EMMIS COMMUNICATIONS
CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is
entered into, effective March 1, 2009 (the “Effective
Date”), by and between EMMIS COMMUNICATIONS CORPORATION, an
Indiana corporation (the “Company”), and J. Scott
Enright (“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 March 24, 2009,
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)
“Base Salary” means Executive’s gross base
salary, regardless of whether payable directly by the Company in
cash or through the television quarterly bonus plan, the stock
compensation program, or a similar program.
(c)
“Board” means the Board of Directors of the
Company.
(d)
“Bonus Amount” means the greater of (i) the
highest annual incentive bonus earned by Executive from the Company
(and/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 on which the Company generally pays bonuses to
its executives for the fiscal year in which Executive’s
employment commenced, 25% of Executive’s Base Salary for the
fiscal year of the Company which includes the Executive’s
Date of Termination.
(e)
“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 clause (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.
(f)
“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 35% 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
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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 (or series of sales and/or other dispositions over time
resulting in a sale and/or other disposition) of all or
substantially all of the assets of the Company to any Person or
Persons as part of the Company’s plan to sell or otherwise
dispose of all or substantially all of such assets ; (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 shall be deemed not to have
occurred with respect to Executive, if he is, by written agreement
executed prior to such Change in Control, a participant on his own
behalf in a transaction in which the persons with whom he has the
written agreement (and/or their Affiliates) Acquire the Company (as
defined below) and, pursuant to the written agreement, Executive
has (or has the right to acquire) an equity interest in the
resulting entity.
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur
solely because any Person acquires beneficial ownership of more
than 35% 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 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
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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.
(g)
“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.
(h)
“Date of Termination” means the effective date of the
Termination of Executive’s Employment.
(i)
“Disability” means Termination of Executive’s
Employment by the Company (A) on account of Executive’s
disability or incapacity in accordance with Executive’s
written employment agreement with the Company, if such agreement
contains provisions relating to Termination of Employment for
disability or incapacity, or (B) except as provided in clause
(A), on account of Executive’s disability or incapacity in
accordance with the Company’s policies applicable to salaried
employees without a written employment agreement, as in effect
immediately before the Change in Control.
(j)
“Effective Date” means January 1, 2008.
(k)
“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.
(l)
“Good Reason” means, without Executive’s express
written consent, the occurrence of any of the following events
after a Change in Control:
(i)
a material diminution in Executive’s authority, duties, or
responsibilities; provided, however, 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 that
does not involve another event described in this Subsection
(l);
(ii)
a material breach by the Company or an Affiliate of the Company of
this Agreement or an employment agreement to which the Executive
and the Company or an Affiliate of the Company are
parties;
(iii)
a material reduction by the Company in Executive’s rate of
annual Base Salary, as in effect immediately prior to such Change
in Control or as the same may be increased from time to time
thereafter (with a reduction or series of reductions exceeding 5%
of Base Salary being deemed material);
(iv)
any requirement of the Company that Executive (A) be based
anywhere more than thirty-five (35) miles from the office
where
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Executive is
based 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 materially greater than the travel obligations of Executive
immediately prior to such Change in Control;
(v) 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
the preceding, an event described above shall not be considered an
event of Good Reason, unless the Executive provides notice to the
Company of the existence of such event of Good Reason within ninety
(90) days after its first occurrence and the Company fails to
cure such event within thirty (30) days after receiving
Executive’s notice. 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 Terminate Employment within ninety (90) days
following the end of the thirty (30) day cure period specified
above, or such event shall not constitute a termination for Good
Reason under this Agreement. Notwithstanding any other provision of
this Agreement to the contrary, Termination of Employment by
Executive for any reason during the thirty (30)-day period
beginning one (1) year after the date of a Change in Control
shall constitute a Termination of Employment for Good
Reason.
(m)
“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.
(n)
“Retirement” means Executive’s Termination of
Employment by reason of 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.
(o)
“SEC” means the Securities and Exchange
Commission.
(p)
“Stock” means the Class A Common Stock and the
Class B Common Stock of the Company, par value $.01 per
share.
(q)
“Termination of Employment”, “Terminates
Employment,”, or any variation thereof means
Executive’s separation from service within the meaning of
Code Section 409A(a)(2)(A)(i).
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(r)
“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(h).
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 of the
Company, other than as a result of Disability, Retirement or an
event which would constitute Good Reason if a Change in Control had
occurred, until the Change in Control occurs or, if earlier, such
tender or exchange offer, proxy contest, or agreement is terminated
or abandoned.
3. Term
of Agreement . This Agreement shall be effective on the date
hereof and shall continue in effect until the Company shall have
given three (3) years’ written notice of cancellation;
provided , that , notwithstanding the delivery of any
such notice, this Agreement shall continue in effect for a period
of two (2) years after a Change in Control, if such Change in
Control shall have occurred during the term of this Agreement.
Moreover, if Executive is party to a written employment agreement
with the Company at the time of a Change in Control, and such
agreement would otherwise expire during the Termination Period, the
term of such agreement shall automatically be extended to the end
of the Termination Period or, if earlier, Executive’s
Retirement. Notwithstanding anything in this Section to the
contrary, except as provided in the second sentence of
Section 1(r), this Agreement shall terminate if Executive or
the Company Terminates Executive’s Employment prior to a
Change in Control.
4.
Payments Upon Termination of Employment .
(a)
Qualifying Termination — Severance . If during the
Termination Period, the Employment of Executive shall Terminate
pursuant to a Qualifying Termination, the Company shall provide to
Executive:
(i)
within ten (10) days following the Date of Termination a
lump-sum cash amount equal to the sum of (A) Executive’s
Base Salary through the Date of Termination and any bonus amounts
which have become payable, to the extent not theretofore paid or
deferred, (B) an amount
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equal to
(I) fifty percent (50%) of Executive’s Base Salary at
the rate in effect on the Change in Control (or, if higher, the
rate in effect on Termination of Employment), multiplied by
(II) a fraction, the numerator of which is the number of days
in the fiscal year in which the Date of Termination occurs through
the Date of Termination and the
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