EMMIS COMMUNICATIONS
CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is
entered into as of the 11th day of August, 2003 (the
“Effective Date”) by and between EMMIS COMMUNICATIONS
CORPORATION, an Indiana corporation (the “Company”),
and David Newcomer (“Executive”).
WHEREAS, the
Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the
best interests of the Company and its stockholders; and
WHEREAS, the
Company recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may arise and
that such possibility may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, the
Compensation Committee of the “Board” (as defined in
Section 1) has determined that it is in the best interests of
the Company and its stockholders to secure Executive’s
continued services and to ensure Executive’s continued and
undivided dedication to his duties in the event of any threat or
occurrence of a “Change in Control” (as defined in
Section 1) of the Company; and
WHEREAS, the
Compensation Committee, at a meeting held on June 25, 2003,
has authorized the Company to enter into this Agreement.
NOW, THEREFORE,
for and in consideration of the mutual covenants and agreements
herein contained, the Company and Executive hereby agree as
follows:
1.
Definitions . As used in this Agreement, the following terms
shall have the respective meanings set forth below:
(a)
“Affiliate” means, with respect to a specified person,
a person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, the person specified.
(b)
“Board” means the Board of Directors of the
Company.
(c)
“Bonus Amount” means the greater of (i) the
highest annual incentive bonus earned by Executive from the Company
(or its Affiliates) during the last three (3) completed fiscal
years of the Company immediately preceding Executive’s Date
of Termination (annualized in the event Executive was not employed
by the Company (or its Affiliates) for the whole of any such fiscal
year), or (ii) if the Date of Termination occurs before
Executive has been employed for a full fiscal year, and before the
date Company generally pays bonuses to its Executives for the
fiscal year in which
Executive’s employment commenced, the
Executive’s target bonus for the fiscal year of the Company
which includes the Executive’s Date of
Termination.
(d)
“Cause” means (i) the willful and continued
failure of Executive to perform substantially his duties with the
Company (other than any such failure resulting from
Executive’s incapacity due to physical or mental illness or
any such failure subsequent to Executive being delivered a Notice
of Termination without Cause by the Company or delivering a Notice
of Termination for Good Reason to the Company) after a written
demand for substantial performance is delivered to Executive by the
Board which specifically identifies the manner in which the Board
believes that Executive has not substantially performed
Executive’s duties; provided that Executive has not cured
such failure or commenced such performance within 30 days
after such demand is given to Executive, or (ii) the willful
engaging by Executive in illegal conduct or gross misconduct which
is demonstrably and materially injurious to the Company or its
Affiliates. For purpose of the preceding sentence, no act or
failure to act by Executive shall be considered
“willful” unless done or omitted to be done by
Executive in bad faith and without reasonable belief that
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board, based upon the
advice of counsel for the Company (or upon the instructions of the
Company’s chief executive officer or another senior officer
of the Company) shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best
interests of the Company. Cause shall not exist unless and until
the Company has delivered to Executive a copy of a resolution duly
adopted by three-quarters (3/4) of the entire Board (excluding
Executive if Executive is a Board member) at a meeting of the Board
called and held for such purpose (after reasonable notice to
Executive and an opportunity for Executive, together with counsel,
to be heard before the Board), finding that in the good faith
opinion of the Board an event set forth in clauses (i) or
(ii) has occurred and specifying the particulars thereof in
detail. The Company must notify Executive of any event constituting
Cause within ninety (90) days following the Company’s
knowledge of its existence or such event shall not constitute Cause
under this Agreement.
