Document:

exv10w1

 

Exhibit 10.1

EMMIS COMMUNICATIONS CORPORATION

CHANGE IN CONTROL SEVERANCE AGREEMENT

          THIS AGREEMENT is entered into as of August 24, 2006 (the “Effective Date”) by and between
EMMIS COMMUNICATIONS CORPORATION, an Indiana corporation (the “Company”), and PATRICK WALSH
(“Executive”).

W I T N E S S E T H

          WHEREAS, the Company considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of the Company and its
stockholders; and

          WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may arise and that such possibility may result in the departure
or distraction of management personnel to the detriment of the Company and its stockholders; and

          WHEREAS, it is in the best interests of the Company and its stockholders to secure Executive’s
continued services and to ensure Executive’s continued and undivided dedication to his duties in
the event of any threat or occurrence of a “Change in Control” (as defined in Section 1) of the
Company.

          NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained, the Company and Executive hereby agree as follows:

          1. Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below:

               (a) “Affiliate” means, with respect to a specified person, a person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is under
common control with, the person specified.

               (b) “Board” means the Board of Directors of the Company.

               (c) “Bonus Amount” means the greater of (i) the highest annual incentive bonus earned by
Executive from the Company (or its Affiliates) during the last three (3) completed fiscal years of
the Company immediately preceding Executive’s Date of Termination (annualized in the event
Executive was not employed by the Company (or its Affiliates) for the whole of any such fiscal
year), or (ii) if the Date of Termination occurs before Executive has been employed for a full
fiscal year, and before the date Company generally pays bonuses to its Executives for the fiscal
year in which Executive’s employment commenced, the Executive’s target bonus for the fiscal year of
the Company which includes the Executive’s Date of Termination.

               (d) “Cause” means (i) the willful and continued failure of Executive to perform substantially
his duties with the Company (other than any such failure resulting from Executive’s incapacity due
to physical or mental illness or any such

 

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failure subsequent to Executive being delivered a Notice of Termination without Cause by the
Company or delivering a Notice of Termination for Good Reason to the Company) after a written
demand for substantial performance is delivered to Executive by the Board which specifically
identifies the manner in which the Board believes that Executive has not substantially performed
Executive’s duties; provided that Executive has not cured such failure or commenced such
performance within 30 days after such demand is given to Executive, or (ii) the willful engaging by
Executive in illegal conduct or gross misconduct which is demonstrably and materially injurious to
the Company or its Affiliates. For purpose of the preceding sentence, no act or failure to act by
Executive shall be considered “willful” unless done or omitted to be done by Executive in bad faith
and without reasonable belief that Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board, based upon the advice of counsel for the Company (or upon the instructions of
the Company’s chief executive officer or another senior officer of the Company) shall be
conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. Cause shall not exist unless and until the Company has delivered to
Executive a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board
(excluding Executive if Executive is a Board member) at a meeting of the Board called and held for
such purpose (after reasonable notice to Executive and an opportunity for Executive, together with
counsel, to be heard before the Board), finding that in the good faith opinion of the Board an
event set forth in clauses (i) or (ii) has occurred and specifying the particulars thereof in
detail. The Company must notify Executive of any event constituting Cause within ninety (90) days
following the Company’s knowledge of its existence or such event shall not constitute Cause under
this Agreement.

               (e) “Change in Control” means any of the following: (i) any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (other than an Affiliate or any employee benefit plan (or any related
trust) of the Company or an Affiliate, and other than Jeffrey H. Smulyan or an Affiliate of Mr.
Smulyan) (a “Person”) becomes after the date hereof the beneficial owner of 25% or more of either
the then outstanding Stock or the combined voting power of the then outstanding voting securities
of the Company entitled to vote in the election of directors, except that no Change in Control
shall be deemed to have occurred solely by reason of any such acquisition by a corporation with
respect to which, after such acquisition, more than 60% of both the then outstanding common shares
of such corporation and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote in the election of directors are then beneficially owned, directly or
indirectly, by the persons who were the beneficial owners of the Stock and voting securities of the
Company immediately before such acquisition in substantially the same proportion as their
ownership, immediately before such acquisition, of the outstanding Stock and the combined voting
power of the then outstanding voting securities of the Company entitled to vote in the election of
directors; (ii) individuals who, as of the Effective Date, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board; provided that any
individual who becomes a director after the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a

 

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vote or written consent of at least two-thirds of the directors then comprising the Incumbent
Directors shall be considered as though such individual were an Incumbent Director, but excluding,
for this purpose, any such individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 under the Exchange Act); (iii) the consummation of (A) a merger,
reorganization or consolidation with respect to which the individuals and entities who were the
respective beneficial owners of the Stock and voting securities of the Company immediately before
such merger, reorganization or consolidation do not, after such merger, reorganization or
consolidation, beneficially own, directly or indirectly, more than 60% of, respectively, the then
outstanding common shares and the combined voting power of the then outstanding voting securities
entitled to vote in the election of directors of the corporation resulting from such merger,
reorganization or consolidation, or (B) the sale or other disposition of all or substantially all
of the assets of the Company to any Person; (iv) the approval by the shareholders of the Company
of a liquidation or dissolution of the Company; or (v) such other event(s) or circumstance(s) as
are determined by the Board to constitute a Change in Control. Notwithstanding the foregoing
provisions of this definition, a Change in Control of the Company shall be deemed not to have
occurred (a) with respect to any Executive, if such Executive is, by written agreement executed
prior to such Change in Control, a participant on such Executive’s own behalf in a transaction in
which the persons (or their Affiliates) with whom such Executive has the written agreement Acquire
the Company (as defined below) and, pursuant to the written agreement, the Executive has an equity
interest in the resulting entity or a right to acquire such an equity interest, or (b) in the event
the Company separates or bifurcates its radio and television divisions by means of merger,
corporate reorganization, sale or disposition of assets, spin-off, tax-free reorganization, or
otherwise (any such separation or bifurcation, a “Separation Event”), and, immediately thereafter,
Mr. Smulyan is Chairman or Chief Executive Officer of the Company or any successor thereto,
including without limitation, either division or any entity established as a result of a Separation
Event ( a “Successor”), Mr. Smulyan retains the ability to vote at least fifty percent (50%) of all
classes of stock of the Company or any Successor, or Mr. Smulyan retains the ability to elect a
majority of the Board of Directors of the Company or any Successor.

          Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur
solely because any Person acquires beneficial ownership of more than 25% of the then outstanding
Stock as a result of the acquisition of the Stock by the Company which reduces the number of shares
of Stock outstanding; provided, that if after such acquisition by the Company such
person becomes the beneficial owner of additional Stock that increases the percentage of
outstanding Stock beneficially owned by such person, a Change in Control of the Company shall then
occur.

          For the purposes of this definition, “Acquire the Company” means the acquisition of beneficial
ownership by purchase, merger, or otherwise, of either more than 50% of the Stock (such percentage
to be computed in accordance with Rule 13d-3(d)(1)(i) of the SEC under the Exchange Act) or
substantially all of the assets of the Company or its successors; “person” means such term as used
in Rule 13d-5 of the SEC under the Exchange Act; “beneficial owner” means such term as defined in
Rule 13d-3 of

 

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the SEC under the Exchange Act; and “group” means such term as defined in Section 13(d) of the
Exchange Act.

               (f) “Code” means the Internal Revenue Code of 1986, as amended, and regulations and rulings
thereunder. References to a particular section of the Code shall include references to successor
provisions.

               (g) “Date of Termination” means (1) the effective date on which Executive’s employment by the
Company terminates as specified in a prior written notice by the Company or Executive, as the case
may be, to the other, delivered pursuant to Section 10 or (2) if Executive’s employment by the
Company terminates by reason of death, the date of death of Executive.

               (h) “Disability” means termination of Executive’s employment by the Company due to Executive’s
absence from Executive’s duties with the Company on a full-time basis for at least one hundred
eighty (180) consecutive days as a result of Executive’s incapacity due to physical or mental
illness.

