Document:

EX-10.1 EMPLOYMENT AGREEMENT, LEWIS W. DICKEY, JR.

 

EXHIBIT 10.1

EXECUTION VERSION

THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Third Amended and Restated Employment Agreement is made and entered into on December 20,
2006 (this “Agreement”), between CUMULUS MEDIA INC., a Delaware corporation (the
“Company”), and LEWIS W. DICKEY, JR. (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Company is a radio broadcasting company focused on the acquisition, operation and
development of radio stations both directly and through its investment in Cumulus Media Partners,
LLC;

     WHEREAS, the Company and the Executive previously entered into an employment agreement dated
May, 1998 (the “1998 Employment Agreement”), an amended and restated employment agreement
dated as of July 1, 2001 (the “First Amendment”), and a second amended and restated
employment agreement dated as of October 14, 2004 (the “Second Amendment” and, together
with the 1998 Employment Agreement and the First Amendment, the “Prior Agreements”);

     WHEREAS, pursuant to the terms of the Second Amendment, either party may terminate the Second
Amendment pursuant to written notice to the other party on or before January 2, 2007, which is 180
days prior to the expiration of the current employment period, set to expire on July 1, 2007;

     WHEREAS, the Company believes it to be in the best interests of it and its stockholders to
assure itself of the continued services of the Executive on terms and conditions that are in the
best interests of the Company, so that it will have the benefit of his ability, experience and
services, and the Executive is willing to enter into this Agreement to that end, upon the terms and
conditions hereinafter set forth; and

     WHEREAS, it is intended that the Executive will continue to serve the Company as its Chairman,
President and Chief Executive Officer following the execution and delivery of this Agreement and
that this Agreement, except as provided in Section 17, shall amend and restate and, thus, supersede
the Prior Agreements.

     NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

     1. EMPLOYMENT.

     The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees
to continue to remain in the employ of the Company, on and subject to the terms and conditions of
this Agreement.

 

 

     2. TERM.

     The period of this Agreement (the “Agreement Term”) shall commence as of December 20,
2006 (the “Effective Date”) and shall expire as of the close of business on May 31, 2013
(the “Initial Term”). The Agreement Term shall be automatically extended for an additional
year at the expiration of the Initial Term, or any succeeding term, unless written notice of
non-extension is provided by either party to the other party at least 180 days prior to the
expiration of the Initial Term or any succeeding term, as the case may be. The period of the
Executive’s employment under this Agreement (the “Employment Period”) shall commence as of
the Effective Date hereof and shall expire at the end of the Agreement Term, unless terminated or
extended in accordance with the terms and conditions of this Agreement.

     3. POSITION, DUTIES AND RESPONSIBILITIES.

     (a) The Executive shall serve as, and with the title, office and authority of, the Chairman,
President and Chief Executive Officer of the Company. The Executive shall also hold similar titles,
offices and authority with the Company’s subsidiaries and its successors. The Company shall use its
best efforts to cause the Executive to be nominated and elected to the Board of Directors of the
Company (the “Board”) and of its subsidiaries and its successors for the duration of the
Employment Period.

     (b) The Executive shall have effective supervision and control over, and responsibility for,
the strategic direction and general and active day-to-day leadership and management of the business
and affairs of the Company and the subsidiaries of the Company, subject only to the authority of
the Board, and shall have all of the powers, authority, duties and responsibilities usually
incident to the position and office of Chairman, President and Chief Executive Officer of the
Company. The Executive shall report directly to the Board.

     (c) The Executive agrees to devote substantially all of his business time, efforts and skills
to the performance of his duties and responsibilities under this Agreement; provided, however, that
nothing in this Agreement shall preclude the Executive from devoting reasonable periods required
for (i) participating in professional, educational, philanthropic, public interest, charitable,
social or community activities, (ii) serving as a director or member of an advisory committee of
any corporation or other entity that the Executive was serving on as of the Effective Date or any
other corporation or entity that is not in competition with the Company, or (iii) managing his
personal investments; provided, further, that any such activities set forth in clauses (i) through
(iii) above do not materially interfere with the Executive’s regular performance of his duties and
responsibilities hereunder.

     (d) The Executive shall perform his duties at the offices of the Company located in Atlanta,
Georgia, but from time to time the Executive may be required to travel to other locations in the
proper conduct of his responsibilities under this Agreement.

     4. SIGNING BONUS; RETENTION PLAN.

     (a) In consideration for the Executive entering into this Agreement, the Company shall award
to the Executive a signing bonus, consisting of 685,000 deferred shares of the Company’s Class A
Common Stock (such common stock, the “Common Stock” and such

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signing bonus, the “Deferred Shares Signing Bonus”), issuable on the first anniversary
of the Effective Date (or immediately upon a Change of Control (as defined in Section 10) should
such event occur prior to the first anniversary of the Effective Date).

     (b) In consideration in part for the Deferred Shares Signing Bonus, and as part of a retention
plan to retain the services of the Executive for the benefit of the Company, in the event that,
prior to the expiration of the Initial Term, Executive resigns for other than Good Reason (as
defined in Section 10) or his employment is terminated for Cause (as defined Section 10), then
Executive agrees to promptly pay to the Company an amount in cash (the “Retention Plan
Payment”) according to the following schedule:

	 	 	 	 	 
	Date of Resignation or Termination	 	Amount	 
	On or before December 20, 2007
	 	$	6,500,000	 
	After December 20, 2007 but on or before December 20, 2008
	 	$	5,500,000	 
	After December 20, 2008 but on or before December 20, 2009
	 	$	4,500,000	 
	After December 20, 2009 but on or before December 20, 2010
	 	$	3,500,000	 
	After December 20, 2010 but on or before December 20, 2011
	 	$	2,500,000	 
	After December 20, 2011 but on or before December 20, 2012
	 	$	1,500,000	 
	After December 20, 2012 but on or before May 31, 2013
	 	$	500,000	 

This provision for the payment of the Retention Plan Payment shall terminate and be of no further
force or effect upon the occurrence of a Change of Control that precedes any such resignation or
termination of employment by the Executive. It is understood and agreed that the amount of the
Retention Plan Payment represents the Executive’s and the Company’s reasonable estimate of actual
damages suffered by the Company with respect to the matters relating to this Agreement, made at the
time this Agreement is executed; that the Retention Plan Payment provision is necessary and
desirable because actual damages are indeterminable or difficult to measure at the time of
execution of this Agreement; and the provision for the payment of the Retention Plan Payment and
the amount of the Retention Plan Payment is not intended to be, and is not, a penalty for breach of
this Agreement.

     5. COMPENSATION AND BENEFITS.

     In consideration of the services to be rendered by the Executive during the Employment Period,
the Company shall pay or provide the Executive the compensation and benefits set forth below.

     (a) SALARY. The Company shall pay the Executive a base salary (the “Base Salary”)
equal to $900,000 per year during the first 12 months of the Agreement Term; with annual increases
of $40,000 thereafter. In its sole discretion, the Compensation Committee of the Board (the
“Compensation Committee”) may review the Base Salary with a view toward consideration of
merit increases as the Compensation Committee deems appropriate. The Base Salary shall be paid in
arrears in substantially equal installments at monthly or more frequent intervals, in accordance
with the normal payroll practices of the Company.

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     (b) INCENTIVE BONUSES. The Company shall provide the Executive with the opportunity to earn an
annual bonus (the “Annual Bonus”), with the potential amount of the Annual Bonus to be
between 75% of his Base Salary, upon achievement of annual “target” performance goals, and 100% of
his Base Salary, upon achievement of annual “maximum” performance goals, with the “target” and
“maximum” performance goals established by the Compensation Committee (in consultation with the
Executive) in advance for each fiscal year of the Company ending during the Employment Period,
payable to the Executive in the event that such performance goals are met during the relevant year.
Any Annual Bonus shall be paid as promptly in the following fiscal year as practicable following
such determination whether the applicable goals had been achieved for the preceding fiscal year.
The Executive shall participate in all other short-term and long-term bonus or incentive plans or
arrangements in which other senior executives of the Company generally are eligible to participate
from time to time, with the Executive’s short-term and long-term bonus or incentive compensation
opportunities under such plans and arrangements to be determined by the Compensation Committee. Any
incentive bonus payable to the Executive for service during fiscal year 2006 shall be payable
pursuant to the Second Amendment.

     (c) EMPLOYEE BENEFITS. The Executive shall be entitled to participate in all employee benefit
plans, programs, practices or arrangements of the Company in which other senior executives of the
Company are eligible, to the extent permissible under law, to participate from time to time,
including, without limitation, any qualified or non-qualified pension, profit sharing and savings
plans, any death benefit and disability benefit plans, any medical, dental, health and welfare
plans and any stock purchase programs that are approved by the Compensation Committee on terms and
conditions at least as favorable as provided to other senior executives of the Company.

     (d) FRINGE BENEFITS AND PERQUISITES. The Executive shall be entitled to all fringe benefits
and perquisites that are generally made available to senior executives of the Company from time to
time that are approved by the Compensation Committee. In addition, the Executive shall receive a
car allowance of $1,000 per month.

     6. EQUITY INCENTIVES.

     As further consideration for the services rendered by the Executive during the Employment
Period, no later than May 1 of each of the calendar years during the Agreement Term (such date upon
which the grant is made for any calendar year herein, an “Equity Grant Date”) the Executive
shall be granted time-vested restricted shares (the “Time-Vested Restricted Shares”) and
performance-vested restricted shares (the “Performance Restricted Shares” and, together
with the Time-Vested Restricted Shares, the “Restricted Shares”) constituting shares of
Common Stock on the terms and conditions set forth below.

