Exhibit 10.1





Exhibit 10.1




EMPLOYMENT AGREEMENT




This EMPLOYMENT AGREEMENT (“Agreement”) is effective as of September 4, 2011 (the “Effective
Date”), by and between EMMIS OPERATING COMPANY, an Indiana company (“Employer”), and PATRICK WALSH,
an Indiana resident (“Executive”).



RECITALS




WHEREAS, Employer and its affiliates are engaged in the ownership and operation of certain
radio, magazine 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 below), Executive
shall serve as Chief Financial Officer and Chief Operating Officer. Executive shall have
direct operating responsibility for the radio division and such other duties, functions,
authority and responsibilities as are commensurate with the position of Chief Financial
Officer and Chief Operating Officer. 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, civic and for-profit 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. Executive
is currently a member of the Board of Directors of Emmis Communications Corporation
(“ECC”), and he shall continue to serve in such position, subject to election by ECC’s
shareholders, 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 18.10. 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 Employer and shall also be entitled to the benefit of indemnification
pursuant to the terms of Section 18.10.


 


 









 






2. Term. The term of this Agreement shall commence on the Effective Date and
continue through and including September 3, 2013, unless earlier terminated in accordance
with the provisions set forth in this Agreement (the “Term”). Each year commencing on the
Effective Date during the Term shall be a “Contract Year.”




3. Base Salary; 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 of Six Hundred Thousand Dollars ($600,000) (the “Base Salary”),
payable pursuant to Employer’s customary payroll practices and subject to applicable taxes
and withholdings as required by law.




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 11) 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 the Key Executive Group. The term “Key Executive Group”
refers to the Company’s General Counsel and President — Publishing Division (or, if either
of those positions are no longer comparable to Executive’s position, any other positions
mutually agreed upon by the parties).




During the Term, Executive shall receive a monthly auto allowance in the amount of One
Thousand Dollars ($1,000) (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.


 


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4. Incentive Compensation.




4.1 Option Grant. Immediately upon execution of this Agreement, Executive
shall be granted an option (the “Option”) to acquire Two Hundred Fifty Thousand (250,000)
 shares of Class A Common Stock of ECC (“Shares”), which shall vest on September 3, 2013,
subject to the terms of this Section 4.1. The Option granted pursuant to this
Section 4.1 shall: (i) have an exercise price per share equal to the Fair Market
Value (“FMV”) of the stock on the date of grant (as FMV 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 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 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. The Option granted pursuant to this Section
4.1 is intended to satisfy the regulatory exemption from the application of Code
Section 409A for certain options for service recipient shares, and it shall be administered
accordingly.




4.2 Fiscal Year Bonus Amounts. Upon the terms and subject to the conditions
set forth in this Section 4, in connection with each of Employer’s fiscal years
ending February 29, 2012, February 28, 2013 and February 28, 2014 (each, a “Fiscal Year”),
Executive shall be eligible to receive one (1) performance bonus in an annualized target
amount equivalent to Executive’s Base Salary (each, a “Fiscal Year Bonus”), the exact
amount of which, if any, shall be determined based upon Executive’s attainment of certain
performance and financial goals as determined each Fiscal Year by the Compensation
Committee of the Board of Directors of ECC (the “Compensation Committee”), in its sole and
absolute discretion, and communicated to Executive within ten (10) days after a final
determination by the Compensation Committee. The Fiscal Year Bonus for Employer’s fiscal
year ending Febuary 29, 2012 shall be paid pursuant to the Fiscal 2012 Corporate Incentive
Plan approved by the Compensation Committee as of March 1, 2011 (the “2012 CIP”), except
that Executive’s Award Targets (as defined in the 2012 CIP) shall be as follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bonus	 	 	Q1	 	 	Q2	 	 	Q3	 	 	Q4	 
	Performance Goal	 	Potential	 	 	Target	 	 	Target	 	 	Target	 	 	Target	 
	Total Emmis EBITDA
	 	$	300,000	 	 	$	55,620	 	 	$	55,620	 	 	$	60,000	 	 	$	128,760	 
	Radio EBITDA
	 	$	240,000	 	 	$	44,496	 	 	$	44,496	 	 	$	50,000	 	 	$	101,008	 
	Int’l Radio EBITDA
	 	$	30,000	 	 	$	5,562	 	 	$	5,562	 	 	$	6,000	 	 	$	12,876	 
	Interactive EBITDA
	 	$	30,000	 	 	$	5,562	 	 	$	5,562	 	 	$	6,000	 	 	$	12,876	 





