Exhibit 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (“Agreement”) is effective as of the date of
execution, by and between EMMIS OPERATING COMPANY, an Indiana company
(“Employer”), and JEFFREY H. SMULYAN, an Indiana resident (“Executive”).
RECITALS
WHEREAS, Employer and its affiliates are engaged in the ownership and operation
of certain radio stations, magazines, and related operations (together, the
“Emmis Group”); and
WHEREAS, Employer desires to employ 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 and Duties. 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. During the Term (as defined
herein), Executive shall serve as Chairman of the Board and Chief Executive
Officer. Executive shall have such duties, functions, authority and
responsibilities as are commensurate with such position and as are assigned by
the Board of Directors (the “Board”) of Emmis Communications Corporation
(“ECC”). Executive’s services hereunder shall be performed on an exclusive,
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
business activities without the prior written consent of Employer. Executive
shall be permitted to serve on the board of charitable or civic organizations so
long as such services: (i) are approved in writing in advance by Employer; and
(ii) do not interfere with Executive’s duties and obligations under this
Agreement. It is understood and agreed that the location for the performance of
Executive’s duties and services pursuant to this Agreement shall be the offices
designated by Employer in Indianapolis, Indiana. Employer shall use its best
efforts to cause Executive to be a member of the Board (a “Director”) throughout
the Term and shall include Executive in the management slate for election as a
Director at every annual shareholders’ meeting during the Term at which
Executive’s term as a Director would otherwise expire. Executive shall serve as
a Director without additional remuneration (unless Employer elects to remunerate
“inside directors”) but shall be entitled to the benefit of indemnification
pursuant to the terms of Section 15.11. Executive shall also serve without
additional remuneration as a director and/or officer of one (1) or more of
Employer’s subsidiaries or affiliates if appointed to such position(s) by the
Board and shall also be entitled to the benefit of indemnification pursuant to
the terms of Section 15.11.

 

 

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2. Term. The term of this Agreement shall be for a three (3) year period
commencing on March 1, 2010, unless earlier terminated or extended in accordance
with the provisions set forth in this Agreement (the “Term”). Unless Executive
or Employer provides the other written notice prior to December 31, 2012 (or any
December 31 thereafter) of such party’s election not to allow the Agreement to
automatically renew, the Agreement shall automatically renew for successive one
(1) year periods following the initial Term. Each year commencing on March 1 and
ending on the last day of February during the Term shall be a “Contract Year.”
Upon failure of either party to make the foregoing election by December 31, the
Term of this Agreement shall be deemed renewed for the Contract Year commencing
the following March 1 and, as used throughout this Agreement, “Term” shall
include such additional Contract Year.
3. Base Salary; Signing Bonus; Auto Allowance. Upon the terms and subject to the
conditions set forth in this Agreement, Employer shall pay or cause to be paid
to Executive an annualized base salary (the “Base Salary”), payable pursuant to
Employer’s customary payroll practices and subject to applicable taxes and
withholdings as required by law, for each Contract Year, as set forth below:

         
First Contract Year:
  $ 792,259  
 
       
Second Contract Year:
  $ 825,000  
 
       
Third Contract Year:
  $ 850,000  

In the event that the Term automatically extends by additional one (1) year
periods pursuant to Section 2 above, the Base Salary for each such period shall
be the previous Contract Year’s Base Salary plus Twenty-Five Thousand Dollars
($25,000). For purposes of clarity only, there will be no additional signing
bonus or Performance Units (defined below) in connection with any such automatic
extension.
Except as otherwise set forth herein, Employer shall have no obligation to pay
Executive the Base Salary for any periods during which Executive fails or
refuses to render services pursuant to this Agreement (except that Executive
shall not be considered to have failed or refused to render services during any
periods of Executive’s incapacity or absence from work due to sickness or other
approved leave of absence in accordance with the Company’s policies, subject to
Employer’s right to terminate Executive’s employment pursuant to Section 10) or
for any period following the expiration or termination of this Agreement. In
addition, it is understood and agreed that Employer may, at its sole election,
pay up to ten percent (10%) of Executive’s Base Salary in Shares (as defined
below); provided that: (i) the Shares are registered with the U.S. Securities
and Exchange Commission (the “SEC”) on a then-effective Form S-8 or other
applicable registration statement and are issued without restriction on resale
(and further provided that the Shares are listed on a securities exchange or
over-the-counter market, which does not include listing on the “pink sheets,” at
the time of issuance), subject to any restrictions on resale under Employer’s
insider trading policy or applicable federal and state law; and (ii) the
percentage of Executive’s Base Salary payable in Shares shall be consistent
with, and the exact number of Shares to be awarded to Executive shall be
determined in the same manner as, that utilized for other senior management
level employees.

