EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is effective as of March 1,
2002, by and between EMMIS OPERATING COMPANY, an Indiana corporation ("Employer"
or "Emmis"), and RICHARD F. CUMMINGS, a California resident ("Executive").
RECITALS
WHEREAS, Employer and its subsidiaries are engaged in the ownership and
operation of certain radio and television stations, magazines, and related
operations; and
WHEREAS, Employer desires to employ Executive as an executive, and
Executive desires to be so employed.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
covenants set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
AGREEMENT
1. Employment Status. Upon the terms and subject to the conditions set
forth in this Agreement, Employer hereby employs Executive, and Executive hereby
accepts exclusive employment with Employer.
2. Term. The term of Executive's employment shall commence on March 1,
2002, and continue until February 28, 2005 (the "Term"). This Agreement shall
expire at the end of the Term unless earlier terminated in accordance with the
terms of this Agreement. For purposes of this Agreement, the term "Contract
Year" shall be defined to mean each twelve (12) month period commencing on March
1, 2002, and on each anniversary thereof during the Term. The term "First
Contract Year" shall refer to the period commencing on March 1, 2002, and ending
on February 28, 2003; "Second Contract Year" shall refer to the period
commencing on March 1, 2003, and ending on February 29, 2004; "Third Contract
Year" shall refer to the period commencing on March 1, 2004, and ending on
February 28, 2005.
3. Executive's Position, Duties and Authority.
3.1 Position. Employer shall employ Executive, and Executive shall
serve as an executive of Employer, and of any successor of Employer by
merger, acquisition of substantially all of the assets or stock of
Employer, or otherwise. Executive shall serve as President - Radio Division
or, subject to the provisions of Section 11.4 and Exhibit A (attached
hereto and made a part hereof), shall serve in such other senior management
positions to which Employer may appoint Executive.
3.2 Duties and Authority. Executive shall have such duties, functions,
authority and responsibilities as are commensurate with the office(s)
Executive holds with the Employer during the Term.
3.3 Directorships and Other Offices. If Executive is elected as a
Director of Emmis Communications Corporation, Executive shall serve in such
position without additional remuneration but shall be entitled to the
benefit of indemnification pursuant to the terms of Section 15.11.
Executive shall also serve without remuneration as a director and/or
officer of one or more of Employer's subsidiaries or affiliates if
appointed to such position(s) by Employer. If Executive is so appointed,
Executive shall be entitled to the benefit of indemnification as set forth
in the first sentence of this Section 3.3.
4. Full-Time Services. Executive's services pursuant to this Agreement
shall be performed on a full-time and exclusive basis in a professional,
diligent and competent manner to the best of Executive's abilities. Executive
shall not undertake any outside employment or outside business activity without
the prior written consent of Employer; provided, however, that Executive shall
be permitted to serve on the board of charitable or other civic organizations so
long as such services do not interfere with Executive's duties and obligations
pursuant to this Agreement.
5. Location of Employment; Travel. The location for performance of
Executive's services hereunder shall be the offices designated by Employer in or
near Los Angeles, California. Executive shall undertake such travel as the
performance of Executive's duties pursuant to this Agreement may require.
6. Compensation.
6.1 Base Salary. Employer shall pay or cause to be paid to Executive a
base salary of Four Hundred Thirty Five Thousand Dollars ($435,000)
(subject to withholding for applicable taxes and as otherwise required by
law) (the "Base Salary") each Contract Year during the Term. Employer shall
pay Executive the Base Salary according to Employer's customary payroll
practices. Executive acknowledges and agrees that: (i) Employer may pay a
portion of Executive's Base Salary (not to exceed ten percent (10%) without
Executive's prior written consent) in Shares (as defined below) pursuant to
a plan adopted for Emmis employees or for other executive-level officers of
Employer; and (ii) ten percent (10%) of any Base Salary paid pursuant to
this Agreement is being paid in consideration of Employer's exclusive
rights set forth in Section 10 of this Agreement.
