EXECUTION COPY
VIACOM INC.
September 6, 1999
Xxx Xxxxxxxx
0 Xxxxxxx Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxx:
Viacom Inc. ("Viacom"), having an address at 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, agrees to employ you and you agree to accept such
employment upon the following terms and conditions:
1. Term. The term of your employment hereunder shall commence on the
Effective Time (as defined in the Agreement and Plan of Merger between Viacom
and CBS Corporation ("CBS"), dated as of the date hereof (the "Merger
Agreement"), pursuant to which CBS shall merge with and into Viacom) (the
"Effective Date") and, unless terminated by Viacom or you pursuant to
paragraph 8 hereof, shall continue through and until December 31, 2003. The
period from the Effective Date through December 31, 2003 shall hereinafter be
referred to as the "Employment Term," notwithstanding any earlier termination
pursuant to paragraph 9. In the event that the Merger Agreement is terminated
or otherwise abandoned, this Agreement shall be void ab initio.
2. Duties. During the Employment Term, 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 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, upon the termination of the Chairman's service as Chief
Executive Officer during the Employment Term, you shall be appointed the Chief
Executive Officer. You will perform such duties and have such responsibilities
set forth in Article XIII of the Amended and Restated Certificate of
Incorporation of Viacom to be effective as of the Effective Date (the
"Certificate of Incorporation"), a copy of which is attached hereto as Exhibit
A. You will have such authority as is necessary for the performance of your
obligations hereunder. You shall serve as a member of the Boards of Directors
of Viacom and Circular. 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.
2
(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"):
(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 and Maximum Bonus opportunity for each
calendar year (prorated for calendar year 2000 by multiplying
such amount by a fraction, the numerator of which is the number
of days in 2000 following the Effective Date, and the
denominator of which is 365) during the Employment Term shall
be as follows:
Year Target Maximum
------------------------------------------------------
2000 $5,000,000 $10,000,000
2001 $5,500,000 $11,000,000
2002 $6,050,000 $12,100,000
2003 $6,655,000 $13,310,000
(iii)Your Bonus for any calendar year shall be payable by February
28 of the following year (even if not during the Employment
Term).
(c) Deferred Compensation: In addition to your Salary and Bonus, you
shall earn, in respect of calendar year 2000 and each calendar year during the
Employment Term after 2000, 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 2000 shall be
$2,000,000, prorated by multiplying such amount by a fraction, the numerator
of which is the number of days in 2000 following the Effective Date, and the
denominator of which is 365. The amount of Deferred Compensation for calendar
years 2001 through 2003 shall be subject to annual increases each January 1st,
commencing January 1, 2001, in an amount equal to 10% of the sum of your
Salary and Deferred Compensation for the preceding year. 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
3
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 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) Grant: You will be awarded a grant (the "Grant") under Viacom's
1997 Long-Term Management Incentive Plan (the "1997 LTMIP") of stock options
to purchase 2,000,000 shares of Viacom's Class B Common Stock (such number to
be adjusted for any stock split, stock dividend or other similar transaction
that would result in an adjustment under the terms of the 1997 LTMIP if such
options were granted on the date hereof), effective as of the Effective Date,
with an exercise price equal to the fair-market value of Viacom's Class B
Common Stock on the Effective Date. Except as provided herein, the Grant shall
be made in accordance with the standard terms of stock option awards under the
1997 LTMIP (a copy of the standard form of such stock option awards is
attached hereto as Exhibit B), shall vest in three equal installments on the
first, second and third anniversaries of the Effective Date and shall be for a
ten-year term. In the event you cease to be employed by the Company for any
reason upon the expiration of the Employment Term, you shall be able to
exercise the Grant for two years following such termination.
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 the Effective Date 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.
4
(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) would be subject to the
excise tax imposed by Section 4999 of 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 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 Viacom's regular
independent auditors. No Gross-Up Payments shall be payable hereunder if
Viacom's auditors determine that such payments are not subject to an Excise
Tax. Viacom's auditors 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 as are customarily reimbursed to senior
executives of Viacom.
6. Perquisites. You shall be eligible for all perquisites made
available by Viacom from time to time during the Employment Term to 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 on a basis no less
favorable than as provided by CBS to you as of the date of execution of this
Agreement, or, if more beneficial to you, 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 (x) a termination of your
employment pursuant to paragraph 9(a) hereof or (y) your resignation without
Good Reason, for a period of eighteen (18) months following the date of such
termination or resignation, as the case may be (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 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.
5
(c) No Employee Solicitation. You agree that, during the Employment
Term and for one (1) year thereafter, you shall not, directly or indirectly,
engage, employ, or 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.
(d) Viacom Ownership. The results and proceeds of your services
hereunder, including, without limitation, any works of authorship resulting
from your services 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 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 documents, data, recordings, or other
property, whether tangible or intangible, including all information stored in
electronic form, 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
shall remain the exclusive property of Viacom. In the event
6
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 Employment Term
and for one (1) year thereafter criticize, ridicule or make any statement
which disparages or is derogatory of the other party in any communications
with any customer or client. 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.
(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 (k) 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 (i) 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
(k) 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.
(k) No Selling of Viacom Stock without Board Consent. In
consideration of your employment hereunder, you hereunder agree that, except
as otherwise provided herein, during the period commencing on the date hereof
and ending on the third anniversary of the Effective Date, you shall not sell
or dispose of (nor exercise any limited rights or stock appreciation rights
with respect to) any shares of capital stock of CBS or Viacom held by you,
your immediate family members (which does not include your former spouse), or
trusts or other entities in which you or your immediate family members have a
controlling interest or are beneficiaries (together, the "Family Affiliates"
and each, a "Family Affiliate") that you or any Family Affiliate now hold, or
in the future may acquire, including, without limitation, shares that you or
any Family Affiliate receive pursuant to the transactions contemplated by the
Merger Agreement (whether in exchange for shares of CBS common stock or
otherwise), under any stock options or other equity-based compensation awards
made to you by CBS or by Viacom under this Agreement or under any other
agreement awarding you shares of capital stock of Viacom, without first
obtaining the consent of (i) if prior to the Effective Date, the Chairman, or
(ii) if on or following the Effective Date, fourteen of the eighteen members
of the Board of Viacom. This restriction shall lapse in the event that, during
the Employment Term, you are terminated without Cause, resign for Good Reason,
die or become disabled. Notwithstanding the foregoing, between the first
anniversary of the Effective Date and the second anniversary of the Effective
Date you and the Family Affiliates collectively may sell or dispose of a
number of
7
shares equal to up to 10% of the shares held by you and the Family Affiliates
on the Effective Date (including, for this purpose, the shares underlying any
equity-based compensation awards held by you on the Effective Date, but not
shares underlying any equity-based compensation awards granted to you pursuant
to paragraph 3(d) or at any time after the Effective Date). Between the second
anniversary of the Effective Date and the third anniversary of the Effective
Date, you and the Family Affiliates collectively may sell or dispose of a
number of shares equal to up to 10% of the shares held by you and the Family
Affiliates on the second anniversary of the Effective Date (including, for
this purpose, the shares underlying any equity-based compensation awards held
by you on the Effective Date, but not shares underlying any equity-based
compensation awards granted to you pursuant to paragraph 3(d) or at any time
after the Effective Date), plus any shares that were not sold or disposed of
by you and the Family Affiliates collectively under the prior year's limits.