               (i) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References to a
particular section of, or rule under, the Exchange Act shall include references to successor
provisions.

               (j) “Good Reason” means, without Executive’s express written consent, the occurrence of any of
the following events after a Change in Control:

               (i) any (A) change in the duties or responsibilities (including reporting
responsibilities) of Executive that is inconsistent in any material and adverse respect
with Executive’s position(s), duties, responsibilities or status with the Company
immediately prior to such Change in Control (including any material and adverse diminution
of such duties or responsibilities); provided, however, that Good Reason
shall not be deemed to occur upon a change in duties or responsibilities (other than
reporting responsibilities) that is solely and directly a result of the Company no longer
being a publicly traded entity and does not involve any other event set forth in this
paragraph (j) or (B) material and adverse change in Executive’s titles or offices
(including, if applicable, membership on the Board) with the Company as in effect
immediately prior to such Change in Control;

               (ii) a material breach by the Company or an Affiliate of the Company of an employment
agreement to which the Executive and the Company or an Affiliate of the Company are
parties;

               (iii) a reduction by the Company in Executive’s rate of annual base salary or annual
target bonus opportunity as in effect immediately prior to such Change in Control or as the
same may be increased from time to time thereafter;

 

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               (iv) any requirement of the Company that Executive (A) be based anywhere more than
thirty-five (35) miles from the office where Executive is located at the time of the Change
in Control, if such relocation increases Executive’s commute by more than twenty (20)
miles, or (B) travel on Company business to an extent substantially greater than the travel
obligations of Executive immediately prior to such Change in Control;

               (v) the failure of the Company to (A) continue in effect any material employee benefit
plan, compensation plan, welfare benefit plan or fringe benefit plan in which Executive is
participating immediately prior to such Change in Control or the taking of any action by
the Company which would adversely affect Executive’s participation in or reduce Executive’s
benefits under any such plan, unless Executive is permitted to participate in other plans
providing Executive with substantially equivalent benefits in the aggregate (at
substantially equivalent cost with respect to welfare benefit plans), or (B) provide
Executive with paid vacation in accordance with the most favorable vacation policies of the
Company and its Affiliates as in effect for Executive immediately prior to such Change in
Control, including the crediting of all service for which Executive had been credited under
such vacation policies prior to the Change in Control;

               (vi) any refusal by the Company to continue to permit Executive to engage in
activities not directly related to the business of the Company in which Executive was
permitted to engage prior to the Change in Control;

               (vii) any purported termination of Executive’s employment which is not effectuated
pursuant to Section 10(b) (and which will not constitute a termination hereunder); or

               (viii) the failure of the Company to obtain the assumption and, if applicable,
guarantee, agreement from any successor (and parent corporation) as contemplated in Section
9(b).

Notwithstanding anything herein to the contrary, termination of employment by Executive for any
reason during the 30-day period commencing one (1) year after the date of a Change in Control shall
constitute a termination for Good Reason. An isolated, insubstantial and inadvertent action taken
in good faith and which is remedied by the Company within ten (10) days after receipt of notice
thereof given by Executive shall not constitute Good Reason. Executive’s right to terminate
employment for Good Reason shall not be affected by Executive’s incapacity due to mental or
physical illness and Executive’s continued employment shall not constitute consent to, or a waiver
of rights with respect to, any event or condition constituting Good Reason; provided,
however, that Executive must provide notice of termination of employment within ninety (90)
days following Executive’s knowledge of an event constituting Good Reason or such event shall not
constitute a termination for Good Reason under this Agreement.

 

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               (k) “Qualifying Termination” means a termination of Executive’s employment (i) by the Company
other than for Cause or (ii) by Executive for Good Reason. Termination of Executive’s employment
on account of death, Disability or Retirement shall not be treated as a Qualifying Termination.

               (l) “Retirement” means Executive’s retirement (not including any mandatory early retirement)
in accordance with the Company’s retirement policy generally applicable to its salaried employees,
as in effect immediately prior to the Change in Control, or in accordance with any retirement
arrangement established with respect to Executive with Executive’s written consent;
provided, however, that under no circumstances shall a resignation with Good Reason
be deemed a Retirement.

               (m) “SEC” means the Securities and Exchange Commission.

               (n) “Stock” means the Class A Common Stock and the Class B Common Stock of the Company, par
value $.01 per share.

               (o) “Termination Period” means the period of time beginning with a Change in Control and
ending two (2) years following such Change in Control. Notwithstanding anything in this Agreement
to the contrary, if (i) Executive’s employment is terminated prior to a Change in Control for
reasons that would have constituted a Qualifying Termination if they had occurred following a
Change in Control; (ii) Executive reasonably demonstrates that such termination (or Good Reason
event) was at the request of a Person who had indicated an intention or taken steps reasonably
calculated to effect a Change in Control, or was otherwise made in connection with a Change in
Control; and (iii) a Change in Control involving such third party or an Affiliate of such third
party (or a party competing with such third party to effectuate a Change in Control) does occur,
then for purposes of this Agreement, the date immediately prior to the date of such termination of
employment or event constituting Good Reason shall be treated as a Change in Control. For purposes
of determining the timing of payments and benefits to Executive under Section 4, the date of the
actual Change in Control shall be treated as Executive’s Date of Termination under Section l(g).

     2. Obligation of Executive. In the event of a tender or exchange offer, proxy
contest, or the execution of any agreement which, if consummated, would constitute a Change in
Control, Executive agrees not to voluntarily leave the employ of the Company, other than as a
result of Disability, Retirement or an event which would constitute Good Reason if a Change in
Control had occurred, until the Change in Control occurs or, if earlier, such tender or exchange
offer, proxy contest, or agreement is terminated or abandoned.

     3. Term of Agreement. This Agreement shall be effective on the date hereof and shall
continue in effect until the Company shall have given three (3) years’ written notice of
cancellation; provided, that, notwithstanding the delivery of any such notice, this
Agreement shall continue in effect for a period of two (2) years after a Change in Control, if such
Change in Control shall have occurred during the term of this Agreement. Notwithstanding anything
in this Section to the contrary, this Agreement

 

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shall terminate if Executive or the Company terminates Executive’s employment prior to a
Change in Control except as provided in the second sentence of Section 1(o).

          4. Payments Upon Termination of Employment.

               (a) Qualifying Termination — Severance. If during the Termination Period the
employment of Executive shall terminate pursuant to a Qualifying Termination, then the Company
shall provide to Executive:

               (i) within ten (10) days following the Date of Termination a lump-sum cash amount
equal to the sum of (A) Executive’s base salary through the Date of Termination and any
bonus amounts which have become payable, to the extent not theretofore paid or deferred,
(B) a pro rata portion of Executive’s annual bonus for the fiscal year in which Executive’s
Date of Termination occurs in an amount at least equal to (1) Executive’s target bonus for
such fiscal year, multiplied by (2) a fraction, the numerator of which is the number of
days in the fiscal year in which the Date of Termination occurs through the Date of
Termination and the denominator of which is three hundred sixty-five (365), and (C) any
accrued vacation pay, in each case to the extent not theretofore paid; plus

               (ii) within ten (10) days following the Date of Termination, a lump-sum cash amount
equal to (i) three (3) times Executive’s highest annual rate of base salary during the
36-month period immediately prior to Executive’s Date of Termination plus (ii) three (3)
times Executive’s Bonus Amount.

