CUMULUS MEDIA INC (Form: 10-Q, Received: 08/10/2020 08:22:13)

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-24525

Cumulus Media Inc.

(Exact Name of Registrant as Specified in its Charter)



Delaware				82-5134717
(State or Other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)

3280 Peachtree Road,	NW Suite 2200	Atlanta,	GA	30305
(Address of Principal Executive Offices)				(ZIP Code)

(404) 949-0700

(Registrant’s telephone number, including area code)

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0000001 per share	CMLS	Nasdaq Global Market
Class A common stock purchase rights	N/A	Nasdaq Global Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:

If an emerging 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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ¨

As of August 3, 2020, the registrant had 20,318,014 outstanding shares of common stock consisting of: (i) 17,818,805 shares of Class A common stock; (ii) 2,499,209 shares of Class B common stock, and no warrants issued and outstanding. In addition, the registrant had 22,154 Series 1 warrants authorized to be issued.

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CUMULUS MEDIA INC.

INDEX



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	3
Condensed Consolidated Statements of Operations For the Three and Six Months Ended June 30, 2020 and June 30, 2019	4
Condensed Consolidated Statements of Stockholders’ Equity For the Six Months Ended June 30, 2020 and June 30, 2019	5
Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2020 and June 30, 2019	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 4. Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 6. Exhibits	32
Signatures	32

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



Dollars in thousands (except for share data)	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	196,914		$	15,142
Restricted cash	—			1,865
Accounts receivable, less allowance for doubtful accounts of $6,405 and $5,197 at June 30, 2020 and December 31, 2019, respectively	154,381			242,599
Trade receivable	3,237			2,790
Assets held for sale	521			87,000
Prepaid expenses and other current assets	40,757			31,285
Total current assets	395,810			380,681
Property and equipment, net	221,921			232,934
Operating lease right-of-use assets	142,178			143,436
Broadcast licenses	825,666			830,490
Other intangible assets, net	154,480			164,383
Other assets	13,240			9,408
Total assets	$	1,753,295		$	1,761,332
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	71,876		$	97,527
Current portion of operating lease liabilities	29,930			34,462
Trade payable	2,438			2,323
Current portion of term loan due 2026	5,250			5,250
Total current liabilities	109,494			139,562
2020 revolving credit facility	60,000			—
Term loan due 2026, net of debt issuance costs of $4,625 and $5,007 at June 30, 2020 and December 31, 2019, respectively	511,188			513,431
6.75% senior notes, net of debt issuance costs of $6,509 and $6,938 at June 30, 2020 and December 31, 2019, respectively	493,491			493,062
Operating lease liabilities	119,052			111,184
Other liabilities	31,805			27,839
Deferred income taxes	16,255			21,038
Total liabilities	1,341,285			1,306,116
Commitments and contingencies (Note 11)
Stockholders’ equity:
Class A common stock, par value $0.0000001 per share; 100,000,000 shares authorized; 17,917,636 and 15,750,097 shares issued; 17,743,414 and 15,681,439 shares outstanding at June 30, 2020 and December 31, 2019, respectively	—			—
Convertible Class B common stock, par value $0.0000001 per share; 100,000,000 shares authorized; 2,574,600 and 1,926,848 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	—			—
Treasury stock, at cost,174,222 and 68,658 shares at June 30, 2020 and December 31, 2019, respectively	(2,414		)	(1,171		)
Additional paid-in-capital	335,409			333,705
Retained earnings	79,015			122,682
Total stockholders’ equity	412,010			455,216
Total liabilities and stockholders’ equity	$	1,753,295		$	1,761,332

See accompanying notes to the unaudited condensed consolidated financial statements.

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CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Dollars in thousands (except for share and per share data)	Three Months Ended						Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net revenue	$	146,022		$	279,673		$	373,936		$	547,169
Operating expenses:
Content costs	65,725			93,844			154,291			197,596
Selling, general and administrative expenses	79,904			115,817			183,531			229,320
Depreciation and amortization	13,122			13,545			25,912			28,135
Local marketing agreement fees	1,006			438			2,053			1,481
Corporate expenses	10,331			22,675			22,139			35,192
Loss (gain) on sale or disposal of assets or stations	3,767			(47,750		)	5,583			(47,724		)
Impairment of intangible assets	4,509			—			4,509			—
Total operating expenses	178,364			198,569			398,018			444,000
Operating (loss) income	(32,342		)	81,104			(24,082		)	103,169
Non-operating expense:
Interest expense	(15,888		)	(21,191		)	(33,047		)	(43,347		)
Interest income	2			8			4			12
Gain on early extinguishment of debt	—			—			—			381
Other expense, net	(61		)	(34		)	(64		)	(62		)
Total non-operating expense, net	(15,947		)	(21,217		)	(33,107		)	(43,016		)
(Loss) income before income taxes	(48,289		)	59,887			(57,189		)	60,153
Income tax benefit (expense)	11,973			(17,026		)	13,522			(16,841		)
Net (loss) income	$	(36,316	)	$	42,861		$	(43,667	)	$	43,312
Basic and diluted (loss) earnings per common share (see Note 10, "(Loss) Earnings Per Share"):
Basic: (Loss) Earnings per share	$	(1.79	)	$	2.13		$	(2.15	)	$	2.16
Diluted: (Loss) Earnings per share	$	(1.79	)	$	2.11		$	(2.15	)	$	2.14
Weighted average basic common shares outstanding	20,332,970			20,125,419			20,279,022			20,091,568
Weighted average diluted common shares outstanding	20,332,970			20,317,328			20,279,022			20,268,393

See accompanying notes to the unaudited condensed consolidated financial statements.

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CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



For the six months ended June 30, 2020 and June 30, 2019
Dollars in thousands	Class A Common Stock			Class B Common Stock				Treasury Stock
	Number of Shares	Par Value		Number of Shares		Par Value		Number of Shares		Value			Additional Paid-In Capital		Retained Earnings			Total
Balance at December 31, 2019	15,681,439	$	—	1,926,848		$	—	68,658		$	(1,171	)	$	333,705	$	122,682		$	455,216
Net loss	—	—		—		—		—		—			—		(7,351		)	(7,351		)
Shares returned in lieu of tax payments	—	—		—		—		75,493		(1,072		)	—		—			(1,072		)
Conversion of Class B common stock	38,563	—		(38,563	)	—		—	—	—			—		—			—
Exercise of warrants	121,114	—		—		—		—		—			—		—			—
Issuance of common stock	112,569	—		—		—		—	—	—			—		—			—
Stock based compensation expense	—	—		—		—		—	—	—			719		—			719
Balance at March 31, 2020	15,953,685	$	—	1,888,285		$	—	144,151		$	(2,243	)	$	334,424	$	115,331		$	447,512
Net loss	—	—		—		—		—		—			—		(36,316		)	(36,316		)
Shares returned in lieu of tax payments	—	—		—		—		30,071		(171		)	—		—			(171		)
Exercise of warrants	1,723,253	—		686,315		—		—		—			—		—			—
Issuance of common stock	66,476	—		—		—		—	—	—			—		—			—
Stock based compensation expense	—	—		—		—		—	—	—			985		—			985
Balance at June 30, 2020	17,743,414	$	—	2,574,600		$	—	174,222		$	(2,414	)	$	335,409	$	79,015		$	412,010

Dollars in thousands	Class A Common Stock			Class B Common Stock				Treasury Stock
	Number of Shares	Par Value		Number of Shares		Par Value		Number of Shares		Value			Additional Paid-In Capital		Retained Earnings			Total
Balance at December 31, 2018	12,995,080	$	—	3,560,604		$	—	—		$	—		$	328,404	$	61,425		$	389,829
Net income	—	—		—		—		—		—			—		451			451
Shares returned in lieu of tax payments	—	—		—		—		34,704		(633		)	—		—			(633		)
Conversion of Class B common stock	751,633	—		(751,633	)	—		—		—			—		—			—
Exercise of warrants	177,186	—		—		—		—		—			—		—			—
Issuance of common stock	68,246	—		3,035		—		—		—			—		—			—
Stock based compensation expense	—	—		—		—		—		—			1,208		—			1,208
Balance at March 31, 2019	13,992,145	$	—	2,812,006		$	—	34,704		$	(633	)	$	329,612	$	61,876		$	390,855
Net income	—	—		—		—		—		—			—		42,861			42,861
Shares returned in lieu of tax payments	—	—		—		—		33,129		(523		)	—		—			(523		)
Conversion of Class B common stock	115,153	—		(115,153	)	—		—	—	—			—		—			—
Exercise of warrants	170,659	—		—		—		—		—			—		—			—
Issuance of common stock	50,581	—		—		—		—	—	—			—		—			—
Stock based compensation expense	—	—		—		—		—	—	—			1,106		—			1,106
Balance at June 30, 2019	14,328,538	$	—	2,696,853		$	—	67,833		$	(1,156	)	$	330,718	$	104,737		$	434,299

See accompanying notes to the unaudited condensed consolidated financial statements.

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CUMULUS MEDIA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Dollars in thousands	Six Months Ended
	June 30, 2020			June 30, 2019
Cash flows from operating activities:
Net (loss) income	$	(43,667	)	$	43,312
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	25,912			28,135
Amortization of right of use assets	6,809			11,931
Amortization of debt issuance costs/discounts	1,541			136
Provision for doubtful accounts	3,702			618
Loss (gain) on sale or disposal of assets or stations	5,583			(47,724		)
Gain on early extinguishment of debt	—			(381		)
Impairment of intangible assets	4,509			—
Deferred income taxes	(4,784		)	7,725
Stock-based compensation expense	1,704			2,314
Changes in assets and liabilities:
Accounts receivable	84,866			16,704
Trade receivable	(697		)	(1,585		)
Prepaid expenses and other current assets	(9,762		)	424
Operating leases	9,522			3,839
Assets held for sale	—			29
Other assets	(4,394		)	2,778
Accounts payable and accrued expenses	(32,515		)	(17,836		)
Trade payable	115			78
Other liabilities	3,967			(1,543		)
Net cash provided by operating activities	52,411			48,954
Cash flows from investing activities:
Proceeds from sale of assets or stations	78,333			103,519
Capital expenditures	(5,575		)	(10,715		)
Net cash provided by investing activities	72,758			92,804
Cash flows from financing activities:
Repayment of borrowings under term loan	(2,626		)	(639,180		)
Borrowings under the 2020 revolving credit facility	60,000			—
Proceeds from issuance of 6.75% senior notes	—			500,000
Financing costs	(444		)	(7,675		)
Shares returned in lieu of tax payments	(1,243		)	(1,156		)
Repayments of financing lease obligations	(949		)	(819		)
Net cash provided by (used in) financing activities	54,738			(148,830		)
Increase (decrease) in cash and cash equivalents and restricted cash	179,907			(7,072		)
Cash and cash equivalents and restricted cash at beginning of period	17,007			30,038
Cash and cash equivalents and restricted cash at end of period	$	196,914		$	22,966

See accompanying notes to the unaudited condensed consolidated financial statements.

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1. Nature of Business, Interim Financial Data and Basis of Presentation

Cumulus Media Inc. (and its consolidated subsidiaries, except as the context may otherwise require, "CUMULUS MEDIA," "we," "us," "our," or the "Company") is a Delaware corporation, organized in 2018, and successor to a Delaware corporation with the same name that had been organized in 2002.

Nature of Business

CUMULUS MEDIA is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month - wherever and whenever they want it. CUMULUS MEDIA engages listeners with high-quality local programming through 424 owned-and-operated stations across 87 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, the Olympics, the Academy of Country Music Awards, and many other world-class partners across nearly 8,000 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. CUMULUS MEDIA provides advertisers with personal connections, local impact and national reach through on-air and on-demand digital, mobile, social, and voice-activated platforms, as well as integrated digital marketing services, powerful influencers, full-service audio solutions, industry-leading research and insights, and live event experiences. CUMULUS MEDIA is the only audio media company to provide marketers with local and national advertising performance guarantees. For more information visit www.cumulusmedia.com.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the Company's unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented herein. The results for the interim periods are not necessarily indicative of those for the full year. The condensed consolidated financial statements herein should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by United States ("U.S.") generally accepted accounting principles ("GAAP").

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including significant estimates related to revenue recognition, bad debts, intangible assets, income taxes, stock-based compensation, contingencies, litigation, valuation assumptions for impairment analysis, certain expense accruals, leases and, if applicable, purchase price allocations. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. We assessed these aforementioned estimates and judgments utilizing information reasonably available to us and considering the unknown future impacts of the novel coronavirus disease ("COVID-19") pandemic. The business and economic uncertainty resulting from the COVID-19 pandemic has made such estimates and assumptions more difficult to calculate. While there was not a material impact to our consolidated financial statements as of and for the quarter ended June 30, 2020, our estimates may change based on the magnitude and duration of COVID-19, as well as other factors. Actual amounts and results may differ materially from these estimates.

Comprehensive (Loss) Income

Comprehensive (loss) income includes net (loss) income and certain items that are excluded from net (loss) income and recorded as a separate component of stockholders' equity. During the six months ended June 30, 2020 and June 30, 2019, the Company had no items of other comprehensive (loss) income and, therefore, comprehensive (loss) income does not differ from reported net (loss) income.

Assets Held for Sale

Long-lived assets to be sold are classified as held for sale in the period in which they meet all the criteria for the disposal of long-lived assets. The Company measures assets held for sale at the lower of their carrying amount or fair value less cost to sell.

