Document:

exv10w39

 

Exhibit 10.39

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of March 1, 2003, by and between
EMMIS OPERATING COMPANY, an Indiana corporation (“Employer” or “Emmis”), and PAUL W. FIDDICK, a
Virginia 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; 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 commence on March 1, 2003, and
continue until February 28, 2006 (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 “Contract Year” shall be defined to mean each twelve (12) month period
commencing on March 1, 2003, and on each anniversary thereof during the Term. The term “First
Contract Year” shall refer to the period commencing on March 1, 2003, and ending on February 29,
2004; “Second Contract Year” shall refer to the period commencing on March 1, 2004, and ending on
February 28, 2005; “Third Contract Year” shall refer to the period commencing on March 1, 2005, and
ending on February 28, 2006 (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, corporate
reorganization, acquisition of substantially all of the assets or stock of Employer, or
otherwise. Executive shall serve as President – International Division or, subject to the
provisions of Exhibit A (attached hereto and made a part hereof), shall serve in
such other senior management positions to which Employer may appoint Executive.

     3.2 Duties and Authority. Executive shall have such duties, functions,
authority and responsibilities as are commensurate with the office(s) Executive holds with
the Employer during the Term.

     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 but shall be entitled to the benefit of indemnification pursuant to the terms
of Section 15.11. Executive shall also serve without 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. If Executive is so appointed, Executive shall be entitled to the
benefit of indemnification as set forth in the first sentence of this Section 3.3.

     4. Full-Time Services. Executive’s services pursuant to this Agreement shall be
performed on a full-time and exclusive basis in a professional, diligent and competent manner to
the best of Executive’s abilities. Executive shall not undertake any outside employment or outside
business activity without the prior written consent of Employer; provided, however,
that Executive shall be permitted to serve on the board of charitable or other civic organizations
so long as such services do not interfere with Executive’s duties and obligations pursuant to this
Agreement.

     5. Location of Employment; Travel. The location for performance of Executive’s
services hereunder shall be Executive’s home office located in Arlington, Virginia;
provided, however, in the event Employer establishes an office in or near the

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Washington D.C. metropolitan area at any time during the Term, Executive shall be required to work
from such office as requested by Employer. Executive shall undertake such travel as the
performance of Executive’s duties pursuant to this Agreement may require.

     6. Compensation.

     6.1 Base Salary. Employer shall pay or cause to be paid to Executive a base
salary in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (subject to
withholding for applicable taxes and as otherwise required by law) (the “Base Salary”) each
Contract Year during the Term. Employer shall pay Executive the Base Salary according to
Employer’s customary payroll practices. Executive acknowledges and agrees that Employer may
pay a portion of Executive’s Base Salary (not to exceed ten percent (10%)) in Shares (as
defined below) pursuant to a plan adopted for Emmis employees or for other executive-level
officers of Employer.

     6.2 Annual Incentive Compensation. For each Contract Year during the Term,
Executive shall be eligible to receive one (1) annual performance bonus in an amount up to a
target amount of One Hundred Thousand Dollars ($100,000) (subject to withholding for
applicable taxes and as otherwise required by law and the terms and conditions set forth on
Exhibit B and Exhibit C (as applicable), attached hereto and made a part
hereof) (each, a “Contract Year Bonus”), the exact amount of which shall be determined by
means of Executive’s attainment of certain performance goals as determined each Contract
Year by the Compensation Committee of the Employer’s Board of Directors (the “Compensation
Committee”) after reasonable consultation with Executive. Executive acknowledges and agrees
that, as a material condition to receiving a Contract Year Bonus, as of the end of each
respective Contract Year: (i) this Agreement must be in effect and not previously terminated
for any reason; and (ii) Executive must be fully performing Executive’s duties and
obligations as required hereunder and not be in breach of any of the material terms and

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conditions of this Agreement. It is understood and agreed that Emmis may, at its sole
election, pay any Contract Year Bonus, if any, in cash or Shares. In the event Emmis elects
pursuant to this Section 6.2 to pay a Contract Year Bonus in Shares, the exact
number of Shares to be awarded to Executive shall be determined by dividing the total dollar
amount of the applicable Contract Year Bonus by the average of the reported high and low
Share price on a valuation date to be used by Employer in determining similar cash incentive
compensation awards for other members of Employer’s senior management team (the “Valuation
Formula”). Any Contract Year Bonus amounts earned by Executive pursuant to the terms and
conditions of this Section 6.2 shall be awarded promptly following Employer’s fiscal
year end earnings release or at such other time or times 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 Contract Year). The
performance goals for the First and Second Contract Years are set forth on Exhibit B
and Exhibit C respectively.

     6.3 Equity Incentive Compensation. On or about the commencement of the Second
and Third Contract Years, or at any other time or times during the Second and Third Contract
Years when Employer generally awards Options (as defined below) to members of Employer’s
senior management team, Executive shall receive an option to acquire Twenty Six Thousand Two
Hundred and Fifty (26,250) shares of Class A Common Stock of Emmis Communications
Corporation (the “Shares”) pursuant to the terms and subject to the conditions of the
applicable Equity Incentive Plan of Employer (each, an “Option”). It is understood and
agreed that in the event of any change in the outstanding Shares by reason of any
reorganization, recapitalization, stock split, reverse stock split, stock dividend, share
combination, consolidation or similar event, the number and class of Shares awarded pursuant
to this Agreement or covered by an Option granted pursuant to this Section 6.3 (and
any applicable Option exercise

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price) shall be adjusted by the Compensation Committee in its sole discretion in
accordance with the terms of the applicable Equity Incentive Plan of Employer and the Option
agreement evidencing the grant of the Option. The determination of the Compensation
Committee shall be conclusive and binding.

