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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 2005
VIACOM INC.
(Exact name of registrant as specified in its charter)
Delaware 001-09553 04-2949533
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
1515 Broadway, New York, NY 10036
(Address of principal executive offices) (Zip Code)
(212) 258-6000 (Registrant's telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On April 27, 2005, Viacom Inc. (the "Company") announced that it had
appointed Michael J. Dolan as Executive Vice President and Chief Financial
Officer of the Company effective May 11, 2005. The material terms of Mr. Dolan's
employment agreement are described under Item 5.02(c) of this Form 8-K and such
description is incorporated herein by reference.
Section 5 - Corporate Governance and Management
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
(c) On April 27, 2005, the Company announced that it had appointed Michael J.
Dolan as Executive Vice President and Chief Financial Officer of the Company
effective May 11, 2005. Mr. Dolan became Executive Vice President of the
Company on May 2, 2005 and he will assume the additional title of Chief
Financial Officer of the Company on May 11, 2005. Mr. Dolan will succeed Richard
J. Bressler in the position of Chief Financial Officer. Mr. Bressler announced
in January that he would not renew his contract with the Company.
Mr. Dolan, 58, held several senior management positions with Young &
Rubicam, Inc., a diversified advertising agency and marketing services company,
including Chairman and Chief Executive Officer from 2000 to 2003, President and
Chief Operating Officer in 2000, and Vice Chairman and Chief Financial Officer
from 1996 to 2000. Prior to that, Mr. Dolan held a number of senior financial
and operational positions with PepsiCo Foods International, a division of
PepsiCo, Inc., including President and Chief Executive Officer of Snack Ventures
Europe from 1992 to 1995, Senior Vice President of Operations from 1991 to 1992
and Vice President of Strategic Planning and New Business Development in 1991.
Since his departure from Young & Rubicam in 2003, Mr. Dolan has served as
Senior Advisor to the private investment firm Kohlberg Kravis Roberts & Co. and
has held board positions with both public and private companies, including
Mattel, Inc., Regal Entertainment Group and America's Choice, Inc.
In connection with his appointment as Executive Vice President and Chief
Financial Officer of the Company, the Company has entered into an employment
agreement with Mr. Dolan effective May 2, 2005. Under the terms of the
employment agreement, Mr. Dolan's term of employment will run for a period of
four years commencing on the effective date. The employment agreement provides
that Mr. Dolan will receive an annual base salary of $1.25 million and will
accrue an additional $250,000 a year in deferred compensation. The amount of Mr.
Dolan's salary and deferred compensation will be subject to discretionary annual
merit reviews commencing May 2, 2006, and may be increased but not decreased
under the terms of his employment agreement. Mr. Dolan will also be eligible to
receive annual bonus compensation during each year of his employment term based
on a target bonus equal to 100% of his salary and deferred compensation
determined in accordance with the Company's Senior Executive Short-Term
Incentive Plan (the "Senior Executive STIP"). Mr. Dolan will also receive a
long-term compensation award with a value of $3 million for the 2005 calendar
year through a combination of restricted share units payable in shares of the
Company's Class B Common Stock ("RSUs") and stock options to purchase shares of
the Company's Class B Common Stock ("Options") granted under the Company's 2004
Long-Term Management Incentive Plan (together with any successor plan, the
"LTMIP"). In addition, Mr. Dolan will also be eligible to receive annual
long-term compensation awards with a target value of $3 million for each of the
calendar years 2006 through 2008 through a combination of RSUs and Options
granted under the LTMIP. The RSUs and Options awarded for calendar year 2005
will be granted to Mr. Dolan ten business days from his start date of May 2,
2005 (the "Start Date")
and will vest in four equal installments on the first, second, third and
fourth anniversaries of his Start Date and any RSUs and Options awarded for
calendar years 2006 through 2008 will vest in four equal installments on the
anniversaries of his Start Date, beginning with the second anniversary of his
Start Date for the 2006 calendar year award, the third anniversary of his Start
Date for the 2007 calendar year award and the fourth anniversary of his Start
Date for the 2008 calendar year award. The vesting of each award of RSUs will
also be subject to the achievement of a performance goal established by the
Compensation Committee of the Company's Board of Directors (the "Compensation
Committee") for a performance period that will end no later than December 31st
of the year in which the grant was made and which shall be the same as the
performance goal established by the Compensation Committee for the Senior
Executive STIP except that the performance goal for the RSUs awarded for 2005
will be prorated for the period from the grant date of such award through
December 31, 2005. Mr. Dolan's employment agreement also contains certain
restrictive covenants imposing non-competition obligations, restricting
solicitation of employees, protecting confidential information and the Company's
ownership of work product and requiring cooperation in litigation, as well as
other covenants, during the term of his employment and for specified periods
after the termination of employment. In the event of the termination of Mr.
Dolan's employment by the Company without "cause" or his voluntary termination
for "good reason" (as such terms are defined in the employment agreement) during
the employment term, he will be entitled to receive salary, deferred
compensation and target bonus compensation and certain benefits and perquisites
for the balance of the employment term, subject to mitigation after the first
twelve months. In addition, as the Company has previously announced that it is
exploring the separation of Viacom Inc. into two businesses, Mr. Dolan's
employment agreement provides that the Company may assign Mr. Dolan's employment
agreement to the publicly held parent corporation of the business that acquires
the assets of MTV Networks ("Newco") in the event of such a separation, in which
case Mr. Dolan would hold the same position with Newco that he will hold with
the Company.