 

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In addition to the foregoing, on or about the date of execution of this
Agreement, Executive shall receive a one-time, lump sum signing bonus in the
amount of Two Hundred Thousand Dollars ($200,000), subject to withholding for
applicable taxes and as otherwise required by law (the “Signing Bonus”);
provided, however, in the event of a termination of Executive’s employment by
Employer for Cause (defined below) or termination of Executive’s employment by
Executive without Good Reason (defined below), Executive shall immediately repay
the Signing Bonus to Employer.
During the Term, Executive shall receive a monthly auto allowance in the amount
of Two Thousand Dollars ($2,000) (subject to withholding and applicable taxes as
required by law) consistent with Employer’s policy or practices regarding such
allowances, as such policy or practices may be amended from time to time during
the Term in Employer’s sole and absolute discretion; provided, however, that in
no event shall the auto allowance amount paid to Executive pursuant to this
provision be reduced.
4. Incentive Compensation.
4.1 Bonus Amounts. Upon the terms and subject to the conditions set forth in
this Section 4, each Contract Year Executive shall be eligible to receive one
(1) performance bonus in a target amount equivalent to One Hundred Twenty-Five
percent (125%) of Executive’s Base Salary, and the exact amount of such
performance bonus, if any, shall be determined on the basis of Executive’s
attainment of certain performance and financial goals to be determined by
Employer, from time to time, in its sole and absolute discretion.
4.2 Payment of Bonus Amounts. Employer shall pay or cause to be paid to
Executive the bonus amounts, if earned according to the terms and conditions set
forth in Section 4.1; provided that, on the final day of the applicable
measuring period for such bonus: (i) this Agreement is in full force and effect
and has not been terminated for any reason (other than due to a material breach
of this Agreement by Employer); and (ii) Executive is fully performing all of
Executive’s material duties and obligations pursuant to this Agreement and is
not in breach of any of the material terms and conditions of this Agreement
(provided that Executive’s failure or inability to perform his duties and
obligations because of his incapacity or death (pursuant to Section 10 or 11),
including during leaves of absence, shall not be considered a breach of this
Agreement or non-performance under this provision). In addition, it is
understood and agreed that Employer may, at its sole election, pay any bonus
amounts earned by Executive pursuant to Section 4.1 in cash, loan foregiveness
or Shares; provided that the

 

