EXHIBIT 10.2
Viacom Inc.
Executive Severance Plan
for
Senior Vice Presidents
(Effective September 6, 1999)
Section 1. Establishment and Purpose. The Viacom Inc. Executive
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Severance Plan for Senior Vice Presidents (the "Plan") is hereby established
effective as of the date it is approved by the Board of Directors (the "Board")
of Viacom Inc. (the "Company"). The purpose of the Plan is to provide severance
benefits to Participants (as defined below) whose employment terminates under
certain circumstances. Capitalized terms that are not otherwise defined herein
shall have the meanings assigned to such terms in Section 12.
This document shall serve as both the formal plan document and as the
Summary Plan Description for the Plan. Appendix A sets forth certain general
information about the Plan.
Section 2. Eligibility. The Senior Vice Presidents employed by the
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Company on a U.S. payroll and listed on Schedule I shall participate in the Plan
(collectively, the "Participants"). For purposes of the Plan, the Controller and
the Deputy General Counsel shall be treated as Senior Vice Presidents.
Section 3. Term. The Plan shall be effective as of September 6, 1999
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(the "Effective Date") and shall continue in effect for a period of one year
following the Effective Time (the "Term"), as defined in the Agreement and Plan
of Merger between Viacom Inc. and CBS Corporation, dated as of September 6, 1999
(the "Merger Agreement"); provided, however, that in the event that (i) the
transactions contemplated by the Merger Agreement are not consummated, or (ii)
the Merger Agreement is terminated or abandoned, each occurring within two years
of the Effective Date, the Plan shall be void and of no further force and
effect.
Section 4. Payments. In the event of the Involuntary Termination of a
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Participant during the Term, the Company shall pay the Participant, in one lump
sum cash payment within 5 business days following such Involuntary Termination
an amount equal to the sum of the following: (i) any compensation earned but
unpaid through the Date of Termination (i.e., base salary, automobile allowance,
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accrued but unpaid vacation pay); (ii) bonus compensation pro-rated for the
period from January 1st through the Date of Termination (at no less than the
target bonus level); (iii) an amount equal to the sum of the base salary and
target bonus compensation (pro-rated for partial years) the Participant would
earn if he remained employed for three years after the Date of Termination; and
(iv) an amount equal to the automobile allowance the Participant would earn if
he remained employed for three years after the Date of Termination, (with no
duplication in (iii) and (iv) of the amounts payable pursuant to (i) and (ii)).
The amounts described in (ii) and (iii) are herein referred to as the "Severance
Payment". The amount described in (iv) is herein referred to as the "Automobile
Allowance Payment".
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If the Participant has a Prior Agreement and such Prior Agreement is
in effect on the Date of Termination, base salary shall be determined in
accordance with the Prior Agreement, together with increases in base salary
determined as follows:
(i) If the Prior Agreement specifies the rate of increases in
base salary, increases shall be payable (a) for the period covered by the
Prior Agreement, as specified in the Prior Agreement, and (b) for any
period after the expiration of the Prior Agreement, at the rate on such
expiration date, together with increases in base salary, as of each
anniversary of the Participant's last regular base salary increase, at the
same annualized percentage rate of increase as the Participant's last
regular base salary increase specified in the Prior Agreement, if any,
excluding any prior increase to the extent related to a promotion or other
change in responsibilities.
(ii) If the Prior Agreement does not specify the rate of
increases in base salary, increases shall be payable, as of each
anniversary of the Participant's last regular salary increase, at the same
annualized percentage rate of increase (but not in excess of 8%) as the
Participant's last regular base salary increase before the Effective Date,
excluding any prior increase to the extent related to a promotion or other
change in responsibilities (such rate of increase is herein referred to as
the "Annualized Rate of Increase").
If the Participant had a Prior Agreement and such Prior Agreement has
expired on or prior to the Date of Termination, base salary shall be payable at
the level in effect on the Date of Termination or, if higher, on the Effective
Date, together with increases in base salary determined as follows:
(x) If the Prior Agreement specified the rate of increases in
base salary, increases shall be payable, as of each anniversary of the
Participant's last regular salary increase, at the same annualized
percentage rate of increase as the Participant's last regular base salary
increase specified in the Prior Agreement, excluding any prior increase to
the extent related to a promotion or other change in responsibilities.
(y) If the Prior Agreement did not specify the rate of
increases in base salary, increases shall be payable, as of each
anniversary of the Participant's last regular salary increase, at the
Annualized Rate of Increase but not in excess of 8%.
