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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(AMENDMENT NO. 29)
PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
SCHEDULE 13D
(AMENDMENT NO. 30)
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
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Page 1 of Pages
Exhibit Index on Page
This Amendment No. 29 to the Tender Offer Statement on
Schedule 14D-1 and Amendment No. 30 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 $107 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"), the Second Supplement thereto dated January 7,
1994 (the "Second Supplement") and the Third Supplement thereto
dated January 18, 1994 (the "Third 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, the Third Supplement
and the Schedule 14D-1.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE
SUBJECT COMPANY.
Item 3(b) is hereby amended and supplemented as follows:
On January 21, 1994, the Paramount Board withdrew its
recommendation of the QVC Offer and recommended that the Company's
stockholders tender their Shares into Purchaser's Offer. The Company
has advised Purchaser that the Company terminated the QVC Merger
Agreement and that QVC and the Company entered into the form of
exemption agreement appended thereto, which exemption agreement
contains terms substantially identical to the terms of the Exemption
Agreement between Purchaser and the Company.
Also on January 21, 1994, Purchaser and the Company entered into an
Agreement and Plan of Merger in substantially the form of the Form of
Merger Agreement appended to the Exemption Agreement, except for the
provisions summarized below (in the form so executed, the "Revised Merger
Agreement"). The following summary of certain provisions of the Revised
Merger Agreement is qualified in its entirety by reference to the Revised
Merger Agreement, a copy of which is filed as Exhibit (a)(65) to the
Schedule 14D-1.
(a) The Revised Merger Agreement contains such changes as are
necessary to reflect the terms of the Offer as described in the Third
Supplement, including the consideration to be received by the holders
of Shares in the Offer and the Merger. Accordingly, the Revised Merger
Agreement provides that, upon consummation of the Merger, in the event
the Offer has been consummated prior to the Merger, each issued and
outstanding Share (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 and other than Shares held
by stockholders who shall have demanded and perfected appraisal rights
under Delaware Law) will be converted into the right to receive (i)
.93065 shares of Viacom Class B Common Stock, (ii) .30408 shares of
Viacom Merger Preferred Stock, (iii) .93065 CVRs and (iv) .50 Viacom
Warrants (with cash payable in lieu of fractional securities). The Revised
Merger Agreement also contains conforming and updating changes to various
representations, warranties and covenants of Purchaser.
(b) The Revised Merger Agreement includes provisions relating to
dissenter's rights available to stockholders who do not vote in favor
of the Merger or consent thereto in writing and who properly demand in
writing appraisal for their Shares in accordance with Section 262 of
Delaware Law and who do not withdraw such demand or otherwise forfeit
appraisal rights.
(c) The Revised Merger Agreement provides that following the
election or appointment of Purchaser's designees to the Paramount
Board following the purchase of Shares pursuant to the Offer and prior
to the Effective Time, any amendment or termination of the Revised
Merger Agreement, extension for the performance or waiver of the
obligations or other acts of Purchaser or waiver of the Company's
rights thereunder will require the concurrence of a majority of
directors of the Company then in office who were directors on the date
of the Revised Merger Agreement or are designated by such directors.
(d) Purchaser confirms certain representations and warranties
made by Blockbuster in the Blockbuster Merger Agreement. In addition,
actions to be taken by Purchaser to consummate the acquisition of
Blockbuster and the Blockbuster Subscription Agreement have been reflected
in the relevant representations, warranties, and covenants of Purchaser
contained in the Revised Merger Agreement. The Revised Merger Agreement
also provides that the terms of the Blockbuster Merger Agreement and the
Blockbuster Subscription Agreement shall not, without the consent of the
Company, be amended or waived in any manner that would have a materially
adverse effect on the value of the aggregate consideration to be received
by the Company's stockholders in the Offer and the Merger taken together.
(e) In the Revised Merger Agreement, July 31, 1994 (or September 30,
1994 in specified circumstances) 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 Form of Merger Agreement was
June 30, 1994 (or August 30, 1994 in specified circumstances).
(f) In addition to the circumstances specified in the Form of
Merger Agreement in which the Company may terminate the Revised Merger
Agreement, the Revised Merger Agreement also permits the Company to
terminate such agreement if due to the occurrence or circumstance that
would result in a failure to satisfy any of the conditions to the
Offer or otherwise, (1) the Offer shall have expired without the
purchase of Shares thereunder or Purchaser shall be obligated to
terminate the Offer in accordance with Section 2.05 of the Revised
Merger Agreement, or (2) Purchaser shall have failed to accept Shares
for payment pursuant to the Offer prior to 9:00 a.m. on the business day
following the Final Expiration Date (as defined in the Revised Merger
Agreement) of the Offer, unless such failure shall have been
caused by or resulted from the failure of the Company to perform in
any material respect its material covenants and agreements contained
in the Revised Merger Agreement or resulted from the termination of
the Offer by Purchaser pursuant to Section 2.1(c) of the Revised
Merger Agreement.
Also on January 21, 1994, the Company and National Amusements,
Inc., the controlling stockholder of Purchaser ("NAI"), entered into a
Voting Agreement (the "Revised Voting Agreement") pursuant to which
NAI has agreed to vote the shares of Viacom Class A Common Stock held
by it (a) in favor of the Merger and the Revised Merger Agreement and
the amendments to Purchaser's Restated Certificate of Incorporation
required to effect the Merger and (b) against any proposal for any
recapitalization, merger, sale of assets or other business combination
involving Purchaser (other than the Merger and any merger of Blockbuster
and Purchaser) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other
obligation or agreement of Purchaser under the Revised Merger Agreement
or which could result in any of the conditions to Purchaser's obligations
under the Revised Merger Agreement not being fulfilled. The foregoing
summary of the Revised Voting Agreement is qualified in its entirety
by reference to the Revised Voting Agreement, a copy of which is filed
as Exhibit (a)(66) to the Schedule 14D-1.
A copy of a press release issued by Purchaser on January 21, 1994
relating to the foregoing is filed as Exhibit (a)(67) to the Schedule
14D-1 and is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4 is hereby amended and supplemented as follows:
Blockbuster expects to obtain a portion of the funds
necessary to purchase the shares of Viacom Class B Common
Stock under the Blockbuster Subscription Agreement pursuant
to a new unsecured credit facility (the "New Blockbuster
Facility") for $1 billion to be established in accordance
with the terms of a commitment letter (the "Blockbuster
Commitment Letter") issued by Bank of America National Trust
and Savings Association ("Bank of America"). Under the
Blockbuster Commitment Letter, the New Blockbuster Facility
would be available in one drawing, not later than April 29,
1994, have a 364-day term and bear interest at Blockbuster's
option at the Reference Rate or at LIBOR plus up to 1.0% for
the first six months and plus 1.25% thereafter. Under the
Blockbuster Commitment Letter, the Reference Rate is
generally defined as the higher of (i) the rate of interest
publicly announced from time to time by the Bank of America
in San Francisco, California as its Reference Rate, or (ii)
0.5% per annum above the Federal Funds Rate in effect on
such day. Under the Blockbuster Commitment Letter, LIBOR is
generally defined as the average London interbank offered
rate for 1-, 2-, 3-, or, if available, 6-month Eurodollar
deposits. Among other conditions, Bank of
America's obligations under the New Blockbuster Facility
will be subject to Purchaser accepting for payment at least
50.1% of the outstanding Shares pursuant to the Offer and to
the negotiation and execution of a definitive credit
agreement with covenants and conditions substantially
similar to the Blockbuster Credit Agreement (as described
below) and other customary provisions. Bank of America's
commitment is also subject to (i) the accuracy and
completeness of the information concerning Blockbuster and
the Blockbuster Subscription Agreement and related matters
provided by Blockbuster, (ii) there being no material
adverse change in the financial condition, business,
operations or properties of Blockbuster since September 30,
1993, except as publicly disclosed on or prior to
January 20, 1994, (iii) there being no material litigation or
any judgment, order, injunction or other restraint which has a
reasonable likelihood of having a material adverse effect on the
condition (financial or otherwise), operations, business or
properties of Blockbuster and its subsidiaries taken as a whole,
and (iv) there being no judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions on
the purchase of Viacom Class B Common Stock under the Blockbuster
Subscription Agreement or the making of the loans under the New
Blockbuster Facility. The foregoing summary of the Blockbuster
Commitment Letter is qualified in its entirety by reference
to the Blockbuster Commitment Letter, a copy of which is
filed as Exhibit (b)(8) to the Schedule 14D-1.
Blockbuster expects to obtain the remainder of such
funds from its existing Amended and Restated Credit
Agreement dated as of December 22, 1993 (the "Blockbuster
Credit Agreement"), with certain banks named therein and
Bank of America, for itself and as agent, pursuant to which
such banks have agreed to advance Blockbuster on an
unsecured basis an aggregate of $1 billion for a term of 40
months. Outstanding advances, if any, will become payable
at the expiration of the 40-month term. The Blockbuster
Credit Agreement requires, among other things, that
Blockbuster maintain certain financial ratios and comply
with certain financial covenants. Interest is generally
determined and payable monthly in accordance with a
competitive bid feature. As of the date hereof, more than
$550 million is available under the Blockbuster Credit
Agreement. The foregoing summary of the Blockbuster Credit
Agreement is qualified in its entirety by reference to the
Blockbuster Credit Agreement, a copy of which is filed as
Exhibit (b)(9) to the Schedule 14D-1.
The Blockbuster Credit Agreement contains, and the
Blockbuster Commitment Letter contemplates that the New
Blockbuster Facility will contain, certain covenants and events
of default, including a change of control default, which will
require a waiver in connection with the Blockbuster Merger or
the refinancing of the indebtedness incurred under such
facilities.
Blockbuster anticipates that the indebtedness incurred
in connection with the purchase of Viacom Class B Common
Stock through borrowings under the New Blockbuster Facility
and the Blockbuster Credit Agreement would be repaid from sources
which include, but may not be limited to, funds generated
internally by Blockbuster and its subsidiaries, bank refinancing,
and the public or private sale of debt or equity securities.
The method of such repayment has not been determined and will
be based on Blockbuster'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 Blockbuster may deem appropriate.
Purchaser anticipates that, if the Blockbuster Merger is
consummated, such indebtedness would be repaid from sources which
include, but may not be limited to, funds generated internally by
Purchaser and its subsidiaries, bank refinancing, and the public
or private sale of debt or equity securities. The method of such
repayment has not been determined and will be 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.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented to add
the following Exhibits:
99(a)(65) Agreement and Plan of Merger, dated as of
January 21, 1994, between Purchaser and the Company.
99(a)(66) Voting Agreement, dated as of January 21, 1994,
between National Amusements, Inc. and the Company.
99(a)(67) Press Release issued by Purchaser, dated January 21, 1994.
99(b)(8) Commitment Letter, dated January 20, 1994, between
Blockbuster Entertainment Corporation and Bank of
America National Trust and Savings Association.
99(b)(9) Amended and Restated Credit Agreement, dated as of
December 22, 1993, among Blockbuster Entertainment
Corporation, the Designated Subsidiaries, Bank of
America National Trust and Savings Association, as
Agent, BA Securities Inc., as Arranger, and the other
financial institutions party thereto.
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 24, 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 24, 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)(65) Agreement and Plan of Merger, dated as of
January 21, 1994, between Purchaser and the Company.
99(a)(66) Voting Agreement, dated as of January 21, 1994,
between National Amusements, Inc. and the Company.
99(a)(67) Press Release issued by Purchaser, dated January 21, 1994.
99(b)(8) Commitment Letter, dated January 20, 1994, between
Blockbuster Entertainment Corporation and Bank of
America National Trust and Savings Association.
99(b)(9) Amended and Restated Credit Agreement, dated as of
December 22, 1993, among Blockbuster Entertainment
Corporation, the Designated Subsidiaries, Bank of
America National Trust and Savings Association, as
Agent, BA Securities Inc., as Arranger, and the other
financial institutions party thereto.
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AGREEMENT AND PLAN OF MERGER
between
VIACOM INC.
and
PARAMOUNT COMMUNICATIONS INC.
Dated as of January 21, 1994
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Index of Defined Terms
----------------------
Section
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affiliate SECTION 9.3
Agreement PREAMBLE
AMEX SECTION 1.7
beneficial owner SECTION 9.3
Blockbuster SECTION 4.3
Blockbuster Merger Agreement SECTION 4.8
Blockbuster Subscription Agreement SECTION 4.3
Blue Sky Laws SECTION 3.5
Business Combination SECTION 8.5
business day SECTION 9.3
Cash Election SECTION 1.6
Cash Election Number SECTION 1.6
Cash Election Shares SECTION 1.6
Cash Fraction SECTION 1.6
Certificate of Merger SECTION 1.3
Certificates SECTION 1.7
Claim SECTION 6.3
Class A Exchange Ratio SECTION 1.6
Class B Exchange Ratio SECTION 1.6
Code RECITALS
Communications Act SECTION 3.5
Competing Transaction SECTION 6.2
Confidentiality Agreements SECTION 6.1
control SECTION 9.3
controlled SECTION 9.3
controlled by SECTION 9.3
CVRs SECTION 1.6
CVR Exchange Ratio SECTION 1.7
Debentures SECTION 4.3
Delaware Law RECITALS
Dissenting Shares SECTION 1.10
ERISA SECTION 3.10
Effective Time SECTION 1.3
Exchange Act SECTION 2.2
Exchange Agent SECTION 1.7
Exchange Cash Consideration SECTION 1.7
Exchange Fund SECTION 1.7
Exchange Ratios SECTION 1.6
Exemption Agreement SECTION 2.1(d)
Expiration Date SECTION 2.1
FCC SECTION 6.10
Final Expiration Date SECTION 2.1(c)
Financing SECTION 4.17
Form of Election SECTION 1.6
Forward Merger RECITALS
fully diluted SECTION 9.3
Gains Tax SECTION 6.18
Governmental Entity SECTION 3.5
HSR Act SECTION 3.5
Incentive Stock Option SECTION 1.7
2
Index of Defined Terms (cont'd)
----------------------
Section
-------
Indemnified Parties SECTION 6.3
Indenture SECTION 4.3
IRS SECTION 3.10
Material Paramount Subsidiary SECTION 3.1
Material Viacom Subsidiary SECTION 4.1
Merger RECITALS
Merger Consideration SECTION 1.7
Merger Subsidiary RECITALS
Minimum Condition SECTION 2.1
National RECITALS
Non-Election SECTION 1.6
Non-Election Fraction SECTION 1.6
Non-Election Shares SECTION 1.6
NYNEX Agreement SECTION 4.3
Offer RECITALS
Offer Documents SECTION 2.1
Offer to Purchase SECTION 2.1(c)
Other Offer SECTION 2.1(c)
Other Offeror SECTION 2.1(d)
Other Exemption Agreement SECTION 2.1(c)
Other Expiration Date SECTION 2.1(d)
Paramount PREAMBLE
Paramount 1992 Balance Sheet SECTION 3.12
Paramount Common Stock RECITALS
Paramount Disclosure Schedule SECTION 3.3
Paramount Indentures SECTION 6.17
Paramount Material Adverse Effect SECTION 3.1
Paramount Plans SECTION 3.10
Paramount Preferred Stock SECTION 3.3
Paramount SEC Reports SECTION 3.7
Paramount Subsidiary SECTION 3.1
Paramount Triggering Event SECTION 6.9
Per Share Amount RECITALS
Per Share Cash Amount SECTION 1.6
Preferred Stock Exchange Ratio SECTION 1.6
Proxy Statement SECTION 6.6
Registration Statement SECTION 6.6
Representatives SECTION 1.6
Respective Representatives SECTION 6.1
Reverse Merger RECITALS
Rights SECTION 3.13
Rights Agreement SECTION 3.13
Rights Condition SECTION 2.1
Schedule 14D-1 SECTION 2.1
Schedule 14D-9 SECTION 2.2
SEC SECTION 2.1
Securities Act SECTION 3.5
Securities Election SECTION 1.6
Securities Election Number SECTION 1.6
Significant Stockholder SECTION 6.21
3
Index of Defined Terms (cont'd)
----------------------
Section
-------
Stock Election Shares SECTION 1.6
Stock Fraction SECTION 1.6
Stock Option SECTION 3.3
Stockholders' Meetings SECTION 6.7
subsidiaries SECTION 9.3
subsidiary SECTION 9.3
Surviving Corporation SECTION 1.1
Transactions SECTION 3.4
Transfer Tax SECTION 6.18
Trustee SECTION 4.3
under common control with SECTION 9.3
Viacom PREAMBLE
Viacom Certificate Amendments SECTION 4.4
Viacom 1992 Balance Sheet SECTION 4.12
Viacom Class A Common Stock RECITALS
Viacom Class B Common Stock SECTION 1.6
Viacom Common Stock SECTION 1.6
Viacom Disclosure Schedule SECTION 4.3
Viacom International SECTION 4.7
Viacom Material Adverse Effect SECTION 4.1
Viacom Merger Preferred Stock SECTION 1.6
Viacom Plans SECTION 4.10
Viacom Preferred Stock SECTION 4.3
Viacom SEC Reports SECTION 4.7
Viacom Series A Preferred Stock SECTION 4.3
Viacom Subsidiary SECTION 4.1
Viacom Triggering Event SECTION 6.9
Viacom Vote Matter SECTION 4.4
Voting Agreement RECITALS
Warrants SECTION 1.6
Warrant Exchange Ratio SECTION 1.6
TABLE OF CONTENTS
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Page
ARTICLE I
THE MERGER . . . . . . . . . . . 2
SECTION 1.1. The Merger . . . . . . . . . . . . . . . . 2
SECTION 1.2. Closing . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Effective Time . . . . . . . . . . . . . . 3
SECTION 1.4. Effect of the Merger . . . . . . . . . . . 3
SECTION 1.5. Certificate of Incorporation; By-Laws . . 3
SECTION 1.6. Conversion of Securities . . . . . . . . . 3
SECTION 1.7. Exchange of Certificates and Cash . . . . 9
SECTION 1.8. Stock Transfer Books . . . . . . . . . . . 12
SECTION 1.9. Stock Options; Payment Rights . . . . . . 12
SECTION 1.10. Dissenting Shares . . . . . . . . . . . . 14
ARTICLE II
THE OFFER . . . . . . . . . . . . 15
SECTION 2.1. The Offer . . . . . . . . . . . . . . . . 15
SECTION 2.2. Action by Paramount . . . . . . . . . . . 17
SECTION 2.3. Receipt of Common Stock . . . . . . . . . 19
SECTION 2.4. Completion Certificate . . . . . . . . . . 19
SECTION 2.5. Termination of the Offer . . . . . . . . . 19
SECTION 2.6. Board of Directors; Section 14(f) . . . . 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARAMOUNT . . . 20
SECTION 3.1. Organization and Qualification;
Subsidiaries . . . . . . . . . . . . . . 20
SECTION 3.2. Certificate of Incorporation and By-Laws . 21
SECTION 3.3. Capitalization . . . . . . . . . . . . . . 21
SECTION 3.4. Authority Relative to This Agreement . . . 22
SECTION 3.5. No Conflict; Required Filings and
Consents . . . . . . . . . . . . . . . . 23
SECTION 3.6. Compliance . . . . . . . . . . . . . . . . 24
SECTION 3.7. SEC Filings; Financial Statements . . . . 24
SECTION 3.8. Absence of Certain Changes or Events . . . 25
SECTION 3.9. Absence of Litigation . . . . . . . . . . 26
SECTION 3.10. Employee Benefit Plans . . . . . . . . . 26
SECTION 3.11. Trademarks, Patents and Copyrights . . . 27
SECTION 3.12. Taxes . . . . . . . . . . . . . . . . . . 27
SECTION 3.13. Amendment to Rights Agreement . . . . . . 28
SECTION 3.14. Opinion of Financial Advisor . . . . . . 29
SECTION 3.15. Vote Required . . . . . . . . . . . . . . 29
SECTION 3.16. Brokers . . . . . . . . . . . . . . . . . 29
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM . . . . 29
SECTION 4.1. Organization and Qualification;
Subsidiaries . . . . . . . . . . . . . . 29
SECTION 4.2. Certificate of Incorporation and By-Laws . 30
SECTION 4.3. Capitalization . . . . . . . . . . . . . . 30
SECTION 4.4. Authority Relative to This Agreement . . . 33
SECTION 4.5. No Conflict; Required Filings and
Consents . . . . . . . . . . . . . . . . 33
SECTION 4.6. Compliance . . . . . . . . . . . . . . . . 34
SECTION 4.7. SEC Filings; Financial Statements . . . . 35
SECTION 4.8. Absence of Certain Changes or Events . . . 36
SECTION 4.9. Absence of Litigation . . . . . . . . . . 36
SECTION 4.10. Employee Benefit Plans . . . . . . . . . 37
SECTION 4.11. Trademarks, Patents and Copyrights . . . 37
SECTION 4.12. Taxes . . . . . . . . . . . . . . . . . . 38
SECTION 4.13. Opinion of Financial Advisor . . . . . . 39
SECTION 4.14. Vote Required . . . . . . . . . . . . . . 39
SECTION 4.15. Ownership of Paramount Common Stock . . . 39
SECTION 4.16. Brokers . . . . . . . . . . . . . . . . . 39
SECTION 4.17. Financing . . . . . . . . . . . . . . . . 39
SECTION 4.18. Purchases of Securities . . . . . . . . . 39
SECTION 4.19. Representations in Blockbuster Merger
Agreement . . . . . . . . . . . . . . . 40
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER . . . . 40
SECTION 5.1. Conduct of Respective Businesses by
Paramount and Viacom Pending the Merger 40
ARTICLE VI
ADDITIONAL COVENANTS . . . . . . . . . 42
SECTION 6.1. Access to Information; Confidentiality . . 42
SECTION 6.2. Intentionally omitted . . . . . . . . . . 43
SECTION 6.3. Directors' and Officers' Indemnification
and Insurance . . . . . . . . . . . . . 43
SECTION 6.4. Notification of Certain Matters . . . . . 44
SECTION 6.5. Tax Treatment . . . . . . . . . . . . . . 45
SECTION 6.6. Registration Statement; Joint Proxy
Statement; Offer Documents and
Schedule 14D-9 . . . . . . . . . . . . . 45
SECTION 6.7. Stockholders' Meetings . . . . . . . . . . 47
SECTION 6.8. Letters of Accountants . . . . . . . . . . 47
SECTION 6.9. Employee Benefits . . . . . . . . . . . . 48
SECTION 6.10. Further Action; Reasonable Best Efforts . 48
SECTION 6.11. Debt Instruments . . . . . . . . . . . . 49
ii
Page
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SECTION 6.12. Public Announcements . . . . . . . . . . 49
SECTION 6.13. Listing of Viacom Securities . . . . . . 49
SECTION 6.14. Affiliates of Paramount . . . . . . . . . 49
SECTION 6.15. Conveyance Taxes . . . . . . . . . . . . 50
SECTION 6.16. Rights Agreement . . . . . . . . . . . . 50
SECTION 6.17. Assumption of Debt and Leases . . . . . . 50
SECTION 6.18. Gains Tax . . . . . . . . . . . . . . . . 50
SECTION 6.19. Reverse Merger . . . . . . . . . . . . . 51
SECTION 6.20. Post-Offer Agreements . . . . . . . . . . 51
SECTION 6.21. Transactions With Significant Stockholder
After the Effective Time . . . . . . . 51
SECTION 6.22. Blockbuster Merger Agreement and
Subscription Agreement . . . . . . . . 52
ARTICLE VII
CLOSING CONDITIONS . . . . . . . . . 52
SECTION 7.1. Conditions to Obligations of Each Party
to Effect the Merger . . . . . . . . . . 52
SECTION 7.2. Additional Conditions to Obligations of
Viacom . . . . . . . . . . . . . . . . . 53
SECTION 7.3. Additional Conditions to Obligations of
Paramount . . . . . . . . . . . . . . . 54
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER . . . . . . 55
SECTION 8.1. Termination . . . . . . . . . . . . . . . 55
SECTION 8.2. Effect of Termination . . . . . . . . . . 58
SECTION 8.3. Amendment . . . . . . . . . . . . . . . . 58
SECTION 8.4. Waiver . . . . . . . . . . . . . . . . . . 58
SECTION 8.5. Fees, Expenses and Other Payments . . . . 58
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . 59
SECTION 9.1. Effectiveness of Representations,
Warranties and Agreements . . . . . . . 59
SECTION 9.2. Notices . . . . . . . . . . . . . . . . . 59
SECTION 9.3. Certain Definitions . . . . . . . . . . . 60
SECTION 9.4. Time Period . . . . . . . . . . . . . . . 61
SECTION 9.5. Headings . . . . . . . . . . . . . . . . . 62
SECTION 9.6. Severability . . . . . . . . . . . . . . . 62
SECTION 9.7. Entire Agreement . . . . . . . . . . . . . 62
SECTION 9.8. Assignment . . . . . . . . . . . . . . . . 62
SECTION 9.9. Parties in Interest . . . . . . . . . . . 62
SECTION 9.10. Specific Performance . . . . . . . . . . 62
SECTION 9.11. Governing Law . . . . . . . . . . . . . . 62
SECTION 9.12. Counterparts . . . . . . . . . . . . . . 63
iii
ANNEX A Principal Conditions to the Offer
ANNEX B Principal Terms of Viacom Merger Preferred Stock
ANNEX C Principal Terms of Contingent Value Rights
ANNEX D Principal Terms of Warrants
EXHIBIT 6.14 Form of Affiliate Letter
iv
AGREEMENT AND PLAN OF MERGER, dated as of January 21,
1994 (this "Agreement"), between VIACOM INC., a Delaware
---------
corporation ("Viacom"), and PARAMOUNT COMMUNICATIONS INC., a
------
Delaware corporation ("Paramount").
---------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Viacom and Paramount have determined that it
is in the best interest of their respective shareholders to enter
into this Agreement so as to facilitate the business combination
of the two companies through a first-step cash tender offer and a
second-step merger, while preserving the ability to proceed with
a single-step merger in appropriate circumstances, and in
accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), Paramount and Viacom have agreed to
------------
enter into a business combination transaction pursuant to which
Paramount will merge with and into Viacom (the "Forward Merger")
--------------
or alternatively, a subsidiary of Viacom ("Merger Subsidiary")
-----------------
will merge with and into Paramount (the "Reverse Merger" and,
--------------
together with the Forward Merger, the "Merger");
------
WHEREAS, in furtherance of the Merger, Viacom has
amended and supplemented its outstanding tender offer (as amended
and supplemented in accordance with this Agreement, the "Offer")
-----
to acquire 61,657,432 shares of common stock, par value $1.00 per
share, of Paramount ("Paramount Common Stock"), or such greater
----------------------
number of shares as equals 50.1% of the shares of Paramount
Common Stock outstanding on a fully diluted basis (as defined in
Section 9.3 herein), for $107.00 per Paramount share (the
consideration per share of Paramount Common Stock to be paid
pursuant to the Offer being referred to as the "Per Share
---------
Amount"), upon the terms and subject to the conditions of this
------
Agreement and the Offer;
WHEREAS, the Board of Directors of Paramount has
determined that the Merger and the Offer are consistent with and
in furtherance of the long-term business strategy of Paramount
and are fair to, and in the best interests of, Paramount and the
holders of Paramount Common Stock and has approved and adopted
this Agreement and has approved the Merger and the other
transactions contemplated hereby (including, without limitation,
the Offer) and recommended approval and adoption of this
Agreement and approval of the Merger by the stockholders of
Paramount and agreed to recommend that stockholders of Paramount
tender their shares of Paramount Common Stock pursuant to the
Offer;
WHEREAS, the Board of Directors of Viacom has
determined that the Merger and the Offer are consistent with and
in furtherance of the long-term business strategy of Viacom and
are fair to, and in the best interests of, Viacom and its
2
stockholders and has approved and adopted this Agreement and has
approved the Merger and the other transactions contemplated
hereby (including, without limitation, the making of the Offer)
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 Forward 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 Paramount to enter into this
Agreement, National Amusements, Inc., a Maryland corporation and
the majority stockholder of Viacom ("National"), and Paramount
--------
will enter into a Voting Agreement, substantially in the form of
the Voting Agreement previously entered into on September 12,
1993 (the "Voting Agreement"), pursuant to which National shall,
----------------
among other things, vote its shares of Viacom Class A Common
Stock 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 1.1. 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 1.3), Paramount shall be merged with and into Viacom;
provided, however, that if, after consulting with Paramount and
-------- -------
its professional advisors in good faith, Shearman & Sterling,
counsel to Viacom, is unable to deliver an opinion in form and
substance reasonably satisfactory to Viacom (such opinion to be
based on customary assumptions and representations) that the
Forward Merger will qualify as a reorganization under Section
368(a) of the Code, Viacom may elect to cause a subsidiary of
Viacom to merge with and into Paramount. As a result of the
Forward Merger, the separate corporate existence of Paramount
(or, in the case of the Reverse Merger, Merger Subsidiary) shall
cease and Viacom (or, in the case of the Reverse Merger,
Paramount) shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
---------------------
SECTION 1.2. Closing. Unless this Agreement shall
-------
have been terminated and the transactions herein contemplated
3
shall have been abandoned pursuant to Section 8.1 and subject to
the satisfaction or, if permissible, 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 1.3. 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 1.4. 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
(or, in the case of the Reverse Merger, Merger Subsidiary) and
Paramount shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Viacom (or, in the case of the Reverse
Merger, Merger Subsidiary) and Paramount shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 1.5. Certificate of Incorporation; By-Laws.
-------------------------------------
(a) At the Effective Time of the Forward Merger, 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.
(b) Alternatively, at the Effective Time of the Reverse
Merger, the Certificate of Incorporation and By-Laws,
respectively, of the Surviving Corporation shall be amended and
restated in their entirety to read as the Certificate of
Incorporation and By-Laws of Merger Subsidiary.
SECTION 1.6. Conversion of Securities. At the
------------------------
Effective Time, by virtue of the Merger and without any action on
the part of Viacom, Paramount or the holders of any
of the following securities:
(a) In the event that the Offer has been consummated
prior to the Effective Time, each share of Paramount Common
Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of Paramount Common
Stock to be canceled pursuant to Section 1.6(c) and any
Dissenting Shares (as defined in Section 1.10)) shall be
4
converted into the right to receive (A) .93065 shares of
Class B common stock, par value $0.01 per share ("Viacom
------
Class B Common Stock"), of Viacom, (B) .30408 shares of a
--------------------
new series of convertible exchangeable preferred stock, par
value $0.01 per share ("Viacom Merger Preferred Stock") of
-----------------------------
Viacom having the principal terms described in Annex B, (C)
.93065 contingent value rights of Viacom (the "CVRs") having
----
the principal terms described in Annex C and (D) .50
warrants (the "Warrants") of Viacom having the principal
--------
terms described in Annex D; provided, however, that, in any
-------- -------
event, if between the date of this Agreement and the
Effective Time the outstanding shares of Viacom Class B
Common Stock, Viacom Merger Preferred Stock or Paramount
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 amounts of
Viacom Class B Common Stock, Viacom Merger Preferred Stock
CVRs and Warrants specified above shall be correspondingly
adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of shares. All such shares of Paramount 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 1.7 certificates evidencing (a) such
number of whole shares of Viacom Class B Common Stock and
Viacom Merger Preferred Stock and (b) such number of whole
CVRs and Warrants into which such Paramount Common Stock was
converted in accordance herewith. The holders of such
certificates previously evidencing such shares of Paramount
Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such
shares of Paramount Common Stock except as otherwise
provided herein or by law. No fractional share of Viacom
Class B Common Stock or Viacom Merger Preferred Stock or
fractional CVR or Warrant shall be issued and, in lieu
thereof, a cash payment shall be made pursuant to Section
1.7(d).
(b) In the event that the Offer has not been
consummated prior to the Effective Time:
(i) subject to the further provisions of this
Section 1.6, each share of Paramount Common Stock
issued and outstanding immediately prior to the
Effective Time (other than any shares of Paramount
Common Stock to be canceled pursuant to Section 1.6(c))
and any Dissenting Shares, shall be converted, subject
to Section 1.7(d), into the right to receive (A)(i)
.93065 of a share of Viacom Class B Common Stock (the
"Class B Exchange Ratio"); (ii) 0.30408 of a share of
----------------------
5
Viacom Merger Preferred Stock (the "Preferred Stock
---------------
Exchange Ratio"); (iii) .93065 CVRs (the "CVR Exchange
-------------- ------------
Ratio") and (iv) .50 Warrants (the "Warrant Exchange
----- ----------------
Ratio"; and together with the Class B Exchange Ratio,
-----
the Preferred Stock Exchange Ratio and the CVR Exchange
Ratio; the "Exchange Ratios"), (B) $107.00 in cash (the
---------------
"Per Share Cash Amount"); or (C) a combination of
---------------------
shares of Viacom Class B Common Stock and Viacom Merger
Preferred Stock, CVRs, Warrants and cash determined in
accordance with Sections 1.6(b)(iv), (v) and (vi);
provided, however, that, in any event, if between the
-------- -------
date of this Agreement and the Effective Time the
outstanding shares of Viacom Class B Common Stock,
Viacom Merger Preferred Stock or Paramount 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 and Per Share Cash Amount
shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of
shares. All such shares of Paramount 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 1.7 and in accordance with
the allocation procedures set forth in this Section
1.6, (i) certificates evidencing (x) such number of
whole shares of Viacom Class B Common Stock and Viacom
Merger Preferred Stock and (y) such number of whole
CVRs and Warrants into which such Paramount Common
Stock was converted in accordance with the Exchange
Ratios and/or (ii) the Per Share Cash Amount multiplied
by the number of shares of Paramount Common Stock
previously evidenced by the canceled certificate. The
holders of such certificates previously evidencing such
shares of Paramount Common Stock outstanding
immediately prior to the Effective Time shall cease to
have any rights with respect to such shares of
Paramount Common Stock except as otherwise provided
herein or by law. No fractional share of Viacom Class
B Common Stock or Viacom Merger Preferred Stock or
fractional CVR or Warrant shall be issued and, in lieu
thereof, a cash payment shall be made pursuant to
Section 1.7(d).
(ii) Subject to the election and allocation
procedures set forth in this Section 1.6, each holder
of record of shares of Paramount Common Stock as of the
record date for the meeting of stockholders of
Paramount referred to in Section 6.7 will be entitled
6
to (A) elect to receive certificates evidencing such
number of shares of Viacom Class B Common Stock and
Viacom Merger Preferred Stock and (y) such number of
whole CVRs and Warrants into which such number of
shares of Paramount Common Stock would be converted in
accordance with the Exchange Ratios (a "Securities
----------
Election"), (B) elect to receive the Per Share Cash
--------
Amount multiplied by such number of shares of Paramount
Common Stock (a "Cash Election"), or (C) indicate that
-------------
such holder has no preference as to the receipt of cash
or shares of Viacom Class B Common Stock and Viacom
Merger Preferred Stock and CVRs and Warrants in
exchange for such shares of Paramount Common Stock (a
"Non-Election"). All such elections shall be made on a
------------
form designed for that purpose and mutually acceptable
to Viacom and Paramount (a "Form of Election") and
----------------
mailed to holders of record of shares of Paramount
Common Stock as of the record date for the meeting of
stockholders of Paramount referred to in Section 6.7.
Holders of record of shares of Paramount Common Stock
who hold such shares as nominees, trustees or in other
representative capacities ("Representatives") may
---------------
submit multiple Forms of Election, provided that such
Representative certifies that each such Form of
Election covers all the shares of Paramount Common
Stock held by such Representative for a particular
beneficial owner entitled to so elect pursuant to the
first sentence of this Section 1.6(b)(ii). Elections
shall be made by holders of Paramount Common Stock by
mailing to the Exchange Agent (as defined in Section
1.7) properly completed and signed Forms of Election.
In order to be effective, a Form of Election must be
received by the Exchange Agent no later than the close
of business on the last business day prior to the
Effective Time. All elections may be revoked until the
last business day prior to the Effective Time. Viacom
shall have the discretion, which it may delegate in
whole or in part to the Exchange Agent, to determine
whether Forms of Election have been properly completed
and signed and properly and timely submitted or revoked
and to disregard immaterial defects in Forms of
Election, and any good faith decision of Viacom or the
Exchange Agent in such matters shall be binding and
conclusive. Neither Viacom nor the Exchange Agent
shall be under any obligation to notify any person of
any defect in a Form of Election. Any holder of shares
of Paramount Common Stock who fails to make an election
and any holder who fails to submit to the Exchange
Agent a properly completed and signed and properly and
timely submitted Form of Election shall be deemed to
have made a Non-Election.
(iii) The aggregate number of shares of Paramount
Common Stock to be converted into the right to receive
7
cash in the Merger (the "Cash Election Number") shall
--------------------
be equal to 50.1% of the number of shares of Paramount
Common Stock outstanding immediately prior to the
Effective Time, and the aggregate number of shares of
Paramount Common Stock to be converted into the right
to receive shares of Viacom Class B Common Stock and
Viacom Merger Preferred Stock and CVRs and Warrants in
the Merger (the "Securities Election Number") shall be
--------------------------
equal to 49.9% of the number of shares of Paramount
Common Stock outstanding immediately prior to the
Effective Time.