Notwithstanding the foregoing, you may transfer shares to Family Affiliates,
but such shares shall remain subject to the restrictions contained in this
paragraph 7(k).
8. Incapacity. In the event you become totally medically disabled at
any time during the Employment Term and are not expected to be able to
substantially perform your duties for a six (6) consecutive month period, the
Chairman, 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;
(iii) stock options granted to you under the 1997 LTMIP 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 Employment
Term will be exercisable for two (2) years after the date as of
which such benefits commence or, if later, until December 31,
2003, but in no event may such stock options be exercised
following the expiration date of such stock options; and
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.
8
9. Termination.
(a) Termination for Cause. Viacom may, at its option, terminate your
employment under this Agreement forthwith for "cause", and Viacom shall
thereafter have no further obligations under this Agreement, including,
without limitation, any obligation to pay Salary or Bonus or provide benefits
under this Agreement; provided, however, that Viacom may terminate this
Agreement pursuant to this paragraph only with the affirmative vote of
fourteen of the eighteen members of the Board of Viacom at a meeting called
for such purpose at which you and a counsel of your choosing shall have an
opportunity to be heard. For purposes of this Agreement, termination of this
Agreement for "cause" shall mean termination for embezzlement, fraud or other
conduct which would constitute a felony, conviction of a felony, or willful
unauthorized disclosure of confidential information, or if you at any time
materially breach this Agreement (including, without limitation, your failure,
neglect of or refusal to substantially perform your obligations hereunder as
set forth in paragraphs 2, 7(k) and 12 hereof), 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 this
Agreement for your material breach setting forth the exact nature of any
alleged breach and the conduct required to cure such breach. Except for a
breach which by its nature cannot be cured, you shall have ten (10) business
days from the giving of such notice within which to cure and within which
period Viacom cannot terminate this Agreement for the stated reasons.
(b) Good Reason Termination. You may terminate your employment
hereunder for "Good Reason" at any time during the Employment Term by written
notice to Viacom not more than thirty (30) 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. Viacom
shall have ten (10) business days from the giving of such notice within which
to cure. 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 positions, duties, responsibilities,
titles or offices, the withdrawal of a material part of your
responsibilities or a change in your reporting relationship, as
set forth in paragraph 2 or in Article XIII of the Certificate
of Incorporation as in effect on the Effective Date;
(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;
(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) Viacom's violation of Article XIII of the Certificate of
Incorporation; or
(v) the material breach by Viacom of its obligations hereunder.
(c) Termination Without Cause. Viacom may terminate your employment
under this Agreement without "cause" (as defined above) at any time during the
Employment
9
Term by written notice to you; provided, however, that Viacom may terminate
your employment pursuant to this paragraph only with the affirmative vote of
fourteen of the eighteen members of the Board of Viacom.
(d) Termination Payments, Etc. In the event that your employment
terminates pursuant to paragraph 9(b) or 9(c) hereof, you shall be entitled to
receive, subject to applicable withholding taxes:
(i) your Salary as provided in paragraph 3(a) until the end of the
Employment Term, payable in accordance with Viacom's then
effective payroll practices;
(ii) bonus compensation for each calendar year during the Employment
Term equal to your Target Bonus as set forth in paragraph 3(b);
(iii) Deferred Compensation for each calendar year during the
Employment Term 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 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) stock options granted to you under the 1997 LTMIP which are
exercisable on or prior to the date of the termination of your
employment under paragraph 9(b) or 9(c) or that would have
vested and become exercisable on or before the last day of the
Employment Term will be exercisable for two (2) years after the
date of such termination or, if later, until December 31, 2003,
but in no event may such stock options be exercised following
the expiration date of such stock options;
10
(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(d) shall constitute liquidated damages, and shall be deemed to satisfy and
be in full and final settlement of all obligations of Viacom to you under this
Agreement.
(e) Termination of Benefits. Notwithstanding anything in this
Agreement to the contrary (except as otherwise provided in paragraph 9(d) 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.
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 granted
under the 1997 LTMIP 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 December 31, 2003, but in no event may such stock
options be exercised following the expiration date of such stock options.
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
11
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.
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. Entire Understanding. This Agreement contains the entire
understanding of the parties hereto relating to the subject matter herein
contained, and 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 Agreement. 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 with Westinghouse
Electric Corporation, dated as of June 20, 1996, and any amendments thereto.
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 beginning of the Employment
Term.
12
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
Senior Vice President,
General Counsel and
Secretary
ACCEPTED AND AGREED:
/s/ Xxx Xxxxxxxx
----------------------------------
Xxx Xxxxxxxx
EXHIBIT A
Article XIII of the Amended and Restated Certificate of Incorporation
(attached)
EXHIBIT B
Form of the Award Agreement
(attached)
EXHIBIT A-1
RESTATED CERTIFICATE OF INCORPORATION
OF
VIACOM INC.
(Originally incorporated on November 10, 1986 under the name Arsenal Holdings,
Inc.)
ARTICLE I
NAME
The name of this Corporation is Viacom Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT FOR SERVICE
The registered office of the Corporation in the State of Delaware is
located at 0000 Xxxxxx Xxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle. The
name and address of the Corporation's registered agent for service of process
in Delaware is:
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
ARTICLE III
CORPORATE PURPOSES
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
the State of Delaware.
ARTICLE IV
CAPITAL STOCK
(1) Shares, Classes and Series Authorized.
(a) The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 3,700,000,000 shares.
The classes and the aggregate number of shares of stock of each class
which the Corporation shall have authority to issue are as follows:
(i) 500,000,000 shares of Class A Common Stock, $0.01 par value
("Class A Common Stock").
(ii) 3,000,000,000 shares of Class B Common Stock, $0.01 par
value ("Class B Common Stock").
(iii) 200,000,000 shares of Preferred Stock, $0.01 par value
("Preferred Stock").
(b) The number of authorized shares of Class B Common Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) from time to time by the affirmative vote of the holders of
a majority of the stock of the Corporation entitled to vote.
(2) Powers and Rights of the Class A Common Stock and the Class B Common
Stock.
Except as otherwise expressly provided in this Restated Certificate of
Incorporation, all issued and outstanding shares of Class A Common Stock and
Class B Common Stock shall be identical and shall entitle the holders thereof
to the same rights and privileges.
A. Voting Rights and Powers. Except as otherwise provided in this
Restated Certificate of Incorporation or required by law, with respect to
all matters upon which stockholders are entitled to vote, the holders of
the outstanding shares of Class A Common Stock shall vote together with
the holders of any other outstanding shares of capital stock of the
Corporation entitled to vote, without regard to class, and every holder
of outstanding shares of Class A Common Stock shall be entitled to cast
thereon one vote in person or by proxy for each share of Class A Common
Stock standing in his name. The holders of shares of Class A Common Stock
shall have the relevant class voting rights set forth in Article IX.