If the Participant does not have a Prior Agreement, base salary shall
be payable at the level in effect on the Date of Termination or, if higher, on
the Effective Date, together with increases, as of each anniversary of the
Participant's last regular salary increase, at the Annualized Rate of Increase
but not in excess of 8%.
Bonus compensation shall be determined in accordance with the target
bonus percentage specified in the Participant's Prior Agreement (or, if the
Participant does not have a Prior Agreement, with the Participant's target bonus
percentage on the Date of Termination or, if higher, on the Effective Date) and
shall increase in conformity with increases in base salary.
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The right of a Participant to receive a Severance Payment and an
Automobile Allowance Payment shall be conditioned upon the Participant's
execution of a release in favor of the Company (in substantially the form
attached hereto as Appendix B) and shall be repaid immediately by the
Participant if such release is revoked within the revocation period provided
therein, if any. The Severance Payment and the Automobile Allowance Payment
shall be in lieu of any other severance payments to which the Participant is
entitled under any individual employment agreement, including the Prior
Agreement, or other severance plan or arrangement sponsored by the Company and
its subsidiaries.
Section 5. Benefits and Perquisites. In the event of an Involuntary
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Termination of the Participant during the Term, he shall be entitled to the
following additional benefits and perquisites:
(a) For a three year period beginning on the Date of Termination (or,
with respect to each plan, until the Participant secures full-time employment
which provides him with comparable coverage), each Participant (i) shall
continue to participate in the Company's medical, dental and life insurance
plans, and, to the extent that any of these continued benefits may not be
provided pursuant to any such plan, such benefits shall be provided pursuant to
an existing supplementary arrangement or a supplementary arrangement established
for purposes of this Plan, and (ii) shall either be provided with car insurance
or reimbursed for his car insurance. At the end of the period during which
medical and dental benefits are provided pursuant to this Section 5(a), a
Participant shall be eligible for the continuation of medical and dental
benefits under COBRA.
(b) On the Date of Termination, each Participant shall be credited
with three years' age and service for all purposes under the Company Investment
Plan, the Company Excess Investment Plan, the Company Pension Plan, the Company
Excess Pension Plan and any and all other retirement plans of the Company, in
accordance with the terms of such plans, and, to the extent that any of the
additional benefits that would result from such additional credited service may
not be provided pursuant to any such plan, such benefits shall be provided
pursuant to an existing supplementary arrangement or a supplementary arrangement
established for purposes of this Plan. In addition, for purposes of the
foregoing, each Participant shall be deemed to have had increases in base salary
and bonus compensation determined in accordance with Section 4 for purposes of
the "final average pay" definition used in any of the foregoing plans.
(c) On the Date of Termination, each Participant shall be credited
with three years' age and service under the Company's retiree welfare benefit
plans. Any increases in the annual amount credited to the retiree medical
accounts of active employees of the Company during the three year period
following the Date of Termination shall apply to the Participants.
(d) For a period of one year following the Date of Termination, (or,
if earlier, until the Participant secures full-time employment), the Company
shall provide each Participant with an office, comparable in both quality and
size to the office the Participant had prior to the Date of Termination, at a
location of the Participant's choosing in midtown Manhattan or
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elsewhere, subject to the Company's approval, which approval shall not
unreasonably be withheld. The Company shall bear the cost of relocating the
Participant's office effects to the new office and provide furniture and
equipment comparable to that in his present office. During the period in which
the Company is providing the Participant with an office, the Company also shall
provide the Participant with a secretary, who may be his current secretary or
another secretary of his choosing.
(e) The Company may, in its discretion, provide outplacement benefits
to Participants.
Section 6. Treatment of Outstanding Equity-Based Compensation. All
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equity-based compensation awards granted to a Participant prior to the Effective
Date in the form of stock options or otherwise under any equity-based
compensation plan of the Company, including, without limitation, the Company's
Long-Term Management Incentive Plans, (together with the individual grant
documents, the "Equity Plans"), to the extent not yet vested, shall vest on the
Date of Termination and each stock option shall continue to be exercisable in
accordance with its terms for a period of three years following the Date of
Termination, or through the original expiration date of the equity-based
compensation award, if earlier.