               (b) Qualifying Termination — Benefits. If during the Termination Period the
employment of Executive shall terminate pursuant to a Qualifying Termination, the Company shall
continue to provide, for a period of three (3) years following Executive’s Date of Termination,
Executive (and Executive’s dependents, if applicable) with the same level of medical, dental,
accident, disability and life insurance benefits upon substantially the same terms and conditions
(including contributions required by Executive for such benefits) as existed immediately prior to
Executive’s Date of Termination (or, if more favorable to Executive, as such benefits and terms and
conditions existed immediately prior to the Change in Control); provided, that, if
Executive cannot continue to participate in the Company plans providing such benefits, the Company
shall otherwise provide such benefits on the same after-tax basis as if continued participation had
been permitted. Notwithstanding the foregoing, in the event Executive becomes reemployed with
another employer and becomes eligible to receive welfare benefits from such employer, the welfare
benefits described herein shall be secondary to such benefits during the period of Executive’s
eligibility, but only to the extent that the Company reimburses Executive for any increased cost
and provides any additional benefits necessary to give Executive the benefits provided hereunder.
For two years following the Executive’s Date of Termination (or such shorter period ending upon the
subsequent employment of Executive at a level of service commensurate with Executive’s positions
with the Company on the Date of Termination), Executive shall be

 

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provided with outplacement services from a provider selected by the Company and at the
Company’s expense. In addition, the Company may make such additional payments, and provide such
additional benefits, to Executive as the Company and Executive may agree in writing, or to which
the Executive may be entitled under the compensation and benefit plans, policies, and arrangements
of the Company.

               (c) Nonqualifying Termination. If during the Termination Period the employment of
Executive shall terminate other than by reason of a Qualifying Termination, then the Company shall
pay to Executive within thirty (30) days following the Date of Termination, a lump-sum cash amount
equal to the sum of Executive’s base salary through the Date of Termination and any bonus amounts
which have become payable, to the extent not theretofore paid or deferred, and any accrued vacation
pay, to the extent not theretofore paid. The Company may make such additional payments, and
provide such additional benefits, to Executive as the Company and Executive may agree in writing,
and the Company shall provide the Executive with those payments and benefits to which Executive may
be entitled under the compensation and benefit plans, policies, and arrangements of the Company, or
any employment agreement with the Company or an Affiliate of the Company.

               (d) Stock Options. In the event of a Change in Control, all options to purchase
Company stock held by Executive (“Options”) which are not fully vested and exercisable shall become
fully vested and exercisable as of a time established by the Board, which shall be no later than a
time preceding the Change in Control which allows Executive to exercise the Options and cause the
stock acquired thereby to participate in the Change in Control transaction. If the Change in
Control transaction is structured such that stock participating therein at one time is or may be
treated differently than stock participating therein at a different time (e.g., a tender
offer followed by a squeeze-out merger), the Board shall interpret this paragraph (d) to provide
for the required vesting acceleration in a manner designed to allow Executive to exercise the
Options and cause the stock acquired thereby to participate in the earliest portion of the Change
in Control transaction. If the consummation of a Change in Control transaction is uncertain
(e.g., a tender offer in which the tender of a minimum number of shares is a condition to
closing, or a voted merger or proxy contest in which a minimum number of votes is a condition to
closing), the Board shall apply this paragraph (d) by using its best efforts to determine if and
when the Change in Control transaction is likely to close, and proceeding accordingly. To the
extent necessary to implement this Section 4(d), each stock option agreement reflecting the
Options, and each stock option plan relating to each such stock option agreement, if any, shall be
deemed amended.

          5. Certain Additional Payments by the Company.

               (a) If it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, or the lapse or termination of any restriction on or the
vesting or

 

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exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax
imposed by Section 4999 of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such excise tax (such
tax or taxes, together with any such interest and penalties, are hereafter collectively referred to
as the “Excise Tax”), then Executive will be entitled to receive an additional payment or payments
(a “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.

               (b) Subject to the provisions of Section 5(f) hereof, all determinations required to be made
under this Section 5, including whether an Excise Tax is payable by Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants (the “Accounting
Firm”) selected by Executive in his sole discretion. Executive will direct the Accounting Firm to
submit its determination and detailed supporting calculations to both the Company and Executive
within 15 calendar days after the date of Executive’s termination of employment, if applicable, and
any other such time or times as may be requested by the Company or Executive. If the Accounting
Firm determines that any Excise Tax is payable by Executive, the Company will pay the required
Gross-Up Payment to Executive within five business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Excise Tax is payable by Executive, it
will, at the same time as it makes such determination, furnish Executive with an opinion that he
has substantial authority not to report any Excise Tax on his federal, state, local income or other
tax return. Subject to the provisions of this Section 5, any determination by the Accounting Firm
as to the amount of the Gross-Up Payment will be binding upon the Company and Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any successor
provision thereto) and the possibility of similar uncertainty regarding applicable state or local
tax law at the time of any determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made (an
“Underpayment”), consistent with the calculations required to be made hereunder. In the event that
an Underpayment is made and the Company exhausts or fails to pursue its remedies pursuant to
Section 5(f) hereof and Executive thereafter is required to make a payment of any Excise Tax,
Executive will direct the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to both the Company
and Executive as promptly as possible. Any such Underpayment will be promptly paid by the Company
to, or for the benefit of, Executive within five business days after receipt of such determination
and calculations.

               (c) The Company and Executive will each provide the Accounting Firm access to and copies of
any books, records and documents in the possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination contemplated by Section 5(b)
hereof.

 

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               (d) The federal, state and local income or other tax returns filed by Executive will be
prepared and filed on a consistent basis with the determination of the Accounting Firm with respect
to the Excise Tax payable by Executive. Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and correct copies (with
any amendments) of his federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of Executive’s federal income tax return, or corresponding state or local
tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, Executive will within five business days pay to the Company the amount of such
reduction.

               (e) The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Sections 5(b) and (d) hereof will be borne by the
Company. If such fees and expenses are initially advanced by Executive, the Company will reimburse
Executive the full amount of such fees and expenses within five business days after receipt from
Executive of a statement therefor and reasonable evidence of his payment thereof.

               (f) Executive will notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-Up Payment. Such
notification will be given as promptly as practicable but no later than 10 business days after
Executive actually receives notice of such claim and Executive will further apprise the Company of
the nature of such claim and the date on which such claim is requested to be paid (in each case, to
the extent known by Executive). Executive will not pay such claim prior to the earlier of (i) the
expiration of the 30-calendar-day period following the date on which he gives such notice to the
Company and (ii) the date that any payment of amount with respect to such claim is due. If the
Company notifies Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive will:

               (i) provide the Company with any written records or documents in his possession
relating to such claim reasonably requested by the Company;

               (ii) take such action in connection with contesting such claim as the Company will
reasonably request in writing from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;

               (iii) cooperate with the Company in good faith in order effectively to contest such
claim; and

               (iv) permit the Company to participate in any proceedings relating to such claim;

 

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provided, however, that the Company will bear and pay directly all costs and expenses (including
interest and penalties) incurred in connection with such contest and will indemnify and hold
harmless Executive, on an after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such representation and payment
of costs and expenses. Without limiting the foregoing provisions of this Section 5(f), the Company
will control all proceedings taken in connection with the contest of any claim contemplated by this
Section 5(f) and, at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim (provided
that Executive may participate therein at his own cost and expense) and may, at its option, either
direct Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company will determine; provided, however, that if the Company directs Executive to pay the tax
claimed and sue for a refund, the Company will advance the amount of such payment to Executive on
an interest-free basis and will indemnify and hold Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with respect to which
the contested amount is claimed to be due is limited solely to such contested amount. Furthermore,
the Company’s control of any such contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any other taxing
authority.

               (g) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 5(f) hereof, Executive receives any refund with respect to such claim, Executive will
(subject to the Company’s complying with the requirements of Section 5(f) hereof) promptly pay to
the Company the amount of such refund (together with any interest paid or credited thereon after
any taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 5(f) hereof, a determination is made that Executive will not be
entitled to any refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial or refund prior to the expiration of 30 calendar days
after such determination, then such advance will be forgiven and will not be required to be repaid
and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid pursuant to this Section 5.

          6. Withholding Taxes. The Company may withhold from all payments due to Executive (or
his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other
law, the Company is required to withhold therefrom. In the case of the withholding of an Excise
Tax, such withholding shall be consistent with any determination made under Section 5.