 


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In the event that Executive’s employment with Employer ends at expiration of the Term (on
September 3, 2013), the Fiscal Year Bonus earned by Executive with respect to Employer’s
Fiscal Year ending February 28, 2014, if any would have been earned had Executive worked
through February 28, 2014, as determined by the Compensation Committee, in its reasonable
discretion, shall be pro-rated according to the following formula: the amount of the Fiscal
Year Bonus that Executive would have earned had Executive worked such entire Fiscal Year
multiplied by a fraction, the numerator of which shall be seven (7), the denominator of
which shall be twelve (12).




4.3 Completion Bonus. Except as provided below, on the condition that
Executive remains employed by Employer, on a full-time, continuous basis, through September
3, 2013, Employer shall make a cash payment to Executive in an amount equal to (i) Five
Hundred Thousand Dollars ($500,000), if ASP (as defined below) is less than Two Dollars
($2.00), or (ii) Eight Hundred Thousand Dollars ($800,000), if ASP is equal to or greater
than Two Dollars ($2.00) but less than Three Dollars ($3.00), or (iii) One Million Two
Hundred Thousand Dollars ($1,200,000), if ASP is equal to or greater than Three Dollars
($3.00)(the “Completion Bonus”). The Completion Bonus shall be paid to Executive within
two (2) weeks after September 3, 2013. Notwithstanding anything contained herein to the
contrary, the bonus amounts set forth in (ii) and (iii) above shall not be paid (regardless
of ASP) in the event that Executive is paid any amounts as a result of a “Qualifying
Termination” (as defined in the 2011 CIC Agreement) following a Change in Control (as
defined below) pursuant to the 2011 CIC Agreement (as defined below). “ASP” shall mean an
adjusted share price, calculated as follows: the average FMV of one (1) Share during the
period August 4, 2013 to September 3, 2013, plus the amount of all dividends paid on one
(1) Share between the Effective Date and September 3, 2013.




Notwithstanding the foregoing, if Executive’s employment is terminated prior to
September 3, 2013 (and Executive does not receive any payment as a result of a Qualifying
Termination pursuant to the 2011 CIC Agreement) and such termination is: (a) due to
Executive’s death, (b) on account of Executive’s incapacity pursuant to Section 11,
(c) by Employer other than for Cause pursuant to Section 10, or (d) by Executive
for Good Reason pursuant to Section 10, then Employer shall pay to Executive,
within two (2) weeks after termination of his employment, a pro-rata portion of the
Completion Bonus if ASP falls within clause (i) above, Eight Hundred Thousand Dollars
($800,000) if ASP falls within (ii) above, or One Million Two Hundred Thousand Dollars
($1,200,000) if ASP falls within clause (iii) above. If Executive’s employment is
terminated prior to September 3, 2013 and such termination is due to a Qualifying
Termination on or


 


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following a Change in Control and Executive receives a Change in Control payment
pursuant to the 2011 CIC Agreement, then Employer shall pay to Executive, within two (2)
weeks after termination of his employment, a pro-rata portion of the Completion Bonus set
forth in clause (i) above without regard to ASP. Any pro-rated portion of the Completion
Bonus shall be based upon the number of calendar days elapsed between the Effective Date
and the date of termination divided by the total number of calendar days between the
Effective Date and September 3, 2013. In these circumstances, ASP shall be calculated as
of the date of Executive’s termination from employment and the relevant period for
calculating ASP shall be the calendar month immediately preceding the month in which such
termination of employment occurs.




4.4 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
Sections 4.2 and 4.3; provided that, unless provided otherwise in
Sections 4.2 and 4.3 or Sections 9, 10, 11 or
12 of this Agreement, 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 death or incapacity (pursuant to Section 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
this Section 4 in cash or Shares; provided that the 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 4.4 to pay
any Fiscal Year 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 the Key Executive Group. Any
Fiscal Year Bonus amounts earned by Executive pursuant to the terms and conditions of
Section 4.2 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),
except any pro-rated Fiscal Year Bonus earned by Executive for the period ending September
3, 2013 shall be paid within two (2) weeks of September 3, 2013. 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 Sections 4.2 or 4.3
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 of the Internal Revenue Code of
1986, as amended (“Code”).