     6.4 Performance-Based Compensation; Fractional Shares. It is the intention of
the parties that each Contract Year Bonus paid to Executive pursuant to this Section
6 shall be deemed performance-based compensation in order to permit such compensation to
qualify for deduction under Section 162(m) of the Internal Revenue Code of 1986.
Accordingly, to the extent permitted by law, the provisions of this Section 6 shall
be construed to permit each Contract Year Bonus paid hereunder to so qualify. Additionally,
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.

     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. 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 made available to other executive-level employees of Employer in
accordance with the general provisions of Employer’s fringe benefit plans or programs;
provided, however, 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.

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     9. Confidential Information.

     9.1 Non-Disclosure. Executive acknowledges that certain information
concerning the business of Employer is of a proprietary and highly confidential nature, and
that as a result of Executive’s employment with Employer prior to and during the Term,
Executive has received and developed, and will hereafter receive and continue to develop,
proprietary and other confidential information concerning the business of Employer and its
subsidiaries which, if known to competitors of Employer, would damage Employer, its
subsidiaries, 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 of its subsidiaries 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, price lists, marketing or
strategic plans, budgets and any other such materials (regardless of form or character) or
information that Executive received from or developed on behalf of Employer in connection
with Executive’s employment with Employer. Executive acknowledges that all such materials
shall remain at all times during and after the expiration or termination of the Term for any
reason the sole and exclusive property of Employer, and that nothing in this Agreement shall
be deemed to grant Executive any right, title or interest in such material.

     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

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irreparable harm and damage. Accordingly, if Executive breaches Section 9.1,
Employer shall be entitled to injunctive relief enforcing Section 9.1 to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security.

10. Non-Interference; Non-Competition and Injunctive Relief.

     10.1 Non-Interference. During the Term and for a period of two (2) years
immediately thereafter, Executive shall not, directly or indirectly, take any action (or
permit any action to be taken by any entity with which Executive is associated in a
management role) which has the effect of interfering with Employer’s relationship
(contractual or otherwise) with any employee of Employer or any of its subsidiaries,
affiliates or related entities.

     10.2 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 prior to and during
the Term, Executive has gained and will continue to gain knowledge of and have access to
highly sensitive and valuable information regarding the operations of Employer and its
subsidiaries and affiliated entities, including but not limited to the 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 earlier termination of the Term for any reason. Therefore,
Executive agrees that, during the Term and for a period of twelve (12) months immediately
following the expiration or earlier 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 radio broadcasting business or has an interest in

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any radio station in Argentina, Hungary, Belgium or any other country where Employer owns,
operates or has an interest in one or more radio stations (collectively, the “Restricted
Countries”). 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 the purpose 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 have been and shall be afforded to Executive by
Employer by virtue of Executive’s continued association with Employer and the influence that
Executive has and will continue to 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
negotiated and carefully written to prevent such irreparable injury and damage.
Accordingly, if Executive breaches Section 10.1 or 10.2, 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 therein. Accordingly,
the obligations set forth in Section 10.1 and 10.2 shall be deemed to have
the duration set forth therein, computed from the date such relief is obtained or

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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 obligations 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 five (5) days after receipt of the
Preliminary Notice to respond in writing. If following the expiration of such five (5) day
period Employer reaffirms its determination that Executive should be terminated for Cause,
such termination shall be effective upon delivery by Employer to Executive of a final notice
of termination (the “Final Notice”).

     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 Sections 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:

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

     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, neglect or refusal to perform any of Executive’s material
duties or obligations under this Agreement (or any duties assigned to Executive consistent
with the terms of this Agreement) or abide by any policy or directive of Employer, 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
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 material 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 or an
opportunity to cure; (ii) commission of any felony or any other crime involving an act of
moral turpitude; (iii) Executive’s action or omission, or knowing allowance of actions or
omissions, which are in violation of any law or the rules and regulations of the Federal
Communications Commission (the “FCC”), or which otherwise jeopardize any license granted to
Employer or any of Employer’s subsidiaries or affiliates 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; (vi) sexual or other prohibited harassment of
other employees of Emmis or any of its subsidiaries, affiliates or related entities; (vii)
unauthorized disclosure or use of proprietary or confidential information, as

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described more fully in Section 9.1; (viii) any action which brings Employer or any
of Employer’s subsidiaries or affiliates into public disrepute, contempt, scandal or
ridicule; and (ix) any matter constituting cause or misconduct under applicable laws.

