This EMPLOYMENT
AGREEMENT (“Agreement”) is entered into as of
March 3, 2009, by and between EMMIS OPERATING COMPANY ,
an Indiana company (“Employer”), and GARY L.
KASEFF , 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, Executive
serves as Executive Vice President and General Counsel of Employer
pursuant to the terms of his employment agreement dated
March 1, 2008, as amended in December, 2008 (“2008
Employment Agreement”) and the Emmis Communications
Corporation Change in Control Severance Agreement effective
January 1, 2008 (“Change in Control Agreement”);
and
WHEREAS, it has
been the intention of the parties that Executive continue providing
services to Employer in a full-time capacity beyond the expiration
of the term set forth in the 2008 Employment Agreement;
and
WHEREAS, Employer
and Emmis Communications Corporation (“ECC”) have
entered into an agreement with their lenders which, among other
things, excludes from consolidated operating cash flow up to
$10 million in contract termination expenses (“contract
termination basket”); and
WHEREAS, it is in
the best interest of Employer to use the contract termination
basket to buy out future financial obligations; and
WHEREAS,
consistent with the foregoing, Executive is willing to resign from
his position as Executive Vice President and General Counsel and
terminate the 2008 Employment Agreement and the Change in Control
Agreement in exchange for compensation relative to the mutual
termination of those agreements and the future services and
obligations described therein and related thereto; and
WHEREAS, in
connection with the foregoing, Employer desires that Executive
remain on the Board of Directors of ECC (“Board”);
and
WHEREAS, the
parties desire Executive to provide services to Employer on a
part-time basis pursuant to the terms and conditions of the 2008
Employment Agreement; and
WHEREAS, the
parties intend that the transition from full-time to part-time
employment shall constitute a “separation from service”
within the meaning of Internal Revenue Code Section 409A so
that Executive shall not be subject to taxes imposed pursuant to
Section 409A.
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. Lump
Sum Cash Payment; Termination of Agreements . On or before
March 13, 2009, Employer shall make a lump sum cash payment to
Executive of $1.2 million, subject to applicable taxes and
withholdings as required by law (the “Cash Payment”).
The Cash Payment shall be made without offset of any kind.
Effective upon Executive’s receipt of the Cash Payment (the
“Effective Date”), the Change in Control Agreement and
the 2008 Employment Agreement shall terminate and be of no further
force and effect; except, however, Section 16.11 of the
2008 Employment Agreement shall survive the termination of that
agreement. Executive shall not receive any Base Salary or
Automobile Allowance (each as defined in the 2008 Employment
Agreement) attributable to the period from March 1, 2009
through March 12, 2009.
2.1
Employment . Upon the terms and subject to the conditions
set forth in this Agreement, Employer hereby employs Executive on a
non-exclusive, part-time basis, and Executive hereby accepts
employment with Employer. During the Term (as defined herein),
Executive shall make himself available to Employer to complete such
reasonable projects and assignments as may be assigned to him by
the Chief Executive Officer of Employer and/or ECC or any successor
in interest thereto. The parties intend that the transition from
full-time to part-time employment shall constitute a
“separation from service” within the meaning of
Internal Revenue Code Section 409A. Therefore, notwithstanding
anything to the contrary contained herein, in no event will
Executive be required or permitted to provide more than twenty
(20) hours of service during any calendar month pursuant to
this Section 2.1 ; provided, however, that the time
spent by Executive serving as a director of ECC or its subsidiaries
or affiliates shall not be included within the twenty
(20) hours of service. Subject to the terms and conditions of
this Section 2.1 , Employer shall have no obligation to
pay Executive the Base Salary, as defined herein, for any periods
during which Executive fails or refuses to render services pursuant
to this Section 2.1 .
2.2 Board.
Subject to the terms of this Section 2.2 , Executive
shall remain a director of ECC through his current term as a
director and thereafter Executive shall be nominated and shall
stand for election as a member of the Board when his current term
expires; provided, however, that if requested by Employer,
Executive shall resign as a director of ECC at the expiration of
such three year term. Executive shall be remunerated, as a
director, in the same manner as directors of ECC who are not
officers and employees of ECC; such remuneration shall be in
addition to the Base Salary. For calendar year 2009, Executive
shall be paid the full year’s director’s annual
retainer in January, 2010,
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but shall be
paid the fee for meetings based on meetings attended in person or
by telephone after the Effective Date. Executive shall be entitled
to the benefit of indemnification pursuant to the terms of
Section 16.11 . Subject to the foregoing, Executive
shall serve during the Term without additional remuneration as a
director of one (1) or more of Employer’s other
subsidiaries or affiliates (other than ECC) if appointed to such
position(s) by Employer and shall also be entitled to the benefit
of indemnification pursuant to the terms of
Section 16.11 . Notwithstanding anything to the
contrary contained herein, Executive may resign at any time as a
member of the Board (and as a director of any of Employer’s
subsidiaries or affiliates) without affecting the parties’
rights and obligations hereunder (other than Executive’s
right to receive remuneration as a director).