Except as otherwise required by law, the holders of outstanding shares of
Class B Common Stock shall not be entitled to any votes upon any
questions presented to stockholders of the Corporation, including but not
limited to, whether to increase or decrease (but not below the number of
shares then outstanding) the number of authorized shares of Class B
Common Stock.
B. Dividends. Subject to the rights and preferences of the Preferred
Stock set forth in this Article IV and in any resolution or resolutions
providing for the issuance of such stock as set forth in Section (3) of
this Article IV, the holders of Class A Common Stock and Class B Common
Stock shall be entitled to receive ratably such dividends as may from
time to time be declared by the Board of Directors out of funds legally
available therefor.
C. Distribution of Assets Upon Liquidation. In the event the
Corporation shall be liquidated, dissolved or wound up, whether
voluntarily or involuntarily, after there shall have been paid or set
aside for the holders of all shares of the Preferred Stock then
outstanding the full preferential amounts to which they are entitled
under the resolutions authorizing the issuance of such Preferred Stock,
the net assets of the Corporation remaining thereafter shall be divided
ratably among the holders of Class A Common Stock and Class B Common
Stock.
2
D. Split, Subdivision or Combination. If the Corporation shall in
any manner split, subdivide or combine the outstanding shares of Class A
Common Stock or Class B Common Stock, the outstanding shares of the other
class of Common Stock shall be proportionally split, subdivided or
combined in the same manner and on the same basis as the outstanding
shares of the other class of Common Stock have been split, subdivided or
combined.
E. Conversion. So long as there are 10,000 shares of Class A Common
Stock outstanding, each record holder of shares of Class A Common Stock
or Class B Common Stock may convert any or all of such shares into an
equal number of shares of Class B Common Stock by surrendering the
certificates for such shares, accompanied by payment of documentary,
stamp or similar issue or transfer taxes, if any, along with a written
notice by such record holder to the Corporation stating that such record
holder desires to convert such shares into the same number of shares of
Class B Common Stock and requesting that the Corporation issue all of
such Class B Common Stock to the persons named therein, setting forth the
number of shares of Class B Common Stock to be issued to each such person
and the denominations in which the certificates therefor are to be
issued.
(3) Powers and Rights of the Preferred Stock.
Subject to Article XIII of this Restated Certificate of Incorporation,
the Preferred Stock may be issued from time to time in one or more series,
with such distinctive serial designations as may be stated or expressed in the
resolution or resolutions providing for the issue of such stock adopted from
time to time by the Board of Directors; and in such resolution or resolutions
providing for the issuance of shares of each particular series, the Board of
Directors is also expressly authorized to fix; the right to vote, if any; the
consideration for which the shares of such series are to be issued; the number
of shares constituting such series, which number may be increased (except as
otherwise fixed by the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time by action of the
Board of Directors; the rate of dividends upon which and the times at which
dividends on shares of such series shall be payable and the preference, if
any, which such dividends shall have relative to dividends on shares of any
other class or classes or any other series of stock of the Corporation;
whether such dividends shall be cumulative or noncumulative, and, if
cumulative, the date or dates from which dividends on shares of such series
shall be cumulative; the rights, if any, which the holders of shares of such
series shall have in the event of any voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets, dissolution or winding
up of the affairs of the Corporation; the rights, if any, which the holders of
shares of such series shall have to convert such shares into or exchange such
shares for shares of any other class or classes or any other series of stock
of the Corporation or for any
3
debt securities of the Corporation and the terms and conditions, including,
without limitation, price and rate of exchange, of such conversion or
exchange, whether shares of such series shall be subject to redemption, and
the redemption price or prices and other terms of redemption, if any, for
shares of such series including, without limitation, a redemption price or
prices payable in shares of Class A Common Stock or Class B Common Stock; the
terms and amounts of any sinking fund for the purchase or redemption of shares
of such series; and any and all other powers, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof pertaining to shares of such series
permitted by law.
(4) Issuance of Class A Common Stock, Class B Common Stock and Preferred
Stock.
Subject to Article XIII of this Restated Certificate of Incorporation,
the Board of Directors of the Corporation may from time to time authorize by
resolution the issuance of any or all shares of Class A Common Stock, Class B
Common Stock and Preferred Stock herein authorized in accordance with the
terms and conditions set forth in this Restated Certificate of Incorporation
for such purposes, in such amounts, to such persons, corporations, or
entities, for such consideration, and in the case of the Preferred Stock, in
one or more series, all as the Board of Directors in its discretion may
determine and without any vote or other action by any of the stockholders of
the Corporation, except as otherwise required by law.
ARTICLE V
DIRECTORS
(1) Power of the Board of Directors. Subject to Article XIII of this
Restated Certificate of Incorporation, the property and business of the
Corporation shall be controlled and managed by or under the direction of its
Board of Directors. In furtherance, and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, subject in all cases to Article XIII of this Restated
Certificate of Incorporation:
(a) To make, alter, amend or repeal the By-Laws of the Corporation;
provided that no By-Laws hereafter adopted shall invalidate any prior act
of the Directors that would have been valid if such By-Laws had not been
adopted;
(b) To determine the rights, powers, duties, rules and procedures
that affect the power of the Board of Directors to manage and direct the
property, business and affairs of the Corporation, including, without
limitation, the power to designate and empower committees of the Board of
Directors, to elect, appoint and empower the officers and other agents of
the Corporation, and to determine the time
4
and place of, and the notice requirements for Board meetings, as well as
the manner of taking Board action; and
(c) To exercise all such powers and do all such acts as may be
exercised by the Corporation, subject to the provisions of the laws of
the State of Delaware, this Restated Certificate of Incorporation, and
the By-Laws of the Corporation.
(2) Number and Qualifications of Directors. The number of directors
constituting the entire Board of Directors shall be fixed from time to time by
resolution of the Board of Directors but shall not be less than three nor more
than twenty. Directors shall be elected to hold office for a term of one year.
As used in this Restated Certificate of Incorporation, the term "entire Board
of Directors" means the total number of Directors fixed in the manner provided
in this Article V Section (2) and in the By-Laws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(1) Action Not By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the Corporation) by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent
(including, without limitation, a trustee) of another corporation,
partnership, joint venture, trust or other enterprise, against judgments,
fines, amounts paid in settlement and expenses (including, without limitation,
attorneys' fees), actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) Action By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the Corporation to procure a judgment in its favor by reason of the fact that
he is or was a Director, officer, employee or agent of the
5
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, or other enterprise against expenses (including, without
limitation, attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability and in view of
all of the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
(3) Successful Defense. To the extent that a present or former Director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 or 2 of this Article VI, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including, without
limitation, attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(4) Determination of Right to Indemnification in Certain Circumstances.