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Shares evidencing any portion thereof are registered with the SEC on a
then-effective Form S-8 or other applicable registration statement and are
issued without restriction on resale (and further provided that the Shares are
listed on a securities exchange or over-the-counter market, which does not
include listing on the “pink sheets,” at the time of issuance), subject to any
restrictions on resale under Employer’s insider trading policy and applicable
federal and state law. In the event that Employer elects pursuant to this
Section 4.2 to pay any bonus amounts in Shares, the percentage of such bonus
amounts payable in Shares shall be consistent with, and the exact number of
Shares to be awarded to Executive shall be determined in the same manner as,
that utilized for other senior management level employees. Any bonus amounts
earned by Executive pursuant to the terms and conditions of Section 4.1 shall be
paid after the end of the fiscal year for which the bonus is earned (but in no
event later than ninety (90) days after the end of such fiscal year). Any and
all bonus amounts payable by Employer to Executive pursuant to this Section 4
shall be subject to applicable taxes and withholdings as required by law.
Notwithstanding any other provisions of this Agreement, any bonus pursuant to
Section 4.1 shall be paid to Executive by the earlier of the date specified
herein or the date that is no later than two-and-a-half months after the end of
either Employer’s or Executive’s first taxable year (whichever period is longer)
in which any such bonus is no longer subject to a substantial risk of forfeiture
for purposes of Section 409A.
4.3 Equity Incentive Compensation. At such time or times following each Contract
Year when Employer grants equity incentive compensation to its senior management
level employees (but in no event later than ninety (90) days after the previous
Contract Year), Executive shall be granted an option (“Option”) to acquire One
Hundred Fifty Thousand (150,000) shares of Class A Common Stock of ECC (the
“Shares”). For purposes of clarity only, the first Option granted hereunder
shall be granted within ninety (90) days following February 28, 2011; and
Executive shall not be entitled to any Option grant during the first Contract
Year.
Each Option granted pursuant to this Section 4.3 shall: (i) have an exercise
price per share equal to the Fair Market Value of the stock on the date of grant
(as Fair Market Value is defined in the applicable Equity Compensation Plan, or
any subsequent equity compensation or similar plan adopted by ECC and generally
used to make equity-based awards to senior management level employees of the
Emmis Group (the “Plan”)); (ii) notwithstanding any other provisions in this
Agreement, be granted according to the terms and subject to the conditions of
the Plan; (iii) be evidenced by a written grant agreement containing such terms
and conditions as are generally provided for other senior management level
employees of the Emmis Group; and (iv) be exercisable for Shares with such
restrictive legends on the certificates in accordance with the Plan and
applicable securities laws. Employer shall use reasonable efforts to register
the Shares subject to the award on a Form S-8 or other applicable registration
statement at such time as the Shares are issued to Executive. Each Option
granted pursuant to this Section 4.3 is intended to satisfy the regulatory
exemption from the application of Section 409A for certain options for service
recipient shares, and it shall be administered accordingly.

 

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4.4 Performance Units. Employer will grant to Executive Performance Units under
the Emmis Communications Corporation 2004 Equity Compensation Plan, as amended
(the “Performance Units”), fully intending that the Performance Units qualify as
performance-based compensation under Section 162(m) of the Internal Revenue Code
to the maximum extent permitted by applicable law. The Performance Units will be
granted on the date of execution of this Agreement, March 1, 2010 and June 1,
2010 in an amount (on each grant date) equal to Two Hundred Thirty-Three
Thousand Three Hundred Thirty-Three Dollars and Thirty-Three Cents ($233,333.33)
divided by the Fair Market Value of a Share on the relevant grant date (each,
“Quarterly Performance Units”). Any fractional Performance Units shall be
rounded up to the nearest full share. The measurement periods for each of the
Quarterly Performance Units shall be each of the fiscal quarters ended
February 28, 2010, May 31, 2010 and August 31, 2010 (each, a “Measurement
Period”). If, upon completion of a Measurement Period, the Performance Goal
(defined below) has been met for that Measurement Period, Executive shall be
paid in respect of the Quarterly Performance Units on the day following delivery
of Employer’s compliance statement to its senior lender under the Credit
Agreement (defined below) for the relevant Measurement Period (each, a
“Quarterly Performance Unit Payment”). The Performance Goal for each Measurement
Period is whether or not Employer’s Consolidated EBITDA as of the end of such
Measurement Period exceeds the minimum amount required for continued compliance
under the Credit Agreement (defined below) as of the end of such Measurement
Period (each, a “Performance Goal”). The Quarterly Performance Unit Payment for
each Measurement Period shall be one hundred percent (100%) if the Performance
Goal is attained and zero percent (0%) if the Performance Goal is not attained.
The Compensation Committee of the Board (the “Comp Committee”) shall determine
whether or not the Performance Goal is attained using “Consolidated EBITDA” as
defined in Employer’s Amended and Restated Revolving Credit and Term Loan
Agreement, as amended through the date hereof (the “Credit Agreement”) for the
relevant Measurement Period. If the Performance Goal is achieved, the Comp
Committee may elect, in its sole discretion, to make the Quarterly Performance
Unit Payment in cash, Shares or any combination of cash and Shares. In the event
that the Comp Committee elects to pay some or all of any Quarterly Performance
Unit Payment in Shares, the number of Shares to be awarded shall be Two Hundred
Thirty-Three Thousand Three Hundred Thirty-Three Dollars and Thirty-Three Cents
($233,333.33) less any amount paid in cash, the result of which shall be divided
by the Fair Market Value of a Share on the relevant payment date.
Notwithstanding anything to the contrary in this Section 4.4, Employer shall
only be required to make each Quarterly Performance Unit Payment to the extent
permitted under the Credit Agreement. In the event that any Quarterly
Performance Unit Payment (whether in cash, Shares or any combination of cash and
Shares) would cause a default under the Credit Agreement, Employer shall pay
Executive the maximum amount possible under the Credit Agreement without causing
a default thereunder; and Executive shall have no further right to any unpaid
amounts attributable to such Quarterly Performance Unit Payment.

