASUREMENTS (Continued)

    Recurring Fair Value Measurements

        The Carved-out Stations had no financial assets or liabilities that were accounted for at fair value on a recurring basis as of February 28, 2018 and 2019. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

    Non-Recurring Fair Value Measurements

        The Carved-out Stations have certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 6, Intangible Assets, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 6 for more discussion).

6. INTANGIBLE ASSETS

        In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Carved-out Stations review their intangible assets at least annually for impairment. In connection with any such review, if the recorded value of an intangible asset is greater than its fair value, the intangible asset is written down and charged to results of operations. FCC licenses are renewed every eight years at a nominal cost, and historically all of Emmis' FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives. Radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under a Local Marketing Agreement by another broadcaster. Accordingly, the two FCC licenses held by the Carved-out Stations are analyzed as a single unit of accounting.

    Impairment testing

        The Carved-out Stations generally perform their annual impairment review of indefinite-lived intangibles as of December 1 each year. At the time of each impairment review, if the fair value of the indefinite-lived intangible is less than its carrying value, a charge is recorded to results of operations. When indicators of impairment are present, the Carved-out Stations will perform an interim impairment test. During the two years ended February 28, 2019, the Carved-out Stations did not record any impairment losses.

    Valuation of Indefinite-lived Broadcasting Licenses

        Fair value of the Carved-out Stations' FCC licenses is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, we use an income valuation method when we perform our impairment tests. Under this method, we project cash flows that would be generated by each of our units of accounting assuming the unit of accounting was commencing operations in its respective market (e.g., New York City) at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Carved-out Stations assume the competitive situation that exists in the market remains unchanged, with the exception that their unit of accounting commenced operations at the beginning of the valuation period. In doing so, we extract the value of going concern and any other assets acquired, and strictly value the

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(Carved-out Stations of Emmis Communications Corporation) (Continued)

6. INTANGIBLE ASSETS (Continued)

FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into the Carved-out Stations' license valuations take into consideration then current economic conditions.

        Below are some of the key assumptions used in the Carved-out Stations' annual impairment assessments. As part of our recent annual impairment assessments, we reduced long-term growth rates for the New York City radio market based on recent industry trends and management's expectations for the market going forward. The methodology used to value the Carved-out Stations' FCC licenses has not changed in the two-year period ended February 28, 2019.

 
  December 1,
2017
  December 1,
2018
 

Discount Rate

    12.1 %   11.9 %

Long-term Revenue Growth Rate

    1.0 %   0.3 %

Mature Market Share

    12.7 %   12.9 %

Operating Profit Margin

    39.1 %   38.0 %

        As of February 28, 2018 and 2019, the carrying amounts of the Carved-out Stations' FCC licenses were $63.3 million.

    Definite-lived intangibles

        The following table presents the weighted-average remaining useful life at February 28, 2019 and gross carrying amount and accumulated amortization for the Carved-out Stations' definite-lived intangible assets at February 28, 2018 and 2019:

 
  As of February 28, 2018   As of February 28, 2019  
 
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
  Weighted
Average
Remaining
Useful Life
(in years)
 

Programming Contract

  $ 2,154   $ 1,101   $ 1,053   $ 2,154   $ 1,394   $ 760     2.6  

        In accordance with ASC Subtopic 360-10, the Carved-out Stations perform an analysis to (i) determine if indicators of impairment of a long-lived asset are present, and if present (ii) test the long-lived asset for recoverability by comparing undiscounted cash flows of the long-lived asset to its carrying value and (iii) measure any potential impairment by comparing the long-lived asset's fair value to its current carrying value. No impairment was recognized during the two years ended February 28, 2019.

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WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

6. INTANGIBLE ASSETS (Continued)

        Total amortization expense related to definite-lived intangibles was $0.3 million for each of the years ended February 2018 and 2019. The following table presents our estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles:

Year ending February 28 (29),
  Expected
Amortization
Expense
 
 
  (in 000's)
 

2020

  $ 294  

2021

    294  

2022

    172  

2023

     

2024

     

7. EMPLOYEE BENEFIT PLANS

        Emmis operates a 401(k) Retirement Savings Plan and we are part of a multi-employer defined contribution health and retirement plan in which certain of the employees of the Carved-out Stations participate.

    a.    401(k) Retirement Savings Plan

        Emmis sponsors a Section 401(k) retirement savings plan that is available to substantially all employees age 18 years and older who have at least 30 days of service. Employees may make pretax contributions to the plan in an amount up to 50% of their compensation, not to exceed the annual limit prescribed by the Internal Revenue Service ("IRS"). Although Emmis may make discretionary matching contributions to the plan in the form of cash or shares of the Company's Class A common stock, none were made during the two years ended February 28, 2019.

    b.    Defined Contribution Health and Retirement Plan

        We contribute to a multi-employer defined contribution health and retirement plan for employees who are members of a certain labor union. Amounts charged to expense related to the multi-employer plan were approximately $0.3 million for each of the years ended February 2018 and 2019.

8. OTHER COMMITMENTS AND CONTINGENCIES

    a.    Commitments

        The Carved-out Stations have various commitments under the following types of material contracts: (i) operating leases; (ii) employment agreements and (iii) other contracts with annual

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8. OTHER COMMITMENTS AND CONTINGENCIES (Continued)

commitments (mostly contractual services for audience measurement information) at February 28, 2019 as follows:

Year ending February 28 (29),
  Operating
Leases
  Employment
Agreements
  Other
Contracts
  Total  

2020

  $ 3,006   $ 3,437   $ 335   $ 6,778  

2021

    2,998     902         3,900  

2022

    3,006             3,006  

2023

    2,899             2,899  

2024

    1,626             1,626  

Thereafter

    4,748             4,748  

Total

  $ 18,283   $ 4,339   $ 335   $ 22,957  

        The Carved-out Stations lease certain office space, tower space, equipment and automobiles under operating leases expiring at various dates through March 2032. Some of the lease agreements contain renewal options and annual rental escalation clauses, as well as provisions for payment of utilities and maintenance costs. The Carved-out Stations recognize escalated rents on a straight-line basis over the term of the lease agreement. Rental expense during the years ended February 2018 and 2019 was approximately $2.4 million and $2.6 million, respectively.

    b.    Litigation

        The Carved-out Stations are a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Carved-out Stations, there are no legal proceedings pending or threatened against us that are reasonably likely to have a material adverse effect on us.

