Document:

Exhibit 10.1

 

EXECUTION VERSION

 

	
 
    

 

 

CYPRESS SEMICONDUCTOR CORPORATION

 

(a Delaware corporation)

 

$130,000,000

 

2.00% Convertible Senior Notes due 2023

 

PURCHASE AGREEMENT

 

Dated:  November 1, 2017

 

	
 
    

 

 

CYPRESS SEMICONDUCTOR CORPORATION

 

(a Delaware corporation)

 

$130,000,000

 

2.00% Convertible Senior Notes due 2023

 

PURCHASE AGREEMENT

 

November 1, 2017

 

Barclays Capital Inc.,

 

as Initial Purchaser

 

745 Seventh Avenue

New York, NY 10019

 

Ladies and Gentlemen:

 

Cypress Semiconductor Corporation, a Delaware corporation (the “Company”), confirms its agreement with Barclays Capital Inc. (the “Initial Purchaser”), with respect to (i) the sale by the Company and the purchase by the Initial Purchaser, of $130,000,000 aggregate principal amount of the Company’s 2.00% Convertible Senior Notes due 2023 (the “Initial Securities”) and (ii) the grant by the Company to the Initial Purchaser of the option to purchase all or any part of an additional $20,000,000 aggregate principal amount of its 2.00% Convertible Senior Notes due 2023 (the “Option Securities” and, together with the Initial Securities, the “Securities”) to cover overallotments.  The Securities are to be issued pursuant to an indenture to be dated as of November 6, 2017 (the “Indenture”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”).  The Securities will be convertible into cash, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) or a combination thereof, as set forth, and subject to the limitations contained, in the Indenture.

 

The Company understands that the Initial Purchaser proposes to make an offering of the Securities on the terms and in the manner set forth herein and agrees that the Initial Purchaser may resell, subject to the conditions set forth herein, all or a portion of the Securities to purchasers (“Subsequent Purchasers”) at any time after this Agreement has been executed and delivered.  The Securities are to be offered and sold through the Initial Purchaser without being registered under the Securities Act of 1933, as amended (the “1933 Act”), in reliance upon exemptions therefrom.  Pursuant to the terms of the Securities and the Indenture, investors that acquire Securities may only resell or otherwise transfer such Securities if such Securities are hereafter registered under the 1933 Act or if an exemption from the registration requirements of the 1933 Act is available (including the exemption afforded by Rule 144A (“Rule 144A”) of the rules and regulations promulgated under the 1933 Act (the “1933 Act Regulations”) by the Securities and Exchange Commission (the “Commission”)).

 

The Company has prepared and delivered to the Initial Purchaser copies of a preliminary offering memorandum dated November 1, 2017 prior to the Applicable Time (as defined below) (the “Preliminary 

 

 

Offering Memorandum”) and has prepared and will deliver to the Initial Purchaser, on the date hereof or the next succeeding day, copies of a final offering memorandum dated November 1, 2017 (the “Final Offering Memorandum”), each for use by the Initial Purchaser in connection with its solicitation of purchases of, or offering of, the Securities.  “Offering Memorandum” means, with respect to any date or time referred to in this Agreement, the most recent offering memorandum (whether the Preliminary Offering Memorandum or the Final Offering Memorandum, or any amendment or supplement to either such document), including exhibits thereto and any documents incorporated therein by reference, which has been prepared and delivered by the Company to the Initial Purchaser, in the case of the Preliminary Offering Memorandum prior to the Applicable Time, in connection with its solicitation of purchases of, or offering of, the Securities.   The Company will prepare a final term sheet reflecting the final terms of the Securities, in the form set forth in Schedule B hereto (the “Final Term Sheet”), and will deliver such Final Term Sheet to the Initial Purchaser prior to the Applicable Time in connection with its solicitation of purchases of, or offering of, the Securities. Each party agrees that, unless it obtains the prior written consent of the other party, it will not make any offer relating to the Securities by any written materials other than the Offering Memorandum and the Issuer Written Information. “Issuer Written Information” means (i) any writing intended for general distribution to investors as evidenced by its being specified in Schedule C hereto, including the Final Term Sheet, and (ii) any “road show” that is a “written communication” within the meaning of the 1933 Act.  “General Disclosure Package” means the Preliminary Offering Memorandum and any Issuer Written Information specified on Schedule C hereto and issued at or prior to 4:40 P.M., New York City time, on November 1, 2017 or such other time as agreed by the Company and the Initial Purchaser (such date and time, the “Applicable Time”).

 

All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” in the Offering Memorandum (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which are incorporated by reference in the Offering Memorandum; and all references in this Agreement to amendments or supplements to the Offering Memorandum shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934 (the “1934 Act”) which is incorporated by reference in the Offering Memorandum.

 

SECTION 1.         Representations and Warranties.

 

(a)           Representations and Warranties by the Company.  The Company represents and warrants to the Initial Purchaser as of the date hereof, the Applicable Time, the Closing Time (as defined below) and any Date of Delivery (as defined below), and agrees with the Initial Purchaser, as follows:

 

(i)            General Disclosure Package; Rule 144A Eligibility.  The Company hereby confirms that it has authorized the use of the General Disclosure Package, including the Preliminary Offering Memorandum and the Final Term Sheet, and the Final Offering Memorandum in connection with the offer and sale of the Securities by the Initial Purchaser.  The Securities satisfy the requirements set forth in Rule 144A(d)(3).

 

(ii)           No Registration Required; No General Solicitation.  Subject to compliance by the Initial Purchaser with the representations and warranties of the Initial Purchaser and the procedures set forth in Section 6 hereof, it is not necessary in connection with the offer, sale and delivery of the offered Securities to the Initial Purchaser and to each Subsequent Purchaser in the manner contemplated by this Agreement, the General Disclosure Package and the Final Offering Memorandum to register the Securities under the 1933 Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the “1939 Act”).  None of the Company, its Affiliates or any person acting on its or any of their behalf (other than the Initial Purchaser and persons acting on its behalf, as to whom the Company makes no representation) has engaged, in 

 

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connection with the offering of the offered Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the 1933 Act Regulations.

 

(iii)          Accurate Disclosure.  As of the Applicable Time, neither (A) the General Disclosure Package nor (B) any Issuer Written Information, when considered together with the General Disclosure Package, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Final Offering Memorandum, as of its date, at the Closing Time or at any Date of Delivery, did not, does not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The documents incorporated or deemed to be incorporated by reference in the General Disclosure Package and the Final Offering Memorandum, when such documents incorporated by reference were filed with the Commission, when read together with the other information in the General Disclosure Package or the Final Offering Memorandum, as the case may be, did not, does not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

The representations and warranties in this subsection shall not apply to statements in or omissions from the General Disclosure Package or the Final Offering Memorandum made in reliance upon and in conformity with written information furnished to the Company by the Initial Purchaser expressly for use therein.  For purposes of this Agreement, the only information so furnished shall be the information in the first paragraph under the heading “Plan of Distribution—Price Stabilization, Short Positions” (collectively, the “Initial Purchaser Information”).

 

(iv)          Incorporation of Documents by Reference.  The documents incorporated or deemed to be incorporated by reference in the Offering Memorandum, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission under the 1934 Act (the “1934 Act Regulations”).

 

(v)           Independent Accountants.  The accountants who certified the financial statements and supporting schedules included in the Offering Memorandum are independent public accountants as required by the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations and the Public Company Accounting Oversight Board.

 

(vi)          Financial Statements; Non-GAAP Financial Measures.  The financial statements included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum, together with the related schedules and notes, present fairly in all material respects the financial position of the Company and its consolidated subsidiaries at the dates indicated and the statement of operations, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved subject, in the case of unaudited financial statements, to the absence of footnotes and to normal year-end audit adjustments.  The supporting schedules, if any, present fairly in all material respects in accordance with GAAP the information required to be stated therein.  The selected financial data and the summary financial information included in the Offering Memorandum present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein.  All disclosures contained in the General Disclosure Package or the 

 

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Final Offering Memorandum, or incorporated by reference therein, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the 1934 Act and Item 10 of Regulation S-K of the 1933 Act, to the extent applicable. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

(vii)         No Material Adverse Change in Business.  Except as otherwise stated therein, since the respective dates as of which information is given in the General Disclosure Package or the Final Offering Memorandum, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “Material Adverse Effect”), and (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise.

 

(viii)        Good Standing of the Company.  The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the General Disclosure Package and the Final Offering Memorandum and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.

 

(ix)          Good Standing of Subsidiaries. Each “significant subsidiary” (as such term is defined in Rule 1-02 of Regulation S-X) (each, a “Subsidiary” and, collectively, the “Subsidiaries”) of the Company has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its incorporation or organization, has corporate or similar power and authority to own, lease and operate its properties and to conduct its business as described in the General Disclosure Package and the Final Offering Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect.  Except as otherwise disclosed in the General Disclosure Package and the Final Offering Memorandum, all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.  None of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary.  The Company does not own or control, directly or indirectly, any Subsidiary other than the Subsidiaries listed in Exhibit 21 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017.

 

(x)           Capitalization.  The authorized, issued and outstanding shares of capital stock of the Company are as set forth in the General Disclosure Package and the Final Offering Memorandum in the column entitled “Actual” under the caption “Capitalization” (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the General Disclosure Package and the Final Offering

 

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Memorandum or pursuant to the exercise of convertible securities or options referred to in the General Disclosure Package and the Final Offering Memorandum).

 

(xi)          Authorization of Agreement.  This Agreement has been duly authorized, executed and delivered by the Company.

 

(xii)         Authorization of the Indenture.  The Indenture has been duly authorized by the Company and, when duly executed and delivered by the Company and the Trustee, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity, including the principles of good faith, commercial reasonableness and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(xiii)        Authorization of the Securities and the Maximum Number of Underlying Shares.  The Securities have been duly authorized and, at the Closing Time, will have been duly executed by the Company and, when authenticated, issued and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity, including the principles of good faith, commercial reasonableness and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture.  The maximum number of shares of Common Stock initially issuable upon conversion of the Securities (including the maximum number of shares of Common Stock that may be issued upon conversion of the Securities in connection with a Make-Whole Fundamental Change (as such term is defined in the Indenture), and assuming the Company elects to issue and deliver solely shares of Common Stock in respect of all such conversions) (the “Maximum Number of Underlying Shares”) have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action and such Maximum Number of Underlying Shares, when issued upon such conversion, will be validly issued and will be fully paid and non-assessable; no holder of such Maximum Number of Underlying Shares will be subject to personal liability by reason of being such a holder; and the issuance of such Maximum Number of Underlying Shares upon such conversion will not be subject to the preemptive or other similar rights of any securityholder of the Company.

 

(xiv)        Description of the Securities, the Common Stock and the Indenture.  The Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the General Disclosure Package and the Final Offering Memorandum.  The Common Stock conforms to all statements relating thereto contained or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum and such description conforms to the rights set forth in the instruments defining the same.

 

(xv)         Absence of Violations, Defaults and Conflicts.  Neither the Company nor any of its Subsidiaries is (A) in violation of its charter, by-laws or similar organizational document, (B) in default in the performance or observance of any obligation, agreement, covenant or condition

 

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contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which it or any of them may be bound or to which any of the properties or assets of the Company or any subsidiary is subject (collectively, “Agreements and Instruments”), except for such defaults that would not, singly or in the aggregate, result in a Material Adverse Effect, or (C) in violation of any law, statute, rule, regulation, judgment, order, writ or decree of any arbitrator, court, governmental body, regulatory body, administrative agency or other authority, body or agency having jurisdiction over the Company or any of its subsidiaries or any of their respective properties, assets or operations (each, a “Governmental Entity”), except for such violations that would not, singly or in the aggregate, result in a Material Adverse Effect.  The execution, delivery and performance of this Agreement, the Indenture and the Securities and the consummation of the transactions contemplated herein and therein and in the General Disclosure Package and the Final Offering Memorandum (including the issuance and sale of the Securities and the Maximum Number of Underlying Shares issuable upon conversion of the Securities and the use of the proceeds from the sale of the Securities as described therein under the caption “Use of Proceeds”) and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any subsidiary pursuant to, the Agreements and Instruments (except for such conflicts, breaches, defaults or Repayment Events or liens, charges or encumbrances that would not, singly or in the aggregate, result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter, by-laws or similar organizational document of the Company or any of its subsidiaries or any law, statute, rule, regulation, judgment, order, writ or decree of any Governmental Entity.  As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

 

(xvi)        Absence of Labor Dispute.  No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any subsidiary’s principal suppliers, manufacturers, customers or contractors, which, in either case, would result in a Material Adverse Effect.

 

(xvii)       Absence of Proceedings.  Except as disclosed in the General Disclosure Package and the Final Offering Memorandum, there is no action, suit, proceeding, inquiry or investigation before or brought by any Governmental Entity now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, which might result in a Material Adverse Effect, or which might materially and adversely affect their respective properties or assets or the consummation of the transactions contemplated by this Agreement, the Indenture and the Securities or the performance by the Company of its obligations hereunder or thereunder.

 

(xviii)      Absence of Further Requirements.  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity is necessary or required for the performance by the Company of its obligations under this Agreement or, in connection with the offering, issuance or sale of the Securities under this Agreement or the consummation of the transactions contemplated by this Agreement or for the due execution, delivery and performance of the Indenture and the Securities (including, without 

 

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limitation, the issuance and delivery of the Securities and the Maximum Number of Underlying Shares issuable upon conversion of the Securities and the use of the proceeds from the sale of the Securities as described therein under the caption “Use of Proceeds”), except such as have been already obtained or such as may be required under the Blue Sky or similar laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Initial Purchaser in the manner contemplated by this Agreement and in the Offering Memorandum and the rules and regulations of the NASDAQ Global Select Market.

 

(xix)        Possession of Licenses and Permits.  The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Governmental Entities necessary to conduct the business now operated by them, except where the failure so to possess would not, singly or in the aggregate, result in a Material Adverse Effect.  The Company and its subsidiaries are in compliance with the terms and conditions of all Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect.  All of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, singly or in the aggregate, result in a Material Adverse Effect.  Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

 

(xx)         Title to Property.  The Company and its subsidiaries have good and marketable title to all real property owned by them and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (A) are described in the General Disclosure Package and the Final Offering Memorandum or (B) do not, singly or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and under which the Company or any of its subsidiaries holds properties described in the General Disclosure Package and the Final Offering Memorandum, are in full force and effect, and neither the Company nor any such subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease.

 

(xxi)        Possession of Intellectual Property.  The Company and its subsidiaries own or possess adequate rights to use, or can acquire on commercially reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) material to the conduct of its business as currently conducted.  Neither the Company nor any of its subsidiaries has received any notice in writing or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect.

 

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(xxii)                    Environmental Laws.  Except as described in the General Disclosure Package and the Final Offering Memorandum or would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the knowledge of the Company, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or Governmental Entity, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws.

 

Except as disclosed in the General Disclosure Package and the Final Offering Memorandum, there is no action, suit, proceeding, inquiry or investigation before or brought by any Governmental Entity under Environmental Laws now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, which would be reasonably expected to result in the Company or any of its subsidiaries incurring liabilities in excess of $100,000.

 

(xxiii)                 Accounting Controls and Disclosure Controls.  The Company and each of its subsidiaries maintain effective internal control over financial reporting (as defined under Rule 13-a15 and 15d-15 under the 1934 Act Regulations) and a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (E) the interactive data in eXtensible Business Reporting Language included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum fairly presents the information called for in all material respects and is prepared in accordance in all material respects with the Commission’s rules and guidelines applicable thereto. Except as described in the General Disclosure Package and the Final Offering Memorandum, since the end of the Company’s most recent audited fiscal year, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company and each of its subsidiaries maintain an effective system of disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the 1934 Act Regulations) that are designed to ensure that information required to be disclosed by the 

 

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Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, as appropriate, to allow timely decisions regarding disclosure.

 

(xxiv)                Compliance with the Sarbanes-Oxley Act.  There is and, in the last five years, has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

 

(xxv)                   Payment of Taxes.  All material United States federal income tax returns of the Company and its subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided. The United States federal income tax returns of the Company through the fiscal year ended December 31, 2016 have been settled and no assessment in connection therewith has been made against the Company. The Company and its subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law, and has paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and its subsidiaries, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been established by the Company, except, in each case, insofar as the failure to file such returns would not result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that was described in the General Disclosure Package and the Final Offering Memorandum or would not result in a Material Adverse Effect.

 

(xxvi)                Insurance.  The Company and its subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance is in full force and effect.  The Company has no reason to believe that it or any of its subsidiaries will not be able (A) to renew its existing insurance coverage as and when such policies expire or (B) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect.  Neither of the Company nor any of its subsidiaries has been denied any insurance coverage which it has sought or for which it has applied.

 

(xxvii)             Investment Company Act.  The Company is not required, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the General Disclosure Package and the Final Offering Memorandum will not be required, to register as an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).

 

(xxviii)          Absence of Manipulation.  Neither the Company nor any affiliate of the Company has taken, nor will the Company or any affiliate take, directly or indirectly, any action 

 

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which is designed, or would be expected, to cause or result in, or which constitutes a violation of Regulation M under the 1934 Act.

 

(xxix)                Foreign Corrupt Practices Act.  None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, controlled affiliate or other person acting on behalf of the Company or any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and, to the knowledge of the Company, its controlled affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(xxx)                   Money Laundering Laws.  The operations of the Company and its subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any Governmental Entity involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(xxxi)                OFAC.  None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or  representative of the Company or any of its subsidiaries is an individual or entity (“Person”) currently the subject or, to the Company’s knowledge, the target of any  sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company located, organized or resident in a country or territory that is the subject of comprehensive Sanctions, which, for clarity currently consists of Iran, North Korea, Syria, and the Crimea Region of Ukraine; and the Company will not directly or indirectly use the proceeds of the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of  Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.

 

(xxxii)             Lending Relationship.  Except as disclosed in the General Disclosure Package and the Final Offering Memorandum, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of the Initial Purchaser and (ii) does not intend to use any of the proceeds from the sale of the Securities to repay any outstanding debt owed to any affiliate of the Initial Purchaser.

 

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(xxxiii)          Statistical and Market-Related Data.  Any statistical and market-related data included in the General Disclosure Package or the Final Offering Memorandum are based on or derived from sources that the Company believes, after reasonable inquiry, to be reliable and accurate and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.

 

(b)                                 Officer’s Certificates.  Any certificate signed by any officer of the Company or any of its subsidiaries delivered to the Initial Purchaser shall be deemed a representation and warranty by the Company to the Initial Purchaser as to the matters covered thereby.

 

SECTION 2.                            Sale and Delivery to Initial Purchaser; Closing.

 

(a)                                 Initial Securities.  On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company, at the price set forth in Schedule A, the aggregate principal amount of Initial Securities set forth in Schedule A.

 

(b)                                 Option Securities.  In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Initial Purchaser to purchase the Option Securities, at the price set forth in Schedule A.  The option hereby granted may be exercised in whole or in part from time to time only for the purpose of covering overallotments upon notice by the Initial Purchaser to the Company setting forth the amount of Option Securities as to which the Initial Purchaser is then exercising the option and the time and date of payment and delivery for such Option Securities.  Any such time and date of delivery (a “Date of Delivery”) shall occur within a period of 30 days beginning on, and including, the date the Initial securities are first issued, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time.

 

(c)                                  Payment.  Payment of the purchase price for, and delivery of certificates or security entitlements for, the Initial Securities shall be made at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, or at such other place as shall be agreed upon by the Initial Purchaser and the Company, at 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the date hereof, or such other time not later than ten business days after such date as shall be agreed upon by the Initial Purchaser and the Company (such time and date of payment and delivery being herein called “Closing Time”).

 

In addition, in the event that any or all of the Option Securities are purchased by the Initial Purchaser, payment of the purchase price for, and delivery of certificates or security entitlements for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Initial Purchaser and the Company, on each Date of Delivery as specified in the notice from the Initial Purchaser to the Company.

 

Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Initial Purchaser of certificates or security entitlements for the Securities to be purchased by it.

 

SECTION 3.                            Covenants of the Company.  The Company covenants with the Initial Purchaser as follows:

 

(a)                                 Delivery of Offering Memorandum.  The Company has delivered to the Initial Purchaser, without charge, as many copies of the Preliminary Offering Memorandum (as amended or supplemented) 

 

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thereto and documents incorporated by reference therein as the Initial Purchaser reasonably requested, and the Company hereby consents to the use of such copies.  The Company will furnish to the Initial Purchaser, without charge, such number of copies of the Final Offering Memorandum thereto and documents incorporated by reference therein as the Initial Purchaser may reasonably request.