Any indemnification under Section 1 or 2 of this Article VI (unless ordered by
a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the present or former
Director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 1 or 2 of this
Article IV. Such determination shall be made, with respect to a person who is
a Director or officer at the time of such determination, (1) by a majority
vote of the Directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (2) by a committee of such Directors
designated by a majority vote of such Directors, even though less than a
quorum, or (3) if there are no such Directors, or if such Directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders
of the Corporation entitled to vote thereon.
(5) Advance Payment of Expenses.
(a) Expenses (including attorneys' fees) incurred by a Director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Director or officer, to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized in this Article.
6
(b) Expenses (including attorneys' fees) incurred by any other employee
or agent in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon such terms and
conditions, if any, as the Corporation deems appropriate.
(6) Not Exclusive. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this Article VI
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. Without limiting the foregoing,
the Corporation is authorized to enter into an agreement with any Director,
officer, employee or agent of the Corporation providing indemnification for
such person against expenses, including, without limitation, attorneys' fees,
judgments, fines and amounts paid in settlement that result from any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative, including, without limitation, any
action by or in the right of the Corporation, that arises by reason of the
fact that such person is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, to the full extent allowed by law,
except that no such agreement shall provide for indemnification for any
actions that constitute fraud, actual dishonesty or willful misconduct.
(7) Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving as the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
(8) Certain Definitions. For the purposes of this Article VI, (A) any
Director, officer, employee or agent of the Corporation who shall serve as a
director, officer, employee or agent of any other corporation, joint venture,
trust or other enterprise of which the Corporation, directly or indirectly, is
or was a stockholder or creditor, or in which the Corporation is or was in any
way interested, or (B) any director, officer, employee or agent of any
subsidiary corporation, joint venture, trust or other enterprise wholly owned
by the Corporation, shall be deemed to be serving as such director, officer,
employee or agent at the request of the Corporation, unless the Board of
Directors of the
7
Corporation shall determine otherwise. In all other instances where any person
shall serve as a director, officer, employee or agent of another corporation,
joint venture, trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise interested, if it
is not otherwise established that such person is or was serving as such
director, officer, employee or agent at the request of the Corporation, the
Board of Directors of the Corporation may determine whether such service is or
was at the request of the Corporation, and it shall not be necessary to show
any actual or prior request for such service. For purposes of this Article VI,
references to a corporation include all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article VI with respect to the resulting
or surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity. For purposes of this Article VI,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries, and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VI.
(9) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE VII
DIRECTOR LIABILITY TO THE CORPORATION
(a) A Director's liability to the Corporation for breach of duty to the
Corporation or its stockholders shall be limited to the fullest extent
permitted by Delaware law as now in effect or hereafter amended. In particular
no Director of the Corporation shall be liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or
8
which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, as the same exists
or hereafter may be amended, or (iv) for any transaction from which the
Director derived an improper personal benefit.
(b) Any repeal or modification of the foregoing paragraph (a) by the
stockholders of the Corporation entitled to vote thereon shall not adversely
affect any right or protection of a director of the Corporation existing at
the time of such repeal or modification.
(c) If the General Corporation Law of the State of Delaware is amended to
authorize corporate action further eliminating or limiting the liability of
directors, then a director of the Corporation, in addition to the
circumstances in which he is not now liable, shall be free of liability to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as so amended.
ARTICLE VIII
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
Subject to Article XIII of this Restated Certificate of Incorporation,
the Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all the provisions of this
Restated Certificate of Incorporation and all rights and powers conferred in
this Restated Certificate of Incorporation on stockholders, directors and
officers are subject to this reserved power.
Each reference in the Restated Certificate of Incorporation to "the
Restated Certificate of Incorporation", "hereunder", "hereof", or words of
like import and each reference to the Restated Certificate of Incorporation
set forth in any amendment to the Restated Certificate of Incorporation shall
mean and be a reference to the Restated Certificate of Incorporation as
supplemented and amended through such amendment to the Restated Certificate of
Incorporation.
ARTICLE IX
VOTING RIGHTS
(1) Class A Common Stock. In addition to any other approval required by
law or by this Restated Certificate of Incorporation, the affirmative vote of
a majority of the then outstanding shares of Class A Common Stock, voted
separately as a class, shall be necessary to approve any consolidation of the
Corporation with another corporation, any merger of the Corporation into
another corporation or any merger of any other corporation into the
Corporation pursuant to which shares of Common Stock are converted into or
exchanged for any securities or any other consideration.
9
(2) Preferred Stock. Subject to Article XIII of this Restated Certificate
of Incorporation, in addition to any other approval required by law or by this
Restated Certificate of Incorporation, each particular series of any class of
Preferred Stock shall have such right to vote, if any, as shall be fixed in
the resolution or resolutions, adopted by the Board of Directors, providing
for the issuance of shares of such particular series.
ARTICLE X
STOCK OWNERSHIP
AND THE FEDERAL COMMUNICATIONS LAWS
(1) Requests for Information. So long as the Corporation or any of its
subsidiaries holds any authorization from the Federal Communications
Commission (or any successor thereto), if the Corporation has reason to
believe that the ownership, or proposed ownership, of shares of capital stock
of the Corporation by any stockholder or any person presenting any shares of
capital stock of the Corporation for transfer into his name (a "Proposed
Transferee") may be inconsistent with, or in violation of, any provision of
the Federal Communications Laws (as hereinafter defined), such stockholder or
Proposed Transferee, upon request of the Corporation, shall furnish promptly
to the Corporation such information (including, without limitation,
information with respect to citizenship, other ownership interests and
affiliations) as the Corporation shall reasonably request to determine whether
the ownership of, or the exercise of any rights with respect to, shares of
capital stock of the Corporation by such stockholder or Proposed Transferee is
inconsistent with, or in violation of, the Federal Communications Laws. For
purposes of this Article X, the term "Federal Communications Laws" shall mean
any law of the United States now or hereafter in effect (and any regulation
thereunder) pertaining to the ownership of, or the exercise of the rights of
ownership with respect to, capital stock of corporations holding, directly or
indirectly, Federal Communications Commissions authorizations, including,
without limitation, the Communications Act of 1934, as amended (the
"Communications Act"), and regulations thereunder pertaining to the ownership,
or the exercise of the rights of ownership, of capital stock of corporations
holding, directly or indirectly, Federal Communications Commission
authorizations, by (i) aliens, as defined in or under the Communications Act,
as it may be amended from time to time, (ii) persons and entities having
interests in television or radio stations, daily newspapers and cable
television systems or (iii) persons or entities, unilaterally or otherwise,
seeking direct or indirect control of the Corporation, as construed under the
Communications Act, without having obtained any requisite prior Federal
regulatory approval to such control.