     (a) TIME-VESTED RESTRICTED SHARES. In connection with the annual grants described above,
Time-Vested Restricted Shares constituting 160,000 shares of Common Stock shall be granted in each
year to the Executive. Except as otherwise provided for in this Agreement, each such grant shall
vest in three installments with one-half of such Time-Vested Restricted Shares vesting on the
second anniversary of the date of such grant, and one-quarter of

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same on each of the third and fourth anniversaries of the date of such grant, subject to
Section 6(d).

     (b) PERFORMANCE RESTRICTIVE SHARES. In connection with the annual grants described above,
Performance Restricted Shares constituting 160,000 shares shall be granted in each year to the
Executive. Except as otherwise provided for in this Agreement, each such grant shall vest upon
achievement of certain specified performance goals, including Adjusted EBITDA budgeting goals, as
established by the Compensation Committee (in consultation with the Executive) in advance for the
three-year period beginning on January 1 of the fiscal year of the date of grant, subject to
Section 6(d). Any Performance Restricted Shares that have not vested due to failure to achieve such
goals shall be forfeited.

     (c) CHANGE OF CONTROL. In the event of a Change of Control, the unvested portion of any
Restricted Shares shall become immediately and fully vested. This accelerated vesting provision
shall apply only to Restricted Shares that have been granted as of the date triggering acceleration
and shall have no force or effect with respect to any Restricted Shares described herein that are
not then issued. In addition, upon a Change of Control during the Initial Term, the Company will
grant to the Executive an award of Common Stock (the “Change of Control Grant”), according
to the following schedule, subject to the Executive’s continuous employment through such date:

	 	 	 	 	 
	 	 	Number of	 
	 	 	Shares	 
	Date of Change of Control	 	Awarded	 
	Prior to the Equity Grant Date for the calendar year 2008
	 	 	430,000	 
	On or thereafter but prior to the Equity Grant Date for
the calendar year 2009
	 	 	360,000	 
	On or thereafter but prior to the Equity Grant Date for
the calendar year 2010
	 	 	290,000	 
	On or thereafter but prior to the Equity Grant Date for
the calendar year 2011
	 	 	220,000	 
	On or thereafter but prior to the Equity Grant Date for
the calendar year 2012
	 	 	150,000	 
	On or thereafter until the end of the Initial Term
	 	 	80,000	 

Notwithstanding the foregoing, the Company may, at its sole option, pay a lump-sum cash payment in
lieu of the Change of Control Grant, equal to the then fair market value of the Change of Control
Grant, as determined by the Board in good faith.

     (d) FORFEITURE OF RESTRICTED SHARES. Subject to Sections 6(c), 9(a)(iv), and 9(c)(iii), any
Restricted Shares that have not theretofore become vested shall be forfeited if the Executive
ceases to be continuously employed by the Company at any time prior to the applicable vesting date.

     (e) RESTRICTIONS ON TRANSFER OF RESTRICTED SHARES. The Restricted Shares may not be
transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by the
Executive, except to the Company, until they have become vested. The certificate(s) representing
the Restricted Shares shall be held in custody by the Company, together with a stock power endorsed
in blank by the Executive with respect thereto, until those

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shares have become vested, and at such time the certificate(s) representing such vested shares
shall be promptly issued to the Executive.

     (f) OTHER EQUITY INCENTIVES. In addition to the foregoing equity grants, the Executive shall
be given consideration from time to time by the Compensation Committee for the grant of stock
options or other equity incentives with respect to the Common Stock under any stock option or
equity-based incentive plan or arrangement of the Company approved by the Compensation Committee
for which senior executives of the Company are eligible to participate.

     7. EQUITY REPURCHASE.

     On the Effective Date, the Executive shall, and hereby does, sell to the Company, and the
Company shall purchase from the Executive, all of his rights and interests in and to (a) currently
outstanding options to purchase 500,000 shares of Common Stock, previously granted to the Executive
on October 2, 2000 at an exercise price per share of $6.4375 and options to purchase 500,000 shares
of Common Stock, previously granted to the Executive on April 12, 2001 at an exercise price per
share of $5.92, in each case as to which Executive confirms his irrevocable election that such
options are exercisable for shares of Common Stock and not for shares of the Company’s Class C
Common Stock, and options to purchase 150,000 shares of Common Stock, previously granted to the
Executive on March 4, 2003 at an exercise price per share of $14.03, for an aggregate purchase
price of $6,849,950, and (b) 500,000 currently outstanding shares of Common Stock, previously
granted to the Executive on April 25, 2005 and March 3, 2006, for an aggregate purchase price of
$5,275,000, each purchase price paid in a lump-sum cash payment at the time of purchase, with the
payment therefor subject to applicable withholding for federal and Georgia income taxes.

     8. TERMINATION OF EMPLOYMENT.

     The Employment Period will be terminated upon the happening of any of the following events:

     (a) RESIGNATION FOR GOOD REASON. The Executive may voluntarily terminate his employment
hereunder for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

     (i) the assignment to the Executive of any duties inconsistent with the Executive’s
position (including status, offices, titles or reporting relationships), authority, duties
or responsibilities as contemplated by Section 3, any adverse change in the Executive’s
reporting responsibilities, or any action by the Company that results in a diminution in
such position, authority, duties or responsibilities, but excluding for these purposes an
isolated and insubstantial action not taken in bad faith and that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;

     (ii) the failure of the Company to nominate the Executive to the Board or the failure
of the Board to recommend that the Company’s stockholders elect the Executive to the Board;

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     (iii) any failure by the Company to comply with the compensation and benefits
provisions of Sections 5 or 6 or to comply with any other material obligation of the Company
under this Agreement, including, without limitation, any failure by the Company to obtain an
assumption of this Agreement by a successor corporation as required under Section 15(a);

     (iv) a notice of non-extension of the Agreement Term given by the Company to the
Executive as set forth in Section 2 prior to the expiration of the Initial Term; or

     (v) the relocation, without the consent of the Executive, of the Executive’s office to
a location more than 40 miles from its current location in Atlanta, Georgia.

However, in no event shall the Executive be considered to have terminated his employment for “Good
Reason” unless and until the Company receives written notice from the Executive identifying in
reasonable detail the acts or omissions constituting “Good Reason” and the provision of this
Agreement relied upon, and such acts or omissions are not cured by the Company to the reasonable
satisfaction of the Executive within 15 days of the Company’s receipt of such notice.

     (b) RESIGNATION WITHOUT GOOD REASON. The Executive may voluntarily terminate his employment
hereunder for any reason at any time, including for any reason that does not constitute Good
Reason.

     (c) TERMINATION FOR CAUSE. The Company may terminate the Executive’s employment hereunder for
Cause. For purposes of this Agreement, the Executive shall be considered to be terminated for
“Cause” only upon (i) the conviction of the Executive of a felony under the laws of the
United States or any state thereof, whether or not appeal is taken, (ii) the conviction of the
Executive for a violation of criminal law involving the Company and its business, (iii) the willful
misconduct of the Executive, or the willful or continued failure by the Executive (except as
provided in Section 8(e)) to substantially perform his duties hereunder, in either case which has a
material adverse effect on the Company; or (iv) the willful fraud or material dishonesty of the
Executive in connection with his performance of duties to the Company. However, in no event shall
the Executive’s employment be considered to have been terminated for Cause unless and until the
Executive receives a copy of a resolution adopted by the Board finding that, in the good faith
opinion of the Board, the Executive is guilty of acts or omissions constituting Cause, which
resolution has been duly adopted by an affirmative vote of a majority of the Board, excluding the
Executive and any individual alleged to have participated in the acts constituting Cause. Any such
vote shall be taken at a meeting of the Board called and held for such purpose, after reasonable
written notice is provided to the Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis of termination for Cause and the Executive is given an
opportunity, together with counsel, to be heard before the Board. The Executive shall have the
opportunity to cure any such acts or omissions (other than items (i) or (ii) above) within 15 days
of the Executive’s receipt of such resolution. The foregoing shall not limit the right of the
Company to suspend the Executive from his day-to-day responsibilities with the Company pending the
completion of such notice and cure procedures.

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     (d) TERMINATION WITHOUT CAUSE. The Board shall have the right to terminate the Executive’s
employment hereunder other than for Cause at any time, subject to the consequences of such
termination as set forth in this Agreement.

     (e) DISABILITY. The Executive’s employment hereunder shall terminate upon his Disability. For
purposes of this Agreement, “Disability” shall mean the inability of the Executive to
perform his duties to the Company on account of physical or mental illness or incapacity for a
period of four and one-half consecutive months, or for a period of 135 calendar days, whether or
not consecutive, during any 365-day period, as a result of a condition that is treated as a total
or permanent disability under the long-term disability insurance policy of the Company that covers
the Executive. The Executive’s employment hereunder shall be deemed terminated by reason of
Disability on the last day of the applicable period; provided, however, in no event shall the
Executive be terminated by reason of Disability unless the Executive receives written notice from
the Company, at least 15 days in advance of such termination, stating its intention to terminate
the Executive for reason of Disability.

     (f) DEATH. The Executive’s employment hereunder shall terminate upon his death.

