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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(AMENDMENT NO. 20)
PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
SCHEDULE 13D
(AMENDMENT NO. 21)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PARAMOUNT COMMUNICATIONS INC.
(Name of Subject Company)
VIACOM INC.
NATIONAL AMUSEMENTS, INC.
SUMNER M. REDSTONE
BLOCKBUSTER ENTERTAINMENT CORPORATION
(Bidder)
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
699216 10 7
(CUSIP Number of Class of Securities)
PHILIPPE P. DAUMAN, ESQ.
VIACOM INC.
1515 BROADWAY
NEW YORK, NEW YORK 10036
TELEPHONE: (212) 258-6000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
COPIES TO:
STEPHEN R. VOLK, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TEL.: (212) 848-4000
ROGER S. AARON, ESQ.
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TEL.: (212) 735-3000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* $6,468,828,870 AMOUNT OF FILING FEE** $0
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* For purposes of calculating fee only. This amount assumes the purchase of
61,607,894 shares of Common Stock of Paramont Communications Inc. at $105
in cash per share.
** The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50 of
one percent of the value of the shares to be purchased.
X Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $1,808,667
Form or Registration No.: Schedule 14A
Filing Party: Viacom Inc.
Date Filed: September 29, 1993
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Page 1 of Pages
Exhibit Index on Page
This Amendment No. 20 to the Tender Offer Statement on
Schedule 14D-1 and Amendment No. 21 to Schedule 13D (the
"Statement") relates to the offer by Viacom Inc., a Delaware
corporation ("Purchaser"), to purchase shares of Common Stock,
par value $1.00 per share (the "Shares"), of Paramount
Communications Inc., a Delaware corporation (the "Company"), at a
price of $105 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in Purchaser's
Offer to Purchase dated October 25, 1993 (the "Offer to
Purchase"), a copy of which was attached as Exhibit (a)(1) to
Amendment No. 1, filed with the Securities and Exchange
Commission (the "Commission") on October 26, 1993, to the Tender
Offer Statement on Schedule 14D-1 filed with the Commission on
October 25, 1993 (the "Schedule 14D-1"), as supplemented by
the Supplement thereto dated November 8, 1993 (the "First
Supplement") and the Second Supplement thereto dated January 7,
1994 (the "Second Supplement") and in the related Letters of
Transmittal.
Capitalized terms used but not defined herein have the
meanings assigned to such terms in the Offer to Purchase, the
First Supplement, the Second Supplement and the Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
Item 1(b) is hereby amended and supplemented by
reference to the Introduction and Section 1 of the Second
Supplement, which Introduction and Section are incorporated
herein by reference.
Item 1(c) is hereby amended and supplemented by
reference to Section 2 of the Second Supplement, which
Section is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby amended and supplemented by reference
to Sections 9 and 10 and Schedule I of the Second Supplement,
which Sections and Schedule are incorporated herein by reference.
Item 2(e) and (f) are also amended as follows:
During the last five years, neither Blockbuster nor, to
the best of its knowledge, any of the persons listed in Schedule I
of the Second Supplement has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors)
or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding any such person was or is subject to a
judgment, decree or final order enjoining future violations of,
or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
WITH THE SUBJECT COMPANY.
Item 3(b) is hereby amended and supplemented by
reference to Section 4 of the Second Supplement, which Section
is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER
CONSIDERATION.
Item 4 is hereby amended and supplemented by reference to
Section 3 of the Second Supplement, which Section is incorporated
herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR
PROPOSALS OF THE BIDDER.
Item 5 is hereby amended and supplemented by reference
to the Introduction and Sections 4 and 7 of the Second Supplement,
which Introduction and Sections are incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Item 6 is hereby amended and supplemented by reference
to Section 10 of the Second Supplement, which Section is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO THE SUBJECT
COMPANY'S SECURITIES.
Item 7 is hereby amended and supplemented by reference
to the Introduction and Section 4 of the Second Supplement, which
Introduction and Section are incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Item 9 is hereby amended and supplemented by reference
to Sections 9 and 10 of the Second Supplement, which Sections are
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(a) is hereby amended and supplemented by reference
to Section 10 of the Second Supplement, which Section is incorporated
herein by reference.
Items 10(b) and (e) are hereby amended and supplemented
by reference to Sections 4 and 8 of the Second Supplement, which
Sections are incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended to add the following Exhibits:
99(a)(41) Form of Second Supplement to Offer to Purchase dated
January 7, 1994
99(a)(42) Form of Revised Letter of Transmittal
99(a)(43) Form of Revised Notice of Guaranteed Delivery
99(a)(44) Form of Revised Letter from Smith Barney
Shearson Inc. to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
99(a)(45) Form of Revised Letter from Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees to Clients
99(a)(46) Form of Revised Letter to Participants in the
Dividend Reinvestment Plan of the Company
99(a)(47) Press Release issued by Purchaser on January 7,
1994
99(b)(7) Amendment No. 1, dated January 4, 1994 to the
Credit Agreement, dated as of November 19, 1993,
among Purchaser, the banks listed on the signature
pages thereof, The Bank of New York, as a Managing
Agent, Citibank, N.A., as a Managing Agent and as the
Administrator, and Morgan Guaranty Trust Company
of New York, as a Managing Agent, the banks
identified as Agents on the signature pages
thereof, as Agents, and the banks identified as
Co-Agents on the signature pages thereof, as
Co-Agents.
99(c)(8) Subscription Agreement, dated as of January 7,
1994, between Blockbuster and Purchaser
99(c)(9) Agreement and Plan of Merger between Purchaser
and Blockbuster, dated as of January 7, 1994.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
January 7, 1994
VIACOM INC.
By /s/ PHILIPPE P. DAUMAN
...................................
Philippe P. Dauman
Senior Vice President, General
Counsel and Secretary
*
...................................
Sumner M. Redstone,
Individually
NATIONAL AMUSEMENTS, INC.
By *
...................................
Sumner M. Redstone
Chairman, Chief Executive
Officer and President
*By /s/ PHILIPPE P. DAUMAN
...................................
Philippe P. Dauman
Attorney-in-Fact under Powers
of Attorney filed as Exhibit (a)(36)
to the Schedule 14D-1
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
January 7, 1994
BLOCKBUSTER ENTERTAINMENT CORPORATION
By /s/ STEVEN R. BERRARD
...................................
Steven R. Berrard
President and
Chief Operating Officer
EXHIBIT INDEX
PAGE IN
SEQUENTIAL
EXHIBIT NUMBERING
NO. SYSTEM
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99(a)(41) Form of Second Supplement to Offer to Purchase dated
January 7, 1994
99(a)(42) Form of Revised Letter of Transmittal
99(a)(43) Form of Revised Notice of Guaranteed Delivery
99(a)(44) Form of Revised Letter from Smith Barney
Shearson Inc. to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
99(a)(45) Form of Revised Letter from Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees to Clients
99(a)(46) Form of Revised Letter to Participants in the
Dividend Reinvestment Plan of the Company
99(a)(47) Press Release issued by Purchaser on January
7, 1994
99(b)(7) Amendment No. 1, dated January 4, 1994 to the
Credit Agreement, dated as of November 19, 1993,
among Purchaser, the banks listed on the signature
pages thereof, The Bank of New York, as a Managing
Agent, Citibank, N.A., as a Managing Agent and as the
Administrator, and Morgan Guaranty Trust Company
of New York, as a Managing Agent, the banks
identified as Agents on the signature pages
thereof, as Agents, and the banks identified as
Co-Agents on the signature pages thereof, as
Co-Agents.
99(c)(8) Subscription Agreement, dated as of January 7,
1994, between Blockbuster and Purchaser
99(c)(9) Agreement and Plan of Merger between Purchaser
and Blockbuster, dated as of January 7, 1994.
SECOND SUPPLEMENT TO THE OFFER TO PURCHASE DATED OCTOBER 25, 1993
VIACOM INC.
HAS INCREASED THE PRICE OF ITS OFFER TO PURCHASE FOR CASH
61,607,894 SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
TO
$105 NET PER SHARE
THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 21,
1994, UNLESS THE OFFER IS FURTHER EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, 61,607,894 SHARES, OR SUCH
GREATER NUMBER OF SHARES AS EQUALS 50.1% OF THE SHARES OUTSTANDING PLUS THE
SHARES ISSUABLE UPON THE EXERCISE OF THE THEN EXERCISABLE STOCK OPTIONS, AS OF
THE EXPIRATION OF THE OFFER, BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO
THE EXPIRATION OF THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS. SEE SECTION 5 OF THIS SECOND SUPPLEMENT.
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IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S
SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE (THE "SHARES"), OF PARAMOUNT
COMMUNICATIONS INC. SHOULD EITHER (1) COMPLETE AND SIGN THE (YELLOW) LETTER OF
TRANSMITTAL WHICH ACCOMPANIED THE OFFER TO PURCHASE DATED OCTOBER 25, 1993 (THE
"OFFER TO PURCHASE"), THE (GREEN) LETTER OF TRANSMITTAL WHICH ACCOMPANIED THE
SUPPLEMENT TO THE OFFER TO PURCHASE DATED NOVEMBER 8, 1993 (THE "FIRST
SUPPLEMENT") OR THE REVISED (ORANGE) LETTER OF TRANSMITTAL WHICH ACCOMPANIES
THIS SUPPLEMENT (THE "SECOND SUPPLEMENT"; ALL SUCH LETTERS OF TRANSMITTAL
REFERRED TO COLLECTIVELY AS THE "LETTERS OF TRANSMITTAL") (OR A FACSIMILE
THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTERS OF TRANSMITTAL AND
MAIL OR DELIVER ONE OF THE LETTERS OF TRANSMITTAL (OR SUCH FACSIMILE) TOGETHER
WITH THE CERTIFICATE(S) EVIDENCING TENDERED SHARES, AND ANY OTHER REQUIRED
DOCUMENTS, TO THE DEPOSITARY OR TENDER SUCH SHARES PURSUANT TO THE PROCEDURE FOR
BOOK-ENTRY TRANSFER SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE OR (2)
REQUEST SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE TO EFFECT THE TRANSACTION FOR SUCH STOCKHOLDER. ANY STOCKHOLDER
WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK,
TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH STOCKHOLDER DESIRES TO TENDER SUCH
SHARES.
A stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3 of the
Offer to Purchase.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Second Supplement. Additional copies
of the Offer to Purchase, the First Supplement, this Second Supplement, the
revised (Orange) Letter of Transmittal and the revised (Yellow) Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
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The Dealer Manager for the Offer is:
SMITH BARNEY SHEARSON INC.
January 7, 1994
To the Holders of Common Stock of
PARAMOUNT COMMUNICATIONS INC.:
INTRODUCTION
The following information amends and supplements the Offer to Purchase
dated October 25, 1993 (the "Offer to Purchase") and the Supplement thereto
dated November 8, 1993 (the "First Supplement") of Viacom Inc., a Delaware
corporation ("Purchaser"). Pursuant to this Second Supplement, Purchaser is now
offering to purchase 61,607,894 shares of Common Stock, par value $1.00 per
share (the "Shares"), of Paramount Communications Inc., a Delaware corporation
(the "Company"), or such greater number of Shares as equals 50.1% of the Shares
outstanding plus the Shares issuable upon the exercise of the then exercisable
stock options, as of the Expiration Date (as defined below), at a price of $105
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, as amended and supplemented by
the First Supplement and this Second Supplement (together with the First
Supplement, the "Supplements"), and in the related Letters of Transmittal (which
together constitute the "Offer").
Except as otherwise set forth in this Second Supplement, the terms and
conditions previously set forth in the Offer to Purchase and the First
Supplement remain applicable in all respects to the Offer, and this Second
Supplement should be read in conjunction with the Offer to Purchase and the
First Supplement. Unless the context requires otherwise, terms not defined
herein have the meanings ascribed to them in the Offer to Purchase and the First
Supplement.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, 61,607,894 SHARES, OR
SUCH GREATER NUMBER OF SHARES AS EQUALS 50.1% OF THE SHARES OUTSTANDING PLUS THE
SHARES ISSUABLE UPON THE EXERCISE OF THE THEN EXERCISABLE STOCK OPTIONS, AS OF
THE EXPIRATION DATE, BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS. SEE SECTION 5 OF THIS SECOND SUPPLEMENT, WHICH SETS
FORTH IN FULL THE CONDITIONS OF THE OFFER.
In the event the Offer is consummated, Purchaser intends to effectuate a
second-step merger pursuant to which each Share that is issued and outstanding
prior to the Effective Time (as defined below) of such merger would be converted
into the right to receive (i) .93065 shares of Viacom Class B Common Stock, par
value $.01 per share, of Purchaser (the "Viacom Class B Common Stock") and (ii)
.30408 shares of a new series of Viacom cumulative convertible exchangeable
preferred stock, par value $.01 per share, of Purchaser (the "Viacom Merger
Preferred Stock") (collectively, the "Merger Consideration"). The Viacom Merger
Preferred Stock will bear dividends at a rate of 5% per annum, will be
convertible into Viacom Class B Common Stock at a conversion price of $70,
will have a liquidation preference of $50 per share, will be redeemable by
Purchaser at declining redemption premiums after the fifth anniversary of the
Effective Time, and will be exchangeable at the option of Purchaser into
Purchaser's 5% Convertible Subordinated Debentures after the third anniversary
of the Effective Time.
The Offer was initially made pursuant to an Amended and Restated Agreement
and Plan of Merger dated as of October 24, 1993 (the "October 24 Merger
Agreement"), as amended on November 6, 1993 (as so amended, the "Merger
Agreement"), between Purchaser and the Company. The October 24 Merger Agreement
amended and restated in its entirety an Agreement and Plan of Merger dated as of
September 12, 1993 between Purchaser and the Company. On December 22, 1993, the
Company terminated the Merger Agreement pursuant to a notice of termination.
Also on December 22, 1993, the Company and Purchaser entered into an Exemption
Agreement (the "Exemption Agreement") which provides, among other things, that
in the event that (1) the Company's Board of Directors intends to recommend to
the stockholders of the Company the acceptance of the Offer or (2) such number
of Shares that would satisfy the Minimum Condition shall have been validly
tendered and not withdrawn in the Offer at the Expiration Date and, as of such
Expiration Date, Purchaser has waived all conditions to the Offer (other than
the Rights Condition, the Supermajority Condition, the Section 203 Condition and
the Injunction Condition (each as defined in Section 5 of this Second
Supplement) and the Minimum Condition) then Purchaser shall promptly execute and
deliver to the Company the Form of Merger Agreement (the "Form of Merger
Agreement") annexed to the Exemption Agreement (with representations and
warranties dated as of the date of execution of such Form of Merger Agreement,
unless otherwise specified therein, and with such other changes as may be
necessary to reflect the terms of the Offer as it then exists, changes in the
consideration offered under the executed Form of Merger Agreement and changes
related thereto) and the Company will execute such Form of Merger Agreement
(with representations and warranties dated as of the date of execution
of such Form of Merger Agreement, unless otherwise specified therein) within one
business day of receipt thereof.
Under the terms of the Exemption Agreement, the Company has agreed that
upon delivery by Purchaser of a Completion Certificate (as defined below), it
will take all necessary action to amend the Rights Agreement to make it
inapplicable, except under certain circumstances, to the Offer and to take all
appropriate action so that the restrictions on business combinations in (i)
Article XI of the Company's Certificate of Incorporation and (ii) Section 203 of
Delaware Law will not apply to the consummation of the Offer. See Section 4 of
this Second Supplement.
The Form of Merger Agreement provides, among other things, that as soon as
practicable after the purchase of Shares pursuant to the Offer, the approval of
the Merger (as defined below) by the stockholders of Purchaser and the Company
and the satisfaction of the other conditions set forth in the Form of Merger
Agreement and described in this Offer to Purchase, the Company will be merged
with and into Purchaser (the "Merger") in accordance with the relevant
provisions of the General Corporation Law of the State of Delaware ("Delaware
Law"). In such event, following consummation of the Merger, Purchaser will
continue as the surviving corporation (the "Surviving Corporation").
Alternatively, if Shearman & Sterling, counsel to Purchaser, is unable to
deliver an opinion, in form and substance reasonably satisfactory to Purchaser,
that the Merger will qualify as a reorganization under section 368(a) of the
Internal Revenue Code of 1986, as amended, Purchaser may elect to cause the
Merger to be effected by causing a wholly owned subsidiary of Purchaser to merge
with and into the Company in accordance with Delaware Law. In such event, the
separate corporate existence of such subsidiary will cease, and the Company will
continue as the Surviving Corporation as a wholly owned subsidiary of Purchaser.
Based on the terms of the Offer and the proposed terms of the Form of
Merger Agreement, it is anticipated that Shearman & Sterling will be unable to
deliver the opinion referred to in the immediately preceding paragraph, and thus
that Purchaser will elect to change the form of the Merger. As a result,
exchanges of Shares pursuant to the Offer or the Merger will be taxable
transactions to stockholders of the Company for Federal income tax purposes. See
Section 6 of this Second Supplement.
Purchaser intends to provide in the executed Form of Merger Agreement that
at the effective time of the Merger (the "Effective Time"), in the event the
Offer has already been consummated, each Share that is issued and outstanding
immediately prior to the Effective Time (other than Shares held in the treasury
of the Company or owned by Purchaser or any direct or indirect wholly owned
subsidiary of Purchaser or of the Company) will be converted into the right to
receive the Merger Consideration.
On January 7, 1994, Purchaser and Blockbuster Entertainment Corporation, a
Delaware corporation ("Blockbuster"), entered into an Agreement and Plan of
Merger (the "Blockbuster Merger Agreement") pursuant to which Blockbuster will
be merged with and into Purchaser (the "Blockbuster Merger"), with Purchaser as
the surviving corporation (the "Blockbuster Merger Surviving Corporation"). See
Sections 9 and 10 of this Second Supplement for certain information regarding
Blockbuster and a description of the Blockbuster Merger Agreement.
In connection with the Blockbuster Merger, an aggregate of approximately
19.8 million shares of Viacom Class A Common Stock and 149.9 million shares of
Viacom Class B Common Stock and VCRs (as defined below) representing a maximum
aggregate of approximately 34.2 million additional shares of Viacom Class B
Common Stockwould be issuable in the Blockbuster Merger. In addition, an
aggregate of approximately 1.5 million additional shares of Viacom Class A
Common Stock and 11.3 million additional shares of Viacom Class B Common Stock,
and VCRs representing a maximum aggregate of approximately 2.6 million
additional shares of Viacom Class B Common Stock would be issuable in
connection with the possible exercise of stock options.
Procedures for tendering Shares are set forth in Section 3 of the Offer to
Purchase. Tendering stockholders may use either the original (Yellow) Letter of
Transmittal and the original (Blue) Notice of Guaranteed Delivery previously
circulated with the Offer to Purchase, the (Green) Letter of Transmittal and the
(Pink) Notice of Guaranteed Delivery circulated with the First Supplement or
the revised (Orange) Letter of Transmittal and the revised (Yellow) Notice of
Guaranteed Delivery. While the original Letter of Transmittal circulated with
the Offer to Purchase refers to the Offer to Purchase, and the Letter of
Transmittal circulated with the First Supplement refers to the Offer to Purchase
and the First Supplement, stockholders using such documents to tender Shares
will nevertheless receive $105 per Share for each Share validly tendered and not
withdrawn and accepted for payment pursuant to the Offer, subject to the
conditions of the Offer. Stockholders who have previously validly tendered
2
and not withdrawn Shares pursuant to the Offer are not required to take any
further action in order to receive, subject to the conditions of the Offer, the
increased tender price of $105 per Share, if the Shares are accepted for payment
and paid for by Purchaser pursuant to the Offer, except as may be required by
the guaranteed delivery procedure if such procedure was utilized. See Section 1
of this Second Supplement.
THE OFFER TO PURCHASE, THE FIRST SUPPLEMENT AND THIS SECOND SUPPLEMENT
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. AMENDED TERMS OF THE OFFER; EXPIRATION DATE. The Offer is being made for
61,607,894 Shares, or such greater number of Shares as equals 50.1% of the
Shares outstanding plus the Shares issuable upon the exercise of the then
exercisable stock options, as of the Expiration Date. The price per Share to be
paid pursuant to the Offer has been increased from $85.00 per Share to $105 per
Share, net to the seller in cash. All stockholders whose Shares are validly
tendered and not withdrawn and accepted for payment pursuant to the Offer
(including Shares tendered prior to the date of this Second Supplement) will
receive the increased price.
This Second Supplement, the revised (Orange) Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. PRICE RANGE OF SHARES; DIVIDENDS. The discussion set forth in Section 6
of the Offer to Purchase and Section 2 of the First Supplement is hereby amended
and supplemented as follows:
According to published financial sources, the Company has paid no cash
dividends on the Shares since the date of the Offer to Purchase.
The high and low sales prices per Share on the New York Stock Exchange (the
"NYSE") as reported by the Dow Jones News Service for the fiscal quarter ended
October 31, 1993 were $81.00 and $51.00, respectively, and the high and low
sales prices per Share for the current fiscal quarter through January 6, 1994,
were $83 1/2 and $73 1/2, respectively. On January 6, 1994, the last full
trading day prior to the announcement of the increase in the price per Share to
be paid pursuant to the Offer, the closing price per Share as reported on the
NYSE was $78 1/2.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
3. FINANCING OF THE OFFER AND THE MERGER. The discussion set forth in
Section 9 of the Offer to Purchase and Section 3 of the First Supplement is
hereby amended and supplemented as follows:
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$6.6 billion.
Purchaser has obtained $600 million of such funds from the issuance and
sale of 24 million shares of Purchaser's Series A Cumulative Convertible
Preferred Stock to Blockbuster. Purchaser has obtained $1.2 billion of such
funds from the issuance and sale of 24 million shares of Purchaser's Series B
Cumulative Convertible Preferred Stock to NYNEX Corporation ("NYNEX"). Purchaser
will obtain the remaining $4.8 billion of such funds from the bank credit
facility described below, from the sale of Viacom Class B Common Stock to
Blockbuster pursuant to the Blockbuster Subscription Agreement described below
or from other sources.
Bank Financing. On November 19, 1993, Purchaser entered into a definitive
credit agreement (as amended by an amendment dated January 4, 1994, the "Credit
Agreement") pursuant to which the banks parties thereto (the "Lenders") agreed
to lend to Purchaser up to $4.8 billion (the "Bank Facility"), comprised of a
$3.7 billion senior unsecured 364-day revolving credit facility (the "Revolving
Facility") and a $1.1 billion term loan (the "Term Loan Facility"). The Lenders
made the following commitments to the Revolving Facility: Morgan Guaranty Trust
Company of New York, Citibank, N.A. and The Bank of New York (the "Managing
Agents"), $318,965,517.24 each; Bank of America National Trust and Savings
Association, The First National Bank of Boston, Bank of Montreal, The Chase
Manhattan Bank (National Association), Canadian Imperial Bank of Commerce and
Societe Generale, $159,482,758.62 each; Credit Suisse, The Fuji Bank, Limited,
Credit Lyonnais, Cayman Island Branch, The First National Bank of Chicago, The
Industrial Bank of Japan, Ltd., Mellon Bank, N.A., The Mitsubishi Bank, Ltd.,
Royal Bank of Canada, Shawmut Bank Connecticut, N.A., Nippon
3
Credit Bank, Ltd., Los Angeles Agency, Sanwa Bank, Ltd. and Banque Paribas,
$127,586,206.90 each; and National Westminster Bank USA, National Westminster
Bank, PLC, Union Bank and The Bank of Tokyo Trust Company, $63,793,103.45 each.
Purchaser has terminated the Term Loan Facility in connection with obtaining the
funds from NYNEX referred to above.
The Credit Agreement provides that up to the full amount of the Revolving
Facility may be borrowed, prepaid and reborrowed until 364 days after execution
and delivery of the Credit Agreement, at which time all amounts outstanding
under the Revolving Facility will become due and payable.
Purchaser may elect to borrow under the Bank Facility at either the Base
Rate or the Eurodollar Rate (each as defined below). The "Base Rate" would be
the higher of (i) Citibank, N.A.'s Base Rate and (ii) the Federal Funds Rate
plus 1/2 of 1%. The "Eurodollar Rate" would be the London Interbank Offered Rate
plus (i) 0.6875%, until Purchaser's long-term debt is rated by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"), and (ii)
thereafter, a variable rate ranging from 0.2500% to 0.8750% dependent on the
senior unsecured long-term debt ratings assigned to Purchaser. The Eurodollar
Rate would be available for one, two, three or six month borrowings. Interest on
Base Rate borrowings would be payable quarterly in arrears. Interest on
Eurodollar Rate borrowings would be payable in arrears (i) at the end of each
applicable interest period and (ii) in the case of a period longer than three
months, every three months.
The Credit Agreement provides that Purchaser will pay each of the Lenders a
facility fee on such Lender's commitment in effect, from time to time, (whether
or not utilized) from the execution and delivery of the Credit Agreement until
the termination of the Bank Facility, payable quarterly in arrears, at the rate
of (i) 0.3125% per annum, until Purchaser's senior unsecured long-term debt is
rated by S&P or Moody's, and (ii) thereafter, a variable rate ranging from
0.1000% to 0.3750% dependent on the senior unsecured long-term debt ratings
assigned to Purchaser. The Credit Agreement provides that the obligations of
each Lender to make advances under the Bank Facility will be subject to the
satisfaction or waiver of the following conditions: (i) Purchaser shall have
acquired at least 50.1% of the Shares outstanding plus the Shares issuable upon
the exercise of the then exercisable Stock Options, as of the expiration of the
Offer; (ii) all regulatory approvals required for the consummation of the Offer
and the Merger shall have been obtained and be in effect (and all applicable
waiting periods relating thereto shall have expired), except (a) approval of the
Proxy Statement by the Securities and Exchange Commission and (b) approval of
the Long Form Application by the FCC; provided that no approval obtained to
consummate the Offer or that would be required from the FCC to consummate the
Merger would require the divestiture of the Shares, and provided that Purchaser
covenants to refrain from taking any action under the Voting Trust Agreement
that would result in the sale of the Shares and to take all actions with respect
to transfer applications before the FCC to assure that the Shares will not be
required to be sold by order of the FCC; (iii) certain representations and
warranties shall be true in all material respects as of the time of borrowing;
(iv) Purchaser shall be in compliance with the financial covenants contained in
the Credit Agreement; (v) there having been no material adverse change since
September 30, 1993 (except as publicly disclosed prior to October 26, 1993 or as
disclosed as of November 19, 1993 in the Merger Agreement) in the business,
financial condition, operations or properties, of Purchaser, the Company and
their respective subsidiaries considered on a pro forma basis taken as a whole;
(vi) no default or event of default under the Credit Agreement shall have
occurred and be continuing at the time of borrowing; (vii) no material
litigation shall be pending or threatened against Purchaser or a subsidiary in
which there is a reasonable probability of adverse decision which could have a
material adverse effect; (viii) the Merger Agreement, as amended, shall be in
full force and effect; and (ix) the Lenders shall have received certificates,
opinions of counsel and other documents satisfactory to the Lenders.
Under the Credit Agreement, Purchaser has agreed to pay to the Lenders fees
customary for commitments of the type described herein as well as certain
out-of-pocket expenses of the Managing Agents arising in connection with the
preparation, execution and delivery of the Credit Agreement and the syndication
of the Bank Facility. In addition, Purchaser has agreed to indemnify each of the
Lenders and certain related persons against certain liabilities.
The foregoing is a summary of the Credit Agreement and is qualified in its
entirety by reference to the Credit Agreement, a copy of which is filed as an
Exhibit to the Schedule 14D-1.
4
Purchaser anticipates that the indebtedness incurred through borrowings
under the Bank Facility will be repaid from a variety of sources, which may
include, but may not be limited to, funds generated internally by Purchaser and
its subsidiaries (including, following the Merger, funds generated by the
Company), bank refinancing, and the public or private sale of debt or equity
securities. No decision has been made concerning the method Purchaser will
employ to repay such indebtedness. Such decision will be made based on
Purchaser's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial and other economic
conditions and such other factors as Purchaser may deem appropriate.
Equity Financing. On January 7, 1994, Purchaser and Blockbuster entered
into a subscription agreement (the "Blockbuster Subscription Agreement")
pursuant to which Blockbuster has agreed to subscribe for and purchase from
Purchaser, and Purchaser has agreed to issue and sell to Blockbuster, (i)
22,727,273 shares of Viacom Class B Common Stock for an aggregate purchase price
of approximately $1,250,000,000 representing a purchase price of $55 per share.
The obligation of each of Purchaser and Blockbuster to consummate such
purchase and sale is subject to (i) the other party having performed in all
material respects all of its obligations under the Blockbuster Subscription
Agreement and the accuracy in all material respects of the representations and
warranties made by such other party in the Blockbuster Subscription Agreement,
(ii) there being no judgment, injunction, order or decree which materially
restricts, prevents or prohibits the consummation of such purchase and sale,
(iii) the receipt of satisfactory legal opinions and (iv) Purchaser having
accepted for payment 50.1% of the Shares pursuant to the Offer.
Purchaser has agreed that it will not make any material change in the
aggregate amount or forms of consideration to be paid in, or in any other
material terms and conditions of, the Offer and the Merger, without the prior
consent of Blockbuster, which consent shall not be unreasonably withheld.
Pursuant to the Blockbuster Subscription Agreement, Purchaser has granted
Blockbuster customary registration rights with respect to the shares of Viacom
Class B Common Stock purchased thereunder.
The Blockbuster Subscription Agreement requires each party to indemnify the
other and its affiliates, officers, directors, employees, agents, successors and
assigns for liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties arising out of or resulting from a breach of any
of such party's representations, warranties or covenants contained therein.
In the event the Blockbuster Merger Agreement is terminated (other than by
Purchaser as a result of a breach of a representation, warranty, covenant or
agreement of Blockbuster contained therein), the Blockbuster Subscription
Agreement grants to Blockbuster certain rights in the event that Viacom Class B
Common Stock trades at levels below $55 per share during the one year period
after such termination. In the event that the highest average trading price of
the Viacom Class B Common Stock during any consecutive 30 trading day period
prior to the first anniversary of such termination of the Blockbuster Merger
Agreement is below $55 per share, Blockbuster shall be entitled to satisfaction
by Purchaser of a make-whole amount. Such make-whole amount may not exceed a
maximum amount equal to the sum of one half the number of shares of Viacom Class
B Common Stock purchased by Blockbuster under the Blockbuster Subscription
Agreement multiplied by the amount of such highest average trading price
deficiency not in excess of $4.40 and one half the number of such shares of
Viacom Class B Common Stock multiplied by the amount of such highest average
trading price deficiency not in excess of $19.80, resulting in a maximum
potential make-whole amount of $275 million.
Under the Blockbuster Subscription Agreement, Purchaser is entitled to
satisfy its obligation with respect to any such make-whole amount, at
Purchaser's option, either through the payment to
5
Blockbuster of cash or marketable equity or debt securities of Purchaser, or a
combination thereof, with an aggregate value equal to the make-whole amount or,
if the Merger has occurred, through the sale to Blockbuster of the theme parks
currently owned and operated by the Company (the "Parks Business").
In the event that Purchaser were to elect to fulfill its obligation to
satisfy the make-whole amount through the sale of the Parks Business to
Blockbuster, the purchase price would be $750 million, subject to adjustment for
certain capital expenditures, payable through delivery to Purchaser of shares of
Viacom Class B Common Stock valued at $55 per share. If the Parks Business were
so purchased by Blockbuster, the Blockbuster Subscription Agreement provides
that Blockbuster would grant an option to Purchaser, exercisable for a period of
two years after the date of grant, to purchase a 50% equity interest in the
Parks Business at a purchase price of $375 million, subject to adjustment for
certain capital expenditures, payable in cash.
The foregoing is a summary of the Blockbuster Subscription Agreement and is
qualified in its entirety by reference to the Blockbuster Subscription
Agreement, a copy of which is filed as an Exhibit to the Schedule 14D-1.
4. BACKGROUND OF THE OFFER SINCE NOVEMBER 8, 1993; CONTACTS WITH THE
COMPANY; THE EXEMPTION AGREEMENT AND THE FORM OF MERGER AGREEMENT. The
discussion set forth in Section 10 of the Offer to Purchase and Section 4 of the
First Supplement is hereby amended and supplemented as follows:
On November 24, 1993, the Delaware Court of Chancery issued a Preliminary
Injunction Order (the "Preliminary Injunction Order") in connection with the
Delaware litigation commenced by QVC Network, Inc. ("QVC") and certain
stockholders of the Company pursuant to which:
(1) The Company was preliminarily enjoined absent further order of the
Chancery Court from amending the Rights Agreement or taking any other
action under the Rights Agreement to, among other things, facilitate the
Offer or second-step merger.
(2) The Company and Purchaser were enjoined from (i) taking any action
to exercise, cash out, enforce, effectuate or consummate any term or
provision of the Stock Option Agreement or (ii) causing the Company or its
subsidiaries or affiliates to pay money, transfer assets or issue
securities of the Company to Purchaser or any of its affiliates or
subsidiaries other than in the ordinary course of business or pursuant to
the termination fee provided for in Section 8.05 of the Merger Agreement.
(3) QVC's motion to enjoin payment of the termination fee provided for
in Section 8.05 of the Merger Agreement was denied.
The grant of the injunction was appealed by Purchaser and the Company to
the Supreme Court of the State of Delaware.
On December 9, 1993, the Delaware Supreme Court issued an order (the
"Order") pursuant to which the Court, among other things, (1) affirmed the
Preliminary Injunction Order and (2) remanded the proceeding to the Delaware
Chancery Court for proceedings consistent with the Order.
On December 20, 1993, in accordance with bidding procedures established by
the Paramount Board, Purchaser delivered to the Company's financial advisor its
revised proposal for the acquisition of the Company.
On December 22, 1993, Purchaser and the Company entered into the Exemption
Agreement, with the Form of Merger Agreement attached thereto, setting forth
certain procedures to govern the Offer and which is described below. Also on
December 22, 1993, the Company terminated the Merger Agreement and entered into
an Agreement and Plan of Merger with QVC (the "QVC Merger
6
Agreement"). The QVC Merger Agreement contains procedures applicable to the QVC
Offer which are substantially identical to the terms of the Exemption Agreement
applicable to the Offer. In addition, the QVC Merger Agreement contains as an
Exhibit thereto a form of exemption agreement containing terms identical to the
Exemption Agreement, which QVC has agreed to enter into in the event that the
QVC Merger Agreement is terminated.
The Exemption Agreement. The following is a summary of certain provisions
of the Exemption Agreement, a copy of which (together with the Form of Merger
Agreement attached as Exhibit A thereto) was previously filed as an Exhibit to
the Schedule 14D-1 and is incorporated herein by reference. The following
summary is qualified in its entirety by reference to the Exemption Agreement
filed as part of Exhibit (a)(39) to the Schedule 14D-1.