(2) Denial of Rights, Refusal to Transfer. If any stockholder or Proposed
Transferee from whom information is requested should fail to respond to such
request pursuant to Section (1) of this Article or the Corporation shall
conclude
10
that the ownership of, or the exercise of any rights of ownership with respect
to, shares of capital stock of the Corporation, by such stockholder or
Proposed Transferee, could result in any inconsistency with, or violation of,
the Federal Communications Laws, the Corporation may refuse to permit the
transfer of shares of capital stock of the Corporation to such Proposed
Transferee, or may suspend those rights of stock ownership the exercise of
which would result in any inconsistency with, or violation of, the Federal
Communications Laws, such refusal of transfer or suspension to remain in
effect until the requested information has been received and the Corporation
has determined that such transfer, or the exercise of such suspended rights,
as the case may be, is permissible under the Federal Communications Laws, and
the Corporation may exercise any and all appropriate remedies, at law or in
equity, in any court of competent jurisdiction, against any such stockholder
or Proposed Transferee, with a view towards obtaining such information or
preventing or curing any situation which would cause any inconsistency with,
or violation of, any provision of the Federal Communications Laws.
(3) Legends. The Corporation may note on the certificates of its capital
stock that the shares represented by such certificates are subject to the
restrictions set forth in this Article.
(4) Certain Definitions. For purposes of this Article, the word "person"
shall include not only natural persons but partnerships, associations,
corporations, joint ventures and other entities, and the word "regulation"
shall include not only regulations but rules, published policies and published
controlling interpretations by an administrative agency or body empowered to
administer a statutory provision of the Federal Communications Laws.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting of the board
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or the committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum, or
(b) the material facts as to his relationship or interest and as to
11
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of such stockholders, or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors, a committee thereof, or the
stockholders entitled to vote thereon. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE XII
COMPROMISE AND REORGANIZATION
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions
of Section 291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agrees to any compromise or arrangement and
to any reorganization of the Corporation as a consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may
be, and also on this Corporation.
ARTICLE XIII
GOVERNANCE OF THE CORPORATION
DURING SPECIFIED PERIOD
(1) Definitions. As used in this Article XIII, the following terms shall
have the following meanings:
(a) "CBS" shall mean CBS Corporation, a Pennsylvania corporation,
immediately prior to the Effective Time.
(b) "CBS Directors" shall mean (i) eight (8) of those directors
serving as members of the Board of Directors of CBS on September 6, 1999
(or any Independent Directors elected or appointed prior to the Effective
Time to serve as a CBS Director) who are designated as such by the Board
of Directors
12
of CBS prior to the Effective Time and (ii) any Replacement CBS Director
(as defined in Section 2(b) of this Article XIII).
(c) "CEO" shall mean the Chief Executive Officer.
(d) "COO" shall mean the President and Chief Operating Officer.
(e) "Effective Time" shall mean the time of filing of the
Certificate of Merger to which this Certificate of Incorporation is
attached.
(f) "Independent Director" shall mean a disinterested, independent
person (determined in accordance with customary standards for independent
directors applicable to U.S. public companies).
(g) "NAI" shall mean National Amusements, Inc., a Maryland
corporation, and its successors or assigns.
(h) "Specified Independent Directors" shall mean the directors of
the Corporation first elected after 1993 and who are not management of
the Corporation or NAI (together with any replacements of such persons).
(i) "Specified Period" shall mean the period of three years
commencing at the Effective Time.
(j) "Stockholder Agreement" shall mean the Stockholder Agreement
dated as of September 6, 1999, by and between NAI and CBS, relating to
Corporation governance matters.
(k) "Viacom Directors" shall mean the ten (10) directors of the
Corporation serving as the Board of Directors of the Corporation
immediately prior to the Effective Time (including the Specified
Independent Directors).
(2) Directors.
(a) Effective immediately at the Effective Time, the Board of
Directors shall consist of eighteen (18) directors. The number of
directors may be fixed by resolution of the Board from time to time,
provided, however, that the size of the Board of Directors may not be
changed during the Specified Period without the approval of at least
fourteen (14) directors. At the Effective Time, ten (10) directors shall
be Viacom Directors and eight (8) directors shall be CBS Directors.
(b) Until the expiration of the Specified Period, the Board of
Directors (subject to the fiduciary duties of the directors) shall take
all action necessary to ensure that any seat on the Board of Directors
held by (i) a CBS Director which becomes vacant is filled promptly by a
person qualifying as an Independent Director and designated to fill such
seat by a majority of the CBS Directors remaining on the Board of
Directors (a "Replacement CBS Director") and (ii) a Specified
13
Independent Director which becomes vacant is filled promptly by an
Independent Director who is the chief executive officer, chief operating
officer or chief financial officer or former chief executive officer of a
Fortune 500 company or a non-U.S. public company of comparable size.
(c) During the Specified Period, all committees of the Board of
Directors (other than the Compensation Committee and the Officers
Nominating Committee) shall have such number of CBS Directors as equals
the total number of members of the Committee multiplied by a fraction,
the numerator of which is eight (8) and the denominator of which is
eighteen (18), rounded to the closest whole number; provided that in no
event shall any committee have (x) fewer than one (1) CBS Director or (y)
less than a majority of Viacom Directors.
(d) During the Specified Period, the Board of Directors shall not
take any action or fail to take any action which would have the effect of
eliminating, limiting, restricting, avoiding or otherwise modifying the
effect of the provisions set forth in this Article XIII (e.g., by
creating a holding company structure if the certificate of incorporation
or similar document of such holding company does not contain equivalent
provisions).
(3) Chairman and Chief Executive Officer.
(a) At the Effective Time, Xxxxxx Xxxxxxxx shall remain the Chairman
and CEO. In the event that Xxxxxx Xxxxxxxx is not the CEO at the
Effective Time or ceases to be the CEO at any time during the Specified
Period, then Xxx Xxxxxxxx, if he is COO at such time, shall succeed to
the position of CEO for the remainder of the Specified Period. During any
such period of succession, Xxx Xxxxxxxx shall continue to exercise the
powers, rights, functions and responsibilities of the COO in addition to
exercising those of the CEO.
(b) The Chairman shall chair all meetings of the Board of Directors
and stockholders at which he is present.
(c) The CEO shall be responsible, in consultation with the COO, for
corporate policy and strategy and the COO shall consult on all major
decisions with, and shall report directly to, the CEO, during the
Specified Period; provided, however, that the CEO shall not exercise any
powers, rights, functions or responsibilities of the COO unless Xxx
Xxxxxxxx is the CEO.
(4) President and Chief Operating Officer.
(a) At the Effective Time, the President and Chief Operating Officer
of the Corporation shall be Xxx Xxxxxxxx. During the Specified Period,
Xxx Xxxxxxxx may not be terminated or demoted from the position of COO
(or, in the event that Xxxxxx Xxxxxxxx is not the CEO, from the position
of CEO) and no COO Functions (as defined below) may be changed without
the affirmative vote of at least fourteen (14) directors.
14
(b) Subject to the requirement that the COO consult with the CEO on
all major decisions, the powers, rights, functions and responsibilities
of the COO (collectively, the "COO Functions") shall include, without
limitation, the following:
(i) supervising, coordinating and managing the Corporation's
business, operations, activities, operating expenses and capital
allocation;
(ii) matters relating to officers (other than the Chairman, CEO
and COO) and employees, including, without limitation, hiring
(subject to (A) the specific Board of Directors authority described
below with respect to the CFO, the General Counsel and the
Controller and (B) Section 5 below), terminating, changing positions
and allocating responsibilities of such officers and employees; and
(iii) substantially all of the powers, rights, functions and
responsibilities typically exercised by a chief operating officer.
