Document:

exv10w31

 

Exhibit 10.31

AIRCRAFT TIME SHARING AGREEMENT

Dated as of the 22nd day of January, 2003.

between

Emmis Operating Company

as Operator,

and

Jeffrey H. Smulyan,

as Time Share Lessee,

Concerning one Gulfstream Aerospace G-IV aircraft bearing

U.S. registration number N971EC,

and

Manufacturer’s serial number 1000.

* * *

INSTRUCTIONS FOR COMPLIANCE WITH

“TRUTH IN LEASING” REQUIREMENTS UNDER FAR § 91.23

Within 24 hours after execution of this Agreement:

mail a copy of the executed document, without Exhibits A and B, to the

following address via certified mail, return receipt requested:

Federal Aviation Administration

Aircraft Registration Branch

ATTN: Technical Section

P.O. Box 25724

Oklahoma City, Oklahoma 73125

At least 48 hours prior to the first flight to be conducted under this Agreement:

provide notice of the departure airport and proposed time of departure

of said first flight, by telephone or facsimile, to the Flight Standards

District Office located nearest the departure airport.

Carry a copy of this Agreement in the aircraft at all times.

* * *

Exhibits A and B are intentionally omitted for FAA submission purposes.

 

 

     This AIRCRAFT TIME SHARING AGREEMENT (the “Agreement”) is made and
effective as of the 22nd day of January, 2003, (the “Effective Date”), by and
between Emmis Operating Company, an Indiana corporation (“Operator”), and
Jeffrey H. Smulyan, an Indiana resident (“Time Share Lessee”).

W I T N E S S E T H :

     WHEREAS, Operator controls and operates in the legal capacity of lessee
the Aircraft described and referred to herein;

     WHEREAS, Operator contracts for the services of a fully qualified flight
crew to operate the Aircraft;

     WHEREAS, Time Share Lessee desires to sublease the Aircraft, with a flight
crew, on a non-exclusive basis, from Operator on a time sharing basis as
defined in Section 91.501(c)(1) of the FAR;

     WHEREAS, Operator is willing to sublease the Aircraft, with flight crew,
on a non-exclusive basis, to Time Share Lessee on a time sharing basis; and

     WHEREAS, during the Term of this Agreement, the Aircraft will be subject
to use by Operator and/or other one or more subleases to third-parties.

     NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valid consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

	1.	 	Definitions. The following terms shall have the following meanings for
all purposes of this Agreement:
	 
	 	 	“Aircraft” means the Airframe, the Engines, and the Aircraft Documents.
Such Engines shall be deemed part of the “Aircraft” whether or not from
time to time attached to the Airframe or on the ground.
	 
	 	 	“Aircraft Documents” means all flight records, maintenance records,
historical records, modification records, overhaul records, manuals,
logbooks, authorizations, drawings and data relating to the Airframe, any
Engine, or any Part, that have been provided to Time Share Lessee by
Operator, or are required by Applicable Law to be created or maintained
with respect to the maintenance and/or operation of the Aircraft.
	 
	 	 	“Airframe” means the Gulfstream Aerospace G-IV airframe bearing
manufacturer’s serial number 1000 and United States registration number
N971EC, together with any and all Parts (including, but not limited to,
landing gear and auxiliary power units but excluding Engines or engines)
so long as such Parts shall be either incorporated or installed in or
attached to the Airframe.
	 
	 	 	“Applicable Law” means, without limitation, all applicable laws,
treaties, international agreements, decisions and orders of any court,
arbitration or governmental agency or authority and rules, regulations,
orders, directives, licenses and permits of any governmental body,
instrumentality, agency or authority, including, without limitation, the
FAR and 49 U.S.C. § 41101, et seq., as amended.
	 
	 	 	“Business Day” means any day of the year in which banks are not
authorized or required to close in the State of Indiana.
	 
	 	 	“Consent to Sublease” means that certain Consent to Sublease of even date
herewith by and among Owner, Operator, and Time Share Lessee, a copy of
which is attached hereto as Exhibit B, the terms and conditions of which
are incorporated into this Agreement by reference
	 
	 	 	“Engines” means two (2) Rolls Royce TAY MK611-8 model engines, serial
numbers 16001 and 16002, together with any and all Parts so long as the
same shall be either incorporated or installed in or attached to such
Engine. An Engine shall remain subleased hereunder whether or not from
time to time attached to the Airframe or on the ground.

 

 

	 	 	“FAA” means the Federal Aviation Administration or any successor agency.
	 
	 	 	“FAR” means collectively the Aeronautics Regulations of the Federal
Aviation Administration and the Department of Transportation, as codified
at Title 14, Parts 1 to 399 of the United States Code of Federal
Regulations.
	 
	 	 	“Flight Hour” means each flight hour of use of the Aircraft by Time Share
Lessee, as recorded on the Aircraft hour meter.
	 
	 	 	“Headlease” means that certain Aircraft Lease Agreement dated as of
September 27, 2002 between Owner and Operator, a copy of which is
attached hereto as Exhibit A, the terms and conditions of which are
incorporated into this Agreement by reference.
	 
	 	 	“Operating Base” means Indianapolis International Airport, Indianapolis,
Indiana.
	 
	 	 	“Operational Control” has the same meaning given the term in Section 1.1
of the FAR.
	 
	 	 	“Owner” means AVN Air, LLC.
	 
	 	 	“Parts” means all appliances, components, parts, instruments,
appurtenances, accessories, furnishings or other equipment of whatever
nature (other than complete Engines or engines) which may from time to
time be incorporated or installed in or attached to the Airframe or any
Engine and includes replacement parts.
	 
	 	 	“Pilot in Command” has the same meaning given the term in Section 1.1 of
the FAR.
	 
	 	 	“Taxes” means all sales taxes, use taxes, retailer taxes, duties, fees,
excise taxes (including, without limitation, federal transportation
excise taxes), or other taxes of any kind which may be assessed or levied
by any Taxing Jurisdiction as a result of the sublease of the Aircraft to
Time Share Lessee, or the use of the Aircraft by Time Share Lessee, or
the provision of a taxable transportation service to Time Share Lessee
using the Aircraft.
	 
	 	 	“Taxing Jurisdictions” means any federal, state, county, local, airport,
district, foreign, or other governmental authority that imposes Taxes.
	 
	 	 	“Term” means the term of this Agreement set forth in Section 3.
	 
	2.	 	Agreement to Sublease. Operator agrees to sublease the Aircraft to Time
Share Lessee on as “as needed and as available” basis, and to provide a
fully qualified flight crew for all Time Share Lessee’s flight operations,
in accordance with the terms and conditions of this Agreement.
	 
	3.	 	Term. The term of this Agreement shall commence on the Effective Date
and continue for a period of one (1) year. At the end of the initial one
(1) year Term or any subsequent one (1) year Term, this Agreement shall
automatically be renewed for an additional one (1) year Term. The
foregoing notwithstanding, each party shall have the right to terminate
this Agreement with or without cause on thirty (30) days written notice to
the other party.
	 