9. INCOME TAXES

        The provision for income taxes for the years ended February 2018 and 2019 consisted of the following:

 
  For the year ended
February 28,
 
 
  2018   2019  

Current:

             

Federal

  $ 554   $  

State

    296      

Total current

    850      

Deferred:

             

Federal

    7,261     1,644  

State

    220     874  

Total deferred

    7,481     2,518  

Provision for income taxes

  $ 8,331   $ 2,518  

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WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

9. INCOME TAXES (Continued)

        The provision for income taxes for the years ended February 2018 and 2019 differs from that computed at the Federal statutory corporate tax rate as follows:

 
  For the year ended
February 28,
 
 
  2018   2019  

Federal statutory income tax rate

    35 %   21 %

Computed income tax provision at federal statutory rate

  $ 3,375   $ 1,656  

State income tax

    1,097     874  

Entertainment disallowance

    17     18  

Valuation allowance

    195      

Federal tax reform

    3,699      

Other

    (52 )   (30 )

Provision for income taxes

  $ 8,331   $ 2,518  

        During the periods presented in these combined financial statements, the Carved-out Stations were generally included in the tax grouping of other Emmis entities within the respective entity's tax jurisdiction. The provision for income taxes included in these combined financial statements has been calculated using the separate return basis, as if the Carved-out Stations filed separate tax returns. Significant judgment is required in determining the provision for income taxes. The calculation of the provision for income taxes is subject to management's interpretation of applicable tax laws in the jurisdictions in which the Carved-out Stations would file.

        On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into federal law. The provisions of this major tax reform were generally effective January 1, 2018. The most significant change impacting the Carved-out Stations is the reduction of the corporate federal income tax rate from 35% to 21% effective January 1, 2018. The Carved-out Stations made reasonable estimates in order to remeasure their deferred tax balances and account for the effects of the Tax Act, as reflected in the February 28, 2018 financial statements. The adjustment to federal deferred tax balances resulted in an expense of $4.3 million and the adjustment to state deferred tax balances resulted in a benefit of $0.6 million. The Carved-out Stations completed the accounting for enactment date income tax effects of the Tax Act, which resulted in an immaterial impact to its combined financial statements.

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WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

9. INCOME TAXES (Continued)

        The components of deferred tax assets and deferred tax liabilities as of February 28, 2018 and 2019 were as follows:

 
  As of
February 28,
 
 
  2018   2019  

Deferred tax assets:

             

Intangible assets

  $ 14,226   $ 12,935  

Accrued rent

    788     698  

Stock compensation

    147     101  

Net operating losses

        86  

Other

    120     114  

Total deferred tax assets

    15,281     13,934  

Deferred tax liabilities

             

Indefinite-lived intangible assets

    (5,621 )   (6,854 )

Property and equipment

    (389 )   (327 )

Total deferred tax liabilities

    (6,010 )   (7,181 )

Net deferred tax assets

  $ 9,271   $ 6,753  

        A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset ("DTA") will not be realized. The Carved-out Stations have considered future taxable income and ongoing prudent and feasible tax-planning strategies in assessing the need for a valuation allowance. The Carved-out Stations have determined that a valuation allowance is required at this time on a capital loss carryforward DTA, as it is unlikely the Carved-out Stations would be able to utilize the DTA prior to its expiration. The Carved-out Stations will assess quarterly whether it remains more likely than not that the deferred tax assets will be realized. In the event the Carved-out Stations determine at a future time that they may not realize their deferred tax assets in excess of the net amount recorded, the Carved-out Stations will record a deferred tax asset valuation allowance as appropriate and increase income tax expense in the period when the Carved-out Stations make such determination.

        As of February 28, 2019, the Carved-out Stations' taxes had net operating losses for U.S. federal and state income tax purposes of $0.1 million. As described in the significant accounting policies, the Carved-out Stations have been prepared on a separate return basis, and as a result, net operating loss carryovers may not be available for use by the Carved-out Stations as they may have already been used in Emmis' consolidated or combined tax return filings.

        ASC Subtopic 740-10 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of February 28, 2019, the Carved-out Stations had no uncertain tax positions.

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WQHT-FM and WBLS-FM
(Carved-out Stations of Emmis Communications Corporation) (Continued)

10. COMBINED EQUITY

        Combined equity includes retained earnings of the Carved-out Stations and the funding of allocated expenses from Emmis. Corporate overhead and other amounts have been allocated from Emmis and offset within combined equity.

11. RELATED PARTY TRANSACTIONS

        The Carved-out Stations are party to a number of transactions with our parent, Emmis Communications. Such transactions primarily involve the provision for certain corporate services, which have been allocated to the Carved-out Stations as described in Note 2 and are reflected in the accompanying combined financial statements. There were no revenues earned from related parties during the two years ended February 28, 2019.

12. SUBSEQUENT EVENTS

        Management has evaluated subsequent events through June 4, 2019, the date the financial statements were available to be issued, and determined that there are no subsequent events that require adjustments to, or disclosure in, the combined financial statements.

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