Exhibit 10.2
EXECUTION COPY
VIACOM INC.
March 20, 2003
Xxx Xxxxxxxx
New York, New York
Dear Xxx:
Viacom Inc. ("Viacom"), having an address at 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, agrees to continue to employ you and you agree to accept such
continued employment upon the following terms and conditions:
1. Term. The term of your employment under this letter agreement (the
"Agreement") shall commence on May 5, 2003 (the "Effective Date"), and, unless
terminated by Viacom or you pursuant to paragraph 9 hereof, shall continue
through and until the third anniversary thereof. The period from May 5, 2003
through the third anniversary thereof shall hereinafter be referred to as the
"Employment Term," notwithstanding any earlier termination pursuant to paragraph
9.
2. Duties. During the term of your employment hereunder, you agree to
devote your entire business time, attention and energies to the business of
Viacom and its subsidiaries. This is not intended to prevent you from engaging
in other activities that do not materially conflict with or interfere with the
performance of your duties and responsibilities hereunder. You will be President
and Chief Operating Officer of Viacom reporting directly and solely to Xxxxxx X.
Xxxxxxxx, the Chairman of the Board and Chief Executive Officer of Viacom (the
"Chairman and CEO"). You will have full authority over the operations of Viacom.
You will consult with the CEO on all matters within your authority. Your
authority shall include, without limitation, the following powers, rights,
functions, and responsibilities:
(i) supervising, coordinating and managing Viacom business,
operations, activities, operating expenses and capital
allocation;
(ii) matters relating to officers (other than the Chairman and CEO and
you) and employees, including, without limitation, hiring,
terminating, changing positions and allocating responsibilities
of such officers and employees (provided that solely with respect
to the firing of a group of senior executives (the "Specified
Executives") to be mutually agreed by the Chairman and CEO and
you, and the hiring of their replacements, you and the Chairman
and CEO will agree jointly on such actions); and
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(iii) substantially all of the powers, rights, functions and
responsibilities typically exercised by a chief operating
officer.
Notwithstanding the foregoing, full and final decision-making
authority over corporate policy and strategy shall reside in the Chairman and
CEO, in consultation with you. For this purpose, "corporate policy and strategy"
means significant acquisitions, significant dispositions, significant
partnerships or ventures with other companies, significant shareholder relations
and corporate governance matters, the entry into significant new lines of
business and withdrawal from significant existing lines of business and other
matters of comparable significance to Viacom. In the case of any matter within
your authority pursuant to this paragraph 2 that would be included within the
foregoing definition of corporate policy and strategy by reason of the language
"other matters of comparable significance to Viacom" (a "Specified Matter"),
however, such Specified Matter will continue to be deemed entirely within your
authority pursuant to this paragraph 2, except that the Chairman and CEO will
have final decision-making authority with respect to any recommendation or
proposal to be submitted by management to the Board of Directors of Viacom (the
"Board") on such Specified Matter. All officers of Viacom (other than the
Chairman and CEO) will report, directly or indirectly, to you. You will keep the
Chairman and CEO advised of significant operating or organizational issues,
including, without limitation, the hiring and firing of senior executives. You
will ensure that the Chairman and CEO will have full access to Viacom
executives, to staff meetings convened by you, and to information and reports
compiled by management so that the Chairman and CEO can fully perform his
responsibilities as chief executive officer and is fully briefed on operating
issues and the business of Viacom. The Chairman and CEO will have the right to
overrule your decision on any operating issue only following prior consultation
with the Board at a meeting called for such purpose to provide the Board with
the full opportunity to take any action it deems appropriate with respect to
such operating issue. Viacom agrees that the Chairman and CEO shall consult with
you and keep you fully informed regarding all matters within his authority. You
shall serve as a member of the Board. Your principal place of business shall be
at Viacom's headquarters in the New York City metropolitan area and you shall
not be required to relocate outside of the New York City metropolitan area. You
shall be entitled to continue to serve on the corporate, charitable and
educational boards of which you are a member as of the date hereof.
3. Compensation. As the sole compensation for services to be rendered
by you during the Employment Term in all capacities to Viacom, its subsidiaries
and affiliates, you will receive the following compensation.
(a) Salary: For all the services rendered by you in any capacity to
Viacom, its subsidiaries and affiliates, Viacom agrees to pay you a base salary
at the rate of $1,000,000 per annum ("Salary"), payable in accordance with
Viacom's then effective payroll practices.
(b) Bonus Compensation: In addition to your Salary, you shall be
entitled to receive bonus compensation for each of the calendar years during the
Employment Term, determined and payable as follows ("Bonus"):
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(i) Your Bonus for each of the calendar years during the
Employment Term will be based upon a measurement of
performance against objectives in accordance with Viacom's
Short-Term Incentive Plan and its Senior Executive
Short-Term Incentive Plan, as the same may be amended from
time to time (collectively, the "STIP"), which objectives
shall be no less favorable to you than the objectives used
to determine the amount of bonus payable to any other
executive of Viacom whose bonus is based in whole or in part
on corporate performance and who participates in the STIP.
