EMPLOYMENT AGREEMENT
Exhibit 10.39
This EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of March 1, 2003, by and between
EMMIS OPERATING COMPANY, an Indiana corporation (“Employer” or “Emmis”), and XXXX X. XXXXXXX, a
Virginia resident (“Executive”).
RECITALS
WHEREAS, Employer and its subsidiaries are engaged in the ownership and operation of certain
radio and television stations, magazines, and related operations; and
WHEREAS, Employer desires to employ Executive as an executive, and Executive desires to be so
employed.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth
in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
AGREEMENT
1. Employment Status. Upon the terms and subject to the conditions set forth in this
Agreement, Employer hereby employs Executive, and Executive hereby accepts exclusive employment
with Employer.
2. Term. The term of Executive’s employment shall commence on March 1, 2003, and
continue until February 28, 2006 (the “Term”). This Agreement shall expire at the end of the Term
unless earlier terminated in accordance with the terms of this Agreement. For purposes of this
Agreement, the term “Contract Year” shall be defined to mean each twelve (12) month period
commencing on March 1, 2003, and on each anniversary thereof during the Term. The term “First
Contract Year” shall refer to the period commencing on March 1, 2003, and ending on February 29,
2004; “Second Contract Year” shall refer to the period commencing on March 1, 2004, and ending on
February 28, 2005; “Third Contract Year” shall refer to the period commencing on March 1, 2005, and
ending on February 28, 2006 (each, a “Contract Year”).
3. Executive’s Position, Duties and Authority.
3.1 Position. Employer shall employ Executive, and Executive shall serve as
an executive of Employer, and of any successor of Employer by merger, corporate
reorganization, acquisition of substantially all of the assets or stock of Employer, or
otherwise. Executive shall serve as President – International Division or, subject to the
provisions of Exhibit A (attached hereto and made a part hereof), shall serve in
such other senior management positions to which Employer may appoint Executive.
3.2 Duties and Authority. Executive shall have such duties, functions,
authority and responsibilities as are commensurate with the office(s) Executive holds with
the Employer during the Term.
3.3 Directorships and Other Offices. If Executive is elected as a Director of
Emmis Communications Corporation, Executive shall serve in such position without additional
remuneration but shall be entitled to the benefit of indemnification pursuant to the terms
of Section 15.11. Executive shall also serve without remuneration as a director
and/or officer of one or more of Employer’s subsidiaries or affiliates if appointed to such
position(s) by Employer. If Executive is so appointed, Executive shall be entitled to the
benefit of indemnification as set forth in the first sentence of this Section 3.3.
4. Full-Time Services. Executive’s services pursuant to this Agreement shall be
performed on a full-time and exclusive basis in a professional, diligent and competent manner to
the best of Executive’s abilities. Executive shall not undertake any outside employment or outside
business activity without the prior written consent of Employer; provided, however,
that Executive shall be permitted to serve on the board of charitable or other civic organizations
so long as such services do not interfere with Executive’s duties and obligations pursuant to this
Agreement.
5. Location of Employment; Travel. The location for performance of Executive’s
services hereunder shall be Executive’s home office located in Arlington, Virginia;
provided, however, in the event Employer establishes an office in or near the
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Washington D.C. metropolitan area at any time during the Term, Executive shall be required to work
from such office as requested by Employer. Executive shall undertake such travel as the
performance of Executive’s duties pursuant to this Agreement may require.
6. Compensation.
6.1 Base Salary. Employer shall pay or cause to be paid to Executive a base
salary in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (subject to
withholding for applicable taxes and as otherwise required by law) (the “Base Salary”) each
Contract Year during the Term. Employer shall pay Executive the Base Salary according to
Employer’s customary payroll practices. Executive acknowledges and agrees that Employer may
pay a portion of Executive’s Base Salary (not to exceed ten percent (10%)) in Shares (as
defined below) pursuant to a plan adopted for Emmis employees or for other executive-level
officers of Employer.