All officers (other than the Chairman, CEO and COO) will report, directly
or indirectly, to the COO (this reporting relationship will be deemed a COO
Function).
(a) In the event that Xxx Xxxxxxxx is not COO or CEO, the Board may
terminate the COO's employment, eliminate the COO position and the
Officers Nominating Committee and reallocate the COO Functions without
regard to the other provisions of this Article XVIII.
(5) Officers Nominating Committee; Compensation Committee.
(a) Subject to the powers of the Compensation Committee set forth
below, during the Specified Period, all powers of the Board of Directors,
including, without limitation, the right to hire, elect, terminate,
change positions, allocate responsibilities or determine non-equity
compensation, with respect to officers and employees, shall be exercised,
subject to clauses (b) and (c) below, by, and delegated to, the Officers
Nominating Committee of the Board of Directors. The Officers Nominating
Committee shall consist solely of the member of the Board of Directors
who is the COO, except that in the event Xxx Xxxxxxxx succeeds to the
position of CEO, the sole member of the Officers Nominating Committee
shall be the member of the Board of Directors who is the CEO.
(b) The Officers Nominating Committee shall have no powers with
respect to the Chairman, CEO and COO, and shall not have the power to
fill the positions of Chief Financial Officer, Controller or General
Counsel of the Corporation without the approval of the Board of
Directors; provided that this provision shall in no way affect the other
powers and authorities of the Officers Nominating Committee with respect
to the Chief Financial Officer, Controller and General Counsel positions,
including, without limitation, the power to terminate employment of
persons holding such positions.
15
(c) The Compensation Committee shall not be required to, or have any
power to, approve the annual compensation of (i) any employee if the
total value of such employee's annual cash compensation (assuming for
this purpose that the actual bonus of each officer and employee is equal
to his or her target bonus) is less than $1 million or (ii) talent (as
such term is commonly used in the media or entertainment industries), in
each such case which power shall be delegated to the Officers Nominating
Committee. The annual compensation of all other officers and employees
and any equity or equity-based compensation of any officer or employee
must be approved by the Compensation Committee.
(d) The Compensation Committee shall consist of three CBS Directors
who are Independent Directors and three non-CBS Directors, two of whom
will be the Specified Independent Directors and the other of whom will be
an Independent Director.
(e) Any decision or determination of the Officers Nominating
Committee may be reversed or overridden by (and only by) the affirmative
vote of at least fourteen (14) directors.
(6) Stockholder Agreement.
The Stockholder Agreement may not be amended, and no provision thereof
may be modified or waived, except with the approval of at least fourteen (14)
directors.
(7) Issuance of Voting Stock.
During the Specified Period, in addition to any other approval required
by law or by this Restated Certificate of Incorporation, the Corporation may
not issue (i) additional shares of Class A Common Stock or (ii) any shares of
Preferred Stock or any other class or series of stock or securities, in each
case with, or convertible into or exchangeable or exercisable for stock or
other securities with, the right to vote on any matter on which stockholders
are entitled to vote if the result would be that parties bound by the
Stockholder Agreement could fail to own at least a majority of the outstanding
shares of voting stock of the Corporation.
(8) Voting
During the Specified Period, except for those actions set forth on Annex
I to this Restated Certificate of Incorporation, which shall require the
approval of the Board of Directors, all action by the Board of Directors shall
require the affirmative vote of at least fourteen (14) directors. At all
meetings of the Board of Directors a majority of the full Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or this Restated Certificate of
Incorporation. If a quorum shall
16
not be present at any meeting of the Board of Directors, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
(9) Amendment.
Until the expiration of the Specified Period the provisions of any
Article of this Restated Certificate which refer to this Article XIII, the
provisions of this Article XIII, and the provisions of Article VIII of the
by-laws of the Corporation, may not be amended, altered, repealed or waived in
any respect without the approval of at least fourteen (14) directors.
(10) Successors.
During the Specified Period, the provisions of this Article XIII shall be
applicable to (i) any successor to the Corporation as the result of a merger,
consolidation or other business combination, whether or not the Corporation is
the surviving company in such transaction, or otherwise and (ii) any
corporation or other entity with respect to which the Corporation or its
successor is or becomes a direct or indirect subsidiary, the Board of
Directors shall not permit the Corporation to be a party to any transaction
which would not comply with the foregoing without the approval of at least
fourteen (14) directors.
(11) Subsidiaries.
The Board of Directors shall have the right, following consultation with
the COO or, if Xxx Xxxxxxxx is the CEO, the CEO, with respect to any public
company which is a subsidiary of the Corporation, to take such steps as the
Board of Directors reasonably determines are necessary to implement corporate
governance arrangements applicable to such subsidiary in a manner as
consistent as practicable with the provisions contained in this Restated
Certificate of Incorporation; provided that any such steps shall not vest in
the Board of Directors greater power or provide the COO with fewer rights than
those provided for in this Restated Certificate of Incorporation.
17
ANNEX I
TO VIACOM INC. RESTATED
CERTIFICATE OF INCORPORATION
The provisions of this Annex I shall form a part of, and be incorporated
in all respects in, the Restated Certificate of Incorporation to which this
Annex I is attached. The following actions shall require the approval of a
majority of the directors:
A. Acquisitions, Divestitures, Joint Ventures, Guarantees
o Any acquisition, equity investment or joint venture (each an
"Acquisition") by the Corporation or any of its subsidiaries for
more than $25 million.
o Any divestiture or other sale of assets (each a "Divestiture") (not
in the ordinary course) by the Corporation or any of its
subsidiaries for more than $25 million (based on purchase price or
net book value of assets).
o Any real estate purchase, sale or lease by the Corporation or any of
its subsidiaries for more than $25 million.
o Any guarantee by the Corporation or any of its subsidiaries of an
obligation of a third party where the obligation guaranteed is more
than $25 million.
o Notwithstanding the above, any Acquisition or Divestiture by the
Corporation or any of its subsidiaries of (a) internet or internet
related businesses for more than $25 million but less than $100
million, with the value thereof represented by multi-year
commitments for advertising, promotion and content licensing, is
excluded, so long as the aggregate of such Acquisitions or
Divestitures, in each case, does not exceed $550 million and (b)
radio or outdoor advertising businesses for more than $25 million
but less than $100 million, is excluded, so long as the aggregate of
such Acquisitions or Divestitures, in each case, does not exceed
$300 million; provided that (i) any Divestiture of shares of a
publicly traded internet or internet related business with a value
of up to $75 million is excluded and shall not be included in the
calculation of any of the threshold amounts set forth above, (ii)
Board approval may be secured (but is not required) for any
transaction of more than $25 million but less than $100 million
where the regular meeting schedule of the Board so permits (and
shall not otherwise be required), (iii) the Board will be provided
with information about and a status report on such transactions
completed without Board approval and (iv) this limit of authority
will be reviewed in 12 months from the Effective Time (as defined in
Article XIII of the Restated Certificate) and may be amended only
with the approval of 14 members of the Board of Directors.
o Any contract of the Corporation or any of its subsidiaries not in
the ordinary course with a value in excess of $25 million.
o Notwithstanding the above, any of the foregoing transactions that is
approved by the Board shall not be included in the calculation of
any of the threshold amounts set forth above.