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On June 24, 2020, the Company completed its previously announced sale of certain land located in Bethesda, MD, used in conjunction with the Company's Washington, DC operations ("DC Land"), to Toll Brothers. See Note 2, "Acquisitions and Dispositions" for additional discussion related to the DC Land sale.

On March 1, 2020, the Company completed its previously announced sale of WABC-AM in New York, NY to Red Apple Media, Inc. (the "WABC Sale"). See Note 2, "Acquisitions and Dispositions" for additional discussion related to the WABC Sale.

The major categories of assets held for sale are as follows (dollars in thousands):



	June 30, 2020		December 31, 2019
	Total		WABC Sale		DC Land		Total
Property and equipment, net	$	220	$	7,054	$	75,000	$	82,054
FCC license	263		4,573		—		4,573
Other intangibles, net	29		373		—		373
Other assets	9		—		—		—
Total	$	521	$	12,000	$	75,000	$	87,000

Supplemental Cash Flow Information

The following summarizes supplemental cash flow information to be read in conjunction with the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and June 30, 2019:



	Six Months Ended
	June 30, 2020			June 30, 2019
Supplemental disclosures of cash flow information:
Interest paid	$	30,435		$	41,978
Income taxes (refunded) paid	(202		)	14,134
Supplemental disclosures of non-cash flow information:
Trade revenue	$	14,921		$	23,980
Trade expense	14,172			22,008
Reconciliation of cash and cash equivalents and restricted cash to the Condensed Consolidated Balance Sheet:
Cash and cash equivalents	$	196,914		$	20,500
Restricted cash	—			2,466
Total cash and cash equivalents and restricted cash	$	196,914		$	22,966

Adoption of New Accounting Standards

ASU 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). In August 2018, the FASB issued ASU 2018-13, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods therein, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company adopted ASU 2018-13 as of January 1, 2020 and there was no material impact to the Condensed Consolidated Financial Statements.

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Recent Accounting Standards Updates

ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"). In June 2016, the FASB issued ASU 2016-13 which requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of "probable" has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset's origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard was effective for public business entities, excluding Smaller Reporting Companies ("SRC"), for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The standard is effective for SRCs for fiscal years beginning after December 15, 2022. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its Condensed Consolidated Financial Statements.

2. Acquisitions and Dispositions

DC Land Sale

On June 24, 2020, the Company completed its previously announced sale of its DC Land to Toll Brothers. The sale generated net proceeds of $71.3 million, $5.0 million of which was received in 2019. The Company recorded a loss on the DC Land sale of $3.7 million which is included in the Loss (gain) on sale or disposal of assets or stations financial statement line item of the Company's Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020.

WABC Sale

On March 1, 2020, the Company completed its previously announced sale of WABC-AM in New York, NY to Red Apple Media, Inc for $12.0 million in cash. The Company recorded a loss on the WABC Sale of $0.9 million which is included in the Loss (gain) on sale or disposal of assets or stations financial statement line item of the Company's Condensed Consolidated Statements of Operations for the six months ended June 30, 2020.

3. Revenues

Revenue Recognition

Revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following table presents revenues disaggregated by revenue source (dollars in thousands):



	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
Advertising revenues	$	142,873	$	274,830
Non-advertising revenues	3,149		4,843
Total revenue	$	146,022	$	279,673



	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Advertising revenues	$	367,413	$	536,834
Non-advertising revenues	6,523		10,335
Total revenue	$	373,936	$	547,169

Advertising Revenues

Substantially all of the Company's revenues are from advertising, primarily generated through (i) the sale of broadcast radio advertising time and advertising and promotional opportunities across digital audio networks to local, regional, national and

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network advertisers and (ii) remote/event revenue. The Company considers each advertising element a separate contract, and thus a separate performance obligation, as a result of both the customer's and the Company's respective ability to stop transferring promised goods or services during the contract term without notice or penalty. Thus, revenue associated with these contracts is recognized at the time advertising or other services, for example hosting an event, is delivered.

The Company's payment terms vary by the type and location of customer and the products or services offered. The term between invoicing and when payment is due is generally not significant. There are no further obligations for returns, refunds or similar obligations related to the contracts. The Company records deferred revenues when cash payments including amounts which are refundable are received in advance of performance.

Non-Advertising Revenues

Non-advertising revenue does not constitute a material portion of the Company's revenue and primarily consists of licensing content, and to a lesser degree, tower rental agreements, satellite rental income and sublease income. Tower rental agreements typically range from one to five years with renewal clauses. Such agreements generally contain a stated recurring monthly amount due, which is recognized upon delivery of services or passage of time. These agreements generally contain a single performance obligation.

Trade and Barter Transactions

The Company provides commercial advertising inventory in exchange for goods and services used principally for promotional, sales, programming and other business activities. Programming barter revenue is derived from an exchange of programming content, to be broadcast on the Company's airwaves, for commercial advertising inventory, usually in the form of commercial placements inside the show exchanged. Trade and barter value is based upon management's estimate of the fair value of the products, supplies and services received. Trade and barter revenue is recorded when commercial spots are aired, in the same pattern as the Company's normal cash spot revenue is recognized. Trade and barter expense is recorded when goods or services are consumed. For the three months ended June 30, 2020 and June 30, 2019, amounts reflected under trade and barter transactions were: (1) trade and barter revenues of $5.8 million, and $10.7 million, respectively; and (2) trade and barter expenses of $6.1 million, and $11.4 million, respectively. For the six months ended June 30, 2020 and June 30, 2019, amounts reflected under trade and barter transactions were: (1) trade and barter revenues of $14.9 million, and $24.0 million, respectively; and (2) trade and barter expenses of $14.2 million, and $22.0 million, respectively.

Capitalized Costs of Obtaining a Contract

The Company capitalizes certain incremental costs of obtaining contracts with customers which it expects to recover. For contracts with a customer life of one year or less, commissions are expensed as they are incurred. For new local direct contracts where the new and renewal commission rates are not commensurate, management capitalizes commissions and amortizes the capitalized commissions over the average customer life. These costs are recorded within selling, general and administrative expenses in our Condensed Consolidated Statements of Operations. As of June 30, 2020, and December 31, 2019, the Company recorded an asset of approximately $6.0 million and $7.9 million, respectively, related to the unamortized portion of commission expense on new local direct revenue.

4. Restricted Cash

As of June 30, 2020, the Company had no restricted cash. As of December 31, 2019, the Company had $1.9 million in restricted cash. Restricted cash was used primarily to collateralize standby letters of credit for certain leases and insurance policies.

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5. Intangible Assets

The gross carrying amount and accumulated amortization of the Company’s intangible assets as of June 30, 2020 and December 31, 2019 are as follows (dollars in thousands):



	Indefinite-Lived						Definite-Lived												Total
Gross Carrying Amount	FCC licenses			Trademarks			Affiliate and producer relationships			Broadcast advertising			Tower income contracts			Other
Balance as of December 31, 2019	$	830,490		$	19,921		$	130,000		$	32,000		$	13,721		$	11,191		$	1,037,323
Impairment charges	(4,509		)	—			—			—			—			—			(4,509		)
Assets held for sale (see Note 1)	(263		)	(16		)	—			—			(16		)	(11		)	(306		)
Dispositions	(52		)	(2		)	—			—			(1		)	(45		)	(100		)
Balance as of June 30, 2020	$	825,666		$	19,903		$	130,000		$	32,000		$	13,704		$	11,135		$	1,032,408

Accumulated Amortization
Balance as of December 31, 2019	$	—		$	—		$	(18,712	)	$	(10,133	)	$	(2,414	)	$	(11,191	)	$	(42,450	)
Amortization Expense	—			—			(5,909		)	(3,200		)	(762		)	—			(9,871		)
Assets held for sale (see Note 1)	—			—			—			—			3			11			14
Dispositions	—			—			—			—			—			45			45
Balance as of June 30, 2020	$	—		$	—		$	(24,621	)	$	(13,333	)	$	(3,173	)	$	(11,135	)	$	(52,262	)
Net Book Value as of June 30, 2020	$	825,666		$	19,903		$	105,379		$	18,667		$	10,531		$	—		$	980,146

The Company performs impairment testing of its indefinite-lived intangible assets annually as of December 31 of each year and on an interim basis if events or circumstances indicate that its indefinite-lived intangible assets may be impaired. The Company reviews the carrying amount of its definite-lived intangible assets, primarily broadcast advertising and affiliate relationships, for recoverability prior to its annual impairment test and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company considered the current and expected future economic and market conditions surrounding COVID-19, the adverse impact on the trading value of the Company's publicly-traded equity and on the Company's second quarter 2020 results, the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic and other potential indicators of impairment and determined a triggering event occurred which necessitated an interim impairment test as of June 30, 2020.

In estimating the fair value of the FCC licenses, we began with the market revenue projections based on third-party radio industry data, which considered the impact of COVID-19. Next, we estimated the percentage of the market's total revenue, or market share, that market participants could reasonably expect an average start-up station to attain, as well as the duration (in years) required to reach the average market share. The estimated average market share was computed based on market share data, by station type (i.e., AM and FM) and signal strength. Below are the key assumptions used in our interim impairment assessment:



	June 30, 2020
Discount rate	8.0	%
Long-term revenue growth rate	(0.75	)%
Mature operating profit margin for average stations in the markets where the Company operates	20% – 30%

As a result of the impairment test as of June 30, 2020, the Company recorded a non-cash impairment charge of $4.5 million on its FCC licenses which is included in the Impairment of Intangible Assets financial statement line item of the Company's Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020.

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The Company also performed an interim impairment test as of June 30, 2020 on its trademarks. As a result of our impairment test of our trademarks, there was no impairment recorded. In addition, based on the Company's test of recoverability using estimated undiscounted future cash flows, the carrying amounts of the Company's definite-lived intangible and long-lived assets were determined to be recoverable, and no impairment was recognized.

While management believes the estimates and assumptions utilized to calculate the fair value of the Company's tangible and intangible long-lived assets are reasonable, it is possible a material change could occur to the estimated fair value of these assets. Uncertainty regarding the full extent of the economic downturn as a result of COVID-19, as well as the timing of any recovery, may result in the Company's actual results not being consistent with its estimates, and the Company could be exposed to future impairment losses that could be material to its results of operations. We will continue to monitor changes in economic and market conditions related to COVID-19 and if any events or circumstances indicate a triggering event has occurred, we will perform an interim impairment test of our intangible assets at the appropriate time.

6. Long-Term Debt

The Company’s long-term debt consisted of the following as of June 30, 2020 and December 31, 2019 (dollars in thousands):



	June 30, 2020			December 31, 2019
Term Loan due 2026	$	521,063		$	523,688
Less: current portion of Term Loan due 2026	(5,250		)	(5,250		)
6.75% Senior Notes	500,000			500,000
2020 Revolving Credit Facility	60,000			—
Less: Total unamortized debt issuance costs	(11,134		)	(11,945		)
Long-term debt, net	$	1,064,679		$	1,006,493

Refinanced Credit Agreement (Term Loan due 2026)

On September 26, 2019, the Company entered into a new credit agreement by and among Holdings, certain other subsidiaries of the Company, Bank of America, N.A., as Administrative Agent, and the other banks and financial institutions party thereto as Lenders (the "Refinanced Credit Agreement"). Pursuant to the Refinanced Credit Agreement, the lenders party thereto provided Holdings and its subsidiaries that are party thereto as co-borrowers with a $525.0 million senior secured Term Loan (the "Term Loan due 2026"), which was used to refinance all of the then outstanding term loan (the "Term Loan due 2022").

Amounts outstanding under the Refinanced Credit Agreement bear interest at a per annum rate equal to (i) the London Inter-bank Offered Rate ("LIBOR") plus an applicable margin of 3.75%, subject to a LIBOR floor of 1.00%, or (ii) the Alternative Base Rate (as defined below) plus an applicable margin of 2.75%, subject to an Alternative Base Rate floor of 2.00%. The Alternative Base Rate is defined, for any day, as the per annum rate equal to the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1.0%, (ii) the rate identified by Bank of America, N.A. as its "Prime Rate" and (iii) one-month LIBOR plus 1.0%. As of June 30, 2020, the Term Loan due 2026 bore interest at a rate of 4.82% per annum.

Amounts outstanding under the Term Loan due 2026 amortize in equal quarterly installments of 0.25% of the original principal amount of the Term Loan due 2026 with the balance payable on the maturity date. The maturity date of the Term Loan due 2026 is March 26, 2026.

The Refinanced Credit Agreement contains representations, covenants and events of default that are customary for financing transactions of this nature. Events of default in the Refinanced Credit Agreement include, among others: (a) the failure to pay when due the obligations owing thereunder; (b) the failure to comply with (and not timely remedy, if applicable) certain covenants; (c) certain defaults and accelerations under other indebtedness; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against Holdings or any of its subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use, any one or more of, any material Federal Communications Commission ("FCC") licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; and (h) the occurrence of a Change in Control (as defined in the Refinanced Credit Agreement). Upon the occurrence of an event of default, the Administrative Agent (as defined in the Refinanced Credit Agreement) may, with the consent of, or upon the request of the required lenders, accelerate the Term Loan due 2026 and exercise any of its rights as a secured party under the Refinanced Credit Agreement and the ancillary loan documents provided, that in the case of certain bankruptcy or insolvency events with respect to a borrower, the Term Loan due 2026 will automatically accelerate.