6.2 Annual Incentive Compensation. For each Contract Year during the Term,
Executive shall be eligible to receive one (1) annual performance bonus in an amount up to a
target amount of One Hundred Thousand Dollars ($100,000) (subject to withholding for
applicable taxes and as otherwise required by law and the terms and conditions set forth on
Exhibit B and Exhibit C (as applicable), attached hereto and made a part
hereof) (each, a “Contract Year Bonus”), the exact amount of which shall be determined by
means of Executive’s attainment of certain performance goals as determined each Contract
Year by the Compensation Committee of the Employer’s Board of Directors (the “Compensation
Committee”) after reasonable consultation with Executive. Executive acknowledges and agrees
that, as a material condition to receiving a Contract Year Bonus, as of the end of each
respective Contract Year: (i) this Agreement must be in effect and not previously terminated
for any reason; and (ii) Executive must be fully performing Executive’s duties and
obligations as required hereunder and not be in breach of any of the material terms and
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conditions of this Agreement. It is understood and agreed that Emmis may, at its sole
election, pay any Contract Year Bonus, if any, in cash or Shares. In the event Emmis elects
pursuant to this Section 6.2 to pay a Contract Year Bonus in Shares, the exact
number of Shares to be awarded to Executive shall be determined by dividing the total dollar
amount of the applicable Contract Year Bonus by the average of the reported high and low
Share price on a valuation date to be used by Employer in determining similar cash incentive
compensation awards for other members of Employer’s senior management team (the “Valuation
Formula”). Any Contract Year Bonus amounts earned by Executive pursuant to the terms and
conditions of this Section 6.2 shall be awarded promptly following Employer’s fiscal
year end earnings release or at such other time or times as annual incentive compensation
awards are made to other members of Employer’s senior management team (but in no event later
than ninety (90) days after the expiration of the applicable Contract Year). The
performance goals for the First and Second Contract Years are set forth on Exhibit B
and Exhibit C respectively.
6.3 Equity Incentive Compensation. On or about the commencement of the Second
and Third Contract Years, or at any other time or times during the Second and Third Contract
Years when Employer generally awards Options (as defined below) to members of Employer’s
senior management team, Executive shall receive an option to acquire Twenty Six Thousand Two
Hundred and Fifty (26,250) shares of Class A Common Stock of Emmis Communications
Corporation (the “Shares”) pursuant to the terms and subject to the conditions of the
applicable Equity Incentive Plan of Employer (each, an “Option”). It is understood and
agreed that in the event of any change in the outstanding Shares by reason of any
reorganization, recapitalization, stock split, reverse stock split, stock dividend, share
combination, consolidation or similar event, the number and class of Shares awarded pursuant
to this Agreement or covered by an Option granted pursuant to this Section 6.3 (and
any applicable Option exercise
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price) shall be adjusted by the Compensation Committee in its sole discretion in
accordance with the terms of the applicable Equity Incentive Plan of Employer and the Option
agreement evidencing the grant of the Option. The determination of the Compensation
Committee shall be conclusive and binding.
6.4 Performance-Based Compensation; Fractional Shares. It is the intention of
the parties that each Contract Year Bonus paid to Executive pursuant to this Section
6 shall be deemed performance-based compensation in order to permit such compensation to
qualify for deduction under Section 162(m) of the Internal Revenue Code of 1986.
Accordingly, to the extent permitted by law, the provisions of this Section 6 shall
be construed to permit each Contract Year Bonus paid hereunder to so qualify. Additionally,
in the event that the calculation of a certain number of Shares awarded to Executive
pursuant to any of the provisions of this Section 6 results in a fractional Share,
such fractional Share shall be rounded up to the nearest whole Share.
7. Business Expenses. Employer shall pay or reimburse Executive for all reasonable
expenses actually incurred by Executive during the Term directly related to the performance of
Executive’s services hereunder upon presentation of expense statements, vouchers or similar
documentation, or such other supporting information as Employer may require of Executive.
8. Fringe Benefits and Vacation. During the Term, Executive shall be entitled to
four (4) weeks of paid vacation in accordance with Employer’s applicable policies and procedures
for executive-level employees. Executive shall also be eligible to participate in and receive the
fringe benefits generally made available to other executive-level employees of Employer in
accordance with the general provisions of Employer’s fringe benefit plans or programs;
provided, however, that these benefits may be increased, changed, eliminated or
added from time to time during the Term as determined in Employer’s sole and absolute discretion.
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9. Confidential Information.
9.1 Non-Disclosure. Executive acknowledges that certain information
concerning the business of Employer is of a proprietary and highly confidential nature, and
that as a result of Executive’s employment with Employer prior to and during the Term,
Executive has received and developed, and will hereafter receive and continue to develop,
proprietary and other confidential information concerning the business of Employer and its
subsidiaries which, if known to competitors of Employer, would damage Employer, its
subsidiaries, and their respective businesses. Accordingly, Executive agrees that, during
the Term and thereafter, Executive shall not divulge or appropriate for Executive’s own use,
or for the use or benefit of any third party (other than Employer or its representatives or
as specifically directed in writing by Employer) any information or knowledge concerning the
business of Employer or any of its subsidiaries which is not generally available to the
public other than through the activities of Executive. Executive further agrees that upon
termination of Executive’s employment for any reason, Executive shall promptly surrender to
Employer all documents, brochures, writings, illustrations, price lists, marketing or
strategic plans, budgets and any other such materials (regardless of form or character) or
information that Executive received from or developed on behalf of Employer in connection
with Executive’s employment with Employer. Executive acknowledges that all such materials
shall remain at all times during and after the expiration or termination of the Term for any
reason the sole and exclusive property of Employer, and that nothing in this Agreement shall
be deemed to grant Executive any right, title or interest in such material.