     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 a separate Change of Control
Agreement executed by the parties and attached to this Agreement as Exhibit A.
“Change in Control” shall have the meaning ascribed to it in Exhibit A.
Notwithstanding anything to the contrary contained herein or in Exhibit A, a Change
in Control shall be deemed not to have occurred if, immediately following any corporate
reorganization or the transaction or transactions described in the definition of Change of
Control in Exhibit A: (i) Jeffrey H. Smulyan is Chairman or Chief Executive Officer
of Employer or any successor thereto, including without limitation, the International
Division or any entity established as a result of a corporate reorganization (collectively,
“Successor”); or (ii) Smulyan retains the ability to vote at least fifty percent (50%) of
all classes of stock of the Employer or any Successor; or (iii) Smulyan retains the ability
to elect a majority of the Board of Directors of Employer or any Successor.

     11.5 Termination of Employment by Executive for Good Reason. Executive may
terminate this Agreement and Executive’s employment hereunder for Good Reason according to
the terms and subject to the conditions set forth in this Section 11.5. For
purposes of this Agreement, “Good Reason” shall be defined to mean any situation or
circumstance following a sale or transfer of control or ownership of the International
Division from Emmis to any third party (the “Successor Employer”) where there is a material
change in Executive’s duties or responsibilities by the Successor Employer. In the event
Executive elects to terminate this Agreement for Good Reason as permitted herein, (i)
Executive shall provide written notice of Executive’s intention to terminate this

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Agreement to the Successor Employer, which notice shall be effective thirty (30) days after
the Successor Employer’s receipt of such notice; and (ii) Executive and the Successor
Employer shall have no further obligations or liabilities hereunder; provided,
however, that Executive’s obligations under Sections 9 and 10 shall
survive the termination of this Agreement and, provided, further, that the
Successor Employer shall, not later than two (2) weeks after the termination date, pay to
Executive all unpaid compensation pursuant to Section 6 above for the remainder of
the Term as if this Agreement had not been terminated (including all remaining, unpaid
Contract Year Bonus amounts as if such Contract Year Bonus amounts had been fully earned by
Executive). It is expressly understood and agreed that, in the event Employer elects to
separate or bifurcate its radio and television divisions by means of merger, corporate
reorganization, sale or disposition of assets, spin off, tax-free reorganization, or
otherwise (each, a “Separation Event”), Executive may not terminate this Agreement pursuant
to the terms of this Section 11.5 so long as Executive continues to report directly
to Jeffrey H. Smulyan after such a Separation Event.

12. Disability.

     12.1 Termination of Employment. If Executive shall become Disabled (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 disability
or nonperformance of duties until Executive has been disabled 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 to
this Section 12.1, the date that Executive’s employment terminates shall be referred
to herein as the “Disability Termination Date.”

     12.2 Definition of Disability. Executive shall be deemed to have become
“Disabled” for purposes of this Agreement if, during the Term, because of ill health,
physical or mental disability, or for other causes beyond Executive’s

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reasonable control, Executive shall have been unable to perform Executive’s duties
hereunder as reasonably determined by a reputable physician selected by Employer.

     12.3 Obligations after Termination. Unless Employer exercises its option
under Section 12.5 below to reinstate Executive to Executive’s full compensation,
duties, functions, responsibilities and authority hereunder for the balance of the original
Term, Executive shall have no further obligations or liabilities hereunder after a
Disability Termination Date except Executive’s obligations under Sections 9 and
10 which shall survive the termination of the Term. After a Disability Termination
Date, Employer shall have no further obligations or liabilities hereunder except its
obligations under Section 12.4 which shall survive the termination of the Term.

     12.4 Payment of Unpaid Amounts after Termination. Employer shall, not later
than two (2) weeks after a Disability Termination Date, pay to Executive: (i) all earned but
unpaid Base Salary with respect to any pay period ending on or before the Disability
Termination Date; plus (ii) any Contract Year Bonus, if any, earned by Executive for a
Contract Year ending on or prior to the Disability Termination Date pursuant to Section
6.2 but which is unpaid as of the Disability Termination Date; provided,
however, that in the event a Disability Termination Date occurs at least six (6)
months after the commencement of a Contract Year during the Term, Employer shall pay to
Executive a pro-rated portion of the Contract Year Bonus for the Contract Year during which
the Disability Termination Date occurs, such amount to be determined in the sole discretion
of Employer, so long as Executive is not reinstated during such Contract Year pursuant to
Section 12.5.

     12.5 Reinstatement. If during the original Term and subsequent to a
Disability Termination Date, Executive shall fully recover from a disability, Employer shall
have the right (exercisable within sixty (60) days after written notice from Executive of
such recovery), but not the obligation, to reinstate

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Executive to employment hereunder for the balance of the original Term; provided,
that Executive consents to such reinstatement. In the event of such reinstatement, Employer
shall pay Executive at Executive’s full level of compensation hereunder and otherwise employ
Executive in accordance with the terms and provisions of this Agreement.

     12.6 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 earned
but unpaid Base Salary and Contract Year Bonus amounts earned by Executive, if any, with
respect to any period ending on or before Executive’s date of death; provided,
however, that in the event Executive’s date of death occurs at least six (6) months
after the commencement of a Contract Year during the Term, Employer shall pay to Executive’s
estate or designated beneficiary a pro-rated portion of the Contract Year Bonus for the
Contract Year during which Executive’s death occurs, such amount to be determined in the
sole discretion of Employer.