Agreements of the Company. Under the terms of the Exemption Agreement, the
Company has agreed that, upon delivery by Purchaser of the Completion
Certificate (as defined below), it shall take all necessary action to amend the
Rights Agreement so that the consummation of the Offer on the terms permitted
under the Exemption Agreement and as contemplated by the Form of Merger
Agreement will not cause (i) the Rights issued pursuant to the Rights Agreement
to become exercisable under the Rights Agreement, (ii) Purchaser or any
subsidiary of Purchaser to be deemed an "Acquiring Person" (as defined in the
Rights Agreement), or (iii) the "Stock Acquisition Date" (as defined in the
Rights Agreement) to occur upon such consummation; provided, however, that the
Company will not be required to make such amendments to the Rights Agreement if
(A) Purchaser has not performed or complied in all material respects with all
agreements and covenants required by the Exemption Agreement to be performed or
complied with by it on or prior to the consummation of the Offer or (B) the
Company obtains and there is in force from the Delaware Court of Chancery an
order declaring that the making of such amendments to the Rights Agreement would
be contrary to the fiduciary duties of the Paramount Board. Notwithstanding the
foregoing, in no event will the Company's Board of Directors make an amendment
of the Rights Agreement in favor of QVC or any other person without making such
amendments in favor of Purchaser; provided that the Company will not be
obligated to make such amendments for Purchaser if Purchaser has become
obligated to terminate the Offer pursuant to the provisions of the Exemption
Agreement as set forth in "Termination of the Offer" below.
The Company has agreed under the terms of the Exemption Agreement that it
will take all appropriate actions so that the restrictions on business
combinations contained in (i) Article XI of the Company's Certificate of
Incorporation and (ii) Section 203 of Delaware Law will not apply to the
consummation of the Offer; provided, however, that such action will not be
effective if the Company is not required to amend the Rights Agreement as
contemplated in the immediately preceding paragraph.
Agreements Regarding Terms of the Offer. Purchaser has also agreed under
the Exemption Agreement (i) that so long as QVC is bound by substantially
identical restrictions made for the benefit of the Company, not to amend the
Offer in order to (A) increase by less than $60 million the aggregate cash
consideration to be paid pursuant to the Offer or (B) increase the number of
Shares for which tenders are sought by less than 2% of the outstanding Shares;
(ii) not to extend the Expiration Date, except for extensions pursuant to
certain provisions of the Exemption Agreement, and except (x) as a result of
failure to satisfy a condition at the Expiration Date or (y) for any such
extension required by federal securities law; (iii) that no extension of the
Expiration Date permitted under the Exemption Agreement shall be for a period of
less than three business days; and (iv) that the Expiration Date shall not be
extended for any reason beyond 12:00 midnight on February 14, 1994, subject to
certain provisions of the Exemption Agreement or as required by federal
securities law to the extent that the extension arises due to an event other
than a change in the terms of the Offer (the "Final Expiration Date"). Purchaser
has agreed that it will not increase the per share consideration offered in the
Offer or otherwise amend the Offer primarily to extend the expiration date of
the QVC Offer.
7
Purchaser has agreed that, without the prior written consent of the
Company, no change in the terms of the Offer shall be made which (i) decreases
the aggregate cash consideration payable in the Offer or changes the form of
consideration payable in the Offer (except to the extent QVC has made such
changes or has been granted benefits by the Company that diminish the value of
the Company to Purchaser); (ii) reduces the number of Shares to be purchased in
the Offer below 50.1% of the outstanding Shares on a fully diluted basis (as
defined below); provided, however, that the number of Shares sought in the Offer
can be decreased to not less than 50.1% of the outstanding Shares on a fully
diluted basis so long as the aggregate cash consideration payable in the Offer
is not decreased; or (iii) waives the Minimum Condition (which under no
circumstances may be less than 50.1% of the outstanding Shares on a fully
diluted basis). Subject to the provisions of the Exemption Agreement, Purchaser,
prior to being obligated to execute a merger agreement by the terms of the
Exemption Agreement, has in the Exemption Agreement expressly reserved the right
to terminate the Offer pursuant to its terms or to increase the price per Share
or the number of Shares for which tenders are sought in the Offer. The term
"fully diluted" as used in the Exemption Agreement means giving effect to the
Shares then outstanding plus the Shares issuable upon the exercise of the then
exercisable options.
In order to cause the Offer and the QVC Offer to remain on the same time
schedule, Purchaser has agreed that if QVC remains subject to the QVC Merger
Agreement or remains subject to the form of exemption agreement attached
thereto, in either case containing terms substantially identical to the
Exemption Agreement for the benefit of the Company (the "Exemption Procedures"),
and (i) extends the expiration date of the QVC Offer (such expiration date, as
extended from time to time, being the "QVC Expiration Date") in accordance with
the Exemption Procedures, then the Expiration Date shall be extended (as soon as
practicable, but not later than one business day following the announcement of
the extension of the QVC Expiration Date) by Purchaser to the QVC Expiration
Date, or (ii) if upon notification to the Company by Purchaser and QVC of the
results of their respective offers (which notification will be required to be
delivered by Purchaser and QVC no later than promptly following the expiration
of their respective offers), the Company has notified Purchaser and QVC (which
notification shall be required to be delivered by the Company promptly) that a
number of Shares that would satisfy the Minimum Condition or the minimum
condition defined in the QVC Offer (which under no circumstances may be less
than 50.1% of the outstanding Shares on a fully diluted basis) (the "QVC Minimum
Condition") have not been validly tendered (and not withdrawn) pursuant to the
Offer or the QVC Offer, respectively, at the Expiration Date (or a number of
Shares that would satisfy the Minimum Condition and the QVC Minimum Condition
have been validly tendered and not withdrawn pursuant to both the Offer and the
QVC Offer at the Expiration Date), then Purchaser will extend the Expiration
Date for a period of ten business days. Purchaser will be subject to the
obligations set forth above in this paragraph and the obligations set forth in
"Termination of the Offer" for so long as QVC is subject to the Exemption
Procedures; provided, however, that Purchaser will not be subject to such
obligations in the event that QVC has not performed or complied in all material
respects with the Exemption Procedures.
Recommendation of the Offer. Under the terms of the Exemption Agreement,
if, at any time, the Paramount Board recommends acceptance of the Offer by the
Company's stockholders, or informs Purchaser that the Paramount Board intends to
recommend acceptance of the Offer, then Purchaser will promptly execute and
deliver an executed Form of Merger Agreement (with representations and
warranties dated as of the date of execution of such Form of Merger Agreement,
unless otherwise specified therein and with such other changes as may be
necessary to reflect the terms of the Offer as it then exists, changes in the
consideration offered under the Form of Merger Agreement and changes related
thereto) as soon as practicable, but in no event more than one business day
thereafter, which Form of Merger Agreement will be executed by the Company (with
representations and warranties dated as of the date of such executed Form of
Merger Agreement, unless otherwise specified therein) within one business day of
receipt thereof.
8
Receipt of Common Stock by Purchaser. In the event that a number of Shares
that would satisfy the Minimum Condition shall have been validly tendered and
not withdrawn in the Offer at the Expiration Date and, as of such Expiration
Date, Purchaser has waived all conditions to the Offer (other than the Minimum
Condition and the Rights Condition, the Supermajority Condition, the Section 203
Condition and the Injunction Condition), then Purchaser has agreed (i) to extend
the Expiration Date to a date ten business days from the then scheduled
Expiration Date, provided that such extension shall be for a period of five
business days in the event that the QVC Offer has been terminated prior to the
foregoing Expiration Date and (ii) promptly to deliver an executed Form of
Merger Agreement (with representations and warranties dated as of the date of
delivery to the Company of such executed Form of Merger Agreement, unless
otherwise specified therein and with such other changes as may be necessary to
reflect the terms of the Offer as it then exists, changes in the consideration
offered under the Form of Merger Agreement and changes related thereto), as soon
as practicable, but in no event more than one business day after the date of
such waiver, which Form of Merger Agreement will be executed by the Company
within one business day of receipt thereof (with representations and warranties
dated as of the date of such executed Form of Merger Agreement, unless otherwise
specified therein).
Completion Certificate. At such time as Purchaser has fulfilled the terms
set forth in the immediately preceding paragraph, Purchaser will deliver to the
Paramount Board a certificate (the "Completion Certificate"), executed by an
authorized officer of Purchaser, certifying that all such terms have been
fulfilled.
Termination of the Offer. Under the terms of the Exemption Agreement,
Purchaser has agreed to terminate the Offer at such time as Purchaser has been
notified pursuant to a certificate executed by an authorized officer of the
Company that: (i) a number of Shares that would satisfy the QVC Minimum
Condition shall have been validly tendered to the QVC Offer and not withdrawn at
the QVC Expiration Date; (ii) all conditions to the QVC Offer, except the QVC
Minimum Condition and the conditions relating to the Rights Agreement, Article
XI of the Company's Certificate of Incorporation, Section 203 of Delaware Law
and governmental or judicial injunction, each as set forth therein, shall have
been waived; and (iii) a completion certificate from QVC shall have been
delivered to the Company; provided, however, that Purchaser shall not be
required to terminate the Offer in the event that QVC has not performed or
complied in all material respects with the Exemption Procedures.
Termination of Exemption Agreement. The Exemption Agreement terminates at
the earliest of (i) 9:00 A.M. on the first business day following the Final
Expiration Date, (ii) the execution and delivery by both Purchaser and the
Company of a Form of Merger Agreement, (iii) the delivery of notice by either
party to the Exemption Agreement in the event the other party materially
breaches any agreement or representation under the Exemption Agreement or (iv)
such time as Purchaser shall have terminated the Offer in accordance with the
terms thereof.
Form of Merger Agreement. The Form of Merger Agreement is substantially
similar in form and substance to the Merger Agreement, except for the provisions
summarized below. The following summary is qualified in its entirety by
reference to the Form of Merger Agreement previously filed as part of Exhibit
(a)(39) to the Schedule 14D-1.
(a) All references to the Stock Option Agreement and the $100 million
termination fee in the Merger Agreement have been eliminated in the Form of
Merger Agreement; provided, however, that each of the Company and Purchaser has
agreed that nothing contained in the Form of Merger Agreement will constitute a
waiver of any rights, claims or defenses of Purchaser or the Company created by
or arising under the Merger Agreement or the Stock Option Agreement, as amended,
all of which rights, claims and defenses are expressly reserved.
9
(b) The provision contained in the Merger Agreement, which prohibited the
Company and Purchaser, and their respective subsidiaries and affiliates, under
certain specified circumstances, from (i) facilitating any inquiries or the
making of any proposal that constitutes or may be reasonably expected to lead to
a Competing Transaction (as defined below), (ii) entering into, maintaining or
continuing discussions or negotiations with any person or entity in furtherance
of such inquiries or to obtain a Competing Transaction, (iii) agreeing to or
endorsing any Competing Transaction or (iv) permitting any of their officers,
directors, employees or other representatives to take any such action, has been
eliminated in the Form of Merger Agreement.
(c) Conditions to the obligations of each party to consummate the Merger
contained in the Merger Agreement, which relate to the receipt of certain
approvals from the FCC and other third parties, have been eliminated in the Form
of Merger Agreement.
(d) In the Form of Merger Agreement, June 30, 1994 is the date on which
either the Company or Purchaser may terminate such agreement if the Merger shall
not have occurred. The corresponding date in the Merger Agreement was March 31,
1994.
(e) In the Form of Merger Agreement, Purchaser has the right to terminate
such agreement if: (i) the Paramount Board withdraws, modifies or changes its
recommendation of such agreement, the Merger or the Offer in a manner adverse to
Purchaser or resolves to do any of the foregoing; provided that a statement by
the Paramount Board that it is neutral or unable to take a position with respect
to the Offer after the commencement or amendment of a tender offer by a third
party will not be deemed to constitute a withdrawal, modification or change of
its recommendation of such agreement if the Solicitation/Recommendation
Statement on Schedule 14D-9 relating to such third party tender offer recommends
rejection of such tender offer and the Paramount Board reconfirms its
recommendation of the Offer on the date of the filing thereof; (ii) the
Paramount Board recommends to the stockholders of the Company a Competing
Transaction; (iii) Purchaser has not consummated the Offer and a tender offer or
exchange offer for 30% or more of the outstanding shares of capital stock of the
Company is commenced, and the Paramount Board recommends that the stockholders
of the Company tender their shares in such tender or exchange offer; or (iv)
Purchaser has not consummated the Offer and any person acquires beneficial
ownership, or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) has been formed which beneficially owns, or
has the right to acquire "beneficial ownership" (as defined in the Rights
Agreement) of, more than 30% of the then outstanding shares of capital stock of
the Company.
(f) In the Form of Merger Agreement, the Company has the right to terminate
such agreement if, due to an occurrence or circumstance that would result in a
failure to satisfy any of the conditions of the Offer, (i) Purchaser has failed
to amend the Offer as provided in Section 2.1 of such agreement within ten
business days following the date thereof or (ii) the Offer expires without the
purchase of Shares thereunder.
(g) In the Form of Merger Agreement, the term "Competing Transaction" means
any of the following involving the Company or any of the Company's subsidiaries:
(i) any merger, consolidation, share exchange, business combination, or other
similar transaction; (ii) any disposition of 30% or more of the assets of the
Company and the Company's subsidiaries, taken as a whole in a single transaction
or series of transactions; (iii) any tender offer or exchange offer for 30% or
more of the outstanding shares of capital stock of the Company or the filing of
a registration statement under the Securities Act in connection therewith; (iv)
any person having acquired beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) having been formed which beneficially owns, or has the
right to acquire beneficial ownership of, 30% or more of the then outstanding
shares of capital stock of the Company; or (v) any
10
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
(h) In the Form of Merger Agreement, if either the Company or Purchaser
terminates such agreement and if Purchaser continues the Offer, the Exemption
Agreement will again become effective.
(i) The Form of Merger Agreement provides that from and after the Effective
Time and until the tenth anniversary of the Effective Time, Purchaser will not
enter into any agreement with any stockholder (the "Majority Stockholder") who
beneficially owns more than 50% of the then outstanding securities entitled to
vote at a meeting of the stockholders of Purchaser that would constitute a Rule
13e-3 (as such rule is in effect on the date of the execution of the Form of
Merger Agreement) transaction under the Exchange Act with respect to any class
of common stock of Purchaser (any such transaction being a "Going Private
Transaction") unless Purchaser provides in any agreement pursuant to which such
Going Private Transaction will be effected that, as a condition to the
consummation of such Going Private Transaction, (a) the holders of a majority of
the shares of each class of common stock subject to such Going Private
Transaction and not beneficially owned by the Majority Stockholder that are
voted and present (whether in person or by proxy) at the meeting of stockholders
called to vote on such Going Private Transaction will have voted in favor
thereof and (b) a special committee (the "Special Committee") of the Board of
Directors of Purchaser comprised solely of the independent directors of
Purchaser will have (i) approved the terms and conditions of the Going Private
Transaction and will have recommended that the stockholders vote in favor
thereof and (ii) received from its financial advisor a written opinion addressed
to the Special Committee, for inclusion in the proxy statement to be delivered
to the stockholders, and dated the date thereof, substantially to the effect
that the consideration to be received by the stockholders (other than the
Majority Stockholder) in the Going Private Transaction is fair to them from a
financial point of view.
(j) In the Form of Merger Agreement, if requested by Purchaser, the Company
will, subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, promptly following the acceptance for payment of the Shares, and
from time to time thereafter, take all actions necessary to cause a majority of
directors of the Company (and of members of each committee of the Paramount
Board) and of each subsidiary of the Company to be designated by Purchaser
(whether, at the request of Purchaser, by means of increasing the size of the
Paramount Board or seeking the resignation of directors and causing Purchaser's
designees to be elected); provided that prior to receipt by Purchaser of
approval by the FCC of the Long Form Application, the Company will take all
actions necessary to elect Purchaser's voting trustee to the Paramount Board.
(k) The Form of Merger Agreement contains procedures applicable to the
terms of the Offer which are substantially identical to the terms of the
Exemption Agreement applicable to the Offer.
5. CONDITIONS TO THE OFFER. The conditions to the Offer are hereby amended
and restated in their entirety as follows:
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) the Paramount Board shall not have amended the
Rights Agreement to make the Rights inapplicable to the Offer and the Merger or
the Rights shall otherwise be applicable to the Offer and the Merger (the
"Rights Condition"), (iii) the Paramount Board shall not have taken all
necessary actions so as to make the restrictions on business combinations
contained in the supermajority voting requirement of Article XI of the Company's
Certificate of Incorporation inapplicable to the Offer and the Merger (the
"Supermajority Condition"), (iv) the Paramount Board shall not have taken all
necessary actions so as to make the restrictions on business combinations
contained in Section 203 of Delaware Law inapplicable to Purchaser in connection
with the Offer and the Merger
11
(the "Section 203 Condition") or (v) at any time on or after the date of this
Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall not exist:
(a) No governmental entity or federal or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
which materially restricts, prevents or prohibits consummation of the
Offer, the Merger or any transaction contemplated by the executed Form of
Merger Agreement (if then in existence); provided that Purchaser shall have
used all reasonable efforts to have any such order, decree or injunction
vacated or reversed (the "Injunction Condition");
(b) Each of the representations and warranties of the Company
contained in the Form of Merger Agreement (as if such agreement had been
duly executed by the Company) shall be true and correct, except (i) for
changes specifically permitted by the Form of Merger Agreement and (ii)
that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date, except in
any case for such failures to be true and correct which would not,
individually or in the aggregate, have a material adverse effect on the
Company;
(c) The Company shall have performed or complied in all material
respects with all agreements and covenants required by the Form of Merger
Agreement (as if such agreement had been duly executed by the Company) to
be performed or complied with by it;
(d) Since December 22, 1993, there shall have been no change,
occurrence or circumstance in the business, results of operations or
financial condition of the Company or any of its subsidiaries having or
reasonably likely to have, individually or in the aggregate, a material
adverse effect on the business, results of operations or financial
condition of the Company and its subsidiaries, taken as a whole; or
(e) Purchaser and the Company shall not have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder;
and, in the reasonable judgment of Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by Purchaser or any of its
affiliates) giving rise to any such condition, it is inadvisable to proceed with
such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by Purchaser in whole or in part at any time and from
time to time in its sole discretion. The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
12
6. CERTAIN FEDERAL INCOME TAX AND OTHER TAX CONSEQUENCES. The discussion
set forth in Section 5 of the Offer to Purchase is hereby amended and
supplemented in its entirety as follows:
The following summary, based upon current law, is a general discussion of
certain Federal income tax consequences of the Offer and the Merger to
Purchaser, the Company and stockholders of the Company. This summary is based
upon the Code, applicable Treasury regulations thereunder and administrative
rulings and judicial authority as of the date hereof. All of the foregoing are
subject to change, and any such change could affect the continuing validity of
this summary. This summary applies to stockholders of the Company who hold their
Shares as capital assets. This summary does not discuss all aspects of Federal
income taxation that may be relevant to a particular stockholder of the Company
in light of such stockholder's specific circumstances or to certain types of
stockholders subject to special treatment under the Federal income tax laws (for
example, foreign persons, dealers in securities, banks, insurance companies,
tax-exempt organizations and stockholders who acquired Shares pursuant to the
exercise of options or otherwise as compensation or through a tax-qualified
retirement plan), and it does not discuss any aspect of state, local, foreign or
other tax laws. No ruling has been (or will be) sought from the Internal Revenue
Service as to the anticipated tax consequences of the Offer or the Merger.
Tax Consequences of the Offer and the Merger. If Shearman & Sterling,
counsel to Purchaser, is unable to deliver an opinion that the Merger will
qualify as a reorganization under section 368(a) of the Code, the Form of Merger
Agreement permits Purchaser to elect to cause a wholly owned subsidiary to merge
with and into the Company in the Merger. Based on the terms of the Offer and the
proposed terms of the Form of Merger Agreement, it is anticipated that Shearman
& Sterling will be unable to deliver such an opinion and thus that Purchaser
will elect to change the form of the Merger. The election by Purchaser to change
the form of the Merger will, under applicable tax laws, prevent the Company from
having to recognize substantial taxable gain as a result of the Merger's failing
to qualify as a reorganization.
Exchanges of Shares pursuant to the Offer or the Merger will be taxable
transactions for Federal income tax purposes. A stockholder of the Company who
exchanges Shares for cash in the Offer or for shares of Viacom Class B Common
Stock and Viacom Merger Preferred Stock in the Merger will recognize capital
gain or loss for Federal income tax purposes equal to the difference between
such stockholder's basis in the Shares so exchanged and the amount of cash
and/or the fair market value of the shares of Viacom Class B Common Stock and
Viacom Merger Preferred Stock received by such stockholder. Stockholders of the
Company should note that, in such circumstances, a stockholder who does not
receive any cash, but instead receives only shares of Viacom Class B Common
Stock and Viacom Merger Preferred Stock in the Merger nevertheless will
recognize taxable gain or loss. Such gain or loss will be long-term capital gain
or loss if, at the time of the Offer or the Merger, the Shares then exchanged
had been held for more than one year. Under current law, long-term capital gains
of individuals are, under certain circumstances, taxed at lower rates than items
of ordinary income (including short-term capital gains).
Such stockholder of the Company will have a tax basis in the shares of
Viacom Class B Common Stock and Viacom Merger Preferred Stock received equal to
the fair market values of such shares on the date of the Merger. The holding
period of such stockholder of the Company in the Viacom Class B Common Stock and
Viacom Merger Preferred Stock received will begin on the day following the date
of the Merger.
No gain or loss will be recognized by Purchaser or the Company as a result
of the Offer and the Merger.
Backup Withholding. To prevent "backup withholding" of Federal income tax
on payments of cash to a stockholder of the Company who exchanges Shares for
cash in the Offer, a stockholder of the Company must, unless an exception
applies under the applicable law and regulations, provide the payor
13
of such cash with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such number is correct and that such stockholder is not subject to backup
withholding. A Substitute Form W-9 is included in the Letter of Transmittal. If
the correct TIN and certifications are not provided, a $50 penalty may be
imposed on a stockholder of the Company by the Internal Revenue Service, and
cash received by such stockholder in exchange for Shares in the Offer may be
subject to backup withholding of 31%.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE BASED UPON PRESENT
LAW, ARE FOR GENERAL INFORMATION ONLY AND DO NOT PURPORT TO BE A COMPLETE
ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS WHICH MAY APPLY TO A
STOCKHOLDER OF THE COMPANY. THE TAX EFFECTS AS APPLICABLE TO A PARTICULAR
STOCKHOLDER OF THE COMPANY MAY BE DIFFERENT FROM THE TAX EFFECTS AS APPLICABLE
TO OTHER STOCKHOLDERS OF THE COMPANY, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL AND OTHER TAX LAWS, AND THUS, STOCKHOLDERS OF THE COMPANY ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS.
Real Estate Transfer Taxes
The New York State Real Property Transfer Gains Tax, the New York State
Real Estate Transfer Tax, and the New York City Real Property Transfer Tax
(collectively, the "Real Estate Transfer Taxes") are imposed on the transfer or
acquisition, directly or indirectly, of controlling interests in an entity which
owns interests in real property located in New York State or New York City, as
the case may be. The Offer and the Merger will result in the taxable transfer of
controlling interests in entities which own New York State or New York City real
property for purposes of the Real Estate Transfer Taxes. Although any Real
Estate Transfer Taxes could be imposed directly on the stockholders of the
Company, Purchaser and the Company will complete and file any necessary tax
returns, and Purchaser will pay all Real Estate Transfer Taxes that are imposed
as a result of the Offer and the Merger. Upon receipt of the consideration for
either the Offer or the Merger, each stockholder of the Company will be deemed
to have agreed to be bound by the Real Estate Transfer Tax returns filed by
Purchaser and the Company.
7. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER. The discussion set forth in Section 11 of the Offer to Purchase is
hereby amended and supplemented as follows:
Purchaser is actively preparing plans for the combination of Purchaser, the
Company and Blockbuster and their respective businesses and management. In the
event the Blockbuster Merger is consummated following consummation of the
Offer, Purchaser intends to intergrate the businesses of Purchaser, Blockbuster
and the Company in order to achieve efficiencies and to create value based upon
the complementary businesses and brands of the combined companies. Purchaser has
no present intention of disposing of any significant assets of Purchaser,
Blockbuster or the Company following consummation of the Offer.
8. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. The discussion set forth
in Section 15 of the Offer to Purchase and Section 5 of the First Supplement is
hereby amended and supplemented as follows:
Delaware Litigation. On December 14, 1993, the plaintiffs in In re
Paramount Communications Inc. Shareholders Litigation, Consolidated Civ. Action
No. 13117, made a motion for the entry of an order modifying the preliminary
injunction granted by the Delaware Chancery Court on November 24, 1993, to
enjoin the termination fee payable to Purchaser pursuant to the Merger
Agreement.
Federal Antitrust Litigation. On November 9, 1993, Purchaser amended its
complaint in federal court in Viacom International Inc. v. Tele-Communications,
Inc., et al., Case No. 93 Civ. 6658, by
14
adding Comcast Corporation as an additional defendant and incorporating claims
of additional anticompetitive activities by the defendants.
FCC Approval. On November 23, 1993, the FCC approved Purchaser's STA
Application to acquire Shares pursuant the Offer, thereby satisfying the FCC
Condition to consummation of the Offer.
9. CERTAIN INFORMATION CONCERNING PURCHASER. The discussion set forth in
Section 8 of the Offer to Purchase is hereby amended and supplemented as
follows:
General. On November 18, 1993, William C. Ferguson was elected to the Board
of Directors of Purchaser. The current business address and present principal
positions, offices or employments and business addresses thereof for the past
five years of Mr. Ferguson are as follows:
Chairman of the Board and Chief Executive Officer of NYNEX at 335
Madison Avenue, New York, New York 10017 since October 1989; Vice Chairman
of the Board of NYNEX from 1987 to 1989 and President and Chief Executive
Officer from June to September 1989; Director of NYNEX since 1987; Director
of General Re Corporation and CPC International, Inc.
Financial Information. On November 12, 1993, Purchaser filed with the
Commission its Quarterly Report on Form 10-Q for the quarter ended September 30,
1993 (the "September 30 10-Q"). Set forth below are certain selected
consolidated financial data relating to Purchaser and its subsidiaries for the
quarter ended September 30, 1993, which have been excerpted or derived from the
unaudited financial statements contained in the September 30 10-Q. More
comprehensive financial information for such quarter is included in the
September 30 10-Q, and the following financial data is qualified in its entirety
by reference to the September 30 10-Q, including the financial information and
related notes contained therein. The September 30 10-Q may be inspected and
copies may be obtained from the offices of the Commission in the same manner as
set forth with respect to information about the Company in Section 7 of the
Offer to Purchase.
VIACOM INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(UNAUDITED; IN MILLIONS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1993 1992
----------- -----------
Results of Operations Data:
Revenues............................................................................. $ 1,474.6 $ 1,353.1
Earnings from operations............................................................. 306.9 280.3
Earnings before extraordinary items and cumulative effect of change in accounting
principle.............................................................................. 143.2 54.4
Net earnings......................................................................... 144.6 37.3
Earnings per common share:
Earnings before extraordinary items and cumulative effect of change in accounting
principle.............................................................................. 1.19 .45
Extraordinary items.................................................................. (.07) (.14)
Cumulative effect of change in accounting principle.................................. .08 --
Net earnings......................................................................... 1.20 .31
AT SEPTEMBER 30, 1993
----------------------
Balance Sheet Data:
Total assets............................................................................ $ 4,625.6
Long term debt.......................................................................... 2,359.1
Stockholders' equity.................................................................... 908.7
15
THE BLOCKBUSTER MERGER AGREEMENT
The following is a summary of the Blockbuster Merger Agreement, a copy of
which is filed as an Exhibit to the Schedule 14D-1. Such summary is qualified in
its entirety by reference to the Blockbuster Merger Agreement.
The Blockbuster Merger. The Blockbuster Merger Agreement provides that,
upon the terms and subject to the conditions thereof, at the effective time of
the Blockbuster Merger (the "Blockbuster Merger Effective Time"), Blockbuster
will be merged with and into Purchaser in accordance with Delaware Law. As a
result of the Blockbuster Merger, the separate corporate existence of
Blockbuster will cease and Purchaser will continue as the Blockbuster Merger
Surviving Corporation.
At the Blockbuster Merger Effective Time, each issued and then outstanding
share of common stock, par value $1.00 per share, of Blockbuster (the
"Blockbuster Shares") (other than any Blockbuster Shares held in the treasury of
Blockbuster, or owned by Purchaser or any direct or indirect wholly owned
subsidiary of Purchaser or of Blockbuster and any dissenting shares (if
applicable)) shall be converted automatically into the right to receive (x) .08
of one share of Viacom Class A Common Stock, (y) .60615 of one share of Viacom
Class B Common Stock and (z) up to an additional .13829 of one share of Viacom
Class B Common Stock, with such amount to be determined in accordance with, and
the right to receive such shares to be evidenced by, one variable common
right (a "VCR") issued by Purchaser having the principal terms described in
Annex A to the Blockbuster Merger Agreement.
In addition, employee stock options and warrants outstanding at the
Blockbuster Merger Effective Time will become exercisable thereafter for the
Blockbuster Merger merger consideration described above. Pursuant to the terms
of the Blockbuster stock option plans, the vesting of employee stock options
will be accelerated in connection with the Blockbuster Merger.
As of December 31, 1993, there were 247,487,375 Blockbuster Shares
outstanding. In addition, there were 18,564,443 Blockbuster Shares subject to
outstanding stock options and warrants. Based thereon, an aggregate of
approximately 19.8 million shares of Viacom Class A Common Stock and 149.9
million shares of Viacom Class B Common Stock, and VCRs representing a maximum
aggregate of approximately 34.2 million additional shares of Viacom Class B
Common Stock would be issuable in the Blockbuster Merger. In addition, an
aggregate of approximately 1.5 million additional shares of Viacom Class A
Common Stock and 11.3 million additional shares of Viacom Class B Common Stock,
and VCRs representing a maximum aggregate of approximately 2.6 million
additional shares of Viacom Class B Common Stock would be issuable in
connection with the possible exercise of stock options and warrants.
The Blockbuster Merger Agreement provides that, at the Blockbuster Merger
Effective Time, the Restated Certificate of Incorporation and the By-Laws of
Purchaser, as in effect immediately prior to the Blockbuster Merger Effective
Time, will be the Certificate of Incorporation and the By-Laws of the
Blockbuster Merger Surviving Corporation.
Agreements of Purchaser and Blockbuster. The Blockbuster Merger Agreement
contains various customary covenants and agreements of the parties thereto,
including agreements as to the calling of meetings of the respective
stockholders of Purchaser and Blockbuster, the making of certain filings under
the federal securities laws with respect to such stockholders' meetings and the
transactions contemplated by the Blockbuster Merger Agreement, and the operation
of the parties' respective businesses prior to the Blockbuster Merger Effective
Time. In addition, pursuant to the Blockbuster Merger Agreement, until the tenth
anniversary of the Blockbuster Merger Effective Time Purchaser is subject to the
same restrictions on Going Private Transactions as are contained in the Form of
Merger Agreement.
Representations and Warranties. The Blockbuster Merger Agreement contains
various customary representations and warranties of the parties thereto.
16
Conditions to the Blockbuster Merger. The obligations of Purchaser and
Blockbuster to consummate the Blockbuster Merger are subject to the satisfaction
or, where legally permissible, waiver of various conditions, including: (i) the
effectiveness of the registration statement to be filed with the Commission with
respect to the shares of Purchaser Common Stock to be issued to the stockholders
of Blockbuster pursuant to the Blockbuster Merger and the absence of any stop
order suspending the effectiveness thereof and any proceedings for that purpose
initiated by the Commission; (ii) the approval of the Blockbuster Merger
Agreement and the Blockbuster Merger by the requisite vote of the stockholders
of Blockbuster and the approval of the Blockbuster Merger and the Blockbuster
Merger Agreement and certain amendments to Viacom's Certificate of Incorporation
by the requisite number of holders of Viacom Class A Common Stock; (iii) no
governmental entity having enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits consummation of the Blockbuster
Merger or any transaction contemplated by the Blockbuster Merger Agreement;
provided, however, that the parties have agreed to use their reasonable best
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted; (iv) the expiration or termination of the applicable waiting
period under the HSR Act; and (v) and receipt of governmental approvals.
The obligations of Purchaser to effect the Blockbuster Merger and the
transactions contemplated by the Blockbuster Merger Agreement are also subject
to the following conditions: (i) representations and warranties of Blockbuster
remaining true and correct, except as would not have a material adverse effect
on Blockbuster; (ii) Blockbuster having performed or complied in all material
respects with all agreements and covenants required by the Blockbuster Merger
Agreement to be performed or complied with by it on or prior to the Blockbuster
Merger Effective Time; and (iii) Purchaser having received the opinion of
Shearman & Sterling to the effect that the Blockbuster Merger will be treated
for federal income tax purposes as a reorganization qualifying under the
provisions of section 368(a) of the Code.
The obligations of Blockbuster to effect the Blockbuster Merger and the
other transactions contemplated by the Blockbuster Merger Agreement are also
subject to the following conditions: (i) the representations and warranties of
Purchaser remaining true and correct, except as would not have a material
adverse effect on Purchaser; (ii) Purchaser having performed or complied in all
material respects with all agreements and covenants required by the Blockbuster
Merger Agreement to be performed or complied with by it on or prior to the
Blockbuster Merger Effective Time; (iii) Blockbuster having received the opinion
of Skadden, Arps, Slate, Meagher & Flom to the effect that the Blockbuster
Merger will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of section 368(a) of the Code; and (iv)
Purchaser having filed with the Secretary of State of the State of Delaware a
certificate of amendment to Purchaser's Restated Certificate of Incorporation
pursuant to which the amendments required by the Blockbuster Merger Agreement
became effective.
Termination; Fees. The Blockbuster Merger Agreement contains customary
provisions relating to the termination of the Blockbuster Merger Agreement and
provides that, under certain limited circumstances, upon such termination,
Blockbuster will pay Purchaser's out of pocket expenses incurred in connection
with the transaction up to a maximum of $50,000,000.
Certain Other Agreements. Certain stockholders of Blockbuster have granted
to Purchaser options to purchase the shares of common stock of Blockbuster owned
by such stockholders in certain circumstances in the event the Blockbuster
Merger Agreement is terminated. In addition, such stockholders and certain
additional stockholders have granted to Purchaser proxies to vote the
Blockbuster shares owned by such stockholders in favor of the Blockbuster Merger
and against any competing business combination proposal.
NAI, the controlling stockholder of Purchaser, has agreed to vote the
shares of Viacom Class A Common Stock owned by it in favor of the Blockbuster
Merger and against any competing business combination proposal. The shares of
Viacom Class A Common Stock owned by NAI constitute a majority of the shares of
Viacom Common Stock entitled to vote on the Blockbuster Merger. Accordingly,
approval of the Blockbuster Merger by the stockholders of Purchaser is assured.