9.2 Injunctive Relief. Executive acknowledges that: Executive’s breach of
Section 9.1 will cause irreparable harm and damage to Employer, the exact amount of
which will be difficult to ascertain; that the remedies at law for any such breach would be
inadequate; and that the provisions of this Section 9 have been specifically
negotiated and carefully written to prevent such
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irreparable harm and damage. Accordingly, if Executive breaches Section 9.1,
Employer shall be entitled to injunctive relief enforcing Section 9.1 to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security.
10. Non-Interference; Non-Competition and Injunctive Relief.
10.1 Non-Interference. During the Term and for a period of two (2) years
immediately thereafter, Executive shall not, directly or indirectly, take any action (or
permit any action to be taken by any entity with which Executive is associated in a
management role) which has the effect of interfering with Employer’s relationship
(contractual or otherwise) with any employee of Employer or any of its subsidiaries,
affiliates or related entities.
10.2 Non-Competition. Executive acknowledges the special and unique nature of
Executive’s employment with Employer as a member of Employer’s senior management team, and
understands that, as a result of Executive’s employment with Employer prior to and during
the Term, Executive has gained and will continue to gain knowledge of and have access to
highly sensitive and valuable information regarding the operations of Employer and its
subsidiaries and affiliated entities, including but not limited to the proprietary and other
confidential information described more fully in Section 9.1. Accordingly,
Executive acknowledges Employer’s special interest in preventing the disclosure of such
information through the engagement of Executive’s services by any of Employer’s competitors
following the expiration or earlier termination of the Term for any reason. Therefore,
Executive agrees that, during the Term and for a period of twelve (12) months immediately
following the expiration or earlier termination of the Term for any reason, Executive shall
not, without the prior written approval of Employer, engage directly or indirectly in
services for, or become employed by, serve as an agent or consultant to, or become an
officer, director, partner, principal or shareholder of, any corporation, partnership or
other entity which is engaged in the radio broadcasting business or has an interest in
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any radio station in Argentina, Hungary, Belgium or any other country where Employer owns,
operates or has an interest in one or more radio stations (collectively, the “Restricted
Countries”). So long as Executive does not engage in any other activity prohibited by the
immediately preceding sentence, Executive’s ownership of less than five percent (5%) of the
issued and outstanding stock of any corporation whose stock is traded on an established
securities market shall not constitute competition with Employer for the purpose of this
Section 10.2.
10.3 Injunctive Relief. Executive acknowledges and agrees that the provisions
of this Section 10 have been specifically negotiated and carefully worded in
recognition of the opportunities which have been and shall be afforded to Executive by
Employer by virtue of Executive’s continued association with Employer and the influence that
Executive has and will continue to have over Employer’s employees, customers and vendors.
Executive further acknowledges that: Executive’s breach of Section 10.1 or
10.2 will cause irreparable harm and damage to Employer, the exact amount of which
will be difficult to ascertain; that the remedies at law for any such breach would be
inadequate; and that the provisions of this Section 10 have been specifically
negotiated and carefully written to prevent such irreparable injury and damage.
Accordingly, if Executive breaches Section 10.1 or 10.2, Employer shall be
entitled to injunctive relief enforcing Section 10.1 or 10.2, as the case
may be, to the extent reasonably necessary to protect Employer’s legitimate interests,
without posting bond or other security. If Executive violates Section 10.1 or
10.2 and Employer brings legal action for injunctive or other relief, Employer shall
not, as a result of the time involved in obtaining such relief, be deprived of the benefit
of the full period of non-interference or non-competition set forth therein. Accordingly,
the obligations set forth in Section 10.1 and 10.2 shall be deemed to have
the duration set forth therein, computed from the date such relief is obtained or
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granted but reduced by the time expired between the date the restrictive period began to run
and the date of the first violation of the obligations by Executive.