B. Employee Matters
o Employee benefit plans (at the Corporation or a subsidiary): (a)
creating a new plan, (b) suspending or terminating an existing plan,
(c) any amendment that materially increases cost to the Corporation
or subsidiary
o Entering into any modifications or amendments to the employment
agreements with the CEO or the COO.
C. General
o The Annual Report on Form 10-K
o Proxy statement and notice of meeting (including annual or special
meeting date, location, record date for voting)
o Any issuance of Corporation stock, or options, warrants or other
similar rights (including stock appreciation rights) or debt or
other securities convertible into or exchangeable for Corporation
stock
o Any issuance of debt unless such debt is short term and is within
the spending limits of the annual operating budget or is replacing
existing debt
o Annual capital expenditure and annual operating budgets and
individual capital expenditure transactions in excess of $25 million
for the Corporation or any of its subsidiaries
o Any Corporation or subsidiary pays a dividend or repurchases stock
from a third party
o Review and approve any action or transaction where Board action is
required by law (other than ss. 141(a) of the Delaware General
Corporation Law) or by the terms of the transaction (in all cases
other than as specifically set forth in the Restated Certificate of
Incorporation)
o Review and approve Board minutes
o Subject to Article XIII of the Restated Certificate of
Incorporation, determine Board administration, including number of
directors, meeting schedule, nominees, committees, director
compensation, D&O insurance authorization, internal investigations
and retention of advisors in connection therewith, and decisions
regarding indemnification of individuals
o Subject to Article XIII of the Restated Certificate of
Incorporation, amendments to the Restated Certificate of
Incorporation and by-laws of the Corporation
o Commencement and settlement of major litigation
o Selection of independent auditors
o All matters on which the Corporation Board of Directors has
historically taken action other than (1) matters relating to the
subject matters addressed in this Annex I and not requiring approval
of the Board of Directors hereunder and (2) those matters delegated to
the COO, including all of the COO Functions (as defined in
2
Article XIII of this Restated Certificate of Incorporation).
3
EXHIBIT B
Agreement Under the
Viacom Inc.
1997 Long-Term Management Incentive Plan
for the 1999 Stock Option Grant
AGREEMENT, dated as of ..............., by and between Viacom Inc., a
Delaware corporation (the "Company"), and ................ (the
"Participant"), with respect to the 1999 grant of stock options under he
Company's 1997 Long-Term Management Incentive Plan, as amended (the "Plan").
This Agreement, together with the Memorandum dated ................ and
the agreements delivered under the Plan in connection with each grant of stock
options under the Plan, constitutes the prospectus covering the shares of
Class B Common Stock subject to the Plan. The Participant can receive
additional copies of his or her Plan agreements and the Memorandum upon
request to the Administrator, Long-Term Incentive Plans, Viacom Inc., 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, the Participant is now employed by the Company or one of its
subsidiaries in a key capacity and the Company desires to reward the
Participant, in accordance with the terms hereof, for the Participant's
contributions to the financial success of the Company by awarding the
Participant stock options to purchase shares of Class B Common Stock;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
TERMS OF STOCK OPTIONS
Section 1.1 Grant of Stock Options. Subject to the terms and conditions
contained herein and in the Plan, the terms of which are hereby incorporated
by reference, the Company hereby awards to the Participant, effective as of
................... (the "Date of Grant"), a grant of stock options (the
"Stock Options") to purchase .............. shares of Class B Common Stock at
an exercise price of $........... for each share (the "Exercise Price"). The
capitalized terms used in this Agreement which are not otherwise defined
herein shall have the meanings assigned to
them in Article III hereof. The Stock Options granted hereunder are not
intended to be, or qualify as, "Incentive Stock Options" within the meaning of
Section 422 of the Code.
Section 1.2 Terms of Stock Options.
(a) Vesting. The Stock Options shall be exercisable only to the
extent the Participant is vested therein. The Stock Options shall vest in
one-third increments on .................... and .......................
(b) Option Period. Except as provided in Section 1.2(c) hereof, the
period during which the Stock Options may be exercised shall expire on
the tenth anniversary of the Date of Grant (the "Expiration Date").
(c) Exercise in the Event of Termination of Employment, Retirement,
Death or Permanent Disability.
(i) Termination other than for Cause, Retirement, Death or
Permanent Disability. In the event that (A) the Participant ceases
to be an employee of the Company or any of its subsidiaries by
reason of the voluntary termination by the Participant or the
termination by the Company or any of its subsidiaries other than for
Cause, the Participant may exercise his or her Outstanding Stock
Options to the extent then exercisable until the earlier of six
months after the date of such termination (or such longer period,
not in excess of the second anniversary of the Date of Grant of such
Stock Options, as may be determined by the Committee, in its
discretion) or the Expiration Date, (B) the Participant ceases to be
an employee of the Company or any of its subsidiaries by reason of
the Participant's Retirement, the Participant may exercise his or
her Outstanding Stock Options to the extent then exercisable until
the earlier of two years after such date or the Expiration Date, (C)
the Participant dies during a period during which his or her Stock
Options could have been exercised by him or her, his or her
Outstanding Stock Options may be exercised to the extent exercisable
at the date of death by the person who acquired the right to
exercise such Stock Options by will or the laws of descent and
distribution until the earlier of one year after such death (or such
longer period as may be determined by the Committee, in its
discretion, prior to the expiration of such one-year period) or the
Expiration Date, or (D) the Permanent Disability of the Participant
occurs, the Participant may exercise his or her Outstanding Stock
Options to the extent exercisable upon the onset of such Permanent
Disability until the earlier of one year after such date (or such
longer period not in excess of two years after such date as may be
determined by the Committee in its discretion) or the Expiration
Date. Upon the occurrence of an event described in clauses (A), (B),
(C) or (D) of this Section 1.2(c)(i), all rights with respect to
Stock Options that are not vested as of such event will be
relinquished.
(ii) Termination for Cause. If the Participant's employment
with the Company or any of its subsidiaries ends because of a
Termination for Cause, all Outstanding Stock Options, whether or not
then vested, shall terminate effective as of the date of such
termination.
Section 1.3 Exercise of Stock Options.
(a) Whole or Partial Exercise. Subject to the restrictions of
Section 1.2(b) hereof, the Participant may exercise all vested Stock
Options granted hereunder at one time or in installments of 100 Stock
Options (or in the whole number of unexercised Stock Options in which the
Participant is vested, if such number is less than 100) by written notice
to the Administrator, Long-Term Incentive Plans, Viacom Inc., 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Such notice shall (i) state the
number of full Stock Options being exercised (ii) be signed by the person
or persons so exercising the Stock Options and, in the event the Stock
Options are being exercised (pursuant to Section 1.2(c)(i) hereof) by any
person or persons other than the Participant accompanied by proof
satisfactory to the Company's counsel of the right of such person or
persons to exercise the Stock
2
Options, and (iii) be accompanied by full payment as set forth in Section
1.3(b) hereof.