	4.	 	Intent and Interpretation. The parties hereto intend that this
Agreement shall constitute, and this Agreement shall be interpreted as, a
Time Sharing Agreement as defined in Section 91.501(c)(1) of the FAR.
	 
	5.	 	Non-Exclusivity. Time Share Lessee acknowledges that the Aircraft is
subleased to Time Share Lessee hereunder on a non-exclusive basis, and
that the Aircraft will also be subject use by Operator, and may also be
subject to non-exclusive sublease to others during the Term.
	 
	6.	 	Flight Charges. Time Share Lessee shall pay Operator for each flight
conducted under this Agreement an

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	 	 	amount equal to the lesser of the following:

	6.1	 	an amount equal to the product of the number of Flight Hours
of the duration of the flight, rounded to the nearest 1/10th of a
Flight Hour, multiplied by the Gulfstream IV Total Direct Costs Per
Flight Hour as published by Conklin & de Decker Aviation
Information, as updated from time to time; and
	 
	6.2	 	an amount equal to the maximum amount of expense
reimbursement permitted in accordance with Section 91.501(d) of the
FAR, which expenses include and are limited to:

	6.2.1	 	fuel, oil, lubricants, and other additives;
	 
	6.2.2	 	travel expenses of the crew, including food, lodging and ground transportation;
	 
	6.2.3	 	hangar and tie down costs away from the Aircraft’s base of operation;
	 
	6.2.4	 	insurance obtained for the specific flight;
	 
	6.2.5	 	landing fees, airport taxes and similar assessments;
	 
	6.2.6	 	customs, foreign permit, and similar fees directly related to the flight;
	 
	6.2.7	 	in-flight food and beverages;
	 
	6.2.8	 	passenger ground transportation;
	 
	6.2.9	 	flight planning and weather contract services; and
	 
	6.2.10	 	an additional charge equal to 100% of the expenses listed in Section 6.2.1.

	7.	 	Invoices and Payment. Operator will initially pay all expenses related
to the operation of the Aircraft when and as such expenses are incurred,
provided that within fifteen (15) days after the last day of any calendar
month during which any flight for the account of Time Share Lessee has
been conducted, Operator shall provide an invoice to Time Share Lessee for
an amount determined in accordance with Section 6 above. Time Share
Lessee shall remit the full amount of any such invoice, together with any
applicable Taxes under Section 8, to Operator promptly within fifteen (15)
days of the invoice date.
	 
	8.	 	Taxes. No payments to be made by Time Share Lessee under Sections 6 and
7 of this Agreement includes, and Time Share Lessee shall be responsible
for, shall indemnify and hold harmless Operator against, any Taxes which
may be assessed or levied by any Taxing Jurisdiction as a result of the
sublease of the Aircraft to Time Share Lessee, or the use of the Aircraft
by Time Share Lessee, or the provision of a taxable transportation service
to Time Share Lessee using the Aircraft. Without limiting the generality
of the foregoing, Time Share Lessee and Operator specifically acknowledge
that all Time Share Lessee’s flights will be subject to commercial air
transportation excise taxes pursuant to Section 4261 of the Internal
Revenue Code, regardless of whether any such flight is considered
“noncommercial” under the FAR. Time Share Lessee shall remit to Operator
all such Taxes together with each payment made pursuant to Section 7.
	 
	9.	 	Scheduling Flights.

	9.1	 	Submitting Flight Requests. Time Share Lessee shall submit
requests for flight time and proposed flight schedules to Operator
as far in advance of any given flight as possible, and in any case,
at least 24 hours in advance of Time Share Lessee’s planned
departure. Time Share Lessee shall provide at least the following
information for each proposed flight at least 24 hours prior to
scheduled departure: departure airport; destination airport; date
and time of departure; the number of anticipated passengers; the
nature and extent of luggage and/or cargo to be carried; the date
and time of return flight, if any; and any other information
concerning the proposed flight that may be pertinent or required by
Operator or Operator’s flight crew.
	 
	9.2	 	Approval of Flight Requests. Each use of the Aircraft by
Time Share Lessee shall be subject to Operator’s prior approval in
writing. Operator may approve or deny any flight scheduling request
in Operator’s sole discretion. Scheduling requests not approved in
writing by 5:00 p.m. Indianapolis local time on the 2nd Business Day
after the request is received by Operator shall be deemed denied.
Operator shall be under no obligation to approve any flight request
submitted by Time Share Lessee, and shall have final authority over
the scheduling of the Aircraft, provided,

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	 	 	however, that Operator will use reasonable efforts to accommodate
Time Share Lessee’s needs and avoid conflicts in scheduling.
	 
	9.3	 	Subordinated Use of Aircraft. Time Share Lessee’s rights to
schedule use of the Aircraft during the Term of this Agreement shall
at all times be subordinate to the Aircraft use requirements of
Operator, and any parent corporation, subsidiary or affiliate of
Operator to which Operator has subleased or hereafter subleases the
Aircraft (each an “Operator Related Sublessee”), and Operator and
each Operator Related Sublessee shall at all times be entitled to
preempt any scheduled, unscheduled, and anticipated use of the
Aircraft by Time Share Lessee, notwithstanding any prior approval by
Operator of a request by Time Share Lessee to schedule a flight.
	 
	9.4	 	Priority Use of Aircraft. Time Share Lessee’s rights to
schedule use of the Aircraft during the Term of this Agreement
shall, subject to Section 9.2, at all times be superior to the
Aircraft use requirements of any person to whom, or entity to which,
Operator has subleased or hereafter subleases the Aircraft other
than an Operator Related Sublessee (any such person or entity an
“Unrelated Sublessee”), and Time Share Lessee shall at all times be
entitled to preempt any scheduled, unscheduled, and anticipated use
of the Aircraft by any Unrelated Subessee.

	10.	 	Title and Registration; Subordination. Owner has exclusive and equitable
title to the Aircraft, and Operator has exclusive leasehold possessory
rights to the Aircraft pursuant to the Headlease. Time Share Lessee
acknowledges that title to the Aircraft shall remain vested in Owner, and
Time Share Lessee undertakes, to the extent permitted by Applicable Law,
to do all such further acts, deeds, assurances or things as may, (i) in
the reasonable opinion of the Owner, be necessary or desirable in order to
protect or preserve Operator’s title to the Aircraft, and (ii) in the
reasonable opinion of the Operator, be necessary or desirable in order to
protect or preserve Operator’s rights under the Headlease. Time Share
Lessee acknowledges that it has executed the Consent to Sublease, the
terms and conditions of which are incorporated in this Agreement by
reference, and agrees to abide by the terms of the Consent to Sublease.
Notwithstanding anything in this Agreement to the contrary, any rights
Time Share Lessee may have in or to the Aircraft by virtue of this
Agreement, including Time Share Lessee’s rights to possession and use of
the Aircraft, are in all respects subordinate, junior, and subject to
Owner’s rights and interests under the Headlease, including, without
limitation, the right of Owner to take possession of the Aircraft and
Engines upon Operator’s default under the Headlease. To the extent
requested by Owner, its successors or assigns, Time Share Lessee shall
take all action necessary to continue all right, title and interest of
Owner, its successors or assigns in the Aircraft under Applicable Law.
	 