10.4 Construction. Despite the express agreement herein between Employer and
Executive, in the event that any of the provisions set forth in this Section 10
shall be determined by any court or other tribunal of competent jurisdiction to be
unenforceable for any reason whatsoever, the parties agree that this Section 10
shall be interpreted to extend only to the maximum extent as to which it may be enforceable,
and that this Section 10 shall be severable into its component parts, all as
determined by such court or tribunal.
11. Termination of Agreement.
11.1 Termination of Agreement by Employer for Cause. Employer may terminate
this Agreement and Executive’s employment hereunder for Cause (as defined in Section
11.3 below) in accordance with the terms and conditions of this Section 11.
Following a determination by Employer that Executive should be terminated for Cause,
Employer shall give written notice to Executive specifying the grounds for such termination
(the “Preliminary Notice”), and Executive shall have five (5) days after receipt of the
Preliminary Notice to respond in writing. If following the expiration of such five (5) day
period Employer reaffirms its determination that Executive should be terminated for Cause,
such termination shall be effective upon delivery by Employer to Executive of a final notice
of termination (the “Final Notice”).
11.2 Effect of Termination by Employer for Cause. In the event of termination
for Cause as provided in Section 11.1 above:
(i) Executive shall have no further obligations or liabilities hereunder, except
Executive’s obligations under Sections 9 and 10, which shall survive
the termination of this Agreement.
(ii) Employer shall have no further obligations or liabilities hereunder, except that
Employer shall, not later than two (2) weeks after the termination date:
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(a) Pay to Executive all earned but unpaid Base Salary with respect to any applicable
pay period ending on or before the termination date; and
(b) Pay to Executive any Contract Year Bonus, if any, which Executive earned for a
Contract Year ending on or prior to the termination date pursuant to Section 6.2 but
which is unpaid as of the termination date.
11.3 Definition of Cause. For purposes of this Agreement, ”Cause” shall be
defined to mean any of the following: (i) any action or omission by Executive involving
willful or repeated failure, neglect or refusal to perform any of Executive’s material
duties or obligations under this Agreement (or any duties assigned to Executive consistent
with the terms of this Agreement) or abide by any policy or directive of Employer, and
continuation of such breach after written notice and the expiration of a ten (10) day cure
period; provided, however, that it is not the parties’ intention that
Employer shall be required to provide successive such notices, and in the event Employer has
provided Executive with a notice and opportunity to cure pursuant to this Section
11.3, Employer may terminate this Agreement for a subsequent breach similar or related
to the material breach for which notice was previously given or for a continuing series or
pattern of breaches (whether or not similar or related) without providing notice or an
opportunity to cure; (ii) commission of any felony or any other crime involving an act of
moral turpitude; (iii) Executive’s action or omission, or knowing allowance of actions or
omissions, which are in violation of any law or the rules and regulations of the Federal
Communications Commission (the “FCC”), or which otherwise jeopardize any license granted to
Employer or any of Employer’s subsidiaries or affiliates in connection with the ownership or
operation of any radio or television station; (iv) theft in any amount; (v) actual or
threatened violence against another employee; (vi) sexual or other prohibited harassment of
other employees of Emmis or any of its subsidiaries, affiliates or related entities; (vii)
unauthorized disclosure or use of proprietary or confidential information, as
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described more fully in Section 9.1; (viii) any action which brings Employer or any
of Employer’s subsidiaries or affiliates into public disrepute, contempt, scandal or
ridicule; and (ix) any matter constituting cause or misconduct under applicable laws.
11.4 Change in Control. In the event of a “Change in Control”, the rights and
obligations of Executive and Employer shall be set forth in a separate Change of Control
Agreement executed by the parties and attached to this Agreement as Exhibit A.
“Change in Control” shall have the meaning ascribed to it in Exhibit A.
Notwithstanding anything to the contrary contained herein or in Exhibit A, a Change
in Control shall be deemed not to have occurred if, immediately following any corporate
reorganization or the transaction or transactions described in the definition of Change of
Control in Exhibit A: (i) Xxxxxxx X. Xxxxxxx is Chairman or Chief Executive Officer
of Employer or any successor thereto, including without limitation, the International
Division or any entity established as a result of a corporate reorganization (collectively,
“Successor”); or (ii) Smulyan retains the ability to vote at least fifty percent (50%) of
all classes of stock of the Employer or any Successor; or (iii) Smulyan retains the ability
to elect a majority of the Board of Directors of Employer or any Successor.