 

(b)                                 Notice and Effect of Material Events.   If at any time prior to the completion of resales of the Securities by the Initial Purchaser, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Initial Purchaser or for the Company, to amend or supplement the General Disclosure Package or the Final Offering Memorandum in order that the General Disclosure Package or the Final Offering Memorandum, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a Subsequent Purchaser, the Company will promptly (A) give the Initial Purchaser notice of such event and (B) prepare any amendment or supplement as may be necessary to correct such statement or omission and, a reasonable amount of time prior to any proposed use or distribution, furnish the Initial Purchaser with copies of any such amendment or supplement; provided that the Company shall not use or distribute any such amendment or supplement to which the Initial Purchaser or counsel for the Initial Purchaser shall object.  The Company will furnish to the Initial Purchaser such number of copies of such amendment or supplement as the Initial Purchaser may reasonably request.

 

(c)                                  Reporting Requirements.  Until the completion of resales of the Securities by the Initial Purchaser, the Company will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations.  The Company has given the Initial Purchaser notice of any filings made pursuant to the 1934 Act or 1934 Act Regulations within 48 hours prior to the Applicable Time; the Company will give the Initial Purchaser notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Initial Purchaser with copies of any such documents a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Initial Purchaser or counsel for the Initial Purchaser shall reasonably object except as reasonably required by recommendation of counsel for the Company.

 

(d)                                 Blue Sky Qualifications.  The Company will use its commercially reasonable efforts, in cooperation with the Initial Purchaser, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Initial Purchaser may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

(e)                                  Use of Proceeds.  The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the General Disclosure Package and the Final Offering Memorandum under “Use of Proceeds.”

 

(f)                                   DTCC.  The Company will cooperate with the Initial Purchaser and use its commercially reasonable efforts to permit the offered Securities to be eligible for clearance and settlement through the facilities of The Depository Trust & Clearing Corporation (“DTCC”).

 

(g)                                  Listing.  The Company will use its commercially reasonable efforts to effect and maintain the listing of a number of shares of Common Stock equal to the Maximum Number of Underlying Shares on the Nasdaq Global Select Market.

 

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(h)                                 Restriction on Sale of Securities.  During a period of 60 days from the date of the Final Offering Memorandum, the Company will not, without the prior written consent of the Initial Purchaser, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise.  The foregoing sentence shall not apply to (A) the Securities to be sold hereunder and any shares of Common Stock issued upon conversion of the Securities, (B) any shares of Common Stock issued by the Company in connection with an exchange of 2.00% Senior Exchangeable Notes due 2020 issued by Spansion LLC, a wholly-owned subsidiary of the Company, (C) any shares of Common Stock issued by the Company upon the exercise of an option or warrant, the vesting or any settlement of any restricted stock unit or the conversion of a security outstanding on the date hereof and referred to in the General Disclosure Package and the Final Offering Memorandum, (D) any shares of Common Stock issued or options to purchase Common Stock or restricted stock granted pursuant to existing employee benefit plans of the Company referred to in the General Disclosure Package and the Final Offering Memorandum or (E) any shares of Common Stock issued pursuant to any non-employee director stock plan or dividend reinvestment plan referred to in the General Disclosure Package and the Final Offering Memorandum.

 

(i)                                     Reservation.  The Company will reserve and keep available at all times, free of preemptive rights, a number of shares of Common Stock equal to the Maximum Number of Underlying Shares.

 

SECTION 4.                            Payment of Expenses.

 

(a)                                 Expenses.  The Company will pay or cause to be paid all expenses incident to the performance of their obligations under this Agreement, including (i) preparation, issuance and delivery of the Securities to the Initial Purchaser and the Maximum Number of Underlying Shares issuable upon conversion thereof and any charges of DTCC in connection therewith, (ii) the fees and disbursements of the Company’s counsel, accountants and other advisors, (iii) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchaser in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement thereto, (iv) the preparation, printing and delivery to the Initial Purchaser of copies of each Preliminary Offering Memorandum, any Issuer Written Information, the Final Term Sheet and the Final Offering Memorandum and any amendments or supplements thereto and any costs associated with electronic delivery of any of the foregoing by the Initial Purchaser to investors, (v) all fees and expenses of the Trustee and any expenses of any transfer agent or registrar for the Securities or the Maximum Number of Underlying Shares issuable upon conversion of the Securities, (vi) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the Securities, including without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of aircraft and other transportation chartered in connection with the road show, (vii) the fees and expenses incurred in connection with the listing of the Maximum Number of Underlying Shares issuable upon conversion of the Securities on the Nasdaq Global Select Market and (viii) the actual costs and expenses (including, without limitation, any damages or other amounts payable in connection with legal or contractual liability) customarily associated with the reforming of any contracts for sale of the 

 

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Securities made by the Initial Purchaser and/or unwinding any trade in connection with the Securities caused by a breach of the representation contained in the first sentence of Section 1(a)(iii) or the failure to meet any condition contained in Section 5.

 

(b)                                 Termination of Agreement.  If this Agreement is terminated by the Initial Purchaser in accordance with the provisions of Section 5, Section 10(a)(i) or (iii) hereof, the Company shall reimburse the Initial Purchaser for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Initial Purchaser.

 

SECTION 5.                            Conditions of Initial Purchaser’s Obligations.  The obligations of the Initial Purchaser hereunder are subject to the accuracy of the representations and warranties of the Company contained herein or in certificates of any officer of the Company or any of its subsidiaries, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions:

 

(a)                                 Opinion of Counsel for Company.  At the Closing Time, the Initial Purchaser shall have received the opinion, dated the Closing Time, of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company, in form and substance satisfactory to counsel for the Initial Purchaser, together with signed or reproduced copies of such letter for the Initial Purchaser to the effect set forth in Exhibit A hereto.

 

(b)                                 Opinions of Counsel for Initial Purchaser.  At the Closing Time, the Initial Purchaser shall have received the opinion, dated the Closing Time, of Weil, Gotshal & Manges LLP, counsel for the Initial Purchaser, together with signed or reproduced copies of such letter for the Initial Purchaser, in form and substance satisfactory to the Initial Purchaser.  In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the General Corporation Law of the State of Delaware and the federal securities laws of the United States, upon the opinions of counsel satisfactory to the Initial Purchaser.  Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers and other representatives of the Company and its subsidiaries and certificates of public officials.

 

(c)                                  Officers’ Certificate.  At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the General Disclosure Package or the Final Offering Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Initial Purchaser shall have received a certificate of the Chief Executive Officer or the President of the Company and of the chief financial or chief accounting officer of the Company, dated the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties of the Company in this Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time and (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time.

 

(d)                                 Chief Financial Officer’s Certificate. At the time of execution of this Agreement and at the Closing Time, the Initial Purchaser shall have received a certificate, dated the respective dates of delivery thereof and addressed to the Initial Purchaser, of the chief financial officer of the Company with respect to certain financial data contained in the Offering Memorandum, in form and substance satisfactory to the Initial Purchaser.

 

(e)                                  Accountant’s Comfort Letter.  At the time of the execution of this Agreement, the Initial Purchaser shall have received from PricewaterhouseCoopers LLP a letter, dated such date, in form and 

 

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substance satisfactory to the Initial Purchaser, together with signed or reproduced copies of such letter for the Initial Purchaser containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Offering Memorandum.

 

(f)                                   Bring-down Comfort Letter.  At the Closing Time, the Initial Purchaser shall have received from PricewaterhouseCoopers LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (e) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.

 

(g)                            Approval of Listing.  At the Closing Time, a number of shares of Common Stock equal to the Maximum Number of Underlying Shares shall have been approved for listing on the Nasdaq Global Select Market, subject only to official notice of issuance.

 

(h)                           Lock-up Agreements.  At the date of this Agreement, the Initial Purchaser shall have received an agreement substantially in the form of Exhibit B hereto signed by the persons listed on Schedule D hereto.

 

(i)                               Maintenance of Rating.  Since the execution of this Agreement, there shall not have been any decrease in or withdrawal of the rating of any securities of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization” (as defined in Section 3(a)(62) of the 1934 Act) or any notice given of any intended or potential decrease in or withdrawal of any such rating or of a possible change in any such rating that does not indicate the direction of the possible change.

 

(j)                                    Conditions to Purchase of Option Securities.  In the event that the Initial Purchaser exercises its option provided in Section 2(b) hereof to purchase all or any portion of the Option Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company and any of its subsidiaries hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Initial Purchaser shall have received:

 

(i)                                     Officers’ Certificate.  A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company confirming that the certificate delivered at the Closing Time pursuant to Section 5(c) hereof remains true and correct as of such Date of Delivery.

 

(ii)                                  Chief Financial Officer’s Certificate.  If requested by the Initial Purchaser, a certificate, dated such Date of Delivery, of the chief financial officer of the Company, to the same effect as the certificate required by Section 5(d) hereof.

 

(iii)                               Opinion of Counsel for Company.  If requested by the Initial Purchaser, the opinion of Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Company, in form and substance satisfactory to counsel for the Initial Purchaser, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(a) hereof.

 

(iv)                              Opinions of Counsel for Initial Purchaser.  If requested by the Initial Purchaser, the opinion of Weil, Gotshal & Manges LLP, counsel for the Initial Purchaser, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b) hereof.

 

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(v)           Bring-down Comfort Letter.  If requested by the Initial Purchaser, a letter from PricewaterhouseCoopers LLP, in form and substance satisfactory to the Initial Purchaser and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Initial Purchaser pursuant to Section 5(f) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.

 

(k)           Additional Documents.  At the Closing Time and at each Date of Delivery (if any), counsel for the Initial Purchaser shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Initial Purchaser and counsel for the Initial Purchaser.

 

(l)            Termination of Agreement.  If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Securities on a Date of Delivery which is after the Closing Time, the obligations of the Initial Purchaser to purchase the relevant Option Securities, may be terminated by the Initial Purchaser by notice to the Company at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 7, 8, 9, 14, 15, 16 and 17 shall survive any such termination and remain in full force and effect.

 

SECTION 6.         Subsequent Offers and Resales of the Securities.

 

(a)   Offer and Sale Procedures.  The Initial Purchaser and the Company hereby establish and agree to observe the following procedures in connection with the offer and sale of the Securities:

 

(i)            Offers and Sales.  Offers and sales of the Securities shall be made to such persons and in such manner as is contemplated by the Offering Memorandum.  The Initial Purchaser agrees that it will not offer, sell or deliver any of the Securities in any jurisdiction outside the United States except under circumstances that will result in compliance with the applicable laws thereof, and that it will take at its own expense whatever action is required to permit its purchase and resale of the Securities in such jurisdictions.  The Company has not entered into any contractual arrangement, other than this Agreement, with respect to the distribution of the Securities or any Common Stock issuable upon conversion of the Securities and the Company will not enter into any such arrangement except as contemplated thereby.

 

(ii)           No General Solicitation.  No general solicitation or general advertising (within the meaning of Rule 502(c) under the 1933 Act Regulations) will be used in the United States in connection with the offering or sale of the Securities.

 

(iii)          Legends.  Each of the Securities will bear, to the extent applicable, the legend contained in “Notice to Investors” in the General Disclosure Package and the Final Offering Memorandum for the time period and upon the other terms stated therein.

 

(iv)          Minimum Principal Amount.  No sale of the Securities to any one Subsequent Purchaser will be for less than U.S. $1,000 principal amount and no Security will be issued in a smaller principal amount.  If the Subsequent Purchaser is a non-bank fiduciary acting on behalf of 

 

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others, each person for whom it is acting must purchase at least U.S. $1,000 principal amount of the Securities.

 

(b)   Covenants of the Company.  The Company covenants with the Initial Purchaser as follows:

 

(i)            Integration.  The Company agrees that it will not and will cause its Affiliates not to, directly or indirectly, solicit any offer to buy, sell or make any offer or sale of, or otherwise negotiate in respect of, securities of the Company of any class if, as a result of the doctrine of “integration” referred to in Rule 502 under the 1933 Act Regulations, such offer or sale would render invalid (for the purpose of (i) the sale of the offered Securities by the Company to the Initial Purchaser, (ii) the resale of the offered Securities by the Initial Purchaser to Subsequent Purchasers or (iii) the resale of the offered Securities by such Subsequent Purchasers to others) the exemption from the registration requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A thereunder or otherwise.

 

(ii)           Rule 144A Information.  The Company agrees that so long as any of the Securities or the Conversion Shares constitute “restricted securities” within the meaning of Rule 144A(a)(3), in order to render the offered Securities eligible for resale pursuant to Rule 144A, it will make available, upon request, to any holder of offered Securities or prospective purchasers of Securities the information specified in Rule 144A(d)(4), unless the Company furnishes information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act.

 

(iii)          Restriction on Repurchases.  Until the expiration of one year after the last original issuance of the offered Securities, the Company will not, and will cause its Affiliates not to, resell any offered Securities which are “restricted securities” (as such term is defined under Rule 144(a)(3)), whether as beneficial owner or otherwise (except as agent acting as a securities broker on behalf of and for the account of customers in the ordinary course of business in unsolicited broker’s transactions).

 

(c)           Representations, Warranties and Agreements of the Initial Purchaser.  The Initial Purchaser represents and warrants to, and agrees with, the Company that it is a Qualified Institutional Buyer and an “accredited investor” within the meaning of Rule 501(a) under the 1933 Act Regulations. The Initial Purchaser understands that the offered Securities have not been and will not be registered under the 1933 Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act.  The Initial Purchaser represents and agrees that it has not offered or sold, and will not offer or sell, any offered Securities constituting part of its allotment within the United States except in accordance with Rule 144A or another applicable exemption from the registration requirements of the 1933 Act.  Accordingly, neither it nor any person acting on its behalf has made or will make offers or sales of the Securities in the United States by means of any form of general solicitation or general advertising (within the meaning of Regulation D) in the United States.  The Initial Purchaser will take reasonable steps to inform, and cause each of its affiliates (as such term is defined in Rule 501(b) under the 1933 Act Regulations (each, an “Affiliate”)) to take reasonable steps to inform, persons acquiring Securities from the Initial Purchaser or Affiliate, as the case may be, in the United States that the Securities (A) have not been and will not be registered under the 1933 Act, (B) are being sold to them without registration under the 1933 Act in reliance on Rule 144A or in accordance with another exemption from registration under the 1933 Act, as the case may be, and (C) may not be offered, sold or otherwise transferred except (1) to the Company, (2) outside the United States in accordance with Regulation S or (3) inside the United States in accordance with (x) Rule 144A to a person whom the seller reasonably believes is a Qualified Institutional Buyer that is purchasing such Securities for its own account or for the account of a Qualified 

 

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Institutional Buyer to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A or (y) pursuant to another available exemption from registration under the 1933 Act.

 

SECTION 7.         Indemnification.

 

(a)           Indemnification of Initial Purchaser.  The Company agrees to indemnify and hold harmless the Initial Purchaser, its Affiliates, its selling agents and each person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

 

(i)            against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact included in any Preliminary Offering Memorandum, the Final Offering Memorandum, the information contained in the Final Term Sheet, any Issuer Written Information or any other information used by or on behalf of the Company in connection with the offer or sale of the Securities (or any amendment or supplement to the foregoing) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)           against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 7(d) below) any such settlement is effected with the written consent of the Company;

 

(iii)          against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Initial Purchaser), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in any Preliminary Offering Memorandum, the Final Offering Memorandum or the information contained in the Final Term Sheet (or any amendment or supplement to the foregoing) in reliance upon and in conformity with the Initial Purchaser Information.

 

(b)           Indemnification of Company, Directors and Officers.  The Initial Purchaser agrees to indemnify and hold harmless the Company, its directors, its officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in any Preliminary Offering Memorandum, the Final Offering Memorandum or the information contained in the Final Term Sheet (or any amendment or supplement to the foregoing) in reliance upon and in conformity with the Initial Purchaser Information.

 

(c)           Actions against Parties; Notification.  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall 

 

18

 

not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement.  In the case of parties indemnified pursuant to Section 7(a) above, counsel to the indemnified parties shall be selected by the Initial Purchaser, and, in the case of parties indemnified pursuant to Section 7(b) above, counsel to the indemnified parties shall be selected by the Company.  An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.  No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 7 or Section 8 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)           Settlement without Consent if Failure to Reimburse.  If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 7(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

SECTION 8.         Contribution.  If the indemnification provided for in Section 7 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Initial Purchaser, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Initial Purchaser, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

The relative benefits received by the Company, on the one hand, and the Initial Purchaser, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company, on the one hand, and the total underwriting discount received by the Initial Purchaser, on the other hand, bear to the aggregate initial offering price of the Securities as set forth on the cover of the Final Offering Memorandum.

 

The relative fault of the Company, on the one hand, and the Initial Purchaser, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue

 

19

 

statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Initial Purchaser and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Company and the Initial Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 8, the Initial Purchaser shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities purchased by it and distributed to the public were offered to the public exceeds the amount of any damages that the Initial Purchaser has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.

 

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 8, each person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and the Initial Purchaser’s Affiliates and selling agents shall have the same rights to contribution as the Initial Purchaser, and each director of the Company, each officer of the Company, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company.

 

SECTION 9.         Representations, Warranties and Agreements to Survive.  All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Initial Purchaser or its Affiliates or selling agents, any person controlling the Initial Purchaser, its officers or directors or any person controlling the Company and (ii) delivery of and payment for the Securities.

 

SECTION 10.       Termination of Agreement.

 

(a)           Termination.  The Initial Purchaser may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, in the judgment of the Initial Purchaser, since the time of execution of this Agreement or since the respective dates as of which information is given in the General Disclosure Package or the Final Offering Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Initial Purchaser, impracticable or inadvisable to proceed with 

 

20

 

the completion of the offering or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the Nasdaq Global Select Market, or (iv) if trading generally on the NYSE MKT or the New York Stock Exchange or in the Nasdaq Global Select Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by order of the Commission, FINRA or any other governmental authority, or (v) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, or (vi) if a banking moratorium has been declared by either Federal or New York authorities.

 

(b)           Liabilities.  If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 7, 8, 9, 14, 15,16 and 17 shall survive such termination and remain in full force and effect.

 

SECTION 11.       Reserved.

 

SECTION 12.       Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication.  Notices to the Initial Purchaser shall be directed to Barclays Capital Inc. at 745 Seventh Ave., New York, New York 10019, attention of Syndicate Registration (facsimile: (212) 519-1921); notices to the Company shall be directed to it at 198 Champion Court, San Jose, California 95134, attention of Thad Trent, Executive Vice President Finance and Administration and Chief Financial Officer.

 

SECTION 13.       No Advisory or Fiduciary Relationship.  The Company acknowledges and agrees that (a) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the initial offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the Initial Purchaser, on the other hand, (b) in connection with the offering of the Securities and the process leading thereto, the Initial Purchaser is and has been acting solely as a principal and is not the agent or fiduciary of the Company, any of its subsidiaries or their respective stockholders, creditors, employees or any other party, (c) the Initial Purchaser has not assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering of the Securities or the process leading thereto (irrespective of whether the Initial Purchaser has advised or is currently advising the Company or any of its subsidiaries on other matters) and the Initial Purchaser does not have any obligation to the Company with respect to the offering of the Securities except the obligations expressly set forth in this Agreement, (d) the Initial Purchaser and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and (e) the Initial Purchaser has not provided any legal, accounting, regulatory or tax advice with respect to the offering of the Securities and the Company has consulted its own respective legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

 

SECTION 14.       Parties.  This Agreement shall each inure to the benefit of and be binding upon the Initial Purchaser and the Company and their respective successors.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Initial Purchaser and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 7 and 8 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained.  This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Initial Purchaser and the Company and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other 

 

21

 

person, firm or corporation.  No purchaser of Securities from the Initial Purchaser shall be deemed to be a successor by reason merely of such purchase.

 

SECTION 15.       Trial by Jury.  The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Initial Purchaser hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

SECTION 16.       GOVERNING LAW.  THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS.

 

SECTION 17.       Consent to Jurisdiction; Waiver of Immunity. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) shall be instituted in (i) the federal courts of the United States of America located in the City and County of New York, Borough of Manhattan or (ii) the courts of the State of New York located in the City and County of New York, Borough of Manhattan (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “Related Judgment”), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.  Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

 

SECTION 18.       TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

 

SECTION 19.       Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

 

SECTION 20.       Effect of Headings.  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

SECTION 21.       Xtract Research LLC.  The Company hereby agrees that the Initial Purchaser may provide copies of the Preliminary Offering Memorandum and the Final Offering Memorandum relating to the offering of the Securities and any other agreements or documents relating thereto, including, without limitation, any trust indentures, to Xtract Research LLC (“Xtract”) following the completion of the offering for inclusion in an online research service sponsored by Xtract, access to which is restricted to “qualified institutional buyers” as defined in Rule 144A under the 1933 Act.