 

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In the event of a termination of Executive’s employment by Employer for Cause or
termination of Executive’s employment by Executive without Good Reason,
Executive shall immediately repay any and all Quarterly Performance Unit
Payments previously paid to Executive by Employer.
5. Expenses; Travel. Employer shall pay or reimburse Executive for all
reasonable expenses actually incurred or paid by Executive during the Term in
connection with the performance of Executive’s services hereunder upon
presentation of expense statements, vouchers or other supporting documentation
as Employer may require of Executive; provided such expenses are otherwise in
accordance with Employer’s policies. Executive shall undertake such travel as
may be required in the performance of Executive’s duties pursuant to this
Agreement. Under no circumstances shall the Employer’s reimbursement for
expenses incurred in a calendar year be made later than the end of the next
following calendar year; provided, however, this requirement shall not alter the
Employer’s obligation to reimburse Executive for eligible expenses on a current
basis.
6. Fringe Benefits.
6.1 Vacation and Other Benefits. Each Contract Year, Executive shall be entitled
to Twenty-Five (25) business days of paid vacation in accordance with Employer’s
applicable policies and procedures for senior management level employees.
Executive shall also be eligible to participate in and receive the fringe
benefits generally made available to other senior management level employees of
Employer in accordance with and to the extent that Executive is eligible under,
the general provisions of Employer’s fringe benefit plans or programs; provided,
however, 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.
6.2 Life and Disability Insurance. Each Contract Year, Employer agrees to
reimburse Executive in an amount not to exceed Ten Thousand Dollars ($10,000)
for the annual premium associated with Executive’s purchase or maintenance of a
life or disability insurance policy or other insurance policies on the life, or
related to the care, 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 6.2 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.
Additionally, with respect to that certain life insurance policy issued by Pruco
Life Insurance Company (number V1001742) and held by the Jeffrey H. Smulyan
Irrevocable Trust (the “Policy”), Executive represents and warrants that the
Policy is self-sustaining. Executive acknowledges that neither Employer nor any
member of the Emmis Group has any obligation to make any premium or other
payments in connection with the Policy and that Employer will not make any such
additional premium payments other than as specifically set forth in this
Agreement. The parties acknowledge that the Split Dollar Life Insurance
Agreement (dated November 2, 1997) and corresponding Limited Collateral
Assignment (dated November 2, 1997), and all of the parties’ respective rights
and obligations pursuant to such agreements, shall remain unaffected and in full
force and effect.

 

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7. Confidential Information.
7.1 Non-Disclosure. Executive acknowledges that certain information concerning
the business of the Emmis Group and its members (including but not limited to
trade secrets and other proprietary information) is of a highly confidential
nature, and that, as a result of Executive’s employment with Employer prior to
and during the Term, Executive shall receive and develop, proprietary and
confidential information concerning the business of Employer and/or other
members of the Emmis Group which, if known to Employer’s competitors, would
damage Employer, other members of the Emmis Group and their respective
businesses. Accordingly, Executive hereby 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 and its
representatives, or as directed in writing by Employer), any information or
knowledge concerning the business of Employer or any other member of the Emmis
Group which is not generally available to the public other than through the
activities of Executive. Executive further agrees that, immediately upon
termination of Executive’s employment for any reason, Executive shall promptly
surrender to Employer all documents, brochures, plans, strategies, writings,
illustrations, client lists, price lists, sales, financial or marketing plans,
budgets and any and all other materials (regardless of form or character) which
Executive received from or developed on behalf of Employer or any member of the
Emmis Group in connection with Executive’s employment prior to or during the
Term. Executive acknowledges that all such materials shall remain at all times
during the Term and thereafter 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.
7.2 Injunctive Relief. Executive acknowledges that Executive’s breach of this
Section 7 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 7 have been
specifically negotiated and carefully written to prevent such irreparable harm
and damage. Accordingly, if Executive breaches this Section 7, Employer shall be
entitled to injunctive relief enforcing this Section 7 to the extent reasonably
necessary to protect Employer’s legitimate interests, without posting bond or
other security.