6.2 Annual Incentive Compensation. For each Contract Year during the
Term, Executive shall be eligible to receive one (1) annual performance
bonus up to a target amount of Three Hundred Thousand Dollars ($300,000)
(subject to withholding for applicable taxes and as otherwise required by
law and the terms and conditions set forth on Exhibit B, attached hereto
and made a part hereof) (each, a "Contract Year Bonus"), the exact amount
of which shall be determined by means of Executive's attainment of certain
performance goals as determined each Contract Year by the Compensation
Committee of the Employer's Board of Directors (the "Compensation
Committee") after reasonable consultation with and input from Executive.
Executive acknowledges and agrees that, as a material condition to
receiving a Contract Year Bonus, as of the end of each respective Contract
Year: (i) this Agreement must be in effect and not previously terminated
for any reason (other than a breach of this Agreement by Employer); and
(ii) Executive must be fully performing Executive's duties and obligations
as required hereunder and shall not be in breach of any of the material
terms and conditions of this Agreement. It is understood and agreed that
Emmis may, at its sole election, pay any Contract Year Bonus, if any, in
cash or Shares. In the event Emmis elects pursuant to this Section 6.2 to
pay a Contract Year Bonus in Shares, the exact number of Shares to be
awarded to Executive shall be determined by dividing the total dollar
amount of the applicable Contract Year Bonus by the average of the reported
high and low Share price on a valuation date to be used by Employer in
determining similar cash incentive compensation awards for other members of
Employer's senior management team (the "Valuation Formula"). Any Contract
Year Bonus amounts earned by Executive pursuant to the terms and conditions
of this Section 6.2 shall be awarded promptly following Employer's fiscal
year end earnings release or at such other time as annual incentive
compensation awards are made to other members of Employer's senior
management team (but in no event later than ninety (90) days after the
expiration of the applicable Contract Year). The performance goals for the
First Contract Year are set forth on Exhibit B.
6.3 Equity Incentive Compensation. On or about the commencement of
each Contract Year during the Term, or at any other time during each
Contract Year when Employer generally awards Options (as defined below) to
members of Employer's senior management team, Executive shall receive an
option to acquire Fifty Thousand (50,000) shares of Class A Common Stock of
Emmis Communications Corporation (the "Shares") pursuant to the terms and
subject to the conditions of the applicable Equity Incentive Plan of
Employer (each, an "Option"). It is understood and agreed that in the event
of any change in the outstanding Shares by reason of any reorganization,
recapitalization, stock split, reverse stock split, stock dividend, share
combination, consolidation or similar event, including without limitation a
Separation Event (as defined below), the number and class of Shares awarded
pursuant to this Agreement or covered by an Option granted pursuant to this
Section 6.3 and any applicable Option exercise price shall be adjusted by
the Compensation Committee in its sole discretion and in accordance with
the terms of the applicable Equity Incentive Plan of Employer and the
Option agreement evidencing the grant of the Option. The determination of
the Compensation Committee shall be conclusive and binding. Executive
hereby acknowledges Executive's receipt of an Option for the First Contract
Year on or about March 1, 2002.
6.4 Signing Bonus. On or about the date of execution of this
Agreement, Executive shall receive a one-time, lump sum, cash bonus in the
amount of Three Hundred Thousand Dollars ($300,000) (subject to withholding
for applicable taxes and as otherwise required by law) (the "Signing
Bonus"). In the event Executive's employment is terminated either: (a) by
Employer under Section 11.1; or (b) by Executive for any reason other than
for Good Reason under Section 11.4, due to Executive's disability or death
pursuant to Sections 12 or 13, or pursuant to Exhibit A, or a material
breach of any of the terms and conditions of this Agreement by Employer
(after providing Employer with notice of such breach and a reasonable
opportunity to cure such breach), Executive shall promptly repay Employer
the total amount of the Signing Bonus within thirty (30) days' immediately
following the termination of Executive's employment.
6.5 Completion Bonus. On or about February 28, 2005, Executive shall
receive 22,500 Shares (the "Completion Shares"); provided, that (i) this
Agreement is in effect on February 28, 2005 and has not been terminated for
any reason (other than a breach of this Agreement by Employer); and (ii)
Executive has fully performed all of Executive's duties and obligations
under this Agreement throughout the Term and is not in breach of any of the
material terms and conditions of this Agreement. Employer shall have the
right, in its sole and absolute discretion, to pay to Executive the value
of the Completion Shares (according to the Valuation Formula) in cash in
lieu of granting Executive the Completion Shares.