 

22

 

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Initial Purchaser and the Company in accordance with its terms.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
CYPRESS SEMICONDUCTOR   CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thad Trent
    
	
 
    	
 
    	
Name: Thad Trent
    
	
 
    	
 
    	
Title: Executive Vice   President, Finance and Administration and Chief Financial Officer
    

 

	
CONFIRMED AND ACCEPTED,
    	
 
    
	
 
    	
as of the date first   above written:
    
			

 

BARCLAYS CAPITAL INC.

 

	
By:
    	
/s/ Rajib Imteaz
    	
 
    
	
 
    	
Name: Syed Rajib Imteaz
    	
 
    
	
 
    	
Title: Managing   Director
    	
 
    

 

As Initial Purchaser.

 

23

 

SCHEDULE A

 

The initial offering price of the Securities shall be 100% of the principal amount thereof, plus accrued interest, if any, from the date of issuance.

 

The purchase price to be paid by the Initial Purchaser for the Securities shall be 97% of the principal amount thereof.

 

The interest rate on the Securities shall be 2.00% per annum.

 

The aggregate principal amount of Initial Securities shall be $130,000,000.

 

Sch A-1

 

SCHEDULE B

 

Final Term Sheet

 

	
PRICING TERM SHEET
    	
STRICTLY   CONFIDENTIAL
    
	
 
    	
 
    
	
DATED NOVEMBER 1, 2017
    	
 
    

 

 

CYPRESS SEMICONDUCTOR CORPORATION

$130,000,000

 

2.00% CONVERTIBLE SENIOR NOTES DUE 2023

 

The information in this pricing term sheet supplements Cypress Semiconductor Corporation’s preliminary offering memorandum, dated November 1, 2017 (the “Preliminary Offering Memorandum”), and supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent with the information in the Preliminary Offering Memorandum. In all other respects, this term sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum, including all documents incorporated by reference therein. Terms used herein but not defined herein shall have the respective meanings as set forth in the Preliminary Offering Memorandum. All references to dollar amounts are references to U.S. dollars.

 

	
Issuer:
    	
 
    	
Cypress Semiconductor   Corporation, a Delaware corporation.
    
	
 
    	
 
    	
 
    
	
Ticker/Exchange for Issuer’s
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Common Stock:
    	
 
    	
“CY”/The NASDAQ Global   Select Market.
    
	
 
    	
 
    	
 
    
	
Notes:
    	
 
    	
2.00% Convertible   Senior Notes due 2023 (the “Notes”).
    
	
 
    	
 
    	
 
    
	
Principal Amount:
    	
 
    	
$130,000,000 aggregate   principal amount (plus up to an   additional
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$20,000,000 principal   amount if the initial purchaser exercises its over- allotment option to   purchase additional Notes in full).
    
	
 
    	
 
    	
 
    
	
Minimum Denominations:
    	
 
    	
$1,000 and multiples of   $1,000 in excess thereof.
    
	
Maturity:
    	
 
    	
February 1, 2023,   unless earlier repurchased or converted.
    
	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
2.00% per year.
    
	
Interest Payment Dates:
    	
 
    	
Interest will accrue   from November  6, 2017 and will be payable
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
semiannually in arrears   on February 1 and August 1 of each year, beginning on   February 1, 2018.
    

 

Sch B-1

 

	
Interest Record Dates:
    	
 
    	
January  15 and July  15 of each   year, immediately preceding any
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
February 1 and   August 1 interest payment date, as the case may be.
    
	
 
    	
 
    	
 
    
	
Offering Price:
    	
 
    	
100% plus accrued   interest, if any, from the Settlement Date.
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
November 2, 2017.
    
	
Settlement Date:
    	
 
    	
November 6, 2017   (T+2).
    
	
 
    	
 
    	
 
    
	
Last Reported Sale Price of   Issuer’s
    	
 
    	
 
    
	
Common Stock on November 1,   2017:
    	
 
    	
$15.57 per share.
    
	
 
    	
 
    	
 
    
	
Initial Conversion Rate:
    	
 
    	
46.7099 shares of   common stock per $1,000 principal amount of Notes.
    
	
 
    	
 
    	
 
    
	
Initial Conversion Price:
    	
 
    	
Approximately $21.41   per share of common stock.
    
	
 
    	
 
    	
 
    
	
Conversion Premium:
    	
 
    	
Approximately 37.50%   above the Last Reported Sale Price of Issuer’s
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Common Stock on   November 1, 2017.
    
	
 
    	
 
    	
 
    
	
Sole Book-Running Manager:
    	
 
    	
Barclays Capital Inc.
    
	
CUSIP Number (144A):
    	
 
    	
232806 AN9
    
	
ISIN (144A):
    	
 
    	
US232806AN99
    
	
 
    	
 
    	
 
    
	
Use of Proceeds:
    	
 
    	
Issuer estimates that   the net proceeds from the offering, after deducting estimated offering fees   and expenses, will be approximately $126 million.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Concurrently with this   offering, in separate privately negotiated transactions, Issuer expects   to enter into agreements with certain holders of the outstanding 2020 Notes,   to exchange (the “Exchanges”) approximately $128.0 million in aggregate   principal amount of 2020 Notes for cash for the aggregate principal amount of   such exchanged 2020 Notes (plus accrued and unpaid interest thereon) and   shares of its common stock. In connection with the Exchanges, Issuer   expects to pay approximately $129.7 million in cash and estimates that it   will issue approximately 17.0 million shares of its common stock. Issuer   intends to use the net proceeds of this offering, together with cash on hand,   to pay the cash consideration of the Exchanges. The Exchanges are expected to   settle on or about November 16, 2017 and are conditioned on the closing   of the offering of the Notes. However, the offering of Notes is not   conditioned on the consummation of any Exchanges.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If the over-allotment   option granted to the initial purchaser is exercised with respect to   additional Notes, Issuer may use a portion of such net proceeds to enter   into additional privately negotiated exchanges with holders of the 2020   Notes. Issuer intends to use any remaining proceeds for general corporate   purposes.
    

 

Sch B-2

 

	
 
    	
 
    	
Pending these   uses, Issuer intends to invest the net proceeds in investment grade,   short-term fixed income instruments which include corporate, financial   institution, federal agency or U.S. government obligations.   Accordingly, Issuer will retain broad discretion over the use of these   proceeds.
    
	
 
    	
 
    	
 
    
	
Adjustment to Shares Delivered
    	
 
    	
 
    
	
upon Conversion upon a Make
    	
 
    	
 
    
	
whole Fundamental Change:
    	
 
    	
If a “make-whole   fundamental change” (as defined in the Preliminary Offering Memorandum)   occurs at any time prior to the maturity date and a holder elects to convert   its Notes in connection with such make-whole fundamental change, the   conversion rate for any Notes so converted will, under certain circumstances   and for a limited period of time, be increased by a number of additional   shares of common stock, as described under “Description of Notes—Adjustment   to Shares Delivered upon Conversion upon a Make-whole Fundamental Change” in   the Preliminary Offering Memorandum.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The following table   sets forth the number of additional shares of Issuer’s common stock to be   received per each $1,000 principal amount of Notes for each stock price and   effective date set forth below:
    

 

	
 
    	
 
    	
Stock Price
    	
 
    
	
Effective Date
    	
 
    	
$15.57
    	
 
    	
$18.00
    	
 
    	
$20.00
    	
 
    	
$21.41
    	
 
    	
$25.00
    	
 
    	
$30.00
    	
 
    	
$35.00
    	
 
    	
$40.00
    	
 
    	
$45.00
    	
 
    	
$50.00
    	
 
    	
$55.00
    	
 
    	
$60.00
    	
 
    
	
November 6, 2017
    	
 
    	
17.5161
    	
 
    	
12.4456
    	
 
    	
9.5081
    	
 
    	
7.9037
    	
 
    	
4.9951
    	
 
    	
2.6657
    	
 
    	
1.4005
    	
 
    	
0.6969
    	
 
    	
0.3086
    	
 
    	
0.1060
    	
 
    	
0.0164
    	
 
    	
0.0000
    	
 
    
	
February 1, 2018
    	
 
    	
17.5161
    	
 
    	
12.3902
    	
 
    	
9.4388
    	
 
    	
7.8291
    	
 
    	
4.9188
    	
 
    	
2.6005
    	
 
    	
1.3507
    	
 
    	
0.6610
    	
 
    	
0.2821
    	
 
    	
0.0872
    	
 
    	
0.0080
    	
 
    	
0.0000
    	
 
    
	
February 1, 2019
    	
 
    	
17.5161
    	
 
    	
12.2052
    	
 
    	
9.1613
    	
 
    	
7.5160
    	
 
    	
4.5792
    	
 
    	
2.3036
    	
 
    	
1.1238
    	
 
    	
0.5026
    	
 
    	
0.1835
    	
 
    	
0.0392
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    
	
February 1, 2020
    	
 
    	
17.5161
    	
 
    	
11.9079
    	
 
    	
8.7440
    	
 
    	
7.0542
    	
 
    	
4.0983
    	
 
    	
1.9045
    	
 
    	
0.8368
    	
 
    	
0.3178
    	
 
    	
0.0836
    	
 
    	
0.0041
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    
	
February 1, 2021
    	
 
    	
17.5161
    	
 
    	
11.3692
    	
 
    	
8.0421
    	
 
    	
6.2999
    	
 
    	
3.3582
    	
 
    	
1.3409
    	
 
    	
0.4716
    	
 
    	
0.1179
    	
 
    	
0.0075
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    
	
February 1, 2022
    	
 
    	
17.5161
    	
 
    	
10.3420
    	
 
    	
6.7319
    	
 
    	
4.9187
    	
 
    	
2.1040
    	
 
    	
0.5376
    	
 
    	
0.0807
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    
	
February 1, 2023
    	
 
    	
17.5161
    	
 
    	
8.8457
    	
 
    	
3.2901
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    

 

The exact stock prices and effective dates may not be set forth in the table above, in which case

 

·                  If the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day year.

 

·                  If the stock price is greater than $60.00 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above), no additional shares will be added to the conversion rate.

 

·                 If the stock price is less than $15.57 per share (subject to adjustment in the same manner as the stock 

 

Sch B-3

 

prices set forth in the column headings of the table above), no additional shares will be added to the conversion rate.

 

Notwithstanding the foregoing, in no event will the conversion rate per $1,000 principal amount of Notes exceed 64.2260 shares of common stock, subject to adjustment in the same manner as the conversion rate as set forth under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the Preliminary Offering Memorandum.

 

 

This communication is intended for the sole use of the person to whom it is provided by the sender. This material  is confidential and is for your information only and is not intended to be used by anyone other than you. This information does not purport to be a complete description of the Notes or the offering thereof. This communication does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make such  offer or solicitation in such jurisdiction.

 

The Notes and any shares of common stock issuable upon conversion of the Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any other securities laws, and may not be offered or sold within the United States or any other jurisdiction, except pursuant to an exemption from, or in a transaction not  subject to, the registration requirements of the Securities Act and any other applicable securities laws. The initial purchaser is initially offering the Notes only to qualified institutional buyers as defined in, and in reliance on, Rule 144A under the  Securities Act.

 

The Notes and shares of common stock issuable upon conversion of the Notes are not transferable except in accordance with the restrictions described under “Transfer Restrictions” in the Preliminary Offering Memorandum.

 

A copy of the Preliminary Offering Memorandum for the offering of the Notes may be obtained by contacting Barclays Capital Inc. by telephone at 1-888-603-5847.

 

Any legends, disclaimers or other notices that may appear below are not applicable to this communication and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of this communication having been sent via Bloomberg or another system

 

Sce B-4

 

SCHEDULE C

 

Issuer Written Information

 

Final Term Sheet in the form set forth on Schedule B

 

Sch C-1

 

SCHEDULE D

 

List of Persons and Entities Subject to Lock-up

 

Thad Trent

 

Dana C. Nazarian

 

Hassane El-Khoury

 

W. Steve Albrecht

 

Catherine P. Lego

 

Camillo Martino

 

J. Daniel McCranie

 

Jeffrey J. Owens

 

O. C. Kwon

 

Michael S. Wishart

 

Sch D-1

 

Exhibit A

 

FORM OF OPINION OF COMPANY’S COUNSEL
 TO BE DELIVERED PURSUANT TO SECTION 5(b)

 

1.                                The Company is a corporation duly incorporated and validly existing under the laws of the State of Delaware and is in good standing under such laws.  The Company has requisite corporate power to own or lease its properties and carry on its business, as described in the Final Offering Memorandum.  The Company is qualified to do business and is in good standing as a foreign corporation in the State of California.

 

2.                                The execution and delivery of the Operative Documents have been duly authorized by all necessary corporate action on the part of the Company, and the Company has the corporate power to execute and deliver the Operative Documents and to perform its obligations under the terms of the Operative Documents.

 

3.                                The Purchase Agreement has been duly executed and delivered by the Company.

 

4.                                The authorized capital stock of the Company is as set forth in the Final Offering Memorandum under the caption “Description of Capital Stock.”

 

5.                                The Securities being issued on the date hereof are in the form contemplated in the Indenture and have been duly authorized by all necessary corporate action of the Company and have been duly executed by the Company and when authenticated by the Trustee in accordance with the terms of the Indenture (which authentication we have not determined by inspection of the Securities) and issued and delivered to the Initial Purchaser against payment of the purchase price therefor specified in the Purchase Agreement, the Securities will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

 

6.                                The Indenture has been duly authorized by all necessary corporate action on the part of the Company and the Indenture has been duly executed and delivered by the Company and the Indenture constitutes a valid and binding instrument, enforceable against the Company in accordance with its terms.

 

7.                                The shares of Common Stock initially issuable upon conversion of the Securities (assuming full physical settlement of the Securities and including shares of Common Stock issuable with respect to any Make-Whole Fundamental Change (as defined in the Indenture)) (the “Shares”) have been duly authorized and reserved by all necessary corporate action on the part of the Company and the Shares, if any, when issued upon due conversion of the Securities in accordance with the terms of such Securities and the Indenture would, if issued today, be validly issued, fully paid and nonassessable and free of preemptive rights arising under the Certificate of Incorporation or Bylaws or the DGCL.

 

8.                                The statements set forth in the General Disclosure Package and the Final Offering Memorandum under the caption “Description of Notes” insofar as such statements purport to constitute a summary of the terms of the Indenture and the Securities, fairly summarize such terms in all material respects.

 

A-1

 

9.                                The statements set forth in the General Disclosure Package and the Final Offering Memorandum under the caption “Certain U.S. Federal Income Tax Considerations,” insofar as they purport to summarize the United States federal tax laws referred to therein or legal conclusions with respect thereto, are fair summaries in all material respects.

 

10.                         The statements set forth in the General Disclosure Package and Final Offering Memorandum under the caption “Description of Capital Stock,” insofar as such statements constitute summaries of legal matters or documents, fairly summarize the matters and documents referred to therein in all material respects.

 

11.                         The Company is not, and immediately after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the General Disclosure Package and the Final Offering Memorandum, will not be required to be registered as an “investment company,” as such term is defined in the Investment Company Act.

 

12.                         None of the issuance and sale of the Securities being delivered on the date hereof, the execution, delivery and performance by the Company of its obligations under the Operative Documents or the consummation of the transactions contemplated thereby will (i) violate the Certificate of Incorporation or Bylaws, (ii) conflict with, result in a breach or violation by the Company of any of the terms or provisions of, or constitute a default by the Company under any Reviewed Agreement, (iii) result in a violation of any Reviewed Judgment, or (iv) contravene any applicable law.

 

13.                         No consent, approval, authorization, order, registration or qualification of or with any U.S. federal, New York, California or Delaware (solely with respect to the DGCL) governmental agency or body or court is required for the execution and delivery of the Purchase Agreement, the offer, sale or issuance by the Company of the Securities or the consummation by the Company of the transactions contemplated by the Purchase Agreement or the Indenture, except such as may be required under state securities or Blue Sky laws.

 

14.                         Assuming the accuracy of the Initial Purchaser’s representations contained in the Purchase Agreement and the accuracy of the Company’s representations contained in the Purchase Agreement, no registration of the Securities or the Shares is required under the Securities Act for the sale of the Securities by the Company to the Initial Purchaser pursuant to the Purchase Agreement and the Indenture or for the initial resale of the Securities by the Initial Purchaser in the manner contemplated by the Purchase Agreement, the General Disclosure Package and the Final Offering Memorandum, and it is not necessary to qualify the Indenture under the Trust Indenture Act (it being understood that, in each case, no opinion is expressed as to any subsequent resale of the Securities or the consequences thereof).

 

A-2

 

Exhibit B

 

FORM OF LOCK-UP TO BE DELIVERED PURSUANT TO SECTION 5(h)

 

November 1, 2017

 

Barclays Capital Inc.,

 

as Initial Purchaser

 

745 Seventh Avenue

New York, NY 10019

 

Re:          Proposed Offering by Cypress Semiconductor Corporation

 

Dear Sirs:

 

The undersigned, a stockholder and an officer and/or director of Cypress Semiconductor Corporation, a Delaware corporation (the “Company”), understands that Barclays Capital Inc. (the “Initial Purchaser”) proposes to enter into a Purchase Agreement (the “Purchase Agreement”) with the Company providing for the offering of $130,000,000 aggregate principal amount of the Company’s Convertible Senior Notes due 2023 (the “Securities”).  In recognition of the benefit that such an offering will confer upon the undersigned as a stockholder and an officer and/or director of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with the Initial Purchaser to be named in the Purchase Agreement that, during the period beginning on the date hereof and ending on the date that is 60 days from the date of the Purchase Agreement (the “Lock-Up Period”), the undersigned will not, without the prior written consent of the Initial Purchaser, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of the Company’s common stock, par value $.01 per share (the “Common Stock”), or any securities convertible into or exercisable or exchangeable for Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “Lock-Up Securities”), or exercise any right with respect to the registration of any of the Lock-Up Securities, or file or cause to be filed any registration statement in connection therewith, under the Securities Act of 1933, as amended, or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise.