11.5 Termination of Employment by Executive for Good Reason. Executive may
terminate this Agreement and Executive’s employment hereunder for Good Reason according to
the terms and subject to the conditions set forth in this Section 11.5. For
purposes of this Agreement, “Good Reason” shall be defined to mean any situation or
circumstance following a sale or transfer of control or ownership of the International
Division from Emmis to any third party (the “Successor Employer”) where there is a material
change in Executive’s duties or responsibilities by the Successor Employer. In the event
Executive elects to terminate this Agreement for Good Reason as permitted herein, (i)
Executive shall provide written notice of Executive’s intention to terminate this
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Agreement to the Successor Employer, which notice shall be effective thirty (30) days after
the Successor Employer’s receipt of such notice; and (ii) Executive and the Successor
Employer shall have no further obligations or liabilities hereunder; provided,
however, that Executive’s obligations under Sections 9 and 10 shall
survive the termination of this Agreement and, provided, further, that the
Successor Employer shall, not later than two (2) weeks after the termination date, pay to
Executive all unpaid compensation pursuant to Section 6 above for the remainder of
the Term as if this Agreement had not been terminated (including all remaining, unpaid
Contract Year Bonus amounts as if such Contract Year Bonus amounts had been fully earned by
Executive). It is expressly understood and agreed that, in the event Employer elects to
separate or bifurcate its radio and television divisions by means of merger, corporate
reorganization, sale or disposition of assets, spin off, tax-free reorganization, or
otherwise (each, a “Separation Event”), Executive may not terminate this Agreement pursuant
to the terms of this Section 11.5 so long as Executive continues to report directly
to Xxxxxxx X. Xxxxxxx after such a Separation Event.
12. Disability.
12. Disability.
12.1 Termination of Employment. If Executive shall become Disabled (as
defined in Section 12.2), Employer shall continue to compensate Executive under the
terms of this Agreement without diminution and otherwise without regard to such disability
or nonperformance of duties until Executive has been disabled for a cumulative period of six
(6) months, at which time Employer may, in its sole discretion, elect to terminate
Executive’s employment. If Employer elects to terminate Executive’s employment pursuant to
this Section 12.1, the date that Executive’s employment terminates shall be referred
to herein as the “Disability Termination Date.”
12.2 Definition of Disability. Executive shall be deemed to have become
“Disabled” for purposes of this Agreement if, during the Term, because of ill health,
physical or mental disability, or for other causes beyond Executive’s
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reasonable control, Executive shall have been unable to perform Executive’s duties
hereunder as reasonably determined by a reputable physician selected by Employer.
12.3 Obligations after Termination. Unless Employer exercises its option
under Section 12.5 below to reinstate Executive to Executive’s full compensation,
duties, functions, responsibilities and authority hereunder for the balance of the original
Term, Executive shall have no further obligations or liabilities hereunder after a
Disability Termination Date except Executive’s obligations under Sections 9 and
10 which shall survive the termination of the Term. After a Disability Termination
Date, Employer shall have no further obligations or liabilities hereunder except its
obligations under Section 12.4 which shall survive the termination of the Term.
12.4 Payment of Unpaid Amounts after Termination. Employer shall, not later
than two (2) weeks after a Disability Termination Date, pay to Executive: (i) all earned but
unpaid Base Salary with respect to any pay period ending on or before the Disability
Termination Date; plus (ii) any Contract Year Bonus, if any, earned by Executive for a
Contract Year ending on or prior to the Disability Termination Date pursuant to Section
6.2 but which is unpaid as of the Disability Termination Date; provided,
however, that in the event a Disability Termination Date occurs at least six (6)
months after the commencement of a Contract Year during the Term, Employer shall pay to
Executive a pro-rated portion of the Contract Year Bonus for the Contract Year during which
the Disability Termination Date occurs, such amount to be determined in the sole discretion
of Employer, so long as Executive is not reinstated during such Contract Year pursuant to
Section 12.5.
12.5 Reinstatement. If during the original Term and subsequent to a
Disability Termination Date, Executive shall fully recover from a disability, Employer shall
have the right (exercisable within sixty (60) days after written notice from Executive of
such recovery), but not the obligation, to reinstate
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Executive to employment hereunder for the balance of the original Term; provided,
that Executive consents to such reinstatement. In the event of such reinstatement, Employer
shall pay Executive at Executive’s full level of compensation hereunder and otherwise employ
Executive in accordance with the terms and provisions of this Agreement.
12.6 No Reduction. Amounts payable pursuant to this Section 12 shall
not be reduced by the value of any benefits payable to Executive under any disability
insurance plan or policy.
13. Death of Executive.
13.1 Termination of Agreement. This Agreement shall terminate immediately
upon Executive’s death. In the event of such termination, Employer shall have no further
obligations or liabilities hereunder except its obligations under Section 13.2 below
which shall survive such termination.