17
10. CERTAIN INFORMATION CONCERNING BLOCKBUSTER.
General. Blockbuster is a Delaware corporation. Its principal offices are
located at One Blockbuster Plaza, Fort Lauderdale, Florida 33301-1860.
Blockbuster is an international entertainment company with businesses
operating in the home video, music retailing and filmed entertainment
industries. Blockbuster also has investments in other entertainment businesses.
Blockbuster owns, operates and franchises Blockbuster Video videocassette
rental and sales Superstores. As of December 31, 1993, there were 3,593 video
stores operating in Blockbuster's system, of which 2,698 were Blockbuster-owned
and 895 were franchise-owned. Blockbuster-owned video stores at December 31,
1993 included 775 stores operating under the "Ritz" trade name in the United
Kingdom and Austria, and 160 recently acquired video stores under various trade
names including "Video Towne" and "Movies at Home in the United States."
Blockbuster has been engaged in the music retailing business since November
1992, when it acquired Sound Warehouse, Inc. and Show Industries, Inc..
Currently Blockbuster is one of the largest specialty retailers of prerecorded
music in the United States, with 511 stores operating throughout the country as
of December 31, 1993. In December 1992, Blockbuster entered into an
international joint venture with Virgin Retail Group Limited to develop music
"Megastores" in Continental Europe, Australia and the United States. The joint
venture currently owns interests in and operates 20 "Megastores."
Blockbuster-owned domestic music stores at December 31, 1993 include 270
recently acquired music stores operating under various trade names including
"Record Bar," "Tracks," "Turtles" and "Rhythm and Views."
In April 1993, Blockbuster expanded into the production, programming and
distribution areas of the filmed entertainment industry through the acquisition
of a majority of the common stock of Spelling Entertainment Group Inc.
("Spelling Entertainment"). The operations of Spelling Entertainment encompass a
broad range of businesses in the filmed entertainment industry, supported by an
extensive library of television series, feature films, television movies,
mini-series and specials. At November 5, 1993, Blockbuster owned 45,658,640
shares, or approximately 70.5%, of Spelling Entertainment's outstanding common
stock.
Blockbuster owns 2,550,000 shares, and warrants to acquire an additional
810,000 shares, of the common stock of Republic Pictures Corporation ("Republic
Pictures"). At October 19, 1993, Blockbuster's investment in Republic Pictures
represented approximately 39% of Republic Pictures' outstanding common stock,
including shares subject to such warrants. Republic Pictures is engaged in the
development and production of television programming and the distribution of
this programming and its extensive library of feature films, television movies,
mini-series and specials.
On December 8, 1993, Spelling Entertainment and Republic Pictures entered
into an agreement and plan of merger pursuant to which a wholly owned subsidiary
of Spelling Entertainment would merge with Republic Pictures, and, as a result
of such merger, Republic Pictures is expected to become a wholly owned
subsidiary of Spelling Entertainment.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history for each of the directors and
executive officers of Blockbuster and certain other information are set forth in
Schedule I to this Second Supplement, which amends and supplements the Schedule
I which was included in the Offer to Purchase.
Financial Information. The summary financial data presented below has been
derived from the consolidated financial statements of Blockbuster which have
been audited by independent certified public accountants. In August 1993,
Blockbuster consolidated with WJB Video Limited Partnership and certain of its
related entities. This transaction was accounted for under the pooling of
interests method of accounting and, accordingly, Blockbuster's financial
statements have been restated for all
18
periods as if the companies had operated as one entity since inception. The
following Selected Consolidated Financial Data should be read in conjunction
with "Management Discussion and Analysis of Financial Condition and Results of
Operations", Blockbuster's Consolidated Financial Statements and Notes thereto
and other financial information contained in Blockbuster's Annual Report on Form
10-K for the year ended December 31, 1992 and from the unaudited financial
statements contained in Blockbuster's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993, in each case filed by Blockbuster with the
Commission. Such reports and other documents may be inspected and copies may be
obtained from the offices of the Commission in the same manner as set forth with
respect to information about the Company in Section 7 of the Offer to Purchase.
BLOCKBUSTER ENTERTAINMENT CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- ---------------------
1992 1991 1990 1993 1992
---------- --------- --------- ---------- ---------
(UNAUDITED)
RESULTS OF OPERATIONS DATA
Revenue................................................... $ 1,315.8 $ 961.6 $ 699.7 $ 1,503.3 $ 879.1
Operating income.......................................... 242.9 161.1 122.1 286.0 163.2
Net income................................................ 148.3 89.1 65.9 162.4 100.6
Net income attributable to common stock................... 148.3 89.1 65.9 162.4 100.6
Net income per common and common equivalent share......... .77 .51 .39 .76 .53
Net income per common and common equivalent share assuming
full dilution............................................. .76 .51 .39 .76 .53
AT DECEMBER 31,
--------------------------------
AT SEPTEMBER 30,
1992 1991 1990 1993
---------- --------- --------- ----------------
(UNAUDITED)
BALANCE SHEET DATA:
Total assets.................................................. $ 1,540.7 $ 893.3 $ 702.1 $ 2,426.1
Long-term debt................................................ 356.6 193.7 220.3 438.5
Stockholders' equity.......................................... 787.3 480.5 319.4 1,336.0
Book value per common share................................... 3.98 2.84 2.04 6.01
Except as set forth in this Second Supplement: (i) neither Blockbuster nor,
to the knowledge of Blockbuster, any of the persons listed in Schedule I hereto
or any associate or majority-owned subsidiary of Blockbuster or any of the
persons so listed beneficially owns or has a right to acquire any Shares or any
other equity securities of the Company; (ii) neither Blockbuster, nor, to the
knowledge of Blockbuster, any of the persons or entities referred to in clause
(i) above or any of their executive officers, directors or subsidiaries has
effected any transaction in the Shares or any other equity securities of the
Company during the past 60 days; (iii) neither Blockbuster nor, to the knowledge
of Blockbuster, any of the persons listed in Schedule I hereto, has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to, the
transfer or voting thereof, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations; (iv) since May 1, 1990, there have been
no transactions which would require reporting under the rules and regulations of
the Commission between Blockbuster or any of its subsidiaries or, to the
knowledge of Blockbuster, any of the persons listed in Schedule I hereto, on the
one hand, and the
19
Company or any of its executive officers, directors or affiliates, on the other
hand; and (v) since May 1, 1990, there have been no contacts, negotiations or
transactions between Blockbuster or any of its subsidiaries or, to the knowledge
of Blockbuster, any of the persons listed in Schedule I hereto, on the one hand,
and the Company or its subsidiaries or affiliates, on the other hand, concerning
a merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets of the Company.
11. MISCELLANEOUS. Purchaser has filed with the Commission amendments to
the Schedule 14D-1 pursuant to Rule 14d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, furnishing certain
additional information with respect to the Offer, and may file further
amendments thereto. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 of the Offer to Purchase
(except that they will not be available at the regional offices of the
Commission).
VIACOM INC.
January 7, 1994
20
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF BLOCKBUSTER
The following table sets forth the name, current business address and
present principal occupation or employment, and material occupations, positions,
offices or employments and business addresses thereof for the past five years of
each director and executive officer of Blockbuster. Unless otherwise indicated,
the current business address of each person is One Blockbuster Plaza, Fort
Lauderdale, Florida 33301-1860. Each such person is a citizen of the United
States of America, except for Ramon Martin-Busutil who is a citizen of France.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with Blockbuster. Directors are indicated by an
asterisk.
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND CURRENT BUSINESS
ADDRESS; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
NAME AND BUSINESS ADDRESSES THEREOF
- -------------------------------------- --------------------------------------------------------------------------
H. Wayne Huizenga*.................... Chairman, Chief Executive Officer and Director of Blockbuster since 1987;
Chairman of Huizenga Holdings, Inc. since 1984, One Blockbuster Plaza,
Fort Lauderdale, Florida; Director of Republic Pictures Corporation
since 1993, 12636 Beatrice Street, Los Angeles, California; Chairman of
the Board of Spelling since 1993, One Blockbuster Plaza, Fort
Lauderdale, Florida; Director of Viacom since 1993; Director of
Discovery Zone Inc. since 1993, 205 N. Michigan Avenue, Chicago,
Illinois.
A. Clinton Allen, III*................ Director of Blockbuster since 1986; Chairman and Chief Executive Officer
of A.C. Allen & Company since 1988, 1280 Massachusetts Avenue,
Cambridge, Massachusetts; Director and Vice Chairman of Psychemedics
Corporation since 1989, 1280 Massachusetts Ave., Cambridge, MA, and the
DeWolfe Companies, Inc., 271 Lincoln, Lexington, MA, since 1991.
Steven R. Berrard*.................... Director of Blockbuster since 1989; Vice Chairman since 1989; President
and Chief Operating Officer since 1993; Treasurer and Senior Vice
President of Blockbuster from 1987 to 1989; Chief Financial Officer of
Blockbuster from 1989 to 1992; Director of Republic Pictures Corporation
since 1993; President, Chief Executive Officer and Director of Spelling
since 1993.
John W. Croghan*...................... Director of Blockbuster since 1987; Director of Lindsay Manufacturing
Company since 1989, East Highway 91, Lindsay, NE; Director of the Morgan
Stanley Emerging Markets Fund since 1991, 1251 Avenue of the Americas,
NY, NY; Chairman of Lincoln Capital Management Company since prior to
1989, 200 South Wacker Drive, Chicago, Illinois.
Donald F. Flynn*...................... Director of Blockbuster since 1987; Chairman and Chief Executive Officer
of Flynn Enterprises, Inc. since 1992, 205 N. Michigan Avenue, Chicago,
IL; Chief Executive Officer of Discovery Zone L.P. since 1992, 205 N.
Michigan Ave., Chicago, IL; Chairman and Chief Operating Officer of
Discovery Zone, Inc. since 1993; Director of Waste Management, Inc.,
3003 Butterfield Road, Oakbrook, IL, since 1981, Chemical Waste
Management, Inc., 3003 Butterfield Road, Oakbrook, IL, since 1986, Waste
Management International, plc., 3003 Butterfield Road, Oakbrook, IL;
since 1992, Wheelabrator Technologies, Inc., Liberty Lane, Hampton, NH,
since 1988, and Psychemedics Corporation, 1280 Massachusetts Ave.,
Cambridge, MA, since 1987 and H20
I-1
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND CURRENT BUSINESS
ADDRESS; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
NAME AND BUSINESS ADDRESSES THEREOF
- -------------------------------------- --------------------------------------------------------------------------
Plus Inc., 676 N. Michigan Ave., Chicago, IL, since 1993; held various
positions, including Vice President and Chief Financial Officer, between
1970 and 1990 with Waste Management, Inc.
John J. Melk*......................... Director of Blockbuster since 1993; Chairman and Chief Executive Officer
of H2O Plus Inc. since 1988, 676 N. Michigan Avenue, Chicago, Illinois;
Director of Psychemedics Corporation since 1991, 1280 Massachusetts
Ave., Cambridge, MA; Director and Vice Chairman of Blockbuster from 1987
to 1989; Director of Discovery Zone, Inc. since 1993.
J. Ronald Castell..................... Senior Vice President of Programming and Communications since 1991; Senior
Vice President of Programming and Merchandising from 1989 to 1991; Vice
President of Marketing and Merchandising at Erol's Inc. until 1989, 6621
Electronic Drive, Springfield, Virginia.
Albert J. Detz........................ Vice President and Corporate Controller since 1992; Assistant Corporate
Controller from 1991 to 1992; various finance related positions with
Encore Computer Corporation until 1991, including Vice President and
Corporate Controller, 6901 W. Sunrise Blvd., Plantation, Florida.
Gregory K. Fairbanks.................. Senior Vice President and Chief Financial Officer since 1992 and Treasurer
since 1993; Executive Vice President and Chief Financial Officer of
Waste Management International plc. from 1980 to 1992.
Robert A. Guerin...................... Senior Vice President of Domestic Franchising since 1992; Senior Vice
President of Administration and Development for Blockbuster from 1989 to
1991; Vice President from 1988 to 1989.
James L. Hilmer....................... Senior Vice President and Chief Marketing Officer since 1993; Director,
Division President and Managing Partner of Whittle Communications L.P.
from 1984 to 1992, 333 Main Avenue, Knoxville, Tennessee.
Ramon Martin-Busutil.................. President--International Division since 1992; various positions with
Cadbury Beverages and Schweppes from 1981 to 1992, including President
of Cadbury Beverages Europe, 6 High Ridge Park, Stamford, Connecticut.
Gerald W.B. Weber..................... Senior Vice President of Operations since 1991; Vice President of
Operations from 1990 to 1991; Regional Manager from 1988 to 1989.
I-2
Facsimiles of Letters of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand or
By Mail: By Facsimile: Overnight Courier:
P.O. Box 2562 (201) 222-4720 14 Wall Street,
Mail Suite 4660 or 8th Floor
Jersey City, New Jersey (201) 222-4721 Suite 4680
07303-2562 Confirm by Telephone: New York, New York 10005
(201) 222-4707
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, this Second
Supplement, the revised (Orange) Letter of Transmittal and the revised (Yellow)
Notice of Guaranteed Delivery may be obtained from the Information Agent. A
stockholder may also contact brokers, dealers, commercial banks or trust
companies for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC. [LOGO]
Wall Street Plaza
New York, New York 10005 Bankers and Brokers call
(212) 509-6240 (collect) (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY SHEARSON INC.
1345 Avenue of the Americas
48th Floor
New York, NY 10105
(212) 698-8455
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 25, 1993,
THE SUPPLEMENT THERETO
DATED NOVEMBER 8, 1993
AND THE SECOND SUPPLEMENT THERETO
DATED JANUARY 7, 1994
OF
VIACOM INC.
THE OFFER IS EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 21,
1994, UNLESS THE OFFER IS FURTHER EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Facsimile
By Mail: Transmission: By Hand or Overnight Courier:
P.O. Box 2562 (201) 222-4720 14 Wall Street,
Suite Box 4660 or 8th Floor
Jersey City, New Jersey (201) 222-4721 Suite 4680
07303-2562 New York, New York 10005
Confirm by Telephone:
(201) 222-4707
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
While the previously circulated (Yellow) or (Green) Letters of Transmittal
refer to the Offer to Purchase dated October 25, 1993 and the Supplement thereto
dated November 8, 1993, stockholders making use thereof to tender their Shares
will nevertheless receive $105 per Share for each Share validly tendered and
not withdrawn and accepted for payment pursuant to the Offer, subject to the
conditions of the Offer. Stockholders who have previously validly tendered and
have not withdrawn their Shares pursuant to the Offer are not required to take
any further action to receive the increased tender price of $105 per Share.
This revised Letter of Transmittal or one of the previously circulated
(Yellow) or (Green) Letters of Transmittal is to be completed by stockholders
either if certificates evidencing Shares (as defined below) are to be forwarded
herewith or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC"), the Midwest
Securities Trust Company ("MSTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure
described in Section 3 of the Offer to Purchase (as defined below). DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) / / DTC / / MSTC / / PDTC
Account Number ____________________ Transaction Code Number ________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) _____________________________________________
Window Ticket No. (if any) __________________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution which Guaranteed Delivery _______________________________
DESCRIPTION OF SHARES TENDERED
NAMES(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
Total Shares..................
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
evidenced by each Share Certificate delivered to the Depositary are
being tendered hereby. See Instruction 4.
|
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Viacom Inc., a Delaware corporation
("Purchaser"), the above-described shares of Common Stock, par value $1.00 per
share, of Paramount Communications Inc., a Delaware corporation (the "Company")
(all shares of such Common Stock from time to time outstanding being,
collectively, the "Shares") pursuant to Purchaser's offer to purchase 61,607,894
Shares, or such greater number of Shares as equals 50.1% of the Shares
outstanding plus the Shares issuable upon the exercise of the then exercisable
stock options, as of the expiration of the Offer, at $105 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated October 25, 1993 (the "Offer to Purchase"), as amended
and supplemented by the Supplement thereto dated November 8, 1993 (the "First
Supplement") and the Second Supplement thereto dated January 7, 1994 (the
"Second Supplement"; and together with the First Supplement, the "Supplements"),
receipt of which is hereby acknowledged, and in the related Letters of
Transmittal (which together constitute the "Offer"). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is further extended or amended, the terms and conditions of such extension
or amendment), the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after October 24, 1993,
except for regular quarterly dividends on the Shares declared and payable
consistent with past practice in an aggregate amount not in excess of $.20 per
Share (collectively, "Distributions"), and irrevocably appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares and all Distributions, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by a Book-Entry Transfer Facility, together, in either
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) present such Shares and all Distributions for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Frank J. Biondi, Jr. and
Philippe P. Dauman, and each of them, as the attorneys and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and otherwise act (by written consent or otherwise) with respect to
all the Shares tendered hereby which have been accepted for payment by Purchaser
prior to the time of such vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all other proxies and
powers of attorney granted by the undersigned at any time with respect to such
Shares (and all Shares and other securities issued in Distributions in respect
of such Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights with respect to such Shares, including, without
limitation, voting at any meeting of the Company's stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the tender of the tendered Shares
complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended,
and that when such Shares are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will be subject to
any adverse claim. The undersigned, upon request, shall execute and deliver all
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Distributions. In addition, the undersigned shall remit and
transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered". Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered". In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned, or if Shares tendered
hereby and delivered by book-entry transfer which are not purchased are to be
returned by credit to an account at one of the Book-Entry Transfer Facilities
other than that designated above.
Issue / / check / / Share Certificate(s) to:
Name ...........................................................................
(PLEASE PRINT)
...............................................................................
Address ........................................................................
...............................................................................
(ZIP CODE)
...............................................................................
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
/ / Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Check appropriate box:
/ / DTC / / MSTC / / PDTC
Account Number .................................................................
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered".
Mail / / check / / Share Certificates(s) to:
Name ...........................................................................
(PLEASE PRINT)
...............................................................................
Address ........................................................................
...............................................................................
(ZIP CODE)
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
_______________________________________________________________________________
_______________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated:_____________________ , 199_
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5.)
Name(s): ______________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT)
Capacity (full title):_________________________________________________________
Address: _____________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: __________________________________________________
Taxpayer Identification or Social Security No.: _______________________________
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE
IN SPACE BELOW.
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., by a commercial bank or trust company having an office or
correspondent in the United States, or by any other "eligible guarantor
institution", as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each of the foregoing being referred to as an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" on
the reverse hereof or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 3 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the reverse hereof prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). If Share Certificates
are forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who cannot
deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Depositary within five New York
Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such
Notice of Guaranteed Delivery, all as described in Section 3 of the Offer to
Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Stockholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such stockholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, the Supplements, this Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF, PROPERLY
COMPLETED AND DULY EXECUTED, (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES
AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder has not been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such stockholder that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
Part I--Taxpayer Identification Number--
SUBSTITUTE For all accounts, enter taxpayer ________________________________
identification number in the box at right. Social Security Number
FORM W-9 (For most individuals, this is your social
security number. If you do not have a OR______________________________
DEPARTMENT OF THE number, see Obtaining a Number in the Employer Identification
TREASURY enclosed Guidelines.) Certify by signing Number
INTERNAL REVENUE and dating below.
SERVICE Note: If the account is in more than one (If awaiting TIN write
name, see the chart in the enclosed "Applied For")
Guidelines to determine which number to
give the payer.
Payer's Request for Part II--For Payees Exempt From Backup Withholding,
Taxpayer Identification see the enclosed Guidelines and complete as
Number (TIN) instructed therein.
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject
to backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
Certificate Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
SIGNATURE ______________________________________ DATE ______________ , 199
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
The Information Agent for the Offer is:
[GEORGESON LOGO]
Wall Street Plaza
New York, New York 10005 Bankers and Brokers call
(212) 509-6240 (collect) (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY SHEARSON INC.
1345 Avenue of the Americas
48th Floor
New York, NY 10105
(212) 698-8455
January 7, 1994
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of Common Stock, par value $1.00 per
share (the "Shares"), of Paramount Communications Inc., a Delaware corporation
(the "Company"), are not immediately available, (ii) if Share Certificates and
all other required documents cannot be delivered to First Chicago Trust Company
of New York, as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase (as defined below)) or (iii) if
the procedure for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand or
mail or transmitted by telegram or facsimile transmission to the Depositary. See
Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Facsimile
By Mail: Transmission: By Hand or Overnight Courier:
P.O. Box 2562 (201) 222-4720 14 Wall Street,
Suite Box 4660 or 8th Floor
Jersey City, New Jersey (201) 222-4721 Suite 4680
07303-2562 Confirm by Telephone: New York, New York 10005
(201) 222-4707
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above, or transmission of instructions via facsimile transmission
other than as set forth above, will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to Viacom Inc., a Delaware corporation, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
October 25, 1993 (the "Offer to Purchase"), as amended and supplemented by the
Supplement thereto dated November 8, 1993 (the "First Supplement") and the
Second Supplement thereto dated January 7, 1994 (the "Second Supplement;
together with the First Supplement, the "Supplements"), and the related Letters
of Transmittal (which together constitute the "Offer"), receipt of each of which
is hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedure described in Section 3 of the Offer to Purchase.
Number of Shares: ______________________ ___________________________________
___________________________________
Signature(s) of Holder(s)
Certificate Nos. (If Available):
Dated: _______________________,1994
________________________________________
Name(s) of Holders:
________________________________________
___________________________________
___________________________________
Please Type or Print
Check one box if Shares will be delivered by
book-entry transfer:
___________________________________
Address
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
___________________________________
/ / Philadelphia Depository Trust Zip Code
Company
Account No. ____________________________ ___________________________________
Area Code and Telephone No.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc. or which is a commercial bank or trust company having an office or
correspondent in the United States, guarantees to deliver to the
Depositary, at one of its addresses set forth above, Share Certificates
evidencing the Shares tendered hereby, in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company, the Midwest Securities Trust
Company or the Philadelphia Depository Trust Company, in each case with
delivery of a Letter of Transmittal (or facsimile thereof) properly
completed and duly executed, and any other required documents, all within
five New York Stock Exchange, Inc. trading days of the date hereof.
____________________________________ ____________________________________
Name of Firm Authorized Signature
____________________________________ ____________________________________
Address Title
____________________________________ Name:_______________________________
Zip Code Please Type or Print
____________________________________
Area Code and Telephone No. Dated:_________________________,199_
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER
OF TRANSMITTAL.
VIACOM INC.
HAS INCREASED THE PRICE OF ITS
OFFER TO PURCHASE FOR CASH
61,607,894 SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
TO
$105 NET PER SHARE
THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
JANUARY 21, 1994, UNLESS THE OFFER IS FURTHER EXTENDED.
January 7, 1994
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Viacom Inc., a Delaware corporation
("Purchaser"), to act as Dealer Manager in connection with Purchaser's offer to
purchase 61,607,894 shares of Common Stock, par value $1.00 per share (the
"Shares"), of Paramount Communications Inc., a Delaware corporation (the
"Company"), or such greater number of Shares as equals 50.1% of the Shares
outstanding plus the Shares issuable upon the exercise of the then exercisable
stock options, as of the expiration of the Offer, at a price of $105 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in Purchaser's Offer to Purchase dated October 25, 1993 (the "Offer to
Purchase"), as amended and supplemented by the Supplement thereto dated November
8, 1993 (the "First Supplement") and the Second Supplement thereto dated January
7, 1994 (the "Second Supplement"; and together with the First Supplement, the
"Supplements") and in the related Letters of Transmittal (which together
constitute the "Offer"). Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares registered in your name
or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, 61,607,894 SHARES, OR
SUCH GREATER NUMBER OF SHARES AS EQUALS 50.1% OF THE SHARES OUTSTANDING PLUS THE
SHARES ISSUABLE UPON THE EXERCISE OF THE THEN EXERCISABLE STOCK OPTIONS, AS OF
THE EXPIRATION OF THE OFFER, BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO
THE EXPIRATION OF THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS.
Enclosed for your information and use are copies of the following
documents:
1. The Second Supplement, dated January 7, 1994;
2. The revised (Orange) Letter of Transmittal to be used by holders of
Shares in accepting the Offer and tendering Shares;
3. The revised (Yellow) Notice of Guaranteed Delivery to be used to accept
the Offer if the Shares and all other required documents are not immediately
available or cannot be delivered to First Chicago Trust Company of New York (the
"Depositary") by the Expiration Date (as defined in the Second Supplement) or if
the procedure for book-entry transfer cannot be completed by the Expiration
Date;
4. A revised letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER HAS
BEEN EXTENDED. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 21,
1994, UNLESS THE OFFER IS FURTHER EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed and any other required
documents in accordance with the instructions contained in the Letter of
Transmittal.
Tendering shareholders may use the revised (Orange) Letter of Transmittal
provided herewith or the previously circulated (Yellow) or (Green) Letters of
Transmittal provided with the Offer to Purchase and the First Supplement to
tender Shares. If you or your clients have previously tendered (and not
withdrawn) Shares, no further action is necessary in order to tender such
Shares.
If a holder of Shares desires to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer) in connection with the solicitation of tenders
of Shares pursuant to the Offer. However, Purchaser will reimburse you, upon
request, for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any stock transfer taxes payable with respect to the transfer
of Shares to it, except as otherwise provided in Instruction 6 of the revised
(Orange) Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Smith Barney Shearson Inc. or Georgeson & Company Inc. (the "Information Agent")
at their respective addresses and telephone numbers set forth on the back cover
page of the Second Supplement.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone numbers set forth on the back
cover page of the Second Supplement.
Very truly yours,
SMITH BARNEY SHEARSON INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE DEALER MANAGER, THE INFORMATION
AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY
OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
VIACOM INC.
HAS INCREASED THE PRICE OF ITS
OFFER TO PURCHASE FOR CASH
61,607,894 SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
TO
$105 NET PER SHARE
THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 21, 1994,
UNLESS THE OFFER IS FURTHER EXTENDED.
To Our Clients:
Enclosed for your consideration is a Second Supplement dated January 7,
1994 (the "Second Supplement") to the Offer to Purchase dated October 25, 1993
(the "Offer to Purchase") as supplemented by the Supplement thereto dated
November 8, 1993 (the "First Supplement"; and together with the Second
Supplement, the "Supplements") and the revised (Orange) Letter of Transmittal in
connection with the offer by Viacom Inc., a Delaware corporation ("Purchaser"),
to purchase 61,607,894 shares of Common Stock, par value $1.00 per share (the
"Shares"), of Paramount Communications Inc., a Delaware corporation (the
"Company"), or such greater number of Shares as equals 50.1% of the Shares
outstanding plus the Shares issuable upon the exercise of the then exercisable
stock options, as of the expiration of the Offer, at a price of $105 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, as amended and supplemented by the Supplements,
and in the related Letters of Transmittal (which together constitute the
"Offer"). We are the holder of record of Shares held by us for your account. A
TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE REVISED (ORANGE) LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT. IF YOU HAVE ALREADY INSTRUCTED US TO TENDER
YOUR SHARES PURSUANT TO THE OFFER, IT IS NOT NECESSARY FOR YOU TO TAKE ANY
FURTHER ACTION IN ORDER TO RECEIVE THE INCREASED TENDER PRICE OF $105 PER SHARE.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $105 per Share, net to the seller in cash.
2. The Offer is being made for 61,607,894 Shares, or such greater
number of Shares as equals 50.1% of the Shares outstanding plus the Shares
issuable upon the exercise of the then exercisable stock options, as of the
expiration of the Offer. If more than 61,607,894 Shares, or such greater
number of Shares as equals 50.1% of the Shares outstanding plus the Shares
issuable upon the exercise of the then exercisable stock options, as of the
expiration of the Offer, are validly tendered prior to the Expiration Date
(as defined in the Offer to Purchase) and not withdrawn, Purchaser will,
upon the terms and subject to the conditions of the Offer, accept such
Shares for payment on a pro rata basis, with adjustments to avoid purchases
of fractional shares, based upon the number of Shares validly tendered
prior to the Expiration Date and not withdrawn.
3. The Offer has been extended. The Offer, proration period and
withdrawal rights will expire at 12:00 Midnight, New York City time, on
Friday, January 21, 1994, unless the Offer is further extended.
4. The Offer is conditioned upon, among other things, 61,607,894
Shares, or such greater number of Shares as equals 50.1% of the Shares
outstanding plus the Shares issuable upon the exercise of the then
exercisable stock options, as of the expiration of the Offer, being validly
tendered and not withdrawn prior to the expiration of the Offer.
5. If the Offer is consummated, Purchaser intends to effectuate a
second-step merger pursuant to which each Share outstanding at the
effective time of such merger would be cancelled and converted into the
right to receive (i) .93065 shares of Viacom Class B Common Stock, par
value $.01 per share, of Purchaser and (ii) .30408 shares of a new series
of cumulative convertible exchangeable preferred stock, par value $.01 per
share, of Purchaser, with terms more fully described in the Second
Supplement.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
revised (Orange) Letter of Transmittal, stock transfer taxes with respect
to the purchase of Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf prior to the expiration of the Offer. The Letters of Transmittal are
furnished to you for your information only and cannot be used by you to tender
Shares held by us for your account.
The Offer is made solely by the Offer to Purchase, the Supplements and the
related Letters of Transmittal and is being made to all holders of Shares.
Purchaser is not aware of any state where the making of the Offer is prohibited
by administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Smith Barney Shearson
Inc. or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
61,607,894 SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
The undersigned acknowledge(s) receipt of your letter enclosing the
Second Supplement dated January 7, 1994 to the Offer to Purchase dated October
25, 1993 as supplemented by the Supplement thereto dated November 8, 1993, and
the revised (Orange) Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by Viacom Inc., a Delaware corporation, to
purchase at least 61,607,894 shares of Common Stock, par value $1.00 per share
(the "Shares"), of Paramount Communications Inc., a Delaware corporation, or
such greater number of Shares as equals 50.1% of the Shares outstanding plus the
Shares issuable upon the exercise of the then exercisable stock options, as of
the expiration of the Offer.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
NUMBER OF SHARES TO BE TENDERED: SIGN HERE
________________ SHARES* ______________________________
Dated:_________ , 199_ ______________________________
Signature(s)
______________________________
______________________________
Please type or print name(s)
______________________________
______________________________
Please type or print address
______________________________
Area Code and Telephone Number
______________________________
Taxpayer Identification or
Social Security Number
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
VIACOM INC.
HAS INCREASED THE PRICE OF ITS
OFFER TO PURCHASE FOR CASH
61,607,894 SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
TO
$105 NET PER SHARE
THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
JANUARY 21, 1994, UNLESS THE OFFER IS FURTHER EXTENDED.
January 7, 1994
To Participants in the Dividend Reinvestment Plan of Paramount Communications
Inc.:
Enclosed for your consideration is a Second Supplement dated January 7,
1994 (the "Second Supplement") to the Offer to Purchase dated October 25, 1993
(the "Offer to Purchase") as supplemented by the Supplement thereto dated
November 8, 1993 (the "First Supplement"; together with the Second Supplement,
the "Supplements") and a revised (Orange) Letter of Transmittal in connection
with the offer by Viacom Inc., a Delaware corporation ("Purchaser"), to purchase
61,607,894 shares of Common Stock, par value $1.00 per share (the "Shares"), of
Paramount Communications Inc., a Delaware corporation (the "Company"), or such
greater number of Shares as equals 50.1% of the Shares outstanding plus the
Shares issuable upon the exercise of the then exercisable stock options, as of
the expiration of the Offer, at a price of $105 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, as amended and supplemented by the Supplements, and in the related
Letters of Transmittal (which together constitute the "Offer"). Our nominee is
the holder of record of Shares held for your account as a participant in the
Dividend Reinvestment Plan of the Company (the "Plan"). A tender of such Shares
can be made only by us through our nominee as the holder of record and pursuant
to your instructions. The revised (Orange) Letter of Transmittal is furnished to
you for your information only and cannot be used by you to tender Shares held in
your Plan account. If you have already instructed us to tender your shares
pursuant to the Offer, it is not necessary for you to take any further action in
order to receive the increased tender price of $105 per Share.
We request instructions as to whether you wish to have us instruct our
nominee to tender on your behalf any or all of the Shares held in your Plan
account, upon the terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $105 per Share, net to the seller in cash.
2. The Offer is being made for 61,607,894 Shares, or such greater
number of Shares as equals 50.1% of the Shares outstanding plus the Shares
issuable upon the exercise of the then exercisable stock options, as of the
expiration of the Offer. If more than 61,607,894 Shares, or such greater
number of shares as equals 50.1% of the Shares outstanding plus the Shares
issuable upon the exercise of the then exercisable stock options, as of the
expiration of the Offer, are validly tendered prior to the Expiration Date
(as defined in the Offer to Purchase) and not withdrawn, Purchaser will,
upon the terms and subject to the conditions of the Offer, accept such
Shares for payment on a pro rata basis, with adjustments to avoid purchases
of fractional Shares, based upon the number of Shares validly tendered
prior to the Expiration Date and not withdrawn.
3. The Offer has been extended. The Offer, proration period and
withdrawal rights will expire at 12:00 Midnight, New York City time, on
Friday, January 21, 1994, unless the Offer is further extended.
4. The Offer is conditioned upon, among other things, 61,607,894
Shares, or such greater number of Shares as equals 50.1% of the Shares
outstanding plus the Shares issuable upon the exercise of the then
exercisable stock options, as of the expiration of the Offer, being validly
tendered and not withdrawn prior to the expiration of the Offer.
5. If the Offer is consummated, Purchaser intends to effectuate a
second-step merger pursuant to which each Share outstanding at the
effective time of such merger would be cancelled and converted into the
right to receive (i) .93065 shares of Viacom Class B Common Stock, par
value $.01 per share, of Purchaser and (ii) .30408 shares of a new series
of cumulative convertible exchangeable preferred stock, par value $.01 per
share, of Purchaser, with terms more fully described in the Second
Supplement.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
revised (Orange) Letter of Transmittal, stock transfer taxes with respect
to the purchase of Shares by Purchaser pursuant to the Offer. The Letters
of Transmittal are furnished to you for your information only and cannot be
used by you to tender Shares held by us for your account.
If you wish to have us tender any or all of the Shares held in your Plan
account, please so instruct us by completing, executing and returning to us the
instruction form contained in this letter BY 5:00 P.M., NEW YORK CITY TIME, ON
TUESDAY, JANUARY 18, 1994, UNLESS THE OFFER IS FURTHER EXTENDED. An envelope in
which to return your instructions to us is enclosed. If you authorize tender of
such Shares, all such Shares will be tendered unless otherwise specified in your
instructions. Your instructions should be forwarded to us in ample time to
permit us to instruct our nominee to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is made solely by the Offer to Purchase, the Supplements and the
Letters of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Smith Barney Shearson
Inc. or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Very truly yours,
CHEMICAL BANK
Plan Administrator
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
61,607,894 SHARES OF COMMON STOCK
OF
PARAMOUNT COMMUNICATIONS INC.