The foregoing description of the terms of Mr. Dolan's employment is
qualified in its entirety be reference to the employment agreement effective May
2, 2005 between the Company and Michael J. Dolan which is attached hereto as
Exhibit 10.1 and is incorporated herein by reference.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Description of Exhibit
10.1 Employment Agreement effective May 2, 2005 between the
Company and Michael J. Dolan
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIACOM INC.
(Registrant)
By: /s/ MICHAEL D. FRICKLAS
------------------------------------
Michael D. Fricklas
Executive Vice President, General
Counsel and Secretary
Date: May 3, 2005
Exhibit Index
Exhibit Number Description of Exhibit
10.1 Employment Agreement effective May 2, 2005 between the
Company and Michael J. Dolan
Exhibit 10.1
May 2, 2005
Michael J. Dolan
c/o Viacom Inc.
1515 Broadway
New York, New York 10036
Dear Mr. Dolan:
Viacom Inc. ("Viacom"), 1515 Broadway, New York, New York 10036, agrees
to employ you and you agree to accept such employment upon the following terms
and conditions:
1. Term. The term of your employment under this Agreement shall commence on
May 2, 2005 (your "Start Date") and, unless terminated by Viacom or you pursuant
to paragraph 8(a), (b) or (c), shall continue through and until the fourth
anniversary of your Start Date (the "End Date"). The period from your Start Date
through the End Date is referred to as the "Term" notwithstanding any earlier
termination of your employment for any reason.
2. Duties.
(a) You agree to devote your entire business time, attention and energies
to the business of Viacom and its subsidiaries during your employment with
Viacom. On your Start Date, you will become Executive Vice President of Viacom
and, commencing on May 11, 2005, you will become Executive Vice President, Chief
Financial Officer of Viacom, and you agree to perform all duties reasonable and
consistent with such offices as may be assigned to you from time to time by the
Chairman, Chief Executive Officer of Viacom (the "Chairman") or, if the Chairman
ceases to serve as the Chief Executive Officer of Viacom, the Chief Executive
Officer of Viacom (or, if there are Co-Chief Executive Officers, either or both
of the Co-Chief Executive Officers). You will have such authority as is
necessary for the performance of your obligations hereunder. Your principal
place of business shall be Viacom's headquarters in the New York City
metropolitan area.
(b) Viacom has announced that it is exploring the separation of Viacom into
two businesses. Viacom may, in its discretion, assign this Agreement to the
publicly held parent corporation of the business that acquires the assets of MTV
Networks ("NEWCO") provided you hold the same position with NEWCO that you held
with Viacom and you report directly to the Chairman, Chief Executive Officer of
NEWCO (the "NEWCO Chairman") or, if the NEWCO Chairman ceases to serve as the
Chief Executive Officer of NEWCO, the Chief Executive Officer of NEWCO or, in
the event that Tom Freston serves as the Chief Operating Officer of NEWCO, to
the Chief Operating Officer of NEWCO. In such event, all references in this
Michael J. Dolan
May 2, 2005
Page 2
Agreement to Viacom shall thereafter refer to NEWCO, except that you agree
that your covenants under paragraphs 6(a) through (i) (non-competition, etc.)
shall apply to the benefit of both businesses until one (1) year after the date
of the separation and then only to NEWCO.
3. Compensation.
(a) Salary. For all the services rendered by you in any capacity under this
Agreement, Viacom agrees to pay you One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) a year in base salary ("Salary"), less applicable
deductions and withholding taxes, in accordance with Viacom's payroll practices
as they may exist from time to time.
(b) Deferred Compensation. In addition to your Salary, you shall earn an
additional amount ("Deferred Compensation"), the payment of which (together with
the return thereon, as provided in this paragraph 3(b)), shall be deferred until
January 31st 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 "1934 Act"), or, if later, six (6) months
after the termination of your employment. Deferred Compensation shall be earned
at the rate of Two Hundred Fifty Thousand Dollars ($250,000) a 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
Viacom Excess 401(k) Plan for Senior Executives (as such plan may be amended
from time to time, the "Excess 401(k) Plan") is determined (it being understood
and agreed that, if at any time during which the Deferred Compensation remains
payable, your account balance in the Excess 401(k) Plan is distributed in full
to you, your Deferred Compensation account shall continue to be credited or
debited with a deemed return based on the investment portfolio in which your
Excess 401(k) Plan account was notionally invested immediately prior to its
distribution). Viacom's obligation to pay the Deferred Compensation (including
the return thereon provided for in this paragraph 3(b) shall be an unfunded
obligation to be satisfied from the general funds of Viacom.
(c) Discretionary Review. The amount of your Salary and Deferred
Compensation will be subject to a discretionary annual merit review on or about
each anniversary of your Start Date during the Term, commencing May 2, 2006, and
may, at that time, be increased but not decreased.
(d) Bonus Compensation. You also shall be eligible to receive annual bonus
compensation ("Bonus") during your employment with Viacom under this Agreement,
determined and payable as follows:
(i) Your Bonus for each calendar year during your employment with Viacom
under this Agreement will be determined in accordance with the Viacom
Senior Executive Short-Term Incentive Plan, as the same may be
amended from time to time (the "Senior Executive STIP").