(iv) If the aggregate number of shares of
Paramount Common Stock with respect to which Cash
Elections have been made plus Dissenting Shares (the
"Cash Election Shares") exceeds the Cash Election
--------------------
Number, all shares of Paramount Common Stock with
respect to which Securities Elections have been made
(the "Securities Election Shares") and all shares of
--------------------------
Paramount Common Stock with respect to which
Non-Elections have been made (the "Non-Election
------------
Shares") shall be converted into the right to receive
------
shares of Viacom Class B Common Stock and Viacom Merger
Preferred Stock, CVRs and Warrants, and the Cash
Election Shares (other than Dissenting Shares) shall be
converted into the right to receive shares of Viacom
Class B Common Stock, Viacom Merger Preferred Stock,
CVRs, Warrants and cash in the following manner:
each Cash Election Share (other than Dissenting
Shares) shall be converted into the right to
receive (i) an amount in cash, without interest,
equal to the product of (x) the Per Share Cash
Amount and (y) a fraction (the "Cash Fraction"),
-------------
the numerator of which shall be the Cash Election
Number and the denominator of which shall be the
total number of Cash Election Shares, (ii) a
number of shares of Viacom Class B Common Stock
equal to the product of (x) the Class B Exchange
Ratio and (y) a fraction equal to one minus the
Cash Fraction, (iii) a number of shares of Viacom
Merger Preferred Stock equal to the product of (x)
the Preferred Stock Exchange Ratio and (y) a
fraction equal to one minus the Cash Fraction,
(iv) a number of CVRs equal to the product of (x)
the CVR Exchange Ratio and (y) a fraction equal to
one minus the Cash Fraction and (v) a number of
Warrants equal to the product of (x) the Warrant
Exchange Ratio and (y) a fraction equal to one
minus the Cash Fraction.
(v) If the aggregate number of Securities
Election Shares exceeds the Securities Election Number,
all Cash Election Shares (other than Dissenting Shares)
8
and all Non-Election Shares shall be converted into the
right to receive cash, and all Securities Election
Shares shall be converted into the right to receive
shares of Viacom Class B Common Stock and Viacom Merger
Preferred Stock, CVRs, Warrants and cash in the
following manner:
each Securities Election Share shall be converted
into the right to receive (i) a number of shares
of Viacom Class B Common Stock equal to the
product of (x) the Class B Exchange Ratio and (y)
a fraction (the "Securities Fraction"), the
-------------------
numerator of which shall be the Securities
Election Number and the denominator of which shall
be the total number of Securities Election Shares,
(ii) a number of shares of Viacom Merger Preferred
Stock equal to the product of (x) the Preferred
Stock Exchange Ratio and (y) the Securities
Fraction, (iii) a number of CVRs equal to the
product of (x) the CVR Exchange Ratio and (y) the
Securities Fraction, (iv) a number of Warrants
equal to the product of (x) the Warrant Exchange
Ratio and (y) the Securities Fraction and (v) an
amount in cash, without interest, equal to the
product of (x) the Per Share Cash Amount and (y) a
fraction equal to one minus the Securities
Fraction.
(vi) In the event that neither Section 1.6(b)(iv)
nor Section 1.6(b)(v) above is applicable, all Cash
Election shares shall be converted into the right to
receive cash, all Securities Election Shares shall be
converted into the right to receive shares of Viacom
Class B Common Stock and Viacom Merger Preferred Stock,
CVRs and Warrants, and the Non-Election Shares, if any,
shall be converted into the right to receive shares of
Viacom Class B Common Stock and Viacom Merger Preferred
Stock, CVRs, Warrants and cash in the following manner:
each Non-Election Share shall be converted into
the right to receive (i) an amount in cash,
without interest, equal to the product of (x) the
Per Share Cash Amount and (y) a fraction (the
"Non-Election Fraction"), the numerator of which
---------------------
shall be the excess of the Cash Election Number
over the total number of Cash Election Shares and
the denominator of which shall be the excess of
(A) the number of shares of Paramount Common Stock
outstanding immediately prior to the Effective
Time over (B) the sum of the total number of Cash
Election Shares and the total number of Securities
Election Shares, (ii) a number of shares of Viacom
Class B Common Stock equal to the product of (x)
the Class B Exchange Ratio and (y) a fraction
9
equal to one minus the Non-Election Fraction,
(iii) a number of shares of Viacom Merger
Preferred Stock equal to the product of (x) the
Preferred Stock Exchange Ratio and (y) a fraction
equal to one minus the Non-Election Fraction, (iv)
a number of CVRs equal to the product of (x) the
CVR Exchange Ratio and (y) a fraction equal to one
minus the Non-Election Fraction and (v) a number
of Warrants equal to the product of (x) the
Warrant Exchange Ratio and (y) a fraction equal to
one minus the Non-Election Fraction.
(vii) The Exchange Agent shall make all
computations contemplated by this Section 1.6 and all
such computations shall be binding and conclusive on
the holders of Paramount Common Stock.
(c) Each share of Paramount Common Stock held in the
treasury of Paramount and each share of Paramount Common
Stock owned by Viacom or any direct or indirect wholly owned
subsidiary of Viacom or of Paramount 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.
(d) In the Reverse Merger, each share of common stock
of Merger Subsidiary issued and outstanding immediately
prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving
Corporation.
SECTION 1.7. Exchange of Certificates and Cash.
---------------------------------
(a) Exchange Agent. As of the Effective Time (in the case
--------------
of a Merger to which Section 1.6(a) applies) or promptly after
completion of the allocation procedures set forth in Section 1.6
(in the case of a Merger to which Section 1.6(b) applies), 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 Paramount (the "Exchange
--------
Agent"), for the benefit of the holders of shares of Paramount
-----
Common Stock (other than Dissenting Shares), for exchange in
accordance with this Article I, through the Exchange Agent, (i)
certificates evidencing the shares of Viacom Class B Common Stock
and Viacom Merger Preferred Stock, the Warrants and the CVRs
issuable pursuant to Section 1.6 in exchange for outstanding
shares of Paramount Common Stock and (ii) cash, if any, in the
aggregate amount required to be exchanged for shares of Paramount
Common Stock pursuant to Section 1.6 (the "Exchange Cash
-------------
Consideration") (such certificates for shares of Viacom Class B
-------------
Common Stock and Viacom Merger Preferred Stock, the Warrants and
the CVRs, together with any dividends or distributions with
respect thereto, and the Exchange Cash Consideration, if any,
being hereafter collectively referred to as the "Exchange Fund").
-------------
10
The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the shares of Viacom Class B Common Stock and Viacom
Merger Preferred Stock, Warrants, CVRs and cash, if any,
contemplated to be issued pursuant to Section 1.6 out of the
Exchange Fund to holders of shares of Paramount Common Stock.
Except as contemplated by Section 1.7(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 Paramount Common Stock (other
than Dissenting Shares) (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 Class B Common Stock and
Viacom Merger Preferred Stock, CVRs, Warrants and cash. 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 Class B Common Stock and Viacom
Merger Preferred Stock and that number of whole CVRs and Warrants
which such holder has the right to receive in accordance with
Section 1.6 in respect of the shares of Paramount Common Stock
formerly evidenced by such Certificate, (B) cash, if any, which
such holder has the right to receive in accordance with Section
1.6, (C) any dividends or other distributions to which such
holder is entitled pursuant to Section 1.7(c), and (D) cash in
lieu of fractional shares of Viacom Class B Common Stock and
Viacom Merger Preferred Stock and fractional CVRs and Warrants to
which such holder is entitled pursuant to Section 1.7(d) (the
shares of Viacom Class B Common Stock and Viacom Merger Preferred
Stock, CVRs, Warrants, dividends, distributions and cash
described in clauses (A), (B), (C) and (D) 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 Paramount Common Stock which is not
registered in the transfer records of Paramount, shares of Viacom
Class B Common Stock and Viacom Merger Preferred Stock, CVRs,
Warrants and cash may be issued and paid in accordance with this
Article I to a transferee if the Certificate evidencing such
shares of Paramount 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
11
transfer taxes have been paid. Until surrendered as contemplated
by this Section 1.7, 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 Class B Common Stock and Viacom Merger Preferred Stock,
-----------------------------------------------------------------
CVRs and Warrants. No dividends or other distributions declared
-----------------
or made after the Effective Time with respect to shares of Viacom
Class B Common Stock and Viacom Merger Preferred Stock, CVRs and
Warrants 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 Class B Common Stock or Viacom Merger
Preferred Stock, CVRs or Warrants they are entitled to receive
until the holder of such Certificate shall surrender such
Certificate.
(d) Fractional Shares, CVRs and Warrants. No fraction
------------------------------------
of a share of Viacom Class B Common Stock or Viacom Merger
Preferred Stock or fraction of a CVR or Warrant shall be issued
in the Merger. In lieu of any such fractional shares or
fractional CVRs or Warrants, each holder of Paramount Common
Stock entitled to receive shares of Viacom Class B Common Stock
and Viacom Merger Preferred Stock, CVRs and Warrants in the
Merger, upon surrender of a Certificate for exchange pursuant to
this Section 1.7, shall be paid (1) 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 B Common Stock on the date of the
----
Effective Time (or, if shares of Viacom Class B Common Stock do
not trade on the AMEX on such date, the first date of trading of
such Viacom Class B Common Stock on the AMEX after the Effective
Time) by (ii) the fractional interest in Viacom Class B Stock to
which such holder would otherwise be entitled (after taking into
account all shares of Paramount Common Stock then held of record
by such holder) plus (2) an amount in cash (without interest),
----
rounded to the nearest cent, determined by multiplying (i) $50.00
by (ii) the fractional interest in Viacom Merger Preferred Stock
to which such holder would otherwise be entitled (after taking
into account all shares of Paramount Common Stock then held of
record by such holder) plus (3) an amount in cash (without
----
interest), rounded to the nearest cent, determined by multiplying
(i) the fair market value of one CVR, as determined by reference
to a five day average trading price, if available, or if not
available, in the reasonable judgment of the Viacom Board of
Directors by (ii) the fractional interest in a CVR to which such
holder would otherwise be entitled (after taking into account all
shares of Paramount Common Stock then held of record by such
holder) plus (4) an amount in cash (without interest) rounded to
----
the nearest cent, determined by multiplying (i) the fair market
value of one Warrant, as determined by reference to a five day
average trading price, if available, or if not available, in the
reasonable judgment of the Viacom Board of Directors by (ii) the
fractional interest in a Warrant to which such holder would
12
otherwise be entitled (after taking into account all shares of
Paramount Common Stock then held of record by such holder).
(e) Termination of Exchange Fund. Any portion of the
----------------------------
Exchange Fund which remains undistributed to the holders of
Paramount Common Stock for six months after the Effective Time
shall be delivered to Viacom, upon demand, and any holders of
Paramount Common Stock who have not theretofore complied with
this Article I shall thereafter look only to Viacom for the
Merger Consideration to which they are entitled pursuant to this
Article I.
(f) No Liability. Neither Viacom nor Paramount shall
------------
be liable to any holder of shares of Paramount Common Stock for
any such shares of Viacom Class B Common Stock or Viacom Merger
Preferred Stock, CVRs, Warrants (or dividends or distributions
with respect thereto) or cash 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 Paramount 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 Paramount Common
Stock in respect of which such deduction and withholding was made
by Viacom or the Exchange Agent.
SECTION 1.8. Stock Transfer Books. At the Effective
--------------------
Time, the stock transfer books of Paramount shall be closed, and
there shall be no further registration of transfers of shares of
Paramount Common Stock thereafter on the records of Paramount.
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 1.9. Stock Options; Payment Rights. (a) At
-----------------------------
the Effective Time, Paramount's obligations with respect to each
outstanding Stock Option (as defined in Section 3.3) to purchase
shares of Paramount Common Stock, as amended in the manner
described in the following sentence, shall be assumed by Viacom.
The 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
Stock Options were issued as in effect immediately prior to the
Effective Time, except that each such Stock Option shall be
exercisable for (i) that number of whole shares of Viacom Class B
Common Stock equal to the product of the number of shares of
Paramount Common Stock covered by such Stock Option immediately
13
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, (ii) that number of whole shares of
Viacom Merger Preferred Stock equal to the product of the number
of shares of Paramount Common Stock covered by such Stock Option
immediately prior to the Effective Time multiplied by the
Preferred Stock Exchange Ratio and rounded up to the nearest
whole number of shares of Viacom Merger Preferred Stock (iii)
that number of whole CVRs equal to the product of the number of
shares of Paramount Common Stock covered by such Stock Option
immediately prior to the Effective Time multiplied by the CVR
Exchange Ratio and rounded up to the nearest whole number of
CVRs; provided, that, if the option holder has not exercised his
--------
or her Stock Option prior to the maturity of the CVRs, then the
CVRs described above shall be replaced by that number of shares
of Viacom Class B Common Stock equal in value to the amount by
which the Target Price (as defined in Annex C hereto) exceeds the
greater of the Current Market Value (as defined in Annex C
hereto) and the Minimum Price (as defined in Annex C hereto) on
the applicable maturity date multiplied by the number of such
CVRs, rounded up to the nearest whole number of shares and (iv)
that number of whole Warrants equal to the product of the number
of shares of Paramount Common Stock covered by such Stock Option
immediately prior to the Effective Time multiplied by the Warrant
Exchange Ratio and rounded up to the nearest whole number of
Warrants; provided, further that, if the option holder has not
-------- -------
exercised his or her Stock Option prior to the third anniversary
of the Effective Time, then the Warrants described above shall be
replaced by that number of shares of Viacom Class B Common Stock
equal in value to the fair market value of such Warrants (as
determined by reference to the average trading price for the
five-day trading period immediately prior to the third
anniversary of the Effective Date, if available, or, if not
available, in the reasonable judgment of the Viacom Board of
Directors), rounded up to the nearest whole number of shares;
provided that there shall be no such rounding up with respect to
--------
Incentive Stock Options (as defined below). Viacom shall (i)
reserve for issuance the number of shares of Viacom Class B
Common Stock and Viacom Merger Preferred Stock, CVRs and Warrants
that will become issuable upon the exercise of such Stock Options
pursuant to this Section 1.9 and (ii) promptly after the
Effective Time, issue to each holder of an outstanding Stock
Option a document evidencing the assumption by Viacom of
Paramount's obligations with respect thereto under this Section
1.9. Nothing in this Section 1.9 shall affect the schedule of
vesting with respect to the Stock Options to be assumed by Viacom
as provided in this Section 1.9. In the case of any Stock Option
to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code (an "Incentive Stock
---------------
Option"), the option price, the number and type of shares
------
purchasable pursuant to such Incentive Stock Option and the terms
and conditions of exercise of such Incentive Stock Option shall
be determined immediately after the Effective Time in such manner
as to comply with Section 424(a) of the Code. To preserve the
14
qualification of all Incentive Stock Options under Section 422 of
the Code, (i) in addition to the Viacom Class B Common Stock and
(ii) in lieu of all shares of Viacom Merger Preferred Stock, CVRs
or Warrants for which an Incentive Stock Option would otherwise
become exercisable pursuant to the foregoing provisions of this
Section 1.9, such Incentive Stock Option shall become exercisable
for that number of shares of Viacom Class B Common Stock equal to
the fair market value of such shares of Viacom Merger Preferred
Stock, CVRs or Warrants (determined, at the time of the Merger,
by reference to a five-day average trading price of such
securities, if available, or if not available, in the reasonable
judgment of the Viacom Board of Directors).
SECTION 1.10. Dissenting Shares. (a) Notwithstanding
-----------------
any other provision of this Agreement to the contrary, shares of
Paramount 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 Paramount 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 Paramount 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 (as if such Shares were Non-Election Shares in the
case of a Merger to which section 1.6(b) applies), upon
surrender, in the manner provided in Section 1.7, of the
certificate or certificates that formerly evidenced such shares
of Paramount Common Stock.
(b) Paramount shall give Viacom (i) prompt notice of
any demands for appraisal received by Paramount, withdrawals of
such demands, and any other instruments served pursuant to
Delaware Law and received by Paramount and (ii) the opportunity
to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. Paramount 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.
15
ARTICLE II
THE OFFER
SECTION 2.1. The Offer. (a) Viacom has amended and
---------
supplemented the Offer to (a) provide that the purchase price
offered for shares pursuant to the Offer shall be the Per Share
Amount, (b) provide that the obligation of Viacom to accept for
payment and pay for Shares tendered pursuant to the Offer shall
be subject to the condition (as such condition may be amended in
accordance with the terms hereof, the "Minimum Condition") that
-----------------
at least 61,657,432 shares of Paramount Common Stock (or such
greater number of shares as equals 50.1% of the shares of
Paramount Common Stock then outstanding on a fully diluted basis)
shall have been validly tendered and not withdrawn prior to the
expiration of the Offer, that the Board of Directors of
Paramount, in accordance with Section 3.13 of this Agreement,
shall have amended the Rights Agreement to make the Rights (such
terms being used as defined in Section 3.13) inapplicable to the
Offer and the Merger as contemplated by Section 3.13 or the
Rights shall be otherwise inapplicable to the Offer and the
Merger (the "Rights Condition"), and also shall be subject to the
----------------
satisfaction of the other conditions set forth in Annex A hereto
and (c) extend the expiration date of the Offer until Midnight on
the tenth business day following the date of the amendment to the
Offer referred to above. Viacom expressly reserves the right to
waive any such condition (other than the Minimum Condition), to
increase the aggregate cash consideration to be paid pursuant to
the Offer and to increase the number of shares of Paramount
Common Stock sought in the Offer; provided, however, that no
-------- -------
change may be made without the prior written consent of Paramount
which decreases the number of shares of Paramount Common Stock
sought in the Offer below 50.1% of the outstanding shares of
Common Stock on a fully diluted basis; which decreases the
aggregate cash consideration payable in the Offer or changes the
form of consideration payable in the Offer (except to the extent
the Other Offeror (as defined below) has made such changes with
the consent of Paramount); or which imposes conditions to the
Offer in addition to those set forth in Annex A hereto.
Notwithstanding the foregoing sentence, so long as the Other
Offeror is bound by substantially identical restrictions made for
the benefit of Paramount, Viacom shall not amend the Offer in
order to increase by less than $60 million the aggregate cash
consideration to be paid pursuant to the Offer or increase the
number of shares of Paramount Common Stock for which tenders are
sought by less than 2% of the outstanding shares of Paramount
Common Stock. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the
terms and subject to the conditions of the Offer. Subject to the
terms and conditions of the Offer (including, without limitation,
the Minimum Condition and the terms of this Agreement), Viacom
shall pay, as promptly as practicable after expiration of the
Offer, for all shares of Paramount Common Stock validly tendered
and not withdrawn at the earliest such time following expiration
16
of the Offer that all conditions to the Offer shall have been
waived or satisfied by Viacom.
(b) Viacom has filed with the Securities and Exchange
Commission (the "SEC") an amendment to its Tender Offer Statement
---
on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The
--------------
Schedule 14D-1 contains or incorporates by reference an amendment
and supplement to the offer to purchase (the "Offer to Purchase")
-----------------
and forms of the related letter of transmittal and any related
summary advertisement (the Schedule 14D-1, the Offer to Purchase
and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the
"Offer Documents"). Viacom and Paramount agree to correct
---------------
promptly any information provided by any of them for use in the
Offer Documents which shall have become false or misleading, and
Viacom further agrees to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to
holders of shares of Paramount Common Stock, in each case as and
to the extent required by applicable federal securities laws.
(c) (i) Notwithstanding the amendment of the Offer,
Viacom shall be free to terminate the Offer at any time subject
to its continuing obligations to consummate the Merger, including
without limitation pursuant to Sections 6.6 and 6.10, provided
--------
that prior to such termination of the Offer, Viacom shall have
determined in good faith that either (x) terminating the Offer
will facilitate the earlier consummation of the Merger in
accordance with the terms of this Merger Agreement or (y) the
conditions to the Offer (other than the Minimum Condition and the
Rights Condition) are unlikely to be satisfied. Notwithstanding
the foregoing, Viacom hereby agrees that, without the written
consent of Paramount, it may not terminate the Offer unless
required to terminate pursuant to Section 2.5 hereof or extend
the Expiration Date except for failure to satisfy a condition at
the Expiration Date, at any time that all of the conditions to
the Offer have been satisfied or that there exists no material
risk that the conditions will not be satisfied by such Expiration
Date, provided, Viacom may extend the Expiration Date pursuant to
this Section 2.1(c), Sections 2.1(a), 2.1(d) and 2.3 hereof or
any such extension required by Federal securities laws.
(ii) No extension of the expiration date (such
expiration date as extended from time to time shall be defined
herein to mean the "Expiration Date") permitted pursuant to this
Agreement shall be for a period of less than three business days
and the Expiration Date shall not be extended for any reason
beyond 12:00 midnight on February 14, 1994, or such later date in
accordance with the last parenthetical of the last sentence of
Section 2.1(d)(ii), Section 2.3, or as required by 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");
---------------------
Viacom agrees that it will not increase the price per share of
17
Paramount Common Stock payable in the Offer or otherwise amend
the Offer primarily to extend the expiration date of the tender
offer by QVC Network, Inc. ("QVC") (the "Other Offeror") to
--- -------------
purchase the outstanding shares of Paramount Common Stock (the
"Other Offer").
-----------
(d) In order to cause the Offer and the Other Offer to
remain on the same time schedule, Viacom hereby agrees that if
the Other Offeror remains subject to an agreement (the "Other
-----
Exemption Agreement"), containing terms for the benefit of
-------------------
Paramount substantially similar to the form of exemption
agreement between Viacom and Paramount dated as of December 22,
1993 (the "Exemption Agreement"), and (i) extends the expiration
-------------------
date of the Other Offer (such expiration date, as extended from
time to time, the "Other Expiration Date") in accordance with the
---------------------
Other Exemption Agreement, 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 Other
Expiration Date) by Viacom to the Other Expiration Date, or (ii)
if upon notification to Paramount by the Offeror and the Other
Offeror of the results of their respective offers (which
notification shall be required to be delivered by the Offeror and
the Other Offeror no later than promptly following the expiration
of their respective offers), Paramount has notified the Offeror
and the Other Offeror (which notification shall be required to be
delivered by Paramount promptly) that a number of shares of
Paramount Common Stock that would satisfy the Minimum Condition
or the minimum condition defined in the Other Offer (which under
no circumstances may be less than 50.1% of the outstanding shares
of Paramount Common Stock on a fully diluted basis) (the "Other
-----
Minimum Condition") shall not have been validly tendered (and not
-----------------
withdrawn) pursuant to either the Offer or the Other Offer,
respectively, at the Expiration Date (or a number of shares of
Paramount Common Stock that would satisfy the Minimum Condition
and the Other Minimum Condition shall have been validly tendered
and not withdrawn pursuant to both the Offer and the Other Offer
at the Expiration Date), then Viacom shall extend the Expiration
Date of the Offer for a period of 10 business days.
(e) Viacom shall be subject to the obligations of
Sections 2.1(c)(ii), 2.1(d) and 2.5 for so long as the Other
Offeror remains subject to the obligations set forth in the Other
Exemption Agreement; provided, however, that Viacom shall not be
-------- -------
subject to Sections 2.1(c)(ii), 2.1(d) and 2.5 in the event that
the Other Offeror has not performed or complied in all material
respects with the Other Exemption Agreement.
SECTION 2.2. Action by Paramount. (a) Paramount
-------------------
hereby approves of and consents to the making of the Offer and
represents that (i) the Board of Directors of Paramount, at a
meeting duly called and held on January 21, 1994, has unanimously
(A) determined that the Offer and the Merger, taken together, are
fair to and in the best interests of the holders of shares of
Paramount Common Stock, (B) approved and adopted this Agreement
18
and the transactions contemplated hereby and (C) recommended that
the stockholders of Paramount approve and adopt this Agreement
and the transactions contemplated hereby and accept the Offer,
and (ii) Lazard Freres & Co. has delivered to the Board an
opinion on January 21, 1994, to the effect that, as of such date,
the consideration to be received by the holders of shares of
Paramount Common Stock pursuant to the Offer and the Merger,
taken together, is fair to the holders of shares of Paramount
Common Stock from a financial point of view. Subject to the
fiduciary duties of the Board of Directors of Paramount under
applicable law as advised by independent legal counsel (who may
be such party's regularly engaged legal counsel), Paramount
hereby consents to the inclusion in the Offer Documents prepared
in connection with the Offer of the recommendation of the Board
of Directors of Paramount described in the immediately preceding
sentence.
(b) As soon as reasonably practicable after the date
hereof, Paramount shall file with the SEC an amendment to its
Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "Schedule
--------
14D-9") containing, subject to the fiduciary duties of the Board
-----
of Directors of Paramount under applicable law as advised by
independent legal counsel (who may be such party's regularly
engaged legal counsel), the recommendation of the Board of
Directors of Paramount described in Section 2.2(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule
14e-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any other applicable federal
------------
securities laws. Paramount and Viacom agree to correct promptly
any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, and Paramount
further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated
to holders of shares of Paramount Common Stock, in each case as
and to the extent required by applicable federal securities laws.
(c) Paramount shall promptly furnish Viacom with
mailing labels containing the names and addresses of all record
holders of shares of Paramount Common Stock and with security
position listings of shares of Paramount Common Stock held in
stock depositories, each as of a recent date, together with all
other available listings and computer files containing names,
addresses and security position listings of record holders and
beneficial owners of shares of Paramount Common Stock. Paramount
shall furnish Viacom with such additional information, including,
without limitation, updated listings and computer files of
stockholders, mailing labels and security position listings, and
such other assistance as Viacom or its agents may reasonably
request. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the
Merger or the Offer, Viacom shall hold in confidence the
information contained in such labels, listings and files, shall
19
use such information only in connection with the Merger and the
Offer, and, if this Agreement shall be terminated in accordance
with Section 8.1, shall deliver to Paramount all copies of such
information then in its possession.
SECTION 2.3. Receipt of Common Stock. Unless the
-----------------------
event referred to in the last parenthetical of Section 2.1(d)(ii)
that would satisfy the Minimum Condition occurs, in the event
that a number of shares of Paramount Common Stock shall have been
validly tendered and not withdrawn in the Offer at the Expiration
Date and, as of such Expiration Date, Viacom has waived all
conditions to the Offer (other than the Minimum Condition and the
conditions relating to the Rights Agreement, Article XI of the
Paramount Certificate of Incorporation, Section 203 of Delaware
Law and judicial or governmental injunction, each as set forth
therein), then Viacom shall extend the Expiration Date to a date
10 business days from the then scheduled Expiration Date;
provided, that such extension shall be for a period of 5 business
days in the event that the Other Offer has been terminated prior
to the foregoing Expiration Date.
SECTION 2.4. Completion Certificate. At such time as
----------------------
Viacom has fulfilled the terms of Section 2.3 above, Viacom shall
deliver to the Board of Directors of Paramount a certificate (the
"Completion Certificate"), executed by an authorized officer of
----------------------
Viacom, certifying that all the terms of Section 2.3 have been
fulfilled.
SECTION 2.5. Termination of the Offer. Unless the
------------------------
event referred to in the last parenthetical of the last sentence
of Section 2.1(d)(ii) occurs, Viacom hereby agrees to terminate
the Offer at such time as Viacom has been notified pursuant to a
certificate executed by an authorized officer of Paramount that
(i) a number of shares of Paramount Common Stock that would
satisfy the Other Minimum Condition shall have been validly
tendered to the Other Offer and not withdrawn at the Other
Expiration Date of the Other Offer, (ii) all conditions to the
Other Offer, except the Other Minimum Condition and the
conditions relating to the Rights Agreement, Article XI of the
Paramount Certificate of Incorporation, Section 203 of the
Delaware Law and judicial or governmental injunction, each as set
forth therein, shall have been waived and (iii) a completion
certificate from the Other Offeror has been delivered to
Paramount; provided, however, that Viacom shall not be required
-------- -------
to terminate the Offer in the event that the Other Offeror has
not performed or complied in all material respects with the Other
Exemption Agreement.
SECTION 2.6. Board of Directors; Section 14(f). (a)
---------------------------------
If requested by Viacom, Paramount shall, promptly following the
acceptance for payment of the shares of Paramount Common Stock to
be purchased pursuant to the Offer, and from time to time
thereafter, take all actions necessary to cause a majority of
directors (and of members of each committee of the Board of
20
Directors) of Paramount and of each subsidiary of Paramount
designated by Viacom (whether, at the request of Viacom, by means
of increasing the size of the Board of Directors of Paramount or
seeking the resignation of directors and causing Viacom's
designees to elected); provided; that prior to receipt by Viacom
--------
of long-form approval by the Federal Communications Commission
(the "FCC") permitting Viacom to control Paramount, Paramount
shall take all actions necessary to elect the Viacom voting
trustee approved by the FCC to the Paramount Board of Directors
and to otherwise act in a manner consistent with the voting trust
agreement approved by the FCC.
(b) Paramount's obligations to cause designees of
Viacom to be elected or appointed to the Board of Directors of
Paramount shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. Paramount shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-
1 in order to fulfill its obligations under this Section, and
shall include in the Schedule 14D-9 such information with respect
to Viacom and its officers and directors as is required under
Section 14(f) and Rule 14f-1. Viacom will supply to Paramount
any information with respect to it and its nominees, officers,
directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of Viacom's
designees pursuant to this Section and prior to the Effective
Time, any amendment or termination of this Agreement, extension
for the performance or waiver of the obligations or other acts of
Viacom or waiver of Paramount's rights hereunder, will require
the concurrence of a majority of directors of Paramount then in
office who are directors on the date hereof or are designated by
a majority of the directors of Paramount who are directors on the
date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARAMOUNT
Paramount hereby represents and warrants to Viacom
that:
SECTION 3.1. Organization and Qualification;
-------------------------------
Subsidiaries. (a) Each of Paramount and each Material Paramount
------------
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
21
aggregate, have a Paramount Material Adverse Effect (as defined
below). Paramount and each Material Paramount 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 Paramount Material Adverse Effect. The term "Paramount
---------
Material Adverse Effect" means any change or effect that is or is
-----------------------
reasonably likely to be materially adverse to the business,
results of operations or financial condition of Paramount and the
Paramount Subsidiaries, taken as a whole; provided, however,
-------- -------
where such term qualifies a representation or warranty contained
in this Article III during the period beginning after the date
hereof and until the Effective Time, then such term shall mean
any change or effect that is or is reasonably likely to be
materially adverse to the business or financial condition of
Paramount and the Paramount Subsidiaries, taken as a whole.
(b) Each subsidiary of Paramount (a "Paramount
---------
Subsidiary") that constitutes a Significant Subsidiary of
----------
Paramount within the meaning of Rule 1-02 of Regulation S-X of
the SEC is referred to herein as a "Material Paramount
------------------
Subsidiary".
----------
SECTION 3.2. Certificate of Incorporation and By-Laws.
----------------------------------------
Paramount 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 Paramount and each Material Paramount Subsidiary. Such
Certificates of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither
Paramount nor any Material Paramount 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
Paramount Material Adverse Effect.
SECTION 3.3. Capitalization. The authorized capital
--------------
stock of Paramount consists of 600,000,000 shares of Paramount
Common Stock and 75,000,000 shares of Preferred Stock, par value
$.01 per share ("Paramount Preferred Stock"). As of January 19,
-------------------------
1994, 121,865,001 shares of Paramount Common Stock were issued
and outstanding, all of which were validly issued, fully paid and
nonassessable. As of January 20, 1993, 25,990,047 shares were
held in the treasury of Paramount. As of December 31, 1993,
9,377,108 shares were reserved for future issuance pursuant to
Paramount's 1992 Stock Option Plan, 1989 Stock Option Plan and
1984 Stock Option Plan (any employee stock option issued under
any such plan being a "Stock Option") and reserved for future
------------
issuance under the Long-Term Incentive Plan. Between August 31,
1993 and the date of this Agreement, awards have been made under
the Long-Term Performance Plan as indicated on Schedule 3.3. As
22
of January 19, 1994, options to acquire 2,581,763 shares of
Paramount Common Stock were outstanding. As of the date hereof,
no shares of Paramount Preferred Stock are issued and
outstanding. Except as set forth in Section 3.3 of the
Disclosure Schedule previously delivered by Paramount to Viacom
(the "Paramount Disclosure Schedule"), or except as set forth in
-----------------------------
this Section 3.3, and except pursuant to the Rights Agreement (as
defined in Section 3.13), there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Paramount or
any Material Paramount Subsidiary or obligating Paramount or any
Material Paramount Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Paramount or any
Material Paramount Subsidiary. All shares of Paramount 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 3.3
of the Paramount Disclosure Schedule, there are no material
outstanding contractual obligations of Paramount or any Paramount
Subsidiary to repurchase, redeem or otherwise acquire any shares
of Paramount Common Stock or any capital stock of any Material
Paramount Subsidiary, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any
Paramount Subsidiary or any other person. Each outstanding share
of capital stock of each Material Paramount Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each
such share owned by Paramount or another Paramount Subsidiary is
free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on
Paramount's or such other Paramount Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever. Set
forth in Section 3.3 of the Disclosure Schedule is Paramount's
percentage interest in the outstanding capital stock or
partnership interests of USA Networks, United Cinemas
International Multiplex B.V., United International Pictures and
Cinamerica Theatres, L.P.
SECTION 3.4. Authority Relative to This Agreement.
------------------------------------
Paramount has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions (including, without limitation,
the Offer) contemplated hereby (the "Transactions"). The
------------
execution and delivery of this Agreement by Paramount and the
consummation by Paramount 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
Paramount are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (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 Paramount 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
23
by Paramount and, assuming the due authorization, execution and
delivery by Viacom, constitutes a legal, valid and binding
obligation of Paramount, enforceable against Paramount in
accordance with its terms. Paramount has taken all appropriate
actions so that the restrictions on business combinations
contained in Section 203 of Delaware Law and Article XI of
Paramount's Certificate of Incorporation will not apply with
respect to or as a result of the Transactions.
SECTION 3.5. No Conflict; Required Filings and
---------------------------------
Consents. (a) Except as set forth in Section 3.05 of the
--------
Disclosure Schedule, the execution and delivery of this Agreement
by Paramount does not, and the performance by Paramount of its
obligations under this Agreement will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of Paramount or any Material Paramount
Subsidiary, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Paramount or
any Paramount Subsidiary or by which any property or asset of
Paramount or any Paramount 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 Paramount
or any Paramount Subsidiary pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Paramount or
any Paramount Subsidiary is a party or by which Paramount or any
Paramount Subsidiary or any property or asset of Paramount or any
Paramount 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 or the Offer in any material
respect, or otherwise prevent Paramount from performing its
obligations under this Agreement in any material respect, and
would not, individually or in the aggregate, have a Paramount
Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Paramount does not, and the performance of this Agreement by
Paramount 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 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)
-------------
applicable requirements of the Communications Act of 1934, as
amended (the "Communications Act"), and of state and local
------------------
governmental authorities, including state and local authorities
granting franchises to operate cable systems, (C) applicable
requirements of the Investment Canada Act of 1985 and the
24
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 or the Offer in any material respect, or otherwise prevent
Paramount from performing its obligations under this Agreement in
any material respect, and would not, individually or in the
aggregate, have a Paramount Material Adverse Effect.
SECTION 3.6. Compliance. Except as set forth in
----------
Section 3.6 of the Paramount Disclosure Schedule, neither
Paramount nor any Paramount Subsidiary is in conflict with,
or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Paramount or any
Paramount Subsidiary or by which any property or asset of
Paramount or any Paramount 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 Paramount or any Paramount Subsidiary is a
party or by which Paramount or any Paramount Subsidiary or any
property or asset of Paramount or any Paramount Subsidiary is
bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have
a Paramount Material Adverse Effect.
SECTION 3.7. SEC Filings; Financial Statements.
---------------------------------
Except as set forth in Section 3.7 of the Paramount Disclosure
Schedule, (a) Paramount has filed all forms, reports and
documents required to be filed by it with the SEC since October
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 fiscal years ended October
31, 1990, 1991 and 1992, respectively, (ii) its Transition Report
on Form 10-K for the six months ended April 30, 1993, as amended,
(iii) its Quarterly Reports on Form 10-Q for the periods ended
July 31, 1993 and October 31, 1993, (iv) all proxy statements
relating to Paramount's meetings of stockholders (whether annual
or special) held since October 31, 1990, and (v) all other forms,
reports and other registration statements (other than Quarterly
Reports on Form 10-Q not referred to in clause (iii) above and
preliminary materials) filed by Paramount with the SEC since
October 31, 1990 (the forms, reports and other documents referred
to in clauses (i), (ii), (iii), (iv) and (v) above being referred
to herein, collectively, as the "Paramount SEC Reports"). The
---------------------
Paramount SEC Reports and any forms, reports and other documents
filed by Paramount 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
25
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No
Paramount Subsidiary is required to file any form, report or
other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Paramount 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 Paramount and
the consolidated Paramount 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).
(c) Except as set forth in Section 3.7 of the
Paramount Disclosure Schedule or except as and to the extent set
forth in the Paramount SEC Reports filed with the SEC prior to
the date of this Agreement, Paramount and the Paramount
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 Paramount Material Adverse Effect.
SECTION 3.8. Absence of Certain Changes or Events.
------------------------------------
Since April 30, 1993, except as contemplated by this Agreement or
as set forth in Section 3.8 of the Paramount Disclosure Schedule,
contemplated by this Agreement or disclosed in any Paramount SEC
Report filed since April 30, 1993 and prior to the date of this
Agreement, Paramount and the Paramount Subsidiaries have
conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since April 30, 1993,
there has not been (i) as of the date hereof, any change,
occurrence or circumstance in the business, results of operations
or financial condition of Paramount or any Paramount Subsidiary
having, individually or in the aggregate, a Paramount Material
Adverse Effect, (ii) any damage, destruction or loss (whether or
not covered by insurance) with respect to any property or asset
of Paramount or any Paramount Subsidiary and having, individually
or in the aggregate, a Paramount Material Adverse Effect, (iii)
any change by Paramount 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
Paramount or any Paramount Subsidiary or any redemption, purchase
or other acquisition of any of their respective securities other
than regular quarterly dividends on the shares of Paramount
Common Stock not in excess of $.20 per share and dividends by a
Paramount Subsidiary to Paramount and other than to fund pre-
established Paramount Plans and dividend reinvestment plans, or
(v) other than as set forth in Section 3.3 and pursuant to the
26
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
Paramount or any Paramount Subsidiary.