	11.	 	Aircraft Maintenance and Flight Crew. Operator shall be solely
responsible for maintenance, preventive maintenance and required or
otherwise necessary inspections of the Aircraft, and shall take such
requirements into account in scheduling the Aircraft. No period of
maintenance, preventative maintenance, or inspection shall be delayed or
postponed for the purpose of scheduling the Aircraft, unless said
maintenance or inspection can be safely conducted at a later time in
compliance with all applicable laws and regulations, and with the sound
discretion of the pilot in command.
	 
	12.	 	Flight Crews. Operator shall provide to Time Share Lessee a qualified
flight crew for each flight conducted in accordance with this Agreement.
Operator chooses not to hire its own pilots but to contract for pilot
services from a third party vendor. Although the flight crew is supplied
by a third party vendor, the flight crew is under the exclusive command
and control of Operator in all phases of all flights conducted hereunder.
	 
	13.	 	OPERATIONAL CONTROL. THE PARTIES EXPRESSLY AGREE THAT OPERATOR SHALL HAVE
AND MAINTAIN OPERATIONAL CONTROL OF THE AIRCRAFT FOR ALL FLIGHTS OPERATED
UNDER THIS AGREEMENT, AND THAT THE INTENT OF THE PARTIES IS THAT THIS
AGREEMENT CONSTITUTE A “TIME SHARING AGREEMENT” AS SUCH TERM IS DEFINED IN
SECTION 91.501(C)(1) OF THE FAR. OPERATOR SHALL EXERCISE EXCLUSIVE
AUTHORITY OVER INITIATING, CONDUCTING, OR TERMINATING ANY FLIGHT CONDUCTED
ON BEHALF OF TIME SHARE LESSEE PURSUANT TO THIS AGREEMENT.

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	14.	 	Authority of Pilot In Command. Notwithstanding that Operator shall have
Operational Control of the Aircraft during any flight conducted pursuant
to this Agreement, Operator and Time Share Lessee expressly agree that the
Pilot in Command, in his or her sole discretion, may terminate any flight,
refuse to commence any flight, or take any other flight-related action
which in the judgment of the Pilot in Command is necessitated by
considerations of safety. The Pilot in Command shall have final and
complete authority to postpone or cancel any flight for any reason or
condition which in his or her judgment would compromise the safety of the
flight. No such action of the Pilot in Command shall create or support any
liability of Operator to Time Share Lessee for loss, injury, damage or
delay.
	 
	15.	 	Force Majeure. Operator shall not be liable for delay or failure to
furnish the Aircraft and flight crew pursuant to this Agreement when such
failure is caused by government regulation or authority, mechanical
difficulty, war, civil commotion, strikes or labor disputes, weather
conditions, acts of God or other unforeseen or unanticipated
circumstances.
	 
	16.	 	Insurance.

	16.1	 	Liability. Operator shall maintain, or cause to be
maintained, bodily injury and property damage, liability insurance
in an amount no less than One Hundred Million United States Dollars
(US$ 100,000,000.00) Combined Single Limit for the benefit of
itself, Time Share Lessee, and Owner, in connection with the use of
the Aircraft. Said policy shall be an occurrence policy naming
Owner, Operator and Time Share Lessee as Named Insured.
	 
	16.2	 	Hull. Operator shall maintain, or cause to be maintained,
all risks aircraft hull insurance in an amount equal to the fair
market value of the Aircraft, which the parties agree is not less
than Seventeen Million United States Dollars (US$ 17,000,000.00),
and such insurance shall name Owner and Operator as loss payees as
their interests may appear.
	 
	16.3	 	Insurance Certificates. Operator will provide Time Share
Lessee with a Certificate of Insurance upon execution of this
Agreement.

	17.	 	Representations and Warranties. Time Share Lessee represents and
warrants that:

	17.1	 	Time Share Lessee will use the Aircraft solely for and on
account of his own personal or business use, and will not use the
Aircraft for the purpose of providing transportation of passengers
or cargo for compensation or hire;
	 
	17.2	 	Time Share Lessee shall refrain from incurring any mechanic’s
or other lien in connection with inspection, preventative
maintenance, maintenance or storage of the Aircraft, whether
permissible or impermissible under this Agreement, nor shall there
be any attempt by Time Share Lessee to convey, mortgage, assign,
lease, sublease, or any way alienate the Aircraft or create any kind
of lien or security interest involving the Aircraft or do anything
or take any action that might mature into such a lien; and
	 
	17.3	 	during the Term of this Agreement, Time Share Lessee will
abide by and conform to all Applicable Laws, governmental and
airport orders, rules and regulations, as shall from time to time be
in effect relating in any way to the operation and use of the
Aircraft by a time sharing Time Share Lessee.

	18.	 	No Assignments Neither this Agreement nor any party’s interest herein
shall be assignable to any other party whatsoever; provided, however, that
the rights and obligations of the Operator may be assigned without the
consent of the Time Share Lessee to the any assignee of Operator’s rights
and obligations under the Headlease.
	 
	19.	 	Governing Law. This Agreement has been negotiated and delivered in the
state of Indiana and shall in all respects be governed by, and construed
in accordance with, the laws of the State of Indiana, including all

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	 	 	matters of construction, validity and performance, without giving effect
to its conflict of laws provisions.
	 
	20.	 	Entire Agreement. This Agreement constitutes the entire agreement of the
parties as of the Effective Date and supersedes all prior or independent,
oral or written agreements, understandings, statements, representations,
commitments, promises, and warranties made with respect to the subject
matter of this Agreement.
	 
	21.	 	Prohibited or Unenforceable Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibitions or unenforceability in any jurisdiction. To the
extent permitted by applicable law, each of Operator and Time Share Lessee
hereby waives any provision of applicable law which renders any provision
hereof prohibited or unenforceable in any respect.
	 
	22.	 	Binding Effect. This Agreement, including all agreements, covenants,
representations and warranties, shall be binding upon and inure to the
benefit of, and may be enforced by Operator, Time Share Lessee, and each
of their respective agents, servants, heirs, representatives and
successors.
	 
	23.	 	Headings. The section headings in this Agreement are for convenience
of reference only and shall not modify, define, expand, or limit any of
the terms or provisions hereof.
	 
	24.	 	Amendments. No term or provision of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in
writing signed by both parties.
	 
	25.	 	No Waiver. No delay or omission in the exercise or enforcement or any
right or remedy hereunder by either party shall be construed as a waiver
of such right or remedy. All remedies, rights, undertakings, obligations,
and agreements contained herein shall be cumulative and not mutually
exclusive, and in addition to all other rights and remedies which either
party possesses at law or in equity.
	 