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The Refinanced Credit Agreement does not contain any financial maintenance covenants. The Refinanced Credit Agreement provides that Holdings will be permitted to enter into either a revolving credit facility or receivables facility, subject to certain conditions (see below).

The borrowers may elect, at their option, to prepay amounts outstanding under the Refinanced Credit Agreement without premium or penalty, except in a refinancing or repricing transaction prior to March 26, 2020, where the borrower would be required to pay a 1% premium. The borrowers may be required to make mandatory prepayments of the Term Loan due 2026 upon the occurrence of specified events as set forth in the Refinanced Credit Agreement, including upon the sale of certain assets and from Excess Cash Flow (as defined in the Refinanced Credit Agreement).

Amounts outstanding under the Refinanced Credit Agreement are guaranteed by Cumulus Media Intermediate Inc. ("Intermediate Holdings"), which is a subsidiary of the Company, and the present and future wholly-owned subsidiaries of Holdings that are not borrowers thereunder, subject to certain exceptions as set forth in the Refinanced Credit Agreement (the "Guarantors") and secured by a security interest in substantially all of the assets of Holdings, the subsidiaries of Holdings party to the Refinanced Credit Agreement as borrowers, and the Guarantors.

Debt discounts and issuance costs of $5.1 million were capitalized and amortized over the term of the Term Loan due 2026. As of June 30, 2020, we were in compliance with all required covenants under the Refinanced Credit Agreement.

2020 Revolving Credit Agreement

On March 6, 2020, Cumulus Media New Holdings Inc., a Delaware corporation ("Holdings") and an indirect wholly-owned subsidiary of the Company and certain of the Company’s other subsidiaries, as borrowers (the “Borrowers”), and Cumulus Media Intermediate Holdings, Inc., a Delaware corporation and a direct wholly-owned subsidiary of the Company, entered into a $100.0 million revolving credit facility (the “2020 Revolving Credit Facility") pursuant to a Credit Agreement (the "2020 Revolving Credit Agreement"), dated as of March 6, 2020, with Fifth Third Bank, as a lender and Administrative Agent and certain other lenders from time to time party thereto. The 2020 Revolving Credit Facility refinances and replaces the Company’s 2018 Revolving Credit Agreement (as defined below) entered into pursuant to that certain Credit Agreement dated as of August 17, 2018, by and among Holdings, the Borrowers, Intermediate Holdings and certain lenders and Deutsche Bank AG New York Branch, as a lender and Administrative Agent.

The 2020 Revolving Credit Facility has a maturity date of March 6, 2025. Availability under the 2020 Revolving Credit Facility is tied to a borrowing base equal to 85% of the accounts receivable of the Borrowers, subject to customary reserves and eligibility criteria and reduced by outstanding letters of credit. Under the 2020 Revolving Credit Facility, up to $10.0 million of availability may be drawn in the form of letters of credit and up to $10.0 million of availability may be drawn in the form of swing line loans.

Borrowings under the 2020 Revolving Credit Facility bear interest, at the option of Holdings, based on LIBOR plus a percentage spread of 1.00% or the Alternative Base Rate. The Alternative Base Rate is defined, for any day, as the per annum rate equal to the rate identified as the “Prime Rate” by Fifth Third Bank. In addition, the unused portion of the 2020 Revolving Credit Facility will be subject to a commitment fee of 0.25%. The 2020 Revolving Credit Facility contains customary LIBOR successor provisions.

The 2020 Revolving Credit Agreement contains representations, covenants and events of default that are customary for financing transactions of this nature. Events of default in the 2020 Revolving Credit Agreement include, among others: (a) the failure to pay when due the obligations owing thereunder; (b) the failure to perform (and not timely remedy, if applicable) certain covenants; (c) certain defaults and accelerations under other indebtedness; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against Intermediate Holdings or any of its subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use, any one or more of, any material FCC licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; and (h) the occurrence of a Change in Control (as defined in the 2020 Revolving Credit Agreement). Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the 2020 Revolving Credit Agreement and the ancillary loan documents as a secured party.

The 2020 Revolving Credit Agreement does not contain any financial maintenance covenants with which the Company must comply. However, if average excess availability under the 2020 Revolving Credit Facility is less than the greater of (a) 12.5% of the total commitments thereunder or (b) $10.0 million, the Company must comply with a fixed charge coverage ratio of not less than 1.0:1.0.

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Amounts outstanding under the 2020 Revolving Credit Agreement are guaranteed by Intermediate Holdings and the present and future wholly-owned subsidiaries of Intermediate Holdings that are not borrowers thereunder, subject to certain exceptions as set forth in the 2020 Revolving Credit Agreement (the “2020 Revolver Guarantors”) and secured by a security interest in substantially all of the assets of Holdings, the subsidiaries of Holdings party to the 2020 Revolving Credit Agreement as borrowers, and the 2020 Revolver Guarantors.

The issuance of the 2020 Revolving Credit Agreement was evaluated in accordance with ASC 470-50-40 - Debt-Modifications and Extinguishments-Derecognition, to determine whether the refinance transaction should be accounted for as a debt modification or extinguishment of the 2018 Revolving Credit Agreement (as defined below). The Company expensed approximately $0.6 million of unamortized debt issuance costs related to the exiting lender from the Revolving Credit Agreement. Costs incurred with third parties for issuance of the 2020 Revolving Credit Agreement totaled approximately $0.4 million and were capitalized and will be amortized over the term of the 2020 Revolving Credit Agreement.

As of June 30, 2020, $66.1 million was outstanding under the 2020 Revolving Credit Facility, including letters of credit. As of June 30, 2020, the Company was in compliance with all required covenants under the 2020 Revolving Credit Agreement.

2018 Revolving Credit Agreement

On August 17, 2018, Holdings entered into a $50.0 million revolving credit facility (the "2018 Revolving Credit Facility") pursuant to a credit agreement (the "2018 Revolving Credit Agreement"), dated as of August 17, 2018, with certain subsidiaries of Holdings as borrowers, Intermediate Holdings as a guarantor, certain lenders, and Deutsche Bank AG New York Branch as a lender and Administrative Agent.

The 2018 Revolving Credit Facility was scheduled to mature on August 17, 2023. Availability under the 2018 Revolving Credit Facility was tied to a borrowing base equal to 85% of the accounts receivable of the borrowers and the guarantors, subject to customary reserves and eligibility criteria and reduced by outstanding letters of credit. Under the 2018 Revolving Credit Facility, up to $10.0 million of availability could be drawn in the form of letters of credit.

Borrowings under the 2018 Revolving Credit Facility bore interest, at the option of Holdings, based on (i) LIBOR plus a percentage spread (ranging from 1.25% to 1.75%) based on the average daily excess availability under the 2018 Revolving Credit Facility or (ii) the Alternative Base Rate (as defined below) plus a percentage spread (ranging from 0.25% to 0.75%) based on the average daily excess availability under the 2018 Revolving Credit Facility. The Alternative Base Rate was defined, for any day, as the per annum rate equal to the highest of (i) the federal funds rate plus 1/2 of 1.0%, (ii) the rate identified as the "Prime Rate" and normally published in the Money Rates section of the Wall Street Journal, and (iii) one-month LIBOR plus 1.0%. In addition, the unused portion of the 2018 Revolving Credit Facility was subject to a commitment fee ranging from 0.25% to 0.375% based on the utilization of the facility.

As of December 31, 2019, $2.9 million was outstanding in the form of letters of credit under the 2018 Revolving Credit Facility. The 2018 Revolving Credit Facility was terminated and replaced by the 2020 Revolving Credit Facility on March 6, 2020.

6.75% Senior Notes

On June 26, 2019, Holdings (the "Issuer"), and certain of the Company's other subsidiaries, entered into an indenture, dated as of June 26, 2019 (the "Indenture") with U.S. Bank National Association, as trustee, governing the terms of the Issuer's $500,000,000 aggregate principal amount of 6.75% Senior Secured First-Lien Notes due 2026 (the "6.75% Senior Notes"). The 6.75% Senior Notes were issued on June 26, 2019. The net proceeds from the issuance of the 6.75% Senior Notes were applied to partially repay existing indebtedness under the Term Loan due 2022 (see above). In conjunction with the issuance of the 6.75% Senior Notes, debt issuance costs of $7.3 million were capitalized and are being amortized over the term of the 6.75% Senior Notes.

Interest on the 6.75% Senior Notes is payable on January 1 and July 1 of each year, commencing on January 1, 2020. The 6.75% Senior Notes mature on July 1, 2026.

The Issuer may redeem some or all of the 6.75% Senior Notes at any time, or from time to time, on or after July 1, 2022, at the following prices:



Year	Price
2022	103.7500	%
2023	101.6875	%
2024 and thereafter	100.0000	%

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Prior to July 1, 2022, the Issuer may redeem all or part of the 6.75% Senior Notes upon not less than 30 nor more than 60 days prior notice, at 100% of the principal amount of the 6.75% Senior Notes redeemed plus a "make whole" premium.

The 6.75% Senior Notes are fully and unconditionally guaranteed by Intermediate Holdings and the present and future wholly-owned subsidiaries of Holdings (the "Senior Notes Guarantors"), subject to the terms of the Indenture. Other than certain assets secured on a first priority basis under the Revolving Credit Facility (as to which the 6.75% Senior Notes are secured on a second-priority basis), the 6.75% Senior Notes and related guarantees are secured on a first-priority basis pari passu with the Term Loan due 2026 (subject to certain exceptions) by liens on substantially all of the assets of the Issuer and the Senior Notes Guarantors.

The Indenture contains representations, covenants and events of default customary for financing transactions of this nature. As of June 30, 2020, the Issuer was in compliance with all required covenants under the Indenture. A default under the 6.75% Senior Notes could cause a default under the Refinanced Credit Agreement.

The 6.75% Senior Notes have not been and will not be registered under the federal securities laws or the securities laws of any state or any other jurisdiction. The Company is not required to register the 6.75% Senior Notes for resale under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any other jurisdiction and is not required to exchange the 6.75% Senior Notes for notes registered under the Securities Act or the securities laws of any other jurisdiction and has no present intention to do so. As a result, Rule 3-10 of Regulation S-X promulgated by the Securities and Exchange Commission is not applicable and no separate financial statements are required for the guarantor subsidiaries.

7. Fair Value Measurements

The following table shows the gross amount and fair value of the Term Loan due 2026 and 6.75% Senior Notes (dollars in thousands):



	June 30, 2020		December 31, 2019
Term Loan due 2026:
Gross value	$	521,063	$	523,688
Fair value - Level 2	481,983		528,684
6.75% Senior Notes:
Gross value	$	500,000	$	500,000
Fair value - Level 2	461,875		533,250

As of June 30, 2020, the Company used trading prices from a third party of 92.50% and 92.38% to calculate the fair value of the Term Loan due 2026 and the 6.75% Senior Notes, respectively.

As of December 31, 2019, the Company used trading prices from a third party of 100.95% and 106.65% to calculate the fair value of the Term Loan 2026 and the 6.75% Senior Notes, respectively.

8. Income Taxes

For the three months ended June 30, 2020, the Company recorded an income tax benefit of $12.0 million on pre-tax book loss of $48.3 million, resulting in an effective tax rate of approximately 24.8%. For the three months ended June 30, 2019, the Company recorded an income tax expense of $17.0 million on pre-tax book income of $59.9 million, resulting in an effective tax rate of approximately 28.3%.

For the six months ended June 30, 2020, the Company recorded an income tax benefit of $13.5 million on pre-tax book loss of $57.2 million, resulting in an effective tax rate of approximately 23.6%. For the six months ended June 30, 2019, the Company recorded an income tax expense of $16.8 million on pre-tax book income of $60.2 million, resulting in an effective tax rate of approximately 27.9%.

The difference between the effective tax rate and the federal statutory rate of 21.0% for the three and six months ended June 30, 2020 primarily relates to state and local income taxes and the effect of certain statutory non-deductible expenses.

The difference between the effective tax rate and the federal statutory rate of 21.0% for the three and six months ended June 30, 2019 primarily relates to state and local income taxes, the effect of certain statutory non-deductible expenses, excess tax benefits related to share-based compensation awards, and the tax effect of changes in uncertain tax positions.

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The Company recognizes the benefits of deferred tax assets only as its assessment indicates that it is more likely than not that the deferred tax assets will be recognized in accordance with ASC Topic 740, Income Taxes ("ASC 740"). The Company reviews the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize existing deferred tax assets. As of June 30, 2020, the Company has not recorded a valuation allowance since the Company continues to believe, on the basis of its evaluation, that its deferred tax assets meet the more likely than not recognition standard for recovery. The Company will continue to monitor the valuation of deferred tax assets, which requires judgment in assessing the likely future tax consequences of events that are recognized in the Company's financial statements or tax returns as well as judgment in projecting future profitability.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (the "CARES Act") was signed into law. Among other provisions, the law provides relief to U.S. federal corporate taxpayers through temporary adjustments to net operating loss rules, changes to limitations on interest expense deductibility, and technical corrections to qualified improvement property. The Company recognized the effect of the changes in tax law on existing deferred tax assets and liabilities in income from continuing operations in the three and six months period ended June 30, 2020. The new legislation is retroactive. As a result, the effective tax rate for the current period and income taxes payable or receivable for the prior annual period was adjusted for the three month period ended June 30, 2020.