     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 Section 11, 12 or 13, all
amounts required to be paid by Employer prior to Executive’s death in connection with

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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 first-class, postage prepaid, by registered 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:

Emmis Communications Corporation

40 Monument Circle

Suite 700

Indianapolis, Indiana 46204

Attn.: David O. Barrett, Esq.

With a copy to:

Gary L. Kaseff, Esq.

3500 West Olive Avenue

Suite 1450

Burbank, CA 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 related 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, and that judgment upon
any award rendered may be entered by the

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prevailing party in any court having jurisdiction thereof. The parties agree to share
equally all costs associated with the arbitration; provided, however, that
each party shall be solely responsible for its own attorneys’ fees and expenses in
connection with any such arbitration.

     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 all exhibits
attached hereto and referenced in this Agreement) 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. Accordingly, this Agreement supersedes and replaces all prior written
employment agreements between the parties.

     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, including
without limitation any entity created as a result of a Separation Event, or any third party
by way of merger, corporate reorganization, acquisition of substantially all of the assets
or stock of Employer or its international radio businesses, 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

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manner affect the right of such party at a later time to enforce such provision. No waiver
by a party of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach or a waiver of the breach of any other
term or covenant contained in this Agreement.

     15.7 Beneficiaries. Whenever this Agreement provides for any payment to
Executive’s estate, such payment may be made instead to such beneficiary 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 Executive’s Warranty and Indemnity. Executive hereby represents and
warrants that Executive: (i) has the full and unqualified right to enter into and fully
perform this Agreement according to each and every term and condition contained herein; and
(ii) has not made any agreement, contractual obligation, or commitment in contravention of
any of the terms and conditions of this Agreement or which would prevent Executive from
performing according to any of the terms and conditions contained herein. Furthermore,
Executive hereby agrees to fully indemnify and hold harmless Employer and each of its
subsidiaries, affiliates and related entities, and each of their respective officers,
directors, employees, agents, attorneys, insurers and representatives (the “Emmis Group”)
from and against any and all 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 or Executive’s breach of any of the material terms or conditions
contained in this Agreement.

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     15.9 No Obligation to Utilize Services. Employer shall not be obligated to
utilize Executive’s services nor use the results or products of such services even if
Executive is not in default hereunder. Employer may at any time during the Term, for any
reason, elect not to use Executive’s services or have any further obligations to Executive
under this Agreement except as provided in the next sentence. If Employer elects not to use
Executive’s services as permitted herein, Executive shall be paid Executive’s full
compensation as described more fully in Section 6 at the times and in the
installments as provided herein as if Executive had fulfilled Executive’s obligations
hereunder through the Term.

     15.10 Change in Fiscal Year. If Employer changes its fiscal year, Employer
shall make such adjustments to the various dates and amounts included herein or in any plan
or program referenced herein as are necessary or appropriate; 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.

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

-18-

 

officers’ liability coverage in a commercially reasonable amount. It is understood that the
foregoing indemnification obligations shall survive the expiration or termination of the
Term.

     15.12 Subsequent Employment by Employer. According to the terms and subject
to the conditions set forth in this Section 15.12, in the event Employer does not
offer Executive reasonably acceptable employment with Employer or any of its affiliates or
related entities upon the expiration of the Term, Employer shall continue to make Base
Salary payments to Executive at the rate of fifty percent (50%) of Executive’s Base Salary
(the “Severance Payment”) for a period of twelve (12) months immediately following
Executive’s termination of employment with Employer (the “Severance Period”);
provided, however, in the event Executive commences subsequent employment at
any time during the Severance Period, Employer’s financial obligation pursuant to this
provision shall be reduced by any amounts paid to Executive by Executive’s subsequent
employer during the Severance Period. In the event that Executive’s subsequent compensation
equals or exceeds the Severance Payment, Employer’s financial obligation to Executive
pursuant to this provision shall immediately terminate. It is understood and agreed that,
as a material condition upon which Executive shall be entitled to receive the Severance
Payment, and as an inducement to Emmis’ agreement to pay Executive the Severance Payment,
Executive agrees to: (i) execute a general release in a form acceptable to Emmis upon the
termination of Executive’s employment; and (ii) promptly notify Employer in writing of the
commencement date upon which Executive begins subsequent employment along with the
particulars of Executive’s subsequent compensation package for purposes of determining
Employer’s continuing obligations, if any, under this Section 15.12.
Notwithstanding anything to the contrary contained in this Agreement, Executive shall not be
entitled to the Severance Payment if Executive’s employment is terminated either (a) by
Employer under Section 11.1, (b) by reason of Executive’s disability or death

-19-

 

under Section 12 or 13, or (c) by Executive for any reason other than a
material breach of any of the terms and conditions of this Agreement by Employer (after
providing Employer with notice of such breach and a reasonable opportunity to cure such
breach), or if Employer offers Executive reasonably acceptable employment upon the
expiration of the Term. Executive acknowledges that Executive shall not be entitled to any
additional severance compensation upon the termination or expiration of this Agreement other
than the Severance Payment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-20-

 

     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 	 
	 
	 	PAUL W. FIDDICK

(“Executive”)