     9. COMPENSATION UPON TERMINATION OF EMPLOYMENT.

     In the event the Executive’s employment by the Company is terminated during the Agreement
Term, the Executive, in addition to any benefits provided pursuant to Section 17, shall be entitled
to the severance payments and benefits specified below:

     (a) RESIGNATION FOR GOOD REASON; TERMINATION WITHOUT CAUSE. In the event the Executive
voluntarily terminates his employment hereunder for Good Reason or is terminated by the Company
other than for Cause, death or Disability, the Company shall pay the Executive and provide him with
the following:

     (i) ACCRUED RIGHTS. Upon the Executive’s termination of employment, the Company shall
pay the Executive a lump-sum amount equal to the sum of (A) his earned but unpaid Base
Salary through the date of termination, (B) any earned but unpaid Annual Bonus for any
completed fiscal year, and (C) any unreimbursed business expenses or other amounts due to
the Executive from the Company as of the date of termination. The Company shall also pay to
the Executive, upon the final preparation of the Company’s audited financial statements for
the year in which termination of employment occurs, an additional lump-sum amount calculated
based on the degrees of achievement of the bonus performance goals applicable to the Annual
Bonus for such year, determined in accordance with the terms of the bonus plan for such year
but prorated on a daily basis to reflect the partial year of service. In addition, the
Company shall provide to the Executive all payments, rights and benefits due as of the date
of termination under the terms of the Company’s employee and fringe benefit plans and
programs in which the Executive participated during the Employment Period (together with the
lump-sum payments described above, the “Accrued Rights”).

     (ii) SEVERANCE PAYMENT. The Company shall pay the Executive the an amount equal to two
times the annual Base Salary in effect at the time of termination.

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Any amount payable pursuant to this Section 9(a)(ii) shall be payable in four equal
consecutive quarterly installments, with the first such payment to be made within 15 days
following the date of termination; provided, however, if any payment to the
Executive would constitute a “deferral of compensation” under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and the Executive is a “specified
employee” (as such phrase is defined in Section 409A of the Code), the Executive (or his
beneficiary) will receive payment of such installment upon the earlier of (A) six months
following the Executive’s “separation from service” with the Company (as such phrase is
defined in Section 409A of the Code) or (B) the Executive’s death.

     (iii) EQUITY RIGHTS. In the event the Executive voluntarily terminates his employment
hereunder for Good Reason, all unvested Time-Vested Restricted Shares and Performance
Restricted Shares shall be forfeited and, in the event the Company terminates Executive’s
employment without Cause, 50% of any unvested Time-Vested Restricted Shares and Performance
Restricted Shares shall become immediately and fully vested, and the remaining 50% of any
Time-Vested Restricted Shares and Performance Restricted Shares shall be forfeited;
provided, however, in the event that the employment of the Executive is
terminated without Cause during the six-month period immediately preceding a Change of
Control by the Company, then 100% of any unvested Time-Vested Restricted Shares and
Performance Restricted Shares shall become immediately and fully vested. This accelerated
vesting provision shall apply only to Time Vested Restricted Shares and Performance
Restricted Shares that have been granted as of the date triggering acceleration and shall
have no force or effect with respect to any Restricted Shares described herein which are not
then issued. For avoidance of doubt, this Section 9(a)(iii) shall have no effect on the
Executive’s right to receive the Signing Bonus Deferred Shares.

     (iv) CONTINUED BENEFITS. For the 12-month period following the date of the Executive’s
termination of employment, the Company shall continue to provide the Executive and his
eligible dependents, at its sole cost, with the medical, dental, disability and life
insurance coverages that were provided to the Executive immediately prior to termination of
employment, subject to cancellation by the Company in the event that the Executive obtains
coverage under comparable substitute plans of another employer. Following the expiration of
such 12-month period and for the lifetime of the Executive, the Executive and his eligible
dependents shall be entitled to continue participating (at the Executive’s sole expense) in
the Company’s group medical, dental, disability and life insurance coverages, with the
Executive’s cost to be determined on a basis consistent with the method for determining
employee payments under the health care continuation requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”).

     (b) RESIGNATION WITHOUT GOOD REASON; TERMINATION FOR CAUSE. In the event the Executive
voluntarily terminates his employment hereunder other than for Good Reason or is terminated by the
Company for Cause, the Company shall pay the Executive and provide him with those Accrued Rights
described in the first sentence of Section 9(a)(i). Upon such termination, (i) the Executive shall
not be entitled to receive, and the Company shall have no obligation to provide, any severance
payments under this Agreement, (ii) the Executive and

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his dependents shall not be entitled to receive, the Company shall have no obligation to
provide to the Executive or his dependents, any medical, dental, disability or life insurance
coverage except as required by COBRA or other applicable law or under the terms of the applicable
plans, and (iii) all unvested Restricted Shares shall be forfeited. For avoidance of doubt, this
Section 9(b) shall have no effect on the Executive’s right to receive the Signing Bonus Deferred
Shares.

     (c) DISABILITY; DEATH. In the event the Executive’s employment hereunder is terminated by
reason of the Executive’s Disability or death, the Company shall pay and provide the Executive (or
his legal representative) with the following:

     (i) ACCRUED RIGHTS. The Company shall pay and provide to the Executive (or his legal
representative) any Accrued Rights, including all disability or life insurance benefits (as
applicable).

     (ii) SALARY CONTINUATION. The Company shall provide the Executive (or his legal
representative) with a lump-sum payment equal to the Executive’s then-current annual Base
Salary.

     (iii) EQUITY RIGHTS. As of the date of the Executive’s termination under this Section
9(c), all unvested Restricted Shares shall become immediately and fully vested. For
avoidance of doubt, this Section 9(b) shall have no effect on the Executive’s right to
receive the Signing Bonus Deferred Shares.

     (iv) CONTINUED BENEFITS. For the 12-month period following the date of the Executive’s
Disability or death, the Company shall continue to provide the Executive and/or his eligible
dependents (as applicable), at its sole cost, with the medical, dental, disability and life
insurance coverages that were provided to the Executive immediately prior to termination of
employment. Following the expiration of such 12-month period, the Executive shall be
entitled to continue group benefit coverages on the same basis as described in Section
9(a)(iv).

     10. CHANGE OF CONTROL DEFINITIONS.

     For purposes of this Agreement, the following terms shall have the meanings given below:

     “CHANGE OF CONTROL” means the occurrence of any of the following: (i) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or
a series of related transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any “Person” or “Group” of related persons (as such terms are used
in Section 13(d)(3) of the Securities Exchange Act of 1934), (ii) the adoption of a plan relating
to the liquidation or dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any purchase, sale, acquisition, disposition, merger or
consolidation) the result of which is that any Person or Group becomes the “beneficial owner” (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934) of
more than 50% of the aggregate voting power of all classes of capital stock of the Company having
the right to elect directors under ordinary circumstances, or (iv) the first day on which a
majority of the members of the Board are not Continuing Directors.

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     “CONTINUING DIRECTORS” means, as of any date of determination, any member of the Board
who (i) was a member of the Board on the Effective Date or (ii) was nominated for election or
elected to the Board with the approval of (a) two-thirds of the Continuing Directors who were
members of the Board at the time of such nomination or election or (b) two-thirds of those
Directors who were previously approved by Continuing Directors.

     “SUBSIDIARY” means, with respect to any Person, (i) any corporation, association or
other business entity of which more than 50% of the total voting power of shares of capital stock,
entitled (without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general partner of which is
such Person or a Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination thereof).

     11. PARACHUTE TAX INDEMNITY.

     (a) If it shall be determined that any amount paid, distributed or treated as paid or
distributed by the Company to or for the Executive’s benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Section 11) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986
(the “Code”) or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all federal, state and local
taxes (including any interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.

     (b) All determinations required to be made under this Section 11, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally recognized accounting
firm (the “Accounting Firm”) selected by the Company that shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 11, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm’s determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial 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 the Company exhausts its remedies pursuant to this
Section 11 and the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the

11

 

amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the Executive’s benefit. Notwithstanding the foregoing, any Gross-Up
Payment, including any Underpayment, will be made only in a manner and to the extent (and at the
earliest date or dates) such that Section 409A of the Code will not be violated.

     (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later then ten business days after the
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall: (i) give the Company any
information reasonably requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith
in order to effectively contest such claim; and (iv) permit the Company to participate in any
proceeding relating to such claim; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, from 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 expense. Without limitation on the foregoing
provisions of this Section 11, the Company shall control all proceedings taken in connection with
such contest 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 and may,
at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the 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 shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the
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 or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the Executive’s taxable year with respect to which
such contested amount is claimed to be due is limited solely to such contested amount. Furthermore,
the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall 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,
so long as such action does not have a material adverse effect on the contest being pursued by the
Company.

     (d) If, after the Executive’s receipt of an amount advanced by the Company pursuant to this
Section 11, the Executive becomes entitled to receive any refund with respect to such

12

 

claim, the Executive shall (subject to the Company’s complying with the requirements of this
Section 11) promptly pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the Executive’s receipt of an amount
advanced by the Company pursuant to this Section 11, a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

     12. NO MITIGATION OR OFFSET.

     The Executive shall not be required to seek other employment or to reduce any severance
benefit payable to him under Section 9, and, except as provided in Section 9(a)(iv), no such
severance benefit shall be reduced on account of any compensation received by the Executive from
other employment. The Company’s obligation to pay benefits (severance or otherwise) under this
Agreement shall not be reduced by any amount owed by the Executive to the Company, except for any
amounts owed by the Executive to the Company pursuant to Section 4(b), to which the Company shall
have an express right of setoff (in addition to any other remedies available to it under law).