(ii) Your Target Bonus for 2003 shall be $6,655,000, and for each
subsequent calendar year during the Employment Term shall be
in an amount determined by the Compensation Committee of the
Board but in any event not less than ten percent (10%)
greater than for the immediately preceding calendar year.
(iii) Your Bonus for any calendar year shall be payable by
February 28 of the following year (even if not during the
Employment Term). In the event that your employment
hereunder terminates on or following the expiration of the
Employment Term, you shall be paid a pro rata Target Bonus
for 2006 promptly thereafter.
(c) Deferred Compensation: In addition to your Salary and Bonus, you
shall earn, in respect of calendar year 2003 and each calendar year during the
Employment Term after 2003, an additional amount ("Deferred Compensation"), the
payment of which (together with the return thereon as provided in this paragraph
3(c)) shall be deferred until January of the first calendar year following the
year in which you cease to be an "executive officer" of Viacom, as defined for
purposes of the Securities Exchange Act of 1934, as amended. The amount of
Deferred Compensation for calendar year 2003 shall be $2,993,000. The amount of
Deferred Compensation for calendar years 2004, 2005 and 2006 shall be the amount
of Deferred Compensation for the preceding year increased by an amount equal to
10% of the sum of your Salary and Deferred Compensation for the preceding year;
provided, however, that if your employment hereunder terminates on or following
the expiration of the Employment Term, you shall continue to be credited with
Deferred Compensation through the date of your termination of employment.
Deferred Compensation shall be credited to a bookkeeping account maintained by
Viacom on your behalf, the balance of which account shall periodically be
credited (or debited) with deemed positive (or negative) return calculated in
the same manner, and at the same times, as the deemed return on your account
under the excess 401(k) plan of Viacom (as such plan may be amended from time to
time) is determined (it being understood and agreed that if at any time during
which the Deferred Compensation remains payable your excess 401(k) account
balance is distributed in full to you, your Deferred Compensation account shall
continue to be credited or debited with a deemed return based on the investment
portfolio in which your excess 401(k) account was notionally invested
immediately prior to its distribution). Viacom's obligation to
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pay the Deferred Compensation (including the return thereon provided for in this
paragraph 3(c)) shall be an unfunded obligation to be satisfied from the general
funds of Viacom.
(d) Except as expressly provided herein, your compensation shall be
determined by the Compensation Committee of the Board.
4. Benefits.
(a) You shall be entitled to participate in such medical, dental and
life insurance, 401(k), pension and other plans as Viacom may have or establish
from time to time and in which any other Viacom executives are eligible to
participate. The foregoing, however, shall not be construed to require Viacom to
establish any such plans or to prevent the modification or termination of such
plans once established, and no such action or failure thereof shall affect this
Agreement; provided, however, that no modification of any plans in which you
participate shall be made which results in treating you less favorably than
other senior executives of Viacom. It is further understood and agreed that all
benefits (including without limitation, Viacom's Pension and Excess Pension
Plans, short term disability program, Long-Term Disability program and any
supplement thereto, life insurance and any applicable death benefit) you may be
entitled to as an employee of Viacom shall be based upon your Salary and, your
Deferred Compensation, as set forth in paragraphs 3(a) and (c) hereof, and not
upon any bonus compensation due, payable or paid to you hereunder, except where
the benefit plan expressly provides otherwise. In addition, it is hereby
expressly agreed that you shall retain all benefits that you have accrued under
any compensation and benefit plans of CBS. You shall be entitled to four (4)
weeks vacation.
(b) Viacom shall provide you with no less than Five Million Dollars
($5,000,000) of term life insurance during the Employment Term. You shall have
the right to assign the policy for such life insurance to your spouse or issue
or to a trust or trusts primarily for the benefit of your spouse and/or issue.
(c) In addition to the benefits described in paragraphs 4(a) and (b)
hereof, Viacom agrees that you shall be credited for service accrued or deemed
accrued prior to May 4, 2000 with CBS or any of its subsidiaries or predecessors
for all purposes under any employee benefit plans, programs or arrangement
established or maintained by Viacom or any of its subsidiaries; provided,
however, that such crediting of service shall not operate to duplicate any
benefit or the funding of any such benefit.
