Filed pursuant to
Rule 424(b)(2)
with respect to
Reg. No. 33-53485
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED MAY 10, 1995)
$550,000,000
[VIACOM LOGO]
$350,000,000 6.75% SENIOR NOTES DUE 2003
$200,000,000 7.625% SENIOR DEBENTURES DUE 2016
EACH UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL AND INTEREST BY
VIACOM INTERNATIONAL INC.
(A WHOLLY OWNED SUBSIDIARY OF VIACOM INC.)
-------------------
The 6.75% Senior Notes due 2003 (the "Senior Notes") and the 7.625% Senior
Debentures due 2016 (the "Senior Debentures" and together with the Senior Notes
the "Senior Securities") are being offered by Viacom Inc. ("Viacom"). Interest
on the Senior Securities is payable semiannually on January 15 and July 15 of
each year, commencing July 15, 1996. The Senior Notes will mature on January 15,
2003 and the Senior Debentures will mature on January 15, 2016. Neither series
of the Senior Securities is subject to redemption prior to maturity nor provides
for any sinking fund.
Each series of the Senior Securities will be unconditionally guaranteed (the
"Senior Guarantees") on a senior basis, as to the payment of principal and
interest, by Viacom International Inc. ("Viacom International"). See
"Description of Senior Debt Securities--Guarantees." Each series of the Senior
Securities will rank pari passu with all other unsecured unsubordinated
obligations of Viacom and the Senior Guarantees will rank pari passu with all
other unsecured unsubordinated obligations of Viacom International. See
"Description of Senior Debt Securities."
The Senior Notes and the Senior Debentures have been approved for listing on
the American Stock Exchange, Inc., under the symbols "VIA.H" and "VIA.I",
respectively, subject to official notice of issuance.
Each series of the Senior Securities will be represented by one or more
Registered Global Securities registered in the name of The Depository Trust
Company (the "Depository") or its nominee. Beneficial interests in the
Registered Global Securities will be shown on, and transfers thereof will be
effected only through, records maintained by the Depository and its
participants. Except as described herein, Registered Global Securities in
definitive form will not be issued. Each series of the Senior Securities will
trade in the Depository's Same-Day Funds Settlement System until maturity, and
secondary market trading activity for the Senior Securities will therefore
settle in immediately available funds. All payments of principal and interest
will be made by Viacom in immediately available funds. See "Description of
Senior Securities--Same-Day Settlement and Payment."
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) VIACOM(1)(3)
------------------- ------------------- -------------------
Per Senior Note............................. 99.903% .625% 99.278%
Per Senior Debenture........................ 99.290% .875% 98.415%
Total....................................... $548,240,500 $3,937,500 $544,303,000
(1) Plus accrued interest, if any, from December 15, 1995.
(2) Viacom has agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by Viacom estimated at $150,000.
-------------------
The Senior Securities are offered by the underwriters, subject to prior
sale, when, as and if delivered to and
accepted by the underwriters and subject to the approval of certain legal
matters by counsel and certain other conditions. The underwriters reserve the
right to withdraw, cancel or modify the offer and to reject orders in whole or
in part. It is expected that delivery of the Senior Securities will be made
against payment therefor on or about December 15, 1995, through the facilities
of the Depository in New York, New York.
-------------------
GOLDMAN, SACHS & CO. BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS SMITH BARNEY INC.
The date of this Prospectus Supplement is December 12, 1995.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK
EXCHANGE, INC. OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
THE COMPANY
Viacom (together with its subsidiaries and divisions, unless the context
otherwise requires, the "Company") is a diversified entertainment and publishing
company with operations in five segments: (i) Networks and Broadcasting, (ii)
Entertainment, (iii) Video and Music/Theme Parks, (iv) Publishing, and (v) Cable
Television. Through the Networks and Broadcasting segment, the Company operates
MTV: MUSIC TELEVISION(R), SHOWTIME(R), NICKELODEON(R)/NICK AT NITE(R) and VH1
MUSIC FIRSTTM, among other program services, and 12 broadcast television and 12
radio stations. Through the Entertainment segment, which includes PARAMOUNT
PICTURESTM and the Company's approximately 77%-owned subsidiary, Spelling
Entertainment Group Inc. ("Spelling"), the Company produces and distributes
theatrical motion pictures and television programming. Through the Video and
Music/Theme Parks segment, which includes the BLOCKBUSTER(R) family of
businesses and PARAMOUNT PARKSTM, the Company is the leading worldwide owner,
operator and franchisor of videocassette rental and sales stores and a leading
owner and operator of music stores in the U.S. In addition, PARAMOUNT PARKSTM
owns and operates six theme parks located in the U.S. and Canada. Through the
Publishing segment, which includes SIMON & SCHUSTER(R), MACMILLAN PUBLISHING
USATM and PRENTICE HALL(R), the Company publishes and distributes educational,
consumer, business, technical and professional books, and audio-video software
products. Through the Cable Television segment, the Company operates cable
television systems serving approximately 1.2 million customers. See "Recent
Developments." The Company's principal offices are located at 1515 Broadway, New
York, New York 10036 and its telephone number is (212) 258-6000.
USE OF PROCEEDS
The net proceeds of approximately $544,153,000 from the sale of the Senior
Securities offered hereby will be used to repay indebtedness under the Bank Loan
Agreements (as defined below). These agreements consist of the $6.489 billion
Credit Agreement dated as of July 1, 1994, as amended, among Viacom and the
financial institutions party thereto, which indebtedness is guaranteed by Viacom
International, the $1.8 billion Credit Agreement dated as of September 29, 1994,
as amended, among Viacom and the financial institutions party thereto, which
indebtedness is guaranteed by Viacom International, and the $311 million Credit
Agreement dated as of July 1, 1994, as amended, among Viacom International,
certain subsidiary borrowers and the financial institutions party thereto, which
indebtedness is guaranteed by Viacom (collectively, the "Bank Loan Agreements").
The indebtedness owed pursuant to the Bank Loan Agreements was primarily
incurred in connection with the acquisitions of Paramount Communications Inc.
("Paramount") and Blockbuster Entertainment Corporation ("Blockbuster"), matures
at various times from December 31, 1996 to July 1, 2002 and currently has a
weighted average interest rate of 6.8%.
S-2
RECENT DEVELOPMENTS
On August 10, 1995, Viacom announced its intention to sell Spelling (the
"Spelling Transaction"). Viacom also announced its intention to acquire
Spelling's interest in Virgin Interactive Entertainment Limited ("Virgin"). An
independent committee of Spelling's Board of Directors has been formed to
negotiate the terms of the Virgin transaction. Viacom acquired Spelling and
Virgin as a part of the acquisition of Blockbuster.
During July 1995, Viacom entered into an agreement to split-off its cable
systems to its shareholders through a dutch-auction exchange offer (the "Cable
Transaction"). The exchange offer will provide shareholders an opportunity to
exchange shares of Viacom Class A or Class B Common Stock for shares of
cumulative, redeemable exchangeable preferred stock of a subsidiary of Viacom
that holds its cable systems. Prior to the consummation of the exchange offer,
such subsidiary will enter into a $1.7 billion credit agreement, the proceeds of
which (the "Loan Proceeds") will be transferred to another subsidiary of Viacom.
Viacom also entered into a definitive agreement with Tele-Communications, Inc.
("TCI") under which a subsidiary of TCI, through a capital contribution of $350
million in cash, will purchase all of the common shares of such subsidiary
immediately following the split-off. National Amusements, Inc., which owns
approximately 25% of Viacom Class A and Class B Common Stock on a combined
basis, will not participate in the exchange offer. The exchange offer and
related transactions are subject to several conditions, including regulatory
approvals, receipt of a tax ruling and consummation of the exchange offer.
Viacom expects, if the conditions are met, the transactions will close in the
first quarter of 1996. On November 21, 1995, the Company filed a registration
statement on Form S-4 (Registration No. 33-64467) with the Securities and
Exchange Commission relating to the exchange offer. Viacom will use the Loan
Proceeds to reduce indebtedness under the Bank Loan Agreements.
On December 4, 1995, certain provisions of the Bank Loan Agreements were
amended which, among other things, (i) increased Viacom's financial flexibility
by eliminating required prepayments prior to December 31, 1996 except for
prepayments of certain amounts received by Viacom in connection with completion
of the Cable Transaction and the Spelling Transaction, and (ii) permit
completion of the Cable Transaction.
S-3
CAPITALIZATION
The following table sets forth the capitalization of the Company on an
historical basis and as adjusted to give effect to the issuance and sale of the
Senior Securities. See "Use of Proceeds" (in millions, except per share
amounts).
AT SEPTEMBER 30, 1995
----------------------
ACTUAL ADJUSTED
--------- ---------
Long-term Debt:
Notes payable to banks......................................... $ 7,012.2 $ 6,468.0
6.625% Senior Notes due 1998................................... 150.0 150.0
5.875% Senior Notes due 2000................................... 149.5 149.5
7.5% Senior Notes due 2002..................................... 247.3 247.3
7.75% Senior Notes due 2005, net of unamortized discount of
$9.3......................................................... 990.7 990.7
6.75% Senior Notes due 2003 offered hereby, net of unamortized
discount of $.3.............................................. -- 349.7
7.625% Senior Debentures due 2016 offered hereby, net of
unamortized discount of $1.4................................. -- 198.6
8.25% Senior Debentures due 2022............................... 247.1 247.1
7.5% Senior Debentures due 2023................................ 149.5 149.5
9.125% Senior Subordinated Notes due 1999...................... 150.0 150.0
8.75% Senior Subordinated Reset Notes due 2001................. 100.0 100.0
10.25% Senior Subordinated Notes due 2001...................... 200.0 200.0
7.0% Senior Subordinated Debentures due 2003, net of
unamortized discount of $45.6................................ 185.9 185.9
8.0% Merger Debentures due 2006, net of unamortized discount of
$123.2....................................................... 946.6 946.6
Other Notes.................................................... 58.9 58.9
Obligations under capital leases............................... 351.4 351.4
--------- ---------
Total long-term debt..................................... 10,939.1 10,943.2
Less current portion................................. (46.9) (46.9)
--------- ---------
Total long-term debt, net of current portion............. 10,892.2 10,896.3
Shareholders' Equity:
Preferred Stock, par value $.01 per share; 200.0 shares
authorized; 24.0 shares issued and outstanding............... 1,200.0 1,200.0
Class A Common Stock, par value $.01 per share; 200.0 shares
authorized, 74.9 shares issued and outstanding............... 0.8 0.8
Class B Common Stock, par value $.01 per share; 1,000.0 shares
authorized; 293.4 shares issued and outstanding.............. 2.9 2.9
Additional paid-in capital..................................... 10,647.5 10,647.5
Retained earnings.............................................. 183.6 183.6
Cumulative translation adjustments............................. (1.1) (1.1)
--------- ---------
Total shareholders' equity............................... 12,033.7 12,033.7
--------- ---------
Total capitalization..................................... $22,925.9 $22,930.0
--------- ---------
--------- ---------
S-4
SELECTED FINANCIAL DATA
The following selected financial data reflect the operations and financial
position of the Company for the periods indicated. Such financial data should be
read in conjunction with the detailed information and consolidated financial
statements, including notes thereto, included in the documents incorporated by
reference into the Prospectus accompanying this Prospectus Supplement. Unaudited
interim data as at and for the nine-month periods ending September 30, 1995 and
1994 reflect, in the opinion of management of the Company, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation of such data. Results of operations for the nine months ended
September 30, 1995 are not necessarily indicative of results which may be
expected for any other interim or annual period (in millions, except per share
amounts).
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- -------------------------------
1995 1994(A) 1994(A) 1993 1992
--------- --------- --------- -------- --------
Revenues................................. $ 8,623.2 $ 4,585.8 $ 7,363.2 $2,004.9 $1,864.7
Earnings from continuing operations
before depreciation and amortization... 1,821.4 579.7 1,074.0 538.1 492.7
Depreciation and amortization............ 608.5 277.8 465.7 153.1 144.8
Earnings from continuing operations...... 1,212.9 301.9 608.3 385.0 347.9
Net earnings............................. 218.0 139.8 89.6 171.0 49.0
Net earnings attributable to common
stock.................................. 173.0 79.8 14.6 158.2 49.0
Primary and fully diluted earnings per
common share:
Net earnings from continuing
operations........................... $ .44 $ .64 $ .25 $ 1.30 $ .55
Net earnings........................... .46 .49 .07 1.31 .41
At Period End:
Total assets........................... $29,311.3 $27,955.6 $28,273.7 $6,416.9 $4,317.1
Long-term debt, net of current
portion.............................. 10,892.2 10,199.9 10,402.4 2,440.0 2,397.0
Shareholders' equity................... 12,033.7 12,014.5 11,791.6 2,718.1 756.5
- ------------
(a) The results of operations of Paramount and Blockbuster are included as of
March 1, 1994 and October 1, 1994, respectively.
S-5
SELECTED SEGMENT DATA
The following tables set forth revenues; earnings (loss) from continuing
operations before interest, taxes, depreciation and amortization ("EBITDA"); and
earnings (loss) from continuing operations, by business segment, with the nine
months ended September 30, 1994 presented on a pro forma basis and on an
historical basis. The pro forma information is provided in addition to
historical information solely to assist in the comparison of results of
operations for the nine months ended September 30, 1995 to the nine months ended
September 30, 1994 and is not necessarily indicative of the combined results of
operations of Viacom, Paramount and Blockbuster that would have occurred if the
completion of the acquisitions of Paramount and Blockbuster (the "Mergers") and
related transactions had occurred on January 1, 1994. The prior period
historical segment presentation has been reclassified to conform to the current
presentation.
Also included is a comparison of actual EBITDA for the nine months ended
September 30, 1995 to pro forma EBITDA for the nine months ended September 30,
1994, which does not reflect the effect of significant amounts of amortization
of goodwill related to the Mergers, and other business combinations accounted
for under the purchase method of accounting. While many in the financial
community consider EBITDA to be an important measure of comparative operating
performance, it should be considered in addition to, but not as a substitute for
or superior to, earnings from continuing operations, net earnings, cash flow and
other measures of financial performance.