6.6. Auto Allowance. During the Term, Executive shall receive a
monthly auto allowance in the amount of One Thousand Dollars ($1,000)
(subject to withholding for applicable taxes and as otherwise required by
law) consistent with Employer's policy or practice regarding such
allowances, as such policy or practice may be changed or eliminated from
time to time during the Term in Employer's sole discretion; provided,
however, that in no event shall the amount paid to Executive under this
Section 6.6 be reduced.
6.7 Life and Disability Insurance. Each Contract Year during the Term,
Employer agrees to reimburse Executive in an amount not to exceed Five
Thousand Dollars ($5,000) (the "Life and Disability Insurance Premium") for
the annual premium associated with Executive's purchase of a term life and
disability insurance policy or policies on the life of Executive. Executive
shall be entitled to freely select and change the beneficiary or
beneficiaries under such policy or policies. Notwithstanding anything to
the contrary contained in this Agreement, Employer's obligations under this
Section 6.7 are expressly contingent upon Executive providing required
information and taking all necessary actions required of Executive in order
to obtain and maintain the subject policy or policies, including without
limitation, passing any required physical examinations.
6.8 Performance-Based Compensation; Fractional Shares. It is the
intention of the parties that each Contract Year Bonus paid to Executive
pursuant to this Section 6 will be deemed performance-based compensation in
order to permit such compensation to qualify for deduction under Section
162(m) of the Internal Revenue Code of 1986. Accordingly, to the extent
permitted by law, the provisions of this Section 6 shall be construed to
permit each Contract Year Bonus paid hereunder to so qualify. Additionally,
in the event that the calculation of a certain number of Shares awarded to
Executive pursuant to any of the provisions of this Section 6 results in a
fractional Share, such fractional Share shall be rounded up to the nearest
whole Share.
7. Business Expenses. Employer shall pay or reimburse Executive for all
reasonable expenses actually incurred by Executive during the Term directly
related to the performance of Executive's services hereunder upon presentation
of expense statements, vouchers or similar documentation, or such other
supporting information as Employer may require of Executive.
8. Fringe Benefits and Vacation. During the Term, Executive shall be
entitled to four (4) weeks of paid vacation in accordance with Employer's
applicable policies and procedures for executive-level employees. Executive
shall also be eligible to participate in and receive the fringe benefits
generally made available to other executive-level employees of Employer in
accordance with the general provisions of Employer's fringe benefit plans or
programs; provided, however that Executive understands that these benefits may
be increased, changed, eliminated or added from time to time during the Term as
determined in Employer's sole and absolute discretion and as generally applied
to other Emmis employees and/or members of Employer's senior management team.
9. Confidential Information.
9.1 Non-Disclosure. Executive acknowledges that certain information
concerning the business of Employer is of a proprietary and highly
confidential nature, and that as a result of Executive's employment with
Employer, Executive has received and developed, and will hereafter receive
and continue to develop, proprietary and other confidential information
concerning the business of Employer and its subsidiaries which, if known to
competitors of Employer, would damage Employer, its subsidiaries, and their
respective businesses. Accordingly, Executive agrees that, during the Term
and thereafter, Executive shall not divulge or appropriate for Executive's
own use, or for the use or benefit of any third party (other than Employer
or its representatives or as specifically directed in writing by Employer)
any information or knowledge concerning the business of Employer or any of
its subsidiaries which is not generally available to the public other than
through the activities of Executive. Executive further agrees that upon
termination of Executive's employment for any reason, Executive shall
promptly surrender to Employer all documents, brochures, writings,
illustrations, price lists, marketing plans, budgets and any other such
materials (regardless of form or character) that Executive received from or
developed on behalf of Employer in connection with Executive's employment.
Executive acknowledges that all such materials shall remain at all times
during and after the expiration or termination of the Term for any reason
the sole and exclusive property of Employer, and that nothing in this
Agreement shall be deemed to grant Executive any right, title or interest
in such material.
9.2 Injunctive Relief. Executive acknowledges that: Executive's breach
of Section 9.1 will cause irreparable harm and damage to Employer, the
exact amount of which will be difficult to ascertain; that the remedies at
law for any such breach would be inadequate; and that the provisions of
this Section 9 have been specifically negotiated and carefully written to
prevent such irreparable harm and damage. Accordingly, if Executive
breaches Section 9.1, Employer shall be entitled to injunctive relief
enforcing Section 9.1 to the extent reasonably necessary to protect
Employer's legitimate interests, without posting bond or other security.
