Exhibit 10.1
[VIACOM LETTERHEAD]
June 14, 2005
Xxxxxx X. Xxxxxxx
c/o Viacom Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxxx:
Reference is made to your employment agreement with Viacom Inc.
("Viacom" or the "Company"), dated July 1, 2004 (your "Employment Agreement").
This letter expresses our agreement concerning the assignment of your Employment
Agreement to NEWCO (as defined below) on the following terms:
1. Viacom has announced that its Board of Directors has approved the
separation of the Company into two separate businesses (the
"Business Separation"). The date on which NEWCO becomes a
separate, publicly-held company is referred to herein as the
"Effective Date".
2. You agree that, notwithstanding any other provision of your
Employment Agreement but subject to the provisions contained
herein, Viacom will assign your Employment Agreement to the
publicly held parent corporation ("NEWCO") that acquires, at a
minimum, the assets (including associated contract and
intellectual property rights) of MTV Networks, BET, Famous
Music, the motion picture operations of the Paramount Motion
Picture Group and Paramount Home Entertainment (as defined
below), and NEWCO will unconditionally assume all obligations
under your Employment Agreement. Upon such assignment and
assumption, NEWCO will be responsible for all obligations of
Viacom under your Employment Agreement and Viacom will be
released from all obligations under your Employment Agreement.
You agree that such assignment shall not constitute a breach of
your Employment Agreement or provide you with "Good Reason" to
terminate your employment pursuant to paragraph 8(b) of your
Employment Agreement, based on the fact that NEWCO will not
acquire all of the assets of the business units currently managed
by you under your Employment Agreement. "Paramount Home
Entertainment" refers to the Paramount unit that handles
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June 14, 2005
Page 2
the physical distribution of all forms of home video for (i) MTV
Networks, BET and the motion picture operations of the Paramount
Motion Picture Group, and (ii) other entities pursuant to
agreements with such entities.
3. In the event of an assignment of your Employment Agreement in
accordance with the terms and conditions set forth herein, it is
further agreed that each reference to Viacom in your Employment
Agreement will, as of the Effective Date, refer to NEWCO and
that your Employment Agreement will, as of the Effective Date,
be deemed to be amended as follows:
A. Paragraph 8(b) of your Employment Agreement will be amended to
replace clauses (v) through (ix) and the last paragraph of
paragraph 8(b) with the following:
"(v) your removal from or any failure to re-elect you as
the sole President and Chief Operating Officer of
NEWCO (if you commenced serving in that position as of
the Effective Date) or, if you are the Chief Executive
Officer of NEWCO, as the sole Chief Executive Officer
of NEWCO;
(vi) the failure to appoint you as the sole Chief Executive
Officer of NEWCO on the earlier to occur of: (A) the
date on which Xxxxxx Xxxxxxxx resigns from the
position of Chief Executive Officer (or ceases to hold
such position for any reason); and (B) December 31,
2007;
(vii) a change in reporting such that you do not report
solely and directly to Xxxxxx Xxxxxxxx in his capacity
as the Chairman and Chief Executive Officer of NEWCO
or to NEWCO's Board of Directors before December 31,
2007 or, if earlier, the date on which Xxxxxx Xxxxxxxx
resigns from the position of Chief Executive Officer
of NEWCO (or ceases to hold such position for any
reason), and, thereafter, a change in reporting such
as you do not report to the Chairman of NEWCO or to
NEWCO's Board of Directors; or
(viii) any other material breach by NEWCO of its material
obligations hereunder.
Notwithstanding anything to the contrary in this Agreement,
NEWCO may sell or otherwise dispose of any New Business Unit
(as defined below); provided, that the aggregate revenues of
all New Business Units sold or otherwise disposed of within
any six (6) month period during the Employment Term do not
constitute more than 50% of the aggregate revenues of the New
Business Units at such time, based on the NEWCO's
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June 14, 2005
Page 3
most recent quarterly financial statements. In making the
calculation described in the proviso in the preceding
sentence, NEWCO may include, on a pro forma basis, the
revenues of any Potential New Business Unit (as defined
below); provided, that, if NEWCO formally abandons (or it
receives notification that the other party has formally
abandoned) the negotiations relating to NEWCO's acquisition of
a Potential New Business Unit whose revenues were included in
the calculation referred to in the preceding sentence, NEWCO
will promptly notify you of such abandonment and you can, by
written notice to NEWCO within thirty (30) business days after
NEWCO's notification to you, require the calculation to be
made as of the date of such notification without including the
revenues of such company. A "New Business Unit" shall mean any
business unit of NEWCO including any business unit acquired
after the Effective Date but excluding (i) any business unit
which was a business unit managed by you prior to the date
that you entered into this Agreement (e.g. MTV), and (ii) the
motion picture operations of the Paramount Motion Picture
Group. A "Potential New Business Unit" shall mean any business
unit for which NEWCO is actively negotiating the acquisition
under authorization from the NEWCO Board of Directors.
