Item 1.01 Entry into a Material Definitive Agreement.
On March 3, 2009, Emmis Communications Corporation ("Emmis") and its principal
operating subsidiary, Emmis Operating Company (the "Borrower"), entered into the
First Amendment and Consent to Amended and Restated Revolving Credit and Term
Loan Agreement (the "First Amendment), by and among the Borrower, Emmis, the
lending institutions party to the Credit Agreement referred to below
(collectively, the "Lenders") and Bank of America, N.A., as administrative agent
(the "Administrative Agent") for itself and the other Lenders party to the
Amended and Restated Revolving Credit and Term Loan Agreement, dated November 2,
2006 (as amended, supplemented, and restated or otherwise modified and in effect
from time to time, the "Credit Agreement"), by and among the Borrower, Emmis,
the Lenders, the Administrative Agent, Deutsche Bank Trust Company Americas, as
syndication agent, General Electric Capital Corporation, Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch and
SunTrust Bank, as co-documentation agents. Among other things, the First
Amendment (i) permits Emmis to purchase a portion of the Tranche B Term Loan (as
defined in the Credit Agreement) for an aggregate purchase price not to exceed
$50 million, (ii) reduces the Total Revolving Credit Commitment (as defined in
the Credit Agreement) from $145 million to $75 million, (iii) excludes from
Consolidated Operating Cash Flow (as defined) up to $10 million in cash
severance and contract termination expenses incurred for the period commencing
March 1, 2008 and ending February 28, 2010, and (iv) tightens the restrictions
on the ability of Emmis to perform certain activities and of the Borrower to
conduct transactions with affiliates. The description of the First Amendment set
forth above is qualified in its entirety by reference to the First Amendment, a
copy of which is attached hereto as Exhibit 10.1 to this Current Report on Form
8-K, and is incorporated herein by reference.
Item 2.05 Costs Associated with Exit or Disposal Activities
In response to a deteriorating economic environment and sharp decline in
advertising revenues, on March 5, 2009, we announced a broad payroll reduction
plan targeting $10 million of annual operating savings. In connection with the
plan, approximately 100 employees were terminated, the salary of all remaining
non-contract employees was reduced by 5%, and all employees under contract were
asked to voluntarily reduce their salary by 5%. All executive officers
voluntarily reduced their salaries by 5%.
The terminated employees will receive severance of approximately $7.47 million
that is expected to be paid within the next 60 days. Approximately $4.17 million
of this total is calculated pursuant to our standard severance policy and
approximately $3.3 million represents enhanced severance that is a one-time
termination benefit. While we may incur severance and contract termination costs
incremental to the severance described above, we do not believe the total of
these costs will exceed the $10 million severance and contract termination
basket in our Credit Agreement (see disclosure under Item 1.01).
Item 5.02. Departure of Directors of Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 3, 2009, we entered into a one-year employment agreement with Richard
F. Cummings to serve as President of Emmis Radio Programming. Under the
agreement, which is effective March 1, 2009, Mr. Cummings' base salary is
$470,000 and his annual incentive compensation target is 60% of his base salary.
The annual incentive bonus will be paid, if at all, based upon achievement of
certain performance goals to be determined by the company. The company retains
the right to pay such annual incentive compensation in cash or shares of our
Class A common stock. Mr. Cummings is entitled to receive an option to acquire
shares of our Class A common stock in an amount determined by the company.
Mr. Cummings will also receive in March 2009 one third of the completion bonus
described in his prior employment agreement, but will not otherwise receive a
completion bonus under the new agreement. Mr. Cummings will continue to receive
an automobile allowance and will continue to be reimbursed for up to $5,000 per
year in premiums for life or other insurance and retains the right to
participate in all of our employee benefit plans for which he is otherwise
eligible. He will also be entitled to severance equal to the above-stated base
salary in the event he is not offered substantially similar employment upon the
expiration of the term and his employment terminates. If he is entitled to
severance, Mr. Cummings will be offered a four year part-time programming role
with total payments over the four years of $530,000. The switch from full-time
to part-time employment is designed to constitute a 'separation from service'
within the meaning of section 409A of the Internal Revenue Code. The description
of the employment agreement set forth above is qualified in its entirety by
reference to the employment agreement, a copy of which is attached as
Exhibit 10.2 to this Current Report on Form 8-K, and is incorporated herein by
reference.
On March 2, 2009, we reached an agreement with Gary L. Kaseff under which
Mr. Kaseff will resign from his position as Executive Vice President and General
Counsel and terminate his employment agreement dated March 1, 2008, as amended,
and his change in control severance agreement dated January 1, 2008. Under the
agreement, Mr. Kaseff will receive a lump sum payment of $1.2 million and will
immediately transition to the post-term, part-time employment under the terms
and conditions provided for in his employment agreement dated March 1, 2008, as
amended. The switch from full-time to part-time employment is designed to
constitute a 'separation from service' within the meaning of section 409A of the
Internal Revenue Code. Mr. Kaseff will also receive the stock option grant made
on March 2, 2009, will remain a director of Emmis, and will otherwise be
remunerated in the same manner as the outside directors.
Table of Contents
Add
EMMS to Portfolio
Set Alert
Email to a
Friend