(e)
“Change in Control” means any of the following:
(i) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (other than an
Affiliate or any employee benefit plan (or any related trust) of
the Company or an Affiliate, and other than Jeffrey H. Smulyan or
an Affiliate of Mr. Smulyan) (a “Person”) becomes after
the date hereof the beneficial owner of 25% or more of either the
then outstanding Stock or the combined voting power of the then
outstanding voting securities of the Company entitled to vote in
the election of directors, except that no Change in Control shall
be deemed to have occurred solely by reason of any such acquisition
by a corporation with respect to which, after such acquisition,
more than 60% of both the then outstanding common shares of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote in the
election of directors are then beneficially owned, directly or
indirectly, by the persons who were the beneficial owners of the
Stock and voting securities of the Company immediately before such
acquisition in substantially the same proportion as their
ownership, immediately
before such
acquisition, of the outstanding Stock and the combined voting power
of the then outstanding voting securities of the Company entitled
to vote in the election of directors; (ii) individuals who, as of
the Effective Date, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a
majority of the Board; provided that any individual who becomes a
director after the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote or written consent of at least two-thirds of the directors
then comprising the Incumbent Directors shall be considered as
though such individual were an Incumbent Director, but excluding,
for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company
(as such terms are used in Rule 14a-11 under the Exchange
Act); (iii) the consummation of (A) a merger,
reorganization or consolidation with respect to which the
individuals and entities who were the respective beneficial owners
of the Stock and voting securities of the Company immediately
before such merger, reorganization or consolidation do not, after
such merger, reorganization or consolidation, beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding common shares and the combined voting power of the then
outstanding voting securities entitled to vote in the election of
directors of the corporation resulting from such merger,
reorganization or consolidation, or (B) the sale or other
disposition of all or substantially all of the assets of the
Company to any Person; (iv) the approval by the shareholders
of the Company of a liquidation or dissolution of the Company; or
(v) such other event(s) or circumstance(s) as are determined
by the Board to constitute a Change in Control. Notwithstanding the
foregoing provisions of this definition, a Change in Control of the
Company shall be deemed not to have occurred (a) with respect
to any Executive, if such Executive is, by written agreement
executed prior to such Change in Control, a participant on such
Executive’s own behalf in a transaction in which the persons
(or their Affiliates) with whom such Executive has the written
agreement Acquire the Company (as defined below) and, pursuant to
the written agreement, the Executive has an equity interest in the
resulting entity or a right to acquire such an equity interest, or
(b) in the event the Company separates or bifurcates its radio
and television divisions by means of merger, corporate
reorganization, sale or disposition of assets, spin-off, tax-free
reorganization, or otherwise (any such separation or bifurcation, a
“Separation Event”), and, immediately thereafter,
Mr. Smulyan is Chairman or Chief Executive Officer of the
Company or any successor thereto, including without limitation,
either division or any entity established as a result of a
Separation Event ( a “Successor”), Mr. Smulyan
retains the ability to vote at least fifty percent (50%) of all
classes of stock of the Company or any Successor, or
Mr. Smulyan retains the ability to elect a majority of the
Board of Directors of the Company or any Successor.
Notwithstanding
the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any Person acquires beneficial
ownership of more than 25% of the then outstanding Stock as a
result of the acquisition of the Stock by the Company which reduces
the number of shares of Stock outstanding; provided ,
that if after such acquisition by the Company such person
becomes the beneficial owner of additional Stock that increases the
percentage of outstanding Stock beneficially owned by such person,
a Change in Control of the Company shall then occur.
For
the purposes of this definition, “Acquire the Company”
means the acquisition of beneficial ownership by purchase, merger,
or otherwise, of either more than 50% of the Stock (such percentage
to be computed in accordance with Rule 13d-3(d)(1)(i) of the
SEC under the Exchange Act) or substantially all of the assets of
the Company or its successors; “person” means such term
as used in Rule 13d-5 of the SEC under the Exchange Act;
“beneficial owner” means such term as defined in
Rule 13d-3 of the SEC under the Exchange Act; and
“group” means such term as defined in Section 13(d) of
the Exchange Act.
(f) “Code”
means the Internal Revenue Code of 1986, as amended, and
regulations and rulings thereunder. References to a particular
section of the Code shall include references to successor
provisions.
(g) “Date
of Termination” means (1) the effective date on which
Executive’s employment by the Company terminates as specified
in a prior written notice by the Company or Executive, as the case
may be, to the other, delivered pursuant to Section 10 or
(2) if Executive’s employment by the Company terminates
by reason of death, the date of death of Executive.
(h) “Disability”
means termination of Executive’s employment by the Company
due to Executive’s absence from Executive’s duties with
the Company on a full-time basis for at least one hundred eighty
(180) consecutive days as a result of Executive’s
incapacity due to physical or mental illness.
(i) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under, the Exchange
Act shall include references to successor provisions.