Section 7. Excise Taxes. Notwithstanding anything herein to the
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contrary, if it is determined by the Company, or by the Internal Revenue Service
(the "IRS") pursuant to an IRS audit of the Participant's federal income tax
return(s) (a "Participant Audit"), that any payment or benefit provided to a
Participant would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any interest or penalties with
respect to such excise tax (such excise tax, together with any interest or
penalties thereon, is herein referred to as the "Excise Tax"), then the Company
shall pay (either directly to the IRS as tax withholdings or to the Participant
as a reimbursement of any amount of taxes, interest and penalties paid by the
Participant to the IRS) both the Excise Tax and an additional cash payment (a
"Gross-Up Payment") in an amount that will place the Participant in the same
after-tax economic position that the Participant would have enjoyed if the
payment or benefit had not been subject to the Excise Tax. The amount of the
Gross-Up Payment shall be calculated by the Company's regular independent
auditors based on the amount of the Excise Tax paid by the Company as determined
by the Company or the IRS. If the amount of the Excise Tax determined by the IRS
is greater than an amount previously determined by the Company, the Company's
auditors shall recalculate the amount of the Gross-Up Payment.
The Participant shall promptly notify the Company of any IRS assertion
during a Participant Audit that an Excise Tax is due with respect to any payment
or benefit, but such Participant shall be under no obligation to defend against
such claim by the IRS unless the Company requests, in writing, that the
Participant undertake the defense of such IRS claim on behalf of the Company and
at the Company's sole expense. In such event, the Company may elect to control
the conduct to a final determination through counsel of it own choosing and at
its sole expense, of any audit, administrative or judicial proceeding involving
an asserted liability relating to the Excise Tax, and the Participant shall not
settle, compromise or concede such asserted Excise Tax and shall cooperate with
the Company in each phase of any contest.
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Section 8. Date and Notice of Termination. Any termination of a
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Participant's employment by the Company or by a Participant during the Term
shall be communicated by a notice of termination to the other party (the "Notice
of Termination"). The Notice of Termination shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for the termination of
the Participant's employment with the Company. The date of a Participant's
termination of employment (the "Date of Termination") shall be determined as
follows: (i) if the Participant's employment is terminated by the Company other
than for Cause, or if the basis for a Participant's Involuntary Termination is
his resignation for Good Reason, the Date of Termination shall be the date
specified in the Notice of Termination, which shall be no earlier than 10 days
after the date such notice is received by the Company or the Participant, unless
waived by the Company or the Participant, as the case may be; and (ii) if the
Participant's employment is terminated by the Company for Cause, the date
specified in the Notice of Termination.
Section 9. No Mitigation or Offset. Except as specifically provided
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herein, no Participant shall be required to mitigate the amount of any payment
provided for in the Plan by seeking other employment or otherwise, nor shall the
amount of any payment provided for herein be reduced by any compensation earned
by a Participant as the result of employment by another employer.
Section 10. Successors; Binding Agreement; Other Covenants.
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(a) Assumption by Successor. The Company will require any successor
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(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and to agree to perform its obligations under the Plan in the same manner
and to the same extent that the Company would be required to perform such
obligations if no such succession had taken place; provided, however, that no
such assumption shall relieve the Company of its obligations hereunder. As used
herein, the "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and agrees to
perform its obligations by operation of law or otherwise.
(b) Enforceability; Beneficiaries. The Plan shall be binding upon and
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inure to the benefit of each Participant (and each Participant's personal
representatives and heirs) and the Company and any organization which succeeds
to substantially all of the business or assets of the Company, whether by means
of merger, consolidation, acquisition of all or substantially all of the assets
of the Company or otherwise, including, without limitation, by operation of law.
The Plan shall inure to the benefit of and be enforceable by a Participant's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If a Participant should die while any
amount would still be payable to (or any equity-based compensation award could
still be exercised by) such Participant hereunder if such Participant had
continued to live, all such amounts (and equity-based compensation), unless
otherwise provided herein, shall be paid to (and such awards may be exercised
by) such Participant's
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devisee, legatee or other designee or, if there is no such designee, to such
Participant's estate, in accordance with the terms of the Plan.
(c) Treatment of Restrictive Covenants in Prior Agreement. Upon an
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Involuntary Termination of a Participant hereunder, the Company shall waive the
non-competition covenant contained in the Prior Agreement. Notwithstanding the
foregoing, Participants shall remain bound by the non-solicitation, non-
disparagement, confidentiality, cooperation with litigation, and other
restrictive covenants set forth in the Prior Agreement.