Michael J. Dolan
May 2, 2005
Page 3
(ii) Your target bonus ("Target Bonus") for each of those calendar years
shall be 100% of your Salary and Deferred Compensation, at the rate
in effect on November 1st of such year or, if earlier, the last day
of the Term. Your Bonus may be prorated for any portion of the
calendar year that you were employed by Viacom.
(iii) Your Bonus for any calendar year shall be payable, less applicable
deductions and withholding taxes, by February 28th of the following
year.
(e) Long-Term Compensation.
(i) For the 2005 calendar year, you will receive a long-term compensation
award under the Viacom 2004 Long-Term Management Incentive Plan or a
successor plan (the "LTMIP") with a value of Three Million Dollars
($3,000,000), through a combination of restricted share units payable
in shares of Viacom Class B Common Stock (the "Annual Restricted
Units") and stock options to purchase shares of Viacom Class B Common
Stock (the "Annual Stock Options"). At least 30% (i.e., at least
$900,000) of the value of the long-term compensation award for
2005 will be derived from the grant of Annual Restricted Units. The
balance of the value of the annual long-term compensation award for
2005 will be derived from the grant of Annual Stock Options. The
Annual Restricted Units and Annual Stock Options for 2005 will be
awarded on the first business day that is ten (10) business days
after your Start Date (the "2005 Grant Date") and will vest in four
(4) equal installments on the first, second, third and fourth
anniversaries of your Start Date, except that vesting of the Annual
Restricted Units will also be subject to achievement of a performance
goal as described in (iii) below. The Annual Stock Options for 2005
will have a per share exercise price equal to the closing price of a
share of Class B Common Stock on the 2005 Grant Date on the New York
Stock Exchange ("NYSE").
(ii) For calendar years 2006, 2007 and 2008, you will be eligible to
receive annual long-term compensation awards with a target value of
Three Million Dollars ($3,000,000) through a combination of Annual
Restricted Units and Annual Stock Options which awards will be made
at such times as the Compensation Committee of the Viacom Board of
Directors shall generally award the long-term compensation awards to
the senior executives of the Company for such year. At least 30% of
the value of the long-term compensation award for each year will be
derived from the grant of Annual Restricted Units. The balance of the
value of the long-term compensation award for each year will be
derived from the grant of Annual Stock Options. The Annual Restricted
Units and Annual Stock Options for the 2006, 2007 and 2008 calendar
years will vest in four (4)
Michael J. Dolan
May 2, 2005
Page 4
equal installments on anniversaries of your Start Date,
starting with the second anniversary of your Start Date for the award
for the 2006 calendar year, the third anniversary of your Start Date
for the award for the 2007 calendar year and the fourth anniversary
of your Start Date for the award for the 2008 calendar year. The
vesting of the Annual Restricted Units will also be subject to
achievement of a performance goal as described in (iii) below. The
Annual Stock Options for 2006, 2007 and 2008 will have a per share
exercise price equal to the closing price of a share of Class B
Common Stock on the applicable date of grant on the NYSE (or, if
different, the principal stock exchange on which the Class B Common
Stock is then traded).
(iii) At the time of each grant of Annual Restricted Units, the
Compensation Committee will establish a performance goal requirement
for such award for a performance period that will end no later than
December 31st of the year in which the grant was made. The
Compensation Committee shall establish the same performance goal for
each grant of Annual Restricted Units that it establishes for the
Senior Executive STIP for the performance period during which such
grant of Annual Restricted Units is awarded except that the following
will apply to the Annual Restricted Units awarded for the 2005
calendar year: (i) the performance goal for the Restricted Share
Units awarded for 2005 (the "2005 Performance Goal") will be
prorated for the period from the 2005 Grant Date through
December 31, 2005 (the "2005 Performance Period"); and (ii) since
audited financial statements will not be available for the 2005
Performance Period, the financial criteria that is being measured
to determine whether the 2005 Performance Goal has been achieved
will be deemed to have been earned equally over the entire 2005
calendar year. At the first Compensation Committee meeting held after
the end of each performance period during which Annual Restricted
Units were awarded (which meeting is expected to be held in
January), the Compensation Committee will determine whether the
performance goal for each award of Annual Restricted Units has
been achieved. If the Committee certifies that the performance
goal established for an award of Annual Restricted Units has been
achieved, the award will vest and become payable in accordance
with the four year vesting schedule. If the Compensation
Committee finds that the goal established for any grant of Annual
Restricted Units has not been achieved, the award will not vest
and will be cancelled.
4. Benefits.
(a) General. You shall participate in such vacation, medical and dental
insurance, long-term disability insurance, 401(k), pension and other plans as
Viacom may have or establish from time to time and in which you would be
entitled to participate under the terms
Michael J. Dolan
May 2, 2005
Page 5
of the plan. This provision, however, shall not be construed to either require
Viacom 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.
(b) Life Insurance. Viacom shall provide you with no less than Five Million
Dollars ($5,000,000) of life insurance during the Term. You shall have the right
to assign the policy for such life insurance to your spouse and/or issue or to a
trust or trusts primarily for the benefit of your spouse or issue.
5. Business Expenses; Car Allowance and Insurance. During your employment
under this Agreement, Viacom shall reimburse you for such reasonable travel and
other expenses incurred in the performance of your duties as are customarily
reimbursed to Viacom executives at comparable levels. You shall receive a car
allowance and car insurance for one vehicle in accordance with Viacom's
policies, as the same may be amended from time to time.
