Item 1.01.
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Entry into Material Definitive Agreement.
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Agreement and Plan of Merger
On July 19, 2016, Beasley Broadcast Group, Inc., a Delaware corporation (the Company), entered into an Agreement and
Plan of Merger with Greater Media, Inc., a Delaware corporation (Greater Media), Beasley Media Group 2, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of the Company (Merger Sub), and Peter A. Bordes,
Jr., as the Stockholders Representative (the Merger Agreement) pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into Greater Media, with Greater Media
surviving the merger as an indirect wholly-owned subsidiary of the Company (the Merger).
Pursuant to the terms of the Merger
Agreement, the Company agreed to acquire all of the issued and outstanding equity stock of Greater Media for an aggregate purchase price of $239,875,000, inclusive of the refinancing of approximately $80 million of Greater Medias outstanding
debt and the payment of certain transaction expenses. The proceeds to be paid to the stockholders of Greater Media are expected to consist of (i) approximately $100 million in cash and (ii) approximately $25 million in shares of the Companys
Class A common stock, which is equal to 5,422,993 shares at a fixed value of $4.61 per share (the Merger Shares). The Merger consideration is subject to adjustment for changes in working capital of Greater Media, outstanding debt of
Greater Media and its subsidiaries as of the date of the closing and certain other payments and expenses. Additional Merger Shares may be issued in connection with such adjustment. In addition, the stockholders of Greater Media will receive the net
cash proceeds from the sale of Greater Medias tower assets, estimated to be approximately $20 million.
As of July 15, 2016, the
Company had 6,654,024 shares of Class A common stock outstanding (the Class A Shares) and 16,662,743 shares of Class B common stock outstanding (the Class B Shares and together with the Class A Shares, the Company
Common Stock). On matters other than the election of directors, the holders of Class A Shares and Class B Shares vote as a single class, with each Class A Share being entitled to one vote and each Class B Share entitled to ten votes.
The board of directors of the Company has approved, and declared to be advisable and in the best interest of the Company and its stockholders,
the Merger Agreement and the transactions contemplated thereby, including the Merger.
The Merger Agreement contains customary
representations, warranties and covenants of the parties, including, among others, covenants to conduct their businesses in the ordinary course between the execution and delivery of the Merger Agreement and the consummation of the Merger and not to
engage in certain kinds of transactions during such period (including the payment of dividends other than, in the case of the Company, the Companys routine quarterly dividend declared and paid in the ordinary course).
Consummation of the Merger is subject to customary closing conditions, including
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(i) approval from the Federal Communications Commission, (ii) the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (iii) absence of any order or injunction prohibiting the consummation of the Merger, (iv) subject to customary materiality qualifiers, the accuracy of the representations and warranties of the Company and Merger Sub contained in the Merger
Agreement and compliance by the Company with its covenants contained in the Merger Agreement, (v) the Merger Shares having been approved for listing on the Nasdaq Global Select Market and (vi) the Company having delivered executed counterparts to
certain ancillary agreements. The Company has obtained a debt financing commitment to fund the transactions contemplated by the Merger Agreement (see
Commitment Letter
below), the aggregate proceeds of which, together with cash
and cash equivalents available to the Company and issuance of the Merger Shares, will be sufficient for the Company to pay the aggregate Merger Consideration and all related fees and expenses.
The Merger Agreement contains certain customary termination rights for both the Company and Greater Media. The Merger Agreement also provides
that the Company shall pay Greater Media a termination fee of $6,390,000 if Greater Media terminates the Merger Agreement because all conditions to closing have been satisfied and the Company has not consummated the Merger due to the failure of the
financing to be available; provided that Greater Media is not also able to terminate the Merger Agreement due to the Companys breach. It further provides that the Company shall pay Greater Media a termination fee of $12,780,000 if (i) Greater
Media terminates the Merger Agreement due to a breach of a representation or covenant by the Company such that the applicable condition to closing is not satisfied or (ii) Greater Media terminates the Merger Agreement because the Company has failed
to consummate the Merger when required by the Merger Agreement, in circumstances where the financing was available.
The Merger Agreement
contemplates that the parties or their affiliates will enter into the following additional agreements at Closing: (i) an Investor Rights Agreement and (ii) a Registration Rights Agreement. The Investor Rights Agreement would provide the former
stockholders of Greater Media receiving Merger Shares (the Greater Media Stockholders) with tag-along rights to participate in certain sales of equity securities by the Company and its affiliates and also would provide the Greater Media
Stockholders with the right to nominate one director for election to the Companys Board, so long as the Greater Media Stockholders collectively hold at least 75 % of the Merger Shares issued to them at the closing of the Merger. The
Registration Rights Agreement would require the Company to prepare and file with the Securities and Exchange Commission (SEC), not later than 20 days after the consummation of the Merger, a registration statement with respect to the
resale of the Merger Shares by the Greater Media Stockholders, among other things.
A copy of the Merger Agreement is attached hereto as
Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement.
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The Merger Agreement has been attached as an exhibit to provide investors and stockholders with
information regarding its terms. It is not intended to provide any other factual information about Greater Media, the Company or Merger Sub. The representations, warranties and covenants contained in the Merger Agreement were made only for the
purposes of the Merger Agreement and as of specified dates, were solely for the benefit of the parties to the Merger Agreement, and may be subject to limitations agreed upon by the contracting parties. The representations and warranties may have
been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to investors. Investors and stockholders accordingly should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Greater Media,
the Company, Merger Sub or any of their respective subsidiaries or affiliates. In addition, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in confidential disclosure
schedules that Greater Media exchanged with the Company and Merger Sub in connection with the execution of the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of
the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information
regarding the parties to the Merger Agreement and the Merger that will be contained in, or incorporated by reference into, the information statement that the Company will be filing in connection with the Merger, as well as in the annual report on
Form 10-K, quarterly reports on Form 10-Q and other documents that the Company has filed or may file with the SEC.
Commitment
Letter
In connection with the transactions contemplated by the Merger Agreement, Royal Bank of Canada (RBC), U.S. Bank
National Association (USBank) and Beasley Mezzanine Holdings, LLC (the Borrower), a direct subsidiary of the Company, entered into a commitment letter, dated July 19, 2016 (the Commitment Letter), pursuant to
which RBC and USBank have agreed to provide a credit facility consisting of (a) a term loan B facility in the amount of $265.0 million (the Term Loan B Facility) and (b) a revolving credit facility of $20.0 million. The Term Loan B
Facility will be borrowed by the Borrower at the closing of the Merger and, along with the Merger Shares, will be used to pay the purchase price, fees, costs and expenses incurred in connection with the Merger, and to refinance existing third party
indebtedness of the Borrower and Greater Media. The obligations of RBC and USBank to provide the debt financing under the Commitment Letter are subject to certain customary closing conditions, including the consummation of the Merger. The
termination date for the commitments of RBC and USBank is six months after the date of the Commitment Letter; provided that such termination date will automatically extend by an additional three months in certain circumstances. In connection with
the Commitment Letter, RBC, USBank, and the Borrower entered into a fee letter pursuant to which the Borrower agreed to pay certain fees to RBC, USBank and any additional lenders.
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