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------
1994(A) 1994(B)
1995 PRO FORMA HISTORICAL
-------- --------- ----------
(IN MILLIONS OF DOLLARS)
Revenues:
Networks and Broadcasting................................... $1,536.3 $1,345.0 $ 1,314.1
Entertainment............................................... 2,743.7 2,024.4 1,370.9
Video and Music/Theme Parks................................. 2,447.4 2,161.1 323.7
Publishing.................................................. 1,600.8 1,541.1 1,300.0
Cable Television............................................ 330.0 304.6 304.6
Intercompany................................................ (35.0) (32.0 ) (27.5)
-------- --------- ----------
Total................................................. $8,623.2 $7,344.2 $ 4,585.8
-------- --------- ----------
-------- --------- ----------
EBITDA:
Networks and Broadcasting................................... $ 484.4 $ 390.0 $ 294.3
Entertainment............................................... 409.4 200.5 (59.0)
Video and Music/Theme Parks................................. 638.6 471.3 72.7
Publishing.................................................. 258.1 212.1 254.1
Cable Television............................................ 135.0 117.5 117.5
Corporate................................................... (104.1) (92.3 ) (99.9)
-------- --------- ----------
Total................................................. $1,821.4 $1,299.1 $ 579.7
-------- --------- ----------
-------- --------- ----------
Earnings (loss) from continuing operations:
Networks and Broadcasting................................... $ 402.2 $ 316.3 $ 226.4
Entertainment............................................... 306.6 107.7 (110.6)
Video and Music/Theme Parks................................. 394.7 228.0 39.2
Publishing.................................................. 144.6 118.7 191.3
Cable Television............................................ 73.9 59.8 59.8
Corporate................................................... (109.1) (96.9 ) (104.2)
-------- --------- ----------
Total................................................. $1,212.9 $ 733.6 $ 301.9
-------- --------- ----------
-------- --------- ----------
- ------------
(a) Gives effect to the Mergers and related transactions as if they had occurred
on January 1, 1994.
(b) The results of operations of Paramount are included as of March 1, 1994 and
the results of operations of Blockbuster are excluded.
S-6
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the nine months ended September 30, 1995 and for each year in the five-year
period ended December 31, 1994. For purposes of computing the following ratios,
earnings represent earnings from continuing operations before fixed charges and
taxes, and fixed charges represent interest on indebtedness, amortization of
debt discount and such portion of rental expense which is deemed to be
representative of the interest factor. The ratios set forth below should be read
in conjunction with the financial statements incorporated by reference into the
Prospectus accompanying this Prospectus Supplement.
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------
SEPTEMBER 30, 1995 1994 1993 1992 1991 1990
------------------ ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges................ 1.8x 1.7x 2.8x 1.8x 1.0x (a)
- ------------
(a) Earnings of the Company were insufficient to cover fixed charges for the
year ended December 31, 1990; the additional amount of earnings required to
cover fixed charges would have been $66.1 million.
S-7
DESCRIPTION OF SENIOR SECURITIES
The following description of the particular terms of the Senior Securities
offered hereby (referred to in the accompanying Prospectus as the "Senior Debt
Securities") supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Senior Debt Securities set
forth under the headings "Description of Debt Securities" and "Description of
Senior Debt Securities" in the accompanying Prospectus, to which description
reference is made. Whenever particular defined terms of the Senior Indenture (as
defined below) are referred to, such defined terms are incorporated herein by
reference.
GENERAL
Each series of the Senior Securities will be issued under an Indenture dated
as of May 15, 1995 among Viacom, Viacom International, as guarantor, and State
Street Bank and Trust Company, as successor to The First National Bank of
Boston, trustee, as supplemented by the First Supplemental Indenture thereto,
dated as of May 24, 1995, and as further supplemented and amended by the Second
Supplemental Indenture and Amendment No. 1 thereto, to be dated as of December
15, 1995 (as so supplemented and amended, the "Senior Indenture").
The Senior Notes will be limited to $350,000,000 aggregate principal amount
and the Senior Debentures will be limited to $200,000,000 aggregate principal
amount. Each series of the Senior Securities will be unsecured obligations of
Viacom and will mature on January 15, 2003, in the case of the Senior Notes, and
January 15, 2016, in the case of the Senior Debentures. Each series of the
Senior Securities will rank pari passu with all other unsecured unsubordinated
obligations of Viacom.
Each series of the Senior Securities will be unconditionally guaranteed on a
senior basis as to the payment of principal and interest by Viacom
International. Each series of the Senior Guarantees will rank pari passu with
all other unsecured unsubordinated obligations of Viacom International.
Each series of the Senior Securities will accrue interest from the most
recent date to which interest has been paid or, if no interest has been paid,
from December 15, 1995 at the rates per annum set forth on the cover page of
this Prospectus Supplement, payable on January 15 and July 15 of each year,
commencing July 15, 1996, to the person in whose name the Senior Security was
registered at the close of business on the preceding January 1 and July 1,
respectively. Neither series of the Senior Securities is subject to redemption
prior to maturity nor provides for any sinking fund.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Under the Senior Indenture, neither Viacom nor Viacom International may
consolidate or merge with or into another corporation, or sell or convey all or
substantially all of their respective property and assets to another Person
unless: (i) immediately after such consolidation, merger, sale or conveyance no
Event of Default or event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing; (ii) the
Person (if other than Viacom or Viacom International, as the case may be) is a
corporation organized under the laws of the United States or any state thereof;
(iii) the Person (if other than Viacom or Viacom International, as the case may
be) through a supplemental indenture assumes payment of the principal of and
interest on, the Outstanding Senior Securities and the performance and
observance of all the covenants and conditions of the Senior Indenture with
respect to Viacom or Viacom International, as the case may be; (iv) Viacom or
Viacom International, as the case may be, shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale or conveyance and such supplemental indenture comply
with the applicable provisions of the Senior Indenture and that all conditions
precedent therein provided for relating to such consolidation, merger, sale or
conveyance have been complied with. Viacom and/or Viacom International may
consolidate or merge with or into, or sell or convey all or substantially all of
their respective property and assets to, each other or any Subsidiary of either
of them. For purposes of
S-8
this paragraph, "sell or convey all or substantially all of their respective
property and assets" shall mean property and assets contributing in the
aggregate at least 80% of Viacom's or Viacom International's, as the case may
be, total consolidated revenues which, in the case of Viacom, shall be as
reported in Viacom's last available periodic financial report (quarterly or
annual, as the case may be) filed with the Commission. (Section 801)
Under the Senior Indenture, upon any consolidation by Viacom or Viacom
International with or merger by Viacom or Viacom International into any other
corporation or any sale or conveyance of all or substantially all of the
property and assets of Viacom or Viacom International to any Person in
accordance with the immediately preceding paragraph, the successor Person formed
by such consolidation or into which Viacom or Viacom International is merged or
to which such sale or conveyance is made shall succeed to, and be substituted
for, and may exercise every right and power of, Viacom or Viacom International,
as the case may be, under the Senior Indenture with the same effect as if such
successor Person had been named as Viacom or Viacom International, as the case
may be, therein, and in the event of any such sale or conveyance, Viacom or
Viacom International, as the case may be (which terms shall for this purpose
mean the Person named as the "Company" or the "Guarantor" in the first paragraph
of the Senior Indenture or any successor Person which shall theretofore become
such in the manner described in the immediately preceding paragraph), shall be
discharged of all obligations and covenants under the Senior Indenture and the
Senior Securities and any coupons appertaining thereto or the Senior Guarantees,
as the case may be, and may be dissolved or liquidated. (Section 802)
LIMITATIONS ON LIENS
The Senior Indenture provides that Viacom will not create, assume or suffer
to exist any Lien on any of its property or assets, without securing the Senior
Securities equally and ratably with (or prior to) such secured Indebtedness;
provided however, that the foregoing shall apply only to Liens which in the
aggregate exceed 15% of Viacom's total consolidated assets as of the end of
Viacom's most recent accounting period preceding the creation or assumption of
any such Lien (reduced by any Attributable Debt with respect to any Sale and
Leaseback Transaction permitted under clause (c) of, but not otherwise permitted
under, the "Limitations on Sale and Leaseback Transactions" covenant described
below). This restriction will not apply to Capitalized Leases or to Indebtedness
secured by (a) Liens existing on the date of issuance of the Senior Securities
and Liens on property of, or Indebtedness of, any Person at the time such Person
becomes a Subsidiary (whether by acquisition or otherwise, including through
merger or consolidation), (b) Liens in favor of Viacom or a Subsidiary of
Viacom, (c) Liens existing at the time of acquisition of the assets secured
thereby (including acquisition through merger or consolidation) and purchase
money Liens, and (d) any extension, renewal or refunding of any Lien referred to
in the foregoing clauses (a) through (c), inclusive. (Section 1010)
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS
Under the Senior Indenture, Viacom will not, and will not permit any
Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with
respect to any Principal Property unless (a) such Sale and Leaseback Transaction
involves a lease for a term of not more than three years; (b) such Sale and
Leaseback Transaction is between Viacom and a Subsidiary of Viacom or between
Subsidiaries of Viacom; (c) Viacom or such Restricted Subsidiary would be
entitled to incur indebtedness secured by a Lien on such Principal Property
involved in such Sale and Leaseback Transaction at least equal in amount to the
Attributable Debt with respect to such Sale and Leaseback Transaction pursuant
to the first sentence of the "Limitations on Liens" covenant described above
without equally and ratably securing the Senior Securities pursuant to such
covenant; (d) the proceeds of such Sale and Leaseback Transaction are at least
equal to the fair market value thereof (as determined in good faith by the Board
of Directors of Viacom) and Viacom applies an amount equal to the greater of the
net proceeds of such sale or the Attributable Debt with respect to such Sale and
Leaseback Transaction within 180 days of such sale to either (or a
S-9
combination) of (i) the retirement (other than the mandatory retirement,
mandatory prepayment or sinking fund payment or by payment at maturity) of debt
for borrowed money of Viacom or a Subsidiary of Viacom that matures more than 12
months after its creation (other than debt that is subordinated to the Senior
Securities or debt to Viacom or a Subsidiary of Viacom) or (ii) the purchase,
construction or development of other comparable property; or (e) such Sale and
Leaseback Transaction is entered into within 180 days after the initial
acquisition by Viacom or such Restricted Subsidiary, as the case may be, of the
Principal Property subject to such Sale and Leaseback Transaction. (Section
1011)
BOOK ENTRY, DELIVERY AND FORM
Each series of the Senior Securities will be issued in the form of one or
more fully Registered Global Securities which will be deposited with, or on
behalf of, the Depository and registered in the name of Cede & Co., the
Depository's nominee. Except as set forth in "Description of Debt
Securities--Registered Global Securities", the Registered Global Securities may
be transferred, in whole but not in part, only to another nominee of the
Depository or to a successor of the Depository or its nominee.
The Depository has advised as follows: It is a limited-purpose trust company
which holds securities for its participating organizations (the "Participants")
and facilitates the settlement among Participants of securities transactions in
such securities through electronic book-entry changes in its Participants'
accounts. Participants include securities brokers and dealers (including the
underwriters), banks and trust companies, clearing corporations and certain
other organizations. Access to the Depository's system is also available to
others such as brokers, dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depository only through Participants or
indirect participants.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for each series of the Senior Securities will be made by the
underwriters in immediately available funds. All payments of principal and
interest will be made by Viacom in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Senior
Securities will trade in the Depository's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Senior Securities will
therefore be required by the Depository to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Senior Securities.
DEFAULTS AND REMEDIES
The following are Events of Default with respect to each series of the
Senior Securities under the Senior Indenture: (1) default in the payment of any
interest on any Senior Security of such series when such interest becomes due
and payable, and continuance of such default for a period of 30 days; (2)
default in the payment of the principal of any Senior Security of such series
when due and payable, at its Maturity, upon acceleration, redemption or
otherwise; (3) default in the performance, or breach, of any covenant or
warranty of Viacom in the Senior Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in the Senior
Indenture specifically dealt with or which has expressly been included in the
Senior Indenture solely for the benefit of a series of Senior Debt Securities
other than the Senior Securities) and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to Viacom by the Trustee or to Viacom and the Trustee by the holders of at least
25% in principal amount of the Outstanding Senior Securities of such series a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the Senior
Indenture; (4) one or more defaults shall have occurred under any
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agreements, indentures or instruments under which Viacom then has outstanding
Indebtedness in excess of $100 million in the aggregate and, if not already
matured at its final maturity in accordance with its terms, such Indebtedness
shall have been accelerated and remains unpaid; (5) the entry by a court having
jurisdiction in the premises of a money judgment in an amount in excess of $100
million against Viacom which has become final and not subject to appeal, and the
continuance of any such judgment unstayed, in effect and unpaid for a period of
60 days; and (6) certain events of bankruptcy, insolvency or reorganization of
Viacom or Viacom International. (Section 501)
If an Event of Default with respect to either series of the Senior
Securities (other than as specified in (6) above) shall occur and be continuing
under the Senior Indenture, either the Trustee or the Holders of not less than
25% in aggregate principal amount of the Outstanding Senior Securities of such
series may declare immediately due and payable the "Default Amount", which is
defined as the unpaid principal of (and premium, if any) and any accrued
interest in respect of each Outstanding Senior Security of such series; provided
however that no action on the part of such Trustee or any Holder of such Senior
Securities is required for such declaration if an Event of Default specified in
(6) above shall occur and be continuing; and provided further that, after such
declaration, but before a judgment or decree based on such declaration has been
obtained, the Holders of a majority in aggregate principal amount of Outstanding
Senior Securities of such series may, under certain circumstances, rescind or
annul such declaration if all Events of Default, other than the nonpayment of
accelerated principal, have been cured or waived as provided in the Indenture.
(Section 502) The Holders of not less than a majority in principal amount of
either series of the Outstanding Senior Securities also have the right to waive
certain past defaults under the Senior Indenture on behalf of the Holders of all
the Senior Securities of such series. (Section 513)
No Holder of any Senior Security of any series issued under the Senior
Indenture has any right to institute any proceeding with respect to such Senior
Indenture, or for any remedy thereunder, or for the appointment of a receiver or
trustee, unless (i) such Holder has previously given to the Trustee with respect
to such Senior Indenture written notice of a continuing Event of Default under
such Senior Indenture with respect to such series, (ii) the Holders of not less
than 25% in principal amount of the Outstanding Senior Securities of such series
have made written request, and offered an indemnity reasonably satisfactory, to
such Trustee to institute such proceeding as Trustee under the Senior Indenture
and (iii) the Trustee has not received from the Holders of a majority in
principal amount of the Outstanding Senior Securities of such series a direction
inconsistent with such request and the Trustee has failed to institute such
proceeding within 60 days after receipt of such notice. (Section 507) Such
limitations do not apply, however, to a suit instituted by a Holder of a Senior
Security for the enforcement of payment of the principal of or interest on such
Senior Security on or after the respective due dates expressed in such Senior
Security. (Section 508)
APPLICATION OF DEFEASANCE PROVISION
Each series of the Senior Securities and Senior Guarantees are subject to
defeasance and covenant defeasance as described under the heading "Description
of Debt Securities--Defeasance and Covenant Defeasance" in the accompanying
Prospectus.
To elect defeasance, or covenant defeasance, Viacom is required to deliver
to the Trustee an Opinion of Counsel to the effect that the deposit of money
and/or U.S. Government Obligations in the trust created when Viacom elects
defeasance or covenant defeasance will not cause the Holders of the relevant
series of Senior Securities to recognize income, gain or loss for federal income
tax purposes.