SECTION 3.9. Absence of Litigation. Except as set
---------------------
forth in Section 3.9 of the Paramount Disclosure Schedule or
except as disclosed in the Paramount 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 Paramount, threatened against Paramount or any
Paramount Subsidiary, or any property or asset of Paramount or
any Paramount Subsidiary, before any court, arbitrator or
administrative, governmental or regulatory authority or body,
domestic or foreign, which, individually or in the aggregate, is
reasonably likely to have a Paramount Material Adverse Effect.
Except as disclosed in the Paramount SEC Reports filed with the
SEC prior to the date of this Agreement, neither Paramount nor
any Paramount Subsidiary nor any property or asset of Paramount
or any Paramount Subsidiary is subject to any order, writ,
judgment, injunction, decree, determination or award having or
reasonably likely to have, individually or in the aggregate, a
Paramount Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. With respect to
----------------------
all the employee benefit plans, programs and arrangements
maintained for the benefit of any current or former employee,
officer or director of Paramount or any Paramount Subsidiary (the
"Paramount Plans"), except as set forth in Section 3.10 of the
---------------
Paramount Disclosure Schedule or the Paramount SEC Reports and
except as would not, individually or in the aggregate, have a
Paramount Material Adverse Effect: (i) each Paramount 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 Paramount
Plan; (ii) each Paramount Plan has been operated in all respects
in accordance with its terms and the requirements of applicable
law; (iii) neither Paramount nor any Paramount 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 Paramount 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) Paramount and the Paramount Subsidiaries have
not incurred any liability under, and have complied in all
27
material respects with, the Worker Adjustment Retraining
Notification Act, 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 Paramount Disclosure Schedule or the Paramount SEC
Reports, the aggregate accumulated benefit obligations of each
Paramount Plan subject to Title IV of ERISA (as of the date of
the most recent actuarial valuation prepared for such Paramount
Plan) do not exceed the fair market value of the assets of such
Paramount Plan (as of the date of such valuation).
SECTION 3.11. Trademarks, Patents and Copyrights.
----------------------------------
Paramount and the Paramount 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, trade secrets,
applications for trademarks and for service marks, know-how and
other proprietary rights and information used or held for use in
connection with the business of Paramount and the Paramount
Subsidiaries as currently conducted or as contemplated to be
conducted, and Paramount is unaware of any assertion or claim
challenging the validity of any of the foregoing which,
individually or in the aggregate, would have a Paramount Material
Adverse Effect. The conduct of the business of Paramount and the
Paramount 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 Paramount Material Adverse Effect. To
the best knowledge of Paramount, there are no infringements of
any proprietary rights owned by or licensed by or to Paramount or
any Paramount Subsidiary which, individually or in the aggregate,
would have a Paramount Material Adverse Effect.
SECTION 3.12. Taxes. Paramount and the Paramount
-----
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 Paramount Material
Adverse Effect. Such reports and returns are and will be true,
correct and complete, except for such failure to be true, correct
and complete as would not, individually or in the aggregate, have
a Paramount Material Adverse Effect. Paramount and the Paramount
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 Paramount dated October 31, 1992 (the "Paramount 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
Paramount Material Adverse Effect. Neither the IRS nor any other
taxing authority or agency, domestic or foreign, is now asserting
28
or, to the best knowledge of Paramount, threatening to assert
against Paramount or any Paramount 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 Paramount and the Paramount
Subsidiaries would, individually or in the aggregate, have a
Paramount Material Adverse Effect. The accruals and reserves for
taxes (including interest and penalties, if any, thereon)
reflected in the Paramount 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 Paramount Material
Adverse Effect. Paramount and the Paramount 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 Paramount Material Adverse Effect. There
are no material liens for taxes upon the assets of Paramount or
the Paramount 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
Paramount nor any Paramount Subsidiary has agreed to or is
required to make any adjustment under Section 481(a) of the Code.
Neither Paramount nor any Paramount 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
Paramount or a Paramount Subsidiary to comply with the
representations herein has a Paramount 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. Amendment to Rights Agreement. (a) The
-----------------------------
Board of Directors of Paramount has taken all necessary action to
amend the Rights Agreement, dated as of September 7, 1988, as
amended, between Paramount and Manufacturers Hanover Trust
Company, as Rights Agent (the "Rights Agreement") so that (i)
----------------
none of the execution or delivery of this Agreement, the exchange
of the shares of Paramount Common Stock for the shares of Viacom
Common Stock, Viacom Merger Preferred Shares and cash in
accordance with Article II or the making of the Offer will cause
(A) the rights (the "Rights") issued pursuant to the Rights
------
Agreement to become exercisable under the Rights Agreement, (B)
Viacom or any of the Viacom Subsidiaries to be deemed an
"Acquiring Person" (as defined in the Rights Agreement), or (C)
the "Stock Acquisition Date" (as defined in the Rights Agreement)
to occur upon any such event and (ii) the "Expiration Date" (as
defined in the Rights Agreement) of the Rights shall occur
immediately prior to the Effective Time. Paramount agrees to
take all necessary action to amend the Rights Agreement so that
the consummation of the Offer, on the terms permitted hereunder,
will not cause any of the effects referred to in Section 3.13
(a)(i)(A), (B) or (C) to occur; provided, however, that Paramount
-------- -------
29
shall not be required to make such amendments to the Rights
Agreement if (i) Viacom has not 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 consummation of the Offer or (ii) Paramount obtains and
there is in force from the Delaware Court of Chancery an order
permanently, preliminarily or temporarily declaring that the
making of such amendments to the Rights Agreement would be
contrary to the fiduciary duties of the Board of Directors of
Paramount. Notwithstanding anything else contained herein, in no
event shall the Board of Directors of Paramount make an amendment
of the Rights Agreement in favor of the Other Offeror or any
other person without making such amendments in favor of Viacom;
provided that Paramount will not be obligated to make such
amendments for Viacom if Viacom has become obligated to terminate
its Offer pursuant to Section 2.5 of this Agreement.
(b) The "Distribution Date" (as defined in the Rights
Agreement) has not occurred.
SECTION 3.14. Opinion of Financial Advisor. Paramount
----------------------------
has received the opinion of Lazard Freres & Co., dated January
21, 1994, to the effect that, as of such date, the consideration
to be received by the stockholders of Paramount pursuant to the
offer and the Merger, taken together, is fair to such
stockholders from a financial point of view, a copy of which
opinion will be delivered to Viacom promptly upon receipt.
SECTION 3.15. Vote Required. The affirmative vote of
-------------
the holders of a majority of the outstanding shares of Paramount
Common Stock is the only vote of the holders of any class or
series of Paramount capital stock necessary to approve the
Merger.
SECTION 3.16. Brokers. No broker, finder or
-------
investment banker (other than Lazard Freres & Co.) is entitled to
any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on
behalf of Paramount. Paramount has heretofore furnished to
Viacom a complete and correct copy of all agreements between
Paramount and Lazard Freres & Co. pursuant to which such firm
would be entitled to any payment relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
Viacom hereby represents and warrants to Paramount
that:
SECTION 4.1. Organization and Qualification;
-------------------------------
Subsidiaries. (a) Each of Viacom and each Material Viacom
------------
Subsidiary (as defined below) is a corporation, partnership or
30
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 is
--------------
reasonably likely to be materially adverse to the business,
results of operations or financial condition of Viacom and the
Viacom Subsidiaries, taken as a whole; provided, however, where
-------- -------
such term qualifies a representation or warranty contained in
this Article IV during the period beginning after the date hereof
and until the Effective Time, then such term shall mean any
change or effect that is or is reasonably likely to be materially
adverse to the business or financial condition of Viacom and the
Viacom Subsidiaries, taken as a whole.
(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 4.2. Certificate of Incorporation and By-Laws.
----------------------------------------
Viacom has heretofore made available to Paramount 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 4.3. 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 Viacom Series A Preferred Stock (the "Viacom
------
Series A Preferred Stock") and 24,000,000 shares have been
------------------------
designated Viacom Series B Preferred Stock (the "Viacom Series B
---------------
31
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 non-assessable, (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
employee stock options or stock incentive rights granted pursuant
to Viacom's 1989 Long-Term Management Incentive Plan and the
Viacom Inc. Stock Option Plan for Outside Directors. 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 4.3
or 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 17,140,800 shares of Viacom
Class B Common Stock for issuance upon conversion of shares of
Viacom Series B Preferred Stock, (iii) the reservation of
8,570,400 shares of Viacom Class B Common Stock for issuance upon
conversion of shares of Viacom Series A Preferred Stock, (iv) the
issuance of any securities in connection with the acquisition of
Blockbuster Entertainment Corporation, a Delaware corporation
("Blockbuster") and (v) the reservation of 22,727,273 shares of
-----------
Viacom Class B Common Stock for issuance upon the consummation of
the transactions contemplated by the Subscription Agreement,
dated as of January 7, 1994 (the "Blockbuster Subscription
------------------------
Agreement"), between Blockbuster and Viacom. All shares of
---------
Viacom Common Stock and VCRs 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 4.3 of the Disclosure Schedule previously
delivered by Viacom to Paramount (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,
other than the amended and restated subscription agreement dated
as of October 21, 1993 between Viacom and Blockbuster, the
subscription agreement dated as of October 4, 1993, as amended,
between Viacom and NYNEX Corporation and the Blockbuster
Subscription Agreement. 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
32
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 shares of Viacom Merger Preferred
Stock 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 non-assessable, and free of preemptive
rights. The shares of Viacom Class B Common Stock initially
issuable upon conversion of the Viacom Merger Preferred Stock at
the initial conversion price have been duly and validly
authorized and reserved for issuance upon such conversion, are
free of preemptive rights, and, if and when the Viacom Merger
Preferred Stock is converted into shares of Viacom Class B Common
Stock in accordance with the terms of the Viacom Merger Preferred
Stock, such shares of Viacom Class B Common Stock issued upon
such conversion will be duly authorized, validly issued, fully
paid and non-assessable, and the holders of outstanding shares of
capital stock of Viacom are not entitled to any preemptive or
other rights with respect to the Viacom Merger Preferred Stock or
the Viacom Class B Common Stock issued upon such conversion. If
and when the Warrants are exercised for Viacom Class B Common
Stock in accordance with the terms of the Warrants, such shares
of Viacom Class B Common Stock issued upon such exercise will be
duly authorized, validly issued, fully paid and non-assessable,
and the holders of outstanding shares of capital stock of Viacom
are not entitled to any preemptive or other rights with respect
to the Warrants or the Viacom Class B Common Stock issued upon
such exercise. Viacom's 5% Convertible Subordinated Debentures
due 2013 (the "Debentures") initially issuable upon exchange of
----------
the Viacom Merger Preferred Stock for such Debentures, and the
Viacom Class B Common Stock initially issuable upon conversion of
the Debentures, will be duly authorized and such Viacom Class B
Common Stock will be duly reserved for issuance upon such
conversion; when the Debentures have been duly executed,
authenticated, issued and delivered in exchange for the Viacom
Merger Preferred Stock in accordance with the terms of the Viacom
Merger Preferred Stock and the Indenture pursuant to which they
are issued (the "Indenture") between Viacom and the trustee
---------
thereunder (the "Trustee"), such Debentures will then constitute
-------
valid and legal binding obligations of the Company entitled to
the benefits provided by the Indenture; and the Debentures will
be convertible into Viacom Class B Common Stock in accordance
with the terms of the Indenture and the shares of Viacom Class B
Common Stock initially issuable upon such conversion, when issued
upon such conversion, will be validly issued, fully paid and
non-assessable. By the date of issuance of the Viacom Merger
Preferred Stock, the Indenture will have been duly authorized by
Viacom, duly qualified under the Trust Indenture Act of 1939,
and, when duly executed and delivered by Viacom and the Trustee,
will constitute a valid and binding instrument of Viacom
enforceable in accordance with its terms. Upon their issuance,
the Warrants and the CVRs shall each constitute legal, valid and
33
binding obligations of Viacom enforceable in accordance with
their terms.
SECTION 4.4. 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 hereby. The
execution and delivery of this Agreement by Viacom and the
consummation by Viacom of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action and the Voting Agreement has been approved by the Viacom
Board of 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 hereby (other than, with respect to the
Merger (including the issuance of the Viacom Class B Common
Stock, the Viacom Merger Preferred Stock, the CVRs and the
Warrants), 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 Class B Viacom Common Stock
to a number not less than the number sufficient to consummate the
issuance of Shares of Viacom Common Stock contemplated under this
Agreement (including such shares issuable upon the exercise of
the Warrants and, if applicable, in connection with the CVRs) and
(y) the size of the Board of Directors of Viacom to a number not
less than 13 (collectively, the "Viacom Vote Matter"; and the
------------------
amendments to Viacom's Restated Certificate of Incorporation
described in clauses (ii)(x) and (y) above being, collectively,
the "Viacom Certificate Amendments"), and the filing and
-----------------------------
recordation of the foregoing amendment to Viacom's Restated
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 Paramount, constitutes a
legal, valid and binding obligation of Viacom, enforceable
against Viacom in accordance with its terms.
SECTION 4.5. No Conflict; Required Filings and
---------------------------------
Consents. (a) The execution and delivery of this Agreement by
--------
Viacom does not, and the performance of the transactions
contemplated hereby 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
34
any property or asset of Viacom or any Viacom Subsidiary pursuant
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) of this Section 4.5, 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 does 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 Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), (C) applicable requirements 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 4.6. 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 such conflicts, defaults or violations that would
not, individually or in the aggregate, have a Viacom Material
Adverse Effect.
35
SECTION 4.7. 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 Paramount, 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 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) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Viacom 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 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).
(c) 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.
36
SECTION 4.8. Absence of Certain Changes or Events.
------------------------------------
Since December 31, 1992, except as contemplated by this
Agreement, any actions taken by Viacom in order to consummate the
acquisition of Blockbuster, or any actions taken by Viacom in
order to consummate the transactions contemplated by the
Blockbuster Subscription Agreement, as set forth in Section 4.8
of the Viacom 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 there
has not been (i) as of the date hereof, any change, occurrence or
circumstance in the business, results of operations or financial
condition of Viacom or any Viacom Subsidiary having, individually
or in the aggregate, a 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 4.3 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 and
other than as contemplated by the Agreement and Plan of Merger,
dated as of January 7, 1994 (the "Blockbuster Merger Agreement"),
between Blockbuster and Viacom, 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 5,000 shares thereunder.
SECTION 4.9. 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, is reasonably likely to 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,
37
judgment, injunction, decree, determination or award having or
reasonably likely to 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 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
------------
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 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, the
Worker Adjustment Retraining Notification Act, 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, trade secrets,
applications for trademarks and for service marks, know-how and
other proprietary rights and information used or held for use in
connection with the business of Viacom and the Viacom
Subsidiaries as currently conducted or as contemplated to be
conducted, and Viacom is unaware of any assertion or claim
challenging the validity of any of the foregoing which,
individually or in the aggregate, would have a Viacom Material
Adverse Effect. 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,
38
trademark right, trade name, trade name right, service mark or
copyright of any third party that, 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 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
39
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., dated
January 17, 1994, to the effect that, as of such date, the
financial terms of the proposed acquisition by Viacom of
Paramount are fair from a financial point of view to Viacom and
its stockholders. A copy of such opinion will be delivered to
Paramount promptly.
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. Ownership of Paramount Common Stock. As
-----------------------------------
of the date of this Agreement and based on the number of issued
and outstanding shares of Paramount Common Stock as of September
3, 1993 set forth in Section 3.3, Viacom and its affiliates
beneficially own, in the aggregate, less than five percent of the
issued and outstanding shares of Paramount Common Stock.
SECTION 4.16. Brokers. No broker, finder or
-------
investment banker (other than Smith Barney Shearson Inc., Goldman
Sachs & Co. and Bear, Stearns & Co. Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with
the Transactions based upon arrangements made by or on behalf of
Viacom. Viacom has heretofore furnished to Paramount a complete
and correct copy of all agreements between Viacom and each of
Smith Barney Shearson Inc., Goldman Sachs & Co. and Bear, Stearns
& Co. Inc. pursuant to which each such firm would be entitled to
any payment relating to the Transactions.
SECTION 4.17. Financing. Viacom has delivered to
---------
Paramount binding commitments or agreements to obtain the
financing in contemplation of the Transactions (the "Financing")
---------
in an amount sufficient, together with the Viacom Class B Common
Stock, the Viacom Merger Preferred Stock, the CVRs and Warrants,
to acquire all the shares of Paramount Common Stock in the Offer
and the Merger and to pay all related contemplated fees and
expenses. Viacom knows of no fact or circumstance (including the
obligations of Viacom under this Agreement) that is reasonably
likely to result in the inability of Viacom to receive the
proceeds from such Financing.
SECTION 4.18. Purchases of Securities. Since September
-----------------------
12, 1993, neither Viacom nor, to Viacom's knowledge, its
affiliates have purchased or sold shares of Viacom Class A Common
Stock or Viacom Class B Common Stock and neither Viacom nor, to
Viacom's knowledge, its affiliates have any knowledge of any such
trading.
40
SECTION 4.19. Representations in Blockbuster Merger
-------------------------------------
Agreement. Viacom hereby confirms that the representations and
---------
warranties contained in Sections 3.07, 3.08 and 3.09 of the
Blockbuster Merger Agreement, shall be true and correct as of the
date hereof and as of the date of consummation of the Offer,
except as would not have a material adverse effect on the
financial condition of Paramount, Viacom and Blockbuster and
their subsidiaries taken as a whole.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.1. Conduct of Respective Businesses by
-----------------------------------
Paramount and Viacom Pending the Merger. Each of Paramount 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) and, except, in the case of Viacom, for actions taken
by Viacom in order to consummate (x) the acquisition of Blockbuster
and (y) the transaction contemplated by the Blockbuster Subscription
Agreement, the businesses of each of Paramount and Viacom and their
respective subsidiaries shall, in all material respects, be
conducted in, and each of Paramount 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 Paramount and Viacom shall use its reasonable best
efforts to preserve substantially intact its business
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 (including, without limitation, the making of the
Offer and Section 6.16), (ii) for any actions taken by Viacom in
order to consummate the acquisition of Blockbuster, (iii) for any
actions taken by Viacom in order to consummate the transactions
contemplated by the Blockbuster Subscription Agreement or (iv) as
set forth on Section 5.1 of the Paramount Disclosure Schedule or
Section 5.1 of the Viacom Disclosure Schedule, neither Viacom nor
Paramount 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
Paramount 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 Paramount (except,
with respect to Viacom, the Viacom Certificate Amendments
and the Certificate of Designations to be filed with the
Secretary of State of the State of Delaware in respect of
the Viacom Merger Preferred Stock);
41
(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 Paramount or Viacom), 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 any dividend reinvestment plan or by any Paramount Plan
with an employee stock fund or employee stock ownership plan
feature, consistent with applicable securities laws or the
exercise of options, warrants or other similar rights, or
conversion of convertible preferred stock 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 or otherwise permitted to be granted pursuant
to this Agreement) 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 Viacom, with respect to the Series A
Preferred Stock and the Series B Preferred Stock, and in the
case of Paramount, regular quarterly dividends in amounts
not in excess of $.20 per quarter and payable consistent
with past practice; provided that, prior to the declaration
--------
of any such dividend, Paramount shall consult with Viacom as
to the timing and advisability of declaring any such
dividend and (ii) dividends declared and paid by a
subsidiary of either Paramount 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 Paramount Plan with an employee
stock fund or employee stock ownership plan feature,
consistent with applicable securities laws;
(e) (i) acquire (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
42
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) for
any such indebtedness incurred by Viacom in connection with
the Merger or the Offer, (B) the refinancing of existing
indebtedness, (C) borrowings under commercial paper programs
in the ordinary course of business, (D) borrowings under
existing bank lines of credit in the ordinary course of
business, (E) which, in the aggregate, do 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 5.1(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 practices, 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 6.1. Access to Information; Confidentiality.
--------------------------------------
(a) From the date hereof to the Effective Time, each of
Paramount and Viacom shall (and shall cause its subsidiaries and
officers, directors, employees, auditors and agents to) afford
the officers, employees and agents of 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 Paramount or Viacom
pursuant to this Section 6.1 shall be kept confidential in
accordance with the confidentiality agreements, dated July 1,
1993 (the "Confidentiality Agreements"), between Paramount and
--------------------------
Viacom.
43
(c) No investigation pursuant to this Section 6.1
shall affect any representation or warranty in this Agreement of
any party hereto or any condition to the obligations of the
parties hereto.
SECTION 6.2. Intentionally omitted.
---------------------
SECTION 6.3. 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 Paramount 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 Paramount (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 Paramount 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 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 Paramount'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
44
effected without its written consent, which consent shall not be
unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.3 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 6.3, except to the extent
such failure prejudices the Surviving Corporation), 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 Paramount (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) 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 6.3(d) more than an
amount equal to 200% of current annual premiums paid by Paramount
for such insurance (which premiums Paramount represents and
warrants to be $850,000 in the aggregate).
(e) This Section 6.3 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 6.4. Notification of Certain Matters.
-------------------------------
Paramount shall give prompt notice to Viacom, and Viacom shall
give prompt notice to Paramount, of (i) the occurrence, or
nonoccurrence, of any event the occurrence, or nonoccurrence, 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
Paramount 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 6.4 shall not
limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
45
SECTION 6.5. Tax Treatment. Each of Paramount and
-------------
Viacom will use its reasonable best efforts to cause the Forward
Merger to qualify as a reorganization under the provisions of
Section 368(a) of the Code and to deliver, in connection with the
legal opinion referred to in Section 1.1, letters of
representation reasonable under the circumstances as to their
present intentions and present knowledge.
SECTION 6.6. Registration Statement; Joint Proxy
-----------------------------------
Statement; Offer Documents and Schedule 14D-9. (a) As promptly
---------------------------------------------
as practicable after the execution of this Agreement, Viacom and
Paramount shall prepare and file with the SEC an amendment to the
joint proxy statement previously filed with the SEC relating to
the meetings of Paramount'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, as promptly as practicable following
---------------
consummation of the Offer (or expiration or termination of the
Offer without any purchase of shares thereunder), Viacom shall
prepare and file with the SEC a registration statement on Form
S-4 (together with any 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 Class B Common Stock and
Viacom Merger Preferred Stock, the CVRs and Warrants to be issued
to the stockholders of Paramount pursuant to the Merger, the
Viacom Class B Common Stock into which such Viacom Merger
Preferred Stock is convertible, the Viacom Class B Common Stock
issuable upon the exercise of the Warrants and the Debentures for
which such Viacom Merger Preferred Stock is exchangeable. Each
of Paramount and Viacom shall use all reasonable efforts to have
or cause the Registration Statement to become 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 Class B Common
Stock and Viacom Merger Preferred Stock, the CVRs and Warrants
pursuant to the Merger. Paramount shall furnish all information
concerning Paramount as Viacom 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 Paramount shall mail the Proxy
Statement to its respective stockholders; provided that no such
--------
mailing shall be required while the Offer remains outstanding.
The Proxy Statement shall include the recommendation of the Board
of Directors of each of Viacom and Paramount in favor of the
Merger, unless otherwise necessary due to the applicable
fiduciary duties of the respective directors of Viacom and
Paramount, 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).
46
(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 Paramount, (iii) the time of each of the Stockholders'
Meetings (as defined in Section 6.7), 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 Paramount.
(c) The information supplied by Paramount 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 Paramount 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
Paramount or any of the Paramount Subsidiaries, or their
respective officers or directors, should be discovered by
Paramount which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement,
Paramount shall promptly inform Viacom.
(d) Viacom represents and warrants to Paramount that
the Offer Documents will not, at the time the 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 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) Paramount represents and warrants to Viacom that
neither the Schedule 14D-9 nor any information supplied by
Paramount for inclusion in the Offer Documents shall, at the
respective times the Schedule 14D-9, the Offer Documents or any
amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders of Paramount, as
the case may be, shall 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
47
therein, in the light of the circumstances under which they are
made, not misleading. The Schedule 14D-9 shall comply in all
material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder.
SECTION 6.7. Stockholders' Meetings. Paramount 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 Paramount, of the Merger and, in the case of Viacom, of
the Viacom Vote Matter (to the extent such matters have not been
previously voted upon and approved by the holders of the Viacom
Class A Common Stock), and Viacom and Paramount 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
Registration Statement becomes effective; provided that neither
--------
Paramount nor Viacom shall be required to call or hold a
stockholders meeting while the Offer remains outstanding.
Paramount shall use its reasonable best efforts to solicit from
its stockholders proxies in favor of the approval of the Merger,
and Viacom shall use its reasonable best efforts to solicit from
its stockholders proxies in favor of the Viacom Vote Matter and
each of Paramount and Viacom 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 Paramount, 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 6.8. Letters of Accountants. (a) Paramount
----------------------
shall use its reasonable best efforts to cause to be delivered to
Viacom "comfort" letters of Ernst & Young, Paramount'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 Paramount "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 Paramount, in form
and substance reasonably satisfactory to Paramount 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.
48
SECTION 6.9. Employee Benefits. The "Continuing
-----------------
Directors" (as such term is defined in certain Paramount Plans,
including, without limitation, Paramount's Corporate Annual
Performance Plan, Corporate Long-Term Performance Plan,
Supplemental Executive Retirement Plan, Non-Qualified Retirement
Plan, Retirement Plan for Non-Employee Directors, Deferred
Compensation Plan for Directors and employment agreements with
Messrs. Doppelt, Greenberg, Hertlein, Levinson, Meyers and
Sherman) prior to the Effective Time shall approve the
transactions contemplated by this Agreement, and prior to the
Effective Time Paramount and its officers and directors shall
take such other actions, or shall forbear from taking any action,
as may be necessary to insure that such transactions shall not
constitute a "Change in Control" (or other similar event
accelerating or triggering changes to benefits or the terms of
any Paramount Plan (a "Paramount Triggering Event")) for purposes
--------------------------
of any Paramount Plan under which a Change in Control (or other
Paramount Triggering Event) may be avoided by action or inaction,
as the case may be, by Paramount or any of its officers or
directors. Paramount shall not terminate either Paramount's
Corporate Annual Performance Plan or Paramount's Long-Term
Performance Plan prior to the Effective Time, and shall (a) delay
the establishment and announcement of targets for awards under
Paramount's Corporate Annual Performance Plan with respect to
Paramount's 1994 fiscal year until after the Effective Time, and
(b) delay the implementation of a new performance cycle under
Paramount's Corporate Long-Term Performance Plan, in each case,
until Paramount and Viacom shall review the terms of such Plans
after the Effective Time and make such changes as they deem
appropriate taking into consideration the effects of the Merger.
Viacom shall take or forbear from taking such action as may be
necessary to insure that the transactions contemplated by this
Agreement shall not constitute a change in ownership or control
(or other similar event accelerating or triggering changes to
benefits or the terms of any Viacom Plan (a "Viacom Triggering
-----------------
Event")) for purposes of any Viacom Plan under which any such
-----
change in ownership or control (or other Viacom Triggering Event)
may be avoided by action or inaction, as the case may be, by
Viacom or any of its officers or directors.
SECTION 6.10. Further Action; Reasonable Best Efforts.
---------------------------------------
(a) Upon the terms and subject to the conditions hereof, each of
the parties hereto shall (i) make promptly any filings with or
applications to the Federal Communications Commission (the "FCC")
---
with respect to the Transactions and (ii) 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, 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 Paramount and their respective subsidiaries as are
necessary for the consummation of the Transactions. In case at
49
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 to not 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 6.11. Debt Instruments. Prior to or at the
----------------
Effective Time, Paramount and each Paramount Subsidiary shall use
its reasonable best efforts to prevent the occurrence, as a
result of the Merger, the Offer 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 Paramount or any Paramount Subsidiary, including,
without limitation, debt securities registered under the
Securities Act.
SECTION 6.12. Public Announcements. Viacom and
--------------------
Paramount shall consult with each other before issuing any press
release or otherwise making any public statements with respect to
this Agreement or any Transaction 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
Paramount 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 6.13. Listing of Viacom Securities. Viacom
----------------------------
shall use its reasonable best efforts to cause the shares of
Viacom Class B Common Stock and Viacom Merger Preferred Stock and
the Warrants and CVRs to be issued in the Merger to be approved
for listing on the AMEX prior to the Effective Time.
SECTION 6.14. Affiliates of Paramount. Paramount
-----------------------
represents and warrants to Viacom that Paramount will promptly
deliver to Viacom a letter identifying all persons who may be
deemed affiliates of Paramount under Rule 145 of the Securities
Act, including, without limitation, all directors and executive
officers of Paramount, and Paramount represents and warrants to
Viacom that Paramount has advised the persons identified in such
letter of the resale restrictions imposed by applicable
securities laws. Paramount shall use its reasonable best efforts
to obtain from each person identified in such letter a written
agreement, substantially in the form of Exhibit 6.14. Paramount
shall use its reasonable best efforts to obtain as soon as
50
practicable from any person who may be deemed to have become an
affiliate of Paramount after Paramount's delivery of the letter
referred to above and prior to the Effective Time, a written
agreement substantially in the form of Exhibit 6.14.
SECTION 6.15. Conveyance Taxes. Viacom and Paramount
----------------
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.
SECTION 6.16. Rights Agreement. Except as
----------------
contemplated by this Agreement, the Board of Directors of
Paramount shall not amend or modify the Rights Agreement or
redeem the Rights prior to the Effective Time except pursuant to
the Other Exemption Agreement.
SECTION 6.17. Assumption of Debt and Leases. With
-----------------------------
respect to debt issued by Paramount under indentures qualified
under the Trust Indenture Act of 1939 ("Paramount Indentures"),
--------------------
Viacom shall execute and deliver to the trustees under the
respective Paramount Indentures, Supplemental Indentures, in form
satisfactory to the respective trustees, expressly assuming the
obligations of Paramount 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 Paramount under the
respective Indentures and the due and punctual performance of all
the terms, covenants and conditions of the respective Paramount
Indentures to be kept or performed by Paramount and shall deliver
such Supplemental Indentures to the respective trustees under the
Paramount Indenture. Viacom shall similarly deliver instruments
of assumption to the holders of any debt obligations of, and the
lessors of any real property to, Paramount, which debt
obligations or leases expressly require such assumption in order
for the Merger to comply with the debt instrument or lease.
SECTION 6.18. Gains Tax. Except as provided in
---------
Section 1.7(b), Viacom shall pay any New York State Tax on Gains
Derived from Certain Real Property Transfers (the "Gains Tax"),
---------
New York State Real Estate Transfer Tax and New York City Real
Property Transfer Tax (the "Transfer Taxes") and any similar
--------------
taxes in any other jurisdiction (and any penalties and interest
with respect to such taxes), which become payable in connection
with the Offer and the Merger, on behalf of the stockholders of
Paramount. Viacom and Paramount shall cooperate in the
preparation, execution and filing of any required returns with
respect to such taxes (including returns on behalf of the
stockholders of Paramount) and in the determination of the
portion of the consideration allocable to the real property of
Paramount and the Paramount Subsidiaries in New York State and
51
City (or in any other jurisdiction, if applicable). The terms of
the Offer to Purchase and of the Proxy Statement shall provide
that the stockholders of Paramount shall be deemed to have agreed
to be bound by the allocation established pursuant to this
Section 6.18 in the preparation of any return with respect to the
Gains Tax and the Transfer Taxes and any similar taxes, if
applicable.
SECTION 6.19. Reverse Merger. In the event that a
--------------
decision is made to structure the Merger as a Reverse Merger
pursuant to Section 1.1, Viacom agrees to form Merger Subsidiary
as promptly as practicable following such decision and to cause a
merger agreement conforming to Section 251 of the Delaware Law
and effecting the terms hereof to be adopted by Merger
Subsidiary. Paramount agrees in such case to enter into such
merger agreement.
SECTION 6.20. Post-Offer Agreements. In the event
---------------------
that the Offer is consummated and subject to any applicable
requirements of the FCC: (a) the affirmative vote of a majority
of the directors of Paramount who are directors on the date
hereof and continue as directors on the date of the actions
described below will be required to amend, modify or waive any
provisions of this Agreement, or to approve any other action by
Paramount with respect to the transactions contemplated hereby
which adversely affect the interests of the stockholders of
Paramount; (b) Viacom shall not directly or indirectly cause
Paramount to breach its obligations hereunder; and (c) at the
Paramount Stockholders' Meeting, Viacom shall cause all shares of
Paramount Common Stock then owned by it or its subsidiaries to be
voted in favor of the approval and adoption of this Agreement and
the transactions contemplated hereby.
SECTION 6.21. Transactions With Significant Stockholder
-----------------------------------------
After the Effective Time. From and after the Effective Time and
------------------------
until the tenth anniversary of the Effective Time, Viacom 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 of each class of common stock subject
to such Going Private Transaction and 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
52
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 Significant Stockholder) in the
Going Private Transaction is fair to them from a financial point
of view. Notwithstanding anything to the contrary in this
Section 6.21, the restrictions contained in this Section 6.21
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.
SECTION 6.22. Blockbuster Merger Agreement and
--------------------------------
Subscription Agreement. Viacom hereby agrees that, from and
----------------------
after the date of this Agreement, the terms of (i) the
Blockbuster Merger Agreement and (ii) the Blockbuster
Subscription Agreement shall not, without the consent of
Paramount, be amended or waived in any manner that would have a
material adverse effect on the value of the aggregate
consideration to be received by the Paramount stockholders
pursuant to the terms of the Offer and the Merger taken together.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1. 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
Paramount, 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 Paramount and the Viacom Vote
Matter (to the extent not previously voted upon and approved
by the holders of Viacom Class A Common Stock) shall have
been approved and adopted by the requisite vote of the
stockholders of Viacom.
53
(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.
(d) AMEX Listing. The shares of Viacom Class B Common
------------
Stock and Viacom Merger Preferred Stock and the Warrants and
CVRs issuable to stockholders of Paramount in accordance
with Article II shall have been authorized for listing on
the AMEX upon official notice of issuance.
SECTION 7.2. 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 Paramount contained in
this Agreement (including, without limitation,
Section 6.06), without giving effect to any notification to
Viacom delivered pursuant to Section 6.4, 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 Paramount Material Adverse Effect. Viacom
shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Paramount to such
effect.
(b) Agreement and Covenants. Paramount 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
Paramount to that effect.
(c) Material Adverse Change. Since the date of this
-----------------------
Agreement, there shall have been no change, occurrence or
circumstance in the business, results of operations or
financial condition of Paramount or any Paramount Subsidiary
having or reasonably likely to have, individually or in the
aggregate, a material adverse effect on the business,
54
results of operations or financial condition of Paramount
and the Paramount Subsidiaries, taken as a whole. Viacom
shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Paramount to such
effect.
Notwithstanding the foregoing, the obligations of Viacom to
effect the Merger and the other transactions contemplated herein
following prior consummation of the Offer shall not be subject to
the conditions set forth in Sections 7.2(a), (b) and (c).
SECTION 7.3. Additional Conditions to Obligations of
---------------------------------------
Paramount. The obligation of Paramount 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 6.6),
without giving effect to any notification made by Viacom to
Paramount pursuant to Section 6.4, 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 Viacom Material Adverse Effect. Paramount
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. Paramount shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer
of Viacom to that effect.
(c) No Material Adverse Change. Since the date of
--------------------------
this Agreement, there shall have been no change, occurrence
or circumstance in the business, results of operations or
financial condition of Viacom or any Viacom Subsidiary
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 Viacom and
the Viacom Subsidiaries, taken as a whole. Paramount shall
have received a certificate of the Chief Executive Officer
and Chief Financial Officer of Viacom to such effect.