6. Non-Competition, Confidential Information, Etc.
(a) Non-Competition. You agree that your employment with Viacom is on an
exclusive basis and that, while you are employed by Viacom, 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 agree
that, during the Non-Compete Period (as defined below), you shall not directly
or indirectly engage in or participate as an owner, partner, stockholder,
officer, employee, director, agent of or consultant for any business competitive
with any business of Viacom, without the written consent of Viacom; 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 entire Term; provided, however, that, if your
employment terminates before the end of the Term, the Non-Compete Period shall
terminate, if earlier, (i) one year after you terminate your employment for Good
Reason or Viacom terminates your employment without Cause, or on such earlier
date as you may make the election under paragraph 6(j) (which relates to your
ability to terminate your obligations under this paragraph 6(a) in exchange for
waiving your right to certain compensation and benefits); or (ii) eighteen (18)
months after Viacom terminates your employment for Cause. (Defined terms used
without definitions in the preceding sentence have the meanings provided in
paragraphs 8(a) and (b).)
(b) Confidential Information. You agree that, during the Term or at any
time thereafter, (i) you shall not use for any purpose other than the duly
authorized business of Viacom, or disclose to any third party, any information
relating to Viacom or any of its affiliated companies which is proprietary to
Viacom or any of its 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 Viacom's
Michael J. Dolan
May 2, 2005
Page 6
policies); and (ii) you will comply with any and all confidentiality obligations
of Viacom 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
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.
(c) No Solicitation, Etc. You agree that, during the Term and for one (1)
year thereafter, you shall not, directly or indirectly:
(i) employ or solicit the employment of any person who is then or has
been within six (6) months prior thereto, an employee of Viacom
or any of its affiliated companies; or
(ii) interfere with, disturb or interrupt the relationships (whether
or not such relationships have been reduced to formal contracts)
of Viacom or any of its affiliated companies with any customer,
supplier or consultant.
(d) Viacom 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 Viacom and/or any of its affiliated
companies and any works in progress resulting from such services, shall be
works-made-for-hire and Viacom 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 Viacom determines in its sole 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 Viacom under the preceding
sentence, then you hereby irrevocably assign and agree to assign any and all of
your right, title and interest thereto, including, without limitation, any and
all copyrights, patents, trade secrets, trademarks and/or other rights of every
nature in the work, whether now known or hereafter defined or discovered, and
Viacom shall have the right to use the work in perpetuity throughout the
universe in any manner Viacom determines in its sole discretion without any
further payment to you. You shall, as may be requested by Viacom from time to
time, do any and all things which Viacom may deem useful or desirable to
establish or document Viacom'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 Chairman 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 Viacom or any of its affiliated
companies of any ownership rights to which Viacom or any of its affiliated
companies may be entitled by operation of law by virtue of being your employer.
Michael J. Dolan
May 2, 2005
Page 7
(e) Litigation.
(i) You agree that, during the Term, for one (1) year thereafter and,
if longer, 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 Viacom or any of its affiliated companies, other than
any litigation or other proceeding in which you are a
party-in-opposition, without giving prior notice to Viacom or its
counsel; and (y) in the event that any other party attempts to
obtain information or documents from you with respect to such
matter, either through formal legal process such as a subpoena or
by informal means such as interviews, you shall promptly notify
Viacom's counsel before providing any information or documents.
(ii) You agree to cooperate with Viacom and its attorneys, both during
and after the termination of your employment, in connection with
any litigation or other proceeding arising out of or relating to
matters in which you were involved prior to the termination of
your employment. Your cooperation shall include, without
limitation, providing assistance to Viacom's counsel, experts or
consultants, and providing truthful testimony in pretrial and
trial or hearing proceedings. In the event that your cooperation
is requested after the termination of your employment, Viacom
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.
(iii) Except as required by law or legal process, you agree that you
will not testify in any lawsuit or other proceeding which
directly or indirectly involves Viacom or any of its affiliated
companies, or which may create the impression that such testimony
is endorsed or approved by Viacom or any of its affiliated
companies. In all events, you shall give advance notice of such
testimony promptly after you become aware that you may be
required to provide it. Viacom expressly reserves its
attorney-client and other privileges except if expressly waived
in writing.
(f) No Right to Give Interviews or Write Books, Articles, Etc. During the
Term, except as authorized by Viacom, 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 Viacom or any of its affiliated companies
or any of their respective officers, directors, agents, employees, suppliers or
customers.
Michael J. Dolan
May 2, 2005
Page 8
(g) Return of Property. All documents, data, recordings, or other property,
whether tangible or intangible, including all information stored in electronic
form, obtained or prepared by or for you and utilized by you in the course of
your employment with Viacom or any of its affiliated companies shall remain the
exclusive property of Viacom. In the event of the termination of your employment
for any reason, Viacom reserves the right, to the extent permitted by law and in
addition to any other remedy Viacom may have, to deduct from any monies
otherwise payable to you the following: (i) all amounts you may owe to Viacom or
any of its affiliated companies at the time of or subsequent to the termination
of your employment with Viacom; and (ii) the value of the Viacom property which
you retain in your possession after the termination of your employment with
Viacom. In the event that the law of any state or other jurisdiction requires
the consent of an employee for such deductions, this Agreement shall serve as
such consent.
(h) Non-Disparagement. You agree that, during the Term and for one (1) year
thereafter, you shall not, in any communications with the press or other media
or any customer, client or supplier of Viacom or any of its affiliated
companies, criticize, ridicule or make any statement which disparages or is
derogatory of Viacom or any of its affiliated companies or any of their
respective directors or senior officers.
