Document:

Exhibit 10.2

 

 

	
   

  	
  July 1, 2004

  

 

 

Thomas E. Freston

c/o Viacom Inc.

1515 Broadway

New York, New York  10036

 

Dear Mr. Freston:

 

Viacom Inc.
(“Viacom” or the “Company”), having an address at 1515 Broadway, New York, New
York 10036, 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 July 1, 2004 and, unless terminated by Viacom or you pursuant to
paragraph 8 hereof, shall continue through and until June 30, 2009.  The period from July 1, 2004 through June 30,
2009 shall hereinafter be referred to as the “Employment Term” notwithstanding
any earlier termination pursuant to paragraph 8.

 

2.               Duties.  During your employment under this Agreement,
you agree to devote your entire business time, attention and energies to the
business of Viacom, except for vacations, illness or incapacity.  However, nothing in this Agreement shall
preclude you from serving as a member of the Board of Directors of any charitable,
educational, religious or entertainment industry trade, public interest or
public service organization, in each instance not inconsistent with the
business practices and policies of Viacom, or from devoting reasonable periods
of time to the activities of the aforementioned organizations or from managing
your personal investments; provided, that such activities do not
materially interfere with the performance of your duties and responsibilities
hereunder.  You will be Co-President and
Co-Chief Operating Officer of Viacom, reporting directly and solely to the
Chairman and Chief Executive Officer of Viacom (the “Chairman, CEO”), and you
agree to perform such duties, and such other duties reasonable and consistent
with such offices as may be assigned to you from time to time by the Chairman,
CEO.  You will manage the operations of
the following business units of Viacom: (i) MTV Networks, Paramount Motion
Picture Group, Paramount Parks, Showtime, BET, Simon & Schuster and such
other business units as may be added from time to time, and (ii) any business
units managed by you as of the commencement of the Employment Term regardless
of whether those units are listed in (i). 
You acknowledge that Leslie Moonves will be your Co-President and
Co-Chief Operating Officer (the “Other Co-Chief Operating Officer”) and will
manage the operations of the following business units of Viacom: (x) CBS, UPN,
Paramount Television (including Spelling Productions Inc.), CBS Enterprises,
Infinity Radio, Viacom Outdoor and such other

 

 

Thomas E. Freston

July 1, 2004

Page 2

 

 

 

business units as may be added
from time to time, and (y) any business units managed by him as of the
commencement of the Employment Term regardless of whether those units are
listed in (x).  You will have the
authority, functions, duties, powers and responsibilities normally associated
with your position, including, without limitation, (i) all of the powers,
rights and functions with respect to supervising, coordinating and managing the
business, operations and activities of the business units for which you are
responsible; and (ii) decisions on hiring and firing of the personnel of such
business units; subject, in each case, to the approval of the Chief Executive
Officer of Viacom, as appropriate, and subject to required approvals and
policies of the Board of Directors or the Compensation Committee of
Viacom.  You acknowledge that the Viacom
officers in charge of the Viacom corporate functions will report to the
Chairman, CEO and will, in the ordinary course of their duties, liaise with
respect to such corporate functions with you and the managers of the business
units for which you are responsible.  You
shall render your services under this Agreement from Viacom’s offices in the
New York metropolitan area (except for services rendered during business trips
as may be reasonably necessary), and you shall not be required to relocate
outside of the New York metropolitan area. 
On the date on which the executive serving as the Chairman, CEO on the
date of this Agreement resigns from the position of CEO (or ceases to serve in
such position for any reason) but in any event no later than December 31, 2007:
(i) you will be appointed the Chief Executive Officer of Viacom or the Co-Chief
Executive Officer of Viacom (with the Other Co-Chief Operating Officer
appointed as the other Co-Chief Executive Officer of Viacom); or (ii) you will
be appointed as the sole President and Chief Operating Officer of Viacom (with
the Other Co-Chief Operating Officer appointed as the Chief Executive Officer
of Viacom).

 

3.               Compensation.

 

(a)          Salary.  For all the services rendered by you in any
capacity hereunder, Viacom agrees to pay you the sum of Three Million Dollars
($3,000,000) per annum (“Salary”), payable in accordance with Viacom’s then
effective payroll practices but no less frequently than semi-monthly.

 

(b)         Deferred
Compensation.  In addition to your
Salary, you shall earn, with respect to each payroll period during the
Employment Term, additional amounts (“Deferred Compensation”), the payment of
which (together with the return thereon as provided in this paragraph 3(b)),
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 by the
rules and regulations of the Securities Exchange Commission for purposes of the
Securities Exchange Act of 1934, as amended, and payable at that time or at
such later date as shall be determined pursuant to paragraph 20.  The Deferred Compensation for the six (6) month
period from July 1, 2004 through December 31, 2004 shall equal One Million
Dollars ($1,000,000), based on an annualized rate of Two Million Dollars
($2,000,000).  The annualized rate of
Deferred Compensation for each subsequent calendar year during the Employment
Term shall be increased by Three Hundred

 

 

 

Thomas E. Freston

July 1, 2004

Page 3

 

 

 

Thousand Dollars ($300,000) on
each January 1st during the Employment Term, commencing January 1,
2005.  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 Viacom Excess 401(k)
Plan for Senior Executives  (as such plan
may be amended from time to time, the “Excess 401(k) Plan”) is determined (it
being understood and agreed that, if at any time during which the Deferred
Compensation remains payable, your account balance in the Excess 401(k) Plan 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) Plan 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(b)) shall be an unfunded
obligation to be satisfied from the general funds of Viacom.

 

(c)          Bonus
Compensation.  In addition to your
Salary and Deferred Compensation, 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 calendar
year or portion thereof during the Employment Term will be based upon
achievement of the performance goal established by the Viacom Compensation
Committee for each calendar year or partial calendar year performance period
during the Employment Term and shall be determined, in accordance with the
Viacom Senior Executive Short-Term Incentive Plan, as the same may be amended
from time to time (the “Senior Executive STIP”), which performance goal shall
be no less favorable to you than the performance goal used to determine the
amount of bonus payable to any other executive of Viacom who participates in
the Senior Executive STIP.   You shall
have meaningful input in the process regarding the determination of the
performance goal with the Chairman and the Viacom Compensation Committee prior
to the determination of such performance goal for the Senior Executive STIP for
each performance period.

 

(ii)                    Your Target Bonus for each of the
calendar years or portion thereof during the Employment Term shall be 200% of
your Salary and Deferred Compensation at the annualized rate in effect at the
end of such period.  For the 2004
calendar year, your bonus compensation for the entire year will be based on the
sum of your Salary and Deferred Compensation at the annualized rate in effect

 

 

 

Thomas E. Freston

July 1, 2004

Page 4

 

 

 

at the end of the year and the Senior Executive STIP performance goal
established by the Viacom Compensation Committee for the period from July 1,
2004 through December 31, 2004.

 

(iii)                 Assuming the performance goal
pre-established by the Viacom Compensation Committee for each calendar year or
partial calendar year performance period during the Employment Term has been
achieved and certified by the Committee, the Compensation Committee is entitled
to use its negative discretion to reduce the amount of the Bonus that you are
entitled to receive for such performance period but will not reduce your Bonus
for any such period below the amount of the bonus compensation that you would
have been entitled to receive if you had continued to participate in Viacom’s
Short-Term Incentive Plan, as the same may be amended from time to time (the
“STIP”), for such period.  In addition,
assuming the pre-established performance goal for the period from July 1, 2004
through December 31, 2004 has been achieved and certified by the Compensation
Committee, in exercising its negative discretion to determine the amount of the
Bonus that you will receive under the Senior Executive STIP for the 2004
calendar year, the Compensation Committee will give due consideration to the
performance of the business units for which you were responsible during the
first half of such year, including their achievement of their objectives under
the STIP during such period.

 

(iv)                Your Bonus for any calendar year,
including the last calendar year of the Employment Term, shall be payable by
February 28th of the following year. 
For the avoidance of doubt, it is understood that you will receive the
Bonus to which you are entitled for each calendar year in which you were
employed, even if you are not employed on February 28th of the
following year or on the actual date on which bonuses are paid for such
year.  In the event that your employment
under this Agreement terminates on or following the expiration of the
Employment Term, you shall be entitled to receive a bonus for calendar year
2009, equal to your Target Bonus, prorated for the period of your employment
during 2009 and payable by February 28, 2010.

 

(v)                   In the event that the Senior
Executive STIP is amended or terminated, you will be given an opportunity under
the amended or successor plan to earn bonus compensation equivalent to the
amount that you could have earned under this paragraph 3(c) but subject to the
same limitations.

 

 

 

Thomas E. Freston

July 1, 2004

Page 5

 

 

 

(d)         Long
Term Compensation.  In addition to
your Salary, Deferred Compensation and Bonus, you shall receive the following
grants of long-term compensation under the Viacom 2004 Long-Term Management
Incentive Plan (the “2004 LTMIP”) or a successor plan (together with Viacom’s
1994, 1997 and 2000 Long-Term Management Incentive Plans, collectively, the
“LTMIP”):

 

(i)                       Stock Option Grants.  The Viacom Compensation Committee awarded
you, on July 1, 2004, grants under the 2004 LTMIP to purchase an aggregate of
One Million Five Hundred Thousand (1,500,000) shares of Viacom Class B Common
Stock as follows:  (x) a grant of stock
options to purchase Five Hundred Thousand (500,000) shares of Viacom Class B
Common Stock that will vest on December 31, 2004; and (y) a grant of stock
options to purchase One Million (1,000,000) shares of Class B Common Stock that
will vest in four (4) equal installments on July 1, 2005, July 1, 2006, July 1,
2007 and July 1, 2008.  Each grant has a
per share exercise price of $35.51 (which is equal to the closing price of a
share of Viacom Class B Common Stock on the New York Stock Exchange on the July
1, 2004 date of grant).

 

(ii)                    Restricted Units.  The Viacom Compensation Committee will award
you four (4) grants under the LTMIP, each for 115,000 restricted share units
(“Restricted Units”), during the first calendar quarter of 2005, 2006, 2007 and
2008.  Each Restricted Unit will
correspond to one (1) share of Viacom Class B Common Stock.  At the time of each grant, the Compensation
Committee will establish a performance goal requirement for such award of
Restricted Units for a performance period that will end no later than December
31st of the year in which the grant was made.  The Compensation Committee shall establish
the same performance goal for each grant of Restricted Units that it
establishes for the Senior Executive STIP for the performance period during
which such grant of Restricted Units is awarded.  At the first Compensation Committee meeting
held after the end of each performance period during which Restricted Units
were awarded (which meeting is expected to be held in January), the
Compensation Committee will determine whether the performance goal for each
award of Restricted Units has been achieved. 
If the Committee certifies that the performance goal established for an
award of Restricted Units has been achieved, the award will vest and become
payable as described below.  If the
Compensation Committee finds that the goal established for any grant of
Restricted Units has not been achieved, the award will not vest and will be
cancelled.  The Restricted Units will be
payable only in

 

 

 

Thomas E. Freston

July 1, 2004

Page 6

 

 

 

shares of Class B Common Stock. 
Prior to the end of each calendar year during the Employment Term, you
will have an option to defer receipt of payment of the Restricted Units that
will be awarded during the following year; you can defer payment of such
Restricted Units as follows:  (x) for up
to ten (10) years after the Restricted Units vest for in-service distributions,
and (y) for up to three (3) years after the termination of your Viacom
employment for post-termination distributions. 
If a timely election to defer is not made for any award of Restricted
Units, payment of such Restricted Units will be made shortly after the
Restricted Units vest.  Notwithstanding
any of the foregoing, payment of each award of Restricted Units will be
deferred to the date determined in accordance with paragraph 20 if such date is
later than the date on which payment would otherwise be made.