The undersigned acknowledge(s) receipt of your letter enclosing the
Second Supplement dated January 7, 1994, to the Offer to Purchase dated October
25, 1993 as supplemented by the Supplement thereto dated November 8, 1993, and
the revised (Orange) Letter of Transmittal (which together constitute the
"Offer"), in connection with the offer by Viacom Inc., a Delaware corporation,
to purchase 61,607,894 shares of Common Stock, par value $1.00 per share (the
"Shares"), of Paramount Communications Inc., a Delaware corporation, or such
greater number of Shares as equals 50.1% of the Shares oustanding plus the
Shares issuable upon the exercise of the then exercisable stock options, as of
the expiration of the Offer. The undersigned understand(s) that the Offer
applies to Shares allocated to the account of the undersigned in the Company's
Dividend Reinvestment Plan (the "Plan").
This will instruct you, as Dividend Reinvestment Agent, to instruct your
nominee to tender the number of Shares indicated below (or, if no number is
indicated below, all Shares) that are held for the Plan account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
NUMBER OF SHARES TO BE TENDERED: SIGN HERE
________________ SHARES* ______________________________
Dated:_________ , 199_ ______________________________
Signature(s)
______________________________
______________________________
Please type or print name(s)
______________________________
______________________________
Please type or print address
______________________________
Area Code and Telephone Number
______________________________
Taxpayer Identification or
Social Security Number
- -------------
* Unless otherwise indicated, it will be assumed that all Shares in your Plan
account are to be tendered.
PAYER'S NAME: CHEMICAL BANK
Part I--Taxpayer Identification Number--
SUBSTITUTE For all accounts, enter taxpayer ________________________________
identification number in the box at right. Social Security Number
FORM W-9 (For most individuals, this is your social
security number. If you do not have a OR______________________________
DEPARTMENT OF THE number, see Obtaining a Number in the Employer Identification
TREASURY enclosed Guidelines.) Certify by signing Number
INTERNAL REVENUE and dating below.
SERVICE Note: If the account is in more than one (If awaiting TIN write
name, see the chart in the enclosed "Applied For")
Guidelines to determine which number to
give the payer.
Payer's Request for Part II--For Payees Exempt From Backup Withholding,
Taxpayer Identification see the enclosed Guidelines and complete as
Number (TIN) instructed therein.
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject
to backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
Certificate Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
SIGNATURE DATE
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
BLOCKBUSTER AND VIACOM ANNOUNCE $8.4 BILLION MERGER
VIACOM INC. INCREASES ITS TENDER OFFER TO $105 PER SHARE FOR
50.1% OF PARAMOUNT STOCK
- Market Capitalization of Combined
Viacom/Blockbuster/Paramount
Valued at $26 Billion -
New York, New York, January 7, 1993 -- Viacom Inc. (ASE: VIA
and VIAB) and Blockbuster Entertainment Corporation (NYSE: BV)
today announced they have entered into a definitive merger
agreement under which Blockbuster will merge into Viacom.
Under the terms of the agreement, which was unanimously
approved by the Boards of Directors of both companies,
Blockbuster shareholders will receive .08 of a share of Viacom
Class A Common Stock, and .60615 of a share of Viacom Class B
Common Stock, and one variable common right (VCR) for each
share of Blockbuster. The transaction is valued at $8.4
billion, based on the closing market prices of Viacom stock on
January 6, 1994. The combined Viacom/Blockbuster company will
be named Viacom-Blockbuster Inc.
Viacom also announced an increase to $105 per share, or $6.5
billion, for the 50.1% in cash consideration to be paid to
shareholders of Paramount Communications Inc. (NYSE: PCI)
under its revised tender offer.
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Viacom and Blockbuster together announced that, subject to the
consummation of Viacom's tender offer for Paramount,
Blockbuster has agreed to invest $1.25 billion in Viacom by
purchasing approximately 23 million shares of Viacom Class B
Common Stock at $55.00 per share. The shares purchased by
Blockbuster will reduce the number of shares previously
offered to existing Paramount shareholders, placing shares
that would otherwise have been distributed to public
shareholders in the hands of Blockbuster. The additional cash
component of this transaction, provided by the Blockbuster
investment, will provide Paramount shareholders with increased
monetary consideration and added value, with virtually no
dilution to shareholders. In the context of the ultimate
combination of Viacom, Blockbuster and Paramount, the
resulting company will enjoy a significantly strengthened
capital structure. Upon the completion of the Paramount
acquisition, the company will be renamed.
"The combination of Viacom with Blockbuster and Paramount
creates a uniquely diversified portfolio of global
entertainment assets and operations with extraordinary
capacity to exploit worldwide opportunities. The potential
for the exploitation and expansion of brand names and
franchises will be dramatic," said Sumner M. Redstone,
Chairman of the Board of Viacom.
"Blockbuster's established relationships with customers and
large presence in the retail video and music markets provide
Viacom with important access and distribution to consumers of
entertainment products.
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"We look forward to welcoming Blockbuster and its employees to
the Viacom family. Blockbuster's headquarters will be
maintained in Ft. Lauderdale.
"From the very beginning, Viacom's strategic rationale for
joining forces with Paramount was the creation of a new global
entertainment powerhouse with an array of complementary,
world-class assets in a wide variety of entertainment and
communication businesses," Mr. Redstone stated.
H. Wayne Huizenga, Chairman of the Board of Blockbuster, said,
"This transaction is an exciting development for our company
and our shareholders, reflecting the vision we share with
Viacom related to building a global integrated entertainment
company. Blockbuster's retail distribution systems and our
programming and production business together with Viacom's
entertainment franchises represent a formidable combination."
William C. Ferguson, Chairman of NYNEX Corporation, expressing
strong support for today's announcement, said, "We initially
joined forces with Viacom in our belief that Viacom presented
numerous opportunities to leverage our existing businesses by
pursuing joint opportunities. We continue to believe that a
combined Viacom/Blockbuster/ Paramount will bring value to
NYNEX."
With the completion of the merger, Mr. Redstone will become
Chairman of the Board of the combined company and will own 61%
of the combined company's voting stock. With the completion
of the Blockbuster merger, Mr. Huizenga will
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become Vice Chairman of the combined company. This new entity
will have a mutually agreed upon Board of Directors consisting
of six Directors designated by Viacom, three Directors
designated by Blockbuster, including Mr. Huizenga and Steven
R. Berrard, Blockbuster's Vice Chairman, two Directors
designated by NYNEX Corporation, including William C.
Ferguson, Chairman of NYNEX Corporation and a current Director
of Viacom's board, and one independent Director.
The Tender Offer for Paramount and Related Merger
Viacom's tender offer has been extended to Friday, January 21,
1994. Under the terms of the Exemption Agreement between
Viacom and Paramount and the Agreement and Plan of Merger
between QVC Network Inc. and Paramount, Viacom said that QVC
would also be required to extend its offer to expire no
earlier than that date. As permitted by the terms of the
Exemption Agreement, Viacom's amended tender offer is for
50.1% of the outstanding shares of the common stock of
Paramount. Viacom's offer contemplates the execution of a
definitive merger agreement with Paramount providing for the
conversion of each share of Paramount that is not acquired
pursuant to the offer into the right to receive .93065 shares
of Viacom Class B Common Stock and .30408 of a share of
Viacom's convertible preferred stock. Viacom said that as of
the close of business on Thursday, January 6, 1994,
approximately 2,305,900 shares of Paramount stock had been
tendered and not withdrawn.
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Under the Exemption Agreement, Paramount is required to
execute the definitive merger agreement if 50.1% of the
outstanding shares of Paramount are validly tendered for
Viacom's offer and not withdrawn by its expiration date.
Other terms of Viacom's offer, including the terms of the
convertible preferred stock in the merger with Paramount, are
substantially unchanged from Viacom's existing offer.
The Blockbuster/Viacom Merger
The merger of Blockbuster into Viacom, which is intended to be
tax-free, is subject to customary conditions, including
approval of shareholders of both companies. However, the
merger is not conditioned upon consummation of Viacom's tender
offer or any other transaction involving Paramount.
Viacom said that certain Blockbuster shareholders holding
approximately 22.7% of the outstanding Blockbuster shares,
including Mr. Huizenga and Mr. Berrard, had granted Viacom
proxies to vote in favor of the proposed merger. Viacom also
said that certain Blockbuster shareholders granted Viacom
options to purchase a portion of such shares amounting to 6.1%
of Blockbuster's outstanding shares at a price of $30.125 per
share. Mr. Huizenga and Mr. Berrard were among the
Blockbuster stockholders who provided Viacom with stock
options and proxies with respect to their personal holdings of
shares.
The variable common rights (VCRs) to be issued in connection
with this transaction convert into Viacom Class B shares under
certain circumstances. The number of Viacom Class B shares
into which the VCRs will convert will
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generally be based upon the highest 30 consecutive trading day
average price for Viacom Class B Common Stock during the 90
trading days prior to the conversion date, which occurs on the
first anniversary of the completion of the Blockbuster merger.
In the event that such value is less than $48 per share and
more than $40 per share, the VCRs will convert into the right
to receive .05929 of a share of Viacom Class B Common Stock.
If such value is below $40 per share, such number of shares
will increase ratably to the maximum of .13829 of a share of
Viacom Class B Common Stock at a value of $36 per share or, if
such value is above $48 per share, the number of shares into
which the VCR will convert will decrease ratably to have no
value at a price of $52 per share. The upward adjustment in
the value of the VCR in excess of .05929 of a share of Viacom
Class B Common Stock will not be made in the event that,
during any 30 trading day period following the completion of
the merger and prior to the conversion date, the average
closing price exceeds $40 per share. In the event that during
any such period such average price exceeds $52 per share, the
VCR will terminate.
Smith Barney Shearson Inc. is acting as financial advisor to
Viacom and is also dealer manager in connection with the
Offer, and Georgeson & Co. is acting as information agent.
Merrill Lynch & Co. is acting as financial advisor to
Blockbuster.
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Viacom Inc. is the holding company parent of Viacom
International Inc., which together own and operate basic cable
and premium television networks (MTV, MTV Europe, Nickelodeon,
Nick at Nite, VH-1, Showtime, The Movie Channel and FLIX); own
one-half of Comedy Central and All News Channel and one-third
of Lifetime; own SET Pay Per View, which provides events for
the pay-per-view industry; own a leading provider of
programming to the backyard dish market; produce and
distribute programming for television exhibition; develop and
publish interactive software; own cable systems serving more
than 1.1 million customers; and own five television stations
and 14 radio stations. National Amusements, Inc., a closely
held corporation, owns approximately 76 percent of Viacom
Inc.'s Class A and Class B common stock, on a combined basis.
National Amusements, Inc. owns and operates approximately 800
movie screens in the United States and the United Kingdom.
Blockbuster Entertainment Corporation, a global leader in the
entertainment industry, is the world's largest home video
retailer and one of the world's largest music retailers. At
December 31, 1993, Blockbuster had 3,593 video stores (2,698
company-owned and 895 franchise-owned) operating in nine
countries and domestically in 49 states, and 511 music stores
(including 20 megastores in a joint venture with the Virgin
Retail Group) in seven countries and throughout the United
States. Blockbuster also owns 70.5% of Spelling Entertainment
Group Inc. and an equity stake in Republic Pictures
Corporation, both of which are leading producers and worldwide
distributors of motion picture and television entertainment.
The company also owns a 19.6% equity stake in Discovery
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Zone, Inc. (NASDAQ: ZONE), which owns and franchises indoor
children's recreational fitness centers known as FunCenters.
In addition, the company has franchise rights to develop 100
Discovery Zone FunCenters in the U.S. and formed a joint
venture with Discovery Zone to develop 10 FunCenters in the
U.K. Blockbuster also has a six-month option to acquire 50.1%
of Discovery Zone.
# # #
Viacom/Blockbuster/Paramount Merger Fact Sheet Attached
Contact: Viacom Inc. Edelman
Raymond A. Boyce Elliot Sloane
(212) 258-6530 (212) 704-8126
Blockbuster Entertainment Corp.
Greg Fairbanks Wally Knief
(305) 832-3522 (305) 832-3250
VIACOM/BLOCKBUSTER/PARAMOUNT MERGER FACT SHEET
Financial Highlights:
$9 billion in revenues
$1.5 billion in operating cash flow
$26 billion in assets
$14 billion in stockholders' equity
40,000-plus employees
Corporate Profile: The combination of Viacom, Blockbuster and
Paramount, will create a global leader in the production and
distribution of entertainment and communication products, with
an array of world-class franchises and brand names. The
companies participate in the fastest growing segments of the
entertainment marketplace, including:
-- Cable network programming
-- Video, music and interactive retail distribution
-- Motion picture and television production
-- Cable television systems
-- Television and radio broadcasting
-- Entertainment centers, theme parks
-- Publishing
-- Interactive/Multimedia products
-- Motion picture theaters
Cable Network Programming: Viacom owns and operates the
largest group of basic and premium networks, including MTV,
MTV Europe, Nickelodeon, Nick at Nite, Showtime, The Movie
Channel and FLIX. Viacom's brand equity and global impact is
unparalleled. In addition to its significant domestic
distribution, MTV now reaches more than 251 million homes in
88 territories around the world. Viacom also participates in
three joint venture cable services: Comedy Central, Lifetime
and All News Channel.
-2-
Paramount is co-owner of USA Network, a leading
advertiser-supported basic cable television network. USA
includes the Sci-Fi Channel, a basic cable channel devoted
exclusively to science fiction, horror and adventure
programming. In addition, Paramount's Madison Square Garden
Network is the largest regional cable sports network in the
country, providing programming to nearly 5 million subscribers
through 231 affiliates.
Video, Music and Interactive Retail Distribution: With more
than 3,500 video stores operating in nine countries and
domestically in 49 states, Blockbuster is the largest retailer
of home video products in the world. Growing from a base of
19 video stores just six years ago, Blockbuster now commands
more than 15% of the domestic home video market and is larger
than the next 550 competitors combined. The home video
marketplace is larger than that of movie theaters, premium
cable and pay-per-view combined. Blockbuster's growth in this
explosive marketplace is expected to continue into the future.
Blockbuster also is a leader in the retail distribution of
music product. With the acquisitions of the Sound Warehouse,
Music Plus, and Super Club music retail chains, the recent
development of the Blockbuster Music Plus concept, and the
joint venture agreement with Virgin Retail Group to build
megastores around the world, Blockbuster operates more than
500 music stores in seven countries and throughout the United
States.
With more than 600 million consumer visits to its retail
stores each year and an active data base of more than 40
million consumers who have rented and purchased product in
their retail stores, Blockbuster is the leading global retail
distributor of entertainment product in the world.
Motion Picture and Television Production: Through its recent
investments in both Spelling Entertainment Group and Republic
Pictures Corporation, Blockbuster is now a leading producer
and distributor of filmed entertainment, with over 20,000
hours of programming available for domestic and international
distribution.
Blockbuster owns 70.5% of Spelling, a producer and distributor
of filmed entertainment supported by a film library of
approximately 12,000 hours. This library includes more than
55 off-network series, such as Little House on the Prairie,
Dallas, Twin Peaks, and an array of feature films including
Basic Instinct, Total Recall, Platoon, and the Rambo trilogy.
Spelling also is the producer of the hit network series
Beverly Hills 90210 and Melrose Place.
Blockbuster owns approximately 37% of Republic, an independent
producer and distributor of filmed entertainment. Republic
distributes its extensive classic library and contemporary
product to television, home video and theaters across the
world. Republic is the 10th largest distributor in the home
video industry. Its library includes The Quiet Man, High
Noon, as well as the popular television series Bonanza.
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Viacom has an enormous syndication library that includes
Roseanne, The Cosby Show, A Different World, I Love Lucy, The
Twilight Zone and Hawaii 5-0. It also produces programs for
broadcast television, including Matlock, Diagnosis Murder, and
the Perry Mason made-for-TV movies. Viacom's first-run
syndication programs include The Montel Williams Show, Nick
News and This Morning's Business.
Paramount Pictures produces motion pictures for distribution
to theatrical markets in the United States and abroad.
Paramount has a motion picture library of approximately 890
films. In video, Paramount holds leadership positions.
Paramount Television is at the forefront in the production and
distribution of television programming for commercial
networks, first-run syndication and cable services, currently
producing 30 1/2 hours weekly. Its network programming lineup
for the 1993-1994 television season includes, Wings, Frasier,
Big Wave Dave's, Viper, The Mommies and Sister Sister. In
first-run syndication, Paramount produces Star Trek: The Next
Generation, Deep Space Nine, The Untouchables, Entertainment
Tonight, The Maury Povich Show, The Arsenio Hall Show and Hard
Copy. The Paramount television library includes Cheers, Star
Trek, Happy Days, Laverne & Shirley and Taxi.
Cable Television Systems: Viacom Cable owns and operates
cable television systems in three regions of the U.S. serving
approximately 1.1 million subscribers. In mid-1994, Viacom,
in conjunction with AT&T, will be launching a test of consumer
acceptance of interactive entertainment and information
services at its Castro Valley, California, cable system.
Television and Radio Broadcasting: Viacom owns five
network-affiliated television stations (three NBC and two CBS
affiliates) and 14 radio stations, making it the sixth largest
radio group in the U.S., ranked by market reach.
The Paramount Stations Group owns and operates four
independent and three Fox-affiliated stations.
Publishing: Paramount Publishing, through such major imprints
as Simon & Schuster, Pocket Books, Silver Burdett Ginn, and
Prentice Hall, is one of the world's leading publishers of
educational materials, from textbooks to computer-based
learning systems, and has significant operations serving the
domestic and international consumer and business, technical
and professional markets.
-4-
Entertainment Facilities and Theme Parks: Through its 19.6%
equity in Discovery Zone, Inc., which owns and franchises
indoor children's recreational fitness centers known as
FunCenters, Blockbuster has a strong presence in the
entertainment center marketplace. The company has franchise
rights to develop 100 Discovery Zone FunCenters in the U.S.
and formed a joint venture with Discovery Zone to develop 10
FunCenters in the U.K. Blockbuster also has a six-month
option to acquire 50.1% of Discovery Zone.
This year, Blockbuster opened the initial phase of a family
entertainment facility called Blockbuster Golf and Games, in
Sunrise, Florida. Additional entertainment facilities are
planned at various other U.S. sites.
Blockbuster recently announced a joint venture with Sony Music
Entertainment (SME) and Pace Entertainment where the three
companies combined their seven existing amphitheaters into a
partnership to be managed by Pace. Existing locations are in
Charlotte, Phoenix, San Bernadino, Pittsburgh, Raleigh,
Houston and Nashville.
Paramount owns and operates five regional theme parks.
Paramount also owns and operates Madison Square Garden, one of
the premiere showplaces for sports, concerts and other live
entertainment, at its Arena and the Paramount Theater, as well
as the New York professional basketball and hockey team
franchises, the Knicks and the Rangers.
Interactive/Multimedia Products: Viacom New Media and
Paramount Technology Group both develop and publish
interactive software for a variety of platforms in the
multimedia marketplace. Paramount's Computer Curriculum unit
is the country's foremost and fastest-growing producer of
computer-based learning systems. Blockbuster also is the
largest wholesaler and retailer of interactive home video
games in the world.
Motion Picture Theaters: Paramount owns the Famous Players
motion picture theater chain, which has 441 screens in Canada.
Paramount is also joint-owner of the 341-screen Cinamerica
theater circuit, and reaches 345 screens in nine countries
through a joint venture, United Cinemas International.
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of January 4, 1994 (the
"Amendment"), to the CREDIT AGREEMENT, dated as of November 19,
1993, among VIACOM INC., a Delaware corporation ("Viacom"),
each of the several banks identified on the signature pages
thereof, THE BANK OF NEW YORK, as a Managing Agent, CITIBANK,
N.A., as a Managing Agent and as the Administrator, and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as a Managing Agent, the
Banks identified as Agents on the signature pages thereof, as
Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
WITNESSETH
WHEREAS, the parties hereto have heretofore entered
into the Agreement and now desire to amend certain provisions
of the Agreement; and
WHEREAS, capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in
the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Amendments
Section 1.1. The term "Merger Agreement" is hereby
amended by deleting the definition thereof in Section 1.1 of
the Agreement in its entirety and replacing it with the
following:
"'Merger Agreement' means the Amended and Restated
Agreement and Plan of Merger, dated as of October 24, 1993,
as amended by Amendment No. 1, dated as of November 6, 1993
(as further amended by the parties thereto from time to
time (including any successor agreement thereto in the form
contemplated by the Exemption Agreement))."
The definition of the term "Merger Agreement" that appears in
the first recital to the Agreement shall also be deemed amended
to be consistent with the foregoing definition.
Section 1.2. Section 1.1 of the Agreement is amended
to insert the following definition:
"'Exemption Agreement' means the Exemption Agreement,
dated as of December 22, 1993, between Viacom and
Paramount."
Section 1.3. Section 5.2(c) of the Agreement is
hereby amended by deleting the reference therein to "51% of the
outstanding shares of Paramount" and inserting in lieu thereof
the phrase "50.1% of the outstanding shares of Paramount on a
'fully diluted basis' (as defined in the Exemption Agreement)".
Section 1.4. Section 10.1(i) of the Agreement is
hereby amended and restated in its entirety as follows:
"(i) The Merger Agreement shall be terminated on or
after the date of the initial Loans and prior to the
consummation of the Merger;".
ARTICLE II
Representations and Warranties
Section 2.1 The Borrower represents and warrants to
the Banks that the representations and warranties contained in
the Agreement, as amended by this Amendment No. 1, are true and
correct in all material respects on and as of the date hereof,
and all such representations and warranties made or deemed made
after the date hereof shall refer to the Agreement after giving
effect to this Amendment No. 1.
ARTICLE III
Conditions Precedent
Section 3.1. The effectiveness of this Amendment is
subject to the condition precedent that, after giving effect to
this Amendment, no Default or Event of Default shall exist or
be continuing under the Agreement.
2
ARTICLE IV
Miscellaneous
Section 4.1. Except as waived or amended hereby, all
of the terms of the Agreement shall remain and continue in full
force and effect and are hereby confirmed in all respects.
Section 4.2. This Amendment may be signed in any
number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto were upon the
same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of
this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above
written.
VIACOM INC., as Borrower
By: /s/ Vaughn A. Clarke
----------------------------------
Name: Vaughn A. Clarke
Title: Vice President
Managing Agents
THE BANK OF NEW YORK, as
Managing Agent and a Bank
By: /s/ Geoffrey C. Brooks
----------------------------------
Name: Geoffrey C. Brooks
Title: Assistant Vice President
CITIBANK, N.A., as Managing
Agent, the Administrator and
a Bank
By: /s/ James J. Sheriden
----------------------------------
Name: James J. Sheriden
Title: Vice President
3
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Managing Agent
and a Bank
By: /s/ Charles Pardue
----------------------------------
Name: Charles Pardue
Title: Associate
Agents
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent and a Bank
By: /s/ Charles Francavilla
----------------------------------
Name: Charles Francavilla
Title: Senior Vice President
BANK OF MONTREAL, as Agent and
a Bank
By: /s/ Thomas P. Waters
----------------------------------
Name: Thomas P. Waters
Title: Director
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent and a Bank
By: /s/ John H. Tuber
----------------------------------
Name: John H. Tuber
Title: Vice President
4
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as
Agent and a Bank
By: /s/ Bruce Langenkamp
----------------------------------
Name: Bruce Langenkamp
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON, as Agent and a Bank
By: /s/ Mary M. Barcus
----------------------------------
Name: Mary M. Barcus
Title: Vice President
SOCIETE GENERALE, as Agent and
a Bank
By: /s/ Pascale Hainline
----------------------------------
Name: Pascale Hainline
Title: Vice President
5
Co-Agents
THE BANK OF TOKYO TRUST
COMPANY, as Co-Agent and a
Bank
By: /s/ Neal Hoffson
----------------------------------
Name: Neal Hoffson
Title: Vice President
BANQUE PARIBAS, as Co-Agent
and a Bank
By: /s/ John G. Acker
----------------------------------
Name: John G. Acker
Title: Vice President
By: /s/ Patrick Menard
----------------------------------
Name: Patrick Menard
Title: Credit Manager, LA Agency
CREDIT LYONNAIS, CAYMAN ISLAND
BRANCH, as Co-Agent and a Bank
By: /s/ Bruce M. Yeager
----------------------------------
Name: Bruce M. Yeager
Title: Authorized Signature
6
CREDIT SUISSE, as Co-Agent
and a Bank
By: /s/ Robert B. Potter
----------------------------------
Name: Robert B. Potter
Title: Member Senior Management
By: /s/ J. Hamilton Crawford
----------------------------------
Name: J. Hamilton Crawford
Title: Associate
THE FIRST NATIONAL BANK OF
CHICAGO, as Co-Agent and a
Bank
By: /s/ Elaine I. Khalil
----------------------------------
Name: Elaine I. Khalil
Title: Vice President
THE FUJI BANK, LIMITED, as
as Co-Agent and a Bank
By: /s/ Katsunori Nozawa
----------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE INDUSTRIAL BANK OF JAPAN,
LTD., as Co-Agent and a Bank
By: /s/ Junri Oda
----------------------------------
Name: Junri Oda
Title: Senior Vice President &
Senior Manager
7
MELLON BANK, N.A., as
Co-Agent and a Bank
By: /s/ John S. McCabe
----------------------------------
Name: John S. McCabe
Title: Senior Vice President
THE MITSUBISHI BANK, LTD., as
Co-Agent and a Bank
By: /s/ Frank H. Madden
----------------------------------
Name: Frank H. Madden
Title: Senior Vice President
NATIONAL WESTMINSTER BANK PLC,
as Co-Agent and a Bank
By: /s/ Hal Sadoff
----------------------------------
Name: Hal Sadoff
Title: Vice President
NATIONAL WESTMINSTER BANK USA,
as Co-Agent and a Bank
By: /s/ Adam Bester
----------------------------------
Name: Adam Bester
Title: Vice President
NIPPON CREDIT BANK, LTD., LOS
ANGELES AGENCY, Co-Agent and
a Bank
By: /s/ Kenneth W. McNerney
----------------------------------
Name: Kenneth W. McNerney
Title: Vice President &
Senior Manager
8
ROYAL BANK OF CANADA, as Co-
Agent and a Bank
By: /s/ E. Salazar
----------------------------------
Name: E. Salazar
Title: Senior Manager
THE SANWA BANK, LTD., as
Co-Agent and a Bank
By: /s/ Masaki Ariyoshi
----------------------------------
Name: Masaki Ariyoshi
Title: Vice President
SHAWMUT BANK CONNECTICUT,
N.A., as Co-Agent and a Bank
By: /s/ Robert F. West
----------------------------------
Name: Robert F. West
Title: Vice President
UNION BANK, as Co-Agent and a
Bank
By: /s/ Bill D. Gooch
----------------------------------
Name: Bill D. Gooch
Title: Assistant Vice President
9
VIACOM INC.
1515 Broadway
New York, New York 10036
January 7, 1994
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, Florida 33301
Dear Sirs:
1. Subject to the terms and conditions set forth
herein, Blockbuster Entertainment Corporation, a Delaware
corporation (the "Purchaser"), hereby subscribes for, and
agrees to purchase, and Viacom Inc., a Delaware corporation
(the "Company"), agrees to issue and sell, 22,727,273 shares
(the "Shares") of Class B Common Stock, par value $0.01 per
share, of the Company ("Class B Common Stock"), for an
aggregate purchase price of $1,250,000,015, representing a
purchase price of $55.00 per Share.
2. (a) The closing (the "Closing") of the purchase
provided for in paragraph 1 shall take place at a date and time
specified by the Company by written notice delivered to the
Purchaser no less than two Business Days (as defined below)
prior to such date, and following satisfaction of the
conditions specified in paragraph 5, at the offices of Shearman
& Sterling, 599 Lexington Avenue, New York, New York. The date
and time of the Closing are referred to herein as the "Closing
Date".
(b) At the Closing, the Purchaser shall deliver to
the Company $1,250,000,015 in cash by wire transfer in
immediately available funds to an account of the Company
designated by the Company, by notice to the Purchaser prior to
the Closing Date, and the Company shall deliver to the
Purchaser certificates representing the Shares, registered in
the name of the Purchaser.
3. (a) The Purchaser represents and warrants to the
Company that: (i) the execution and delivery of this Agreement
by the Purchaser and the performance of its
obligations hereunder have been duly and validly authorized by
all necessary corporate action on the part of the Purchaser;
(ii) this Agreement has been duly and validly executed and
delivered by the Purchaser and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal,
valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other
similar laws relating to or affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law);
(iii) the execution, delivery and performance of this Agreement
by the Purchaser and the purchase of the Shares by the
Purchaser do not conflict with or violate or result in any
breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under
the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Purchaser; (iv) the execution,
delivery and performance of this Agreement by the Purchaser do
not, and the consummation of the transactions contemplated
hereby by the Purchaser will not, require any consent,
approval, authorization or permit of, or filing with or
notification to, any governmental authority with respect to the
Purchaser, except under the Securities Exchange Act of 1934, as
amended (the "1934 Act"); (v) the Purchaser is acquiring the
Shares for its own account for the purpose of investment and
not with a view to or for sale in connection with any
distribution thereof; and (vi) the Purchaser is an "accredited
investor" within the meaning of Rule 501 under the Securities
Act of 1933, as amended (the "1933 Act").
(b) Except as set forth in this paragraph 3, the
Purchaser makes no other representation, express or implied, to
the Company.
4. (a) The Company represents and warrants to the
Purchaser that (i) each of the Company and each Subsidiary (as
defined below) is a corporation, partnership or other legal
entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority
and governmental approvals would not, individually or in the
aggregate, have a Material Adverse
Effect (as defined below); (ii) the execution and delivery of
this Agreement by the Company and the issuance of the Shares in
accordance with the terms of this Agreement have been duly and
validly authorized by all necessary corporate action on the
part of the Company; (iii) this Agreement has been duly and
validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by the Purchaser,
constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law); (iv) the execution, delivery
and performance of this Agreement by the Company do not, and
the issuance of the Shares and the performance of the Company's
obligations in accordance with the terms of this Agreement will
not, conflict with or violate or result in any breach of or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under (A) the Certificate
of Incorporation or By-Laws or equivalent organizational
documents of the Company or any Subsidiary, (B) any law, rule,
regulation, order, judgment or decree applicable to the Company
or any Subsidiary, or (C) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or any
property or asset of the Company or any Subsidiary is bound or
affected, except in the case of subclauses (B) and (C) above,
for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay the issuance of
the Shares in accordance with the terms of this Agreement in
any material respect, or otherwise prevent the Company from
performing its obligations under this Agreement in any material
respect, or which would not, individually or in the aggregate,
have a Material Adverse Effect; (v) the execution, delivery and
performance of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing
with or notification to, any governmental authority with
respect to the Company, except for (A) any filings required to
effect the registration of the Shares pursuant to paragraph 8
and any filings pursuant to federal and state securities laws
which will be timely made after the Closing hereunder and
(B) any filings required under the 1934 Act; (vi) the Shares
have been duly authorized and, upon issuance
at the Closing, will be validly issued, fully paid and
nonassessable, and free and clear of all security interests,
liens, claims, encumbrances, pledges, options and charges of
any nature whatsoever, and the issuance of the Shares will not
be subject to preemptive rights of any other stockholder of the
Company; (vii) the authorized capital stock of the Company
consists of 100,000,000 shares of Class A Common Stock, par
value $0.01 per share ("Class A Common Stock"), 150,000,000
shares of Class B Common Stock and 100,000,000 shares of
Preferred Stock, par value $0.01 per share ("Company Preferred
Stock"); (viii) as of November 30, 1993, (A) 53,449,125 shares
of Class A Common Stock and 67,345,982 shares of Class B Common
Stock were issued and outstanding, all of which were validly
issued, fully paid and nonassessable, (B) no shares were held
in the treasury of the Company, (C) no shares were held by the
Subsidiaries, (D) 224,610 shares of Class A Common Stock and
3,760,297 shares of Class B Common Stock were reserved for
future issuance pursuant to employee stock options or stock
incentive rights granted pursuant to the Company's 1989
Long-Term Management Incentive Plan and the Company's Stock
Option Plan for Outside Directors, and (E) 25,711,200 shares of
Class B Common Stock were reserved for future issuance upon
conversion of the Company's Series A Convertible Preferred
Stock, par value $0.01 per share ("Series A Preferred Stock"),
and the Company's Series B Convertible Preferred Stock, par
value $0.01 per share ("Series B Preferred Stock"); (ix) as of
the date hereof, 48,000,000 shares of Company Preferred Stock
are issued and outstanding, consisting of 24,000,000 shares of
Series A Preferred Stock and 24,000,000 shares of Series B
Preferred Stock, and there are no agreements, arrangements or
understandings with respect to the issuance of any other shares
of Company Preferred Stock, except for Preferred Stock proposed
to be issued in the Paramount Transaction (as defined below);
(x) the Company has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange
Commission (the "Commission") since December 31, 1990, and has
heretofore made available to the Purchaser, in the form filed
with the Commission (excluding any exhibits thereto), (A) its
Annual Reports on Form 10-K for the fiscal years ended December
31, 1990, 1991 and 1992, respectively, (B) its Quarterly
Reports on Form 10-Q for the periods ended March 31, 1993,
June 30, 1993 and September 30, 1993, (C) all proxy statements
relating to the Company's meetings of stockholders (whether
annual or special) held since January 1, 1991 and (D) all other
forms, reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (B)
above and preliminary materials) filed by the Company with the
Commission since
December 31, 1990 (the forms, reports and other documents
referred to in clauses (A), (B), (C) and (D) above being
referred to herein, collectively, as the "SEC Reports"); (xi)
the SEC Reports and any other forms, reports and other
documents filed by the Company with the Commission after the
date of this Agreement (A) were or will be prepared in
accordance with the requirements of the 1933 Act and the 1934
Act, as the case may be, and the rules and regulations
thereunder and (B) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which
they were made, not misleading; (xii) the consolidated
financial statements (including, in each case, any notes
thereto) contained in the SEC Reports were prepared in
accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each
fairly presented the consolidated financial position, results
of operations and cash flows of the Company and its
consolidated subsidiaries as at the respective dates thereof
and for the respective periods indicated therein (subject, in
the case of unaudited statements, to normal and recurring
year-end adjustments which were not and are not expected,
individually or in the aggregate, to be material in amount);
(xiii) since December 31, 1992 there has not been any change,
occurrence or circumstance in the business, results of
operations or financial condition of the Company or any
Subsidiary having, individually or in the aggregate, a Material
Adverse Effect, other than changes, occurrences and
circumstances referred to in any SEC Reports filed prior to the
date of this Agreement; (xiv) there is no claim, action,
proceeding or investigation pending or, to the best knowledge
of the Company, threatened by any public official or
governmental authority, against the Company or any Subsidiary,
or any of their respective property or assets before any court,
arbitrator or administrative, governmental or regulatory
authority or body, which challenges the validity of this
Agreement or the Shares or any action taken or to be taken
pursuant hereto or, except as set forth in the SEC Reports,
which is reasonably likely to have a Material Adverse Effect;
and (xv) neither the Company nor any Subsidiary is in conflict
with, or in default or violation of, (A) any law, rule,
regulation, order, judgment or decree applicable to the Company
or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (B) any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected, except for any
such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse
Effect.