(i) Injunctive Relief. Viacom has entered into this Agreement in order to
obtain the benefit of your unique skills, talent, and experience. You
acknowledge and agree that any violation of paragraphs 6(a) through (h) of this
Agreement will result in irreparable damage to Viacom, and, accordingly, Viacom
may obtain injunctive and other equitable relief for any breach or threatened
breach of such paragraphs, in addition to any other remedies available to
Viacom.
(j) Survival; Modification of Terms. Your obligations under paragraphs 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 or the expiration of the Term; provided, however, that your
obligations under paragraph 6(a) (but not under any other provision of this
Agreement) shall cease if you terminate your employment for Good Reason or
Viacom terminates your employment without Cause and you notify Viacom in writing
that you have elected to waive your right to receive, or to continue to receive,
termination payments and benefits under paragraphs 8(d)(i) through (vi) and/or
8(e). You and Viacom 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 Viacom 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 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.
7. Disability. In the event that you become "disabled" within the meaning
of such term under Viacom's Short-Term Disability ("STD") program and its
Long-Term Disability ("LTD") program during the Term (such condition is referred
to as a "Disability"), you will receive compensation under the STD program in
accordance with its terms. Thereafter, you will
Michael J. Dolan
May 2, 2005
Page 9
be eligible to receive benefits under the LTD program in accordance with its
terms. If you have not returned to work by December 31st of a calendar year
during the Term, you will receive bonus compensation for the period from January
1st of the year in which you first receive compensation under the STD program
through the last day of the period for which you receive compensation under the
STD program, in an amount equal to your Target Bonus and prorated for such
period(s). Bonus compensation under this paragraph 7 shall be paid, less
applicable deductions and withholding taxes, by February 28th of the year(s)
following the year as to which such bonus compensation is payable. 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. In addition, if you
receive compensation under the STD program during calendar year 2005 or any
subsequent calendar year during the Term, you will receive (i) Deferred
Compensation for the calendar year in which such benefits commence prorated for
the portion of such year during which you receive compensation under the STD
program, (ii) prorated Deferred Compensation for any portion of the following
calendar year during which you receive compensation under the STD program, and
(iii) Deferred Compensation attributable to prior periods, payable, together in
each case with the return thereon as provided in paragraph 3(b), prior to
January 31st of the calendar year following the calendar year in which you cease
to be an "executive officer" of Viacom, as defined for purposes of the 1934 Act.
For the periods that you receive compensation and benefits under the STD and LTD
programs, such compensation and benefits and the bonus compensation and Deferred
Compensation provided under this paragraph 7 are in lieu of Salary, Deferred
Compensation and Bonus under paragraphs 3(a), (b) and (d). The stock options
granted to you under the LTMIP which are exercisable on or prior to the date on
which benefits commence under the LTD program, together with all LTMIP stock
options that would have vested and become exercisable on or before the last day
of the Term (which options shall become immediately vested and exercisable),
shall be exercisable until the third anniversary of the date on which such
benefits commence or, if earlier, the expiration date of the stock options.
8. Termination.
(a) Termination for Cause. Viacom may, at its option, terminate your
employment under this Agreement forthwith for Cause and thereafter shall have no
further obligations under this Agreement, including, without limitation, any
obligation to pay Salary, Deferred Compensation or Bonus or provide benefits.
Cause shall mean: (i) embezzlement, fraud or other conduct which would
constitute a felony; (ii) willful unauthorized disclosure of Confidential
Information; (iii) your failure to obey a material lawful directive that is
appropriate to your position from an executive(s) in your reporting line; (iv)
your material breach of this Agreement; (v) your failure (except in the event of
your Disability) or refusal to substantially perform your material obligations
under this Agreement; or (vi) willful failure to cooperate with a bona fide
internal investigation or an investigation by regulatory or law enforcement
authorities, after being instructed by Viacom to cooperate, or the willful
destruction or failure to preserve documents or other material known to be
relevant to such investigation or the willful inducement of others to fail to
cooperate or to produce documents or other material. Viacom will give you
written notice prior to terminating your employment pursuant to (iii), (iv), (v)
or (vi) of this paragraph 8(a), setting forth the nature of any alleged failure,
breach or refusal in
Michael J. Dolan
May 2, 2005
Page 10
reasonable detail and the conduct required to cure. Except for a failure, breach
or refusal which, by its nature, cannot reasonably be expected to be cured, you
shall have ten (10) business days from the giving of such notice within which to
cure any failure, breach or refusal under (iii), (iv), (v) or (vi) of this
paragraph 8(a); provided, however, that, if Viacom reasonably expects
irreparable injury from a delay of ten (10) business days, Viacom may give you
notice of such shorter period within which to cure as is reasonable under the
circumstances. In the event that your employment is terminated by Viacom for
Cause pursuant to paragraph 8(a) or you resign without Good Reason, you shall be
entitled to receive (i) any unpaid Salary through your termination or
resignation date, and (ii) prorated Deferred Compensation for the calendar year
in which the termination or resignation occurs, and Deferred Compensation
attributable to prior periods payable, together with the return thereon as
provided in paragraph 3(b), on the later of (x) January 31st of the following
calendar year, or (y) six (6) months after your termination or resignation date.