(d) Notwithstanding anything herein to the contrary, if it is
determined that any payment or benefit provided to you (whether hereunder or
otherwise, and including any payments or benefits resulting from the
transactions contemplated by the Merger Agreement dated September 6, 1999,
between Viacom and CBS Corporation (the "Merger Agreement")) would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any interest or penalties with respect to such excise
tax (such excise tax, together with any interest or penalties thereon, is herein
referred to as an "Excise
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Tax"), then you shall be entitled to an additional cash payment (a "Gross-Up
Payment") in an amount that will place you in the same after-tax economic
position that you would have enjoyed if the Excise Tax had not applied to the
payment. The amount of the Gross-Up Payment shall be determined by an
independent accounting firm of international stature selected by Viacom and
reasonably acceptable by you. No Gross-Up Payments shall be payable hereunder if
such accounting firm determines that such payments are not subject to an Excise
Tax, unless there is a "determination" (within the meaning of Section 1313 of
the Code) that such payments are subject to an Excise Tax. Viacom shall
reimburse you for any costs or expenses reasonably incurred by you (including
reasonable attorney's fees) in connection with any audit, investigation or claim
by the Internal Revenue Service regarding the applicability of any Excise Tax.
The accounting firm retained by Viacom pursuant to this paragraph 4 shall be
paid by Viacom for services performed hereunder.
5. Business Expenses. During the Employment Term, you shall be
reimbursed for such reasonable travel and other expenses incurred in the
performance of your duties hereunder on a basis no less favorable than as
provided by Viacom to any of its senior executives.
6. Perquisites. You shall be eligible for all perquisites made
available by Viacom from time to time during the Employment Term to any other
senior executives of Viacom. Without limiting the generality of the foregoing,
you shall be entitled to (i) a car allowance and insurance in accordance with
Viacom's policy and (ii) use of a private airplane in accordance with Viacom
policy on a basis no less favorable than as provided by Viacom to any of its
senior executives.
7. Exclusive Employment, Confidential Information, Etc.
(a) Non-Competition. You agree that your employment hereunder is on an
exclusive basis, and that during the period of your employment hereunder and, in
the event during the Employment Term, of a termination of your employment
pursuant to paragraph 9(a) or 9(d) hereof (such terminations being referred to
as "Specified Terminations"), for a period of eighteen (18) months following the
date of such Specified Termination (the "Non-Compete Period"), you will not
engage in any other business activity which is in conflict with your duties and
obligations hereunder. You agree that during the Non-Compete Period you shall
not directly or indirectly engage in or participate as an officer, employee,
director, agent of or consultant for any business directly competitive with that
of Viacom, nor shall you make any investments in any company or business
competing with Viacom; provided, however, that nothing herein shall prevent you
from investing as less than a two (2%) percent shareholder in the securities of
any company listed on a national securities exchange or quoted on an automated
quotation system.
(b) Confidential Information. You agree that you shall not, during the
Employment Term or at any time thereafter, use for your own purposes, or
disclose to or for the benefit of any third party, any trade secret or other
confidential information of Viacom or any of
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its affiliates or predecessors (except as may be required by law or in the
performance of your duties hereunder consistent with Viacom's policies) and that
you will comply with any confidentiality obligations of Viacom to a third party,
whether under agreement or otherwise. Notwithstanding the foregoing,
confidential information shall be deemed not to include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or any other person who directly or indirectly receives such
information from you or at your direction or (ii) is or becomes available to you
on a non-confidential basis from a source which is entitled to disclose it to
you.
(c) No Employee Solicitation. You agree that, during the period of
your employment hereunder and for one (1) year thereafter, you shall not
solicit, or direct or assist any other person to solicit, the employment of any
person who is then or has been within six (6) months prior thereto, an employee
of Viacom or any of Viacom's affiliates or predecessors (a "Restricted
Employee"); provided that general solicitations or advertisements shall not be
deemed solicitations for purposes of this paragraph 7(c). In addition, for a
period of six (6) months (or one year, in the event of a Specified Termination)
following the termination of your employment hereunder, you shall not, directly
or indirectly, hire or engage, as an employee or independent contractor, any
Restricted Employee who reported directly to you during the period of your
employment hereunder or headed any business unit of Viacom generating $250
million or more in operating revenue in the then most recently completed fiscal
year.