 	 
	 	/s/ Paul W. Fiddick
 	 
	 	Paul W. Fiddick 	 
	 	 	 

-21-

 

	 	 	 	 	 

EXHIBIT A

[TO BE PROVIDED]

-22-

 

EXHIBIT B

Calculation of Annual Incentive Compensation – First Contract Year

     Pursuant to Section 6.2, for the First Contract Year, Executive shall be entitled to a
Contract Year Bonus in an amount up to a target amount of One Hundred Thousand Dollars ($100,000)
upon the attainment of the following performance goals (the “Performance Goals”):

	 	 	 	 	 	 	 	 	 
	 	 	Target Bonus	 	Performance Goal
	1.
	 	$	50,000	 	 	
International Radio Operating Income
	2.
	 	$	50,000	 	 	
Individual Performance

     Executive’s attainment of the Performance Goals shall be determined in the sole and absolute
discretion of the Compensation Committee (after reasonable consultation with Executive) based on
certain performance targets established by the Compensation Committee related to the operating
income of Employer’s International Division radio properties as reported by the Employer in its
filings with the United States Securities and Exchange Commission and/or Executive’s performance.
For purposes of this Exhibit B: (i) “International Radio Operating Income” shall be defined
as the combined operating income for all of Employer’s international radio properties; and (ii)
“Individual Performance” bonus amounts shall be awarded by the Compensation Committee in its sole
and absolute discretion. The Compensation Committee reserves the right to amend the performance
targets to the extent it deems appropriate in order to take into account any material acquisition,
disposition, reorganization, recapitalization or other material transaction involving Employer or
its properties. It is understood and agreed that the Performance Goals for the Second Contract
Year are set forth on Exhibit C.

     Executive shall earn a percentage of each Contract Year Bonus in accordance with the following
scale depending upon the extent to which the Performance Goals are attained:

	 	 	 
	Percentage of Performance Goal Attained	 	Percentage of Target Bonus Earned
	115% or more

	 	150% maximum
	110%

	 	125% 
	100%

	 	100% 
	90%

	 	70% 
	less than 90%

	 	0% 

-23-

 

EXHIBIT C

Calculation of Annual Incentive Compensation – Second Contract Year

     Pursuant to Section 6.2, for the Second Contract Year, Executive shall be entitled to
a Contract Year Bonus in an amount up to a target amount of One Hundred Thousand Dollars ($100,000)
upon the attainment of the following performance goals (the “Performance Goals”):

	 	 	 	 	 	 	 
	 	 	Target Bonus	 	Performance Goal
	1.
	 	$	25,000	 	 	International Radio Operating Income
	2.
	 	$	25,000	 	 	Individual Performance
	3.
	 	$	25,000	 	 	Evaluation of International Transactions
	4.
	 	$	25,000	 	 	Management of International Corporate Budget

     Executive’s attainment of the Performance Goals shall be determined in the sole and absolute
discretion of the Compensation Committee (after reasonable consultation with Executive) based on
certain performance targets established by the Compensation Committee related to the operating
income of Employer’s International Division radio properties as reported by the Employer in its
filings with the United States Securities and Exchange Commission and/or Executive’s performance.
For purposes of this Exhibit C: (i) “International Radio Operating Income” shall be defined
as the combined operating income for all of Employer’s international radio properties; (ii)
“Individual Performance” bonus amounts shall be awarded by the Compensation Committee in its sole
and absolute discretion; (iii) “Evaluation of International Transactions” shall be defined to mean
the Compensation Committee’s evaluation, in its sole and absolute discretion, of Executive’s
ability to effectuate successful acquisitions of international radio properties during the Second
Contract Year; and (iv) “Management of International Corporate Budget” shall be defined to mean the
Compensation Committee’s evaluation, in its sole and absolute discretion, of Executive’s management
of the International Division’s corporate budget including development and related costs and
expenses. The Compensation Committee reserves the right to amend the performance targets to the
extent it deems appropriate in order to take into account any material acquisition, disposition,
reorganization, recapitalization or other material transaction involving Employer or its
properties. It is understood and agreed that the Performance Goals (and corresponding performance
targets) for the Third Contract Year shall be determined by the Compensation Committee (after
reasonable consultation with Executive) on or about the commencement of the Third Contract Year.

-24-

 

     Executive shall earn a percentage of each Contract Year Bonus in accordance with the following
scale depending upon the extent to which the Performance Goals are attained:

	 	 	 
	Percentage of Performance Goal Attained	 	Percentage of Target Bonus Earned
	115% or more

	 	150% maximum
	110%

	 	125% 
	100%

	 	100% 
	90%

	 	70% 
	less than 90%

	 	0% 

-25-exv10w1

 

Exhibit 10.1

	 	 	 	 	 
	 

	 	EFFECTIVE DATE:
	 
May 7th, 2007

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

(PAUL D. TOBIAS)

          This Agreement, dated as of the 7th day of May 2007 (the “Effective Date”) by and between
MACKINAC FINANCIAL CORPORATION, a Michigan corporation (the “Company”), and PAUL D. TOBIAS
(“Employee”).

