EXHIBIT 10.5
EMMIS COMMUNICATIONS
CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of
the 7th day of February, 2005 (the “Effective Date”) by
and between EMMIS COMMUNICATIONS CORPORATION, an Indiana
corporation (the “Company”), and MICHAEL LEVITAN
(“Executive”).
W I T N E S S E T H
WHEREAS, the Company considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the
Company and its stockholders; and
WHEREAS, the Company recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control may arise and that such
possibility may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, 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
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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
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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.
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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;
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(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).
Notwithstanding anything
herein to the contrary, termination of employment by Executive for
any reason during the 30-day period commencing one (1) year
after the date of a Change in Control shall constitute a
termination for Good Reason. An isolated, insubstantial and
inadvertent action taken in good faith and which is remedied by the
Company within ten (10) days after receipt of notice thereof
given by Executive shall not constitute Good Reason.
Executive’s right to terminate employment for Good Reason
shall not be affected by Executive’s incapacity due to mental
or physical illness and Executive’s continued employment
shall not constitute consent to, or a waiver of rights
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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
voluntar
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