(d) Viacom Ownership. The results and proceeds of your services
hereunder, including, without limitation, any works of authorship resulting from
your services for Viacom and created during your employment with Viacom and/or
any of its affiliates or predecessors and any works in progress, shall be
works-made-for-hire and Viacom shall be deemed the sole owner throughout the
universe of any and all rights of whatsoever nature therein, whether or not now
or hereafter known, existing, contemplated, recognized or developed, with the
right to use the same in perpetuity in any manner Viacom determines in its sole
discretion without any further payment to you whatsoever. If, for any reason,
any of such results and proceeds shall not legally be a work-for-hire and/or
there are any rights which do not accrue to Viacom under the preceding sentence,
then you hereby irrevocably assign and agree to assign any and all of your
right, title and interest thereto, including, without limitation, any and all
copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever
nature therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed to Viacom, and Viacom shall have the right to use the
same in perpetuity throughout the universe in any manner Viacom determines
without any further payment to you whatsoever. You shall, from time to time, as
may be requested by Viacom, do any and all things which Viacom may deem useful
or desirable to establish or document Viacom's exclusive ownership of any and
all rights in any such results and proceeds, including, without limitation, the
execution of appropriate copyright and/or patent applications or assignments. To
the extent you have any rights in the results and proceeds of your services that
cannot be assigned in the manner described above, you unconditionally and
irrevocably waive the enforcement of such rights. This paragraph 7(d) is subject
to, and shall not be deemed to limit, restrict, or constitute any waiver by
Viacom of any rights of ownership to
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which Viacom may be entitled by operation of law by virtue of Viacom or any of
its affiliates or predecessors being your employer.
(e) Litigation. You agree that, during the Employment Term, for one
(1) year thereafter and, if longer, during the pendancy of any litigation or
other proceeding, (i) you shall not communicate with anyone (other than your own
attorneys and tax advisors and, except to the extent required by law or
necessary in the performance of your duties hereunder) with respect to the facts
or subject matter of any pending or potential litigation, or regulatory or
administrative proceeding involving any of Viacom's affiliates or predecessors,
other than any litigation or other proceeding in which you are a
party-in-opposition, without giving prior notice to Viacom or Viacom's counsel,
and (ii) in the event that any other party attempts to obtain information or
documents from you with respect to matters possibly related to such litigation
or other proceeding, you shall promptly so notify Viacom's counsel unless you
are prohibited from doing so under applicable law.
(f) No Right to Write Books, Articles, Etc. During the Employment
Term, except as authorized by Viacom, you shall not prepare or assist any person
or entity in the preparation of any books, articles, television or motion
picture productions or other creations, concerning Viacom or any of Viacom's
affiliates or predecessors or any of their officers, directors, agents,
employees, suppliers or customers.
(g) Return of Property. All property of Viacom obtained or prepared
by or for you and utilized by you in the course of your employment with Viacom
or any of its affiliates or predecessors, including all documents, data,
recordings, or other property, whether tangible or intangible, including all
information stored in electronic form, shall remain the exclusive property of
Viacom. In the event of the termination of your employment for any reason,
Viacom reserves the right, to the extent permitted by law and in addition to any
other remedy Viacom may have, to deduct from any monies otherwise payable to you
the following: (i) the full amount of any debt you owe to Viacom or any of its
affiliates or predecessors at the time of or subsequent to the termination of
your employment with Viacom, and (ii) the value of the Viacom property which you
retain in your possession after the termination of your employment with Viacom.
In the event that the law of any state or other jurisdiction requires the
consent of an employee for such deductions, this Agreement shall serve as such
consent.
(h) Non-Disparagement. You and, to the extent set forth in the next
sentence, Viacom agree that each party shall not, during the period of your
employment hereunder and for one (1) year thereafter criticize, ridicule or make
any statement which disparages or is derogatory of the other party in any
non-public communication with any customer, client or member of the investment
community or media or in any public communication. Viacom's obligations under
the preceding sentence shall be limited to communications by its senior
corporate executives having the rank of Senior Vice President or above
("Specified Executives"), and it is agreed and understood that any such
communication by any Specified Executive shall be deemed to be a breach of this
paragraph 7(h) by Viacom.
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(i) Injunctive Relief. Viacom has entered into this Agreement in order
to obtain the benefit of your unique skills, talent, and experience. You
acknowledge and agree that any violation of paragraphs 7(a) through (h) hereof
will result in irreparable damage to Viacom, and, accordingly, Viacom may obtain
injunctive and other equitable relief for any breach or threatened breach of
such paragraphs, in addition to any other remedies available to Viacom.
(j) Survival; Modification of Terms. Your obligations under paragraphs
7(a) through (h) hereof shall remain in full force and effect for the entire
period provided therein notwithstanding the termination of the Employment Term
pursuant to paragraph 9 hereof or otherwise. You and Viacom agree that the
restrictions and remedies contained in paragraphs 7(a) through (i) are
reasonable and that it is your intention and the intention of Viacom that such
restrictions and remedies shall be enforceable to the fullest extent permissible
by law. If it shall be found by a court of competent jurisdiction that any such
restriction or remedy is unenforceable but would be enforceable if some part
thereof were deleted or the period or area of application reduced, then such
restriction or remedy shall apply with such modification as shall be necessary
to make it enforceable.