9. Stockholders' Equity

Common Stock

Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue an aggregate of 300,000,000 shares of stock divided into three classes consisting of: (i) 100,000,000 shares of new Class A common stock; (ii) 100,000,000 shares of new Class B common stock; and (iii) 100,000,000 shares of preferred stock.

As of June 30, 2020, the Company had 20,492,236 aggregate issued shares of common stock, and 20,318,014 outstanding shares consisting of: (i) 17,917,636 issued shares and 17,743,414 outstanding shares designated as Class A common stock; and (ii) 2,574,600 issued and outstanding shares designated as Class B common stock.

Stock Purchase Warrants

On June 4, 2018 (the "Effective Date"), the Company entered into a warrant agreement (the "Warrant Agreement") with Computershare Inc., a Delaware corporation, and its wholly-owned subsidiary, Computershare Trust Company, N.A., a federally chartered trust company, as warrant agent. In accordance with the Plan and pursuant to the Warrant Agreement, on the Effective Date, the Company (i) issued 3,016,853 Series 1 warrants (the "Series 1 warrants") to purchase shares of new Class A common stock or new Class B common stock, on a one-for-one basis with an exercise price of $0.0000001 per share, to certain claimants with claims against the Company prior to the Effective Date and (ii) issued or will issue 712,736 Series 2 warrants (the "Series 2 warrants" and, together with the Series 1 warrants the "Warrants") to purchase shares of new Class A common stock or new Class B common stock on a one-for-one basis with an exercise price of $0.0000001 per share, to other claimants. Pursuant to an exchange process under the Warrant Agreement, on June 22, 2020, all outstanding warrants were converted into shares of Class A or Class B common stock, and the remaining Series 2 warrants authorized for issuance were converted into Series 1 warrants.

Shareholder Rights Plan

On May 20, 2020, our Board adopted a rights plan and declared a dividend of (a) one Class A right (a "Class A Right") in respect of each share of the Company's Class A common stock, par value $0.0000001 per share (the "Class A Common Shares"), (b) one Class B right (a "Class B Right") in respect of each share of the Company's Class B common stock, par value $0.0000001 per share (the "Class B Common Shares" and together with the Class A Common Shares, the "Common Shares"), (c) one Series 1 warrant right (a "Series 1 Warrant Right") in respect of each of the Company's Series 1 warrants (the "Series 1 Warrants"), and (d) one Series 2 warrant right (a "Series 2 Warrant Right," and together with the Class A Rights, the Class B Rights and the Series 1 Warrant Rights, the "Rights") in respect of each of the Company's Series 2 warrants (the "Series 2 Warrants," and together with the Series 1 Warrants, the "Warrants"). The dividend distribution was made on June 1, 2020 to the Company's stockholders and Warrant holders of record on that date. The terms of the Rights and the rights plan are set forth in a Rights Agreement, dated as of May 21, 2020 (the "Rights Agreement"), by and between the Company and Computershare Trust Company, N.A., as rights agent (or any successor rights agent), as it may be amended from time to time.

In the event that a person or group that is or becomes the beneficial owner of 10% or more of the Company's outstanding Class A Common Shares (20% or more in the case of a passive institutional investor), subject to certain exceptions, (a) each Class A Right would allow its holder to purchase from the Company one one-hundredth of a Class A Common Share for a purchase price of $25.00, (b) each Class B Right would allow its holder to purchase from the Company one one-hundredth of a Class B Common Share for a purchase price of $25.00, (c) each Series 1 Warrant Right would allow its holder to purchase from the

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Company one one-hundredth of a Series 1 Warrant for a purchase price of $25.00, and (d) each Series 2 Warrant would allow its holder to purchase from the Company one one-hundredth of a Series 2 Warrant for a purchase price of $25.00.

After the date that the Rights become exercisable, a person or group that is or becomes the beneficial owner of 10% or more of the Company's outstanding Class A Common Shares (20% or more in the case of a passive institutional investor), all holders of Rights, except such beneficial owner, may exercise their (a) Class A Rights, upon payment of the applicable purchase price, to purchase Class A Common Shares (or other securities or assets as determined by the Board) with a market value of two times the applicable purchase price, (b) Class B Rights, upon payment of the applicable purchase price, to purchase Class B Common Shares (or other securities or assets as determined by the Board) with a market value of two times the applicable purchase price, (c) Series 1 Warrant Rights, upon payment of the applicable purchase price, to purchase Series 1 Warrants (or other securities or assets as determined by the Board) with a market value of two times the applicable purchase price, and (d) Series 2 Warrant Rights, upon payment of the applicable purchase price, to purchase Series 2 Warrants (or other securities or assets as determined by the Board) with a market value of two times the applicable purchase price. After the date that the Rights become exercisable, if a flip-in event has already occurred and the Company is acquired in a merger or similar transaction, all holders of Rights, except such beneficial owner, may exercise their Rights, upon payment of the purchase price, to purchase shares of the acquiring corporation with a market value of two times the applicable purchase price of the Rights.

In addition, after a person or group has become a beneficial owner of 10% or more of the Company's outstanding Class A Common Shares (20% or more in the case of a passive institutional investor), but before any person beneficially owns 50% or more of the Company's outstanding Class A Common Shares, the Board may exchange each Right (other than Rights that have become null and void) at an exchange ratio of (a) one Class A Common Share per Class A Right, (b) one Class B Common Share per Class B Right, (c) one Series 1 Warrant per Series 1 Warrant Right, and (d) one Series 2 Warrant per Series 2 Warrant Right. The Board may redeem all (but not less than all) of the Rights for a redemption price of $0.001 per Right at any time before the later of the date that the Rights become exercisable and the date of the Company's first public announcement or disclosure that a person or group has become a beneficial owner of 10% or more of the Company's outstanding Class A Common Shares (20% or more in the case of a passive institutional investor). Unless earlier redeemed or exchanged, the Rights will expire on April 30, 2021.

10. (Loss) Earnings Per Share

The Company calculates basic (loss) earnings per share by dividing net (loss) income by the weighted average number of common shares outstanding, excluding unvested restricted shares. The Company calculates diluted (loss) earnings per share by dividing net (loss) income by the weighted average number of common shares outstanding plus the dilutive effect of all outstanding share-based awards, including stock options and restricted stock awards. Warrants generally are included in basic and diluted shares outstanding because there is little or no consideration paid upon exercise of the Warrants. Antidilutive instruments are not considered in this calculation. The Company applies the two-class method to calculate (loss) earnings per share. Because both classes share the same rights in dividends and (losses) earnings, (loss) earnings per share (basic and diluted) are the same for both classes.

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The following table presents the basic and diluted (loss) earnings per share, and the reconciliation of basic to diluted weighted average common shares (in thousands):



	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019
Basic (Loss) Earnings Per Share
Numerator:
Undistributed net (loss) income from operations	$	(36,316	)	$	42,861
Basic net (loss) income attributable to common shares	$	(36,316	)	$	42,861
Denominator:
Basic weighted average shares outstanding	20,333			20,125
Basic undistributed net (loss) income per share attributable to common shares	$	(1.79	)	$	2.13

Diluted (Loss) Earnings Per Share
Numerator:
Undistributed net (loss) income from operations	$	(36,316	)	$	42,861
Diluted net (loss) income attributable to common shares	$	(36,316	)	$	42,861
Denominator:
Basic weighted average shares outstanding	20,333			20,125
Effect of dilutive options and restricted share units	—			192
Diluted weighted average shares outstanding	20,333			20,317
Diluted undistributed net (loss) income per share attributable to common shares	$	(1.79	)	$	2.11



	Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
Basic (Loss) Earnings Per Share
Numerator:
Undistributed net (loss) income from operations	$	(43,667	)	$	43,312
Basic net (loss) income attributable to common shares	$	(43,667	)	$	43,312
Denominator:
Basic weighted average shares outstanding	20,279			20,092
Basic undistributed net (loss) income per share attributable to common shares	$	(2.15	)	$	2.16

Diluted (Loss) Earnings Per Share
Numerator:
Undistributed net (loss) income from operations	$	(43,667	)	$	43,312
Diluted net (loss) income attributable to common shares	$	(43,667	)	$	43,312
Denominator:
Basic weighted average shares outstanding	20,279			20,092
Effect of dilutive options and restricted share units	—			176
Diluted weighted average shares outstanding	20,279			20,268
Diluted undistributed net (loss) income per share attributable to common shares	$	(2.15	)	$	2.14

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11. Commitments and Contingencies

Future Commitments

The radio broadcast industry’s principal ratings service is Nielsen Audio ("Nielsen"), which publishes surveys for domestic radio markets. Certain of the Company’s subsidiaries have agreements with Nielsen under which they receive programming ratings information. The remaining aggregate obligation under the agreements with Nielsen is approximately $121.0 million as of June 30, 2020 and is expected to be paid in accordance with the agreements through December 2022.

The Company engages Katz Media Group, Inc. ("Katz") as its national advertising sales agent. The national advertising agency contract with Katz contains termination provisions that, if exercised by the Company during the term of the contract, would obligate the Company to pay a termination fee to Katz, based upon a formula set forth in the contract.

The Company is committed under various contractual agreements to pay for broadcast rights that include sports and news content and to pay for talent, executives, research, weather and traffic information and other content and services.

The Company from time to time enters into radio network contractual obligations to guarantee a minimum amount of revenue share to contractual counterparties on certain programming in future years. As of June 30, 2020, the Company believes that it will meet all such material minimum obligations.

Legal Proceedings

We have been, and expect in the future to be, a party to various legal proceedings, investigations or claims. In accordance with applicable accounting guidance, we record accruals for certain of our outstanding legal proceedings when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least on a quarterly basis, developments in our legal proceedings or other claims that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. When a loss contingency is not both probable and reasonably estimable, we do not record a loss accrual.

If the loss (or an additional loss in excess of any prior accrual) is reasonably possible and material, we disclose an estimate of the possible loss or range of loss, if such estimate can be made. The assessment of whether a loss is probable or reasonably possible and whether the loss or a range of loss is estimable, involves a series of judgments about future events, which are often complex. Even if a loss is reasonably possible, we may not be able to estimate a range of possible loss, particularly where (i) the damages sought are substantial or indeterminate, (ii) the proceedings are in the early stages, (iii) the matters involve novel or unsettled legal theories or a large number of parties, or (iv) various factors outside of our control could lead to vastly different outcomes. In such cases, there is considerable uncertainty regarding the ultimate resolution of such matters, including the amount of any possible loss.

In August 2015, the Company was named as a defendant in two separate putative class action lawsuits relating to its use and public performance of certain sound recordings fixed prior to February 15, 1972 ("Pre-1972 Recordings"). ABS Entertainment, Inc., v. Cumulus Media Inc., was filed in the U.S. District Court for the Southern District of New York and claimed, among other things, common law copyright infringement and unfair competition. On December 20, 2016, the New York Court of Appeals held that New York common law does not recognize a right of public performance for owners of Pre-1972 Recordings. As a result of that case (to which Cumulus Media Inc. was not a party) the New York case against Cumulus Media Inc., was voluntarily dismissed by the plaintiffs on April 3, 2017. The same plaintiffs filed a separate case in the U.S. District Court for the Central District of California and alleged, among other things, copyright infringement under California state law, common law conversion, misappropriation and unfair business practices. On December 11, 2015, the California suit was dismissed without prejudice. On October 11, 2018, President Trump signed the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the "Music Modernization Act") into law, which, among other things, provides new federal rights going forward for owners of Pre-1972 Recordings. On January 27, 2020, the Company reached a settlement with the named plaintiffs in the California lawsuit involving all claims that accrued through the date that the Company's Chapter 11 reorganization plan was confirmed. The question of whether public performance rights existed for Pre-1972 Recordings under state law prior to the enactment of the new Music Modernization Act is still being litigated in the Ninth Circuit as a result of a case filed in California. The Company is not a party to that case, and is not yet able to determine what effect that proceeding will have, if any, on its financial position, results of operations or cash flows.

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The FCC staff has advised companies in the radio broadcast industry, including the Company, that it has been conducting an investigation into the timeliness of compliance with political file record keeping obligations by radio stations throughout the industry. The Company has been engaged in discussions with the FCC staff with respect to this investigation and on July 22, 2020, the FCC adopted a Consent Decree entered into by the Company with respect to such investigation. Under the Consent Decree, the Company has agreed to implement a comprehensive compliance plan to ensure future compliance with the FCC's political file rules and to submit periodic compliance reports to the FCC. No fines were imposed on the Company as a result of the investigation.

On May 17, 2018, after unsuccessful license fee negotiations between the Radio Music License Committee, Inc. ("RMLC") and Broadcast Music, Inc. ("BMI"), RMLC, on behalf of the FCC-licensed broadcast radio stations operating in the U.S. that it represents (the "Stations"), filed a petition for the determination of reasonable final license fees, case No. 18-cv-044420-LLS, in the U.S. District Court for the Southern District of New York. In the petition, RMLC requested that the court determine reasonable final fees and terms for a blanket license, an adjustable-fee blanket license, and a per-program license for the Stations on a retroactive basis for the period January 1, 2017 through December 31, 2021, and for such other and further relief as the court deems just and proper. RMLC negotiates music licensing fees with performing rights organizations on behalf of many U.S. radio stations, including Cumulus. On January 24, 2020, RMLC and BMI agreed to basic terms in a provisional settlement. The final agreement was reached on March 20, 2020. As a result of the final settlement, the Company has accrued $1.7 million as of June 30, 2020.