(b) Except as set forth in this paragraph 4, the
Company makes no representation, express or implied, to the
Purchaser.
(c) "Subsidiary" means a "significant subsidiary" of
the Company, as such term is defined in Regulation S-X
promulgated under the 1933 Act.
(d) The term "Material Adverse Effect" means any
change or effect that is or would be materially adverse to the
business, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole.
(e) Notwithstanding anything to the contrary in this
paragraph 4, any change to or effect on the business, results
of operations or financial condition of the Company and its
Subsidiaries that results, directly or indirectly, from the
Company's tender offer for shares of common stock of and
proposed merger with Paramount Communications Inc. (the
"Paramount Transaction"), shall not be considered for purposes
of determining whether a breach has occurred of any
representation or warranty, covenant or agreement of the
Company contained herein.
5. (a) The obligation of the Purchaser to
consummate the Closing is subject to the satisfaction (or
waiver by the Purchaser, at its sole discretion) of the
following conditions:
(i) (A) the Company shall have performed in all
material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date, (B)
the representations and warranties of the Company contained
in this Agreement and in the Agreement and Plan of Merger
dated as of the date hereof between the Purchaser and the
Company (the "Merger Agreement") shall be true in all
material respects (other than those contained in Paragraph
4(a)(xiii) of this Agreement, which shall be true in all
respects) as of the Closing Date, as if made at and as of
such date (except for any such representations and
warranties that are expressly stated to be as of a
different date), (C) the Company shall not be in material
breach of any of its material
obligations under the Merger Agreement as of the Closing
Date and (D) the Purchaser shall have received a
certificate signed by an executive officer of the Company
to the foregoing effect;
(ii) no judgment, injunction, order or decree shall
materially restrict, prevent or prohibit the consummation
of the Closing;
(iii) the Purchaser shall have received an opinion of
Shearman & Sterling, dated the Closing Date, substantially
in the form of Exhibit A hereto; and
(iv) the Company shall have accepted for payment at
least 50.1% of the outstanding shares of common stock of
Paramount Communications Inc. pursuant to its tender offer
therefor.
(b) The obligation of the Company to consummate the
Closing is subject to the satisfaction (or waiver by the
Company, at its sole discretion) of the following conditions:
(i) (A) the Purchaser shall have performed in all
material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date, (B)
the representations and warranties of the Purchaser
contained in this Agreement shall be true in all material
respects at and as of the Closing Date, as if made at and
as of such date (except for any such representations and
warranties that are expressly stated to be as of a
different date) and (C) the Company shall have received a
certificate signed by an executive officer of the Purchaser
to the foregoing effect;
(ii) no judgment, injunction, order or decree shall
materially restrict, prevent or prohibit the consummation
of the Closing;
(iii) the Company shall have received an opinion of
Thomas W. Hawkins, General Counsel of the Purchaser, dated
the Closing Date, substantially in the form of Exhibit B
hereto;
(iv) the Company shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom, dated the Closing
Date, substantially in the form of Exhibit C hereto; and
(v) the Company shall have accepted for payment at
least 50.1% of the outstanding shares of common stock of
Paramount Communications Inc. pursuant to its tender offer
therefor.
(c) Notwithstanding any other provision of this
Agreement, if the Company shall accept shares of common stock
of Paramount Communications Inc. for payment pursuant to its
tender offer therefor but following the Closing shall not
purchase such shares in accordance with the terms of such
offer, then the Purchaser may return the Shares to the Company,
by delivering to the Company the certificates representing the
Shares, duly endorsed in blank, or accompanied by stock powers
duly executed in blank, whereupon the Company shall return the
purchase price therefor, by wire transfer in immediately
available funds to an account of the Purchaser designated by
the Purchaser by notice to the Company.
6. (a) The Purchaser acknowledges that the Shares
have not been registered under the 1933 Act or any state
securities law, and hereby agrees not to offer, sell or
otherwise transfer, pledge or hypothecate such Shares unless
and until registered under the 1933 Act and any applicable
state securities law or unless, in the opinion of counsel
reasonably satisfactory to the Company, such offer, sale,
transfer, pledge or hypothecation is exempt from registration
or is otherwise in compliance with the 1933 Act and such laws.
(b) Upon issuance of the Shares, and until such time
as the same is no longer required under the applicable
requirements of the 1933 Act, the certificates evidencing the
Shares (and all securities issued in exchange therefor or
substitution thereof) shall bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
ISSUER, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION
IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE
WITH THE ACT AND SUCH LAWS.
7. In addition to the provisions of paragraph 6, the
Purchaser agrees that prior to the earlier of the termination
of the Merger Agreement and September 30, 1994 it shall not
offer, sell, transfer, pledge or hypothecate any of the Shares,
except that the Shares may be pledged in connection with the
financing of the purchase price specified in paragraph 2,
subject to the same restrictions on alienation applicable to
the Purchaser hereunder.
8. Following the Closing, the Purchaser shall have
the registration rights, and the Company shall have the
obligations, set forth in Annex I. Such registration rights
shall be assignable by the Purchaser to any party purchasing
Shares directly from the Purchaser, but shall not be further
assignable by such subsequent purchaser or purchasers.
9. (a) The representations and warranties contained
in this Agreement shall survive the Closing until the first
anniversary of the Closing Date.
(b) The Purchaser and its Affiliates, officers,
directors, employees, agents, successors and assigns shall be
indemnified and held harmless by the Company for any and all
liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) (a "Loss")
actually suffered or incurred by them, arising out of or
resulting from the breach of any representation or warranty or
covenant of the Company contained in this Agreement.
(c) The Company and its Affiliates, officers,
directors, employees, agents, successors and assigns shall be
indemnified and held harmless by the Purchaser for any and all
Losses actually suffered or incurred by them, arising out of or
resulting from the breach of any representation or warranty or
covenant of the Purchaser contained in this Agreement.
10. (a) The Purchaser agrees that neither the
Purchaser nor any of its Affiliates shall participate in any
transaction that, directly or indirectly, would have the effect
of precluding or competing with the Paramount Transaction.
(b) The Company agrees that it shall not make any
material change in the aggregate amount or forms of
consideration to be paid in, or in any other material terms and
conditions of, the Paramount Transaction from the aggregate
amount and forms of consideration described in the amendment to
be filed on the date hereof to the Company's Tender Offer
Statement on Schedule 14D-1, without the prior consent of the
Purchaser, which consent shall not be unreasonably withheld.
(c) The Company agrees that prior to consummation of
the Paramount Transaction, the Company shall receive an opinion
from Smith Barney Shearson Inc. that the consideration actually
to be paid by the Company in such
transaction is fair, from a financial point of view, to the
Company and the stockholders of the Company, which opinion
shall not have been withdrawn at the time the Company accepts
shares of common stock of Paramount Communications Inc. for
payment pursuant to its tender offer therefor.
11. The Purchaser, on the one hand, and the Company,
on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to equitable relief
(including injunction and specific performance) in any action
instituted in any court of the United States or any state
thereof having subject matter jurisdiction, as a remedy for any
such breach or to prevent any breach of this Agreement. Such
remedies shall not be deemed to be the exclusive remedies for a
breach or anticipatory breach of this Agreement, but shall be
in addition to all other remedies available at law or equity to
the parties hereto. To the extent permitted by applicable law,
the parties hereto irrevocably submit to the exclusive
jurisdiction of the courts of the State of New York and the
United States of America located in the State of New York for
any suits, actions or proceedings arising out of or relating to
this Agreement.
12. This Agreement, its Annexes and Exhibits contain
the entire understandings of the parties with respect to the
subject matter hereof, thereby superseding all prior agreements
of the parties relating to the subject matter hereof (other
than the Confidentiality Agreement entered into between the
Purchaser and Viacom International Inc. dated July 1, 1993),
and may not be amended except by a writing signed by the
parties. Except as otherwise provided herein, this Agreement
is not assignable by any of the parties; provided that the
Purchaser may assign its rights and obligations under this
Agreement to a wholly owned subsidiary of the Purchaser, so
long as the Purchaser shall remain liable for all financial and
performance obligations of the Purchaser hereunder. This
Agreement shall be binding upon, and inure to the benefit of,
the respective successors of the parties. This Agreement may
be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the
same instrument.
13. Any notices and other communications required to
be given pursuant to this Agreement shall be in writing and
shall be given by delivery by hand, by mail (registered or
certified mail, postage prepaid, return receipt requested) or
by facsimile transmission or telex, as follows:
If to the Company:
Viacom Inc.
1515 Broadway
New York, New York 10036
Attention: Senior Vice President,
General Counsel and
Secretary
Facsimile No.: 212-258-6134
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Stephen R. Volk
Facsimile No.: 212-848-7179
If to the Purchaser:
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, Florida 33301
Attention: Vice President, General
Counsel and Secretary
Facsimile No.: 305-832-3929
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Roger S. Aaron
Facsimile No.: 212-735-2000
or to such other addresses as either the Company or the
Purchaser shall designate to the other by notice in writing.
14. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" shall mean any Person that (i)
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
the Person specified or (ii) is (A) the specified Person's
spouse, parent, child, brother or sister or any issue of the
foregoing (for purposes of the definition of Affiliate, issue
shall include Persons legally adopted into the line of
descent), (B) any corporation or organization of which the
Person specified or such specified Person's spouse,
parent, child, brother or sister or any issue of the foregoing
is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class of voting
stock, and (C) any trust or other estate in which the specified
Person or such specified Person's spouse, parent, child,
brother or sister or any issue of the foregoing serves as
trustee or in a similar fiduciary capacity and (D) the heirs or
legatees of the specified Person by will or under the laws of
descent and distribution.
(b) "Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
(c) "Person" shall mean any individual, partnership,
joint venture, corporation, trust, incorporated organization,
government or department or agency of a government, or any
entity that would be deemed to be a "person" under Section
13(d)(3) of the 1934 Act.
15. Subject to the terms and conditions of this
Agreement, each of the parties hereby agrees to use all
reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws, rules and regulations to
consummate and make effective the transactions contemplated by
this Agreement, including using its best efforts to make all
necessary filings and to obtain all necessary waivers, consents
and approvals. In case at any time after the execution of this
Agreement, further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and
directors of each of the parties shall take all such necessary
action.
16. The parties agree to consult with each other
before taking any action that would require the issuance of, or
issuing, any press release or making any public statement with
respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any
listing agreement with any securities exchange, will not take
any such action, issue any such press release or make any such
public statement prior to such consultation.
17. (a) In the event that the Merger Agreement is
terminated, other than pursuant to Section 8.01(b) thereof, the
Company shall satisfy, upon the written request of the
Purchaser and as provided in paragraph 17(c), any Make-Whole
Amount (as defined below) within 20 Business Days (or with
respect to the Asset Purchase Transaction, such period of time
as is consistent with the terms of Annex II) following the
first anniversary (the "First Anniversary") of the date of
termination (the "Termination Date") of the Merger Agreement.
(b) For the purposes of this paragraph 17, the
following terms shall have the following meanings:
(i) "Measurement Period" shall mean the period commencing
on the first day after the Termination Date and ending on
the First Anniversary; provided that such period shall be
extended by the number of days occurring after the
Termination Date and prior to the First Anniversary during
which Shares both (a) are registered under the 1933 Act
pursuant to the rights granted in Annex I and (b) are
unsold.
(ii) "Class B Trading Price" shall mean the highest Class B
Trading Average that occurs within the Measurement Period
for any consecutive 30 trading day period occurring within
the Measurement Period.
(iii) "Class B Trading Average" shall mean with respect to
any consecutive 30 trading day period the average of the
closing prices for the Class B Common Stock for the trading
days in such period on the American Stock Exchange, or if
the American Stock Exchange is not the exchange on which
the Class B Common Stock is then principally traded.
(iv) "Make-Whole Amount" shall mean the amount, if any,
that is the sum of (A) 50% of the aggregate of (1) the
number of Shares Beneficially Owned by the Purchaser (and
not subject to contracts of sale) on the First Anniversary
and (2) the Sold Shares multiplied by the difference between
$55 and the Class B Trading Price, up to, but in no event
exceeding for the purpose of such calculation, a difference
of $4.40 and (B) 50% of the aggregate of (1) the number of
Shares Beneficially Owned by the Purchaser (and not subject
to contracts of sale) on the First Anniversary and (2) the
Sold Shares multiplied by the difference between $55 and
the Class B Trading Price, up to, but in no event exceeding
for the purpose of such calculation, a difference of
$19.80.
(v) "Marketable Security" shall mean any debt or equity
security, or a combination of debt and equity securities,
issued by the Company with such terms, as agreed by
SmithBarney Shearson Inc. on behalf of the Company and by
Merrill Lynch & Co. on behalf of the Purchaser, as would
cause such security to trade on a fully distributed basis
after the date of its issuance at the value attributed to
such security in satisfying the Make-Whole Amount as
provided in paragraph 17(c) below. If Smith Barney
Shearson Inc. and Merrill Lynch & Co. are unable to agree
on such terms within 10 Business Days after the First
Anniversary, the Purchaser shall select one investment bank
from a list of at least five investment banks of national
standing supplied to the Purchaser by the Company, which
investment bank shall, not later than 5 Business Days after
its selection resolve, in its sole judgment, any such
disagreements with respect to such terms. The
determination by such investment bank shall be final,
binding and conclusive on the Company and the Purchaser,
and the fees and expenses of such investment bank shall be
borne equally by the Company and the Purchaser.
(v) "Sold Shares" shall mean up to the first 4,547,454
Shares, and only up to the first 4,547,454 Shares, of any
Shares sold by the Purchaser after the Termination Date and
prior to the First Anniversary; provided that Sold Shares
shall not include any of such Shares sold by the Purchaser
for gross proceeds equal to or greater than $55 per Share.
(vi) "Asset Purchase Transaction" shall mean the
transaction with the material terms described in Annex II.
(c) The Company shall be entitled to satisfy its
obligation with respect to the Make-Whole Amount, at the option
of the Company through written notice to the Purchaser no later
than 5 Business Days following the First Anniversary, by any
of the following means:
(i) Delivery to the Purchaser of cash in an amount equal
to the Make-Whole Amount by wire transfer of immediately
available funds to an account specified by the Purchaser;
or
(ii) Delivery to the Purchaser of Marketable Securities
with an aggregate value (determined as specified above)
equal to the Make-Whole Amount; or
(iii) Delivery to the Purchaser of a combination of cash
and Marketable Securities with an aggregate value equal to
the Make-Whole Amount; or
(iv) Consummation of the Asset Purchase Transaction;
provided that in the event the Company has given notice to the
Purchaser as provided above of its intent to satisfy all or a
portion of the Make-Whole Amount with Marketable Securities and
the Company determines, in its sole discretion, that the terms
of the Marketable Securities are unacceptable to the Company,
the Company shall be entitled to satisfy the Make-Whole Amount
through any of the other means specified above in lieu of using
Marketable Securities.
18. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable
to contracts executed in and to be performed entirely within
that state.
Very truly yours,
VIACOM INC.
By
Accepted and agreed on
the date written above:
BLOCKBUSTER ENTERTAINMENT CORPORATION
By
ANNEX I
Registration Rights
(a) From time to time after the earlier of the
termination of the Merger Agreement and September 30, 1994, the
Purchaser shall have the right to make six requests of the
Company in writing: with respect to the first such request to
register under the 1933 Act at least $100 million in market
value of the Shares beneficially owned by the Purchaser (the
Shares subject to any such request hereunder being referred to
as the "Subject Stock"), and with each subsequent such request
being at least 6 months following such prior request which
resulted in a registration statement with respect to the
Subject Stock which was effective until the earlier of the
completion of the offering of such Subject Stock or three
months. The Company shall use all reasonable efforts to cause
the Subject Stock to be registered under the 1933 Act as soon
as reasonably practicable after receipt of a request so as to
permit promptly the sale thereof, and in connection therewith,
the Company shall prepare and file, on such appropriate form as
the Company in its discretion shall determine, a registration
statement under the 1933 Act to effect such registration. The
Company shall use all reasonable efforts to list all Subject
Stock covered by such registration statement on any national
securities exchange on which the Class B Common Stock is then
listed or, if such listing cannot be made, to list such Subject
Stock on the National Association of Securities Dealers
Automated Quotation System or National Market System. The
Purchaser hereby undertakes to provide all such information and
materials and take all such action as may be required in order
to permit the Company to comply with all applicable
requirements of the Commission and to obtain any desired
acceleration of the effective date of such registration
statement. Any registration statement filed at the Purchaser's
request hereunder will not count as a requested registration
(i) unless effectiveness is maintained until the earlier of
completion of the offering and three months or (ii) if the
Purchaser is required to reduce the number of Shares as to
which registration was requested hereunder as a result of the
inclusion in such registration of securities of a third party
without the consent of the Purchaser. Notwithstanding the
foregoing, the Company (i) shall not be obligated to cause any
special audit to be undertaken in connection with any such
registration (provided that this provision shall not relieve
the Company of its obligation to obtain any required consents
with respect to financial statements in prior periods) and
(ii) shall be entitled to postpone for a reasonable period of
time (not to exceed 180 days) the filing of any registration
statement otherwise
2
required to be prepared and filed by the Company if the Company
is, at such time, either (A) conducting or in active
preparation to conduct an underwritten public offering of
equity securities (or securities convertible into equity
securities) or is subject to a contractual obligation not to
engage in a public offering and is advised in writing by its
managing underwriter or underwriters (with a copy to the
Purchaser) that such offering would in its or their opinion be
adversely affected by the registration so requested or (B)
subject to an existing contractual obligation to its
underwriters not to engage in a public offering; provided,
however, that the Company may not exercise such right to
postpone the filing of a registration statement for more than
180 days in any 365-day period.
The Purchaser may use one or more of the registration
requests to which it is entitled pursuant to the preceding
paragraph to require the Company to register Shares on a
registration statement also covering securities of the
Purchaser convertible into or exchangeable for Shares and may
assume primary responsibility for the preparation of such
registration statement. In such event, in which each of the
Company and the Purchaser shall be registrants of securities
registered, in addition to the indemnification provided herein,
the Company shall be entitled to receive indemnifications from
the Purchaser consistent with the indemnifications provided
herein to be granted by the Company to the Purchaser and the
Purchaser shall reimburse the Company for one half of any fees,
expenses and disbursements referred to in the second sentence
of paragraph (c) below for which the Company is otherwise
responsible.
At any time after the earlier of the termination of
the Merger Agreement and September 30, 1994, if the Company
proposes to file a registration statement under the 1933 Act
with respect to an offering of shares of its equity securities
(i) for its own account (other than a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by
the Commission)) or (ii) for the account of any holders of its
securities (including any pursuant to a demand registration),
then the Company shall give written notice of such proposed
filing to the Purchaser as soon as practicable (but in any
event not less than 5 Business Days before the anticipated
filing date), and such notice shall offer the Purchaser the
opportunity to register such number of Shares as the Purchaser
requests. If the Purchaser wishes to register Shares, such
registration shall be on the same terms and conditions as the
registration of the Company's or such holders' shares of Class B
Common Stock (a "Piggyback Registration"). Notwithstanding
anything contained herein,
3
if the lead underwriter of an offering involving a Piggyback
Registration delivers a written opinion to the Company that the
success of such offering would be materially and adversely
affected by inclusion of all the securities requested to be
included, then the number of securities to be registered by
each party requesting registration rights shall be reduced in
proportion to the number of securities originally requested to
be registered by each of them. Nothing contained herein shall
require the Company to reduce the number of shares proposed to
be issued by the Company.
Other than as required by contractual obligations of
the Company existing on the date of this Agreement, no
securities may be registered on a registration statement
requested by the Purchaser under this Agreement without the
Purchaser's express written consent. The Company agrees that
following the date of this Agreement it shall not grant to any
person any rights to compel inclusion of securities in any
registration statement requested by the Purchaser under this
Agreement without the Purchaser's express written consent.
(b) In connection with any offering of shares of
Subject Stock registered pursuant to this Annex I, the Company
(i) shall furnish to the Purchaser such number of copies of any
prospectus (including any preliminary prospectus) as it may
reasonably request in order to effect the offering and sale of
the Subject Stock to be offered and sold, but only while the
Company shall be required under the provisions hereof to cause
the registration statement to remain current and (ii) take such
action as shall be necessary to qualify the shares covered by
such registration statement under such "blue sky" or other
state securities laws for offer and sale as the Purchaser shall
request; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business
under the laws of any jurisdiction in which it shall not then
be qualified or to file any general consent to service of
process in any jurisdiction in which such a consent has not
been previously filed. If applicable, the Company shall enter
into an underwriting agreement with a managing underwriter or
underwriters selected by the Purchaser (reasonably satisfactory
to the Company) containing representations, warranties,
indemnities and agreements then customarily included by an
issuer in underwriting agreements with respect to secondary
distributions; provided, however, that such underwriter or
underwriters shall agree to use their best efforts to ensure
that the offering results in a distribution of the Subject
Stock sold in accordance with the terms of the agreement. In
connection with any offering of
4
Subject Stock registered pursuant to this Annex I, the Company
shall (x) furnish to the underwriter, at the Company's expense,
unlegended certificates representing ownership of the Subject
Stock being sold in such denominations as requested and (y)
instruct any transfer agent and registrar of the Subject Stock
to release any stop transfer orders with respect to such
Subject Stock. Upon any registration becoming effective
pursuant to this Annex I, the Company shall use all reasonable
efforts to keep such registration statement current for such
period as shall be required for the disposition of all of said
Subject Stock; provided, however, that such period need not
exceed three months.
(c) The Purchaser shall pay all underwriting
discounts and commissions related to shares of Subject Stock
being sold by the Purchaser. The Company shall pay all other
fees and expenses in connection with any registration
statement, including, without limitation, all registration and
filing fees, all fees and expenses of complying with securities
or "blue sky" laws, fees and disbursements of the Company's
counsel, the counsel of the Purchaser, accountants (including
the expenses of "cold comfort" letters required by or incident
to such performance and compliance) and any fees and
disbursements of underwriters customarily paid by issuers in
secondary offerings.
(d) In the case of any offering registered pursuant
to this Annex I, the Company agrees to indemnify and hold the
Purchaser, each underwriter of Shares under such registration
and each person who controls any of the foregoing within the
meaning of Section 15 of the 1933 Act and the directors and
officers of the Purchaser, harmless against any and all losses,
claims, damages, liabilities or actions to which they or any of
them may become subject under the 1933 Act or any other statute
or common law or otherwise, and to reimburse them for any legal
or other expenses reasonably incurred by them in connection
with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or
actions shall arise out of or shall be based upon (i) any
untrue statement or alleged untrue statement of a material fact
contained in the registration statement relating to the sale of
such Subject Stock, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus (as
amended or supplemented if the Company shall have filed with
the Commission any amendment
5
thereof or supplement thereto), if used prior to the effective
date of such registration statement, or contained in the
prospectus (as amended or supplemented if the Company shall
have filed with the Commission any amendment thereof or
supplement thereto), or the omission or alleged omission to
state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
indemnification agreement contained in this paragraph (d) shall
not apply to such losses, claims, damages, liabilities or
actions which shall arise from the sale of Subject Stock by the
Purchaser if such losses, claims, damages, liabilities or
actions shall arise out of or shall be based upon any such
untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission
shall have been (x) made in reliance upon and in conformity
with information furnished in writing to the Company by the
Purchaser or any such underwriter specifically for use in
connection with the preparation of the registration statement
or any preliminary prospectus or prospectus contained in the
registration statement or any such amendment thereof or
supplement thereto or (y) made in any preliminary prospectus,
and the prospectus contained in the registration statement in
the form filed by the Company with the Commission pursuant to
Rule 424(b) under the 1933 Act shall have corrected such
statement or omission and a copy of such prospectus shall not
have been sent or given to such person at or prior to the
confirmation of such sale to him.
(e) In the case of each offering registered pursuant
to this Annex I, the Purchaser and each underwriter
participating therein shall agree, in the same manner and to
the same extent as set forth in paragraph (d) of this Annex I
severally to indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act, and the directors and officers of
the Company, and in the case of each such underwriter, the
Purchaser, each person, if any, who controls the Purchaser
within the meaning of Section 15 of the 1933 Act and the
directors, officers and partners of the Purchaser, with respect
to any statement in or omission from such registration
statement or any preliminary prospectus (as amended or as
supplemented, if amended or supplemented as aforesaid) or
prospectus contained in such registration statement (as amended
or as supplemented, if amended or supplemented as aforesaid),
if such statement or omission shall have been made in reliance
upon and in conformity with information furnished in writing to
the Company by the Purchaser or such underwriter specifically
for use in connection with the preparation of such registration
6
statement or any preliminary prospectus or prospectus contained
in such registration statement or any such amendment thereof or
supplement thereto.
(f) Each party indemnified under paragraph (d) or (e)
of this Annex I shall, promptly after receipt of notice of the
commencement of any action against such indemnified party in
respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the commencement thereof. The
omission of any indemnified party to so notify an indemnifying
party of any such action shall not relieve the indemnifying
party from any liability in respect of such action which it may
have to such indemnified party on account of the indemnity
agreement contained in paragraph (d) or (e) of this Annex I,
unless the indemnifying party was prejudiced by such omission,
and in no event shall relieve the indemnifying party from any
other liability which it may have to such indemnified party.
In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may
desire, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, and after notice from
the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under
paragraph (d) or (e) of this Annex I for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable
costs of investigation.
(g) If the indemnification provided for under
paragraph (d) or (e) shall for any reason be held by a court to
be unavailable to an indemnified party under paragraph (d) or
(e) hereof in respect of any loss, claim, damage or liability,
or any action in respect thereof, then, in lieu of the amount
paid or payable under paragraph (d) or (e) hereof, the
indemnified party and the indemnifying party under paragraph
(d) or (e) hereof shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating
the same), (i) in such proportion as is appropriate to reflect
the relative fault of the Company and the prospective seller of
Securities covered by the registration statement which resulted
in such loss, claim, damage or liability, or action in respect
thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause
7
(i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative
benefits received by the Company and such prospective seller
from the offering of the securities covered by such
registration statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. In
addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or
claim effected without such Person's consent, which consent
shall not be unreasonably withheld.
ANNEX II
ASSET PURCHASE TRANSACTION**
Asset to be Acquired by the Purchaser
Asset Purchased 100% of the Parks
Business of Paramount
Communications Inc
("Paramount")
"Parks Business" means
all of the rights,
obligations, assets
(including interests in
other legal entities),
liabilities (whether
known, unknown,
contingent or otherwise)
and business, including
all capital stock of
Paramount Parks Inc., a
Delaware corporation,
primarily related to the
following theme parks
operated by Paramount
:Kings Island, Cincinnati,
Ohio; Kings Dominion,
Richmond, Virginia;
Great America,
Santa Clara, California;
Carowinds, Charlotte,
North Carolina; and
Wonderland, Toronto,
Canada.
Purchase Price $750 million, plus the
amount of capital
expenditures made on the
Parks Business after the
date of the merger of
the Company and Paramount
net of indebtedness
related thereto incurred
by the Parks Business
(the "Parks Purchase
Price").
Consideration Class B Common Stock
valued at $55 per share.
**See page 3 of this Annex II.
2
Conditions (a) The merger between
the Company and Paramount
shall have become
effective.
(b) All governmental and
material third party
approvals shall have
been obtained.
(c) The Parks Business
shall have continued to
be operated in the
ordinary course.
(d) No injunction or
litigation shall be in
effect or pending the
effect of which would
materially and adversely
affect the transaction.
Option to be Acquired by the Company
Option Simultaneous with the
closing of the purchase
of the Parks Business by
the Purchaser, the
Purchaser shall grant an
option (the "Option") to
the Company, exercisable
by the Company by
written notice to the
Purchaser at any time on
or prior to the second
anniversary of the
closing of the purchase
by the Purchaser of the
Parks Business,
entitling the Company to
purchase a 50% equity
interest in the Parks
Business.
3
Exercise Price 50% of the Parks
Purchase Price, plus 50%
of the amount of capital
expenditures made on the
Parks Business after the
closing of the purchase
by the Purchaser of the
Parks Business net of
indebtedness related
thereto incurred by the
Parks Business (the
"Option Price").
Consideration Cash
Management Following exercise of
the Option and the
acquisition of a 50%
equity interest by the
Company, the Purchaser
shall be entitled to
elect a simple majority
of the board of
directors or other
governing body of the
Parks Business and to
control the management
of the Parks Business.
Other Terms If the Option is
exercised, the Company
and the Purchaser shall
enter into a
stockholders' or other
similar agreement
containing such terms as
are customary for joint
ventures in which the
equity is equally owned
by two parties where one
party has primary
management authority.
4
General
1. In the event that the Company elects to enter into the
Asset Purchase Transaction pursuant to paragraph 17, each of
the Company and the Purchaser agrees to act in good faith and
use all reasonable best efforts to take all steps necessary and
advisable to effect the transaction consistent with the terms
set forth in this Annex II as soon as practicable after such
election is made.
2. Unless the parties otherwise agree and so long as such
structure would be consistent with the intent of the
transaction as expressed in this Annex II, the acquisition of
the Parks Business by the Purchaser shall be effected through
the acquisition of all of the capital stock of Patriot Parks
Inc. and the Option of the Company to acquire a 50% equity
interest in the Parks Business, if exercised, shall be effected
through the acquisition of 50% of the capital stock of Patriot
Parks Inc.
* * *
**In the event that the Company elects to enter into the
Asset Purchase Transaction pursuant to paragraph 17 and the
Purchaser does not Beneficially Own sufficient shares of Class B
Common Stock to pay the full Parks Purchase Price with such
shares, the Purchaser shall have the right, at its option,
either (a) to pay in cash such amount of the Parks Purchase
Price not paid in Class B Common Stock and thereby still
purchase 100% of the Parks Business or (b) to purchase only
such percentage of the equity of the Parks Business as equals
the percentage of the Parks Purchase Price that the Purchaser
pays with all of the shares of Class B Common Stock
Beneficially Owned by the Purchaser.
In the event that the Purchaser elects to purchase less
than 100% of the Parks Business as provided immediately above,
the following adjustments to the Asset Purchase Transaction
shall be made:
(A) The Company and the Purchaser shall enter into a
stockholders' or other similar agreement containing such
terms as are customary for joint ventures in which the
equity is owned by two parties in the proportions in which
the Company and the Purchaser would own the Parks Business;
provided that in the event the Purchaser acquires less than
a 50% equity interest in the Parks Business, the Company
shall retain the right to elect a majority of the board of
directors or other governing body of the Parks Business and
to control the management of the Parks Business.
5
(B) The Purchaser shall grant the Option to the Company
only in the event that the Purchaser acquires an equity
interest in the Parks Business of greater than 50% and the
equity interest for which the Option may be exercised by
the Company shall be equal only to such percentage as would
result in the Purchaser, after exercise of the Option by
the Company, owning a 50% equity interest in the Parks
Business. In such event, the Option Price shall be
decreased in proportion to the percentage decrease from a
50% equity interest to the percentage interest for which
the Option shall be exercisable.
Exhibit A
1. The execution and delivery of the Agreement by
the Company and the performance of its obligations thereunder
have been duly and validly authorized by all necessary
corporate action on the part of the Company.
2. The Agreement has been duly and validly executed
and delivered by the Company and, assuming the due
authorization, execution and delivery by the Purchaser,
constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance
or other similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
3. The Shares have been validly issued, are fully
paid and nonassessable, have not been issued in violation of or
subject to any preemptive rights and have the rights set forth
in the Company's Restated Certificate of Incorporation, as
amended through the date hereof.
Exhibit B
1. The execution and delivery of the Agreement by
the Purchaser and the performance of its obligations thereunder
have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser.
2. The Agreement has been duly and validly executed
and delivered by the Purchaser and, assuming the due
authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with
its terms, except (i) as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance
or other similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law),
and (ii) that I express no opinion as to the enforceability of
any right to indemnity or contribution under the Agreement
which are violative of the public policy underlying any law,
rule or regulation (including any state and federal securities
law, rule or regulation).
Exhibit C
Assuming the due authorization, execution and delivery
by the Purchaser and the Company, the Agreement constitutes the
valid and binding obligation of the Company, enforceable
against the Company, in accordance with its terms, provided
that (i) the enforceability of the Agreement may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and (ii) we express no opinion
as to the enforceability of any right to indemnity or
contribution under the Agreement which are violative of the
public policy underlying any law, rule or regulation (including
any state and Federal securities law, rule or regulation).
AGREEMENT AND PLAN OF MERGER, dated as of January 7,
1994 (this "Agreement"), between VIACOM INC., a Delaware
corporation ("Viacom"), and BLOCKBUSTER ENTERTAINMENT
CORPORATION, a Delaware corporation ("Blockbuster").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions
of this Agreement and in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law"),
Blockbuster and Viacom will enter into a business combination
transaction pursuant to which Blockbuster will merge with and
into Viacom (the "Merger");
WHEREAS, the Board of Directors of Blockbuster has
determined that the Merger is consistent with and in
furtherance of the long-term business strategy of Blockbuster
and is fair to, and in the best interests of, Blockbuster and
the holders of Blockbuster Common Stock (as defined in Section
2.01(a)) and has approved and adopted this Agreement and has
approved the Merger and the other transactions contemplated
hereby and recommended approval and adoption of this Agreement
and approval of the Merger by the stockholders of Blockbuster;
WHEREAS, the Board of Directors of Viacom has
determined that the Merger is consistent with and in
furtherance of the long-term business strategy of Viacom and is
fair to, and in the best interests of, Viacom and its
stockholders and has approved and adopted this Agreement and
has approved the Merger and the other transactions contemplated
hereby and recommended approval and adoption of this Agreement
and approval of the Merger by the holders of the Class A Common
Stock, par value $.01 per share, of Viacom (the "Viacom Class A
Common Stock");
WHEREAS, for federal income tax purposes, it is
intended that the Merger qualify as a reorganization under the
provisions of Section 368(a) of the United States Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, concurrently with the execution of this
Agreement and as an inducement to Blockbuster to enter into
this Agreement, National Amusements, Inc., a Maryland
corporation and the majority stockholder of Viacom ("Parent"),
and Blockbuster have entered into a Voting Agreement (the
"Parent Voting Agreement") pursuant to which Parent shall,
among other things, vote its shares of Viacom Class A Common
Stock (as defined in Section 2.01(a)) in favor of the Merger
and the other transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth in this Agreement, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject
to the conditions set forth in this Agreement, and in
accordance with Delaware Law, at the Effective Time (as defined
in Section 1.03), Blockbuster shall be merged with and into
Viacom. As a result of the Merger, the separate corporate
existence of Blockbuster shall cease and Viacom shall continue
as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 1.02. Closing. Unless this Agreement shall
have been terminated and the transactions herein contemplated
shall have been abandoned pursuant to Section 8.01 and subject
to the satisfaction or waiver of the conditions set forth in
Article VII, the consummation of the Merger will take place as
promptly as practicable (and in any event within two business
days) after satisfaction or waiver of the conditions set forth
in Article VII at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time. As promptly as
practicable after the satisfaction or, if permissible, waiver
of the conditions set forth in Article VII, the parties hereto
shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in such form as
required by, and executed in accordance with the relevant
provisions of, Delaware Law (the date and time of such filing,
or such later date or time as set forth therein, being the
"Effective Time").