 

Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer the Lock-Up Securities without the prior written consent of the Initial Purchaser, provided that (1) in the case of subclauses (i), (ii), (iii), (iv) and (v) below, the Initial Purchaser receives a signed lock-up agreement for the balance of the Lock-Up Period from each donee, trustee, distributee, or transferee, as the case may be, (2) in the case of subclauses (i), (ii), (iii), (iv) and (v) below, any such transfer shall not involve a disposition for value, (3) in the case of subclauses (i), (ii), (iii), (iv) and (v) below, such transfers are not required to be reported with the Securities and Exchange Commission on Form 4 in accordance with Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 

 

B-1

 

and (4) the undersigned does not otherwise voluntarily effect any public filing or report regarding such transfers:

 

(i)                                     as a bona fide gift or gifts;

 

(ii)                                  if the undersigned is a corporation, partnership, limited liability company, or other business entity, (A) to another corporation, partnership, limited liability company, trust or other business entity that is a direct or indirect affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of the undersigned or (B) as a distribution of shares of Common Stock or any security convertible into or exercisable for Common Stock to limited partners, limited liability company members or stockholders of the undersigned;

 

(iii)                               to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin);

 

(iv)                              by will or intestacy;

 

(v)                                 if the undersigned is a trust, to its beneficiaries;

 

(vi)                              to the Company, as forfeitures to satisfy any income, employment or social tax withholding and remittance obligations of the undersigned or the employer of the undersigned in connection with the vesting of restricted stock units held by the undersigned and outstanding as of the date hereof or as of the date of the Purchase Agreement; provided, that any shares of Common Stock received shall be subject to the restrictions set forth herein; and provided further, if the undersigned is required to file a report under the Exchange Act, the undersigned shall include a statement in such report to the effect that the filing relates to the forfeiture of Common Stock for tax purposes;

 

(vii)                           if (A) the undersigned is an employee of the Company as of the date of transfer and (B) the Company does not elect to settle income tax withholding and remittance obligations of the undersigned (or the employer of the undersigned) in connection with the vesting of restricted stock units held by the undersigned by withholding shares of Common Stock as forfeitures pursuant to subclause (vi) above, then the undersigned may transfer up to that number of shares of the Common Stock underlying restricted stock units held by the undersigned that are vested and settled and necessary to satisfy income tax withholding and remittance obligations in connection with the vesting of restricted stock units outstanding as of the date hereof or as of the date of the Purchase Agreement (for avoidance of doubt, this right to transfer shares of Common Stock will apply on a particular date only with respect to Common Stock underlying restricted stock units held by the undersigned that are vested and settled on or before such date);

 

(viii)                        to the Company, in connection with the receipt of shares of Common Stock upon the “net” or “cashless” exercise of options to purchase shares of Common Stock for purposes of exercising such options, including the payment of taxes due as a result of such exercise, with respect to stock options outstanding as of the date hereof or as of the date of the Purchase Agreement; provided, that any shares of Common Stock received shall be subject to the restrictions set forth herein; and provided further, if the undersigned is required to file a report under the Exchange Act, the undersigned shall include a statement in such report to the effect that the filing relates to the exercise of options;

 

B-2

 

(ix)                              if for the payment of the exercise price for the exercise of options to purchase shares of Common Stock with respect to stock options outstanding as of the date hereof or as of the date of the Purchase Agreement, including the payment of taxes due as a result of such exercise; provided, if the undersigned is required to file a report under the Exchange Act, the undersigned shall include a statement in such report to the effect that the filing relates to the exercise of options and the sale of such shares to cover the payment of taxes in connection with such exercise;

 

(x)                                                                                 to the Company, in connection with the repurchase of shares of Common Stock issued pursuant to an employee benefit plan disclosed or incorporated by reference in the final Offering Memorandum relating to the Purchase Agreement or pursuant to the agreements pursuant to which such shares were issued; provided, that if the undersigned is required to file a report under the Exchange Act, the undersigned shall include a statement in such report to the effect that the filing relates to a repurchase by the Company pursuant to an employee benefit plan;

 

(xi)                                                                              pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction made to all holders of the Company’s capital stock involving a purchase of beneficial ownership of more than 50% of the total voting power of the capital stock of the Company, provided that in the event that such tender offer, merger, consolidation or other such transaction is not completed, the Lock-Up Securities shall remain subject to the provisions of this lock-up agreement;

 

(xii)                                                                           by operation of law, such as pursuant to a qualified domestic order or in connection with a divorce settlement;

 

(xiii)                                                                        pursuant to a written plan of which you are aware to which the undersigned is a party meeting the requirements of Rule 10b5-1 under the Exchange Act (a “10b5-1 Plan”) entered into prior to the date of this lock-up agreement relating to the sale of the Lock-Up Securities; or

 

(xiv)                                                                       sales of shares of Common Stock of no more than 250,000 shares in the aggregate by all persons who enter into a “lock-up” agreement with Initial Purchaser in connection with the offering of the Securities, provided that the undersigned and the Initial Purchaser have received written confirmation from the Company that, after giving effect to such sale, the aggregate number of shares sold pursuant to this exception will not exceed 250,000 shares.

 

Furthermore, the undersigned may sell shares of Common Stock of the Company purchased by the undersigned on the open market following the offering if and only if (i) such sales are not required to be reported in any public report or filing with the Securities and Exchange Commission, or otherwise and (ii) the undersigned does not otherwise voluntarily effect any public filing or report regarding such sales.

 

In addition, the undersigned may (i) enter into, modify or amend a 10b5-1 Plan after the date of this lock-up agreement relating to the sale of the Lock-Up Securities, if then permitted by the Company and in accordance with the Company’s internal policies, provided that the securities subject to such plan may not be sold until after the expiration of the Lock-Up Period and no public announcement or filing under the Exchange Act regarding the establishment, modification or amendment of such plan shall be required or voluntarily made by or on behalf of the undersigned, or (ii) terminate a 10b5-1 Plan to which the undersigned is a party entered into prior to the date of this lock-up agreement relating to the sale of the Lock-Up Securities, in accordance with the Company’s internal policies and the requirements of the 

 

B-3

 

10b5-1 Plan, provided that no public announcement or filing under the Exchange Act regarding such termination shall be required of or voluntarily made by or on behalf of the undersigned.

 

The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Lock-Up Securities except in compliance with the foregoing restrictions.

 

Notwithstanding anything to the contrary contained herein, this lock-up agreement will automatically terminate and the undersigned will be released from all of his, her or its obligations hereunder upon the earliest to occur, if any, of (i) the Company advising the Initial Purchaser in writing prior to entry into the Purchase Agreement that it does not intend to proceed with the offering of the Securities, (ii) the Purchase Agreement (other than the provisions thereof which survive termination) terminates or is terminated prior to payment for and delivery of the Securities to be sold thereunder, or (iii) December 1, 2017, in the event that the Purchase Agreement has not been executed by such date.

 

[Signature page follows]

 

B-4

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Print Name:
    	
 
    

 

B-5Exhibit

Exhibit 10(a)
EXECUTION COPY

 51 West 52nd Street
 New York, NY 10019

Joseph R. Ianniello 
c/o CBS Corporation
51 West 52nd Street
New York, NY  10019

	
		
	Dear Joe:
	as of July 1, 2017

CBS Corporation (“CBS”), having an address at 51 West 52nd Street, New York, New York 10019, agrees to employ you and you agree to accept such employment upon the following terms and conditions (this “Agreement”):
1.     Term.  The term of your employment under this Agreement shall commence on July 1, 2017 (the “Effective Date”) and, unless earlier terminated under this Agreement, shall expire on June 30, 2022 (the “Expiration Date”). The period from the Effective Date through the Expiration Date is referred to herein as the “Term” notwithstanding any earlier termination of your employment for any reason.  
2.    Duties.  
(a)    During the Term, you will serve as the Chief Operating Officer of CBS (“COO”), and you agree to perform all duties reasonable and consistent with that office as the Chairman of the Board, President and Chief Executive Officer of CBS (the “Chairman & CEO”) (currently Leslie Moonves) may assign to you from time to time, which, for avoidance of doubt, shall include all of your duties as of the Effective Date and any duties consistent with your position that are subsequently acquired. You will report solely to the Chairman & CEO. You shall also continue to perform the duties of the Chief Financial Officer of CBS (“CFO”) until such time as CBS (after consultation with you) may, in its discretion, assign another individual (or any successor(s) to such individual) to serve in the CFO position, provided that such individual (or successor(s) to such individual) has been jointly approved by you and the Chairman & CEO.  Any individual serving in the position of CFO will report to you.  The parties agree that it would be mutually beneficial for your continued development to assign the CFO role and its related duties to another executive early into the Term so that you may focus on the strategic and operational components of the COO role, and, accordingly, CBS will endeavor in good faith to do so not later than December 31, 2018.  

Joseph R. Ianniello
as of July 1, 2017
Page 2

(b)    During the period of your employment with CBS, you agree to devote your entire business time, attention and energies to the business of CBS.  Notwithstanding the foregoing, you will be permitted to engage in charitable, civic, or other non-business activities and to serve as a member of the board of directors of not-for-profit organizations and one for-profit organization (in the case of the for-profit organization, which is mutually agreeable to you and the Chairman & CEO, subject to CBS’s applicable conflict of interest policies) so long as such activities do not materially interfere with the performance of your duties and responsibilities hereunder. During the period of your employment with CBS, consistent with current and past practice, you shall render your services under this Agreement from CBS’s executive offices in the New York and Los Angeles metropolitan areas; provided, however, that you will be required to engage in reasonable business travel to other locations.  
3.    Base Compensation.
(a)    Salary.  For all the services rendered by you in any capacity under this Agreement, CBS agrees to pay you an annual base salary (“Salary”) at the rate of Two Million Five Hundred Thousand Dollars ($2,500,000), less applicable deductions and withholding taxes, in accordance with CBS’s payroll practices as they may exist from time to time. Effective July 1, 2019, your Salary shall automatically be increased, without further action by the Compensation Committee of the CBS Board of Directors (the “Committee”), to Two Million Seven Hundred and Fifty Thousand Dollars ($2,750,000). Thereafter during your employment with CBS, your Salary shall be reviewed annually and may be increased, but not decreased. Any such increase shall be made at a time, and in an amount, that CBS shall determine in its discretion.  
(b)    Bonus Compensation.  You also shall be eligible to receive annual bonus compensation (“Bonus”) during your employment with CBS under this Agreement, determined and payable as follows:
(i)    Your Bonus for each calendar year during your employment with CBS under this Agreement (including, in the case of the 2017 calendar year, the period of your service prior to the Effective Date of this Agreement) will be determined in accordance with the guidelines of the CBS short-term incentive program (the “STIP”), as such guidelines may be amended from time to time without notice in the discretion of CBS.
(ii)    Your target bonus (“Target Bonus”) for the 2017 calendar year (including the period of your service prior to the Effective Date of this Agreement) and for the 2018 calendar year shall be 450% of your Salary in effect on November 1st of 2017 and 2018, respectively, or the last day of your employment, if earlier.  Your Target Bonus for the 2019 calendar year and subsequent calendar years during your employment with CBS under this Agreement shall be 500% of your Salary in effect on November 1st of the calendar year or the last day of your employment, if earlier.

Joseph R. Ianniello
as of July 1, 2017
Page 3

(iii)    Your Bonus for any calendar year shall be payable, less applicable deductions and withholding taxes, between January 1st and March 15th of the following calendar year.
(iv)    Except as otherwise provided in paragraphs 7(b)(ii)(D), 7(c)(ii)(D), 7(d), 7(e), 7(f)(iii)(D) and 7(j)(ii)(A), if, prior to the last day of a calendar year, your employment with CBS terminates, CBS may, in its discretion, choose to pay you a prorated Bonus, in which case such prorated Bonus will be determined in accordance with the guidelines of the STIP and payable in accordance with paragraph 3(b)(iii).
(c)    Long-Term Incentive Compensation.  
(i)    Beginning with calendar year 2018 (it being understood and agreed that you have already received an annual LTIP grant for calendar year 2017), you shall be eligible to receive annual grants of long-term incentive compensation under the LTIP. For the 2018 and 2019 calendar years, you shall have a target long-term incentive value equal to Twelve Million Two Hundred and Fifty Thousand Dollars ($12,250,000). For the 2020, 2021 and 2022 calendar years, your target long-term incentive value shall automatically be increased, without further action of the Committee, to Thirteen Million Five Hundred Thousand Dollars ($13,500,000). The precise amount, form (including equity and equity-based awards, which for purposes of this Agreement are collectively referred to as “equity awards”) and timing of any such long-term incentive award, if any, shall be determined in the discretion of the Committee, all of which (other than the amount) shall be consistent with current and past practice.
(ii)    You shall be eligible to receive a grant of shares of Class B Common Stock based on the stock price performance of CBS’s Class B Common Stock over the period beginning July 1, 2017 and ending on December 31, 2021 (or earlier in certain instances as provided for in Schedule A to this Agreement), and subject to the Company’s degree of achievement against the PRSU Performance Goals for calendar years 2019 and 2020 (the “2017 Performance Award”).  The number of shares of Class B Common Stock to be granted to you and the timing of such grant shall be determined pursuant to the schedule set forth on Schedule A to this Agreement, a copy of which is attached hereto and incorporated herein by reference.  For the avoidance of doubt, each reference to “other equity awards” in paragraph 7 of this Agreement is not intended to be a reference to the 2017 Performance Award, the treatment of which upon your termination of employment, disability or death, as applicable, is separately addressed in Schedule A to this Agreement.
(iii)    CBS agrees to maintain a registration statement on Form S-8 for the Class B Common Stock with respect to the shares that may be delivered to you under the LTIP upon exercise of the stock options described in 

Joseph R. Ianniello
as of July 1, 2017
Page 4

paragraph 3(c)(ii) or in settlement of the RSUs described in paragraph 3(c)(iii) of the Prior Agreement (as defined in paragraph 15 below).  
4.    Benefits.  You shall be eligible to participate in all CBS vacation, medical, dental, life insurance, long-term disability insurance, retirement, and long-term incentive plans and programs and other benefit plans and programs (other than any plan or program evidenced in the Chairman & CEO’s employment agreement or other individual contractual arrangement) as CBS may have or establish from time to time and in which you would be eligible to participate under the terms of the plans, as may be amended from time to time, on terms no less favorable than those applicable to the Chairman & CEO. This provision shall not be construed to either require CBS to establish any welfare, compensation or long-term incentive plans, or to prevent the modification or termination of any plan once established, and no action or inaction with respect to any plan shall affect this Agreement.  During your employment under this Agreement, CBS agrees that it will continue the existing arrangements concerning your usage of a car service consistent with current practices in effect immediately prior to the Effective Date. Additionally, CBS agrees that it will continue the existing arrangements concerning your usage of Company aircraft in effect immediately prior to the Effective Date (e.g., second priority among CBS senior executives for usage of company aircraft for business-related travel, and limited usage of company aircraft for personal travel, subject to Chairman & CEO approval).     
5.    Business Expenses.  During your employment under this Agreement, CBS shall reimburse you for such reasonable travel and other expenses (including, without limitation, the expense of first class travel) incurred in the performance of your duties as are customarily reimbursed to the Chairman & CEO (other than travel and other expenses unique to the Chairman & CEO which are evidenced in his employment agreement or other individual contractual arrangement). Such travel and other expenses shall be reimbursed by CBS as soon as practicable in accordance with CBS’s established guidelines, as may be amended from time to time, but in no event later than December 31st of the calendar year following the calendar year in which you incur the related expenses. 
6.    Non-Competition, Confidential Information, Etc. 
(a)    Non-Competition. You agree that your employment with CBS is on an exclusive basis and that, while you are employed by CBS or any of its subsidiaries, other than as permitted by paragraph 2, you will not engage in any other business activity which is in conflict with your duties and obligations (including your commitment of time) under this Agreement. You further agree that, during the Non-Compete Period (as defined below), you shall not directly or indirectly engage in or participate in (or negotiate or sign any agreement to engage in or participate in), whether as an owner, partner, stockholder, officer, employee, director, agent of or consultant for, any business which at such time is competitive with any business of CBS, or any of its 

Joseph R. Ianniello
as of July 1, 2017
Page 5

subsidiaries, without the written consent of CBS; provided, however, that this provision shall not 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. The Non-Compete Period shall cover the period during your employment with CBS and shall continue following the termination of your employment for any reason (including, without limitation, upon expiration of the Term) for the greater of: (i) twelve (12) months; or (ii) if longer, for so long as any payments are due to you pursuant to paragraph 7(b), 7(c), 7(f) or 7(j) of this Agreement, unless you provide CBS with an irrevocable written notice pursuant to paragraph 6(j) of this Agreement.
(b)    Confidential Information. You agree that, during the period of your employment with CBS and at any time thereafter, (i) you shall not use for any purpose other than the duly authorized business of CBS, or disclose to any third party, any information relating to CBS, or any of CBS’s affiliated companies which is non-public, confidential or proprietary to CBS or any of CBS’s affiliated companies (“Confidential Information”), including any trade secret or any written (including in any electronic form) or oral communication incorporating Confidential Information in any way (except as may be required by law or in the performance of your duties under this Agreement consistent with CBS’s policies or to enforce your rights under this Agreement or in connection with any arbitration or litigation relating to your employment with CBS, provided that, in connection with your use of Confidential Information in any arbitration or litigation proceeding, you use reasonable best efforts to avoid any unnecessary disclosure by you of the Confidential Information outside of such proceeding); and (ii) you will comply with any and all confidentiality obligations of CBS to a third party, whether arising under a written agreement or otherwise.  Information shall not be deemed Confidential Information which (x) is or becomes generally available to the public other than as a result of a prohibited disclosure by you or at your direction or by any other person who directly or indirectly receives such information from you, or (y) is or becomes available to you on a non-confidential basis from a source which is entitled to disclose it to you. For purposes of this paragraph 6(b), the term “third party” shall be defined to mean any person other than CBS and its subsidiaries or any of their respective directors and senior officers.
Notwithstanding the foregoing, your obligation to protect confidential and proprietary information shall not prohibit you from disclosing matters that are protected under any applicable whistleblower laws, including reporting possible violations of laws or regulations, or responding to inquiries from, or testifying before, any governmental agency or self-regulating authority, all without notice to or consent from CBS. Additionally, you hereby are notified that the immunity provisions in Section 1833 of title 18 of the United States Code provide that an individual cannot be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that is made (i) in confidence to federal, state or local government officials, either directly or indirectly, or to an attorney, and is solely for the purpose of 

Joseph R. Ianniello
as of July 1, 2017
Page 6

reporting or investigating a suspected violation of the law, (ii) under seal in a complaint or other document filed in a lawsuit or other proceeding, or (iii) to your attorney in connection with a lawsuit for retaliation for reporting a suspected violation of law (and the trade secret may be used in the court proceedings for such lawsuit) as long as any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to court order.
(c)    No Solicitation, Etc.  You agree that, while employed by CBS and for the greater of twelve (12) months thereafter or for so long as payments are due to you pursuant to paragraph 7(b), 7(c), 7(f) or 7(j) of this Agreement, you shall not:
(i)    directly or indirectly employ or solicit the employment of any person (other than your current personal assistant) who is then or has been within twelve (12) months prior thereto, an employee of CBS or any of CBS’s affiliated companies; or
(ii)    willfully and directly interfere with, disturb, or interrupt any of the then-existing relationships (whether or not such relationships have been reduced to formal contracts) of CBS or any of CBS’s affiliated companies with any customer, consultant or supplier resulting in material harm to CBS (it being understood and agreed that actions by your employer or other third party in which you do not willfully and directly participate will not be attributed to you).
Notwithstanding any provision herein to the contrary, in the event your employment is terminated under circumstances described in paragraphs 7(b) or 7(c) of this Agreement, you will be entitled to the continued support and assistance of your then current personal assistant for a reasonable period of time following your termination in order to effect a smooth transition of your duties and responsibilities.