(d) Amendments to Viacom's Certificate of
-------------------------------------
Incorporation. Viacom shall have filed with the Secretary
-------------
55
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 8.1. 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 Paramount 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 Paramount and Viacom;
(b) by Viacom, prior to consummation of the Offer,
upon a breach of any representation,
warranty, covenant or agreement on the part of Paramount set
forth in this Agreement, or if any representation or
warranty of Paramount shall have become untrue, in either
case such that the conditions set forth in Section 7.2(a) or
Section 7.2(b), as the case may be, would be incapable of
being satisfied by July 31, 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 8.1(b);
(c) by Paramount, 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 7.3(a) or
Section 7.3(b), as the case may be, would be incapable of
being satisfied by July 31, 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 8.1(c);
(d) by either Viacom or Paramount, 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 Paramount, if the Merger shall
not have been consummated before July 31, 1994; provided,
--------
however, that this Agreement may be extended by written
-------
notice of either Viacom or Paramount to a date not later
than September 30, 1994, if the Merger shall not have been
consummated as a direct result of Viacom or Paramount having
56
failed by July 31, 1994, to receive all required regulatory
approvals or consents with respect to the Merger;
(f) by either Viacom or Paramount, if this Agreement
and the Merger shall fail to receive the requisite vote for
approval and adoption by the stockholders of Paramount or
Viacom at the Stockholders' Meetings;
(g) by Viacom, if (i) the Board of Directors of
Paramount shall withdraw, modify or change its
recommendation of this Agreement, the Merger or the Offer in
a manner adverse to Viacom or shall have resolved to do any
of the foregoing; provided, that a statement by the Board of
--------
Directors of Paramount 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 shall not be
deemed to constitute a withdrawal, modification or change of
its recommendation of this 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 Board of Directors of
Paramount reconfirms its recommendation of the Offer on the
date of the filing thereof; (ii) the Board of Directors of
Paramount shall have recommended to the stockholders of
Paramount a Competing Transaction (as defined below); (iii)
Viacom has not consummated the Offer and a tender offer or
exchange offer for 30% or more of the outstanding shares of
capital stock of Paramount is commenced, and the Board of
Directors of Paramount recommends that the stockholders of
Paramount tender their shares in such tender or exchange
offer; or (iv) Viacom has not consummated the Offer and any
person shall have 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) shall have
been formed which beneficially owns, or has the right to
acquire "beneficial ownership" (as defined in the Rights
Plan) of, more than 30% of the then outstanding shares of
capital stock of Paramount;
(h) by Paramount, if the Board of Directors of
Paramount (x) fails to make or withdraws or modifies its
recommendation referred to in Section 2.2(a) or Section
6.6(a) if there exists at such time a tender offer or
exchange offer or a proposal by a third party to acquire
Paramount pursuant to a merger, consolidation, share
exchange, business combination, tender or exchange offer or
other similar transaction or (y) recommends to Paramount's
stockholders approval or acceptance of any of the foregoing
in each case only if the Board of Directors of Paramount,
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
57
Paramount to comply with its fiduciary duties to
stockholders under applicable law; and
(i) by Paramount, if due to the occurrence or
circumstance that would result in a failure to satisfy any
of the conditions set forth in Annex A or otherwise, (A) the
Offer shall have expired without the purchase of shares of
Paramount Common Stock thereunder or Viacom shall be
obligated to terminate the Offer pursuant to Section 2.5 or
(B) Viacom shall have failed to accept for payment shares of
Paramount Common Stock pursuant to the Offer prior to 9:00
a.m. on the first business day following the Final
Expiration Date, unless such failure to accept for payment
shares of Paramount Common Stock shall have been caused by
or resulted from the failure of Paramount to perform in any
material respect its material covenants and agreements
contained in this Agreement or resulted from the termination
of the Offer pursuant to Section 2.1(c).
The right of any party hereto to terminate this Agreement
pursuant to this Section 8.1 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 involving Paramount or any Paramount Subsidiaries: (i)
any merger, consolidation, share exchange, business combination,
or other similar transaction; (ii) any disposition of 30% or more
of the assets of Paramount and the Paramount Subsidiaries, taken
as a whole in the 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 Paramount 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
beneficial ownership of, 30% or more of the then outstanding
shares of capital stock of Paramount; 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 8.2. Effect of Termination. Except as
---------------------
provided in Section 9.1, in the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith
become void, there shall be no liability on the part of Paramount
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 (i) 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 and (ii) if Viacom or Paramount shall terminate
58
this Agreement in accordance with the provisions of Section 8.1,
and if Viacom shall continue the Offer, the exemption agreement
between the parties dated as of December 22, 1993 shall again
become effective.
SECTION 8.3. 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, further, that, after approval of the Merger by
-------- -------
the stockholders of Paramount or Viacom, no amendment, which
under applicable law may not be made without the approval of the
stockholders of Paramount 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 8.4. 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 8.5. Fees, Expenses and Other Payments. All
---------------------------------
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;
provided, however, that all costs and expenses related to
-------- -------
printing, filing and mailing the 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 Paramount and Viacom.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Effectiveness of Representations,
---------------------------------
Warranties and Agreements. (a) Except as set forth in Section
-------------------------
9.1(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 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
59
that the agreements set forth in Articles I, II and IX and
Sections 6.3 and 6.21 shall survive the Effective Time and those
set forth in Sections 2.2(c), 2.3, 6.1(b), 8.2 and 8.5 and
Article IX hereof shall survive termination.
(c) Each of the representations and warranties made
in Article III shall be deemed to be made on September 12, 1993
and not made on the date hereof, except for representations and
warranties which address matters as of a particular date,
provided, that the representations set forth in the last sentence
--------
of Section 3.4, Sections 3.13, 3.14, 4.13 and 4.17 and any
representations and warranties with respect to this Agreement,
the Merger and the Offer are made on the date hereof.
(d) Each of Paramount and Viacom agree that nothing
herein shall constitute a waiver of any rights, claims or
defenses of Viacom or Paramount created by or arising under the
Amended and Restated Agreement and Plan of Merger, dated as of
October 24, 1993, as subsequently amended, or the Stock Option
Agreement, dated as of September 12, 1993, between Paramount and
Viacom, as amended by Amendment No. 1 thereto, dated as of
October 24, 1993, all of which rights, claims and defenses are
hereby expressly reserved.
SECTION 9.2. 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 telecopier number specified
below:
(a) If to Viacom:
Viacom Inc.
1515 Broadway
New York, NY 10036
Attention: Senior Vice President,
General Counsel
Telecopier No.: (212) 258-6134
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attention: Stephen R. Volk, Esq.
Telecopier No.: (212) 848-7179
60
(b) If to Paramount:
Paramount Communications Inc.
15 Columbus Circle
New York, NY 10023
Attention: Executive Vice President and
General Counsel
Telecopier No.: (212) 373-8184
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Joel S. Hoffman
Telecopier No.: (212) 455-2502
SECTION 9.3. 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
----------------
Paramount 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
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" shall have the meaning set forth in
------------
Rule 14d-1(c)(6) as promulgated under the Exchange Act;
(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
61
ownership of stock or as trustee or executor, by contract or
credit arrangement or otherwise;
(e) The parties agree that the term "fully diluted
-------------
basis" as used herein, shall mean giving effect to the
-----
shares of Paramount Common Stock then outstanding plus the
shares of Paramount Common Stock issuable upon the exercise
of the then exercisable stock options;
(f) The parties agree that the term "Merger", as used
------
herein, may refer to, consistent with the context of such
usage, each of the single step merger, the second step
merger following the Offer, or both. The parties hereto
agree to promptly amend this Agreement subsequent to the
execution and delivery thereof to provide for more precise
defined terms and usage thereof; and
(g) "subsidiary" or "subsidiaries" of Paramount,
---------- ------------
Viacom, the Surviving Corporation or any other person means
any corporation, partnership, joint venture or other legal
entity of which Paramount, 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 9.4. Time Period. In computing any time
-----------
period hereunder, the computation shall be governed by Rule
14d-1(c)(6) as promulgated under the Exchange Act.
SECTION 9.5. 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 9.6. 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.
SECTION 9.7. Entire Agreement. This Agreement
----------------
(together with the Exhibits, the Paramount Disclosure Schedule,
62
the Viacom Disclosure Schedule and the other documents delivered
pursuant hereto) and the Confidentiality Agreements 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 9.8. Assignment. This Agreement shall not be
----------
assigned by operation of law or otherwise.
SECTION 9.9. 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 6.3), 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, including
to confer third party beneficiary rights; provided, however,
-------- -------
nothing in the foregoing shall be deemed to derogate from any
rights of the Other Offeror (other than as a third party
beneficiary) as against Paramount or its Board with respect to
any amendment of this Agreement or failure to enforce the
Agreement.
SECTION 9.10. Specific Performance. The parties
--------------------
hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.11. Governing Law. Except to the extent
-------------
that Delaware Law is mandatorily applicable to the Merger and the
rights of the stockholders of Paramount 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 9.12. 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.
63
IN WITNESS WHEREOF, Viacom and Paramount 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 /s/ Katherine B. Rosenberg By /s/ Philippe P. Dauman
-------------------------- ------------------------
Assistant Secretary Senior Vice President,
General Counsel and
Secretary
ATTEST: PARAMOUNT COMMUNICATIONS INC.
By /s/ Martin M. Shea By /s/ Donald Oresman
------------------------ ------------------------
Vice President Executive Vice
President
ANNEX A
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer,
Viacom shall not be required to accept for payment or pay for any
shares of Paramount Common Stock tendered pursuant to the offer,
and may terminate or amend the Offer and may postpone the
acceptance for payment of and payment for shares of Paramount
Common Stock tendered, if (i) the Minimum Condition shall not
have been satisfied, (ii) the Rights Condition shall not have
been satisfied, or (iii) at any time on or after the date of this
Agreement, and prior to the acceptance for payment of shares of
Paramount Common Stock, 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 Agreement; provided that
--------
Viacom shall have used its reasonable best efforts to cause
any such decree, judgment, injunction or other order to be
vacated or lifted;
(b) Each of the representations and warranties of
Paramount contained in the Agreement (including, without
limitation, Section 6.6), without giving effect to any
notification to Viacom delivered pursuant to Section 6.4,
shall be true and correct as of the date of consummation of
the Offer as though made on and as of such date, except (i)
for changes specifically permitted by the 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 Paramount Material
Adverse Effect;
(c) Paramount shall have performed or complied in all
material respects with all agreements and covenants required
by the Agreement to be performed or complied with by it on
or prior to the date of consummation of the Offer;
(d) Since December 22, 1993, there shall have been no
change, occurrence or circumstance in the business, results
of operations or financial condition of Paramount or any
Paramount Subsidiary having or reasonably likely to have,
2
individually or in the aggregate, a material adverse effect
on the business, results of operations or financial
condition of Paramount and the Paramount Subsidiaries, taken
as a whole;
(e) The Agreement shall not have been terminated in
accordance with its terms;
(f) Viacom shall not have terminated the Offer under
Sections 2.1(c) or 2.5 of the Agreement;
(g) Viacom and Paramount shall not have agreed that
Viacom shall terminate the Offer or postpone the acceptance
for payment of or payment for shares of Paramount Common
Stock thereunder;
and, in the reasonable judgment of Viacom in any such case, and
regardless of the circumstances (including any action or inaction
by Viacom 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
Viacom and may be asserted by Viacom regardless of the
circumstances giving rise to any such condition or may be waived
by Viacom in whole or in part at any time and from time to time
in their sole discretion, subject to the terms of this Agreement.
The failure by Viacom 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.
ANNEX B
Principal Terms of Viacom Merger Preferred Stock
General Unless otherwise specified herein, the
Viacom Merger Preferred Stock will have
the same terms as contained in the
Certificate of Designation for Viacom's
existing Series A Cumulative Convertible
Preferred Stock.
Dividends Cumulative from the Effective Time at
the annual rate of $2.50 per share of
Viacom Merger Preferred Stock, payable
quarterly.
Conversion Rights The Viacom Merger Preferred Stock will
be convertible at the option of the
holder at any time, unless previously
redeemed, into shares of Viacom Class B
Common Stock at an initial conversion
price of $70.00 (equivalent to a
conversion rate of approximately .7143
of a share of Viacom Class B Common
Stock for each share of Viacom Merger
Preferred Stock), subject to adjustment
in certain events.
Liquidation Preference $50.00 per share of Viacom Merger
Preferred Stock, plus accrued and unpaid
dividends.
Redemption at the The Viacom Merger Preferred Stock may
Option of Viacom not be redeemed prior to the fifth
anniversary of the Effective Time. On
and after such date, the Viacom Merger
Preferred Stock may be redeemed in whole
or in part, at the option of Viacom,
initially at a per share redemption
price of $52.50 and thereafter at prices
declining to $50.00 on and after the
tenth anniversary of the Effective Time,
plus, in each case, all accrued and
unpaid dividends.
Mandatory Redemption None
Exchange for Debentures The Viacom Merger Preferred Stock will
be exchangeable in whole, or in part, at
the option of Viacom on any dividend
payment date beginning on and after the
third anniversary of the Effective Time,
2
for Viacom's 5% Convertible Subordinated
Debentures (the "Exchange Debentures")
-------------------
at the rate of $50.00 principal amount
of Exchange Debentures for each share of
Viacom Merger Preferred Stock. Viacom
may effect each exchange only if all
accrued and unpaid dividends on the
Viacom Merger Preferred Stock have been
paid.
Voting Rights The Viacom Merger Preferred Stock will
have no voting rights except (i) as
otherwise required by law and (ii) for
the right to elect two additional
directors to Viacom's Board of Directors
in the event that Viacom has failed to
pay dividends payable on the shares of
Viacom Merger Preferred Stock for such
number of dividend periods which shall
in the aggregate contain not less than
360 days. In any such election, the
holders of shares of Viacom Merger
Preferred Stock will vote separately as
a class with the holders of shares of
any one or more other shares of
preferred stock ranking on a parity with
the Viacom Merger Preferred Stock. Such
right to elect two directors will
continue until such dividend arrearages
have been paid.
Exchange Debentures
Interest 5% per annum, payable semi-annually.
Aggregate Principal Equal to aggregate liquidation
Amount preference of Viacom Merger Preferred
Stock exchanged.
Maturity 20 years from the Effective Time.
Optional Redemption Not redeemable prior to the fifth
anniversary of the Effective Time. On
and after that date, redeemable, in
whole or in part, at the option of
Viacom, at a redemption price of 105% of
the principal amount thereof and
thereafter at prices declining to 100%
of the principal amount thereof on and
after the tenth anniversary of the
Effective Time, plus, in each case, all
accrued and unpaid interest.
Mandatory Redemption None
3
Conversion Convertible at the option of the holder
at any time, unless previously redeemed,
into shares of Viacom Class B Common
Stock at an initial conversion price of
$70.00, subject to the same adjustments
as contained in the Viacom Merger
Preferred Stock.
Subordination The Exchange Debentures will be
subordinated in right of payment to all
Senior Indebtedness of Viacom when due.
Senior Indebtedness of Viacom will be
defined as (a) the principal of,
premium, if any, and accrued and unpaid
interest on (i) indebtedness of Viacom
for money borrowed, (ii) guarantees by
Viacom of indebtedness for money
borrowed by any other person, (iii)
indebtedness evidenced by notes,
debentures, bonds or other instruments
of indebtedness for payment of which
Viacom is responsible or liable, by
guarantees or otherwise, and (iv)
obligations of Viacom under capital
leases, and (b) modifications, renewals,
extensions and refunding of any such
indebtedness, obligations or guarantees,
unless it is provided that such
indebtedness, obligations or guarantees,
or such modifications, renewals,
extensions or refundings thereof, are
not superior in right of payment to the
Exchange Debentures. No payment on
account of principal or interest on the
Exchange Debentures may be made if at
the time of such payment there exists a
payment default with respect to any
Senior Indebtedness. Upon any
distribution of the assets of Viacom
upon any dissolution, total or partial
liquidation or reorganization of or
similar proceeding relating to Viacom,
the holders of its Senior Indebtedness
will be entitled to receive payment in
full before the Exchange Debenture
holders are entitled to receive any
payment.
Events of Default The term "Event of Default" when used in
the indenture for the Exchange
Indebtedness will mean any of the
following: (i) failure of Viacom to pay
(whether or not prohibited by the
subordination provisions) interest for
4
thirty days on the principal of or any
redemption payment on any of the
Exchange Debentures, (ii) failure to
perform any other covenant contained in
the Indenture for sixty days after
notice to Viacom by the trustee (or to
Viacom and the trustee by the holders of
at least 25% in aggregate principal
amount of Exchange Debentures then
outstanding) and (iii) certain events of
bankruptcy, insolvency or
reorganization.
ANNEX C
VIACOM INC.
PRINCIPAL TERMS OF CONTINGENT VALUE RIGHTS ("CVRs")
----
Issuer: Viacom Inc. ("Viacom")
------
Payment at Maturity: Following the maturity of a CVR, the
holder of such CVR (the "CVR Holder")
----------
shall have the right to receive the
amount, if any, by which the Target
Price exceeds the greater of the Current
Market Value and the Minimum Price (each
as defined below). The CVRs shall
mature on the Maturity Date unless
otherwise extended to the First Extended
Maturity Date or the Second Extended
Maturity Date, as the case may be (each
as defined below).
Form of Payment: Viacom, at its option, may pay any
amount due under the terms of the CVRs
to the CVR Holders in cash or in the
equivalent fair market value (as
determined by an independent nationally
recognized investment bank) of
registered securities of Viacom,
including, without limitation, common
stock, preferred stock, notes or other
securities.
Target Price: "Target Price" means (i) at the Maturity
------------
Date, $48.00, (ii) at the First Extended
Maturity Date, $51.00 and (iii) at the
Second Extended Maturity Date, $55.00.
In each case, such Target Prices shall
be adjusted upon the occurrence of any
event described in the Section entitled
"Antidilution" set forth below.
Current Market Value: "Current Market Value" means (i) with
--------------------
respect to the Maturity Date and the
First Extended Maturity Date, the median
of the averages of the closing prices on
the American Stock Exchange (or such
other exchange on which such shares are
then listed) of shares of Viacom's Class
B Common Stock, par value $.01 per share
(the "Class B Common Stock"), during
--------------------
each 20 consecutive trading day period
that both begins and ends in the
Valuation Period and (ii) with respect
to the Second Extended Maturity Date,
2
the average of the closing prices on the
American Stock Exchange (or such other
exchange on which such shares are then
listed) of the Class B Common Stock
during the 20 consecutive trading days
in the Valuation Period which yield the
highest such average of the closing
prices for any such 20 consecutive
trading day period within the Valuation
Period. "Valuation Period" means the 60
----------------
trading day period immediately preceding
(and including) the Maturity Date, the
First Extended Maturity Date or the
Second Extended Maturity Date, as the
case may be.
Minimum Price: "Minimum Price" means $38.00, subject to
-------------
adjustment upon the occurrence of any
event described in the Section entitled
"Antidilution" set forth below.
Maturity Date;
Extensions Thereof: "Maturity Date" means the first
-------------
anniversary of the effective time (the
"Effective Time") of the merger between
--------------
Viacom and Paramount Communications Inc.
(the "Merger"); provided, however, that
------ -------- -------
Viacom, at its option, may (i) extend
the Maturity Date to the second
anniversary of the Effective Time (the
"First Extended Maturity Date") and (ii)
----------------------------
extend the First Extended Maturity Date
to the third anniversary of the
Effective Time (the "Second Extended
---------------
Maturity Date"). Viacom shall exercise
-------------
either such option to extend by
publishing notice of such exercise in
the Wall Street Journal (Eastern
Edition), or if the Wall Street Journal
is not then published, such other
newspaper with general circulation in
the City of New York, New York no later
than one business day preceding the
Maturity Date or First Extended Maturity
Date, as the case may be.
No Interest: Other than in the case of interest on
the Default Amount (as defined below),
no interest shall accrue on any amounts
payable to the CVR Holders pursuant to
the terms of CVRs.
Disposition Payment: Following the consummation of a
Disposition (as defined below), Viacom
3
shall pay to each CVR Holder for each
CVR held by such CVR Holder an amount,
if any, by which the Discounted Target
Price (as defined below) exceeds the
greater of (a) the fair market value (as
determined by an independent nationally
recognized investment banking firm) of
the consideration, if any, received by
holders of Class B Common Stock for each
share of Class B Common Stock held by
such holder as a result of such
Disposition and (b) the Minimum Price.
Dispositions: "Disposition" means (a) a merger,
-----------
consolidation or other business
combination involving Viacom as a result
of which no shares of Class B Common
Stock shall remain outstanding, (b) a
sale, transfer or other disposition, in
one or a series of transactions, of all
or substantially all of the assets of
Viacom or (c) a reclassification of
Class B Common Stock as any other
capital stock of Viacom or any other
person.
Acceleration Upon
Event of Default: If an Event of Default (as defined
below) occurs and is continuing, either
the bank or trust company acting as the
trustee (the "Trustee") or CVR Holders
-------
holding at least 25% of the outstanding
CVRs, by notice to Viacom (and to the
Trustee if given by CVR Holders), may
declare the CVRs to be due and payable,
and upon any such declaration, the
Default Amount shall become due and
payable and, thereafter, shall bear
interest at an interest rate of 8% per
annum until payment is made to the
Trustee. "Default Amount" means the
--------------
amount, if any, by which the Discounted
Target Price exceeds the Minimum Price.
Discounted Target
Price: "Discounted Target Price" means (a) if a
-----------------------
Disposition or an Event of Default shall
occur prior to the Maturity Date,
$48.00, discounted to the Disposition
Payment Date (as defined below) or the
Default Payment Date (as defined below),
as the case may be, at a per annum rate
of 8%; (b) if a Disposition or an Event
of Default shall occur after the
4
Maturity Date but prior to the First
Extended Maturity Date, $51.00
discounted to the date of the
Disposition Payment Date or Default
Payment Date, as the case may be, at a
per annum rate of 8%; or (c) if a
Disposition or an Event of Default shall
occur after the First Extended Maturity
Date but prior to the Second Extended
Maturity Date, $55.00 discounted to the
Disposition Payment Date or Default
Payment Date, as the case may be, at a
per annum rate of 8%. In each case, the
Discounted Target Price and the Minimum
Price shall be adjusted upon the
occurrence of any event described in the
Section entitled "Antidilution" set
forth below. "Disposition Payment
-------------------
Date", with respect to a Disposition,
----
means the date established by Viacom for
payment of the amount due on the CVRs in
respect of such Disposition, which in no
event shall be more than 30 days after
the date on which such Disposition was
consummated. "Default Payment Date"
--------------------
means the date on which the CVRs become
due and payable upon the declaration
thereof following an Event of Default.
Events of Default: "Event of Default", with respect to the
----------------
CVRs, means any of the following which
shall have occurred and be continuing;
(a) default in the payment of all or any
part of the amounts payable in respect
of any of the CVRs as and when the same
shall become due and payable following
the Maturity Date, the First Extended
Maturity Date or the Second Extended
Maturity Date, the Disposition Payment
Date or otherwise; (b) material default
in the performance, or material breach,
of any material covenant or warranty of
Viacom, and continuance of such material
default or breach for a period of 90
days after written notice has been given
to Viacom by the Trustee or to Viacom
and the Trustee by CVR Holders holding
at least 25% of the outstanding CVRs; or
(c) certain events of bankruptcy,
insolvency, reorganization or other
similar events in respect of Viacom.
Antidilution: If Viacom shall in any manner subdivide
(by stock split, stock dividend or
5
otherwise) or combine (by reverse stock
split or otherwise) the number of
outstanding shares of Class B Common
Stock, Viacom shall correspondingly
subdivide or combine the CVRs and shall
appropriately adjust the Target Price,
the Minimum Price and the Discounted
Target Price.
Trading: None of Viacom, National Amusements,
Inc. or any of their affiliates shall
trade in shares of Class B Common Stock
during the period commencing 10 trading
days before the Valuation Period and
ending on the last day of the Valuation
Period, except with respect to employee
benefit plans and other incentive
compensation arrangements.
No Fractional CVRs: No fraction of a CVR will be issued in
the Merger. In lieu thereof, a cash
payment will be made in an amount
equivalent to the fair market value of
the fraction of the CVR.
CVR Agreement: The CVRs will be issued pursuant to a
CVR Agreement between Viacom and the
Trustee. Viacom shall use its
reasonable best efforts to cause the CVR
Agreement to be qualified under the
Trust Indenture Act of 1939, as amended.
Registration/Listing: The CVRs will be issued in registered
form, and Viacom shall use its
reasonable best efforts to list the CVRs
on the American Stock Exchange (or such
other securities exchange on which the
shares of Class B Common Stock are then
listed).
Nature and Ranking of
CVRs: The CVRs are unsecured obligations of
Viacom and will rank equally with all
other unsecured obligations of Viacom.
ANNEX D
Summary of Terms and Warrants
-----------------------------
Each Warrant will entitle the holder thereof to
purchase one share of Viacom Class B Common Stock per whole
Warrant at any time prior to the third anniversary of the Merger
at a price of $60.00, payable in cash. The terms of the Warrants
will include customary anti-dilution (with respect to stock
splits, stock dividends, reverse stock splits or other similar
subdivisions or combinations of stock) and other provisions. No
fraction of a Warrant will be issued in the Merger. In lieu
thereof, a cash payment will be made in an amount determined in
accordance with Section 1.7 of this Agreement.
EXHIBIT 6.14
FORM OF AFFILIATE LETTER
------------------------
Viacom Inc.
1515 Broadway
New York, NY 10036
Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of Paramount Communications
Inc., 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 21, 1994, (the "Agreement"), between
---------
Viacom Inc., a Delaware corporation ("Viacom"), and the Company,
------
the Company will be merged with and into Viacom or a wholly owned
Subsidiary of Viacom (the "Merger").
------
As a result of the Merger, I may receive (i) shares of
Class B common stock, par value $.01 per share, of Viacom, (ii)
shares of a new series of convertible exchangeable preferred
stock, par value $.01 per share, of Viacom, (iii) CVRs (as
defined in the Agreement) and (iv) Warrants (as defined in the
Agreement) (collectively, the "Viacom Securities"). I would
-----------------
receive such securities in exchange for, respectively, shares (or
options for shares) owned by me of common stock, par value $1.00
per share, of the Company (the "Company Securities").
------------------
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.
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 Securities 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
2
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] [WARRANTS] REPRESENTED BY THIS
CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE
145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE [SHARES] [RIGHTS] [WARRANTS] REPRESENTED
BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
____________ 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] [WARRANTS] 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 TRANSACTION TO WHICH RULE
145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE [SHARES] [RIGHTS] [WARRANTS] 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."
3
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, or 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:
Accepted this day of
---
, 1994, by
---------
VIACOM INC.
By
---------------------
Name:
Title:
VOTING AGREEMENT, dated as of January 21, 1994 (this
"Agreement"), between NATIONAL AMUSEMENTS, INC., a Maryland
corporation (the "Stockholder"), and PARAMOUNT COMMUNICATIONS
INC., a Delaware corporation ("Paramount").
WHEREAS, Viacom Inc., a Delaware corporation
("Viacom"), and Paramount propose to enter into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, that Paramount
will merge with Viacom pursuant to the merger contemplated by
the Merger Agreement (the "Merger");
WHEREAS, as of the date hereof, the Stockholder owns
(i) 45,547,214 shares of Class A Common Stock, par value $.01
per share, of Viacom ("Viacom Class A Common Stock") and
(ii) 46,565,414 shares of Class B Common Stock, par value $.01
per share, of Viacom ("Viacom Class B Common Stock"; together
with the Viacom Class A Common Stock, the "Viacom Common
Stock"); and
WHEREAS, as a condition to the willingness of
Paramount to enter into the Merger Agreement, Paramount has
required that the Stockholder agree, and in order to induce
Paramount to enter into the Merger Agreement, the Stockholder
has agreed, to enter into this Agreement with respect to all
the shares of Viacom Class A Common Stock now owned and which
may hereafter be acquired by the Stockholder (the "Shares").
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I
VOTING OF SHARES
SECTION 1.01. Voting Agreement. The Stockholder
hereby agrees that during the time this Agreement is in effect,
at any meeting of the stockholders of Viacom, however called,
and in any action by consent of the stockholders of Viacom, the
Stockholder shall vote the Shares: (a) in favor of the Merger,
the Merger Agreement (as amended from time to time) and the
transactions contemplated by the Merger Agreement, including,
but not limited to, the amendments to the Certificate of
Incorporation of Viacom contemplated thereby, and (b) against
any proposal for any recapitalization, merger, sale of assets
or other business
2
combination between Viacom and any person or entity (other than
the Merger and any merger of Blockbuster Entertainment
Corporation, a Delaware corporation ("Blockbuster"), with
Viacom) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other
obligation or agreement of Viacom under the Merger Agreement or
which could result in any of the conditions to Viacom's
obligations under the Merger Agreement not being fulfilled.
The Stockholder acknowledges receipt and review of a copy of
the Merger Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to
Paramount as follows:
SECTION 2.01. Authority Relative to This Agreement.
The Stockholder has all necessary power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the
Stockholder and the consummation by the Stockholder of the
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Stockholder, and no
other corporate proceedings on the part of the Stockholder are
necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly and validly
executed and delivered by the Stockholder and, assuming the due
authorization, execution and delivery by Paramount, constitutes
a legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its
terms.
SECTION 2.02. No Conflict. (a) The execution and
delivery of this Agreement by the Stockholder do not, and the
performance of this Agreement by the Stockholder shall not, (i)
conflict with or violate the Certificate of Incorporation or
By-laws or equivalent organizational documents of the
Stockholder, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the
Stockholder or by which the Shares are bound or affected or
(iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Shares pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which the Stockholder is a
3
party or by which the Stockholder or the Shares are 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 the performance by
the Stockholder of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by
the Stockholder do not, and the performance of this Agreement
by the Stockholder shall not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Entity (as such term is defined in the Merger
Agreement) except for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended, and except where
the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not
prevent or delay the performance by the Stockholder of its
obligations under this Agreement.
SECTION 2.03. Title to the Shares. As of the date
hereof, the Stockholder is the record and beneficial owner of
45,547,214 shares of Viacom Class A Common Stock. Other than
46,565,414 shares of Viacom Class B Common Stock of which the
Stockholder is the record and beneficial owner, such Shares are
all the securities of Viacom owned, either of record or
beneficially, by the Stockholder. The Shares are owned free
and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on
the Stockholder's voting rights, charges and other encumbrances
of any nature whatsoever (other than a voting agreement entered
into in connection with the merger of Blockbuster and Viacom).
The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the
Shares.
ARTICLE III
COVENANTS OF THE STOCKHOLDER
SECTION 3.01. No Inconsistent Agreements. The
Stockholder hereby covenants and agrees that, except as
contemplated by this Agreement and the Merger Agreement, the
Stockholder shall not enter into any voting agreement or grant a
proxy or power of attorney with respect to the Shares which is
inconsistent with this Agreement (it being agreed that any
voting agreement entered into in connection with a merger of
Viacom and Blockbuster shall not be deemed to be inconsistent
with this Agreement.)
SECTION 3.02. Transfer of Title. The Stockholder
hereby covenants and agrees that the Stockholder shall not
transfer record or beneficial ownership of any of the Shares
unless the transferee agrees in writing to be bound by the
terms and conditions of this Agreement.
4
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Termination. This Agreement shall
terminate upon the termination of the Merger Agreement.
SECTION 4.02. Specific Performance. The parties
hereto agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 4.03. Entire Agreement. This Agreement
constitutes the entire agreement between Paramount and the
Stockholder with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both
written and oral, between Paramount and the Stockholder with
respect to the subject matter hereof.
SECTION 4.04. Amendment. This Agreement may not be
amended except by an instrument in writing signed by the
parties hereto.
SECTION 4.05. 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 this Agreement 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 or
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 a mutually acceptable
manner in order that the terms of this Agreement remain as
originally contemplated to the fullest extent possible.
SECTION 4.06. Governing Law. Except to the extent
that the General Corporation Law of the State of Delaware is
mandatorily applicable to the rights of the stockholders of
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.
5
IN WITNESS WHEREOF, the Stockholder and Paramount have
caused this Agreement to be duly executed on the date hereof.
NATIONAL AMUSEMENTS, INC.
By /s/ Sumner M. Redstone
Name: Sumner M. Redstone
Title: Chairman of the Board,
President and Chief Executive
Officer
PARAMOUNT COMMUNICATIONS INC.
By /s/ Donald Oresman
Name: Donald Oresman
Title: Executive Vice President,
Chief Administrative Officer,
General Counsel and Secretary
(BW) (VIACOM/PARAMOUNT) Viacom makes announcement
Business Editors
NEW YORK-(BUSINESS WIRE)- -In response to the announcement issued
today by the Board of Directors of Paramount Communications Inc.
(NYSE: PCI), Viacom Inc. (ASE: VIA and VIAB) issued the following
statement:
We are pleased that Paramount has entered into a merger agreement
with Viacom. We continue to believe that the combination of Viacom,
Blockbuster and Paramount is in the best long-term interest of
Paramount shareholders.
- -30- -cm/ny
CONTACT: Viacom Inc., New York
Raymond A. Boyce, 212/258-6530
or
Edelman
Elliot Sloane, 212/704-8126
[LOGO]
BANK OF AMERICA
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
335 MADISON AVENUE NEW YORK, NEW YORK 10017
January 20, 1994
Mr. Gregory K. Fairbanks
Senior Vice President and
Chief Financial Officer
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301-1860
Re: Acquisition of Capital Stock of Viacom Inc.
-------------------------------------------
Dear Greg:
You have advised BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION ("Bank of America") that BLOCKBUSTER ENTERTAINMENT
---------------
CORPORATION, a Delaware corporation ("Blockbuster") has offered
-----------
to acquire shares of capital stock (the "Stock") of VIACOM INC.,
-----
a Delaware corporation ("Viacom") for cash (the "Transaction")
------ -----------
pursuant to a subscription agreement dated January 7, 1994
between Blockbuster and Viacom (the "Subscription Agreement") and
contemporaneously executed a merger agreement with Viacom (the
"Merger Agreement").
----------------
You have requested Bank of America to provide the financing
(the "Financing") for the purchase of the Stock and related
---------
transaction costs in the form of a 364-day credit facility in the
amount of $1,000,000,000 (the "Facility"). The obligations of
--------
Blockbuster under such Facility will be unsecured.
Bank of America is pleased to offer its commitment to
provide the Financing on the terms and conditions set forth in
the attached Amended and Restated Summary of Terms and
Conditions.
Bank of America intends to syndicate part of its commitment
to a group of financial institutions. Accordingly, Blockbuster
shall be deemed hereby to have authorized BA Securities, Inc.
("BASI") to act as arranger and agent for the Facility. To
assist BASI in its syndication efforts, you agree to provide upon
its request all information reasonably deemed necessary by it to
complete successfully the syndication. You further agree that
the management of Blockbuster will make itself available for bank
meetings at reasonable times and upon reasonable advance notice.
During the course of syndication, Blockbuster will undertake
not to be in the bank debt markets to obtain additional financing
which, in the reasonable opinion of BASI and Bank of America,
would have a detrimental effect on the successful completion of
its syndication efforts.
As consideration for Bank of America's commitment hereunder
and BASI's and Bank of America's agreement to perform the
services described herein in respect of the Facility, you confirm
your agreement to pay the fees set forth in the fee letter dated
January 7, 1994 (the "Fee Letter") and delivered with a
----------
commitment letter dated January 7, 1994, which letter is amended
and restated herein and superseded by this letter in its entirety
(the "Commitment Letter").
-----------------
Bank of America's commitment to provide the Financing is
subject to the negotiation and execution of a definitive credit
agreement (the "Credit Agreement") and other related
----------------
documentation, reasonably satisfactory to Bank of America and
BASI as to credit matters and to it and its counsel as to legal
matters.
The attached Amended and Restated Summary of Terms and
Conditions is intended as an outline of the principal terms and
conditions of the Facility only, and does not purport to
summarize all of the terms, conditions, covenants,
representations and warranties, defaults, and other provisions,
which will be contained in the Credit Agreement. The Credit
Agreement will include applicable covenants and conditions
substantially similar to those of that certain Credit Agreement
dated as of December 22, 1993 among Blockbuster, its Designated
Subsidiaries, Bank of America as Agent and the several financial
institutions party thereto (the "December Facility") and other
-----------------
provisions customary for this type of financing transaction and
that Bank of America and BASI may deem appropriate after they are
afforded the opportunity to review information regarding the
Transaction that is as yet unavailable.
Specifically, Bank of America's commitment and Bank of
America's and BASI's obligations hereunder with respect to the
Facility are subject to (i) the accuracy and completeness of the
information concerning Blockbuster, the Transaction and the
Subscription Agreement that is available or that has been or will
be provided by you, and (ii) there being no material adverse
change in the financial condition, business, operations or
properties of Blockbuster since September 30, 1993, except as
publicly disclosed on or prior to the date hereof.
You hereby agree to indemnify and hold harmless Bank of
America and BASI and each director, officer, employee and
affiliate thereof (each, an "indemnified person") from and
------------------
against any and all losses, claims, damages, liabilities (or
actions or other proceedings commenced or threatened in respect
thereof) and expenses that arise out of, result from or in any
way relate to the acquisition of the Stock by Blockbuster, the
Subscription Agreement, the Merger Agreement (or any related
document), this Commitment Letter, or the providing of the
Facility or in any way arising from any use or intended use of
any of the Financing, and to reimburse each indemnified person,
upon its demand, for any legal or other expenses (including the
allocated cost of in-house counsel) incurred in connection with
investigating, defending or participating in any such loss,
claim, damage, liability or action or other proceeding (whether
or not such indemnified person is a party to any action or
proceeding out of which any such expenses arise), other than any
of the foregoing claimed by any indemnified person to the extent
incurred by reason of the gross negligence or willful misconduct
of such person. Bank of America and BASI shall not be
responsible or liable to you or any other person for any
consequential damages which may be alleged as a result of this
letter except if caused by its gross negligence and willful
misconduct.
In addition, you hereby agree to reimburse Bank of America
and BASI from time to time upon demand for their reasonable out-
of-pocket costs and expenses (including, without limitation,
legal fees and expenses including the allocated cost of in-house
counsel, industry experts, and printing, reproduction, document
delivery and communication) incurred in connection with the
syndication of the Facility and the preparation, review,
negotiation, execution and delivery of this Commitment Letter,
the Amended and Restated Summary of Terms and Conditions, the Fee
Letter and the Credit Agreement and related documents. Your
obligations under this paragraph and the preceding paragraph
shall survive any termination of this Commitment Letter and shall
be effective regardless of whether the Credit Agreement is
executed.
In connection with our commitment contained herein, you
should be aware, and you hereby agree, that other entities with
conflicting interests may also be (or may become at any time in
the future) customers of ours, and that we may be providing
financing or other services to them.
Bank of America and BASI are pleased to have the opportunity
to work with you to complete the Transaction successfully.
Please indicate your acceptance of this Commitment Letter by
signing and returning the enclosed copy hereof no later than
11:59 p.m. EST on January 20, 1994 when, if not so accepted, Bank
of America's commitment and Bank of America's and BASI's
obligations hereunder will terminate. Our commitment and obligations
hereunder will also terminate if the execution of the Credit Agreement
does not occur by April 29, 1994.
