CONFORMED COPY
VIACOM INC.
September 6, 1999
Xxxxxx X. Xxxxxxxx
The Xxxxxxx Hotel
Suite 3201
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xx. Xxxxxxxx:
This is to confirm our agreement that, effective as of the
Effective Time (as defined in the Agreement and Plan of Merger (the "Merger
Agreement") between Viacom Inc. ("Viacom") and CBS Corporation ("CBS"), dated as
of the date hereof) (the "Effective Date"), you shall be paid the following
compensation by Viacom, in addition to any compensation, benefits and
perquisites you have heretofore received from Viacom.
As the sole compensation for services to be rendered by you in
all capacities to Viacom, its subsidiaries and affiliates, you will receive the
following compensation.
(a) Salary: For all the services rendered by you in any
capacity to Viacom, its subsidiaries and affiliates, Viacom agrees to pay you a
base salary at the rate of $1,000,000 per annum ("Salary"), payable in
accordance with Viacom's then effective payroll practices.
(b) Bonus Compensation: In addition to your Salary, you shall
be entitled to receive bonus compensation for each of the calendar years during
your employment with Viacom, determined and payable as follows ("Bonus"):
(i) Your Bonus for each of the calendar years during your
employment with Viacom will be based upon a
measurement of performance against objectives in
accordance with Viacom's Short-Term Incentive Plan
and its Senior Executive Short-Term Incentive Plan,
as the same may be amended from time to time
(collectively, the "STIP"), which objectives shall be
no less favorable to you than the objectives used to
determine the amount of bonus payable to any other
executive of Viacom whose bonus is based in
Xxxxxx X. Xxxxxxxx 2 September 6, 1999
whole or in part on corporate performance and who
participates in the STIP.
(ii) Your Target Bonus and Maximum Bonus opportunity for
each calendar year (prorated for calendar year 2000
by multiplying such amount by a fraction, the
numerator of which is the number of days in 2000
following the Effective Date, and the denominator of
which is 365) during your employment with Viacom
shall be as follows:
Year Target Maximum
-------------- ---------------- -----------
2000 $5,000,000 $10,000,000
2001 $5,500,000 $11,000,000
2002 $6,050,000 $12,100,000
2003 and $6,655,000 $13,310,000
thereafter
(iii) Your Bonus for any calendar year shall be payable by
February 28 of the following year.
(c) Deferred Compensation: In addition to your Salary and
Bonus, you shall earn, in respect of calendar year 2000 and each calendar year
thereafter during your employment with Viacom, an additional amount ("Deferred
Compensation"), the payment of which (together with the return thereon as
provided in this paragraph (c)) shall be deferred until January of the first
calendar year following the year in which you cease to be an "executive officer"
of Viacom, as defined for purposes of the Securities Exchange Act of 1934, as
amended. The amount of Deferred Compensation for calendar year 2000 shall be
$2,000,000, prorated by multiplying such amount by a fraction, the numerator of
which is the number of days in 2000 following the Effective Date, and the
denominator of which is 365. The amount of Deferred Compensation for calendar
years 2001 through 2003 shall be subject to annual increases each January 1st,
commencing January 1, 2001, in an amount equal to 10% of the sum of your Salary
and Deferred Compensation for the preceding year. Deferred Compensation shall be
credited to a bookkeeping account maintained by Viacom on your behalf, the
balance of which account shall periodically be credited (or debited) with deemed
positive (or negative) return calculated in the same manner, and at the same
times, as the deemed return on your account under the excess 401(k) plan of
Viacom (as such plan may be amended from time to time) is determined or, if you
do not participate in such plan, with a return to be mutually agreed by the
Company and you. Viacom's obligation to pay the Deferred Compensation (including
the return thereon provided for in this paragraph (c)) shall be an unfunded
obligation to be satisfied from the general funds of Viacom.
Xxxxxx X. Xxxxxxxx 3 September 6, 1999
(d) Grant: You will be awarded a grant (the "Grant") under
Viacom's 1997 Long-Term Management Incentive Plan (the "1997 LTMIP") of stock
options to purchase 2,000,000 shares of Viacom's Class B Common Stock, effective
as of the Effective Date, with an exercise price equal to the fair-market value
of Viacom's Class B Common Stock on the date of the Grant. The Grant shall vest
in three equal installments on the first, second and third anniversaries of the
Effective Date. Such stock options shall be subject to terms identical in all
material respects to those applicable to the grant to be made to Xx. Xxxxxxxx as
of the Effective Date.
If you agree with the foregoing terms, please execute this
letter in the space provided below and return a copy to the undersigned.
VIACOM INC.
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------
Xxxxxxxx X. Xxxxxx
Deputy Chairman
ACCEPTED AND AGREED:
/s/ Xxxxxx X. Xxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxx
September 6, 1999