	26.	 	Notices. All communications, declarations, demands, consents,
directions, approvals, instructions, requests and notices required or
permitted by this Agreement shall be in writing and shall be deemed to
have been duly given or made when delivered personally or transmitted
electronically by e-mail or facsimile, receipt acknowledged, or in the
case of documented overnight delivery service or registered or certified
mail, return receipt requested, delivery charge or postage prepaid, on the
date shown on the receipt therefor, in each case at the address set forth
below:

	 	 	 	 	 	 	 	 	 
	

	 	If to Operator:
	 	Emmis Operating Company

40 Monument Circle, Suite 700
	 	Tel:

Fax:
	 	317-684-6565

317-684-558
	

	 	 	 	Indianapolis, Indiana 46204
	 	E-Mail:
	 	scotte@emmis.com
	

	 	 	 	Attn: Legal Department	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	With a copy to:
	 	Galland, Kharasch, Greenberg,
	 	Tel:
	 	202-342-5251
	

	 	 	 	Fellman & Swirsky, P.C.
	 	Fax:
	 	202-342-5219
	

	 	 	 	1054 31st Street, N.W., Suite 200
	 	E-Mail:
	 	kswirsky@gkglaw.com
	

	 	 	 	Washington, D.C. 20007	 	 	 	 
	

	 	 	 	Attn: Keith G. Swirsky	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	If to Sublessee:
	 	Jeffrey H. Smulyan
	 	Tel:
	 	317-684-6530
	

	 	 	 	40 Monument Circle, Suite 700
	 	Fax:
	 	317-684-558
	

	 	 	 	Indianapolis, Indiana 46204
	 	E-Mail:
	 	jeff@emmis.com

	27.	 	Both Parties Equally Responsible for Agreement. It is herein agreed that
both Operator and Time Share Lessee have equally collaborated in the
drafting of this Agreement and both have had the opportunity to confer
with legal counsel prior to signing. Due to this fact, both parties take
equal responsibility with regard to the drafting of this Agreement and any
ambiguities contained herein.

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	28.	 	DISCLAIMER. THE AIRCRAFT IS BEING SUBLEASED BY THE OPERATOR TO THE TIME
SHARE LESSEE HEREUNDER ON A COMPLETELY “AS IS, WHERE IS,” BASIS, WHICH IS
ACKNOWLEDGED AND AGREED TO BY THE TIME SHARE LESSEE. THE WARRANTIES AND
REPRESENTATIONS SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
AND OPERATOR HAS NOT MADE AND SHALL NOT BE CONSIDERED OR DEEMED TO HAVE
MADE (WHETHER BY VIRTUE OF HAVING SUBLEASED THE AIRCRAFT UNDER THIS
AGREEMENT, OR HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR FAILED TO DO
ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS AGREEMENT OR OTHERWISE) ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR
TO ANY PART THEREOF, AND SPECIFICALLY, WITHOUT LIMITATION, IN THIS RESPECT
DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES CONCERNING THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, DESIGN, MERCHANTABILITY, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION AND CONDITION OF THE AIRCRAFT, OR FITNESS FOR
A PARTICULAR USE OF THE AIRCRAFT AND AS TO THE ABSENCE OF LATENT AND OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AND AS TO THE ABSENCE OF ANY
INFRINGEMENT OR THE LIKE, HEREUNDER OF ANY PATENT, TRADEMARK OR COPYRIGHT,
AND AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY
PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF
PERFORMANCE OR DEALING OR USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT OR
ANY PART THEREOF. TIME SHARE LESSEE HEREBY WAIVES, RELEASES, DISCLAIMS
AND RENOUNCES ALL EXPECTATION OF OR RELIANCE UPON ANY SUCH AND OTHER
WARRANTIES, OBLIGATIONS AND LIABILITIES OF OPERATOR AND RIGHTS, CLAIMS AND
REMEDIES OF TIME SHARE LESSEE AGAINST OPERATOR, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO (I) ANY IMPLIED
WARRANTY OF MERCHANTABILITY OF FITNESS FOR ANY PARTICULAR USE, (II) ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR
USAGE OF TRADE, (III) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN
TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF OPERATOR, ACTUAL OR
IMPUTED, AND (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR
LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF USE, REVENUE OR PROFIT WITH
RESPECT TO THE AIRCRAFT, OR FOR ANY OTHER DIRECT, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

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	29.	 	TRUTH IN LEASING STATEMENT UNDER 14 C.F.R. SECTION 91.23.

WITHIN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT,
EXCEPT TO THE EXTENT THE AIRCRAFT IS LESS THAN TWELVE (12) MONTHS OLD, THE
AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED AND IN ACCORDANCE WITH THE FOLLOWING
PROVISIONS OF TITLE 14 OF THE CODE OF FEDERAL REGULATIONS (SAID TITLE 14
HEREINAFTER REFERRED TO AS THE “FEDERAL AVIATION REGULATIONS” OR THE “FAR”):

CHECK ONE:

	9	 	91.409(f) (1): A continuous airworthiness inspection program that is part of a continuous airworthiness
maintenance program currently in use by a person holding an air carrier operating
certificate or an operating certificate issued under FAR Part 121, 127, or 135 and operating
that make and model aircraft under FAR Part 121 or operating that make and model under FAR
Part 135 and maintaining it under FAR 135.411(a)(2).
	 
	9	 	91.409 (f) (2): An approved aircraft inspection program approved under FAR 135.419 and currently in use by a
person holding an operating certificate issued under FAR Part 135.

[Checked] 91.409 (f) (3): A current inspection program recommended by the manufacturer.

	9	 	91.409 (f) (4): Any other inspection program established by the registered owner or operator of the Aircraft
and approved by the Administrator of the Federal Aviation Administration in accordance with
FAR 91.409 (g).

THE PARTIES HERETO CERTIFY THAT DURING THE TERM OF THIS AGREEMENT AND FOR
OPERATIONS CONDUCTED HEREUNDER, THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED
IN ACCORDANCE WITH THE PROVISIONS OF FAR:

CHECK ONE:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9

	 	91.409 (f) (1)
	 	9	 	 	91.409 (f) (2)
	 	[Checked]
	 	91.409 (f) (3)
	 	 	9	 	 	91.409 (f) (4)

OPERATOR SHALL HAVE AND RETAIN OPERATIONAL CONTROL OF THE AIRCRAFT DURING ALL
OPERATIONS CONDUCTED PURSUANT TO THIS LEASE. EACH PARTY HERETO CERTIFIES THAT
IT UNDERSTANDS THE EXTENT OF ITS RESPONSIBILITIES, SET FORTH HEREIN, FOR
COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL
AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FEDERAL AVIATION
ADMINISTRATION FLIGHT STANDARDS DISTRICT OFFICE.

THE PARTIES HERETO CERTIFY THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED
ON THE AIRCRAFT AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON
REQUEST BY AN APPROPRIATELY CONSTITUTED IDENTIFIED REPRESENTATIVE OF THE
ADMINISTRATOR OF THE FAA.

* * *

8

 

     IN WITNESS WHEREOF, the parties have executed this Aircraft Time Sharing
Agreement as of the date and year first written above.