(b) Payment of Aggregate Option Price. The written notice of
exercise described above must be accompanied by full payment of the
aggregate Exercise Price which shall be determined by multiplying the
number of Stock Options being exercised by the Exercise Price. Such
Exercise Price shall be paid in cash (e.g. personal bank check, certified
check or official bank check). In addition, in accordance with Section
4.3 hereof, the Participant shall make an arrangement acceptable to the
Company to pay to the Company an amount sufficient to satisfy the
combined Federal, state and local withholding tax obligations which arise
in connection with the exercise of such Stock Options.
(c) Issuance of Share Certificates. Upon satisfaction of the
conditions set forth in Section 1.3(b) hereof, the Company shall deliver
(or cause to be delivered) a certificate or certificates for the shares
of Class B Common Stock issued pursuant to the exercise of the Stock
Options to the Participant.
ARTICLE II
EFFECT OF CERTAIN CORPORATE CHANGES
In the event of a merger, consolidation, stock split, dividend,
distribution, combination, reclassification or recapitalization that changes
the character or amount of the Class B Common Stock, the Committee shall make
such adjustments to the number of shares of Class B Common Stock subject to
the Stock Options or the exercise price of the Stock Options, in each case, as
it deems appropriate. Such determinations shall be conclusive and binding for
all purposes.
ARTICLE III
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Class B Common Stock" shall mean shares of Class B Common
Stock, par value $0.01 per share, of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any successor law thereto.
(d) "Committee" shall mean the Senior Executive Compensation
Committee of the Board (or such other Committee as may be appointed by
the Board) except that (i) the number of directors on the Committee shall
not be less than two and (ii) each member of the Committee shall be a
"non-employee director" within the meaning of Rule 16b-3 under the
Exchange Act.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, including any successor law thereto.
3
(f) "Fair Market Value" of a share of Class B Common Stock on a
given date shall be the closing price of a share of Class B Common Stock
on the New York Stock Exchange or such other national securities exchange
as may be designated by the Committee or, in the event that the Class B
Common Stock is not listed for trading on a national securities exchange
but is quoted on an automated quotation system, the average closing bid
price per share of the Class B Common Stock on such automated quotation
system or, in the event that the Class B Common Stock is not quoted on
any such system, the average of the closing bid prices per share of the
Class B Common Stock as furnished by a professional marketmaker making a
market in the Class B Common Stock designated by the Committee.
(g) "Outstanding Stock Option" shall mean a Stock Option granted to
the Participant which has not yet been exercised and which has not yet
expired in accordance with its terms.
(h) "Permanent Disability" shall have the same meaning as such term
or a similar term has in the long-term disability policy maintained by
the Company or a subsidiary thereof for the Participant and in effect on
the date of the onset of the Participant's Permanent Disability.
(i) "Retirement" shall mean the resignation or termination of
employment after attainment of an age and years of service required for
payment of an immediate pension pursuant to the terms of any qualified
retirement plan maintained by the Company or a subsidiary in which the
Participant participates; provided, however, that no resignation or
termination prior to a Participant's 60th birthday shall be deemed a
retirement unless the Committee so determines in its sole discretion.
(j) "Termination for Cause" shall mean a termination of employment
with the Company or any of its subsidiaries which, as determined by the
Committee, is by reason of (i) "cause" as such term or a similar term is
defined in any employment agreement applicable to the Participant, or
(ii) if there is no such employment agreement or if such employment
agreement contains no such term, (x) dishonesty, conviction of a felony,
or willful unauthorized disclosure of confidential information, (y)
failure, neglect of or refusal by the Participant to substantially
perform the duties of the Participant's employment, or (z) any other act
or omission which is materially injurious to the financial condition or
business reputation of the Company of any subsidiary thereof.
(k) To "vest" a Stock Option held by the Participant shall mean to
render such Stock Option exercisable, subject to the terms of the Plan,
except where the Participant's employment ends because of a Termination
for Cause.
ARTICLE IV
MISCELLANEOUS
Section 4.1 No Rights to Continued Employment. Neither this Agreement,
the Plan nor any action taken in accordance with such documents shall be
construed as giving the Participant any right to be retained by the Company or
any of its subsidiaries.
Section 4.2 Restriction on Transfer. The rights of the Participant with
respect to the Stock Options shall not be transferable by the Participant
except (i) by will or the laws of descent and distribution or (ii) subject to
the prior approval of the Committee, for transfers to
4
members of the Participant's immediate family or trusts whose beneficiaries
are members of the Participant's immediate family, in each case subject to the
condition that the Committee shall be satisfied that such transfer is being
made for estate an/or tax planning purposes without consideration being
received therefor and subject to such other conditions as the Committee may
impose.
Section 4.3 Tax Withholding. As a condition to the exercise of the Stock
Options, the Participant shall make a payment (or an arrangement acceptable to
the Company for the withholding of such payment) sufficient to satisfy the
combined Federal, state and local withholding tax obligations which arise in
connection with the exercise of such Stock Options.
Section 4.4 Stockholder Rights. The grant of Stock Options under this
Agreement shall not entitle the Participant or any permitted transferee to any
rights of a holder of shares of common stock of the Company, other than when
and until share certificates are delivered to the Participant upon exercise of
a Stock Option.
Section 4.5 No Restriction on Right of Company to Effect Corporate
Changes. This Agreement shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalization, reorganization or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Class B Common Stock or the rights thereof or which
are convertible into or exchangeable for Class B Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
Section 4.6 Amendment. Other than as provided in Article II hereof, this
Agreement may not be modified, amended or waived in any manner except by an
instrument in writing signed by both parties hereto. The waiver by either
party of compliance with any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party of a provision of this
Agreement.
Section 4.7 Stockholder Approval. The grant of Stock Options under this
Agreement is subject to the approval of the stockholders of the Company, at
the next annual or special meeting of stockholders, to the extent that the
number of shares of Class B Common Stock subject to the Plan is insufficient
to cover the number of shares of Class B Common Stock subject to Stock Options
awarded under this Agreement.
Section 4.8 Notices. Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the
party for whom it is intended at such address as may from time to time be
designated by such party in a notice mailed or delivered to the other party as
herein provided. If no such address has been specified by the Participant,
such notices or communications shall be sent to the Participant's address as
specified in the records of the Company.
Section 4.9 Headings. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning
of any of the provisions of this Agreement.
Section 4.10 Receipt of Copy of Plan. By executing this Agreement, the
Participant acknowledges receipt of a copy of the Plan.
5
Section 4.11 Governing Law. This Agreement and all rights hereunder shall
be construed in accordance with and governed by the laws of the State of
Delaware.
VIACOM INC.
By:
---------------------------
Senior Vice President,
Human Resources and
Administration
-------------------------------
Participant
6