(b) Good Reason Termination. You may terminate your employment under this
Agreement for Good Reason at any time during the Term by written notice to
Viacom no more than thirty (30) days after the occurrence of the event
constituting Good Reason. Such notice shall state an effective date no earlier
than thirty (30) business days after the date it is given. Viacom shall have ten
(10) business days from the giving of such notice within which to cure and, in
the event of such cure, your notice shall be of no further force or effect. Good
Reason shall mean without your consent (other than in connection with the
termination or suspension of your employment or duties for Cause or in
connection with your Disability): (i) the assignment to you of duties or
responsibilities substantially inconsistent with your position(s) or duties;
(ii) the withdrawal of material portions of your duties described in paragraph 2
or a change in your reporting relationships such that you do not report directly
and solely to the Chairman or, if the Chairman ceases to serve as the Chief
Executive Officer of Viacom, to the Chief Executive Officer of Viacom (or, if
there are Co-Chief Executive Officers, one or both of the Co-Chief Executive
Officers), or in the event that Viacom separates into two businesses, to the
NEWCO Chairman or, if the NEWCO Chairman ceases to serve as the Chief Executive
Officer of NEWCO, to the Chief Executive Officer of NEWCO or, if Tom Freston
serves as the Chief Operating Officer of NEWCO, to the Chief Operating Officer
of NEWCO; (iii) the material breach by Viacom of its material obligations under
this Agreement; or (iv) the relocation of your position outside the New York
City metropolitan area.
(c) Termination Without Cause. Viacom may terminate your employment under
this Agreement without Cause at any time during the Term by written notice to
you.
(d) Termination Payments/Benefits. In the event that your employment
terminates under paragraph 8(b) or (c), you shall thereafter receive, less
applicable withholding taxes:
(i) your Salary, as in effect on the date on which your employment
terminates, until the end of the Term, paid in accordance with
Viacom's then effective payroll practices;
Michael J. Dolan
May 2, 2005
Page 11
(ii) Deferred Compensation for the Term as set forth in paragraph
3(b); Deferred Compensation attributable to the calendar year in
which the termination occurs and to prior calendar years shall be
payable, together with the return thereon as provided in
paragraph 3(b), on the later of (x) January 31st of the calendar
year following such termination, or (y) six (6) months after the
date of such termination; and Deferred Compensation attributable
to subsequent calendar years shall be payable, together with the
return thereon as provided in paragraph 3(b), prior to January
31st, of each such following year;
(iii) your car allowance until the end of the Term, paid in accordance
with Viacom's then effective payroll practices;
(iv) bonus compensation for the calendar year in which such
termination occurs and for each subsequent calendar year or
portion thereof during the Term, in an amount equal to your
Target Bonus, pro-rated for any partial calendar year and payable
by February 28th of the following year;
(v) medical and dental insurance coverage provided under COBRA at no
cost to you (except as hereafter described) pursuant to Viacom's
then-current benefit plans until the end of the Term or, if
earlier, the date on which you become eligible for medical and
dental coverage from a third party; provided, that, during the
period that Viacom provides you with this coverage, an
amount equal to the applicable COBRA premiums (or such other
amounts as may be required by law) will be included in your
income for tax purposes to the extent required by law and Viacom
may withhold taxes from your compensation for this purpose; and
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;
(vi) life insurance coverage in the amount of Five Million Dollars
($5,000,000) until the end of the Term (the amount of such
coverage will be reduced by the amount of life insurance coverage
furnished to you at no cost by a third party employer); and
(vii) the following with respect to any stock options granted to you
under the LTMIP:
(x) all LTMIP stock options that have not vested and become
exercisable on the date of such termination but that would have
vested on or before the end of the Term shall vest on the date of
termination; such LTMIP stock options shall remain exercisable
for one (1) year after such date or, if earlier, until their
expiration date; and
Michael J. Dolan
May 2, 2005
Page 12
(y) all outstanding LTMIP stock options that have previously vested
and become exercisable by the date of such termination shall
remain exercisable for one (1) year after such date or, if
earlier, until their expiration date.
There will not be any acceleration of the vesting of any restricted share units
that you may be granted as part of your annual long-term compensation grants.
You shall be required to mitigate the amount of any payment provided for in (i),
(ii), (iii) and (iv) of this paragraph 8(d) by seeking other employment, and the
amount of such payments shall be reduced by any compensation earned by you from
any source, including, without limitation, salary, sign-on or annual bonus
compensation, consulting fees, commission payments, car allowance and, in the
event you receive long-term compensation with a present value, as reasonably
determined by Viacom, greater than you would likely have received from Viacom
during a comparable period (based on historical grants of long-term compensation
during your service with Viacom and Viacom's practices with respect to your
position, and prorating the value of such long-term compensation over the term
of service required to vest therein), in each case as reasonably determined by
Viacom, the amount of such excess; provided, that mitigation shall not be
required, and no reduction for other compensation shall be made, for twelve (12)
months after the termination of your employment or, if less, the balance of the
Term. The payments provided in (i), (ii), (iii) and (iv) above are in lieu of
any severance or income continuation or protection under any Viacom plan that
may now or hereafter exist. The payments and benefits to be provided pursuant to
this paragraph 8(d) shall constitute liquidated damages, and shall be deemed to
satisfy and be in full and final settlement of all obligations of Viacom to you
under this Agreement.