(d)    CBS Ownership. The results and proceeds of your services under this Agreement, including, without limitation, any works of authorship resulting from your services during your employment with CBS and/or any of CBS’s affiliated companies and any works in progress resulting from such services, shall be works-made-for-hire and CBS shall be deemed the sole owner throughout the universe of any and all rights of every nature in such works, whether such rights are now known or hereafter defined or discovered, with the right to use the works in perpetuity in any manner CBS determines, in its discretion, without any further payment to you. If, for any reason, any of such results and proceeds are not legally deemed a work-made-for-hire and/or there are any rights in such results and proceeds which do not accrue to CBS 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 every nature in the work, whether now known or hereafter defined or discovered, and CBS shall have the right to use the work in perpetuity throughout the universe in any manner CBS determines, in its discretion, 

Joseph R. Ianniello
as of July 1, 2017
Page 7

without any further payment to you. You shall, as may be requested by CBS from time to time and at CBS’s expense, do any and all things which CBS may deem useful or desirable to establish or document CBS’s rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright, trademark and/or patent applications, assignments or similar documents and, if you are unavailable or unwilling to execute such documents, you hereby irrevocably designate the Senior Executive Vice President, Chief Legal Officer, CBS Corporation or his designee as your attorney-in-fact with the power to execute such documents on your behalf. To the extent you have any rights in the results and proceeds of your services under this Agreement that cannot be assigned as 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 a waiver by CBS of any ownership rights to which CBS may be entitled by operation of law by virtue of being your employer.  
(e)    Litigation.
(i)    You agree that during the period of your employment with CBS and for twelve (12) months thereafter or, if later, during the pendency of any litigation or other proceeding, (x) you shall not communicate with anyone (other than your own attorneys and tax advisors), except to the extent necessary in the performance of your duties under this Agreement, with respect to the facts or subject matter of any pending or potential litigation, or regulatory or administrative proceeding involving CBS, or any of CBS’s affiliated companies, other than any litigation or other proceeding in which you are a party-in-opposition, without giving prior notice to CBS or its counsel (to the extent lawful); and (y) in the event that any other party attempts to obtain information or documents from you with respect to such matters, either through formal legal process such as a subpoena or by informal means such as interviews, you shall promptly notify CBS’s counsel before providing any information or documents (to the extent lawful).
(ii)    You agree to cooperate with CBS 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 or had knowledge of prior to the termination of your employment. Your cooperation shall include, without limitation, providing assistance to CBS’s counsel, experts or consultants, providing truthful testimony in pretrial and trial or hearing proceedings and any travel related to your attendance at such proceedings. In the event that your cooperation is requested after the termination of your employment, CBS will (x) seek to minimize interruptions to your schedule to the extent consistent with its interests in the matter; and (y) reimburse you for all reasonable and appropriate out-of-pocket expenses actually incurred by you in connection with such cooperation upon reasonable substantiation of such expenses. Any such reimbursement shall be made within 

Joseph R. Ianniello
as of July 1, 2017
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60 calendar days following the date on which CBS receives appropriate documentation with respect to such expenses, but in no event shall payment be made later than December 31 of the calendar year following the calendar year in which you incur the related expenses.  
(iii)    You agree that during the period of your employment with CBS and at any time thereafter, to the fullest extent permitted by law, you will not, other than to enforce your rights under this Agreement pursuant to and in accordance with paragraph 17 of this Agreement, testify voluntarily in any lawsuit or other proceeding which directly or indirectly involves CBS, or any of CBS’s affiliated companies, or which may create the impression that such testimony is endorsed or approved by CBS, or any of CBS’s affiliated companies, without advance notice (including the general nature of the testimony) to and, if such testimony is without subpoena or other compulsory legal process, the approval of the Senior Executive Vice President, Chief Legal Officer, CBS Corporation. 
(f)    No Right to Give Interviews or Write Books, Articles, Etc.  During the Term, except as authorized by CBS (which authorization shall include, without limitation, the written or verbal approval by the Chairman & CEO) or in carrying out your duties and responsibilities under this Agreement (which include, without limitation, approved participation in industry conferences, investor conferences, media events, road shows and similar events), you shall not (i) give any interviews or speeches, or (ii) prepare or assist any person or entity in the preparation of any books, articles, television or motion picture productions or other creations, in either case, concerning CBS, or any of CBS’s affiliated companies or any of their respective officers, directors, agents, employees, suppliers or customers; provided, that any failure to obtain approval for participation in industry conferences, investor conferences, media events, road shows and similar events shall not be considered Cause (as defined in paragraph 7(a)(i) of this Agreement) unless such failure is part of a pattern of continuous or repeated failures to obtain approval for participation in such events.  
(g)    Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with CBS shall remain the exclusive property of CBS. In the event of the termination of your employment for any reason, CBS reserves the right, to the extent permitted by law and in addition to any other remedy CBS may have, to deduct from any monies otherwise payable to you the following:  (i) all amounts you may owe to CBS, or any of CBS’s subsidiaries at the time of or subsequent to the termination of your employment with CBS; and (ii) the value of the CBS property which you retain in your possession after the termination of your employment with CBS. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement shall serve as such consent. Notwithstanding anything in this 

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paragraph 6(g) to the contrary, CBS will not exercise such right to deduct from any monies otherwise payable to you that constitute “deferred compensation” within the meaning of Internal Revenue Code Section 409A (“Code Section 409A”).
(h)    Non-Disparagement.  You and CBS agree that each party, during the period of your employment with CBS and for a period of one (1) year thereafter, shall not, in any communications with the press or other media or any customer, client, supplier or member of the investment community, criticize, ridicule or make any statement which disparages or is derogatory of the other party; provided, that CBS’s obligations 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 (or by any executive at the behest of a Specified Executive) shall be deemed to be a breach of this paragraph 6(h) by CBS. Notwithstanding the foregoing, neither you nor CBS shall be prohibited from making truthful statements in connection with any arbitration proceeding described in paragraph 17 hereof concerning a dispute relating to this Agreement.    
(i)    Injunctive Relief. CBS 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) of this Agreement will result in irreparable damage to CBS and, accordingly, CBS may obtain injunctive and other equitable relief for any breach or threatened breach of such paragraphs, in addition to any other remedies available to CBS.  
(j)    Survival; Modification of Terms.  Your obligations under paragraphs 6(a) through (i) shall remain in full force and effect for the entire period provided therein notwithstanding the termination of your employment under this Agreement for any reason; provided, however, that your obligations under paragraph 6(a) (but not under any other provision of this Agreement) shall cease if: (x) CBS terminates your employment without Cause, you resign with Good Reason or your employment under this Agreement terminates due to failure to renew this Agreement in accordance with paragraph 7(f)(iii); and (y) at any time following the one-year anniversary of your termination date, you provide CBS with an irrevocable written notice waiving your right to receive, or to continue to receive, any payments and benefits under paragraphs 7(b)(ii)(A), (B), (C), (D) and (G), paragraphs 7(c)(ii)(A), (B), (C), (D) and (G), paragraphs 7(f)(iii)(A) through (D) or paragraphs 7(j)(ii)(A), (B), (C), (D) and (G), as applicable, that would otherwise be paid or provided to you after the one-year anniversary of your termination date (it being understood and agreed that you shall be entitled to retain any payments or benefits required to be paid or provided to you prior to such date).  You and CBS agree that the restrictions and remedies contained in paragraphs 6(a) through (i) are reasonable and that it is your intention and the intention of CBS that such restrictions and remedies shall be enforceable to the fullest extent permissible by law.  If a court of competent jurisdiction shall find that any such 

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restriction or remedy is unenforceable but would be enforceable if some part were deleted or the period or area of application reduced, then such restriction or remedy shall apply with the modification necessary to make it enforceable.  You acknowledge that CBS conducts its business operations around the world and has invested considerable time and effort to develop the international brand and goodwill associated with the “CBS” name.  To that end, you further acknowledge that the obligations set forth in this paragraph 6 are by necessity international in scope and necessary to protect the international operations and goodwill of CBS and its affiliated companies.
7.    Termination of Employment.
(a)    Termination for Cause. 
(i)    CBS may, at its option, terminate your employment under this Agreement for Cause at any time during the Term.  For purposes of this Agreement, “Cause” shall mean termination of your employment due to any of the following: 
(A)     your engaging or participating in intentional acts of material fraud against CBS and its subsidiaries (the “Company”);  
(B)     your willful misfeasance having a material adverse effect on the Company (except in the event of your Disability as set forth in paragraph 7(e));  
(C)     your conviction of a felony;  
(D)     your willful failure to obey a material lawful directive that is appropriate to your position from the Chairman & CEO;
(E)    your willful unauthorized disclosure of trade secret or other confidential material information of the Company;  
(F)     your terminating your employment without Good Reason (as defined below) other than for death or Disability pursuant to paragraph 7(e) (it being understood that your terminating your employment during the Term without Good Reason prior to the end of the Term shall constitute Cause);  
(G)     your willful and material violation of any formal written policy of the Company that is generally applicable to all employees or all officers of the Company including, but not limited to, policies concerning insider trading or sexual harassment, Supplemental Code of Ethics for Senior Financial 

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Officers, and CBS’s Business Conduct Statement; 
(H)    your willful failure to cooperate fully with a bona fide Company internal investigation or an investigation of the Company by regulatory or law enforcement authorities, whether or not related to your employment with the Company (an “Investigation”), after being instructed by the Board or the Chairman & CEO to cooperate or your willful destruction of or knowing and intentional failure to preserve documents or other material known by you to be relevant to any Investigation; or
(I)    your willful and material breach of any of your material obligations hereunder.
For purposes of the foregoing definition, an act or omission shall be considered “willful” if done, or omitted to be done, by you with knowledge and intent.  
Anything herein to the contrary notwithstanding, CBS will give you written notice as soon as practicable, but in no event later than forty-five (45) calendar days, after the occurrence of an event constituting Cause is known by (x) the Chairman & CEO, (y) the Senior Executive Vice President, Chief Administrative Officer and Chief Human Resources Officer or (z) the Senior Executive Vice President, Chief Legal Officer, CBS Corporation prior to terminating this Agreement for Cause pursuant to clauses (A), (B), (D), (E), (G), (H) and (I) above. Such notice shall set forth the nature of any alleged misfeasance in reasonable detail and, if such misfeasance is capable of being cured, the conduct required to cure.  Except for a failure, conduct or breach which by its nature cannot be cured, you shall have thirty (30) calendar days from the receipt of such notice within which to cure and within which period CBS cannot terminate this Agreement for the stated reason, and, if so cured, after which period CBS cannot terminate your employment under this Agreement for the stated reason. For purposes of this Agreement, no such purported termination of your employment for Cause set forth in clauses (A), (B), (D), (E), (G), (H) or (I) above shall be effective without such notice.  
(ii)    In the event that your employment terminates under paragraph 7(a)(i) during the Term, CBS shall have no further obligations under this Agreement, including, without limitation, any obligation to pay Salary or Bonus or provide benefits, except for the Accrued Obligations (as defined below) or as required by applicable law.
(b)    Termination without Cause.
(i)    CBS may terminate your employment under this Agreement without Cause at any time during the Term by providing written 

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notice of termination to you.
(ii)    In the event that your employment terminates under paragraph 7(b)(i) during the Term hereof, you shall thereafter receive, less applicable withholding taxes, (x) any unpaid Salary through and including the date of termination, any unpaid Bonus earned for the calendar year prior to the calendar year in which you are terminated, any business expense reimbursements incurred but not yet approved and/or paid and such other amounts as are required to be paid or provided by law (the “Accrued Obligations”), payable within thirty (30) days following your termination date, and (y) subject to your compliance with paragraph 7(i) hereunder, the following payments and benefits:
(A)    Severance Amount: a severance amount (the “Severance Amount”) equal to two and one-half (2-1/2) times the sum of (i) your Salary (or, if your Salary has been reduced in violation of this Agreement, your highest Salary during the Term) and (ii) the greater of (x) your Target Bonus in effect at the time of termination (or, if your Target Bonus has been reduced in violation of this Agreement, your highest Target Bonus during the Term) and (y) the average of your actual annual Bonus awards for the two calendar years immediately preceding the calendar year in which your employment is terminated, 50% of which will be paid in a lump sum within thirty (30) days following your termination date and the remaining 50% of which will be paid over a period of twenty-four (24) months in accordance with CBS’s then effective payroll practices (your “Regular Payroll Amount”) as follows:
(I)    beginning with the regular payroll date (“Regular Payroll Dates”) next following your termination date, you will receive your Regular Payroll Amount on the Regular Payroll Dates that occur on or before March 15th of the calendar year following the calendar year in which your employment terminates;
(II)    beginning with the first Regular Payroll Date after March 15th of the calendar year following the calendar year in which your employment terminates, you will receive your Regular Payroll Amount, if any remains due, until you have received an amount equal to the maximum amount permitted to be paid pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (i.e., the lesser of (x) two times your “annualized compensation” within the meaning of Code Section 409A or (y) two times the limit under Section 401(a)(17) of the Internal Revenue Code (the “Code”) for the calendar year in which your 

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termination occurs, which, for 2017, is $540,000); provided, however, that in no event shall payment be made to you pursuant to this paragraph 7(b)(ii)(A)(II) later than December 31st of the second calendar year following your termination of employment; and
(III)    the balance of your Regular Payroll Amount, if any remains due, will be paid to you by payment of your Regular Payroll Amount on your Regular Payroll Dates beginning with the regular payroll date that follows the date of the last payment pursuant to paragraph 7(b)(ii)(A)(II);
provided, however, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of the Severance Amount that would be paid to you during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be paid to you in a lump sum on the earlier of (x) the first business day of the seventh calendar month following the calendar month in which your termination of employment occurs or (y) your death (the applicable date, the “Permissible Payment Date”) rather than as described above, and any remaining Severance Amount, if any, shall be paid to you or your estate, as applicable, by payment of your Regular Payroll Amount on your Regular Payroll Dates commencing with the Regular Payroll Date that follows the Permissible Payment Date.  Each payment pursuant to this paragraph 7(b)(ii) shall be regarded as a separate payment and not one of a series of payments for purposes of Code Section 409A;
(B)    Health Benefits:  medical and dental insurance coverage for you and your eligible dependents at no cost to you (except as hereafter described) pursuant to the CBS benefit plans in which you participated at the time of your termination of employment (or, if different, other benefit plans generally available to senior level executives) for a period of thirty (30)  months following the termination date, or if earlier, the date on which you become eligible for medical or dental coverage as the case may be from a third party, which period of coverage shall be considered to run concurrently with the COBRA continuation period; provided, however, that during the period that CBS provides you with this coverage, the cost of such coverage will be treated as taxable income to you and CBS may withhold taxes 

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from your compensation for this purpose; provided, further, that you may elect to continue your medical and dental insurance coverage under COBRA at your own expense for the balance, if any, of the period required by law; provided, further, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term or if such continuation would violate Code Section 105(h), CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(C)    Life Insurance:  life insurance coverage for thirty (30)  months under CBS’s policy in effect on the date of termination in the amount then furnished to CBS employees at no cost (the amount of which coverage will be reduced by the amount of life insurance coverage furnished to you at no cost by a third party employer); provided, however, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term, CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(D)    Pro-Rata Bonus:  You will receive a Bonus for the calendar year in which your employment is terminated, such Bonus to be determined based on actual performance and consistent with senior executives who remain employed with CBS, and then prorated based on the number of calendar days of such year elapsed through the date your employment is terminated (the “Pro-Rata Bonus”), payable, less any applicable deductions and withholding taxes, between January 1st and March 15th of the following calendar year; 
(E)    Additional Cash Payment:  a cash payment equal to One Million Dollars ($1,000,000); provided, however, this paragraph 7(b)(ii)(E) will become null and void upon you receiving the title of President and Chief Operating Officer; and
(F)    Equity:  the following with respect to awards granted to you under the LTIP (or any predecessor plan to the LTIP):
(I)    All outstanding stock option awards (or portions thereof) that have not fully vested and become exercisable on or before the date of such termination shall accelerate and vest immediately on the Release Effective Date (as defined in paragraph 7(i) below), and will continue to be 

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exercisable until the greater of thirty (30) months following the termination date or the period provided in accordance with the terms of the grant, but in no event later than their expiration date.
(II)    All outstanding stock option awards (or portions thereof) that have previously vested and become exercisable by the date of such termination shall remain exercisable until the greater of thirty (30) months following the termination date or the period provided in accordance with the terms of the grant, but in no event later than their expiration date.  
(III)    All outstanding RSU and other equity awards (or portions thereof) that have not vested on or before the termination date shall accelerate and vest immediately on the Release Effective Date and be settled within ten (10) business days thereafter; provided, however, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and limited to the extent that compliance with the performance-based compensation exception is required in order to ensure the deductibility of any such RSU or other equity award under Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code Section 162(m)”), such RSU or other equity award shall vest if and to the extent the Committee certifies that the performance goal relating to such RSU or other equity award has been met, or, if later, the Release Effective Date, and shall be settled within ten (10) business days thereafter; provided, further, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and to the extent that compliance with the performance-based compensation exception under Code Section 162(m) is not required in order to ensure the deductibility of any such RSU or other equity award, such RSU or other equity award shall immediately vest (with an assumption that the performance goal was achieved at target level, if and to the extent applicable) on the Release Effective Date and be settled within ten (10) business days thereafter; provided, further, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of your RSUs or other equity awards that would otherwise be settled during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be settled on the Permissible 

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Payment Date.
(G)    Outplacement Services:  CBS will make available to you, at its expense, executive level outplacement services with a leading national outplacement firm, with such outplacement services to be provided for a period of up to twelve (12) months following the date on which your employment is terminated.  The outplacement program shall be designed and the outplacement firm selected by CBS. CBS will pay all expenses related to the provision of outplacement services directly to the outplacement firm by the end of the calendar year following the calendar year in which the outplacement services are provided.
(iii)    You shall not be required to mitigate the amount of any payment provided for in paragraph 7(b)(ii) by seeking other employment.  The payments provided for in paragraph 7(b)(ii) are in lieu of any other severance or income continuation or protection (other than any indemnification protection) under any CBS plan, program or agreement that may now or hereafter exist (unless the terms of such plan, program or agreement expressly state that the payments and benefits payable thereunder are intended to be in addition to the type of payments and benefits described in paragraph 7(b)(ii) of this Agreement).
(c)    Resignation with Good Reason. 
(i)    You may resign your employment under this Agreement with Good Reason at any time during the Term by written notice of termination to CBS given no more than thirty (30) days after you know or reasonably should have known of the occurrence of the event constituting Good Reason.  Such notice shall state an effective resignation date that is not earlier than thirty (30) business days and not later than sixty (60) days after the date it is given to CBS, provided that CBS may set an earlier effective date for your resignation at any time after receipt of your notice.  
For purposes of this Agreement (and any other agreement that expressly incorporates the definition of Good Reason hereunder), “Good Reason” shall mean the occurrence of any of the following without your consent (other than in connection with the termination or suspension of your employment or duties for Cause or in connection with physical and mental incapacity): (A) the failure of CBS to recommend you or the CBS Board of Directors to ratify you as President of CBS on or before December 31, 2018; (B)  the appointment of a person other than yourself or Leslie Moonves as President and/or Chief Executive Officer of CBS (including, for the avoidance of doubt, any such appointment that occurs either before or after an appointment of you as President); (C) a material reduction in your position, titles, offices, reporting relationships, authorities, duties or responsibilities from those in effect 

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immediately prior to such reduction, including any such reduction effected through any arrangement involving the sharing of your position, titles, offices reporting relationships, authorities, duties or responsibilities, or any such reduction which would remove positions, titles, offices reporting relationships, authorities, duties or responsibilities which are customarily given to an executive of a public company comparable to CBS (for the avoidance of doubt, (i) a material reduction shall include and be deemed to have occurred if either (x) you cease to be the most senior executive responsible for the financial affairs of CBS and the operational responsibilities in effect immediately prior to the Effective Date and such additional operating responsibilities as the Chairman & CEO may assign to you thereafter (the “Operational Responsibilities”) (provided that no cessation shall be deemed to have occurred if CBS has an ultimate parent company that is a public company and you are the most senior executive responsible for the financial affairs and the Operational Responsibilities of the ultimate public parent company), or (y) neither CBS nor its ultimate parent company (if any) is a public company; and (ii) neither the assignment of another individual (or any successor(s) to such individual) to serve in the CFO position in accordance with paragraph 2 nor such individual’s performance of duties customary to that of a CFO of a public company shall be considered a material reduction or otherwise constitute “Good Reason” so long as such CFO position reports to you as the COO); (D) a reduction in your base Salary or target compensation in effect immediately prior to such reduction, including your annual Target Bonus or long term incentive targets; (E) the assignment to you of duties or responsibilities that are materially inconsistent with the usual and customary duties associated with a Chief Operating Officer of a publicly traded company or that materially impair your ability to function as the Chief Operating Officer of CBS (provided that you acknowledge and agree that supporting the Chairman & CEO on such strategic and operational matters as he may assign to you shall not be deemed materially inconsistent with the usual and customary duties associated with a Chief Operating Officer of a publicly traded company or to materially impair your ability to function as the COO of CBS); (F) the material breach by CBS of any of its obligations under this Agreement (it being understood that a breach by CBS of its obligations under paragraph 3(c)(ii) shall constitute a material breach of an obligation under this Agreement); or (G) CBS requiring you to be based anywhere other than the New York or Los Angeles metropolitan area, except for required travel on CBS business. CBS shall have thirty (30) days from the receipt of your notice within which to cure, and, in the event of such cure, your notice shall be of no further force or effect.  If no cure is effected, your resignation will be effective as of the date specified in your written notice to CBS or such earlier effective date set by CBS following receipt of your notice.
(ii)    In the event that your employment terminates under paragraph 7(c)(i) during the Term, you shall thereafter receive, less applicable 

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withholding taxes, (x) the Accrued Obligations, payable within thirty (30) days following your termination date, and (y), subject to your compliance with paragraph 7(i) hereunder, the following payments and benefits:
(A)    Severance Amount: a Severance Amount equal to two and one-half (2-1/2) times the sum of (i) your Salary (or, if your Salary has been reduced in violation of this Agreement, your highest Salary during the Term) and (ii) the greater of (x) your Target Bonus in effect at the time of termination (or, if your Target Bonus has been reduced in violation of this Agreement, your highest Target Bonus during the Term) and (y) the average of your actual annual Bonus awards for the two calendar years immediately preceding the calendar year in which your employment is terminated, 50% of which will be paid in a lump sum within thirty (30) days following your termination date and the remaining 50% of which will be paid in Regular Payroll Amounts over a period of twenty-four (24) months as follows:
(I)    beginning with the Regular Payroll Date following your termination date, you will receive your Regular Payroll Amount on the Regular Payroll Dates that occur on or before March 15th of the calendar year following the calendar year in which your employment terminates;
(II)    beginning with the first Regular Payroll Date after March 15th of the calendar year following the calendar year in which your employment terminates, you will receive your Regular Payroll Amount, if any remains due, until you have received an amount equal to the maximum amount permitted to be paid pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (i.e., the lesser of (x) two times your “annualized compensation” within the meaning of Code Section 409A or (y) two times the limit under Code Section 401(a)(17) for the calendar year in which your termination occurs, which, for 2017, is $540,000); provided, however, that in no event shall payment be made to you pursuant to this paragraph 7(c)(ii)(A)(II) later than December 31st of the second calendar year following your termination of employment; and
(III)    the balance of your Regular Payroll Amount, if any remains due, will be paid to you by payment of your Regular Payroll Amount on your Regular Payroll Dates beginning with the regular payroll date that follows the date of the last payment pursuant to paragraph 7(c)(ii)(A)(II);