10. Non-Interference; Injunctive Relief.
10.1 Non-Interference. During the Term and for a period of two (2)
years immediately thereafter, Executive shall not, directly or indirectly,
take any action (or permit any action to be taken by an entity with which
Executive is associated in a management role) which has the effect of
interfering with Employer's relationship (contractual or otherwise) with
any employee of Employer or any of its subsidiaries, affiliates or related
entities. It is understood and agreed that, notwithstanding the restriction
set forth in the immediately preceding sentence, Executive may solicit the
employment of Executive's administrative assistant.
10.2 Injunctive Relief. Executive acknowledges and agrees that the
provisions of this Section 10 have been specifically negotiated and
carefully worded in recognition of the opportunities which shall be
afforded to Executive by Employer by virtue of Executive's continued
association with Employer and the influence that Executive has and will
continue to have over Employer's employees, customers and vendors.
Executive further acknowledges that: Executive's breach of Section 10.1
will cause irreparable harm and damage to Employer, the exact amount of
which will be difficult to ascertain; that the remedies at law for any such
breach would be inadequate; and that the provisions of this Section 10 have
been specifically negotiated and carefully written to prevent such
irreparable injury and damage. Accordingly, if Executive breaches Section
10.1, Employer shall be entitled to injunctive relief enforcing Section
10.1 to the extent reasonably necessary to protect Employer's legitimate
interests, without posting bond or other security. If Executive violates
Section 10.1 and Employer brings legal action for injunctive or other
relief, Employer shall not, as a result of the time involved in obtaining
such relief, be deprived of the benefit of the full period of
non-interference set forth herein. Accordingly, the obligations set forth
in Section 10.1 shall be deemed to have the duration set forth therein,
computed from the date such relief is obtained or granted but reduced by
the time expired between the date the restrictive period began to run and
the date of the first violation of the obligations by Executive.
10.3 Construction. Despite the express agreement herein between
Employer and Executive, in the event that any of the provisions set forth
in this Section 10 shall be determined by any court or other tribunal of
competent jurisdiction to be unenforceable for any reason whatsoever, the
parties agree that this Section 10 shall be interpreted to extend only to
the maximum extent as to which it may be enforceable, and that this Section
10 shall be severable into its component parts, all as determined by such
court or tribunal.
11. Termination of Agreement.
11.1 Termination of Agreement by Employer for Cause. Employer may
terminate this Agreement and Executive's employment hereunder for Cause (as
defined in Section 11.3 below) in accordance with the terms and conditions
of this Section 11. Following a determination by Employer that Executive
should be terminated for Cause, Employer shall give written notice to
Executive specifying the grounds for such termination (the "Preliminary
Notice"), and Executive shall have five (5) days after receipt of the
Preliminary Notice to respond in writing. If following the expiration of
such five (5) day period Employer reaffirms its determination that
Executive should be terminated for Cause, such termination shall be
effective upon delivery by Employer to Executive of a final notice of
termination (the "Final Notice").
11.2 Effect of Termination by Employer for Cause. In the event of
termination for Cause as provided in Section 11.1 above:
(i) Executive shall have no further obligations or liabilities
hereunder, except Executive's obligations under Section 6.4, 9 and 10,
which shall survive the termination of this Agreement.
(ii) Employer shall have no further obligations or liabilities
hereunder, except that Employer shall, not later than two (2) weeks
after the termination date:
(a) Pay to Executive all unpaid Base Salary with respect to
any applicable pay period ending on or before the termination
date (including any un-reimbursed business expenses incurred
pursuant to the terms of Section 7); and
(b) Pay to Executive any Contract Year Bonus, if any, which
Executive earned for a Contract Year ending on or prior to the
termination date pursuant to Section 6.2 but which is unpaid as
of the termination date.