 

4.               Benefits.

 

(a)          You
shall be entitled to participate in such life and medical insurance, 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. 
In the event your benefits in such plans are reduced or terminated and
such reduction or termination was not a result of a change in law, the Company
shall continue to provide you with benefits equivalent to the benefits provided
prior to any such reduction or termination until the end of the Employment
Term.  It is further understood and
agreed that all benefits you may be entitled to as an employee of Viacom shall
be based upon your Salary plus Deferred Compensation (as if it were Salary), as
set forth in paragraphs 3(a) and 3(b), and not upon any bonus compensation due,
payable or paid to you hereunder, except where the benefit plan expressly
provides otherwise.  You shall be
entitled to four (4) weeks paid vacation during each year during the Employment
Term.

 

(b)         Viacom
shall provide you with no less than Eight Million Dollars ($8,000,000) of life
insurance during the Employment Term, provided, that the amount of such
life insurance, and the terms and conditions under which it is provided, shall
be no less favorable than those currently in effect for you.  You shall have the right to assign the policy
for such life insurance to your spouse and/or issue or to a trust or trusts
primarily for the benefit of your spouse or issue.

 

5.               Business
Expenses, Perquisites.  During the
Employment Term, you shall be reimbursed for such reasonable travel and other
expenses incurred in the performance of your duties hereunder on a basis no
less favorable than that provided by Viacom to any of its senior executives at
your level or below but in any event on a basis no less favorable

 

 

 

Thomas E. Freston

July 1, 2004

Page 7

 

 

 

to you than
had previously been provided to you, or agreed to be provided to you, prior to
the date of this Agreement.  You shall be
entitled to receive such perquisites with respect to an automobile as are
provided to any senior executive reporting directly to the Chairman of Viacom,
including a car allowance of Eleven Hundred Dollars ($l,100) per month and the
provision of insurance for a car.  Viacom
shall pay all fees and expenses of your counsel and other fees and expenses
which you may incur in an effort to establish entitlement to compensation or
other benefits under this Agreement in the event that you ultimately prevail.  While you are actively employed during the
Employment Term, you shall be entitled to the use of a private plane in
accordance with Viacom policy on a basis no less favorable than that provided
by Viacom to any of its senior executives at your level or below but in any
event on a basis no less favorable to you than had previously been provided to
you prior to the date of this Agreement.

 

6.               Exclusive
Employment, Etc.

 

(a)          Non-Competition.  You agree that your employment hereunder is
on an exclusive basis, and that during the period ending on the last day of the
Employment Term or, if earlier, (x) the date of the termination of your
employment pursuant to paragraph 8(c), the date on which you terminate your
employment for “Good Reason” pursuant to paragraph 8(b) or the date of the
termination of your employment pursuant to paragraph 8(g), or (y) eighteen (18)
months after the termination of your employment pursuant to paragraph 8(a) (but
in any case not beyond the Employment Term) (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 or consultant
for any business 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 one (1%)
percent stockholder in the securities of any company listed on a national
securities exchange or quoted on an automated quotation system.

 

(b)         No
Employee Solicitation.  You further
agree that, during the period of your employment hereunder and for the period
provided below after the termination of your employment for any reason, you
will not employ any Restricted Employee (as defined below), or in any way
induce or attempt to induce any Restricted Employee to leave the employment of
Viacom or any of its affiliates.  You
agree that you will not take the actions described in the preceding sentence
(x) with respect to any Restricted Employee at the level of Vice President or
above for one (1) year after the termination of your employment for any reason,
and (y) with respect to any Restricted Employee at the level of director for
six (6) months after the termination of your employment for any reason.  “Restricted Employee” refers to any person
employed by Viacom or any of its affiliates or predecessors or previously
employed by Viacom or any of its affiliates or predecessors (unless at such
time such person has not been employed by Viacom and/or any of its affiliates
or predecessors for at least six (6) months).

 

 

 

Thomas E. Freston

July 1, 2004

Page 8

 

 

 

(c)          Confidential
Information.  You agree that, during
the Employment Term or at any time thereafter, you will not 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 which is proprietary to Viacom or any of its affiliates (except as
may be required by law or in the performance of your duties hereunder
consistent with Viacom’s policies) and you will comply with any and all 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.

 

(d)         Viacom
Ownership.  The results and proceeds
of your services hereunder, including, without limitation, any works of
authorship resulting from your services for Viacom and created during your
employment with Viacom and/or any of its affiliates or predecessors and any
works in progress, shall be works-made-for-hire and Viacom shall be deemed the
sole owner throughout the universe of any and all rights of whatsoever nature
therein, whether or not now or hereafter known, existing, contemplated, recognized
or developed, with the right to use the same in perpetuity in any manner Viacom
determines in its sole discretion without any further payment to you
whatsoever.  If, for any reason, any of
such results and proceeds shall not legally be a work-made-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.  You shall, from time to time as may be
reasonably requested by Viacom, do any and all things which Viacom may
reasonably 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 or 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 6(d) is subject to, and does
not 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 period of your
employment hereunder, 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 attorneys and tax advisors and except to the
extent required by law or necessary in the

 

 

 

Thomas E. Freston

July 1, 2004

Page 9

 

 

 

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
Viacom or any of its 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.  You agree to
cooperate, in a reasonable and appropriate manner, with Viacom and its attorneys,
both during and after the termination of your employment, in connection with
any litigation or other proceeding arising out of or relating to matters in
which you were involved prior to the termination of your employment to the
extent Viacom pays all expenses you incur in connection with such cooperation
and to the extent such cooperation does not unduly interfere with your personal
or professional schedule.

 

(f)            No
Right to Write Books, Articles, Etc. 
During the period of your employment hereunder and for two (2) years
thereafter but not beyond the end of 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 its affiliates or predecessors or
any of their officers, directors, agents, employees, suppliers or customers.

 

(g)         Return
of Property.  All property of Viacom
obtained or prepared by or for you in the course of your employment with Viacom
or any of its affiliates or predecessors, including all documents, data,
recordings, or other property, whether tangible or intangible, including all
information stored in electronic form, shall remain the exclusive property of
Viacom.  In the event of the termination
of your employment for any reason, Viacom reserves the right, to the extent
permitted by law and in addition to any other remedy Viacom may have, to deduct
from any monies otherwise payable to you the following:  (i) all amounts you may 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 following Viacom’s written request for same and your
failure to return same.  In the event
that the law of any state or other jurisdiction requires the consent of any
employee for such deductions, this Agreement shall serve as such consent.

 

(h)         Non-Disparagement.  You and, to the extent set forth in the next
sentence, Viacom agree that each party shall not, during the period of your
employment hereunder and for one (1) year thereafter, criticize, ridicule or
make any statement which disparages or is derogatory of the other party in any
non-public communication with any customer, client or member of the investment
community or media or in any public communication.  Viacom’s obligations under the preceding
sentence shall be limited to communications by its senior corporate executives
having the rank of Senior Vice

 

 

 

Thomas E. Freston

July 1, 2004

Page 10

 

 

 

President or above (“Specified
Executives”), and it is agreed and understood that any such communication by
any Specified Executive shall be deemed to be a breach of this paragraph 6(h)
by Viacom.  Notwithstanding the
foregoing, neither party shall be prohibited from making statements in response
to statements by the other party that criticize or ridicule or are disparaging
or derogatory provided that the responsive statements do not criticize or
ridicule and are not disparaging or derogatory.

 

(i)             Injunctive
Relief, Etc.  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 6(a) through (h) 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.  You and Viacom agree that the restrictions
and remedies contained in paragraphs 6(a) through (h) 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.

 

(j)             Survival.  Your obligations under paragraphs 6(a)
through (h) and Viacom’s obligations under paragraph 6(h) shall remain in full
force and effect for the entire period provided therein notwithstanding the
termination of your employment pursuant to paragraph 8 hereof or otherwise or
the expiration of the Employment Term.

 

7.               Incapacity.  In the event you become totally medically
disabled and you will not be able to substantially perform your duties for at
least six (6) consecutive months or a total of 180 days during any 270 day
period, the Chairman of Viacom, at any time after such disability has continued
for 60 consecutive days, may determine that Viacom requires such duties and
responsibilities be performed by another executive.  In the event that you become “disabled”
within the meaning of such term under Viacom’s Short-Term Disability (STD) and
its Long-Term Disability (LTD) program, you will first receive benefits under
the STD program for the first 26 weeks of consecutive absence, which will be
equal to your Salary and you shall continue to earn your Deferred Compensation
for such period.  Thereafter, you will be
eligible to receive benefits under the LTD program in accordance with its
terms.  Upon receipt of benefits under
the LTD program, you will also be entitled to receive the following:

 

(i)                       Target
Bonus prorated for the portion of the calendar year through the date on which
you become eligible to receive benefits under the LTD program, payable at the
time the Bonus for such calendar year would otherwise be paid;

 

 

 

Thomas E. Freston

July 1, 2004

Page 11

 

 

 

(ii)                    Deferred
Compensation attributable to prior calendar years, payable, together with the
return thereon as provided in paragraph 3(b), prior to January 31st of the
calendar year following the calendar year in which such benefits commence;

 

(iii)                 all
unvested restricted share units will vest and payment will be made within ten
(10) business days after the date as of which you begin to receive benefits
under the LTD or such payment will be deferred in accordance with the election
that you made prior to the time of grant; and

 

(iv)                LTMIP
stock options granted on or after July 1, 2004 that are vested on the date as
of which benefits commence under the LTD, or that would have vested and become
exercisable on or before the last day of the Employment Term, will be
exercisable for three (3) years after the date as of which benefits commence
under the LTD or, if earlier, the expiration date of the stock options.

 

For the periods that you receive compensation and benefits under the
STD and LTD programs, the compensation and benefits provided under such programs
and the compensation provided under this paragraph 7 are in lieu of Salary,
Deferred Compensation and Bonus under paragraphs 3(a), (b) and (c) for such
periods.  In the event that you
thereafter become able to substantially perform your duties, your employment
will be terminated pursuant to paragraph 8(c) and you will be entitled to
receive, after such termination of your employment, the compensation and
benefits provided in paragraphs 8(d)(i) through (iv) and, to the extent
applicable, paragraph 8(d)(vii).

 

8.               Termination.

 

(a)          Termination
for Cause.  Viacom may, at its
option, terminate this Agreement forthwith for “cause”, in which case Viacom
shall be required to provide you with the Accrued Obligations (as defined
below).  For purposes of this Agreement,
termination of this Agreement for “cause” shall be limited to termination for
(i) engaging or participating in intentional acts of material fraud against
Viacom; (ii) willful misfeasance having a material adverse effect on Viacom
(except in the event of your disability as set forth in paragraph 7); (iii)
conviction of a felony; (iv) willful unauthorized disclosure of a trade secret
or other confidential material information of Viacom; or (v) your terminating
your employment without Good Reason (as defined below) other than for death or
your permanent disability or pursuant to paragraph 8(g) (it being understood
that your terminating your employment prior to the end of the eighteen (18)
month period referred to in the introductory sentence of paragraph 8(g) would
constitute “cause”).  Anything herein to
the contrary notwithstanding, Viacom will give you written notice, not more
than thirty (30) calendar days after the occurrence of the

 

 

 

Thomas E. Freston

July 1, 2004

Page 12

 

 

 

event constituting “cause”
comes to the attention of an “executive officer” of Viacom (as defined by the
rules and regulations of the Securities Exchange Commission for purposes of the
Securities Exchange Act of 1934, as amended), prior to terminating this
Agreement for the cause set forth in (ii) setting forth the nature of any
alleged misfeasance in reasonable detail and the conduct required to cure such
misfeasance.  Except for a breach which
cannot by its nature be cured, you shall have thirty (30) days from your
receipt of such notice within which to cure and within which period Viacom
cannot terminate this Agreement for the stated reasons, and, if so cured, after
which period Viacom cannot terminate your employment under this Agreement for
the stated reasons.  For purposes of this
Agreement, no such purported termination of your employment for the cause set
forth in (ii) shall be effective without such notice.  Accrued Obligations shall consist of (i) your
Salary through the effective date of your termination, (ii) any earned but
unpaid Bonus with respect to any then completed calendar year, (iii) the
Deferred Compensation credited on your behalf under paragraph 3(b) as of the
effective date of your termination (which shall be paid, together with the
return thereon as provided in paragraph 3(b), prior to January 31st
of the calendar year following the effective date of your termination or such
later date as shall be determined pursuant to paragraph 20), and (iv) all other
vested compensation benefits to which you are entitled as of the effective date
of your termination under the terms and conditions applicable to such
compensation and benefits.