SECTION 1.04. Effect of the Merger. At the Effective
Time, the effect of the Merger shall be as provided in the
applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Viacom
and Blockbuster shall vest in the Surviving Corporation, and
all debts, liabilities and duties
of Viacom and Blockbuster shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 1.05. Certificate of Incorporation; By-Laws.
At the Effective Time the Certificate of Incorporation and the
By-Laws of Viacom, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and
the By-Laws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the
Effective Time, by virtue of the Merger and without any action
on the part of Viacom, Blockbuster or the holders of any of the
following securities:
(a) Each share of common stock, par value $.10 per
share, of Blockbuster ("Blockbuster Common Stock"), issued
and outstanding immediately prior to the Effective Time
(other than any shares of Blockbuster Common Stock to be
canceled pursuant to Section 2.01(b) and any Dissenting
Shares (if applicable and as defined in Section 2.05)),
shall be converted, subject to Section 2.02(d), into the
right to receive (x) .08 of one share of Viacom Class A
Common Stock (the "Class A Exchange Ratio"), (y) .60615 of
one share of Class B Common Stock, par value $.01 per share
("Viacom Class B Common Stock", and together with the
Viacom Class A Common Stock, the "Viacom Common Stock"), of
Viacom (the "Class B Exchange Ratio") and (z) up to an
additional .13829 of one share of Viacom Class B Common
Stock, with such amount to be determined in accordance
with, and the right to receive such shares to be evidenced
by, one variable common right (a "VCR") issued by
Viacom having the principal terms described in Annex A (the
"VCR Exchange Ratio"; together with the Class A and Class B
Exchange Ratios, the "Exchange Ratios"); provided, however,
that, in any event, if between the date of this Agreement
and the Effective Time the outstanding shares of Viacom
Common Stock or Blockbuster Common Stock shall have been
changed into a different number of shares or a different
class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of shares, the Exchange Ratios shall be
correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares. All such shares of
Blockbuster Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease
to exist, and each certificate previously evidencing any
such shares shall thereafter represent the right to
receive, upon the surrender of such certificate in
accordance with the provisions of Section 2.02,
certificates evidencing (i) such number of whole shares of
Viacom Common Stock into which such Blockbuster Common
Stock was converted in accordance with the Class A and
Class B Exchange Ratios and (ii) such number of VCRs into
which such Blockbuster Common Stock was converted in
accordance with the VCR Exchange Ratio. The holders of
such certificates previously evidencing such shares of
Blockbuster Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with
respect to such shares of Blockbuster Common Stock except
as otherwise provided herein or by law. No fractional
share of Viacom Common Stock shall be issued; and, in lieu
thereof, a cash payment shall be made pursuant to Section
2.02(d).
(b) Each share of Blockbuster Common Stock held in
the treasury of Blockbuster and each share of Blockbuster
Common Stock owned by Viacom or any direct or indirect
wholly owned subsidiary of Viacom or of Blockbuster
immediately prior to the Effective Time shall automatically
be canceled and extinguished without any conversion thereof
and no payment shall be made with respect thereto.
SECTION 2.02. Exchange of Certificates and Cash. (a)
Exchange Agent. Viacom shall deposit, or shall cause to be
deposited, with or for the account of a bank or trust company
designated by Viacom, which shall be reasonably satisfactory to
Blockbuster (the "Exchange Agent"), for the benefit of the
holders of shares of Blockbuster Common Stock (other than
Dissenting Shares, if applicable), for exchange in accordance
with this Article II, through the Exchange Agent, at the
Effective Time, (i) certificates evidencing the shares of
Viacom Common Stock and the VCRs issuable pursuant to
Section 2.01 in exchange for outstanding shares of Blockbuster
Common Stock and (ii) upon the request of the Exchange Agent,
cash in an amount sufficient to make any cash payment due under
Section 2.02(d) (such certificates for shares of Viacom Common
Stock, together with any dividends or distributions with
respect thereto, the VCRs and cash being hereafter collectively
referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Viacom Common
Stock and VCRs
contemplated to be issued pursuant to Section 2.01 out of the
Exchange Fund to holders of shares of Blockbuster Common Stock.
Except as contemplated by Section 2.02(d) hereof, the Exchange
Fund shall not be used for any other purpose. Any interest,
dividends or other income earned on the investment of cash or
other property held in the Exchange Fund shall be for the
account of Viacom.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Viacom will instruct the
Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Blockbuster
Common Stock (other than Dissenting Shares, if applicable) (the
"Certificates") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Viacom may reasonably
specify) and (ii) instructions to effect the surrender of the
Certificates in exchange for the certificates evidencing shares
of Viacom Common Stock and the VCRs and cash (if any). Upon
surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed,
and such other customary documents as may be required pursuant
to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates
evidencing that number of whole shares of Viacom Common Stock
and VCRs that such holder has the right to receive in
accordance with the Exchange Ratios in respect of the shares of
Blockbuster Common Stock formerly evidenced by such
Certificate, (B) any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c) and (C)
cash in lieu of fractional shares of Viacom Common Stock to
which such holder is entitled pursuant to Section 2.02(d) (the
shares of Viacom Common Stock, the VCRs and the dividends,
distributions and cash described in clauses (A), (B) and (C)
being, collectively, the "Merger Consideration"), and the
Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of shares of Blockbuster
Common Stock that is not registered in the transfer records of
Blockbuster, shares of Viacom Common Stock and VCRs may be
issued and paid in accordance with this Article II to a
transferee if the Certificate evidencing such shares of
Blockbuster Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time to evidence only
the right to receive upon such surrender the Merger
Consideration.
(c) Distributions with Respect to Unexchanged Shares
of Viacom Common Stock. No dividends or other distributions
declared or made after the Effective Time with respect to
Viacom Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Viacom Common Stock they are
entitled to receive until the holder of such Certificate shall
surrender such Certificate.
(d) Fractional Shares. No fraction of a share of
Viacom Common Stock shall be issued in the Merger. In lieu of
any such fractional shares, each holder of Blockbuster Common
Stock upon surrender of a Certificate for exchange pursuant to
this Section 2.02 shall be paid an amount in cash (without
interest), rounded to the nearest cent, determined by
multiplying (i) the per share closing price on the American
Stock Exchange ("AMEX") of Viacom Class A Common Stock or
Viacom Class B Common Stock, as the case may be, on the date of
the Effective Time (or, if shares of Viacom Class A Common
Stock or Viacom Class B Common Stock, as the case may be, do
not trade on the AMEX on such date, the first date of trading
of such Viacom Common Stock on the AMEX after the Effective
Time) by (ii) the fractional interest to which such holder
would otherwise be entitled (after taking into account all
shares of Blockbuster Common Stock then held of record by such
holder).
(e) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of
Blockbuster Common Stock for six months after the Effective
Time shall be delivered to Viacom, upon demand, and any holders
of Blockbuster Common Stock who have not theretofore complied
with this Article II shall thereafter look only to Viacom for
the Merger Consideration to which they are entitled pursuant to
this Article II.
(f) No Liability. Neither Viacom nor Blockbuster
shall be liable to any holder of shares of Blockbuster Common
Stock for any such shares of Viacom Common Stock (or dividends
or distributions with respect thereto) or VCRs from the
Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(g) Withholding Rights. Viacom or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to
any holder of shares of Blockbuster Common Stock such amounts
as Viacom or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the
Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Viacom or the
Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
the shares of Blockbuster Common Stock in respect of which such
deduction and withholding was made by Viacom or the Exchange
Agent.
SECTION 2.03. Stock Transfer Books. At the Effective
Time, the stock transfer books of Blockbuster shall be closed,
and there shall be no further registration of transfers of
shares of Blockbuster Common Stock thereafter on the records of
Blockbuster. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Viacom for any reason shall
be converted into the Merger Consideration.
SECTION 2.04. Stock Options. At the Effective Time,
Blockbuster's obligations with respect to each outstanding
Blockbuster Stock Option (as defined in Section 3.03) to
purchase shares of Blockbuster Common Stock, as amended in the
manner described in the following sentence, shall be assumed by
Viacom. The Blockbuster Stock Options so assumed by Viacom
shall continue to have, and be subject to, the same terms and
conditions as set forth in the stock option plans and
agreements pursuant to which such Blockbuster Stock Options
were issued as in effect immediately prior to the Effective
Time, except that each such Blockbuster Stock Option shall be
exercisable for (A) that number of whole shares of (i) Viacom
Class A Common Stock equal to the product of the number of
shares of Blockbuster Common Stock covered by such Blockbuster
Stock Option immediately prior to the Effective Time multiplied
by the Class A Exchange Ratio and rounded up to the nearest
whole number of shares of Viacom Class A Common Stock and (ii)
Viacom Class B Common Stock equal to the product of the number
of shares of Blockbuster Common Stock covered by such
Blockbuster Stock Option immediately prior to the Effective
Time multiplied by the Class B Exchange Ratio and rounded up to
the nearest whole number of shares of Viacom Class B Common
Stock and (B) that number of VCRs equal to the product of the
number of shares of Blockbuster Common Stock covered by such
Blockbuster Stock Option immediately prior to the Effective
Time multiplied by the VCR Exchange Ratio. Each warrant held by
employees or directors of Blockbuster shall be converted into a
Viacom warrant on the same terms and conditions except that each
such warrant shall be exercisable for (A) that number of whole
shares of (i) Viacom Class A Common Stock equal to the product
of the number of shares of Blockbuster Common Stock covered by
such warrant immediately prior to the Effective Time multiplied by
the Class A Exchange Ratio and rounded up to the nearest whole
number of shares of Viacom Class A Common Stock and (ii) Viacom
Class B Common Stock equal to the product of the number of shares
of Blockbuster Common Stock covered by such warrant immediately prior
to the Effective Time multiplied by the Class B Exchange Ratio and
rounded up to the nearest whole number of shares of Viacom Class B
Common Stock and (B) that number of VCRs equal to the product of the
number of shares of Blockbuster Common Stock covered by such warrant
immediately prior to the Effective Time multiplied by the VCR Exchange
Ratio. Viacom shall (i) reserve for issuance the number of shares
of Viacom Common Stock that will become issuable upon the exercise
of such Blockbuster Stock Options pursuant to this Section 2.04
and (ii) promptly after the Effective Time issue to each holder
of an outstanding Blockbuster Stock Option a document
evidencing the assumption by Viacom of Blockbuster's
obligations with respect thereto under this Section 2.04.
Nothing in this Section 2.04 shall affect the schedule of
vesting with respect to the Blockbuster Stock Options to be
assumed by Viacom as provided in this Section 2.04; provided,
however, that Blockbuster and Viacom shall use their best
efforts to secure from each of the executives previously
identified by mutual agreement of Blockbuster and Viacom (the
"Designated Executives"), as promptly as practicable following
the execution of this Agreement, a waiver of (i) the
accelerated vesting of Blockbuster Stock Options held by such
Designated Executive (such waiver to lapse (and vesting of such
Blockbuster Stock Option to occur if such option has not
already vested in accordance with the applicable vesting
schedule) upon the termination of such Designated Executive's
employment with Blockbuster or Viacom for any reason) and (ii)
the triggering of the right of such Designated Executive to
cause Blockbuster to acquire his Blockbuster Stock Options for
cash, in each case resulting from the execution of this
Agreement and the transactions contemplated hereby, in
consideration for Blockbuster entering into an employment
agreement acceptable to Blockbuster and Viacom with such
Designated Executive. In addition to the adjustment provided
by Section 2.04, effective as of the Effective Time, the
terms of each Blockbuster Stock Option held by a Blockbuster
employee who as of the date hereof is not subject to the
reporting requirements of Section 16(a) of the Exchange Act,
and, subject, at Blockbuster's discretion, to any stockholder
approvals it determines are necessary, any non employee director,
shall be amended to provide that, if such Blockbuster
employee's employment is terminated without cause, or such
directorship shall cease, such Blockbuster Stock Option shall not
expire prior to the second anniversary of the Effective Time;
provided, however, that in no event shall the maximum term of such
Blockbuster Stock Option be extended.
SECTION 2.05. Dissenting Shares. (a) If provided
for under Delaware Law, notwithstanding any other provision of
this Agreement to the contrary, shares of Blockbuster Common
Stock that are outstanding immediately prior to the Effective
Time and which are held by stockholders who shall have not
voted in favor of the Merger or consented thereto in writing
and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of Delaware Law and
who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be
entitled to receive payment of the appraised value of such
shares of Blockbuster Common Stock held by them in accordance
with the provisions of such
Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to
appraisal of such shares of Blockbuster Common Stock under such
Section 262 shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time,
for the right to receive, without any interest thereon, the
Merger Consideration, upon surrender, in the manner provided in
Section 2.02, of the certificate or certificates that formerly
evidenced such shares of Blockbuster Common Stock.
(b) Blockbuster shall give Viacom (i) prompt notice
of any demands for appraisal received by Blockbuster,
withdrawals of such demands, and any other instruments served
pursuant to Delaware Law and received by Blockbuster and (ii)
the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law.
Blockbuster shall not, except with the prior written consent of
Viacom, make any payment with respect to any demands for
appraisal, or offer to settle, or settle, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BLOCKBUSTER
Blockbuster hereby represents and warrants to Viacom
that:
SECTION 3.01. Organization and Qualification;
Subsidiaries. (a) Each of Blockbuster and each Material
Blockbuster Subsidiary (as defined below) is a corporation,
partnership or other legal entity duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to
have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Blockbuster
Material Adverse Effect (as defined below). Blockbuster and
each Material Blockbuster Subsidiary are duly qualified or
licensed as foreign corporations to do business, and are in
good standing, in each jurisdiction where the character of the
properties owned, leased or operated by them or the nature of
their business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in
good standing that would not,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect. The term "Blockbuster Material Adverse Effect"
means any change or effect that is or would be materially
adverse to the business, results of operations or financial
condition of Blockbuster and the Blockbuster Subsidiaries,
taken as a whole; provided that from and after the date on
which the issuance and sale of shares of Viacom Class B Common
Stock contemplated by the Subscription Agreement (the
"Subscription Agreement") dated as of the date of this
Agreement between Viacom and Blockbuster is consummated (the
"Subscription Date"), the term "Blockbuster Material Adverse
Effect", for purposes of Article III and Section 7.02(a) only,
shall be changed to mean any change or effect that is or would
be materially adverse to the financial condition of Blockbuster
and the Blockbuster Subsidiaries, taken as a whole, excluding
any changes or effects caused by changes in general economic
conditions or changes generally affecting Blockbuster's
industry..
(b) Each subsidiary of Blockbuster (a "Blockbuster
Subsidiary") that constitutes a Significant Subsidiary of
Blockbuster within the meaning of Rule 1-02 of Regulation S-X
of the Securities and Exchange Commission (the "SEC") is
referred to herein as a "Material Blockbuster Subsidiary".
SECTION 3.02. Certificate of Incorporation and
By-Laws. Blockbuster has heretofore made available to Viacom a
complete and correct copy of the Certificate of Incorporation
and the By-Laws or equivalent organizational documents, each as
amended to date, of Blockbuster and each Material Blockbuster
Subsidiary. Such Certificates of Incorporation, By-Laws and
equivalent organizational documents are in full force and
effect. Neither Blockbuster nor any Material Blockbuster
Subsidiary is in violation of any provision of its Certificate
of Incorporation, By-Laws or equivalent organizational
documents, except for such violations that would not,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect.
SECTION 3.03. Capitalization. The authorized capital
stock of Blockbuster consists of 300,000,000 shares of
Blockbuster Common Stock and 500,000 shares of Preferred Stock,
par value $1.00 per share ("Blockbuster Preferred Stock"). As
of December 31, 1993, (i) 247,487,375 shares of Blockbuster
Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable, (ii) no shares
were held in the treasury of Blockbuster, (iii) 18,564,443
shares were reserved for future issuance pursuant to
outstanding employee stock options granted pursuant to
Blockbuster's 1987 Stock Option Plan, as amended, 1989
11
Stock Option Plan, as amended, 1990 Stock Option Plan, as
amended, 1991 Employee Director Stock Option Plan, 1991
Non-Employee Director Stock Option Plan and any other employee
stock option plan or program (any employee or director stock
option issued under any such plan being a "Blockbuster Stock
Option") and (iv) 7,138,859 shares were reserved for future
issuance pursuant to the terms of outstanding warrants to
purchase shares of Blockbuster Common Stock. As of the date
hereof, no shares of Blockbuster Preferred Stock are issued
and outstanding. Except as set forth in Section 3.03
of the Disclosure Schedule previously delivered by
Blockbuster to Viacom (the "Blockbuster Disclosure
Schedule"), or except as set forth in this Section 3.03, there
are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the
issued or unissued capital stock of Blockbuster or any Material
Blockbuster Subsidiary or obligating Blockbuster or any
Material Blockbuster Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Blockbuster or
any Material Blockbuster Subsidiary. All shares of Blockbuster
Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in
Section 3.03 of the Blockbuster Disclosure Schedule, there are
no material outstanding contractual obligations of Blockbuster
or any Blockbuster Subsidiary to repurchase, redeem or
otherwise acquire any shares of Blockbuster Common Stock or any
capital stock of any Material Blockbuster Subsidiary, or make
any material investment (in the form of a loan, capital
contribution or otherwise) in, any Blockbuster Subsidiary or
any other person. Each outstanding share of capital stock of
each Material Blockbuster Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and each such
share owned by Blockbuster or another Blockbuster Subsidiary is
free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements,
limitations on Blockbuster's or such other Blockbuster
Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement.
Blockbuster has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions
12
contemplated hereby. The execution and delivery of this
Agreement by Blockbuster and the consummation by Blockbuster of
the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other
corporate proceedings on the part of Blockbuster are necessary
to authorize this Agreement or to consummate the transactions
contemplated herein (other than, with respect to the Merger,
the approval and adoption of this Agreement by the holders of a
majority of the then outstanding shares of Blockbuster Common
Stock and the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Blockbuster
and, assuming the due authorization, execution and delivery by
Viacom, constitutes a legal, valid and binding obligation of
Blockbuster, enforceable against Blockbuster in accordance with
its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). Blockbuster has taken all
appropriate actions so that the restrictions on business
combinations contained in Section 203 of Delaware Law and
Article 6 of Blockbuster's Certificate of Incorporation will
not apply with respect to or as a result of the transactions
contemplated herein or related hereto.
SECTION 3.05. No Conflict; Required Filings and
Consents. (a) Except as set forth in Section 3.05 of the
Blockbuster Disclosure Schedule, the execution and delivery of
this Agreement by Blockbuster do not, and the performance of
the transactions contemplated herein by Blockbuster will not,
(i) conflict with or violate the Certificate of Incorporation
or By-Laws or equivalent organizational documents of
Blockbuster or any Material Blockbuster Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Blockbuster or any Blockbuster
Subsidiary or by which any property or asset of Blockbuster or
any Blockbuster Subsidiary is bound or affected, or (iii)
result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under,
or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of
Blockbuster or any Blockbuster Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation
13
to which Blockbuster or any Blockbuster Subsidiary is a party
or by which Blockbuster or any Blockbuster Subsidiary or any
property or asset of Blockbuster or any Blockbuster Subsidiary
is bound or affected, except, in the case of clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults
or other occurrences which would not prevent or delay
consummation of the Merger in any material respect, or
otherwise prevent Blockbuster from performing its obligations
under this Agreement in any material respect, and would not,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect.
(b) The execution and delivery of this Agreement by
Blockbuster do not, and the performance of this Agreement by
Blockbuster will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic or foreign
(each a "Governmental Entity"), except (i) for (A) applicable
requirements, if any, of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Securities Act of 1933, as
amended (the "Securities Act"), state securities or "blue sky"
laws ("Blue Sky Laws") and state takeover laws, (B) the
pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (C) applicable
requirements of the Investment Canada Act of 1985 and the
Competition Act (Canada), (D) filing and recordation of
appropriate merger documents as required by Delaware Law and
(E) any non-United States competition, antitrust and investment
laws and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent
Blockbuster from performing its obligations under this
Agreement in any material respect, and would not, individually
or in the aggregate, have a Blockbuster Material Adverse
Effect.
SECTION 3.06. Compliance. Except as set forth in
Section 3.06 of the Blockbuster Disclosure Schedule, neither
Blockbuster nor any Blockbuster Subsidiary is in conflict with,
or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree (including, without limitation, laws,
rules and regulations relating to franchises) applicable to
Blockbuster or any Blockbuster Subsidiary or by which any
property or asset of Blockbuster or any Blockbuster Subsidiary
is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or
14
obligation to which Blockbuster or any Blockbuster Subsidiary
is a party or by which Blockbuster or any Blockbuster
Subsidiary or any property or asset of Blockbuster or any
Blockbuster Subsidiary is bound or affected, except for any
such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a)
Blockbuster has filed all forms, reports and documents required
to be filed by it with the SEC since December 31, 1990 and has
heretofore made available to Viacom, in the form filed with the
SEC (excluding any exhibits thereto), (i) its Annual Reports on
Form 10-K for the years ended December 31, 1990, 1991 and 1992,
respectively, (ii) its Quarterly Reports on Form 10-Q for the
periods ended March 30, 1993, June 30, 1993 and September 30,
1993, (iii) all proxy statements relating to Blockbuster's
meetings of stockholders (whether annual or special) held since
January 1, 1991 and (iv) all other forms, reports and other
registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above and preliminary
materials) filed by Blockbuster with the SEC since December 31,
1990 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being referred to
herein, collectively, as the "Blockbuster SEC Reports"). The
Blockbuster SEC Reports and any forms, reports and other
documents filed by Blockbuster with the SEC after the date of
this Agreement (x) were or will be prepared in accordance with
the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder and
(y) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made
therein, in the light of circumstances under which they were
made, not misleading. No Material Blockbuster Subsidiary,
except for Spelling Entertainment Group Inc., a Florida
corporation ("Spelling"), is required to file any form, report
or other document with the SEC.
(b) Spelling has filed all forms, reports and
documents required to be filed by it with the SEC since
June 30, 1992 and Blockbuster has heretofore made available to
Viacom, in the form filed with the SEC (excluding any exhibits
thereto), (i) Spelling's Quarterly Reports on Form 10-Q for the
periods ended June 30, 1993 and September 30, 1993,
(ii) all proxy statements relating to Spelling's meetings of
stockholders (whether annual or special) held since May 1, 1993
and (iii) all other forms, reports and
15
other registration statements (other than Quarterly Reports on
Form 10-Q not referred to in clause (ii) above and preliminary
materials) filed by Spelling with the SEC since May 1, 1992
(the forms, reports and other documents referred to in clauses
(i), (ii) and (iii) above being referred to herein,
collectively, as the "Spelling SEC Reports"). The Spelling SEC
Reports and any forms, reports and other documents filed by
Spelling with the SEC after the date of this Agreement (x) were
or will be prepared in accordance with the requirements of the
Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (y) did not at the
time they were filed, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading.
(c) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Blockbuster SEC Reports and Spelling SEC Reports was prepared
in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each
fairly presented the financial position, results of operations
and cash flows of Blockbuster and the consolidated Blockbuster
Subsidiaries or Spelling and its subsidiaries, as the case may
be, as at the respective dates thereof and for the respective
periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the
aggregate, to be material in amount).
(d) Except as set forth in Section 3.07 of the
Blockbuster Disclosure Schedule or except as and to the extent
set forth in the Blockbuster SEC Reports filed with the SEC
prior to the date of this Agreement, Blockbuster and the
Blockbuster Subsidiaries do not have any liability or
obligation of any nature (whether accrued, absolute, contingent
or otherwise) other than liabilities and obligations which
would not, individually or in the aggregate, have a Blockbuster
Material Adverse Effect.
SECTION 3.08. Absence of Certain Changes or Events.
Since December 31, 1992, except as set forth in Section 3.08 of
the Blockbuster Disclosure Schedule, contemplated by this
Agreement or disclosed in any Blockbuster SEC Report filed
since December 31, 1992 and prior to the date of this
Agreement, Blockbuster and the Blockbuster Subsidiaries have
conducted their businesses only
16
in the ordinary course and in a manner consistent with past
practice and, since December 31, 1992, there has not been (i)
any Blockbuster Material Adverse Effect, (ii) any damage,
destruction or loss (whether or not covered by insurance) with
respect to any property or asset of Blockbuster or any
Blockbuster Subsidiary and having, individually or in the
aggregate, a Blockbuster Material Adverse Effect, (iii) any
change by Blockbuster in its accounting methods, principles or
practices, (iv) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of
Blockbuster or any Blockbuster Subsidiary or any redemption,
purchase or other acquisition of any of their respective
securities other than (A) regular quarterly dividends on the
shares of Blockbuster Common Stock not in excess of $0.025 per
share, (B) regular quarterly dividends on the shares of the
common stock of Spelling not in excess of $.020 per share, (C)
dividends by a Blockbuster Subsidiary to Blockbuster and (D) to
fund pre-established dividend reinvestment plans or (v) other
than as set forth in Section 3.03 and pursuant to the plans,
programs or arrangements referred to in Section 3.10 and other
than in the ordinary course of business consistent with past
practice, any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation
rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase
in the compensation payable or to become payable to any
officers or key employees of Blockbuster or any Blockbuster
Subsidiary.
SECTION 3.09. Absence of Litigation. Except as set
forth in Section 3.09 of the Blockbuster Disclosure Schedule or
except as disclosed in the Blockbuster SEC Reports filed with
the SEC prior to the date of this Agreement, there is no claim,
action, proceeding or investigation pending or, to the best
knowledge of Blockbuster, threatened against Blockbuster or any
Blockbuster Subsidiary, or any property or asset of Blockbuster
or any Blockbuster Subsidiary, before any court, arbitrator or
administrative, governmental or regulatory authority or body,
domestic or foreign, which, individually or in the aggregate,
would have a Blockbuster Material Adverse Effect. Except as
disclosed in the Blockbuster SEC Reports filed with the SEC
prior to the date of this Agreement, neither Blockbuster nor
any Blockbuster Subsidiary nor any property or asset of
Blockbuster or any Blockbuster Subsidiary is subject to any
order, writ, judgment, injunction, decree, determination or
award which would have, individually or in the aggregate, a
Blockbuster Material Adverse Effect.
17
SECTION 3.10. Employee Benefit Plans. With respect
to all the employee benefit plans, programs and arrangements
maintained or contributed to by Blockbuster or any Blockbuster
Subsidiary for the benefit of any current or former employee,
officer or director of Blockbuster or any Blockbuster
Subsidiary (the "Blockbuster Plans"), except as set forth in
Section 3.10 of the Blockbuster Disclosure Schedule or the
Blockbuster SEC Reports and except as would not, individually
or in the aggregate, have a Blockbuster Material Adverse
Effect: (i) each Blockbuster Plan intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the
"IRS") that it is so qualified and nothing has occurred since
the date of such letter that could reasonably be expected to
affect the qualified status of such Blockbuster Plan; (ii) each
Blockbuster Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable
law; (iii) neither Blockbuster nor any Blockbuster Subsidiary
has incurred any direct or indirect liability under, arising
out of or by operation of Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), in
connection with the termination of, or withdrawal from, any
Blockbuster Plan or other retirement plan or arrangement, and
no fact or event exists that could reasonably be expected to
give rise to any such liability; and (iv) Blockbuster and the
Blockbuster Subsidiaries have not incurred any liability under,
and have complied in all material respects with, the Worker
Adjustment Retraining Notification Act ("WARN"), and no fact or
event exists that could give rise to liability under such act.
Except as set forth in Section 3.10 of the Blockbuster
Disclosure Schedule, none of the Blockbuster Plans currently
maintained by or contributed to by Blockbuster nor any Plan
maintained by any entity that together with Blockbuster or the
Blockbuster Subsidiaries would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA (a "Blockbuster
Affiliate Plan") is subject to Title IV of ERISA. No
Blockbuster Plan or Blockbuster Affiliate Plan has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived as of
the most recently completed plan year of such plan.
SECTION 3.11. Trademarks, Patents and Copyrights.
Blockbuster and the Blockbuster Subsidiaries own, or possess
adequate licenses or other valid rights to use, all material
patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, service marks, service
mark rights, trade secrets, applications to register, and
18
registrations for, the foregoing trademarks, service marks,
know-how and other proprietary rights and information used in
connection with the business of Blockbuster and the Blockbuster
Subsidiaries as currently conducted, and no assertion or claim
has been made in writing challenging the validity of any of the
foregoing which, individually or in the aggregate, would have a
Blockbuster Material Adverse Effect. To the best knowledge of
Blockbuster, the conduct of the business of Blockbuster and the
Blockbuster Subsidiaries as currently conducted does not
conflict in any way with any patent, patent right, license,
trademark, trademark right, trade name, trade name right,
service mark or copyright of any third party that, individually
or in the aggregate, would have a Blockbuster Material Adverse
Effect.
SECTION 3.12. Taxes. Except as set forth in Section
3.12 of the Disclosure Schedule, Blockbuster and the
Blockbuster Subsidiaries have timely filed all federal, state,
local and foreign tax returns and reports required to be filed
by them through the date hereof and shall timely file all
returns and reports required on or before the Effective Time,
except for such returns and reports the failure of which to
file timely would not, individually or in the aggregate, have a
Blockbuster Material Adverse Effect. Such reports and returns
are and will be true, correct and complete, except for such
failures to be true, correct and complete as would not,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect. Blockbuster and the Blockbuster Subsidiaries
have paid and discharged all federal, state, local and foreign
taxes due from them, other than such taxes that are being
contested in good faith by appropriate proceedings and are
adequately reserved as shown in the audited consolidated
balance sheet of Blockbuster dated December 31, 1992 (the
"Blockbuster 1992 Balance Sheet") and its most recent quarterly
financial statements, except for such failures to so pay and
discharge which would not, individually or in the aggregate,
have a Blockbuster Material Adverse Effect. Neither the IRS
nor any other taxing authority or agency, domestic or foreign,
is now asserting or, to the best knowledge of Blockbuster,
threatening to assert against Blockbuster or any Blockbuster
Subsidiary any deficiency or material claim for additional
taxes or interest thereon or penalties in connection therewith
which, if such deficiencies or claims were finally resolved
against Blockbuster and the Blockbuster Subsidiaries would,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect. The accruals and reserves for taxes (including
interest and penalties, if any, thereon) reflected in the
Blockbuster 1992 Balance Sheet and the most recent quarterly
financial statements are adequate in accordance
19
with generally accepted accounting principles, except where the
failure to be adequate would not have a Blockbuster Material
Adverse Effect. Blockbuster and the Blockbuster Subsidiaries
have withheld or collected and paid over to the appropriate
governmental authorities or are properly holding for such
payment all taxes required by law to be withheld or collected,
except for such failures to have so withheld or collected and
paid over or to be so holding for payment which would not,
individually or in the aggregate, have a Blockbuster Material
Adverse Effect. There are no material liens for taxes upon the
assets of Blockbuster or the Blockbuster Subsidiaries, other
than liens for current taxes not yet due and payable and liens
for taxes that are being contested in good faith by appropriate
proceedings. Neither Blockbuster nor any Blockbuster
Subsidiary has agreed to or is required to make any adjustment
under Section 481(a) of the Code. Neither Blockbuster nor any
Blockbuster Subsidiary has made an election under Section
341(f) of the Code. For purposes of this Section 3.12, where a
determination of whether a failure by Blockbuster or a
Blockbuster Subsidiary to comply with the representations
herein has a Blockbuster Material Adverse Effect is necessary,
such determination shall be made on an aggregate basis with all
other failures within this Section 3.12.
SECTION 3.13. Opinion of Financial Advisor.
Blockbuster has received the opinion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), dated January 7,
1994, to the effect that, as of such date, the Exhange Ratios,
taken as a whole, are fair to the stockholders of Blockbuster
from a financial point of view, a copy of which opinion has
been delivered to Viacom.
SECTION 3.14. Vote Required. The affirmative vote of
the holders of a majority of the outstanding shares of
Blockbuster Common Stock is the only vote of the holders of any
class or series of Blockbuster capital stock necessary to
approve the Merger.
SECTION 3.15. Brokers. No broker, finder or
investment banker (other than Merrill Lynch) is entitled to any
brokerage, finder's or other fee or commission in connection
with the transactions contemplated herein based upon
arrangements made by or on behalf of Blockbuster. Blockbuster
has heretofore furnished to Viacom a complete and correct copy
of all agreements between Blockbuster and Merrill Lynch
pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated herein.
20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
Viacom hereby represents and warrants to Blockbuster
that:
SECTION 4.01. Organization and Qualification;
Subsidiaries. (a) Each of Viacom and each Material Viacom
Subsidiary (as defined below) is a corporation, partnership or
other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite power and
authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or
in the aggregate, have a Viacom Material Adverse Effect (as
defined below). Viacom and each Material Viacom Subsidiary is
duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it
or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Viacom Material
Adverse Effect. The term "Viacom Material Adverse Effect"
means any change or effect that is or would be materially
adverse to the business, results of operations or financial
condition of Viacom and the Viacom Subsidiaries, taken as a
whole; provided that from and after the Subscription Date, the
term "Viacom Material Adverse Effect", for purposes of Article
IV and Section 7.03(a) only, shall be changed to mean any
change or effect that is or would be materially adverse to the
financial condition of Viacom and the Viacom Subsidiaries,
taken as a whole, excluding any changes or effects caused by
changes in general economic conditions or changes generally
affecting Viacom's industry.
(b) Each subsidiary of Viacom (a "Viacom Subsidiary")
that constitutes a Significant Subsidiary of Viacom within the
meaning of Rule 1-02 of Regulation S-X of the SEC is referred
to herein as a "Material Viacom Subsidiary".
SECTION 4.02. Certificate of Incorporation and
By-Laws. Viacom has heretofore made available to Blockbuster
21
a complete and correct copy of the Certificate of Incorporation
and the By-Laws or equivalent organizational documents, each as
amended to date, of Viacom and each Material Viacom Subsidiary.
Such Certificates of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither
Viacom nor any Material Viacom Subsidiary is in violation of
any provision of its Certificate of Incorporation, By-Laws or
equivalent organizational documents, except for such violations
that would not, individually or in the aggregate, have a Viacom
Material Adverse Effect.