 


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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 that, 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.




6. Fringe Benefits.




6.1 Vacation and Other Benefits. Each Contract Year, Executive shall be
entitled to four (4) weeks of paid vacation (annualized) 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 and to the extent that
Executive is eligible under 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.




6.2 Insurance and Estate Planning. Each Contract Year, Employer agrees to
reimburse Executive in an amount not to exceed Five Thousand Dollars ($5,000) for the
annual premium and other fees and expenses associated with estate planning services for
Executive, including legal and tax services, and/or 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
services, policy or policies, including without limitation passing any required physical
examinations. Reimbursements pursuant to this Section 6.2 with respect to a
Contract Year shall be made as soon as administratively feasible after Executive submits
the information and documentation required for reimbursement; provided, however, under no
circumstances shall such reimbursement be paid later than two-and-a-half months after the
end of the calendar year or Employer’s taxable year in which such Contract Year commenced.


 


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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 Ownership of Materials. Employer shall solely and exclusively own all
rights of every kind and nature in perpetuity and throughout the universe in: (i) the
programs and broadcasts on which Executive appears or for which Executive renders services
to Employer in any capacity; (ii) the results and proceeds of Executive’s services pursuant
to this Agreement, including without limitation those results and proceeds provided in
connection with the creation, development, preparation, writing, editing or production by
Executive or any employee of any member of the Emmis Group of any and all materials,
properties or elements of any and all kinds for the programs on which Executive appears or
for which Executive renders services (whether directly or indirectly); and (iii) any
business, financial, sales or marketing plans and strategies, documents, presentations or
other similar materials, regardless of kind or character, each of which Executive
acknowledges is a work specially ordered by Employer which shall be considered to be a
“work made for hire” for Employer. Therefore, Employer shall be the author and copyright
owner of the programs on which Executive appears or for which Executive renders services
pursuant to this Agreement, the broadcasts and tapes or recordings thereof for all purposes
without limitation of any kind, and all materials described in the immediately preceding
sentence. All characters developed for the programs and broadcasts


 


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during the Term shall be solely and exclusively owned by Employer, including all
right, title and interest thereto. The exclusive legal title to all of the aforesaid works
and matters, programs, broadcasts and materials and all secondary and derivative rights
therein, shall belong, at all times, to Employer, which shall have the right to copyright
the same and apply for copyright registrations and copyright renewal registrations and to
make whatever use thereof that Employer, in its sole and absolute discretion, deems
advisable, including but not limited to rebroadcasts of programs or use of any portions of
any program in the production or broadcast of other programs at any time, notwithstanding
expiration of the Term or termination of this Agreement for any reason.




7.3 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 (including attorneys’ fees and costs) enforcing this Section 7 to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security.




8. Non-Interference; Non-Competition; 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 Non-Competition. Executive acknowledges the special and unique nature of
Executive’s employment with Employer as a senior-management-level employee, and understands
that, as a result of Executive’s employment with Employer prior to and during the Term,
Executive has gained and will continue to gain knowledge of and have access to highly
sensitive and valuable information regarding the operations of Employer and its
subsidiaries and affiliated entities, including but not limited to the confidential
information described more fully in Section 7.1. Accordingly, Executive
acknowledges Employer’s interest in preventing the disclosure of such information through
the engagement of


 


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Executive’s services by any of Employer’s competitors following the expiration or
termination of the Term for any reason. Consequently, during the Term and for a period of
twelve (12) months immediately following the expiration or termination of the Term for any
reason, Executive shall not engage directly or indirectly in, or become employed by, serve
as an agent or consultant to, or become an officer, director, partner, principal or
shareholder of, any corporation, partnership or other entity which is engaged in the
terrestrial radio broadcasting business, or the city and regional magazine publishing
business, in any market in which Employer owns or operates a radio station or magazine as
of the termination date of Executive’s employment with Employer. As long as Executive does
not engage in any other activity prohibited by the immediately preceding sentence,
Executive’s ownership of less than five percent (5%) of the issued and outstanding stock of
any corporation whose stock is traded on an established securities market shall not
constitute competition with Employer for the purpose of this Section 8.2.