On February 24, 2020, two individual plaintiffs filed a putative class action lawsuit against the Company in the U.S. District Court for the Northern District of Georgia alleging claims regarding the Cumulus Media Inc. 401(k) Plan (the "Plan"). The case alleges that the Company breached its fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA") in the oversight of the Plan, principally by selecting and retaining certain investment options despite their higher fees and costs than other available investment options, causing participants in the Plan to pay excessive recordkeeping fees, and by failing to monitor other fiduciaries. The plaintiffs seek unspecified damages on behalf of a class of Plan participants from February 24, 2014 through the date of any judgment. On May 28, 2020, the Company filed a motion to dismiss the complaint, and will continue to defend the case vigorously. The Company is currently unable to reasonably estimate what effect the ultimate outcome might have, if any, on its financial position, results of operations or cash flows.

12. Subsequent Event

On August 7, 2020, the Company entered into an agreement with Vertical Bridge REIT, LLC (“Buyer”), for the sale of substantially all of the Company's broadcast communications tower sites and certain other related assets for approximately $213 million.

The transaction may occur in one or more closings. Simultaneous with each closing, the Company would enter into lease agreements for the continued use of certain of the towers. The Company will not enter into lease agreements for certain other assets being sold, including excess land and certain intangible rights. The initial term of each lease will be ten (10) years followed by five (5) option periods of five (5) years each, subject to exclusions and limitations. If the Buyer acquires all tower sites that are subject to the transaction, we will have annual lease payments of approximately $13.5 million subject to customary escalators, which will be accounted for as a reduction of the financial lease liability and interest expense, a loss of annual tenant revenues of approximately $2.3 million and an approximate $2.3 million annual reduction of operating expenses of which $1.5 million is non-cash intangible amortization. The Company will also record non-cash imputed rental income for certain tower sites where the Company will continue to use a portion of the tower along with other existing and future tenants. The transaction will not have any effect on the Company’s current broadcast operations.

The first closing of the transaction is expected to occur in the fourth quarter of 2020 following a 45-day diligence period, during which the Buyer and/or the Company may exclude certain sites from the transaction based upon customary grounds for exclusion. Notwithstanding the foregoing and subject to satisfaction of customary closing conditions, the Buyer is required to acquire at least 85% of the tower sites (based on value and irrespective of any defects identified with respect to such tower sites during the diligence period), and the Company is not required to consummate the transaction unless the Buyer agrees to acquire at least 92.5% of the tower sites (based on value) at the first closing. Subsequent closings will occur as and to the extent defects are cured with respect to any excluded tower sites.

The Company expects that the net proceeds of the sale related to assets that are not being leased would be used to pay down debt on a pro rata basis between the Term Loan due 2026 and the 6.75% Senior Notes, subject to a 12-month reinvestment right. The Company expects that the net proceeds of the sale related to assets that are being leased would be applied to pay down the Term Loan due 2026 and the 6.75% Senior Notes on a pro rata basis.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following discussion of our financial condition and results of operations should be read in conjunction with the other information contained in this Form 10-Q, including our unaudited Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-Q, as well as our audited Consolidated Financial Statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K"), filed with the Securities and Exchange Commission ("SEC"). This discussion, as well as various other sections of this Form 10-Q, contain and refer to statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Such statements are any statements other than those of historical fact and relate to our intent, belief or current expectations primarily with respect to our future operating, financial and strategic performance. Any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties. These risks and uncertainties include, but are not limited to, those described in Part I, "Item 1A. Risk Factors," and elsewhere in our 2019 Form 10-K , in Part II, "Item 1A. Risk Factors," and elsewhere in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the "First Quarter 2020 10-Q"), in Part II, "Item 1A. Risk Factors" and elsewhere in this report, and those described from time to time in other reports filed with the SEC from time to time. Actual results may differ from those contained in or implied by the forward-looking statements as a result of various factors, including the evolving and uncertain nature of the COVID-19 pandemic and its impact on the Company, the media industry, and the economy in general. For more information, see "Cautionary Statement Regarding Forward-Looking Statements" in our 2019 Form 10-K.

Recent Events and Company Outlook

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. In March of 2020, the impact of COVID-19 and related actions to attempt to control its spread began to impact our consolidated operating results. Beginning in the second half of March, revenue trends began to weaken when compared to the prior year, which continued through the second quarter. We expect consolidated revenue to continue to be negatively impacted in the third quarter of 2020, when compared to the prior year, and for negative impacts to continue until economic conditions improve.

As a result of the COVID-19 pandemic, we have experienced a disruption in events we produce, including the cancellation or postponement of certain sporting events. The ultimate impact of these disruptions, including the extent of their adverse impact on our financial and operating results, will be affected by the length of time that such disruptions continue, which will, in turn, depend on the currently unknown duration of the COVID-19 pandemic and the impact of governmental regulations and other restrictions that have been or may be imposed in response to the pandemic. Our businesses could also continue to be impacted by the disruptions from COVID-19 and resulting adverse changes in advertising customers and consumer behavior. Our sales teams are focused on how to meet changing needs of our customers in this environment. COVID-19's impact on the capital markets could impact our ability and cost to borrow under our existing or future financing arrangements. There are certain limitations on our ability to mitigate the adverse financial impact of these items, including the fixed costs of our businesses. COVID-19 also makes it more challenging for management to estimate future performance of our businesses, particularly over the near to medium term.

As these events developed, we executed on our business continuity plans and formed a crisis management team to address the challenges related to the COVID-19 pandemic. Since March, most of our employees have been working from home, with only certain essential employees working on site at our radio stations. For employees working at our radio stations, we have instituted social distancing protocols, increased the level of cleaning and sanitizing in those stations and undertaken other actions to make these stations safer for our employees. We have also substantially reduced employee travel to only essential business needs. As part of our business continuity plans, we are generally following the requirements and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments. We cannot predict when or how we will begin to lift the actions put in place as part of our business continuity plans, including work from home requirements and travel restrictions. As of the date of this filing, we do not believe our work from home protocol has adversely impacted our internal controls, financial reporting systems or our operations.

As a response to the ongoing COVID-19 pandemic, we have implemented plans to manage our costs. We have implemented a hiring freeze and significantly limited the addition of third party contracted services, limited all travel except where necessary to meet customer or regulatory needs, and acted to limit discretionary spending. We also announced intermittent furloughs, which began mid-April 2020 for the subsequent three months, as well as temporary salary cuts for the leadership team and employees deemed essential to continue to operate the business. We have also temporarily stopped the Company matching of 401(k) and Health Savings Account contributions. In July, the Company announced that certain non-essential positions would be eliminated. To the extent the business disruption continues for an extended period, we expect to consider additional cost management actions.

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In light of the evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that continue to occur in response to the COVID-19 pandemic, as well as the duration and severity of the resulting economic downturn, the broader impact that COVID-19 could have on our business, financial condition and operating results remains highly uncertain.

The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in response to the COVID-19 pandemic. The CARES Act and related notices include several significant provisions, including delaying certain payroll tax payments and estimated income tax payments. As a result, the effective tax rate for the current period and income taxes payable or receivable for the prior annual period was adjusted for the three month period ended June 30, 2020. We do not currently expect the CARES Act to have a material impact on our financial results or on our liquidity. We will continue to monitor and assess the impact the CARES Act may have on our business and financial results.

Non-GAAP Financial Measure

From time to time, we utilize certain financial measures that are not prepared or calculated in accordance with GAAP to assess our financial performance and profitability. Consolidated adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") is the financial metric by which management and the chief operating decision maker allocate resources of the Company and analyze the performance of the Company as a whole. Management also uses this measure to determine the contribution of our core operations to the funding of our corporate resources utilized to manage our operations and the funding of our non-operating expenses including debt service and acquisitions. In addition, consolidated Adjusted EBITDA is a key metric for purposes of calculating and determining our compliance with certain covenants contained in our Refinanced Credit Agreement.

In determining Adjusted EBITDA, we exclude from net income items not related to core operations and those that are non-cash including: interest, taxes, depreciation, amortization, stock-based compensation expense, gain or loss on the exchange, sale, or disposal of any assets or stations or on the early extinguishment of debt, local marketing agreement fees, expenses relating to acquisitions, divestitures, restructuring costs, reorganization items and non-cash impairments of assets, if any.

Management believes that Adjusted EBITDA, although not a measure that is calculated in accordance with GAAP, is commonly employed by the investment community as a measure for determining the market value of a media company and comparing the operational and financial performance among media companies. Management has also observed that Adjusted EBITDA is routinely utilized to evaluate and negotiate the potential purchase price for media companies. Given the relevance to our overall value, management believes that investors consider the metric to be extremely useful.

Adjusted EBITDA should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with GAAP. In addition, Adjusted EBITDA may be defined or calculated differently by other companies, and comparability may be limited.

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Consolidated Results of Operations

Analysis of Consolidated Results of Operations

The following selected data from our unaudited Condensed Consolidated Statements of Operations and other supplementary data should be referred to while reading the results of operations discussion that follows (dollars in thousands):



	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019			2020 vs 2019 Change
							$			%
STATEMENT OF OPERATIONS DATA:
Net revenue	$	146,022		$	279,673		$	(133,651	)	(47.8	)%
Content costs	65,725			93,844			(28,119		)	(30.0	)%
Selling, general and administrative expenses	79,904			115,817			(35,913		)	(31.0	)%
Depreciation and amortization	13,122			13,545			(423		)	(3.1	)%
Local marketing agreement fees	1,006			438			568			129.7	%
Corporate expenses	10,331			22,675			(12,344		)	(54.4	)%
Loss (gain) on sale or disposal of assets or stations	3,767			(47,750		)	51,517			N/A
Impairment of intangible assets	4,509			—			4,509			N/A
Operating (loss) income	(32,342		)	81,104			(113,446		)	N/A
Interest expense	(15,888		)	(21,191		)	5,303			(25.0	)%
Interest income	2			8			(6		)	(75.0	)%
Other expense, net	(61		)	(34		)	(27		)	79.4	%
(Loss) income before income taxes	(48,289		)	59,887			(108,176		)	N/A
Income tax benefit (expense)	11,973			(17,026		)	28,999			N/A
Net (loss) income	$	(36,316	)	$	42,861		$	(79,177	)	N/A
KEY FINANCIAL METRIC:
Adjusted EBITDA	$	(6,375	)	$	61,819		$	(68,194	)	(110.3	)%

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	Six Months Ended June 30, 2020			Six Months Ended June 30, 2019			2020 vs 2019 Change
							$			%
STATEMENT OF OPERATIONS DATA:
Net revenue	$	373,936		$	547,169		$	(173,233	)	(31.7	)%
Content costs	154,291			197,596			(43,305		)	(21.9	)%
Selling, general and administrative expenses	183,531			229,320			(45,789		)	(20.0	)%
Depreciation and amortization	25,912			28,135			(2,223		)	(7.9	)%
Local marketing agreement fees	2,053			1,481			572			38.6	%
Corporate expenses	22,139			35,192			(13,053		)	(37.1	)%
Loss (gain) on sale or disposal of assets or stations	5,583			(47,724		)	53,307			N/A
Impairment of intangible assets	4,509			—			4,509			N/A
Operating (loss) income	(24,082		)	103,169			(127,251		)	N/A
Interest expense	(33,047		)	(43,347		)	10,300			(23.8	)%
Interest income	4			12			(8		)	(66.7	)%
Gain on early extinguishment of debt	—			381			(381		)	N/A
Other expense, net	(64		)	(62		)	(2		)	3.2	%
(Loss) income before income taxes	(57,189		)	60,153			(117,342		)	N/A
Income tax benefit	13,522			(16,841		)	30,363			N/A
Net (loss) income	$	(43,667	)	$	43,312		$	(86,979	)	N/A
KEY FINANCIAL METRIC:
Adjusted EBITDA	$	21,350		$	103,623		$	(82,273	)	(79.4	)%

Three Months Ended June 30, 2020 compared to the Three Months Ended June 30, 2019

Net Revenue

Net revenue for the three months ended June 30, 2020 compared to net revenue for the three months ended June 30, 2019 decreased primarily as a result of decreases in local and national broadcast advertising revenue.

Content Costs

Content costs consist of all costs related to the licensing, acquisition and development of our programming. Content costs for the three months ended June 30, 2020 compared to content costs for the three months ended June 30, 2019 decreased primarily as a result of the reduction in personnel costs, both internally and externally, related to cost-saving actions and station dispositions, the cancellation or postponement of sporting events due to COVID-19 and the reduction in our syndicated programming costs and music licensing fees attributed to lower revenue.

Selling, General & Administrative Expenses

Selling, general and administrative expenses consist of expenses related to our sales efforts and distribution of our content across our platform and overhead in our markets. Selling, general and administrative expenses for the three months ended June 30, 2020 compared to selling, general and administrative expenses for the three months ended June 30, 2019 decreased primarily as result of a reduction in personnel costs, both internally and externally, related to cost mitigation efforts and station dispositions, declines in local and national commissions due to lower local and national broadcast revenue, lower trade and event-related expenses as a result of the cancellation or postponement of sporting, music, and various promotional events due to COVID-19, and lower incentive accruals based on Company performance. These declines were slightly offset by an increase in bad debt expense.

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Depreciation and Amortization

Depreciation and amortization for the three months ended June 30, 2020 as compared to depreciation and amortization for the three months ended June 30, 2019 decreased slightly because certain definite-lived intangibles were fully amortized by the second quarter of 2020.