SECTION 4.03. Capitalization. The authorized capital
stock of Viacom consists of 100,000,000 shares of Viacom
Class A Common Stock, 150,000,000 shares of Viacom Class B
Common Stock and 100,000,000 shares of Preferred Stock, par
value $.01 per share ("Viacom Preferred Stock"), of which
24,000,000 shares have been designated Series A Preferred Stock
(the "Series A Preferred Stock") and 24,000,000 shares have
been designated Series B Preferred Stock (the "Series B
Preferred Stock"). As of November 30, 1993, (i) 53,449,125
shares of Viacom Class A Common Stock and 67,345,982 shares of
Viacom Class B Common Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable, (ii)
no shares were held in the treasury of Viacom, (iii) no shares
were held by the Viacom Subsidiaries, and (iv) 224,610 shares
of Viacom Class A Common Stock and 3,760,297 shares of Viacom
Class B Common Stock were reserved for future issuance pursuant
to outstanding employee stock options or stock incentive rights
granted pursuant to Viacom's 1989 Long-Term Management
Incentive Plan, the Viacom Inc. Stock Option Plan for Outside
Directors and any other employee stock option plan or program.
Since December 1, 1993 to the date of this Agreement, stock
options were granted pursuant to which no shares of Viacom Class
A Common Stock and no shares of Viacom Class B Common Stock are
subject to issuance. As of the date hereof, 24,000,000 shares
of Viacom Series A Preferred Stock and 24,000,000 shares of
Viacom Series B Preferred Stock are issued and outstanding.
Except as set forth in this Section 4.03 and as contemplated by
this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Viacom or
any Material Viacom Subsidiary or obligating Viacom or any
Material Viacom Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Viacom or any
Material Viacom Subsidiary, except for (i) options granted
since November 30, 1993 in the ordinary course consistent with
past practice, (ii) the reservation of 8,570,400 shares of
Class B Common
22
Stock for issuance upon conversion of shares of Viacom Series A
Preferred Stock and (iii) the reservation of 17,140,800 shares
of Class B Common Stock for issuance upon conversion of shares
of Series B Preferred Stock. All shares of Viacom Common Stock
subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Section
4.03 of the Disclosure Schedule previously delivered by Viacom
to Blockbuster (the "Viacom Disclosure Schedule"), there are no
material outstanding contractual obligations of Viacom or any
Viacom Subsidiary to repurchase, redeem or otherwise acquire
any shares of Viacom Common Stock or any capital stock of any
Material Viacom Subsidiary, or make any material investment (in
the form of a loan, capital contribution or otherwise) in, any
Viacom Subsidiary or any other person. Each outstanding share
of capital stock of each Material Viacom Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and
each such share owned by Viacom or another Viacom Subsidiary is
free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements,
limitations on Viacom's or such other Viacom Subsidiary's
voting rights, charges and other encumbrances of any nature
whatsoever. The VCRs to be issued pursuant to the Merger will
be duly and validly authorized by Viacom and, when issued and
delivered pursuant to the terms of this Agreement, will be duly
and validly issued, fully paid and nonassessable. The shares
of Viacom Class B Common Stock (if any) issuable pursuant to
the terms of the VCRs will be duly authorized, validly issued,
fully paid and nonassessable. The VCRs constitute legal, valid
and binding obligations of Viacom, enforceable against Viacom
in accordance with their terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors' rights generally and
subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
SECTION 4.04. Authority Relative to this Agreement.
Viacom has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated herein. The
execution and delivery of this Agreement by Viacom and the
consummation by Viacom of the transactions contemplated herein
have been duly and validly authorized by all necessary
corporate action and the Parent Voting Agreement has been
approved by the Viacom Board of
23
Directors for purposes of Section 203 of Delaware Law and no
other corporate proceedings on the part of Viacom are necessary
to authorize this Agreement or to consummate the transactions
contemplated herein (other than, with respect to the Merger,
the approval by the holders of a majority of the then
outstanding shares of Viacom Class A Common Stock of (i) this
Agreement and the Merger and (ii) to the extent necessary, the
amendment to Viacom's Certificate of Incorporation necessary to
increase (x) the shares of authorized Viacom Class B Common
Stock to a number not less than the number sufficient to
consummate the issuance of Shares of Viacom Class B Common
Stock contemplated under this Agreement and (y) the size of the
Board of Directors of Viacom to a number not less than 12
(collectively, the "Viacom Vote Matter"; and the amendments to
Viacom's Certificate of Incorporation described in clauses (x)
and (y) being, collectively, the "Viacom Certificate
Amendments"), and the filing and recordation of the foregoing
amendment to Viacom's Certificate of Incorporation and
appropriate merger documents as required by Delaware Law).
This Agreement has been duly and validly executed and delivered
by Viacom and, assuming the due authorization, execution and
delivery by Blockbuster, constitutes a legal, valid and binding
obligation of Viacom, enforceable against Viacom in accordance
with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 4.05. No Conflict; Required Filings and
Consents. (a) Except as set forth in Section 4.05 of the
Viacom Disclosure Schedule, the execution and delivery of this
Agreement by Viacom do not, and the performance of the
transactions contemplated herein by Viacom will not,
(i) conflict with or violate the Certificate of Incorporation
or By-Laws or equivalent organizational documents of Viacom or
any Material Viacom Subsidiary, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable
to Viacom or any Viacom Subsidiary or by which any property or
asset of Viacom or any Viacom Subsidiary is bound or affected,
or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under
or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of Viacom or
any Viacom Subsidiary pursuant
24
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which Viacom or any Viacom Subsidiary is a party
or by which Viacom or any Viacom Subsidiary or any property or
asset of Viacom or any Viacom Subsidiary is bound or affected,
except in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences
which would not prevent or delay consummation of the Merger in
any material respect, or otherwise prevent Viacom from
performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a
Viacom Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Viacom do not, and the performance of this Agreement by Viacom
will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental
Entity, except (i) for (A) applicable requirements, if any, of
the Exchange Act, Securities Act, state securities or Blue Sky
Laws and state takeover laws, (B) the pre-merger notification
requirements of the HSR Act, (C) applicable requirements, if
any, of the Communications Act, and of state and local
governmental authorities, including state and local authorities
granting franchises to operate cable systems, (D) applicable
requirements of the Investment Canada Act of 1985 and the
Competition Act (Canada), (E) filing and recordation of
appropriate merger documents and the Viacom Certificate
Amendments as required by Delaware Law and (F) any non-United
States competition, antitrust and investment laws and (ii)
where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent Viacom
from performing its obligations under this Agreement in any
material respect, and would not, individually or in the
aggregate, have a Viacom Material Adverse Effect.
SECTION 4.06. Compliance. Neither Viacom nor any
Viacom Subsidiary is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Viacom or any Viacom Subsidiary or by
which any property or asset of Viacom or any Viacom Subsidiary
is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Viacom or
any Viacom Subsidiary is a party or by which Viacom or any
Viacom Subsidiary or any property or asset of Viacom or any
Viacom Subsidiary is bound or affected, except for any
25
such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Viacom Material
Adverse Effect.
SECTION 4.07. SEC Filings; Financial Statements. (a)
Viacom has filed all forms, reports and documents required to
be filed by it with the SEC since December 31, 1990, and has
heretofore made available to Blockbuster, in the form filed
with the SEC (excluding any exhibits thereto), (i) its Annual
Reports on Form 10-K for the fiscal years ended December 31,
1990, 1991 and 1992, respectively, (ii) its Quarterly Reports
on Form 10-Q for the periods ended March 31, 1993, June 30,
1993 and September 30, 1993, (iii) all proxy statements
relating to Viacom's meetings of stockholders (whether annual
or special) held since January 1, 1991 and (iv) all other
forms, reports and other registration statements (other than
Quarterly Reports on Form 10-Q not referred to in clause (ii)
above and preliminary materials) filed by Viacom with the SEC
since December 31, 1990 (the forms, reports and other documents
referred to in clauses (i), (ii), (iii), and (iv) above being
referred to herein, collectively, as the "Viacom SEC Reports").
The Viacom SEC Reports and any other forms, reports and other
documents filed by Viacom with the SEC after the date of this
Agreement (x) were or will be prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the
case may be, and the rules and regulations thereunder and (y)
did not at the time they were filed, or will not at the time
they are filed, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading. No Material Viacom Subsidiary (other than Viacom
International Inc., a Delaware corporation
("Viacom International")) is required to file any form, report
or other document with the SEC.
(b) Viacom International has filed all forms, reports
and documents required to be filed by it with the SEC since
December 31, 1992 and Viacom has heretofore made available to
Blockbuster, in the form filed with the SEC (excluding any
exhibits thereto), (i) Viacom International's Annual Report on
Form 10-K for the year ended December 31, 1992, (ii) Viacom
International's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1993, June 30, 1993 and September 30, 1993,
(iii) all proxy statements relating to Viacom International's
meetings of stockholders (whether annual or special) held since
January 1, 1993 and (iv) all other forms, reports and other
registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause
26
(ii) above and preliminary materials) filed by Viacom
International with the SEC since December 31, 1992 (the forms,
reports and other documents referred to in clauses (i), (ii),
(iii) and (iv) above being referred to herein, collectively, as
the "Viacom International SEC Reports"). The Viacom
International SEC Reports and any forms, reports and other
documents filed by Viacom International with the SEC after the
date of this Agreement (x) were or will be prepared in
accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations
thereunder and (y) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which
they were made, not misleading.
(c) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Viacom SEC Reports and the Viacom International SEC Reports was
prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and
each fairly presented the consolidated financial position,
results of operations and cash flows of Viacom and the
consolidated Viacom Subsidiaries or Viacom International or the
subsidiaries of Viacom International, as the case may be, as at
the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the
aggregate, to be material in amount).
(d) Except as and to the extent set forth in the
Viacom SEC Reports filed with the SEC prior to the date of this
Agreement, Viacom and the Viacom Subsidiaries do not have any
liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) other than liabilities and
obligations which would not, individually or in the aggregate,
have a Viacom Material Adverse Effect.
SECTION 4.08. Absence of Certain Changes or Events.
Since December 31, 1992, except as contemplated by this
Agreement, as set forth in Section 4.08 of the Disclosure
Schedule or disclosed in any Viacom SEC Report filed since
December 31, 1992 and prior to the date of this Agreement,
Viacom and the Viacom Subsidiaries have conducted their
businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1992
27
there has not been (i) any Viacom Material Adverse Effect, (ii)
any damage, destruction or loss (whether or not covered by
insurance) with respect to any property or asset of Viacom or
any Viacom Subsidiary and having, individually or in the
aggregate, a Viacom Material Adverse Effect, (iii) any change
by Viacom in its accounting methods, principles or practices,
(iv) any declaration, setting aside or payment of any dividend
or distribution in respect of any capital stock of Viacom or
any Viacom Subsidiary or any redemption, purchase or other
acquisition of any of their respective securities other than
dividends by a Viacom Subsidiary to Viacom or (v) other than as
set forth in Section 4.03 and pursuant to the plans, programs
or arrangements referred to in Section 4.10, other than in the
ordinary course of business consistent with past practice, any
increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase
or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or
key employees of Viacom or any Viacom Subsidiary, except for
the establishment of the Viacom Inc. Stock Option Plan for
Outside Directors and the grant of options to purchase an
aggregate of 25,000 shares thereunder.
SECTION 4.09. Absence of Litigation. Except as
disclosed in the Viacom SEC Reports filed with the SEC prior to
the date of this Agreement, there is no claim, action,
proceeding or investigation pending or, to the best knowledge
of Viacom, threatened against Viacom or any Viacom Subsidiary,
or any property or asset of Viacom or any Viacom Subsidiary,
before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, which,
individually or in the aggregate, would have a Viacom Material
Adverse Effect. Except as disclosed in the Viacom SEC Reports
filed with the SEC prior to the date of this Agreement, neither
Viacom nor any Viacom Subsidiary nor any property or asset of
Viacom or any Viacom Subsidiary is subject to any order, writ,
judgment, injunction, decree, determination or award which
would have, individually or in the aggregate, a Viacom Material
Adverse Effect.
SECTION 4.10. Employee Benefit Plans. With respect
to all the employee benefit plans, programs and arrangements
maintained or contributed to by Viacom or any Viacom Subsidiary
for the benefit of any current or former employee, officer or
director of Viacom or any Viacom Subsidiary (the "Viacom
Plans"), except as set forth in Section 4.10 of the
28
Viacom Disclosure Schedule or the Viacom SEC Reports and except
as would not, individually or in the aggregate, have a Viacom
Material Adverse Effect: (i) none of the Viacom Plans is a
multiemployer plan within the meaning of ERISA; (ii) none of
the Viacom Plans promises or provides retiree medical or life
insurance benefits to any person; (iii) each Viacom Plan
intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the IRS that it
is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the
qualified status of such Viacom Plan; (iv) each Viacom Plan has
been operated in all material respects in accordance with its
terms and the requirements of applicable law; (v) neither
Viacom nor any Viacom Subsidiary has incurred any direct or
indirect liability under, arising out of or by operation of
Title IV of ERISA in connection with the termination of, or
withdrawal from, any Viacom Plan or other retirement plan or
arrangement, and no fact or event exists that could reasonably
be expected to give rise to any such liability; and (vi) Viacom
and the Viacom Subsidiaries have not incurred any liability
under, and have complied in all respects with, WARN, and no
fact or event exists that could give rise to liability under
such act. Except as set forth in Section 4.10 of the Viacom
Disclosure Schedule or the Viacom SEC Reports, the aggregate
accumulated benefit obligations of each Viacom Plan subject to
Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Viacom Plan) do not exceed the fair
market value of the assets of such Viacom Plan (as of the date
of such valuation).
SECTION 4.11. Trademarks, Patents and Copyrights.
Viacom and the Viacom Subsidiaries own, or possess adequate
licenses or other valid rights to use, all material patents,
patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights, service marks, service mark rights,
trade secrets, applications to register, and registrations for,
the foregoing trademarks, service marks, know-how and other
proprietary rights and information used in connection with the
business of Viacom and the Viacom Subsidiaries as currently
conducted, and no assertion or claim has been made in writing
challenging the validity of any of the foregoing which,
individually or in the aggregate, would have a Viacom Material
Adverse Effect. To the best knowledge of Viacom, the conduct
of the business of Viacom and the Viacom Subsidiaries as
currently conducted does not conflict in any way with any
patent, patent right, license, trademark, trademark right,
trade name, trade name right, service mark or copyright of any
third party that,
29
individually or in the aggregate, would have a Viacom Material
Adverse Effect.
SECTION 4.12. Taxes. Viacom and the Viacom
Subsidiaries have timely filed all federal, state, local and
foreign tax returns and reports required to be filed by them
through the date hereof and shall timely file all returns and
reports required on or before the Effective Time, except for
such returns and reports the failure of which to file timely
would not, individually or in the aggregate, have a Viacom
Material Adverse Effect. Such reports and returns are and will
be true, correct and complete, except for such failures to be
true, correct and complete as would not, individually or in the
aggregate, have a Viacom Material Adverse Effect. Viacom and
the Viacom Subsidiaries have paid and discharged all federal,
state, local and foreign taxes due from them, other than such
taxes that are being contested in good faith by appropriate
proceedings and are adequately reserved as shown in the audited
consolidated balance sheet of Viacom dated December 31, 1992
(the "Viacom 1992 Balance Sheet") and its most recent quarterly
financial statements, except for such failures to so pay and
discharge which would not, individually or in the aggregate,
have a Viacom Material Adverse Effect. Neither the IRS nor any
other taxing authority or agency, domestic or foreign, is now
asserting or, to the best knowledge of Viacom, threatening to
assert against Viacom or any Viacom Subsidiary any deficiency
or material claim for additional taxes or interest thereon or
penalties in connection therewith which, if such deficiencies
or claims were finally resolved against Viacom and the Viacom
Subsidiaries, would, individually or in the aggregate, have a
Viacom Material Adverse Effect. The accruals and reserves for
taxes (including interest and penalties, if any, thereon)
reflected in the Viacom 1992 Balance Sheet and the most recent
quarterly financial statements are adequate in accordance with
generally accepted accounting principles, except where the
failure to be adequate would not have a Viacom Material Adverse
Effect. Viacom and the Viacom Subsidiaries have withheld or
collected and paid over to the appropriate governmental
authorities or are properly holding for such payment all taxes
required by law to be withheld or collected, except for such
failures to have so withheld or collected and paid over or to
be so holding for payment which would not, individually or in
the aggregate, have a Viacom Material Adverse Effect. There
are no material liens for taxes upon the assets of Viacom or
the Viacom Subsidiaries, other than liens for current taxes not
yet due and payable and liens for taxes that are being
contested in good faith by appropriate proceedings. Neither
Viacom nor any Viacom Subsidiary has agreed to or is required
to make any
30
adjustment under Section 481(a) of the Code. Neither Viacom
nor any Viacom Subsidiary has made an election under Section
341(f) of the Code. For purposes of this Section 4.12, where a
determination of whether a failure by Viacom or a Viacom
Subsidiary to comply with the representations herein has a
Viacom Material Adverse Effect is necessary, such determination
shall be made on an aggregate basis with all other failures
within this Section 4.12.
SECTION 4.13. Opinion of Financial Advisor. Viacom
has received the opinion of Smith Barney Shearson Inc. ("Smith
Barney"), dated January 6, 1994, to the effect that, as of such
date, the Merger is fair to the stockholders of Viacom from a
financial point of view, a copy of which opinion has been
delivered to Blockbuster.
SECTION 4.14. Vote Required. The affirmative vote of
the holders of a majority of the outstanding shares of Viacom
Class A Common Stock is the only vote of the holders of any
class or series of Viacom capital stock necessary to approve
the Viacom Vote Matter.
SECTION 4.15. Brokers. No broker, finder or
investment banker (other than Smith Barney) is entitled to any
brokerage, finder's or other fee or commission in connection
with the transactions contemplated herein based upon
arrangements made by or on behalf of Viacom. Viacom has
heretofore furnished to Blockbuster a complete and correct copy
of all agreements between Viacom and Smith Barney pursuant to
which such firm would be entitled to any payment relating to
the transactions contemplated herein.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Respective Businesses by
Blockbuster and Viacom Pending the Merger. Each of Blockbuster
and Viacom covenants and agrees that, between the date of this
Agreement and the Effective Time, unless the other party shall
have consented in writing (such consent not to be unreasonably
withheld), the businesses of each of Blockbuster and Viacom and
their respective subsidiaries shall, in all material respects,
be conducted in, and each of Blockbuster and Viacom and their
respective subsidiaries shall not take any material action
except in, the ordinary course of business, consistent with
past practice; and each of Blockbuster and Viacom shall use its
reasonable best efforts to preserve substantially intact its
business
31
organization, to keep available the services of its and its
subsidiaries' current officers, employees and consultants and
to preserve its and its subsidiaries' relationships with
customers, suppliers and other persons with which it or any of
its subsidiaries has significant business relations. By way of
amplification and not limitation, except (i) as contemplated by
this Agreement, (ii) for any actions taken by Viacom relating
to the proposed acquisition by Viacom of Paramount
Communications Inc., a Delaware corporation ("Paramount"),
(iii) for any actions taken by Blockbuster in its capacity as
the controlling stockholder of Spelling that are necessary due
to the applicable fiduciary duties to Spelling and the other
stockholders of Spelling, as determined by Blockbuster in good
faith after consultation with and based upon the advice of
independent legal counsel (who may be Blockbuster's regularly
engaged independent legal counsel) or (iv) as set forth on
Section 5.01 of the Blockbuster Disclosure Schedule or Section
5.01 of the Viacom Disclosure Schedule, neither Viacom nor
Blockbuster nor any of their respective subsidiaries shall,
between the date of this Agreement and the Effective Time,
directly or indirectly do, or propose or agree to do, any of
the following without the prior written consent of the other
(provided that the following restrictions shall not apply to
any subsidiaries which Blockbuster or Viacom, as the case may
be, do not control):
(a) amend or otherwise change the Certificate of
Incorporation or By-Laws of Viacom or Blockbuster (except,
with respect to Viacom, the Viacom Certificate Amendments);
(b) issue, sell, pledge, dispose of, grant, encumber,
or authorize the issuance, sale, pledge, disposition, grant
or encumbrance of, (i) any shares of capital stock of any class
of it or any of its subsidiaries, or any options (other than
the grant of options in the ordinary course of business
consistent with past practice to employees who are not
executive officers of Blockbuster or Viacom or the grant of
options previously disclosed by Blockbuster to Viacom prior
to the date of this Agreement), warrants, convertible
securities or other rights of any kind to acquire any shares
of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of it
or any of its subsidiaries (other than the issuance of
shares of capital stock in connection with (A) any dividend
reinvestment plan or by any Blockbuster Plan with an employee
stock fund or employee stock ownership plan feature,
consistent with
applicable
32
securities laws, (B) the exercise of options, warrants or
other similar rights outstanding as of the date of this
Agreement and in accordance with the terms of such options,
warrants or rights in effect on the date of this Agreement,
(C) otherwise permitted to be granted pursuant to this
Agreement or (D) any acquisition by Blockbuster permitted
by paragraph (e)(i) of this Section 5.01) or (ii) any
assets of it or any of its subsidiaries, except for sales
in the ordinary course of business or which, individually,
do not exceed $10,000,000 or which, in the aggregate, do
not exceed $25,000,000;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock except,
(i) in the case of Blockbuster, the regular quarterly
dividend payable on or about April 1, 1994 in an amount not
to exceed $.025 per share of Blockbuster Common Stock, (ii)
in the case of Blockbuster, other regular quarterly
dividends in amounts not in excess of $.025 per share per
quarter and payable consistent with past practice, (iii) in
the case of Spelling, regular quarterly dividends of $.020
per share per quarter and payable consistent with past
practice and (iv) dividends declared and paid by a
subsidiary of either Blockbuster (other than Spelling) or
Viacom (each such dividend to be declared and paid in the
ordinary course of business consistent with past practice);
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any
of its capital stock other than acquisitions by a dividend
reinvestment plan or by any Blockbuster Plan with an
employee stock fund or employee stock ownership plan
feature, consistent with applicable securities laws;
(e) (i) acquire (for cash or shares of stock)
(including, without limitation, by merger, consolidation,
or acquisition of stock or assets) any corporation,
partnership, other business organization or any division
thereof or any assets, except for such acquisitions which,
individually, do not exceed $10,000,000 or which, in the
aggregate, do not exceed $25,000,000; (ii) incur any
indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of
any person, or make any loans or advances, except (A)
indebtedness incurred by Viacom in connection with the
proposed acquisition by Viacom of Paramount and
33
in connection with this Agreement and the transactions
contemplated hereby, (B) indebtedness incurred by
Blockbuster in connection with the performance of its
obligations under the Subscription Agreement, (C) the
refinancing of existing indebtedness, (D) in connection
with this Agreement and the transactions contemplated
hereby, borrowings under commercial paper programs in the
ordinary course of business, (E) borrowings under existing
bank lines of credit in the ordinary course of business,
(F) in the case of Blockbuster, indebtedness resulting from
the issuance of debt securities registered pursuant to the
Registration Statement on Form S-3, registration number
33-56154, or (G) indebtedness which, in the aggregate, does
not exceed $25,000,000; or (iii) enter into or amend any
contract, agreement, commitment or arrangement with respect
to any matter set forth in this Section 5.01(e);
(f) increase the compensation payable or to become
payable to its executive officers or employees, except for
increases in the ordinary course of business in accordance
with past practice, or grant any severance or termination
pay to, or enter into any employment or severance agreement
with any director or executive officer of it or any of its
subsidiaries, or establish, adopt, enter into or amend in
any material respect or take action to accelerate any
rights or benefits under any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted
stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, executive
officer or employee; or
(g) take any action, other than reasonable and usual
actions in the ordinary course of business and consistent
with past practice, with respect to accounting policies or
procedures.
ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.01. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, each of
Blockbuster and Viacom shall (and shall cause its subsidiaries
and officers, directors, employees, auditors and agents to)
afford the officers, employees and agents of
34
the other party (the "Respective Representatives") reasonable
access at all reasonable times to its officers, employees,
agents, properties, offices, plants and other facilities, books
and records, and shall furnish such Respective Representatives
with all financial, operating and other data and information as
may be reasonably requested.
(b) All information obtained by Blockbuster or Viacom
pursuant to this Section 6.01 shall be kept confidential in
accordance with the confidentiality agreement, dated July 1,
1993 (the "Confidentiality Agreement"), between Blockbuster and
Viacom.
(c) No investigation pursuant to this Section 6.01
shall affect any representation or warranty in this Agreement
of any party hereto or any condition to the obligations of the
parties hereto.
SECTION 6.02. Directors' and Officers'
Indemnification and Insurance. (a) The Certificate of
Incorporation and By-Laws of the Surviving Corporation shall
contain the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-Laws of Viacom
on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of six
years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at
any time prior to the Effective Time were directors or officers
of Blockbuster in respect of actions or omissions occurring at
or prior to the Effective Time (including, without limitation,
the transactions contemplated by this Agreement), unless such
modification is required by law.
(b) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the
present and former officers and directors of Blockbuster
(collectively, the "Indemnified Parties") against all losses,
expenses, claims, damages, liabilities or amounts that are paid
in settlement of, with the approval of the Surviving
Corporation (which approval shall not unreasonably be
withheld), or otherwise in connection with any claim, action,
suit, proceeding or investigation (a "Claim"), based in whole
or in part on the fact that such person is or was a director or
officer of Blockbuster and arising out of actions or omissions
occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement),
in each case to the full extent permitted under Delaware Law
(and shall pay expenses in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the
fullest extent permitted under
35
Delaware Law, upon receipt from the Indemnified Party to whom
expenses are advanced of the undertaking to repay such advances
contemplated by Section 145(e) of Delaware Law).
(c) Without limiting the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising
before or after the Effective Time) after the Effective Time
(i) the Indemnified Parties may retain Blockbuster's regularly
engaged independent legal counsel or other independent legal
counsel satisfactory to them, provided that such other counsel
shall be reasonably acceptable to the Surviving Corporation,
(ii) the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received and (iii) the
Surviving Corporation will use its reasonable best efforts to
assist in the vigorous defense of any such matter, provided
that the Surviving Corporation shall not be liable for any
settlement of any Claim effected without its written consent,
which consent shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this
Section 6.02 upon learning of any such Claim shall notify the
Surviving Corporation (although the failure so to notify the
Surviving Corporation shall not relieve the Surviving
Corporation from any liability which the Surviving Corporation
may have under this Section 6.02, except to the extent such
failure materially prejudices the Surviving Corporation's
position with respect to such claim), and shall deliver to the
Surviving Corporation the undertaking contemplated by Section
145(e) of Delaware Law. The Indemnified Parties as a group may
retain no more than one law firm (in addition to local counsel)
to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct (as
determined by counsel to the Indemnified Parties), a conflict
on any significant issue between the positions of any two or
more Indemnified Parties, in which event such additional
counsel as may be required may be retained by the Indemnified
Parties.
(d) For a period of three years after the Effective
Time, the Surviving Corporation shall cause to be maintained in
effect the current policies of directors' and officers'
liability insurance maintained by Blockbuster (provided that
the Surviving Corporation may substitute therefor policies of
at least the same coverage and amounts containing terms and
conditions which are no less advantageous to former officers
and directors of Blockbuster) with respect to claims arising
from facts or events which occurred before the Effective Time;
provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section
36
6.02(d) more than an amount equal to 200% of current annual
premiums paid by Blockbuster for such insurance (which premiums
Blockbuster represents and warrants to be $756,000 in the
aggregate).
(e) This Section 6.02 is intended to be for the
benefit of, and shall be enforceable by, the Indemnified
Parties, their heirs and personal representatives and shall be
binding on the Surviving Corporation and its respective
successors and assigns.
SECTION 6.03. Notification of Certain Matters.
Blockbuster shall give prompt notice to Viacom, and Viacom
shall give prompt notice to Blockbuster, of (i) the occurrence,
or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause (x) any
representation or warranty contained in this Agreement to be
untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with
or satisfied and (ii) any failure of Blockbuster or Viacom, as
the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.03 shall not limit or otherwise
affect the remedies available hereunder to the party receiving
such notice.
SECTION 6.04. Tax Treatment. Each of Blockbuster and
Viacom will use its reasonable best efforts to cause the Merger
to qualify as a reorganization under the provisions of Section
368(a) of the Code and to obtain the opinions of counsel
referred to in Sections 7.02(c) and 7.03(c).
SECTION 6.05. Registration Statement; Joint Proxy
Statement. (a) As promptly as practicable after the execution
of this Agreement, (i) Viacom and Blockbuster shall prepare and
file with the SEC a joint proxy statement relating to the
meetings of Blockbuster's stockholders and holders of Viacom
Class A Common Stock to be held in connection with the Merger
(together with any amendments thereof or supplements thereto,
the "Proxy Statement") and (ii) Viacom shall prepare and file
with the SEC a registration statement on Form S-4 (together
with all amendments thereto, the "Registration Statement") in
which the Proxy Statement shall be included as a prospectus, in
connection with the registration under the Securities Act of
the shares of Viacom Common Stock and the VCRs to be issued to
the stockholders of Blockbuster pursuant to the Merger. Each
of Blockbuster and Viacom shall use all reasonable efforts to
have or cause the Registration Statement to become
37
effective as promptly as practicable, and shall take all or any
action required under any applicable federal or state
securities laws in connection with the issuance of shares of
Viacom Common Stock and VCRs pursuant to the Merger. Each of
Blockbuster and Viacom shall furnish all information concerning
itself to the other as the other may reasonably request in
connection with such actions and the preparation of the
Registration Statement and Proxy Statement. As promptly as
practicable after the Registration Statement shall have become
effective, each of Viacom and Blockbuster shall mail the Proxy
Statement to its respective stockholders. The Proxy Statement
shall include the recommendation of the Board of Directors of
each of Viacom and Blockbuster in favor of the Merger, unless
otherwise necessary due to the applicable fiduciary duties of
the respective directors of Viacom and Blockbuster, as
determined by such directors in good faith after consultation
with and based upon the advice of independent legal counsel
(who may be such party's regularly engaged independent legal
counsel).
(b) The information supplied by Viacom for inclusion
in the Registration Statement and the Proxy Statement shall
not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the
stockholders of Viacom and Blockbuster, (iii) the time of each
of the Stockholders' Meetings (as defined in Section 6.06), and
(iv) the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective
Time any event or circumstance relating to Viacom or any of the
Viacom Subsidiaries, or their respective officers or directors,
should be discovered by Viacom which should be set forth in an
amendment or a supplement to the Registration Statement or
Proxy Statement, Viacom shall promptly inform Blockbuster.
(c) The information supplied by Blockbuster for
inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the
stockholders of Blockbuster and Viacom, (iii) the time of each
of the Stockholders' Meetings, and (iv) the Effective Time,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any
event or circumstance relating to
38
Blockbuster or any of the Blockbuster Subsidiaries, or their
respective officers or directors, should be discovered by
Blockbuster which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement,
Blockbuster shall promptly inform Viacom.
(d) Viacom represents and warrants to Blockbuster
that the information supplied by and relating to Viacom for
inclusion in the Paramount Offer Documents (as defined below)
will not, at the time the Paramount Offer Documents are filed
with the SEC or are first published, sent or given to
stockholders of Paramount, as the case may be, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading. The
Paramount Offer Documents shall comply in all material respects
as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
(e) Blockbuster represents and warrants to Viacom
that the information supplied by and relating to Blockbuster
for inclusion in the Paramount Offer Documents will not, at the
time the Paramount Offer Documents are filed with the SEC or
are first published, sent or given to stockholders of
Paramount, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which
they are made, not misleading.
(f) For the purposes of this Section 6.05, the term
"Paramount Offer Documents" shall mean the Tender Offer
Statement on Schedule 14D-1 relating to the tender offer by
Viacom for shares of common stock of Paramount, the offer to
purchase incorporated by reference therein and forms of the
related letter of transmittal and any related summary
advertisement, together with all supplements and amendments to
the foregoing.
SECTION 6.06. Stockholders' Meetings. Blockbuster
shall call and hold a meeting of its stockholders and Viacom
shall call and hold a meeting of the holders of the Viacom
Class A Common Stock (collectively, the "Stockholders'
Meetings") as promptly as practicable for the purpose of voting
upon the approval, in the case of Blockbuster, of the Merger
and, in the case of Viacom, of the Viacom Vote Matter, and
Viacom and Blockbuster shall use their reasonable best efforts
to hold the Stockholders' Meetings on the same day and as soon
as practicable after the date on which the
39
Registration Statement becomes effective. Blockbuster shall
use its reasonable best efforts to solicit from its
stockholders proxies in favor of the approval of the Merger,
and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required by Delaware
Law to obtain such approvals, unless otherwise necessary under
the applicable fiduciary duties of the respective directors of
Blockbuster, as determined by such directors in good faith
after consultation with and based upon the advice of
independent legal counsel (who may be such party's regularly
engaged independent legal counsel).
SECTION 6.07. Letters of Accountants. (a)
Blockbuster shall use its reasonable best efforts to cause to
be delivered to Viacom "comfort" letters of Arthur Andersen,
Blockbuster's independent public accountants, dated and
delivered the date on which the Registration Statement shall
become effective and as of the Effective Time, and addressed to
Viacom, in form and substance reasonably satisfactory to Viacom
and reasonably customary in scope and substance for letters
delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) Viacom shall use its reasonable best efforts to
cause to be delivered to Blockbuster "comfort" letters of Price
Waterhouse, Viacom's independent public accountants, dated the
date on which the Registration Statement shall become effective
and as of the Effective Time, and addressed to Blockbuster, in
form and substance reasonably satisfactory to Blockbuster and
reasonably customary in scope and substance for letters
delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
SECTION 6.08. [Intentionally Deleted]
SECTION 6.09. Further Action; Reasonable Best
Efforts. (a) Upon the terms and subject to the conditions
hereof, each of the parties hereto shall (i) make promptly its
respective filings, and thereafter make any other required
submissions under the HSR Act with respect to the transactions
contemplated herein, (ii) make promptly filings with or
applications to the Federal Communications Commission (the
"FCC") with respect to the transactions contemplated herein, if
required and (iii) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause
to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated herein,
40
including, without limitation, using its reasonable best
efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental
Entities and parties to contracts with Viacom and Blockbuster
and their respective subsidiaries as are necessary for the
consummation of the transactions contemplated herein. In case
at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take
all such action.
(b) Each party shall use its best efforts not to take
any action, or enter into any transaction, which would cause
any of its representations or warranties contained in this
Agreement to be untrue or result in a breach of any covenant
made by it in this Agreement.
SECTION 6.10. Debt Instruments. Prior to or at the
Effective Time, Blockbuster and each Blockbuster Subsidiary
shall use its reasonable best efforts to prevent the
occurrence, as a result of the Merger and the other
transactions contemplated by this Agreement, of a change in
control or any event which constitutes a default (or an event
which with notice or lapse of time or both would become a
default) under any debt instrument of Blockbuster or any
Blockbuster Subsidiary, including, without limitation, debt
securities registered under the Securities Act.