8. Incapacity. In the event you become totally medically disabled at
any time during the Employment Term and an independent physician selected by the
Board (subject to your reasonable approval) determines that you are not expected
to be able to substantially perform your duties for a six (6) consecutive month
period, the Chairman and CEO, at any time after such disability has in fact
continued for 60 consecutive days, may determine that Viacom requires such
duties and responsibilities be performed by another executive. In the event you
become disabled, you will first receive benefits under Viacom's short-term
disability program for the first 26 weeks of consecutive absence. Thereafter,
you will be eligible to receive benefits under Viacom's Long-Term Disability
("LTD") program or any supplement thereto, in accordance with its terms. Upon
receipt of benefits under the LTD program you will also be entitled to receive,
subject to applicable withholding taxes:
(i) a Target Bonus prorated for the portion of calendar year
through the date on which you become eligible to receive
benefits under the LTD program, payable at the time that the
Bonus for such calendar year would otherwise be paid;
(ii) prorated Deferred Compensation for the calendar year in
which such benefits commence and Deferred Compensation
attributable to prior calendar years, payable, together with
the return thereon as provided in paragraph 3(c), prior to
January 31 of the calendar year following the calendar year
in which such benefits commence; and
(iii) stock options previously granted to you which are
exercisable on or prior to the date as of which benefits
commence under the LTD program or that would have vested and
become exercisable on or before the last day of the
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Employment Term will become vested and shall be exercisable
for two (2) years after the date as of which such benefits
commence or, if later, until May 5, 2006, but in no event
may such stock options be exercised following the expiration
date of such stock options.
In the event that you thereafter become able to substantially perform your
duties, you will then be entitled to receive from Viacom your Salary and
Deferred Compensation at the rate being paid to you immediately prior to the
commencement of such disability, and your Bonus calculated pursuant to paragraph
3(b) hereof, through the remainder of the Employment Term reduced by any
employment compensation earned by you for any work or service performed for any
other person.
9. Termination.
(a) Termination for Cause. Viacom may, at its option, terminate your
employment under this Agreement forthwith for "cause"; provided, however, that
Viacom may terminate your employment under this Agreement pursuant to this
paragraph only by action of the Board at a meeting called for such purpose at
which you and a counsel of your choosing shall have an opportunity to be heard.
In the event your employment hereunder is terminated pursuant to this paragraph
9(a), you shall be entitled to receive and Viacom shall be required to provide
(i) your Salary through the effective date of your termination, (ii) any earned
but unpaid Bonus with respect to any then completed calendar year, (iii) the
Deferred Compensation credited on your behalf under paragraph 3(c) as of the
effective date of your termination (which shall be paid, together with the
return thereon as provided in paragraph 3(c), prior to January 31 of the
calendar year following the effective date of your termination), and (iv) all
vested other compensation and benefits to which you are entitled as of the
effective date of your termination under the terms or conditions applicable to
such compensation or benefits (collectively, the "Accrued Obligations"). For
purposes of this Agreement, termination of your employment under this Agreement
for "cause" shall mean termination for embezzlement, fraud or other conduct
relating to Viacom or its affiliates which would constitute a felony, conviction
of, or plea of nolo contendere to, a felony, or willful and either repeated or
continuing refusal or failure to substantially perform a material obligation
under this Agreement (including, without limitation, your willful and either
repeated or continuing failure or refusal to substantially perform your
obligations hereunder as set forth in paragraphs 2, 7 and 12 hereof) after a
written demand for performance has been delivered to you by the Board, except in
the event of your disability as set forth in paragraph 8. Anything herein to the
contrary notwithstanding, Viacom will give you written notice prior to
terminating your employment under this Agreement for your willful and either
repeated or continuing failure or refusal to substantially perform setting forth
the exact nature of any alleged willful and either repeated or continuing
failure or refusal to substantially perform. You shall have ten (10) business
days from the giving of such notice within which to cure and within which period
Viacom cannot terminate your employment under this Agreement for the stated
reasons and, if so cured, after which period Viacom cannot terminate your
employment under this Agreement for the stated reasons; provided, however, that
this sentence
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shall not apply with respect to willful and either repeated or continuing
failures or refusals to substantially perform which by their nature cannot be
cured. For purposes of the foregoing definition of "cause", no act, or failure
to act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without the reasonable belief by you that
such act or omission was in the best interests of Viacom and not in violation of
any material provision of this Agreement.