Local Marketing Agreement Fees

Local marketing agreements ("LMA") are those agreements under which one party programs a radio station on behalf of another party. LMA fees for the three months ended June 30, 2020 compared to LMA fees for the three months ended June 30, 2019 increased as we are no longer receiving fees from Meruelo Media to program KLOS-FM since our LMA ended in July 2019.

Corporate Expenses

Corporate expenses consist primarily of compensation and related costs for our executive, accounting, finance, human resources, information technology and legal personnel, and fees for professional services. Professional services are principally comprised of audit, consulting and outside legal services. Corporate expenses also include restructuring costs and stock-based compensation expense. Corporate expenses for the three months ended June 30, 2020 compared to corporate expenses for the three months ended June 30, 2019 decreased primarily as a result of lower restructuring expense, lower incentives based on Company performance and a decrease in salary expense as a result of cost-saving initiatives.

Loss (Gain) on Sale or Disposal of Assets or Stations

The loss on sale or disposal of assets or stations for the three months ended of June 30, 2020 of $3.8 million was primarily a result of the DC Land sale. See Part I, "Item 1 - Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 2 - Acquisitions and Dispositions," for further discussion of the DC Land sale.

The gain on sale or disposal of assets or stations for the three months ended June 30, 2019 of $47.8 million included a $47.6 million gain on the EMF Sale.

Impairment of Intangible Assets

Impairment of intangible assets for the three months ended June 30, 2020 of approximately $4.5 million resulted from the interim impairment test of our FCC licenses. See Part I, "Item - 1 - Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5 - Intangible Assets," for further discussion of the interim impairment test.

Interest Expense

Total interest expense for the three months ended June 30, 2020 decreased as compared to the total interest expense for the three months ended June 30, 2019. The below table details the components of our interest expense by debt instrument (dollars in thousands):



	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		$ Change
Term Loan due 2022	$	—	$	20,365	$	(20,365	)
Term Loan due 2026	6,367		—		6,367
6.75% Senior Notes	8,438		469		7,969
2020 Revolving Credit Facility	285		—		285
Other, including debt issuance cost amortization	798		357		441
Interest expense	$	15,888	$	21,191	$	(5,303	)

Income Tax Expense

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The difference between the effective tax rate and the federal statutory rate of 21.0% for the three months ended June 30, 2020 primarily related to state and local income taxes and the effect of certain statutory non-deductible expenses.

The difference between the effective tax rate and the federal statutory rate of 21.0% for the three months ended June 30, 2019 primarily relates to state and local income taxes, the effect of certain statutory non-deductible expenses, excess tax benefits related to share-based compensation awards, and the tax effect of changes in uncertain tax positions.

Adjusted EBITDA

As a result of the factors described above, Adjusted EBITDA for the three months ended June 30, 2020 compared to the Adjusted EBITDA for the three months ended June 30, 2019 decreased.

Six Months Ended June 30, 2020 compared to the Six Months Ended June 30, 2019

Net Revenue

Net revenue for the six months ended June 30, 2020 compared to net revenue for the six months ended June 30, 2019 decreased primarily as a result of decreases in local and national broadcast advertising revenue and trade revenue slightly offset by increases in political and digital revenue.

Content Costs

Content costs consist of all costs related to the licensing, acquisition and development of our programming. Content costs for the six months ended June 30, 2020 compared to content costs for the six months ended June 30, 2019 decreased primarily as a result of the reduction in personnel costs, both internally and externally, related to cost-saving actions and station dispositions, the cancellation or postponement of sporting events due to COVID-19 and a reduction in our syndicated programming costs and music licensing fees attributed to lower revenue.

Selling, General & Administrative Expenses

Selling, general and administrative expenses consist of expenses related to our sales efforts and distribution of our content across our platform and overhead in our markets. Selling, general and administrative expenses for the six months ended June 30, 2020 compared to selling, general and administrative expenses for the six months ended June 30, 2019 decreased primarily as a result of the reduction in personnel costs, both internally and externally, related to cost mitigation efforts and station dispositions, declines in local and national commissions due to lower local and national broadcast revenue, lower trade and event-related expenses as a result of the cancellation or postponement of sporting, music, and various promotional events due to COVID-19, lower incentive accruals based on Company performance, and lower rent expense as a result of exiting certain facilities, which were slightly offset by an increase in bad debt expense and higher amortization of new local commissions.

Depreciation and Amortization

Depreciation and amortization for the six months ended June 30, 2020 as compared to depreciation and amortization for the six months ended June 30, 2019 decreased because certain definite-lived intangibles were fully amortized by the first quarter of 2020, which was partially offset by an increase in depreciation expense.

Local Marketing Agreement Fees

Local marketing agreements ("LMA") are those agreements under which one party programs a radio station on behalf of another party. LMA fees for the six months ended June 30, 2020 compared to LMA fees for the six months ended June 30, 2019 increased as we are no longer receiving fees from Meruelo Media to program KLOS-FM since our LMA ended in July 2019.

Corporate Expenses

Corporate expenses consist primarily of compensation and related costs for our executive, accounting, finance, human resources, information technology and legal personnel, and fees for professional services. Professional services are principally comprised of audit, consulting and outside legal services. Corporate expenses also include restructuring costs and stock-based compensation expense. Corporate expenses for the six months ended June 30, 2020 compared to corporate expenses for the six months ended June 30, 2019 decreased primarily as a result of lower restructuring expense and lower incentive and stock-based compensation based on Company performance which were slightly offset by an increase in professional fees.

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Loss (Gain) on Sale or Disposal of Assets or Stations

The loss on sale or disposal of assets or stations for the six months ended of June 30, 2020 of $5.6 million was primarily due to the WABC Sale, DC Land sale and fixed asset dispositions. See Part I, "Item 1 - Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 2 - Acquisitions and Dispositions," for further discussion of the sale of the DC Land and the WABC Sale.

The gain on sale or disposal of assets or stations for the three months ended June 30, 2019 of $47.8 million included a $47.6 million gain on the EMF Sale.

Interest Expense

Total interest expense for the six months ended June 30, 2020 decreased as compared to the total interest expense for the three months ended June 30, 2019. The below table details the components of our interest expense by debt instrument (dollars in thousands):



	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019		$ Change
Term Loan due 2022	$	—	$	42,083	$	(42,083	)
Term Loan due 2026	13,548		—		13,548
6.75% Senior Notes	16,875		469		16,406
2020 Revolving Credit Facility	332		—		332
Other, including debt issuance cost amortization	2,292		795		1,497
Interest expense	$	33,047	$	43,347	$	(10,300	)

Income Tax Expense

Adjusted EBITDA

As a result of the factors described above, Adjusted EBITDA for the six months ended June 30, 2020 compared to the Adjusted EBITDA for the six months ended June 30, 2019 decreased.

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Reconciliation of Non-GAAP Financial Measure

The following tables reconcile Adjusted EBITDA to net income (the most directly comparable financial measure calculated and presented in accordance with GAAP) as presented in the accompanying unaudited consolidated Statements of Operations (dollars in thousands):



	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019
GAAP net (loss) income	$	(36,316	)	$	42,861
Income tax (benefit) expense	(11,973		)	17,026
Non-operating expenses, including net interest expense	15,947			21,217
Local marketing agreement fees	1,006			438
Depreciation and amortization	13,122			13,545
Stock-based compensation expense	985			1,106
Loss (gain) on sale of assets or stations	3,767			(47,750		)
Impairment of intangible assets	4,509			—
Restructuring costs	2,343			13,024
Franchise taxes	235			352
Adjusted EBITDA	$	(6,375	)	$	61,819



	Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
GAAP net (loss) income	$	(43,667	)	$	43,312
Income tax (benefit) expense	(13,522		)	16,841
Non-operating expenses, including net interest expense	33,107			43,397
Local marketing agreement fees	2,053			1,481
Depreciation and amortization	25,912			28,135
Stock-based compensation expense	1,704			2,314
Loss (gain) on sale of assets or stations	5,583			(47,724		)
Gain on early extinguishment of debt	—			(381		)
Impairment of intangible assets	4,509			—
Restructuring costs	5,263			15,801
Franchise taxes	408			447
Adjusted EBITDA	$	21,350		$	103,623

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Liquidity and Capital Resources

As of June 30, 2020, we had $196.9 million of cash and cash equivalents. The Company generated cash from operating activities of $52.4 million and $49.0 million for the three months ended June 30, 2020 and June 30, 2019, respectively.

Historically, our principal sources of funds have been cash flow from operations and borrowings under credit facilities in existence from time to time. Our cash flow from operations remains subject to factors such as fluctuations in advertising media preferences and changes in demand caused by shifts in population, station listenership, demographics and audience tastes, some of which may be exacerbated by the COVID-19 pandemic. In addition, our cash flows may be affected if customers are not able to pay, or delay payment of, accounts receivable that are owed to us, which risks may also be exacerbated in challenging or otherwise uncertain economic periods. In certain periods, the Company has experienced reductions in revenue and profitability from prior historical periods because of market revenue pressures and cost escalations built into certain contracts. Notwithstanding this, we believe that our national platform and extensive station portfolio representing a broad diversity in format, listener base, geography, and advertiser base help us maintain a more stable revenue stream by reducing our dependence on any single demographic, region or industry. However, future reductions in revenue or profitability are possible and could have a material adverse effect on the Company’s business, results of operations, financial condition or liquidity.

Although there is uncertainty related to the anticipated impact of the COVID-19 pandemic on the Company's future results, we believe our business model, our current cash reserves and the recent steps we have taken to strengthen our balance sheet, such as the DC Land sale and drawing $60 million under our 2020 Revolving Credit Facility, will help us manage our business through this pandemic as it continues to unfold and meet our currently anticipated liquidity needs.

We continually monitor our capital structure, and from time to time, we have evaluated, and expect that we will continue to evaluate, opportunities to obtain additional capital from the divestiture of radio stations or other assets, when we determine that it would further our strategic and financial objectives, as well as from the issuance of equity and/or debt securities, in each case, subject to market and other conditions in existence at that time. There can be no assurance that any such financing would be available on commercially acceptable terms, or at all. To date, in fiscal 2020, we have not experienced difficulty accessing the capital and credit markets; however, future volatility in the capital and credit markets may increase costs associated with issuing debt instruments or affect our ability to access those markets. In addition, it is possible that our ability to access the capital and credit markets could be limited at a time when we would like, or need, to do so, which could have an adverse impact on our ability to refinance maturing debt on terms or at times acceptable to us, or at all, and/or react to changing economic and business conditions.

Refinanced Credit Agreement

On September 26, 2019, we entered into a Refinanced Credit Agreement to refinance the principal balance outstanding on the Term Loan due 2022. See Part I, "Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 6 — Long-Term Debt," for further discussion of the Refinanced Credit Agreement.

2020 Revolving Credit Agreement

On March 6, 2020, we entered into a $100.0 million Revolving Credit Facility pursuant to the 2020 Revolving Credit Agreement, and replaced our 2018 Revolving Credit Agreement. See Part I, "Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 6 — Long-Term Debt," for further discussion of our 2020 Revolving Credit Agreement.

6.75% Senior Notes

On June 26, 2019, we entered into an Indenture under which the 6.75% Senior Notes were issued. See Part I, "Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 6 — Long-Term Debt," for further discussion of the Indenture and the 6.75% Senior Notes.

Cash Flows Provided by Operating Activities



	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
(Dollars in thousands)
Net cash provided by operating activities	$	52,411	$	48,954

Net cash provided by operating activities for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 increased primarily as a result of increases in non-cash activities and favorable changes in working capital.

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Cash Flows Provided by (Used in) Investing Activities



	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
(Dollars in thousands)
Net cash provided by investing activities	$	72,758	$	92,804

Net cash provided by investing activities for the six months ended June 30, 2020 includes the proceeds received from the sale of the DC Land and the WABC Sale partially offset by capital expenditures. See Part I, "Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 2 — Acquisitions and Dispositions," for further discussion of the sale of the DC Land and the WABC Sale.

For the six months ended June 30, 2019, net cash used in investing activities primarily consisted of proceeds received from the EMF Sale offset by capital expenditures.

Cash Flows Provided by (Used in) Financing Activities



	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
(Dollars in thousands)
Net cash provided by (used in) financing activities	$	54,738	$	(148,830	)

For the six months ended June 30, 2020, net cash provided by financing activities primarily reflects $60.0 million of proceeds received from borrowings under the 2020 Revolving Credit Agreement slightly offset by principal payments on the Term Loan due 2026.

For the six months ended June 30, 2019, net cash used in financing activities included $500 million in proceeds received from the issuance of the 6.75% Senior Notes. The proceeds from the issuance of the 6.75% Senior Notes, combined with the proceeds from the EMF Sale and cash generated from operations, were used to repay $639.2 million of debt under the Term Loan.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2020.

Item 4. Controls and Procedures

We maintain a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, the "Exchange Act") designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such disclosure controls and procedures are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including, our President and Chief Executive Officer ("CEO") and Executive Vice President and Chief Financial Officer ("CFO") the principal executive and principal financial officers, respectively, as appropriate, to allow timely decisions regarding required disclosure. At the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2020.