3.
Term . The term of this Agreement shall commence on the
Effective Date and shall end on the earliest of: (a) the fifth
(5 th
) anniversary of its commencement,
(b) the date Executive secures full-time employment other than
with Employer or any of its affiliates, (c) Executive’s
death, (d) the “Incapacity Termination Date”, as
defined in Section 11.1 or (e) the date this Agreement
and Executive’s employment is terminated for Cause (as
defined in Section 10.3 ) in accordance with the terms
and conditions of Section 10 . The term of part-time
employment described in the preceding sentence shall be referred to
herein as the “Term”. Each twelve (12) month
period commencing on March 13 and ending on the following
March 12 during the Term shall be referred to herein as a
“Contract Year.” As used herein, “full-time
employment” shall not include any one or more of the
following situations in which Executive renders services to others:
(a) being employed to work 30 hours or less per week ;
(b) serving as a director on a number of boards;
(c) being employed to work more than 30 hours per week on
specified projects or transactions e.g. providing legal or
consulting services in connection with a specific acquisition or
divestiture; (d) being employed to work more than 30 hours per
week; provided that such employment is for a specified period of
time of one year or less; or (e) working in any capacity other
than as an employee (e.g., as an independent
contractor).
4. Base
Salary . Upon the terms and subject to the conditions set forth
in this Agreement, for the services described in
Section 2.1 , Employer shall pay or cause to be paid to
Executive an annualized base salary (the “Base Salary”)
of $93,400, payable pursuant to Employer’s customary payroll
practices and subject to applicable taxes and withholdings as
required by law, for each Contract Year during the Term.
5.
Equity. On March 2, 2009, Executive was granted an
option (“Option”) to acquire One Hundred Seventy Five
Thousand (175,000) shares of Class A Common Stock of ECC (the
“Shares”). The Option has an exercise price per Share
equal to 29.5 cents and shall be evidenced by a written grant
agreement and be exercisable for Shares with such restrictive
legends on the certificates in accordance with applicable
securities laws and the applicable Equity Compensation Plan, or any
subsequent equity compensation or similar plan adopted by ECC and
generally used to make equity-based awards to management-level
employees of the Emmis Group (the “Plan”). The Option
shall have a ten year term commencing March 2, 2009 and vests
one hundred percent (100%) on March 2, 2012. Subject to the above
vesting schedule, Executive shall have
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the right to
exercise the Option from time to time during the entire ten year
term, notwithstanding any termination of part-time employment prior
to expiration of the ten year term, unless Executive’s
employment is terminated for Cause in accordance with
Section 10 . The Option is 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. Any option granted to Executive prior to
March 2, 2009 shall continue to vest and become exercisable
during the Term and thereafter (to the extent not already
exercisable as of the first day of the Term) in accordance with the
applicable vesting schedule of each such option, and shall remain
outstanding through the last day of the applicable option term
provided under the applicable award agreement pursuant to which
each such option was awarded, notwithstanding any termination of
part-time employment prior to expiration of each such option term,
unless Executive’s employment is terminated for Cause in
accordance with Section 10 . Ownership of any
restricted Shares previously granted to Executive shall continue to
vest (to the extent not already fully vested as of the first day of
the Term) in accordance with the vesting schedule applicable to
each grant, notwithstanding any termination of full-time or
part-time employment, unless Executive’s employment is
terminated for Cause in accordance with Section 10
.
6.
Expenses . Employer shall pay or reimburse Executive for all
reasonable expenses actually incurred or paid by Executive during
the Term directly related to 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 performance of Executive’s
duties pursuant to this Agreement. During the Term, Executive shall
be provided with a PDA, computer, monitor and printer and shall
remain on the Emmis network, all at no cost to Executive. During
the Term, Employer shall reimburse Executive for the reasonable
cost of compliance with his continuing education requirement. 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.
7. Health
Care Coverage. Throughout the Term, Executive and his
dependents (as such term is defined in the applicable health plan
of Employer) shall continue to participate in Employer’s
health plan, to the extent permitted under the terms of such plan
and at the expense of Employer, except for any premium co-payment
or other similar amounts for which Executive would have otherwise
been responsible pursuant to the terms of the plan. Employer will
include as taxable income on Executive’s W-2 for each
calendar year in which Executive participates in Employer’s
health plan under this Agreement an amount equal to the cost of the
premiums paid for such insurance. In the event that the terms of
Employer’s health plan do not at any time during the Term
permit Executive and/or his dependents to continue to participate
in such plan, Employer shall reimburse Executive for the cost of
securing substantially comparable health care coverage, as
reasonably determined by Executive, (with no preexisting condition
exclusion) for Executive and his dependents.
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8.
Confidential Information .
8.1
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 activities
of Executive. Executive further agrees that, immediately upon
termination of Executive’s employment hereunder 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.
8.2 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
5
during the Term
shall be solely and exclusively owned by Employer, including all
right, title and interest thereto. The exclusive legal title
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