(j) “Good
Reason” means, without Executive’s express written
consent, the occurrence of any of the following events after a
Change in Control:
(i)
any (A) change in the duties or responsibilities (including
reporting responsibilities) of Executive that is inconsistent in
any material and adverse respect with Executive’s
position(s), duties, responsibilities or status with the Company
immediately prior to such Change in Control (including any material
and adverse diminution of such duties or responsibilities);
provided , however , that Good Reason shall not be
deemed to occur upon a change in duties or responsibilities (other
than reporting responsibilities) that is solely and directly a
result of the Company no longer being a publicly traded entity and
does not involve any other event set forth in this paragraph
(j) or (B) material and adverse change in
Executive’s titles or offices (including, if applicable,
membership on the Board) with the Company as in effect immediately
prior to such Change in Control;
(ii)
a material breach by the Company or an Affiliate of the Company of
an employment agreement to which the Executive and the Company or
an Affiliate of the Company are parties;
(iii)
a reduction by the Company in Executive’s rate of annual base
salary or annual target bonus opportunity as in effect immediately
prior to such Change in Control or as the same may be increased
from time to time thereafter;
(iv)
any requirement of the Company that Executive (A) be based
anywhere more than thirty-five (35) miles from the office
where Executive is located at the time of the Change in Control, if
such relocation increases Executive’s commute by more than
twenty (20) miles, or (B) travel on Company business to an
extent substantially greater than the travel obligations of
Executive immediately prior to such Change in Control;
(v)
the failure of the Company to (A) continue in effect any
material employee benefit plan, compensation plan, welfare benefit
plan or fringe benefit plan in which Executive is participating
immediately prior to such Change in Control or the taking of any
action by the Company which would adversely affect
Executive’s participation in or reduce Executive’s
benefits under any such plan, unless Executive is permitted to
participate in other plans providing Executive with substantially
equivalent benefits in the aggregate (at substantially equivalent
cost with respect to welfare benefit plans), or (B) provide
Executive with paid vacation in accordance with the most favorable
vacation policies of the Company and its Affiliates as in effect
for Executive immediately prior to such Change in Control,
including the crediting of all service for which Executive had been
credited under such vacation policies prior to the Change in
Control;
(vi)
any refusal by the Company to continue to permit Executive to
engage in activities not directly related to the business of the
Company in which Executive was permitted to engage prior to the
Change in Control;
(vii)
any purported termination of Executive’s employment which is
not effectuated pursuant to Section 10(b) (and which will not
constitute a termination hereunder); or
(viii)
the failure of the Company to obtain the assumption and, if
applicable, guarantee, agreement from any successor (and parent
corporation) as contemplated in Section 9(b).
An isolated,
insubstantial and inadvertent action taken in good faith and which
is remedied by the Company within ten (10) days after receipt
of notice thereof given by Executive shall not constitute Good
Reason. Executive’s right to terminate employment for Good
Reason shall not be affected by Executive’s incapacity due to
mental or physical illness and Executive’s continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any event or condition constituting Good Reason;
provided , however , that Executive must provide
notice of termination of employment within ninety (90) days
following Executive’s knowledge of an event constituting
Good
Reason or such
event shall not constitute a termination for Good Reason under this
Agreement.
(k)
“Qualifying Termination” means a termination of
Executive’s employment (i) by the Company other than for
Cause or (ii) by Executive for Good Reason. Termination of
Executive’s employment on account of death, Disability or
Retirement shall not be treated as a Qualifying
Termination.
(l)
“Retirement” means Executive’s retirement (not
including any mandatory early retirement) in accordance with the
Company’s retirement policy generally applicable to its
salaried employees, as in effect immediately prior to the Change in
Control, or in accordance with any retirement arrangement
established with respect to Executive with Executive’s
written consent; provided , however , that under no
circumstances shall a resignation with Good Reason be deemed a
Retirement.
(m)
“SEC” means the Securities and Exchange
Commission.
(n)
“Stock” means the Class A Common Stock and the
Class B Common Stock of the Company, par value $.01 per
share.
(o)
“Termination Period” means the period of time beginning
with a Change in Control and ending two (2) years following
such Change in Control. Notwithstanding anything in this Agreement
to the contrary, if (i) Executive’s employment is
terminated prior to a Change in Control for reasons that would have
constituted a Qualifying Termination if they had occurred following
a Change in Control; (ii) Executive reasonably demonstrates
that such termination (or Good Reason event) was at the request of
a Person who had indicated an intention or taken steps reasonably
calculated to effect a Change in Control, or was otherwise made in
connection with a Change in Control; and (iii) a Change in
Control involving such third party or an Affiliate of such third
party (or a party competing with such third party to effectuate a
Change in Control) does occur, then for purposes of this Agreement,
the date immediately prior to the date of such termination of
employment or event constituting Good Reason shall be treated as a
Change in Control. For purposes of determining the timing of
payments and benefits to Executive under Section 4, the date
of the actual Change in Control shall be treated as
Executive’s Date of Termination under Section
l(g).
2.
Obligation of Executive . In the event of a tender or
exchange offer, proxy contest, or the execution of any agreement
which, if consummated, would constitute a Change in Control,
Executive agrees not to voluntarily leave the employ
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