Section 11. Confidentiality. Each Participant acknowledges that during
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the course of his employment with the Company, he may have acquired confidential
information and trade secrets concerning the operations, future plans and
methods of doing business of the Company and its subsidiaries ("Proprietary
Information") and, in consideration of the payments to be made and the benefits
to be provided hereunder, agrees to keep all Proprietary Information
confidential (except for such information which is or becomes publicly available
other than as a result of a breach of this provision) without limitation in
time.
Section 12. Definitions. For purposes of the Plan, the following
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capitalized terms have the meanings set forth below:
"Cause" means embezzlement, fraud or other criminal conduct relating
to the Company or its businesses; conviction of a felony; willful unauthorized
disclosure of Proprietary Information; failure, neglect of or refusal by a
Participant to substantially perform duties reasonably assigned to the
Participant by the Participant's superior and consistent with the Participant's
position, including, without limitation, the duty to facilitate the transactions
contemplated by the Merger Agreement; or willful and material failure to abide
by the Company's Employee Statement of Business Conduct which failure has a
detrimental effect on the Company or its businesses.
"Date of Termination" has the meaning assigned thereto in Section 8.
"Effective Date" has the meaning assigned thereto in Section 3.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Good Reason" means, the occurrence of any of the following, without
the Participant's prior written consent, if the occurrence of such event is
related in any way to the transactions contemplated by the Merger Agreement,
other than in connection with the termination of the Participant's employment
for Cause:
(i) the assignment to a Participant by the Company of duties
substantially inconsistent with his positions, duties, responsibilities,
titles or offices in effect immediately prior to the Effective Date or the
withdrawal of a material part of the
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Participant's responsibilities or a change in his reporting relationship or
titles, in each case as in effect immediately prior to the Effective Date;
(ii) a reduction in his salary, bonus or other compensation as
in effect at any time following the Effective Date or as provided in the
Prior Agreement;
(iii) failure of the Company to offer to extend or renew a Prior
Agreement on terms that are at least as favorable to the Participant as
those set forth in the Prior Agreement, and for a term from the date of
such extension or renewal that is at least as long as the term of the Prior
Agreement, which offer to extend or renew must occur not later than 30 days
before the end of the Term;
(iv) the Company's requiring the Participant to be based
anywhere other than the New York City metropolitan area, or if the
Participant's principal place of employment is outside of the New York City
metropolitan area (such as Washington, D.C. or greater London, U.K.), then
the Participant's principal place of business, except for required travel
on the Company's business to any extent substantially consistent with
business travel obligations of other senior executives of the Company; and
(v) a material breach by the Company of its material
obligations under the Prior Agreement.
The Participant may terminate his employment for "Good Reason" at any time
during the Term by written notice to the Company not more than 60 days after the
Participant receives written notice (or other formal notification) of an event
set forth in (i) through (v). Prior to the Effective Time (as defined in the
Merger Agreement), the events set forth in (i) through (v) shall constitute the
basis for the Participant's resignation for Good Reason only if the occurrence
of such event is related in any way to the transactions contemplated by the
Merger Agreement. On and after the Effective Time, the occurrence of an event
set forth in (i) through (v) shall be deemed related to the transactions
contemplated by the Merger Agreement unless otherwise shown by clear and
convincing evidence to the contrary.
"Involuntary Termination" means, with respect to any Participant (i) a
Participant's termination of employment by the Company during the Term, other
than for Cause, or (ii) a Participant's resignation of employment with the
Company during the Term for Good Reason.
"Notice of Termination" has the meaning assigned thereto in Section 8.
"Prior Agreement" means the Participant's employment agreement with
the Company or its affiliates in effect on the Date of Termination or, if the
Participant's employment agreement has expired on the Date of Termination, the
Participant's employment agreement, if any, that was most recently in effect.
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Section 13. Notice. For the purpose of the Plan, notices and all other
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communications provided for in the Plan shall be in writing and shall be deemed
to have been duly given, in the case of the Company, when delivered or sent to
Viacom Inc., 1515 Broadway, New York, New York 10036, Attn: Senior Vice
President, Human Resources and Administration, or, in the case of a Participant,
when delivered to the Participant or sent to the Participant at the address of
the Participant in the records of the Company, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
Section 14. Administration.
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(a) Plan Year. The initial Plan Year shall be the period beginning on
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the Effective Date and ending on December 31, 1999. Each subsequent Plan Year
shall be the period beginning on January 1 and ending on the earlier of December
31 or the second anniversary of the Effective Time.
