exv10w5



 





Exhibit 10.5




EMPLOYMENT AGREEMENT




     This EMPLOYMENT AGREEMENT (“Agreement”) is effective as of March 1, 2008, by and between EMMIS
OPERATING COMPANY, an Indiana company (“Employer”), and GARY A. THOE, an Indiana resident
(“Executive”).



RECITALS




     WHEREAS, Employer and its affiliates are engaged in the ownership and operation of certain
radio and television 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 President
– Publishing Division. Executive shall have such duties, functions, authority and responsibilities
as are commensurate with such position. 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. If Executive is elected as a Director of Emmis Communications Corporation,
he shall serve in such position 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 Employer and shall also be entitled to the benefit of indemnification
pursuant to the terms of Section 15.11.



     2. Term. The term of this Agreement shall be for a period of one (1) year commencing
on March 1, 2008, and continuing until February 28, 2009, 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 of the then-current Contract Year (as defined below) of such party’s election not
to allow the Agreement to automatically renew, the Agreement shall automatically renew for
successive one year periods. 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; 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:




Contract Year commencing March 1, 2008: $275,000




Each additional Contract Year: Executive’s Base Salary for the previous Contract Year, plus
an amount that is equal to the greater of: (a) three percent (3%) of the Executive’s Base
Salary for the previous Contract Year; (b) the percentage increase in the Revised Consumer
Price Index for All Urban Consumers—U.S. Cities Average, all items (base 1982/84 = 100) as
published by the Bureau of Labor Statistics, U.S. Department of Labor (the “CPI”) which
shall be determined by comparing the CPI for October in the calendar year prior to the year
in which the Base Salary is to be adjusted to the calendar year preceding the
latter-described year; or (c) the percentage increase in the Executive’s Base Salary as
specified in writing by the Compensation Committee of the Board of Directors of Emmis
Communications Corporation (the “Compensation Committee”). For example and by way of
illustration of subsection (b) above, in regard to the adjustment to be made for the
Contract Year commencing March 1, 2009, the parties would calculate the percentage increase
in the CPI from October of 2007 to October 2008. In the event the CPI shall be
discontinued, changed, or otherwise becomes unavailable, the parties will convert to the
then-published index of the Bureau of Labor Statistics so as to continue to calculate
adjustments on the same basis as described above.



     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 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 in Section 4.3);
provided that: (i) Executive is able to sell those Shares on substantially the same terms and
conditions applicable to Employer’s stock compensation plan in effect through 2005; and (ii) the
percentage of Executive’s Base Salary payable in Shares shall be consistent with, and the exact
number of Shares to be



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awarded to Executive shall be determined in the same manner as that utilized for other senior
management level employees.   




     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.



     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 Forty-Five and 45/100 percent (45.45%)
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 foregoing bonus amounts if earned according to the terms and conditions set
forth in Section 4.1; provided, that, at the end of each applicable
Contract Year: (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 duties and obligations pursuant to
this Agreement and is not in breach of any of the material terms and conditions of this
Agreement. 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 shall be freely
transferable when delivered to Executive, subject to Employer’s securities 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 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 senior management
level employees. Any bonus amounts earned by Executive pursuant to the terms and conditions
of this Section 4 shall be paid after the end of the Contract Year for which the
bonus is paid (but in no event later than ninety (90) days after the end of such Contract
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.




     4.3 Equity Incentive Compensation. At such time or times 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 February 29, 2008 or, if this Agreement
is renewed, in no event later than ninety



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(90) days after the expiration of the previous Contract Year), Executive shall be
granted options and restricted shares as follows:




(i) an
option (“Option”) to acquire Twelve Thousand Eight Hundred Six (12,806) shares of Class A Common Stock of Emmis Communications Corporation (the “Shares”);
and (ii) Four Thousand Nine Hundred Forty (4,940) restricted Shares (the
“Restricted Shares”).