CERTAIN DEFINITIONS
"Attributable Debt" means, with regard to a Sale and Leaseback Transaction
with respect to any Principal Property, the lesser of: (a) the fair market value
of such property (as determined in good faith by the Board of Directors of
Viacom); or (b) the present value of the total net amount of rent required to be
paid under such lease during the remaining term thereof (including any period
for
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which such lease has been extended and excluding any unexercised renewal or
other extension options exercisable by the lessee, and excluding amounts on
account of maintenance and repairs, services, taxes and similar charges and
contingent rents), discounted at the rate of interest set forth or implicit in
the terms of such lease (or, if not practicable to determine such rate, the
weighted average interest rate per annum borne by the Senior Securities of the
applicable series then Outstanding) compounded semi-annually. In the case of any
lease which is terminable by the lessee upon the payment of a penalty, such net
amount shall be the lesser of the net amount determined assuming termination
upon the first date such lease may be terminated (in which case the net amount
shall also include the amount of the penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated) or the net amount determined assuming no such termination.
"Principal Property" means, any parcel of real property and related fixtures
or improvements (other than telecommunications equipment, including, without
limitation, satellite transponders) owned by Viacom or any Restricted Subsidiary
and located in the United States, the aggregate book value of which on the date
of determination exceeds $500 million, other than any such real property and
related fixtures or improvements which, as determined in good faith by the Board
of Directors of Viacom, is not of material importance to the total business
conducted by Viacom and its Subsidiaries, taken as a whole. As of the date
hereof, neither Viacom nor any Subsidiary of Viacom owns any Principal Property.
"Sale and Leaseback Transaction" means, any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
Principal Property which has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such Person; provided however, that "Sale and
Leaseback Transaction" shall not include such arrangements that were existing on
the date of issuance of the Senior Securities or at the time any Person owning a
Principal Property becomes a Restricted Subsidiary (whether by acquisition or
otherwise, including through merger or consolidation).
S-12
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters") have agreed, severally, to
purchase from Viacom, and Viacom has agreed to sell to them, severally, the
entire principal amount of the Senior Securities offered hereby. The respective
principal amount of the Senior Securities that each Underwriter has agreed to
purchase is set forth opposite its name below:
PRINCIPAL
AMOUNT OF
UNDERWRITER SENIOR NOTES
- ------------------------------------------------------------ -----------------
Goldman, Sachs & Co......................................... $ 105,000,000
Bear, Stearns & Co. Inc..................................... 105,000,000
Lehman Brothers Inc......................................... 70,000,000
Smith Barney Inc............................................ 70,000,000
-----------------
Total................................................. $ 350,000,000
-----------------
-----------------
PRINCIPAL
AMOUNT OF
UNDERWRITER SENIOR DEBENTURES
- ------------------------------------------------------------ -----------------
Goldman, Sachs & Co......................................... $ 60,000,000
Bear, Stearns & Co. Inc..................................... 60,000,000
Lehman Brothers Inc......................................... 40,000,000
Smith Barney Inc............................................ 40,000,000
-----------------
Total................................................. $ 200,000,000
-----------------
-----------------
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Senior Securities, if
any are taken.
The Underwriters propose to offer the Senior Securities in part directly to
purchasers at the initial public offering prices set forth on the cover of this
Prospectus Supplement and in part to certain securities dealers at such prices
less a concession of .375% and .5% of the principal amount of the Senior Notes
and the Senior Debentures, respectively. The Underwriters may allow, and such
dealers may reallow, a concession not to exceed .25% of the principal amount of
the Senior Notes or the Senior Debentures, as the case may be, to certain
brokers and dealers. After the Senior Securities are released for sale to the
public, the respective offering prices and other selling terms may from time to
time be varied by the Underwriters.
Each series of the Senior Securities is a new issue of securities with no
established trading market. The Senior Notes and the Senior Debentures have been
approved for listing on the American Stock Exchange, Inc., under the symbols
"VIA.H" and "VIA.I", respectively, subject to official notice of issuance.
Viacom has been advised by the Underwriters that they intend to make markets in
the Senior Securities, but are not obligated to do so and may discontinue such
market making at any time without notice. No assurance can be given, however, as
to whether trading markets in the Senior Securities will develop or as to
liquidity of any trading markets for the Senior Securities.
From time to time in the course of their business, the Underwriters have
engaged and may in the future engage in investment banking transactions with
Viacom and its affiliates.
Viacom has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
LEGAL MATTERS
Certain legal matters in connection with the Senior Securities and the
related Senior Guarantees will be passed upon for Viacom and Viacom
International by Shearman & Sterling, New York, New York, and for the
Underwriters by Hughes Hubbard & Reed, New York, New York. Hughes Hubbard & Reed
has from time to time performed legal services for Viacom and Viacom
International.
S-13
PROSPECTUS
$3,000,000,000
-------------------
VIACOM INC.
SENIOR DEBT SECURITIES
SENIOR SUBORDINATED DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
CONTINGENT VALUE RIGHTS
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST ON DEBT SECURITIES, TO THE EXTENT
SET FORTH IN THE APPLICABLE PROSPECTUS SUPPLEMENT, BY
VIACOM INTERNATIONAL INC.
(A WHOLLY OWNED SUBSIDIARY OF VIACOM INC.)
-------------------
Viacom Inc. ("Viacom") may offer from time to time (i) its senior unsecured
debt securities (the "Senior Debt Securities"); (ii) its senior subordinated
unsecured debt securities (the "Senior Subordinated Debt Securities"); (iii) its
subordinated unsecured debt securities (the "Subordinated Debt Securities" and,
together with the Senior Debt Securities and Senior Subordinated Debt
Securities, the "Debt Securities"); (iv) shares of its preferred stock (the
"Preferred Stock"); and (v) its contingent value rights ("CVRs"), representing
the right to receive (under certain circumstances) cash or securities of Viacom
depending on market prices of Viacom's Class B Common Stock, par value $.01 per
share ("Class B Common Stock"), during certain specified periods; in one or more
series, or any combination of the foregoing. The aggregate gross proceeds from
the offer, sale and distribution of Debt Securities, Preferred Stock and CVRs
hereunder will not exceed $3.0 billion.
The Senior Subordinated Debt Securities will be subordinated in right of
payment to all existing and future Senior Obligations of Viacom, and the
Subordinated Debt Securities will be subordinate in right of payment to all
existing and future Senior and Senior Subordinated Obligations of Viacom. See
"Description of Senior Subordinated Debt Securities--Subordination",
"Description of Subordinated Debt Securities-- Subordination" and "Description
of Debt Securities--Certain Definitions" for the definition of "Senior
Obligations" and "Senior and Senior Subordinated Obligations". The Senior Debt
Securities, the Senior Subordinated Debt Securities and the Subordinated Debt
Securities will be unconditionally guaranteed (the "Guarantees") as to the
payment of principal, premium, if any, and interest, to the extent set forth in
the applicable Prospectus Supplement (as defined below), by Viacom International
Inc. ("Viacom International") on a senior basis, a senior subordinated basis and
a subordinated basis, respectively.
Specific terms of the securities in respect of which this Prospectus is
being delivered ("Offered Securities") will be set forth in one or more
supplements to this Prospectus (each a "Prospectus Supplement"), together with
the terms of the offering of the Offered Securities, the initial price thereof
and the net proceeds from the sale thereof. Debt Securities may be issued as
Original Issue Discount Debt Securities (as defined in "Description of Debt
Securities--General") to be sold at a substantial discount below their principal
amount and, if issued, certain terms thereof will be set forth in the Prospectus
Supplement related thereto.
-------------------
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "CERTAIN CONSIDERATIONS".
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
Viacom may sell the Offered Securities to or through underwriters and may
also sell the Offered Securities directly to one or more other purchasers or
through dealers or agents. Viacom may also distribute the Offered Securities
directly to certain of its security holders in satisfaction of its obligations
in respect of the outstanding securities held by such security holders. See
"Plan of Distribution". The names of any underwriters, dealers or agents
involved in the sale of the Offered Securities and any applicable commission or
discount arrangements with them will be set forth in an accompanying Prospectus
Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
-------------------
THE DATE OF THIS PROSPECTUS IS MAY 10, 1995.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY VIACOM OR VIACOM INTERNATIONAL, OR ANY UNDERWRITER,
DEALER OR AGENT. NEITHER THIS PROSPECTUS NOR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY
ANY OF THE SECURITIES HEREBY OR THEREBY OFFERED IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF VIACOM OR VIACOM INTERNATIONAL SINCE SUCH
DATE OR, IN THE CASE OF INFORMATION INCORPORATED HEREIN OR THEREIN BY REFERENCE,
THE DATE OF FILING WITH THE SECURITIES AND EXCHANGE COMMISSION.
AVAILABLE INFORMATION
Viacom is currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Viacom with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and should be available at the Commission's Regional Offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material also can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, material filed by Viacom can be inspected at
the offices of the American Stock Exchange, Inc. (the "AMEX"), 86 Trinity Place,
New York, New York 10006. As of March 1, 1995, Viacom International is no longer
required to file reports, proxy statements or other information with the
Commission pursuant to the requirements of the Exchange Act. Instead,
information with respect to Viacom International is provided, to the extent
required, in filings made by Viacom.
This Prospectus constitutes part of a registration statement (the
"Registration Statement") filed by Viacom and Viacom International with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain of the information contained in the Registration Statement. For
further information with respect to Viacom and Viacom International and the
Offered Securities, reference is hereby made to the Registration Statement and
to the exhibits thereto. Copies of the Registration Statement and the exhibits
thereto are on file at the offices of the Commission and may be obtained upon
payment of the fee prescribed by the Commission, or may be examined without
charge at the public reference facilities of the Commission described above.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission, copies of which may be obtained as provided in the preceding
paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Viacom (File No.
1-9553) and Viacom International (File No. 1-9554) pursuant to the Exchange Act
are incorporated by reference in this Prospectus:
1. Viacom's Annual Report on Form 10-K for the year ended December 31, 1994;
2
2. Viacom's Current Reports on Form 8-K filed January 24, 1995, March 15,
1995, April 14, 1995 and May 8, 1995;
3. Item 8 of Viacom International's Annual Report on Form 10-K for the year
ended December 31, 1993, as amended by Form 10-K/A Amendment No. 1 dated May 2,
1994; and
4. Viacom International's Current Report on Form 8-K filed January 4, 1995.
All documents and reports filed by Viacom (or, to the extent applicable,
Viacom International), if any, pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering of the Offered Securities shall be deemed to be incorporated by
reference in this Prospectus and to be a part of this Prospectus from the dates
of filing of such documents or reports. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in any accompanying Prospectus
Supplement) or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified and superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference) are
available, without charge, to any person, including any beneficial owner, to
whom a copy of this Prospectus is delivered, upon written or oral request to
Viacom Inc., 1515 Broadway, New York, New York 10036, Attention: John H. Burke
(telephone number (212) 258-6000).
THE COMPANY
Viacom Inc. (together with its subsidiaries and divisions, unless the
context otherwise requires, the "Company") is a diversified entertainment and
publishing company with operations in five segments: (i) Networks and
Broadcasting, (ii) Entertainment, (iii) Video and Music/Theme Parks, (iv)
Publishing, and (v) Cable Television. Through the Networks and Broadcasting
segment, the Company operates MTV: MUSIC TELEVISION(R), SHOWTIME(R),
NICKELODEON(R)/NICK AT NITE(R) and VH1 MUSIC FIRSTTM, among other program
services, and 12 broadcast television and 12 radio stations. Through the
Entertainment segment, which includes PARAMOUNT PICTURESTM and the Company's
approximately 77%-owned subsidiary Spelling Entertainment Group Inc., the
Company produces and distributes theatrical motion pictures and television
programming. Through the Video and Music/Theme Parks segment, which includes the
BLOCKBUSTER(R) family of businesses and PARAMOUNT PARKSTM, the Company is the
leading worldwide owner, operator and franchisor of videocassette rental and
sales stores and a leading owner and operator of music stores in the U.S. In
addition, PARAMOUNT PARKSTM owns and operates five theme parks located in the
U.S. and Canada. Through the Publishing segment, which includes SIMON &
SCHUSTER(R), MACMILLAN PUBLISHING USATM and PRENTICE HALL(R), the Company
publishes and distributes educational, consumer, business, technical and
professional books, and audio-video software products. Through the Cable
Television segment, the Company operates cable television systems serving
approximately 1.1 million customers. The Company's principal offices are located
at 1515 Broadway, New York, New York 10036 and its telephone number is (212)
258-6000.
CERTAIN CONSIDERATIONS
PROSPECTIVE PURCHASERS OF THE OFFERED SECURITIES SHOULD CONSIDER CAREFULLY
ALL OF THE INFORMATION SET FORTH OR INCORPORATED IN THIS PROSPECTUS AND ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IN PARTICULAR, THE FOLLOWING:
3
TOTAL INDEBTEDNESS
As of December 31, 1994, Viacom had outstanding total indebtedness of
approximately $10.4 billion and 5% preferred stock with a liquidation preference
of $1.2 billion. The Company's scheduled maturities of long-term debt, through
December 31, 1999 assuming full utilization of the outstanding credit agreements
(after giving effect to the reduction in commitments resulting from the sale of
Madison Square Garden), are $1.9 billion (1996), $163 million (1997), $1.0
billion (1998) and $1.5 billion (1999). The Company's preferred stock dividend
requirement is $60 million per year.
FRAUDULENT CONVEYANCE CONSIDERATIONS
Viacom's obligations under the Debt Securities will be guaranteed to the
extent set forth herein and in the applicable Prospectus Supplement by Viacom
International. See "Description of Senior Debt Securities-- Guarantees",
"Description of Senior Subordinated Debt Securities--Senior Subordinated
Guarantees" and "Description of Subordinated Debt Securities --Subordinated
Guarantees". Various federal and state fraudulent conveyance laws have been
enacted for the protection of creditors and may be utilized by a court of
competent jurisdiction to subordinate or avoid all or part of any Guarantee
issued by Viacom International.
To the extent that a court were to find that (x) a Guarantee was incurred by
Viacom International with intent to hinder, delay or defraud any present or
future creditor or (y) Viacom International did not receive fair consideration
or reasonably equivalent value for issuing its Guarantee and Viacom
International (i) was insolvent or rendered insolvent by reason of the issuance
of the Guarantee, (ii) was engaged or about to engage in a business or
transaction for which the remaining assets of Viacom International constituted
unreasonably small capital to carry on its business or (iii) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured, the court could subordinate or avoid all or part of such Guarantee
in favor of Viacom International's other creditors. To the extent any Guarantee
issued by Viacom International was avoided as a fraudulent conveyance or held
unenforceable for any other reason, the holders of Debt Securities guaranteed by
Viacom International would cease to have any claim against Viacom International
and would be creditors solely of Viacom.