11.3 Definition of Cause. For purposes of this Agreement, "Cause"
shall be defined to mean any of the following: (i) any action or omission
by Executive involving willful or repeated failure, neglect or refusal to
perform any of Executive's material duties or obligations under this
Agreement (or any duties assigned to Executive consistent with the terms of
this Agreement) or abide by any applicable policy of Employer, and
continuation of such breach after written notice and the expiration of a
ten (10) day cure period; provided, however, that it is not the parties'
intention that Employer shall be required to provide successive such
notices, and in the event Employer has provided Executive with a notice and
opportunity to cure pursuant to this Section 11.3, Employer may terminate
this Agreement for a subsequent breach similar or related to the material
breach for which notice was previously given or for a continuing series or
pattern of breaches (whether or not similar or related) without providing
notice or an opportunity to cure; (ii) commission of any felony or any
other crime involving an act of moral turpitude; (iii) Executive's action
or omission, or knowing allowance of actions or omissions, which are in
violation of any law or the rules and regulations of the Federal
Communications Commission (the "FCC"), or which otherwise jeopardize the
licenses granted to Employer or any of Employer's subsidiaries or
affiliates in connection with the ownership or operation of any radio or
television station; (iv) theft in any amount; (v) actual or threatened
violence against another employee; (vi) sexual or other prohibited
harassment of other employees of Emmis or any of its subsidiaries,
affiliates or related entities; (vii) unauthorized disclosure or use of
proprietary or confidential information, as described more fully in Section
9.1; (viii) any action which brings Employer or any of Employer's
subsidiaries or affiliates into public disrepute, contempt, scandal or
ridicule; and (ix) any matter constituting cause or gross misconduct under
applicable laws.
11.4 Termination of Employment by Executive for Good Reason. Executive
may terminate this Agreement and Executive's employment hereunder for Good
Reason according to the terms and subject to the conditions set forth in
this Section 11.4. For purposes of this Agreement, "Good Reason" shall be
defined to mean any situation or circumstance where Executive no longer
reports directly to Jeffrey H. Smulyan ("Smulyan") with respect to the
Radio Division. In such an event: (i) Executive may terminate this
Agreement by providing written notice to Employer, which notice shall be
effective one hundred twenty (120) days after Employer's receipt of such
notice; and (ii) Executive and Employer shall have no further obligations
or liabilities hereunder; provided, however, that Executive's obligations
under Sections 9 and 10 shall survive the termination of this Agreement
and, provided, further, that Employer shall, not later than two (2) weeks
after the termination date, pay to Executive all unpaid Base Salary with
respect to any applicable pay period ending on or before the termination
date (including any un-reimbursed business expenses incurred pursuant to
the terms of Section 7), and any Contract Year Bonus, if any, earned by
Executive for a Contract Year ending on or prior to the termination date
pursuant to Section 6.2 but which is unpaid as of the termination date. It
is expressly understood and agreed that, in the event Employer elects to
separate or bifurcate its radio and television divisions by means of
merger, corporate reorganization, sale or disposition of assets, spin off,
tax-free reorganization, or otherwise (each, a "Separation Event"),
Executive may not terminate this Agreement so long as Executive continues
to report directly to Smulyan after such a Separation Event with respect to
the Radio Division.
11.5Change in Control. In the event of a "Change in Control", the
rights and obligations of Executive and Employer shall be set forth in a
separate Change of Control Agreement to be executed by the parties in a
form acceptable to Employer and thereafter attached to this Agreement as
Exhibit A. "Change in Control" shall have the meaning ascribed to it in
Exhibit A. Notwithstanding anything to the contrary contained herein or in
Exhibit A, a Change in Control shall be deemed not to have occurred if,
immediately following a Separation Event or the transaction or transactions
described in the definition of Change of Control in Exhibit A: (i) Smulyan
is Chairman or Chief Executive Officer of Employer or any successor
thereto, including without limitation, the Radio Division or any entity
established as a result of a Separation Event (collectively, "Successor");
or (ii) Smulyan retains the ability to vote at least fifty percent (50%) of
all classes of stock of the Employer or any Successor; or (iii) Smulyan
retains the ability to elect a majority of the Board of Directors of
Employer or any Successor.