13.2 Compensation. Employer shall, not later than two (2) weeks after
Executive’s date of death, pay to Executive’s estate or designated beneficiary all earned
but unpaid Base Salary and Contract Year Bonus amounts earned by Executive, if any, with
respect to any period ending on or before Executive’s date of death; provided,
however, that in the event Executive’s date of death occurs at least six (6) months
after the commencement of a Contract Year during the Term, Employer shall pay to Executive’s
estate or designated beneficiary a pro-rated portion of the Contract Year Bonus for the
Contract Year during which Executive’s death occurs, such amount to be determined in the
sole discretion of Employer.
13.3 No Reduction. Amounts payable pursuant to this Section 13 shall
not be reduced by the value of any benefits payable to Executive’s estate or designated
beneficiaries under any applicable life insurance plan or policy.
13.4 Death after Termination. In the event that Executive dies after
termination of this Agreement pursuant to Section 11, 12 or 13, all
amounts required to be paid by Employer prior to Executive’s death in connection with
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such termination that remain unpaid as of Executive’s date of death shall be paid to
Executive’s estate or designated beneficiary.
14. Notices. All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be made in writing and shall be deemed to have been duly
given if delivered personally or mailed first-class, postage prepaid, by registered or certified
mail, as follows (or to such other or additional address as either party shall designate by notice
in writing to the other in accordance herewith):
(i) If to Employer:
Emmis Communications Corporation
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx X. Xxxxxxx, Esq.
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx X. Xxxxxxx, Esq.
With a copy to:
Xxxx X. Xxxxxx, Esq.
0000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
0000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
(ii) If to Executive, to Executive’s address on the personnel records of Employer.
15. Miscellaneous.
15.1 Governing Law. This Agreement shall be deemed to have been entered into
in the State of Indiana and shall be governed by, and construed and enforced in accordance
with, the laws of the State of Indiana without regard to its choice of law provisions.
15.2 Arbitration. The parties agree that any controversy or claim of either
party hereto arising out of or in any way related to this Agreement, or breach thereof,
shall be settled by final and binding arbitration in Indianapolis, Indiana in accordance
with the applicable rules of the American Arbitration Association, and that judgment upon
any award rendered may be entered by the
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prevailing party in any court having jurisdiction thereof. The parties agree to share
equally all costs associated with the arbitration; provided, however, that
each party shall be solely responsible for its own attorneys’ fees and expenses in
connection with any such arbitration.
15.3 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of any of the
terms or conditions of this Agreement.
15.4 Entire Agreement; Merger. This Agreement (including all exhibits
attached hereto and referenced in this Agreement) sets forth the entire agreement and
understanding of the parties relating to the subject matter herein, and supersedes all prior
agreements, arrangements and understandings, written or oral, between the parties, which are
merged herein. Accordingly, this Agreement supersedes and replaces all prior written
employment agreements between the parties.
15.5 Successors and Assigns. This Agreement, and Executive’s rights and
obligations hereunder, may not be assigned by Executive without the prior written consent of
Employer, which consent may be granted or withheld in Employer’s sole and absolute
discretion; provided, however, that Executive may designate pursuant to
Section 15.7 one or more beneficiaries to receive any amounts that would otherwise
be payable hereunder to Executive’s estate. Employer may assign all or any portion of its
rights and obligations hereunder to any subsidiary, affiliate or related entity, including
without limitation any entity created as a result of a Separation Event, or any third party
by way of merger, corporate reorganization, acquisition of substantially all of the assets
or stock of Employer or its international radio businesses, or otherwise.
15.6 Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without the written consent
of Executive and Employer. The failure of either party at any time or times to require
performance of any provision hereof shall in no
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manner affect the right of such party at a later time to enforce such provision. No waiver
by a party of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach or a waiver of the breach of any other
term or covenant contained in this Agreement.
15.7 Beneficiaries. Whenever this Agreement provides for any payment to
Executive’s estate, such payment may be made instead to such beneficiary or beneficiaries as
Executive may have designated in a writing filed with Employer. Executive shall have the
right to revoke any such designation and to re-designate a beneficiary or beneficiaries by
written notice to Employer (and to any applicable insurance company).
