EXHIBIT 10.4
CONFORMED 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
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outside of the New York City metropolitan area. You shall be entitled to
continue to serve on the corporate, charitable and educational boards of which
you are a member as of the date hereof.
3. Compensation. As the sole compensation for services to be
rendered by you during the Employment Term in all capacities to Viacom, its
subsidiaries and affiliates, you will receive the following compensation.
(a) Salary: For all the services rendered by you in any
capacity to Viacom, its subsidiaries and affiliates, Viacom agrees to pay you a
base salary at the rate of $1,000,000 per annum ("Salary"), payable in
accordance with Viacom's then effective payroll practices.
(b) Bonus Compensation: In addition to your Salary, you shall
be entitled to receive bonus compensation for each of the calendar years during
the Employment Term, determined and payable as follows ("Bonus"):
(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).
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(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
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.
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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.
(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
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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.
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(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.
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(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 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.
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(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 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.
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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.
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
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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 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.
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(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
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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;
(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
13
any matter as part of any film, television program or other production produced,
distributed and/or developed by Viacom and/or any of its affiliates or
predecessors.
12. Equal Opportunity Employer. You acknowledge that Viacom is
an equal opportunity employer. You agree that you will comply with Viacom
policies regarding employment practices and with applicable federal, state and
local laws prohibiting discrimination on the basis of race, color, creed,
national origin, age, sex or disability.
13. Indemnification.
(a) Viacom shall indemnify and hold you harmless, to the
maximum extent permitted by law and by the Certificate of Incorporation and/or
the Bylaws of Viacom, against judgments, fines, amounts paid in settlement of
and reasonable expenses incurred by you in connection with the defense of any
action or proceeding (or any appeal therefrom) in which you are a party by
reason of your position as President and Chief Operating Officer or any other
office you may hold with Viacom or its affiliates or by reason of any prior
positions held by you with Viacom or any of its affiliates or predecessors or
for any acts or omissions made by you in good faith in the performance of any of
your duties as an officer of Viacom.
(b) To the extent that Viacom maintains officers' and
directors' liability insurance, you will be covered under such policy.
14. Notices. All notices required to be given hereunder shall
be given in writing, by personal delivery or by mail at the respective addresses
of the parties hereto set forth above, or at such other address as may be
designated in writing by either party. Any notice given by mail shall be deemed
to have been given three days following such mailing.
15. Assignment. This is an Agreement for the performance of
personal services by you and may not be assigned by you or Viacom except that
Viacom may assign this Agreement to any affiliate of or any successor in
interest to Viacom.
16. New York Law, Etc. This Agreement and all matters or
issues collateral thereto shall be governed by the laws of the State of New York
applicable to contracts entered into and performed entirely therein. Any action
to enforce this Agreement shall be brought in the state or federal courts
located in the City of New York.
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.
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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.
15
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.
2
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.
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
3
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 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.
4
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 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.
5
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 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
6
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.
(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
7
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
8
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 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.
9
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
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
10
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.
(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
11
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 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.
12
(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 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.
13
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 of CBS
prior to the Effective Time and (ii) any Replacement CBS Director (as defined in
Section 2(b) of this Article XIII).
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(e) "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.
() "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.
(3) (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
15
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 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.
16
(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.
(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).
(c) 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
17
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.
(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.
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(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 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
19
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.
20
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
* Any acquisition, equity investment or joint venture (each an
"Acquisition") by the Corporation or any of its subsidiaries for more than
$25 million.
* 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).
* Any real estate purchase, sale or lease by the Corporation or any of
its subsidiaries for more than $25 million.
* 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.
* 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.
* Any contract of the Corporation or any of its subsidiaries not in the
ordinary course with a value in excess of $25 million.
* 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
* 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
* Entering into any modifications or amendments to the employment
agreements with the CEO or the COO.
C. General
* The Annual Report on Form 10-K
* Proxy statement and notice of meeting (including annual or special
meeting date, location, record date for voting)
* 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
* 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
* 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
* Any Corporation or subsidiary pays a dividend or repurchases stock
from a third party
* 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)
* Review and approve Board minutes
* 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
2
* Subject to Article XIII of the Restated Certificate of Incorporation,
amendments to the Restated Certificate of Incorporation and by-laws of
the Corporation
* Commencement and settlement of major litigation
* Selection of independent auditors
* 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 Article XIII of this
Restated Certificate of Incorporation).
3
EXHIBIT B
Form of 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.
2
(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 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
3
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.
(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.
4
(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 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.
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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.
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Section 4.10 Receipt of Copy of Plan. By executing this
Agreement, the Participant acknowledges receipt of a copy of the Plan.
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:
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Senior Vice President,
Human Resources and
Administration
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Participant
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