	 	 	 	 	 
	OPERATOR:

	 	 	 	TIME SHARE LESSEE:

Emmis Operating Company

	 	 	 	 	 	 	 
	By:

	 	/s/ J. Scott Enright
	 	 	 	/s/ Jeffrey H. Smulyan
	

	 	
 
	 	 	 	
 
	Print:

	 	J. Scott Enright
	 	 	 	Jeffrey H. Smulyan
	Title:

	 	Vice President	 	 	 	 

9

 

AIRCRAFT TIME SHARING AGREEMENT

Exhibit A

(Attach Headlease)

10

 

AIRCRAFT TIME SHARING AGREEMENT

Exhibit B

(Atach Consent to Sublease)

11exv10w32

 

Exhibit 10.32

TAX SHARING AGREEMENT

     THIS TAX SHARING AGREEMENT (the “Agreement”), dated as of May 10, 2004, is
entered into between Emmis Communications Corporation, an Indiana corporation
(“Parent”), and Emmis Operating Company, an Indiana corporation (“Subsidiary”).

     Parent is the common parent corporation of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the “Code”), that has elected to file consolidated federal
income tax returns, and Subsidiary is a member of such group.

     Parent and Subsidiary desire to set forth in this Agreement their
agreement as to certain matters relating to the inclusion of the Subsidiary
Consolidated Group (as defined below) in the Parent Consolidated Group (as
defined below), including the allocation of tax liabilities for years in which
Subsidiary is so included, and certain other matters relating to taxes.

     The parties agree as follows:

     1. DEFINITIONS.

     “Adjustment” shall have the meaning set forth in Section 8.

     “Agreement Year” shall mean any taxable year beginning on or after
February 29, 2004 during which the Subsidiary Consolidated Group is included in
the Parent Consolidated Group.

     “Balance Payment” shall have the meaning set forth in Section 4.

     “Code” shall have the meaning set forth above.

     “Estimated Tax Payments” shall have the meaning set forth in Section 4.

     “Final Determination” shall mean the final resolution of any tax matter,
including, but not limited to, a closing agreement with the IRS or the relevant
state, local or foreign taxing authority, a claim for refund which has been
allowed, a deficiency notice with respect to which the period for filing a
petition with the Tax Court or the relevant state, local or foreign tribunal
has expired, or a decision of competent jurisdiction that is not subject to
appeal or as to which the time for appeal has expired.

     “IRS” shall mean the Internal Revenue Service.

     “Parent” shall have the meaning set forth above.

 

 

     “Parent Consolidated Group” shall mean the affiliated group of
corporations (including any predecessors and successors thereto) within the
meaning of Section 1504(a) of the Code electing to file consolidated federal
income tax returns and of which Parent is the common parent.

     “Parent Consolidated Return” shall have the meaning set forth in Section 2.

     “Post-Consolidation Year” shall have the meaning set forth in Section 6 of
this Agreement.

     “Pro-Forma Subsidiary Attribute” shall have the meaning set forth in
Section 5.

     “Pro Forma Subsidiary Return” shall have the meaning set forth in Section
3.

     “Records” shall have the meaning set forth in Section 8.

     “Regulations” shall mean the Treasury regulations promulgated under the
Code.

     “Total Periodic Payments” shall have the meaning set forth in Section 4.

     “Subsidiary” shall have the meaning set forth above.

     “Subsidiary Consolidated Group” shall mean the affiliated group of
corporations (including any predecessors and successors thereto) within the
meaning of Section 1504(a) of the Code, of which Subsidiary would be the common
parent if it were not included in the Parent Consolidated Group.

     “Subsidiary Return Items” shall have the meaning set forth in Section 8.

     “Subsidiary Tax Package” shall have the meaning set forth in Section 7.

     2. FILING OF CONSOLIDATED RETURNS AND PAYMENT OF CONSOLIDATED TAX
LIABILITY.

     For all taxable years in which Parent files consolidated federal income
tax returns (any such return of the Parent Consolidated Group for any taxable
year, a “Parent Consolidated Return”) and is entitled to include the Subsidiary
Consolidated Group in such returns, Parent shall include the Subsidiary
Consolidated Group in the consolidated federal income tax returns that it files
as the common parent corporation of the Parent Consolidated Group. Parent,
Subsidiary and the other members of the Parent Consolidated Group shall file
any and all consents, elections or other documents and take any other actions
necessary or appropriate to

2

 

effect the filing of such federal income tax returns. For all taxable
years in which the Subsidiary Consolidated Group is included in the Parent
Consolidated Group, Parent shall pay the entire federal income tax liability of
the Parent Consolidated Group and shall indemnify and hold harmless Subsidiary
and each member of the Subsidiary Consolidated Group against any such
liability; provided, however, that Subsidiary shall make payments to Parent or
receive payments from Parent as provided in this Agreement for any Agreement
Year.

     3. PRO FORMA SUBSIDIARY RETURN.

     For each Agreement Year, Parent shall prepare a pro forma federal income
tax return for the Subsidiary Consolidated Group (a “Pro Forma Subsidiary
Return”). Except as otherwise provided in this Agreement, the Pro Forma
Subsidiary Return for each Agreement Year shall be prepared as if Subsidiary
filed a consolidated federal income tax return on behalf of the Subsidiary
Consolidated Group for such taxable period. The Pro Forma Subsidiary Return
shall reflect any carryovers of net operating losses, net capital losses,
excess tax credits, or other tax attributes from prior Pro Forma Subsidiary
Returns (excluding those attributes that are carried back pursuant to Section
5) that could have been utilized by the Subsidiary Consolidated Group if the
Subsidiary Consolidated Group had never been included in the Parent
Consolidated Group and all Pro Forma Subsidiary Returns had been filed as
actual returns. The Pro Forma Subsidiary Return shall be prepared in a manner
that reflects all elections, positions and methods used in the Parent
Consolidated Return that must be applied on a consolidated basis and otherwise
shall be prepared in a manner consistent with the Parent Consolidated Return.
The provisions of the Code that require consolidated computations, such as
Sections 861, 1201-1212 and 1231, shall be applied separately to the Subsidiary
Consolidated Group as if the Subsidiary Consolidated Group and the Parent
Consolidated Group (excluding the members of the Subsidiary Consolidated Group)
were separate affiliated groups, except that the Pro Forma Subsidiary Return
prepared for the last taxable year, or portion thereof, during which the
Subsidiary Consolidated Group is included in the Parent Consolidated Return
shall also include any gains or losses of the members of the Subsidiary
Consolidated Group on transactions within the Subsidiary Consolidated Group
that must be taken into account pursuant to Section 1.1502-13 of the
Regulations and reflected on the Parent Consolidated Return when the Subsidiary
Consolidated Group ceases to be included in the Parent Consolidated Return.
For each Agreement Year, Section 1.1502-13 of the Regulations shall be applied
as if the Subsidiary Consolidated Group were not a member of the Parent
Consolidated Group. For purposes of the Agreement, all determinations made as
if the Subsidiary Consolidated Group had never been included in the Parent
Consolidated Group and as if all Pro Forma Subsidiary Returns were actual
returns shall reflect any actual short taxable years resulting from the
Subsidiary Consolidated Group joining or leaving the Parent Consolidated Group.