(b) Good Reason Termination. You may terminate your employment
hereunder for "Good Reason" at any time during the Employment Term by written
notice to the Board not more than thirty (30) calendar days after the occurrence
of the event constituting "Good Reason." Such notice shall state an effective
date no earlier than thirty (30) business days after the date it is given (such
not less than thirty (30) business day period being hereinafter referred to as
the "Notice Period"); provided, however, that in the case of a resignation with
respect to clause (iv)(B) below (other than with respect to a Specified Matter),
the Notice Period shall be extended by an additional sixty (60) calendar days,
it being understood and agreed that during such sixty (60) calendar day
extension, you shall not be required to report to your office or perform your
duties under paragraph 2. Viacom shall have ten (10) business days from the
giving of such notice within which to cure and within which period you cannot
terminate your employment under this Agreement for the stated reasons and, if so
cured, after which period you cannot terminate your employment under this
Agreement for the stated reason; provided, however, that this sentence shall not
apply (1) with respect to events which by their nature cannot be cured and (2)
with respect to clause (b)(iv) or (b)(v) below. "Good Reason" shall mean any of
the following, without your prior written consent, other than in connection with
the termination of your employment for "cause" (as defined above) or in
connection with your permanent disability:
(i) the assignment to you by Viacom of duties substantially
inconsistent with your responsibilities, authority,
positions, titles or offices, the withdrawal of a material
part of your responsibilities, authority, positions, titles
or offices or an adverse change in your reporting
relationship, all as set forth in paragraph 2, including,
without limitation, a determination made by you in good
faith (and not without some reasonable basis) that there has
been (x) material repeated or continuing interference in
your material reporting relationships with, or material
repeated or continuing undermining of your authority over,
the officers or employees of Viacom, or (y) material
repeated or continuing interference with, or material
repeated or continuing undermining of, your authority as set
forth in paragraph 2, in the case of each of clause (x) and
clause (y), after written demand that such actions cease has
been delivered by you to the Board;
(ii) a reduction by Viacom in your Salary or Target Bonus as in
effect at the date hereof or as the same may be increased
from time to time during the Employment Term;
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(iii) Viacom's requiring you to be based anywhere other than the
New York City metropolitan area, except for required travel
on Viacom's business to any extent substantially consistent
with business travel obligations of other senior executives
of Viacom;
(iv) (A) your being overruled by the Board or the Chairman and
CEO on any decision which is within the authority given to
you under paragraph 2 hereof, so long as your decision that
is being overruled was a bona fide decision, or (B) the
Chairman and CEO or the Board making a decision with respect
to a matter that falls within the definition of "corporate
policy and strategy" set forth in paragraph 2 despite your
bona fide objection to such decision; provided that (x) if
the final decision with respect to such matter was made by
the Board or the Chairman and CEO at a Board meeting, such
bona fide objection was made by you at such Board meeting,
(y) if the final decision with respect to such matter was
made by the Chairman and CEO and the Chairman and CEO fully
consulted with you in the proximate time frame (which
consultation included his informing you that he was making a
final decision on the matter) in which the Chairman and CEO
made such final decision, such bona fide objection was made
by you in writing and delivered to the Chairman and CEO
(with a copy to the Board) within a reasonable period after
such full consultation and (z) if the final decision with
respect to such matter was made other than in the
circumstances described in clause (x) or (y) above, such
bona fide objection was made by you promptly in writing and
delivered to the Chairman and CEO (with a copy to the Board)
following your obtaining knowledge of such final decision
and; provided, further, that if the final decision was on a
Specified Matter, such decision is not reversed based on
your bona fide objection within ten (10) business days
following your communication of such objection to the
Chairman and CEO and the Board;
(v) the Board ceasing to be comprised of a majority of
independent directors (as defined for purposes of the
Corporate Governance Guidelines adopted by the Board of
Directors and in effect as of the date hereof); provided,
however, that in the event such circumstance is due to a
vacancy or removal of any independent director, Viacom shall
have a reasonable period of time from the date of such
vacancy or removal (not extending beyond the earlier of six
months and the date of the next annual meeting of
shareholders, but in no event less than two months) within
which to fill such vacancy with an independent director or
otherwise cure such circumstance and within which period you
cannot terminate your employment under this Agreement for
the stated reason;
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(vi) the material breach by Viacom of any of its material
obligations hereunder;
(vii) in the event Xxxxxx Xxxxxxxx ceases to be the chief
executive officer of Viacom, Viacom's failure to promptly
appoint you as Xx. Xxxxxxxx'x successor as chief executive
officer; or
(viii) in the event the Chairman and CEO does not agree within ten
(10) business days to any written request by you to
terminate a Specified Executive or hire a replacement for a
Specified Executive.
(c) Termination Without Cause; Non-Renewal. Viacom may terminate your
employment under this Agreement without "cause" (as defined above) at any time
during the Employment Term by written notice to you. The Chairman and CEO may at
any time during the Employment Term recommend to the Board that your employment
hereunder be terminated; provided, however, that Viacom may terminate your
employment without "cause" only by action of the Board. In addition, in the
event that, on or prior to December 1, 2005, Viacom has not offered to renew the
Employment Term for at least two years, with Salary and Target Bonus at least
equal to those in effect during the last calendar year of the Employment Term
and otherwise on the terms and conditions contained herein, then either you or
Viacom may terminate your employment hereunder effective December 31, 2005 upon
written notice to the other delivered prior to such date.