Viacom and Viacom International believe that the issuances of the Guarantees
by Viacom International are not fraudulent conveyances. There can be no
assurance, however, that a court passing on such questions would reach the same
conclusions. In rendering their opinions on the validity of the Offered
Securities and, if applicable, the related Guarantees, neither counsel for
Viacom and Viacom International nor counsel for the underwriters will express
any opinion as to federal or state laws relating to fraudulent transfers.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities may be used by
Viacom to repay, redeem, repurchase or satisfy its obligations in respect of its
outstanding indebtedness or other securities; to make loans to its subsidiaries;
for general corporate purposes; or for such other purposes as may be specified
in the applicable Prospectus Supplement. Viacom also may distribute the Offered
Securities directly to certain of its security holders in satisfaction of its
obligations in respect of the outstanding securities held by such security
holders. A description of any indebtedness to be refinanced or obligations, in
respect of securities, to be satisfied with Offered Securities or the proceeds
of the Offered Securities will be set forth in the applicable Prospectus
Supplement.
4
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth (i) the ratio of earnings to fixed charges
for the Company for each year in the five-year period ended December 31, 1994
and (ii) the ratio of earnings to combined fixed charges and preferred stock
dividends for the Company for each applicable year in the five-year period ended
December 31, 1994. For purposes of computing the following ratios, earnings
represent income from operations before fixed charges and taxes, and fixed
charges represent interest on indebtedness, amortization of debt discount and
such portion of rental expense which is deemed to be representative of the
interest factor. The ratios set forth below should be read in conjunction with
the financial statements of the Company incorporated by reference into this
Prospectus.
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges........................... 1.7x 2.8x 1.8x 1.0x (a)
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.............................. 1.1x 2.5x (b) (b) (b)
- ------------
(a) Earnings of the Company were insufficient to cover fixed charges for the
year ended December 31, 1990. The additional amount of earnings required to
cover fixed charges of the Company for the year ended December 31, 1990
would have been $66.1 million.
(b) The Company did not have any preferred stock outstanding from 1990 to
October 1993.
DESCRIPTION OF DEBT SECURITIES
THE FOLLOWING STATEMENTS RELATING TO THE DEBT SECURITIES AND THE INDENTURES
(AS DEFINED BELOW) ARE SUMMARIES AND DO NOT PURPORT TO BE COMPLETE. SUCH
SUMMARIES MAY MAKE USE OF CERTAIN TERMS DEFINED IN THE INDENTURES AND ARE
QUALIFIED IN THEIR ENTIRETY BY EXPRESS REFERENCE TO SUCH INDENTURES. IN
ADDITION, CERTAIN DEFINED TERMS, INCLUDING "CREDIT AGREEMENT", USED IN THIS
SECTION AND UNDER "DESCRIPTION OF SENIOR DEBT SECURITIES", "DESCRIPTION OF
SENIOR SUBORDINATED DEBT SECURITIES" AND "DESCRIPTION OF SUBORDINATED DEBT
SECURITIES" ARE SET FORTH BELOW UNDER "--CERTAIN DEFINITIONS". CAPITALIZED TERMS
NOT OTHERWISE DEFINED BELOW OR ELSEWHERE IN THIS PROSPECTUS HAVE THE MEANINGS
GIVEN TO THEM IN THE APPLICABLE INDENTURE.
EXCEPT AS OTHERWISE NOTED, THE FOLLOWING TERMS AND CONDITIONS APPLY TO THE
SENIOR DEBT SECURITIES, THE SENIOR SUBORDINATED DEBT SECURITIES AND THE
SUBORDINATED DEBT SECURITIES. FOR TERMS AND CONDITIONS APPLICABLE SOLELY TO
SENIOR DEBT SECURITIES, SEE "DESCRIPTION OF SENIOR DEBT SECURITIES". FOR TERMS
AND CONDITIONS APPLICABLE SOLELY TO SENIOR SUBORDINATED DEBT SECURITIES, SEE
"DESCRIPTION OF SENIOR SUBORDINATED DEBT SECURITIES". FOR TERMS AND CONDITIONS
APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES, SEE "DESCRIPTION OF
SUBORDINATED DEBT SECURITIES".
GENERAL
The Debt Securities will represent unsecured general obligations of Viacom.
The Senior Debt Securities will rank pari passu with other unsecured
unsubordinated obligations of Viacom. The Senior Subordinated Debt Securities
will be subordinated and subject in right of payment to the prior payment in
full of all Senior Obligations of Viacom. See "--Certain Definitions" below. The
Subordinated Debt Securities will be subordinated and subject in right of
payment to the prior payment in full of all Senior and Senior Subordinated
Obligations of Viacom. See "--Certain Definitions" below.
5
The Senior Debt Securities will be issued under an Indenture to be executed
by Viacom, Viacom International, as guarantor, and The First National Bank of
Boston, trustee (the "Senior Indenture"), the Senior Subordinated Debt
Securities will be issued under an Indenture to be executed by Viacom, Viacom
International, as guarantor, and The First National Bank of Boston, trustee (the
"Senior Subordinated Indenture"), and the Subordinated Debt Securities will be
issued under an Indenture to be executed by Viacom, Viacom International, as
guarantor, and The First National Bank of Boston, trustee (the "Subordinated
Indenture"). In this Prospectus, the Senior Indenture, the Senior Subordinated
Indenture and the Subordinated Indenture are sometimes collectively referred to
as the "Indentures" and individually as an "Indenture", and the trustees under
the Senior Indenture, the Senior Subordinated Indenture and the Subordinated
Indenture are sometimes collectively referred to as the "Trustees" and
individually as a "Trustee". Copies of the Indentures have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.
Section references used in this Prospectus refer to the sections of all of the
Indentures unless otherwise indicated.
The Indentures will provide that Debt Securities may be issued in separate
series thereunder without limitation as to aggregate principal amount. The terms
of each series of Debt Securities will be established by or pursuant to a
resolution of the Board of Directors of Viacom and set forth or determined in
the manner provided in an Officer's Certificate or by a supplemental indenture.
(Section 301) The Prospectus Supplement applicable to any particular series of
Debt Securities will describe the particular terms of the Debt Securities of
such series.
Debt Securities may be issued as Original Issue Discount Debt Securities. An
"Original Issue Discount Debt Security" is a Debt Security, including any
zero-coupon Debt Security, which is issued at a price lower than the amount
payable upon the Stated Maturity thereof, and which provides that, upon
redemption or acceleration of the Maturity thereof, an amount less than the
amount payable upon the Stated Maturity thereof and determined in accordance
with the terms of such Debt Security shall become due and payable. Special
United States federal income tax considerations applicable to Original Issue
Discount Debt Securities will be described in the Prospectus Supplement relating
thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable solely as Registered Securities,
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Registered Securities will be issuable in denominations of $1,000
and integral multiples of $1,000 and Bearer Securities will be issuable in
denominations of $5,000 or, in each case, in such other denominations as may be
in the terms of the Debt Securities of any particular series. The Indentures
also provide that Debt Securities of a series may be issuable in global form.
Unless otherwise indicated in the applicable Prospectus Supplement, Bearer
Securities will have interest coupons attached. (Sections 201 and 301)
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. If (but only if)
provided in the relevant Prospectus Supplement, Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in default)
of any series may be exchanged for Registered Securities of the same series of
any authorized denominations and of a like aggregate principal amount and tenor.
In such event, Bearer Securities surrendered in a permitted exchange for
Registered Securities between a Regular Record Date or a Special Record Date and
the relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest, and interest will not be
payable on such date for payment of interest in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the terms of the
Indentures. (Section 305)
The Debt Securities may be presented for exchange as described above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a written instrument of transfer), at the office of
the Security Registrar or at the office of any transfer agent designated by
6
Viacom for such purpose with respect to any series of Debt Securities and
referred to in an applicable Prospectus Supplement. No service charge will be
made for any transfer or exchange of Debt Securities, but Viacom may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Viacom has appointed the Trustees as Security
Registrars. (Section 305) If a Prospectus Supplement refers to any transfer
agent (in addition to the Security Registrars) initially designated by Viacom
with respect to any series of Debt Securities, Viacom may at any time rescind
the designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that, if Debt Securities of a
series are issuable solely as Registered Securities, Viacom will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series may be issuable both as Registered Securities and as
Bearer Securities, Viacom will be required to maintain (in addition to the
Security Registrars) a transfer agent in a Place of Payment for such series
located outside the United States. Viacom may at any time designate additional
transfer agents with respect to any series of Debt Securities. (Section 1002)
In the event of any redemption in part, Viacom shall not be required to (i)
issue, register the transfer of or exchange any Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (A) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) if Debt Securities of the series are issuable as Bearer Securities, the
day of the first publication of the relevant notice of redemption or, if Debt
Securities of the series are also issuable as Registered Securities and there is
no publication, the mailing of the relevant notice of redemption; (ii) register
the transfer of or exchange any Registered Security, or portion thereof, called
for redemption, except the unredeemed portion of any Registered Security being
redeemed in part; (iii) exchange any Bearer Security selected for redemption,
except to exchange such Bearer Security for a Registered Security of that series
and like tenor which is simultaneously surrendered for redemption; or (iv)
issue, register the transfer of or exchange any Debt Security which has been
surrendered for repayment at the option of the Holder, except the portion, if
any, thereof not to be so repaid. (Section 305)
REGISTERED GLOBAL SECURITIES
If provided in the applicable Prospectus Supplement for a series of Debt
Securities, then the Debt Securities of such series initially will be issued in
the form of one or more fully registered global certificates (a "Registered
Global Security") that will be deposited with a depository (referred to in this
section as the "Depository"), and registered in the name of a nominee for the
Depository identified in the Prospectus Supplement relating to such series. In
such cases, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole or in part for Debt Securities in definitive registered
form, a Registered Global Security may not be transferred except as a whole by
the Depository for such Registered Global Security to another nominee of such
Depository or to a successor of the Depository or its nominee.
The specific terms of the depository arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global Security
will be described in the Prospectus Supplement relating to such series. Viacom
anticipates that the following provisions will apply to all depository
arrangements.
Upon the issuance of a Registered Global Security by Viacom, the Depository
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the respective principal amounts of the Debt Securities
represented by such Registered Global Security to the accounts of persons that
have accounts with such Depository ("participants"). The accounts to be credited
shall be designated by any underwriters or agents participating in the
distribution of such Debt Securities or by
7
Viacom if such Debt Securities are offered and sold directly by Viacom.
Ownership of beneficial interests in a Registered Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Registered Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depository for such Registered Global Security (with
respect to interests of participants) or by participants or persons that hold
through participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery in definitive form of securities they own.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Registered Global Security.
So long as the Depository for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the respective Indenture. Except as set forth below, owners of
beneficial interests in a Registered Global Security will not be entitled to
have the Debt Securities represented by such Registered Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of such Debt Securities in definitive form and will not be considered
the owners or holders thereof under the respective Indenture.
None of Viacom, Viacom International, as guarantor, the Trustee under the
respective Indenture, any Paying Agent or any Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in such Registered Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depository or its nominee will be made by the Trustee to such Depository or its
nominee, as the case may be, as the registered owner of such Debt Securities.
Under the terms of the Indentures, Viacom, Viacom International, as guarantor,
and the Trustee will treat the persons in whose names Debt Securities are
registered as the owners of such Debt Securities for the purpose of receiving
payment of principal, premium, if any, and interest on such Debt Securities and
for all other purposes whatsoever. Viacom expects that the Depository for any
Debt Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest, will immediately credit participants'
accounts with such payments in amounts proportionate to their respective
beneficial interests in the principal amount of such Registered Global Security
as shown on the records of such Depository. Viacom also expects that payments by
participants and indirect participants to owners of beneficial interests in such
Registered Global Security or Securities will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name", and will be the responsibility of such participants or indirect
participants.
If the Depository for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depository and a
successor Depository is not appointed by Viacom within 90 days, then Viacom will
issue Debt Securities of such series in definitive form in exchange for the
Registered Global Security evidencing such series. In addition, Viacom may at
any time and in its sole discretion determine not to have the Debt Securities of
a series represented by a Registered Global Security and, in such event, will
issue Debt Securities of such series in definitive form in exchange for the
Registered Global Securities or Securities representing such Debt Securities. In
either instance, an owner of a beneficial interest in such a Registered Global
Security will be entitled to have Debt Securities of such series equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of Debt Securities of such series in definitive
form. Debt Securities so issued in definitive form will, except as set forth in
the applicable Prospectus Supplement, be issued in denominations of $1,000 and
integral multiples of $1,000 in excess thereof and will be issued in registered
form only, without coupons. Further, if Viacom so specifies in the Prospectus
8
Supplement with respect to the Debt Securities of a series, an owner of a
beneficial interest in a Registered Global Security representing such Debt
Securities may, on terms acceptable to Viacom and the Depository for such
Registered Global Securities, receive such Debt Securities in definitive form.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, principal
of, premium, if any, and interest on Registered Securities will be payable,
subject to any applicable laws and regulations, at the office of such Paying
Agent or Paying Agents as Viacom may designate from time to time, except that at
the option of Viacom payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register. (Sections 301, 307, 1002) Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on a Registered Security
on any Interest Payment Date will be made to the Person in whose name such Debt
Security (or Predecessor Debt Security) is registered at the close of business
on the Regular Record Date for such interest. (Section 307)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on Bearer Securities
will be made, subject to any applicable laws and regulations, at such office
outside the United States as specified in the applicable Prospectus Supplement
and as Viacom may designate from time to time or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of interest
on Bearer Securities will be made only against surrender of the coupon relating
to such Interest Payment Date. No payment with respect to any Bearer Security
will be made at any office or agency of Viacom in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States. (Sections 301, 307, 1001)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee will be designated as a Paying Agent for
Viacom for payments with respect to the Debt Securities of each series. Any
Paying Agents initially designated by Viacom for the Debt Securities of each
series will be named in an applicable Prospectus Supplement. Viacom may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that Viacom will be required to maintain a Paying Agent in each Place of
Payment for such series.