This letter shall not be assignable by you without the prior
written consent of Bank of America and BASI and may not be
amended or waived except by a written instrument signed by Bank
of America and BASI and you. It is intended solely for the
benefit of the parties hereto except as otherwise mutually agreed
and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto.
This letter and the attached Amended and Restated Summary of
Terms and Conditions are confidential and, without our prior
written consent, or pursuant to subpoena or other court process
or as otherwise required by law, may not be disclosed in whole or
in part to any other person or entity, other than Blockbuster's
or Viacom's affiliates, directors, officers, employees, agents,
advisors and representatives who agree to be bound by the
provisions set forth herein.
This letter may be signed in counterparts and shall be
construed in accordance with and governed by the law of the State
of New York.
Very truly yours,
BA SECURITIES, INC. BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
/s/ Keith C. Barnish /s/ Charles S. Francaville
----------------------- --------------------------
By: Keith C. Barnish By: Charles S. Francaville
Managing Director Senior Vice President
ACCEPTED AND AGREED TO this
20th day of January, 1994
BLOCKBUSTER ENTERTAINMENT CORPORATION
By: /s/ Gregory K. Fairbanks
-----------------------------
Title: SVP, Treasurer & CFO
-------------------------
January 20, 1994
AMENDED AND RESTATED
SUMMARY OF TERMS AND CONDITIONS
BLOCKBUSTER ENTERTAINMENT CORPORATION
$1,000,000,000
TERM CREDIT FACILITY
Borrower: Blockbuster Entertainment Corporation (the
"Borrower" or "Blockbuster").
-------- -----------
Arranger: BA Securities, Inc. (the "Arranger").
--------
Agent: Bank of America National Trust and Savings
Association (in its capacity as agent, the
"Agent", and in its capacity as a Bank, "Bank
----- ----
of America").
----------
Amount: Up to $1,000,000,000. Bank of America has
committed initially to provide the entire
amount of the Facility but will at a later
date syndicate the Facility among a group of
banks designated in consultation with
Blockbuster. All institutions participating
in the financing, including Bank of America,
are collectively referred to as the "Banks",
or singularly as a "Bank".
Facility: A 364-day term credit facility providing for
one advance with interest periods of, subject
to availability, up to 6 months (the
"Facility"). Amounts borrowed and repaid may
--------
not be subsequently re-borrowed.
Availability: In one drawing, not later than April 29,
1994.
Use of Proceeds: To finance the acquisition of capital stock
(the "Stock") of Viacom Inc. ("Viacom")
----- ------
pursuant to the Subscription Agreement dated
January 7, 1994, as amended and in accordance
with the conditions hereof (the "Subscription
Agreement") and to pay related fees and
expenses.
Final Maturity: 364 days after the date of signing of the
Credit Agreement, but no later than March 31,
1995.
Minimum Advances: Advances under the Facility shall be in a
minimum principal amount of $5,000,000
($2,5000,000 for Reference Rate advances) and
in multiples of $1,000,000 in excess thereof
and subject to appropriate notice.
Voluntary Reduction
or Cancellation: Upon five business days' notice, Blockbuster
may reduce without penalty all or a portion
of the Facility unutilized for advances, in
minimum amounts of $5,000,000 and in
multiples of $1,000,000 in excess thereof.
Voluntary
Prepayment: The Borrower may prepay at any time without
penalty committed advances in minimum amounts
of $5,000,000 ($2,500,000 for Reference Rate
advances), subject to three business days'
prior written notice (one business day's
prior written notice for Reference Rate
advances), provided that LIBOR advances
prepaid at any time other than at maturity
shall be subject to reimbursement of break-
funding costs and related expenses, if any.
Commitment Fee: A rate per annum of .25% for the period from
January 7, 1994 until the date of the
drawdown, calculated on a 365-day basis on
the unutilized portion of the Facility and
payable on the earlier to occur of (i) the
date of the drawdown, (ii) April 29, 1994 and
(iii) termination of the Facility.
Other Fees: As set forth in the Fee Letter.
Interest: Borrower shall have the option to choose
between Reference Rate and LIBOR funding,
with the per annum LIBOR interest margins
during the first six months as outlined in
the attached Pricing Grid; after six months,
the LIBOR margin shall be 1.25% per annum.
Reference Rate margin shall be zero.
Reference Rate is defined as the higher of
(i) the rate of interest publicly announced
from time to time by the Bank of America in
San Francisco, California as its Reference
Rate, or (ii) 0.5% per annum above the
Federal Funds Rate in effect on such day.
Any change in the Reference Rate shall take
effect at the opening of business on the date
specified in the public announcement of such
change, interest is to accrue based on a 365-
day year and is to be paid in arrears
quarterly and upon termination of the
Facility.
LIBOR is defined as the average London
interbank offered rate for 1-, 2-, 3-, or, if
available, 6-month Eurodollar deposits as
quoted by Bank of America or, after
syndication of the Facility, Reference Banks
(such banks to be designated), rounded
upwards to the nearest 1/16%. Cost of
reserves, if any actual cost applies, will be
billed to the Borrower. Interest is to
accrue based on a 360-day year and actual
days elapsed and is to be paid at the end of
each interest period and, if such period is
longer than 3 months, at least every 3
months.
Default Rate: If any amount is not paid when due, all
amounts then outstanding shall bear interest
at a rate of 2% per annum above the relevant
margin and base rate.
Assignments/
Participations: Bank of America may at any time with the
prior approval of Blockbuster (which will not
be unreasonably withheld) and the Agent, and
after syndication, any Bank may at any time
with prior approval of Blockbuster (which
will not be unreasonably withheld) and the Agent
(which will not be unreasonably withheld), assign
all or a portion of its commitment under the
Facility to other banking institutions
(minimum assignment amounts of $10,000,000).
In addition, each Bank shall have the right
to grant participations in its commitment and
outstandings without Blockbuster's or the
Agent's approval.
Information Package: Blockbuster shall provide sufficient
Information for the preparation of an
information package to be distributed on a
confidential basis to potential participating
banks.
Documentation: The Facility shall be subject to the
execution of a Credit Agreement reasonably
satisfactory to all parties, based on the
$1 Billion Amended and Restated Credit
Agreement dated as of December 22, 1993 with
Blockbuster (the "December Facility");
-----------------
including, without limitation, the following
conditions and covenants:
Conditions to Advances
----------------------
1. Representations and warranties by
Blockbuster relating to: the absence of
a material adverse change since
September 30, 1993, except as publicly
disclosed on or prior to the date
hereof; material compliance with all
regulations and laws (including
Regulations G, T, U and X); no
defaults; and other matters similar to
those set forth in the December
Facility.
2. Guaranties and cross-guaranties of
obligations under the Facility from
each material Subsidiary of
Blockbuster, except no guaranty from
Spelling Entertainment Group Inc. shall
be required.
3. The Subscription Agreement shall be in
full force and effect and has not been
materially amended without the consent
of Bank of America. Blockbuster shall
use the proceeds of the Financing to
purchase the Stock in accordance with
the terms of the Subscription Agreement.
4. Viacom shall have accepted for payment
at least 50.1% of the outstanding
shares of common stock of Paramount
Communications Inc. ("Paramount").
---------
5. (a) There shall not exist any material
claim, action, suit, investigation,
litigation or proceedings pending or,
to Blockbuster's knowledge, threatened,
in any court or before any arbitration
or governmental instrumentality, or any
judgment, order, injunction or other
restraint which has any reasonable likelihood
of having a material adverse effect on the
condition (financial or otherwise), operations,
business or properties of Blockbuster
and its Subsidiaries taken as a whole.
(b) There shall not exist any judgment,
order, injunction or other restraint
prohibiting or imposing materially
adverse conditions upon the purchase of
the stock of Viacom pursuant to the
Subscription Agreement or the making of
the loans under the Facility.
6. All material governmental and third
party consents and approvals necessary
in connection with the Subscription
Agreement shall have been obtained and
remain in effect and all applicable
waiting periods shall have expired.
Covenants
---------
1. Blockbuster to provide audited year-end
consolidated financials and company-
prepared quarterly consolidated
financials. Blockbuster will also
provide annual financial projections.
2. Additional guaranties and cross-
guaranties of obligation under the
Facility will be required from each
material subsidiary of Blockbuster.
3. Cross-default provision on all existing
and future debt of Blockbuster or its
subsidiaries ($10,000,000 aggregate
threshold for Blockbuster or any
subsidiary).
4. Limitation on liens; with certain
exceptions, including without
limitation an exception for "other
liens" not to exceed in aggregate 25%
of Consolidated Net Worth.
5. No loans, advances or investments
(other than investments in marketable
securities) to third persons other than
(i) the investment in Viacom pursuant
to the Subscription Agreement, (ii) the
loans disclosed to the Banks in
connection with Spelling/Republic,
(iii) other investments (other than,
directly or indirectly, in Viacom or
Paramount) not in excess of $150
million in the aggregate, (iv)
transactions, the payment or
consideration for which is common stock
of Blockbuster, and (v) loans,
advances, contributions and investments
which Blockbuster is obligated to make
on the date of this letter or becomes
obligated to make hereafter pursuant to
any agreement in existence on the date
hereof.
6. Provisions as to mergers and
substantial asset divestitures.
7. Change of Control provision.
8. Provisions pertaining to ERISA and
environmental laws compliance.
9. Indemnities customary to credit
agreements of this type, including
without limitation increased costs,
capital adequacy, and failure to borrow
following notice.
10. LIBOR funding is subject to
availability.
11. Customary provisions as to present or
future taxes, levies, imposts,
deductions, charges or withholdings,
and all liabilities with respect
thereto, other than net income taxes or
franchise taxes, as applicable to this
Facility, which shall be for the
account of the Borrower.
12. Events of default customary to credit
agreements of this type.
13. The definition of "Debt" will, without
limitation, include guaranties of
external obligations and exclude
interest and currency swaps.
14. Should Blockbuster receive any cash
payment with respect to its investment
pursuant to the Subscription Agreement
or should Viacom reduce Blockbuster's
obligations to invest in Viacom, the
proceeds shall be applied to reduce
outstandings and/or the commitment
under the Credit Agreement (in the case
of the Subscription Agreement, on a pro
rata basis with respect to similar
loans under the December Facility).
Financial Covenants
-------------------
1. Interest and Rents Coverage covenant,
such that the ratio of (i) consolidated
earnings before interest, taxes and
rents to (ii) consolidated interest and
rents, shall not be less than 1.5 to 1
(tested quarterly for year-to-date).
2. Senior Debt to Capital shall not exceed
a ratio of 0.50 to 1.
3. Total Debt to Capital shall not exceed
a ratio of 0.60 to 1.
4. Net Worth shall not be less than
$1,250,000,000 plus 50% of capital
stock issued and 50% of consolidated
net income (excluding net losses)
earned subsequent to December 31, 1993.
5. Net Cash Flow Coverage covenant, such
that the ratio of (i) consolidated net
income, plus interest, depreciation,
amortization and extraordinary losses,
less additions to capitalized store
pre-opening costs and extraordinary
gains to (ii) purchases of PP&E and
videocassettes (other than acquisitions
and new store development) plus cash
interest and cash dividends, shall not
be less than 1.25 to 1.0 (tested
quarterly trailing).
Governing Law: State of New York.
EXHIBIT A
BLOCKBUSTER ENTERTAINMENT CORPORATION
$1 Billion Term Loan
(in basis points)
Blockbuster Senior
Unsecured LTD Rating(*) Drawn Cost
Pricing Level 1:
A-/A3 and above LIBOR + 50
Pricing Level II:
BBB+/Baa1 to BBB/Baa2 LIBOR + 62.5
Pricing Level III:
BBB-/Baa3 LIBOR + 75
Pricing Level IV:
BB+ and Ba1 or below LIBOR + 100
Note: Commitment fee of 25 bp accruing upon acceptance.
--------------------
(*) In the event of a split rating, the lower rating will
determine the applicable pricing level; provided, however, that
--------
if one rating is at least BBB- or Baa3, and the other rating is
---
BB+ or Ba1, Pricing Level III shall apply.
EXECUTION COPY
_______________________________________________________________
_______________________________________________________________
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF DECEMBER 22, 1993
AMONG
BLOCKBUSTER ENTERTAINMENT CORPORATION,
THE DESIGNATED SUBSIDIARIES,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
AS AGENT,
BA SECURITIES, INC.,
AS ARRANGER,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
_______________________________________________________________
_______________________________________________________________
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Certain Common Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) Performance; Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(g) Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.03 Procedure for Committed Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.04 Conversion and Continuation Elections for Committed Borrowings . . . . . . . . . . . 25
2.05 Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.06 Procedure for Bid Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.07 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . . . . . 32
2.08 Optional Prepayments of Loans . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.09 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) The Committed Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) The Absolute Rate Bid Loans . . . . . . . . . . . . . . . . . . . . . . 33
2.10 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Participation Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(d) Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.12 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.14 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . . . . 37
2.15 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . . . . 45
- i -
Page
3.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . 47
3.06 Reserves on Offshore Rate Committed Loans . . . . . . . . . . . . . . . . . 47
3.07 Certificates of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.08 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.09 Replacement Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) Credit Agreement/Bid Notes . . . . . . . . . . . . . . . . . . . . 49
(b) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . . . . . 49
(c) Certificates of Incorporation; By-laws and Good Standing . . . . . . 49
(d) Guaranties/Pledge Agreement . . . . . . . . . . . . . . . . . . . . 50
(e) Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(f) Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . 50
(g) Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(h) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(i) Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.02 Conditions to All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 51
(a) Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 51
(b) Continuation of Representations and Warranties . . . . . . . . . . 51
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . . . . . 51
4.03 Conditions for Participation by a Designated Subsidiary . . . . . . . . . . 51
(a) Election to Participate . . . . . . . . . . . . . . . . . . . . . . 51
(b) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 51
(c) Documents; Authorizations . . . . . . . . . . . . . . . . . . . . . 51
(d) Guaranty Agreement . . . . . . . . . . . . . . . . . . . . . . . . 52
(e) Opinion of Counsel to the Guarantor . . . . . . . . . . . . . . . . 52
(f) Evidence of Appointment of Agent for Service . . . . . . . . . . . 52
(g) Continuation of Representations and Warranties . . . . . . . . . . 52
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . 53
5.02 Corporate Authorization; No Contravention . . . . . . . . . . . . . . . . . 53
5.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.08 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-ii-
Page
5.10 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.12 Trademarks and Licenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.04 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . 62
6.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.09 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . . . . . . . 63
6.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.11 Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VII
NEGATIVE COVENANTS
7.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.03 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.05 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.06 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.07 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.08 Consolidated Senior Debt to Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.09 Total Debt to Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.10 Net Cash Flow Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(b) Representation or Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(f) Bankruptcy or Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(h) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(i) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(j) Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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Section Page
(k) Guarantor/Pledgor Defaults . . . . . . . . . . . . . . . . . . . 72
8.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . 74
9.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . 77
9.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.10 The Arranger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 79
10.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . 81
10.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.08 Assignments, Participations, Confidentiality, etc. . . . . . . . . . . . . 81
10.09 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.10 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . 84
10.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.13 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . 84
10.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
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SCHEDULES
Schedule 2.01 Revolving Commitment
Schedule 4.01(d) Guarantors and Domestic Parents
Schedule 5.05 Litigation
Schedule 5.07 ERISA
Schedule 5.10 Permitted Liabilities
Schedule 5.11 Environment
Schedule 5.13 Subsidiaries and Equity Investments
Schedule 7.01 Permitted Liens
EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B Notice of Conversion/Continuation
Exhibit C Election to Participate
Exhibit D Election to Terminate
Exhibit E Guaranty Agreement
Exhibit F Bid Notes
Exhibit G Form of Competitive Bid Request
Exhibit H Invitation for Competitive Bids
Exhibit I Form of Competitive Bid
Exhibit J Subsidiary Guaranty
Exhibit K Contribution Agreement
Exhibit L-1 Pledge Agreement
Exhibit L-2 Pledge Agreement
Exhibit M-1 Opinion of Counsel for the Company
Exhibit M-2 Opinion of Counsel for the Designated
Subsidiary
Exhibit M-3 Opinion of Counsel for the Company,
as Guarantor
Exhibit N Assignment and Acceptance
-v-
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
December 22, 1993, among BLOCKBUSTER ENTERTAINMENT CORPORATION, a Delaware
corporation (the "Company"), the Designated Subsidiaries (as hereinafter
defined) of the Company, the several financial institutions party to this
Agreement (collectively, the "Banks"; individually, a "Bank"), Bank of America
National Trust and Savings Association, as administrative agent for the Banks
(the "Agent") and BA Securities, Inc., as Arranger.
WHEREAS, Company, the Designated Subsidiaries, the financial
institutions party thereto (the Existing Banks") and the Agent are party to a
Credit Agreement dated as of October 15, 1992 (the "1992 Credit Agreement");
WHEREAS, the Company has requested that the Banks enter into this
Amended and Restated Credit Agreement for the purpose of increasing the
Revolving Commitment, terminating the Obligations of Existing Banks which are
not Banks party hereto (the "Non- Extending Banks"), adding certain new Banks
and making certain amendments;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereto hereby agree that from and
after the Closing Date (as hereinafter defined), the 1992 Credit Agreement
shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Absolute Rate" has the meaning specified in subsection
2.06(c).
"Absolute Rate Auction" means a solicitation of Competitive
Bids setting forth Absolute Rates pursuant to Section 2.06.
"Absolute Rate Bid Loan" means a Loan by a Bank to the Company
or a Designated Subsidiary that bears interest at a rate determined
with reference to an Absolute Rate.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct
or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by
contract or otherwise. Without limitation, any director, executive
officer or beneficial owner of 10% or more of the equity of a Person
shall for the purposes of this Agreement, be deemed to control the
other Person. In no event shall any Bank be deemed an "Affiliate" of
the Company or any Subsidiary of the Company.
"Agent" means Bank of America National Trust and Savings
Association in its capacity as agent for the Banks hereunder, and any
successor agent.
"Agent-Related Persons" has the meaning specified in Section
9.03.
"Agent's Payment Office" means the address for payments set
forth on the signature page hereto in relation to the Agent or such
other address as the Agent may from time to time specify in accordance
with Section 10.02.
"Aggregate Commitment" means the combined Revolving
Commitments of the Banks in the principal amount of $1,000,000,000, as
such amount may be reduced from time to time pursuant to this
Agreement.
"Agreement" means this Credit Agreement, as amended,
supplemented or modified from time to time.
"Applicable Margin" means
(i) with respect to Reference Rate Committed Loans,
zero percent (0%);
(ii) with respect to all outstanding CD Rate
Committed Loans,
(A) if Level I Status exists on such day
and outstandings are (i) equal to or less than $375
million dollars, .4375% or (ii) greater than $375
million dollars, .50%;
(B) if Level II Status exists on such
day and outstandings are (i) equal to or less than
$375 million dollars, .4375% or (ii) greater than
$375 million dollars, .5625%;
(C) if Level III Status exists on such
day and outstandings are (i) equal to or less than
$375 million dollars, .5500% or (ii) greater than
$375 million dollars, .6750%;
2
(D) if Level IV Status exists on such
day and outstandings are (i) equal to or less than
$375 million dollars. .6500% or (ii) greater than
$375 million dollars, .7750%.
(iii) with respect to all outstanding Offshore Rate
Committed Loans,
(A) if Level I Status exists on such day
and outstandings are (i) equal to or less than $375
million dollars, .3125% or (ii) greater than $375
million dollars, .3750%;
(B) if Level II Status exists on such
day and outstandings are (i) equal to or less than
$375 million dollars, .3125% or (ii) greater than
$375 million dollars, .4375%;
(C) if Level III Status exists on such
day and outstandings are (i) equal to or less than
$375 million dollars, .4250% or (ii) greater than
$375 million dollars, .5500%;
(D) if Level IV Status exists on such
day and outstandings are (i) equal to or less than
$375 million dollars, .5250% or (ii) greater than
$375 million dollars, .6500%.
"Arranger" means BA Securities, Inc. or a successor mutually
agreed between BofA and the Company.
"Assignee" has the meaning specified in Section 10.08.
"Assignment and Acceptance" has the meaning specified in
subsection 10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated
cost of internal legal services and all disbursements of internal
counsel.
"Bank Affiliate" means a Person engaged primarily in the
business of commercial banking and that is a Subsidiary of a Bank or
of a Person of which a Bank is a Subsidiary.
"Bid Borrowing" means a Borrowing hereunder consisting of one
or more Absolute Rate Bid Loans made to the Company or a Designated
Subsidiary on the same day by one or more Banks.
3
"Bid Loan Lender" means, in respect of any Absolute Rate Bid
Loan, the Bank making such Loan to the Company or a Designated
Subsidiary.
"Bid Notes" means those master promissory notes by the
Company, executed by the Company or any Designated Subsidiary, to the
order of each of the Banks, substantially in the form of Exhibit F.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder, consisting of one or
more Loans made to the Company or a Designated Subsidiary on the same
day by the Banks or a Bank pursuant to Article II, and may be a Bid
Borrowing or a Committed Borrowing, as applicable.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close and, if the applicable
Business Day relates to any Offshore Rate Committed Loan, means such a
day on which dealings are carried on in the applicable offshore dollar
interbank market.
"Capital" means the sum of all Indebtedness of the Company and
its Subsidiaries plus Consolidated Net Worth.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Lease Obligations" means all monetary obligations of
the Company or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured
by the United States Government or any agency thereof and
backed by the full faith and credit of the United States
having maturities of not more than six months from the date of
acquisition;
(b) certificates of deposit, time deposits,
Eurodollar time deposits, repurchase agreements, reverse
repurchase agreements, or bankers' acceptances, having in each
case a tenor of not more than six months, issued by any Bank,
or by any U.S. commercial bank or any branch or
4
agency of a non-U.S. bank licensed to conduct business in the
U.S. having combined capital and surplus of not less than
$100,000,000 whose ultimate parent's short term securities are
rated at least A-1 by S&P and P-1 by Moody's;
(c) commercial paper of an issuer rated at least A-1
by S&P and P-1 by Moody's and in either case having a tenor of
not more than six months.
"CD Rate" means, for each Interest Period in respect of CD
Rate Committed Loans comprising a part of the same Borrowing, the rate
of interest (rounded upward to the nearest 1/100th of 1%) determined
pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
--------------------------- Rate
1.00 - Reserve Percentage
Where:
"Assessment Rate" means for any day of any Interest
Period for CD Rate Committed Loans, the rate determined by the
Agent as equal to the annual assessment rate in effect on such
day that is payable to the FDIC by a member of the Bank
Insurance Fund, that is classified as adequately capitalized
and within supervisory subgroup "A" (or a comparable successor
assessment risk classification within the meaning of 12 C.F.R.
Section 327.3(d)) for insuring time deposits at offices of
such member in the United States, or, in the event that the
FDIC shall at any time hereafter cease to assess time deposits
based upon such classifications or successor classifications,
equal to the maximum annual assessment rate in effect on such
day that is payable to the FDIC by commercial banks (whether
or not applicable to the Banks) for insuring time deposits at
offices of such banks in the United States.
"Certificate of Deposit Rate" means for any Interest
Period for CD Rate Committed Loans the rate of interest
determined by the Agent to be the average (rounded upward to
the nearest 1/100th of 1%) of the rates notified to the Agent
by each of the Reference Banks at 10:00 a.m. (New York time)
on the first day of such Interest Period, of the rates of
interest bid by two or more certificate of deposit dealers of
recognized standing selected by such Reference Bank for the
purchase at face value of certificates of deposit of such
Reference Bank for a maturity comparable to such period and in
the amount of the CD Rate Committed Loans to be made that day.
5
"Reserve Percentage" means for any Interest Period
for CD Rate Committed Loans the maximum reserve percentage
(expressed as a decimal, rounded upward to the nearest 1/100th
of 1%), as determined by the Agent, in effect on the first day
of such Interest Period (including, but not limited to,
marginal, emergency, supplemental, special and other reserve
percentages) prescribed by the Federal Reserve Board for
determining the maximum reserves to be maintained by member
banks of the Federal Reserve System with deposits exceeding
$1,000,000,000 for new non-personal time deposits for a period
comparable to such Interest Period and in an amount of
$100,000 or more.
"CD Rate Committed Loan" means a Committed Loan that bears
interest based on the CD Rate.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Change of Control" means that there is a report filed on
Schedule 13D or 14D-1 (or any successor schedule, form or report)
pursuant to the Exchange Act, disclosing that any person (for the
purposes hereof only, as the term "person" is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13-d or
any successor rule or regulation promulgated under the Exchange Act)
of 50% or more of the then outstanding shares of common stock of the
Company; provided, however, that a person shall not be deemed
beneficial owner of, or to own beneficially, (A) any securities
tendered pursuant to a tender or exchange offer made by or on behalf
of such person or any of such person's Affiliates until such tendered
securities are accepted for purchase or exchange thereunder, or (B)
any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or
consent solicitation made pursuant to the applicable rules and
regulations under the Exchange Act.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to have occurred by virtue of the Company, any Subsidiary,
any employee stock ownership plan or any other employee benefit plan
of the Company or any Subsidiary, or any person holding common stock
of the Company for or pursuant to the terms of any such employee
benefit plan, filing or becoming obligated to file a report under or
in response to Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report) under the Exchange Act disclosing beneficial
ownership by it of shares of common stock of the Company, whether in
excess of 50% or otherwise.
6
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.01 are satisfied or waived by all
Banks.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
"Commitment Percentage" means, as to any Bank at any time, the
percentage equivalent of such Bank's Revolving Commitment divided by
the Aggregate Commitment of all the Banks.
"Committed Borrowing" means a Borrowing hereunder consisting
of Committed Loans made on the same day by the Banks ratably according
to their respective Commitment Percentages and, in the case of CD Rate
Committed Loans and Offshore Rate Committed Loans, having the same
Interest Periods.
"Committed Loan" means a Loan by a Bank to the Company or a
Designated Subsidiary under Section 2.01, and shall be a CD Rate
Committed Loan, an Offshore Rate Committed Loan or a Reference Rate
Committed Loan.
"Competitive Bid" means an offer by a Bank to make an Absolute
Rate Bid Loan in accordance with subsection 2.06(c).
"Competitive Bid Request" has the meaning specified in
subsection 2.06(a).
"Company's Payment Office" means the address for payments set
forth on the signature page hereto or such other instructions as the
Company may from time to time specify in accordance with Section
10.02.
"Consolidated Interest Expense" means, for any period, gross
consolidated interest expense for the period (including all
commissions, discounts, fees and other charges in connection with
standby letters of credit and similar instruments) for the Company and
its Subsidiaries, plus the portion of the upfront costs and expenses
for Rate Contracts (to the extent not included in gross consolidated
interest expense) fairly allocated to such Rate Contracts as expenses
for such period.
"Consolidated Net Worth" means, with respect to the Company
and its Subsidiaries, the excess of consolidated total assets over
consolidated total liabilities, excluding, however, from the
determination of consolidated total assets (i) capital stock,
obligations, or other securities of, or
7
capital contributions to, or investments in, any Subsidiary, to the
extent otherwise included in the preparation of the financial
statements which set forth the consolidated total assets of the
Company and its Subsidiaries, and (ii) cash held in a sinking or other
analogous fund contractually established for the purpose of
redemption, retirement or prepayment of capital stock or Indebtedness.
"Consolidated Senior Debt" means all Indebtedness of the
Company and its consolidated Subsidiaries other than (i) Subordinated
Debt and (ii) Contingent Obligations relating to the amended and
restated partnership agreement between The Westside Amphitheatre and
Charlotte Amphitheater Corporation and YM Corp. dated as of December
1, 1993 in an amount not to exceed $50,000,000.
"Contingent Obligation" means, without duplication, as to any
Person, (a) any Guaranty Obligation of that Person; and (b) any direct
or indirect recourse obligation or liability, contingent or otherwise,
of that Person, (i) in respect of any letter of credit or similar
instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, (ii) to
purchase any materials, supplies or other property from, or to obtain
the services of, another Person if the relevant contract or other
related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be
made if delivery of such materials, supplies or other property is not
made or tendered, or such services are never performed or tendered, or
(iii) incurred pursuant to any Rate Contract net of any payments due
to that Person. The amount of any Contingent Obligation shall
(subject, in the case of Guaranty Obligations, to the last sentence of
the definition of "Guaranty Obligation") be deemed equal to the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligations" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether
or not incorporated) under common control or treated as a single
employer with the Company pursuant to Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Date" means any date on which the Company converts
a Reference Rate Committed Loan to an Offshore Rate Committed Loan or
a CD Rate Committed Loan; a CD Rate Committed Loan to an Offshore Rate
Committed Loan or a
8
Reference Rate Committed Loan; or an Offshore Rate Committed Loan to a
CD Rate Committed Loan or a Reference Rate Committed Loan.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied) constitute an Event of Default.
"Designated Subsidiary" means any Subsidiary of the Company as
to which an Election to Participate shall have been delivered to the
Agent and as to which an Election to Terminate shall not have been
delivered to the Agent. Each such Election to Participate and
Election to Terminate shall be duly executed on behalf of such
Subsidiary and the Company in such number of copies as the Agent may
request. The delivery of an Election to Terminate shall not affect
any Obligation of a Designated Subsidiary theretofore incurred. The
Agent shall promptly give notice to the Banks of the receipt of any
Election to Participate or Election to Terminate.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"Domestic Dollar Loans" means CD Rate Committed Loans and
Reference Rate Committed Loans, collectively.
"Domestic Lending Office" means, with respect to each Bank,
the office of that Bank designated as such in the signature pages
hereto or such other office of the Bank as it may from time to time
specify to the Company and the Agent.
"Domestic Parent" means with respect to a foreign Material
Subsidiary, the domestic Subsidiary which most directly owns such
foreign Material Subsidiary.
"Election to Participate" means an Election to Participate by
a Designated Subsidiary, substantially in the form of Exhibit C
hereto.
"Election to Terminate" means an Election to Terminate by a
Designated Subsidiary, substantially in the form of Exhibit D hereto.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, and having
total assets of at least $10,000,000,000; (ii) a commercial bank
organized under the laws of any other country or a political
subdivision of any such country, and having total assets of at least
$10,000,000,000, provided that such bank is acting through a branch or
agency located in the
9
United States; and (iii) any Bank Affiliate which meets the
qualifications of (i) and (ii) above.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law or
for release or injury to the environment or threat to public health,
personal injury (including sickness, disease or death), property
damage, natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based
upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental placement, spills,
leaks, discharges, emissions or releases) of any Hazardous Material
at, in, or from Property, whether or not owned by the Company, or (b)
any other circumstances forming the reasonable basis of any violation,
or alleged violation, of any Environmental Law.
"Environmental Laws" means all Federal, State or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters; including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act
of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste Management,
Resource, Recovery and Recycling Act, the California Water Code and
the California Health and Safety Code.
"Environmental Lien" means a lien in favor of any Governmental
Authority for (i) any liability under any environmental or health and
safety Requirement of Law, or (ii) damages arising from, or costs
incurred by such Governmental Authority in response to, a release or
threatened release of Hazardous Materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
10
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan; (b) a withdrawal by the
Company or any ERISA Affiliate from a Qualified Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete
or partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan; (d) a failure by the Company or any member of the
Controlled Group to make required contributions to a Qualified Plan or
Multiemployer Plan; (e) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Company or any ERISA Affiliate; (f) an
application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code with respect to any Plan;
or (g) a violation of the applicable requirements of Section 404 or
405 of ERISA or the exclusive benefit rule under Section 401(a) of the
Code by any fiduciary or disqualified person with respect to any Plan
for which the Company or any member of the Controlled Group may be
directly or indirectly liable.
"Estimated Remediation Cost" means all costs associated with
performing work to remediate contamination of real property or
groundwater, including engineering and other professional fees and
expenses, costs to remove, transport and dispose of contaminated soil,
costs to "cap" or otherwise contain contaminated soil, and costs to
pump and treat water and monitor water quality.
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and regulations promulgated thereunder.
"Existing Bid Loan" means a Bid Loan outstanding under the
1992 Credit Agreement.
"Federal Funds Rate" means the weighted average of the rates
on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for
such day of determination (or if such day of determination is not a
Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such
day on such
11
transaction received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereof.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or such other practices as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to
the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" means the Company and each domestic Material
Subsidiary of the Company and such foreign Material Subsidiary which
shall have delivered a guaranty pursuant to Section 6.11.
"Guaranty Obligation" means, without duplication, as applied
to any Person, any direct or indirect recourse liability of that
Person with respect to any Indebtedness, capital lease, dividend,
letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of
that Person, whether or not contingent, (a) to purchase, repurchase
or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance
or provide funds (i) for the payment or discharge of any such primary
obligation, or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency
or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in
respect thereof. The amount of any Guaranty Obligation shall be
deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if
not stated or if
12
indeterminable, the maximum reasonably anticipated liability in
respect thereof.
"Hazardous Materials" means all those substances which are
regulated by, or which form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, asbestos or petroleum or petroleum
derived substance or waste.
"Indebtedness" means, with respect to any Person, without
duplication, (i) indebtedness for borrowed money or for the deferred
purchase price of property or services, (ii) obligations as lessee
under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (iii) Contingent Obligations of the
kinds referred to in clause (i) or (ii) above or in respect of any
letter of credit or similar instrument, but shall in no event include
Rate Contracts, and (iv) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA.
"Indemnified Person" has the meaning specified in subsection
10.05.
"Indemnified Liabilities" has the meaning specified in
subsection 10.05.
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors; in
each case (a) and (b) undertaken under U.S. Federal, State or foreign
law.
"Interest Payment Date" means, with respect to any CD Rate
Committed Loan, Offshore Rate Committed Loan, or Absolute Rate Bid
Loan, the last day of each Interest Period applicable to such Loan
and, with respect to Reference Rate Committed Loans, the last Business
Day of each calendar quarter and each date a Reference Rate Committed
Loan is converted into an Offshore Rate Committed Loan or a CD Rate
Committed Loan, provided, however, that if any Interest Period for a
CD Rate Committed Loan or Offshore Rate Committed Loan exceeds 90 days
or three months, respectively, the date which falls 90 days or three
months after the beginning of such Interest Period shall also be an
"Interest Payment Date".
13
"Interest Period" means, (a) with respect to any Offshore Rate
Committed Loan, the period commencing on the Business Day the Loan is
disbursed or continued or on the Conversion Date on which the Loan is
converted to the Offshore Rate Committed Loan and ending on the date
one, two, three or six months thereafter, as selected by the Company
or a Designated Subsidiary in its Notice of Borrowing, Notice of
Conversion/Continuation or Competitive Bid Request; (b) with respect
to any CD Rate Committed Loan, the period commencing on the Business
Day the CD Rate Committed Loan is disbursed or continued or on the
Conversion Date on which a Loan is converted to the CD Rate Committed
Loan and ending 30, 60, 90 or 180 days thereafter, as selected by the
Company in its Notice of Borrowing or Notice of
Conversion/Continuation; and (c) with respect to any Absolute Rate Bid
Loan, a period of not less than 7 days and not more than 183 days as
selected by the Company in its Competitive Bid Request commencing on
the date of the funding;
provided that:
(i) if any Interest Period pertaining to an
Offshore Rate Committed Loan or CD Rate Committed Loan would
otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding
Business Day unless, in the case of an Offshore Rate Committed
Loan, the result of such extension would be to carry such
Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period pertaining to an Offshore
Rate Committed Loan that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend
beyond the Revolving Termination Date.
"Invitation for Competitive Bids" means a solicitation for
Competitive Bids, substantially in the form of Exhibit H.
"Lending Office" means, with respect to any Bank, the office
or offices of the Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be,
opposite its name on the signature pages hereto, or such other office
or offices of the
14
Bank as it may from time to time specify to the Company, the
Designated Subsidiaries and the Agent.
"Level I Status" exists at any date if, at such date the
Company's Public Debt Rating is rated A- or higher (or the equivalent)
as publicly announced by S&P and A3 or higher (or the equivalent) as
publicly announced by Moody's.
"Level II Status" exists at any date if, at such date (i) the
Company's Public Debt Rating is rated BBB+ or BBB or higher (or the
equivalent) as publicly announced by S&P and Baa1 or Baa2 or higher
(or the equivalent) as publicly announced by Moody's and (ii) Level I
Status does not exist.
"Level III Status" exists at any date if, at such date (i) the
Company's Public Debt Rating is rated BBB- or higher (or the
equivalent) as publicly announced by S&P and Baa3 or higher (or the
equivalent) as publicly announced by Moody's and (ii) Level I Status
and Level II Status do not exist.
"Level IV Status" exists at any date if, at such date (i) the
Company's Public Debt Rating is rated BB+ or lower (or the equivalent)
as publicly announced by S&P or Ba1 or lower (or the equivalent) as
publicly announced by Moody's.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever
(including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the UCC or any comparable
law) and any other agreement to provide any the foregoing.
"Loan" means an extension of credit by a Bank to the Company
or a Designated Subsidiary pursuant to Article II, and may be a
Committed Loan or an Absolute Rate Bid Loan.
"Loan Documents" means this Agreement and all documents
hereafter delivered to the Agent, including guaranties and pledge
agreements, in connection therewith.
"Majority Banks" means, at any time, Banks holding more than
50% of the Revolving Commitments, provided, that if the Revolving
Commitments have been terminated in full, "Majority Banks" shall mean
Banks holding more than 50% of the then aggregate unpaid principal
amount of the Loans.
15
"Material Adverse Effect" means a material adverse change in,
or a material adverse effect upon, any of (a) the business, results of
operations or financial condition of the Company and its Subsidiaries
taken as a whole; or (b) the legality, validity, binding effect or
enforceability of any Loan Document.