(b) Named Fiduciary. The "named fiduciary" of the Plan for purposes of
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ERISA is the Company. The Company shall have the authority to appoint and remove
other fiduciaries, and to exercise general supervisory authority over them.
(c) Plan Administrator. The Company's Human Resources Administrator
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shall be the Plan Administrator. The Plan Administrator shall manage the
operation and administration of the Plan and shall have responsibility for
filing, distributing or otherwise publishing such returns, reports and notices
as are required by ERISA. The Plan Administrator may delegate responsibilities
for the operation and administration of the Plan to one or more officers or
employees of the Company.
(d) Authority of the Plan Administrator. Except for any determinations
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or interpretations relating to "Cause", "Good Reason" and "Involuntary
Termination", the Plan Administrator shall have full and complete authority to
construe and interpret the provisions of the Plan, to determine an individual's
entitlement to benefits under the Plan, to investigate and make factual
determinations necessary or advisable to administer or implement the Plan, and
to adopt such rules and procedures as the Plan Administrator shall deem
necessary or advisable for the administration or implementation of the Plan.
Subject to the exclusions set forth above and Sections 14(b) and 15, all
determinations under the Plan by the Plan Administrator shall be final and
binding on all interested persons.
(e) Unfunded Plan. The Plan shall be unfunded. Benefits payable under
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the Plan shall be paid from the general assets of the Company. The Company shall
have no obligation to establish any fund or to set aside any assets to provide
benefits under the Plan.
Section 15. Claims Procedure.
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(a) Initial Claim. A claim must be promptly filed in writing by a
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Participant or his authorized representative (hereinafter called the "claimant")
with the Plan Administrator.
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If a claim is denied in whole or in part, the Plan Administrator shall send a
written notice of the denial to the claimant within 30 days of receipt of the
claim, unless special circumstances require an extension of time for processing.
Such extension shall not exceed an additional thirty days, and notice thereof
must be given within the first 30-day period. The notice of denial shall
indicate the reasons for the denial, including reference to the provisions of
the Plan on which the denial is based, shall describe any additional information
or material needed and the reasons why such additional information or material
is necessary, and shall explain the claim review procedure.
(b) Appeal. A claimant whose claim pursuant to Section 15(a) above is
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denied in whole or in part (or whose initial claim is not ruled upon within the
foregoing limitations of time) may file, in writing and within thirty days of
the receipt of the notice of denial, with the Board, a request for review of the
initial decision. The claimant may review pertinent documents and may submit in
writing additional comments or material. A review decision shall be made by the
Board within thirty days of receipt of a timely request for review unless there
are special circumstances which require an extension of time for processing. If
an extension is required, notice thereof shall be given within the first 30-day
period and the review decision shall be made within 45 days after receipt of the
request for review. The review decision shall be in writing and shall include
specific references to the provisions of the Plan on which the decision is
based. The decision of the Board on such claims shall be final, binding and
conclusive on all interested persons.
Section 16. Miscellaneous.
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(a) No Right of Employment. Nothing in the Plan shall be construed as
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giving any Participant any right to be retained in the employ of the Company or
shall affect the terms and conditions of any Participant's employment with the
Company.
(b) ERISA. The Plan is intended to constitute an "employee welfare
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benefit plan" within the meaning of Section 3(1) of ERISA and shall be construed
accordingly. No person shall have any vested benefits under the Plan.
(c) Rules of Construction. As used herein, the masculine gender shall
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be deemed to include the feminine and the singular form shall be deemed to
encompass the plural, unless the context requires otherwise. Headings of
sections (other than the definitions) are included solely for convenience of
reference and shall not govern or control the meaning of the text of the Plan.
The invalidity or unenforceability of any provision of the Plan shall not affect
the validity or enforceability of any other provision of the Plan, which shall
remain in full force and effect.
(d) Tax Withholding. All amounts paid under the Plan shall be subject
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to all applicable federal, state and local wage withholding.
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(e) Amendment and Termination. The Board reserves the right to amend,
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modify or terminate the Plan, in whole or in part, at any time; provided,
however, that the Plan may not be amended, modified or terminated at any time in
any way, without the consent of the Participant, that would adversely affect the
rights of the Participants under the Plan.
(f) Governing Law. Except as preempted by federal law, the Plan shall
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be governed by the laws of New York, without giving effect to the conflicts of
laws provisions thereof.
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