8.3 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 or
8.2 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 or 8.2, Employer shall be entitled to
injunctive relief (including attorneys’ fees and costs) enforcing Section 8.1 or
8.2, 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 or 8.2, and Employer
brings legal action for injunctive or other relief, Employer shall not, as a result of the
time involved in obtaining such relief, be deprived of the benefit of the full period of
noninterference set forth therein. Accordingly, the obligations set forth in Section
8.1 or 8.2 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.




8.4 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 ten (10) days after receipt of the Preliminary Notice to attempt to
cure any acts or omissions giving rise to Cause, if applicable, and/or to respond to
Employer in writing. If following the expiration of such ten (10) 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.




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 any Base Salary which has been earned on or
prior to the termination date, but which remains unpaid as of 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.




Additionally, Employer shall comply with the applicable provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and the provisions of any Employer
benefit plans in which Executive or Executive’s eligible dependents or beneficiaries are
participating at the time of termination.


 


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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
(Executive’s inability or failure to perform his obligations hereunder because of his death
or incapacity, subject to Employer’s right to terminate Executive’s employment pursuant to
Section 11, including during
approved periods of absence, shall not be considered Cause for termination under this
provision), 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 ten (10) 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, 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 station; (iv) theft in any
amount; (v) actual or threatened violence against any individual (in connection with his
employment hereunder) or another employee; (vi) sexual or other prohibited harassment of
others that is actionable under applicable laws; (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 any 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 or gross
misconduct under applicable laws.




10. Termination by Employer Without Cause or Voluntary Resignation by Executive
for Good Reason.




10.1 Effect of the Termination. If Employer Terminates Executive’s Employment
(as defined below) without Cause, or Executive Terminates his Employment for Good Reason
(as defined below), then:




(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.




(ii) Employer shall have no further obligations or liabilities hereunder,
except that Employer shall:




(a) Pay to Executive any Base Salary which has been earned on or
prior to the termination date, but which remains unpaid as of the
termination date, in a lump-sum cash payment within two (2) weeks of the
termination date;


 


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(b) Pay to Executive any bonus amounts, if any, which
Executive earned prior to the termination date pursuant to Section
4 but which are unpaid as of the termination date, in a lump-sum cash
payment within two (2) weeks of the termination date;




(c) Pay to Executive a lump-sum cash payment within two (2) weeks of
the termination date equal to the total amount of Base Salary that would
have been payable to Executive hereunder had the termination not occurred
for a period that is the lesser of one (1) year from the termination date
or the period between the termination date and September 3, 2013, subject
to any applicable tax withholding and deductions as required by law;




(d) Pay or reimburse, for the period applicable under Section
10.1(ii)(c) above, any medical, dental or vision insurance premiums
(up to the amount that Employer is paying on behalf of Executive and his
eligible dependents immediately prior to the date of termination, e.g.,
the employer-paid premium) for the continuation of such health coverage
for Executive and Executive’s dependents pursuant to the provisions of
COBRA or applicable state law. If Employer becomes eligible to
participate in any other group insurance program of another employer and
elects coverage thereunder, these payments shall cease at that time;




(e) Pay the full amount of Executive’s bonus opportunity pursuant to
Section 4.2 (for purposes of clarity only, the Fiscal Year Bonus
opportunity applicable with respect to Employer’s Fiscal Year ending
February 28, 2014 shall be pro-rated as set forth in Section 4.2),
as applicable, in a lump-sum cash payment within two (2) weeks after the
termination date, for the Fiscal Year in which the termination occurs,
subject to applicable tax withholding;




(f) Pay the Completion Bonus described in Section 4.3 in the
amounts set forth therein, in a lump-sum cash payment within two (2) weeks
after the termination date, subject to applicable taxes and withholding;
and




(g) Accelerate in full the vesting of any equity granted to Executive
prior to the termination date within two (2) weeks after the termination
date (subject to applicable tax withholding and deductions as required by
law).




10.2 Definition of Termination of Employment. For purposes of this Agreement,
when capitalized, “Terminates Employment,” “Termination of Employment,” or any variation of
that term means a separation from service within the meaning of Section 409A (defined
below). If Executive’s employment terminates but does not qualify as a separation from
service under Section 409A,
then Executive shall become entitled to receive the severance pay and benefits set
forth in this Agreement at such time as he incurs a separation from service.