     13. TAX WITHHOLDING; METHOD OF PAYMENT.

     All compensation payable pursuant to this Agreement shall be subject to reduction by all
applicable withholding, social security and other federal, state and local taxes and deductions.
Any lump-sum payments provided for in this Agreement shall be made in a cash payment, net of any
required tax withholding. If the Company shall be required to withhold any federal, state or local
tax in connection with the vesting of any Restricted Shares pursuant to this Agreement, the
Executive shall pay the tax or make provisions that are satisfactory to the Company for the payment
thereof. Unless the Executive elects to satisfy all or any part of any such withholding obligation
by the payment to the Company of immediately available funds on or before the date such withholding
is required, then the Company is hereby authorized to and shall cause a surrender of a portion of
the nonforfeitable shares of Common Stock that are to be transferred to the Executive hereunder,
and the shares of Common Stock so surrendered shall be credited against any such withholding
obligation at the fair market value per share of such shares on the date of such surrender.

     14. RESTRICTIVE COVENANTS.

     (a) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The Executive acknowledges that during
the course of his affiliation with the Company he has or will have access to and knowledge of
certain information and data which the Company considers confidential or proprietary and the
release of such information or data to unauthorized persons would be extremely detrimental to the
Company. As a consequence, the Executive hereby agrees and acknowledges that he owes a duty to the
Company not to disclose, and agrees that without the prior written consent of the Company, at any
time, either during or after his employment with the Company, he will not communicate, publish or
disclose, to any person anywhere, or use for

13

 

his own account any Confidential Information (as hereinafter defined), except as may be
necessary or appropriate to conduct his duties hereunder, provided the Executive is acting in good
faith and in the best interest of the Company, or as may be required by law or judicial process.
The Executive will use his best efforts at all times to hold in confidence and to safeguard any
Confidential Information from falling into the hands of any unauthorized person and, in particular,
will not permit any Confidential Information to be read, duplicated or copied. The Executive will
return to the Company all Confidential Information in the Executive’s possession or under the
Executive’s control whenever the Company shall so request, and in any event will promptly return
all such Confidential Information if the Executive’s relationship with the Company is terminated
for any or no reason and will not retain any copies thereof. For purposes hereof the term
“Confidential Information” shall mean any information or data used by or belonging or
relating to the Company or any of its subsidiaries or Affiliates that is not known generally to or
available for use by the industry in which the Company is or may be engaged, other than as a result
of the Executive’s acts or omissions to act, and which the Company maintains on a confidential
basis, including, without limitation, any and all trade secrets, proprietary data and information
relating to the Company’s business and products, price list, customer lists, processes, procedures
or standards, know-how, manuals, business strategies, records, drawings, specifications, designed,
financial information, whether or not reduced to writing, or information or data which the Company
advises the Executive should be treated as confidential information. The covenants made in this
Section 14(a) shall remain in effect during the term of the Executive’s relationship with the
Company and, in the case of Confidential Information that constitutes trade secrets under the
Uniform Trade Secrets Act, shall survive the termination of such relationship for any reason
indefinitely, and, in the case of all other Confidential Information, shall survive for a period of
five years after such termination. The Executive further agrees and acknowledges that Confidential
Information, as between the Company and the Executive, shall be deemed and at all time remain and
constitute the exclusive property of the Company.

     (b) COVENANT NOT TO COMPETE. The Executive acknowledges that he has established and will
continue to establish favorable relations with the customers, clients and accounts of the Company
and will have access to trade secrets of the Company and that the Company would be irreparably
damaged if the Executive were to provide similar services to any person or entity competing with
the Company or engaged in a similar business in the markets served or to be served by the Company.
Therefore, in consideration of such relations and to further protect trade secrets, directly or
indirectly, of the Company, the Executive agrees that during the term of his employment by the
Company and for a period of eighteen months from the date of termination of the Executive, except
that such eighteen month period shall not apply in the event of termination of employment (i) by
the Company other than for Cause, (ii) by the Executive for Good Reason or (iii) by the Company or
the Executive for any reason within one year following a Change of Control, the Executive will not,
directly or indirectly, without the express written consent of the Company:

     (i) act as a manager of a business substantially similar to, a supervisor of officers
or employees rendering services for, or as an advisor with respect to the conduct of,
whether on the Executive’s own behalf or as an employee, director, or independent contractor
of, any business that consists of radio broadcasting services (the “Business”) and
serves the listening areas (as defined by the Arbitron Metro Survey Area) set forth on

14

 

Exhibit A, within which area the Executive acknowledges the Company currently
conducts its business or has definite or immediate plans to conduct its business, (the
“Competitive Businesses”);

     (ii) solicit, or attempt to solicit, clients, customers or accounts of the Company, (A)
which during the 12-month period prior to the date of termination of the Executive has
obtained or contracted to obtain services from the Company and with which the Executive had
contact during the term of the Executive’s employment by the Company or (B) whose name
and/or address both would constitute Confidential Information and became known to Executive
as a customer or client or potential customer or client of the Company in any manner during
the term of the Executive’s employment by the Company, for, on behalf of or otherwise
related to any such Competitive Businesses or any products related thereto; or

     (iii) solicit or in any manner influence or encourage any person who is an employee of
the Company at the time the Executive’s employment terminates or who was such an employee
with the Company at any time during the 12-month period immediately preceding the date of
such termination and with whom the Executive had contact during the term of the Executive’s
employment by the Company to leave such employ or service with the Company for any
employment opportunity with any Competitive Businesses.

Notwithstanding the foregoing, if any court determines that the covenant not to compete, or any
part thereof, is unenforceable because of the duration of such provision or the geographic area or
scope covered thereby, all of which the Executive acknowledges are reasonable under the
circumstances, such court shall have the power to reduce the duration, area or scope of such
provisions and, in its reduced form, such provision shall then be enforceable and shall be
enforced.

     (c) In the event that, and each time during the Executive’s employment with the Company, as,
the Company (i) establishes the Business hereinafter in a territory other than those areas listed
on Exhibit A or (ii) adds a substantially different service line to the Business, the
Executive agrees to execute and deliver an amendment to this Agreement adding the territory or
additional service line or some combination thereof upon payment to the Executive by the Company of
the sum of $100.00.

     (d) SPECIFIC PERFORMANCE. Recognizing the irreparable damage will result to the Company in the
event of the breach or threatened breach of any of the foregoing covenants and assurances by the
Executive contained in Sections 14(a) or 14(b), and that the Company’s remedies at law for any such
breach or threatened breach will be inadequate, the Company and its successors and assigns, in
addition to such other remedies which may be available to them, shall be entitled to an injunction,
including a mandatory injunction, to be issued by any court of competent jurisdiction ordering
compliance with this Agreement or enjoining and restraining the Executive, and each and every
person, firm or Company acting in concert or participation with him, from the continuation of such
breach and, in addition thereto, he shall pay to the Company all ascertainable damages, including
costs and reasonable attorneys’ fees sustained by the Company by reason of the breach or threatened
breach of said covenants and assurances. The

15

 

obligations of the Executive and the rights of the Company, its successors and assigns under
this Section 14 shall survive the termination of this Agreement. The covenants and obligations of
the Executive set forth in this Section 14 is in addition to and not in lieu of or exclusive of any
other obligations and duties of the Executive to the Company, whether express or implied in fact or
in law.

     (e) POTENTIAL UNENFORCEABILITY OF ANY PROVISION. If a final judicial determination is made
that any provision of this Agreement is an unenforceable restriction against the Executive, the
provisions hereof shall be rendered void only to the extent that such judicial determination finds
such provisions unenforceable, and such unenforceable provisions shall automatically be
reconstituted and become a part of this Agreement, effective as of the date first written above, to
the maximum extent in favor of the Company that is lawfully enforceable. A judicial determination
that any provision of this Agreement is unenforceable shall in no instance render the entire
Agreement unenforceable, but rather the Agreement will continue in full force and effect absent any
unenforceable provision to the maximum extent permitted by law.

     15. SUCCESSORS.

     (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its
successors and any person, firm, corporation or other entity which succeeds to all or substantially
all of the business, assets or property of the Company. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business, assets or property of the Company, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this Agreement, the
“Company” shall mean the Company as hereinbefore defined and any successor to its business,
assets or property as aforesaid which executes and delivers an agreement provided for in this
Section 15(a) or which otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Notwithstanding the foregoing provisions of this Section 15(a), this Agreement
shall not be assignable by the Company without the prior written consent of the Executive.

     (b) This Agreement and all rights of the Executive hereunder shall inure to the benefit of and
be enforceable by the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should die while any
amounts are due and payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid to the Executive’s designated beneficiary or, if there be no such designated
beneficiary, to the legal representatives of the Executive’s estate.

     16. NO ASSIGNMENT.

     Except as to withholding of any tax under the laws of the United States or any other country,
state or locality, neither this Agreement nor any right or interest hereunder nor any amount
payable at any time hereunder shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment, or other legal process, or encumbrance of any kind by the Executive
or the beneficiaries of the Executive or by his legal representatives without the

16

 

Company’s prior written consent, nor shall there be any right of set-off or counterclaim in
respect of any debts or liabilities of the Executive, his beneficiaries or legal representatives,
except in the case of termination of employment for Cause; provided, however, that nothing in this
Section 16 shall preclude the Executive from designating a beneficiary to receive any benefit
payable on his death, or the legal representatives of the Executive from assigning any rights
hereunder to the person or persons entitled thereto under his will or, in case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his estate.