          7. Reimbursement of Expenses. If any contest or dispute shall arise under this
Agreement involving termination of Executive’s employment with the

 

12

Company or involving the failure or refusal of the Company to perform fully in accordance with
the terms hereof, the Company shall reimburse Executive, on a current basis, for all reasonable
legal fees and expenses, if any, incurred by Executive in connection with such contest or dispute
(regardless of the result thereof); provided, however, Executive shall be required
to repay any such amounts to the Company to the extent that a court or an arbitration panel issues
a final order from which no appeal can be taken, or with respect to which the time period to appeal
has expired, setting forth that Executive has not wholly or partially prevailed on at least one
material issue in dispute.

          8. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle Executive
to continued employment with the Company or its Subsidiaries, and if Executive’s employment with
the Company shall terminate prior to a Change in Control, Executive shall have no further rights
under this Agreement (except as otherwise provided hereunder); provided, however,
that any termination of Executive’s employment during the Termination Period shall be subject to
all of the provisions of this Agreement.

          9. Successors; Binding Agreement.

     (a) This Agreement shall not be terminated by any Change in Control or other merger,
consolidation, statutory share exchange, sale of substantially all the assets or similar form of
corporate transaction involving the Company (a “Business Combination”). In the event of any
Business Combination, the provisions of this Agreement shall be binding upon the surviving
corporation, and such surviving corporation shall be treated as the Company hereunder.

               (b) The Company agrees that in connection with any Business Combination, it will cause any
successor entity to the Company unconditionally to assume (and for any parent corporation in such
Business Combination to guarantee), by written instrument delivered to Executive (or his
beneficiary or estate), all of the obligations of the Company hereunder. Failure of the Company to
obtain such assumption and guarantee prior to the effectiveness of any such Business Combination
that constitutes a Change in Control, shall be a breach of this Agreement and shall constitute Good
Reason hereunder and shall entitle Executive to compensation and other benefits from the Company in
the same amount and on the same terms as Executive would be entitled hereunder if Executive’s
employment were terminated following a Change in Control by reason of a Qualifying Termination.
For purposes of implementing the foregoing, the date on which any such Business Combination becomes
effective shall be deemed the date Good Reason occurs, and shall be the Date of Termination if
requested by Executive.

               (c) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive shall die while any amounts would be payable to Executive hereunder had
Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the

 

13

terms of this Agreement to such person or persons appointed in writing by Executive to receive
such amounts or, if no person is so appointed, to Executive’s estate.

          10. Notice. (a) For purposes of this Agreement, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have been duly given
when actually received or, if mailed, three days after mailing by registered or certified mail,
return receipt requested, or one business day after mailing by a nationally recognized express mail
delivery service with instructions for next-day delivery, addressed as follows:

          If to the Executive, to the Executive’s principal residence as reflected in the records of the
Company.

If to the Company:

Emmis Communications Corporation

40 Monument Circle

Suite 700

Indianapolis, Indiana 46204

Attn.: General Counsel

or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

               (b) A written notice of Executive’s Date of Termination by the Company or Executive, as the
case may be, to the other, shall (i) indicate the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s employment under the
provision so indicated and (iii) specify the termination date (which date shall be not less than
fifteen (15) (thirty (30), if termination is by the Company for Disability) nor more than sixty
(60) days after the giving of such notice). The failure by Executive or the Company to set forth
in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of Executive or the Company hereunder or preclude Executive or the
Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights
hereunder.

          11. Full Settlement; Resolution of Disputes. The Company’s obligation to make any
payments and provide any benefits pursuant to this Agreement and otherwise to perform its
obligations hereunder shall be in lieu and in full settlement of all other severance payments to
Executive under any other severance or employment agreement between Executive and the Company, and
any severance plan of the Company; provided, however, that if any such other
agreement or plan would provide Executive with a greater payment or more or longer benefits in
respect of any particular item described hereunder (e.g., severance, welfare benefits), then
Executive shall receive such particular item of payment and/or benefit pursuant to such other
agreement or plan,

 

14

in lieu of receiving that particular item pursuant to this Agreement. The Company’s
obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against Executive or others. In no event
shall Executive be obligated to seek other employment or take other action by way of mitigation of
the amounts payable and benefits provided to Executive under any of the provisions of this
Agreement and, except as provided in Section 4(b), such amounts shall not be reduced whether or not
Executive obtains other employment. The parties agree that any controversy or claim of either
party hereto arising out of or in any way relating to this Agreement, or breach thereof, shall be
settled by final and binding arbitration in Indianapolis, Indiana by three arbitrators in
accordance with the applicable rules of the American Arbitration Association, and that judgment
upon any award rendered may be entered by the prevailing party in any court having jurisdiction
thereof. The Company shall bear all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section.

     12. Employment by Subsidiaries. Employment by the Company for purposes of this
Agreement shall include employment by any Affiliate.

     13. Survival. The respective obligations and benefits afforded to the Company and
Executive as provided in Sections 4 (to the extent that payments or benefits are owed as a result
of a termination of employment that occurs during the term of this Agreement), 5 (to the extent
that Payments are made to Executive as a result of a Change in Control that occurs during the term
of this Agreement), 6, 7, 9(c) and 11 shall survive the termination of this Agreement.

     14. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF INDIANA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, OF SUCH
PRINCIPLES OF ANY OTHER JURISDICTION WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF INDIANA. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION
OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS
AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

     15. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and the same instrument.

     16. Miscellaneous. No provision of this Agreement may be modified or waived unless
such modification or waiver is agreed to in writing and signed by Executive and by a duly
authorized officer of the Company. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any

 

15

prior or subsequent time. Failure by Executive or the Company to insist upon strict
compliance with any provision of this Agreement or to assert any right Executive or the Company may
have hereunder, including, without limitation, the right of Executive to terminate employment for
Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement. Except as otherwise specifically provided herein, the rights of, and
benefits payable to, Executive, his estate or his beneficiaries pursuant to this Agreement are in
addition to any rights of, or benefits payable to, Executive, his estate or his beneficiaries under
any other employee benefit plan or compensation program of the Company.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized
officer of the Company and Executive has executed this Agreement as of the day and year first above
written.

	 	 	 	 	 
	 	EMMIS COMMUNICATIONS

CORPORATION

 	 
	 	By:  	/s/ Jeffrey H. Smulyan
 	 
	 	 	Jeffrey H. Smulyan 	 
	 	 	Chairman & Chief Executive Officer 	 
	 
	 	EXECUTIVE

 	 
	 	/s/ Patrick Walsh
 	 
	 	Patrick Walshexv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”) is effective as of September 4, 2006, by and between
EMMIS OPERATING COMPANY, an Indiana corporation (“Employer” or “Emmis”), and PATRICK WALSH, a
Maryland resident (“Executive”).

RECITALS

     WHEREAS, Employer and its subsidiaries are engaged in the ownership and operation of certain
radio and television stations, magazines, and related operations (together, the “Emmis Group”); and

     WHEREAS, Employer desires to employ Executive as an executive, and Executive desires to be so
employed.

     NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth
in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

     1. Employment Status. Upon the terms and subject to the conditions set forth in this
Agreement, Employer hereby employs Executive, and Executive hereby accepts exclusive employment
with Employer.

     2. Term. The term of Executive’s employment shall be for a period of three (3) years
commencing on September 4, 2006, and ending on September 3, 2009 (the “Term”). This Agreement
shall expire at the end of the Term unless earlier terminated in accordance with the terms of this
Agreement. For purposes of this Agreement, the term “First Contract Year” shall be defined to mean
the twelve (12) month period commencing on September 4, 2006 and ending on September 3, 2007; the
term “Second Contract Year” shall be defined to mean the twelve (12) month period commencing on
September 4, 2007 and ending on September 3, 2008; the term “Third Contract Year” shall be defined
to mean the twelve (12) month period commencing on September 4, 2008 and ending on September 3,
2009 (each, a “Contract Year”).

 

 

     3. Executive’s Position, Duties and Authority.

     3.1 Position. Employer shall employ Executive, and Executive shall serve as
an executive of Employer, and of any successor of Employer by merger, acquisition of
substantially all of the assets or stock of Employer, or otherwise. During the Term,
Executive shall serve as Executive Vice President, Chief Financial Officer and Treasurer of
Employer.