     Each Option granted pursuant to this Section 4.3 shall: (i) have an exercise
price per share equal to its Fair Market Value (as defined in the applicable Equity
Compensation Plan, or any subsequent equity compensation or similar plan adopted by Emmis
Communications Corporation 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 (including vesting requirements); and (iv) be exercisable for Shares with such
restrictive legends on the certificates in accordance with the Plan and applicable
securities laws. Options granted pursuant to this Section 4.3 are intended to
satisfy the regulatory exemption from the application of Code Section 409A for certain
options for service recipient shares, and they shall be administered accordingly. Any
Restricted Shares granted pursuant to this Section 4.3 shall be granted according
to the terms and subject to the conditions of the Plan and shall include a restrictive
legend as provided for by the Plan.




     4.4 Completion Bonus. On the condition that Executive remains employed by
Employer, on a full-time, continuous basis, through February 28, 2011, Employer shall make
a cash payment to Executive in an amount equal to the average annual Base Salary paid to
Executive during the Term (“Completion Bonus”), subject to applicable taxes and
withholdings as required by law. The Completion Bonus shall be paid to Executive within
ten (10) days after February 28, 2011 (“Completion Bonus Payment Date”). Notwithstanding
the foregoing, Employer shall pay a pro-rated portion of the Completion Bonus to Executive
within two (2) weeks after termination of Executive’s employment if the effective date of
such termination is prior to March 1, 2011 and such termination is: (i) due to Executive’s
death, or (ii) on account of Executive’s incapacity pursuant to Section 10, or
(iii) by Employer other than for Cause (as defined below), or (iv) due to Employer’s
election not to renew this Agreement according to its terms for any Contract Year after
February 28, 2009. Such pro-rated portion shall be based upon the number of calendar days
elapsed between March 1, 2008 and the date of termination divided by the total number of
calendar days between March 1, 2008 and February 28, 2011.



     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



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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.




     6. Vacation and Fringe Benefits. Each Contract Year, Executive shall be entitled to
four (4) weeks of paid vacation in accordance with Employer’s applicable policies and procedures
for executive-level employees. Executive shall also be eligible to participate in and receive the
fringe benefits generally made available to other executive-level employees of Employer in
accordance with 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.



     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








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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 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 any 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



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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 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 six (6) 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 magazine publishing business in any market in which Employer owns or operates a
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 Sections 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 Sections 8.1 or 8.2, Employer shall be entitled to
injunctive relief (including attorneys’ fees and costs) enforcing Sections 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 Sections 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 or non-competition set forth therein. Accordingly, the obligations



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set forth in Sections 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.



     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 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
(the “Final 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 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 (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 or misconduct under
applicable laws.



     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.”




     10.2 Obligations after Termination. Executive shall have no further
obligations or liabilities hereunder after an Incapacity Termination Date except
Executive’s obligations under Section 7 and 8 that 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



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Executive those amounts described in Section 9.2(ii). Nothing in this
Section 10 or in 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.



     11. 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 Section
9.2(ii).



     12. Gross Up for Taxes Imposed Under Code Section 409A.




     12.1 Employer’s Gross-Up Obligation. This Agreement is intended to comply
with Code Section 409A, and it is intended that no amounts payable hereunder shall be
subject to tax under Section 409A. If, however, Executive pays taxes imposed pursuant to
Code Section 409A, Employer shall reimburse Executive to the extent provided in Section
12.2 or 12.3.




     12.2 Reimbursement by Agreement. If, before Executive’s tax return due date
for the year in which an amount is paid hereunder, (i) Employer reasonably determines that
part or all of the amounts payable pursuant to this Agreement during the year was subject
to taxes under Code Section 409A, or (ii) Executive reasonably determines that part or all
of such amounts was subject to taxes under Code Section 409A, and Employer agrees with
Executive’s determination (such agreement not to be unreasonably withheld, conditioned or
delayed), Employer shall reimburse Executive for any taxes under Code Section 409A with
respect to such payment and any additional federal, state, or local income or employment
taxes imposed on Executive due to the foregoing reimbursement, so that the after-tax
payment to Executive is equal to the after-tax amount that Executive would have received if
Code Section 409A had not applied. Employer shall pay the reimbursement required by the
preceding sentence only if Executive provides acceptable proof of payment within sixty (60)
days after having paid the taxes subject to reimbursement. If Executive provides
acceptable proof to Employer within such period, Employer shall pay the reimbursement
required by this Section 12.2 as soon as administratively feasible (and under no
circumstances more than one hundred twenty (120) days) after receiving such proof.