     17. ENTIRE AGREEMENT.

     (a) This Agreement contains the entire understanding of the parties with respect to the
subject matter hereof and, except as specifically provided herein, cancels and supersedes any and
all other agreements between the parties with respect to the subject matter hereof. In particular,
this Agreement amends and restates and, thus, supersedes the Prior Agreements, except for (i) any
and all provisions of the Second Amendment that relate to the payment of incentive bonuses for
services performed by the Executive during fiscal year 2006, (ii) any and all provisions in the
Prior Agreements that relate to the grant of equity incentives granted pursuant to Section 5 of
each of the Prior Agreements, which provisions, including any provisions under Sections 5 or 7 of
each of the Prior Agreements, shall remain in effect throughout the Agreement Term of this
Agreement, and (iii) any and all provisions of the loan reduction program set forth in Section 8 of
the First Amendment, which provisions shall remain in effect according to the original terms and
conditions thereof with no changes. Any amendment or modification of this Agreement shall not be
binding unless in writing and signed by the Company and the Executive. Notwithstanding the
foregoing, the parties hereto shall enter into restricted stock agreements or deferred share
agreements in respect of the Restricted Shares, the Deferred Shares Signing Bonus and, if
applicable, the Change of Control Grant, setting forth terms and conditions consistent with the
provisions of this Agreement and such other terms and conditions approved by the Compensation
Committee, in each case consistent with the Company’s equity incentive plans or as approved by the
Company’s stockholders.

     (b) Notwithstanding anything to the contrary in this Agreement, to the extent this Agreement
provides for the issuance of any securities of the Company in excess of the amount of securities
available for issuance pursuant to the Company’s then-existing equity incentive plans, the issuance
of such excess securities shall be postponed indefinitely, pending approval by the Company’s
stockholders (which the Company shall use its commercially reasonable efforts to facilitate
obtaining) of (i) an amendment to one or more of the Company’s equity incentive plans to increase
the number of securities available for issuance under such plan or plans by no less than the amount
of such excess, (ii) a new equity incentive plan providing for the issuance of securities in an
amount no less than the amount of such excess, or (iii) the issuance of securities, outside of an
equity incentive plan, equal to the amount of such excess.

     18. SEVERABILITY.

     In the event that any provision of this Agreement is determined to be invalid or
unenforceable, the remaining terms and conditions of this Agreement shall be unaffected and shall
remain in full force and effect, and any such determination of invalidity or unenforceability shall
not affect the validity or enforceability of any other provision of this Agreement.

17

 

     19. SECTION 409A OF THE CODE.

     To the extent applicable, it is intended that the compensation arrangements under this
Agreement be in full compliance with the provisions of Section 409A of the Code. To the extent any
provision in this Agreement is or will be in violation of Section 409A of the Code, the Agreement
shall be amended in such a manner as the parties may agree such that the Agreement is or remains in
compliance with Section 409A of the Code and the intent of the parties is maintained to the maximum
extent possible.

     20. NOTICES.

     All notices which may be necessary or proper for either the Company or the Executive to give
to the other shall be in writing and shall be delivered by hand or sent by registered or certified
mail, return receipt requested, or by air courier, to the Executive at:

Mr. Lewis W. Dickey, Jr.

3535 Piedmont Road

Building 14, 14th Floor

Atlanta, Georgia 30305

and shall be sent in the manner described above to the Secretary of the Company at the Company’s
principal executives offices at 3535 Piedmont Road, Building 14, 14th Floor, Atlanta,
Georgia 30305 or delivered by hand to the Secretary of the Company, and shall be deemed given when
sent, provided that any notice required under Section 8 or notice given pursuant to Section 2 shall
be deemed given only when received. Any party may by like notice to the other party change the
address at which he or they are to receive notices hereunder.

     21. GOVERNING LAW.

     This Agreement shall be governed by and enforceable in accordance with the laws of the State
of Georgia, without giving effect to the principles of conflict of laws thereof.

     22. ARBITRATION.

     Any controversy or claim arising out of, or related to, this Agreement, or the breach thereof,
shall be settled by binding arbitration in the City of Atlanta, Georgia, in accordance with the
rules then obtaining of the American Arbitration Association, and the arbitrator’s decision shall
be binding and final, and judgment upon the award rendered may be entered in any court having
jurisdiction thereof.

     23. LEGAL FEES AND EXPENSES.

     To induce the Executive to execute this Agreement and to provide the Executive with reasonable
assurance that the purposes of this Agreement will not be frustrated by the cost of its enforcement
should the Company fail to perform its obligations hereunder, the Company shall pay and be solely
responsible for any attorneys’ fees and expenses and court costs incurred by the Executive as a
result of a claim that the Company has breached or otherwise failed to

18

 

perform this Agreement or any provision hereof to be performed by the Company, regardless of
which party, if any, prevails in the contest.

[ SIGNATURE PAGE TO FOLLOW ]

19

 

     The Company and the Executive are signing this Agreement effective as of the date first above
written.

EXECUTIVE

/s/ Lewis W. Dickey, Jr.

LEWIS W. DICKEY, JR.

CUMULUS MEDIA INC.

/s/ Martin R. Gausvik

By: Martin R. Gausvik

Title: Executive Vice President, Treasurer and

          Chief Financial Officer

[Signature Page to Employment Agreement]

 

 

EXHIBIT A

Listening Areas

	 	 	 
	Bangor

	 	Albany
	Florence

	 	Columbus-Starkville
	Harrisburg

	 	Flint
	Myrtle Beach

	 	Lake Charles
	Tallahassee

	 	Lexington
	Wilmington

	 	Melbourne
	Youngstown

	 	Montgomery
	 

	 	Saginaw
	Fayetteville, AR

	 	Shreveport
	Fayetteville, NC
	 	 
	Ft. Smith

	 	Abilene
	Kalamazoo

	 	Amarillo
	Mobile

	 	Ann Arbor
	Monroe

	 	Appleton
	Pensacola

	 	Battle Creek
	Rockford

	 	Beaumont
	Savannah

	 	Grand Junction
	Toledo

	 	Green Bay
	 

	 	Killeen Temple
	Bismarck

	 	Odessa
	Cedar Rapids

	 	Topeka
	Dubuque

	 	Wichita Falls
	Eugene
	 	 
	Fairbault

	 	San Francisco
	Owatonna

	 	Dallas
	Oxnard-Ventura

	 	Houston
	Quad Cities

	 	Atlanta
	Santa Barbara

	 	Cincinnati
	Waseca

	 	Kansas City
	Waterloo

	 	Indianapolis
	 

	 	YorkExhibit 4.11

 

Exhibit 4.11

Warrant

The securities represented by this Warrant have not been registered under the Securities Act of
1933, as amended (the “Act”), or under the provisions of any applicable state securities laws, but
have been acquired by the registered holder hereof for purposes of investment and in reliance on
statutory exemptions under the Act, and under any applicable state securities laws. These
securities and the securities issued upon exercise hereof may not be sold, pledged, transferred or
assigned, nor may this Warrant be exercised, except in a transaction which is exempt under the
provisions of the Act and any applicable state securities laws or pursuant to an effective
registration statement.

AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT

Date of Original Issuance: September 15, 2006

			
	 	 	 
	Amended and Restated as of: December 20, 2006
	 	Certificate No.: A-2

     For value received, The Fashion House Holdings, Inc., a Colorado corporation (the
“Company”), hereby grants to Westrec Capital Partners, LLC, a Delaware limited liability
company (“Westrec”), or its permitted transferees and assigns, the right to purchase from
the Company a total of Nine Million (9,000,000) shares of the Company’s common stock (“Common
Stock”), at a price per share equal to $0.40 (the “Initial Exercise Price”). The
exercise price and number of Warrant Shares (and the amount and kind of other securities) for which
this Warrant is exercisable shall be subject to adjustment as provided in Section 2 and Section
3(a)(iii) hereof. This Warrant is being issued in connection with that certain Credit Enhancement
Agreement between Westrec and the Company dated as of September 15, 2006 (the “Agreement”),
as amended and restated as of December ___, 2006. Certain capitalized terms used herein are
defined in Section 4 hereof; capitalized terms used but not defined herein have the meanings
ascribed to them in the Agreement.

     This Warrant is subject to the following provisions:

     SECTION 1. Exercise of Warrant.

          (a) Terms of Warrant; Exercise Period. Subject to the terms of this Agreement, the
Registered Holder shall have the right, commencing on the date hereof and expiring at 11:59 P.M.
PST on September 15, 2013 (the “Expiration Date”), to exercise this Warrant, from time to
time and in whole or in part, and to receive from the Company the number of Warrant Shares that the
Registered Holder may at the time otherwise be entitled to receive on exercise of this Warrant and
payment of the Exercise Price then in effect for the Warrant Shares. To the extent not exercised
prior to the Expiration Date, this Warrant shall become void as to any then unexercised Warrant
Shares, and all rights hereunder in respect of such then unexercised Warrant Shares under this
Warrant shall cease as of the Expiration Date.

 

 

          (b) Exercise Procedure.