WITNESSETH:

          WHEREAS, the Company currently employs Employee pursuant to an Employment Agreement dated
August 10, 2004, as amended by that certain letter agreement dated December 19, 2006 (the “First
Agreement”); and

          WHEREAS, Employee and Company have agreed to Employee’s employment by Company on the terms and
conditions set forth herein.

          NOW, THEREFORE, in consideration of the premises and the mutual undertakings set forth herein
the parties hereto agree as follows:

          1. Employment and Duties. As Chairman and Chief Executive Officer of the Company and
Chairman of the Company’s wholly-owned subsidiary, mBank (the “Bank”), Employee shall have the
duties and responsibilities commensurate with such titles and offices, including, without
limitation, all such duties and responsibilities as now are or hereafter may be set forth with
respect to such offices in the bylaws of the Company and the Bank or in the directives of the Board
of Directors of the Company (the “Company Board”) or Board of Directors of the Bank. As of the
Effective Date, this Agreement shall amend, supersede and replace in its entirety any other written
or oral Employment Agreements between Company, Bank and Employee, including, without limitation,
the First Agreement, and all such agreements shall be of no further force and

 

 

effect. During the Employment Period (as hereinafter defined), Employee also shall serve as
an officer of such other affiliates of the Bank or the Company and in such other capacities as he
may be requested by the Company Board and shall assume such duties and responsibilities as from
time to time may be assigned to him by the Company Board, all without additional compensation
therefore. Throughout the Employment Period, Employee shall devote his business time, attention
and energy on a full-time basis exclusively to the affairs of the Bank and the Company and its
affiliates. The foregoing notwithstanding, during the Employment Period, it shall not be a
violation of this Agreement for the Employee to (a) serve on corporate, civic or charitable boards
or committees, (b) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (c) own, operate and manage investments or businesses other than banking
institutions, including, Mackinac Partners, LLC, so long as such activities do not interfere with
the performance of the Employee’s primary responsibilities as an executive of the Company in
accordance with this Agreement. On an annual basis, Employee shall disclose to the Board of
Directors of the Company all such other activities, responsibilities and arrangements. It is
expressly understood and agreed that, to the extent that any such activities have been conducted by
Employee prior to the effective date of the First Agreement, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance of the Employee’s
responsibilities to the Company.

          2. Term of Employment. The employment of Employee hereunder shall commence on the
Effective Date and shall continue, unless earlier terminated as provided in this Agreement, through
June 30, 2010 (the “Employment Period”).

 - 2 - 

 

          3. Cash Compensation. As full cash compensation for all services to be performed by
Employee hereunder, the Company shall pay to Employee the following:

     (a) salary of not less than $240,000.00 per year (to be reviewed annually by the
Company Board), payable at the intervals at which other executive officers of the Company
and Bank are paid;

     (b) an additional incentive bonus (if earned) payable during the Employment Period
prior to fiscal year-end in accordance with the Company’s or Bank’s policy or plan.

          4. Oakland County Office. During the Employment Period, the Company shall provide
Employee with an office and support staff in Oakland County, Michigan for his principal office.

          5. Employee Benefits; Disability Insurance. During the Employment Period, Employee
shall be entitled to participate in such Company employee benefit plans as from time to time are
maintained, sponsored, or made available to the executive employees of the Company and the Bank
generally, in each case on the same terms and subject to the same conditions and limitations
generally applicable to other executive officers with respect to participation therein. Employee
shall be entitled to no less than six (6) weeks of paid vacation per calendar year during the
Employment Period. Vacation time not taken shall not be accumulated and carried forward to a
subsequent calendar year.

          6. Certain Expenses. Subject to review of the Board of Directors, in accordance with
the Company’s practices and policies as then effect during the Employment Period as same are
applied to executive officers, the Company shall pay or reimburse Employee for reasonable travel,
entertainment, and other incidental expenses (including, the cost of business publications and

 - 3 - 

 

professional associations), incurred on or in furtherance of the business of the Company or
the Bank.

          7. Certain Continuing Obligations of Employee. Throughout the Employment Period and
thereafter, Employee agrees to keep confidential all trade secrets, customer lists, business
strategies, financial and marketing information, and other data concerning the private affairs of
the Company and the Bank or any of their affiliates, made known to or developed by Employee during
the course of his employment hereunder (“Confidential Information”), not to use any Confidential
Information or supply Confidential Information to others other than in furtherance of the Company’s
or Bank’s business, and to return to the Company upon termination of his employment all copies, in
whatever form, of all Confidential Information and all other documents relating to the business of
the Company or any of its affiliates, including, without limitation, the Bank, which may then be in
the possession or under the control of Employee.

          At the request of the Company Board, whether or not made during the Employment Period,
Employee agrees to execute such confidentiality agreements, assignments of intellectual property
rights, and other documents as hereafter may be reasonably determined by the Company Board to be
appropriate to carry out the purposes of this Section.

