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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is effective as of March 1,
2002, by and between EMMIS OPERATING COMPANY, an Indiana corporation ("Employer"
or "Emmis"), and XXXXXX X. XXXXXX, an Indiana 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 employment with Employer.
2. Term. The term of Executive's employment shall commence on March 1,
2002, 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, 2002, and on each anniversary thereof during the Term. The term "First
Contract Year" shall refer to the period commencing on March 1, 2002, and ending
on February 28, 2003; "Second Contract Year" shall refer to the period
commencing on March 1, 2003, and ending on February 29, 2004; "Third Contract
Year" shall refer to the period commencing on March 1, 2004, and ending on
February 28, 2005; "Fourth Contract Year" shall refer to the period commencing
on March 1, 2005, and ending on February 28, 2006. It is understood and agreed
that, in the event Employer does not intend to provide Executive with a written
proposal for continued employment in the same position he is then-currently
holding upon the expiration of the Term, Employer shall provide written notice
of such fact to Executive no later than 366 days prior to the expiration of the
Term; provided, however, if Employer does not provide timely notice pursuant to
this
provision, the maximum Severance Payment to which Executive may be entitled
pursuant to the terms and conditions set forth in Section 3.4 below shall be
increased in an amount equal to 1/365th of the Base Salary for each day Employer
is late in providing such notice.
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, acquisition of substantially all of the assets or stock of
Employer, or otherwise. Executive shall report directly to Xxxxxxx X.
Xxxxxxx ("Xxxxxxx") and serve as Executive Vice President, Chief Financial
Officer and Treasurer of Employer or any entity established in connection
with a Separation Event (as defined below) as determined in the sole
discretion of management.
3.2 Duties and Authority. Executive shall have such duties, functions,
authority and responsibilities as are commensurate with the offices
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 15.10.
Notwithstanding the foregoing, in the event Employer adopts a policy
whereby Employer remunerates "inside" Directors of Emmis Communications
Corporation who are also employees of Employer, Executive shall be entitled
to receive no less remuneration than any other such Director according to
the terms and subject to the conditions of Employer's policy. 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.
3.4 Subsequent Employment by Employer. According to the terms and
subject to the conditions set forth in this Section 3.4, in the event
Employer, upon the expiration of the Term, does not offer Executive
employment with Employer whereby Executive reports directly to Smulyan as
Employer's Chief Financial Officer, or as Chief Financial Officer of any
entity established in connection with a Separation Event ("Reasonably
Acceptable Employment"), Employer shall continue to make regular payments
of Executive's Base Salary (as defined below; provided, however, that for
purposes of this Section 3.4, Executive's Base Salary shall be $535,000),
plus Auto Allowance (as defined below), plus Life and Disability Insurance
Premium (as defined below) (collectively, the "Severance Payment") for a
period of twelve (12) months immediately following Executive's termination
of employment with Employer (the "Severance Period"); provided, however,
that 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 3.4. Notwithstanding anything to the contrary contained in
this Agreement: (i) 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 under
Section 12 or 13, or (c) by Executive for any reason other than a material
breach of the terms and conditions of this Agreement by Employer (after
providing Employer with written 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; and
(ii) it is expressly understood and agreed that, in the event Executive
commences employment with a "Competitor" at any time during the Severance
Period, Executive shall no longer be entitled to receive any unpaid portion
of the Severance Payment. For purposes of this Agreement, "Competitor"
shall be defined to mean any individual or entity that owns or operates a
radio station, television station or magazine in any city in which Employer
or any of its affiliates or related entities owns, operates or has an
interest in any radio station, television station or magazine. Furthermore,
it is expressly agreed that any individual or entity that does not own or
operate a radio station, television station or magazine in any city in
which Employer or any of its affiliates or related entities owns, operates
or has an interest in any radio station, television station or magazine at
the time of commencement of Employee's employment with such individual or
entity, but subsequently acquires a radio station, television station or
magazine in such city at any time during the Severance Period, shall be
deemed a "Competitor" for purposes of this Section 3.4. 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, as provided in this Section 3.4. In
addition to the foregoing benefits, if Executive is entitled to the
Severance Payment, Employer shall also reimburse Executive for Executive's
payment of COBRA insurance premiums for a maximum of eighteen (18) months
immediately following the termination of Executive's employment; provided,
however, in the event Executive becomes eligible for medical coverage under
a subsequent employer's insurance or benefit plans, Executive shall
promptly discontinue Executive's COBRA coverage thereby terminating
Employer's obligation pursuant to this sentence.