 


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10.3 Definition of Good Reason. For purposes of this Section 10, the
term “Good Reason” shall be defined to mean, without Executive’s written consent: (i) a
reduction by Employer in Executive’s Base Salary or target Fiscal Year Bonus opportunity
from the amounts set forth in this Agreement; (ii) failure of Employer to provide an office
to Executive, or Employer requiring Executive to work in an office that is more than
thirty-five (35) miles from the location of the Company’s principal executive offices at
the time of this Agreement, except for required travel on business of the Company to the
extent substantially consistent with Executive’s business travel obligations, or (iii) a
material breach of the terms of this Agreement by Employer; provided that Executive
has given Employer notice of such breach within thirty (30) days of the initial occurrence
of the event that is alleged to constitute Good Reason, such breach remains uncured in the
thirty (30) day period after such notice, and Executive terminates his employment no later
than ten (10) days after the cure period has expired. Employer shall not take any position
that a resignation by Executive for Good Reason fails to constitute on involuntary
separation from service for purposes of Section 409A.




11. Termination of Agreement by Employer for Incapacity.




11.1 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 11 is referred to herein as the “Incapacity Termination Date.”




11.2 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, which shall survive the
termination or expiration of this Agreement. After an Incapacity Termination Date,
Employer shall have no further obligations or liabilities hereunder except that Employer
shall, not later than two (2) weeks after an Incapacity Termination Date, pay to Executive
those amounts described in Sections 4.3 and 9.2(ii); provided,
however, that in the event an Incapacity Termination Date occurs at least six (6)
months after the commencement of a Fiscal Year during the Term, Employer shall pay to
Executive a pro-rated portion of the Fiscal Year Bonus for the Fiscal Year during which the
Incapacity Termination Date occurs, such amount to be determined in the sole discretion of
Employer. Additionally, Employer shall comply with the provisions of COBRA and the
provisions of any Employer benefit plans in which Executive or Executive’s eligible
dependents or


 


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beneficiaries are participating at the time of termination. Nothing in this
Section 11 shall affect the amount of any benefits which may be payable to
Executive under any insurance plan or policy maintained by Employer or Executive or
pursuant to any Employer company practice, plan or program applicable to other
senior-management-level employees of the Emmis Group.




12. Death of Executive. 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 that Employer shall, not later than two (2)
weeks after Executive’s date of death, pay or grant to Executive’s estate or designated
beneficiary those amounts described in Sections 4.3 and 9.2(ii).
Additionally, Employer shall comply with the provisions of COBRA and the provisions of any
Employer benefit plans in which Executive or Executive’s eligible dependents or
beneficiaries are participating at the time of termination. In the event that Executive
dies after termination of this Agreement pursuant to Sections 9, 10 or
11, 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.




13. Termination of the Agreement because of Non-renewal. If this Agreement
expires on September 3, 2013 and is not renewed or extended by the parties, Executive shall
have no further obligations or liabilities hereunder, except Executive’s obligations under
Sections 7 and 8, which shall survive the expiration of this Agreement.
Employer shall have the liabilities and obligations set forth in Section 9.2(ii)
above, and shall pay the Fiscal Year Bonus, if any, in accordance with Section 4.2
and the Completion Bonus in accordance with Section 4.3 within two (2) weeks after
the expiration of the Agreement.




14. Change in Title/Duties. Notwithstanding anything to the contrary
contained herein, at any time upon prior notice to Executive, Employer may change
Executive’s duties and responsibilities hereunder, and may change Executive’s titles with
Executive’s consent in his sole discretion to a comparable title or may promote Executive
to the position of President, Chief Executive Officer or Vice Chairman of the Company
without his consent. If Employer elects to exercise its rights under this Section
14, Employer shall continue for the remainder of the Term (i) to provide Executive with
an office within thirty-five (35) miles from the location of the Company’s principal
executive offices at the time of this Agreement and (ii) to perform its obligations under
Sections 3, 4, 5 and 6 of this Agreement.