All moneys paid by Viacom or Viacom International, as guarantor, to a Paying
Agent for the payment of the principal of, premium, if any, or interest on any
Debt Security of any series that remain unclaimed at the end of two years after
such principal, premium or interest shall have become due and payable will be
repaid to Viacom or Viacom International, as guarantor, as the case may be, and
the Holder of such Debt Security will thereafter look only to Viacom and Viacom
International for payment thereof. (Section 1003)
DEFAULTS AND REMEDIES
The following are Events of Default with respect to a series of Debt
Securities under each Indenture, unless otherwise indicated in an applicable
Prospectus Supplement and except as noted below: (1) default in the payment of
any interest on any Debt Security of such series, or any related coupon, issued
under such Indenture when such interest or coupon becomes due and payable, and
continuance of such default for a period of 30 days whether or not, in the case
of the Senior Subordinated Debt Securities and the Subordinated Debt Securities,
such payment shall be prohibited by the subordination provisions of Article
Thirteen (Subordination) or Article Fourteen (Subordinated Guarantees) of the
Senior Subordinated Indenture and Subordinated Indenture, respectively; (2)
default in the payment of the principal of (or premium, if any, on) any Debt
Security of such series when due and payable, at its Maturity, upon
acceleration, redemption or otherwise, whether or not, in
9
the case of the Senior Subordinated Debt Securities and Subordinated Debt
Securities, such payment shall be prohibited by the subordination provisions of
Article Thirteen (Subordination) or Article Fourteen (Subordinated Guarantees)
of the Senior Subordinated Indenture and Subordinated Indenture, respectively;
(3) default in the performance, or breach, of any covenant or warranty of Viacom
in such Indenture (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in the relevant Indenture specifically
dealt with or which has expressly been included in that Indenture solely for the
benefit of a series of Debt Securities other than that series) and continuance
of such default or breach for a period of 60 days after there has been given, by
registered or certified mail, to Viacom and all relevant Agent Banks by the
Trustee or to Viacom, the Trustee and all relevant Agent Banks by the holders of
at least 33 1/3% in principal amount of the Outstanding Debt Securities of that
series a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under the
relevant Indenture; (4) one or more defaults shall have occurred under any
agreements, indentures or instruments under which Viacom then has outstanding
Indebtedness in excess of $100 million in the aggregate and, if not already
matured at its final maturity in accordance with its terms, such Indebtedness
shall have been accelerated and remains unpaid; (5) the entry by a court having
jurisdiction in the premises of a money judgment in an amount in excess of $250
million against Viacom which has become final and not subject to appeal, and the
continuance of any such judgment unstayed, in effect and unpaid for a period of
90 days; and (6) certain events of bankruptcy, insolvency or reorganization of
Viacom or, if a guarantor, Viacom International. (Section 501)
Unless otherwise specified in an applicable Prospectus Supplement, if an
Event of Default with respect to a series of Debt Securities (other than as
specified in (6) above) shall occur and be continuing under an Indenture, either
the applicable Trustee or the Holders of not less than 33 1/3% in aggregate
principal amount of such series of Debt Securities outstanding may declare
immediately due and payable the "Default Amount", which is defined as the unpaid
principal (or, if the Securities of that series are Original Issue Discount Debt
Securities, such portion of the principal amount thereof as may be specified in
the terms of that series) of (and premium, if any) and any accrued interest in
respect of each such Debt Security outstanding; provided, however, that, with
respect to the Senior Subordinated Debt Securities and the Subordinated Debt
Securities, if any Credit Agreement is then in effect, such declaration shall
not become effective until the first to occur of (i) an acceleration under any
Credit Agreement or (ii) the fifth Business Day after notice of such declaration
is received by Viacom and each Agent Bank (unless on or prior to such fifth
Business Day Viacom shall have discharged or caused to be discharged the
Indebtedness, if any, that is the subject of the Event of Default or otherwise
cured the default relating to the Event of Default); and provided further that
no action on the part of such Trustee or any Holder of such Debt Securities is
required for such declaration if an Event of Default specified in (6) above
shall occur and be continuing; and provided further that, after such
declaration, but before a judgment or decree based on such declaration has been
obtained, the Holders of a majority in aggregate principal amount of Outstanding
Debt Securities of such series may, under certain circumstances, rescind or
annul such declaration if all Events of Default, other than the nonpayment of
accelerated principal, have been cured or waived as provided in the Indenture.
(Section 502) The Holders of not less than a majority in principal amount of a
series of Debt Securities Outstanding also have the right to waive certain past
defaults under their respective Indenture on behalf of the Holders of all the
Debt Securities of such series. (Section 513)
Unless otherwise specified in an applicable Prospectus Supplement, no Holder
of any Debt Security of any series issued under an Indenture has any right to
institute any proceeding with respect to such Indenture, or for any remedy
thereunder, or for the appointment of a receiver or trustee, unless (i) such
Holder has previously given to the Trustee with respect to such Indenture
written notice of a continuing Event of Default under such Indenture, (ii) the
Holders of not less than 33 1/3% in principal amount of the Outstanding Debt
Securities of such series issued under such Indenture have made written request,
and offered an indemnity reasonably satisfactory, to such Trustee to institute
such proceeding as Trustee under the Indenture and (iii) the Trustee has not
received from the Holders of a majority in
10
principal amount of the Outstanding Debt Securities of such series a direction
inconsistent with such request and the Trustee has failed to institute such
proceeding within 60 days after receipt of such notice. (Section 507) Such
limitations do not apply, however, to a suit instituted by a Holder of a Debt
Security of such series for the enforcement of payment of the principal of, or
premium, if any, or interest on such Debt Security on or after the respective
due dates expressed in such Debt Security. (Section 508)
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
is not under any obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee security or indemnity reasonably satisfactory
to the Trustee. (Section 602) Subject to such provisions for the indemnification
of the Trustee and to certain other limitations, the Holders of a majority in
principal amount of a series of Outstanding Debt Securities shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee under the Indenture. (Section 512)
Viacom is required to furnish to each Trustee an annual statement as to the
performance by Viacom of its obligations under each Indenture and as to any
default in such performance. Viacom is also required to notify each Trustee of
any event that is, or after notice or lapse of time or both would become, an
Event of Default. (Section 1008)
MEETINGS, MODIFICATION AND WAIVER
Modifications and amendments of an Indenture may be made by Viacom, Viacom
International, as guarantor, and the Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of the Outstanding Debt
Securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any Debt Security or the terms of any sinking fund or analogous payment with
respect to any Debt Security, (b) reduce the principal amount of, or premium or
interest on, any Debt Security, (c) change any obligation of Viacom to pay
additional amounts, (d) reduce the amount of principal of an Original Issue
Discount Debt Security payable upon acceleration of the Maturity thereof or
provable in bankruptcy, (e) change the Place of Payment where, or the coin or
currency in which, any Debt Security or any premium or interest thereon is
payable, (f) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security, (g) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of such Indenture or for
waiver of compliance with certain provisions of such Indenture or for waiver of
certain defaults, (h) reduce the requirements contained in such Indenture for
quorum or voting, (i) change any obligation of Viacom to maintain an office or
agency in the places and for the purposes required by such Indenture, or (j)
reduce the obligations of Viacom International, if any, in respect of the due
and punctual payment of any principal of, premium or interest on any Debt
Security or any additional amounts in respect thereof. (Section 902)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of a series may, on behalf of the Holders of all the
Debt Securities of that series, waive, insofar as that series is concerned,
compliance by Viacom with certain provisions of an Indenture. (Section 1009) The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of a series may, on behalf of all Holders of Debt
Securities of that series,
11
waive any past default under the Indenture with respect to Debt Securities of
that series, except a default (a) in the payment of principal of or any premium
or interest on any Debt Security of such series or (b) in respect of any other
provision of the Indenture that cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series affected
thereby. (Section 513)
Each Indenture will provide that, in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of Holders of Debt Securities for quorum purposes,
the principal amount of an Original Issue Discount Debt Security that shall be
deemed to be Outstanding shall be the amount that would be due and payable as of
the date of such determination upon acceleration of the Maturity thereof.
(Section 101)
Unless otherwise specified in an applicable Prospectus Supplement, each
Indenture will contain provisions for convening meetings of the Holders of Debt
Securities of any or all series. (Section 1601) A meeting may be called at any
time by the Trustee, and also, upon request, by Viacom or the Holders of at
least 33 1/3% in aggregate principal amount of the Outstanding Debt Securities
of such series, in any such case upon notice given in accordance with
"--Notices" below. (Section 1602) Except for any consent that must be given by
the Holder of each Outstanding Debt Security affected thereby, as described
above, any resolution presented at a meeting or adjourned meeting at which a
quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except for any consent that must be given by the Holder
of each Outstanding Debt Security affected thereby, as described above, any
resolution with respect to any consent, waiver, request, demand, notice,
authorization, direction or other action that may be made, given or taken by the
Holders of not less than a specified percentage in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or an
adjourned meeting at which a quorum is present only by the affirmative vote of
the Holders of not less than such specified percentage in principal amount of
the Outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of Holders of Debt Securities of any series duly
held in accordance with an Indenture will be binding on all Holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any adjourned meeting, will be Persons holding or
representing a majority in principal amount of the Outstanding Debt Securities
of a series; provided, however, that, if any action is to be taken at such
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action that may be given by the Holders of not
less than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum. (Section 1604)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they appear in the Security Register. (Sections 101, 106)
TITLE
Viacom, Viacom International, as guarantor, the Trustee and any agent of
Viacom, Viacom International, as guarantor, or the Trustee may treat the
registered owner of any registered Debt Security as the absolute owner thereof
(whether or not such Debt Security shall be overdue and notwithstanding any
notice to the contrary) for the purpose of making payment and for all other
purposes. (Section 309)
REPLACEMENT OF DEBT SECURITIES
Any mutilated Debt Security will be replaced by Viacom at the expense of the
Holder upon surrender of such Debt Security to the Trustee. Debt Securities that
become destroyed, lost or stolen
12
will be replaced by Viacom at the expense of the Holder upon delivery to the
Trustee of evidence of the destruction, loss or theft thereof satisfactory to
Viacom and the Trustee. In the case of a destroyed, lost or stolen Debt
Security, an indemnity satisfactory to the Trustee and Viacom may be required at
the expense of the Holder of such Debt Security before a replacement Debt
Security will be issued. (Section 306)
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise specified in the applicable Prospectus Supplement for a
series of Debt Securities, Viacom may elect either (i) to defease and be
discharged (and, if applicable, to have Viacom International defeased and
discharged) from any and all obligations with respect to such Outstanding Debt
Securities (except as otherwise provided in the Indenture) ("defeasance") or
(ii) to be released from its obligations with respect to certain covenants that
are described in the Indenture ("covenant defeasance"), upon the deposit with
the Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or Government Obligations that through the payment of principal and interest
in accordance with their terms will provide money in an amount sufficient,
without reinvestment, to pay the principal of, premium, if any, and interest on
the Debt Securities of such series to Maturity or redemption, as the case may
be, and any mandatory sinking fund or analogous payments thereon. As a condition
to defeasance or covenant defeasance, Viacom must deliver to the Trustee an
Opinion of Counsel to the effect that the Holders of the Debt Securities of such
series will not recognize income, gain or loss for United States federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred. Such Opinion of Counsel, in the case of
defeasance under clause (i) above, must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable United States federal
income tax law occurring after the date of the Indenture. (Senior Indenture
Article Fifteen, Senior Subordinated Indenture Article Seventeen and
Subordinated Indenture Article Seventeen)
Viacom may exercise its defeasance option with respect to Debt Securities of
any series notwithstanding its prior exercise of its covenant defeasance option.
If Viacom exercises its defeasance option, payment of the Debt Securities of
such series may not be accelerated because of an Event of Default and the
Guarantees relating to such Debt Securities will cease to exist. If Viacom
exercises its covenant defeasance option, payment of the Debt Securities of such
series may not be accelerated by reference to any covenant from which Viacom is
released as described under clause (ii) above. However, if acceleration were to
occur for other reasons, the realizable value at the acceleration date of the
money and Government Obligations in the defeasance trust could be less than the
principal and interest then due on the Debt Securities of such series, in that
the required deposit in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors.
GOVERNING LAW
The Indentures, the Debt Securities and, if applicable, the Guarantees, will
be governed by, and construed in accordance with, the laws of the State of New
York. (Section 113)
REGARDING THE TRUSTEE
Viacom and Viacom International maintain deposit accounts and banking and
borrowing relations with The First National Bank of Boston, the trustee under
the Senior Indenture, the Senior Subordinated Indenture and the Subordinated
Indenture, and such trustee is currently a lender to Viacom and Viacom
International. The trustee may be removed by Viacom at any time with respect to
the Debt Securities of any series, provided that Viacom immediately appoints a
successor trustee meeting the
13
requirements for trustees specified in the Indentures and provided further that
no Default with respect to such Debt Securities has occurred and is continuing.
(Section 608)
CERTAIN DEFINITIONS
Unless otherwise specified in an applicable Prospectus Supplement, the
following definitions are applicable to one or all of the Indentures relating to
the Debt Securities:
"Capitalized Lease" means any obligation of a Person to pay rent or other
amounts incurred with respect to real property or equipment acquired or leased
by such Person and used in its business that is required to be recorded as a
capital lease in accordance with generally accepted accounting principles
consistently applied as in effect from time to time.
"Credit Agreement" means any credit agreement under which Viacom or any
successor thereto is a borrower, in the principal amount of at least $100
million.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement relating to fluctuations in
currency values.
"Indebtedness" of any Person means, without duplication (i) any obligation
of such Person for money borrowed, (ii) any obligation of such Person evidenced
by bonds, debentures, notes or other similar instruments, (iii) any
reimbursement obligation of such Person in respect of letters of credit or other
similar instruments which support financial obligations which would otherwise
become Indebtedness, (iv) any obligation of such Person under Capitalized Leases
(other than in respect of (x) telecommunications equipment including, without
limitation, satellite transponders, and (y) theme park equipment and
attractions), and (v) any obligation of any third party to the extent secured by
a Lien on the assets of such Person; provided, however, that "Indebtedness" of
such Person shall not include any obligation of such Person (i) to any
Subsidiary of such Person or to any Person with respect to which such Person is
a Subsidiary or (ii) specifically with respect to the production, distribution
or acquisition of motion pictures or other programming rights, talent or
publishing rights. When used with respect to Viacom, the term "Indebtedness"
also includes any obligation of Viacom International specified in clauses (i)
through (v) above to the extent that said Indebtedness is guaranteed by Viacom.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
relating to fluctuations in interest rates.
"Lien" means any pledge, mortgage, lien, encumbrance or other security
interest.
"Officer's Certificate" means a certificate signed by any Officer of Viacom
or Viacom International, as the case may be, in his or her capacity as such
Officer and delivered to the Trustee.
"Outstanding Senior Subordinated Securities" means the 7% Senior
Subordinated Debentures due 2003, Series A and B; the 10 1/4% Senior
Subordinated Notes due 2001; the 9 1/8% Senior Subordinated Notes due 1999; and
the 8 3/4% Senior Subordinated Reset Notes due 2001; in each case, of Viacom
International.
"Principal Property" means any parcel of real property and related fixtures
or improvements (other than telecommunications equipment, including, without
limitation, satellite transponders) owned by Viacom, Viacom International or any
wholly owned Subsidiary of Viacom and located in the United States, the
aggregate book value of which on the date of determination exceeds $500 million,
other than any such real property and related fixtures or improvements which, as
determined in good faith by the Board of Directors of Viacom, is not of material
importance to the total business conducted by Viacom and its Subsidiaries, taken
as a whole.