"Material Subsidiary" means any Subsidiary of the Company, the
assets of which represent 10% or more of the consolidated assets of
the Company and its Subsidiaries.
"Multiemployer Plan" means a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and to which any member of the
Controlled Group makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has made,
or been obligated to make, contributions.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Flow" means, for any period, the sum of (i)
consolidated net income (or net loss, as the case may be) of the
Company and its Subsidiaries during such period, minus (ii) additions
to capitalized store pre-opening costs during such period, plus (iii)
amounts which in the determination of net income for such period have
been deducted for depreciation, amortization and interest expense.
The calculation of net income with respect to any period shall be made
without giving effect to any extraordinary gains or losses (as such
gains and losses are defined under GAAP) arising during such period.
"Notice of Borrowing" means a notice given by the Company or a
Designated Subsidiary to the Agent pursuant to Section 2.03, in
substantially the form of Exhibit A.
"Notice of Conversion/Continuation" means a notice given by
the Company or a Designated Subsidiary to the Agent pursuant to
Section 2.04, in substantially the form of Exhibit B.
"Notice of Lien" means any "notice of lien" or similar
document intended to be filed or recorded with any court, registry,
recorder's office, central filing office or other Governmental
Authority for the purpose of evidencing, creating, perfecting or
preserving the priority of a Lien securing obligations owing to a
Governmental Authority.
"Obligations" means all Loans, and other Indebtedness,
advances, debts, liabilities, obligations, covenants and duties owing
by the Company or any Designated Subsidiary to any Bank, the Agent, or
any Indemnified Person, of any kind or
16
nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement, under any
other Loan Document, or in respect of any Rate Contract, whether or
not for the payment of money, whether arising by reason of an
extension of credit, loan, guaranty, indemnification or in any other
manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired.
"Offshore Lending Office" means with respect to each Bank, the
office of such Bank designated as such in the signature pages hereto
or such other office of such Bank as such Bank may from time to time
specify to the Company, the Designated Subsidiaries and the Agent.
"Offshore Rate" means, for any Interest Period for Offshore
Rate Committed Loans comprising the same Borrowing, the rate per annum
equal to the average (rounded upward to the nearest whole multiple of
1/16th of 1%) of the rates of interest per annum notified to the Agent
by each Reference Bank as the rate at which dollar deposits for such
Interest Period and in an amount comparable to the amount of the
Offshore Rate Committed Loan of such Reference Bank during such
Interest Period would be offered by its Offshore Lending Office to
major banks in the London eurodollar market at or about 11:00 a.m.
(London time) on the second Business Day before the first day of such
Interest Period.
"Offshore Rate Committed Loan" means any Committed Loan that
bears interest at a rate determined with reference to the Offshore
Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders, and all applicable resolutions of the board of directors
(or any committee thereof) of such corporation.
"Other Taxes" has the meaning specified in subsection 3.01(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Participant" has the meaning specified in subsection 10.08(d).
"Permitted Liens" has the meaning specified in Section 7.01.
17
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company or any member of the Controlled Group
sponsors or maintains or to which the Company or any member of the
Controlled Group makes, is making or is obligated to make
contributions.
"Pledgor" means each Material Subsidiary that has delivered a
pledge agreement pursuant to Section 6.11.
"Property" means any estate or interest in any kind of
property or asset, whether real, personal or mixed, and whether
tangible or intangible.
"Public Debt Rating" means, as of any date, the lowest rating
that has been most recently announced by S&P or Moody's, as the case
may be, for any class of long-term senior unsecured debt issued by the
Company. For the purposes of the foregoing, (a) if no Public Debt
Rating shall be available from either S&P or Moody's, the level will
be set in accordance with Level IV Status; (b) if only one of S&P or
Moody's shall have in effect a Public Debt Rating, the level shall be
determined by reference to the available rating; (c) if the ratings
established by S&P and Moody's shall fall within different levels, the
level shall be based upon the lower rating; provided, however,that if
one rating is at least BBB- or Baa3 and the other rating is BB+ or
Ba1, Level III Status shall apply; and (d) if any rating established
by S&P or Moody's shall be changed, such change shall be effective as
of such date on which such change is first announced publicly by the
rating agency making such change.
"Qualified Plan" means a pension plan (as defined in Section
3(2) of ERISA) intended to be tax-qualified under Section 401(a) of
the Code which is subject to Section 412 of the Code and which any
member of the Controlled Group sponsors, maintains, or to which it
makes, is making or is obligated to make contributions, or in the case
of a multiple employer plan (as described in Section 4064(a) of ERISA)
has made contributions at any time during the immediately preceding
period covering at least five (5) plan years, but excluding any
Multiemployer Plan.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or
arrangements designed to provide protection against fluctuations in
interest or currency exchange rates.
18
"Reference Banks" means BofA, Citibank, N.A., The Bank of
Tokyo, Ltd. and Westdeutsche Landesbank Gironzentrale. Subject to
Section 3.05, in the event that at any time of determination any two
Banks designated as "Reference Banks" are providing rates for deposits
referred to in the definition of "CD Rate" or "Offshore Rate", those
two Banks shall be the "Reference Banks" or, if only one such Bank is
providing such rates, that Bank shall be the "Reference Bank" for
purposes of this Agreement.
"Reference Rate" means the higher of:
(a) the rate of interest publicly announced from
time to time by BofA in San Francisco, California, as its
reference rate. It is a rate set by BofA based upon various
factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced
at, above, or below such announced rate; and
(b) 1/2% per annum above the latest Federal Funds
Rate.
Any change in the reference rate announced by BofA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"Reference Rate Committed Loan" means a Committed Loan that
bears interest based on the Reference Rate.
"Rents" means rental payments pursuant to any operating lease
between the Company or any Subsidiary and any real estate lessor.
"Reportable Event" means, as to any Plan, (a) any of the
events set forth in Section 4043(b) of ERISA or the regulations
thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the
PBGC, (b) a withdrawal from a Plan described in Section 4063 of ERISA,
or (c) a cessation of operations described in Section 4062(e) of
ERISA.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the vice chairman, chief executive
officer, the president, chief financial officer or
19
treasurer of the Company, a Designated Subsidiary, or a Guarantor or
any other officer having substantially the same authority and
responsibility.
"Revolving Commitment", with respect to each Bank, has the
meaning specified in subsection 2.01.
"Revolving Termination Date" means the earlier to occur of
(a) the earlier of (i) forty months from the Closing
Date and (ii) April 30, 1997; and
(b) the date on which the Revolving Commitments
shall terminate in accordance with the provisions of this
Agreement.
"SEC" means the Securities and Exchange Commission, or any
successor thereto.
"S&P" means Standard & Poor's Corporation.
"Subordinated Debt" means, unsecured Indebtedness of the
Company or a Subsidiary which is subordinated in right of payment to
the Obligations.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which at least
50% of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof.
"Taxes" has the meaning specified in subsection 3.01(a).
"Total Debt" means the aggregate of all Indebtedness of the
Company, including Subordinated Debt.
"Transferee" has the meaning specified in subsection 10.08(e).
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"Unfunded Pension Liabilities" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used by the Plan's actuaries for funding the Plan pursuant
to Section 412 of the Code for the applicable plan year.
20
"United States" and "U.S." each means the United States of
America.
"Withdrawal Liabilities" means, as of any determination date,
the aggregate amount of the liabilities, if any, pursuant to Section
4201 of ERISA if the Controlled Group made a complete withdrawal from
all Multiemployer Plans and any increase in contributions pursuant to
Section 4243 of ERISA.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms.
(b) The Agreement. The words "hereof", "herein",
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and section, schedule and exhibit references are to this Agreement
unless otherwise specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Whenever any performance
obligation hereunder (other than a payment obligation) shall be stated to be
due or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business Day. In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding," and the word "through" means "to and including".
If any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be interpreted to encompass any and all means, direct or indirect, of
taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided
herein, references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and
21
other modifications are not prohibited by the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to
be construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
22
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees,
on the terms and conditions hereinafter set forth, to make Committed Loans to
the Company and the Designated Subsidiaries from time to time on any Business
Day during the period from the Closing Date to the Revolving Termination Date,
in an aggregate amount not to exceed at any time outstanding the amount set
forth opposite the Bank's name in Schedule 2.01 under the heading "Revolving
Commitment" (such amount as the same may be reduced pursuant to Section 2.07 or
as a result of one or more assignments pursuant to Section 10.08, the Bank's
"Revolving Commitment"); provided, however, that, after giving effect to any
Borrowing of Committed Loans, the aggregate principal amount of all outstanding
Committed Loans together with the aggregate principal amount of all outstanding
Absolute Rate Bid Loans and Existing Bid Loans shall not exceed the Aggregate
Commitment and provided that no Bank shall be obliged to make a Loan, if the
Interest Period would extend beyond the Revolving Termination Date. Within the
limits of each Bank's Revolving Commitment, and subject to the other terms and
conditions hereof, the Company and the Designated Subsidiaries may borrow under
this subsection 2.01, prepay pursuant to Section 2.07 and reborrow pursuant to
this subsection 2.01.
2.02 Loan Accounts.
(a) The Committed Loans made by each Bank shall be evidenced
by one or more loan accounts maintained by such Bank in the ordinary
course of business and not, except pursuant to Section 10.08, by
promissory notes. The loan accounts maintained by the Agent and each
Bank shall be conclusive, absent manifest error, of the amount of the
Committed Loans made by the Banks to the Company and the interest and
payments thereon. Any failure to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the
Company and the Designated Subsidiaries hereunder to pay any amount
owing with respect to the Committed Loans. In the case of any
dispute, action or proceeding relating to any amount payable
hereunder, the entries in each such account shall constitute
conclusive evidence of the accuracy of the information so recorded.
In case of a discrepancy between the entries in the Agent's books and
any Bank's books, such Bank's books shall be considered correct in the
absence of manifest error.
(b) The Absolute Rate Bid Loans made by each Bank shall be
evidenced by a Bid Note payable to the order of such Bank. Each Bank
shall endorse on the schedules annexed to its Bid Note the date,
amount and maturity of each Absolute Rate Bid Loan made by it and the
amount of each payment of principal made by the Company or a
Designated Subsidiary with respect
23
thereto. Each Bank is irrevocably authorized by the Company to
endorse its Bid Note and each Bank's record shall constitute prima
facie evidence of the accuracy of the information so recorded;
provided, however, that the failure of a Bank to make, or an error in
making, a notation thereon with respect to any Absolute Rate Bid Loan
shall not limit or otherwise affect the obligations of the Company or
any Designated Subsidiary hereunder or under any such Bid Note to such
Bank.
2.03 Procedure for Committed Borrowings.
(a) Each Committed Borrowing by the Company or a
Designated Subsidiary shall be requested (which request shall be
irrevocable) by a telephone call to the Agent followed promptly by
facsimile transmission by the Company or a Designated Subsidiary of a
Notice of Borrowing in substantially the form ofExhibit A (which
notice must be received by the Agent prior to 11:00 a.m. (New York
time) (i) three Business Days prior to the requested borrowing date,
in the case of Offshore Rate Committed Loans; (ii) two Business Days
prior to the requested borrowing date, in the case of CD Rate
Committed Loans, and (iii) one Business Days prior to the requested
borrowing date, in the case of Reference Rate Committed Loans, except
as otherwise set forth in Section 2.06, specifying:
(A) the amount of the Committed Borrowing,
which shall be in an aggregate minimum principal
amount of $5,000,000 ($2,500,000 for Reference Rate
Loans) or in an integral multiple of $1,000,000 in
excess thereof;
(B) the requested borrowing date, which
shall be a Business Day;
(C) whether the Committed Borrowing is to be
comprised of Offshore Rate Committed Loans, CD Rate
Committed Loans or Reference Rate Committed Loans;
(D) the duration of the Interest Period
applicable to such Loans included in such notice
subject to the provisions of the definition of
Interest Period. If the Notice of Borrowing shall
fail to specify the duration of the Interest Period
for any Committed Borrowing comprised of CD Rate
Committed Loans or Offshore Rate Committed Loans,
such Interest Period shall be 30 days or one month,
respectively.
24
(b) Upon receipt of the Notice of Borrowing, the Agent
will promptly, but no later than the close of business (New York time)
on the day of such notice, notify each Bank thereof and of the amount
such Bank's Commitment Percentage of the Borrowing.
(c) Each Bank will make the amount of its Commitment
Percentage of the Committed Borrowing available to the Agent for the
account of the Company or the Designated Subsidiary at the Agent's
Payment Office by 11:00 a.m. (New York time) on the borrowing date
requested by the Company or a Designated Subsidiary in funds
immediately available to the Agent. Unless any applicable condition
specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company or a Designated
Subsidiary by the Agent at the Company's Payment Office no later than
1:00 p.m. (New York time) by crediting the account of the Company or a
Designated Subsidiary with the aggregate of the amounts made available
to the Agent by the Banks and in like funds as received by the Agent.
(d) Unless the Majority Banks shall otherwise agree,
during the existence of a Default or Event of Default, the Company may
not have a Committed Loan converted into or continued as, an Offshore
Rate Committed Loan or a CD Rate Committed Loan.
(e) After giving effect to any Borrowing, there shall not
be more than 15 different Interest Periods in effect in respect of all
Committed Loans.
2.04 Conversion and Continuation Elections for Committed Borrowings.
(a) The Company or a Designated Subsidiary may upon
irrevocable written notice to the Agent in accordance with subsection
2.04(b):
(i) elect to convert on any Business Day, any
Reference Rate Committed Loans (or any part thereof in an
amount not less than $5,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof) into Offshore Rate
Committed Loans or CD Rate Committed Loans;
(ii) elect to convert at the end of any Interest
Period any Offshore Rate Committed Loans or CD Rate Committed
Loans payable on such date (or any part thereof in an amount
not less than $2,500,000 into Reference Rate Committed Loans
(assuming the balance of any such Committed Loans are
simultaneously repaid);
25
(iii) elect to convert at the end of any Interest
Period any Offshore Rate Committed Loans or CD Rate Committed
Loans payable on such date (or any part thereof in an amount
not less than $5,000,000 or that is in an integral multiple of
$1,000,000 in excess thereof) into CD Rate Committed Loans, or
Offshore Rate Committed Loans, as the case may be; or
(iv) elect to continue at the end of any Interest
Period any Offshore Rate Committed Loans or CD Rate Committed
Loans payable on such date (or any part thereof in an amount
not less than $5,000,000, or that is in an integral multiple
of $1,000,000 in excess thereof);
provided, that if the aggregate amount of CD Rate Committed Loans or
Offshore Rate Committed Loans shall have been reduced, by payment,
prepayment, or conversion of part thereof to be less than $1,000,000,
the CD Rate Committed Loans or Offshore Rate Committed Loans shall
automatically convert into Reference Rate Committed Loans, and on and
after such date the right of the Company or a Designated Subsidiary to
continue such Loans as Offshore Rate Committed Loans or CD Rate
Committed Loans, as the case may be, shall terminate.
(b) The Company or a Designated Subsidiary shall call the
Agent, followed promptly by telex, cable or facsimile of a Notice of
Conversion/Continuation substantially in the form of Exhibit B to be
received by the Agent not later than 11:00 a.m. (New York time) at
least (i) three Business Days in advance of the Conversion Date or
continuation date, if the Committed Loans are to be converted into or
continued as Offshore Rate Committed Loans; (ii) two Business Days in
advance of the Conversion Date or continuation date, if the Loans are
to be converted into or continued as CD Rate Committed Loans; and
(iii) one Business Day in advance of the Conversion Date or
continuation date, if the Loans are to be converted into Reference
Rate Committed Loans, specifying:
(A) the proposed Conversion Date or
continuation date;
(B) the aggregate amount of Committed Loans
to be converted or renewed;
(C) the nature of the proposed conversion or
continuation; and
(D) the duration of the Interest Period
applicable to such Loans included in such notice subject to the
provisions of the definition of Interest Period. If the Notice of
Conversion/Continuation shall fail to specify the
26
duration of the Interest Period for any Committed Borrowing
comprised of CD Rate Committed Loans or Offshore Rate
Committed Loans, such Interest Period shall be 30 days or one
month, respectively.
(c) If upon the expiration of any Interest Period
applicable to CD Rate Committed Loans or Offshore Rate Committed
Loans, the Company or Designated Subsidiary has failed to select a new
Interest Period to be applicable to such CD Rate Committed Loans or
Offshore Rate Committed Loans, as the case may be, or if any Default
or Event of Default shall then exist, the Company or Designated
Subsidiary shall be deemed to have elected to convert such CD Rate
Committed Loans or Offshore Rate Committed Loans into Reference Rate
Committed Loans effective as of the expiration date of such current
Interest Period.
(d) Upon receipt of a Notice of Conversion/ Continuation,
the Agent will promptly, no later than the same day, notify each Bank
thereof, or, if no timely notice is provided, the Agent will promptly
notify each Bank of the details of any automatic conversion. All
conversions and continuations shall be made pro rata according to the
respective outstanding principal amounts of the Committed Loans with
respect to which the notice was given held by each Bank.
(e) After giving effect to any conversion or continuation
of any Loans, there shall not be more than 15 different Interest
Periods in effect in respect of all Committed Loans.
2.05 Bid Borrowings. In addition to Committed Borrowings pursuant
to Section 2.03, each Bank severally agrees that the Company or any Designated
Subsidiary may, as set forth in Section 2.06, from time to time request the
Banks prior to the Revolving Termination Date to submit offers to make Absolute
Rate Bid Loans to the Company or such Designated Subsidiary; provided, however,
that the Banks may, but shall have no obligation to, submit such offers and the
Company or such Designated Subsidiary may, but shall have no obligation to,
accept any such offers; and provided, further, that at no time shall the
outstanding aggregate principal amount of all Absolute Rate Bid Loans made by
all Banks, plus the outstanding aggregate principal amount of all Committed
Loans made by all Banks exceed the Aggregate Commitment.
2.06 Procedure for Bid Borrowing.
(a) When the Company or any Designated Subsidiary wishes to
request the Banks to submit offers to make Absolute Rate Bid Loans
hereunder, it shall call the Agent (followed promptly by facsimile
transmission of a notice in
27
substantially the form ofExhibit G (a "Competitive Bid Request")) so
as to be received no later than 11:00 a.m. (New York time) one
Business Day prior to the date of a proposed Bid Borrowing in the case
of an Absolute Rate Auction, specifying:
(i) the date of such Borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Borrowing, which
shall be a minimum amount of $5,000,000 or in an integral
multiple of $1,000,000 in excess thereof; and
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
"Interest Period."
Subject to subsection 2.06(c), the Company or the Designated Subsidiaries may
not request Competitive Bids for more than four Interest Periods.
(b) Upon receipt of a Competitive Bid Request, the Agent will
promptly, no later than the same day by the close of business (New
York time), send to the Banks by telex or facsimile transmission an
Invitation for Competitive Bids, which shall constitute an invitation
by the Company or such Designated Subsidiary to each Bank to submit
Competitive Bids offering to make the Absolute Rate Bid Loans to which
such Competitive Bid Request relates in accordance with this Section
2.06.
(c) (i) Each Bank may at its discretion submit a
Competitive Bid containing an offer or offers to make Absolute
Rate Bid Loans in response to any Invitation for Competitive
Bids. Each Competitive Bid must comply with the requirements
of this subsection 2.06(c) and must be submitted to the
Company or such Designated Subsidiary by telex or facsimile
transmission at the Company's or such Designated Subsidiary's
office for notices set forth on the signature pages hereto or
in its Notice of Election, as appropriate, not later than 9:30
a.m. (New York time) on the proposed date of Borrowing, in the
case of an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially
the form of Exhibit I, specifying therein:
(A) the proposed date of Borrowing;
28
(B) the principal amount of each Absolute
Rate Bid Loan for which such Competitive Bid is being
made, which principal amount (x) may be equal to,
greater than or less than the Revolving Commitment of
the quoting Bank, (y) must be not less than
$1,000,000 and in multiples of $100,000 in excess
thereof, and (z) may not exceed the principal amount
of Absolute Rate Bid Loans for which Competitive Bids
were requested;
(C) the minimum (which must not be less than
$1,000,000 and multiples of $100,000) and maximum
amount of each Absolute Rate Bid Loan which such Bank
would be willing to make as part of such Borrowing;
(D) the rate of interest per annum (rounded
upward to the nearest 1/100th of 1%) (the "Absolute
Rate") offered for each such Absolute Rate Bid Loan;
and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to four separate offers by
the quoting Bank with respect to each Interest Period
specified in the related Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity with
Exhibit I or does not specify all of the information
required by subsection (c)(ii) of this Section;
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in addition
to those set forth in the applicable Invitation for
Competitive Bids; or
(D) arrives after the time set forth in
subsection (c)(i).
(d) Subject only to the provisions of Sections 3.02, 3.05 and
4.02 hereof, any Competitive Bid shall be irrevocable except with the
written consent of the Agent given on the written instructions of the
Company or the Designated Subsidiary.
29
(e) Not later than 10:30 a.m. (New York time) on the proposed
date of Borrowing, in the case of an Absolute Rate Auction, the
Company or the Designated Subsidiary shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant
to subsection 2.06(c). The Company or the Designated Subsidiary shall
be under no obligation to accept any offer and may choose to reject
all offers. In the case of acceptance, such notice shall specify the
aggregate principal amount of offers for each Interest Period that is
accepted as well as the ranges of bids submitted for each Interest
Period requested and the bids accepted for each Interest Period as
well as the Bid Loan Lender's name for each Absolute Rate Bid Loan
accepted. The Company or the Designated Subsidiary may accept any
Competitive Bid in whole or in part provided that:
(i) the aggregate principal amount of each Bid
Borrowing may not exceed the applicable amount set forth in
the related Competitive Bid Request;
(ii) the principal amount of each Bid Borrowing must
be not less than $1,000,000 or in an integral multiple of
$100,000 in excess thereof;
(iii) acceptance of offers may only be made on the
basis of ascending Absolute Rates within each Interest Period;
and
(iv) the Company and the Designated Subsidiaries may
not accept any offer that is described in subsection
2.06(c)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(f) If two or more Banks submit offers at identical pricing
for the same Interest Period and the Company or the Designated
Subsidiary accepts any of such offers but does not wish to borrow the
total amount offered by such Banks, the Company or the Designated
Subsidiary shall accept offers from all of such Banks on amounts
allocated among them pro rata (rounded upward, if necessary, to the
next higher $100,000 at the discretion of the Company or the
Designated Subsidiary) according to the amounts offered by such Banks;
andprovided, in any event, that, except to the extent of any such
rounding adjustment, the Company or the Designated Subsidiary shall
not accept offers from the Banks in an aggregate amount in excess of
the aggregate amount of the proposed Absolute Rate Bid Loan specified
in the Company's or the Designated Subsidiary's Competitive Bid with
respect thereto.
(g) (i) The Company or the Designated Subsidiary will
notify not later than 10:30 a.m. (New York time) on the
30
proposed date of Borrowing each Bank whose offer has been accepted of
the amount of the Absolute Rate Bid Loan or Absolute Rate Bid Loans to
be made by it on the date of the Bid Borrowing. The Company or the
Designated Subsidiary will also promptly thereafter notify each Bank
having submitted a Competitive Bid whose offer has not been accepted.
(ii) If, on or prior to the proposed date of
Borrowing, the Revolving Commitments have not been terminated
and if, on such proposed date of Borrowing all applicable
conditions to funding referenced in Sections 3.02 and 4.02
hereof are satisfied, each Bank, which has received notice
pursuant to subsection 2.06(g)(i) that its Competitive Bid has
been accepted, shall make the amounts of such Bid Loans
available to the Company or the Designated Subsidiary for the
account of the Company or the Designated Subsidiary at the
Company's Payment Office, by 12:00 p.m. (New York time) on
such date of Bid Borrowing, in funds immediately available to
the Company or the Designated Subsidiary.
(iii) Promptly, no later than the same day,
following each Bid Borrowing, the Company or the Designated
Subsidiary shall notify each Bank of the aggregate principal
amount of offers for each Interest Period that is accepted as
well as the ranges of bids submitted and accepted for each
Interest Period requested by the Company or the Designated
Subsidiary.
(iv) From time to time, the Company or the
Designated Subsidiary and the Banks shall furnish such
information to the Agent as the Agent may request relating to
the making of Absolute Rate Bid Loans, including the amounts,
interest rates, dates of borrowings and maturities thereof,
for purposes of the allocation of amounts received from the
Company or the Designated Subsidiary for payment of all
amounts owing hereunder.
(h) Nothing in this Section 2.06 shall be construed as a
right of first offer in favor of the Banks or to otherwise limit the
ability of the Company or the Designated Subsidiary to request and
accept credit facilities from any Person (including any of the Banks),
provided that no Default or Event of Default would otherwise arise or
exist as a result of the Company or the Designated Subsidiary
executing, delivering or performing under such credit facilities.
31
(i) Each outstanding Absolute Rate Bid Loan and Existing Bid
Loan shall reduce pro tanto the available Aggregate Commitment, but
shall not otherwise reduce or affect the Bid Loan Lender's available
Revolving Commitment or its Commitment Percentage.
(j) If the Company or the Designated Subsidiary has not
accepted a Bid Borrowing pursuant to subsection 2.06(e) above, the
Company or the Designated Subsidiary may request a same-day Committed
Loan consisting of Reference Rate Loans in an amount not to exceed the
unaccepted Bid Borrowing,provided, that the Company or the Designated
Subsidiary gives notice to the Agent no later than 10:30 a.m. (New
York time) by telephone call followed promptly by a facsimile
transmission in form of a Notice of Borrowing in substantially the
form ofExhibit A.
(k) The Company and each Bank severally agree that all
Existing Bid Loans shall have the same rights under this Agreement as
if such Existing Bid Loans had been made hereunder.
2.07 Voluntary Termination or Reduction of Commitments. The
Company may, upon not less than five Business Days' prior notice to the Agent,
terminate the Aggregate Commitments or permanently reduce the Aggregate
Commitment by an aggregate minimum amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof; provided that no such reduction or termination
shall be permitted if, after giving effect thereto and to any prepayments of
the Loans made on the effective date thereof, the then outstanding principal
amount of the Loans would exceed the amount of the Aggregate Commitment then in
effect and, provided, further, that once reduced in accordance with this
Section 2.07, the Aggregate Commitments may not be increased. Any reduction of
the Aggregate Commitments shall be applied to each Bank's Revolving Commitment
in accordance with such Bank's Commitment Percentage. If the Revolving
Commitments are terminated in their entirety, all accrued commitment fees to,
but not including, the effective date of such termination shall be payable on
the effective date of such termination without any premium or penalty.
2.08 Optional Prepayments of Loans.
(a) Subject to Section 3.04, the Company or Designated
Subsidiary may, at any time or from time to time, upon at least three
Business Days' written notice to the Agent with respect to Offshore
Committed Loans, three Business Days' notice with respect to CD Rate
Committed Loans, and one Business Day's notice with respect to
Reference Rate Committed Loans, ratably prepay Committed Loans in
whole or in part in minimum amounts of $5,000,000 ($2,500,000 for
Reference Rate Loans). Such notice of prepayment shall be delivered
by 11:00
32
a.m (New York time) on the applicable day and shall specify the date
and amount of such prepayment and whether such prepayment is of
Reference Rate Committed Loans, CD Rate Committed Loans or Offshore
Rate Committed Loans, or any combination thereof. Such notice shall
not thereafter be revocable by the Company or Designated Subsidiary
and the Agent will promptly notify each Bank thereof and of such
Bank's Commitment Percentage of such prepayment. If such notice is
given, the Company or Designated Subsidiary shall make such prepayment
and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and the amounts required
pursuant to Section 3.04.
(b) The Company may not voluntarily prepay all or any
portion of the principal amount of any Absolute Rate Bid Loan prior to
the maturity thereof except pursuant to Section 10.01.
2.09 Repayment.
(a) The Committed Loans. The Company and Designated
Subsidiaries shall repay the principal amount of the Committed Loans
on the Revolving Termination Date.
(b) The Absolute Rate Bid Loans. Each Absolute Rate Bid
Loan shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable thereto.
2.10 Interest.
(a) Subject to subsection 2.10(d), each Committed Loan
shall bear interest on the outstanding principal amount thereof from
the date when made until it becomes due at a rate per annum equal to
the CD Rate, the Offshore Rate or the Reference Rate, as the case may
be,plus the Applicable Margin.
(b) The Company and the Designated Subsidiaries shall pay
interest on the outstanding principal amount of each Absolute Rate Bid
Loan from the date when made until paid in full at the Absolute Rate.
Each Bid Loan Lender shall notify the Company and the Designated
Subsidiaries of the amount of interest that is payable and payment
instructions with respect to its Absolute Rate Bid Loans promptly
after the funding thereof.
(c) Interest on each Loan shall be payable in arrears on
each Interest Payment Date. Interest shall also be payable on the
date of any prepayment of Loans for the portion of the Loans so
prepaid and upon payment (including prepayment) in
33
full thereof. During the existence of any Event of Default, interest
shall be payable on demand.
(d) While any Event of Default exists or upon
acceleration, and unless and until such Event of Default is waived,
the Company or Designated Subsidiary shall pay interest (after as well
as before judgment to the extent permitted by law) on the principal
amount of all Loans outstanding, at a rate per annum which is
determined by increasing the Applicable Margin then in effect by 2%
per annum;provided, however, that, on and after the expiration of the
Interest Period applicable to any Offshore Rate Committed Loan or CD
Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or upon acceleration,
bear interest at a fluctuating rate per annum equal to the Reference
Rate plus 2%.
(e) Anything herein to the contrary notwithstanding, the
obligations of the Company and Designated Subsidiaries hereunder shall
be subject to the limitation that payments of interest shall not be
required, for any period for which interest is computed hereunder, to
the extent (but only to the extent) that contracting for or receiving
such payment by the respective Bank would be contrary to the
provisions of any law applicable to such Bank limiting the highest
rate of interest which may be lawfully contracted for, charged or
received by such Bank, and in such event the Company shall pay such
Bank interest at the highest rate permitted by applicable law.
2.11 Fees.
(a) Facility Fees. The Company shall pay to the Agent
for the account of each Bank a facility fee on the amount of each
Bank's Revolving Commitment regardless of utilization equal to (i)
0.125% per annum if Level I Status exists; (ii) 0.1875% per annum if
Level II Status exists; (iii) 0.2000% per annum if Level III Status
exists; and (iv) 0.3500% per annum if Level IV Status exists. Such fee
shall accrue from the Closing Date to the Revolving Termination Date
and shall be payable quarterly in arrears on the last Business Day of
each calendar quarter commencing on December 31, 1993 and ending on
the Revolving Termination Date.
(b) Commitment Fees. The Company shall pay to the Agent
for the account of each Bank a commitment fee on the average daily
unused portion of such Bank's Revolving Commitment equal to (i)
0.0250% per annum if Level I Status exists; (ii) 0.0125% per annum if
Level II Status exists; (iii) 0.0500% per annum if Level III Status
exists; and (iv) zero, if Level IV Status exists. Such commitment fee
shall accrue from the Closing Date to the Revolving Termination Date
and shall be
34
due and payable quarterly in arrears on the last Business Day of each
calendar quarter commencing on December 31, 1993 and ending on the
Revolving Termination Date. For the purpose of this Section 2.11(b),
any outstanding Absolute Rate Bid Loan shall be deemed to utilize the
Revolving Commitment of each Bank by an amount equal to such Bank's
Commitment Percentage times the amount of such Absolute Rate Bid Loan.
(c) Participation Fees. The Company shall pay to the
Agent for the account of each Bank, a participation fee, calculated on
each Bank's Revolving Commitment, payable on the Closing Date, equal
to 0.125% for initial commitments of $40,000,000 and above, 0.09% for
initial commitments of $30,000,000, up to but not including
$40,000,000, and .03125% for initial commitments of less than
$30,000,000.
(d) Other Fees. The Company shall pay BofA and the Agent
such other fees in the amounts and at the times set forth in letter
agreement and term sheet between the Company, BofA and the Arranger
dated November 12, 1993.
2.12 Computation of Fees and Interest.
(a) All computations of interest payable in respect of
Reference Rate Committed Loans and all computations of fees shall be
made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed. All other computations of interest under
this Agreement shall be made on the basis of a 360-day year and actual
days elapsed. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) The Agent will, with respect to the Offshore Rate at
least two Business Days before any borrowing date, notify the Company,
the Designated Subsidiaries and the Banks of each determination of an
Offshore Rate or of a CD Rate, provided that any failure to do so
shall not relieve the Company or a Designated Subsidiary of any
liability hereunder. Any change in the interest rate on a Loan
resulting from a change in the Applicable Margin, Reserve Percentage
or the Assessment Rate shall become effective as of the opening of
business on the day on which such change in the Applicable Margin,
Reserve Percentage or the Assessment Rate occurs. The Company shall
inform the Agent immediately if a change in its Public Debt Rating
occurs. The Agent will with reasonable promptness notify the Company,
the Designated Subsidiaries and the Banks of the effective date and
the amount of each such change, provided that any failure to do so
shall not relieve the Company or a Designated Subsidiary of any
liability hereunder.
35
(c) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and
binding on the Company, the Designated Subsidiaries and the Banks in
the absence of manifest error.
(d) If any Reference Bank's Commitment shall terminate
(otherwise than on termination of all the Revolving Commitments), or
for any reason whatsoever the Reference Bank shall cease to be a Bank
hereunder, that Reference Bank shall thereupon cease to be a Reference
Bank, and the CD Rate and Offshore Rate shall be determined on the
basis of the rates as notified by the remaining Reference Banks.
(e) Each Reference Bank shall use its best efforts to
furnish quotations of rates to the Agent as contemplated hereby. If
any of the Reference Banks shall be unable or otherwise fails to
supply such rates to the Agent upon its request, the rate of interest
shall be determined on the basis of the quotations of the remaining
Reference Banks or Reference Bank. Notwithstanding the foregoing, the
Reference Banks shall promptly notify the Agent of any change in the
CD Rate or the Offshore Rate. If there shall only be one Reference
Bank remaining, then the Majority Banks shall select a Bank,
acceptable to the Agent and the Company, to be a Reference Bank, and
the Agent shall, by notice to the Company and the Banks, designate
such Bank as a Reference Bank so that there shall at all times be at
least two (2) Reference Banks; provided that such designated Bank
agrees to be a Reference Bank.
2.13 Payments by the Company.
(a) All payments with respect to Committed Loans
(including prepayments) to be made by the Company or a Designated
Subsidiary on account of principal, interest, fees and other amounts
required hereunder shall be made without set-off or counterclaim and
shall, except as otherwise expressly provided herein be made to the
Agent for the ratable account of the Banks at the Agent's Payment
Office, in dollars and in immediately available funds, no later than
1:00 p.m. (New York time) on the date specified herein. All payments
with respect to Absolute Rate Bid Loans (including prepayments) to be
made by the Company or a Designated Subsidiary on account of
principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall be made to the
appropriate Bid Loan Lender for its own benefit in dollars and in
immediately available funds, no later than 1:00 p.m. (New York time)
on the date specified herein. The identification of a Fed wire number
shall constitute compliance with this deadline;however, it shall not
relieve the Company of its obligation to make payment if payment is
not actually received, provided
36
that provision of the Fed wire number in good faith shall not
constitute a Default hereunder. The Agent will promptly distribute to
each Bank its Commitment Percentage (or other applicable share as
expressly provided herein) of such principal, interest, fees or other
amounts, in like funds as received. Any payment which is received by
the Agent or Bid Loan Lender, as appropriate, later than 1:00 p.m.
(New York time) shall be deemed to have been received on the
immediately succeeding Business Day and any applicable interest or fee
shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or fees, as the
case may be; subject to the provisions set forth in the definition of
"Interest Period" herein.
(c) Unless the Agent shall have received notice from the
Company or the relevant Designated Subsidiary prior to the date on
which any payment is due to the Banks hereunder that the Company or
the Designated Subsidiary will not make such payment in full, the
Agent may assume that the Company or the Designated Subsidiary has
made such payment in full to the Agent on such date and the Agent may
(but shall not be so required), in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Company or
the Designated Subsidiary shall not have made such payment in full to
the Agent, each Bank shall repay to the Agent on demand such amount
distributed to such Bank, together with interest thereon for each day
from the date such amount is distributed to such Bank until the date
such Bank repays such amount to the Agent, at the Federal Funds Rate
as in effect for each such day.
2.14 Payments by the Banks to the Agent.
(a) Unless the Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after the
Closing Date, at least one Business Day prior to the date of any
proposed Borrowing that such Bank will not make available to the Agent
for the account of the Company or the Designated Subsidiary the amount
of that Bank's Commitment Percentage of the Borrowing, the Agent may
assume that each Bank has made such amount available to the Agent on
the borrowing date and the Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Company or the
Designated Subsidiary on such date a corresponding amount. If and to
the extent any Bank shall not have made its full amount available to
the Agent and the Agent
37
in such circumstances has made available to the Company or the
Designated Subsidiary such amount, that Bank shall on the next
Business Day following the date of such Borrowing make such amount
available to the Agent, together with interest at the Federal Funds
Rate for and determined as of each day during such period. A
certificate of the Agent submitted to any Bank with respect to amounts
owing under this subsection 2.14(a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to
the Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made
available to the Agent on the next Business Day following the date of
such Borrowing, the Agent shall notify the Company or the Designated
Subsidiary of such failure to fund and, upon demand by the Agent, the
Company or the Designated Subsidiary shall pay such amount to the
Agent for the Agent's account, together with interest thereon for each
day elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date
of Borrowing shall not relieve any other Bank of any obligation
hereunder to make a Loan on the date of such Borrowing, but no Bank
shall be responsible for the failure of any other Bank to make the
Loan to be made by such other Bank on the date of any Borrowing.
