Emmis Corp (EMMS)

[Enterprising Investor]

Emmis Communications Corporation Settles Preferred Holder Lawsuit (12/04/15)

On December 4, 2015, Emmis Communications Corporation (the “Company”) entered into a Settlement and Release Agreement (the “Settlement Agreement”) with Corre Opportunities Fund, LP, Zazove Associates LLC, DJD Group LLLP, First Derivative Traders LP and Kevan A. Fight (collectively, the “Preferred Group”) to settle any and all remaining issues with respect to the lawsuit captioned in the United States District Court for the Southern District of Indiana as Corre Opportunities Fund, LP, et al v. Emmis Communications Corporation, Cause No. 1:12-cv-00491-SEB-TAB, and in the United States Court of Appeals for the Seventh Circuit as Corre Opportunities Fund, LP, et al v. Emmis Communications Corporation, Cause No. 14-1647 (the “Lawsuit”). Under the terms of the Settlement Agreement, (i) the Company is withdrawing its bill of costs with respect to certain reimbursable expenses in the Lawsuit; (ii) the Company agrees to submit to a vote of its shareholders, and the Preferred Group and Jeffrey H. Smulyan agree to vote in favor of, an amendment to Exhibit A to the Company’s Second Amended and Restated Articles of Incorporation (the “Terms”) to amend the terms of the Company’s Series A Non-Cumulative Convertible Preferred Stock (the “Preferred Stock”) to (A) change the voluntary conversion ratio to permit holders of Preferred Stock to convert their shares of Preferred Stock into Class A Common Stock at a ratio of 2.80 shares of the Company’s Class A Common Stock for each share of Preferred Stock, and (B) provide that all shares of Preferred Stock shall automatically convert into shares of Class A Common Stock at a ratio of 2.80 shares of Class A Common Stock for each share of Preferred Stock on the fifth business day after the delisting of the Preferred Stock by Nasdaq; and (iii) both the Company and the Preferred Group will release each other from claims related to the Lawsuit. Under the current Terms, the Preferred Stock is voluntarily convertible into shares of Class A Common Stock at a ratio of 2.44 shares of Class A Common Stock for each class of Preferred Stock, and there is no provision of mandatory conversion. As disclosed in the Company’s Current Report on Form 8-K filed on August 24, 2015, the Preferred Stock is currently subject to a Deficiency Notice from Nasdaq stating that the Company has until February 17, 2016 to cure its failure to meet Nasdaq’s Continued Listing Standards with respect to the Preferred Stock. The Company does not anticipate that such failure will be timely cured and the Preferred Stock will subsequently be delisted by Nasdaq.

http://www.sec.gov/Archives/edgar/data/783005/000078300515000048/emms8k12042015.htm