     3.2 Duties and Authority. Executive shall have such duties, functions,
authority and responsibilities as are commensurate with the offices Executive holds with the
Employer during the Term. Executive shall report directly to the Chief Executive Officer of
the Employer. Executive’s services hereunder shall be performed in a professional, diligent
and competent manner to the best of Executive’s abilities.

     3.3 Directorships and Other Offices. If Executive is elected as a Director of
Emmis Communications Corporation, Executive shall serve in such position without additional
remuneration (unless Employer elects to remunerate “inside directors”) but shall be entitled
to the benefit of indemnification pursuant to the terms of Section 15.10. Executive
shall also serve without additional remuneration as a director and/or officer of one or more
of Employer’s subsidiaries or affiliates if appointed to such position(s) by Employer during
the Term.

     4. Full-Time and Exclusive Services. Executive’s services pursuant to this Agreement
shall be performed on a full-time and exclusive basis, except for vacation periods and periods of
illness as permitted by the Company’s employment policies. Accordingly, Executive shall not
undertake any outside business activity during the Term 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.

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     5. Location of Employment; Travel. The location for performance of Executive’s
services hereunder shall be the offices designated by Employer in Indianapolis, Indiana. Executive
shall undertake such travel as the performance of Executive’s duties pursuant to this Agreement may
require.

     6. Compensation.

     6.1 Base Salary. Upon the terms and subject to the conditions set forth in
this Agreement, each Contract Year, Employer shall pay or cause to be paid to Executive an
annualized base salary (“Base Salary”) in the amount of Four Hundred Thousand Dollars
($400,000), to be paid according to Employer’s customary payroll practices. Employer shall
have no obligation to pay Executive the Base Salary for any period 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. All Base Salary earned by Executive and
paid pursuant to this Agreement shall be subject to withholding for applicable taxes and as
otherwise required by law.

     6.2 Annual Incentive Compensation. Upon the terms and subject to the
conditions set forth in this Section 6.2, following the conclusion of each Emmis
fiscal year during the Term, Executive shall be eligible to receive one (1) performance
bonus in a target amount of Two Hundred Thousand Dollars ($200,000) (each, a “Fiscal Year
Bonus”), the exact amount of which shall be determined by means of Executive’s attainment of
certain performance goals as determined each fiscal year by the Compensation Committee of
the Employer’s Board of Directors (the “Compensation Committee”) and communicated to
Executive within ten (10) days after a final determination by the Compensation Committee.
The Fiscal Year Bonus earned by Executive for the fiscal year ending on February 28, 2007,
if any, shall be pro-rated according to the following formula: the amount of the Fiscal Year
Bonus that Executive would have earned had Executive worked the entire fiscal year
multiplied by a fraction the numerator of which shall be the number of full months during
the fiscal year during which

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Executive was employed by Employer plus three (3) months; the denominator of which shall be
twelve (12). If this Agreement is not renewed and expires on September 3, 2009, Executive
shall be eligible to receive a pro-rata Fiscal Year Bonus, if earned, for the fiscal year
during which the Agreement expires based on the number of completed months as set forth in
the formula above (except that the additional three (3) months shall not be credited for
purposes of the calculation). Executive acknowledges and agrees that, as a material
condition to receiving a Fiscal Year Bonus, as of the end of each respective fiscal year
during the Term: (i) this Agreement must be in full force and effect; and (ii) Executive
must be fully performing all of Executive’s duties and obligations as required hereunder and
not be in breach of any of the terms and conditions of this Agreement; provided,
however, that notwithstanding the foregoing, in the event Executive voluntarily
resigns for Good Reason (as defined in Section 11.5 below), Executive shall remain
eligible for a Fiscal Year Bonus in accordance with the terms of Section 11.5.
Employer may pay all or any portion of a Fiscal Year Bonus in Shares of Class A Common Stock
of Emmis Communications Corporation (“Shares”) in the same manner utilized for other senior
management level employees. Any Fiscal Year Bonus amounts earned by Executive pursuant to
the terms and conditions of this Section 6.2 (including upon non-renewal and
expiration of the Term or upon a termination for Good Reason) shall be awarded following
Employer’s fiscal year-end earnings release or at such other time as annual incentive
compensation awards are made to other members of Employer’s senior management team (but in
no event later than ninety (90) days after the expiration of the applicable fiscal year).
All Fiscal Year Bonus amounts earned by Executive pursuant to this Agreement shall be
subject to withholding for applicable taxes and as otherwise required by law.

     6.3 Equity Incentive Compensation. Upon the terms and subject to the
conditions set forth in this Section 6.3, at or promptly following the commencement
of the Term, Executive shall receive (i) an option (“Option”) to

-4-

 

acquire Ten Thousand (10,000) Shares, and (ii) Three Thousand (3,000) restricted
Shares. Additionally, upon the terms and subject to the conditions set forth in this
Section 6.3, on or about the commencement of each Emmis fiscal year during the Term,
or at such time(s) during the Term as Employer grants equity incentive compensation to
members of its senior management team, Executive shall receive (i) an Option to acquire
Twenty Thousand (20,000) Shares, and (ii) Six Thousand (6,000) restricted Shares. The
grants of Options and restricted Shares described in this Section 6.3 shall be
subject to the terms and conditions of the applicable equity compensation plan of Employer,
the Option agreements evidencing the Option grants and the restricted stock agreements
evidencing the grants of restricted Shares. In the event of any change in the outstanding
Shares by reason of any reorganization, recapitalization, reclassification, merger, stock
split, reverse stock split, stock dividend, asset spinoff, share combination, consolidation
or similar event, the number and class of all Shares awarded pursuant to this Agreement or
covered by an Option granted pursuant to this Agreement (and any applicable Option exercise
price) shall be adjusted by the Compensation Committee in its sole discretion and in
accordance with the terms of the applicable equity compensation or similar plan of Employer,
the Option agreement evidencing the grant of the Option, and the restricted Stock agreement
evidencing the grant of Shares. The determination of the Compensation Committee shall be
conclusive and binding.

     6.4 Completion Bonus. On or about September 3, 2009, Executive shall receive
Twenty Thousand (20,000) Shares (the “Completion Shares”); provided, that
(i) this Agreement is in effect on September 3, 2009 and has not been terminated for any
reason (other than a material breach of this Agreement by Employer); and (ii) Executive has
fully performed all of Executive’s duties and obligations under this Agreement throughout
the Term and is not in breach of any of the material terms and conditions of this Agreement.
The Completion Shares

-5-

 

shall be freely transferable when delivered to Executive subject to Employer’s
securities trading policy and applicable federal and state law. Employer shall have the
right, in its sole and absolute discretion, to pay Executive the value of the Completion
Shares (in the same manner applied to other senior management level employees) in cash in
lieu of granting Executive the Completion Shares. The Completion Shares shall be subject to
withholding for applicable taxes and as otherwise required by law.

     6.5 Fractional Shares. In the event that the calculation of a certain number
of Shares awarded to Executive pursuant to any of the provisions of this Section 6
results in a fractional Share, such fractional Share shall be rounded up to the nearest
whole Share.

     6.6. Auto Allowance. During the Term, Executive shall receive a monthly auto
allowance in the amount of One Thousand Dollars ($1,000) (subject to withholding for
applicable taxes and as otherwise required by law) consistent with Employer’s policy or
practice regarding such allowances, as such policy or practice may be changed from time to
time, or eliminated, during the Term in Employer’s sole discretion; provided,
however, that in no event shall the amount paid to Executive under this Section
6.6 be reduced.