There were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f)) during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company currently is, and expects that from time to time in the future it will be, party to, or a defendant in, various other claims or lawsuits that are generally incidental to its business. The Company expects that it will vigorously contest any such claims or lawsuits and believes that the ultimate resolution of any such known claim or lawsuit will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors disclosed in Part I, Item 1A, "Risk Factors," in our 2019 Form 10-K, in Part II, "Item IA. Risk Factors," in our First Quarter 2020 10-Q, and in other reports we file with the SEC from time to time, all of which could materially affect our business, financial condition or future results. For example, these risks now include risks related to the COVID-19 pandemic and related economic developments. Additional factors not presently known to the Company, or that the Company does not currently believe to be material, may also cause actual results to differ materially from expectations. The risk factors set forth below updates, and should be read together with, the risk factors in our 2019 Form 10-K, First Quarter 2020 10-Q and other reports from time to time.

The rights plan adopted by our Board may impair a takeover attempt.

On May 20, 2020, our Board adopted a rights plan and declared a dividend of (a) one Class A right (a "Class A Right") in respect of each share of the Company's Class A common stock, par value $0.0000001 per share (the "Class A Common Shares"), (b) one Class B right (a "Class B Right") in respect of each share of the Company's Class B common stock, par value $0.0000001 per share (the "Class B Common Shares" and together with the Class A Common Shares, the "Common Shares"), (c) one Series 1 warrant right (a "Series 1 Warrant Right") in respect of each of the Company's Series 1 warrants (the "Series 1 Warrants"), and (d) one Series 2 warrant right (a "Series 2 Warrant Right," and together with the Class A Rights, the Class B Rights and the Series 1 Warrant Rights, the "Rights") in respect of each of the Company's Series 2 warrants (the "Series 2 Warrants," and together with the Series 1 Warrants, the "Warrants"). The dividend distribution was made on June 1, 2020 to the Company's stockholders and Warrant holders of record on that date. In the event that a person or group that is or becomes the beneficial owner of 10% or more of the Company's outstanding Class A Common Shares (20% or more in the case of a passive institutional investor), subject to certain exceptions, (a) each Class A Right would allow its holder to purchase from the Company one one-hundredth of a Class A Common Share for a purchase price of $25.00, (b) each Class B Right would allow its holder to purchase from the Company one one-hundredth of a Class B Common Share for a purchase price of $25.00, (c) each Series 1 Warrant Right would allow its holder to purchase from the Company one one-hundredth of a Series 1 Warrant for a purchase price of $25.00, and (d) each Series 2 Warrant would allow its holder to purchase from the Company one one-hundredth of a Series 2 Warrant for a purchase price of $25.00.

In addition, after a person or group has become a beneficial owner of 10% or more of the Company's outstanding Class A Common Shares (20% or more in the case of a passive institutional investor), but before any person beneficially owns 50% or more of the Company’s outstanding Class A Common Shares, the Board may exchange each Right (other than Rights that have become null and void) at an exchange ratio of (a) one Class A Common Share per Class A Right, (b) one Class B Common Share per Class B Right, (c) one Series 1 Warrant per Series 1 Warrant Right, and (d) one Series 2 Warrant per Series 2 Warrant Right. The shareholder rights plan could make it more difficult for a third party to acquire the Company or a large block of our Common Shares without the approval of our Board. Unless earlier redeemed or exchanged, the Rights will expire on April 30, 2021.

Table of Contents

Item 6. Exhibits



4.1		Rights Agreement, dated as of May 21, 2020, by and between Cumulus Media Inc. and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Cumulus Media Inc.’s Form 8-K filed with the SEC on May 21, 2020).

10.1		2020 Equity and Incentive Compensation Plan

31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURE

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



	CUMULUS MEDIA INC.

August 10, 2020	By:	/s/ Francisco J. Lopez-Balboa
		Francisco J. Lopez-Balboa
		Executive Vice President, Chief Financial Officer

Exhibit 10.1

CUMULUS MEDIA INC.

2020 EQUITY AND INCENTIVE COMPENSATION PLAN

1. Purpose. The purpose of this Plan is to permit award grants to non-employee Directors, officers and other employees of the Company and its Subsidiaries, and certain consultants to the Company and its Subsidiaries, and to provide to such persons incentives and rewards for service and/or performance.

2. Definitions. As used in this Plan:

(a) “Appreciation Right” means a right granted pursuant to Section 5 of this Plan.

(b) “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of an Appreciation Right.

(d) “Cash Incentive Award” means a cash award granted pursuant to Section 8 of this Plan.

(e) “Change in Control” has the meaning set forth in Section 12 of this Plan.

(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder, as such law and regulations may be amended from time to time.

(g) “Committee” means the Compensation Committee of the Board (or its successor(s)), or any other committee of the Board designated by the Board to administer this Plan pursuant to Section 10 of this Plan.

(h) “Common Shares” means the shares of Class A common stock, par value $0.0000001 per share, of the Company or any security into which such Class A common stock may be changed by reason of any transaction or event of the type referred to in Section 11 of this Plan.

(i) “Company” means Cumulus Media Inc., a Delaware corporation, and its successors.

(j) “Date of Grant” means the date provided for by the Committee on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, Cash Incentive Awards, or other awards contemplated by Section 9 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by Section 9 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).

(k) “Director” means a member of the Board.

(l) “Effective Date” means the date this Plan is approved by the Stockholders.

(m) “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of the awards granted under this Plan. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant.

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.

(o) “Incentive Stock Option” means an Option Right that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.

(p) “Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares, Performance Units or Cash Incentive Awards or, when so determined by the Committee, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend equivalents or other awards pursuant to this Plan. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances

render the Management Objectives unsuitable, the Committee may in its discretion modify such Management Objectives or the goals or actual levels of achievement regarding the Management Objectives, in whole or in part, as the Committee deems appropriate and equitable.

(q) “Market Value per Share” means, as of any particular date, the closing price of a Common Share as reported for that date on the NASDAQ Global Market or, if the Common Shares are not then listed on the NASDAQ Global Market, on any other national securities exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during which a sale occurred. If there is no regular public trading market for the Common Shares, then the Market Value per Share shall be the fair market value as determined in good faith by the Committee. The Committee is authorized to adopt another fair market value pricing method provided such method is stated in the applicable Evidence of Award and is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.

(r) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.

(s) “Option Price” means the purchase price payable on exercise of an Option Right.

(t) “Option Right” means the right to purchase Common Shares upon exercise of an award granted pursuant to Section 4 of this Plan.

(u) “Participant” means a person who is selected by the Committee to receive benefits under this Plan and who is at the time (i) a non-employee Director, (ii) an officer or other employee of the Company or any Subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the Date of Grant, or (iii) a person, including a consultant, who provides services to the Company or any Subsidiary that are equivalent to those typically provided by an employee (provided that such person satisfies the Form S-8 definition of an “employee”).

(v) “Performance Period” means, in respect of a Cash Incentive Award, Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Cash Incentive Award, Performance Share or Performance Unit are to be achieved.

(w) “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan.

(x) “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee.

(y) “Plan” means this Cumulus Media Inc. 2020 Equity and Incentive Compensation Plan, as may be amended or amended and restated from time to time.

(z) “Predecessor Plan” means the Cumulus Media Inc. Long-Term Incentive Plan, including as amended or amended and restated.

(aa) “Restricted Stock” means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.

(bb) “Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the right to receive Common Shares, cash or a combination thereof at the end of the applicable Restriction Period.

(cc) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan.

(dd) “Stockholder” means an individual or entity that owns one or more Common Shares.

(ee) “Spread” means the excess of the Market Value per Share on the date when an Appreciation Right is exercised over the Base Price provided for with respect to the Appreciation Right.

(ff) “Subsidiary” means a corporation, company or other entity (i) more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, limited liability company, unincorporated association or other similar entity), but more than 50% of whose ownership interest representing the right generally to make

decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company; provided, however, that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which the Company at the time owns or controls, directly or indirectly, more than 50% of the total combined Voting Power represented by all classes of stock issued by such corporation.

(gg) “Voting Power” means, at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the election of Directors in the case of the Company or members of the board of directors or similar body in the case of another entity.

3. Shares Available Under this Plan.



	(a)	Maximum Shares Available Under this Plan.



	(i)	Subject to adjustment as provided in Section 11 of this Plan and the share counting rules set forth in Section 3(b) of this Plan, the number of Common Shares available under this Plan for awards of (A) Option Rights or Appreciation Rights, (B) Restricted Stock, (C) Restricted Stock Units, (D) Performance Shares or Performance Units, (E) awards contemplated by Section 9 of this Plan, or (F) dividend equivalents paid with respect to awards made under this Plan will not exceed in the aggregate (x) 2,100,000 Common Shares plus (y) one Common Share for every one Common Share that remains available for awards pursuant to the Predecessor Plan as of the Effective Date. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.



	(ii)	Subject to the share counting rules set forth in Section 3(b) of this Plan, the aggregate number of Common Shares available under Section 3(a)(i) of this Plan will be reduced by one Common Share for every one Common Share subject to an award granted under this Plan.

(b) Share Counting Rules.



	(i)	Except as provided in Section 22 of this Plan, if any award granted under this Plan (in whole or in part) is cancelled or forfeited, expires, is settled for cash, or is unearned, the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available under Section 3(a)(i) above.



	(ii)	If, after the Effective Date, any Common Shares subject to an award granted under the Predecessor Plan are forfeited, or an award granted under the Predecessor Plan (in whole or in part) is cancelled or forfeited, expires, is settled for cash, or is unearned, the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under this Plan.



	(iii)	Notwithstanding anything to the contrary contained in this Plan: (A) Common Shares withheld by the Company, tendered or otherwise used in payment of the Option Price of an Option Right (or the option price of an option granted under the Predecessor Plan) shall be added back to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; (B) Common Shares withheld by the Company, tendered or otherwise used to satisfy tax withholding with respect to Option Rights or Appreciation Rights (or options or stock appreciation rights granted under the Predecessor Plan) shall be added back to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; (C) Common Shares withheld by the Company, tendered or otherwise used prior to the tenth anniversary of the Effective Date to satisfy tax withholding with respect to awards other than Option Rights or Appreciation Rights (or options or stock appreciation rights granted under the Predecessor Plan) shall be added back to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; (D) Common Shares withheld by the Company, tendered or otherwise used on or after the tenth anniversary of the Effective Date to satisfy tax withholding with respect to awards other than Option Rights or Appreciation Rights (or options or stock appreciation rights granted under the Predecessor Plan) shall not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; (E) Common Shares subject to a share-settled Appreciation Right that are not actually issued in connection with the settlement of such Appreciation Right on the exercise thereof shall be added back to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; and (F) Common Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Option Rights will not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan.



	(iv)	If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on fair market value, such Common Shares will not count against the aggregate limit under Section 3(a)(i) of this Plan.

(c) Limit on Incentive Stock Options. Notwithstanding anything to the contrary contained in this Plan, and subject to adjustment as provided in Section 11 of this Plan, the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 2,100,000 Common Shares.

(d) Non-Employee Director Compensation Limit. Notwithstanding anything to the contrary contained in this Plan, in no event will any non-employee Director in any one calendar year be granted compensation for such service having an aggregate maximum value (measured at the Date of Grant as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $800,000.

4. Option Rights. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of Option Rights. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a) Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan.

(b) Each grant will specify an Option Price per Common Share, which Option Price (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant.

(c) Each grant will specify whether the Option Price will be payable (i) in cash, by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee having a value at the time of exercise equal to the total Option Price, (iii) subject to any conditions or limitations established by the Committee, by the withholding of Common Shares otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number of treasury shares held by the Company, the Common Shares so withheld will not be treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Committee.

(d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the Common Shares to which such exercise relates.

(e) Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary, if any, that is necessary before any Option Rights or installments thereof will vest. Option Rights may provide for continued vesting or the earlier vesting of such Option Rights, including in the event of the retirement, death, disability or termination of employment or service of a Participant or in the event of a Change in Control.

(f) Any grant of Option Rights may specify Management Objectives regarding the vesting of such rights.

(g) Option Rights granted under this Plan may be (i) options, including Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended to so qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

(h) No Option Right will be exercisable more than 10 years from the Date of Grant. The Committee may provide in any Evidence of Award for the automatic exercise of an Option Right upon such terms and conditions as established by the Committee.

(i) Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.

(j) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

5. Appreciation Rights.

(a) The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to any Participant of Appreciation Rights. An Appreciation Right will be the right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100%) at the time of exercise.

(b) Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:



	(i)	Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common Shares or any combination thereof.



	(ii)	Each grant will specify the period or periods of continuous service by the Participant with the Company or any Subsidiary, if any, that is necessary before the Appreciation Rights or installments thereof will vest. Appreciation Rights may provide for continued vesting or the earlier vesting of such Appreciation Rights, including in the event of the retirement, death, disability or termination of employment or service of a Participant or in the event of a Change in Control.



	(iii)	Any grant of Appreciation Rights may specify Management Objectives regarding the vesting of such Appreciation Rights.



	(iv)	Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.



	(v)	Each grant of Appreciation Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.



	(i)	Each grant will specify in respect of each Appreciation Right a Base Price, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant; and



	(ii)	No Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. The Committee may provide in any Evidence of Award for the automatic exercise of an Appreciation Right upon such terms and conditions as established by the Committee.

6. Restricted Stock.

The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a) Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter described.

(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share on the Date of Grant.

(c) Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Committee on the Date of Grant or until achievement of Management Objectives referred to in Section 6(e) of this Plan.

(d) Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Committee on the Date of Grant (which restrictions may include rights of repurchase or first refusal of the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture while held by any transferee).