12. Disability.
12.1 Termination of Employment. If Executive shall become Disabled (as
defined in Section 12.2), Employer shall continue to compensate Executive
under the terms of this Agreement without diminution and otherwise without
regard to such disability or nonperformance of duties until Executive has
been disabled for a cumulative period of six (6) months, at which time
Employer may, in its sole discretion, elect to terminate Executive's
employment. If Employer elects to terminate Executive's employment pursuant
to this Section 12.1, the date that Executive's employment terminates shall
be referred to herein as the "Disability Termination Date."
12.2 Definition of Disability. Executive shall be deemed to have
become "Disabled" for purposes of this Agreement if, during the Term,
because of ill health, physical or mental disability, or for other causes
beyond Executive's reasonable control, Executive shall have been unable to
perform Executive's duties hereunder as reasonably determined by a
reputable physician selected by Employer.
12.3 Obligations after Termination. Unless Employer exercises its
option under Section 12.5 below to reinstate Executive to Executive's full
compensation, duties, functions, responsibilities and authority hereunder
for the balance of the original Term, Executive shall have no further
obligations or liabilities hereunder after a Disability Termination Date
except Executive's obligations under Sections 9 and 10 which shall survive
the termination of the Term. After a Disability Termination Date, Employer
shall have no further obligations or liabilities hereunder except its
obligations under Section 12.4 which shall also survive the termination of
the Term.
12.4 Payment of Unpaid Amounts after Termination. Employer shall, not
later than two (2) weeks after a Disability Termination Date, pay to
Executive: (i) all unpaid Base Salary with respect to any period ending on
or before the Disability Termination Date (including any un-reimbursed
business expenses incurred pursuant to the terms of Section 7); plus (ii)
any Contract Year Bonus, if any, earned by Executive for a Contract Year
ending on or prior to the Disability Termination Date pursuant to Section
6.2 but which is unpaid as of the Disability Termination Date; provided,
however, that in the event a Disability Termination Date occurs at least
six (6) months after the commencement of a Contract Year during the Term,
Employer shall pay to Executive a pro-rated portion of the Contract Year
Bonus for the Contract Year during which the Disability Termination Date
occurs, such amount to be determined in the sole discretion of Employer, so
long as Executive is not reinstated during such Contract Year pursuant to
Section 12.5.
12.5 Reinstatement. If during the original Term and subsequent to a
Disability Termination Date, Executive shall fully recover from a
disability, Employer shall have the right (exercisable within sixty (60)
days after written notice from Executive of such recovery), but not the
obligation, to reinstate Executive to employment hereunder for the balance
of the original Term; provided, that Executive consents to such
reinstatement. In the event of such reinstatement, Employer shall pay
Executive at Executive's full level of compensation hereunder and otherwise
employ Executive in accordance with the terms and provisions of this
Agreement.
12.6 No Reduction. Amounts payable pursuant to this Section 12 shall
not be reduced by the value of any benefits payable to Executive under any
disability insurance plan or policy, including without limitation, any
policy contemplated by Section 6.7 of this Agreement.
13. Death of Executive.
13.1 Termination of Agreement. This Agreement shall terminate
immediately upon Executive's death. In the event of such termination,
Employer shall have no further obligations or liabilities hereunder except
its obligations under Section 13.2 below which shall survive such
termination.
13.2 Compensation. Employer shall, not later than two (2) weeks after
Executive's date of death, pay to Executive's estate or designated
beneficiary all unpaid Base Salary (including any un-reimbursed business
expenses incurred pursuant to the terms of Section 7) and Contract Year
Bonus amounts earned by Executive, if any, with respect to any period
ending on or before Executive's date of death; provided, however, that in
the event Executive's date of death occurs at least six (6) months after
the commencement of a Contract Year during the Term, Employer shall pay to
Executive's estate or designated beneficiary a pro-rated portion of the
Contract Year Bonus for the Contract Year during which Executive's death
occurs, such amount to be determined in the sole discretion of Employer.
13.3 No Reduction. Amounts payable pursuant to this Section 13 shall
not be reduced by the value of any benefits payable to Executive's estate
or designated beneficiaries under any applicable life insurance plan or
policy, including without limitation, any policy contemplated by Section
6.7 of this Agreement.
13.4 Death after Termination. In the event that Executive dies after
termination of this Agreement pursuant to Section 11, 12 or 13, all amounts
required to be paid by Employer prior to Executive's death in connection
with such termination that remain unpaid as of Executive's date of death
shall be paid to Executive's estate or designated beneficiary.