 

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8. Non-Interference; Injunctive Relief.
8.1 Non-Interference. During the Term, and for a period of two (2) years
immediately following the expiration or early termination of the Term for any
reason, 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: (i) on-air talent of any member of the Emmis Group; or (ii) any
other employee of any member of the Emmis Group. Without limiting the generality
of the foregoing, Executive specifically agrees that during such time period,
neither Executive nor any entity with which Executive is associated shall
solicit, hire or engage any on-air talent or other employee of any member of the
Emmis Group or any other employee of any member of the Emmis Group to provide
services for Executive’s benefit or for the benefit of any other business or
entity, or solicit or encourage them to cease their employment with any member
of the Emmis Group for any reason.
8.2 Injunctive Relief. Executive acknowledges and agrees that the provisions of
this Section 8 have been specifically negotiated and carefully worded in
recognition of the opportunities which will be afforded to Executive by Employer
by virtue of Executive’s continued association with Employer during the Term,
and the influence that Executive has and will continue to have over Employer’s
employees, customers and suppliers. Executive further acknowledges that
Executive’s breach of Section 8.1 herein 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 8 have been specifically negotiated and carefully written to
prevent such irreparable harm and damage. Accordingly, if Executive breaches
Section 8.1, Employer shall be entitled to injunctive relief enforcing Section
8.1, to the extent reasonably necessary to protect Employer’s legitimate
interests, without posting bond or other security. Notwithstanding anything to
the contrary contained in this Agreement, if Executive violates Section 8.1, 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 noninterference set forth therein. Accordingly,
the obligations set forth in Section 8.1 shall 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 obligation(s) by Executive.
8.3 Construction. Despite the express agreement herein between the parties, in
the event that any provisions set forth in this Section 8 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 8 shall be
interpreted to extend only to the maximum extent as to which it may be
enforceable, and that this Section 8 shall be severable into its component
parts, all as determined by such court or tribunal.

 

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9. Termination of Agreement by Employer for Cause.
9.1 Termination. Employer may terminate this Agreement and Executive’s
employment hereunder for Cause (as defined in Section 9.3 below) in accordance
with the terms and conditions of this Section 9. Following a determination by
Employer that Executive should be terminated for Cause, Employer shall give
written notice (the “Preliminary Notice”) to Executive specifying the grounds
for such termination, and Executive shall have thirty (30) days after receipt of
the Preliminary Notice to respond to Employer 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”). Notwithstanding Section 9.5, a termination by
Executive pursuant to Section 9.5 shall be deemed a termination by Employer for
Cause to which this Section 9.1 shall apply if such termination by Executive
occurs after delivery of a Preliminary Notice and Executive is thereafter
terminated for Cause as specified in such Preliminary Notice.
9.2 Effect of Termination. In the event of termination for Cause
as provided in Section 9.1 above:
(i) Executive shall have no further obligations or liabilities hereunder except
Executive’s obligations under Sections 7 and 8, which shall survive the
termination of this Agreement, and except for any obligations arising in
connection with any conduct of Executive described in Section 9.3;
(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 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 bonus amounts which have been earned on or prior to the
termination date pursuant to Section 4, if any, but which remain unpaid as of
the termination date.

 