 

(b)         Good
Reason Termination.  Upon written
notice to Viacom, you may terminate your employment hereunder for “Good Reason”
at any time during the Employment Term not more than thirty (30) calendar days
after the occurrence of the event constituting Good Reason. Such notice shall
state an effective date no earlier than thirty (30) business days after the
date it is given.  Viacom shall have ten
(10) business days from the giving of such notice within which to cure and
within which period you cannot terminate your employment under this Agreement
for the stated reasons and, if so cured, after which you cannot terminate your
employment under this Agreement for the stated reasons; provided, however,
that this sentence shall not apply with respect to events which by their nature
cannot be cured.  Good Reason shall mean,
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 or as a result of your death:

 

(i)                       the assignment to you by Viacom
of duties inconsistent with your positions, duties, responsibilities, titles or
offices;

 

(ii)                    the diminution or withdrawal of a
meaningful portion of your authority or responsibilities as set forth in
paragraph 2, subject to Viacom’s right to sell or otherwise dispose of New
Business Units as set forth below;

 

 

 

Thomas E. Freston

July 1, 2004

Page 13

 

 

 

(iii)                 a
reduction by Viacom of your Salary, Deferred Compensation or Target Bonus as
provided in this Agreement, as the same may be increased from time to time
during the Employment Term;

 

(iv)                Viacom’s
requiring you to be based anywhere other than the New York metropolitan area;

 

(v)                   your
removal from or any failure to re-elect you as Co-President and Co-Chief
Operating Officer of Viacom while the current Chairman, CEO serves in the
position of CEO;

 

(vi)                the
failure to appoint you to one of the following positions on the date on which
the current Chairman, CEO resigns from the position of CEO (or ceases to hold
such position for any reason) but not later than December 31, 2007: (A) the
Chief Executive Officer of Viacom or the Co-Chief Executive Officer of Viacom
(with the Other Co-Chief Operating Officer being appointed as the Co-Chief
Executive Officer of Viacom), or (B) the sole President and Chief Operating
Officer of Viacom (with the Other Co-Chief Operating Officer of Viacom being
appointed as the Chief Executive Officer of Viacom);

 

(vii)             a
change in reporting such that you do not report solely and directly to the
Chairman, CEO or to Viacom’s Board of Directors before December 31, 2007 or, if
earlier, the date on which the current Chairman, CEO resigns from the position
of CEO (or ceases to hold such position for any reason), and, thereafter, a
change in reporting such as you do not report to (A) the Chairman of Viacom or
Viacom’s Board of Directors, if you have been promoted to the position of Chief
Executive Officer or Co-Chief Executive Officer of Viacom, or (B) to the Other
Co-Chief Operating Officer of Viacom who has been promoted to the office of the
Chief Executive Officer of Viacom, if you have been promoted to the position of
the sole President and Chief Operating Officer of Viacom;

 

(viii)          the
failure to appoint or elect you to the position of (A) the sole President and
Chief Operating Officer of Viacom, if the Other Co-Chief Operating Officer of
Viacom resigns or his employment terminates for any reason, (B) the sole Chief
Executive Officer of Viacom, if the other Co-Chief Executive Officer resigns or
his employment terminates for any reason, or (C) the Chief Executive Officer of
Viacom, if the Other Co-Chief Operating Officer becomes the Chief Executive
Officer of Viacom and thereafter

 

 

 

Thomas E. Freston

July 1, 2004

Page 14

 

 

 

                                  resigns
or his employment terminates for any reason, in each case, with authority over
the business units previously supervised by the departing executive; or

 

(ix)                  any
other material breach by Viacom of its material obligations hereunder.

 

Notwithstanding anything to the contrary in this Agreement, Viacom may
sell or otherwise dispose of any New Business Unit (as defined below); provided,
that the aggregate revenues of all New Business Units sold or otherwise
disposed of within any six (6) month period during the Employment Term do not
constitute more than 50% of the aggregate revenues of the New Business Units at
such time, based on the Viacom’s most recent quarterly financial
statements.  In making the calculation
described in the proviso in the preceding sentence, Viacom may include, on a
pro forma basis, the revenues of any Potential New Business Unit (as defined
below); provided, that, if Viacom formally abandons (or it receives
notification that the other party has formally abandoned) the negotiations
relating to Viacom’s acquisition of a Potential New Business Unit whose
revenues were included in the calculation referred to in the preceding
sentence, Viacom will promptly notify you of such abandonment and you can, by
written notice to Viacom within thirty (30) business days after Viacom’s
notification to you, require the calculation to be made as of the date of such
notification without including the revenues of such company.  A “New Business Unit” shall mean any business
unit that you manage including any business unit acquired after the
commencement of the Employment Term but not including any business units that
you managed prior to the commencement of the Employment Term.  A “Potential New Business Unit” shall mean
any business unit for which Viacom is actively negotiating the acquisition
under authorization from the Viacom Board of Directors that will be managed by
you.

 

(c)          Termination
Without Cause.  Viacom may terminate
your employment hereunder without “cause” (as defined above) at any time during
the Employment Term by written notice to you.

 

(d)         Termination
Payments, Etc.  In the event that
your employment terminates pursuant to paragraph 8(b) or 8(c) hereof, you shall
be entitled to receive the following, beginning on the date of such
termination:

 

(i)                       Salary,
an amount equal to the Deferred Compensation and bonus compensation shall be
payable as follows:  (x) 50% of the sum
of (A) your Salary and an amount equal to the Deferred Compensation for the
Non-Mitigation Period (as defined below), and (B) bonus compensation equal to
your Target Bonus for each calendar year or portion thereof during the period
from the beginning of the calendar year in which your employment terminates
through the end of the Non-Mitigation Period (prorated

 

 

 

Thomas E. Freston

July 1, 2004

Page 15

 

 

 

                                  for
any partial calendar years), shall be payable within thirty (30) days after the
date of such termination; (y) 50% of the sum of (A) and (B) in the preceding
clause (x) shall be payable in accordance with Viacom’s regular payroll
practices; and (z) your Salary and an amount equal to the Deferred Compensation
for the period after the end of the Non-Mitigation Period until the end of the
Employment Term, and bonus compensation equal to your Target Bonus for each
calendar year or portion thereof during the period after the Non-Mitigation
Period until the end of the Employment Term (prorated for any partial calendar
years), shall be payable, in each case, in accordance with Viacom’s regular
payroll practices;

 

(ii)                    your
car allowance as provided in paragraph 5 until the end of the Employment Term,
payable in accordance with Viacom’s then effective payroll practices;

 

(iii)                 medical
and dental insurance coverage provided under COBRA at no cost to you (except as
hereafter described) pursuant to Viacom’s then-current benefit plans until the
later of (x) eighteen (18) months after the date of such termination, and (y)
the end of the Employment Term or, if earlier, until the date on which you
become eligible for medical and dental coverage from a third party; provided,
that, during the period that Viacom provides you with this coverage, an amount
equal to the applicable COBRA premiums (or such other amounts as may be
required by law) will be included in your income for tax purposes to the extent
required by law and Viacom may withhold taxes from your compensation for this
purpose;

 

(iv)                life
insurance coverage as set forth in paragraph 4 hereof until the end of the
Employment Term or, if earlier, the date on which you become eligible for
insurance coverage from a third party employer;

 

(v)                   all
unvested restricted share units will vest and payment will be made within ten
(10) business days after the termination of your employment or such payment
will be deferred in accordance with the election that you made prior to the
time of grant; provided, that, in either case, payment will be deferred
until the date determined in accordance with paragraph 20, if such date is
later that the date on which payment would otherwise be made;

 

(vi)                LTMIP
stock options granted on or after July 1, 2004 that are vested on the date of
such termination of your employment, or that

 

 

 

Thomas E. Freston

July 1, 2004

Page 16

 

 

 

                                  would
have vested and become exercisable on or before the last day of the Employment
Term, will be exercisable for the following period after the date of such
termination or, if earlier, the expiration date of such stock options:

 

(w)                six
(6) months after the date of such termination, if the termination occurs before
June 30, 2005;

 

(x)                    one
(1) year after the date of such termination, if the termination occurs during
the period beginning on July 1, 2005 and ending on June 30, 2006;

 

(y)                  two
(2) years after the date of such termination, if the termination occurs during
the period beginning on July 1, 2006 and ending on June 30, 2007; and

 

(z)                    three
(3) years after the date of such termination, if the termination occurs on or
after July 1, 2007; and

 

(vii)             the
Accrued Obligations.

 

You shall be required to mitigate the amount of any payment provided
for in (i) and (ii) of this paragraph 8(c) by seeking other employment or
otherwise (only to the extent required by law) and the amount of any such
payment provided for in (i) and (ii) shall be reduced by any compensation
earned by you after the termination of your employment and during or with
respect to the Employment Term from a third person except that mitigation shall
not be required, and no reduction for any other compensation shall be made, for
the shorter of (x) thirty six (36) months after the termination of your
employment pursuant to paragraph 8(b) or 8(c) or (y) the period commencing with
the termination of your employment and ending on the last day of the Employment
Term (the “Non-Mitigation Period”).  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 8(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
paragraphs 8(d) and (g) with respect to medical, dental and life insurance and
the continued exercisability of stock options), coverage under all Viacom
benefit plans and programs (including, without limitation, vacation, 401(k) and
excess 401(k) plans, pension and excess pension plans, LTD, car insurance 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.

 

 

 

Thomas E. Freston

July 1, 2004

Page 17

 

 

 

(f)            Excise
Taxes.  Notwithstanding anything
herein to the contrary, in the event that it is determined by Viacom, or by the
Internal Revenue Service (the “IRS”) pursuant to an IRS audit (an “Audit”) of
your federal income tax return(s), that any payment or benefit provided to you
hereunder, would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), or any interest or
penalties with respect to such excise tax (such excise tax, together with any
interest or penalties thereon, is herein referred to as the “Excise Tax”), then
Viacom shall pay (either directly to the IRS as tax withholdings or to you as a
reimbursement of any amount of taxes, interest and penalties paid by you to the
IRS) both the Excise Tax and 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 payment or benefit had not been subject to the
Excise Tax.  Viacom will consult with its
outside tax counsel at its expense, to the extent it reasonably deems appropriate,
in making determinations pursuant to the preceding sentence.  The amount of the Gross-Up Payment shall be
calculated by Viacom’s regular independent auditors based on the amount of the
Excise Tax paid by Viacom as determined by Viacom or the IRS.  If the amount of the Excise Tax determined by
the IRS is greater than an amount previously determined by Viacom, Viacom’s
auditors shall recalculate the amount of the Gross-Up Payment.  Viacom’s auditors shall provide you with
detailed support for its calculations. 
Viacom shall be responsible for the fees and expenses incurred by its
auditors in making these calculations. 
You shall promptly notify Viacom of any IRS assertion during an Audit
that an Excise Tax is due with respect to any payment or benefit, but you shall
be under no obligation to defend against such claim by the IRS unless Viacom
requests, in writing, that you undertake the defense of such IRS claim on
behalf of Viacom and at Viacom’s sole expense. 
In such event, Viacom may elect to control the conduct to a final
determination through counsel of its own choosing and at its sole expense, of
any audit, administrative or judicial proceeding involving an asserted
liability relating to the Excise Tax, and you shall not settle, compromise or
concede such asserted Excise Tax and shall cooperate with Viacom in each phase
of any contest.