14. Notices. All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be made in writing and shall
be deemed to have been duly given if delivered personally or sent by prepaid
telegram, or mailed first-class, postage prepaid, by registered or certified
mail, as follows (or to such other or additional address as either party shall
designate by notice in writing to the other in accordance herewith):
(i) If to Employer:
Emmis Communications Corporation
40 Monument Circle
Suite 700
Indianapolis, Indiana 46204
Attn.: David O. Barrett, Esq.
With a copy to:
Gary L. Kaseff, Esq.
15821 Ventura Blvd.
Suite 685
Encino, California 91436
(ii) If to Executive, to Executive's address on the personnel records
of Employer with a copy to:
Peter T. Paterno, Esq.
1900 Avenue of the Stars, 25th Floor
Los Angeles, California 90067-4506
15. Miscellaneous.
15.1 Governing Law. This Agreement shall be deemed to have been
entered into in the State of Indiana and shall be governed by, and
construed and enforced in accordance with, the laws of the State of Indiana
without regard to its choice of law provisions.
15.2 Arbitration. The parties agree that any controversy or claim of
either party hereto arising out of or in any way relating to this
Agreement, or breach thereof, shall be settled by final and binding
arbitration in Los Angeles, California in accordance with the applicable
rules of JAMS, or, in the event JAMS no longer conducts business in Los
Angeles, California, any other mutually acceptable arbitration service, and
that judgment upon any award rendered may be entered by the prevailing
party in any court having jurisdiction thereof. The parties agree to share
equally all costs associated with the arbitration; provided, however, that
each party shall be solely responsible for its own attorneys' fees and
expenses in connection with any such arbitration.
15.3 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation
of any of the terms or conditions of this Agreement.
15.4 Entire Agreement; Merger. This Agreement (including all exhibits
attached hereto and referenced in this Agreement) sets forth the entire
agreement and understanding of the parties relating to the subject matter
herein, and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties, which are merged
herein. Accordingly, this Agreement supersedes and replaces all prior
written employment agreements between the parties as of March 1, 2002,
including without limitation, the employment agreement between the parties
effective as of March 1, 1999, which agreement is terminated and no longer
of any force and effect.
15.5 Successors and Assigns. This Agreement, and Executive's rights
and obligations hereunder, may not be assigned by Executive without the
prior written consent of Employer, which consent may be granted or withheld
in Employer's sole and absolute discretion; provided, however, that
Executive may designate pursuant to Section 15.7 one or more beneficiaries
to receive any amounts that would otherwise be payable hereunder to
Executive's estate. Employer may assign all or any portion of its rights
and obligations hereunder to any subsidiary, affiliate or related entity,
or any third party by way of merger, corporate reorganization, acquisition
of substantially all of the assets or stock of Employer, or otherwise.
15.6 Amendments; Waivers. This Agreement cannot be changed, modified
or amended, and no provision or requirement hereof may be waived, without
the written consent of Executive and Employer. The failure of either party
at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce such
provision. No waiver by a party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach or a waiver of the breach of any other
term or covenant contained in this Agreement.
15.7 Beneficiaries. Whenever this Agreement provides for any payment
to Executive's estate, such payment may be made instead to such beneficiary
or beneficiaries as Executive may have designated in a writing filed with
Employer. Executive shall have the right to revoke any such designation and
to re-designate a beneficiary or beneficiaries by written notice to
Employer (and to any applicable insurance company).
15.8 Executive's Warranty and Indemnity. Executive hereby represents
and warrants that Executive: (i) has the full and unqualified right to
enter into and fully perform this Agreement according to each and every
term and condition contained herein; and (ii) has not made any agreement,
contractual obligation, or commitment in contravention of any of the terms
and conditions of this Agreement or which would prevent Executive from
performing according to any of the terms and conditions contained herein.
Furthermore, Executive hereby agrees to fully indemnify and hold harmless
Employer and each of its subsidiaries, affiliates and related entities, and
each of their respective officers, directors, employees, agents, attorneys,
insurers and representatives (the "Emmis Group") from and against any and
all losses, costs, damages, expenses (including attorneys' fees and
expenses), liabilities and claims, arising out of, in connection with, or
in any way related to Executive's breach of any of the representations or
warranties contained in this Section 15.8 or Executive's breach of any of
the material terms or conditions contained in this Agreement.