2.15 Sharing of Payments, Etc. If, other than as expressly
contemplated elsewhere herein, any Bank shall obtain on account of the
Committed Loans made by it any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of its Commitment
Percentage of payments on account of the Committed Loans obtained by all the
Banks, such Bank shall forthwith (a) notify the Agent of such fact, and (b)
purchase from the other Banks such participations in the Committed Loans made
by them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid thereto together with an
amount equal to such paying Bank's Commitment Percentage (according to the
proportion of (i) the amount of such paying Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company and each Designated Subsidiary agrees that
any Bank so purchasing a participation from another Bank pursuant to this
Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to Section
10.09) with respect to such participation as fully as if such Bank were the
direct creditor of the Company in
38
the amount of such participation. The Agent will keep records (which shall be
conclusive and binding in the absence of manifest error), of participations
purchased pursuant to this Section 2.15 and will in each case notify the Banks
following any such purchases.
39
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Subject to subsection 3.01(g), any and all payments
by the Company or the Designated Subsidiaries to each Bank or the
Agent under this Agreement shall be made free and clear of, and
without deduction or withholding for, any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank
and the Agent, such taxes (including income taxes or franchise taxes)
as are imposed on or measured by each Bank's net income by the
jurisdiction under the laws of which such Bank or the Agent, as the
case may be, is organized or maintains a Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) In addition, the Company and the Designated
Subsidiaries shall pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents (hereinafter referred to as
"Other Taxes").
(c) Subject to subsection 3.01(g), the Company shall
indemnify and hold harmless each Bank and the Agent for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section
3.01) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Bank or the Agent makes
written demand therefor.
(d) If the Company or any Designated Subsidiary shall be
required by law to deduct or withhold any Taxes or Other Taxes from or
in respect of any sum payable hereunder to any Bank or the Agent,
then, subject to subsection 3.01(g):
(i) the sum payable shall be increased as necessary
so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 3.01) and including, in the case of non-U.S.
withholding tax imposed at rates of 5% or greater, any U.S.
tax (including, notwithstanding any exclusion from Taxes in
Section 3.01(a), taxes on net income of the
40
Banks) attributable to such increase to the extent not
actually offset by a foreign tax credit in the Bank's U.S.
tax return as determined by the Bank in its sole discretion,
such Bank or the Agent, as the case may be, receives an amount
equal to the sum it would have received had no such deductions
been made;
(ii) the Company or Designated Subsidiary shall make
such deductions, and
(iii) the Company or Designated Subsidiary shall pay
the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(e) Within 30 days after the date of any payment by the
Company or Designated Subsidiary of Taxes or Other Taxes, the Company
or Designated Subsidiary shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a person
other than a United States person for United States Federal income tax
purposes) agrees that:
(i) it shall, no later than the Closing Date (or,
in the case of a Bank which becomes a party hereto pursuant to
Section 10.08 after the Closing Date, the date upon which the
Bank becomes a party hereto) deliver to the Agent (with a copy
to the Company) two accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"), or two accurate and complete signed originals
of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), as appropriate, in each case indicating that
the Bank is on the date of delivery thereof entitled to
receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal
income tax;
(ii) if at any time the Bank makes any changes
necessitating a new Form, it shall with reasonable promptness
deliver to the Agent (with a copy to the Company) in
replacement for, or in addition to, the forms previously
delivered by it hereunder, two accurate and complete signed
originals of Form 4224; or two accurate and complete signed
originals of Form 1001, as appropriate, in each case
indicating that the Bank is on the date of delivery thereof
entitled to receive payments of principal, interest and fees
under this Agreement free from withholding of United States
Federal income tax or
41
at a reduced rate of withholding under an applicable tax
treaty;
(iii) it shall, before or promptly after the
occurrence of any event (including the passing of time but
excluding any event mentioned in (ii) above) requiring a
change in or renewal of the most recent Form 4224 or Form 1001
previously delivered by such Bank and deliver to the Company
through the Agent two accurate and complete original signed
copies of Form 4224 or Form 1001 in replacement for the forms
previously delivered by the Bank; and
(iv) it shall, promptly upon the Company's
reasonable request to that effect, deliver to the Company such
other forms or similar documentation as may be required from
time to time by any applicable law, treaty, rule or regulation
in order to establish such Bank's tax status for withholding
purposes.
(v) if such Bank claims exemption from withholding
tax under a United States tax treaty by providing a Form 1001
and such Bank sells or grants a participation of all or part
of its rights under this Agreement, such Bank shall notify the
Agent of the percentage amount in which it is no longer the
beneficial owner under this Agreement. To the extent of this
percentage amount, the Agent shall treat such Bank's Form 1001
as no longer in compliance with this Section 3.01(f). In the
event a Bank claiming exemption from United States withholding
tax by filing Form 4224 with the Agent, sells or grants a
participation in its rights under this Agreement, such Bank
agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442
of the Code;
(vi) without limiting or restricting any Bank's
right to increased amounts under Section 3.01(d) from the
Company and its Designated Subsidiaries upon satisfaction of
such Bank's obligations under the provisions of this Section
3.01(f), if such Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any
interest to such Bank an amount equivalent to the applicable
withholding tax after taking into account such reduction. If
the forms or other documentation required by subparagraph (i)
are not delivered to the Agent, then the Agent may withhold
from any interest payment to the Bank not providing such forms
or other documentation, an amount equivalent to the applicable
withholding tax. In addition, the Agent may also withhold
against periodic payments other than interest
42
payments to the extent United States withholding tax is not
eliminated by obtaining Form 4224 or Form 1001; and
(vii) if the IRS or any authority of the United
States or other jurisdiction asserts a claim that the Agent or
the Company or any Designated Subsidiary did not properly
withhold tax from amounts paid to or for the account of any
Bank (because the appropriate form was not delivered by such
Bank, was not properly executed by such Bank, or because such
Bank failed to notify the Agent of a change in circumstances
which rendered the exemption from withholding tax
ineffective), such Bank shall indemnify the Agent and/or the
Company or the Designated Subsidiary, as applicable, fully for
all amounts paid, directly or indirectly, by the Agent and/or
the Company or the Designated Subsidiary, as applicable, as
tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts
payable to the Agent or the Company or the Designated
Subsidiary, as applicable under this Section 3.01(f), together
with all costs, expenses and Attorneys' Costs.
(g) The Company and any Designated Subsidiary will not be
required to pay any additional amounts in respect of United States
Federal income tax pursuant to subsection 3.01(d)(i) to any Bank for
the account of any Lending Office of such Bank:
(i) if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank
to comply with its obligations under subsection 3.01(f) in
respect of such Lending Office;
(ii) if such Bank shall have delivered to the
Company and the Designated Subsidiaries a Form 4224 in respect
of such Lending Office pursuant to subsection 3.01(f), and
such Bank shall not at any time be entitled to exemption from
deduction or withholding of United States Federal income tax
in respect of payments by the Company and the Designated
Subsidiaries hereunder for the account of such Lending Office
for any reason other than a change in United States law or
regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not
having the force of law) after the date of delivery of such
Form 4224; or
(iii) if the Bank shall have delivered to the Company
and the Designated Subsidiaries a Form 1001 in respect of such
Lending Office pursuant to Section 3.01(f), and such Bank
shall not at any time be entitled to exemption from deduction
or withholding of United
43
States Federal income tax in respect of payments by the
Company and the Designated Subsidiaries hereunder for the
account of such Lending Office for any reason other than a
change in United States law or regulations or any applicable
tax treaty or regulations or in the official interpretation of
any such law, treaty or regulations by any governmental
authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the
date of delivery of such Form 1001.
(h) If, at any time, the Company or a Designated
Subsidiary requests any Bank to deliver any forms or other
documentation pursuant to subsection 3.01(f)(iv), then the Company or
a Designated Subsidiary shall, on demand of such Bank through the
Agent, reimburse such Bank for any costs and expenses (including
Attorney Costs) reasonably incurred by such Bank in the preparation or
delivery of such forms or other documentation.
(i) If the Company or a Designated Subsidiary is required
to pay additional amounts to any Bank or the Agent pursuant to
subsection 3.01(d), then such Bank shall use its reasonable best
efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue if such
change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
(j) The agreements and Obligations of the Company and the
Designated Subsidiaries contained in this Section 3.01 shall survive
the payment in full of principal and interest hereunder and
termination of the Revolving Commitments.
3.02 Illegality.
(a) If any Bank shall determine upon advice of its
counsel, that the introduction of any Requirement of Law or any change
in or in the interpretation or administration thereof has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its Lending Office to
make Offshore Rate Committed Loans, then, on notice thereof by the
Bank to the Company and the Designated Subsidiary through the Agent,
the obligation of the Bank to make Offshore Rate Committed Loans shall
be suspended until the Bank shall have notified the Agent and the
Company and the Designated Subsidiary that the circumstances giving
rise to such determination no longer exists. During such period of
suspension as to any Bank, any subsequent Committed Borrowings
consisting of Offshore Rate Committed Loans shall include a Reference
Rate Loan rather
44
than Offshore Rate Committed Loan by the Bank subject to such
suspension.
(b) If a Bank shall determine upon advice of its counsel
that it is unlawful to maintain any Offshore Rate Committed Loan, the
Company or any Designated Subsidiary, as the case may be, shall prepay
in full all Offshore Rate Committed Loans of the Bank then
outstanding, together with interest accrued thereon, either on the
last day of the Interest Period thereof if the Bank may lawfully
continue to maintain such Offshore Rate Committed Loans to such day,
or immediately, if the Bank may not lawfully continue to maintain such
Offshore Rate Committed Loans, together with any amounts required to
be paid in connection therewith pursuant to Section 3.04.
(c) If the Company or any Designated Subsidiary, as the
case may be, is required to prepay any Offshore Rate Committed Loan
immediately as provided in subsection 3.02(b), then concurrently with
such prepayment, the Company or any Designated Subsidiary, as the case
may be, shall borrow from the affected Bank, in the amount of such
repayment, a Reference Rate Committed Loan.
3.03 Increased Costs and Reduction of Return. In the event that
any Bank determines that compliance with any United States (including any
state, political subdivision, territory or possession thereof) or foreign law,
regulation, treaty, directive or guideline, currently or hereafter in effect,
or the interpretation or application thereof, or the compliance with any
request, guideline or directive (whether or not having the force of law) from
any United States or foreign central bank or any other governmental authority:
(a) imposes, modifies or holds applicable any reserve,
special deposit, compulsory loan or similar requirement against, or
imposes any other conditions with respect to assets held by, or
deposits or other liabilities in or for the account of, advances or
loans by, or other credit or commitment therefor extended by, or any
other acquisition of funds by, any office of any Bank which is not
otherwise included or accounted for in any determination of the
Reference Rate, the CD Rate or the Offshore Rate or any interest
payable hereunder; or
(b) affects or would affect the amount of capital
required or expected to be maintained by any Bank or any corporation
controlling any such Bank and such Bank determines that the amount of
such capital is increased by or based upon the existence of such
Bank's Revolving Commitment, or the making, maintaining or funding of
such Bank's Loans or other extensions of credit hereunder;
45
and the result is to increase (as reasonably determined by such Bank) the cost
to such Bank of (A) agreeing to make, making, funding, renewing or maintaining
its Loans hereunder, or (B) agreeing to maintain, or its maintenance of, its
Revolving Commitment hereunder, or to reduce any amount receivable in respect
of any of the foregoing, or to reduce (as determined by such Bank) the rate of
return on such Bank's or such controlling corporation's capital (taking into
account the policies of such Bank or corporation with regard to capital), then,
in any such case, the Company agrees to pay to the Agent, for the account of
such Bank, upon such Bank's demand, any additional amount as may be necessary
to compensate fully such Bank for such additional cost, reduced amount
receivable, or reduced rate of return as reasonably determined by such Bank to
place such Bank in the same economic position as if such compliance had not
occurred. Each Bank will promptly notify the Agent, in writing, of the
occurrence of any of the events described in this Section 3.03 and, upon its
receipt of such notice, the Agent will promptly notify the Company thereof,
provided, however, that the Company shall not be liable to compensate any Bank
for such additional costs or reduced rate of return which accrue prior to a
date which is 45 days before such notice is given. A certificate as to such
amounts in reasonable detail, submitted to the Company and the Agent by such
Bank, shall be conclusive and binding for all purposes, absent manifest error.
Each Bank agrees that, in the determination of any such amount, such Bank shall
use reasonable means of allocation and attribution with respect to the Loans
and Revolving Commitment hereunder as among all loans, advances, commitments
and other extensions of credit by such Bank generally.
3.04 Funding Losses. The Company agrees to reimburse each Bank and
to hold each Bank harmless from any loss, cost or expense which the Bank may
sustain or incur as a consequence of:
(a) any failure of the Company or a Designated Subsidiary
to make any payment or prepayment, after having given notice, of
principal of any Offshore Rate Committed Loan or CD Rate Committed
Loan (including payments made after any acceleration thereof);
(b) any failure of the Company or a Designated Subsidiary
to borrow, continue or convert a Committed Loan or borrow an Absolute
Rate Bid Loan after the Company or the Designated Subsidiary has given
a Notice of Borrowing or a Notice of Conversion/Continuation;
(c) any failure of the Company or a Designated Subsidiary
to make any prepayment after the Company or a Designated Subsidiary
has given a notice in accordance with Section 2.08;
46
(d) any prepayment of an Offshore Rate Committed Loan or
a CD Rate Committed Loan on a day which is not the last day of the
Interest Period with respect thereto; or
(e) the conversion of any Offshore Rate Committed Loan to
a Reference Rate Committed Loan on a day that is not the last day of
the respective Interest Period pursuant to subsection 2.04;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Committed Loans or CD
Rate Committed Loans hereunder or from fees payable to terminate the deposits
from which such funds were obtained.
3.05 Inability to Determine Rates. If two or more Reference Banks
or the Majority Banks shall have reasonably determined that for any reason
adequate and reasonable means do not exist for ascertaining the Offshore Rate
or the CD Rate for any requested Interest Period with respect to a proposed
Offshore Rate Committed Loan or CD Rate Committed Loan or that the Offshore
Rate or the CD Rate for any requested Interest Period with respect to a
proposed Offshore Rate Committed Loan or CD Rate Committed Loan does not
adequately reflect the funding cost to such Banks of such Loan, the Agent will
forthwith give notice of such determination to the Company and each Bank.
Thereafter, the obligation of the Banks to make CD Rate Committed Loans or
Offshore Rate Committed Loans, as the case may be, hereunder shall be suspended
until the Agent upon the instruction of the Majority Banks revokes such notice
in writing. Upon receipt of such notice, the Company may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Company does not revoke such notice, the Banks shall make, convert or continue
the Committed Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Reference Rate Committed Loans instead of CD Rate
Committed Loans or Offshore Rate Committed Loans, as the case may be.
3.06 Reserves on Offshore Rate Committed Loans. The Company shall
pay to each Bank, as long as such Bank shall be required under regulations of
the Federal Reserve Board to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities"), additional costs on the unpaid principal
amount of each Offshore Rate Committed Loan equal to actual costs of such
reserves allocated to such Loan by the Bank (as determined by the Bank in good
faith, which determination shall be conclusive), payable on each date on which
interest is payable on such Loan provided the Company or the Designated
Subsidiary shall have received at least fifteen days' prior written notice
(with a copy to the Agent) of such additional interest from the Bank. If a
Bank
47
fails to give notice fifteen days prior to the relevant Interest Payment Date,
such additional interest shall be payable fifteen days from receipt of such
notice.
3.07 Certificates of Banks. Any Bank claiming reimbursement or
compensation pursuant to this Article III shall deliver to the Company and the
Designated Subsidiaries (with a copy to the Agent) a certificate setting forth
in reasonable detail the amount payable to the Bank hereunder and such
certificate shall be conclusive and binding on the Company and the Designated
Subsidiaries in the absence of manifest error.
3.08 Survival. The agreements and obligations of the Company and
the Designated Subsidiaries in this Article III shall survive the payment of
all other Obligations provided that, any Bank desiring to make a claim for
reimbursement under Section 3.04 shall do so within 180 days after the
Revolving Termination Date.
3.09 Replacement Banks. If the obligation of any Bank to make
Offshore Rate Committed Loans has been suspended pursuant to Section 3.02, the
Company or such Designated Subsidiary, as the case may be, may, with respect to
such Bank, elect to terminate this Agreement, and in connection therewith, not
to borrow any Reference Rate Loan provided for in Section 3.02 , or to repay
any Reference Rate Loan made pursuant to Section 3.02; provided, that the
Company or such Designated Subsidiary, as the case may be, notifies such Bank
through the Agent of such election at least three Business Days before any date
fixed for such a borrowing or such a prepayment, as the case may be, and (i)
repays all of such Bank's outstanding Loans plus all accrued interest,
commitment fees and other amounts owing to, but not including, the date of
repayment at the end of the respective Interest Periods applicable thereto or
as otherwise required by Section 3.02, and (ii) selects, with the consent of
the Agent, which shall not be unreasonably withheld, an Eligible Assignee which
shall assume all the rights and obligations of such Bank as to which this
Agreement has been terminated. Upon receipt by the Agent of such notice and
the assignment to and assumption of the Revolving Commitment by a replacement
bank, the Revolving Commitment of such Bank shall terminate.
48
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to
make its first Loan hereunder is subject to the condition that the Agent shall
have received on or before the Closing Date all of the following, in form and
substance satisfactory to the Agent, each Bank and their respective counsel and
in sufficient copies for each Bank:
(a) Credit Agreement/Bid Notes. This Agreement and the
Bid Notes executed by the Company, the Agent and each of the Banks;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company approving and authorizing the
execution, delivery and performance by the Company of this
Agreement and the other Loan Documents to be delivered
hereunder, and authorizing the borrowing of the Loans,
certified as of the Closing Date by the Secretary or an
Assistant Secretary of the Company;
(ii) Certified copies of the resolutions of the
board of directors of each Guarantor approving the Loan
Documents to be delivered by it hereunder;
(iii) A certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized on behalf
of the Company to execute and deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be
delivered hereunder;
(iv) A certificate of the Secretary or Assistant
Secretary of each Guarantor, certifying the names and true
signatures of the officers of the Guarantor authorized on
behalf of the Guarantor to execute and deliver, as applicable,
this Agreement, and all other Loan Documents to be delivered
hereunder;
(c) Certificates of Incorporation; By-laws and Good
Standing. Each of the following documents:
(i) the certificate of incorporation of the Company
as in effect on the Closing Date, certified by the Secretary
of State of the state of incorporation of the Company as of a
recent date and by the Secretary or Assistant Secretary of the
Company as of the Closing Date and the bylaws of the Company
as in effect on the Closing
49
Date, certified by the Secretary or Assistant Secretary of the
Company as of the Closing Date; and
(ii) a good standing certificate for the Company,
the Designated Subsidiaries, the Guarantors and the Domestic
Parent from the Secretary of State of its state of
incorporation as of a recent date;
(d) Guaranties/Pledge Agreement. A guaranty
substantially in the form of Exhibit J hereto executed by each of the
Subsidiaries listed on Schedule 4.01(d) hereto (each a Guaranty" and
collectively the "Guaranties") and the pledge agreement substantially
in the form of Exhibit L-1 executed by each of the Subsidiaries listed
on Schedule 4.01(d);
(e) Legal Opinions. An opinion of Thomas W. Hawkins,
Esq., counsel to the Company and the Guarantors and addressed to the
Agent and the Banks, substantially in the form ofExhibit M-1;
(f) Contribution Agreement. A Contribution Agreement,
substantially in the form of Exhibit K attached hereto, executed by
the Guarantors.
(g) Payment of Fees. The Company shall have paid all
costs, accrued and unpaid fees (including Attorney's Costs of the
Agent) to the extent then due and payable on the Closing Date any
costs and fees arising under Sections 2.11, 3.01 and 10.04;
(h) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article V are true and correct in all material respects on and
as of such date, as though made on and as of such date; and
(ii) no Default or Event of Default exists or would result from the initial
Borrowing;
(i) Other Documents. Such other approvals, opinions or
documents as the Agent or any Bank may reasonably request.
50
4.02 Conditions to All Borrowings. The obligation of each Bank to
make any Loan to be made by it hereunder (including its initial Loan and any
Absolute Rate Bid Loan as to which there has been an offer and acceptance of
terms pursuant to subsection 2.06(c)) is subject to the satisfaction of the
following conditions precedent on the relevant borrowing date:
(a) Notice of Borrowing.
(i) In the case of any Committed Loan, the Agent
shall have received (with, in the case of the initial Loan
only, a copy for each Bank) a timely Notice of Borrowing; and
(ii) In the case of any Absolute Rate Bid Loan, the
Agent shall have received a timely Competitive Bid Request;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Company and any Designated
Subsidiary contained in Article V (other than the representations set
forth in Section 5.10(a) and 5.13) shall be true and correct in all
material respects on and as of such borrowing date with the same
effect as if made on and as of such borrowing date; and
(c) No Existing Default. The Agent shall have received a
certificate from a Responsible Officer of the Company that no Default
or Event of Default shall exist or shall result from such Borrowing.
4.03 Conditions for Participation by a Designated Subsidiary. The
obligation of each Bank to accept a Designated Subsidiary as a participant in
this Agreement, is subject to the satisfaction of the following conditions
precedent before the effectiveness of such Election to Participate.
(a) Election to Participate. The Agent shall have
received a duly executed Election to Participate in the form of
Exhibit C hereto.
(b) Opinion of Counsel. The Agent shall have received an
opinion of counsel for such Designated Subsidiary, substantially in
the form ofExhibit M-2 hereto, and if from a foreign Subsidiary,
acceptable to the Agent and the Banks, and covering such additional
matters relating to the transactions contemplated hereby as the
Majority Banks may reasonably request.
(c) Documents; Authorizations. The Agent shall have
received documents evidencing the authority for and the validity of
the Election to Participate of such Designated
51
Subsidiary and this Agreement, including, without limitation,
documents of the type listed in Section 4.01(b), (c), (d) and (e)
hereof, and any other documents it may reasonably request, all in form
and substance satisfactory to the Agent and the Banks.
(d) Guaranty Agreement. A Guaranty Agreement of the
Company of the Obligations of the Designated Subsidiary in
substantially the form ofExhibit E.
(e) Opinion of Counsel to the Guarantor. An opinion of
counsel to the Guarantor in substantially the form of Exhibit M-3, and
if with respect to a foreign Subsidiary, acceptable to the Agent and
the Banks.
(f) Evidence of Appointment of Agent for Service.
Evidence satisfactory to the Agent and the Banks, that the Designated
Subsidiary has appointed CT Corp. in the United States as its agent
for service of process and that the CT Corp. in the United States has
accepted such appointment.
(g) Continuation of Representations and Warranties. The
representations and warranties made by such Designated Subsidiary
contained in Article V (other than the representations set forth in
Section 5.10(a) and 5.13) shall be true and correct in all material
respects on and as of such election date with the same effect as if
made on and as of such election date.
Each Notice of Borrowing and Competitive Bid Request submitted by the Company
or a Designated Subsidiary hereunder shall constitute a representation and
warranty by the Company or a Designated Subsidiary hereunder, as of the date of
each such notice or request and as of the date of each Borrowing relating
thereto, that the conditions in Sections 4.01, 4.02 and 4.03 are satisfied.
52
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants and each Designated Subsidiary
shall be deemed by execution and delivery of its Election to Participate to
have represented as of the date of such Election to Participate to the Agent
and each Bank that:
5.01 Corporate Existence and Power. The Company, each of its
Subsidiaries and each of the Guarantors:
(a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation;
(b) has the power and authority and all material
governmental licenses, authorizations, consents and approvals to own
its assets, carry on its business and to execute, deliver, and perform
its obligations under, the Loan Documents;
(c) is duly qualified as a foreign corporation, licensed
and in good standing under the laws of each jurisdiction where failure
to qualify would have a Material Adverse Effect; and
(d) is in compliance in all material respects with all
Requirements of Law.
5.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company and its Subsidiaries or a Designated
Subsidiary of this Agreement, and any other Loan Document to which such Person
is party, have been duly authorized by all necessary corporate action, and do
not and will not:
(a) contravene the terms of any of that Person's
Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which such Person is a party
or any order, injunction, writ or decree of any Governmental Authority
to which such Person or its Property is subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, other than any
routine filing with the SEC pursuant to the Exchange Act, and the Securities
Act of 1933 (including, without limitation, filings on Form 8-K), any
Governmental
53
Authority is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, the Company or any of its
Subsidiaries of the Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document
to which the Company or any of its Subsidiaries is a party constitute the
legal, valid and binding obligations of the Company and any of its Subsidiaries
to the extent it is a party thereto, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
5.05 Litigation. Except as specifically disclosed in Schedule
5.05, there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of the Company, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, or any of its Subsidiaries or any of their respective Properties
which:
(a) purport to affect the legality, validity or
enforceability or pertain to this Agreement, or any other Loan
Document, or any of the transactions contemplated hereby or thereby;
or
(b) if determined adversely to the Company, or its
Subsidiaries would reasonably be expected to have a Material Adverse
Effect. No injunction, writ, temporary restraining order or any order
of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery and
performance of this Agreement or any other Loan Document, or directing
that the transactions provided for herein or therein not be
consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists hereunder
or would result from the incurring of any Obligations by the Company or any
Designated Subsidiary. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, would reasonably be
expected to have a Material Adverse Effect.
5.07 ERISA Compliance.
(a) Schedule 5.07 lists all Plans and separately
identifies Plans intended to be Qualified Plans and Multiemployer
Plans. All written descriptions thereof provided to the Agent are
true and complete in all material respects.
54
(b) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal or
state law, including all requirements under the Code or ERISA for
filing reports (which are true and correct in all material respects as
of the date filed), and benefits have been paid in accordance with the
provisions of the Plan.
(c) Except as specifically disclosed in Schedule 5.07,
there is no outstanding liability under Title IV of ERISA with respect
to any Plan maintained or sponsored by the Company or any ERISA
Affiliate, nor with respect to any Plan to which the Company or any
ERISA Affiliate contributes or is obligated to contribute.
(d) Except as specifically disclosed in Schedule 5.07, no
Plan subject to Title IV of ERISA has any Unfunded Pension Liability.
(e) The Company does not maintain an Employee Welfare
Benefit Plan which provides benefits (within the meaning of section
3(1) of ERISA) following retirement or termination of employment.
(f) Members of the Controlled Group have complied in all
material respects with the notice and continuation coverage
requirements of Section 4980B of the Code.
(g) There are no pending or, to the best knowledge of the
Company, threatened claims, actions or lawsuits, other than routine
claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the
Company, (ii) any member of the Controlled Group with respect to any
Qualified Plan, or (iii) any fiduciary with respect to any Plan for
which the Company may be directly or indirectly liable, through
indemnification obligations or otherwise.
(h) Except as specifically disclosed in Schedule 5.07,
neither the Company nor any ERISA Affiliate has incurred nor
reasonably expects to incur (i) any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan or (ii) any liability under Title
IV of ERISA (other than premiums due and not delinquent under Section
4007 of ERISA) with respect to a Plan.
(i) Except as specifically disclosed in Schedule 5.07,
neither the Company nor any ERISA Affiliate has transferred any
Unfunded Pension Liability to a Person other than the Company or an
ERISA Affiliate or otherwise engaged in a
55
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
(j) No member of the Controlled Group has engaged,
directly or indirectly, in a non-exempt prohibited transaction (as
defined in Section 4975 of the Code or Section 406 of ERISA) in
connection with any Plan which has a reasonable likelihood of having a
Material Adverse Effect.
5.08 Use of Proceeds. The proceeds of the Loans are intended to be
used for general corporate purposes, including, without limitation, working
capital, refinancing indebtedness, acquisitions and stock repurchases.
5.09 Title to Properties. The Company and each of its Subsidiaries
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real Property necessary or used in the ordinary conduct of
its business, except as would not reasonably be expected, in the aggregate, to
have a Material Adverse Effect. As of the Closing Date, the Property of the
Company and its Subsidiaries is subject to no Liens, other than Permitted
Liens.
5.10 Financial Condition.
(a) The unaudited consolidated condensed balance sheets
of the Company and its Subsidiaries dated September 30, 1993, and the
related unaudited condensed consolidated statements of operations and
cash flows for the fiscal quarter ended on that date:
(i) were prepared in accordance with SEC guidelines
for the preparation of interim financial statements,
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein;
(ii) fairly present the consolidated financial
condition of the Company and its Subsidiaries in all material
respects as of the date thereof and results of operations for
the period covered thereby; and
(iii) except as specifically disclosed in Schedule
5.10, show all material indebtedness and other liabilities of
the Company and its consolidated Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments
and Contingent Obligations.
(b) Since September 30, 1993, there has been no Material
Adverse Effect.
56
5.11 Environmental Matters.
(a) The on-going operations of the Company and each of its
Subsidiaries comply in all respects with all Environmental Laws,
except such non-compliance which would not (if enforced in accordance
with applicable law) result in a Material Adverse Effect.
(b) The Company and each of its Subsidiaries has obtained
all material licenses, permits, authorizations and registrations
required under any Environmental Law ("Environmental Permits") and
necessary for its ordinary course operations, all such Environmental
Permits are in good standing, and the Company and each of its
Subsidiaries is in compliance with all material terms and conditions
of such Environmental Permits.
(c) Except as provided in Schedule 5.11, none of the
Company, any of its Subsidiaries or any of their respective present
Property or operations is subject to any outstanding written order
from or agreement with any Governmental Authority nor subject to any
judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material, which
order, agreement or proceeding would have a Material Adverse Affect.
(d) To the best of the Company's knowledge after due
inquiry in the course of conducting its business, there are no
Hazardous Materials or other conditions or circumstances existing with
respect to any Property, or arising from operations prior to the
Closing Date, of the Company or any of its Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with a
potential liability to the Company and its Subsidiaries that would
result in a Material Adverse Effect. In addition, to the best of the
Company's knowledge after due inquiry in the course of conducting its
business (i) neither the Company nor any of its Subsidiaries has any
underground storage tanks (x) that are not properly registered or
permitted under applicable Environmental Laws, or (y) that are leaking
or disposing of Hazardous Materials off-site, and (ii) the Company and
its Subsidiaries have notified all of their employees of the
existence, if any, of any health hazard arising from the conditions of
their employment and have met all notification requirements under
Title III of CERCLA and all other Environmental Laws.
5.12 Trademarks and Licenses, etc. The Company or its
consolidated Subsidiaries own or are licensed or otherwise have the right to
use, to the best of their knowledge, all of the trademarks, service marks,
trade names, franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of
57
any other Person, to the extent that failure to have such rights would
reasonably be likely to cause a Material Adverse Effect. To the best knowledge
of the Company, no slogan or other advertising device or product, now employed,
or now contemplated to be employed by the Company or any of its Subsidiaries
infringes upon any rights held by any other Person; no claim or litigation
regarding any of the foregoing is pending or threatened, and no statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the
Company, proposed regarding the foregoing, which, in either case, would
reasonably be expected to result in a Material Adverse Effect.
5.13 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in Schedule 5.13 hereto.
58
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have
any Revolving Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied, unless the Majority Banks waive compliance in
writing:
6.01 Financial Statements. The Company shall furnish to the Agent,
with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days
after the end of each fiscal year, a copy of the audited consolidated
balance sheet of the Company and its consolidated Subsidiaries as at
the end of such year and the related consolidated statements of
income, shareholders' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the
previous year, and accompanied by the opinion of Arthur Andersen or
another nationally-recognized independent public accounting firm which
report shall state that such consolidated financial statements present
fairly in all material respects the financial position for the periods
indicated in conformity with GAAP (for purposes of this Section
6.01(a) Form 10-K will suffice);
(b) as soon as available, but not later than 45 days
after the end of each of the first three fiscal quarters of each year
a copy of the unaudited condensed consolidated balance sheets of the
Company and its consolidated Subsidiaries as of the end of such
quarter and the related condensed consolidated statements of income
and cash flows for the period commencing on the first day and ending
on the last day of such quarter, and certified by an appropriate
Responsible Officer with a statement that in management's opinion such
financial statements contain all material adjustments (which include
only normal recurring adjustments) necessary to present fairly the
Company's financial position and results of operations (for purposes
of this Section 6.01(b) Form 10-Q will suffice).
6.02 Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient original copies for each Bank:
(a) together with the financial statements required to be
delivered under Sections 6.01 (a) and (b) above, a certificate of the
chief financial officer or treasurer of the Company (A) setting forth
calculations demonstrating compliance with the financial covenants set
forth in Sections 7.01(k), 7.02, 7.04, 7.07, 7.08, 7.09, 7.10 and 7.11
for and as at the end of such year or quarter as applicable, (B)
certifying on behalf of the Company that (i) no Event of
59
Default or Default shall have occurred during such period relating to
any covenant contained in Sections 7.01(k), 7.02, 7.04, 7.07, 7.08,
7.09, 7.10 or 7.11, or (ii) to the best of such officer's knowledge
following diligent inquiry, no other Event of Default or Default shall
have occurred during such period, or, if an Event of Default or any
such other event shall have occurred, describing the nature thereof
and the actions that the Company has taken or proposes to take with
respect thereto and (C) describing in reasonable detail any material
variation between the application of accounting principles employed in
the preparation of such certificates and the application of accounting
principles employed in the preparation of the financial statements
referred to in Section 6.01, and reasonable estimates of the
difference for the period in question between such certificates
arising as a consequence thereof; and (D) setting forth the total
assets of each foreign Material Subsidiary covered by an executory
pledge agreement; and
(b) within 90 days of the beginning of each fiscal year
of the Company, financial projections ("Projections") with respect to
each fiscal year through the Termination Date, or budgets or related
items as the Agent, or any Bank through the Agent, may reasonably
request, all in such detail as the Agent or any Bank through the Agent
may reasonably request.
(c) promptly after the same are filed, copies of all
financial statements and regular, periodical or special reports which
the Company is required to make to, or file with, the Securities and
Exchange Commission or any successor or similar Governmental
Authority;
(d) promptly, such additional financial and other
information as the Agent, at the request of any Bank, may from time to
time reasonably request; and
(e) within 90 days of the beginning of each fiscal year
of the Company, a chart of the corporate structure of the Company.
6.03 Notices. The Company shall promptly notify the Agent and each
Bank:
(a) as soon as possible and in any event within five days
after the Company shall have knowledge of the occurrence of any
Default or Event of Default;
(b) of (i) any breach or non-performance of, or any
default under, any Contractual Obligation of the Company or any of its
Subsidiaries which would reasonably be expected to result in a
Material Adverse Effect; and (ii) any material dispute, litigation,
investigation, proceeding or suspension
60
which exists at any time between the Company or any of its Subsidiaries
and any Governmental Authority;
(c) upon, but in no event later than 10 days after,
becoming aware of (i) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or
threatened against the Company or any Subsidiary or any of their
Properties pursuant to any applicable Environmental Laws, (ii) all
other Environmental Claims, and (iii) any environmental or similar
condition on any real property adjoining or in the vicinity of the
property of the Company or any Subsidiary that would reasonably be
anticipated to cause such property or any part thereof to be subject
to any restrictions on the ownership, occupancy, transferability or
use of such property under any Environmental Laws which restrictions
would reasonably be expected to have a Material Adverse Effect;
(d) of any other litigation or proceeding affecting the
Company or any of its Subsidiaries which the Company would be required
to report to the SEC pursuant to the Exchange Act, within four days
after reporting the same to the SEC;
(e) of any of the following ERISA events affecting the
Company or any member of its Controlled Group (but in no event more
than 10 days after such event), together with a copy of any notice
with respect to such event that may be required to be filed with a
Governmental Authority and any notice delivered by a Governmental
Authority to the Company or any member or its Controlled Group with
respect to such event:
(i) an ERISA Event;
(ii) the adoption of any new Plan that is subject to
Title IV of ERISA or section 412 of the Code by any member of
the Controlled Group;
(iii) the adoption of any amendment to a Plan that
is subject to Title IV of ERISA or section 412 of the Code, if
such amendment results in a material increase in benefits or
unfunded liabilities; or
(iv) the commencement of contributions by any member
of the Controlled Group to any Plan that is subject to Title
IV of ERISA or section 412 of the Code;
(f) any Material Adverse Effect subsequent to the date of
the most recent audited financial statements of the Company delivered
to the Banks pursuant to subsection 6.01(a).
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Company
61
setting forth details of the occurrence referred to therein, the
provisions of this Agreement affected, and stating what action the
Company proposes to take with respect thereto. Each notice under
subsection 6.03(a) shall describe with particularity the clause or
provision of this Agreement or other Loan Document that has been
breached or violated.
6.04 Preservation of Corporate Existence, Etc. The Company shall
preserve and keep in full force and effect its corporate existence and the
rights, privileges and franchises material to its business; and cause to be
preserved and kept in full force and effect the corporate existence of such of
its Subsidiaries and such rights, privileges and franchises of its Subsidiaries
the failure to so preserve or keep would have a Material Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain, or cause
to be maintained, in good repair, working order and condition, except ordinary
wear and tear, all Properties which the Company or any of its Subsidiaries
owns, leases or otherwise holds an interest in (to the extent the terms of any
such leases or other agreements establishing such property interests permit
such maintenance), and from time to time make or cause to be made all
appropriate (as determined by the senior management of the Company in the
exercise of prudent business judgment) repairs, renewals and replacements
thereof and maintain, or cause its subsidiaries to maintain, all franchise
privileges, licenses, patents, trademarks, copyrights and trade names deemed by
the Company to be reasonably necessary to conduct its business.