 

(g)         Severance
Payments, Etc.  In the event that you
are promoted to the position of sole President and Chief Operating Officer and
you remain employed in that position for a period of eighteen (18) months after
such promotion, you will receive the following, beginning on the date of such
termination, if (x) you elect to terminate your employment, as of or within
thirty (30) days following the expiration of such eighteen (18) month period,
by giving prior written notice to the Company, or (y) your employment under
this Agreement has terminated at the end of such eighteen (18) month period,
since the Employment Term has expired:

 

(i)                       the sum of (A) your Salary and
an amount equal to the Deferred Compensation that you would otherwise have
earned, as provided in paragraphs 3(a) and 3(b), for six (6) months after the
termination of your employment, and (B) bonus compensation equal to your Target
Bonus for each calendar year or portion

 

 

 

Thomas E. Freston

July 1, 2004

Page 18

 

 

 

                                  thereof
during the period from the beginning of the year in which your employment
terminates and ending six (6) months after the termination of your employment
(prorated for any partial calendar years), shall be payable as follows:  (x) 50% of the sum of (A) and (B) within
thirty (30) days after the date of such termination, and (y) 50% of the sum of
(A) and (B) in accordance with Viacom’s regular payroll practices;

 

(ii)                    your car allowance as provided in
paragraph 5 for six (6) months after the termination of your employment and
payable in accordance with Viacom’s then effective payroll practices;

 

(iii)                 medical and dental insurance coverage
provided under COBRA at no cost to you (except as hereafter described) pursuant
to Viacom’s then-current benefit plans for six (6) months after the termination
of your employment or, if earlier until the date on which you become eligible
for medical and dental coverage from a third party; provided, that,
during the period that Viacom provides you with this coverage, an amount equal
to the applicable COBRA premiums (or such other amounts as may be required by
law) will be included in your income for tax purposes to the extent required by
law and Viacom may withhold taxes from your compensation for this purpose;

 

(iv)                life insurance coverage as set forth in
paragraph 4 hereof for six (6) months after the termination of your employment
or, if earlier, the date on which you become eligible for insurance coverage
from a third party employer;

 

(v)                   all unvested restricted share units
will vest and payment will be made within ten (10) business days after the
termination of your employment or such payment will be deferred in accordance
with the election that you made prior to the time of grant; provided,
that, in either case, payment will be deferred until the date determined in
accordance with paragraph 20, if such date is later than the date on which
payment would otherwise be made;

 

(vi)                LTMIP stock options granted on or after
July 1, 2004 that are vested on the date of such termination of your
employment, or that would have vested and become exercisable on or before the
last day of the Employment Term, will be exercisable for three (3) years after
the date of such termination or, if earlier, the expiration date of such stock
options; and

 

 

 

Thomas E. Freston

July 1, 2004

Page 19

 

 

 

(vii)             the
Accrued Obligations.

 

You will not be required to mitigate the amount of any payment provided
for in this paragraph 8(g) and no reduction will be made for any compensation
earned by you from a third party.  You
will continue to be subject to the obligations set forth in paragraphs 6(b)
through (h) except that your obligations under such paragraphs will be
determined as though the date of the termination of your employment pursuant to
this paragraph 8(g) were the last day of the Employment Term.  Except as otherwise provided in this
paragraph 8(g) with respect to medical, dental and life insurance and the
continued exercisability of stock options), coverage under all Viacom benefit
plans and programs (including, without limitation, vacation, 401(k) and excess
401(k) plans, pension and excess pension plans, LTD, car insurance 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.

 

(h)         Advisory
Services.  In the event that your
employment terminates pursuant to paragraph 8(b), (c) or (g), or upon the
expiration of the Employment Term (provided you remain employed, and are being
paid on Viacom’s payroll, through the end of the Employment Term), you can
elect to become an advisor to the Company for up to three (3) years after such
termination of your employment (the “Advisory Period”).  During the Advisory Period, you will provide
such advisory services concerning the business, affairs and management of the
Company as may be reasonably requested by the Chairman or the Chief Executive
Officer of Viacom; but you shall not be required to devote more than five (5)
days (up to eight (8) hours per day) each month to such services, which shall
be performed at a time and place mutually convenient to you.  You may accept full-time employment during
the Advisory Period with any charitable, educational, religious or
entertainment industry trade, public interest or public service organization
and you may provide full-time services to third parties (including serving as a
member of the Board of Directors of any such party) that is not in competition
with the Company as described in paragraph 6(a) and any compensation earned by
you from such employment shall not reduce the compensation or fees payable by
the Company under paragraphs 8(d) or (g). 
During the Advisory Period, you shall receive advisory fees of One
Million Dollars ($1,000,000) per annum, payable in accordance with Viacom’s
then effective payroll practices.  During
the Advisory Period, you will be subject to the provisions of paragraphs 6(b)
though (h) until the later of (x) the last day of the Advisory Period, as the
same may be terminated by you pursuant to the following sentence, and (y) the
period specified in such paragraph.  You
may terminate the Advisory Period at any time upon fourteen (14) days’ prior
written notice to the Company.

 

9.               Death.  If you die prior to the termination of your
employment under this Agreement, your beneficiary or estate shall be entitled
to receive the following:

 

(i)                       your Salary up to the date on
which the death occurs;

 

 

 

Thomas E. Freston

July 1, 2004

Page 20

 

 

 

(ii)                    prorated Target Bonus for the year
in which the death occurs prorated through the date of death and payable when
such bonus compensation would otherwise be paid;

 

(iii)                 prorated 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(b), prior to January 31st of the following calendar
year;

 

(iv)                all unvested restricted share units will
vest on the date of death and payment will be made to your beneficiary or
estate within ten (10) business days after the date of death; and

 

(v)                   LTMIP stock options granted on or
after July 1, 2004 that are vested on the date of death, or that would have
vested and become exercisable on or before the last day of the Employment Term
but for your death, will be exercisable for two (2) years after the date of
death, or, if earlier, the expiration date of such stock options.

 

10.         Section
317 and 507 of the Federal Communications Act.  You represent that you have not accepted or
given nor will you accept or give, directly or indirectly, any money, services
or other valuable consideration from or to anyone other than Viacom for the
inclusion of any matter as part of any film, television program or other
production produced, distributed and/or developed by Viacom and/or any of
Viacom’s affiliates.

 

11.         Equal
Opportunity Employer; Viacom Business Conduct Statement.  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.  In addition, you agree that you will comply
with the Viacom Business Conduct Statement.

 

12.         Indemnification.

 

(a)          Viacom
shall indemnify and hold you harmless, to the maximum extent permitted by law
and by the Restated Certificate of Incorporation and/or the By-Laws 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 positions under
this Agreement 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

 

 

 

Thomas E. Freston

July 1, 2004

Page 21

 

 

 

performance of any of your
duties as an officer of Viacom or any of its affiliates or predecessors.

 

(b)         To
the extent that Viacom maintains officers’ and directors’ liability insurance,
you will be covered under such policy subject to the exclusions and limitations
set forth therein.

 

13.         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, and in the case of Viacom, to the
attention of the General Counsel of Viacom. 
Any notice given by mail shall be deemed to have been given three days
following such mailing.  Copies of all
notices to you shall be given to Grubman Indursky & Schindler, P.C., 152
West 57th Street, New York, New York. 10019, Attention: Arthur I.
Indursky, Esq.

 

14.         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 Viacom or any successor in
interest to Viacom, provided that such assignee assumes all of the obligations
of Viacom hereunder.

 

15.         New
York Law.  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.

 

16.         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.

 

17.         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.

 

18.         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.

 

19.         Previous
Agreement.  With respect to the
period covered by the Employment Term, this Agreement supersedes and cancels
all prior agreements relating to your employment by Viacom or any of Viacom’s
affiliates or predecessors, including, without limitation, your employment
agreement with MTV Networks, dated as of January 1,

 

 

 

Thomas E. Freston

July 1, 2004

Page 22

 

 

 

1996, as
amended (your “Prior Employment Agreement”). 
Notwithstanding the foregoing, your rights with respect to stock options
granted to you by Viacom or a predecessor of Viacom before July 1, 2004 will
continue to have the terms provided in your Prior Employment Agreement which
are set forth in Exhibit A hereto. 
Notwithstanding anything in this Agreement to the contrary, in the event
that the 2004 LTMIP or a successor plan provides you with a longer period to
exercise the LTMIP stock options granted to you on or after July 1, 2004 after
the termination of your employment, death, disability or retirement than the
period provided in this Agreement, you shall have the benefit of such longer
period.

 

20.         Deductions
and Withholdings, Payment of Deferred Compensation.  All amounts payable under this Agreement
shall be paid less deductions and income and payroll tax withholdings as may be
required under applicable law and any benefits and perquisites provided to you
under this Agreement shall be taxable to you as may be required under
applicable law.  Notwithstanding any
other provision of this Agreement to the contrary, no distribution of Deferred
Compensation, payment for any restricted share units or distribution of any
other deferred compensation shall be made sooner than the earliest date
permitted under the provisions of the Code or the rules or regulations
promulgated thereunder, as in effect on the date of such payment, in order for
such payment to be taxable at the time of the distribution thereof.

 

If the
foregoing correctly sets forth our understanding, please sign, date and return
all four (4) copies of this Agreement and return it to the undersigned for
execution on behalf of Viacom; after this Agreement has been executed by Viacom
and a fully executed copy returned to you, it shall constitute a binding
agreement between us.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  VIACOM INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SUMNER M. REDSTONE

  
	
   

  	
   

  	
  Name:

  	
  Sumner M. Redstone

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief

  
	
   

  	
   

  	
   

  	
  Executive Officer

  
	
  ACCEPTED AND AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ THOMAS E. FRESTON

  	
   

  	
   

  
	
   
  Thomas E. Freston

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
  July 15, 2004

  	
   

  	
   

  
						

 

 

 

EXHIBIT A

 

Summary of Provisions in Tom Freston’s

Prior Employment Agreement

 

 

Mr. Freston’s
Prior Employment Agreement included the following provisions concerning stock
options granted under Viacom’s 1994, 1997 and 2000 Long-Term Management
Incentive Plans (the “LTMIP”)* which provisions remain in effect:

 

In the event that Mr. Freston’s employment is terminated by Viacom
without “cause” or by him for Good Reason, stock options granted to him under
the LTMIP which were exercisable on or prior to the date of such termination of
his employment, or that would have vested and become exercisable on or before
the last day of the Employment Term, will be exercisable (x) for stock options
granted before May 4, 2000, until six (6) months after the date of termination
or, if earlier, the expiration date of such stock options, and (y) for stock
options granted on or after May 4, 2000, for one (1) year after the date of
such termination or, if earlier, the expiration date of such stock options.

 

In the event of Mr. Freston’s permanent disability, stock options
granted to him under the LTMIP which were exercisable on or prior to the date
on which benefits commenced under Viacom’s Long-Term Disability program, or
that would have vested and become exercisable on or before the last day of his
Employment Term, will be exercisable for one (1) year after the date as of
which such benefits commenced or, if earlier, the expiration date of the stock
options.

 

In the event of Mr. Freston’s death, his beneficiary or estate is
entitled to exercise stock options granted to him under the LTMIP which were
exercisable on or prior to his death, or that would have vested and become
exercisable on or prior to the last day of his Employment Term but for his
death, for one (1) year after the date of death or, if earlier, the expiration
date of such stock options.

 

 

 

 

 

 

 

*            As used in these
provisions, “cause”, Good Reason and Employment Term have the definitions
provided in the employment agreement that applies to Mr. Freston on the date on
which his employment terminates or his permanent disability or death
occurs.  In the event that the LTMIP
provides Mr. Freston with a longer period to exercise the stock options after
the termination of his employment or in the event of his death, permanent
disability or retirement than the period provided for in the Prior Employment
Agreement, he will have the benefit of the longer period.Exhibit 10.3

 

 

 

 

 

 

	
   

  	
  July 1, 2004

  

 

 

 

Leslie Moonves

c/o Viacom Inc.

1515 Broadway

New York, New York  10036

 

Dear Mr. Moonves:

 

Viacom Inc. (“Viacom” or the “Company”),
having an address at 1515 Broadway, New York, New York 10036, 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 July 1, 2004
and, unless terminated by Viacom or you pursuant to paragraph 8 hereof, shall
continue through and until June 30, 2009. 
The period from July 1, 2004 through June 30, 2009 shall hereinafter be
referred to as the “Employment Term” notwithstanding any earlier termination
pursuant to paragraph 8.