 


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15. Application of Internal Revenue Code Section 409A. Notwithstanding
anything to the contrary set forth herein, any payments and benefits provided under this
Agreement (the “Severance Benefits”) that constitute “deferred compensation” within the
meaning of Section 409A of the Code and the regulations and other guidance thereunder and
any state law of similar effect (collectively “Section 409A”) shall not commence in
connection with Executive’s
termination of employment unless and until Executive has also incurred a “separation
from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h)
(“Separation From Service”), unless Employer reasonably determines that such amounts may be
provided to Executive without causing Executive to incur the additional 20% tax under
Section 409A.




It is intended that each installment of the Severance Benefits payments provided for
in this Agreement is a separate “payment” for purposes of Treasury Regulation Section
1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that payments of the
Severance Benefits set forth in this Agreement satisfy, to the greatest extent possible,
the exemptions from the application of Section 409A provided under Treasury Regulation
Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if Employer (or, if
applicable, the successor entity thereto) determines that the Severance Benefits constitute
“deferred compensation” under Section 409A and Executive is, on the termination of service,
a “specified employee” of Employer or any successor entity thereto, as such term is defined
in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the
incurrence of the adverse personal tax consequences under Section 409A, the timing of the
Severance Benefit payments shall be delayed until the earlier to occur of: (i) the date
that is six months and one day after Executive’s Separation From Service, or (ii) the date
of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”),
the Employer (or the successor entity thereto, as applicable) shall (A) pay to Executive a
lump sum amount equal to the sum of the Severance Benefit payments that Executive would
otherwise have received through the Specified Employee Initial Payment Date if the
commencement of the payment of the Severance Benefits had not been so delayed pursuant to
this Section and (B) commence paying the balance of the Severance Benefits in accordance
with the applicable payment schedules set forth in this Agreement.




This Agreement is intended to comply with 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 payments of
benefits hereunder.




16. 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) and the Share used in the calculation of ASP in
Section 4.3 shall be adjusted by the Compensation 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 Compensation
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.


 


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17. 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 three (3) days after the date of mailing, if
sent via the U.S. postal service, first-class, postage-prepaid, (b) the date that is the
next date upon which an overnight delivery service (Federal Express or UPS only) will make
such delivery, if sent via such overnight delivery service, postage prepaid, (c) the date
such delivery is made, if delivered in person to the notice party specified below or (d)
the date such delivery is made, if delivered via email. 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:




Jeffrey H. Smulyan, Chairman & CEO

Emmis Communications Corporation

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204




With a copy to:




Legal Department

Emmis Communications Corporation

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204




(ii) If to Executive, to Executive at Executive’s address in the personnel
records of Employer.




18. Miscellaneous.




18.1 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Indiana without regard to its conflict
of law principles.




18.2 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.




18.3 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.”


 


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18.4 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 18.6 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.




18.5 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.




18.6 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).




18.7 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.




18.8 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;
(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


 


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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 18.8.




18.9 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.




18.10 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, and for a commercially reasonable period after 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.




18.11 Change in Control. Executive and Employer are, as of this day, entering
into that certain Emmis Change in Control Severance Agreement effective as of September 4,
2011 (the “2011 CIC Agreement”). Without limiting the generality of the foregoing and
notwithstanding anything to the contrary contained in the 2011 CIC Agreement, whichever is
then applicable: (i) neither the Completion Bonus nor any bonus amount earned in excess of
seventy percent (70%) of Executive’s Base Salary shall be included within the definition of
“Bonus Amount” in the 2011 CIC Agreement; and (ii) the consummation of the sale, or series
of sales resulting in a sale, of at least seventy percent (70%) of the domestic radio
stations in which the Emmis Group owns an interest on the Effective Date constitutes at
“Change in Control” under Section 1(e) of the 2011 CIC Agreement.


 


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18.12 Survival. Provision of this Agreement shall survive the termination or
expiration of this Agreement to the extent necessary in order to effectuate the intent of
the parties hereunder, including without limitation Sections 7, 8,
9, 10, 11, 12 and 18. 



[Signatures on Following Page]



 


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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written
above.



	 	 	 	 	 
	 	EMMIS OPERATING COMPANY (“Employer”)

 	 
	 	By:  	/s/ Jeffrey H. Smulyan
 	 
	 	 	Jeffrey H. Smulyan 	 
	 	 	Chief Executive Officer 	 
	 
	 	PATRICK WALSH

(“Executive”)

 	 
	 	/s/ Patrick Walsh
 	 
	 	Patrick Walsh