4. Full-Time Services. Executive's services pursuant to this Agreement
shall be performed on a full-time 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 the Employer's headquarters located in
Indianapolis, Indiana. 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 of Four Hundred Thirty Five Thousand Dollars ($435,000)
(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: (i) Employer may pay a
portion of Executive's Base Salary in Shares (as defined below) pursuant to
a plan adopted for Emmis employees or for other executive-level officers of
Employer; and (ii) ten percent (10%) of any Base Salary paid pursuant to
this Agreement is being paid in consideration of Employer's exclusive
rights set forth in Section 10 of this Agreement.
6.2 Annual Incentive Compensation. For each Contract Year during the
Term, Executive shall be eligible to receive one (1) annual performance
bonus in a target amount of Three Hundred Thousand Dollars ($300,000)
(subject to withholding for applicable taxes and as otherwise required by
law and the terms and conditions set forth on Exhibit A, attached hereto
and made a part hereof) (each, a "Contract Year Bonus") to be paid after
the conclusion of each Contract Year, 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, good faith 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, Executive must be
fully performing Executive's duties and obligations as required hereunder
and shall not be in breach of any of the terms and 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 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 Contract Year are set forth on
Exhibit A.
6.3 Equity Incentive Compensation. On or about the commencement of
each Contract Year during the Term, or at any other time during each
Contract Year when Employer generally awards Options (as defined below) to
members of Employer's senior management team, Executive shall receive an
option to acquire Fifty Thousand (50,000) 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, including without limitation a
Separation Event, the number and class of Shares awarded pursuant to
Section 6.5 of this Agreement or covered by an Option granted pursuant to
this Section 6.3 (and any applicable Option exercise price) shall be
adjusted by the Compensation Committee in its sole discretion and 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. Executive hereby acknowledges Executive's receipt of an Option for
the First Contract Year on or about March 1, 2002, and the Second Contract
Year on or about March 1, 2003.
6.4 Equity Bonus. On or about the conclusion of each Contract Year
during the Term, Executive shall receive a certain number of Shares
equivalent to the dollar amounts set forth below on the date of grant
(subject to withholding for applicable taxes and as otherwise required by
law) (the "Equity Bonus"), the exact number of which shall be determined by
the Valuation Formula:
First Contract Year: $100,000
Second Contract Year: $102,908
Third Contract Year: $106,584
Fourth Contract Year: $110,380
It is understood and agreed that Executive shall be eligible to receive an
Equity Bonus only if Executive is fully performing Executive's duties and
obligations as required hereunder and is not in breach of any of the terms and
conditions of this Agreement. In the event Executive's employment is terminated
either: (a) by Employer under Section 11.1; or (b) by Executive for any reason
other than for Good Reason under Section 11.4 or pursuant to Exhibit B (attached
hereto and made a part hereof), or 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), Executive
shall promptly repay Employer the actual pre-tax dollar value of the Shares
received by Executive on the date(s) of grant pursuant to this Section 6.4
within one hundred twenty (120) days immediately following the termination of
Executive's employment.
6.5 Stock Grant. On or about February 28, 2006, Executive shall
receive Thirty Thousand (30,000) Shares (the "Bonus Shares"); provided,
that (i) this Agreement is in effect on February 28, 2006 and has not been
terminated for any reason; and (ii) Executive has fully performed all of
Executive's duties and obligations under this Agreement throughout the Term
and is not in breach of any of the terms and conditions of this Agreement.