 

2.     Duties. 
During your employment under this Agreement, you agree to devote your
entire business time, attention and energies to the business of Viacom, except
for vacations, illness or incapacity. 
However, nothing in this Agreement shall preclude you from serving as a
member of the Board of Directors of any charitable, educational, religious or
entertainment industry trade, public interest or public service organization,
in each instance not inconsistent with the business practices and policies of
Viacom, or from devoting reasonable periods of time to the activities of the
aforementioned organizations or from managing your personal investments; provided,
that such activities do not materially interfere with the performance of your
duties and responsibilities hereunder. 
You will be Co-President and Co-Chief Operating Officer of Viacom,
reporting directly and solely to the Chairman and Chief Executive Officer of
Viacom (the “Chairman, CEO”), and you agree to perform such duties, and such
other duties reasonable and consistent with such offices as may be assigned to
you from time to time by the Chairman, CEO. 
You will manage the operations of the following business units of
Viacom: (i) CBS, UPN, Paramount Television (including Spelling Productions
Inc.), CBS Enterprises, Infinity Radio, Viacom Outdoor and such other business
units as may be added from time to time, and (ii) any business units managed by
you as of the commencement of the Employment Term regardless of whether those
units are listed in (i).  You
acknowledge that Thomas E. Freston will be your Co-President and Co-Chief
Operating Officer (the “Other Co-Chief Operating Officer”) and will manage the
operations of the following business units of Viacom: (x) MTV Networks,
Paramount Motion Picture Group, Paramount Parks, Showtime, BET, Simon &
Schuster and such

 

 

Leslie Moonves

July 1, 2004

Page 2

 

 

 

other business units as may be
added from time to time, and (y) any business units managed by him as of the
commencement of the Employment Term regardless of whether those units are
listed in (x).  You will have the
authority, functions, duties, powers and responsibilities normally associated
with your position, including, without limitation, (i) all of the powers,
rights and functions with respect to supervising, coordinating and managing the
business, operations and activities of the business units for which you are
responsible; and (ii) decisions on hiring and firing of the personnel of such
business units; subject, in each case, to the approval of the Chief Executive
Officer of Viacom, as appropriate, and subject to required approvals and
policies of the Board of Directors or the Compensation Committee of
Viacom.  You acknowledge that the Viacom
officers in charge of the Viacom corporate functions will report to the Chairman,
CEO and will, in the ordinary course of their duties, liaise with respect to
such corporate functions with you and the managers of the business units for
which you are responsible.  You shall
render your services under this Agreement from Viacom’s offices in the Los
Angeles metropolitan area (except for services rendered during business trips
as may be reasonably necessary), and you shall not be required to relocate
outside of the Los Angeles metropolitan area. 
On the date on which the executive serving as the Chairman, CEO on the
date of this Agreement resigns from the position of CEO (or ceases to serve in
such position for any reason) but in any event no later than December 31, 2007:
(i) you will be appointed the Chief Executive Officer of Viacom or the Co-Chief
Executive Officer of Viacom (with the Other Co-Chief Operating Officer
appointed as the other Co-Chief Executive Officer of Viacom); or (ii) you will
be appointed as the sole President and Chief Operating Officer of Viacom (with
the Other Co-Chief Operating Officer appointed as the Chief Executive Officer
of Viacom).

 

3.     Compensation.

 

(a)       Salary. 
For all the services rendered by you in any capacity hereunder, Viacom
agrees to pay you the sum of Three Million Dollars ($3,000,000) per annum
(“Salary”), payable in accordance with Viacom’s then effective payroll
practices but no less frequently than semi-monthly.

 

(b)       Deferred Compensation.  In addition to your Salary, you shall earn,
with respect to each payroll period during the Employment Term, additional
amounts (“Deferred Compensation”), the payment of which (together with the
return thereon as provided in this paragraph 3(b)), 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 by the rules and regulations of
the Securities Exchange Commission for purposes of the Securities Exchange Act
of 1934, as amended, and payable at that time or at such later date as shall be
determined pursuant to paragraph 20. 
The Deferred Compensation for the six (6) month period from July 1, 2004
through December 31, 2004 shall equal One Million Dollars ($1,000,000), based
on an annualized rate of Two Million Dollars ($2,000,000).  The annualized rate of Deferred Compensation
for each subsequent calendar year during the Employment Term shall be increased
by Three Hundred

 

 

 

Leslie Moonves

July 1, 2004

Page 3

 

 

 

Thousand Dollars ($300,000) on
each January 1st during the Employment Term, commencing January 1,
2005.  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 Viacom Excess 401(k)
Plan for Senior Executives  (as such
plan may be amended from time to time, the “Excess 401(k) Plan”) is determined
(it being understood and agreed that, if at any time during which the Deferred
Compensation remains payable, your account balance in the Excess 401(k) Plan 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) Plan 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(b)) shall be an unfunded
obligation to be satisfied from the general funds of Viacom.

 

(c)       Bonus Compensation.  In addition to your Salary and Deferred
Compensation, 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
calendar year or portion thereof during the Employment Term will be based upon
achievement of the performance goal established by the Viacom Compensation
Committee for each calendar year or partial calendar year performance period
during the Employment Term and shall be determined, in accordance with the
Viacom Senior Executive Short-Term Incentive Plan, as the same may be amended
from time to time (the “Senior Executive STIP”), which performance goal shall
be no less favorable to you than the performance goal used to determine the
amount of bonus payable to any other executive of Viacom who participates in
the Senior Executive STIP.  You shall
have meaningful input in the process regarding the determination of the
performance goal with the Chairman and the Viacom Compensation Committee prior
to the determination of such performance goal for the Senior Executive STIP for
each performance period.

 

(ii)       Your
Target Bonus for each of the calendar years or portion thereof during the
Employment Term shall be 200% of your Salary and Deferred Compensation at the
annualized rate in effect at the end of such period.  For the 2004 calendar year, your bonus compensation for the
entire year will be based on the sum of your Salary and Deferred Compensation at
the annualized rate in effect

 

 

 

Leslie Moonves

July 1, 2004

Page 4

 

 

 

at the end of the year and the Senior
Executive STIP performance goal established by the Viacom Compensation
Committee for the period from July 1, 2004 through December 31, 2004.

 

(iii)      Assuming
the performance goal pre-established by the Viacom Compensation Committee for
each calendar year or partial calendar year performance period during the
Employment Term has been achieved and certified by the Committee, the
Compensation Committee is entitled to use its negative discretion to reduce the
amount of the Bonus that you are entitled to receive for such performance
period but will not reduce your Bonus for any such period below the amount of
the bonus compensation that you would have been entitled to receive if you had
continued to participate in Viacom’s Short-Term Incentive Plan, as the same may
be amended from time to time (the “STIP”), for such period.  In addition, assuming the pre-established
performance goal for the period from July 1, 2004 through December 31, 2004 has
been achieved and certified by the Compensation Committee, in exercising its
negative discretion to determine the amount of the Bonus that you will receive
under the Senior Executive STIP for the 2004 calendar year, the Compensation
Committee will give due consideration to the performance of the business units
for which you were responsible during the first half of such year, including
their achievement of their objectives under the STIP during such period.

 

(iv)      Your
Bonus for any calendar year, including the last calendar year of the Employment
Term, shall be payable by February 28th of the following year.  For the avoidance of doubt, it is understood
that you will receive the Bonus to which you are entitled for each calendar
year in which you were employed, even if you are not employed on February 28th
of the following year or on the actual date on which bonuses are paid for such
year.  In the event that your employment
under this Agreement terminates on or following the expiration of the
Employment Term, you shall be entitled to receive a bonus for calendar year
2009, equal to your Target Bonus, prorated for the period of your employment
during 2009 and payable by February 28, 2010.

 

(v)       In
the event that the Senior Executive STIP is amended or terminated, you will be
given an opportunity under the amended or successor plan to earn bonus
compensation equivalent to the amount that you could have earned under this
paragraph 3(c) but subject to the same limitations.

 

 

 

Leslie Moonves

July 1, 2004

Page 5

 

 

 

(d)       Long Term Compensation.  In addition to your Salary, Deferred
Compensation and Bonus, you shall receive the following grants of long-term
compensation under the Viacom 2004 Long-Term Management Incentive Plan (the
“2004 LTMIP”) or a successor plan (together with Viacom’s 1994, 1997 and 2000
Long-Term Management Incentive Plans, collectively, the “LTMIP”):

 

(i)        Stock Option Grants.  The Viacom Compensation Committee awarded
you, on July 1, 2004, grants under the 2004 LTMIP to purchase an aggregate of
One Million Five Hundred Thousand (1,500,000) shares of Viacom Class B Common
Stock as follows:  (x) a grant of stock
options to purchase Five Hundred Thousand (500,000) shares of Viacom Class B
Common Stock that will vest on December 31, 2004; and (y) a grant of stock
options to purchase One Million (1,000,000) shares of Class B Common Stock that
will vest in four (4) equal installments on July 1, 2005, July 1, 2006, July 1,
2007 and July 1, 2008.  Each grant has a
per share exercise price of $35.51 (which is equal to the closing price of a
share of Viacom Class B Common Stock on the New York Stock Exchange on the July
1, 2004 date of grant).

 

(ii)       Restricted Units.  The Viacom Compensation Committee will award
you four (4) grants under the LTMIP, each for 115,000 restricted share units
(“Restricted Units”), during the first calendar quarter of 2005, 2006, 2007 and
2008.  Each Restricted Unit will
correspond to one (1) share of Viacom Class B Common Stock.  At the time of each grant, the Compensation
Committee will establish a performance goal requirement for such award of
Restricted Units for a performance period that will end no later than December
31st of the year in which the grant was made.  The Compensation Committee shall establish
the same performance goal for each grant of Restricted Units that it
establishes for the Senior Executive STIP for the performance period during
which such grant of Restricted Units is awarded.  At the first Compensation Committee meeting held after the end of
each performance period during which Restricted Units were awarded (which
meeting is expected to be held in January), the Compensation Committee will
determine whether the performance goal for each award of Restricted Units has been
achieved.  If the Committee certifies
that the performance goal established for an award of Restricted Units has been
achieved, the award will vest and become payable as described below.  If the Compensation Committee finds that the
goal established for any grant of Restricted Units has not been achieved, the
award will not vest and will be cancelled. 
The Restricted Units will be payable only in

 

 

 

Leslie Moonves

July 1, 2004

Page 6

 

 

 

shares of Class B Common Stock.  Prior to the end of each calendar year
during the Employment Term, you will have an option to defer receipt of payment
of the Restricted Units that will be awarded during the following year; you can
defer payment of such Restricted Units as follows:  (x) for up to ten (10) years after the Restricted Units vest for
in-service distributions, and (y) for up to three (3) years after the
termination of your Viacom employment for post-termination distributions.  If a timely election to defer is not made for
any award of Restricted Units, payment of such Restricted Units will be made
shortly after the Restricted Units vest. 
Notwithstanding any of the foregoing, payment of each award of
Restricted Units will be deferred to the date determined in accordance with
paragraph 20 if such date is later than the date on which payment would
otherwise be made.

 

4.     Benefits.

 

(a)       You shall be entitled to participate in such
life and medical insurance, 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.  In the event your benefits in such plans are
reduced or terminated and such reduction or termination was not a result of a
change in law, the Company shall continue to provide you with benefits equivalent
to the benefits provided prior to any such reduction or termination until the
end of the Employment Term.  It is
further understood and agreed that all benefits you may be entitled to as an
employee of Viacom shall be based upon your Salary plus Deferred Compensation
(as if it were Salary), as set forth in paragraphs 3(a) and 3(b), and not upon
any bonus compensation due, payable or paid to you hereunder, except where the
benefit plan expressly provides otherwise. 
You shall be entitled to four (4) weeks paid vacation during each year
during the Employment Term.