3

 

     4. TAX PAYMENTS.

     (a) Estimated Income Tax Payments. For each Agreement Year, Subsidiary
shall make periodic payments (“Estimated Income Tax Payments”) to Parent in
such amounts as shall be equal to the estimated tax payments that would be
payable by the Subsidiary Consolidated Group if it were not included in the
Parent Consolidated Group, no later than the dates on which such estimated tax
payments would be due from the Subsidiary Consolidated Group if it were not
included in the Parent Consolidated Group.

     (b) Balance Payment. For each Agreement Year, Subsidiary shall pay to
Parent an amount equal to the tax payment that would be payable by the
Subsidiary Consolidated Group if it were not included in the Parent
Consolidated Group, no later than March 15 of the following year (the “Balance
Payment”).

     (c) Payments based on Pro Forma Subsidiary Return. For each Agreement
Year, Subsidiary shall pay to Parent, no later than the date on which a Parent
Consolidated Return is filed for such Agreement Year, an amount equal to the
sum of (i) the federal income tax liability shown on the corresponding Pro
Forma Subsidiary Return prepared for such Agreement Year and (ii) the additions
to tax, if any, under Section 6655 of the Code that would have been imposed on
the Subsidiary Consolidated Group (treating the amount due to Parent under (i)
above as its federal income tax liability and treating any Estimated Tax
Payments to Parent pursuant to clause (a) as estimated payments under Section
6655 of the Code) and which result from the inaccuracy of any information
provided by Subsidiary to Parent pursuant to Section 7 hereof or from the
failure of Subsidiary to provide any requested information, reduced by (iii)
the sum for such Agreement Year of the amount of the Estimated Tax Payments and
the Balance Payment (collectively, the “Total Periodic Payments”), plus (iv)
any interest and additions to tax (other than under Section 6655 of the Code)
that would be due under the Code if the Total Periodic Payments were actual
payments of tax. If the Total Periodic Payments to Parent for any Agreement
Year exceed the amount of Subsidiary’s liability for such Agreement Year under
the preceding sentence, Parent shall pay to Subsidiary an amount equal to such
excess within 10 days after filing the Parent Consolidated Return for such
Agreement Year. For purposes of this Agreement, the term “federal income tax
liability” includes the tax imposed by Sections 11, 55 and 59A of the Code, or
any successor provisions to such Sections. Parent shall notify Subsidiary of
any amounts due from Subsidiary to Parent pursuant to this Section 4 at least 5
business days prior to the date such payments are due, and such payments shall
not be considered due until the later of the due date described above or the
fifth day after Parent gives such notice.

4

 

     5. LOSSES; REFUNDS.

     If a Pro Forma Subsidiary Return for any Agreement Year reflects a net
operating loss, net capital loss, excess tax credit or other tax attribute (a
“Pro Forma Subsidiary Attribute”),which attribute is actually utilized in a
Parent Consolidated Return (including any amendments thereto), then, within 30
days after the later of (i) the due date for the relevant Parent Consolidated
Return for such Agreement Year (taking into account any extensions) or (ii) the
date such Pro Forma Subsidiary Attribute is actually realized in cash (whether
directly or by offset), Parent shall pay to Subsidiary an amount equal to the
lesser of (x) the refund that the Subsidiary Consolidated Group would have
received as a result of the carryback of such Pro Forma Subsidiary Attribute to
a Pro Forma Subsidiary Return for any prior Agreement Year or Years, assuming
that all Pro Forma Subsidiary Returns had been filed as actual returns and that
the Subsidiary Consolidated Group had filed returns as a separate affiliated
group for all prior taxable years or (y) the tax savings or tax benefit
actually realized by Parent with respect to the use of such Pro Forma
Subsidiary Attribute in a Parent Consolidated Return. For purposes of Section
3, the portion of any such attribute that is treated as carried back pursuant
to this Section 5 shall be appropriately adjusted to reflect the extent to
which payment under this Section 5 is limited by clause (y) of the preceding
sentence. All calculations of deemed refunds pursuant to this Section 5 shall
include interest computed as if the Subsidiary Consolidated Group had filed a
claim for refund or an application for a tentative carryback adjustment
pursuant to Section 6411(a) of the Code on the date on which the relevant
Parent Consolidated Return is filed.

     6. PAYMENTS FOR TAXABLE YEARS IN THE EVENT OF DECONSOLIDATION.

     (a) Payments By Subsidiary To Parent. If for any taxable year after the
Subsidiary Consolidated Group ceases to be included in the Parent Consolidated
Group (a “Post-Consolidation Year”), (i) the federal income tax liability of
the Subsidiary Consolidated Group is less than the federal income tax liability
that would have been imposed with respect to the same period if the Subsidiary
Consolidated Group had not been included in the Parent Consolidated Group for
any Agreement Year and all Pro Forma Subsidiary Returns had been actual returns
for such years, or (ii) the federal income tax liability of the Parent
Consolidated Group is greater than the federal income tax liability that would
have been imposed with respect to the same period if the Subsidiary
Consolidated Group had not been included in the Parent Consolidated Group for
any Agreement Year and all Pro Forma Subsidiary Returns had been actual returns
for such years, then, to the extent that Subsidiary has not already made a
payment to Parent for utilization of the tax attributes that gave rise to the
decrease or increase described in (i) or (ii), Subsidiary shall pay to Parent
an amount equal to such decrease or increase within 10 days of the filing of
Subsidiary Post-Consolidation Year return. In the event that there is both a
decrease and an increase described in (i) and (ii), respectively, of the
previous sentence for any

5

 

Post-Consolidation Year, then Subsidiary shall make a payment to Parent in
an amount equal to the sum of such decrease and increase, unless such decrease
and increase (or any portion thereof) result from utilization of the same tax
attribute(s), in which case the amount of the payment will be reduced
accordingly.

     (b) Payments By Parent To Subsidiary. If for any Post-Consolidation Year
(i) the federal income tax liability of the Subsidiary Consolidated Group is
greater than the federal income tax liability that would have been imposed with
respect to the same period if the Subsidiary Consolidated Group had not been
included in the Parent Consolidated Group for any Agreement Year and all Pro
Forma Subsidiary Returns had been actual returns for such years, or (ii) the
federal income tax liability of the Parent Consolidated Group is less than the
federal income tax liability that would have been imposed with respect to the
same period if the Subsidiary Consolidated Group had not been included in the
Parent Consolidated Group for any Agreement Year and all Pro Forma Subsidiary
Returns had been actual returns for such years, then, to the extent that Parent
has not already made a payment to Subsidiary for utilization of the tax
attributes that gave rise to the increase or decrease described in (i) or (ii),
Parent shall pay to Subsidiary an amount equal to such increase or decrease
within 10 days of notification by Subsidiary to Parent of the filing of
Subsidiary Post-Consolidation Year return. In the event that there is both an
increase and a decrease described in (i) and (ii), respectively, of the
previous sentence for any Post-Consolidation Year, then Parent shall make a
payment to Subsidiary in an amount equal to the sum of such increase and
decrease, unless such increase and decrease (or any portion thereof) result
from utilization of the same tax attribute(s), in which case the amount of the
payment will be reduced accordingly.