"Restricted Subsidiary" means a corporation all of the outstanding voting
stock of which is owned, directly or indirectly, by Viacom or by one or more of
its Subsidiaries, or by Viacom and one or more of
14
its Subsidiaries, which is incorporated under the laws of a State of the United
States, and which owns a Principal Property.
"Senior and Senior Subordinated Obligations" of any Persons means (i) the
Senior Obligations of such Person, (ii) any obligation of such Person under, or
any guarantee by such Person of, as the case may be, the Outstanding Senior
Subordinated Securities, (iii) any obligation of such Person under, or any
guarantee by such Person of, as the case may be, any Senior Subordinated Debt
Securities, (iv) any obligation of such Person to a third party or any guarantee
by such Person of any obligation to a third party (including, without
limitation, any Affiliate of such Person), in each case, whether now existing or
hereafter created, incurred or assumed, where such obligation or guarantee, as
the case may be, ranks pari passu with (A) the obligation of such Person under,
or the guarantee by such Person of, as the case may be, the Outstanding Senior
Subordinated Securities or the Senior Subordinated Debt Securities or (B) any
other obligation of such Person to a third party or any other guarantee by such
Person of any obligation to a third party, whether now existing or hereafter
created, incurred or assumed which ranks pari passu with the Outstanding Senior
Subordinated Securities or the Senior Subordinated Debt Securities and (v) any
obligation of such Person to a third party or any guarantee by such Person of
any obligation to a third party specified in the applicable Prospectus
Supplement as being Senior and Senior Subordinated Obligations; provided,
however, that the obligations (but not the guarantees) of such Person described
in any of clauses (ii) through (v) above shall not include any obligation of
such Person to any Subsidiary of such Person or to any Person with respect to
which such Person is a Subsidiary; provided, further, however, that the
obligations and guarantees of such Person described in clauses (ii) through (v)
above (and not excluded therefrom pursuant to the immediately preceding proviso)
shall include the principal, premium, if any, and interest on, such obligations
or guarantees, as the case may be.
"Senior Obligations" of any Person means (i) any obligation of such Person
for money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) any obligation, contingent
or otherwise, of such Person in respect of letters of credit or bankers'
acceptances or other similar instruments (including any reimbursement obligation
of such Person with respect thereto), (iv) any obligation of such Person under
Capitalized Leases, (v) any obligation of such Person under any Interest Rate
Agreements or any Currency Agreements and (vi) any guarantee by such Person of
obligations of any third party (including, without limitation, any Affiliate of
such Person) of the type set forth in any of clauses (i) through (v) above; and
in the case of each of clauses (i) through (vi) above, whether such obligation
and/or instrument is outstanding on the date of execution of the Senior
Subordinated Indenture or the Subordinated Indenture, as the case may be, or
thereafter created, incurred or assumed; provided, however, that (I) "Senior
Obligations" of such Person shall not include (1) any obligation of such Person
of the type set forth in any of clauses (i) through (v) above to any Subsidiary
of such Person or to any Person with respect to which such Person is a
Subsidiary, (2) any obligation of such Person of the type set forth in any of
clauses (i) through (vi)above which is by its terms subordinate or junior in any
respect to any other obligation of such Person of any such type or (3) any
obligation of such Person where the instrument creating or evidencing such
obligation or pursuant to which the same is outstanding expressly provides that
such obligation shall not be senior in right of payment to Senior Subordinated
Debt Securities or Subordinated Debt Securities, as the case may be, and (II)
"Senior Obligations" of such Person shall include the principal, premium, if
any, and interest on, any obligations of the type set forth in any of clauses
(i) through (vi) above (and not excluded from the scope of "Senior Obligations"
pursuant to clause (I) above). (Senior Subordinated Indenture Section 101 and
Subordinated Indenture Section 101)
"Subsidiary" of any Person means (i) a corporation a majority of the
outstanding voting stock of which is at the time, directly or indirectly, owned
by such Person by one or more Subsidiaries of such Person, or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a partnership or joint venture, in
which such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Person performing
similar functions). (Section 101)
15
DESCRIPTION OF SENIOR DEBT SECURITIES
THE FOLLOWING TERMS AND CONDITIONS APPLY SOLELY TO SENIOR DEBT SECURITIES.
SEE "DESCRIPTION OF DEBT SECURITIES" FOR OTHER TERMS AND CONDITIONS THAT ARE
ALSO APPLICABLE TO SENIOR DEBT SECURITIES.
RANKING
The payment of the principal of and premium, if any, and any interest on the
Senior Debt Securities will rank pari passu with all other unsecured
unsubordinated obligations of Viacom.
GUARANTEES
Viacom International will unconditionally guarantee the due and punctual
payment of the principal of, and premium, if any, and any interest on the Senior
Debt Securities, to the extent set forth in the applicable Prospectus
Supplement, when and as the same shall become due and payable, whether at
maturity, upon redemption, upon acceleration or otherwise. The guarantees of the
Senior Debt Securities (the "Senior Guarantees"), if issued, will be endorsed on
the Senior Debt Securities.
The Senior Indenture provides that in the event that the Senior Guarantees
would constitute or result in a fraudulent transfer or conveyance for purposes
of, or result in a violation of, any United States federal, or applicable United
States state, fraudulent transfer or conveyance or similar law, then the
liability of Viacom International under the Senior Guarantees shall be reduced
to the extent necessary to eliminate such fraudulent transfer or conveyance or
violation under the applicable fraudulent transfer or conveyance or similar law.
(Senior Indenture Section 1303) Application of this clause could limit the
amount which Holders of Senior Debt Securities may be entitled to collect under
the Senior Guarantees. Holders, by their acceptance of the Senior Debt
Securities, will have agreed to such limitations. See "Certain
Considerations--Fraudulent Conveyance Considerations".
The Senior Guarantees represent unsecured general obligations of Viacom
International and will rank pari passu with the other unsecured unsubordinated
obligations of Viacom International and will be senior to the Senior
Subordinated Guarantees and the Subordinated Guarantees (each as defined below).
DESCRIPTION OF SENIOR SUBORDINATED DEBT SECURITIES
THE FOLLOWING TERMS AND CONDITIONS APPLY SOLELY TO SENIOR SUBORDINATED DEBT
SECURITIES. SEE "DESCRIPTION OF DEBT SECURITIES" FOR OTHER TERMS AND CONDITIONS
THAT ARE ALSO APPLICABLE TO SENIOR SUBORDINATED DEBT SECURITIES.
SUBORDINATION
The payment of the principal of and premium, if any, and any interest on the
Senior Subordinated Debt Securities will, to the extent set forth in the Senior
Subordinated Indenture, be subordinated in right of payment to the prior payment
in full of all Senior Obligations of Viacom. (Senior Subordinated Indenture
Section 1301) Subject to any exceptions provided for in the applicable
Prospectus Supplement, upon any payment or distribution of assets to creditors
upon any liquidation, dissolution, winding up, reorganization, assignment for
the benefit of creditors, marshalling of assets or any bankruptcy, insolvency or
similar proceedings of Viacom, the holders of all Senior Obligations of Viacom
will first be entitled to receive payment in full of all amounts due or to
become due thereon before the Holders of the Senior Subordinated Debt Securities
will be entitled to receive any payment or distribution in respect of the
principal of, premium, if any, or any interest on the Senior Subordinated Debt
Securities, and in the event that, notwithstanding the foregoing, the Trustee
under the Senior Subordinated Indenture or the
16
Holder of any Senior Subordinated Debt Security receives any payment or
distribution of assets of any kind or character before all Senior Obligations of
Viacom are paid in full, then such payment or distribution will be required to
be paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of Viacom for application to the payment of all Senior
Obligations of Viacom remaining unpaid, to the extent necessary to pay all
Senior Obligations of Viacom in full. (Senior Subordinated Indenture Section
1302) No payments on account of principal, premium, if any, or any interest in
respect of the Senior Subordinated Debt Securities may be made if there shall
have occurred and be continuing (i) a default in any payment with respect to any
Senior Obligations of Viacom beyond any applicable grace period (a "payment
event of default"), (ii) an event of default (other than a payment event of
default) with respect to any Senior Obligations of Viacom resulting in the
acceleration of the maturity thereof, (iii) any event of default (other than a
payment event of default) with respect to any Senior Obligations of Viacom
permitting the holders thereof to accelerate the maturity thereof after Viacom
or the Trustee under the Senior Subordinated Indenture is notified of such event
by a representative of a holder of Senior Obligations of Viacom (until the
earlier of (A) 180 days thereafter and (B) the date, if any, on which such event
is cured or waived or the related indebtedness is discharged) or (iv) the
pendency of any judicial proceeding with respect to any such default; and in the
event that Viacom makes any payment to the Trustee under the Senior Subordinated
Indenture or the Holder of any Senior Subordinated Debt Security prohibited by
the foregoing, then such payment will be required to be paid over and delivered
forthwith to the appropriate Agent Bank. (Senior Subordinated Indenture Section
1303)
Subject to the payment in full of all Senior Obligations of Viacom, the
Holders of the Senior Subordinated Debt Securities shall be subrogated to the
rights of the holders of Senior Obligations of Viacom to receive payments or
distributions of assets of Viacom applicable to Senior Obligations of Viacom
until the Senior Subordinated Debt Securities are paid in full. (Senior
Subordinated Indenture Section 1305)
By reason of such subordination, in the event of insolvency, the holders of
Senior Obligations of Viacom may recover more, ratably, than the Holders of the
Senior Subordinated Debt Securities.
At December 31, 1994, Viacom had outstanding approximately $8.9 billion of
Senior Obligations.
SENIOR SUBORDINATED GUARANTEES
Viacom International will unconditionally guarantee the due and punctual
payment of the principal of, and premium, if any, and any interest on the Senior
Subordinated Debt Securities, to the extent set forth in the applicable
Prospectus Supplement, when and as the same shall become due and payable,
whether at maturity, upon redemption, upon acceleration or otherwise. The
guarantees of the Senior Subordinated Debt Securities (the "Senior Subordinated
Guarantees"), if issued, will be endorsed on the Senior Subordinated Debt
Securities.
The Senior Subordinated Guarantees will be subordinate in right of payment
(to the same extent as described with respect to Viacom under "--Subordination"
above) to the prior payment in full of all Senior Obligations of Viacom
International, including the Senior Guarantees.
The Senior Subordinated Indenture provides that in the event that the Senior
Subordinated Guarantees would constitute or result in a fraudulent transfer or
conveyance for purposes of, or result in a violation of, any United States
federal, or applicable United States state, fraudulent transfer or conveyance or
similar law, then the liability of Viacom International under the Senior
Subordinated Guarantees shall be reduced to the extent necessary to eliminate
such fraudulent transfer or conveyance or violation under the applicable
fraudulent transfer or conveyance or similar law. (Senior Subordinated Indenture
Section 1422) Application of this clause could limit the amount which Holders of
Senior Subordinated Debt Securities may be entitled to collect under the Senior
Subordinated Guarantees.
17
Holders, by their acceptance of the Senior Subordinated Debt Securities, will
have agreed to such limitations. See "Certain Considerations--Fraudulent
Conveyance Considerations".
At December 31, 1994, Viacom International had outstanding approximately
$8.5 billion of Senior Obligations (substantially all of which is included in
the $8.9 billion of Senior Obligations of Viacom referred to above).
DESCRIPTION OF SUBORDINATED DEBT SECURITIES
THE FOLLOWING TERMS AND CONDITIONS APPLY SOLELY TO SUBORDINATED DEBT
SECURITIES. SEE "DESCRIPTION OF DEBT SECURITIES" FOR OTHER TERMS AND CONDITIONS
THAT ARE ALSO APPLICABLE TO SUBORDINATED DEBT SECURITIES.
SUBORDINATION
The payment of the principal of and premium, if any, and any interest on the
Subordinated Debt Securities will, to the extent set forth in the Subordinated
Indenture, be subordinated in right of payment to the prior payment in full of
all Senior and Senior Subordinated Obligations of Viacom. (Subordinated
Indenture Section 1301) The applicable Prospectus Supplement will set forth any
additional indebtedness to which the Subordinated Debt Securities are
subordinate. Subject to any exceptions provided for in the applicable Prospectus
Supplement, upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of Viacom, the holders of all Senior and Senior Subordinated
Obligations of Viacom will first be entitled to receive payment in full of all
amounts due or to become due thereon before the Holders of the Subordinated Debt
Securities will be entitled to receive any payment or distribution in respect of
the principal of, premium, if any, or any interest on the Subordinated Debt
Securities, and in the event that, notwithstanding the foregoing, the Trustee
under the Subordinated Indenture or the Holder of any Subordinated Debt Security
receives any payment or distribution of assets of any kind or character before
all Senior and Senior Subordinated Obligations of Viacom are paid in full, then
such payment or distribution will be required to be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of Viacom for application to the payment of all Senior and Senior
Subordinated Obligations of Viacom remaining unpaid, to the extent necessary to
pay all Senior and Senior Subordinated obligations of Viacom in full.
(Subordinated Indenture Section 1302) No payments on account of principal,
premium, if any, or any interest in respect of the Subordinated Debt Securities
may be made if there shall have occurred and be continuing (i) a default in any
payment with respect to any Senior and Senior Subordinated Obligations of Viacom
beyond any applicable grace period (a "payment event of default"), (ii) an event
of default (other than a payment event of default) with respect to any Senior
and Senior Subordinated Obligations of Viacom resulting in the acceleration of
the maturity thereof, (iii) any event of default (other than a payment event of
default) with respect to any Senior and Senior Subordinated Obligations of
Viacom permitting the holders thereof to accelerate the maturity thereof after
Viacom or the Trustee under the Subordinated Indenture is notified of such event
by a representative of a holder of Senior and Senior Subordinated Obligations of
Viacom (until the earlier of (A) 180 days thereafter and (B) the date, if any,
on which such event is cured or waived or the related indebtedness is
discharged) or (iv) the pendency or any judicial proceeding with respect to any
such default; and in the event that Viacom makes any payment to the Trustee
under the Subordinated Indenture or the Holder of any Subordinated Debt Security
prohibited by the foregoing, then such payment will be required to be paid over
and delivered forthwith to the appropriate Agent Bank. (Subordinated Indenture
Section 1303)
18
Subject to the payment in full of all Senior and Senior Subordinated
Obligations of Viacom, the Holders of the Subordinated Debt Securities shall be
subrogated to the rights of the holders of Senior and Senior Subordinated
Obligations of Viacom to receive payments or distributions of assets of Viacom
applicable to Senior and Senior Subordinated Obligations of Viacom until the
Subordinated Debt Securities are paid in full. (Subordinated Indenture Section
1305)
By reason of such subordination, in the event of insolvency, the holders of
Senior and Senior Subordinated Obligations of Viacom may recover more, ratably,
than the Holders of the Subordinated Debt Securities.
