This EMPLOYMENT
AGREEMENT (“Agreement”) is effective as of
March 1, 2009, by and between EMMIS OPERATING COMPANY ,
an Indiana company (“Employer”), and RICHARD F.
CUMMINGS , a California resident
(“Executive”).
WHEREAS, Employer
and its affiliates are engaged in the ownership and operation of
certain radio stations, magazines, and related operations
(together, the “Emmis Group”); and
WHEREAS, Employer
desires to employ 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:
1.
Employment Status and Duties . 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. During the Term (as defined herein), Executive shall
serve as President, Emmis Radio Programming. Executive shall have
such duties, functions, authority and responsibilities as are
commensurate with such position. Executive’s services
hereunder shall be performed on an exclusive, full-time basis in a
professional, diligent and competent manner to the best of
Executive’s abilities. Executive shall not undertake any
outside employment or business activities without the prior written
consent of Employer. Executive shall be permitted to serve on the
board of charitable or civic organizations so long as such
services: (i) are approved in writing in advance by Employer;
and (ii) do not interfere with Executive’s duties and
obligations under this Agreement. It is understood and agreed that
the location for the performance of Executive’s duties and
services pursuant to this Agreement shall be the offices located at
3500 West Olive Avenue, Burbank, California, or if Employer no
longer maintains possession of those premises, then such offices as
may be designated by Employer in Los Angeles, California. If
Executive is elected as a Director of Emmis Communications
Corporation, he shall serve in such position without additional
remuneration (unless Employer elects to remunerate “inside
directors”) but shall be entitled to the benefit of
indemnification pursuant to the terms of Section 15.12 .
Executive shall also serve without additional remuneration as a
director and/or officer of one (1) or more of Employer’s
subsidiaries or affiliates if appointed to such position(s) by
Employer and shall also be entitled to the benefit of
indemnification pursuant to the terms of
Section 15.12.
2.
Term . The term of this Agreement shall be for a period of
one (1) year commencing on March 1, 2009, and continuing
until February 28, 2010, unless earlier terminated in
accordance with the provisions set forth in this Agreement (the
“Term”).
3. Base
Salary; Auto Allowance . Upon the terms and subject to the
conditions set forth in this Agreement, Employer shall pay or cause
to be paid to Executive during the Term an annualized base salary
(the “Base Salary”) of $470,000, payable pursuant to
Employer’s customary payroll practices and subject to
applicable taxes and withholdings as required by law.
Notwithstanding anything to the contrary contained herein, the Base
Salary may be reduced, from time to time, by Employer without
notice, provided that the annualized Base Salary cannot at any time
be less than $423,000.
Except as
otherwise set forth herein, Employer shall have no obligation to
pay Executive the Base Salary for any periods during which
Executive fails or refuses to render services pursuant to this
Agreement or for any period following the expiration or termination
of this Agreement. In addition, it is understood and agreed that
Employer may, at its sole election, pay up to ten percent (10%) of
Executive’s Base Salary in Shares (as defined below in
Section 4.3 ); provided that: (i) Executive is
able to sell those Shares on substantially the same terms and
conditions applicable to Employer’s stock compensation plan
in effect through 2005; and (ii) the percentage of
Executive’s Base Salary payable in Shares shall be consistent
with, and the exact number of Shares to be awarded to Executive
shall be determined in the same manner as that utilized for other
senior management level employees.
During the Term,
Executive shall receive a monthly auto allowance in the amount of
One Thousand Dollars ($1,000) (subject to withholding and
applicable taxes as required by law) consistent with
Employer’s policy or practices regarding such allowances, as
such policy or practices may be amended from time to time during
the Term in Employer’s sole and absolute discretion;
provided, however, that in no event shall the auto allowance amount
paid to Executive pursuant to this provision be reduced.
4.
Incentive Compensation .
4.1 Bonus
Amounts . Upon the terms and subject to the conditions set
forth in this Section 4 , Executive shall be eligible
to receive one (1) performance bonus in a target amount
equivalent to sixty percent (60%) of Executive’s Base Salary
paid during the Term, and the exact amount of such performance
bonus, if any, shall be determined on the basis of
Executive’s attainment of certain performance and financial
goals to be determined by Employer in its sole and absolute
discretion.