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provided, however, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of your Regular Payroll Amount that would be paid to you during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be paid to on the Permissible Payment Date rather than as described in paragraph 7(c)(ii)(A)(I), (II) or (III), as applicable, and any remaining Salary, if any, shall be paid to you or your estate, as applicable, by payment of your Regular Payroll Amount on your Regular Payroll Dates commencing with the Regular Payroll Date that follows the Permissible Payment Date.  Each payment pursuant to this paragraph 7(c)(ii) shall be regarded as a separate payment and not one of a series of payments for purposes of Code Section 409A;

(B)    Health Benefits:  medical and dental insurance coverage for you and your eligible dependents at no cost to you (except as hereafter described) pursuant to the CBS benefit plans in which you participated at the time of your termination of employment (or, if different, other benefit plans generally available to senior level executives) for a period of thirty (30)  months following the termination date, or if earlier, the date on which you become eligible for medical or dental coverage as the case may be from a third party, which period of coverage shall be considered to run concurrently with the COBRA continuation period; provided, however, that during the period that CBS provides you with this coverage, the cost of such coverage will be treated as taxable income to you and CBS may withhold taxes from your compensation for this purpose; provided, further, that you may elect to continue your medical and dental insurance coverage under COBRA at your own expense for the balance, if any, of the period required by law; provided, further, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term or if such continuation would violate Code Section 105(h), CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(C)    Life Insurance:  life insurance coverage for thirty (30) months under CBS’s policy in effect on the date of termination in the amount then furnished to CBS employees at no cost (the amount of which coverage will be reduced by the amount 

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of life insurance coverage furnished to you at no cost by a third party employer); provided, however, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term, CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(D)    Pro-Rata Bonus:  a Pro-Rata Bonus, payable, less any applicable deductions and withholding taxes, between January 1st and March 15th of the following calendar year; 
(E)    Additional Cash Payment: a cash payment equal to One Million Dollars ($1,000,000); provided, however, this paragraph 7(c)(ii)(E) will become null and void upon you receiving the title of President and Chief Operating Officer; and
(F)    Equity:  the following with respect to awards granted to you under the LTIP (or any predecessor plan to the LTIP):
(I)    All outstanding stock option awards (or portions thereof) that have not fully vested and become exercisable on or before the date of such termination shall accelerate and vest immediately on the Release Effective Date (as defined in paragraph 7(i) below), and will continue to be exercisable until the greater of thirty (30) months following the termination date or the period provided in accordance with the terms of the grant, but in no event later than their expiration date.
(II)    All outstanding stock option awards (or portions thereof) that have previously vested and become exercisable by the date of such termination shall remain exercisable until the greater of thirty (30) months following the termination date or the period provided in accordance with the terms of the grant, but in no event later than their expiration date.  
(III)    All outstanding RSU and other equity awards (or portions thereof) that have not vested on or before the termination date shall accelerate and vest immediately on the Release Effective Date and be settled within ten (10) business days thereafter; provided, however, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and limited to the extent that compliance with the performance-based compensation exception is required in order to ensure the 

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deductibility of any such RSU or other equity award under Code Section 162(m), such RSU or other equity award shall vest if and to the extent the Committee certifies that the performance goal relating to such RSU or other equity award has been met, or, if later, the Release Effective Date, and shall be settled within ten (10) business days thereafter; provided, further, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and to the extent that compliance with the performance-based compensation exception under Code Section 162(m) is not required in order to ensure the deductibility of any such RSU or other equity award, such RSU or other equity award shall immediately vest (with an assumption that the performance goal  was achieved at target level, if and to the extent applicable) on the Release Effective Date and be settled within ten (10) business days thereafter; provided, further, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of your RSUs or other equity awards that would otherwise be settled during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be settled on the Permissible Payment Date.
(G)    Outplacement Services:  CBS will make available to you, at its expense, executive level outplacement services with a leading national outplacement firm, with such outplacement services to be provided for a period of up to twelve (12) months following the date on which your employment is terminated.  The outplacement program shall be designed and the outplacement firm selected by CBS. CBS will pay all expenses related to the provision of outplacement services directly to the outplacement firm by the end of the calendar year following the calendar year in which the outplacement services are provided.
(iii)    You shall not be required to mitigate the amount of any payment provided for in paragraph 7(c)(ii) by seeking other employment. The payments provided for in paragraph 7(c)(ii) are in lieu of any other severance or income continuation or protection (other than any indemnification protection)  under any CBS plan, program or agreement that may now or hereafter exist (unless the terms of such plan, program or agreement expressly state that the payments and benefits payable thereunder are intended to be in addition to the type of payments and benefits described in paragraph 7(c)(ii) of this Agreement).

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(d)    Death.
(i)    Your employment with CBS shall terminate automatically upon your death.
(ii)    In the event of your death prior to the end of the Term while you are actively employed, your beneficiary or estate shall be entitled to receive the following:
(A)    the Accrued Obligations, payable, less applicable withholding taxes, within 30 days following your date of death; 
(B)    bonus compensation for the calendar year in which your death occurs, determined in accordance with the STIP (i.e., based upon your Target Bonus) and prorated for the portion of the calendar year through and including your date of death, payable, less applicable withholding taxes, between January 1st and March 15th of the following calendar year;
(C)    all your outstanding unvested stock options will vest, and all such stock options and all of your outstanding stock options that have previously vested will remain exercisable for the period provided for under the terms of the applicable award agreement; and
(D)    all your unvested and outstanding restricted stock and/or RSUs and any other type of equity awards (or unvested portions thereof) will vest and be settled within ten (10) business days after the date of your death; provided, that to the extent any such unvested and outstanding equity awards (or portions thereof) remain subject to performance-based vesting conditions on the date of your death, such awards shall immediately vest (with an assumption that the performance goal(s) were achieved at target level, if and to the extent applicable) and to be settled within ten (10) business days thereafter.
(iii)    In the event of your death after the termination of your employment (which termination occurred during the Term) under circumstances described in paragraph 7(b)(i), 7(c)(i) or 7(f)(iii), but prior to payment of any amounts or benefits described in paragraphs 7(b)(ii)(A), (D), (E) and (F), paragraphs 7(c)(ii)(A), (D), (E) and (F), or paragraphs 7(f)(iii)(A), (D) and (E), as applicable, that you would have received had you continued to live, all such amounts and benefits shall be paid, less applicable deductions and withholding taxes, to your beneficiary (or, if no beneficiary has been designated, to your estate) in accordance with the applicable payment schedule set forth in 

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paragraphs 7(b)(ii)(A), (D), (E) and (F), paragraphs 7(c)(ii)(A), (D), (E) and (F), or paragraphs 7(f)(iii)(A), (D) and (E), as applicable.
(e)    Disability.
(i)    If, while employed during the Term, you become “disabled” within the meaning of such term under CBS’s Short-Term Disability (“STD”) program (such condition is referred to as a “Disability” or being “Disabled”), you will be considered to have experienced a termination of employment with CBS and its subsidiaries as of the date you first become eligible to receive benefits under CBS’s Long-Term Disability (“LTD”) program or, if you do not become eligible to receive benefits under CBS’s LTD program, you have not returned to work by the six (6) month anniversary of your Disability onset date (such 6-month anniversary, the “Disability Termination Date”).
(ii)    Except as provided in this paragraph 7(e)(ii), if you become Disabled while employed full-time during the Term, you will exclusively receive compensation under the STD program in accordance with its terms and, thereafter, under the LTD program in accordance with its terms, provided you are eligible to receive LTD program benefits.  Notwithstanding the foregoing, if you have not returned to work by December 31st of a calendar year during the Term, you will receive bonus compensation for the calendar year(s) during the Term in which you receive compensation under the STD program, determined as follows:
(A)    for the portion of the calendar year from January 1st until the date on which you first receive compensation under the STD program, bonus compensation shall be determined in accordance with the STIP (i.e., based upon CBS’s achievement of its goals and CBS’s good faith estimate of your achievement of your personal goals) and prorated for such period; and
(B)    for any subsequent portion of that calendar year and any portion of the following calendar year in which you receive compensation under the STD program, bonus compensation shall be in an amount equal to your Target Bonus and prorated for such period(s).  
Bonus compensation under this paragraph 7(e)(ii) shall be paid, less applicable deductions and withholding taxes, between January 1st and March 15th of the calendar year following the calendar year to which such bonus compensation relates.  You will not receive bonus compensation for any portion of the calendar year(s) during the Term while you receive benefits under the LTD program.  For the periods that you receive compensation and benefits under the STD and LTD programs, such compensation and benefits and the bonus compensation provided under this paragraph 7(e)(ii) are in lieu of Salary and Bonus under paragraphs 

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3(a) and (b).
(iii)    Upon your Disability Termination Date, you shall be entitled to receive the following:
(A)    all your outstanding unvested stock options will vest, and all such stock options and all of your outstanding stock options that have previously vested will remain exercisable for the period provided for under the terms of the applicable award agreement; and 
(B)    all your unvested and outstanding restricted stock and/or RSUs and any other type of equity awards (or unvested portions thereof) will vest and, subject to any prior deferral election, be settled within ten (10) business days after the Disability Termination Date; provided, that to the extent any such unvested and outstanding equity awards (or portions thereof) remain subject to performance-based vesting conditions on the Disability Termination Date, such equity awards shall immediately vest (with an assumption that the performance goal(s) were achieved at target level, if and to the extent applicable) and, subject to any prior deferral election, to be settled within ten (10) business days thereafter.
(f)    Renewal Notice / Non-Renewal.  
(i)    CBS shall notify you twelve (12) months prior to the expiration of the Term in writing if it intends to continue your employment beyond the expiration of the Term.  If you are notified that CBS does intend to continue your employment, then you and CBS agree that you and CBS shall negotiate in good faith following such notification and, during the first 180 days following such notification, the negotiations for the COO position shall be conducted by both you and CBS on an exclusive basis.  Nothing contained herein shall obligate either party to agree to any terms for any renewal, and the decision to enter into a renewal or amended employment agreement shall be at the sole discretion of each of you and CBS.  In the absence of your willful and material bad faith (which, for avoidance of doubt, shall not be alleged to have occurred as a result of either party’s proposal of terms (economic or otherwise) which are unacceptable to the other party) which remains uncured for thirty (30) days after written notice by CBS to you, your right to receive the payments or benefits set forth in paragraph 7(f)(iii) below shall not be adversely affected if you and CBS do not agree to continue your employment.
(ii)    If you accept any offer of continued employment with CBS (or any of its subsidiaries), whether on an “at will” basis or pursuant to an 

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employment agreement, you shall not be entitled to any severance payment or benefits under any provision of this Agreement or any other severance or income continuation plan, program or agreement.
(iii)    If, on the Expiration Date, you and CBS have not agreed to continue your employment relationship with CBS (or any of CBS’s subsidiaries), your employment shall automatically terminate on the day next following the Expiration Date, and, you shall thereafter receive, less applicable withholding taxes, (x) the Accrued Obligations, payable within thirty (30) days following your termination date, and (y), subject to your compliance with paragraph 7(i) hereunder, the payments and benefits in paragraph 7(j), if applicable, or, if paragraph 7(j) is not applicable, the following payments and benefits:
(A)    an amount equal to the sum of (i) your Salary (or, if your Salary has been reduced in violation of this Agreement, your highest Salary during the Term) and (ii) the greater of (x) your Target Bonus in effect at the time of termination (or, if your Target Bonus has been reduced in violation of this Agreement, your highest Target Bonus during the Term) and (y) the average of your actual annual Bonus awards for the two calendar years immediately preceding the calendar year in which your employment is terminated, 50% of which will be paid in a lump sum within thirty (30) days following your termination date and the remaining 50% of which will be paid in Regular Payroll Amounts over a period of twenty-four (24) months as follows:
(I)    beginning on the Regular Payroll Date following your termination date, you will receive your Regular Payroll Amount on the Regular Payroll Dates that occur on or before March 15th of the calendar year following the calendar year in which your employment terminates;
(II)    beginning with the first Regular Payroll Date after March 15th of the calendar year following the calendar year in which your employment terminates, you will receive your Regular Payroll Amount, if any remains due, until you have received an amount equal to the maximum amount permitted to be paid pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (i.e., the lesser of (x) two times your “annualized compensation” within the meaning of Code Section 409A or (y) two times the limit under Code Section 401(a)(17) for the calendar year in which your termination occurs, which is $540,000 for 2017); provided, however, that in no event shall payment be made to you pursuant to this paragraph 7(f)(iii)(A)(II) 

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later than December 31st of the second calendar year following your termination of employment; and
(III)    the balance of your Regular Payroll Amount, if any remains due, will be paid to you by payment of your Regular Payroll Amount on your Regular Payroll Dates beginning with the regular payroll date that follows the date of the last payment pursuant to paragraph 7(f)(iii)(A)(II);
provided, however, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of your Regular Payroll Amount that would be paid to you during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be paid to on the Permissible Payment Date rather than as described in paragraph 7(f)(iii)(A)(I), (II) or (III), as applicable, and any remaining Salary, if any, shall be paid to you or your estate, as applicable, by payment of your Regular Payroll Amount on your Regular Payroll Dates commencing with the Regular Payroll Date that follows the Permissible Payment Date.  Each payment pursuant to this paragraph 7(f)(iii) shall be regarded as a separate payment and not one of a series of payments for purposes of Code Section 409A;

(B)    medical and dental insurance coverage for you and your eligible dependents at no cost to you (except as hereafter described) pursuant to the CBS benefit plans in which you participated at the time of your termination of employment (or, if different, other benefit plans generally available to senior level executives) for a period of twelve (12) months following the termination date, or if earlier, the date on which you become eligible for medical or dental coverage as the case may be from a third party, which period of coverage shall be considered to run concurrently with the COBRA continuation period; provided, however, that during the period that CBS provides you with this coverage, the cost of such coverage will be treated as taxable income to you and CBS may withhold taxes from your compensation for this purpose; provided, further, that you may elect to continue your medical and dental insurance coverage under COBRA at your own expense for the balance, if any, of the period required by law; provided, further, that to the extent CBS is unable to continue such benefits because of underwriting on the 

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plan term or if such continuation would violate Code Section 105(h), CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(C)    life insurance coverage for twelve (12) months under CBS’s policy in effect on the date of termination in the amount then furnished to CBS employees at no cost (the amount of which coverage will be reduced by the amount of life insurance coverage furnished to you at no cost by a third party employer); provided, however, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term, CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(D)    a Pro-Rata Bonus, payable, less any applicable deductions and withholding taxes, between January 1st and March 15th of the following calendar year; and
(E)    the following with respect to awards granted to you under the LTIP (or any predecessor plan to the LTIP):
(I)    All outstanding stock option awards (or portions thereof) that have not fully vested and become exercisable on or before the date of such termination shall accelerate and vest immediately on the Release Effective Date (as defined in paragraph 7(i) below), and will continue to be exercisable until the greater of twenty-four (24) months following the termination date or the period provided in accordance with the terms of the grant, but in no event later than their expiration date.
(II)    All outstanding stock option awards (or portions thereof) that have previously vested and become exercisable by the date of such termination shall remain exercisable until the greater of twenty-four (24) months following the termination date or the period provided in accordance with the terms of the grant, but in no event later than their expiration date.  
(III)    All outstanding RSU and other equity awards (or portions thereof) that have not vested on or before the termination date shall accelerate and vest immediately on the Release Effective Date and be settled within ten (10) business days thereafter; provided, however, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and 

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limited to the extent that compliance with the performance-based compensation exception is required in order to ensure the deductibility of any such RSU or other equity award under Code Section 162(m), such RSU or other equity award shall vest if and to the extent the Committee certifies that the performance goal relating to such RSU or other equity award has been met, or, if later, the Release Effective Date, and shall be settled within ten (10) business days thereafter; provided, further, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and to the extent that compliance with the performance-based compensation exception under Code Section 162(m) is not required in order to ensure the deductibility of any such RSU or other equity award, such RSU or other equity award shall immediately vest (with an assumption that the performance goal was achieved at target level, if and to the extent applicable) on the Release Effective Date and be settled within ten (10) business days thereafter; provided, further, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of your RSUs or other equity awards that would otherwise be settled during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be settled on the Permissible Payment Date.
(iv)    Nothing in this paragraph 7(f) shall (x) create a right to continued employment with CBS or be interpreted as forming an employment contract with CBS, or interfere with the ability of CBS to terminate your employment or (y) obligate you to continue your employment with CBS.
(v)    You shall not be required to mitigate the amount of any payment provided for in paragraph 7(f) by seeking other employment. The payments provided for in paragraph 7(f) are in lieu of any other severance or income continuation or protection (other than any indemnification protection) under any CBS plan, program or agreement that may now or hereafter exist (unless the terms of such plan, program or agreement expressly state that the payments and benefits payable thereunder are intended to be in addition to the type of payments and benefits described in paragraph 7(f) of this Agreement).
(g)    Resignation from Official Positions.  If your employment with CBS terminates for any reason, you shall automatically be deemed to have resigned at that time from any and all officer or director positions that you may have held with CBS, 

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or any of CBS’s affiliated companies and all board seats or other positions in other entities you held on behalf of CBS, including any fiduciary positions (including as a trustee) you hold with respect to any employee benefit plans or trusts established by CBS.  You agree that this Agreement shall serve as written notice of resignation in this circumstance.  If, however, for any reason this paragraph 7(g) is deemed insufficient to effectuate such resignation, you agree to execute, upon the request of CBS or any of its affiliated companies, any documents or instruments which CBS may deem necessary or desirable to effectuate such resignation or resignations, and you hereby authorize the Secretary and any Assistant Secretary of CBS or any of CBS’s affiliated companies to execute any such documents or instruments as your attorney-in-fact.  
(h)    Termination of Benefits.  Notwithstanding anything in this Agreement to the contrary (except as otherwise provided in paragraph 7(b)(ii)(B), 7(c)(ii)(B), 7(f)(iii)(B) or 7(j)(ii)(C), as applicable, with respect to medical and dental benefits), participation in all CBS benefit plans and programs (including, without limitation, vacation accrual, all retirement and related excess plans and LTD) will terminate upon the termination of your employment except to the extent otherwise expressly provided in such plans or programs or in this Agreement, and subject to any vested rights you may have under the terms of such plans or programs.  The foregoing shall not apply to the LTIP and, after the termination of your employment, your rights under the LTIP shall be governed by the terms of the LTIP award agreements, certificates, the applicable LTIP plan(s) and this Agreement.
(i)    Release; Compliance with Paragraph 6.
(i)    Notwithstanding any provision in this Agreement to the contrary, prior to payment by CBS of any amount or provision of any benefit pursuant to paragraph 7(b)(ii), 7(c)(ii), 7(f)(iii), 7(j)(ii) or 7(j)(iv), as applicable, within sixty (60) days following your termination of employment, (x) you shall have executed and delivered to CBS a general release in the form attached hereto as Exhibit A and (y) such general release shall have become effective and irrevocable in its entirety (such date, the “Release Effective Date”); provided, however, that if, at the time any cash severance payments are scheduled to be paid to you pursuant to paragraph 7(b)(ii), 7(c)(ii), 7(f)(iii), 7(j)(ii) or 7(j)(iv), as applicable, you have not executed the attached general release that has become effective and irrevocable in its entirety, then any such cash severance payments shall be held and accumulated without interest, and shall be paid to you on the first Regular Payroll Date following the Release Effective Date and the vesting of any stock options, RSUs and other equity awards shall be delayed until the Release Effective Date.  Your failure or refusal to sign and deliver the attached release or your revocation of an executed and delivered release in accordance with applicable laws, whether intentionally or unintentionally, will result in the forfeiture of the payments and benefits under paragraph 7(b)(ii), 7(c)(ii), 7(f)(iii), 7(j)(ii) or 7(j)(iv), as applicable.  Notwithstanding the foregoing, if the sixty (60) 