               (i) This Warrant shall be deemed to have been exercised on the date specified in a written
notice from the Registered Holder to the Company (the “Exercise Time”) and within three
business days following the Exercise Time, the Registered Holder shall deliver the following to the
Company:

                    (A) a completed Exercise Agreement, as described in Section 1(c) below;

                    (B) this Warrant; and

                    (C) either (I) a wire transfer or a check payable to the Company in an amount equal to the
product of the Exercise Price (as such term is defined in Section 2) multiplied by the number of
Warrant Shares being purchased upon such exercise (the “Aggregate Exercise Price”), (II)
the surrender to the Company of shares of Common Stock of the Company having a Fair Market Value
equal to the Aggregate Exercise Price, or (III) the delivery of a notice to the Company that the
Registered Holder is exercising the Warrant by authorizing the Company to reduce the number of
Warrant Shares subject to the Warrant by that number of shares having an aggregate Fair Market
Value in excess of the total Exercise Price for such shares equal to the Aggregate Exercise Price
(a “Net Exercise”).

               (ii) Certificates for Warrant Shares purchased upon exercise of this Warrant shall be
delivered by the Company to the Registered Holder within five business days after the date of the
Exercise Time. Unless this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant that have not expired or been
exercised and shall, within such five-day period, deliver such new Warrant to the Person designated
for delivery in the Exercise Agreement.

               (iii) The Warrant Shares issuable upon the exercise of this Warrant shall be deemed to have
been issued to the Registered Holder at the Exercise Time, and the Registered Holder shall be
deemed for all purposes to have become the record holder of such Warrant Shares at the Exercise
Time.

               (iv) The Company shall not close its books against the transfer of this Warrant or of any
Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which interferes
with the timely exercise of this Warrant.

               (v) The Company shall make any governmental filings or obtain any governmental approvals
necessary in connection with the exercise of this Warrant by the Registered Holder.

               (vi) The Company shall at all times reserve and keep available out of its authorized but
unissued capital stock, solely for the purpose of issuance upon the exercise of this Warrant, the
maximum number of Warrant Shares issuable upon the exercise of this Warrant. All Warrant Shares
that are so issuable shall, when issued and upon the payment

- 2 -

 

of the Exercise Price therefor, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Company shall take all such actions as may be
necessary to assure that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any domestic securities
exchange upon which securities of the Company may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).

          (c) Exercise Agreement. Upon any exercise of this Warrant, the Registered Holder
shall deliver an Exercise Agreement in the form set forth in Exhibit I hereto, except that
if the Warrant Shares are not to be issued in the name of the Person in whose name this Warrant is
registered, the Exercise Agreement shall also state the name of the Person to whom the certificates
for the Warrant Shares are to be issued, and if the number of Warrant Shares to be issued does not
include all the Warrant Shares purchasable hereunder, it shall also state the name of the Person to
whom a new Warrant for the unexercised portion of the rights hereunder is to be issued.

     SECTION 2. Adjustment of Exercise Price and Number of Shares. In order to prevent
dilution of the rights granted under this Warrant, the Initial Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2 (such price or such price as last
adjusted pursuant to the terms hereof, as the case may be, is herein called the “Exercise
Price”), and the number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time as provided in this Section 2.

     (a) Vesting of Warrant Shares. This Warrant may be exercised from time to time only
as to Warrant Shares that have previously vested at the time this Warrant is exercised. The
Warrant Shares (as initially stated above to aggregate 9,000,000 in number, the “Initial Number”)
shall vest hereunder in the following percentages on the following dates: 20% of the Initial Number
vested as of September 15, 2006; an additional 20% of the Initial Number vested as of November 14,
2006; and an additional 20% of the Initial Number shall vest on each of December 14, 2006, January
13, 2007 and February 12, 2007, such that the entire Initial Number shall be vested as of February
12, 2007. Notwithstanding the foregoing sentence, however, (i) no previously unvested Warrant
Shares shall vest hereunder after the Agreement Termination Date (as defined in the Agreement), and
(ii) the maximum number of Warrant Shares vested under this Section 2(a) shall not exceed (at any
time such number is calculated) the number equal to the product of (A) the highest amount of
Aggregate Principal Owed (as defined in the Agreement) outstanding at any time since the date of
the Original Agreement (September 15, 2006) (at the time such number is calculated) (the
“Highest Aggregate Principal Owed”), times (B) the aggregate percentage of Warrant Shares
vested under the previous sentence, it being the intention of the Company and Westrec that the
maximum number of Warrant Shares that can possibly vest under this Section 2(a) shall be the lesser
of 9,000,000 or the number equal to the number of dollars in the Highest Aggregate Principal Owed.
By way of illustration of this Section 2(a), if the Agreement Termination Date occurs after
December 14, 2006 but before January 13, 2007, and the Highest Aggregate Principal Owed prior to
the Agreement Termination Date is $3,500,000, the maximum

- 3 -

 

number of Warrant Shares that would have vested under this Section 2(a) would be 2,100,000
(i.e., 60% of 3,500,000).

     (b) Conditional Increases in Vested Warrant Shares. The number of Warrant Shares
subject to this Warrant shall be increased by each of the following amounts: if the Agreement
Termination Date (as defined in the Agreement) has not occurred on or before September 14, 2007, an
additional number of Warrant Shares equal to 3% of the Warrant Shares vested under Section 2(a);
plus if the Agreement Termination Date has not occurred on the October 14, 2007, an additional
number of Warrant Shares equal to 5% of the Warrant Shares vested under Section 2(a); plus if the
Agreement Termination Date has not occurred on the November 13, 2007, an additional number of
Warrant Shares equal to 8% of the Warrant Shares vested under Section 2(a); plus an additional
number of Warrant Shares equal to 10% of the Warrant Shares vested under Section 2(a) on December
13, 2007 and on each 30th day thereafter until the Agreement Termination Date occurs.
All Warrant Shares arising under this Section 2(b) shall be immediately, automatically and fully
vested, and shall be in addition to any Warrant Shares that may have become, or may thereafter
become, vested under Section 2(a) or elsewhere hereunder.

     (c) Reorganization, Reclassification, Consolidation, Merger or Sale. In case of any
reclassification, capital reorganization, consolidation, merger, sale of all or substantially all
of the Company’s assets to another Person or any other change in the Common Stock of the Company,
other than as a result of a subdivision, combination, or stock dividend provided for in Section
2(d) below (any of which, a “Change Event”), then, as a condition of such Change Event,
lawful provision shall be made, and duly executed documents evidencing the same from the Company or
its successor shall be delivered to the Registered Holder, so that the Registered Holder shall have
the right at any time prior to the Expiration Date to purchase, at a total price equal to that
payable upon the exercise of this Warrant (subject to adjustment of the then-applicable Exercise
Price as provided in Section 2), the kind and amount of shares of stock and other securities and
property receivable in connection with such Change Event by a holder of the same number of shares
of Common Stock as were purchasable by the Registered Holder immediately prior to such Change
Event. In any such case appropriate provisions shall be made with respect to the rights and
interest of the Registered Holder so that the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property deliverable upon exercise hereof,
and appropriate adjustments shall be made to the then-applicable Exercise Price payable hereunder,
provided the aggregate purchase price shall remain the same.

          (d) Subdivisions, Combinations and Other Issuances. If the Company shall at any time
prior to the Expiration Date (i) subdivide its Common Stock, by split up or otherwise, or combine
its Common Stock, or (ii) issue additional shares of its Common Stock or other equity securities as
a dividend with respect to any shares of its Common Stock, the number of shares of Common Stock
issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case
of a subdivision or stock dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the then-applicable Exercise Price payable per share,
but the aggregate purchase price payable for the total number of Warrant Shares purchasable under
this Warrant (as

- 4 -

 

adjusted) shall remain the same. Any adjustment under this Section 2(d) shall become
effective at the close of business on the date that the subdivision, combination, issuance or other
event triggering such adjustment becomes effective, or in the case of dividends as of the record
date of such dividend, or in the event that no dividend record date is fixed, upon the making of
such dividend.

          (e) Additional Anti-Dilution Provision. This Section 2(e) shall apply and control
notwithstanding anything to the contrary expressed or implied herein. If the Company effects any
transaction that is not covered by Section 2(c) or Section 2(d) above and that includes (or has the
direct or indirect effect of) an issuance of Common Stock or warrants, options or other rights to
acquire Common Stock or other securities convertible into Common Stock (collectively, “Equity
Securities”) at a per share price that is less than the then-applicable Exercise Price
hereunder (a “Reduced Share Price”), the then-applicable Exercise Price hereunder shall
automatically then be such Reduced Share Price, and the then-applicable number of Warrant Shares
hereunder, including, without limitation, each of the then-applicable numbers of increased Warrant
Shares set forth in Section 2(b) and in Section 3(a)(iii)above, shall be increased in each case to
the number that results from dividing the number in question by a fraction, the numerator of which
is the Reduced Share Price and the denominator of which is the then-applicable Exercise Price. If
the Company effects any transaction that is covered by Section 2(c) or Section 2(d) above and that
includes (or has the direct or indirect effect of) an issuance of Equity Securities at a Reduced
Share Price, the number of Warrant Shares and the then-current Exercise Price shall be adjusted as
set forth in such Sections, unless the increase to the number of Warrant Shares and the reduction
of the then-current Exercise Price would be less than would occur under the previous sentence, in
which case, the previous sentence shall apply in lieu of such increase and reduction determined
under Section 2(c) or 2(d) as the case may be. This Section 2(e) shall not apply, however, to the
issuance or sale of Common Stock pursuant to options or warrants therefor outstanding and disclosed
to Westrec on or before September 15, 2006.