(e) Non-Renewal Notice/Payments. If Viacom elects not to extend or renew
this Agreement at the end of the Term, you shall receive the following:
(i) If (x) Viacom notifies you less than twelve (12) months before
the end of the Term that it has elected not to extend or renew
this Agreement (such notice is referred to as a "Non-Renewal
Notice"), or (y) your employment terminates under paragraph 8(b)
or (c) during the final twelve (12) months of the Term, you shall
continue to receive, after your employment terminates, your
Salary and Deferred Compensation for the balance of the twelve
(12) months from the date on which the Non-Renewal Notice is given
or your employment terminates, whichever is earlier.
(ii) If Viacom does not give you a Non-Renewal Notice by the end of
the Term and you remain employed through that date but have not
entered into a new contractual relationship with Viacom or any of
its affiliated companies, and Viacom thereafter terminates your
employment without Cause, you shall continue to receive your
Salary and Deferred Compensation for the balance, if any, of the
twelve (12) months after the expiration of the Term.
Michael J. Dolan
May 2, 2005
Page 13
Notwithstanding the foregoing, you shall not receive compensation under this
paragraph 8(e) with respect to any period for which you receive Salary and
Deferred Compensation under paragraphs 8(d)(i) and (ii). Payments under this
paragraph 8(e) shall be made, less applicable withholding taxes, in accordance
with Viacom's then effective payroll practices. You shall be required to
mitigate the amount of any payment under this paragraph 8(e) by seeking other
employment, and the amount of any such payment shall be reduced by any
compensation earned by you from any source, including, without limitation,
salary, sign-on or annual bonus compensation, consulting fees, commission
payments, car allowance and, in the event you receive long-term compensation
with a present value, as reasonably determined by Viacom, greater than you would
likely have received from Viacom during a comparable period (based on historical
grants of long-term compensation during your service with Viacom and Viacom's
practices with respect to your position, and prorating the value of such
long-term compensation over the term of service required to vest therein), in
each case as reasonably determined by Viacom, the amount of such excess. The
payments provided in this paragraph 8(e) are in lieu of any severance or income
continuation or protection under any Viacom plan that may now or hereafter
exist.
(f) Termination of Benefits. Notwithstanding anything in this Agreement to
the contrary (except as otherwise provided in paragraph 8(d) with respect to
medical, dental and life insurance), participation in all Viacom benefit plans
and programs (including, without limitation, vacation accrual, all retirement
and the related excess plans, car insurance, LTD and accidental death and
dismemberment and business travel and accident insurance) will terminate upon
the termination of your employment except to the extent otherwise expressly
provided in such plans or programs and subject to any vested rights you may have
under the terms of such plans or programs. The foregoing shall not apply to the
LTMIP and, after the termination of your employment, your rights under the LTMIP
shall be governed by the terms of the LTMIP option agreements and the applicable
LTMIP plans together with paragraph 8(d)(vii).
(g) Resignation from Official Positions. If your employment with Viacom
terminates for any reason, you shall be deemed to have resigned at that time
from any and all officer or director positions that you may have held with
Viacom or any of its affiliated companies and all board seats or other positions
in other entities you held on behalf of Viacom. If, for any reason, this
paragraph 8(g) is deemed insufficient to effectuate such resignation, you agree
to execute, upon the request of Viacom, any documents or instruments which
Viacom may deem necessary or desirable to effectuate such resignation or
resignations, and you hereby authorize the Secretary and any Assistant Secretary
of Viacom to execute any such documents or instruments as your attorney-in-fact.
9. Death. In the event of your death prior to the end of the Term while
actively employed, your beneficiary or estate shall receive (i) your Salary up
to the date on which the death occurs; (ii) any Bonus earned in the prior year
but not yet paid; and (iii) bonus compensation for the calendar year in which
the death occurs, in an amount equal to your Target Bonus and pro-rated for the
portion of the year through the date of death, payable, less applicable
deductions and withholding taxes, by February 28th of the following year. In the
event of your
Michael J. Dolan
May 2, 2005
Page 14
death after the termination of your employment while you are entitled to receive
compensation under paragraph 8(d) or (e), your beneficiary or estate shall
receive (x) any Salary payable under paragraph 8(d)(i) or 8(e) up to the date on
which the death occurs; (y) any bonus compensation earned but not yet paid under
paragraph 8(d)(iv) with respect to the prior year; and (z) any bonus
compensation for the calendar year in which the death occurs, determined in
accordance with paragraph 8(d)(iv) and pro-rated for the portion of the year
through the date of death, payable, less applicable deductions and withholding
taxes, by February 28th of the following year. In addition, your beneficiary or
estate shall receive prorated Deferred Compensation for the calendar year in
which the death occurs and Deferred Compensation attributable to prior calendar
years payable, together with the return thereon as provided in paragraph 3(b)
prior to January 31st of the following calendar year. Your beneficiary or estate
or permitted transferee shall also be entitled to exercise LTMIP stock options
which are exercisable on or prior to your death, together with all LTMIP stock
options that would have vested and become exercisable on or prior to the last
day of the Term but for your death (which options shall immediately become
vested and exercisable), until the second anniversary of the date of death or,
if earlier, the expiration date of the stock options.
10. 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 Viacom for the
inclusion of any matter as part of any film, television program or other
production produced, distributed and/or developed by Viacom and/or any of its
affiliated companies.