(e) Any grant of Restricted Stock may specify Management Objectives regarding the vesting of such Restricted Stock.

(f) Notwithstanding anything to the contrary contained in this Plan, Restricted Stock may provide for continued vesting or the earlier vesting of such Restricted Stock, including in the event of the retirement, death, disability or termination of employment or service of a Participant or in the event of a Change in Control.

(g) Any such grant or sale of Restricted Stock may require that any and all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and/or reinvested in additional Restricted Stock, which will be subject to the same restrictions as the underlying award. For the avoidance of doubt, any such dividends or other distributions on Restricted Stock shall be deferred until, and paid contingent upon, the vesting of such Restricted Stock.

(h) Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve. Unless otherwise directed by the Committee, (i) all certificates representing Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Restricted Stock will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Stock.

7. Restricted Stock Units.

The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash, or a combination thereof, to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include achievement regarding Management Objectives) during the Restriction Period as the Committee may specify.

(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share on the Date of Grant.

(c) Notwithstanding anything to the contrary contained in this Plan, Restricted Stock Units may provide for continued vesting or the earlier lapse or other modification of the Restriction Period, including in the event of the retirement, death, disability or termination or employment of service of a Participant or in the event of a Change in Control.

(d) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the Committee may, at or after the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on a deferred and contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other distributions on Common Shares underlying Restricted Stock Units shall be deferred until and paid contingent upon the vesting of such Restricted Stock Units.

(e) Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned. Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common Shares or cash, or a combination thereof.

(f) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

8. Cash Incentive Awards, Performance Shares and Performance Units.

The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Cash Incentive Awards, Performance Shares and Performance Units. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a) Each grant will specify the number or amount of Performance Shares or Performance Units, or amount payable with respect to a Cash Incentive Award, to which it pertains, which number or amount may be subject to adjustment to reflect changes in compensation or other factors.

(b) The Performance Period with respect to each Cash Incentive Award or grant of Performance Shares or Performance Units will be such period of time as will be determined by the Committee, which may be subject to continued vesting or earlier lapse or other modification, including in the event of the retirement, death, disability or termination of employment or service of a Participant or in the event of a Change in Control.

(c) Each grant of a Cash Incentive Award, Performance Shares or Performance Units will specify Management Objectives regarding the earning of the award.

(d) Each grant will specify the time and manner of payment of a Cash Incentive Award, Performance Shares or Performance Units that have been earned.

(e) The Committee may, on the Date of Grant of Performance Shares or Performance Units, provide for the payment of dividend equivalents to the holder thereof either in cash or in additional Common Shares, which dividend equivalents shall be subject to deferral and payment on a contingent basis based on the Participant’s earning and vesting of the Performance Shares or Performance Units, as applicable, with respect to which such dividend equivalents are paid.

(f) Each grant of a Cash Incentive Award, Performance Shares or Performance Units will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

9. Other Awards.

(a) Subject to applicable law and the applicable limits set forth in Section 3 of this Plan, the Committee may authorize the grant to any Participant of Common Shares or such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Committee, and awards valued by reference to the book value of the Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company. The Committee will determine the terms and conditions of such awards. Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Common Shares, other awards, notes or other property, as the Committee determines.

(b) Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 9.

(c) The Committee may authorize the grant of Common Shares as a bonus, or may authorize the grant of other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.

(d) The Committee may, at or after the Date of Grant, authorize the payment of dividends or dividend equivalents on awards granted under this Section 9 on a deferred and contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other distributions on Common Shares underlying awards granted under this Section 9 shall be deferred until and paid contingent upon the earning and vesting of such awards.

(e) Each grant of an award under this Section 9 will be evidenced by an Evidence of Award. Each such Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve, and will specify the time and terms of delivery of the applicable award.

(f) Notwithstanding anything to the contrary contained in this Plan, awards under this Section 9 may provide for the earning or vesting of, or earlier elimination of restrictions applicable to, such award, including in the event of the retirement, death, disability or termination of employment or service of a Participant or in the event of a Change in Control.

10. Administration of this Plan.

(a) This Plan will be administered by the Committee. The Committee may from time to time delegate all or any part of its authority under this Plan to a subcommittee thereof. To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.

(b) The interpretation and construction by the Committee of any provision of this Plan or of any Evidence of Award (or related documents) and any determination by the Committee pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive. No member of the Committee shall be liable for any such action or determination made in good faith. In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.

(c) To the extent permitted by law, the Committee may delegate to one or more of its members, to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee, the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee, the subcommittee or such person may have under this Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Committee: (i) designate employees to be recipients of awards under this Plan; and (ii) determine the size of any such awards; provided, however, that (A) the Committee will not delegate such responsibilities to any such officer for

awards granted to an employee who is an officer (for purposes of Section 16 of the Exchange Act), Director, or more than 10% “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with Section 16 of the Exchange Act; (B) the resolution providing for such authorization shall set forth the total number of Common Shares such officer(s) may grant; and (C) the officer(s) will report periodically to the Committee regarding the nature and scope of the awards granted pursuant to the authority delegated.

11. Adjustments.

The Committee shall make or provide for such adjustments in the number of and kind of Common Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of and kind of Common Shares covered by other awards granted pursuant to Section 9 of this Plan, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, respectively, in Cash Incentive Awards, and in other award terms, as the Committee, in its sole discretion, exercised in good faith, determines is equitably required to prevent dilution or enlargement of the rights of Participants that otherwise would result from (a) any extraordinary cash dividend, stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Committee may provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each Option Right or Appreciation Right with an Option Price or Base Price, respectively, greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any payment to the person holding such Option Right or Appreciation Right. The Committee shall also make or provide for such adjustments in the number of Common Shares specified in Section 3 of this Plan as the Committee in its sole discretion, exercised in good faith, determines is appropriate to reflect any transaction or event described in this Section 11; provided, however, that any such adjustment to the number specified in Section 3(c) of this Plan will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail to so qualify.

12. Change in Control.

For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan, a “Change in Control” will be deemed to have occurred upon the occurrence (after the Effective Date) of any of the following events:

(a) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock of the Company held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, if any one person, or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Control;

(b) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the stock of the Company;

(c) a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election;

(d) the consummation of a merger or consolidation involving the Company or in which Company securities are issued other than a merger or consolidation that results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

(e) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the

Company immediately before such acquisition or acquisitions (for this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets); provided, however, a transfer of assets by the Company is not treated as a Change in Control if the assets are transferred to (i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to his/her/its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (iv) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (iii) hereof.

Notwithstanding the foregoing, with respect to any award under the Plan that is characterized as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of any payment in respect of such award unless such event would also constitute a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets of” the Company under Section 409A of the Code.

13. Detrimental Activity and Recapture Provisions.

Any Evidence of Award may reference a clawback policy of the Company or provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with the Company or a Subsidiary, or (b) within a specified period after termination of such employment or service, engages in any detrimental activity, as described in the applicable Evidence of Award or such clawback policy. In addition, notwithstanding anything in this Plan to the contrary, any Evidence of Award or such clawback policy may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any Common Shares issued under and/or any other benefit related to an award, or other provisions intended to have a similar effect, including upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Common Shares may be traded.

14. Non-U.S. Participants.

In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company or any Subsidiary under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the Stockholders.

15. Transferability.

(a) Except as otherwise determined by the Committee, and subject to compliance with Section 17(b) of this Plan and Section 409A of the Code, no Option Right, Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Cash Incentive Award, award contemplated by Section 9 of this Plan or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except by will or the laws of descent and distribution. In no event will any such award granted under this Plan be transferred for value. Where transfer is permitted, references to “Participant” shall be construed, as the Committee deems appropriate, to include any permitted transferee to whom such award is transferred. Except as otherwise determined by the Committee, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.

(b) The Committee may specify on the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer, including minimum holding periods.

16. Withholding Taxes.

To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of Common Shares, and such Participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Committee, the Company will withhold Common Shares having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income, employment, tax or other laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the obligation, in whole or in part, by having withheld, from the Common Shares required to be delivered to the Participant, Common Shares having a value equal to the amount required to be withheld or by delivering to the Company other Common Shares held by such Participant. The Common Shares used for tax or other withholding will be valued at an amount equal to the fair market value of such Common Shares on the date the benefit is to be included in Participant’s income. In no event will the fair market value of the Common Shares to be withheld and delivered pursuant to this Section 16 exceed the minimum amount required to be withheld, unless such additional withholding amount is authorized by the Committee. Participants will also make such arrangements as the Company may require for the payment of any withholding tax or other obligation that may arise in connection with the disposition of Common Shares acquired upon the exercise of Option Rights.

17. Compliance with Section 409A of the Code.

(a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made hereunder will be administered in a manner consistent with this intent. Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service.

(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owed by a Participant to the Company or any of its Subsidiaries.

(c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the tenth business day of the seventh month after such separation from service.

(d) Solely with respect to any award that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that is payable on account of a Change in Control (including any installments or stream of payments that are accelerated on account of a Change in Control), a Change in Control shall occur only if such event also constitutes a “change in the ownership,” “change in effective control,” and/or a “change in the ownership of a substantial portion of assets” of the Company as those terms are defined under Treasury Regulation §1.409A-3(i)(5), but only to the extent necessary to establish a time and form of payment that complies with Section 409A of the Code, without altering the definition of Change in Control for any purpose in respect of such award.

(e) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

18. Amendments.

(a) The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan, for purposes of applicable stock exchange rules and except as permitted under Section 11 of this Plan, (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan, or (iv) must otherwise be approved by the Stockholders in order to comply with applicable law or the rules of the NASDAQ Global Market or, if the Common Shares are not traded on the NASDAQ Global Market, the principal national securities exchange upon which the Common Shares are traded or quoted, all as determined by the Board, then, such amendment will be subject to Stockholder approval and will not be effective unless and until such approval has been obtained.

(b) Except in connection with a corporate transaction or event described in Section 11 of this Plan or in connection with a Change in Control, the terms of outstanding awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, or cancel outstanding “underwater” Option Rights or Appreciation Rights (including following a Participant’s voluntary surrender of “underwater” Option Rights or Appreciation Rights) in exchange for cash, other awards or Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, without Stockholder approval. This Section 18(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of this Plan. Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without approval by the Stockholders.

(c) If permitted by Section 409A of the Code, but subject to the paragraph that follows, including in the case of termination of employment or service, or in the case of unforeseeable emergency or other circumstances or in the event of a Change in Control, to the extent a Participant holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Cash Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any dividend equivalents or other awards made pursuant to Section 9 of this Plan subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 15(b) of this Plan, the Committee may, in its sole discretion, provide for continued vesting or accelerate the time at which such Option Right, Appreciation Right or other award may vest or be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Cash Incentive Awards, Performance Shares or Performance Units will be deemed to have been earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award.

(d) Subject to Section 18(b) of this Plan, the Committee may amend the terms of any award theretofore granted under this Plan prospectively or retroactively. Except for adjustments made pursuant to Section 11 of this Plan, no such amendment will materially impair the rights of any Participant without his or her consent. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.

19. Governing Law. This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with the internal substantive laws of the State of Delaware.

20. Effective Date/Termination. This Plan will be effective as of the Effective Date. No grants will be made on or after the Effective Date under the Predecessor Plan, provided that outstanding awards granted under the Predecessor Plan will continue unaffected following the Effective Date. No grant will be made under this Plan on or after the tenth anniversary of the Effective Date, but all grants made prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan. For clarification purposes, the terms and conditions of this Plan shall not apply to or otherwise impact previously granted and outstanding awards under the Predecessor Plan, as applicable.

21. Miscellaneous Provisions.

(a) The Company will not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.

(b) This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.

(c) Except with respect to Section 21(e) of this Plan, to the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.

(d) No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or shares thereunder, would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.

(e) Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder.

(f) No Participant will have any rights as a Stockholder with respect to any Common Shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such Common Shares upon the share records of the Company.

(g) The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.

(h) Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of Common Shares under this Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and which are intended to comply with the requirements of Section 409A of the Code. The Committee also may provide that deferred issuances and settlements include the crediting of dividend equivalents or interest on the deferral amounts.

(i) If any provision of this Plan is or becomes invalid or unenforceable in any jurisdiction, or would disqualify this Plan or any award under any law deemed applicable by the Committee, such provision will be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will remain in full force and effect. Notwithstanding anything in this Plan or an Evidence of Award to the contrary, nothing in this Plan or in an Evidence of Award prevents a Participant from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of clarity a Participant is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act.

22. Share-Based Awards in Substitution for Awards Granted by Another Company. Notwithstanding anything in this Plan to the contrary:

(a) Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted shares, restricted share units or other share or share-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.

(b) In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by shareholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under this Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.

(c) Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) of this Plan will not reduce the Common Shares available

for issuance or transfer under this Plan or otherwise count against the limits contained in Section 3 of this Plan. In addition, no Common Shares subject to an award that is granted by, or becomes an obligation of, the Company under Sections 22(a) or 22(b) of this Plan, will be added to the aggregate limit contained in Section 3(a)(i) of this Plan.



	/s/ Mary G. Berner
	Name:		Mary G. Berner
	Title:		President and Chief Executive Officer

	/s/ Francisco J. Lopez-Balboa
	Name:		Francisco J. Lopez-Balboa
	Title:		Executive Vice President, Chief Financial Officer


a.	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


(1)	The Report fully complies with the requirements of Section 13(a) or 15d of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.