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day period does not begin and end in the same calendar year, then the Release Effective Date shall occur no earlier than January 1st of the calendar year following the calendar year in which your termination occurs.
(ii)    Notwithstanding any provision in this Agreement to the contrary, the payments and benefits described in paragraphs 7(b)(ii), 7(c)(ii), 7(f)(iii), 7(j)(ii) and 7(j)(iv), as applicable, shall immediately cease in the event that you materially breach any provision of paragraph 6 hereof; provided, however, that CBS gives you written notice setting forth the nature of any alleged breach in reasonable detail and, if CBS reasonably determines that such breach is capable of being cured, the conduct required to cure and an opportunity of at least ten (10) business days from the giving of such notice within which to cure.  
(j)    Payments in Connection with Certain Corporate Events.
(i)    Definition.  For purposes of this Agreement, a “Corporate Event” shall be deemed to occur upon the occurrence of any of the following events:
(A)    consummation of a merger, consolidation or reorganization of CBS or any of its subsidiaries unless, immediately following such transaction, (I) all or substantially all the beneficial owners of CBS stock having general voting power immediately prior to such transaction directly or indirectly own more than fifty percent (50%) of the general voting power of the entity resulting from such transaction (the “Combined Company”) in substantially the same proportions as their beneficial ownership of such CBS stock immediately prior to the transaction (excluding any general voting power of the Combined Company that such beneficial owners directly or indirectly received as a result of their beneficial ownership of the other entity involved in the transaction), (II) no person or group directly or indirectly beneficially owns stock representing more than twenty percent (20%) of the general voting power of the Combined Company and (III) a majority of the independent directors of the Combined Company and a majority of the directors of the Combined Company, in each case, consist of individuals who were Original Independent Directors (as such term is defined in clause (D) below) immediately prior to such transaction; or
(B)    consummation of the sale or disposition of all or substantially all of the assets of CBS; or
(C)    at any time after January 1, 2011, any “person” or “group” (within the meaning of Section 13(d) of the Securities 

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Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder), directly or indirectly acquires or then beneficially owns (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) stock representing more than twenty percent (20%) of the general voting power of CBS at a time when the person who, on January 1, 2011, was the ultimate beneficial owner (within the meaning of Rule 13d-3(a)(1) under the Exchange Act) (the “Ultimate Voting Beneficial Owner”) of a majority of the general voting power of CBS no longer is the Ultimate Voting Beneficial Owner of a majority thereof; or
(D)    a majority of the independent directors of the CBS Board of Directors (the “Board”) ceases to consist of Original Independent Directors.  “Original Independent Directors” shall mean those individuals who, as of January 1, 2011, constituted the independent directors of the Board and those successor independent directors who are elected or appointed to the Board, either by a vote of the Board or by action of the shareholders of CBS pursuant to a recommendation by the Board, as a result of the death, voluntary retirement or resignation of an Original Independent Director (or any successor thereto pursuant to this proviso), including a voluntary determination by such Original Independent Director (or such successor) not to stand for re-election.
(ii)    Termination Payments.  In the event that (x) CBS terminates your employment without Cause (as defined in paragraph 7(a)(i)), whether during or after the Term; (y) you resign your employment with Good Reason (as defined in paragraph 7(c)(i)), whether during or after the Term; or (z) your employment ceases under circumstances described in paragraph 7(f)(iii), in each case during the twenty-four (24) month period following the date of a Corporate Event, you shall thereafter receive, less applicable withholding taxes, the Accrued Obligations, payable within thirty (30) days following your termination date, and subject to your compliance with paragraph 7(i) hereunder, the following payments and benefits:
(A)    Pro-Rata Bonus:  the Pro-Rata Bonus, payable, less applicable deductions and withholding taxes, between January 1st and March 15th of the following calendar year;
(B)    Enhanced Severance Amount:   an amount equal to three (3) times the sum of (i) your Salary in effect at the time of your termination (or, if your Salary has been reduced in violation 

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of this Agreement, your highest Salary during the Term) and (ii) the average of your actual annual Bonus awards for the three years immediately preceding the year in which your employment is terminated (the “Enhanced Severance Amount”).  To the extent the Enhanced Severance Amount exceeds the Severance Amount described in paragraph 7(b)(ii)(A), 7(c)(ii)(A) or 7(f)(iii)(A), as applicable, such excess portion shall be paid in a lump sum within thirty (30) days following your termination date.  The remaining portion of the Enhanced Severance Amount that is equal to the amount determined pursuant to paragraph 7(b)(ii)(A), 7(c)(ii)(A) or 7(f)(iii)(A), as applicable, shall be paid in accordance with the schedule described in paragraph 7(b)(ii)(A), 7(c)(ii)(A) or 7(f)(iii)(A), as applicable; provided that to the extent such remaining portion of the Enhanced Severance Amount does not constitute “deferred compensation” within the meaning of Code Section 409A, such portion shall also be paid in a lump sum within thirty (30) days following your termination date and any remainder will be paid in accordance with the schedule described in paragraph 7(b)(ii)(A), 7(c)(ii)(A) or 7(f)(iii)(A), as applicable; provided, further, that if you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of the Enhanced Severance Amount that would be paid to you during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall be paid to you in a lump sum on the Permissible Payment Date rather than as described above, and any remaining Enhanced Severance Amount shall be paid to you or your estate, as applicable, in accordance with the installment payment schedule set forth above on your Regular Payroll Dates commencing with the Regular Payroll Date that follows the Permissible Payment Date.  Each payment pursuant to this paragraph 7(j)(ii)(B) shall be regarded as a separate payment and not one of a series of payments for purposes of Code Section 409A; 
(C)    Health Benefits:  medical and dental insurance coverage for you and your eligible dependents at no cost to you (except as hereafter described) pursuant to the CBS benefit plans in which you participated at the time of your termination of employment (or, if different, other benefit plans generally available to senior level executives) for a period of thirty-six (36) months following the termination date, or if earlier, the date on which you become eligible for medical or dental coverage as the 

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case may be from a third party, which period of coverage shall be considered to run concurrently with the COBRA continuation period; provided, however, that during the period that CBS provides you with this coverage, the cost of such coverage will be treated as taxable income to you and CBS may withhold taxes from your compensation for this purpose; provided, further, that you may elect to continue your medical and dental insurance coverage under COBRA at your own expense for the balance, if any, of the period required by law; provided, further, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term or if such continuation would violate Code Section 105(h), CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable);
(D)    Life Insurance:  life insurance coverage for thirty-six (36) months under CBS’s policy in effect on the date of termination in the amount then furnished to CBS employees at no cost (the amount of which coverage will be reduced by the amount of life insurance coverage furnished to you at no cost by a third party employer); provided, however, that to the extent CBS is unable to continue such benefits because of underwriting on the plan term, CBS shall provide you with economically equivalent benefits determined on an after-tax basis (to the extent such benefit was non-taxable); and
(E)    Additional Cash Payment: a cash payment equal to One Million Dollars ($1,000,000); provided, however, this paragraph 7(j)(ii)(E) will become null and void upon you receiving the title of President and Chief Operating Officer; and
(F)    Equity:  the following with respect to awards granted to you under the LTIP (or any predecessor plan to the LTIP):
(I)    All outstanding stock option awards (or portions thereof) that have not vested and become exercisable on the date of such termination shall accelerate and vest immediately on the Release Effective Date (as defined in paragraph 7(i) above), and will continue to be exercisable until their expiration date;
(II)    All outstanding stock option awards (or portions thereof) that have previously vested and become exercisable by the date of such termination shall remain 

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exercisable until their expiration date; and 
(III)    With respect to all outstanding RSU and other equity awards (or portions thereof) that have not vested on the date your employment is terminated, such awards (or portions thereof) shall accelerate and vest immediately on the Release Effective Date and be settled within ten (10) business days thereafter; provided, however, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date,  in the event and limited to the extent that compliance with the performance-based compensation exception is required in order to ensure the deductibility of any such RSU or other equity award under Code Section 162(m), such RSU or other equity award shall vest if and to the extent the Committee certifies that the performance goal relating to such RSU or other equity award has been met, or, if later, the Release Effective Date, and shall be settled within ten (10) business days thereafter; provided, further, that with respect to RSUs and other equity awards which remain subject to performance-based vesting conditions on your termination date, in the event and limited to the extent that compliance with the performance-based compensation exception under Code Section 162(m) is not required in order to ensure the deductibility of any such RSU or other equity award, such RSU or other equity award shall immediately vest (with an assumption that the performance goal was achieved at target level, if and to the extent applicable) on the Release Effective Date and be settled within ten (10) business days thereafter; provided, further, that to the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of your RSUs or other equity awards that would otherwise be settled during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall instead be settled on the Permissible Payment Date; and
(G)    Outplacement Services:  CBS will make available to you, at its expense, executive level outplacement services with a leading national outplacement firm, with such outplacement services to be provided for a period of up to twelve (12) months following the date on which your employment is terminated.  The outplacement program shall be designed and the outplacement firm selected by CBS.  CBS will pay all expenses related to the 

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provision of outplacement services directly to the outplacement firm by the end of the calendar year following the calendar year in which the outplacement services are provided.
(iii)    No Mitigation.  You shall not be required to mitigate the amount of any payment provided for in paragraph 7(j)(ii) by seeking other employment.  The payments provided for in paragraphs 7(j)(ii) and 7(j)(iv) are in lieu of any other severance or income continuation or protection (other than any indemnification protection) in this Agreement or in any CBS plan, program or agreement that may now or hereafter exist, unless the terms of such plan, program or agreement expressly state that the payments and benefits payable thereunder are intended to be in addition to the type of payments and benefits described in paragraphs 7(j)(ii) and 7(j)(iv) of this Agreement.
(iv)    Tax Neutralization Payment.  Notwithstanding any provision of this Agreement to the contrary, you shall not be entitled to receive any payment or benefit under this paragraph 7(j)(iv) if, at the time of your termination of employment, there shall have occurred a Corporate Event described in paragraph 7(j)(i)(C) without a Corporate Event described in paragraph 7(j)(i)(D) also having occurred. 
(A)    If it is determined by CBS, 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 under this Agreement or otherwise would be subject to the excise tax imposed under Code Section 4999, 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”), CBS shall compute the amount that would be payable to you if the total amounts that are payable to you by CBS and are considered payments described in Code Section 280G(b)(2) (“Tax Payments”) were limited to the maximum amount that may be paid to you under Code Sections 280G and 4999 without imposition of the Excise Tax (this amount is referred to as the “Capped Amount”).  CBS will also compute the amount that would be payable under the Agreement without regard to Code Sections 280G and 4999 limit (this amount is referred to as the “Uncapped Amount”). Notwithstanding anything in this Agreement to the contrary, if the Uncapped Amount is less than 120% of the Capped Amount, then the total benefits and other amounts that are considered Tax Payments and are payable to you under this Agreement will be reduced to the Capped Amount.  If the Capped Amount is to be paid, payments shall be reduced in the following order: (I) acceleration of vesting 

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on any stock options for which the exercise price exceeds the then fair market value, (II) acceleration of vesting of RSUs and any other equity not covered by clause (I) above, (III) any benefits valued as Tax Payments, (IV) any cash amounts payable to you other than the Enhanced Severance Amount and (V) the Enhanced Severance Amount (with the reduction first applied against the payment scheduled to be made the furthest from your termination date, then the next earliest, and so forth).
(B)    If the Uncapped Amount equals or exceeds 120% of the Capped Amount, then any payments, distributions or benefits you would receive from CBS or otherwise, but determined without regard to any additional payment required under this paragraph 7(j)(iv), pursuant to the terms of this Agreement (“Payments”), would (I) constitute Tax Payments and (II) be subject to the Excise Tax, then CBS 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 “Tax Neutralization Payment”) in an amount that will place you in the same after-tax economic position that you would have enjoyed if the Payments had not been subject to the Excise Tax.  Any Tax Neutralization Payment, as determined pursuant to this paragraph 7(j)(iv)(B), shall be paid by CBS to you within fifteen (15) days following the later of (x) the due date for the payment of any Excise Tax and (y) the receipt of the Auditors’  determination. Any determination by the Auditors shall be binding upon CBS and you.  
(C)    CBS will consult with its outside tax counsel at its expense, to the extent it reasonably deems appropriate, in making determinations pursuant to the proceeding paragraphs.  The amount of the Tax Neutralization Payment shall be calculated by CBS’s regular independent auditors (the “Auditors”) based on the amount of the Excise Tax paid or payable by CBS as determined by CBS or by the IRS.  If the amount of the Excise Tax determined by the IRS is greater than the amount previously determined by CBS, the Auditors shall recalculate the amount of the Tax Neutralization Payment and shall provide you with detailed support for their calculations.  CBS shall be responsible for the fees and expenses incurred by the Auditors in making these calculations.  
(D)    As a result of the uncertainty in the application of 

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Code Section 4999 (or any successor to such Code Section) at the time of any determination hereunder, it is possible that (x) the Tax Neutralization Payment is less than the amount which should have been paid or reimbursed (an “Underpayment”), or (y) the Tax Neutralization Payment is greater than the amount which should have been paid or reimbursed (an “Overpayment”), consistent with the calculations required to be made hereunder.  In the event of an Underpayment, such Underpayment shall be promptly paid by CBS to you or directly to the IRS on your behalf.  In the event of an Overpayment, such Overpayment shall be promptly repaid by you to CBS and CBS shall provide you a corrected Form W-2 if you had previously received a Form W-2 reflecting such Overpayment.
(E)    You shall promptly notify CBS of any IRS claim during an Audit that an Excise Tax is due with respect to any Payments.  Such notification shall be given as soon as practicable, but no later than ten (10) business days after you are informed in writing of such claim, and shall apprise CBS of the nature of such claim and the date on which such claim is requested to be paid.  However, you shall be under no obligation to defend against such claim by the IRS unless CBS requests, in writing, that you undertake the defense of such IRS claim on behalf of CBS and at CBS’s sole expense.  In such event, CBS 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 CBS in each phase of any contest.  
(F)    Notwithstanding anything in this paragraph 7(j)(iv), any Tax Neutralization Payment shall be paid no later than the last day of the calendar year following the calendar year in which you remitted the Excise Tax or, if the IRS’s assessment of the Excise Tax is disputed, the end of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of the dispute.
(v)    Death.  If you die prior to payment of any amount or benefit described in paragraph 7(j)(ii)(A), (B), (C), (E) or (F) that would have been paid to you had you continued to live, all such amounts and benefits shall be paid, less applicable deductions and withholding taxes, to your beneficiary (or, if no beneficiary has been designated, your estate) in accordance with the 

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applicable payment schedule.   
(vi)    Survival of Provisions.  If a Corporate Event occurs during the Term, the provisions of this paragraph 7(j) (and any other provision in this Agreement which relates to or is necessary for the enforcement of the parties’ rights under this paragraph 7(j)) shall survive the expiration of the Term of this Agreement.  For avoidance of doubt, the provisions of paragraphs 6(a) and 6(c) shall apply so long as any payments are due to you pursuant to this paragraph 7(j) (subject to paragraph 6(j)), even if your termination date occurs following expiration of the Term of this Agreement.
8.    No Acceptance of Payments.  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 CBS for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by CBS, or any of CBS’s affiliated companies. 
9.    Equal Opportunity Employer; Employee Statement of Business Conduct. You recognize that CBS is an equal opportunity employer.  You agree that you will comply with CBS policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination on the basis of race, color, sex, religion, national origin, citizenship, age, marital status, sexual orientation, disability or veteran status.  In addition, you agree that you will comply with the CBS Business Conduct Statement.  
10.    Notices.  All notices under this Agreement must be given in writing, by personal delivery or by registered mail, at the parties’ respective addresses shown on this Agreement (or any other address designated in writing by either party), with a copy, in the case of CBS, to the attention of the Senior Executive Vice President, Chief Legal Officer, CBS Corporation. Copies of all notices to you shall be given to Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, NY 10004, Attention: Kenneth A. Lefkowitz. Any notice given by registered mail shall be deemed to have been given three days following such mailing.
11.    Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you or CBS except that CBS may assign this Agreement to any majority-owned subsidiary of or any successor in interest to CBS, provided that such assignee expressly assumes all of the obligations of CBS hereunder. 
12.    New York Law, Etc.  You acknowledge that this Agreement has been executed, in whole or in part, in the State of New York and that your employment duties are primarily performed in New York. Accordingly, you agree that this Agreement and all matters or issues arising out of or relating to your CBS employment shall be governed by the laws of the State of New York applicable to contracts entered into and performed entirely therein without giving effect to any 

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choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of New York. 
13.    No Implied Contract. Nothing contained in this Agreement shall be construed to impose any obligation on CBS or you to renew this Agreement or any portion thereof; provided, however, that the failure to renew this Agreement as described in paragraph 7(f) shall entitle you to the payments and benefits set forth in paragraph 7(f)(iii). 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 the Term.  
14.    Void Provisions.  If any provision of this Agreement, as applied to either party or to any circumstances, shall be found by a court of competent jurisdiction to be unenforceable but would be enforceable if some part were deleted or the period or area of application were reduced, then such provision shall apply with the modification necessary to make it enforceable, and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement.
15.    Entire Understanding; Supersedes Prior Agreements. This Agreement contains the entire understanding of the parties hereto as of the time on the Effective Date that the Agreement is signed by both parties relating to the subject matter contained in this Agreement, and can be changed only by a writing signed by both parties. This Agreement supersedes and cancels all prior agreements relating to your employment by CBS or any of CBS’s affiliated companies relating to the subject matter herein, including, without limitation, your prior employment agreement with CBS dated as of June 4, 2013 (the “Prior Agreement”); provided, however, that no provision in this Agreement shall be construed to adversely affect any of your rights accrued under the Prior Agreement.
16.    Payment of Deferred Compensation – Code Section 409A.  
(a)    To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Code Section 409A.  This Agreement shall be construed in a manner to give effect to such intention.  In no event whatsoever (including, but not limited to as a result of this paragraph 16 or otherwise) shall CBS or any of its affiliates be liable for any tax, interest or penalties that may be imposed on you under Code Section 409A.  Neither CBS nor any of its affiliates have any obligation to indemnify or otherwise hold you harmless from any or all such taxes, interest or penalties, or liability for any damages related thereto. You acknowledge that you have been advised to obtain independent legal, tax or other counsel in connection with Code Section 409A. 
(b)    Your right to any in-kind benefit or reimbursement benefits pursuant to any provisions of this Agreement or pursuant to any plan or arrangement of 

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CBS covered by this Agreement shall not be subject to liquidation or exchange for cash or another benefit.
17.    Arbitration. If any disagreement or dispute whatsoever shall arise between the parties concerning, arising out of or relating to this Agreement (including the documents referenced herein) or your employment with CBS, the parties hereto agree that such disagreement or dispute shall be submitted to binding arbitration before the American Arbitration Association (the “AAA”), and that a neutral arbitrator will be selected in a manner consistent with its Employment Arbitration Rules and Mediation Procedures (the “Rules”). Such arbitration shall be confidential and private and conducted in accordance with the Rules. Any such arbitration proceeding shall take place in New York City before a single arbitrator (rather than a panel of arbitrators). The parties agree that the arbitrator shall have no authority to award any punitive or exemplary damages and waive, to the full extent permitted by law, any right to recover such damages in such arbitration. Each party shall bear its respective costs (including attorney’s fees, and there shall be no award of attorney’s fees), provided that if you are the prevailing party (as determined by the arbitrator in his or her discretion), you shall be entitled to recover all of your costs (including attorney’s fees) reasonably incurred in connection with such dispute. Following the arbitrator’s issuance of a final non-appealable award setting forth that you are the prevailing party, CBS shall reimburse you for such costs within thirty (30) days following its receipt of reasonable written evidence substantiating such costs, provided that in no event will payment be made to you later than the last day of the calendar year next following the calendar year in which the award is issued. If there is a dispute regarding the reasonableness of the costs you incur, the same arbitrator shall determine, in his or her discretion, the costs that shall be reimbursed to you by CBS. Judgment upon the final award(s) rendered by such arbitrator, after giving effect to the AAA internal appeals process, may be entered in any court having jurisdiction thereof. Notwithstanding anything herein to the contrary, CBS shall be entitled to seek injunctive, provisional and equitable relief in a court proceeding as a result of your alleged violation of the terms of paragraph 6 of this Agreement, and you hereby consent and agree to exclusive personal jurisdiction in any state or federal court located in the City of New York, Borough of Manhattan.
18.    Indemnification. 
(a)      If you are made a party, are threatened to be made a party to, or otherwise receive any other legal process in, any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that you are or were a director, officer or employee of CBS or are or were serving at the request of CBS as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is your alleged action in an official capacity while serving as director, officer, member, employee or agent, CBS shall indemnify you and hold you harmless to the fullest extent permitted or 