          (f) Issuance of New Warrant. Upon the occurrence of any of the events listed in this
Section 2 that results in an adjustment of the type, number or exercise price of the securities
underlying this Warrant, the Registered Holder shall have the right to receive a new warrant
reflecting such adjustment upon the Registered Holder tendering this Warrant in exchange. The new
warrant shall otherwise have terms identical to this Warrant.

          (g) Notices.

               (i) The Company shall give written notice to the Registered Holder of this Warrant at least 10
days prior to the date on which the Company closes its books or takes a record for determining
rights to vote with respect to any event described in this Section 2 or any dissolution or
liquidation.

               (ii) The Company shall also give written notice to the Registered Holder of this Warrant at
least 10 days prior to the date on which any event described in this Section 2 or any dissolution
or liquidation shall take place.

- 5 -

 

     SECTION 3. Registration Rights.

     (a) Piggyback Registration.

               (i) If, at any time commencing on the date hereof and expiring on the Expiration Date, the
Company proposes to file a Registration Statement (other than under a Registration Statement
pursuant to Form S-8 or Form S-4) to register its securities, and all of the Registrable Securities
are not then covered by an effective Registration Statement, the Company shall: (A) give written
notice by registered mail, at least 20 days prior to the filing of such Registration Statement to
the Holders of its intention to do so; and (B) include all Registrable Securities in such
Registration Statement with respect to which the Company has received written requests for
inclusion therein within 15 days of actual receipt of the Company’s notice. Notwithstanding the
foregoing, the Company need not include more of the Registrable Securities in Amendment No. 1 to
the Registration Statement on Form SB-2 filed by the Company on November 4, 2006 (File No.
333-136138) than were included in such Amendment.

               (ii) The Company shall have the right at any time after it shall have given written notice
pursuant to this Section 3(b) (irrespective of whether a written request for inclusion of any
Registration Securities shall have been made) to elect not to file any such Registration Statement,
or to withdraw the same after the filing but prior to the effective date thereof.

               (iii) If the Registration Statement pursuant to this Section 3(b) relates to a firmly
underwritten public offering and the managing underwriter(s) advise the Company in writing that in
their opinion the number of securities proposed to be included in the Registration Statement
(including the Registrable Securities) exceeds the number of securities which can be sold therein
without adversely affecting the marketability of the public offering, the Company will include in
such Registration Statement the number of securities requested to be included which in the opinion
of such underwriter(s) can be sold without adversely affecting the marketability of the offering,
pro rata among the respective holders of all securities proposed to be included in the Registration
Statement.

     (b) Covenants of the Company with Respect to Registration. In connection with each
Registration under this Section 3, the Company covenants and agrees as follows:

               (i) The Company shall use its best efforts to have any Registration Statement declared
effective at the earliest practicable time. The Company will promptly notify each Holder of
included Registrable Securities and confirm such advice in writing, (A) when such Registration
Statement becomes effective, (B) when any post-effective amendment to such Registration Statement
becomes effective and (C) of any request by the SEC for any amendment or supplement to such
Registration Statement or any prospectus relating thereto or for additional information.

               (ii) The Company shall furnish to each Holder of included Registrable Securities such number
of copies of such Registration Statement and of each such amendment and supplement thereto (in each
case including each preliminary prospectus

- 6 -

 

and summary prospectus) in conformity with the requirements of the Act, and such other
documents as such Holders may reasonably request in order to facilitate their disposition of the
Registrable Securities.

               (iii) If the Company shall fail to comply with the provisions of Sections 3(a), 3(b) and/or
3(c) of this Warrant, the Company shall, in addition to any other equitable or other relief
available to the Holders, be liable for any or all special and consequential damages sustained by
the Holders requesting registration of their Registrable Securities.

               (iv) If at any time the SEC should institute or threaten to institute any proceedings for the
purpose of issuing a stop order suspending the effectiveness of any Registration Statement, the
Company will promptly notify each Registered Holder of Registrable Securities and will use all
reasonable efforts to prevent the issuance of any such stop order or to obtain the withdrawal
thereof as soon as possible.

               (v) The Company will use its good faith reasonable efforts and take all reasonably necessary
action which may be required in qualifying or registering the Registrable Securities included in a
Registration Statement for offering and sale under the securities or blue sky laws of such states
as reasonably are required by the Holders, provided that the Company shall not be obligated to
execute or file any general consent to service of process or to qualify as a foreign corporation to
do business under the laws of any such jurisdiction.

               (vi) The Company shall use its good faith reasonable efforts to cause such Registrable
Securities covered by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities of the United States or any State thereof as may be reasonably
necessary to enable the Holder(s) thereof to consummate the disposition of such Registrable
Securities.

               (vii) The Company shall furnish to each Holder that has included Registrable Securities in a
Registration Statement and to the managing underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated the effective date
of such Registration Statement (and, if such Registration Statement includes an underwritten public
offering, an opinion dated the date of the closing under the underwriting agreement), and (ii) a
“Cold Comfort” letter dated the effective date of such Registration Statement (and, if such
registration includes an underwritten public offering, a letter dated the date of the closing under
the underwriting agreement) signed by the independent public accountants who have issued a report
on the Company’s financial statements included in such Registration Statement, in each case
covering substantially the same matters with respect to such Registration Statement and, in the
case of such accountants’ letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters
delivered to underwriters in underwritten public offerings of securities.

               (viii) The Company shall deliver promptly to each Holder that has included Registrable
Securities in a Registration Statement and to the managing underwriter, if any, copies of all
correspondence between the SEC and the Company, its

- 7 -

 

counsel or auditors and all non-privileged memoranda relating to discussions with the SEC or
its staff with respect to the Registration Statement and permit each such Holder and underwriter to
do such investigation, upon reasonable advance notice, with respect to information contained in or
omitted from the Registration Statement as it deems reasonably necessary to comply with applicable
securities laws or rules of the NASD. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times and as often as
any such Holder shall reasonably request.

               (ix) All expenses incident to the Company’s performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons retained by the Company will
be borne by the Company. In no event shall the Company be obligated to be pay any discounts or
commissions with respect to the Registrable Shares sold by any Holder. In connection with each
Registration Statement, the Company will reimburse the Holders of included Registrable Securities
for the reasonable fees and disbursements of one counsel chosen by the Holders of a majority of the
included Registrable Securities.

     (c) Indemnification and Contribution.

               (i) The Company shall indemnify each Holder of the Registrable Securities included in any
Registration Statement, each of its officers, directors and agents (including brokers and
underwriters selling Registrable Securities on behalf of the Holder), and each Person, if any, who
controls such Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act against all losses, claims, damages, expenses and/or liabilities (including all expenses
reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which
any of them may become subject under the Act, the Exchange Act, any state securities laws or
otherwise, arising from such Registration Statement, including, without limitation, any and all
losses, claims, damages, expenses and liabilities caused by (I) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or (II) any omission
or alleged omission to state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the circumstances
under which they were made, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to Company by the Holder expressly for use therein.

               (ii) If requested by the Company prior to the filing of any Registration Statement covering
the Registrable Securities, each Holder of the Registrable Securities to be included in such
Registration Statement shall severally, and not jointly, indemnify the Company, its officers and
directors and each Person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against

- 8 -

 

all losses, claims, damages, expenses and/or liabilities (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever) to which they may
become subject under the Act, the Exchange Act or otherwise, arising from written information
furnished by such Holder, or their successors or assigns, for specific inclusion in such
Registration Statement, except that the maximum amount which may be recovered from each Holder
pursuant to this Section 3(d)(ii) or otherwise shall be limited to the amount of net proceeds
received by the Holder from the sale of the Registrable Securities under such Registration
Statement.

               (iii) In case any proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to this Section 3(c),
such Person (an “Indemnified Party”) shall promptly notify the Person against whom such
indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the
failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent (and only to the extent that)
that the Indemnifying Party is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party unless (A) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (B) in the reasonable judgment of such Indemnified Party representation of both parties
by the same counsel would be inappropriate due to actual or potential differing interests between
them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at any time for all
such Indemnified Parties (including in the case of Holder, all of its officers, directors and
controlling persons) and that all such fees and expenses shall be reimbursed as they are incurred.
In the case of any such separate firm for the Indemnified Parties, the Indemnified Parties shall
designate such firm in writing to the Indemnifying Party. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written consent (which consent
shall not be unreasonably withheld or delayed), but if settled with such consent, or if there be a
final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated above) by reason
of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.

               (iv) To the extent any indemnification by an Indemnifying Party is prohibited or limited by
law, the Indemnifying Party agrees to make the maximum contribution with respect to any amounts for
which, he, she or it would otherwise be liable under this Section 3(c) to the fullest extent
permitted by law; provided, however, that (A)

- 9 -

 

no contribution shall be made under circumstances where a party would not have been liable for
indemnification under this Section 3(c) and (B) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning used in the Securities Act) shall be entitled to
contribution from any party who was not guilty of such fraudulent misrepresentation.

     (d) Nothing contained in this Agreement shall be construed as requiring the Holders to
exercise their Warrants prior to the filing of any Registration Statement or the effectiveness
thereof.