Executive understands and agrees that Employer shall have the right, in its
sole and absolute discretion, to pay to Executive the value of the Bonus
Shares (according to the Valuation Formula) in cash in lieu of granting
Executive the Bonus Shares.
6.6. Auto Allowance. During the Term, Executive shall receive a
monthly auto allowance ("Auto Allowance") in the amount of One Thousand
Dollars ($1,000) (subject to withholding for applicable taxes and as
otherwise required by law) consistent with Employer's policy or practice
regarding such allowances, as such policy or practice may be changed or
eliminated from time to time during the Term in Employer's sole discretion;
provided, however, that in no event shall the amount paid to Executive
under this Section 6.6 be reduced.
6.7 Life and Disability Insurance. Each Contract Year during the Term,
Employer agrees to reimburse Executive in an amount not to exceed Five
Thousand Dollars ($5,000) (the "Life and Disability Insurance Premium") for
the annual premium associated with Executive's purchase of a term life and
disability insurance policy or policies on the life of Executive. Executive
shall be entitled to freely select and change the beneficiary or
beneficiaries under such policy or policies. Notwithstanding anything to
the contrary contained in this Agreement, Employer's obligations under this
Section 6.7 are expressly contingent upon Executive providing required
information and taking all necessary actions required of Executive in order
to obtain and maintain the subject policy or policies, including without
limitation, passing any required physical examinations.
6.8 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 will 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 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 Executive
understands 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.
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, 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 plans,
budgets and any other such materials (regardless of form or character)
that Executive received from or developed on behalf of Employer in
connection with Executive's employment. 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 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.
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 an
entity with which Executive is associated) 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 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 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 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, Employer shall be
entitled to injunctive relief enforcing Section 10.1 to the extent
reasonably necessary to protect Employer's legitimate interests,
without posting bond or other security. If Executive violates Section
10.1 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 set forth therein. Accordingly, the obligations set
forth in Sections 10.1 shall be deemed to have the duration set forth
therein, computed from the date such relief is 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.
10.3 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
thirty (30) days after receipt of the Preliminary Notice to respond in
writing. If following the expiration of such thirty (30) 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
Section 6.4, 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:
(a) Pay to Executive all 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 obligations under this Agreement (or any duties
assigned to Executive consistent with the terms of this Agreement) or abide
by any applicable policy of Employer, and continuation of such breach after
written notice and the expiration of a ninety (90) 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 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, or the bringing of charges against Executive for,
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 the licenses 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 or individual; (vi) sexual or
other prohibited harassment of others; (vii) unauthorized disclosure or use
of proprietary or confidential information, as described more fully in
Section 9.1; and (viii) any action which brings Employer or any of
Employer's subsidiaries or affiliates into public disrepute, contempt,
scandal or ridicule.
11.4 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 11.4. For purposes of this Agreement, "Good Reason" shall be
defined to mean any situation or circumstance where, following a Separation
Event, Executive (a) is no longer Executive Vice President, Chief Financial
Officer and Treasurer of Employer or any entity established in connection
with such Separation Event, or (b) no longer reports directly to Smulyan
with respect to at least one of the following two divisions: (i) Emmis
radio division; or (ii) Emmis television division (each, a "Division";
collectively, the "Divisions"), or any entity established in connection
with a Separation Event. In such an event: (i) Executive may terminate this
Agreement by providing written notice to Employer, which notice shall be
effective one hundred twenty (120) days after Employer's receipt of such
notice; and (ii) Executive and Employer shall have no further obligations
or liabilities hereunder except as specifically provided in the next
sentence. If Executive terminates this Agreement for Good Reason, as
permitted in this Section 11.4, Executive's obligations under Sections 9
and 10 shall survive the termination of this Agreement and Employer shall,
not later than two (2) weeks after the termination date, pay to Executive a
one-time, lump sum payment equal to the present cash value of all unpaid
compensation owed to Executive for the remainder of the Term pursuant to
Section 6 of this Agreement (except the equity incentive compensation set
forth in Section 6.3, which compensation shall not be included in the
calculation of the lump sum payment), plus the Severance Payment described
in Section 3.4. For purposes of calculating the lump sum payment described
in the immediately preceding sentence, the annual incentive compensation
shall be determined to be Three Hundred Thousand Dollars ($300,000) for
each applicable Contract Year remaining during the Term. All amounts paid
pursuant to this Section 11.4 shall be subject to withholding for
applicable taxes and as otherwise required by law. For purposes of this
Agreement, "Separation Event" shall be defined as any event whereby
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.