15.8 Executive’s Warranty and Indemnity. Executive hereby represents and
warrants that Executive: (i) has the full and unqualified right to enter into and fully
perform this Agreement according to each and every term and condition contained herein; and
(ii) has not made any agreement, contractual obligation, or commitment in contravention of
any of the terms and conditions of this Agreement or which would prevent Executive from
performing according to any of the terms and conditions contained herein. Furthermore,
Executive hereby agrees to fully indemnify and hold harmless Employer and each of its
subsidiaries, affiliates and related entities, and each of their respective officers,
directors, employees, agents, attorneys, insurers and representatives (the “Emmis Group”)
from and against any and all losses, costs, damages, expenses (including attorneys’ fees and
expenses), liabilities and claims, arising out of, in connection with, or in any way related
to Executive’s breach of any of the representations or warranties contained in this
Section 15.8 or Executive’s breach of any of the material terms or conditions
contained in this Agreement.
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15.9 No Obligation to Utilize Services. Employer shall not be obligated to
utilize Executive’s services nor use the results or products of such services even if
Executive is not in default hereunder. Employer may at any time during the Term, for any
reason, elect not to use Executive’s services or have any further obligations to Executive
under this Agreement except as provided in the next sentence. If Employer elects not to use
Executive’s services as permitted herein, Executive shall be paid Executive’s full
compensation as described more fully in Section 6 at the times and in the
installments as provided herein as if Executive had fulfilled Executive’s obligations
hereunder through the Term.
15.10 Change in Fiscal Year. If Employer changes its fiscal year, Employer
shall make such adjustments to the various dates and amounts included herein or in any plan
or program referenced herein as are necessary or appropriate; provided,
however, that the end of the Term shall in no event be extended beyond the
expiration of the Term without the written consent of the parties.
15.11 Indemnification. Executive shall be entitled to the benefit of the
indemnification provisions set forth in Employer’s Amended and Restated Articles of
Incorporation and/or By-Laws, or any applicable corporate resolution, as the same may be
amended from time to time during the Term (not including any limiting amendments or
additions, but including any amendments or additions that add to or broaden the protection
afforded to Executive at the time of execution of this Agreement) to the fullest extent
permitted by applicable law. Additionally, Employer shall cause Executive to be indemnified
in accordance with Chapter 37 of the Indiana Business Corporation Law (the “IBCL”), as the
same may be amended from time to time during the Term, to the fullest extent permitted by
the IBCL as required to make Executive whole in connection with any indemnifiable loss, cost
or expense incurred in Executive’s performance of Executive’s duties and obligations
pursuant to this Agreement. Employer shall also maintain during the Term an insurance
policy providing directors’ and
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officers’ liability coverage in a commercially reasonable amount. It is understood that the
foregoing indemnification obligations shall survive the expiration or termination of the
Term.
15.12 Subsequent Employment by Employer. According to the terms and subject
to the conditions set forth in this Section 15.12, in the event Employer does not
offer Executive reasonably acceptable employment with Employer or any of its affiliates or
related entities upon the expiration of the Term, Employer shall continue to make Base
Salary payments to Executive at the rate of fifty percent (50%) of Executive’s Base Salary
(the “Severance Payment”) for a period of twelve (12) months immediately following
Executive’s termination of employment with Employer (the “Severance Period”);
provided, however, in the event Executive commences subsequent employment at
any time during the Severance Period, Employer’s financial obligation pursuant to this
provision shall be reduced by any amounts paid to Executive by Executive’s subsequent
employer during the Severance Period. In the event that Executive’s subsequent compensation
equals or exceeds the Severance Payment, Employer’s financial obligation to Executive
pursuant to this provision shall immediately terminate. It is understood and agreed that,
as a material condition upon which Executive shall be entitled to receive the Severance
Payment, and as an inducement to Emmis’ agreement to pay Executive the Severance Payment,
Executive agrees to: (i) execute a general release in a form acceptable to Emmis upon the
termination of Executive’s employment; and (ii) promptly notify Employer in writing of the
commencement date upon which Executive begins subsequent employment along with the
particulars of Executive’s subsequent compensation package for purposes of determining
Employer’s continuing obligations, if any, under this Section 15.12.
Notwithstanding anything to the contrary contained in this Agreement, Executive shall not be
entitled to the Severance Payment if Executive’s employment is terminated either (a) by
Employer under Section 11.1, (b) by reason of Executive’s disability or death
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under Section 12 or 13, or (c) by Executive for any reason other than a
material breach of any of the terms and conditions of this Agreement by Employer (after
providing Employer with notice of such breach and a reasonable opportunity to cure such
breach), or if Employer offers Executive reasonably acceptable employment upon the
expiration of the Term. Executive acknowledges that Executive shall not be entitled to any
additional severance compensation upon the termination or expiration of this Agreement other
than the Severance Payment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties, intending to be legally bound, have duly executed this
Agreement as of the date first written above.