(d) Termination Without Good Reason. You may voluntarily terminate
your employment under this Agreement without "Good Reason" (as defined above) at
any time during the Employment Term by written notice to the Board, in which
case you shall be entitled to receive the Accrued Obligations, it being
understood and agreed that a termination by you pursuant to the last sentence of
paragraph 9(c) shall not be deemed a termination without Good Reason.
(e) Termination Payments, Etc. In the event that your employment
terminates pursuant to paragraph 9(b) or 9(c) hereof, you shall be entitled to
the following, subject to applicable withholding taxes:
(i) your Salary as provided in paragraph 3(a) until the end of
the Employment Term (with the exception of paragraph
9(e)(vii), the term "Employment Term" as used in this
paragraph 9(e) shall be deemed to end upon the second
anniversary of the effective date of your termination),
payable in accordance with Viacom's then effective payroll
practices;
(ii) bonus compensation for the calendar year of termination and
for each subsequent calendar year, if any, during the
Employment Term (prorated
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for any partial calendar year) equal to your Target Bonus as
set forth in paragraph 3(b);
(iii) additional Deferred Compensation for the calendar year of
termination and for each subsequent calendar year, if any,
during the Employment Term (prorated for any partial
calendar year) as set forth in paragraph 3(c); Deferred
Compensation attributable to the calendar year in which the
termination pursuant to paragraph 9(b) or 9(c) hereof occurs
and Deferred Compensation previously accrued and
attributable to prior calendar years shall be payable,
together with the return thereon as provided in paragraph
3(c), prior to January 31 of the calendar year following
such termination; and Deferred Compensation attributable to
subsequent calendar years shall be payable, together with
the return thereon as provided in paragraph 3(c), prior to
January 31 of each such following calendar year;
(iv) your perquisites as provided in paragraph 6 until the end of
the Employment Term, payable in accordance with Viacom's
then effective payroll practices;
(v) medical and dental insurance coverage until the end of the
Employment Term or, if earlier, the date on which you become
eligible for medical and dental coverage from a third party
employer; during this period, Viacom will pay an amount
equal to the applicable COBRA premiums (or such other
amounts as may be required by applicable law) (which amount
will be included in your income for tax purposes to the
extent required by applicable law); at the end of such
period, you may elect to continue your medical and dental
insurance coverage at your own expense for the balance, if
any, of the period required by law;
(vi) life insurance coverage as set forth in paragraph 4(b) until
the end of the Employment Term (the amount of such insurance
to be reduced by the amount of any insurance provided by a
new employer without cost to you);
(vii) all stock options (x) granted to you on or following the
Effective Date whether or not such stock options are
exercisable on or prior to the date of the termination of
your employment and (y) granted to you before the Effective
Date which are exercisable on or prior to the date of the
termination of your employment or that would have vested and
become exercisable on or before the last day of the
Employment Term, will become vested and shall be exercisable
for two (2) years after the date of such termination or, if
later, until May 5, 2006, but in no event may such
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stock options be exercised following the expiration date of
such stock options;
(viii) a supplemental pension benefit calculated in accordance with
the terms of the Excess Pension Plan and paragraph 4(c) as
though you were employed through the end of the Employment
Term; and
(ix) provision of an appropriate office and secretarial
assistance for up to six (6) months after the termination of
your employment.
The payments provided for in (i) above are in lieu of any severance or
income continuation or protection under any Viacom plan that may now or
hereafter exist. The payments and benefits to be provided pursuant to this
paragraph 9(e) shall constitute liquidated damages, shall not be subject to
reduction or offset as a result of any other compensation or benefits you may
earn from subsequent employment and shall be deemed to satisfy and be in full
and final settlement of all obligations of Viacom to you under this Agreement.
(f) Termination of Benefits. Notwithstanding anything in this
Agreement to the contrary (except as otherwise provided in paragraph 9(e) with
respect to medical, dental and life insurance and Excess Pension Plan benefits
or in paragraphs 7 and 8 with respect to continued exercisability of options),
coverage under all Viacom benefit plans and programs (including, without
limitation, vacation, 401(k), excess 401(k) and pension plans, LTD and
accidental death and dismemberment and business travel and accident insurance)
will terminate upon the termination of your employment except to the extent
otherwise expressly provided in such plans or programs.
(g) Deemed Resignation. Upon any termination of your employment
hereunder pursuant to this paragraph 9, and without any further action by you or
Viacom, you shall be deemed to have resigned from the Board and from all other
offices and positions with Viacom and its affiliates effective as of the
effective date of such termination of employment.