 - 4 - 

 

          8. Termination of Employment: Effect.

     (a) Employee’s employment hereunder will be terminated in any of the following ways:

     (i) Immediately upon the death of the Employee;

     (ii) Upon the Employee becoming disabled due to his physical or mental
condition to regularly and satisfactorily perform his duties hereunder (as
determined by the Company Board) for a period of one (1) year, but the retention of
another person to perform Employee’s duties on a temporary basis during such period
of disability shall not constitute a termination under this subsection (ii) or a
termination without Cause under subsection (iii) below;

     (iii) By either the Employee or the Company, without or with Cause (as
hereinafter defined), by thirty (30) days’ prior written notice to the other,
effective as of the date specified in such notice; or

     (iv) In the event of a Change in Control (as hereinafter defined) unless prior
to the effectiveness of the Change in Control, Employee enters into a new employment
agreement or other arrangement acceptable to Employee which terminates this
Agreement and Employee’s right to the compensation and benefits described in Section
9(d) of this Agreement. Employee covenants and agrees to negotiate a new employment
agreement in good faith.

     (b) Upon the termination of Employee’s employment in any of the ways provided in
subsection (a), then this Agreement and all rights and obligations of Employee and the
Company hereunder (as opposed to rights and obligations under any Company employee benefit
plan in which Employee participated) shall terminate and cease

 - 5 - 

 

immediately, except for (i) Employee’s rights to the payments provided in Section 9
below; and (ii) the rights and obligations set forth in Section 7 above and Sections 11, 12
and 13 below.

          9. Payments on Termination. Employee shall be entitled to the following payments and
benefits upon termination of his employment:

     (a) If Employee’s employment is terminated under Section 8(a)(i) above (by reason of
death), or if Employee’s employment is terminated (either voluntarily by Employee or for
Cause by the Company) under Section 8(a)(iii) above, then Employee shall be entitled to the
cash compensation under Section 3(a) above, and the benefits and reimbursements to which
Employee is entitled under Sections 5(a) and 6 above, through the date of termination of
employment.

     (b) If Employee’s employment is terminated by the Company without Cause under Section
8(a)(iii) above, and

     (i) the effective date of such termination is during the first 12 months of this
Agreement, then Employee shall be entitled to a lump sum cash compensation equal to 300% of
his then compensation under Section 3(a) above, or

     (ii) the effective date of such termination is during the second 12 months of this
Agreement, then Employee shall be entitled to a lump sum cash compensation equal to 200% of
his then compensation under Section 3(a) above, or

     (iii) the effective date of such termination is during the third 12 months of this
Agreement or thereafter (in the event that Employee’s employment, under this Agreement, is
extended beyond the date set forth in Section 2 above) then Employee shall be entitled to

 - 6 - 

 

a lump sum cash compensation equal to 100% of his then compensation under Section 3(a)
above, and

     plus, in each case, the greater of (x) the highest incentive bonus received by Employee
under Section 3(b) above, and (y) the highest incentive bonus received by Employee from the
period January 1, 2005 through the Effective Date; together with the benefits and
reimbursements under Sections 5(a) and 6 above, for a period of one year following the
effective date of such termination of employment.

     Unless otherwise prohibited or restricted by statute, regulation, or regulatory agency
overseeing banks or bank holding companies, the lump sum compensation due Employee under
this Section 9(b) shall be paid to Employee within fifteen (15) days of the event giving
rise to the required payment.

     (c) If Employee’s employment is terminated due to Employee’s disability under Section
8(a)(ii) above, Employee shall be entitled to receive the insurance benefits described in
Section 5(b)(ii) above.

     (d) If Employee’s employment is terminated upon a Change of Control under Section
8(a)(iv) above (by Employee or by the Company other than for Cause), Employee shall be
entitled to (a) a cash payment equal to 299% of Employee’s then current base salary under
Section 3(a) above immediately, and (b) the benefits and reimbursements under Sections 5(a)
and 6 above for a period of one (1) year following a Change in Control.

     (e) In the event the payments required under this Agreement, when added together with
any other amounts required to be included by Employee under the provisions of the Internal
Revenue Code of 1986, as amended, result in an “Excess Parachute Payment,” as that term is
defined in Section 280G of the Code, then the amount of the

 - 7 - 

 

payments provided for in this Agreement shall be reduced in an amount which eliminates
any and all excise tax to be imposed under Section 4999 (or any successor thereto) of the
Code.

          10. Definitions. For purposes of this Agreement:

     (a) “Cause” means any of the following:

     (i) Material breach of any of the terms of this Agreement or of the Company’s
or Bank’s policies and procedures applicable to employees and/or directors;

     (ii) Conviction of or plea of guilty or nolo contendere to a
crime involving moral turpitude or involving any violation of securities or banking
law or regulation, or the issuance of any court or administrative order enjoining or
prohibiting Employee from violating any such law or regulation;

     (iii) Repeated or habitual intoxication with alcohol or drugs while on the
premises of the Company or the Bank or any of their affiliates, or during the
performance by Employee of any of his duties hereunder;

     (iv) Embezzlement of any property belonging or entrusted to the Company or the
Bank, or any of their affiliates;

     (v) Willful misconduct or gross neglect of duties, or failure to act with
respect to duties or actions previously communicated to Employee in writing by the
Company Board; or

     (vi) Any act or omission of kind or nature determined in good faith by the
Company Board to be of significant seriousness, which in the good faith judgment of
the Company Board may have adversely affected or may in the future

 - 8 - 

 

adversely affect the Company, the Bank, or any of their affiliates, or has
irreparably damaged Employee’s continued ability to function effectively in any of
the capacities contemplated by this Agreement.