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authorized by CBS’s certificate of incorporation and bylaws or, if greater, by the laws of the State of Delaware, against all cost, expense, liability and loss (including without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement and any cost and fees incurred in enforcing your rights to indemnification or contribution) actually and reasonably incurred or suffered by you in connection therewith, and such indemnification shall continue even though you have ceased to be a director, member, employee or agent of CBS or other entity and shall inure to the benefit of your heirs, executors and administrators. CBS shall advance to you all reasonable costs and expenses that you incur in connection with a Proceeding within thirty (30) days after its receipt of a written request for such advance. Such request shall include an undertaking by you to repay the amount of such advance if it shall ultimately be determined that you are not entitled to be indemnified against such costs and expenses.
(b)     Neither the failure of CBS (including its board of directors, independent legal counsel or stockholders) to have made a determination that indemnification of you is proper because you have met the applicable standard of conduct, nor a determination by CBS (including its board of directors, independent legal counsel or stockholders) that you have not met such applicable standard of conduct, shall create a presumption or inference that you have not met the applicable standard of conduct.
(c)     To the extent that CBS maintains officers’ and directors’ liability insurance, you will be covered under such policy subject to the exclusions and limitations set forth therein.
(d)     The provisions of this paragraph 18 shall survive the expiration or termination of your employment and/or this Agreement.
19.    Legal Fees.  CBS shall reimburse you for all legal fees and expenses and other fees and expenses which you may incur in an effort to establish entitlement to compensation or other benefits under this Agreement in accordance with paragraph 17.  Any such reimbursement shall be made within 60 calendar days following the date on which CBS receives appropriate documentation with respect to such fees and expenses, but in no event shall payment be made later than December 31 of the calendar year following the calendar year in which you incur the related fees and expenses.
20.    Counterparts. This Agreement may be executed in one or more counterparts, including by facsimile, and all of the counterparts shall constitute one fully executed agreement.  The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

[signature page to follow]

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

	
						
	 
	 
	 
	Very truly yours,

	 
	 
	 
	 
	 

	 
	 
	 
	CBS CORPORATION

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	By:
	/s/ Anthony G. Ambrosio

	 
	 
	 
	 
	Name:
	Anthony G. Ambrosio

	 
	 
	Title:
	Senior Executive Vice President,

	 
	 
	 
	 
	 
	Chief Administrative Officer and

	 
	 
	 
	 
	 
	Chief Human Resources Officer

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	ACCEPTED AND AGREED:
	 
	 
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	/s/ Joseph R. Ianniello
	 
	 
	 

	Joseph R. Ianniello
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	Dated:
	7/20/17
	 
	 
	 

	 
	 
	 
	 
	 
	 

SCHEDULE A

2017 Performance Award

Part A: Number of Shares Earned Based on Stock Price Performance

	
		
	Final Stock Price                                           (% of Initial Stock Price)
	# of Shares Earned*

	< 124.55%
	0

	124.55%
	41,152

	129.98%
	49,076

	135.59%
	56,287

	141.39%
	62,841

	147.37%
	68,790

	153.56%
	    74,177**

	159.94%
	82,139

	166.53%
	89,372

	173.32%
	95,949

	180.33%
	101,906

	187.56%
	107,291

	> 187.56%
	107,291

* Number of shares earned between percentages shown in above table will be determined through straight-line interpolation.
** The target 2017 Performance Award (the “2017 Target Performance Award”) shall be 74,177 shares of Class B Common Stock.

Part B: Modifier to Number of Shares Earned

	
		
	PRSU Performance Goal Percentage Achievement
	Modifier***

	Below Threshold
(i.e., <80%)
	0.9

	Threshold
(i.e., 80%)
	0.9

	Target
(i.e., 100%)
	1.0

	Maximum
(i.e., 120%)
	1.1

	Above Maximum
(i.e., >120%)
	1.1

*** Modifier between levels determined through straight-line interpolation.

Schedule A - 1

		
	1.
	Determination of the Number of Shares to be Granted:

(a)    (i)    On December 31, 2021, subject to your continued employment with CBS through such date (subject to paragraphs 1(b), 1(c), 1(d), 2 and 3 of this Schedule A), the Compensation Committee will determine the number of shares of Class B Common Stock to be granted to you as the 2017 Performance Award based on the performance of the Class B Common Stock over the period beginning July 1, 2017 and ending December 31, 2021 (the “Performance Period”). 

(ii)    Within thirty (30) days following the end of the Performance Period, the Compensation Committee will certify the “Final Stock Price” (as defined below) that was achieved during the Performance Period, expressed as a percentage of the “Initial Stock Price” (as defined below).  The number of shares of Class B Common Stock earned based on such percentage is referred to herein as the “Initial Performance Shares.” If the Final Stock Price for the Performance Period falls at an intermediate point between percentages shown in the table in Part A above, the number of Initial Performance Shares shall be interpolated on a straight-line basis between the respective numbers of shares earned at such percentages. Fractional shares will be rounded to the next higher whole share.

(iii)    Once the Compensation Committee has determined the number of Initial Performance Shares, such number shall be divided into halves with one-half allocated to each of the 2019 and 2020 calendar years (each, a “Performance Year”).  With respect to each such Performance Year, the number of Initial Performance Shares allocated to such year shall be adjusted based on CBS’s degree of achievement against the PRSU Performance Goal established for the Performance Year as reflected in the table in Part B above.  For avoidance of doubt, the portion of the Initial Performance Shares allocated to any Performance Year shall be increased or decreased by no more than 10%.  Following adjustment for CBS’s performance for each Performance Year, the aggregate performance-adjusted number of Initial Performance Shares (the “Final Performance Shares”) shall be granted to you as soon as practicable, but in no event later than sixty (60) days following December 31, 2021, subject to paragraphs 1(b), 1(c), 1(d), 1(e), 2 and 3 of this Schedule A.  

(b)    In the event your employment is terminated in accordance with paragraph 7(b) or 7(c) prior to December 31, 2021, you shall remain eligible to receive shares of Class B Common Stock as the 2017 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule A. Shares of Class B Common Stock to be granted pursuant to this paragraph 1(b) shall be granted to you as soon as practicable following December 31, 2021, but in no event later than sixty (60) days following such date, subject to paragraph 7(i) of the Agreement and paragraphs 1(e), 2 and 3 of this Schedule A.

Schedule A - 2

(c)    In the event your employment terminates prior to December 31, 2021 due to your death in accordance with paragraph 7(d) or your disability in accordance with paragraph 7(e), you shall remain eligible to receive shares of Class B Common Stock as the 2017 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule A, and then prorated based on the number of calendar days of the Performance Period which have elapsed through the date of your death or termination due to disability.  Shares of Class B Common Stock to be granted pursuant to this paragraph 1(c) shall be granted to you (or your estate or beneficiary, if applicable) as soon as practicable following December 31, 2021, but in no event later than sixty (60) days following such date, subject to paragraphs 1(e), 2 and 3 of this Schedule A.

(d)    In the event your employment is terminated in accordance with paragraph 7(j) prior to December 31, 2021, then

 (i)    in the event and limited to the extent that compliance with the performance-based compensation exception is required in order to ensure the deductibility of the 2017 Performance Award, you shall remain eligible to receive shares of Class B Common Stock as the 2017 Performance Award following the conclusion of the Performance Period, determined in accordance with paragraph 1(a) of this Schedule A. Shares of Class B Common Stock to be granted pursuant to this paragraph 1(d)(i) shall be granted to you as soon as practicable following December 31, 2021, but in no event later than sixty (60) days following such date, subject to paragraph 7(i) of the Agreement and paragraphs 1(e), 2 and 3 of this Schedule A, or

(ii)    in the event and limited to the extent that compliance with the performance-based compensation exception under Code Section 162(m) is not required in order to ensure the deductibility of the 2017 Performance Award, you will receive a number of shares of Class B Common Stock as the 2017 Performance Award calculated at the target level set forth in Part A of this Schedule A (or such higher level as has then been achieved), which shall be granted to you within sixty (60) days following your termination date, subject to paragraph 7(i) of the Agreement and paragraphs 1(e), 2 and 3 of this Schedule A. If the determination occurs prior to the end of a Performance Year(s), the Part B modifier applicable for such Performance Year(s) shall be deemed to be 1.0.

(e)    To the extent that you are a “specified employee” (within the meaning of Code Section 409A and determined pursuant to procedures adopted by CBS) at the time of your termination and any portion of the 2017 Performance Award that would otherwise be settled during the six-month period following your termination of employment constitutes “deferred compensation” within the meaning of Code Section 409A, such portion shall instead be settled on the Permissible Payment Date.

Schedule A - 3

		
	2.
	Adjustments:

In the event of any dividend or other distribution (whether in the form of cash, shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of shares or other securities of CBS, issuance of warrants or other rights to purchase shares or other securities of CBS, or other similar corporate transaction or event that constitutes an “equity restructuring transaction” as that term is defined in Accounting Standards Codification Topic 718 (or any successor thereto) or otherwise affects the shares of Class B Common Stock, then you and the Chair of the Compensation Committee on the Effective Date shall mutually determine in good faith the appropriate adjustment to be made to the tables in Part A and Part B and/or to the number and kind of securities or other consideration deliverable as the 2017 Performance Award in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Schedule A.   

		
	3.
	Registration:

CBS shall grant the shares of Class B Common Stock under the LTIP if it is able to do so under the terms of the plan and applicable law.  If (a) CBS is a publicly traded company at the time that the shares of Class B Common Stock are required to be granted to you as the 2017 Performance Award and (b) CBS is unable to grant such shares to you under the LTIP at such time (e.g., following your termination of employment), then CBS shall grant to you the shares of Class B Common Stock at the applicable time set forth in paragraph 1 above and, in addition, shall file a registration statement with regard to such shares with the Securities and Exchange Commission (the “SEC”) on Form S-3 (or such other form as CBS deems appropriate) no more than thirty (30) calendar days following the date of grant and shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable; provided, however, that if CBS is not eligible for or is otherwise restricted from filing such registration statement with the SEC, then CBS shall use reasonable best efforts to effect the registration of such shares of Class B Common Stock granted to you as the 2017 Performance Award as soon as practicable; provided, further, however, that if, in the good faith reasonable judgment of the Chief Legal Officer of CBS, the filing of such a registration statement would require the disclosure of material non-public information that CBS has a business purpose to keep confidential, then, upon notice to you, (x) if CBS qualifies as a “well-known seasoned issuer” (“WKSI”) under the Securities Act of 1933, as amended, at such time, the filing and effectiveness of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and (y) if CBS is not a WKSI at such time, the filing of the registration statement may be postponed for a period not to exceed ninety (90) days from the date of grant and CBS shall use reasonable best efforts to cause the registration statement to become effective as soon as practicable thereafter.  Any such postponement described above shall not exceed such number of days that the Chief Legal Officer of CBS determines in good faith to be reasonably necessary.

Schedule A - 4

		
	4.
	Defined Terms:

“Closing Price” means the closing price of a share of Class B Common Stock, as published in the Wall Street Journal, for the applicable trading day.

“Fair Market Value” means, as of any date, the fair market value of a share of stock or other equity interest as determined by an independent appraiser selected in good faith by the Board (or the board of directors of a successor to CBS, if applicable).

“Final Stock Price” means the tenth (10th) highest Closing Price which occurs during the Performance Period.    

“Initial Stock Price” means the greater of (x) the average Closing Price of the ten (10) trading days immediately preceding the date on which this Agreement is executed by both parties hereto and (y) the Closing Price on the date on which the Compensation Committee approves the terms of this Agreement (or if such day is not a trading day, the Closing Price on the preceding trading day).

Schedule A - 5

EXHIBIT A

Form of General Release

GENERAL RELEASE

WHEREAS, Joseph R. Ianniello (hereinafter referred to as the “Executive”) and CBS Corporation (hereinafter referred to as “Employer”) are parties to an Employment Agreement, dated as of July 1, 2017 (the “Employment Agreement”), which provided for Executive’s employment with Employer on the terms and conditions specified therein; and 

WHEREAS, pursuant to paragraph 7(i) of the Employment Agreement, Executive has agreed to execute a General Release of the type and nature set forth herein as a condition to his entitlement to certain payments and benefits upon his termination of employment with Employer; and 

NOW, THEREFORE, in consideration of the premises and mutual promises herein contained and for other good and valuable consideration received or to be received by Executive in accordance with the terms of the Employment Agreement, it is agreed as follows: 

1.     Excluding enforcement of the covenants, promises and/or rights reserved herein (including but not limited to those contained in paragraph 4, (a) Executive hereby irrevocably and unconditionally waives, releases, settles (gives up), acquits and forever discharges Employer and each of Employer’s owners, stockholders, predecessors, successors, assigns, directors, officers, employees, divisions, subsidiaries, affiliates (and directors, officers and employees of such companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them (collectively, the “Releasees”), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, any claims for salary, salary increases, alleged promotions, expanded job responsibilities, constructive discharge, misrepresentation, bonuses, equity awards of any kind, severance payments, unvested retirement benefits, vacation entitlements, benefits, moving expenses, business expenses, attorneys’ fees, any claims which he may have under any contract or policy (whether such contract or policy is written or oral, express or implied), rights arising out of alleged violations of any covenant of good faith and fair dealing (express or implied), any tort, any legal restrictions on Employer’s right to terminate employees, and any claims which he may have based upon any Federal, state or other governmental statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Federal Age Discrimination In Employment Act of 1967, as amended (“ADEA”), the Employee Retirement Income Security Act of 1974, as 

Exhibit A - 1

amended (“ERISA”), the American with Disabilities Act, as amended (“ADA”), the Civil Rights Act of 1991, as amended, the Rehabilitation Act of 1973, as amended, the Older Workers Benefit Protection Act, as amended (“OWBPA”), the Worker Adjustment Retraining and Notification Act, as amended (“WARN”), the Fair Labor Standards Act, as amended (“FLSA”), the Occupational Safety and Health Act of 1970 (“OSHA”), the Family and Medical Leave Act of 1993, as amended (“FMLA”), the New York State Human Rights Law, as amended, the New York Labor Act, as amended, the New York Equal Pay Law, as amended, the New York Civil Rights Law, as amended, the New York Rights of Persons With Disabilities Law, as amended, and the New York Equal Rights Law, as amended, the Sarbanes-Oxley Act of 2002, as amended (“SOX”), and Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), that Executive now has, or has ever had, or ever shall have, against each or any of the Releasees, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring up through the date of Executive’s execution hereof that directly or indirectly arise out of, relate to, or are connected with, Executive’s services to, or employment by Employer (any of the foregoing being a “Claim” or, collectively, the “Claims”); provided, that the foregoing shall not preclude you from exercising any legally protected whistleblower rights (including under Rule 21F under the Exchange Act) or rights concerning the defense of trade secrets; and (b) Executive will not now, or in the future, accept any recovery (including monetary damages or any form of personal relief) in any forum, nor will he pursue or institute any Claim against any of the Releasees.

2.    Employer hereby irrevocably and unconditionally waives, releases, settles (gives up), acquits and forever discharges the Executive and each of his respective heirs, executors, administrators, representatives, agents, successors and assigns (“Executive Parties”), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, that Employer now has, or has ever had, or ever shall have, against Executive Parties, by reason of any and all acts, omissions, events, circumstances or facts existing or occurring through the date of Employer execution of this release that directly or indirectly arise out of, relate to, or are connected with, the Executive’s services to, or employment by Employer; provided, however, that this General Release shall not apply to any of the continuing obligations of Executive under the Employment Agreement, or under any agreements, plans, contracts, documents or programs described or referenced in the Employment Agreement; and provided, further, that this General Release shall not apply to any rights Employer may have to obtain contribution or indemnity against Executive pursuant to contract or otherwise.

3.    In addition, if applicable Executive expressly waives and relinquishes all rights and benefits afforded by California Civil Code Section 1542 and does so understanding and acknowledging the significance of such specific waiver of Section 1542.  Section 1542 states as follows: 

Exhibit A - 2

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” 

Thus, notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and complete release and discharge of the Releasees, Executive expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all Claims that Executive does not know or suspect to exist in Executive’s favor at the time of execution hereof, and that this Agreement contemplates the extinguishment of any such Claim or Claims. 

4.     Notwithstanding the foregoing, neither the Employer nor the Executive has not waived and/or relinquished any rights he may have to file any Claim that cannot be waived and/or relinquished pursuant to applicable laws, including, in the case of Executive, the right to file a charge or participate in any investigation with the Equal Employment Opportunity Commission or any other governmental or administrative agency that is responsible for enforcing a law on behalf of the government.  Executive also acknowledges and understands that because Executive is waiving and releasing all claims for monetary damages and any other form of personal relief per paragraph 1, Executive may only seek and receive non-personal forms of relief through any such claim.  Moreover, this General Release shall not apply to (a) any of the continuing obligations of Employer or any other Releasee under the Employment Agreement, or under any agreements, plans, contracts, documents or programs described or referenced in the Employment Agreement or any other written agreement entered into between Executive and Employer, (b) any rights Executive may have to obtain contribution or indemnity against Employer or any other Releasee pursuant to contract, Employer’s certificate of incorporation and by-laws or otherwise, (c) any rights Executive may have to enforce the terms of this General Release or the Employment Agreement, (d) any claims for accrued, vested benefits under any employee benefit or pension plan of Employer or its affiliates subject to the terms and conditions of such plan or pursuant to applicable law, and (e) any rights of Executive in connection with his interest as a stockholder or optionholder of Employer whether under agreements between Executive and Employer or any of its affiliates or otherwise. 

5.    Executive understands that he has been given a period of twenty-one (21) days to review and consider this General Release before signing it pursuant to the ADEA.  Executive further understands that he may use as much of this 21–day period as Executive wishes prior to signing. 

6.     Executive acknowledges and represents that he understands that he may revoke the General Release set forth in paragraph 1, including, the waiver of his rights 

Exhibit A - 3

under the Age Discrimination in Employment Act of 1967, as amended, effectuated in this General Release, within seven (7) days of signing this General Release.  Revocation can be made by delivering a written notice of revocation to Senior Executive Vice President, Chief Legal Officer, CBS Corporation, 51 West 52nd Street, New York, New York 10019.  For this revocation to be effective, written notice must be received by the General Counsel no later than the close of business on the seventh day after Executive signs this General Release. If Executive revokes the General Release set forth in paragraphs 1 and 3, Employer shall have no obligations to Executive under paragraphs 7(b), 7(c), 7(f) or 7(j) of the Employment Agreement, except to the extent specifically provided for therein.

7.     Executive and Employer respectively represent and acknowledge that in executing this General Release neither of them is relying upon, and has not relied upon, any representation or statement not set forth herein made by any of the agents, representatives or attorneys of the Releasees with regard to the subject matter, basis or effect of this General Release or otherwise. 

8.     This General Release shall not in any way be construed as an admission by any of the Releasees that any Releasee has acted wrongfully or that Executive has any rights whatsoever against any of the Releasees except as specifically set forth herein, and each of the Releasees specifically disclaims any liability to any party for any wrongful acts. 

9.     It is the desire and intent of the parties hereto that the provisions of this General Release be enforced to the fullest extent permissible under law.  Should there be any conflict between any provision hereof and any present or future law, such law shall prevail, but the provisions affected thereby shall be curtailed and limited only to the extent necessary to bring them within the requirements of law, and the remaining provisions of this General Release shall remain in full force and effect and be fully valid and enforceable. 

10.     Executive represents and agrees (a) that Executive has, to the extent he desires, discussed all aspects of this General Release with his attorney, (b) that Executive has carefully read and fully understands all of the provisions of this General Release, and (c) that Executive is voluntarily executing this General Release. 

11.    This General Release shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflicts of laws principles thereof or to those of any other jurisdiction which, in either case, could cause the application of the laws of any jurisdiction other than the State of New York.  This General Release is binding on the successors and assigns of the parties hereto; fully supersedes any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof; and may not be changed except by explicit written agreement to that effect subscribed by the parties hereto.

Exhibit A - 4

PLEASE READ CAREFULLY. THIS GENERAL RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. 

This General Release is executed by the Executive and Employer as of the _______ day of __________ , 20___. 

	
		
	 
	 

	 
	Joseph R. Ianniello

 
	
			
	 
	CBS CORPORATION

	 
	 
	 

	 
	 
	 

	 
	By:
	 

	 
	 
	 

	 
	Title:

Exhibit A - 5

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