     6.7 Moving Allowance. Employer agrees to reimburse Executive for reasonable
moving and relocation expenses actually incurred in connection with Executive’s relocation
to Indianapolis, Indiana in an amount up to a maximum of One Hundred Thousand Dollars
($100,000) upon submission of receipts evidencing such expenses satisfactory to Employer
(“Moving Allowance”). The Moving Allowance is intended to cover the following expenses,
each to be secured at a reasonable rate: (1) moving expenses relating to the transfer of
Executive’s and Executive’s family’s belongings to Indianapolis, Indiana; (2) airfare to and
from Indianapolis, Indiana for Executive and members of Executive’s immediate family for the
purpose of locating and securing a residence; (3) a maximum of twelve (12) months of either
temporary housing in

-6-

 

Indianapolis or payment of the interest portion of Executive’s monthly mortgage payment at
his Maryland residence after purchasing a home in the Indianapolis area, but before his
previous residence has been sold; and (4) broker’s fees on the sale of Executive’s Maryland
home. Employer agrees to pay to Executive a “gross up” amount on any payments made to
Executive pursuant to this provision that are taxable to Executive as ordinary income under
the applicable provisions of the Internal Revenue Code. Notwithstanding the foregoing, it
is understood and agreed that, in no event, shall the amount paid to Executive pursuant to
this Section 6.7 exceed One Hundred Thousand Dollars ($100,000).

     6.8 Life and Disability Insurance. Each Contract Year, Employer agrees to
reimburse Executive in an amount not to exceed Five Thousand Dollars ($5,000) for the annual
premium associated with Executive’s purchase of a term life and disability insurance policy
or policies on the life of Executive. Executive shall be entitled to freely select and
change the beneficiary or beneficiaries under such policy or policies. Notwithstanding
anything to the contrary contained in this Agreement, Employer’s obligations under this
Section 6.8 are expressly contingent upon Executive providing required information
and taking all necessary actions required of Executive in order to obtain and maintain the
subject policy or policies, including without limitation, passing any required physical
examinations.

     7. Business Expenses. Employer shall pay or reimburse Executive for all reasonable
expenses actually incurred by Executive during the Term directly related to the performance of
Executive’s services hereunder upon presentation of expense statements, vouchers or similar
documentation, or such other supporting information as Employer may require of Executive.

     8. Fringe Benefits and Vacation. Each Contract Year during the Term, 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

-7-

 

made available to other executive-level employees of Employer in accordance with, and to the extent
that Executive is eligible under, the general provisions of Employer’s fringe benefit plans or
programs; provided, however, that Executive understands that these benefits may be
increased, changed, eliminated or added from time to time during the Term as determined in
Employer’s sole and absolute discretion.

     9. Confidential Information.

     9.1 Non-Disclosure. Executive acknowledges that certain information
concerning the business of the Emmis Group and its members is of a proprietary and highly
confidential nature, and that as a result of Executive’s employment with Employer during the
Term, Executive will receive and develop such proprietary and confidential information
concerning the business of Employer and other members of the Emmis Group which, if known to
competitors of Employer, would damage Employer, the other members of the Emmis Group, and
their respective businesses. Accordingly, Executive agrees that, during the Term and
thereafter, Executive shall not divulge or appropriate for Executive’s own use, or for the
use or benefit of any third party (other than Employer or its representatives or as
specifically directed in writing by Employer) any information or knowledge concerning the
business of Employer or any 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
upon termination of Executive’s employment for any reason, Executive shall promptly
surrender to Employer all documents, brochures, writings, illustrations, client, financial
and sales lists, marketing and strategic plans, programs, presentations, budgets, financial
statements, marketing materials and any other such documents or materials (regardless of
form or character) that Executive received from or developed on behalf of Employer in
connection with Executive’s employment. Executive acknowledges that all such materials
shall remain at all times during and after the expiration or early termination of the Term
for any reason the sole and exclusive property of Employer, and that nothing in this
Agreement shall be

-8-

 

deemed to grant Executive any right, title or interest in such material, all of which shall
be deemed a “work made for hire” for the sole and exclusive benefit of Employer.

     9.2 Injunctive Relief. Executive acknowledges that: Executive’s breach of
Section 9.1 will cause irreparable harm and damage to Employer, the exact amount of
which will be difficult to ascertain; that the remedies at law for any such breach would be
inadequate; and that the provisions of this Section 9 have been specifically
negotiated and carefully written to prevent such irreparable harm and damage. Accordingly,
if Executive breaches Section 9.1, notwithstanding the arbitration and dispute
resolution provisions contained in this Agreement, Employer shall be entitled to injunctive
relief (including attorneys’ fees and costs) enforcing Section 9.1 to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security.

     10. Non-Interference; Exclusive Employment and Non-Competition.

     10.1 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 or person with which Executive is associated) which has the effect of
interfering with Employer’s relationship (contractual or otherwise) with any employee of
Employer or any member of the Emmis Group. Without limiting the generality of the
foregoing, Executive specifically agrees that during such time period, Executive shall not
solicit or encourage, directly or indirectly, any employee of any member of the Emmis Group
to cease his or her employment for any reason.

     10.2 Exclusive Employment and Non-Competition. Executive acknowledges the
special and unique nature of Executive’s employment with Employer as a member of Employer’s
senior management team, and understands that, as a result of Executive’s employment with
Employer during the Term, Executive will gain knowledge of and have access to highly
sensitive

-9-

 

and valuable information regarding the operations of Employer and other members of the Emmis
Group, including but not limited to the proprietary and other confidential information
described more fully in Section 9.1. Accordingly, Executive acknowledges Employer’s
special 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 early
termination of the Term. Therefore, Executive agrees that, during the Term and for a period
of twelve (12) months immediately following the expiration or early termination of the Term
for any reason, Executive shall not, without the prior written approval of Employer, engage
directly or indirectly in services for, 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 local terrestrial radio or
local terrestrial television broadcasting business, or the city and regional magazine
publishing business, in any city in which Employer operates or has an interest in any radio
or television station, or magazine. So 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 purposes of this Section 10.2.

     10.3 Injunctive Relief. Executive acknowledges and agrees that the provisions
of this Section 10 have been specifically negotiated and carefully worded in
recognition of the opportunities which shall be afforded to Executive by Employer by virtue
of Executive’s association with Employer and the influence that Executive will have over
Employer’s employees, customers and vendors. Executive further acknowledges that:
Executive’s breach of Section 10.1 or 10.2 will cause irreparable harm and
damage to Employer, the exact amount of which will be difficult to ascertain; that the
remedies at law for any such breach would be inadequate; and that the provisions of this
Section 10 have been specifically

-10-

 

negotiated and carefully written to prevent such irreparable injury and damage.
Accordingly, if Executive breaches Section 10.1 or 10.2, notwithstanding the
arbitration and dispute resolution provisions contained in this Agreement, Employer shall be
entitled to injunctive relief enforcing Section 10.1 or 10.2, as the case
may be, to the extent reasonably necessary to protect Employer’s legitimate interests,
without posting bond or other security. If Executive violates Section 10.1 or
10.2 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 non-interference or non-competition set forth herein. Accordingly,
the obligations set forth in Sections 10.1 and 10.2 shall be deemed to have
the duration set forth therein, computed from the date such relief is granted but reduced by
the time expired between the date the restrictive period began to run and the date of the
first violation of the obligation(s) by Executive.

     10.4 Construction. Despite the express agreement herein between Employer and
Executive, in the event that any of the provisions set forth in this Section 10
shall be determined by any court or other tribunal of competent jurisdiction to be
unenforceable for any reason whatsoever, the parties agree that this Section 10
shall be interpreted to extend only to the maximum extent as to which it may be enforceable,
and that this Section 10 shall be severable into its component parts, all as
determined by such court or tribunal.

     11. Termination of Agreement.

     11.1 Termination of Agreement by Employer for Cause. Employer may terminate
this Agreement and Executive’s employment hereunder for Cause (as defined in Section
11.3 below) in accordance with the terms and conditions of this Section 11.
Following a determination by Employer that Executive should be terminated for Cause,
Employer shall give written notice to Executive specifying the grounds for such termination
(the “Preliminary Notice”), and Executive shall have ten (10) days after receipt of the
Preliminary Notice to respond to Employer

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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.