6.06 Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons. Not later than
thirty days after the renewal, replacement or modification of any policy, the
Company shall deliver to the Agent for distribution to each Bank a detailed
schedule setting forth for each such policy: (i) the amount of such policy,
(ii) the risks insured against by such policy, (iii) the name of the insurer
and each insured party under such policy, (iv) the policy number of such
policy, and (v) such other information as any Bank through the Agent may
reasonably request. In addition, the Company shall deliver to the Agent for
distribution to each Bank written notice of any cancellation of any of the
insurance policies required by this Section 6.06 within seven Business Days
after the Company receives notification of such cancellation.
6.07 Payment of Obligations. The Company shall, and shall cause
its Subsidiaries to, pay and discharge as the same shall become due and
payable:
62
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same
are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the
Company or such Subsidiary; and
(b) all lawful claims which, if unpaid, would by law
become a material Lien upon its Property.
6.08 Compliance with Laws. The Company shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business (including the Federal Fair Labor Standards Act), except such
as may be contested in good faith or as to which a bona fide dispute may exist.
6.09 Inspection of Property and Books and Records. The Company
shall keep and shall cause each of its Subsidiaries to keep, proper books of
record and account, in which true and correct entries in all material respects,
in conformity with GAAP subject to customary periodic adjustments in connection
with the preparation of financial statements and all legal requirements, shall
be made of all material dealings and transactions in relation to their
respective businesses and activities. The Company shall permit, and shall
cause each of its Subsidiaries to permit, authorized representatives of the
Agent or any Bank to visit and inspect any of their respective Properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom (except copies and extracts of the
Company's monthly reports internally known as the "blue book" and other
specified documents which the Company in its reasonable judgment deems highly
confidential), and to discuss their respective affairs, finances and accounts
with their respective directors, officers, and independent public accountants,
all at the expense of the Agent or such Bank and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Company; provided, however, when an Event of
Default exists the Agent or any Bank may visit and inspect at the expense of
the Company such Properties at any time during business hours and without
advance notice.
6.10 Environmental Laws.
(a) The Company shall, and shall cause each of its
Subsidiaries to, conduct its operations and keep and maintain its
Property in compliance with all material Environmental Laws the
non-compliance with which could reasonably be expected to cause a
Material Adverse Effect.
(b) Upon the written request of the Agent or any Bank,
the Company shall submit and cause each of its Subsidiaries to
63
submit, to the Agent and such Bank, at the Company's sole cost and
expense, at reasonable intervals, a report providing an update of the
status of any environmental, health or safety compliance, hazard or
liability issue identified in any notice or report required pursuant
to subsection 6.03(d), that would reasonably be expected to have a
Material Adverse Effect.
6.11 Subsidiary Guaranties.
(a) The Company shall cause each domestic Material
Subsidiary of the Company now or hereafter existing to execute and
deliver for the benefit of the Banks a guaranty substantially in the
form ofExhibit J, which shall, in the case of Spelling Entertainment
Group Inc., be limited to the amount borrowed from the Company. SEGI,
the parent of Spelling Entertainment Group Inc. shall provide a
guaranty substantially in the form of Exhibit J. In the event that
Spelling Entertainment Group Inc. borrows from the Company pursuant to
an intercompany credit agreement between Spelling Entertainment Group
Inc. and the Company, such borrowing shall be evidenced by an
intercompany note which shall be pledged to the Banks and promptly
delivered and duly endorsed to the Agent.
(b) The Company shall cause each foreign Material
Subsidiary of the Company now or hereafter existing, or its Domestic
Parent with respect to any pledge, to execute and deliver for the
benefit of the Banks one of the following: (i) a guaranty
substantially in the form of Exhibit J, (ii) an executory pledge
agreement executed by its Domestic Parent substantially in the form
ofExhibit L-1 (which pledge agreement shall require the delivery of
pledged shares upon the occurrence of Default) or (iii) a completed
pledge agreement executed by its Domestic Parent substantially in the
form of Exhibit L-2 (which pledge agreement shall require the delivery
of the pledged shares contemporaneously with the delivery of such
pledge agreement). At any time, the Company may cause the Domestic
Parent or its foreign Material Subsidiary to substitute a guaranty, an
executory pledge agreement or a completed pledge agreement for any
previously delivered guaranty, executory pledge agreement or completed
pledge agreement. The total assets of all foreign Material
Subsidiaries with respect to which executory pledge agreements have
been delivered shall not at any time exceed 30% of the Company's
consolidated total assets.
(c) Notwithstanding the foregoing, if at any time the
total assets of the domestic and foreign Material Subsidiaries of the
Company for which guaranties have been provided and/or shares have
been pledged, represent less than 66 2/3% of the Company's
consolidated total assets, the Company shall cause additional
Subsidiaries (commencing with the Subsidiaries with
64
the largest amount of total assets, in descending order) to provide
guarantees and pledge agreements so that the total assets of the
Subsidiaries of the Company which have provided guaranties and/or
whose shares have been pledged represent at least 66 2/3% of the
Company's consolidated total assets.
65
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank
shall have any Revolving Commitment hereunder, or any Loan or other Obligation
shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance
in writing:
7.01 Limitation on Liens. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien or Environmental Lien upon or
with respect to any part of its or its Subsidiaries' Property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien existing on the Property of the Company or
its Subsidiaries on the Closing Date and set forth in Schedule 7.01
securing Indebtedness outstanding on such date and any extensions or
renewals thereof, provided that any such extension or renewal shall
not (A) secure Indebtedness in an aggregate amount greater than the
Indebtedness so secured on the date hereof or (B) attach to or
otherwise encumber Property other than Property subject thereto as of
the date hereof;
(b) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable
without penalty, or to the extent that non-payment thereof is
permitted by Section 6.07, provided that no Notice of Lien has been
filed or recorded;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable
without penalty;
(d) Liens (other than any Lien imposed by ERISA)
consisting of pledges or deposits required in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(e) Liens securing (i) the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, (ii) obligations on surety and appeal bonds, and (iii)
other obligations of a like nature; in each case, incurred in the
ordinary course of business, provided all such Liens in the aggregate
would not (even if enforced) cause a Material Adverse Effect;
(f) Liens on Property hereafter acquired in connection with
an acquisition of a business and its property by the Company or any of
its Subsidiaries, provided that such liens
66
and security interests secure amounts not then due and payable by the
Company or any such Subsidiary and were not created and did not arise
in contemplation of such acquisition;
(g) Liens arising in favor of a lessee of assets or
Property of the Company or any Subsidiary of the Company in connection
with the grant by the Company or such Subsidiary to such lessee of an
option to purchase the leased Property;
(h) any Lien on real property, and on any fixtures
thereon or attached thereto, acquired, constructed or improved by the
Company or any Subsidiary and created contemporaneously with or within
eighteen (18) months after the date the Indebtedness has been incurred
with respect to such acquisition, construction or improvement, to
secure all or a portion of the purchase price of such real property or
the cost of such construction, acquisition or improvement, or any of
them; provided, that, that principal amount of the Indebtedness
secured by all such purchase money security interests shall not at any
time exceed $50,000,000;
(i) Purchase money security interests on any Property
acquired or held by the Company or its Subsidiaries in the ordinary
course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such
Property; provided that (i) any such Lien attaches to such Property
concurrently with or within 20 days after the acquisition thereof,
(ii) such Lien attaches solely to the Property so acquired in such
transaction, (iii) the principal amount of the debt secured thereby
does not exceed 100% of the cost of such Property, and (iv) the
principal amount of the Indebtedness secured by any and all such
purchase money security interests shall not at any time exceed 25% of
the Company's Consolidated Net Worth at the time;
(j) Liens in favor of the Company securing intercompany
loans and advances which Liens have been assigned to the Banks; and
(k) Liens, other than as described in clauses (a) through
(h) and (j) above, in an aggregate amount not to exceed 25% of the
Company's Consolidated Net Worth at any time.
7.02 Disposition of Assets. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) all or substantially all of its Property (including
accounts and notes receivable, with or without recourse, and equipment
sale-leaseback transactions) or enter into any agreement to do any of the
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foregoing; provided that the Subsidiaries of the Company may sell, lease,
assign, transfer or otherwise dispose of their Property having an aggregate
fair market value, not to exceed 20% of Consolidated Net Worth during any
fiscal year; provided further that the consideration received by a Subsidiary
in each such transaction permitted hereunder shall constitute fair market value
determined in the Company's management's best business judgment.
7.03 Mergers.
(a) The Company shall not merge with or consolidate into
any other Person unless (i) the Company is the continuing or surviving
corporation or (ii) if the Company is merged into a public holding
company or is merged with a Subsidiary located in another
jurisdiction, the holders of common stock of the Company are entitled
to receive (other than cash in lieu of fractional shares) solely
common stock in amounts proportionate to their holdings of common
stock of the Company immediately prior to such transaction and, in
either case of (i) or (ii) above, immediately after giving effect to
such transaction, no Default shall have occurred and be continuing;
and
(b) The Company shall not permit any Guarantor or
Domestic Parent to merge with another Subsidiary that is not a
Guarantor unless the surviving entity is or becomes a Guarantor or
Domestic Parent.
7.04 Loans and Investments. The Company may purchase or acquire
and permit any of its Subsidiaries to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, assets, obligations or
other securities of or any interest in, any Person and make any advance, loan,
extension of credit or capital contribution to or any other investment in, any
Person including any Affiliate of the Company, provided, that, advances,
extensions of credit, or capital contributions to, or any other investment
(other than Cash Equivalents) in persons in which the Company owns, directly or
indirectly, less than 50% of the outstanding capital stock and in which the
Company has no board representation shall not exceed in the aggregate 15% of
Consolidated Net Worth.
7.05 Federal Regulations. The Company shall not and shall not
suffer or permit any of its Subsidiaries to use the proceeds of any Loan,
directly or indirectly, in violation of Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System, as in effect from time to time.
7.06 Compliance with ERISA. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, (i) terminate any Plan subject to
Title IV of ERISA so as to result in any material liability to the Company or
any ERISA Affiliate, which would have
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a Material Adverse Effect (ii) permit to exist any ERISA Event or any other
event or condition, which presents the risk of a material liability to any
member of the Controlled Group which would have a Material Adverse Effect,
(iii) make a complete or partial withdrawal within the meaning of ERISA Section
4201) from any Multiemployer Plan which is reasonably likely to result in any
liability to the Company or any ERISA Affiliate, which would have a Material
Adverse Effect, (iv) enter into any new Plan or modify any existing Plan so as
to increase its obligations thereunder in excess of 20% of payroll except in
the ordinary course of business, or (v) permit the minimum funding requirements
of ERISA to be violated with respect to any Plan if the liability to the
Company resulting therefrom would have a Material Adverse Effect.
7.07 Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than $1,250,000,000 plus 50% of
capital stock issued and 50% of consolidated net income (excluding net losses)
earned subsequent to December 31, 1993.
7.08 Consolidated Senior Debt to Capital. The Company shall not
permit the ratio of Consolidated Senior Debt to Capital to exceed 0.50 to 1.
7.09 Total Debt to Capital. The Company shall not permit its ratio
of Total Debt to Capital to exceed 0.60 to 1.
7.10 Net Cash Flow Ratio. The Company shall not permit its ratio
at the end of any fiscal quarter for the previous four quarters during the
calendar years set forth below of (a) Net Cash Flow to (b) purchases of
property, plant and equipment and video cassettes (other than acquisitions and
new store development) plus cash interest and cash dividends to be less than
the following:
During Calendar Year Ratio
-------------------- -----
1993 1.15 to 1.0
1994 and thereafter 1.25 to 1.0
7.11 Fixed Charge Coverage Ratio. The Company shall not permit its
ratio of (i) consolidated earnings before interest, taxes and Rents to (ii)
Consolidated Interest Expense and Rents to be less than 1.5 to 1 as of each
quarter for the current fiscal year to date period.
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ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company or any Designated
Subsidiary fails to pay, (i) when and as required to be paid herein,
any amount of principal of any Loan or any amount of interest on any
Absolute Rate Bid Loan, or (ii) within three days after the same shall
become due, any other interest, or any fee or any other amount payable
hereunder or pursuant to any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company or any of its Subsidiaries made herein, in any
Loan Document, or which is contained in any certificate, document or
financial or other statement by the Company, any of its Subsidiaries,
or their respective Responsible Officers, furnished at any time under
this Agreement, or in or under any Loan Document, shall prove to have
been incorrect in any material respect on or as of the date made
(except with respect to Section 6.02(b) as to which the extent of the
representations are limited as set forth therein); or
(c) Specific Defaults. The Company or any Designated
Subsidiary fails to perform or observe any term, covenant or agreement
contained in Article VII; or
(d) Other Defaults. The Company or any Designated
Subsidiary fails to perform or observe any other term or covenant
contained in this Agreement or any Loan Document, and such default
shall continue unremedied for a period of 15 days after the initial
occurrence thereof; or
(e) Cross-Default. The Company or any of its
Subsidiaries (i) fails to make any payment in respect of any other
Indebtedness or Guaranty Obligation or Rate Contracts having an
aggregate principal amount of more than $10,000,000 when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto; or
(ii) fails to perform or observe any other condition or covenant, or
any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Guaranty Obligation or
Rate Contract, and such failure continues after the applicable grace
or notice period, if any, specified in the document relating thereto
if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries
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of such Indebtedness or Rate Contract (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause
such Indebtedness to be declared to be due and payable prior to its
stated maturity, or such Guaranty Obligation to become payable or cash
collateral in respect thereof to be demanded;provided, however, that
if the Company is contesting the payment amount on any such other
Indebtedness or Guaranty Obligation or the date such payment is due in
good faith and the Company establishes reserves on its books if
required by and in accordance with GAAP as consistently applied, then
such nonpayment, in and of itself, shall not, absent an acceleration
of such Indebtedness or Guaranty Obligation or Rate Contract
constitute an Event of Default; or
(f) Bankruptcy or Insolvency. The Company, any Guarantor
or any of the Designated Subsidiaries (i) ceases or fails to be
solvent, or generally fails to pay, or admits in writing its inability
to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course;
(iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing;
or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company, any
Guarantor or any Designated Subsidiary, or any writ, judgment, warrant
of attachment, execution or similar process, is issued or levied
against a substantial part of the Company's, any Guarantor's or any of
its Designated Subsidiaries' Properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released,
vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company, any Guarantor or any of its Designated
Subsidiaries admits the material allegations of a petition against it
in any Insolvency Proceeding, or an order for relief (or similar order
under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii)
the Company, any Guarantor or any of its Designated Subsidiaries
acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its
Property or business;
(h) Monetary Judgments. One or more final
(non-interlocutory) judgments, orders or decrees shall be entered
against the Company or any of its Subsidiaries involving in the
aggregate a liability (not fully covered by insurance) as to any
single or related series of transactions, incidents or conditions, of
$10,000,000 or more, and the same shall remain
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unvacated and unstayed pending appeal for a period of 10 days after the entry
thereof; or
(i) Non-Monetary Judgments. Any non-monetary judgment,
order or decree shall be rendered against the Company or any of its
Subsidiaries which does or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(j) Change in Control. Any Change in Control;
(k) Guarantor/Pledgor Defaults. Any Guarantor or any
Pledgor shall fail in any material respect to perform or observe any
term, covenant or agreement in any guaranty or any pledge agreement
delivered hereunder; or the guaranty or any pledge agreement
delivered hereunder shall for any reason other than as contemplated by
Section 6.11 be partially (including with respect to future advances)
or wholly revoked or invalidated, or otherwise cease to be in full
force and effect, or any Guarantor or any Pledgor or any other Person
shall contest in any manner the validity or enforceability thereof or
deny that it has any further liability or obligation thereunder; or
any event described at paragraphs (f) or (g) shall occur with respect
to any Guarantor or any Pledgor.
8.02 Remedies. If any Event of Default occurs, the Agent shall, at
the request of, or may, with the consent of, the Majority Banks,
(a) declare the Revolving Commitment of each Bank to make
Committed Loans to be terminated, whereupon such Revolving Commitments
shall forthwith be terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable; without presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Loan Documents or
applicable law;
provided, however, that upon the occurrence of any event specified in paragraph
(f) or (g) above (in the case of clause (i) of paragraph (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all
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outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank. If any Bid Loan Lender shall suffer an Event of Default under subsection
8.01(a) due to the Company's failure to pay any amount of principal on or
interest of any Absolute Rate Bid Loan, such Bid Loan Lender may send a written
request to the Agent to obtain approval of the Majority Banks to terminate the
Revolving Commitments and, if such approval is not obtained within 10 Business
Days after the date such request is received, the affected Bid Loan Lender (or
assignee) may commence enforcement of such default by any and all legal means.
8.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
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ARTICLE IX
THE AGENT
9.01 Appointment and Authorization. Each Bank hereby irrevocably
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.03 Liability of Agent. None of the Agent, its Affiliates, or any
of their respective officers, directors, employees, agents, or
attorneys-in-fact (collectively, the "Agent-Related Persons") shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct), or (ii) be responsible in any manner
to any of the Banks for any recital, statement, representation or warranty made
by the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the Properties,
books or records of the Company or any of its Subsidiaries or Affiliates.
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9.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any
discretionary action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance
with a request or consent of the Majority Banks or the Banks, as the
case may be, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Sections 4.01 and 4.02, each Bank that has
executed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank, unless an officer of the Agent responsible
for the transactions contemplated by the Loan Documents shall have
received notice from the Bank prior to the initial Borrowing
specifying its objection thereto and either such objection shall not
have been withdrawn by notice to the Agent to that effect or the Bank
shall not have made available to the Agent the Bank's ratable portion
of such Committed Borrowing.
9.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank, the Company or a Designated
Subsidiary referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be requested by the Majority Banks in
accordance with Article VIII;
75
provided, however, that unless and until the Agent shall have received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by the Agent hereinafter taken, including any review of the affairs
of the Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to
the Agent and the Arranger that it has, independently and without reliance upon
the Agent or the Arranger and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated thereby, and made its
own decision to enter into this Agreement and extend credit to the Company and
the Designated Subsidiaries hereunder. Each Bank also represents that it will,
independently and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company and the Designated Subsidiaries. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Agent, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of
the Agent-Related Persons.
9.07 Indemnification. The Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company or any Designated Subsidiary and without limiting the obligation of the
Company or any Designated Subsidiary to do so), ratably from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind whatsoever
which may at any time (including at any time following the repayment of the
Loans) be imposed on, incurred by or asserted against any such Person any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by any such Person under or in
connection with any of the foregoing; provided, however, that no Bank shall be
liable for the
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payment to the Agent-Related Persons of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein to
the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company or any Designated Subsidiary. The obligation of the Banks in
this Section shall survive the payment of all Obligations hereunder.
9.08 Agent in Individual Capacity. BofA and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to the Banks. With respect to its Loans, BofA shall have the
same rights and powers under this Agreement as any other Bank and may exercise
the same as though it were not the Agent, and the terms "Bank" and "Banks"
shall include BofA in its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks or the
Agent, respectively. If the Agent shall resign as Agent under this Agreement,
the Majority Banks, after consultation with the Company, shall appoint from
among the Banks a successor agent for the Banks. If no successor Agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent shall appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall mean
such successor agent and the retiring Agent's rights, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
9.10 The Arranger. The Arranger shall have no right, power,
obligation, liability, responsibility or duty under this Agreement other than
the right to receive the fees referred to in Section 2.11(d) and the right to
indemnity under Section 10.05.
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ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company or any Designated Subsidiary therefrom,
shall be effective unless the same shall be in writing and signed by the
Company, Majority Banks, and acknowledged in writing by the Agent, and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks,
acknowledged in writing by the Agent, do any of the following:
(a) increase the Revolving Commitment of any Bank or
subject any Bank to any additional obligations (except pursuant to
Section 10.08);
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due hereunder or under any
Loan Document or extend the Revolving Termination Date;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts payable
hereunder or under any Loan Document;
(d) change the percentage of the Revolving Commitments
or of the aggregate unpaid principal amount of the Loans which shall be
required for the Banks or any of them to take any action hereunder;
(e) amend this Section 10.01 or Section 2.15; or
(f) release any guaranty or pledge agreement delivered
pursuant to Section 6.11 except as otherwise contemplated by Section
6.11 or change the criteria for delivering any guaranty or pledge
agreement set forth in Section 6.11;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and consented to and signed by the Agent in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or duties of the
Agent under this Agreement or any other Loan Document. Notwithstanding the
foregoing, each Bid Loan Lender may, in its sole discretion, if there exists no
Default or Event of Default, and without the consent or signature of the Agent
or any other Bank (provided, however, that written notice thereof is provided
by 11:00 a.m. (New York time) one Business Day prior to the date of prepayment
by such Bid Loan Lender to the Agent), accept any prepayment on account of any
such Bid Loan Lender's Bid Loans.
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10.02 Notices.
(a) All notices, requests and other communications provided
for hereunder except as specifically provided otherwise herein, shall
be in writing (including, unless the context expressly otherwise
provides, telegraphic, telex, facsimile transmission or cable
communication) and telegraphed, telexed or delivered, (i) if to the
Company, to its address specified on the signature pages hereof (or,
in case of a Designated Subsidiary, in its Election to Participate),
(ii) if to any Bank, to its Domestic Lending Office, and (iii) if to
the Agent, to its address specified on the signature pages hereof; or,
as to the Company, a Designated Subsidiary or the Agent, to such other
address as shall be designated by such party in a written notice to
the other parties, and as to each other party, at such other address
as shall be designated by such party in a written notice to the
Company, and Designated Subsidiary and the Agent.
(b) All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to
the telegraph company, transmitted by facsimile, confirmed by telex
answerback or delivered to the cable company, respectively, or if
delivered, upon delivery, except that notices pursuant to Article II
or VIII shall not be effective until actually received by the Agent or
the Banks as specified herein.
(c) The Company acknowledges and agrees that any agreement
of the Agent and the Banks at Article II herein to receive certain
notices by telephone and facsimile is solely for the convenience and
at the request of the Company. The Agent and the Banks shall be
entitled to rely on the authority of any Person purporting to be a
Person authorized by the Company to give such notice and the Agent and
the Banks shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Agent and the Banks
in reliance upon such telephonic or facsimile notice. The obligation
of the Company to repay the Loans shall not be affected in any way or
to any extent by any failure by the Agent and the Banks to receive
written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at
variance with the terms understood by the Agent and the Banks to be
contained in the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or
79
further exercise thereof or the exercise of any other right, remedy, power or
privilege.
10.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Agent and the Arranger on demand
for all costs and expenses incurred by the Agent in connection
with the development, preparation, delivery, and execution of and
any amendment, supplement, waiver or modification to, this
Agreement, any Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the
Attorney Costs incurred by the Agent and the Arranger with
respect thereto;
(b) pay or reimburse each Bank and the
Agent on demand for all costs and expenses incurred by
them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies
(including in connection with any "workout" or
restructuring regarding the Loans) under this
Agreement, any other Loan Document, and any such other
documents, including Attorney Costs incurred by the
Agent and any Bank; and
(c) pay or reimburse the Agent on
demand for all appraisal (including the allocated cost
of internal appraisal services), audit, environmental
inspection and review (including the allocated cost of
such internal services), search and filing costs, fees
and expenses, incurred or sustained by the Agent in
connection with the matters referred to under
paragraphs (a) and (b) of this Section.
10.05 Indemnity. The Company shall pay,
indemnify, and hold each Bank, the Agent, the Arranger and each of their
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including Attorney
Costs) of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and any
other Loan Documents, or the transactions contemplated hereby and thereby, and
with respect to any investigation, litigation or proceeding related to this
Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all other
Obligations.
80
10.06 Marshalling; Payments Set Aside. Neither the Agent nor the
Banks shall be under any obligation to marshall any assets in favor of the
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment or payments to the
Agent or the Banks, or the Agent or the Banks exercise their rights of set-off,
and such payment or payments or the proceeds of such enforcement or set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party in connection with any Insolvency Proceeding, or otherwise, then to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.
10.07 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company and the Designated
Subsidiaries may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Agent and each Bank.
10.08 Assignments, Participations, Confidentiality, etc.
(a) Any Bank may, with the written
consent of the Company (which will not be unreasonably
withheld) and the Agent (which will not be unreasonably withheld), at
any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or the Agent shall be
required in connection with any assignment and delegation by a Bank to
a Bank Affiliate of such Bank) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Revolving Commitments and the
other rights and obligations of such Bank hereunder, in a minimum
amount of $10,000,000; provided, however, that (i) the Company and
the Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (A)
written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall
have been given to the Company and the Agent by such Bank and the
Assignee; and (B) such Bank and its Assignee shall have delivered to
the Company and the Agent an Assignment and Acceptance in the form of
Exhibit N ("Assignment and Acceptance").
(b) From and after the date that the
Agent notifies the assignor Bank that it has received an
executed Assignment and Acceptance and payment of a recordation fee of
$2,500, (i) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the
81
rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the
extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from
its obligations under the Loan Documents.
(c) Immediately upon each Assignee's
making its payment under the Assignment and Acceptance,
this Agreement, shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting
adjustment of the Revolving Commitments arising
therefrom. The Revolving Commitment allocated to each
Assignee shall reduce such Revolving Commitments of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to
one or more commercial banks and, in respect of Bid
Loans, to any other Person, (a "Participant")
participating interests in any Loans, the Revolving
Commitment of that Bank and the other interests of that
Bank (the "originating Bank") hereunder and under the
other Loan Documents; provided, however, that (i) the
originating Bank's obligations under this Agreement
shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such
obligations, (iii) the Company, the Designated
Subsidiaries and the Agent shall continue to deal
solely and directly with the originating Bank in
connection with the originating Bank's rights and
obligations under this Agreement and the other Loan
Documents, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant
shall have rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous
consent as described in the first proviso to Section
10.01. In the case of any such participation, the
Participant shall not have any rights under this
Agreement, or any of the other Loan Documents, and all
amounts payable by the Company or a Designated
Subsidiary hereunder shall be determined as if such
Bank had not sold such participation; except that, if
amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the
same extent as if the amount of its participating
interest were owing directly to it as a Bank under this
Agreement.
(e) Each Bank agrees to take normal and
reasonable precautions and exercise due care to
maintain the confidentiality of all non-public
information provided to it by the Company or any
Subsidiary of the Company, or by the Agent on such
Company's or Subsidiary's behalf, in connection with
82
this Agreement or any other Loan Document, and neither
it nor any of its Affiliates shall use any such
information for any purpose or in any manner other than
pursuant to the terms contemplated by this Agreement;
except to the extent such information (i) was or
becomes generally available to the public other than as
a result of a disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a
source other than the Company, provided that such
source is not bound by a confidentiality agreement with
the Company or subject to a fiduciary duty to the
Company or its stockholders; provided further, however,
that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or
in connection with an examination of such Bank by any
such authority; (B) pursuant to subpoena or other court
process, provided that the Bank will promptly notify
the Company of any such process and shall make only
such disclosures as such Bank's legal counsel advises
are required; (C) when required to do so in accordance
with the provisions of any applicable Requirement of
Law; and (D) to such Bank's independent auditors and
other professional advisors. Notwithstanding the
foregoing, the Company authorizes each Bank to disclose
to any Participant or Assignee (each, a "Transferee")
and to any prospective Transferee, such financial and
other information in such Bank's possession concerning
the Company or its Subsidiaries which has been
delivered to Agent or the Banks pursuant to this
Agreement or which has been delivered to the Agent or
the Banks by the Company in connection with the Banks'
credit evaluation of the Company prior to entering into
this Agreement; provided that, unless otherwise agreed
by the Company, such Transferee agrees in writing to
such Bank to keep such information confidential to the
same extent required of the Banks hereunder and such
Bank agrees to provide the Company with a copy of the
confidentiality agreement executed in connection
therewith.
(f) Notwithstanding any other provision
contained in this Agreement or any other Loan Document
to the contrary, any Bank may assign all or any portion
of the Loans or Notes held by it to any Federal Reserve
Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned
Loans or Notes made by the Company to or for the
account of the assigning and/or pledging Bank in
accordance with the terms of this Agreement shall
satisfy the Company's obligations hereunder in respect
to such assigned Loans or Notes to the extent of such
payment. No such assignment shall release the
assigning Bank from its obligations hereunder.
83
(g) Any Bank may request the Agent to obtain from the
Company a promissory note evidencing the Company's Indebtedness to it
hereunder for the purpose of pledging such note to a Federal Reserve
Bank located outside the State of Florida.
10.09 Set-off. In addition to any rights and remedies of the
Banks provided by law, if an Event of Default exists, each Bank is authorized
at any time and from time to time, without prior notice to the Company, any
such notice being waived by the Company to the fullest extent permitted by law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing to, such Bank to or for the credit or the account of the Company against
any and all Obligations owing to such Bank, now or hereafter existing,
irrespective of whether or not the Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify the Company and
the Agent after any such set-off and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 10.09
are in addition to the other rights and remedies (including other rights of
set-off) which the Bank may have.
10.10 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of its Offshore Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
10.11 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Agent.
10.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks and the Agent, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct
or indirect cause of
84
action or claim in connection with, this Agreement or any of the other Loan
Documents. Neither the Agent nor any Bank shall have any obligation to any
Person not a party to this Agreement or other Loan Documents.
10.14 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT
THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
10.15 Waiver of Jury Trial. THE COMPANY, THE DESIGNATED
SUBSIDIARIES, THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
COMPANY, THE DESIGNATED SUBSIDIARIES, THE BANKS AND THE AGENT EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.16 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire Agreement and understanding among the
Company, the Banks and the Agent, and supersedes all prior or contemporaneous
Agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof, except for the fee letters referenced in
subsection 2.11(d), and any prior arrangements made with respect to the payment
by the Company of (or any indemnification for) any fees, costs or expenses
payable to or incurred (or to be incurred) by or on behalf of the Agent or the
Banks.
85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York City by their proper and duly
authorized officers as of the day and year first above written.
BLOCKBUSTER ENTERTAINMENT CORPORATION
By: ____________________________________
Title: _________________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: ____________________________________
Title: _________________________________
Address for notices:
Bank of America National Trust
and Savings Association
1455 Market Street 12th Floor
San Francisco, CA 94103
Attn: Global Agency #5596
Facsimile: (415) 622-4894
Telex: 3726050BA GA SFO
Address for payments:
Bank of America National Trust
and Savings Association
ABA #:121-000-358-SF
For Credit to:
Bank Control Account #12333-14235
Attn: Global Agency, Unit 5596
Ref: Blockbuster
BA SECURITIES, INC., as Arranger
By: ____________________________________
Title: _________________________________
S-1
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
1850 Gateway Boulevard
Concord, CA 94520
S-2
ABN AMRO BANK N.V.
By: ____________________________________
Title: _________________________________
Domestic and Offshore Lending Office
200 S. Biscyane Blvd., 22nd Floor
Miami, FL 33131-5311
S-3
THE BANK OF NEW YORK
By: ___________________________________
Title: ________________________________
Domestic and Offshore Lending Office
One Wall Street, 16th Floor
Corporate Banking Admin.
New York, NY 10286
S-4
THE BANK OF NOVA SCOTIA
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
600 Peachtree St., N.E.
Suite 2700
Atlanta, GA 30308
S-5
THE BANK OF TOKYO, LTD.,
ATLANTA AGENCY
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
133 Peachtree St., N.E.
#5050
Atlanta, GA 30303-1808
S-6
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By: ____________________________________
Title: _________________________________
By: ____________________________________
Title: _________________________________
Domestic and Offshore Lending Office
Southwest Representative Office
333 Clay Street, Suite 4340
Houston, TX 77002
Attn: Tanya McAllister
with a copy to:
New York Branch
645 Fifth Avenue, 20th Floor
New York, NY
Attn: Joan Rankine
S-7
BANQUE PARIBAS
By: __________________________________
Title: _______________________________
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
787 Seventh Avenue
New York, NY 10019
S-8
BARNETT BANK OF BROWARD COUNTY, N.A.
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
One East Broward Blvd., 2nd Floor
Fort Lauderdale, FL 33301
S-9
CHEMICAL BANK
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office:
270 Park Avenue
New York, NY 10017
S-10
CITIBANK, N.A.
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
c/o Citicorp North America, Inc.
400 Perimeter Center Terrace, Ste. 600
Atlanta, GA 30346
S-11
CONTINENTAL BANK N.A.
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
231 S. LaSalle St.
Chicago, IL 60697
S-12
CREDIT LYONNAIS ATLANTA AGENCY
By: ___________________________________
Title: ________________________________
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: ___________________________________
Title: ________________________________
Domestic Lending Office
Credit Lyonnais Atlanta Agency
235 Peachtree Street, Suite 1700
Atlanta, GA 30303
Eurodollar Lending Office:
Credit Lyonnais Cayman Island Branch
C/O Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
S-13
THE DAI-ICHI KANGYO BANK LIMITED,
ATLANTA AGENCY
By: __________________________________
Title: _______________________________
Domestic and Offshore Lending Office
285 Peachtree Center Avenue, N.E.
Atlanta, GA 30303
S-14
THE FIRST NATIONAL BANK OF CHICAGO
By: ______________________________
Title: ______________________________
Domestic and Offshore Lending Office
One First National Plaza
Chicago, IL 60670
S-15
FIRST INTERSTATE BANK OF CALIFORNIA
By: _________________________________
Title: ______________________________
By: _________________________________
Title: ______________________________
Domestic and Offshore Lending Office
1055 Wilshire Blvd., MS: B10-6
Los Angeles, CA 90017
S-16
THE FIRST NATIONAL BANK OF BOSTON
By: ____________________________________
Title: _________________________________
Domestic and Offshore Lending Office
Commercial Loan Services
74-02-04I
100 Rustcraft Road
Bedham, MA 02026
S-17
FIRST UNION NATIONAL BANK OF FLORIDA
By: ____________________________________
Title:__________________________________
Domestic and Offshore Lending Office
Corporate Banking
200 E. Broward Blvd., Suite 900
Fort Lauderdale, FL 33301
S-18
FUJI BANK, LIMITED
By: _________________________________
Title: ______________________________
Domestic and Offshore Lending Office
Two World Trade Center
New York, NY 10048
S-19
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY
By:__________________________________
Title: ______________________________
Domestic and Offshore Lending Office
One Ninety One Peachtree Tower,
191 Peachtree Street, N.E., Suite 3600
Atlanta, GA 30303-1757
S-20
KREDIETBANK N.V.
By:_______________________________________
Title:____________________________________
Domestic and Offshore Lending Office
Grand Cayman Branch/New York Branch
125 West 55th Street
New York, NY 10019
S-21
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED NEW YORK BRANCH
By: _______________________________
Title: ____________________________
Domestic and Offshore Lending Office
165 Broadway 49th Fl.
New, NY 10006
S-22
THE MITSUBISHI BANK LIMITED,
NEW YORK BRANCH
By:______________________________
Title: __________________________
Domestic and Offshore Lending Office
New York Branch
225 Liberty Street
Two World Financial Center
New York, NY 10281
S-23
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH/NASSAU BRANCH
By: __________________________
Title:________________________
By: __________________________
Title: _______________________
Domestic and Offshore Lending Office
New York Branch/Nassau Branch
175 Water Street, 19th Floor
New York, NY 10038
S-24
NATIONSBANK OF FLORIDA, N.A.
By:____________________________________
Title:_________________________________
Domestic and Offshore Lending Office
One NationsBank Plaza
NC1002-06-19
Charlotte, NC 28255
S-25
PNC BANK, KENTUCKY, INC.
By:____________________________________
Title:_________________________________
Domestic and Offshore Lending Office
201 S. Orange Ave., #750
Orlando, FL 32801
S-26
ROYAL BANK OF CANADA
By:___________________________________
Title:________________________________
Domestic and Offshore Lending Office
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201-2701
S-27
SAKURA BANK, LTD, ATLANTA AGENCY
By:___________________________________
Title:________________________________
Domestic and Offshore Lending Office
245 Peachtree Center Avenue, Suite 2703
Atlanta, GA 30303
S-28
SHAWMUT BANK CONNECTICUT, N.A.
By:____________________________________
Title:_________________________________
Domestic and Offshore Lending Office
777 Main Street - MSN 397
Hartford, CT 06115
S-29
SOCIETE GENERALE
By:_______________________________
Title:____________________________
Domestic and Offshore Lending Office
50 Rockefeller Plaza
New York, NY 10020
S-30
THE SUMITOMO BANK, LIMITED, ATLANTA AGENCY
By:___________________________________
Title:________________________________
Domestic and Offshore Lending Office
133 Peachtree Street, Suite 3210
Atlanta, GA 30303
S-31
BANK/SOUTH FLORIDA, NATIONAL ASSOCIATION
By:________________________________
Title:_____________________________
Domestic and Offshore Lending Office
Corporate Banking - 7th Floor
SunBank Center
501 East Las Olas Blvd.
Fort Lauderdale, FL 33301
S-32
THE TOKAI BANK, LIMITED, ATLANTA AGENCY
By:____________________________________
Title:_________________________________
Domestic and Offshore Lending Office
285 Peachtree Center Avenue, N.E.
Marquis Two Tower, Suite 2802
Atlanta, GA 30303
S-33
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By:____________________________________
Title:_________________________________
By:____________________________________
Title:_________________________________
Domestic and Offshore Lending Office
New York Branch & Cayman Islands Branch
1211 Avenue of the Americas
New York, NY 10036
S-34
THE YASUDA TRUST AND BANKING COMPANY,
LIMITED, NEW YORK BRANCH
By:_________________________________
Title:______________________________
Domestic and Offshore Lending Office
666 Fifth Avenue, Suite 801
New York, NY 10103
S-35