11.5 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 to be executed by the parties in a
form acceptable to Employer and thereafter attached to this Agreement as
Exhibit B. "Change in Control" shall have the meaning ascribed to it in
Exhibit B. Notwithstanding anything to the contrary contained herein or in
Exhibit B, a Change in Control shall be deemed not to have occurred if,
immediately following a Separation Event or the transaction or transactions
described in the definition of Change of Control in Exhibit B: (i) Smulyan
is Chairman or Chief Executive Officer of Employer or any successor
thereto, including without limitation, either Division or any entity
established as a result of a Separation Event (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.
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 reasonable control, Executive shall have been unable to
perform Executive's duties hereunder as reasonably determined by a
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 also 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 unpaid Base Salary with respect to any 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.
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 Executive to employment hereunder for the balance
of the original Term. 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, including without limitation, any
policy contemplated by Section 6.7 of this Agreement.
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 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.
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, including without limitation, any policy contemplated by Section
6.7 of this Agreement.
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 such termination that remain unpaid as of Executive's date of death
shall be paid to Executive's estate or designated beneficiary. It is
understood and agreed that if Executive dies while receiving installments
of the Severance Payment, Employer shall pay the remaining installments of
the Severance Payment for the remainder of the Severance Period after
Executive's date of death 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 sent by prepaid
telegram, 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.
With a copy to:
Xxxx X. Xxxxxx, Esq.
00000 Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
(ii) If to Executive, to Executive's address on the personnel
records of Employer, with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Ice Xxxxxx
Xxx Xxxxxxxx Xxxxxx, Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
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 relating 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 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, including without
limitation, the employment agreement between the parties effective as of
March 1, 1999.
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,
or any third party by way of merger, corporate reorganization, a Separation
Event, acquisition of substantially all of the assets or stock of Employer,
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 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 (collectively, 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.
15.9 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.
15.10 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 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.
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
XXXXXX X. XXXXXX
("Executive")
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
EXHIBIT A
Calculation of Annual Incentive Compensation
Pursuant to Section 6.2, for the first Contract Year during the Term,
Executive shall be entitled to a Contract Year Bonus in a target amount of up to
Three Hundred Thousand Dollars ($300,000) upon the attainment of the following
performance goals (the "Performance Goals"):
Target Bonus Performance Goal
1. $120,000 Domestic Radio Broadcast Cash Flow Target
2. $90,000 Television Broadcast Cash Flow Target
3. $90,000 Discretionary
Executive's attainment of the Performance Goals shall be determined in the
sole and absolute discretion of the Compensation Committee based on certain
performance targets established by the Compensation Committee related to the
broadcast cash flow of the Divisions or other operating units of Employer as
reported by the Employer in its filings with the United States Securities and
Exchange Commission. For purposes of this Exhibit A, "Domestic Radio Broadcast
Cash Flow" shall be defined as the combined broadcast cash flow for all of
Employer's domestic radio stations. "Television Broadcast Cash Flow" shall be
defined as the combined broadcast cash flow for all of Employer's television
stations. Discretionary 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 Goals 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 each subsequent Contract Year during the Term, and the corresponding
performance targets, shall be determined by the Compensation Committee on or
about the commencement of each respective Contract Year.
Executive shall earn a percentage of each Target 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
105% or more 120% maximum
100% 100%
95% 80%
90% 70%
less than 90% 0%
EXHIBIT B
Change of Control Agreement