4.2 Payment of
Bonus Amounts . Employer shall pay or cause to be paid to
Executive the foregoing bonus amounts if earned according to the
terms and conditions set forth in Section 4.1 ;
provided, that, at the end of the Term: (i) this Agreement is
in full force and effect and has not been terminated for any reason
(other than due to a material breach of this Agreement by
Employer); and
2
(ii) Executive is fully performing all of
Executive’s duties and obligations pursuant to this Agreement
and is not in breach of any of the material terms and conditions of
this Agreement. In addition, it is understood and agreed that
Employer may, at its sole election, pay any bonus amounts earned by
Executive pursuant to this Section 4 in cash or Shares;
provided that the Shares evidencing any portion thereof shall be
freely transferable when delivered to Executive, subject to
Employer’s securities trading policy and applicable federal
and state law. In the event that Employer elects pursuant to this
Section 4.2 to pay any bonus amounts in Shares, the
percentage of bonus amounts payable in Shares shall be consistent
with, and the exact number of Shares to be awarded to Executive
shall be determined in the same manner as that utilized for senior
management level employees. Any bonus amounts earned by Executive
pursuant to the terms and conditions of this Section 4
shall be paid after the end of the Term (but in no event later than
ninety (90) days after the end of the Term). Any and all bonus
amounts payable by Employer to Executive pursuant to this
Section 4 shall be subject to applicable taxes and
withholdings as required by law.
4.3 Equity
Incentive Compensation . At such time when Employer grants
equity incentive compensation to its senior management level
employees (but in no event later than ninety (90) days after
February 28, 2009), Executive shall be granted an option
(“Option”) to acquire shares of Class A Common
Stock of Emmis Communications Corporation (the
“Shares”), the exact amount of which shall be
determined by Employer in its sole and absolute
discretion.
Each Option
granted pursuant to this Section 4.3 shall:
(i) have an exercise price per share equal to its Fair Market
Value (as defined in the applicable Equity Compensation Plan, or
any subsequent equity compensation or similar plan adopted by Emmis
Communications Corporation and generally used to make equity-based
awards to management-level employees of the Emmis Group (the
“Plan”)); (ii) notwithstanding any other
provisions in this Agreement, be granted according to the terms and
subject to the conditions of the Plan; (iii) be evidenced by a
written grant agreement containing such terms and conditions as are
generally provided for other management-level employees of the
Emmis Group (including vesting requirements); and (iv) be
exercisable for Shares with such restrictive legends on the
certificates in accordance with the Plan and applicable securities
laws. Options granted pursuant to this Section 4.3 are
intended to satisfy the regulatory exemption from the application
of Code Section 409A for certain options for service recipient
shares, and they shall be administered accordingly.
5.
Expenses; Travel . Employer shall pay or reimburse Executive
for all reasonable expenses actually incurred or paid by Executive
during the Term in connection with the performance of
Executive’s services hereunder upon presentation of expense
statements, vouchers or other supporting documentation as Employer
may require of Executive; provided such expenses are otherwise in
accordance with Employer’s policies. Executive shall
undertake such travel as may be required in the
3
performance of
Executive’s duties pursuant to this Agreement. Under no
circumstances shall the Employer’s reimbursement for expenses
incurred in a calendar year be made later than the end of the next
following calendar year; provided, however, this requirement shall
not alter the Employer’s obligation to reimburse Executive
for eligible expenses on a current basis.
6.1 Vacation
and Other Benefits . 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 and to the extent that Executive is eligible under,
the general provisions of Employer’s fringe benefit plans or
programs; provided, however, 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.
6.2 Life and
Disability Insurance . During the Term, Employer agrees to
reimburse Executive in an amount not to exceed Five Thousand
Dollars ($5,000) for the annual premium associated with
Executive’s purchase or maintenance of a life or disability
insurance policy or other insurance policies on the life, or
related to the care, 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 6.2 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.
7.
Confidential Information .