"Effective Date" shall have the meaning set forth in that
certain letter agreement dated June 14, 2005 between the
parties to this Agreement. It is agreed that any sale of a New
Business Unit by NEWCO shall be made only after the Board of
Directors of NEWCO has meaningfully consulted with you
regarding such transaction."
B. Paragraph 8(g) of your Employment Agreement will be deleted in
its entirety.
4. Your outstanding stock options will be adjusted (a) in the same
manner as other outstanding stock options held by employees of
NEWCO are adjusted in connection with the Business Separation, and
(b) in a manner that the Compensation Committee of the Viacom
Board of Directors determines in good faith would eliminate any
reduction in the value of your outstanding stock options that
might otherwise be caused by the Business Separation.
5. A. The number of restricted share units to be awarded to you
after the Business Separation will be determined by (a)
multiplying the closing price of a share of Viacom Class B
Common Stock on the last trading day on the New York Stock
Exchange before the Effective Date by 115,000, and (b)
dividing this amount by the closing price of a share of Class
B Common Stock of NEWCO on the Effective Date or, if the
Effective Date is not a trading date, on the first trading day
after the Effective Date, on the principal stock exchange on
which the stock of NEWCO is traded.
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June 14, 2005
Page 4
B. Your Employment Agreement provides that your next grant of
restricted share units will be awarded during the first
calendar quarter of 2006. It would be desirable for your next
grant of restricted share units to be awarded by XXXXX.
Accordingly, you agree that, if the Business Separation occurs
after the end of the first calendar quarter of 2006 but before
the end of the second calendar quarter of 2006, your next
award of restricted share units could be granted during the
second calendar quarter of 2006; if the Business Separation
has not occurred by the end of the second calendar quarter of
2006, you will receive your next award of restricted share
units from Viacom by the end of the second calendar quarter of
2006 and it is expected that such restricted share units will
be adjusted by the Compensation Committee in the same manner
that the restricted share units to be awarded to you after the
Business Separation are adjusted pursuant to paragraph A
above. It is acknowledged and agreed that the foregoing will
in no way delay the vesting of such restricted share units, as
provided for in your Employment Agreement.
6. Subject to obtaining required approvals of the Board of Directors
and the stockholders of NEWCO, any adjustment or change to, or
adoption of a new, Senior Executive STIP will preserve the
potential maximum bonus that could be paid under the current
Senior Executive STIP.
7. It is our current expectation that NEWCO will adopt benefits
plans, retirement plans and other similar plans in order to
provide you with benefits comparable to the benefits currently
available to you; adoption of such plans would, among other
things, be subject to obtaining required approvals of the Board of
Directors and stockholders of NEWCO. The foregoing shall in no way
limit any specific benefits provided to you pursuant to your
Employment Agreement.
8. Except as expressly provided for herein, your Employment Agreement
will not be modified and will continue in full force and effect in
accordance with its terms and nothing contained herein will in any
way preclude you from disputing any actions taken by the Company
in violation of this letter agreement or your Employment
Agreement. In addition, this letter agreement will not be deemed
to be a waiver of any term or condition of your Employment
Agreement except as expressly provided for herein.
Xxxxxx X. Xxxxxxx
June 14, 2005
Page 5
Please sign, date and return all four (4) copies of this letter agreement
to the undersigned for execution on behalf of Viacom; after this letter
agreement has been executed by Xxxxxx and a fully executed copy returned to you,
it will constitute a binding amendment to your Employment Agreement.
Very truly yours,
VIACOM INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President,
Human Resources and
Administration
ACCEPTED AND AGREED:
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Dated: 6/14/05
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