11. Equal Opportunity Employer; Viacom Business Conduct Statement. You
recognize that Viacom is an equal opportunity employer. You agree that you will
comply with Viacom policies regarding employment practices and with applicable
federal, state and local laws prohibiting discrimination on the basis of race,
color, sex, religion, national origin, citizenship, age, marital status, sexual
orientation, disability or veteran status. In addition, you agree that you will
comply with the Viacom Business Conduct Statement.
12. Indemnification. Viacom hereby agrees that it shall indemnify and hold
you harmless to the maximum extent permitted by law to the extent that you are
or are threatened to be made a party to a threatened or pending action, suit or
proceeding by reason of the fact that you are or were an officer, employee or
agent of Viacom, or that you are or were serving at the request of Viacom as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding. Neither the
determination of Viacom, its Board of Directors, independent legal counsel or
stockholders that you are not entitled to indemnification or the failure of any
or all of them to make any determination regarding such entitlement shall create
any presumption or inference that you have not met the applicable standard of
conduct. If you have any knowledge of any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, as to
which you may request indemnity under this provision (a "Proceeding"), you will
give Viacom prompt written notice thereof, provided that
Michael J. Dolan
May 2, 2005
Page 15
the failure to give such notice shall not affect your right to indemnification.
Viacom shall be entitled to assume the defense of any Proceeding and you will
use reasonable efforts to cooperate with such defense. To the extent that you in
good faith determine that there is an actual or potential conflict of interest
between Viacom and you in connection with the defense of a Proceeding, you shall
so notify Viacom and shall be entitled to separate representation by counsel
selected by you (provided that Viacom may reasonably object to the selection of
counsel within five (5) business days after notification thereof) which counsel
shall cooperate, and coordinate the defense, with Viacom's counsel and minimize
the expense of such separate representation to the extent consistent with your
separate defense. Viacom shall not be liable for any settlement of any
Proceeding effected without its prior written consent. You shall be entitled to
advancement of expenses incurred by you in defending any Proceeding upon receipt
of an undertaking by you or on your behalf to repay such amount if it shall
ultimately be determined that you are not entitled to be indemnified by Viacom.
Viacom's and your obligations under this paragraph 12 shall remain in full force
and effect notwithstanding the termination of your employment under this
Agreement for any reason or the expiration of the Term.
13. Notices. All notices under this Agreement must be given in writing, by
personal delivery or by 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 Viacom, to the attention of the General Counsel of Viacom.
Any notice given by mail shall be deemed to have been given three days following
such mailing. Copies of all notices to you shall be given to Shack Siegel Katz &
Flaherty, P.C., 530 Fifth Avenue, New York, New York 10036, Attention: Ronald S.
Katz, Esq.
14. Assignment. This is an Agreement for the performance of personal
services by you and may not be assigned by you or Viacom except that Viacom may
assign this Agreement to any affiliated company of or any successor in interest
to Viacom.
15. NEW YORK LAW, ETC. YOU ACKNOWLEDGE THAT THIS AGREEMENT HAS BEEN
EXECUTED, IN WHOLE OR IN PART, IN NEW YORK, AND 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 VIACOM EMPLOYMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
ENTERED INTO AND PERFORMED ENTIRELY THEREIN. ANY ACTION TO ENFORCE THIS
AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN THE
CITY OF NEW YORK, BOROUGH OF MANHATTAN.
Michael J. Dolan
May 2, 2005
Page 16
16. No Implied Contract. Nothing contained in this Agreement shall be
construed to impose any obligation on Viacom or you to renew this Agreement or
any portion thereof. The parties intend to be bound only upon execution of a
written agreement and no negotiation, exchange of draft or partial performance
shall be deemed to imply an agreement. Neither the continuation of employment
nor any other conduct shall be deemed to imply a continuing agreement upon the
expiration of the Term.
17. Entire Understanding. This Agreement contains the entire understanding
of the parties hereto relating to the subject matter contained in this
Agreement, and can be changed only by a writing signed by both parties.
18. 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.
19. Supersedes Prior Agreements. With respect to the period covered by the
Term, this Agreement supersedes and cancels all prior agreements relating to
your employment by Viacom or any of its affiliated companies.
20. Deductions and Withholdings, Payment of Deferred Compensation. All
amounts payable under this Agreement shall be paid less deductions and income
and payroll tax withholdings as may be required under applicable law and any
property (including shares of Viacom Class B Common Stock), benefits and
perquisites provided to you under this Agreement shall be taxable to you as may
be required under applicable law. Notwithstanding any other provisions of this
Agreement to the contrary, no payment for any restricted share units or
distribution of any other deferred compensation shall be made sooner than the
earliest date permitted under the provisions of the Internal Revenue Code or the
rules or regulations promulgated thereunder, as in effect on the date of such
payment, in order for such payment to be taxable at the time of the distribution
thereof without imposition of penalty taxes under the American Jobs Creation Act
of 2004.
Michael J. Dolan
May 2, 2005
Page 17
21. Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. The execution and delivery
of this instrument by facsimile of the signature of the party or an officer of a
party shall constitute due execution and delivery by that party and shall bind
that party to the terms and conditions contained herein.
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 Viacom; after this Agreement has been executed by Viacom
and a fully-executed copy returned to you, it shall constitute a binding
agreement between us.
Very truly yours,
VIACOM INC.
By: /s/ William A. Roskin
---------------------------------------------
Name: William A. Roskin
Title: Executive Vice President,
Human Resources and Administration
ACCEPTED AND AGREED:
/s/ Michael J. Dolan
- ----------------------------
Michael J. Dolan
Dated: April 27, 2005