| EMMIS OPERATING COMPANY (“Employer”) |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Xxxxxxx X. Xxxxxxx | ||||
| Chairman of the Board and Chief Executive Officer | ||||
| XXXX X. XXXXXXX (“Executive”) |
||||
| /s/ Xxxx X. Xxxxxxx | ||||
| Xxxx X. Xxxxxxx | ||||
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EXHIBIT A
[TO BE PROVIDED]
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EXHIBIT B
Calculation of Annual Incentive Compensation – First Contract Year
Pursuant to Section 6.2, for the First Contract Year, Executive shall be entitled to a
Contract Year Bonus in an amount up to a target amount of One Hundred Thousand Dollars ($100,000)
upon the attainment of the following performance goals (the “Performance Goals”):
| Target Bonus | Performance Goal | |||||||
1. |
$ | 50,000 | International Radio Operating Income |
|||||
2. |
$ | 50,000 | Individual Performance |
|||||
Executive’s attainment of the Performance Goals shall be determined in the sole and absolute
discretion of the Compensation Committee (after reasonable consultation with Executive) based on
certain performance targets established by the Compensation Committee related to the operating
income of Employer’s International Division radio properties as reported by the Employer in its
filings with the United States Securities and Exchange Commission and/or Executive’s performance.
For purposes of this Exhibit B: (i) “International Radio Operating Income” shall be defined
as the combined operating income for all of Employer’s international radio properties; and (ii)
“Individual Performance” bonus amounts shall be awarded by the Compensation Committee in its sole
and absolute discretion. The Compensation Committee reserves the right to amend the performance
targets to the extent it deems appropriate in order to take into account any material acquisition,
disposition, reorganization, recapitalization or other material transaction involving Employer or
its properties. It is understood and agreed that the Performance Goals for the Second Contract
Year are set forth on Exhibit C.
Executive shall earn a percentage of each Contract Year Bonus in accordance with the following
scale depending upon the extent to which the Performance Goals are attained:
| Percentage of Performance Goal Attained | Percentage of Target Bonus Earned | |
115% or more
|
150% maximum | |
110%
|
125% | |
100%
|
100% | |
90%
|
70% | |
less than 90%
|
0% |
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EXHIBIT C
Calculation of Annual Incentive Compensation – Second Contract Year
Pursuant to Section 6.2, for the Second Contract Year, Executive shall be entitled to
a Contract Year Bonus in an amount up to a target amount of One Hundred Thousand Dollars ($100,000)
upon the attainment of the following performance goals (the “Performance Goals”):
| Target Bonus | Performance Goal | |||||
1. |
$ | 25,000 | International Radio Operating Income | |||
2. |
$ | 25,000 | Individual Performance | |||
3. |
$ | 25,000 | Evaluation of International Transactions | |||
4. |
$ | 25,000 | Management of International Corporate Budget | |||
Executive’s attainment of the Performance Goals shall be determined in the sole and absolute
discretion of the Compensation Committee (after reasonable consultation with Executive) based on
certain performance targets established by the Compensation Committee related to the operating
income of Employer’s International Division radio properties as reported by the Employer in its
filings with the United States Securities and Exchange Commission and/or Executive’s performance.
For purposes of this Exhibit C: (i) “International Radio Operating Income” shall be defined
as the combined operating income for all of Employer’s international radio properties; (ii)
“Individual Performance” bonus amounts shall be awarded by the Compensation Committee in its sole
and absolute discretion; (iii) “Evaluation of International Transactions” shall be defined to mean
the Compensation Committee’s evaluation, in its sole and absolute discretion, of Executive’s
ability to effectuate successful acquisitions of international radio properties during the Second
Contract Year; and (iv) “Management of International Corporate Budget” shall be defined to mean the
Compensation Committee’s evaluation, in its sole and absolute discretion, of Executive’s management
of the International Division’s corporate budget including development and related costs and
expenses. The Compensation Committee reserves the right to amend the performance targets to the
extent it deems appropriate in order to take into account any material acquisition, disposition,
reorganization, recapitalization or other material transaction involving Employer or its
properties. It is understood and agreed that the Performance Goals (and corresponding performance
targets) for the Third Contract Year shall be determined by the Compensation Committee (after
reasonable consultation with Executive) on or about the commencement of the Third Contract Year.
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Executive shall earn a percentage of each Contract Year Bonus in accordance with the following
scale depending upon the extent to which the Performance Goals are attained:
| Percentage of Performance Goal Attained | Percentage of Target Bonus Earned | |
115% or more
|
150% maximum | |
110%
|
125% | |
100%
|
100% | |
90%
|
70% | |
less than 90%
|
0% |
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