 

(b)       Viacom shall provide you with no less than Eight
Million Dollars ($8,000,000) of life insurance during the Employment Term, provided,
that the amount of such life insurance, and the terms and conditions under
which it is provided, shall be no less favorable than those currently in effect
for you.  You shall have the right to
assign the policy for such life insurance to your spouse and/or issue or to a
trust or trusts primarily for the benefit of your spouse or issue.

 

(c)        In addition to the benefits described in
paragraphs 4(a) and (b), Viacom agrees that, except with respect to your
participation in Viacom’s qualified and non-qualified defined benefit plans
which shall be handled as provided in the second and third sentences of this
paragraph, you shall be credited for service accrued or deemed accrued

 

 

 

Leslie Moonves

July 1, 2004

Page 7

 

 

 

prior to June 1, 2004 with CBS
or any of its subsidiaries or predecessors for all purposes under any employee
benefit plans, programs or arrangements 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.  Your participation in the
CBS cash balance plan and excess plan shall continue through May 31, 2004;
after such date, the amounts in such plans will earn interest and be available
to you in accordance with the terms of such plans, as they may be amended in
the future.  Effective June 1, 2004, you
shall participate in Viacom’s qualified and non-qualified defined benefit plans
and you shall receive credit in such plans for service before June 1, 2004 for
purposes of eligibility and vesting but not for purposes of benefit accrual.

 

5.     Business Expenses, Perquisites.  During the Employment Term, you shall be
reimbursed for such reasonable travel and other expenses incurred in the
performance of your duties hereunder on a basis no less favorable than that
provided by Viacom to any of its senior executives at your level or below but
in any event on a basis no less favorable to you than had previously been
provided to you, or agreed to be provided to you, prior to the date of this
Agreement.  You shall be entitled to receive
such perquisites with respect to an automobile as are provided to any senior
executive reporting directly to the Chairman of Viacom, including a car
allowance of Eleven Hundred Dollars ($l,100) per month and the provision of
insurance for a car.  Viacom shall pay
all fees and expenses of your counsel and other fees and expenses which you may
incur in an effort to establish entitlement to compensation or other benefits
under this Agreement in the event that you ultimately prevail.  While you are actively employed during the
Employment Term, you shall be entitled to the use of a private plane in
accordance with Viacom policy on a basis no less favorable than that provided
by Viacom to any of its senior executives at your level or below but in any
event on a basis no less favorable to you than had previously been provided to
you prior to the date of this Agreement.

 

6.     Exclusive Employment, Etc.

 

(a)        Non-Competition.  You agree that your employment hereunder is
on an exclusive basis, and that during the period ending on the last day of the
Employment Term or, if earlier, (x) the date of the termination of your
employment pursuant to paragraph 8(c), the date on which you terminate your
employment for “Good Reason” pursuant to paragraph 8(b) or the date of the
termination of your employment pursuant to paragraph 8(g), or (y) eighteen (18)
months after the termination of your employment pursuant to paragraph 8(a) (but
in any case not beyond the Employment Term) (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 or consultant
for any business 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 one

 

 

 

Leslie Moonves

July 1, 2004

Page 8

 

 

 

(1%) percent stockholder in the
securities of any company listed on a national securities exchange or quoted on
an automated quotation system.

 

(b)       No Employee Solicitation.  You further agree that, during the period of
your employment hereunder and for the period provided below after the
termination of your employment for any reason, you will not employ any
Restricted Employee (as defined below), or in any way induce or attempt to
induce any Restricted Employee to leave the employment of Viacom or any of its
affiliates.  You agree that you will not
take the actions described in the preceding sentence (x) with respect to any
Restricted Employee at the level of Vice President or above for one (1) year
after the termination of your employment for any reason, and (y) with respect
to any Restricted Employee at the level of director for six (6) months after
the termination of your employment for any reason.  “Restricted Employee” refers to any person employed by Viacom or
any of its affiliates or predecessors or previously employed by Viacom or any
of its affiliates or predecessors (unless at such time such person has not been
employed by Viacom and/or any of its affiliates or predecessors for at least
six (6) months).

 

(c)        Confidential Information.  You agree that, during the Employment Term
or at any time thereafter, you will not 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
which is proprietary to Viacom or any of its affiliates (except as may be
required by law or in the performance of your duties hereunder consistent with
Viacom’s policies) and you will comply with any and all 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.

 

(d)       Viacom Ownership.  The results and proceeds of your services hereunder,
including, without limitation, any works of authorship resulting from your
services for Viacom and created during your employment with Viacom and/or any
of its affiliates or predecessors and any works in progress, shall be
works-made-for-hire and Viacom shall be deemed the sole owner throughout the
universe of any and all rights of whatsoever nature therein, whether or not now
or hereafter known, existing, contemplated, recognized or developed, with the
right to use the same in perpetuity in any manner Viacom determines in its sole
discretion without any further payment to you whatsoever.  If, for any reason, any of such results and
proceeds shall not legally be a work-made-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

 

 

 

Leslie Moonves

July 1, 2004

Page 9

 

 

 

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.  You shall, from time to time as may be
reasonably requested by Viacom, do any and all things which Viacom may
reasonably 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 or 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 6(d) is subject to, and does not 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 period of your employment hereunder,
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 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 Viacom or any of its
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.  You agree to cooperate, in a reasonable and
appropriate manner, with Viacom and its attorneys, both during and after the termination
of your employment, in connection with any litigation or other proceeding
arising out of or relating to matters in which you were involved prior to the
termination of your employment to the extent Viacom pays all expenses you incur
in connection with such cooperation and to the extent such cooperation does not
unduly interfere with your personal or professional schedule.

 

(f)        No Right to Write Books, Articles, Etc.  During the period of your employment
hereunder and for two (2) years thereafter but not beyond the end of 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 its affiliates or predecessors or any of their officers, directors,
agents, employees, suppliers or customers.

 

(g)       Return of Property.  All property of Viacom obtained or prepared
by or for you in the course of your employment with Viacom or any of its
affiliates or predecessors, including all documents, data, recordings, or other
property, whether tangible or intangible, including all information stored in
electronic form, shall remain the exclusive property of Viacom.  In the event of the termination of your
employment

 

 

 

Leslie Moonves

July 1, 2004

Page 10

 

 

 

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) all amounts you may 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 following Viacom’s written request for same and
your failure to return same.  In the
event that the law of any state or other jurisdiction requires the consent of
any employee for such deductions, this Agreement shall serve as such consent.

 

(h)       Non-Disparagement.  You and, to the extent set forth in the next
sentence, Viacom agree that each party shall not, during the period of your
employment hereunder and for one (1) year thereafter, criticize, ridicule or
make any statement which disparages or is derogatory of the other party in any
non-public communication with any customer, client or member of the investment
community or media or in any public communication.  Viacom’s obligations under the preceding sentence shall be
limited to communications by its senior corporate executives having the rank of
Senior Vice President or above (“Specified Executives”), and it is agreed and
understood that any such communication by any Specified Executive shall be
deemed to be a breach of this paragraph 6(h) by Viacom.  Notwithstanding the foregoing, neither party
shall be prohibited from making statements in response to statements by the
other party that criticize or ridicule or are disparaging or derogatory
provided that the responsive statements do not criticize or ridicule and are
not disparaging or derogatory.

 

(i)         Injunctive Relief, Etc.  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 6(a) through (h) 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.  You and
Viacom agree that the restrictions and remedies contained in paragraphs 6(a)
through (h) 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.

 

(j)         Survival.  Your obligations under paragraphs 6(a) through (h) and Viacom’s
obligations under paragraph 6(h) shall remain in full force and effect for the
entire period provided therein notwithstanding the termination of your
employment pursuant to paragraph 8 hereof or otherwise or the expiration of the
Employment Term.

 

 

 

Leslie Moonves

July 1, 2004

Page 11

 

 

 

7.     Incapacity.  In the event you become totally medically disabled and you will
not be able to substantially perform your duties for at least six (6)
consecutive months or a total of 180 days during any 270 day period, the
Chairman of Viacom, at any time after such disability has continued for 60
consecutive days, may determine that Viacom requires such duties and
responsibilities be performed by another executive.  In the event that you become “disabled” within the meaning of
such term under Viacom’s Short-Term Disability (STD) and its Long-Term
Disability (LTD) program, you will first receive benefits under the STD program
for the first 26 weeks of consecutive absence, which will be equal to your
Salary and you shall continue to earn your Deferred Compensation for such
period.  Thereafter, you will be
eligible to receive benefits under the LTD program in accordance with its
terms.  Upon receipt of benefits under
the LTD program, you will also be entitled to receive the following:

 

(i)        Target
Bonus prorated for the portion of the calendar year through the date on which
you become eligible to receive benefits under the LTD program, payable at the
time the Bonus for such calendar year would otherwise be paid;

 

(ii)       Deferred
Compensation attributable to prior calendar years, payable, together with the
return thereon as provided in paragraph 3(b), prior to January 31st of the
calendar year following the calendar year in which such benefits commence;

 

(iii)      all
unvested restricted share units will vest and payment will be made within ten
(10) business days after the date as of which you begin to receive benefits
under the LTD or such payment will be deferred in accordance with the election
that you made prior to the time of grant; and

 

(iv)      LTMIP
stock options granted on or after July 1, 2004 that are vested on the date as
of which benefits commence under the LTD, or that would have vested and become
exercisable on or before the last day of the Employment Term, will be
exercisable for three (3) years after the date as of which benefits commence
under the LTD or, if earlier, the expiration date of the stock options.

 

For the periods that you receive compensation
and benefits under the STD and LTD programs, the compensation and benefits
provided under such programs and the compensation provided under this paragraph
7 are in lieu of Salary, Deferred Compensation and Bonus under paragraphs 3(a),
(b) and (c) for such periods.  In the
event that you thereafter become able to substantially perform your duties,
your employment will be terminated pursuant to paragraph 8(c) and you will be
entitled to receive, after such termination of your employment, the
compensation and benefits

 

 

 

Leslie Moonves

July 1, 2004

Page 12

 

 

 

provided in paragraphs 8(d)(i)
through (iv) and, to the extent applicable, paragraph 8(d)(vii).

 

8.     Termination.

 

(a)        Termination for Cause.  Viacom may, at its option, terminate this
Agreement forthwith for “cause”, in which case Viacom shall be required to
provide you with the Accrued Obligations (as defined below).  For purposes of this Agreement, termination
of this Agreement for “cause” shall be limited to termination for (i) engaging
or participating in intentional acts of material fraud against Viacom; (ii)
willful misfeasance having a material adverse effect on Viacom (except in the
event of your disability as set forth in paragraph 7); (iii) conviction of a
felony; (iv) willful unauthorized disclosure of a trade secret or other
confidential material information of Viacom; or (v) your terminating your
employment without Good Reason (as defined below) other than for death or your
permanent disability or pursuant to paragraph 8(g) (it being understood that
your terminating your employment prior to the end of the eighteen (18) month
period referred to in the introductory sentence of paragraph 8(g) would
constitute “cause”).  Anything herein to
the contrary notwithstanding, Viacom will give you written notice, not more
than thirty (30) calendar days after the occurrence of the event constituting
“cause” comes to the attention of an “executive officer” of Viacom (as defined
by the rules and regulations of the Securities Exchange Commission for purposes
of the Securities Exchange Act of 1934, as amended), prior to terminating this
Agreement for the cause set forth in (ii) setting forth the nature of any
alleged misfeasance in reasonable detail and the conduct required to cure such
misfeasance.  Except for a breach which
cannot by its nature be cured, you shall have thirty (30) days from your
receipt of such notice within which to cure and within which period Viacom
cannot terminate this Agreement for the stated reasons, and, if so cured, after
which period Viacom cannot terminate your employment under this Agreement for
the stated reasons.  For purposes of
this Agreement, no such purported termination of your employment for the cause
set forth in (ii) shall be effective without such notice.  Accrued Obligations shall consist of (i)
your Salary through the effective date of your termination, (ii) any earned but
unpaid Bonus with respect to any then completed calendar year, (iii) the Deferred
Compensation credited on your behalf under paragraph 3(b) as of the effective
date of your termination (which shall be paid, together with the return thereon
as provided in paragraph 3(b), prior to January 31st of the calendar
year following the effective date of your termination or such later date as
shall be determined pursuant to paragraph 20), and (iv) all other vested
compensation benefits to which you are entitled as of the effective date of
your termination under the terms and conditions applicable to such compensation
and benefits.