     (c) Documentation. Prior to the payment of any amounts due pursuant to
this Section 6, the parties shall exchange such information and documentation
as is reasonably satisfactory to each of them in order to substantiate the
amounts due pursuant to this Section 6. Any disputes as to such amounts and
documentation that cannot be resolved prior to the date on which a payment is
due shall be referred to an independent accounting firm whose fees shall paid
one-half by Subsidiary and one-half by Parent.

          (d) Post-Consolidation Year Carrybacks.

     (i) If a Subsidiary Consolidated Group federal income tax
return for any Post-Consolidation Year reflects a net operating
loss, net capital loss, excess tax credits, or any other tax
attribute, whether or not Subsidiary waives the right to carryback
any such attribute to a Parent Consolidated Return, no payment with
respect to such carrybacks shall be due from Parent.

     (ii) If a Parent Consolidated Return for any
Post-Consolidation Year reflects a net operating loss, net capital
loss, excess tax credits, or any other

6

 

tax attribute, such attribute may be carried back to Parent
Consolidated Return for an Agreement Year, and Parent shall be
entitled to retain (without any obligation to reimburse Subsidiary)
the full amount of any refund received in connection therewith. In
the event that Subsidiary (or any other member of the Subsidiary
Consolidated Group) receives any refund with respect to an
Agreement Year issued in connection with a carryback of a Parent
Consolidated Group tax attribute from a Post-Consolidation Year to
a Parent Consolidated Return for an Agreement Year, Subsidiary
shall promptly pay the full amount of such refund to Parent.

     (e) No Duplication of Payment. Notwithstanding anything to the contrary
herein, neither Section 5(a) nor Section 5(b) shall require Subsidiary or
Parent, as the case may be, to make any payment pursuant to such section to the
extent that the payment is attributable to a tax attribute for which payment
has previously been made pursuant to Section 4.

     7. PREPARATION OF TAX PACKAGE AND OTHER FINANCIAL REPORTING INFORMATION.

     Subsidiary shall provide to Parent, in a format determined by Parent, all
information requested by Parent as reasonably necessary to prepare the Parent
Consolidated Return and the Pro Forma Subsidiary Return (the “Subsidiary Tax
Package”). The Subsidiary Tax Package with respect to any taxable year shall
be provided to Parent on a basis consistent with practices of the Parent
Consolidated Group. Subsidiary shall also provide to Parent information
required to determine the Total Periodic Payments, current federal taxable
income, current and deferred tax liabilities, tax reserve items and any
additional current or prior information required by Parent on a timely basis
consistent with practices of the Parent Consolidated Group.

     8. RETURNS, AUDITS, REFUNDS, AMENDED RETURNS, LITIGATION, ADJUSTMENTS AND
RULINGS.

     (a) Returns. Parent shall have exclusive and sole responsibility for the
preparation and filing of the Parent Consolidated Returns (including requests
for extensions) and any other returns, amended returns and other documents or
statements required to be filed with the IRS in connection with the
determination of the federal income tax liability of the Parent Consolidated
Group.

     (b) Audits; Refund Claims. Parent will have exclusive and sole
responsibility and control with respect to the conduct of IRS examinations of
the returns filed by the Parent Consolidated Group and any refund claims with
respect to such returns, including without limitation the right to select
counsel, the right to determine the court or other body in

7

 

which any contest shall be brought, the right to determine whether to
contest a proposed deficiency or to pay a tax and sue for a refund and the
right to determine whether and how to appeal any adverse determination .
Subsidiary shall assist and cooperate with Parent during the course of any such
proceeding. Parent shall give Subsidiary notice of and consult with Subsidiary
with respect to any issues relating to items of income, gain, loss, deduction
or credit of Subsidiary (any such items, “Subsidiary Return Items”). Parent
shall not settle or otherwise compromise any Subsidiary Return Item that would
result in additional liability for Subsidiary under this Agreement without the
written consent of Subsidiary, which consent shall not be unreasonably
withheld. If Subsidiary does not respond to Parent’s request for consent
within 30 days, Subsidiary shall be deemed to have consented.

     (c) Litigation. If the federal income tax liability of the Parent
Consolidated Group becomes the subject of litigation in any court, the conduct
of the litigation shall be controlled exclusively by Parent. Subsidiary shall
assist and cooperate with Parent during the course of litigation, and Parent
shall consult with Subsidiary regarding any issues relating to Subsidiary
Return Items.

     (d) Expenses. Subsidiary shall reimburse Parent for all reasonable
out-of-pocket expenses (including, without limitation, legal, consulting and
accounting fees) in the course of proceedings described in paragraphs (b) and
(c) of this Section 8, to the extent such expenses are reasonably attributable
to Subsidiary Return Items for any Agreement Year.

     (e) Recalculation Of Payments To Reflect Adjustments. To the extent that
there is a Final Determination with respect to a Parent Consolidated Return
that results in a change in an item relating to such return (an “Adjustment”)
that affects the treatment of a Subsidiary Return Item for an Agreement Year, a
corresponding adjustment shall be made to the corresponding Pro Forma
Subsidiary Return. All calculations of payments made pursuant to Sections 4, 5
and 6 of this Agreement shall be recomputed to reflect the effect of any
Adjustments on the relevant Pro Forma Subsidiary Return. Within 5 days after
any such Adjustment, Subsidiary or Parent, as appropriate, shall make a payment
to the other party reflecting such Adjustment, plus interest pursuant to
Section 9 of the Agreement, calculated as if payments by and to Subsidiary
pursuant to Sections 4, 5 and 6 of this Agreement and this Section 8 were
payments and refunds of federal income taxes. Subsidiary shall further pay to
Parent the amount of any penalties or additions to tax incurred by the Parent
Consolidated Group as a result of an adjustment to any Subsidiary Return Item
for an Agreement Year.

     (f) Rulings. Subsidiary shall assist and cooperate with Parent and take
all actions requested by Parent in connection with any ruling requests
submitted by Parent to the IRS.

8

 

     (g) Applicability With Respect To All Consolidated Returns. The
provisions of Sections 8(a), (b) and (c) above shall apply to Parent
Consolidated Returns and Subsidiary Return Items for all taxable years in which
Subsidiary is includable in the Parent Consolidated Group.

     (h) Document Retention, Access To Records and Use Of Personnel. Until the
expiration of the relevant statute of limitations (including extensions),
Subsidiary shall (i) retain records, documents, accounting data, computer data
and other information (collectively, the “Records”) necessary for the
preparation, filing, review, audit or defense of all tax returns relevant to an
obligation, right or liability of either party under the Agreement; and (ii)
give Parent reasonable access to such Records and to its personnel (insuring
their cooperation) and premises to the extent relevant to an obligation, right
or liability of either party under the Agreement. Prior to disposing of any
such Records, Subsidiary shall notify Parent in writing of such intention and
afford Parent the opportunity to take possession or make copies of such Records
at its discretion.