     11.2 Effect of Termination by Employer for Cause. In the event of termination
for Cause as provided in Section 11.1 above:

          (i) Executive shall have no further obligations or liabilities hereunder, except
Executive’s obligations under Section 9 and 10, which shall survive the
termination of this Agreement.

          (ii) Employer shall have no further obligations or liabilities hereunder, except that
Employer shall, not later than two (2) weeks after the termination date:

               (a) Pay to Executive all 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 Fiscal Year Bonus, if any, which Executive earned for a fiscal
year ending on or prior to the termination date pursuant to Section 6.2 but which is
unpaid as of the termination date.

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

     11.3 Definition of Cause. For purposes of this Agreement, ”Cause” shall be
defined to mean any of the following: (i) any action or omission by Executive involving
willful or repeated failure or refusal to perform any of Executive’s material obligations
under this Agreement (or any material duties assigned to Executive consistent with the terms
of this Agreement) and continuation of such breach after written notice and the expiration
of a ten (10) day cure period; provided, however, that it is not the
parties’ intention that

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Employer shall be required to provide successive such notices, and in the event Employer has
provided Executive with a notice and opportunity to cure pursuant to this Section
11.3, Employer may terminate this Agreement for a subsequent breach similar or related
to the breach for which notice was previously given or for a continuing series or pattern of
breaches (whether or not similar or related) without providing notice 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 jeopardizes any license 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 another employee or individual; (vii) unauthorized
disclosure or use of proprietary or confidential information, including without limitation
the information described more fully in Section 9.1; (viii) any action which brings
Employer or any member of the Emmis Group into public disrepute, contempt, scandal or
ridicule and which is harmful to Employer’s business or reputation; and (ix) violation of
any policy of Employer that has been communicated to Executive in advance of such violation.

     11.4 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.

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     11.5 Voluntary Resignation by Executive for Good Reason. If Executive
terminates this Agreement for Good Reason, then:

     (i) Executive shall have no further obligations or liabilities hereunder, except
Executive’s obligations under Section 9 and 10, which shall survive the
termination of this Agreement.

     (ii) Employer shall have no further obligations or liabilities hereunder, except that
Employer shall, not later than two (2) weeks after the termination date:

          (a) Pay to Executive all earned but unpaid Base Salary with respect to any applicable
pay period ending on or before the termination date;

          (b) Pay to Executive any Fiscal Year Bonus, if any, which Executive earned for a fiscal
year ending on or prior to the termination date pursuant to Section 6.2 but which is
unpaid as of the termination date;

          (c) Continue to pay Executive’s then-current Base Salary, on each regularly scheduled
payroll date of Employer after the date of termination, for a period of one (1) year,
subject to any applicable tax withholding and deductions as required by law;

          (d) Pay or reimburse, for a period up to one (1) year, any medical, dental or vision
insurance premiums (up to the amount that Employer is paying on behalf of Executive and his
eligible dependents immediately prior to the date of termination, e.g., the employer-paid
premium) for the continuation of such health coverage for Executive and Executive’s
dependents pursuant to the provisions of COBRA or applicable state law. If Employer becomes
eligible to participate in any other group insurance program of another employer and elects
coverage thereunder, these payments shall cease at that time.

          (e) Pay Executive’s full Fiscal Year Bonus opportunity, in a lump-sum cash payment
within two (2) weeks after the termination date, for the fiscal year in which the
termination occurs, subject to applicable tax withholding

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          (f) Accelerate the vesting of any equity compensation described in Section 6.3
and granted to Executive prior to the termination date within two (2) weeks after the
termination date (subject to applicable tax withholding and deductions as required by law).

          (g) Grant to Executive the Completion Shares (or cash equivalent) described in
Section 6.4 within two (2) weeks after the termination date (subject to applicable
tax withholding and deductions as required by law).

     For purposes of this Section 11.5, the term “Good Reason” shall be defined to
mean, without Executive’s written consent: (1) a material adverse change made by Employer to
Executive’s functions, duties or responsibilities; (2) a reduction by Employer in
Executive’s Base Salary or target Fiscal Year Bonus opportunity from the amounts set forth
in this Agreement; (3) failure to provide an office or administrative support or requiring
Executive to work in an office that is more than thirty-five (35) miles from the location of
the Company’s principal executive offices at the time of this Agreement, except for required
travel on business of the Company to the extent substantially consistent with Executive’s
business travel obligations, and (4) a material breach of the terms of this Agreement by
Employer; provided, that Executive has given Employer notice of such breach and such
breach remains uncured after thirty (30) days.

     12. Incapacity.

     12.1 Termination of Employment. If Executive shall become Incapacitated (as
defined in Section 12.2), Employer shall continue to compensate Executive under the
terms of this Agreement without diminution and otherwise without regard to such 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. If Employer elects to terminate Executive’s employment pursuant

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to this Section 12.1, the date on which Executive’s employment terminates shall be
referred to herein as the “Incapacity Termination Date.”

     12.2 Definition of Incapacity. Executive shall be deemed to have become
“Incapacitated” for purposes of this Agreement if, during the Term, Executive shall have
been unable to perform Executive’s duties hereunder for reasons beyond Executive’s control,
with or without reasonable accommodation, on account of physical or mental impairment or
sickness as reasonably determined by a physician selected by mutual agreement of the
parties, or if applicable, their representative.

     12.3 Obligations after Termination. Executive shall have no further
obligations or liabilities hereunder after a Incapacity Termination Date except Executive’s
obligations under Sections 9 and 10 which shall survive the expiration or
termination of the Term. After a Incapacity Termination Date, Employer shall have no
further obligations or liabilities hereunder except its obligations under Section
12.4 which shall also survive the termination of the Term.

     12.4 Payment of Unpaid Amounts after Termination. Employer shall, not later
than two (2) weeks after a Incapacity Termination Date, pay to Executive: (i) all earned but
unpaid Base Salary with respect to any pay period ending on or before the Incapacity
Termination Date; plus (ii) any Fiscal Year Bonus, if any, earned by Executive for a fiscal
year ending on or prior to the Incapacity Termination Date pursuant to Section 6.2
but which is unpaid as of the Incapacity Termination Date; provided,
however, that in the event a Incapacity Termination Date occurs at least six (6)
months after the commencement of a fiscal year during the Term, Employer shall pay to
Executive a pro-rated portion of the Fiscal Year Bonus for the fiscal year during which the
Incapacity Termination Date occurs, such amount to be determined in the sole discretion of
Employer. Additionally, Employer shall comply with the provisions of COBRA and the
provisions of any Employer benefit plans in which Executive or

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Executive’s eligible dependents or beneficiaries are participating at the time of
termination.

     12.5 No Reduction. Amounts payable pursuant to this Section 12 shall
not be reduced by the value of any benefits payable to Executive under any disability
insurance plan or policy.

     13. Death of Executive.

     13.1 Termination of Agreement. This Agreement shall terminate immediately
upon Executive’s death. In the event of such termination, Employer shall have no further
obligations or liabilities hereunder except its obligations under Section 13.2 below
which shall survive such termination.

     13.2 Compensation. Employer shall, not later than two (2) weeks after
Executive’s date of death, pay to Executive’s estate or designated beneficiary all unpaid
Base Salary and Fiscal Year Bonus amounts earned by Executive, if any, with respect to any
pay period or fiscal year, as the case may be, ending on or before Executive’s date of
death. Additionally, Employer shall comply with the provisions of COBRA and the provisions
of any Employer benefit plans in which Executive or Executive’s eligible dependents or
beneficiaries are participating at the time of termination.

     13.3 No Reduction. Amounts payable pursuant to this Section 13 shall
not be reduced by the value of any benefits payable to Executive’s estate or designated
beneficiaries under any applicable life insurance plan or policy.

     13.4 Death after Termination. In the event that Executive dies after
termination of this Agreement pursuant to Sections 11 or 12, all amounts
required to be paid by Employer prior to Executive’s death in connection with such
termination that remain unpaid as of Executive’s date of death shall be paid to Executive’s
estate or designated beneficiary.