 

(b)       Good Reason Termination.  Upon written notice to Viacom, you may
terminate your employment hereunder for “Good Reason” at any time during the
Employment Term not more than thirty (30) calendar days after the occurrence of
the event constituting Good Reason. Such notice shall state an effective date
no earlier than thirty (30) business days after the date it is given.  Viacom shall have ten (10) business

 

 

 

Leslie Moonves

July 1, 2004

Page 13

 

 

 

days from the giving of such
notice within which to cure and within which period you cannot terminate your
employment under this Agreement for the stated reasons and, if so cured, after
which you cannot terminate your employment under this Agreement for the stated
reasons; provided, however, that this sentence shall not apply
with respect to events which by their nature cannot be cured.  Good Reason shall mean, 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
or as a result of your death:

 

(i)        the
assignment to you by Viacom of duties inconsistent with your positions, duties,
responsibilities, titles or offices;

 

(ii)       the
diminution or withdrawal of a meaningful portion of your authority or
responsibilities as set forth in paragraph 2, subject to Viacom’s right to sell
or otherwise dispose of New Business Units as set forth below;

 

(iii)      a
reduction by Viacom of your Salary, Deferred Compensation or Target Bonus as
provided in this Agreement, as the same may be increased from time to time
during the Employment Term;

 

(iv)      Viacom’s
requiring you to be based anywhere other than the Los Angeles metropolitan
area;

 

(v)       your
removal from or any failure to re-elect you as Co-President and Co-Chief
Operating Officer of Viacom while the current Chairman, CEO serves in the
position of CEO;

 

(vi)      the
failure to appoint you to one of the following positions on the date on which
the current Chairman, CEO resigns from the position of CEO (or ceases to hold
such position for any reason) but not later than December 31, 2007:  (A) the Chief Executive Officer of Viacom or
the Co-Chief Executive Officer of Viacom (with the Other Co-Chief Operating
Officer being appointed as the Co-Chief Executive Officer of Viacom), or (B)
the sole President and Chief Operating Officer of Viacom (with the Other
Co-Chief Operating Officer of Viacom being appointed as the Chief Executive
Officer of Viacom);

 

(vii)     a
change in reporting such that you do not report solely and directly to the
Chairman, CEO or to Viacom’s Board of Directors before December 31, 2007 or, if
earlier, the date on which the current Chairman, CEO resigns from the position
of CEO (or ceases to hold such position for any reason), and, thereafter, a

 

 

 

Leslie Moonves

July 1, 2004

Page 14

 

 

 

change in reporting such as you do not report
to (A) the Chairman of Viacom or Viacom’s Board of Directors, if you have been
promoted to the position of Chief Executive Officer or Co-Chief Executive
Officer of Viacom, or (B) to the Other Co-Chief Operating Officer of Viacom who
has been promoted to the office of the Chief Executive Officer of Viacom, if
you have been promoted to the position of the sole President and Chief Operating
Officer of Viacom;

 

(viii)    the
failure to appoint or elect you to the position of (A) the sole President and
Chief Operating Officer of Viacom, if the Other Co-Chief Operating Officer of
Viacom resigns or his employment terminates for any reason, (B) the sole Chief
Executive Officer of Viacom, if the other Co-Chief Executive Officer resigns or
his employment terminates for any reason, or (C) the Chief Executive Officer of
Viacom, if the Other Co-Chief Operating Officer becomes the Chief Executive Officer
of Viacom and thereafter resigns or his employment terminates for any reason,
in each case, with authority over the business units previously supervised by
the departing executive; or

 

(ix)       any
other material breach by Viacom of its material obligations hereunder.

 

Notwithstanding anything to the contrary in
this Agreement, Viacom may sell or otherwise dispose of any New Business Unit
(as defined below); provided, that the aggregate revenues of all New
Business Units sold or otherwise disposed of within any six (6) month period
during the Employment Term do not constitute more than 50% of the aggregate
revenues of the New Business Units at such time, based on the Viacom’s most
recent quarterly financial statements. 
In making the calculation described in the proviso in the preceding
sentence, Viacom may include, on a pro forma basis, the revenues of any
Potential New Business Unit (as defined below); provided, that, if
Viacom formally abandons (or it receives notification that the other party has
formally abandoned) the negotiations relating to Viacom’s acquisition of a
Potential New Business Unit whose revenues were included in the calculation
referred to in the preceding sentence, Viacom will promptly notify you of such
abandonment and you can, by written notice to Viacom within thirty (30)
business days after Viacom’s notification to you, require the calculation to be
made as of the date of such notification without including the revenues of such
company.  A “New Business Unit” shall
mean any business unit that you manage including any business unit acquired
after the commencement of the Employment Term but not including any business
units that you managed prior to the commencement of the Employment Term.  A “Potential New Business Unit” shall mean
any business unit for which Viacom is actively negotiating the acquisition
under authorization from the Viacom Board of Directors that will be managed by
you.

 

 

 

Leslie Moonves

July 1, 2004

Page 15

 

 

 

(c)       Termination Without Cause.  Viacom may terminate your employment
hereunder without “cause” (as defined above) at any time during the Employment
Term by written notice to you.

 

(d)       Termination Payments, Etc.  In the event that your employment terminates
pursuant to paragraph 8(b) or 8(c) hereof, you shall be entitled to receive the
following, beginning on the date of such termination:

 

(i)        Salary,
an amount equal to the Deferred Compensation and bonus compensation shall be
payable as follows:  (x) 50% of the sum
of (A) your Salary and an amount equal to the Deferred Compensation for the
Non-Mitigation Period (as defined below), and (B) bonus compensation equal to
your Target Bonus for each calendar year or portion thereof during the period
from the beginning of the calendar year in which your employment terminates
through the end of the Non-Mitigation Period (prorated for any partial calendar
years), shall be payable within thirty (30) days after the date of such
termination; (y) 50% of the sum of (A) and (B) in the preceding clause (x)
shall be payable in accordance with Viacom’s regular payroll practices; and (z)
your Salary and an amount equal to the Deferred Compensation for the period
after the end of the Non-Mitigation Period until the end of the Employment
Term, and bonus compensation equal to your Target Bonus for each calendar year
or portion thereof during the period after the Non-Mitigation Period until the
end of the Employment Term (prorated for any partial calendar years), shall be
payable, in each case, in accordance with Viacom’s regular payroll practices;

 

(ii)       your
car allowance as provided in paragraph 5 until the end of the Employment Term,
payable in accordance with Viacom’s then effective payroll practices;

 

(iii)      medical
and dental insurance coverage provided under COBRA at no cost to you (except as
hereafter described) pursuant to Viacom’s then-current benefit plans until the
later of (x) eighteen (18) months after the date of such termination, and (y)
the end of the Employment Term or, if earlier, until the date on which you
become eligible for medical and dental coverage from a third party; provided,
that, during the period that Viacom provides you with this coverage, an amount
equal to the applicable COBRA premiums (or such other amounts as may be
required by law) will be included in your income for tax purposes to the extent
required by law and Viacom may withhold taxes from your compensation for this
purpose;

 

 

 

Leslie Moonves

July 1, 2004

Page 16

 

 

 

(iv)      life
insurance coverage as set forth in paragraph 4 hereof until the end of the Employment
Term or, if earlier, the date on which you become eligible for insurance
coverage from a third party employer;

 

(v)       all
unvested restricted share units will vest and payment will be made within ten
(10) business days after the termination of your employment or such payment
will be deferred in accordance with the election that you made prior to the
time of grant; provided, that, in either case, payment will be deferred
until the date determined in accordance with paragraph 20, if such date is
later that the date on which payment would otherwise be made;

 

(vi)      LTMIP
stock options granted on or after July 1, 2004 that are vested on the date of
such termination of your employment, or that would have vested and become
exercisable on or before the last day of the Employment Term, will be
exercisable for the following period after the date of such termination or, if
earlier, the expiration date of such stock options:

 

(w)         six (6) months after the
date of such termination, if the termination occurs before June 30, 2005;

 

(x)          one (1) year after the
date of such termination, if the termination occurs during the period beginning
on July 1, 2005 and ending on June 30, 2006;

 

(y)         two
(2) years after the date of such termination, if the termination occurs during
the period beginning on July 1, 2006 and ending on June 30, 2007; and

 

(z)         three (3) years after the
date of such termination, if the termination occurs on or after July 1, 2007;
and

 

(vii)      the
Accrued Obligations.

 

You shall be required to mitigate the amount
of any payment provided for in (i) and (ii) of this paragraph 8(c) by seeking
other employment or otherwise (only to the extent required by law) and the
amount of any such payment provided for in (i) and (ii) shall be reduced by any
compensation earned by you after the termination of your employment and during
or with respect to the Employment Term from a third person except that
mitigation shall not be required, and no reduction for any other compensation
shall be made, for the shorter of (x) thirty six (36) months after the
termination of your employment pursuant to paragraph 8(b) or 8(c) or (y) the
period commencing with the

 

 

 

Leslie Moonves

July 1, 2004

Page 17

 

 

 

termination of your employment
and ending on the last day of the Employment Term (the “Non-Mitigation
Period”).  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 8(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 paragraphs 8(d) and (g) with
respect to medical, dental and life insurance and the continued exercisability
of stock options), coverage under all Viacom benefit plans and programs
(including, without limitation, vacation, 401(k) and excess 401(k) plans,
pension and excess pension plans, LTD, car insurance 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.

 

(f)        Excise Taxes.  Notwithstanding anything herein to the contrary, in the event
that it is determined by Viacom, or by the Internal Revenue Service (the “IRS”)
pursuant to an IRS audit (an “Audit”) of your federal income tax return(s),
that any payment or benefit provided to you hereunder, would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), or any interest or penalties with respect to such excise
tax (such excise tax, together with any interest or penalties thereon, is
herein referred to as the “Excise Tax”), then Viacom shall pay (either directly
to the IRS as tax withholdings or to you as a reimbursement of any amount of
taxes, interest and penalties paid by you to the IRS) both the Excise Tax and
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
payment or benefit had not been subject to the Excise Tax.  Viacom will consult with its outside tax
counsel at its expense, to the extent it reasonably deems appropriate, in
making determinations pursuant to the preceding sentence.  The amount of the Gross-Up Payment shall be
calculated by Viacom’s regular independent auditors based on the amount of the
Excise Tax paid by Viacom as determined by Viacom or the IRS.  If the amount of the Excise Tax determined
by the IRS is greater than an amount previously determined by Viacom, Viacom’s
auditors shall recalculate the amount of the Gross-Up Payment.  Viacom’s auditors shall provide you with
detailed support for its calculations. 
Viacom shall be responsible for the fees and expenses incurred by its
auditors in making these calculations. 
You shall promptly notify Viacom of any IRS assertion during an Audit
that an Excise Tax is due with respect to any payment or benefit, but you shall
be under no obligation to defend against such claim by the IRS unless Viacom
requests, in writing, that you undertake the defense of such IRS claim on
behalf of Viacom and at Viacom’s sole expense. 
In such event, Viacom may elect to control the conduct to a final
determination through counsel of its own choosing and at its sole expense, of
any audit, administrative or judicial proceeding involving an asserted
liability relating to the Excise

 

 

 

Leslie Moonves

July 1, 2004

Page 18

 

 

 

Tax, and you shall not settle,
compromise or concede such asserted Excise Tax and shall cooperate with Viacom
in each phase of any contest.