     (b) “Change in Control” shall occur if at any time:

     (i) Any person or group (as such terms are used in connection with Section
13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in
Rule 13(d)(3) and 13(d)(5) under the Exchange Act), directly or indirectly, of
securities of the Company or Bank representing twenty-five percent (25%) or more of
the combined voting power of the Company’s or Bank’s then outstanding securities;

     (ii) A merger, consolidation, sale of assets, reorganization, or proxy contest
is consummated and, as a consequence of which, members of the Company Board in
office immediately prior to such transaction or event constitute less than a
majority of the Board thereafter; or

     (iii) A merger, consolidation, or reorganization is consummated with any other
corporation pursuant to which the shareholders of the Company or the Bank
immediately prior to the merger, consolidation, or reorganization do not immediately
thereafter directly or indirectly own more than fifty percent (50%) of the combined
voting power of the voting securities entitled to vote in the election of directors
of the merged, consolidated, or reorganized entity.

Notwithstanding the foregoing, no trust department or designated fiduciary or other trustee
of such trust department of the Company or a subsidiary of the Company, or other similar
fiduciary capacity of the Company with direct voting control of the stock shall be treated
as a person or group within the meaning of subsection (b)(i) hereof. Further, no
profit-sharing, employee stock ownership, employee stock purchase and savings, employee
pension, or other employee benefit plan of the Company or any of its subsidiaries, and no
trustee of any such plan in its capacity as such trustee, shall be treated as a person or
group within the meaning of subsection (b)(i) hereof.

          11. Integration; Amendment. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof and thereof, and supersedes and replaces in their
entirety any prior agreements or understandings concerning such subject matter, including without
limitation the First Agreement. This Agreement may not be waived, changed, modified, extended,

 - 9 - 

 

or discharged orally, but only by agreement in writing signed in the case of the Company by
the Chairman or Vice Chairman of the Company Board.

          12. Arbitration. Any controversy, dispute, or claim arising out of or relating to
employee’s employment or to this Agreement or breach thereof shall be settled by arbitration in
accordance with the commercial rules of the American Arbitration Association at its Southfield,
Michigan offices. Judgment upon any award may be entered in any circuit court or other court
having jurisdiction thereof, without notice to the opposite party or parties. Anything contained
herein to the contrary notwithstanding, this agreement to arbitrate shall not be deemed to be a
waiver of the Company’s right to secure equitable relief including injunction (whether as part of
or separate from the arbitration proceeding) if and when otherwise appropriate.

          13. Noncompetition and Nonsolicitation. Notwithstanding anything to the contrary
contained elsewhere in this Agreement:

     (a) In view of Employee’s importance to the success of the Company and the Bank,
Employee and the Company agree that the Company and the Bank would likely suffer significant
harm from Employee’s competing with the Company or the Bank during Employee’s term of
employment and for some period of time thereafter. Accordingly, Employee agrees that
Employee shall not engage in competitive activities while employed by the Company or the
Bank and, in the event Employee’s employment is terminated voluntarily by Employee or
without cause by the Company pursuant to Section 8(a)(iii) above, during the Restricted
Period. Employee shall be deemed to engage in competitive activities if he shall, without
the prior written consent of the Company, (i) within a fifty (50) mile radius of the main
office or any branch office of the Bank, render services directly or indirectly, as an
employee, officer, director, consultant, advisor, partner, or

 - 10 - 

 

otherwise, for any organization or enterprise which competes directly or indirectly
with the business of Company or any of its affiliates in providing financial products or
services (including, without limitation, banking, insurance, or securities products or
services) to consumers and businesses, or (ii) directly or indirectly acquires any financial
or beneficial interest in (except as provided in the next sentence) any organization which
conducts or is otherwise engaged in a business or enterprise within a fifty (50) mile radius
of the main office or any branch office of the Bank, which competes directly or indirectly
with the business of the Company or the Bank or any of their affiliates in providing
financial products or services (including, without limitation, banking, insurance or
securities products or services) to consumers and businesses. Notwithstanding the preceding
sentence, Employee shall not be prohibited from owning less than five (5%) percent of any
publicly traded corporation whether or not such corporation is in competition with the
Company. For purposes hereof, the term “Restricted Period” shall equal the longer of (y)
twelve (12) months, or (z) the period during which Employee receives salary and benefits
under Section 8(a)(iii) above (as provided in Section 9(b)), in each case commencing as of
the date of Employee’s termination of employment.

          14. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan applicable to contracts made and to be performed within such
State.

          15. Regulatory Approval. The Company and Employee agree to use their respective best
efforts to obtain such approval of bank regulatory authorities if required for this Agreement and
the payment of any termination payments.

 - 11 - 

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 - 12 - 

 

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

	 	 	 	 	 
	 

	 	MACKINAC FINANCIAL CORPORATION	 	 
	 
	 	 	 	 
	 

	 	/s/ Kelly W. George
 

By:      Kelly W. George

Its:      President
	 	 
	 
	 	 	 	 
	 

	 	/s/ Paul D. Tobias
 

Paul D. Tobias
	 	 

 - 13 -

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