     12.3 Reimbursement following Audit. If Employer does not report any portion
of the amounts payable to Executive hereunder as subject to taxes under Code Section 409A,
and as a result of a later tax audit by the Internal Revenue Service, Executive is required
to pay taxes under Code Section 409A, Employer shall reimburse Executive for any taxes
under Code Section 409A with respect to such payment, any interest and penalties imposed on
Executive for the failure to make timely payment of such taxes (with respect to any period
before the end of



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the audit), and any additional federal, state, or local income or employment taxes
imposed on Executive due to the foregoing reimbursement, so that the after-tax payment to
Executive is equal to the after-tax amount that Executive would have received if Code
Section 409A had not applied. Employer shall pay the reimbursement required by the
preceding sentence only if Executive provides acceptable proof of payment within sixty (60)
days after having paid the taxes subject to reimbursement. If Executive provides
acceptable proof to Employer within such period, Employer shall pay the reimbursement
required by this Section 12.3 as soon as administratively feasible (and under no
circumstances more than one hundred twenty (120) days) after receiving such proof.



     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 and/or
Restricted Shares awarded pursuant to Section 4 (and any applicable Option exercise price)
shall be adjusted by the Compensation Committee in its sole and absolute discretion and, if
applicable, in accordance with the terms of the Plan, the Option agreement evidencing the grant of
the Option, and the restricted stock agreement evidencing the grant of Restricted Shares. 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 Code 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 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, UPS or DHL only) will make such delivery, if sent via such
overnight delivery service, first-class, postage prepaid, or (c) 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:
	 
	 	 	 	Ian D. Arnold, Esq.

Corporate Counsel

Emmis Communications Corporation

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204




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	 	 	 	With a copy to:
	 
	 	 	 	Gary L. Kaseff, Esq.

Executive Vice President and General Counsel

Emmis Communications Corporation

3500 W. Olive Avenue, Suite 1450

Burbank, CA 91505






     (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 Code Section 409A. To the extent required by
Code Section 409A(a)(2)(B)(i) and the regulations thereunder, 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 Code Section
409A(a)(2)(B)(i).




     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



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Employer reasonably determines that such change is necessary to comply with Code
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.




     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 15.11.




     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



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essential provision of this Agreement and Executive hereby waives any defense of lack
of personal jurisdiction or improper venue.




     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. In the event of a “Change in Control,” the rights
and obligations of Executive and Employer shall be set forth in the separate Change in
Control Agreement executed by the parties and attached to this Agreement as Exhibit
A. “Change in Control” shall have the meaning ascribed to it in Exhibit A.
Notwithstanding the preceding provisions or any provision of Exhibit A, Employer
shall have the right to amend the Change in Control Agreement to the extent that it
reasonably deems such amendment necessary to comply with the requirements of Code Section
409A. Notwithstanding anything to the contrary contained herein or in Exhibit A, a
Change in Control shall be deemed not to have occurred if, immediately following a
Separation Event or the transaction or transactions described in the definition of Change
of Control in Exhibit A: (i) Jeffrey H. Smulyan (“Smulyan”) is Chairman or Chief
Executive Officer of Employer or any successor thereto, including without limitation, the
Publishing Division or any entity established as a result of a Separation Event
(collectively, “Successor”); or (ii) Smulyan retains the ability to vote at least fifty
percent (50%) of all classes of stock of the Employer or any Successor; or (iii) Smulyan
retains the ability to elect a majority of the Board of Directors of Employer or any
Successor. For purposes of this Section 15.12, “Separation Event” shall be defined
to mean any endeavor by Employer to separate or bifurcate its radio and publishing
divisions by means of merger, corporate reorganization, sale or disposition of assets, spin
off, tax-free reorganization, or otherwise.



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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 	 
	 



	 	 	 	 	 
	 	GARY A. THOE

(“Executive”)

 	 
	 	/s/ Gary A Thoe
 	 
	 	Gary A Thoe 	 




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Exhibit A




Change in Control Agreement



The Emmis Communications Corporation Change in Control Severance Agreement between Emmis
Communications Corporation and Gary A. Thoe dated August 11, 2003 is hereby incorporated by
reference.