7.1
Non-Disclosure . Executive acknowledges that certain
information concerning the business of the Emmis Group and its
members (including but not limited to trade secrets and other
proprietary information) is of a highly confidential nature, and
that, as a result of Executive’s employment with Employer
prior to and during the Term, Executive shall receive and develop,
proprietary and confidential information concerning the business of
Employer and/or other members of the Emmis Group which, if known to
Employer’s competitors, would damage Employer, other members
of the Emmis Group and their respective businesses. Accordingly,
Executive hereby 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 and its representatives, or as directed in writing by
Employer), any information or knowledge concerning the business of
Employer or any other member of the Emmis Group which is not
generally available to the public other than through the
4
activities of
Executive. Executive further agrees that, immediately upon
termination of Executive’s employment for any reason,
Executive shall promptly surrender to Employer all documents,
brochures, plans, strategies, writings, illustrations, client
lists, price lists, sales, financial or marketing plans, budgets
and any and all other materials (regardless of form or character)
which Executive received from or developed on behalf of Employer or
any member of the Emmis Group in connection with Executive’s
employment prior to or during the Term. Executive acknowledges that
all such materials shall remain at all times during the Term and
thereafter 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.
7.2 Ownership
of Materials . Employer shall solely and exclusively own all
rights of every kind and nature in perpetuity and throughout the
universe in: (i) the programs and broadcasts on which
Executive appears or for which Executive renders services to
Employer in any capacity; (ii) the results and proceeds of
Executive’s services pursuant to this Agreement including,
without limitation, those results and proceeds provided in
connection with the creation, development, preparation, writing,
editing or production by Executive or any employee of any member of
the Emmis Group of any and all materials, properties or elements of
any and all kinds for the programs on which Executive appears or
for which Executive renders services (whether directly or
indirectly); and (iii) any business, financial, sales or
marketing plans and strategies, documents, presentations, or other
similar materials, regardless of kind or character, each of which
Executive acknowledges is a work specially ordered by Employer
which shall be considered to be a “work made for hire”
for Employer. Therefore, Employer shall be the author and copyright
owner of the programs on which Executive appears or for which
Executive renders services pursuant to this Agreement, the
broadcasts and tapes or recordings thereof for all purposes without
limitation of any kind, and all materials described in the
immediately preceding sentence. All characters developed for the
programs and broadcasts during the Term shall be solely and
exclusively owned by Employer, including all right, title and
interest thereto. The exclusive legal title to all of the aforesaid
works and matters, programs, broadcasts, and materials and all
secondary and derivative rights therein, shall belong, at all
times, to Employer which shall have the right to copyright the same
and apply for copyright registrations and copyright renewal
registrations and to make whatever use thereof that Employer, in
its sole and absolute discretion, deems advisable, including but
not limited to rebroadcasts of programs or use of any portions of
any program in the production or broadcast of other programs at any
time, notwithstanding expiration of the Term or termination of this
Agreement for any reason.
7.3 Injunctive
Relief . Executive acknowledges that Executive’s breach
of this Section 7 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 7
have been specifically negotiated and carefully written to prevent
such irreparable harm
5
and damage.
Accordingly, if Executive breaches this Section 7 ,
Employer shall be entitled to injunctive relief (including
attorneys’ fees and costs) enforcing this
Section 7 to the extent reasonably necessary to protect
Employer’s legitimate interests, without posting bond or
other security.
8.
Non-Interference; Injunctive Relief .
8.1
Non-Interference . During the Term, and for a period of two
(2) years immediately following the expiration or early
termination of the Term for any reason, and during the Post Term
Period if Executive elects part-time employment pursuant to
Section 13 , Executive shall not, directly or
indirectly, take any action (or permit any action to be taken by an
entity with which Executive is associated) which has the effect of
interfering with Employer’s relationship (contractual or
otherwise) with: (i) on-air talent of any member of the Emmis
Group; or (ii) any other employee of any member of the Emmis
Group. Without limiting the generality of the foregoing, Executive
specifically agrees that during such time period, neither Executive
nor any entity with which Executive is associated shall solicit,
hire or engage any on-air talent or other employee of any member of
the Emmis Group or any other employee of any member of the Emmis
Group to provide services for Executive’s benefit or for the
benefit of any other business or entity, or solicit or encourage
them to cease their employment with any member of the Emmis Group
for any reason.
8.2 Injunctive
Relief . Executive acknowledges and agrees that the provisions
of this Section 8 have been specifically negotiated and
carefully worded in recognition of the opportunities which will be
afforded to Executive by Employer by virtue of Executive’s
continued association with Employer during the Term, and the
influence that Executive has and will continue to have over
Employer’s employees, customers and suppliers. Executive
further acknowledges that Executive’s breach of
Section 8.1 herein will cause irreparable harm and
damage to Employer, the exact amount of which will be difficult to
ascertain; that the
|