15.9 No Obligation to Utilize Services. Employer shall not be
obligated to utilize Executive's services nor use the results or products
of such services even if Executive is not in default hereunder. Employer
may at any time during the Term, for any reason, elect not to use
Executive's services or have any further obligations to Executive under
this Agreement except as provided in the next sentence. If Employer elects
not to use Executive's services as permitted herein, Executive shall be
paid Executive's full compensation as described more fully in Section 6 at
the times and in the installments as provided herein as if Executive had
fulfilled Executive's obligations hereunder through the Term.
15.10 Change in Fiscal Year. If Employer changes its fiscal year,
Employer shall make such adjustments to the various dates and amounts
included herein or in any plan or program referenced herein as are
necessary or appropriate; provided, however, that the end of the Term shall
in no event be extended beyond the expiration of the Term without the
written consent of the parties.
15.11 Indemnification. Executive shall be entitled to the benefit of
the indemnification provisions set forth in Employer's Amended and Restated
Articles of Incorporation and/or By-Laws, or any applicable corporate
resolution, as the same may be amended from time to time during the Term
(not including any limiting amendments or additions, but including any
amendments or additions that add to or broaden the protection afforded to
Executive at the time of execution of this Agreement) to the fullest extent
permitted by applicable law. Additionally, Employer shall cause Executive
to be indemnified in accordance with Chapter 37 of the Indiana Business
Corporation Law (the "IBCL"), as the same may be amended from time to time
during the Term, to the fullest extent permitted by the IBCL as required to
make Executive whole in connection with any indemnifiable loss, cost or
expense incurred in Executive's performance of Executive's duties and
obligations pursuant to this Agreement. Employer shall also maintain during
the Term an insurance policy providing directors' and officers' liability
coverage in a commercially reasonable amount. It is understood that the
foregoing indemnification obligations shall survive the expiration or
termination of the Term.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have duly
executed this Agreement as of the date first written above.
EMMIS OPERATING COMPANY
("Employer")
By: /s/ Jeffrey H. Smulyan
Jeffrey H. Smulyan
Chairman of the Board and Chief Executive Officer
RICHARD F. CUMMINGS
("Executive")
/s/ Richard F. Cummings
Richard F. Cummings
EXHIBIT A
[TO BE PROVIDED]
EXHIBIT B
Calculation of Annual Incentive Compensation
Pursuant to Section 6.2, for the first Contract Year during the Term,
Executive shall be entitled to a Contract Year Bonus up to a target amount of
Three Hundred Thousand Dollars ($300,000) upon the attainment of the
following performance goals (the "Performance Goals"):
Target Bonus Performance Goal
1. $210,000 Domestic Radio Broadcast Cash Flow Target
2. $90,000 Discretionary
Executive's attainment of the Performance Goals shall be determined in the
sole and absolute discretion of the Compensation Committee (after reasonable
consultation with and input from Executive) based on certain performance targets
established by the Compensation Committee related to the broadcast cash flow of
the Radio Division and/or other operating units of Employer as reported by the
Employer in its filings with the United States Securities and Exchange
Commission. For purposes of this Exhibit B, "Domestic Radio Broadcast Cash Flow"
shall be defined as the combined broadcast cash flow for all of Employer's
domestic radio stations. Discretionary bonus amounts shall be awarded by the
Compensation Committee in its sole and absolute discretion. The Compensation
Committee reserves the right to amend the Performance Goals to the extent it
deems appropriate in order to take into account any material acquisition,
disposition, reorganization, recapitalization or other material transaction
involving Employer or its properties. It is understood and agreed that the
Performance Goals for each subsequent Contract Year during the Term, and the
corresponding performance targets, shall be determined by the Compensation
Committee (after reasonable consultation with and input from Executive) on or
about the commencement of each respective Contract Year.
Executive shall earn a percentage of each Contract Year Bonus in accordance
with the following scale depending upon the extent to which the Performance
Goals are attained:
Percentage of Performance Goal Attained Percentage of Target Bonus Earned
105% or more 120% maximum
100% 100%
95% 80%
90% 70%
less than 90% 0%