     9. INTEREST.

     Interest required to be paid by or to Subsidiary pursuant to the Agreement
shall, unless otherwise specified, be computed at the rate and in the manner
provided in the Code for interest on underpayments and overpayments,
respectively, of federal income tax for the relevant period. Any payments
required pursuant to the Agreement which are not made within the time period
specified in the Agreement shall bear interest at a rate equal to the rate
provided in the Code for interest on underpayments of tax.

     10. FOREIGN, STATE AND LOCAL INCOME TAXES.

     (a) In the case of foreign, state or local taxes based on or measured by
the net income of the Parent Consolidated Group, or any members of the Parent
Consolidated Group (other than solely with respect to the Subsidiary
Consolidated Group or solely with respect to members of the Parent Consolidated
Group other than members of the Subsidiary Consolidated Group) on a combined,
consolidated or unitary basis, the provisions of this Agreement shall apply
with equal force to such foreign, state or local tax for each Agreement Year,
whether or not the Subsidiary Consolidated Group is included in the Parent
Consolidated Group for federal income tax purposes; provided, however, that
interest pursuant to the first sentence of Section 9 of this Agreement shall be
computed at the rate and in the manner provided under such foreign, state or
local law for interest on underpayments and overpayments of such tax for the
relevant period, and references to provisions of the Code throughout the
Agreement shall be deemed to be references to analogous provisions of foreign,
state and local law.

9

 

     (b) For any taxable year, Parent shall have the sole and exclusive control
of (a) the determination of whether a combined, consolidated or unitary tax
return should be filed for any foreign, state or local tax purpose and (b) all
foreign, state or local income tax audits and litigation with respect to the
Subsidiary Consolidated Group to the same extent as provided in this Agreement
for federal income tax matters (including the right in its sole discretion to
have Subsidiary pay any disputed taxes and sue for a refund in the forum of
Parent’s choice). Subsidiary shall reimburse Parent for all reasonable
out-of-pocket expenses (including, without limitation, legal, consulting and
accounting fees) in the course of proceedings described in the preceding
sentence, to the extent such expenses are reasonably attributable to the
Subsidiary Consolidated Group.

     (c) Subsidiary shall be responsible for filing tax returns relating to
payroll, sales and use, property, withholding, capital stock, net worth and
similar taxes attributable to members of the Subsidiary Consolidated Group and
shall be responsible for the payment of such taxes.

     (d) For all taxable years that Subsidiary is a member of the Parent
Consolidated Group, Subsidiary shall have the sole and exclusive responsibility
for all taxes based on or measured by net income that are determined solely by
the income of the Subsidiary Consolidated Group (or any combination of the
members thereof, including the predecessors and successors of such members) on
a combined, consolidated, unitary or separate company basis.

     (e) Parent will provide notice of and consult with Subsidiary with respect
to any issue relating to such audits and litigation, and Subsidiary will
provide to Parent any information necessary to conduct such audits and
litigation. Parent shall not settle or otherwise compromise any audits or
litigation that would result in additional liability for Subsidiary under this
Section 10 without the written consent of Subsidiary, which consent shall not
be unreasonably withheld. If Subsidiary does not respond to Parent’s request
for consent within 30 days, Subsidiary shall be deemed to have consented.

     11. SUCCESSORS AND ACCESS TO INFORMATION.

     The Agreement shall be binding upon and inure to the benefit of any
successor to any of the parties, by merger, acquisition of assets or otherwise,
to the same extent as if the successor had been an original party to the
Agreement, and in such event, all references in this Agreement to a party shall
refer instead to the successor of such party. If for any taxable year
Subsidiary is no longer included in the Parent Consolidated Group, Parent and
Subsidiary agree to provide to the other party any information reasonably
required to complete tax returns for taxable periods beginning after Subsidiary
is no longer included in a Parent Consolidated Return,

10

 

and each of Parent and Subsidiary will cooperate with respect to any
audits or litigation relating to any Parent Consolidated Return.

     12. CONFIDENTIALITY.

     Each of Parent and Subsidiary agrees that any information furnished
pursuant to the Agreement is confidential and, except as and to the extent
required by law or otherwise during the course of an audit or litigation or
other administrative or legal proceeding, shall not be disclosed to other
persons. In addition, each of Parent and Subsidiary shall cause its employees,
agents and advisors to comply with the terms of this Section 12.

     13. GOVERNING LAW.

     The Agreement shall be governed by and construed in accordance with the
laws of the State of Indiana applicable to contracts entered into and to be
fully performed within the State of Indiana.

     14. HEADINGS.

     The headings in the Agreement are for convenience only and shall not be
deemed for any purpose to constitute a part or to affect the interpretation of
the Agreement.

     15. SECTION REFERENCES.

     References to Sections shall, unless otherwise specified, be references to
Sections of this Agreement.

     16. COUNTERPARTS.

     The Agreement may be executed simultaneously in two or more counterparts,
each of which will be deemed an original, and it shall not be necessary in
making proof of the Agreement to produce or account for more than one
counterpart.

     17. SEVERABILITY.

     If any provision of the Agreement is held to be unenforceable for any
reason, it shall be adjusted rather than voided, if possible, in order to
achieve the intent of the parties to the maximum extent practicable. In any
event, all other provisions of the Agreement shall be deemed valid, binding,
and enforceable to their full extent.

11

 

     18. TERMINATION.

     The Agreement shall remain in force and be binding so long as the
applicable period of assessments (including extensions) remains unexpired for
any taxes contemplated by the Agreement; provided, however, that neither Parent
nor Subsidiary shall have any liability to the other party with respect to tax
liabilities for any taxable year in which Subsidiary is not included in the
Parent Consolidated Return for such year, except as provided in Sections 5 and
10.

     19. SUCCESSOR PROVISIONS.

     Any reference herein to any provisions of the Code or Treasury Regulations
shall be deemed to include any amendments or successor provisions thereto, as
appropriate.

     20. COMPLIANCE BY SUBSIDIARIES.

     Parent and Subsidiary each agrees to cause all members of the Parent
Consolidated Group and the Subsidiary Consolidated Group (including
predecessors and successors to such members) to comply with the terms of this
Agreement.

12

 

     IN WITNESS WHEREOF, each of the parties to this Agreement has caused this
Agreement to be executed by its duly authorized officer on this May 10, 2004.

	 	 	 	 	 
	 	EMMIS COMMUNICATIONS CORPORATION

 	 
	 	By:  	  /s/  J. Scott Enright
 	 
	 	 	  Name:  	  J. Scott Enright 	 
	 	 	  Title:  	  Vice President, Secretary and

  Associate General Counsel 	 
	 

	 	 	 	 	 
	 	EMMIS OPERATING COMPANY

 	 
	 	By:  	  /s/  J. Scott Enright
 	 
	 	 	  Name:  	  J. Scott Enright 	 
	 	 	  Title:  	  Vice President, Secretary and

  Associate General Counsel 	 
	 

13

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