     14. Notices. All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be made in writing and shall be deemed to have been duly
given if delivered personally or mailed via first-class,

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overnight or certified mail, as follows (or to such other or additional address as either party
shall designate by notice in writing to the other in accordance herewith):

          (i) If to Employer:

David O. Barrett, Esq.

Emmis Communications Corporation

40 Monument Circle

Suite 700

Indianapolis, Indiana 46204

          With a copy to:

Gary L. Kaseff, Esq.

3500 W. Olive Avenue

Suite 1450

Burbank, California 91505

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

     15. Miscellaneous.

     15.1 Governing Law. This Agreement shall be deemed to have been entered into
in the State of Indiana and shall be governed by, and construed and enforced in accordance
with, the laws of the State of Indiana without regard to its choice of law provisions.

     15.2 Arbitration. The parties agree that any controversy or claim of either
party hereto arising out of or in any way relating to this Agreement, or breach thereof,
shall be settled by final and binding arbitration in Indianapolis, Indiana in accordance
with the applicable rules of the American Arbitration Association (using a single
arbitrator), and that judgment upon any award rendered may be entered by the prevailing
party in any court having jurisdiction thereof. The parties agree to share equally all
costs associated with any arbitration; provided, however, that each party
shall be responsible for its own attorneys’ fees and expenses.

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     15.3 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of any of the
terms or conditions of this Agreement.

     15.4 Entire Agreement; Merger. This Agreement (including Exhibit A)
sets forth the entire agreement and understanding of the parties relating to the subject
matter herein, and supersedes all prior agreements, arrangements and understandings, written
or oral, between the parties, which are merged herein.

     15.5 Successors and Assigns. This Agreement, and Executive’s rights and obligations
hereunder, may not be assigned by Executive without the prior written consent of Employer, which
consent may be granted or withheld in Employer’s sole and absolute discretion; provided,
however, that Executive may designate pursuant to Section 15.7 one or more
beneficiaries to receive any amounts that would otherwise be payable hereunder to Executive’s
estate. Employer may assign all or any portion of its rights and obligations hereunder to any
subsidiary, affiliate or related entity, or any third party by way of merger, corporate
reorganization, acquisition of substantially all of the assets or stock of Employer, or otherwise.

     15.6 Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without the written consent
of Executive and Employer. The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such party at a
later time to enforce such provision. No waiver by a party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing waiver of any
such breach or a waiver of the breach of any other term or covenant contained in this
Agreement.

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     15.7 Beneficiaries. Whenever this Agreement provides for any payment to
Executive’s estate, such payment may be made instead to such beneficiary or beneficiaries as
Executive may have designated in a writing filed with Employer. Executive shall have the
right to revoke any such designation and to re-designate a beneficiary or beneficiaries by
written notice to Employer (and to any applicable insurance company).

     15.8 Warranty and Indemnity. Executive and Employer hereby mutually represent
and warrant that each of them: (i) has the full and unqualified right to enter into and
fully perform this Agreement according to each and every term and condition contained
herein; and (ii) in Executive’s case, has not made any agreement, contractual obligation, or
commitment in contravention of any of the terms and conditions of this Agreement or which
would prevent Executive from performing according to any of the terms and conditions
contained herein. Furthermore, Executive hereby agrees to fully indemnify and hold harmless
Employer and each of its subsidiaries, affiliates and related entities, and each of their
respective officers, directors, employees, shareholders, agents, attorneys, insurers and
representatives from and against any losses, costs, damages, expenses (including attorneys’
fees and expenses), liabilities and claims, arising out of, in connection with, or in any
way related to Executive’s breach of any of the representations or warranties contained in
this Section 15.8.

     15.9 Change in Fiscal Year and Capitalization. If Employer changes its fiscal
year (currently March 1st through February 28th), Employer shall in
good faith make such adjustments to the various dates and amounts included herein or in any
plan or program referenced herein as are necessary or appropriate with the intent to place
Executive in a same or substantially similar financial position; provided,
however, that the end of the Term shall in no event be extended beyond the
expiration of the Term without the written consent of the parties.

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     15.10 Indemnification. Executive shall be entitled to the benefit of the
indemnification provisions set forth in Employer’s Amended and Restated Articles of
Incorporation and/or By-Laws, or any applicable corporate resolution, as the same may be
amended from time to time during the Term (not including any limiting amendments or
additions, but including any amendments or additions that add to or broaden the protection
afforded to Executive at the time of execution of this Agreement) to the fullest extent
permitted by applicable law. Additionally, Employer shall cause Executive to be indemnified
in accordance with Chapter 37 of the Indiana Business Corporation Law (the “IBCL”), as the
same may be amended from time to time during the Term, to the fullest extent permitted by
the IBCL as required to make Executive whole in connection with any indemnifiable loss, cost
or expense incurred in Executive’s performance of Executive’s duties and obligations
pursuant to this Agreement. Employer shall also maintain during the Term an insurance
policy providing directors’ and officers’ liability coverage in a commercially reasonable
amount providing coverage on a “claims made” basis relating to Executive’s duties and
obligations during Executive’s term of employment with Employer. It is understood that the
foregoing indemnification obligations shall survive the expiration or termination of the
Term.

     15.11 Subsequent Employment by Employer. Subject to the conditions set forth
in the last sentence of this Section 15.11, in the event Employer does not offer
Executive reasonably acceptable employment with Employer upon the expiration of the Term,
Employer shall continue to make regular payments of Executive’s then-current Base Salary for
either: (a) twelve (12) months; or (b) until such time as Executive commences subsequent
employment with a new employer, whichever first occurs (the “Severance Payment”). It is
understood and agreed that, as a material condition upon which Executive shall be entitled
to receive the Severance Payment, Executive agrees to promptly notify Employer of the
commencement date upon which Executive begins subsequent employment

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with a new employer. It is further understood and agreed that Executive shall not be
entitled to any additional severance compensation upon the expiration of this Agreement
other than the Severance Payment. Executive shall not be entitled to the Severance Payment
as otherwise specified in this provision if Executive’s employment is terminated either (i)
by Employer under Section 11, (ii) by reason of Executive’s incapacity or death
under Section 12 or 13, or (iii) by Executive for any reason other than Good
Reason. Notwithstanding the foregoing, the Severance Payment and any other severance
payments contemplated by this Agreement shall be delayed for a period of six (6) months
(with a catch-up payment equal to the sum of all installments that have been delayed to be
made as of the date of the initial payment) after the date of such termination if Executive
is determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of
the Code and such delay is required to avoid the imposition of the tax set forth in Section
409A(a)(1) of the Code. In any circumstance involving the payment of the Severance Payment,
it shall not be possible for the parties to accelerate or further defer the dates of any
such payments other than as specified under the payment schedule above to the extent Section
409A is applicable.

     15.12 Taxes. The parties recognize the uncertainty regarding the
application of Section 409A to payments under this Agreement and to the extent that any
payment or benefit provided hereunder is determined to be subject to Section 409A (and
otherwise does not comply with the provisions of Section 409A such that Executive will be
subject to the taxes imposed under Section 409A(a)(1)), then the parties agree to work
together in good faith to modify the payments or benefits to avoid the application of
Section 409A while undertaking to place Executive and Employer in a same or substantially
similar financial position.

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     IN WITNESS WHEREOF, the parties, intending to be legally bound, have duly executed this
Agreement as of the date first written above.

	 	 	 	 	 
	 	EMMIS OPERATING COMPANY

(“Employer”)

 	 
	 	By:  	/s/ Jeffrey H. Smulyan
 	 
	 	 	Jeffrey H. Smulyan 	 
	 	 	Chairman of the Board and Chief Executive Officer 	 
	 
	 	PATRICK WALSH

(“Executive”)

 	 
	 	By:  	/s/ Patrick Walsh
 	 
	 	 	Patrick Walsh 	 
	 	 	 	 
	 

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