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9.3 Definition of Cause. For purposes of this Agreement, “Cause” shall be
defined to mean any of the following: (i) Executive’s failure, refusal or
neglect to perform any of Executive’s material duties or obligations under this
Agreement (or any material duties assigned to Executive consistent with the
terms of this Agreement) or abide by any applicable policy of Employer, or
Executive’s breach of any material term or condition of this Agreement, and
continuation of such failure, refusal, neglect, or breach after written notice
and the expiration of a ninety (90) day cure period; provided, however, that it
is not the parties’ intention that the 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 9.3, 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
and an opportunity to cure; (ii) commission of any felony or any other crime
involving an act of moral turpitude which is harmful to Employer’s business or
reputation; (iii) Executive’s action or omission, or knowing allowance of
actions or omissions, which are in violation of any law or any of the rules or
regulations of the Federal Communications Commission (the “FCC”), or which
otherwise jeopardize any of the licenses granted to Employer or any member of
the Emmis Group 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 trade secrets or
proprietary or confidential information, as described more fully in Section 7.1;
(viii) any action which brings Employer or member of the Emmis Group into public
disrepute, contempt, scandal or ridicule, and which is harmful to Employer’s
business or reputation; and (ix) any matter constituting cause under applicable
laws. For purposes of clarity, neither disability nor death (as set forth in
Sections 10 and 11) shall qualify as “Cause” hereunder.
9.4 Termination by Employer Without Cause. Notwithstanding anything to the
contrary contained in this Agreement, Employer may, by action of the Board,
terminate this Agreement and Executive’s employment hereunder at any time during
the Term for any reason. In the event the Board elects to terminate Executive’s
employment pursuant to this provision: (i) such termination shall be effective
immediately upon delivery of written notice of such termination to Executive;
(ii) Executive shall have no further obligations or liabilities hereunder,
except Executive’s obligations under Sections 7 and 8, which shall survive the
termination of this Agreement; and (iii) Employer shall have no further
obligations or liabilities except to pay to Executive those amounts and benefits
that would otherwise be payable to Executive in the event of a “Qualifying
Termination” (as that term is defined in the CIC Agreement (defined below)),
except the amounts calculated pursuant to Section 4(a)(ii) of the CIC Agreement
shall be one and one-half (1.5) times (i) Executive’s highest annual rate of
Base Salary during the 36-month period immediately prior to Executive’s date of
termination and (ii) Executive’s highest annual incentive bonus earned from
Employer (and/or its affiliates) during the last three (3) fiscal years of
Employer immediately preceding Executive’s date of termination (collectively,
the “Severance Payment”), rather than the three (3) times multiple provided in
Section 4(a)(ii) of the CIC Agreement.

 

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9.5 Termination by Executive for Good Reason. Executive may terminate this
Agreement and Executive’s employment hereunder at any time during the Term for
“Good Reason”, such termination to be effective sixty (60) days after Executive
provides written notice thereof to the Board. For purposes of this provision,
“Good Reason” shall be defined to mean either: (a) Employer’s breach of any of
the material terms of this Agreement (after written notice of such breach from
Executive and a reasonable opportunity to cure); or (b) any diminution in
Executive’s duties or authority by the Board without Executive’s consent,
including without limitation the assignment to Executive of any duties,
functions or responsibilities inferior to the duties, functions, authority or
responsibilities contemplated in Section 1 above. In the event of a termination
for Good Reason by Executive, on the effective date of such termination:
(i) Executive shall have no further obligations or liabilities hereunder, except
Executive’s obligations under Sections 7 and 8, which shall survive the
termination of this Agreement; and (ii) Employer shall have no further
obligations or liabilities except to pay to Executive the Severance Payment.
9.6 Employer Election not to Renew. Notwithstanding anything to the contrary
contained herein, in the event that, subject to its obligations under the CIC
Agreement, Employer elects not to renew this Agreement according to its terms
for any Contract Year after February 28, 2013 and does not offer Executive
employment pursuant to a written employment agreement on substantially similar
to those contained herein (which shall include without limitation the same
title, duties, Base Salary, incentive, equity and other compensation (not
including signing bonus or Performance Units) in effect at expiration of the
Term), and Executive terminates employment, such election shall be considered a
termination by Employer other than for Cause for all purposes under the CIC
Agreement and hereunder, including without limitation Section 9.4 hereof. If
Employer elects not to renew this Agreement according to its terms for any
Contract Year after February 28, 2013, any offer of subsequent employment made
by Employer to Executive shall be made in the form of a proposed written
agreement and shall be made no later than thirty (30) days after the election
not to renew is given.
10. Termination of Agreement by Employer for Incapacity.
10.1 Termination. If Executive shall become incapacitated (as defined in the
Employer’s employee handbook or, if that is not applicable, as reasonably
determined by Employer), Employer shall continue to compensate Executive under
the terms of this Agreement without diminution and otherwise without regard to
such incapacity or nonperformance of duties until Executive has been
incapacitated for a cumulative period of six (6) months, at which time Employer
may, in its sole discretion, elect to terminate Executive’s employment. The date
that Executive’s employment terminates pursuant to this Section is referred to
herein as the “Incapacity Termination Date.”