At December 31, 1994, Viacom had outstanding approximately $9.6 billion of
Senior and Senior Subordinated Obligations.
SUBORDINATED GUARANTEES
Viacom International will unconditionally guarantee the due and punctual
payment of the principal of, and premium, if any, and any interest on the
Subordinated Debt Securities, to the extent set forth in the applicable
Prospectus Supplement, when and as the same shall become due and payable,
whether at maturity, upon redemption, upon acceleration or otherwise. The
guarantees of the Subordinated Debt Securities (the "Subordinated Guarantees"),
if issued, will be endorsed on the Subordinated Debt Securities.
The Subordinated Guarantees will be subordinate in right of payment (to the
same extent as described with respect to Viacom under "--Subordination" above)
to the prior payment in full of all Senior and Senior Subordinated Obligations
of Viacom International, including the Senior Guarantees and the Senior
Subordinated Guarantees.
The Subordinated Indenture provides that in the event that the Subordinated
Guarantees would constitute or result in a fraudulent transfer or conveyance for
purposes of, or result in a violation of, any United States federal, or
applicable United States state, fraudulent transfer or conveyance or similar
law, then the liability of Viacom International under the Subordinated
Guarantees shall be reduced to the extent necessary to eliminate such fraudulent
transfer or conveyance or violation under the applicable fraudulent transfer or
conveyance or similar law. (Subordinated Indenture Section 1422) Application of
this clause could limit the amount which Holders of Subordinated Debt Securities
may be entitled to collect under the Subordinated Guarantees. Holders, by their
acceptance of the Subordinated Debt Securities, will have agreed to such
limitations. See "Certain Considerations--Fraudulent Conveyance Considerations".
At December 31, 1994, Viacom International had outstanding approximately
$9.2 billion of Senior and Senior Subordinated Obligations (substantially all of
which is included in the $9.6 billion of Senior and Senior Subordinated
Obligations of Viacom referred to above).
DESCRIPTION OF PREFERRED STOCK
UNDER ITS RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED (THE "VIACOM
CERTIFICATE OF INCORPORATION"), VIACOM IS AUTHORIZED TO ADOPT RESOLUTIONS
PROVIDING FOR THE ISSUANCE, IN ONE OR MORE SERIES, OF UP TO 200,000,000 SHARES
OF ITS PREFERRED STOCK, WITH SUCH POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS THEREOF AS SHALL BE ADOPTED BY THE BOARD OF DIRECTORS OF VIACOM
OR A DULY AUTHORIZED COMMITTEE THEREOF.
THE DESCRIPTION BELOW SETS FORTH CERTAIN GENERAL TERMS AND PROVISIONS OF
VIACOM'S PREFERRED STOCK COVERED BY THIS PROSPECTUS. THE SPECIFIC TERMS OF ANY
SERIES OF THE PREFERRED STOCK WILL BE DESCRIBED IN THE
19
PROSPECTUS SUPPLEMENT RELATING TO SUCH OFFERED SECURITIES. THE FOLLOWING
SUMMARIES OF CERTAIN PROVISIONS OF THE PREFERRED STOCK OFFERED HEREBY DO NOT
PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE QUALIFIED IN THEIR ENTIRETY
BY REFERENCE TO, THE VIACOM CERTIFICATE OF INCORPORATION AND THE CERTIFICATE OF
DESIGNATIONS RELATING TO THE PARTICULAR SERIES OF PREFERRED STOCK.
IF SO INDICATED IN THE APPLICABLE PROSPECTUS SUPPLEMENT, THE TERMS OF THE
OFFERED SECURITIES MAY DIFFER FROM THE TERMS SET FORTH BELOW, EXCEPT THOSE TERMS
REQUIRED BY THE VIACOM CERTIFICATE OF INCORPORATION.
GENERAL
The Preferred Stock of any series offered hereby will, when issued, be fully
paid and nonassessable and holders thereof will have no preemptive rights. The
Prospectus Supplement applicable to any particular series of Preferred Stock
will describe the particular terms of the Preferred Stock of such series.
Subject to the Viacom Certificate of Incorporation and to any limitations
contained in then outstanding Preferred Stock, Viacom may issue additional
series of Preferred Stock, at any time or from time to time, with such powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as the Board of Directors
of Viacom or any duly authorized committee thereof shall determine, all without
further action of the stockholders, including holders of then outstanding
Preferred Stock, of Viacom. The Preferred Stock offered hereby may rank senior
to Viacom's common stock with respect to dividends and distribution of assets
upon liquidation or winding up. Issuance of a new series of Preferred Stock
could contain terms that adversely affect the voting power and other rights of
holders of other series of Preferred Stock.
The Viacom Certificate of Incorporation provides that, so long as Viacom or
any of its subsidiaries holds any authorization from the Federal Communications
Commission, Viacom may prohibit the ownership or voting of a percentage of its
equity securities in order to ensure compliance with the requirements of the
Communications Act of 1934, as amended, and regulations thereunder.
DIVIDENDS
Holders of the Preferred Stock offered hereby will be entitled to receive
cash dividends, when, as and if declared by the Board of Directors of Viacom out
of assets of Viacom legally available for payment, at such rate and on such
dates as will be set forth in the applicable Prospectus Supplement. Each
dividend will be payable to holders of record as they appear on the stock books
of Viacom on the record date fixed by its Board of Directors. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement.
All dividends declared on any particular series of Preferred Stock offered
hereby for any dividend period and on any class or series of stock of Viacom
ranking on a parity with such particular series of Preferred Stock as to
dividends shall be declared pro rata so that the amounts of dividends per share
declared for such period on such particular series of Preferred Stock and on any
other class or series of stock ranking on a parity with such particular series
of Preferred Stock as to dividends that were outstanding during such period
shall in all cases bear to each other the same ratio that the accrued dividends
per share on the shares of such particular series of Preferred Stock and such
other stock bear to each other. As of the date of this Prospectus, Viacom has
issued 24 million shares of Series B Preferred Stock, which will rank equally
with or senior to any particular series of Preferred Stock offered hereby as to
dividends. Holders of shares of Series B Preferred Stock are entitled to receive
cumulative cash dividends at the rate per annum of $2.50 per share. The terms of
the Series B Preferred Stock contain restrictions on dividend declarations on
parity stock comparable to those described above in this paragraph.
20
So long as any shares of any particular series of Preferred Stock offered
hereby are outstanding, Viacom may not (i) declare or pay any dividend or
distribution on any class or series of stock of Viacom ranking junior to such
particular series of Preferred Stock as to dividends or (ii) redeem or set apart
funds for the purchase or redemption of any such junior stock through a sinking
fund or otherwise, unless all accrued and unpaid dividends with respect to such
particular series of Preferred Stock have been paid or funds have been set apart
for payment through the current dividend period.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Viacom, the holders of any particular series of Preferred Stock
offered hereby will be entitled to receive out of assets of Viacom available for
distribution to stockholders, before any distribution of assets is made to
holders of any stock ranking junior to such particular series of Preferred Stock
on liquidation, dissolution or winding up of Viacom, liquidating distributions
in the amount set forth in the applicable Prospectus Supplement plus all accrued
and unpaid dividends. If, upon any liquidation, dissolution or winding up of
Viacom, the assets of Viacom, or proceeds thereof, distributable among the
holders of such particular series of Preferred Stock shall be insufficient to
pay in full the preferential amount set forth in the applicable Prospectus
Supplement and the liquidation preference with respect to any other shares of
stock ranking, as to liquidation, dissolution or winding up, on a parity with
such particular series of Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of such particular
series of Preferred Stock and any such other stock ratably in accordance with
the respective amounts which would be payable on such particular series of
Preferred Stock and any such other stock if all amounts payable thereon were
paid in full. The Series B Preferred Stock will rank equally with or senior to
any particular series of Preferred Stock offered hereby as to distribution of
assets upon liquidation, dissolution or winding up. In the event of any
liquidation, dissolution or winding up of Viacom, whether voluntary or
involuntary, holders of shares of Series B Preferred Stock shall receive $50.00
per share plus an amount per share equal to all dividends accrued and unpaid
thereon to the date of final distribution to such holders. The terms of the
Series B Preferred Stock contain restrictions on distributions on parity stock
in the event of the liquidation, dissolution or winding up of Viacom comparable
to those described above in this paragraph. After payment of the full amount of
the liquidating distribution to which they are entitled, the holders of the
Preferred Stock offered hereby will not be entitled to any further participation
in any distribution of assets by Viacom. A consolidation or merger of Viacom
with or into any other corporation or corporations or a sale of all or
substantially all of the assets of Viacom shall not be deemed to be a
liquidation, dissolution or winding up of Viacom.
REDEMPTION
A series of the Preferred Stock offered hereby may be redeemable, in whole
or in part, at the option of Viacom, at the times and at the redemption prices
set forth in the applicable Prospectus Supplement.
VOTING RIGHTS
Except as indicated below or in the applicable Prospectus Supplement, or
except as expressly required by applicable law, the holders of the Preferred
Stock offered hereby will not be entitled to vote. Except as indicated in the
applicable Prospectus Supplement, when and if any series is entitled to vote,
each share in such series will be entitled to one vote.
Changes to the Viacom Certificate of Incorporation which adversely affect
the rights of the holders of any series of Preferred Stock offered hereby will
require two-thirds approval of the outstanding shares of such series.
21
DESCRIPTION OF CONTINGENT VALUE RIGHTS
THE FOLLOWING STATEMENTS RELATING TO THE CVRS AND THE CVR AGREEMENT (AS
DEFINED BELOW) ARE SUMMARIES AND DO NOT PURPORT TO BE COMPLETE. SUCH SUMMARIES
MAY MAKE USE OF CERTAIN TERMS DEFINED IN THE CVR AGREEMENT AND ARE QUALIFIED IN
THEIR ENTIRETY BY EXPRESS REFERENCE TO THE CVR AGREEMENT. THE CVRS WILL BE
ISSUED UNDER A CONTINGENT VALUE RIGHTS AGREEMENT (THE "CVR AGREEMENT") TO BE
ENTERED INTO BETWEEN VIACOM AND HARRIS TRUST AND SAVINGS BANK, TRUSTEE (THE "CVR
TRUSTEE"), A FORM OF WHICH IS FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT
OF WHICH THIS PROSPECTUS IS A PART. THE FOLLOWING SUMMARIES OF CERTAIN
PROVISIONS OF THE CVR AGREEMENT DO NOT PURPORT TO BE COMPLETE, AND, WHERE
REFERENCE IS MADE TO PARTICULAR PROVISIONS OF THE CVR AGREEMENT, SUCH
PROVISIONS, INCLUDING THE DEFINITIONS OF CERTAIN TERMS, ARE INCORPORATED BY
REFERENCE AS A PART OF SUCH SUMMARIES OR TERMS, WHICH ARE QUALIFIED IN THEIR
ENTIRETY BY SUCH REFERENCE. REFERENCES TO SECTIONS IN THE FOLLOWING SUMMARIES
ARE REFERENCES TO SECTIONS OF THE CVR AGREEMENT. THE DEFINITIONS OF CERTAIN
CAPITALIZED TERMS USED IN THE FOLLOWING SUMMARY ARE SET FORTH BELOW UNDER
"--CERTAIN DEFINITIONS".
GENERAL
The CVRs represent the right to receive (under certain circumstances) cash
or securities of Viacom depending on market prices of the Class B Common Stock
during certain specified periods. The CVR Agreement will provide that CVRs may
be issued in separate series thereunder without limitation as to the aggregate
number of CVRs. The terms of each series of CVRs will be established by or
pursuant to a resolution of the Board of Directors of Viacom and set forth or
determined in the manner provided in an Officer's Certificate or by a
supplemental CVR Agreement. (Section 301(a)) The Prospectus Supplement
applicable to any particular series of CVRs will describe the particular terms
of the CVRs of such series.
Reference is made to the Prospectus Supplement relating to a particular
issuance of CVRs which will describe the following terms of a particular series
of CVRs, as may be applicable: (a) the title of the CVRs; (b) the Maturity Date
and any Extended Maturity Dates; (c) the Target Price; (d) the Minimum Price, if
any; (e) the Discount Rate, if any; (f) the Default Interest Rate, if any; (g)
the rate at which CVRs will bear interest, if any; (h) redemption provisions, if
any; (i) any deletions from, changes in or additions to Events of Default or
covenants of Viacom in the CVR Agreement; (j) the Valuation Period and the
method of determining the Current Market Value; (k) subordination provisions, if
any; (1) whether and under what circumstances a determination may be made that
no amount is payable with respect to the CVRs; and (m) any other terms,
conditions, rights and preferences (or limitations on such rights and
preferences) relating to the series (which terms shall not be inconsistent with
the requirements of the TIA or the provisions of the CVR Agreement), including,
without limitation, any modifications of the definitions set forth in the CVR
Agreement.
PAYMENT
The CVR Agreement provides that, subject to adjustment as described under
"Antidilution" below, Viacom shall pay to each holder of the CVRs of a
particular series (each such person, a "CVR Holder") on a Maturity Date for such
series, unless Viacom shall, if applicable, in its sole discretion, extend a
Maturity Date to one or more Extended Maturity Dates for such series, then on
the final Extended Maturity Date for such series, such CVR held by such CVR
Holder, if applicable, an amount, if any, as determined by Viacom, by which the
Target Price for such series (as defined), if applicable, exceeds the greater of
the Current Market Value for such series and the Minimum Price for such series
(each as defined). Such determination by Viacom absent manifest error shall be
final and binding on Viacom and the CVR Holders. (Section 301(b))
Unless otherwise provided in the applicable Prospectus Supplement, any
amount payable by Viacom in respect of the CVRs shall be paid, at Viacom's sole
discretion, either (i) in such coin or
22
currency of the United States of America as at the time is legal tender for the
payment of public and private debts, provided, however, Viacom may pay such
amounts by its check payable in such money or (ii) by delivering the equivalent
fair market value (as determined by an Independent Financial Expert) of
securities of Viacom, including, without limitation, common stock or preferred
stock, options or warrants therefor, other securities convertible into or
exchangeable for common stock or preferred stock, notes, debentures, derivative
securities or any other security of Viacom now existing or hereafter created or
any combination of the foregoing. There can be no assurance, however, that such
securities, if issued, would ultimately trade in the market at a price at or
above the value determined by the Independent Financial Expert. Such securities,
if issued, would be registered under the Securities Act prior to the issuance
thereof and a prospectus in connection with such issuance would be delivered to
holders of record of CVRs at that time. Harris Trust Company of New York has
initially been appointed as paying agent in the Borough of Manhattan, The City
of New York. (Section 307)
Unless otherwise provided in the applicable Prospectus Supplement, Viacom
may at its option with respect to any series of CVRs, extend a Maturity Date to
an Extended Maturity Date and may extend an Extended Maturity Date to a further
Extended Maturity Date. Such options shall be exercised by (i) publishing notice
of an extension in the Authorized Newspaper and (ii) furnishing notice to the
Trustee and the CVR Holders of such series of such extension, in each case, not
less than one Business Day preceding the Maturity Date or the Extended Maturity
Date, as the case may be; provided, however, that no defect in any such notice
shall affect the validity of the extension to any Extended Maturity Date and
that any notice when published and mailed to the Trustee and a CVR Holder in the
aforesaid manner shall be conclusively deemed to have been received by such CVR
Holder whether or not actually received by such CVR Holder. (Section 301(c))
PAYMENT UPON THE OCCURRENCE OF A DISPOSITION
If applicable, upon the consummation of a Disposition, Viacom shall pay (in
cash or securities of Viacom) to each CVR Holder of each applicable series for
each CVR of such series held by such CVR Holder an amount, if any, as determined
by Viacom, by which the Discounted Target Price for such series exceeds the
greater of (i) the fair market value, as determined by an Independent Financial
Expert, of the consideration, if any, received for each share of Class B Common
Stock by the holder thereof as a result of such Disposition and assuming that
such holder did not exercise any right of appraisal granted under law with
respect to such Disposition and (ii) the Minimum Price with respect to such
series. Such determinations by Viacom and such Independent Financial Expert,
absent manifest error, shall be final and binding on Viacom and the CVR Holders.