 

(g)       Severance Payments, Etc.  In the event that you are promoted to the
position of sole President and Chief Operating Officer and you remain employed
in that position for a period of eighteen (18) months after such promotion, you
will receive the following, beginning on the date of such termination, if (x)
you elect to terminate your employment, as of or within thirty (30) days
following the expiration of such eighteen (18) month period, by giving prior
written notice to the Company, or (y) your employment under this Agreement has
terminated at the end of such eighteen (18) month period, since the Employment
Term has expired:

 

(i)            the sum of (A) your
Salary and an amount equal to the Deferred Compensation that you would
otherwise have earned, as provided in paragraphs 3(a) and 3(b), for six (6)
months after the termination of your employment, and (B) bonus compensation
equal to your Target Bonus for each calendar year or portion thereof during the
period from the beginning of the year in which your employment terminates and
ending six (6) months after the termination of your employment (prorated for
any partial calendar years), shall be payable as follows:  (x) 50% of the sum of (A) and (B) within
thirty (30) days after the date of such termination, and (y) 50% of the sum of
(A) and (B) in accordance with Viacom’s regular payroll practices;

 

(ii)           your car allowance as
provided in paragraph 5 for six (6) months after the termination of your
employment and payable in accordance with Viacom’s then effective payroll
practices;

 

(iii)          medical and dental
insurance coverage provided under COBRA at no cost to you (except as hereafter
described) pursuant to Viacom’s then-current benefit plans for six (6) months
after the termination of your employment or, if earlier until the date on which
you become eligible for medical and dental coverage from a third party; provided,
that, during the period that Viacom provides you with this coverage, an amount
equal to the applicable COBRA premiums (or such other amounts as may be
required by law) will be included in your income for tax purposes to the extent
required by law and Viacom may withhold taxes from your compensation for this
purpose;

 

 

 

Leslie Moonves

July 1, 2004

Page 19

 

 

 

(iv)          life insurance coverage
as set forth in paragraph 4 hereof for six (6) months after the termination of
your employment or, if earlier, the date on which you become eligible for
insurance coverage from a third party employer;

 

(v)           all unvested restricted
share units will vest and payment will be made within ten (10) business days
after the termination of your employment or such payment will be deferred in
accordance with the election that you made prior to the time of grant; provided,
that, in either case, payment will be deferred until the date determined in
accordance with paragraph 20, if such date is later than the date on which
payment would otherwise be made;

 

(vi)          LTMIP stock options
granted on or after July 1, 2004 that are vested on the date of such
termination of your employment, or that would have vested and become
exercisable on or before the last day of the Employment Term, will be
exercisable for three (3) years after the date of such termination or, if
earlier, the expiration date of such stock options; and

 

(vii)         the Accrued Obligations.

 

You will not be required to mitigate the
amount of any payment provided for in this paragraph 8(g) and no reduction will
be made for any compensation earned by you from a third party.  You will continue to be subject to the
obligations set forth in paragraphs 6(b) through (h) except that your
obligations under such paragraphs will be determined as though the date of the
termination of your employment pursuant to this paragraph 8(g) were the last
day of the Employment Term.  Except as
otherwise provided in this paragraph 8(g) with respect to medical, dental and
life insurance and the continued exercisability of stock options), coverage
under all Viacom benefit plans and programs (including, without limitation,
vacation, 401(k) and excess 401(k) plans, pension and excess pension plans,
LTD, car insurance 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.

 

(h)       Advisory Services.  In the event that your employment terminates
pursuant to paragraph 8(b), (c) or (g), or upon the expiration of the
Employment Term (provided you remain employed, and are being paid on Viacom’s
payroll, through the end of the Employment Term), you can elect to become an
advisor to the Company for up to three (3) years after such termination of your
employment (the “Advisory Period”). 
During the Advisory Period, you will provide such advisory services
concerning the business, affairs and management of the Company as may be
reasonably requested by the Chairman or the Chief Executive Officer of Viacom;
but you shall not be required to devote more than five (5) days (up to eight
(8) hours per day) each month to such

 

 

 

Leslie Moonves

July 1, 2004

Page 20

 

 

 

services, which shall be
performed at a time and place mutually convenient to you.  You may accept full-time employment during
the Advisory Period with any charitable, educational, religious or
entertainment industry trade, public interest or public service organization
and you may provide full-time services to third parties (including serving as a
member of the Board of Directors of any such party) that is not in competition
with the Company as described in paragraph 6(a) and any compensation earned by
you from such employment shall not reduce the compensation or fees payable by
the Company under paragraphs 8(d) or (g). 
During the Advisory Period, you shall receive advisory fees of One
Million Dollars ($1,000,000) per annum, payable in accordance with Viacom’s
then effective payroll practices. 
During the Advisory Period, you will be subject to the provisions of
paragraphs 6(b) though (h) until the later of (x) the last day of the Advisory
Period, as the same may be terminated by you pursuant to the following
sentence, and (y) the period specified in such paragraph.  You may terminate the Advisory Period at any
time upon fourteen (14) days’ prior written notice to the Company.

 

9.     Death. 
If you die prior to the termination of your employment under this
Agreement, your beneficiary or estate shall be entitled to receive the
following:

 

(i)         your Salary up to the
date on which the death occurs;

 

(ii)        prorated Target Bonus for
the year in which the death occurs prorated through the date of death and
payable when such bonus compensation would otherwise be paid;

 

(iii)       prorated
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(b), prior to January 31st
of the following calendar year;

 

(iv)      all unvested restricted
share units will vest on the date of death and payment will be made to your
beneficiary or estate within ten (10) business days after the date of death;
and

 

(v)       LTMIP stock options granted
on or after July 1, 2004 that are vested on the date of death, or that would
have vested and become exercisable on or before the last day of the Employment
Term but for your death, will be exercisable for two (2) years after the date
of death, or, if earlier, the expiration date of such stock options.

 

10.   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

 

 

 

Leslie Moonves

July 1, 2004

Page 21

 

 

 

the inclusion of any matter as
part of any film, television program or other production produced, distributed
and/or developed by Viacom and/or any of Viacom’s affiliates.

 

11.   Equal Opportunity Employer; Viacom Business
Conduct Statement.  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.  In addition, you agree that
you will comply with the Viacom Business Conduct Statement.

 

12.   Indemnification.

 

(a)       Viacom shall indemnify and hold you harmless, to
the maximum extent permitted by law and by the Restated Certificate of
Incorporation and/or the By-Laws 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 positions under this Agreement 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 or any of its
affiliates or predecessors.

 

(b)       To the extent that Viacom maintains officers’
and directors’ liability insurance, you will be covered under such policy
subject to the exclusions and limitations set forth therein.

 

13.     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, and in the case of Viacom, to the attention of the General
Counsel of Viacom.  Any notice given by mail
shall be deemed to have been given three days following such mailing.  Copies of all notices to you shall be given
to Del, Shaw, Moonves, Tanaka & Finkelstein, 2120 Colorado Avenue, Suite
200, Santa Monica, California 90404, Attention: Ernest Del, Esq.

 

14.     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 Viacom or any successor in interest to Viacom,
provided that such assignee assumes all of the obligations of Viacom hereunder.

 

15.     New York Law.  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.

 

 

 

Leslie Moonves

July 1, 2004

Page 22

 

 

 

16.       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.

 

17.     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.

 

18.     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.

 

19.     Previous Agreement.  With respect to the period covered by the
Employment Term, this Agreement supersedes and cancels all prior agreements
relating to your employment by Viacom or any of Viacom’s affiliates or
predecessors, including, without limitation, your employment agreement with
CBS, dated as of May 17, 1995, as amended (your “Prior Employment
Agreement”).  Notwithstanding the
foregoing, your rights with respect to stock options granted to you by Viacom
or a predecessor of Viacom before July 1, 2004 will continue to have the terms
provided in your Prior Employment Agreement which are set forth in Exhibit A
hereto.  Notwithstanding anything in
this Agreement to the contrary, in the event that the 2004 LTMIP or a successor
plan provides you with a longer period to exercise the LTMIP stock options
granted to you on or after July 1, 2004 after the termination of your
employment, death, disability or retirement than the period provided in this
Agreement, you shall have the benefit of such longer period.

 

20.     Deductions and Withholdings, Payment of
Deferred Compensation.  All amounts
payable under this Agreement shall be paid less deductions and income and
payroll tax withholdings as may be required under applicable law and any
benefits and perquisites provided to you under this Agreement shall be taxable
to you as may be required under applicable law.  Notwithstanding any other provision of this Agreement to the
contrary, no distribution of Deferred Compensation, payment for any restricted
share units or distribution of any other deferred compensation shall be made
sooner than the earliest date permitted under the provisions of the Code or the
rules or regulations promulgated thereunder, as in effect on the date of such
payment, in order for such payment to be taxable at the time of the
distribution thereof.

 

 

 

Leslie Moonves

July 1, 2004

Page 23

 

 

 

If the foregoing correctly sets forth our
understanding, please sign, date and return all four (4) copies of this
Agreement and return it to the undersigned for execution on behalf of Viacom;
after this Agreement has been executed by Viacom and a fully executed copy
returned to you, it shall constitute a binding agreement between us.

 

	
   

  	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  VIACOM INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ SUMNER M. REDSTONE

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Sumner M. Redstone

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman and Chief

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCEPTED AND
  AGREED:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   /s/ LESLIE MOONVES

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Leslie Moonves

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:  

  	
    July 15, 2004

  	
   

  	
   

  	
   

  	
   

  
										

 

 

 

EXHIBIT A

 

Excerpt and Summary of Provisions from Leslie
Moonves’

Prior Employment Agreement

 

 

“If Executive’s active
employment with Viacom or any of its subsidiaries terminates for any reason
other than for cause, all management stock options granted under the 2000 LTMIP
or any successor plans (collectively, the “Viacom Stock Options”) will be
exercisable in accordance with the following provisions*:

 

(i)            if
Executive dies, his outstanding Viacom Stock Options (including any Viacom
Stock Options that have not vested by the date of death) may be exercised by
the person who acquires the right to exercise such Viacom Stock Options until
the earlier of two (2) years after the date of death or the options’ expiration
date;

 

(ii)           if
Executive’s employment is terminated by CBS other than for disability or for
cause or Executive terminates his employment for Good Reason, any outstanding
Viacom Stock Options (including any Viacom Stock Options that have not vested
by the termination date) can be exercised by Executive until the earlier of
three (3) years after the termination date or the options’ expiration date;

 

(iii)          in
the event of Executive’s Retirement (as defined in the 2000 LTMIP), any
outstanding Viacom Stock Options that had vested prior to the date of his
Retirement may be exercised by Executive until the options’ expiration date;

 

(iv)          in
the event of Executive’s Permanent Disability (as defined in the 2000 LTMIP),
(x) any outstanding Viacom Stock Options granted prior to January 31, 2001 that
had vested prior to the date of the onset of Permanent Disability can be exercised
by Executive until the earlier of two (2) years after such date or the options’
expiration date, and (y) any outstanding Viacom Stock Options granted on or
after January 31, 2001 that had vested prior to the date of the onset of
Permanent Disability can be exercised by Executive until the earlier of three
(3) years after such date or the options’ expiration date; or

 

(v)           if
Executive’s employment terminates for any reason other than for cause or as a
result of death, termination by CBS other than for disability or for cause or
termination by Executive for Good Reason, Retirement or Permanent Disability,
any outstanding Viacom Stock Options that had vested by the date of such
termination of employment can be exercised by Executive until the earlier of six
(6) months after the date of termination or the options’ expiration date.”

 

Mr. Moonves’
Prior Employment Agreement provided that the stock options granted by CBS to
Mr. Moonves on January 27, 1999, June 14, 1999 and January 26, 2000 shall have
terms relating to the vesting and period to exercise after a termination of
employment, death, disability or retirement that were consistent with the terms
concerning these matters in the agreements applicable to the stock options
granted by CBS to Mr. Moonves on June 17, 1997 and July 28, 1997, which
provisions shall remain in effect.

 

 

*      As used in these provisions, “Executive”
refers to Leslie Moonves and cause and Good Reason have the definitions
provided in the employment agreement that applies to Mr. Moonves on the date on
which his employment terminates.  In the
event that the LTMIP provides Mr. Moonves with a longer period to exercise the
stock options after the termination of his employment or in the event of his death,
permanent disability or retirement than the period provided for in the Prior
Employment Agreement, he will have the benefit of the longer period.

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