 

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10.2 Obligations after Termination. Executive shall have no further obligations
or liabilities hereunder after an Incapacity Termination Date except Executive’s
obligations under Sections 7 and 8 that shall survive the termination or
expiration of this Agreement. Employer shall, not later than two (2) weeks after
an Incapacity Termination Date, pay to Executive those amounts described in
Section 9.2(ii); provided, however, that in the event an Incapacity 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
bonus amount for the Contract Year during which the Incapacity Termination Date
occurs, such amount to be determined in the sole discretion of Employer.
Employer shall have no further obligations or liabilities hereunder following an
Incapacity Termination Date except those set forth in the next sentence. For a
period of five (5) years following an Incapacity Termination Date, Employer
shall pay to Executive, according to Employer’s customary payroll practices, an
amount equal to seventy five percent (75%) of Executive’s then-current Base
Salary (subject to withholding for applicable taxes and as otherwise required by
law). It is understood and agreed that (i) the foregoing payment obligation
shall be inclusive of any benefits received by Executive pursuant to any
applicable group disability or similar policy maintained by Employer for the
benefit of its employees; (ii) Employer may elect (but shall not be obligated)
to insure its payment obligations hereunder; (iii) Employer shall not be
entitled to an offset as a result of any disability benefits received by
Executive in connection with any private disability insurance policy purchased
by Executive; and (iv) Employer’s payment obligation hereunder shall terminate
in the event that Executive fully recovers from such Incapacity.
11. Death of Executive.
11.1 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 11.2 below which shall survive such termination.
11.2 Compensation. Employer shall, not later than two (2) weeks after
Executive’s date of death, pay to Executive’s estate or designated beneficiary
or beneficiaries those amounts described in Section 9.2(ii); 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 bonus
amount for the Contract Year during which Executive’s death occurs, such amount
to be determined in the sole discretion of Employer. Additionally, Employer
shall make a one-time, lump sum payment in an amount equal to one (1) year of
Executive’s then-current Base Salary (subject to withholding for applicable
taxes and as otherwise required by law). Amounts payable pursuant to this
Section 11 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 6.2 of this Agreement. In the event that Executive dies after
termination of this Agreement pursuant to Section 9 or 10, 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.

 

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12. Section 409A. This Agreement is intended to comply with Internal Revenue
Code Section 409A(a)(2)(B)(i) and the regulations thereunder (collectively,
“Section 409A”), and it is intended that no amounts payable hereunder shall be
subject to tax under Section 409A. Employer shall use commercially reasonable
efforts to comply with Section 409A with respect to payment of benefits
hereunder. For purposes of the Agreement, “termination of employment,”
“terminates employment,” or any variation of such term shall mean “separation
from service” within the meaning of Section 409A.
13. Adjustments for Changes in Capitalization of Employer. In the event of any
change in Employer’s outstanding Shares during the Term by reason of any
reorganization, recapitalization, reclassification, merger, stock split, reverse
stock split, stock dividend, asset spin-off, share combination, consolidation,
or other event, the number and class of Shares and/or Options awarded pursuant
to Section 4 (and any applicable Option exercise price) shall be adjusted by the
Comp Committee in its sole and absolute discretion and, if applicable, in
accordance with the terms of the Plan and the Option agreement evidencing the
grant of the Option. The determination of the Comp Committee shall be conclusive
and binding. All adjustments pursuant to this Section shall be made in a manner
that does not result in taxation to the Executive under Section 409A.
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 made as of: (a) the date that is the next date upon which an
overnight delivery service (Federal Express, UPS or DHL only) will make such
delivery, if sent via such overnight delivery service, first-class, postage
prepaid, or (b) the date such delivery is made, if delivered in person to the
notice party specified below. Such notice shall be delivered 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
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204
Attn: Legal Department
With a copy to:
Emmis Communications Corporation
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204
Attn: CFO and/or COO

 