Such payment, if any, shall be made on the Disposition Payment Date for such
series established by Viacom, which in no event shall be more than 30 days after
the date on which the Disposition was consummated. (Section 301(d)) As soon as
practicable, Viacom shall give CVR Holders for such series notice of such
Disposition and the Disposition Payment Date for such series. (Section 301(e))
NO INTEREST
Unless otherwise specified in the applicable Prospectus Supplement with
respect to a particular series of CVRs, other than in the case of interest on
the Default Amount, no interest shall accrue on any amounts payable on the CVRs
to the CVR Holders. (Section 301(h))
EVENTS OF DEFAULT
If an Event of Default with respect to a series of CVRs occurs and is
continuing, either the CVR Trustee or CVR Holders of not less than 33 1/3% of
the outstanding CVRs of that series, by notice in writing to Viacom (and to the
CVR Trustee if given by CVR Holders), may declare the CVRs of that series to be
due and payable immediately, and, upon any such declaration, Viacom shall pay to
the CVR Holders of that series (in cash or securities of Viacom, at Viacom's
option) for each CVR of that series
23
held by the CVR Holders the applicable Default Amount with interest at the
applicable Default Interest Rate, from the Default Payment Date through the date
payment is made to the CVR Trustee. (Section 801)
If, at any time after the CVRs of a series shall have been so declared due
and payable, and before any judgment or decree for the payment of the amounts
due shall have been obtained or entered, Viacom shall pay or shall deposit with
the CVR Trustee a sum sufficient to pay all amounts which shall have become due
otherwise than by acceleration (with interest upon such overdue amount at the
Default Interest Rate to the date of such payment or deposit) and such amount as
shall be sufficient to cover reasonable compensation to the CVR Trustee, its
agents, attorneys and counsel, and all other expenses and liabilities incurred
and all advances made by the CVR Trustee, except as a result of negligence or
bad faith, and if any and all Events of Default, other than the nonpayment of
the amounts which shall have become due by acceleration, shall have been cured,
waived or otherwise remedied, then the CVR Holders holding a majority of the
CVRs of that series then Outstanding, by written notice to Viacom and to the CVR
Trustee, may waive all defaults with respect to CVRs of that series and rescind
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereof. (Section 801)
CERTAIN PURCHASES AND SALES
Unless otherwise specified in the applicable Prospectus Supplement, Viacom
will not, and Viacom will not permit any of its subsidiaries or controlled
Affiliates to, purchase any shares of Class B Common Stock in open market
transactions, in privately negotiated transactions or otherwise, on any day
during the period commencing 10 trading days before the Valuation Period with
respect to any series of CVRs and ending on the last day of such Valuation
Period, except with respect to employee benefit plans and other incentive
compensation arrangements. (Section 704)
ANTIDILUTION
In the event Viacom shall in any manner subdivide (by stock split, stock
dividend or otherwise) or combine (by reverse stock split or otherwise) the
number of outstanding shares of Class B Common Stock, Viacom shall similarly
subdivide or combine the CVRs of each series Outstanding and shall appropriately
adjust the Discounted Target Price, if any, the Target Price and the Minimum
Price, if any. Whenever such an adjustment is made, Viacom shall (i) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (ii) promptly file with the CVR Trustee a
copy of such certificate and (iii) mail a brief summary thereof to each CVR
Holder of each series Outstanding. The CVR Trustee shall be fully protected in
relying on any such certificate and on any adjustment therein contained. Such
adjustment, absent manifest error, shall be final and binding on Viacom and the
CVR Holders. Each Outstanding CVR of each series Outstanding shall thenceforth
represent that number of adjusted CVRs of that series necessary to reflect such
subdivision or combinations and reflect the adjusted applicable Discounted
Target Price, Target Price and Minimum Price, if applicable. (Section 301(j))
CONSOLIDATION, MERGER AND SALE OF ASSETS
The CVR Agreement provides that Viacom may, without the consent of the CVR
Holders of any of the Outstanding CVRs, consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any corporation, partnership or trust organized under the laws of
the United States of America, any state thereof or the District of Columbia,
provided that (i) the Surviving Person assumes Viacom's obligations under the
Outstanding CVRs and the CVR Agreement, (ii) immediately after giving pro forma
effect to the transaction, there exists no Event of Default and (iii) Viacom
delivers to the Trustee an Officer's Certificate regarding compliance with the
24
foregoing. For purposes of this paragraph, "convey, transfer or lease its
properties and assets substantially as an entirety" shall mean properties and
assets contributing in the aggregate at least 80% of Viacom's total revenues as
reported in Viacom's last available periodic financial report (quarterly or
annual, as the case may be) filed with the Commission. (Section 901)
CERTAIN DEFINITIONS
Unless otherwise specified in the Prospectus Supplement applicable to a
particular series of CVRs, the following terms have the following definitions:
"Authorized Newspaper" means The Wall Street Journal (Eastern Edition) or,
if The Wall Street Journal (Eastern Edition) shall cease to be published or if
the publication or general circulation of The Wall Street Journal (Eastern
Edition) shall be suspended for whatever reason, such other English language
newspaper as is selected by Viacom with general circulation in The City of New
York, New York.
"Disposition" means (i) a merger, consolidation or other business
combination involving Viacom as a result of which no shares of Class B Common
Stock shall remain outstanding, (ii) a sale, transfer or other disposition, in
one or a series of transactions, of all or substantially all of the assets of
Viacom or (iii) a reclassification of Class B Common Stock as any other capital
stock of Viacom or any other Person; provided, however, that neither clause (i)
nor clause (ii) shall mean a merger, consolidation or other business combination
of Viacom and any subsidiary of Viacom, or to a sale, transfer or other
disposition by Viacom to any Subsidiary of Viacom. For purposes of this
definition, "all or substantially all of the assets of Viacom" shall mean
properties and assets contributing in the aggregate at least 80% of Viacom's
total revenues as reported in Viacom's last available periodic financial report
(quarterly or annual, as the case may be) filed with the Commission.
"Disposition Payment Date" means the date established by Viacom, which in no
event shall be more than 30 days after the date on which the Disposition was
consummated, upon which Viacom shall pay in the manner provided in Section 307
of the CVR Agreement to each CVR Holder for each CVR of a particular series held
by such CVR Holder the applicable amount, if any, as determined by Viacom
pursuant to Section 301(d) of the Agreement.
"Event of Default," with respect to the CVRs of any series, means each 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
of that series as and when the same shall become due and payable either at the
Maturity Date, an Extended Maturity Date, the Disposition Payment Date, if
applicable, or otherwise; (b) default in the performance, or breach of any
covenant or warranty of Viacom in respect of that series, and continuance of
such default or breach for a period of 90 days after written notice has been
given to Viacom by the CVR Trustee or to Viacom and the CVR Trustee by CVR
Holders holding at least 33 1/3% of the CVRs of that series; or (c) certain
events of bankruptcy, insolvency, reorganization or other similar events in
respect of Viacom.
"Independent Financial Expert" means an independent nationally recognized
investment banking firm.
PLAN OF DISTRIBUTION
Viacom may sell the Offered Securities to or through underwriters, and also
may sell the Offered Securities directly to one or more other purchasers or
through dealers or agents. Viacom also may distribute the Offered Securities
directly to certain of its security holders in satisfaction of its obligations
in respect of the outstanding securities held by such security holders. The
Prospectus Supplement with respect to such Offered Securities will set forth the
terms of the offering of such
25
Offered Securities, including the name or names of any underwriters, dealers or
agents with whom Viacom has entered into arrangements with respect to the sale
of such Offered Securities, the initial public offering or purchase price of
such Offered Securities, the net proceeds to Viacom from such sale, any
underwriting discounts, commissions and other items constituting underwriters'
compensation from Viacom and any other discounts, concessions or commissions
allowed or reallowed or paid by any underwriters to other dealers, any
commissions paid to any agents, and the securities exchanges, if any, on which
such Offered Securities may be listed.
If underwriters are used in any offering of Offered Securities, the Offered
Securities will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time. It is anticipated that any underwriting agreement pertaining to any
Offered Securities will (i) entitle the underwriters to indemnification by
Viacom against certain civil liabilities under the Securities Act, or to
contribution with respect to payments which the underwriters may be required to
make in respect thereof, (ii) provide that the obligations of the underwriters
will be subject to certain conditions precedent and (iii) provide that the
underwriters will be obligated to purchase all Offered Securities in a
particular offering if any such Offered Securities are purchased.
The Offered Securities also may be sold to dealers, as principals. Each such
dealer may then resell such Offered Securities to the public at varying prices
to be determined by such dealer at the time of resale.
The Offered Securities may be offered and sold by Viacom directly or through
agents designated by Viacom from time to time. Unless otherwise indicated in the
applicable Prospectus Supplement, any such agent or agents will be acting on a
best efforts basis for the period of its or their appointment.
Dealers and agents named in a Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Offered
Securities described therein and, under agreements which may be entered into
with Viacom, may be entitled to indemnification by Viacom against certain civil
liabilities under the Securities Act. Underwriters, dealers and agents may be
customers of, engage in transactions with, or perform services for, Viacom or
Viacom International in the ordinary course of business.
The anticipated date of delivery of Offered Securities will be set forth in
the Prospectus Supplement relating to each offering.
LEGAL MATTERS
The validity of the Offered Securities and, if applicable, the related
Guarantees will be passed upon for Viacom and Viacom International by Shearman &
Sterling, New York, New York, counsel for such companies, and for any
underwriters by Hughes Hubbard & Reed and/or Simpson Thacher & Bartlett (a
partnership which includes professional corporations), New York, New York, or
such other counsel as may be named in the applicable Prospectus Supplement.
Hughes Hubbard & Reed and Simpson Thacher & Bartlett have each from time to time
performed legal services for Viacom and Viacom International.
26
EXPERTS
The (i) consolidated financial statements of Viacom as of December 31, 1994
and December 31, 1993 and for each of the three years in the period ended
December 31, 1994 incorporated by reference in this Prospectus from the Annual
Report on Form 10-K of Viacom for the year ended December 31, 1994, (ii)
consolidated financial statements of Viacom International as of December 31,
1993 and December 31, 1992 and for each of the three years in the period ended
December 31, 1993 incorporated by reference in this Prospectus from the Annual
Report on Form 10-K of Viacom International for the year ended December 31,
1993, as amended by Form 10-K/A Amendment No. 1 dated May 2, 1994, and (iii) the
consolidated financial statements of Paramount Communications Inc. ("Paramount")
as of March 31, 1994 and for the eleven months ended March 31, 1994 incorporated
by reference from the Current Report on Form 8-K of Viacom dated April 13, 1995
(the "Viacom Form 8-K") have been so incorporated in reliance on the reports of
Price Waterhouse LLP, independent accountants, given on the authority of such
firm as experts in auditing and accounting.
The consolidated financial statements of Paramount at April 30, 1993 and at
October 31, 1992, and for the six-month period ended April 30, 1993, and for
each of the two years in the period ended October 31, 1992 incorporated by
reference in this Prospectus from the Viacom Form 8-K have been audited by Ernst
& Young LLP, independent auditors, as set forth in their reports thereon
included therein, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements and schedules of Blockbuster
Entertainment Corporation and subsidiaries as of December 31, 1993 and 1992 and
for each of the three years in the period ended December 31, 1993 incorporated
by reference in this Prospectus from the Viacom Form 8-K have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
27
============================================== ==============================
NO DEALER, SALESPERSON OR ANY
OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR IN THE PROSPECTUS, $550,000,000
AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY VIACOM, VIACOM
INTERNATIONAL OR ANY UNDERWRITER, [VIACOM LOGO]
DEALER OR AGENT. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER
TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES
IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS $350,000,000 6.75%
UNLAWFUL. NEITHER THE DELIVERY OF SENIOR NOTES DUE 2003
THIS PROSPECTUS SUPPLEMENT AND $200,000,000 7.625%
THE PROSPECTUS NOR ANY SALE SENIOR DEBENTURES DUE 2016
MADE HEREUNDER AND THEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, EACH UNCONDITIONALLY GUARANTEED
CREATE ANY IMPLICATION THAT AS TO PAYMENT OF PRINCIPAL
THERE HAS BEEN NO CHANGE IN AND INTEREST BY
THE AFFAIRS OF VIACOM OR VIACOM INTERNATIONAL INC.
VIACOM INTERNATIONAL SINCE THE (A WHOLLY OWNED SUBSIDIARY OF
DATE HEREOF OR THEREOF OR THAT VIACOM INC.)
INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
---------------------
The Company............................ S-2 PROSPECTUS SUPPLEMENT
Use of Proceeds........................ S-2 ---------------------
Recent Developments.................... S-3
Capitalization......................... S-4
Selected Financial Data................ S-5
Selected Segment Data.................. S-6
Ratio of Earnings to Fixed Charges..... S-7
Description of Senior Securities....... S-8
Underwriting........................... S-13
Legal Matters.......................... S-13
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................. 2
GOLDMAN, SACHS & CO.
The Company............................ 3 BEAR, STEARNS & CO. INC.
Certain Considerations................. 3 LEHMAN BROTHERS
Use of Proceeds........................ 4 SMITH BARNEY INC.
Ratio of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................ 5
Description of Debt Securities......... 5
Description of Senior Debt
Securities........................... 16
Description of Senior Subordinated Debt
Securities............................. 16
Description of Subordinated Debt
Securities............................. 18
Description of Preferred Stock......... 19
Description of Contingent Value
Rights................................. 22
Plan of Distribution................... 25
Legal Matters.......................... 26
Experts................................ 27
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