     (e) The Company shall not, directly or indirectly, enter into any merger, business combination
or consolidation in which (i) the Company shall not be the surviving corporation and (ii) the
shareholders of the Company are to receive, in whole or in part, capital stock or other securities
of the surviving corporation, unless the surviving corporation shall, prior to such merger,
business combination or consolidation, agree in writing to assume the obligations of the Company
under this Agreement, and for that purpose references hereunder to “Registrable Securities”
shall be deemed to include the securities which the Holders would be entitled to receive in
exchange for Registrable Securities under any such merger, business combination or consolidation,
provided that to the extent such securities to be received are convertible into shares of Common
Stock of the issuer thereof, then any such shares of Common Stock as are issued or issuable upon
conversion of said convertible securities shall also be included within the definition of
“Registrable Securities.”

     SECTION 4. Definitions. The following terms have the meanings set forth below:

     “Act” means the Securities Act of 1933, as amended.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” shall be determined on a per Share basis as of the close of the
business day preceding the date of exercise, which determination shall be made as follows: (A) if
the Common Stock is listed on a national securities exchange or admitted to unlisted trading
privileges on such an exchange or quoted on the The Nasdaq Stock Market, the Fair Market Value
shall be the last reported sale price of that security on such exchange or system on such day or,
if no such sale is made on such day, the average of the highest closing bid and lowest asked price
for such day on such exchange or system; (b) if the Common Stock is not so listed or quoted or
admitted to unlisted trading privileges, the Fair Market Value shall be the average of the last
reported highest bid and lowest asked prices quoted on the Nasdaq Electronic Bulletin Board, or, if
not so quoted, then by the National Quotation Bureau, Inc. on such day; or (c) if the Common Stock
is not so listed or quoted or admitted to unlisted trading privileges and bid and asked prices are
not reported, the Fair Market Value shall be determined by the mutual agreement of Registered
Holder and the Company; provided, however, that if they fail to reach such a mutual agreement
within fifteen (15) days, Registered Holder shall designate an independent third-party appraiser to
determine the Fair Market Value, the determination of which shall be conclusive and binding upon
Registered Holder and the Company, and the fees and expenses of which
shall be borne by the Company.

- 10 -

 

     “Holders” means the Registered Holder, and the registered holders of all other
Warrants (including Additional Warrants) originally issued pursuant the Agreement, and the
registered holders of the Registrable Securities.

     “Person” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government or any department
or agency thereof.

     “Registered Holder” means the registered holder of this Warrant.

     “Registrable Securities” means the Warrant Shares and any securities issued with
respect to the Warrant Shares by virtue of a stock dividend, stock split, reclassification or
reorganization, provided that the Warrant Shares and such other securities shall no longer by
Registrable Securities once they have been sold or transferred pursuant to an effective
Registration Statement under the Act or pursuant to Rule 144.

     “Registration” shall mean a registration of Registrable Securities under the Act
pursuant to Section 3 of this Agreement.

     “Registration Statement” shall mean the Registration Statement, as amended from time
to time, filed with the SEC in connection with a Registration, and each prospectus that is used in
connection with such Registration Statement (including any preliminary prospectus).

     “Rule 144” means Rule 144 of the SEC under the Act.

     “SEC” means the United States Securities and Exchange Commission, or any successor
regulatory agency.

     “Warrant” means the right to purchase one or more Warrant Shares pursuant to the terms
of this Warrant, as the same may be transferred, divided or exchanged pursuant to the terms hereof.

     “Warrant Shares” means shares of the Common Stock issuable upon exercise of the
Warrant; provided, however, that if there is a change such that the securities issuable upon
exercise of the Warrant are issued by a Person other than the Company or there is a change in the
class of securities so issuable, then the term “Warrant Shares” shall mean shares of the security
issuable upon exercise of the Warrant if such security is issuable in shares, or shall mean the
equivalent units in which such security is issuable if such security is not issuable in shares.

     SECTION 5. No Voting Rights; Limitations of Liability. This Warrant shall not entitle
the holder hereof to any voting rights or other rights as a stockholder of the Company. No
provision hereof, in the absence of affirmative action by the Registered Holder to purchase Warrant
Shares, and no enumeration herein of the rights or privileges

- 11 -

 

of the Registered Holder shall give rise to any liability of such Registrable Holder for the
Exercise Price or as a stockholder of the Company.

     SECTION 6. Warrant Transferable. Subject to compliance with applicable securities
laws and the terms of this Section 6, this Warrant and all rights hereunder are transferable, in
whole or in part, without charge to the Registered Holder upon surrender of this Warrant with a
properly executed Assignment (in the form of Exhibit II hereto) at the principal office of the
Company.

     SECTION 7. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the
Company, for new Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender. The date the Company initially
issues this Warrant shall be deemed to be the “Date of Issuance” hereof regardless of the number of
times new certificates representing the unexpired and unexercised rights formerly represented by
this Warrant shall be issued. All Warrants representing portions of the rights hereunder are
referred to herein as the “Warrants.”

     SECTION 8. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at the expense of the Registered Holder) execute
and deliver in lieu of such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.

     SECTION 9. Notices. All notices, requests, deliveries, consents and other
communications provided for herein shall be in writing and shall be effective upon delivery in
person, faxed, or mailed by certified or registered mail, return receipt requested, postage
pre-paid, addressed as follows:

If to the Company, to:

The Fashion House Holdings, Inc.

6310 San Vicente Boulevard, Suite 330

Los Angeles, CA 90048-5499

Attn: John Hanna, CEO

- 12 -

 

If to Westrec, to:

Westrec Capital Partners, LLC

16633 Ventura Boulevard, Sixth Floor

Encino, CA 91436

Attn: Gregory C. McPherson

Fax: (818) 907-1104

or, in any case, at such other address or addresses as shall have been furnished in writing to the
Company (in the case of a Registered Holder of Warrants) or to the Registered Holders of Warrants
(in the case of the Company) in accordance with the provisions of this paragraph.

     SECTION 10. Amendment and Waiver. Except as otherwise provided herein, the provisions
of the Warrants may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written
consent of the Holders representing a majority of the Warrant Shares obtainable upon exercise of
the then-outstanding Warrants; provided, however, that no such action may change the Exercise Price
of the Warrants or the number of shares or class of capital stock obtainable upon exercise of each
Warrant without the written consent of all Holders.

     SECTION 11. Descriptive Headings; Governing Law.

     (a) The descriptive headings of the several Sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.

     (b) All issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by, and construed in accordance with, the laws
of the State of California, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of California.

     SECTION 12. Warrant Register. The Company shall maintain at its principal executive
office books for the registration and the registration of transfer of this Warrant. The Company
may deem and treat the Registered Holder as the absolute owner hereof (notwithstanding any notation
of ownership or other writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.

     SECTION 13. Fractions of Shares. The Company may, but shall not be required, to issue
a fraction of a Warrant Share upon the exercise of this Warrant in whole or in part. As to any
fraction of a share that the Company elects not to issue, the Company shall make a cash payment in
respect of such fraction in an amount equal to the same fraction of the market price of a Warrant
Share on the date of such exercise (as determined by the board of directors in its reasonable
discretion).

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     SECTION 14. Attorneys’ Fees. If any action, suit, arbitration or other proceeding is
instituted to remedy, prevent or obtain relief from a default in the performance by any party to
this Agreement of its obligations under this Agreement, the prevailing party shall recover all of
such party’s attorneys’ fees incurred in each and every such action, suit, arbitration or other
proceeding, including any and all appeals or petitions therefrom. As used in this Section,
attorneys’ fees shall be deemed to mean the full and actual costs of any legal services actually
performed in connection with the matters involved calculated on the basis of the usual fee charged
by the attorney performing such services and shall not be limited to “reasonable attorneys’ fees”
as defined in any statute or rule of court.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly
authorized officers and to be dated as of the Date of Issuance hereof.

	 	 	 	 	 	 	 
	 	 	THE FASHION HOUSE HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael McHugh	 	 
	 

	 	 
	 	Name: Michael McHugh

	 	 
	 

	 	 	 	Title:  Chief Financial Officer	 	 

- 14 -

 

EXHIBIT I

EXERCISE AGREEMENT

			
	 	 	 
	To:
	 	Dated:

     The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No.
W-___), hereby subscribes for the purchase of
___ Warrant Shares covered by such Warrant and
makes payment herewith in full therefor at the price per share provided by such Warrant. Please
issue the Warrant Shares in the following names and amounts:

			
	 	 	 
	Name
	 	Number of Warrant Shares

     The
undersigned elects to pay the exercise price by Net Exercise:
___ Yes ___ No

	 	 	 	 	 
	 

	 	Signature	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address	 	 
	 

	 	 	 	 

- 15 -

 

EXHIBIT II

ASSIGNMENT

     FOR VALUE RECEIVED,                                          hereby sells, assigns and transfers all of
the rights of the undersigned under the attached Warrant (Certificate No. W-___) with respect to
the number of the Warrant Shares covered thereby set forth below, unto:

	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Shares
	 
	 	 	 	 
	 
	 	 	 	 

	 	 	 	 	 
	 

	 	Signature	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Witness	 	 
	 

	 	 	 	 

     The Assignee agrees to be bound by the terms of the Warrant.

	 	 	 	 	 
	 

	 	Signature	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Witness	 	 
	 

	 	 	 	 

- 16 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]