10. Death. If you die prior to the end of the Employment Term, your
beneficiary or estate shall be entitled to receive your Salary up to the date on
which the death occurs, a pro-rated Target Bonus and pro-rated Deferred
Compensation for the calendar year in which the death occurs and Deferred
Compensation attributable to prior calendar years payable, together with the
return thereon as provided in paragraph 3(c), prior to January 31 of the
following calendar year. In addition, the vesting of all stock options
previously granted to you that are not exercisable as of the date on which the
death occurs shall be accelerated, and your beneficiary or estate shall be
entitled to exercise such stock options, together with all stock options that
are exercisable as of the date of your death, for two (2) years after the date
of death or, if later, until May 5, 2006, but in no event may such stock options
be exercised following the expiration date of such stock options.
15
11. Section 317 and 507 of the Federal Communications Act. You
represent that you have not accepted or given nor will you accept or give,
directly or indirectly, any money, services or other valuable consideration from
or to anyone other than Viacom for the inclusion of any matter as part of any
film, television program or other production produced, distributed and/or
developed by Viacom and/or any of its affiliates or predecessors.
12. Equal Opportunity Employer. You acknowledge that Viacom is an
equal opportunity employer. You agree that you will comply with Viacom policies
regarding employment practices and with applicable federal, state and local laws
prohibiting discrimination on the basis of race, color, creed, national origin,
age, sex or disability.
13. Indemnification.
(a) Viacom shall indemnify and hold you harmless, to the maximum
extent permitted by law and by the Certificate of Incorporation and/or the
Bylaws of Viacom, against judgments, fines, amounts paid in settlement of and
reasonable expenses incurred by you in connection with the defense of any action
or proceeding (or any appeal therefrom) in which you are a party by reason of
your position as President and Chief Operating Officer or any other office you
may hold with Viacom or its affiliates or by reason of any prior positions held
by you with Viacom or any of its affiliates or predecessors or for any acts or
omissions made by you in good faith in the performance of any of your duties as
an officer of Viacom.
(b) To the extent that Viacom maintains officers' and directors'
liability insurance, you will be covered under such policy.
14. Notices. All notices required to be given hereunder shall be given
in writing, by personal delivery or by mail at the respective addresses of the
parties hereto set forth above, or at such other address as may be designated in
writing by either party. Any notice given by mail shall be deemed to have been
given three days following such mailing.
15. Assignment. This is an Agreement for the performance of personal
services by you and may not be assigned by you or Viacom except that Viacom may
assign this Agreement to any affiliate of or any successor in interest to
Viacom.
16. New York Law, Etc. This Agreement and all matters or issues
collateral thereto shall be governed by the laws of the State of New York
applicable to contracts entered into and performed entirely therein. Any action
to enforce this Agreement shall be brought in the state or federal courts
located in the City of New York. If you obtain any money judgment or otherwise
prevail in the final adjudication of any claim or suit brought by you or Viacom
to enforce or interpret any material provision contained herein, Viacom shall
reimburse you for any costs or expenses reasonably incurred by you (including
reasonable attorney's fees) in connection with such claim or suit.
16
17. No Implied Contract. Nothing contained in this Agreement shall be
construed to impose any obligation on Viacom to renew this Agreement or any
portion thereof. The parties intend to be bound only upon execution of a written
agreement and no negotiation, exchange of draft or partial performance shall be
deemed to imply an agreement. Neither the continuation of employment nor any
other conduct shall be deemed to imply a continuing agreement upon the
expiration of this Agreement.
18. Written Instrument. This Agreement can be changed only by a
writing signed by both parties hereto.
19. Void Provisions. If any provision of this Agreement, as applied to
either party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall be deemed stricken from this Agreement and shall
in no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
20. Supersedes Previous Agreements. Effective as of the Effective
Date, this Agreement shall supersede and cancel all prior agreements relating to
your employment by Viacom or any of its affiliates and predecessors, including,
without limitation, the employment agreement, dated September 6, 1999, as
amended, between Viacom and you. Notwithstanding the preceding sentence, this
Agreement is not intended, and shall not be construed, to affect your rights in
any compensation or benefits that have been granted or accrued prior to the
Effective Date.
21. Expiration of Article XIII. The parties hereto acknowledge and
agree that the special governance provisions of Article XIII of the Amended and
Restated Certificate of Incorporation of Viacom, including the super-majority
Board approval requirements contained therein, shall expire on May 4, 2003.
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If the foregoing correctly sets forth our understanding, please sign
one copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding agreement between us.
Very truly yours,
VIACOM INC.
By:/s/ XXXXXXX X. XXXXXXXX
--------------------------------
Xxxxxxx X. Xxxxxxxx
Executive Vice President,
General Counsel and Secretary
ACCEPTED AND AGREED:
/s/ XXX XXXXXXXX
---------------------------
Xxx Xxxxxxxx
March 20, 2003