SECTION 6.11. Public Announcements. Viacom and
Blockbuster shall consult with each other before issuing any
press release or otherwise making any public statements with
respect to this Agreement or any transaction contemplated
herein and shall not issue any such press release or make any
such public statement without the prior consent of the other
party, which shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the
other party, issue such press release or make such public
statement as may be required by law or any listing agreement
with a national securities exchange to which Viacom or
Blockbuster is a party if it has used all reasonable efforts to
consult with the other party and to obtain such party's consent
but has been unable to do so in a timely manner.
SECTION 6.12. Listing of Shares of Viacom Common
Stock and VCRs. Viacom shall use its reasonable best efforts
to cause the shares of Viacom Common Stock and the VCRs to be
issued in the Merger to be approved for listing on the AMEX
prior to the Effective Time.
41
SECTION 6.13. Affiliates of Blockbuster.
(a) Within 30 days after the date of this Agreement, (a)
Blockbuster shall deliver to Viacom a letter identifying all
persons who may be deemed affiliates of Blockbuster under Rule
145 of the Securities Act ("Rule 145"), including, without
limitation, all directors and executive officers of Blockbuster
and (b) Blockbuster shall advise the persons identified in such
letter of the resale restrictions imposed by applicable
securities laws. Blockbuster shall use its reasonable best
efforts to obtain as soon as practicable from any person who
may be deemed to have become an affiliate of Blockbuster after
Blockbuster's delivery of the letter referred to above and
prior to the Effective Time, a written agreement substantially
in the form of Exhibit 6.13.
(b) If any stockholder of Blockbuster who is identified by
Blockbuster as an affiliate of Blockbuster in accordance with
paragraph (a) of this Section 6.13 reasonably determines that
such stockholder will not be eligible to sell all of the shares
(the "Stockholder Shares") of Viacom Common Stock received by
such stockholder in the Merger pursuant to Rule 145(d)(1) in
the three month period immediately following the Effective
Time, Viacom agrees, if requested by such stockholder, to
either, at Viacom's option, (i) take such actions reasonably
necessary to register the Stockholder Shares for resale
pursuant to the Registration Statement or (ii) promptly after
the Effective Time, register the Stockholder Shares pursuant to
a registration statement on Form S-3. Viacom shall maintain
the effectiveness of any such registration statement (subject
to Viacom's right to convert to a Form S-3 registration from
the Registrtion Statement at any time) until such time as
Viacom reasonably determines that such stockholder will be
eligible to sell all of the Stockholder Shares then owned by
the Stockholder pursuant to Rule 145(d)(1) in the three month
period immediately following the termination of the
effectiveness of the applicable registration statement.
Viacom's obligations contained in this paragraph (b) shall
terminate on the second anniversary of the Effective Time.
SECTION 6.14. Conveyance Taxes. Viacom and
Blockbuster shall cooperate in the preparation, execution and
filing of all returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales,
use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the
transactions contemplated hereby that are required or permitted
to be filed on or before the Effective Time.
42
SECTION 6.15. Assumption of Debt and Leases. With
respect to debt issued by Blockbuster under indentures
qualified under the Trust Indenture Act of 1939 ("Indentures"),
Viacom shall execute and deliver to the trustees, under the
respective Indentures, Supplemental Indentures, in form
satisfactory to the respective trustees, expressly assuming the
obligations of Blockbuster with respect to the due and punctual
payment of the principal of (and premium, if any) and interest,
if any, on all debt securities issued by Blockbuster under the
respective Indentures and the due and punctual performance of
all the terms, covenants and conditions of the respective
Indentures to be kept or performed by Blockbuster, and shall
deliver such Supplemental Indentures to the respective trustees
under the Indenture. Viacom shall similarly deliver
instruments of assumption to the holders of any debt
obligations of, holders of warrants of, and the lessors of any
real property to, Blockbuster, which debt obligations, warrants
or leases expressly require such assumption in order for the
Merger to comply with the debt instrument, warrant or lease.
SECTION 6.16. Transactions with Significant
Stockholder After the Effective Time. From and after the
Effective Time and until the tenth anniversary of the Effective
Time, the Surviving Corporation shall not enter into any
agreement with any stockholder (the "Significant Stockholder")
who beneficially owns more than 35% of the then outstanding
securities entitled to vote at a meeting of the stockholders of
Viacom that would constitute a Rule 13e-3 (as such rule is in
effect today) transaction under the Exchange Act with respect
to any class of common stock of Viacom (any such transaction
being a "Going Private Transaction"), unless Viacom provides in
any agreement pursuant to which such Going Private Transaction
shall be effected that, as a condition to the consummation of
such Going Private Transaction, (a) the holders of a majority
of the shares not beneficially owned by the Significant
Stockholder that are voted and present (whether in person or by
proxy) at the meeting of stockholders called to vote on such
Going Private Transaction shall have voted in favor thereof and
(b) a special committee (the "Special Committee") of the Board
of Directors of Viacom comprised solely of the independent
directors of Viacom shall have (i) approved the terms and
conditions of the Going Private Transaction and shall have
recommended that the stockholders vote in favor thereof and
(ii) received from its financial advisor a written opinion
addressed to the Special Committee, for inclusion in the proxy
statement to be delivered to the stockholders, and dated the
date thereof, substantially to the effect that the
consideration to be received by the stockholders (other than
the majority
43
stockholder) in the Going Private Transaction is fair to them
from a financial point of view. Notwithstanding anything to
the contrary in this Section 6.16, the restrictions contained
in this Section 6.16 shall not apply to any Significant
Stockholder if there exists another stockholder who
beneficially owns a greater percentage of outstanding
securities entitled to vote at the meeting than the Significant
Stockholder.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party
to Effect the Merger. The respective obligations of each party
to effect the Merger and the other transactions contemplated
herein shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective
by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for
that purpose shall have been initiated or, to the knowledge
of Viacom or Blockbuster, threatened by the SEC.
(b) Stockholder Approval. This Agreement and the
Merger shall have been approved and adopted by the
requisite vote of the stockholders of Blockbuster and the
Viacom Vote Matter shall have been approved and adopted by
the requisite vote of the holders of Viacom Class A Common
Stock.
(c) No Order. No Governmental Entity or federal or
state court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which
is in effect and which materially restricts, prevents or
prohibits consummation of the Merger or any transaction
contemplated by this Agreement; provided, however, that the
parties shall use their reasonable best efforts to cause
any such decree, judgment, injunction or other order to be
vacated or lifted.
44
(d) HSR Act. The applicable waiting period under the
HSR Act shall have expired or been terminated.
(e) Approvals. Other than the filing of merger
documents in accordance with Delaware Law, all
authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, notices or
declarations required to be made, by Viacom and Blockbuster
prior to the consummation of the Merger and the
transactions contemplated hereunder shall have been
obtained from, and made with, all required Governmental
Entities except for such authorizations, consents, waivers,
orders, approvals, filings, notices or declarations the
failure to obtain or make which would not have a material
adverse effect, at or after the Effective Time, on the
financial condition (as existing immediately prior to the
consummation of the Merger) of (i) Blockbuster and the
Blockbuster Subsidiaries, taken as a whole, or (ii) Viacom
and the Viacom Subsidiaries, taken as a whole.
SECTION 7.02. Additional Conditions to Obligations of
Viacom. The obligations of Viacom to effect the Merger and the
transactions contemplated herein are also subject to the
following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Blockbuster contained in
this Agreement (including, without limitation,
Section 6.05), without giving effect to any notification to
Viacom delivered pursuant to Section 6.03, shall be true
and correct as of the Effective Time as though made on and
as of the Effective Time, except (i) for changes
specifically permitted by this Agreement and (ii) that
those representations and warranties which address matters
only as of a particular date shall remain true and correct
as of such date, except in any case for such failures to be
true and correct which would not, individually or in the
aggregate, have a Blockbuster Material Adverse Effect.
Viacom shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of
Blockbuster to such effect.
(b) Agreement and Covenants. Blockbuster shall have
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the
Effective Time. Viacom shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer
of Blockbuster to that effect.
45
(c) Tax Opinion. Viacom shall have received the
opinion of Shearman & Sterling, dated on or about the date
that is two business days prior to the date the Proxy
Statement is first mailed to stockholders of Viacom and
Blockbuster, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the
Code, which opinion shall not have been withdrawn or
modified in any material respect. The issuance of such
opinion shall be conditioned on the receipt of
representation letters from each of Viacom, Blockbuster,
and certain stockholders of Blockbuster. The specific
provisions of each such representation letter shall be in
form and substance satisfactory to each of Shearman &
Sterling and Skadden, Arps, Slate, Meagher & Flom, and each
such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or
modified in any material respect.
SECTION 7.03. Additional Conditions to Obligations of
Blockbuster. The obligation of Blockbuster to effect the
Merger and the other transactions contemplated in this
Agreement are also subject to the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Viacom contained in this
Agreement (including, without limitation, Section 6.05),
without giving effect to any notification made by Viacom to
Blockbuster pursuant to Section 6.03, shall be true and
correct as of the Effective Time, as though made on and as
of the Effective Time, except (i) for changes specifically
permitted by this Agreement and (ii) that those
representations and warranties which address matters only
as of a particular date shall remain true and correct as of
such date, except in any case for such failures to be true
and correct that would not, individually or in the
aggregate, have a Viacom Material Adverse Effect.
Blockbuster shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Viacom to
such effect.
(b) Agreements and Covenants. Viacom shall have
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the
Effective Time. Blockbuster shall have received a
certificate of the Chief Executive Officer and Chief
Financial Officer of Viacom to that effect.
46
(c) Tax Opinion. Blockbuster shall have received the
opinion of Skadden, Arps, Slate, Meagher & Flom, dated on
or about the date that is two business days prior to the
date the Proxy Statement is first mailed to stockholders of
Viacom and Blockbuster, to the effect that the Merger will
be treated for federal income tax purposes as a
reorganization qualifying under the provisions of
Section 368(a) of the Code, which opinion shall not have
been withdrawn or modified in any material respect. The
issuance of such opinion shall be conditioned on the
receipt of representation letters from each of Viacom,
Blockbuster, and certain stockholders of Blockbuster. The
specific provisions of each such representation letter
shall be in form and substance satisfactory to each of
Shearman & Sterling and Skadden, Arps, Slate, Meagher &
Flom, and each such representation letter shall be dated on
or before the date of such opinion and shall not have been
withdrawn or modified in any material respect.
(d) Amendments to Viacom's Certificate of
Incorporation. Viacom shall have filed with the Secretary
of State of the State of Delaware a Certificate of
Amendment to Viacom's Certificate of Incorporation pursuant
to which the Viacom Certificate Amendments shall have
become effective.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after approval of this Agreement and the Merger by
the stockholders of Blockbuster or the approval by the
stockholders of Viacom of the issuance of the shares of Viacom
Common Stock in accordance with Article II:
(a) by mutual consent of Blockbuster and Viacom;
(b) by Viacom, upon a breach of any representation,
warranty, covenant or agreement on the part of Blockbuster
set forth in this Agreement, or if any representation or
warranty of Blockbuster shall have become untrue, in either
case such that the conditions set forth in Section 7.02(a)
or Section 7.02(b), as the case may be, would be incapable
of being satisfied by September 30, 1994 (or as otherwise
extended); provided
47
that, in any case, a wilful breach shall be deemed to cause
such conditions to be incapable of being satisfied for
purposes of this Section 8.01(b);
(c) by Blockbuster, upon a breach of any
representation, warranty, covenant or agreement on the part
of Viacom set forth in this Agreement, or if any
representation or warranty of Viacom shall have become
untrue, in either case such that the conditions set forth
in Section 7.03(a) or Section 7.03(b), as the case may be,
would be incapable of being satisfied by September 30, 1994
(or as otherwise extended); provided that, in any case, a
wilful breach shall be deemed to cause such conditions to
be incapable of being satisfied for purposes of this
Section 8.01(c);
(d) by either Viacom or Blockbuster, if any permanent
injunction or action by any Governmental Entity preventing
the consummation of the Merger shall have become final and
nonappealable;
(e) by either Viacom or Blockbuster, if the Merger
shall not have been consummated before September 30, 1994;
provided, however, that this Agreement may be extended by
written notice of either Viacom or Blockbuster to a date
not later than November 30, 1994, if the Merger shall not
have been consummated as a direct result of Viacom or
Blockbuster having failed, by September 30, 1994, to
receive all required regulatory approvals or consents with
respect to the Merger;
(f) by either Viacom or Blockbuster, if this
Agreement and the Merger shall fail to receive the
requisite vote for approval and adoption by the
stockholders of Blockbuster or, with respect to Blockbuster
only, Viacom at the Stockholders' Meetings;
(g) by Viacom, if (i) the Board of Directors of
Blockbuster shall withdraw, modify or change its
recommendation of this Agreement or the Merger in a manner
adverse to Viacom or shall have resolved to do any of the
foregoing; (ii) the Board of Directors of Blockbuster shall
have recommended to the shareholders of Blockbuster a
Competing Transaction (as defined below); (iii) a tender
offer or exchange offer for 25% or more of the outstanding
shares of capital stock of Blockbuster is commenced, and
the Board of Directors of Blockbuster recommends that the
stockholders of Blockbuster tender their shares in such
tender or exchange offer; or (iv) any person shall have
acquired beneficial ownership
48
or the right to acquire beneficial ownership of or any
"group" (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated
thereunder) shall have been formed which beneficially owns,
or has the right to acquire beneficial ownership of, more
than 25% of the then outstanding shares of capital stock of
Blockbuster; and
(h) by Blockbuster, if the Board of Directors of
Blockbuster (x) fails to make or withdraws or modifies its
recommendation referred to in Section 6.05(a) if there
exists at such time a tender offer or exchange offer or a
proposal by a third party to acquire Blockbuster pursuant
to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar
transaction or (y) recommends to Blockbuster's stockholders
approval or acceptance of any of the foregoing, in each
case only if the Board of Directors of Blockbuster, after
consultation with and based upon the advice of independent
legal counsel (who may be such party's regularly engaged
independent legal counsel), determines in good faith that
such action is necessary for the Board of Directors of
Blockbuster to comply with its fiduciary duties to
stockholders under applicable law.
The right of any party hereto to terminate this
Agreement pursuant to this Section 8.01 shall remain operative
and in full force and effect regardless of any investigation
made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers
or directors, whether prior to or after the execution of this
Agreement. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following (other than the
transactions contemplated under the Agreement) involving a
party hereto or any of its subsidiaries: (i) any merger,
consolidation, share exchange, business combination, or other
similar transaction; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of 25% or more of the
assets of such party and its subsidiaries, taken as a whole, in
a single transaction or series of transactions; (iii) any
tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of such party or the filing
of a registration statement under the Securities Act in
connection therewith; (iv) any person having acquired
beneficial ownership or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) having been formed which beneficially
owns or has the right to acquire
49
beneficial ownership of, 25% or more of the then outstanding
shares of capital stock of such party; or (v) any public
announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
SECTION 8.02. Effect of Termination. Except as
provided in Section 8.05 or Section 9.01, in the event of the
termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void, there shall be no
liability on the part of Blockbuster or Viacom or any of their
respective officers or directors to the other and all rights
and obligations of any party hereto shall cease; provided,
however, that nothing herein shall relieve any party from
liability for the wilful breach of any of its representations,
warranties, covenants or agreements set forth in this
Agreement.
SECTION 8.03. Amendment. This Agreement may be
amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to
the Effective Time; provided, however, that, after approval of
the Merger by the stockholders of Blockbuster or Viacom, no
amendment, which under applicable law may not be made without
the approval of the stockholders of Blockbuster or Viacom, may
be made without such approval. This Agreement may not be
amended except by an instrument in writing signed by the
parties hereto.
SECTION 8.04. Waiver. At any time prior to the
Effective Time, either party hereto may (a) extend the time for
the performance of any of the obligations or other acts of the
other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and
(c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 8.05. Fees, Expenses and Other Payments. (a)
Subject to paragraph (b) of this Section 8.05, all
out-of-pocket costs and expenses, including, without
limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred by the parties hereto shall
be borne solely and entirely by the party which has incurred
such costs and expenses (with respect to such party, its
"Expenses"); provided, however, that all costs and expenses
related to printing, filing and mailing the
50
Registration Statement and the Proxy Statement and all SEC and
other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement shall be borne
equally by Blockbuster and Viacom.
(b) Blockbuster agrees that if this Agreement shall
be terminated pursuant to (i) Section 8.01(b); (ii)
Section 8.01(f) because this Agreement and the Merger shall
fail to receive the requisite vote for approval and adoption by
the stockholders of Blockbuster at the meeting of stockholders
of Blockbuster called to vote thereon and at the time of such
meeting there shall exist a Competing Transaction; or (iii)
Section 8.01(g)(i), (ii) or (iii) or Section 8.01(h) and at the
time of such termination there shall exist a Competing
Transaction and the terms of such Competing Transaction provide
that Blockbuster's stockholders shall receive consideration
having a higher per share value than the consideration per
share payable to Blockbuster's stockholders under this
Agreement then in any such event Blockbuster shall pay to
Viacom an amount equal to Viacom's Expenses; provided, however,
that in no event shall Blockbuster be obligated to pay any of
Viacom's Expenses exceeding $50,000,000. For purposes of this
Section 8.05(b), the per share value of the consideration
payable to the Blockbuster stockholders under this Agreement
and under the terms of the Competing Transaction shall be the
blended weighted average price per share determined as of the
close of business on the business day prior to the date this
Agreement is terminated.
(c) Any payment required to be made pursuant to
Section 8.05(b) shall be made as promptly as practicable but
not later than five business days after the delivery by Viacom
to Blockbuster of a statement setting forth any of Viacom's
Expenses in reasonable detail and shall be made by wire
transfer of immediately available funds to an account
designated by Viacom.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations,
Warranties and Agreements. (a) Except as set forth in
Section 9.01(b), the representations, warranties and agreements
of each party hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on
behalf of any other party hereto, any person controlling any
such party or any of their officers or
51
directors, whether prior to or after the execution of this
Agreement.
(b) The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Article VIII;
except that the agreements set forth in Articles I, II and IX
and Sections 6.02 and 6.16 shall survive the Effective Time and
those set forth in Sections 6.01(b), 8.02 and 8.05 and Article
IX hereof shall survive termination.
(c) Notwithstanding anything to the contrary in this
Agreement, no action taken by Viacom in connection with the
acquisition of Paramount, or effect thereof, shall cause any
breach of a representation, warranty or covenant under this
Agreement.
SECTION 9.02. Notices. All notices and other
communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as
of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by
registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the
facsimile numbers specified below:
(a) If to Viacom:
Viacom Inc.
1515 Broadway
New York, New York 10036
Attention: Senior Vice President,
General Counsel and Secretary
Facsimile No.: (212) 258-6134
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attention: Stephen R. Volk, Esq.
Facsimile No.: (212) 848-7179
52
(b) If to Blockbuster:
Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, Florida 33301-1860
Attention: Vice President,
General Counsel and Secretary
Facsimile No.: (305) 852-3939
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Roger S. Aaron, Esq.
Facsimile No.: (212) 735-2001
SECTION 9.03. Certain Definitions. For purposes of
this Agreement, the term:
(a) "affiliate" means a person that, directly or
indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, the
first mentioned person;
(b) "beneficial owner", with respect to any shares of
Blockbuster Common Stock, means, unless otherwise defined
herein, a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its
affiliates or associates (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any
of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise or (B)
the right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such
person or any of its
53
affiliates or associates, or any person with whom such
person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on
which (i) banks in the State of New York are authorized or
obligated to be closed or (ii) the New York Stock Exchange
is closed;
(d) "control" (including the terms "controlled",
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the
ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise; and
(e) "subsidiary" or "subsidiaries" of Blockbuster,
Viacom, the Surviving Corporation or any other person means
any corporation, partnership, joint venture or other legal
entity of which Blockbuster, Viacom, the Surviving
Corporation or such other person, as the case may be
(either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of
the stock or other equity interests, the holders of which
are generally entitled to vote for the election of the
board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.04. Headings. The headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
SECTION 9.05. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in
an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
54
SECTION 9.06. Entire Agreement. This Agreement
(together with the Exhibit, the Blockbuster Disclosure
Schedule, the Viacom Disclosure Schedule and the other
documents delivered pursuant hereto) and the Confidentiality
Agreement constitute the entire agreement of the parties and
supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to
the subject matter hereof.
SECTION 9.07. Assignment. This Agreement shall not
be assigned by operation of law or otherwise.
SECTION 9.08. Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied
(other than the provisions of Section 6.02 and 6.16), is
intended to or shall confer upon any person any right, benefit
or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.09. Governing Law. Except to the extent
that Delaware Law is mandatorily applicable to the Merger and
the rights of the stockholders of Blockbuster and Viacom, this
Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of
conflicts of law.
SECTION 9.10. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
55
IN WITNESS WHEREOF, Viacom and Blockbuster have caused
this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
ATTEST: VIACOM INC.
By By
Name: Name:
Title: Title:
ATTEST: BLOCKBUSTER ENTERTAINMENT
CORPORATION
By By
Name: Name:
Title: Title:
56
ANNEX A
VARIABLE COMMON RIGHTS ("VCRs")
Term Sheet
Issuer: Viacom, Inc.
No. of VCRs to
be issued: One VCR per Blockbuster Share
issued and outstanding at the time
of the Merger, including
Blockbuster Shares subject to
outstanding employee stock
options.
Maturity: First anniversary of Merger.
Trading/Listing: VCRs will be certificated and
trade separately from Viacom
Common Shares. Viacom will use
best efforts to list VCRs on AMEX
or such other exchange on which
its shares are then listed.
Payout: In the ninety trading day period
immediately preceding Maturity
(the "Valuation Period"), a value
for Viacom B Common Shares ("B
Share Value") will be determined.
The B Share Value will equal the
average closing price on the AMEX
(or such other exchange on which
such shares are then listed) for a
Viacom B Common Share during any
30 consecutive trading days in the
Valuation Period which yield the
highest such average closing
price.
Subject to the dilution protection
mentioned below, each VCR will
represent a fraction of one Viacom
B Common Share, such fraction to
be determined based upon the B
Share Value, as set forth below:
57
B Share Value Value of VCR*
$0 to $35.99 .13829
$36 to $40 30 - .32 - .08 - .60615
B Share Value
$40.01 to $47.99 .05929
$48 to $52 36 - .32 - .08 - .60615
B Share Value
$52.01 and above 0
Maximum Payout: .13829 of one Viacom B Common Share.
Minimum Payout: 0
General Market Adjustment: The dollar amounts set forth in the
table above under "B Share Value" will
be reduced by a percentage equal to any
percentage decline in excess of 25% in
the S&P 400 Index from the Merger to
Maturity.
Limitation on Payout: Notwithstanding the table above, if at
any time during the period from the
Merger to Maturity the average closing
price for a Viacom B Common Share on
AMEX (or such other exchange on which
such shares are then listed) for any 30
consecutive trading days is:
(a) above $40, then the maximum payout,
if any, for each VCR will equal .05929
of one Viacom B Common Share; or
(b) above $52, then the VCRs will have
no value and will automatically
terminate.
* Expressed as a fraction of one Viacom B Common Share
58
Dilution Protection The number of Viacom B Shares
represented by each VCR will be
adjusted to appropriately reflect
any distribution or dividend paid
in Viacom B Shares and any
combination, split or
reclassification of Viacom B
Shares.
Determination of For purposes of determining any
Trading Period period of consecutive trading
days, trading days shall not be
included if, (i) during the
first month following the
Effective Time, fewer than
400,000 shares of Viacom B
Shares trade, (ii) during the
second month following the
Effective Time, fewer than
300,000 shares of Viacom B
Shares trade, (iii) during the
third month following the
Effective Time, fewer than
250,000 shares of Viacom B
Shares trade and (iv) from and
after the first day of the
fourth month following the
Effective Time, fewer than
200,000 shares of Viacom B
Shares trade.
Neither Viacom Inc., National
Amusements Inc. nor any of
their affiliates shall trade
in Viacom B Shares during
the period from the
Merger to Maturity, except for
benefit plan purposes.
59
EXHIBIT 6.13
FORM OF AFFILIATE LETTER
Viacom Inc.
1515 Broadway
New York, New York 10036
Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of Blockbuster
Entertainment Corporation, a Delaware corporation (the
"Company"), as the term "affiliate" is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"). Pursuant to the terms of the Agreement
and Plan of Merger dated as of January 7, 1994 (the
"Agreement"), between Viacom Inc., a Delaware corporation
("Viacom"), and the Company, the Company will be merged with
and into Viacom (the "Merger").
As a result of the Merger, I may receive (A) shares of
(i) Class A Common Stock, par value $.01 per share, of Viacom
(the "Viacom Class A Common Stock") and (ii) Class B Common
Stock, par value $.01 per share, of Viacom (the "Viacom Class B
Common Stock"; and, together with the Viacom Class A Common
Stock, the "Viacom Common Stock") and (B) VCRs (as defined in
the Agreement) (the VCRs, together with the Viacom Common
Stock, being the "Viacom Securities"). I would receive such
Viacom Securities in exchange for, respectively, shares (or
options for shares) owned by me of common stock, par value $.10
per share, of the Company (the "Company Common Stock").
I represent, warrant and covenant to Viacom that in
the event I receive any Viacom Securities as a result of the
Merger:
A. I shall not make any sale, transfer or other
disposition of the Viacom Securities in violation of the
Act or the Rules and Regulations.
60
2
B. I have carefully read this letter and the
Agreement and discussed the requirements of such documents
and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Viacom Common Stock to the
extent I felt necessary, with my counsel or counsel for the
Company.
C. I have been advised that the issuance of Viacom
Securities to me pursuant to the Merger has been registered
with the Commission under the Act on a Registration
Statement Form S-4. However, I have also been advised
that, because at the time the Merger is submitted for a
vote of the stockholders of the Company, (a) I may be
deemed to be an affiliate of the Company and (b) the
distribution by me of the Viacom Securities has not been
registered under the Act, I may not sell, transfer or
otherwise dispose of Viacom Securities issued to me in the
Merger unless (i) such sale, transfer or other disposition
is made in conformity with the volume and other limitations
of Rule 145 promulgated by the Commission under the Act,
(ii) such sale, transfer or other disposition has been
registered under the Act or (iii) in the opinion of counsel
reasonably acceptable to Viacom, such sale, transfer or
other disposition is otherwise exempt from registration
under the Act.
D. I understand that Viacom is under no obligation to
register the sale, transfer or other disposition of the
Viacom Securities by me or on my behalf under the Act or to
take any other action necessary in order to make compliance
with an exemption from such registration available solely
as a result of the Merger.
E. I also understand that there will be placed on the
certificates for the Viacom Securities issued to me, or any
substitutions therefor, a legend stating in substance:
"THE [SHARES] [RIGHTS] REPRESENTED BY THIS CERTIFICATE
WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE [SHARES] [RIGHTS] REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS
OF AN AGREEMENT
61
3
DATED , 1994 BETWEEN THE REGISTERED HOLDER HEREOF
AND VIACOM INC., A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICES OF VIACOM INC."
F. I also understand that unless a sale or transfer
is made in conformity with the provisions of Rule 145, or
pursuant to a registration statement, Viacom reserves the
right to put the following legend on the certificates
issued to my transferee:
"THE [SHARES] [RIGHTS] REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH
SHARES IN A TRANSACTIONTO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
[SHARES] [RIGHTS] HAVE BEEN ACQUIRED BY THE HOLDER NOT
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth
in paragraphs E and F above shall be removed by delivery of
substitute certificates without such legend if the undersigned
shall have delivered to Viacom a copy of a letter from the
staff of the Commission, or an opinion of counsel reasonably
satisfactory to Viacom, in form and substance reasonably
satisfactory to Viacom, to the effect that such legend is not
required for purposes of the Act.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a
waiver of any rights I may have to object to any claim that I
am such an affiliate on or after the date of this letter.
Very truly yours,
Name:
62
4
Accepted this day of
, 1994, by
VIACOM INC.
By
Name:
Title:
63
AGREEMENT AND PLAN OF MERGER
between
VIACOM INC.
and
BLOCKBUSTER ENTERTAINMENT CORPORATION
Dated as of January 7, 1994
64
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.01 The Merger.................................... 2
1.02 Closing....................................... 2
1.03 Effective Time................................ 2
1.04 Effect of the Merger.......................... 2
1.05 Certificate of Incorporation; By-Laws......... 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01 Conversion of Securities...................... 3
2.02 Exchange of Certificates and Cash............. 4
2.03 Stock Transfer Books.......................... 7
2.04 Stock Options................................. 7
2.05 Dissenting Shares............................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BLOCKBUSTER
3.01 Organization and Qualification;
Subsidiaries................................ 9
3.02 Certificate of Incorporation and By-Laws...... 10
3.03 Capitalization................................ 10
3.04 Authority Relative to this Agreement.......... 11
3.05 No Conflict; Required Filings and Consents.... 12
3.06 Compliance.................................... 13
3.07 SEC Filings; Financial Statements............. 14
3.08 Absence of Certain Changes or Events.......... 15
3.09 Absence of Litigation......................... 16
3.10 Employee Benefit Plans........................ 17
3.11 Trademarks, Patents and Copyrights............ 17
3.12 Taxes......................................... 18
3.13 Opinion of Financial Advisor.................. 19
(i)
65
Page
3.14 Vote Required................................. 19
3.15 Brokers....................................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
4.01 Organization and Qualification;
Subsidiaries................................ 20
4.02 Certificate of Incorporation and By-Laws...... 20
4.03 Capitalization................................ 21
4.04 Authority Relative to this Agreement.......... 22
4.05 No Conflict; Required Filings and Consents.... 23
4.06 Compliance.................................... 24
4.07 SEC Filings; Financial Statements............. 25
4.08 Absence of Certain Changes or Events.......... 26
4.09 Absence of Litigation......................... 27
4.10 Employee Benefit Plans........................ 27
4.11 Trademarks, Patents and Copyrights............ 28
4.12 Taxes......................................... 29
4.13 Opinion of Financial Advisor.................. 30
4.14 Vote Required................................. 30
4.15 Brokers....................................... 30
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
5.01 Conduct of Respective Businesses by
Blockbuster and Viacom Pending the Merger.... 30
ARTICLE VI
ADDITIONAL COVENANTS
6.01 Access to Information; Confidentiality........ 33
6.02 Directors' and Officers' Indemnification
and Insurance............................... 34
(ii)
66
Page
6.03 Notification of Certain Matters............... 36
6.04 Tax Treatment................................. 36
6.05 Registration Statement; Joint Proxy
Statement................................... 36
6.06 Stockholders' Meetings........................ 38
6.07 Letters of Accountants........................ 39
6.08 [Intentionally Deleted]....................... 39
6.09 Further Action; Reasonable Best Efforts....... 39
6.10 Debt Instruments.............................. 40
6.11 Public Announcements.......................... 40
6.12 Listing of Shares of Viacom
Common Stock and VCRs....................... 40
6.13 Affiliates of Blockbuster..................... 40
6.14 Conveyance Taxes.............................. 40
6.15 Assumption of Debt and Leases................. 42
6.16 Transactions with Significant Stockholder
After the Effective Time.................... 42
ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each
Party to Effect the Merger.................. 43
7.02 Additional Conditions to Obligations
of Viacom.................................. 44
7.03 Additional Conditions to Obligations
of Blockbuster............................. 45
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination................................... 46
8.02 Effect of Termination......................... 49
8.03 Amendment..................................... 49
8.04 Waiver........................................ 49
8.05 Fees, Expenses and Other Payments............. 49
ARTICLE IX
GENERAL PROVISIONS
9.01 Effectiveness of Representations,
Warranties and Agreements................... 50
9.02 Notices....................................... 51
(iii)
67
Page
9.03 Certain Definitions........................... 52
9.04 Headings...................................... 53
9.05 Severability.................................. 53
9.06 Entire Agreement.............................. 54
9.07 Assignment.................................... 54
9.08 Parties in Interest........................... 54
9.09 Governing Law................................. 54
9.10 Counterparts.................................. 54
ANNEX A VCRs Term Sheet
EXHIBIT 6.13 Form of Affiliate Letter
(iv)
68
Index of Defined Terms
Section
affiliate SECTION 9.03
Agreement PREAMBLE
AMEX SECTION 2.02
beneficial owner SECTION 9.03
Blockbuster PREAMBLE
Blockbuster Common Stock SECTION 2.01
Blockbuster Disclosure Schedule SECTION 3.03
Blockbuster Material Adverse Effect SECTION 3.01
Blockbuster 1992 Balance Sheet SECTION 3.12
Blockbuster Plans SECTION 3.10
Blockbuster Preferred Stock SECTION 3.03
Blockbuster SEC Reports SECTION 3.07
Blue Sky Laws SECTION 3.05
Blockbuster Stock Option SECTION 3.03
Blockbuster Subsidiary SECTION 3.01
business day SECTION 9.03
Certificate of Merger SECTION 1.03
Certificates SECTION 2.02
Class A Exchange Ratio SECTION 2.01
Class B Exchange Ratio SECTION 2.01
Code RECITALS
Communications Act SECTION 3.05
Competing Transaction SECTION 8.01
Confidentiality Agreements SECTION 6.01
control SECTION 9.03
Delaware Law RECITALS
Dissenting Shares SECTION 2.05
Effective Time SECTION 1.03
ERISA SECTION 3.10
Exchange Act SECTION 3.05
Exchange Agent SECTION 2.02
Exchange Fund SECTION 2.02
Exchange Ratios SECTION 2.01
FCC SECTION 6.09
Governmental Entity SECTION 3.05
HSR Act SECTION 3.05
IRS SECTION 3.10
Material Blockbuster Subsidiary SECTION 3.01
Material Viacom Subsidiary SECTION 4.01
Merger RECITALS
Merger Consideration SECTION 2.02
69
Index of Defined Terms (cont'd)
Section
Merrill Lynch SECTION 3.13
Parent Voting Agreement RECITALS
Paramount SECTION 5.01
Paramount Offer Documents SECTION 6.05
Proxy Statement SECTION 6.05
Registration Statement SECTION 6.05
Respective Representatives SECTION 6.01
SEC SECTION 3.01
Securities Act SECTION 3.05
Smith Barney SECTION 4.13
Spelling SECTION 3.07
Stockholders' Meetings SECTION 6.06
subsidiary SECTION 9.03
Surviving Corporation SECTION 1.01
VCRs SECTION 2.01
VCR Exchange Ratio SECTION 2.01
Viacom PREAMBLE
Viacom Certificate Amendments SECTION 4.04
Viacom Class A Common Stock RECITALS
Viacom Class B Common Stock SECTION 2.01
Viacom Common Stock SECTION 2.01
Viacom Disclosure Schedule SECTION 4.03
Viacom International SECTION 4.07
Viacom Material Adverse Effect SECTION 4.01
Viacom 1992 Balance Sheet SECTION 4.12
Viacom Plans SECTION 4.10
Viacom Preferred Stock SECTION 4.03
Viacom SEC Reports SECTION 4.07
Viacom Subsidiary SECTION 4.01
Viacom Vote Matter SECTION 4.04
WARN SECTION 3.10