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(ii) If to Executive, to Executive at Executive’s address in the personnel
records of Employer.
15. Miscellaneous.
15.1 Governing Law. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of Indiana without regard to its
conflict of law principles.
15.2 Payment Delays Required by Section 409A. To the extent required by
Section 409A, if Executive is a “specified employee” for purposes of such
Section, payments on account of Executive’s separation from service shall be
delayed to the earliest date permissible under Section 409A.
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 and conditions of this Agreement.
15.4 Entire Agreement. This Agreement shall supersede and replace, in all
respects, any prior employment agreement entered into between the parties and
any such agreement shall immediately terminate and be of no further force or
effect. For purposes of the preceding sentence, any change in control,
restricted stock, option, and other benefits-related agreement shall not
constitute a “prior employment agreement.”
15.5 Assignment. This Agreement, and Executive’s rights and obligations
hereunder, may not be assigned by Executive to any third party; provided,
however, that Executive may designate pursuant to Section 15.7 one (1) 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 other member of the Emmis Group or to any successor
or assignee of Employer pursuant to a reorganization, recapitalization, merger,
consolidation, sale of substantially all of the assets or stock of Employer, or
otherwise.
15.6 Amendments; Waivers. Except as expressly provided in the following
sentence, 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. Employer may amend this Agreement to the extent that
Employer reasonably determines that such change is necessary to comply with
Section 409A and further guidance thereunder, provided that such change does not
reduce the amounts payable to Executive hereunder. The failure of a party at any
time 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.

 

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15.7 Beneficiaries. Whenever this Agreement provides for any payment to
Executive’s estate, such payment may be made instead to such beneficiary 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
by written notice to Employer (or to any applicable insurance company).
15.8 Change in Fiscal Year. If, at any time during the Term, Employer changes
its fiscal year, Employer shall make such adjustments to the various dates and
target amounts included herein as are necessary or appropriate, provided that no
such change shall affect the date on which any amount is payable hereunder.
15.9 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; (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; and (iii) has not entered into any agreement
with any prior employer or other person, corporation or entity which would in
any way adversely affect Executive’s or Employer’s right to enter into this
Agreement. 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,
shareholders, insurers and representatives from and against any and all losses,
costs, damages, expenses (including attorneys’ fees and expenses), liabilities
and claims, arising from, in connection with, or in any way related to
Executive’s breach of any of the representations or warranties contained in this
Section 15.9.
15.10 Venue. Any action to enforce, challenge or construe the terms or making of
this Agreement or to recover for its breach shall be litigated exclusively in a
state court located in Marion County, Indiana, except that the Employer may
elect, at its sole and absolute discretion, to litigate the action in the county
or state where any breach by Executive occurred or where Executive can be found.
Executive acknowledges and agrees that this venue provision is an essential
provision of this Agreement and Executive hereby waives any defense of lack of
personal jurisdiction or improper venue.

 

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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
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 Change in Control. Effective as of January 1, 2008, Executive and ECC have
entered into that certain Emmis Communications Corporation Change in Control
Severance Agreement (the “CIC Agreement”). In the event of a “Change in Control”
(as defined in the CIC Agreement), the rights and obligations of Executive and
Employer shall be set forth in the CIC Agreement. Notwithstanding anything to
the contrary contained in this Agreement or the CIC Agreement, a Change in
Control shall be deemed not to have occurred if, immediately following the
transaction or transactions described in the definition of Change in Control in
the CIC Agreement: (i) Executive is Chairman of the Board or Chief Executive
Officer of Employer or any successor thereto, including without limitation any
entity established as a result of a separation of the radio and publishing
divisions of Employer (collectively, “Successor”); or (ii) Executive retains the
ability to vote at least fifty percent (50%) of all classes of stock of ECC or
any Successor; or (iii) Executive retains the ability to elect a majority of the
Board or any Successor.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.

            EMMIS OPERATING COMPANY (“Employer”)
      By:   /s/ J. Scott Enright         J. Scott Enright        Executive Vice
President and General Counsel        JEFFREY H. SMULYAN
(“Executive”)
      /s/ Jeffrey H. Smulyan       Jeffrey H. Smulyan         

 

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Exhibit A
Change in Control Agreement
The Emmis Communications Corporation Change in Control Severance Agreement
between Emmis Communications Corporation and Jeffrey H. Smulyan effective
January 1, 2008 is hereby incorporated by reference.